Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

A longstanding aid program serves our national interest, creating a more secure, stable and economically prosperous region. Paying for the reconstruction in the considered way outlined by the government is the right thing to do. The impact of the floods is devastating, but during reconstruction we must also ensure that we stay on track when it comes to the challenges to our economy, including meeting the skill needs and attending to our infrastructure constraints over time. The task of rebuilding after the floods will mean added demands now on our capacity, skills and resources. That is why we have made room in the budget through spending cuts and a temporary levy to fund the rebuild. Many of those affected by the floods have lost loved family members, children, life partners, parents and siblings. Some have lost homes and businesses and many have lost a way of living. Introducing the temporary reconstruction flood levy is the right thing to do.

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

In rising to make a contribution to this debate on the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 it is wise for us all to be mindful about exactly why we have to do this. No-one can understate the devastation that has occurred in Queensland and Western Australia, and indeed other parts of Australia, due to floods and cyclones. Regrettably, these are a natural if not catastrophic part of life in Australia, given our climate and the nature of our vast continent. However, we also have to be mindful of exactly why we need to have a bill of this nature introduced into this place. The simple reason is that this government has squandered an unprecedented amount of taxpayers’ money. This government is borrowing $100 million every single day to fund irresponsible and reckless spending. That means the amount of $1.8 billion that is going to be raised by this levy is only 18 days of government borrowings.

When we put that into perspective, we think that that is going to go on for year after year. There are billions and billions of dollars that will be spent paying the interest payments and mortgaging future generations—that is why we are debating this bill today. The government has spent far more than it has earned. In fact, I would dare say that this government has not earned any money. It has only spent money, recklessly. It is taking money from taxpayers who have entrusted the government to do the right thing with that money for the long-term interest of Australia. Unfortunately for the government, its political imperatives have always been much more important than Australia’s national interest. How else can we explain the sudden urgency to go out and spend billions of dollars on a pink batts program—giving it away to people—that this government made such a mess of. Not only were billions of dollars wasted, there are also thousands of houses that are at risk of further disaster. There are hundreds of millions of dollars to be spent checking the work that the government has already paid for. Who can forget the fact that a number of young men lost their lives due to inadequate safety programs?

That was just one aspect of the waste of taxpayers’ money by this government. There were billions more dollars rorted through the Building the Education Revolution program, which is still rolling out across the country rorts and all. This government has been in denial repeatedly about its problems. Whenever it has had a bad policy and the flaws of that policy have been brought to its attention by the coalition, the government has said, ‘Please, you’re just being negative.’ Of course we have been negative, because they are such bad programs. We are being negative now not because we lack heart or compassion for the people affected by the floods in Queensland or the cyclones or those who have been affected by disasters elsewhere; we are being negative because this levy is an unnecessary burden on the taxpayers of Australia. It has only been foisted upon us because of the inadequacy of this government in managing our financial resources and its inability or unwillingness to cut its cloth to fit its budget.

What further evidence do we need of that other than the fact that not only does this government always underestimates expenditure because it does not know how to implement policies and programs but also the Prime Minister herself at the National Press Club said, ‘We will find further savings if it costs more money.’ It is a stark admission—a confession, if you will—that there is still plenty of fat to rip out of this government’s wasteful budget.

Going back to how they have managed the national finances, we have to remind ourselves that this is just another tax. It is another tax in a long line of taxes. In fact, one could say this government have never met a tax they did not like. They have put up the taxes on things that a lot of people enjoy today. Whether it be a tax on a ready-made drink which actually supports responsible mixing of alcohol or on cigarettes, which are unfortunately still quite popular in our society, or imposing a mining tax to stifle investment and put Australia at a competitive disadvantage, they have never met a tax they did not like.

The role of government is not to put free pink batts in people’s roofs, imperilling their lives and their properties. That is not the role of government. It is not the role of government to send out $900 cheques to dead people and people living overseas. That is not the responsibility of government. The responsibility of government is to invest taxpayers’ money prudently for the future. That means sometimes setting it aside for a rainy day. By goodness, didn’t the rainy days come in Queensland? But if you do not save for a rainy day you cannot then provide the resources that are necessary. This is the tragedy of this government’s mismanagement and fiscal ineptitude.

We have a circumstance where there is a legitimate role for government to assist in the rebuilding and provision of public infrastructure in Queensland and around the country. Yet we have the government ignoring so many aspects of where help is really needed because they simply are not prepared to save the money in areas where they have their pet hobbyhorses. There are any number of areas in which we could save money. The coalition has identified quite a number of them in our finding of $1.8 billion to assist in the rebuilding of Queensland and the other states. But the government are unwilling to make those tough choices. They think that it is easier to play the wealth redistribution game, attack taxpayers and say: ‘Please just give more. We know you have a little bit left in you.’

The taxpayers and families of Australia are already suffering. They are suffering because this government has injected too much money into the money supply. It is fuelling inflation. It does not show up in the government’s figures because the government can manipulate those, but it shows up in the everyday lives of ordinary Australians. It shows up in the cost of utility bills, food, interest rates and mortgages, which would be much lower today if this government had not injected nearly $100 billion of borrowed money into our economy. There is no question about that, and we do not expect to hear much about it from the other side.

One of the interesting things that has given me an insight into the inability of the other side—the Labor Party and government—to come to terms with what they are creating is their great spinmeistering in saying, ‘Electricity price rises are nothing to do with us,’ even though they are going to be impacted by their proposed carbon tax. Their justification for future price increases is that prices have increased in the past. Quite frankly, we know why prices of electricity have increased in the past. It is because there is $1.1 billion of renewable energy imposts on Australian consumers at the moment. It is an interesting thing when you look at your bill and you see that the costs have gone up, your electricity consumption has gone down but apparently your greenhouse gas emissions remain the same. It is such a fraud.

This government is blaming everyone else for its policy failings. This is just another example. It might seem quite small. The taxpayers of Australia are going to be asked to pay $300, $400, $500, $1,000 or whatever it is a year in additional tax. The total sum of $1.8 billion may not seem so significant but it is like straws that are piled onto a camel’s back. Families of Australia are already struggling, and this is another impost on them, another levy in the face of the taxes that have already been enacted and the rises in cost-of-living pressures, including health insurance and a number of necessities. The fact that this government is prepared to pile straw upon straw on the good people of Australia, who are only interested in making this a better country, means eventually their backs are going to break. This is my great concern. Eventually, if governments borrow too much money and they put too many demands on taxpayers, their will, resilience and ability to make additional contributions stops. It stifles creativity; it stifles investment. What worse message can there be when Australians rally to the aid of their fellow man and say, ‘I will reach into my pocket voluntarily to support those who are in trouble and struggling or for charities,’ than to be encouraged to do so disingenuously by the government that all the time had in mind for them not only to give voluntarily but also to be forced to give through a tax or a levy. That is exactly what happened.

The Australian people will naturally be dubious about future demands on their charity dollars. I do not want that to happen because I think personal charity and the willingness of Australians and many other people in the world to give to good causes is so important to the culture and the camaraderie of our society. It builds cohesiveness and it builds that elusive Australian quality which some would refer to as mateship—that is, looking after others. But the Australian people will be right to question next time demands are forced upon them, next time they are asked to reach into their pockets voluntarily and give $5, $50, $500 or whatever they can afford, whether it be for disaster relief, for a humanitarian mission or just to help someone who is in need. They are going to be right to ask, ‘What if I give all I can afford to now and then the government, because of their own ineptitude and financial mismanagement, say they are going to force us to give that little bit more through a “temporary” levy?’ I put quotation marks around ‘temporary’ because that is always the question. How can we plan for certainty when the government are prepared to change the rules on a whim?

I regret to say it looks like this levy will get through the parliament. I regret to say that because I think it sends a very bad message. This is not about restoring goodwill. It is not about restoring the budget to surplus, because you and I know, Madam Acting Deputy President, and everyone else in this chamber knows except those who publicly will not advocate it, that this government will never ever deliver a surplus. It will not deliver a surplus, so it is not about that; it is just about saying, ‘How can we scramble together more money so that we can throw it into silly and ridiculous programs?’

I stand opposed to this levy because I am opposed to new taxes of any sort. If there should be an admirable aim of this government, of this parliament, it is to reduce the burden on taxpayers, promote more self-reliance, promote the freedom of willing giving. We should be looking at reducing our tax requirements by cutting the unnecessary fat from the budget. The coalition has found some unnecessary fat and I can tell you there is plenty more out there. Even the government acknowledge that they can find further savings if they are required to do so. Why don’t they do it, rather than slug the Australian people with something they can ill afford? No matter how well intentioned, they can ill afford it. Why wouldn’t the government just say, ‘Let’s cut back a little bit’? It would not be hard. Every family in Australia has to do it on occasions when the electricity bill comes in and it has gone up 16 per cent. But of course it is not the government’s fault, only that small $1.1 billion through the renewable energy targets. When the bills come in and the food prices have gone up by 16 or 20 per cent or when interest rates have gone up by four per cent and the government have lured the first home buyers into the market with some incentives and never any warning about being prudent about the future and that they are risking financial ruin, what do the government do? They just apply another tax. It is easier for the Australian people to have to wear it than for the government to make a difficult decision. I regret it has come to this.

I know the other side, the government, has referred to some levies and things that have taken place under previous governments and I regret that there have been times when they were needed in order to overcome budget black holes that were left to us as a legacy, kind of like a nasty present for an incoming government, such as the $96 billion debt that we inherited in 1996. That is $96,000 million. The difficult thing is that it does not sound that much money when you compare it with what this government has run up in only the last three years. It took them 10 or 12 or 13 years to run up that much debt and in only three years we are now $150 billion underwater, so $150,000 million underwater, and there is not a prospect, not a hope, not a snowball’s chance of them ever repaying that debt. That is a burden that will be left to successive generations in this country. It is a burden that no Labor government has ever undertaken. The Labor governments in my memory and in my research have never ever repaid the debts that they have accumulated.

Unfortunately it is going to fall in this instance on the Australian people to shoulder this burden, but at least it has been done, I would guess, in an upfront way. What the government has not done at any stage is acknowledge that the Australian people are going to have to wear this yoke around their neck for the next 20 or 30 years repaying such reckless ineptitude. That is going to put pressure on all of us in the future. As we earn our money, as we try and take care of our families, as we look to increase self-reliance, it is going to put increased pressure on all of us when surely disaster will strike this nation again. I hope it is a long way away, I sincerely do, but rest assured that it will take place again. The only hope we have, the only prospect we have, is that we will have a government that is actually prepared to invest for the future, to prepare for the unforeseen but the all too expected. This is not a burden. This is not an onerous obligation. It is common sense. It is something that every family does and every individual does and it is something that successful governments do. Unfortunately this is not a successful government. It is successfully getting itself re-elected and we know why and how they got themselves re-elected: because they have no regard for the truth. They only have regard for spin and swindle. This is a government built on spin and swindle. They are swindling the Australian people, they are spinning to their heart’s content, and fortunately they are now being exposed by it.

In conclusion, I do not support this levy. I stand very firmly with the coalition. I do not support additional imposts on the Australian taxpayers because they can ill afford it. It is time for the government to get real, to take some responsibility for their own actions and look at how they can cut their cloth to fit the taxpayer budget.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution on the debate on the temporary flood reconstruction levy. The two bills we are debating here today, the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011, do exactly as they suggest in their titles. They impose a small, temporary levy on those earning over $50,000 to assist with the rebuilding and reconstruction of flood affected areas. As everyone in the chamber is aware, over the Christmas and new year period Queensland in particular suffered from some of the worst floods we have ever experienced. This was truly a once-in-a-lifetime natural disaster. City streets turned to rivers, houses were swept away, whole communities were destroyed and people’s lives were changed forever. It is difficult to find the right words to describe the destruction and devastation caused by the floodwaters. The damage sustained was catastrophic. Whole towns and communities were destroyed. People’s lives were torn to pieces.

We have seen the harrowing images of complete towns and communities buried beneath floodwaters and now the waters have subsided we are left with the huge task of rebuilding and reconstruction. We know that this will not be easy; we know it will not be done quickly. A huge amount of work is required to rebuild the roads, railway lines, schools and bridges which have been destroyed. This is all vital infrastructure which we must rebuild, and to complete this rebuilding process we must pass these two bills.

This will be a costly natural disaster. In fact, the recent floods could prove to be the most costly natural disaster in Australian history. The damage caused by the floods is unprecedented. A huge amount of time, money and resources will need to be committed to fully rebuild those areas which have been crippled by the devastating floodwaters. Whilst the destruction in Queensland was devastating, other areas around Australia have not been immune from the destruction of the floodwaters either. Victoria and New South Wales were also severely impacted by the floods, as was my home state of Tasmania, which felt the effects of floodwaters too. I was pleased that the federal government and the Tasmanian state Labor government quickly joined together to provide assistance for Tasmanians affected by the floods. Tasmanian primary producers and small businesses have the opportunity to apply for category C grants, worth up to $25,000, under the Natural Disaster Relief and Recovery Arrangements. The grants, which are funded on a fifty-fifty basis, will help primary producers, small businesses and not-for-profit organisations get back to undertaking business as soon as possible. The Prime Minister highlighted that the assistance is:

… in addition to joint Federal-Tasmanian Government assistance available under NDRRA to restore critical public infrastructure—such as roads and bridges—once certain thresholds are met.

There is no doubting the impact these floodwaters have had around Australia. The damage has been wide reaching and devastating, and the effects on the Australian economy will be vast. Already, Treasury estimates that the floods will take half a percentage point off growth in 2010-11. As the Treasurer pointed out, this is around $6 billion stripped out of the economy. Key economic sectors in Queensland have been severely impacted and this does not include the damage sustained to critical public and community infrastructure, and the damage bill to rebuild that critical infrastructure comes in at $5.6 billion. That is why we have put forward our package of budget saving measures as well as the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011.

As the federal government, it is our responsibility to be there ready to help rebuild this critical infrastructure. To rebuild this infrastructure, we have announced a $5.6 billion package made up of a temporary levy and substantial budgetary saving measures. This is a package that we believe is right. Two-thirds of the $5.6 billion package will come from savings within the budget. The government has decided that more than $2½ billion will come from cuts to programs and about $1 billion will come from infrastructure projects that have been identified as projects which can be delayed.

Our entire flood-rebuilding package, including the temporary levy and the savings measures, is fully costed and accounted for. This is in stark contrast to the alternative package put up by those opposite. Whilst those opposite are happy to oppose our package, which includes the one-off, temporary levy, it is important to note that it was they who presided over the gun levy, the Timor levy, the dairy industry levy and the Ansett levy, just to name a few. In fact, those opposite introduced six levies in total during their tenure in government—that is, six levies in 12 years. They were happy to introduce levy after levy when they were in government, but they will not support a one-year temporary levy, a levy to rebuild Australia, a levy to repair affected Queensland communities after unprecedented levels of damage caused by the floodwaters. Those opposite have a history of being very supportive of levies. They introduced six of them whilst in government. Last year, during the election campaign, their leader, Mr Abbott, tried to impose a two-year $6 billion levy on Australian businesses as part of their paid parental leave scheme.

I am not sure how Mr Abbott and those opposite think they can now fool the Australian people by saying they oppose levies, when they have the track record and the history to show that they are more than comfortable introducing levies. They are partial to levies. They have used them before and so their opposition to this levy can be construed as nothing more than an attempt to play politics and try to score cheap political points. How can opposition senators come into this place and tell their constituents that they have been happy to support levies in the past but will not support a levy to rebuild Australia? Maybe it is because they think they are able to pull billions of dollars of savings out of the budget. How wrong those opposite have got it. How wrong they were. Their alternative plan to fund the rebuilding of the areas affected by the floodwaters got it wrong—they mucked up the figures. It is not the first time, mind you, those opposite have put forward an alternative budgetary savings plan that was full of holes.

The opposition Treasury spokesperson, Mr Hockey, along with the Leader of the Opposition, Mr Abbott, tried to pull the wool over the Australian people’s eyes. They were again exposed for counting savings measures which had already been accounted for, double-counting savings and overall just trying to deliver another costings con job. I suppose all these bungles were hardly surprising from an opposition who advocated a wait-and-see approach to the global financial crisis, an approach which we all know would have led to results similar to those experienced by the rest of the world: high levels of unemployment, large amounts of government debt and an economy in recession. This is in stark contrast to the Labor government. We on this side of the chamber have the economic credibility to deliver a package of measured budget savings and a one-off temporary measure.

Our levy will be introduced for the 2011-12 financial year and will only apply to those people earning a taxable income of $50,000 or more. Those people earning between $50,000 and $100,000 will pay a rate of 0.5 per cent as part of the flood levy and those taxpayers earning $100,000 or more will pay the levy at a rate of one per cent. The levy will not apply to those low-income taxpayers with an income of $50,000 or less. There have also been a number of exemptions put in place to ensure that taxpayers who have been affected by a natural disaster during 2010-11 will not have to pay the flood levy. For instance, those people who received the Australian government disaster relief payment will not be required to pay the flood levy, as well as a number of other people who meet specific criteria. The levy will be automatically withheld from a taxpayer’s pay. Employees that are entitled to an exemption from the levy can ask their employers not to withhold the flood levy. Also, businesses will not need to pay the levy but will be required to withhold it from an employee’s pay.

It is worth remembering that this is a temporary levy—it will only apply for the 2011-12 financial year—and that it is a modest levy. In fact, about 50 per cent of taxpayers will pay nothing. Over 60 per cent of taxpayers will pay less than $1 a week. About 70 per cent of taxpayers will pay less than $2 a week and over 85 per cent of taxpayers will pay less than $5 a week. These are modest levels. In fact a person on the average full-time wage of $68,000 will pay just $1.74 per week. The Treasurer has highlighted that this amount is actually:

… less than a tenth of the tax cuts that they have received over the past three years. Let’s just put that into perspective: it is less than a bus ticket, less than a packet of Burger Rings, less than a weekend newspaper and less than a cup of coffee.

The two pieces of legislation we are debating here today form a vital part of the Labor government’s responsible flood rebuilding package. We have made significant savings to the federal budget and we plan to introduce a small one-off temporary levy to fund the rebuilding of vital infrastructure. In fact, for every $1 contributed to the flood rebuilding process via the levy, we have found $2 of savings in the budget. We have found spending cuts of $2.8 billion and delayed $1 billion of infrastructure projects, which is two-thirds of the cost, with the remainder met through the one-off levy of $1.8 billion.

It is time for the political point scoring and mud slinging to end. The time has come to get on with the job of rebuilding Queensland. Australians have responded to the flood crisis with such compassion and kindness. We have heard amazing stories of comradeship and mateship, of complete strangers responding to the distress calls of their fellow Australians, and of everyone pitching in and helping each other out. It is now our turn as the federal government to come to the party and meet our obligation to stand with the people of Queensland and rebuild the communities devastated by the floodwaters. These two pieces of legislation will help with that rebuilding process and I urge all senators to support the bills.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

The very fact that we are here debating the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 is a testament to the incompetence of this Labor government. We should not even be here debating it. If this government were competent, it would still have most, if not all, of the surplus funding of $22 billion which it inherited from the last Liberal coalition government led by Mr Howard. If it were competent to manage those funds, we would not even be having this discussion. Do we support Queenslanders, Victorians, New South Welshmen, Western Australians, Tasmanians and New Zealanders in their natural disasters? Of course we do. We always have and we always will, so do not hide behind that curtain of protection by appealing to the goodwill of Australians.

Why do we need a levy? As Dorothea Mackellar said in her poem a hundred years ago and others have said repeatedly, we are a land of drought and flooding rains. We always have been a land of natural disasters and we always will be. Some of them I will draw attention to this evening. What would any responsible family, any responsible household, any responsible business do? They would always save for a rainy day. Labor governments do not know how to save for rainy days, but they were handed a surplus of $22 billion when they came into government and one would have thought they would have been capable of keeping this budget in surplus for that purpose.

I have sat here this evening and today and listened to the nonsense that has been put forward about Howard-Costello governments always calling for levies when the need arose—a levy on gun control, a levy on dairying and a levy on Ansett. Why did the Howard-Costello government have to do that? There were two reasons. One was that that government inherited a $96 billion debt from the last Labor government and it spent through until 2007 repaying that debt. For those who are not aware, the average interest bill alone whilst they were paying down that principal was in excess of $5 billion a year. That was one of the two reasons they had to do it. The second reason was that they were very active in prudently managing the economy and in effecting cuts where it was necessary. It was only after their efforts to repay debt and after their efforts to prune the budget that they may have had to go to a levy. I will remind this chamber that it did not even go to a vote when Mr Howard called for the levy on guns as a result of those shocking events in 1996 in Tasmania. The circumstances here today could not be more profoundly different. Labor did not inherit a $96 billion debt; it inherited a $22 billion surplus. We have seen little if any evidence of this government being willing to cut its cloth so that it could make these savings on its own.

What are the funding alternatives in an event such as this? There are three: the first is to find alternative cuts or deferrals, the second is to add to loans and the third is a levy. Which one did the government rush to? I return to the alternative of funding cuts or deferrals and remind Senator Carol Brown, if I may—through you, Madam Acting Deputy President—that the coalition offered to work cooperatively with this Labor government to try and find those extra cuts in the budget. What was the reaction? As usual it was one of rejection.

If I could return for one moment to when the global financial crisis first hit, who was the person who first suggested that there be some limited level of underwriting of deposits by the banks? It was Malcolm Turnbull. The figure he suggested was $100,000. He was laughed at and was rejected by this Treasurer, who knows very little about economics, who only days later not only accepted—

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

You rejected him, too.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

We did not reject the man at all, Senator Farrell.

Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

You did; he was your leader.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

We will have to have a conversation about that at another time. In fact, Treasurer Swan went beyond the $100,000 deposit guarantee and put in an unlimited deposit guarantee and, of course, we know the rest is history. The government had the opportunity and the offer of the coalition to work cooperatively to find some of those cuts or deferrals. For example, since we have had the floods down the Murray-Darling, we could defer a $600 million payment for water buybacks, which would appear to not be necessary in this or the next financial year, and defer the Australia-Indonesia education partnership of $450 million—not to stop it, not to completely remove it, but to defer it. At a time when Indonesia was in terrible straits as a result of the tsunami, the Howard government donated $1 billion when their own Muslim brothers in the United Arab Emirates, in Dubai, came up with the princely sum of $1 million to assist. This is a time when we need support and need to be able to wind back some of that $448 million.

Of course, we come to the famous automotive transformation scheme overseen by Senator Carr—Carr by name and car by nature. That was $500 million which could be either deferred or indeed cut.

Government Senators:

Government senators interjecting—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

There are plenty of opportunities, Senator Brown and Senator Farrell, to be able to avoid that levy. The second option is to increase loans. But what has this Labor government been doing since the middle of 2009? It has been borrowing in excess of $100 million a day, seven days of every week. They have been borrowing $700 million a week. Of course, they have the great big excuse that they want to return the budget to surplus.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Senator Carol Brown interjecting—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Do not worry about it, Senator Brown—you have never returned a surplus budget. Labor would not know what it was to return a surplus budget. Nevertheless, why is the loan option not attractive? Because they are embarrassed by the amount they are borrowing at this moment. We know, of course, the response of the banks to that.

We turn then to some of the advice the government received in an inquiry recently. Mr Eslake said:

I would be concerned if every time a significant or expensive natural disaster or indeed any other exigency fell to the Australian government the response was to slug the 40 per cent of the population who are considered rich enough to bear an additional tax burden.

Professor McKibbin said:

My view is that we should always, where possible, establish good principles for economic management because when the big decisions have to be made we have a framework in which to act, whereas if we continue to do what we have always done we end up becoming a banana republic.

Where have we heard the term ‘banana republic’ before? I think it was from a previous Labor Prime Minister.

So we look then at this flood levy, the third option, that we say is totally unnecessary. What about the bureaucracy that is going to be put into place to administer it? What about the fact that the levy was called down before Cyclone Yasi hit the North Queensland coast? What do we do now? Do we increase the levy, do we increase borrowings or do we dig a bit further into cuts? What do we do when we have another natural disaster? Is the $1.8 billion cast in stone? I doubt it. And of course, as Senator Carol Brown said, there will be some in the salary brackets who will be exempted, and I intend to come back to that. Isn’t the brilliant management of this particular government wonderful?

In some of the deferrals the government have decided to defer flood mitigation work on the Bruce Highway and the Herbert River floodplain. I do not know those areas all that well but I would have thought that the highest priority should be protecting the Bruce Highway through keeping the channel of logistics and transport open and doing something about flood mitigation on the Herbert River floodplain. They ought to be highest on the priority list to do, not to cut. But, of course, that is what we see the government doing.

To secure the support of Mr Wilkie, in this case, we saw that they had already reversed one of the earlier decisions, which was about the Australian learning and teaching program. They also reversed a $365 million solar flagship and the NRAS program. And it is my understanding that Mr Katter was able to get $650 million for North Queensland flood mitigation as a result of Cyclone Yasi. At least he got something for his vote. Our good member for O’Connor, Mr Crook, got absolutely nothing. Not only did Western Australia get nothing—and I do not intend dwelling on WA, much to your surprise, Madam Acting Deputy President Kroger—but the good member got nothing for his electorate of O’Connor in giving away his vote.

This government has lost the confidence of the Australian people. We saw its waste in the Gillard memorial halls exercise. Some of us in this chamber sat and watched and wept as we learnt about the waste. In three states only—the states of Queensland, New South Wales and Victoria—when you took the figures per square metre for the building construction in the state schools as opposed to the independent schools, the dollars per square metre differential equated to more than $2 billion. There alone, in one project, in three states, is the equivalent of the levy that this government so shamelessly wants to visit upon some within the Australian community. In the pink batts program, magically and mystically, there was another $2 billion of waste. There were the green loans—one could go on and on. There is no confidence in this government left in the Australian people.

How then do we prioritise these projects? If there is $5.6 billion and if $1.8 billion is the levy, there is $3.8 billion left to get underway with the reconstruction programs. We have seen that the Prime Minister has gone through and made savage cuts so heroically to the budget. What are they? Cash for clunkers is one that she was ashamed of to start with. Everything that she has cut is from projects that she knows very well were dear to the heart of her predecessor, the person she marked and deposed but also the person of whose gang of four she was a member. The government has discontinued bad policies, bad funding and bad projects.

As was said earlier this evening, all this is is a tax on generosity. We are per capita the most generous country in the world when it comes to responding to natural disasters. I spoke earlier about the overwhelming response by Australians to the tsunamis that afflicted those to the north. We have seen it with Christchurch. We saw it with these floods. I would be very interested to know what the change in donations to the Queensland Premier’s flood appeal has been since 27 January, when this Prime Minister shamelessly announced the introduction of the levy.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Senator Boyce interjecting—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

It is a secret, apparently, Senator Boyce tells me. They are so ashamed of the cut-off of funds in those donations that they will not even come out—well, it certainly did not cause much difficulty for that Premier to be in front of the cameras when there was a story to be told. I want her to tell us: what was the cessation of donations once it became known that people who had donated generously will now, in fact, be levied? As has been said by the government’s own advisers, this has not been an economic decision; this has been a political decision—a poor political decision, a disincentive to donate.

It is interesting, isn’t it? Just today we see that, because Queensland, of all the mainland states, has been alone in not insuring against disasters, we find ourselves now in the circumstance of having to grant further support. Whilst there will be an outpouring of support, assistance, time and effort, it behoves the Queensland government to do as the other mainland states do—that is, to take out that disaster insurance—as indeed it behoves people in fire prone areas and flood prone areas to insure. It is simply not good enough. We now see, with the current break-up of the GST as recommended by the Grants Commission, that Queensland will save $15 a head, Victorians will save 50c a head, and it will be the other states that bear that burden.

Speaking of Victoria for a moment, it is only two years ago that we regrettably had the Black Saturday fires, with in excess of $4½ billion worth of damage. If you think back to that time, the world was in the global financial crisis. At that time there was no need, despite the economic circumstances we found ourselves in, to go to the Australian people with a levy. Here we are now, where the government is calling for this levy. I ask why. I ask why the inconsistency, and I ask why the incompetence of this government.

Finally, in this contribution I wish to speak about the poor management of disasters at the financial level by the Attorney-General’s Department and Emergency Management Australia under the Australian government response and recovery arrangements. The Gascoyne River floods in December, the worst in WA’s history, afflicted that entire area and destroyed the town of Gascoyne Junction and the pastoral properties down the Gascoyne. All of the plantations in Carnarvon were destroyed. Caravan parks and houses were washed away. In accordance with the disaster response agreement, the Premier wrote to the Prime Minister on 31 December, declaring it a category C natural disaster. In her defence, the Prime Minister wrote back to the Premier on 5 or 6 January with a copy to the Attorney-General, agreeing with the Premier, and she went to visit the Gascoyne.

No-one got the $1,000 per head or $400 per child under the response and recovery arrangements. Not a single person received those payments from Centrelink until I asked the question, here in the chamber, of Senator Ludwig, representing the Attorney-General. I got absolutely no answer because he did not know the answer. Only then did we find out that a government bureaucracy here in Canberra had made its decision that people of the Gascoyne were not entitled because not very much had happened. It was then, 24 hours later, that the Prime Minister, to her credit, put out a requirement that they were to be paid those funds.

I will refer very briefly to the squandering that went on in Queensland as a result of those floods. People north of Brisbane, some 1,170 kilometres, at the Yarrabah community, ended up getting flood relief funding—1,700 kilometres away! People in Laura, halfway up Cape York, ended up getting funding as a result of Cyclone Yasi, when they suffered no damage at all. To answer Senator Brown’s comment about the Prime Minister waiving any costs for people who have drawn down these funds: in Queensland, I understand, there were plenty who availed themselves of the $1,000, donated it back to flood relief but of course, as a result of being recipients, are now themselves exempted from paying that particular levy.

We have seen throughout this exercise a complete and utter disregard for the generosity of Australians; we have seen a disregard for what I would regard as an acceptance and an understanding of the fact that we live in a country of droughts and flooding rains. It is time this government acted responsibly—and, if they cannot, for them to stand to one side for a government that has and will again.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

I am proud to stand here today as a senator representing the people of Queensland, who are a proud people. I was reduced to tears listening to a number of people in Grantham, one of the towns that was most affected by the floods, saying to me, ‘I hate to say this, but we need help; we really need help.’ But they were not looking for the sort of help that is being suggested by this … government. I was searching for a term there, but I am not sure what it is—the Labor-Greens alliance. The Labor-Greens alliance has tried to characterise opposition to the flood levy which would be imposed by the Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 as not standing up for the Queensland constituency. I am sorry, but I represent a large portion of the Queensland constituency. I was driven recently in a taxi by a man whose main occupation is growing vegetables in the Lockyer Valley. He lost his house, he lost his crop—a pumpkin crop that was 90 per cent ready to go—and he said to me, ‘This flood levy is BS.’ That is not the sort of help that Queenslanders want. They are appalled by the suggestion that this is the way to fix it; they look at the record of this government.

If we go back to previous Premier’s relief appeals, established by and named after the current Premier, I contributed to the last one. But where was the governance? Where was the accountability? It did not exist. There is still $700,000 sitting unspent in the Cyclone Larry Premier’s appeal. Why would anyone in their right mind contribute to this appeal? Well, they would contribute to this appeal, as thousands and thousands of people throughout Australia have, because they think it is designed to help all those who were affected by the floods. Sorry, but a little while later you find out that in fact it is means-tested, it is income tested, it is only available for personal loss. Then we discover that the rate at which this is being pushed out is pathetic—less than 20 per cent of the over-$200 million that has been contributed to the Premier’s flood relief appeal has so far been distributed.

Once again we are looking at incompetence by this government. Not only are we looking at incompetence; we are looking at what is to me a very frightening ignorance. Senators on the other side have over and over spoken about ‘flood affected’ people. I am sorry, but there was almost no-one in Queensland who was not flood affected. I spoke to a woman in Rocklea, whose business had not been flooded. She told me about having a visit from her local member, who just kept walking when he discovered that she had not had water through the premises. But her business was a fireworks events business. She had had 39 cancellations between Christmas and early January. So you tell me she was not flood affected. There was a business on the Sunshine Coast. There was no flooding whatsoever on the Sunshine Coast, but one of their major customers went into liquidation, owing them over $160,000, because of the flood effects on that customer.

The list goes on and on: ‘flood affected’ means almost everyone in Queensland—and yet the flood levy, were it to be passed, will be available to those who were ‘damaged’ by the floods. I am sorry, but practically every business, practically every individual, in Queensland has somehow been affected by the floods—often, people who were simply not able to get home for 24 hours, or did not have power for 48 hours. A lot of companies, businesses and individuals did not actually have water through their premises, but if you could not get to work for three days, and your employer chose to see that as leave without pay, you were affected. If your customers could not order because they had no ability to sell, if your suppliers could not supply, if the freight companies that deliver your products could not deliver, if you had nothing for those freight companies to deliver, you were affected. It is ridiculous, absolutely crazy, for this government to talk about individuals who were affected by the floods. It is not just individuals who were affected by the floods, and it will not be by just assisting individuals that we will solve this problem. We will solve this problem by assisting individuals and by assisting companies, the job creators of Queensland. It goes on and on.

I was interested to hear Senator Milne refer to the fact that this levy was a one-off event, yet that climate change meant that there would be more and more extreme weather events. She asked, ‘What are we going to do next summer?’ I ask the Labor government the same question. Right now we have a 12-month ‘temporary’ levy. There was nothing in the bank from this government for the future. This is not the first and last time that extreme weather events will happen and yet this government had absolutely nothing in the back pocket for it.

In Queensland we are talking of needing $5.6 billion for the rebuilding of infrastructure in flood affected regions. Yet up until last Saturday the Prime Minister and others were not even in the slightest interested in assisting local government with their infrastructure. There was the crazy situation where if employed council workers undertook flood reparation work they were not covered by federal government support. As one mayor said to me, ‘We should send the council workers off to repaint the library, even though it does not need it, and put subcontractors in to fix the roads and bridges.’ How ridiculous. In a lot of cases councils just went ahead, as they do in Queensland, because they are sensible people representing their local ratepayers. They have roots in the area and they understand their ratepayers. They went ahead and used their council workers to undertake the desperately urgent work that needed to be done, with their fingers crossed that they could persuade the federal government to fund that. How ridiculous that this went on for six weeks before some agreement was dragged out of this government for the funding to take place.

An even more vulnerable group is the not-for-profits. There was an opportunity for Premier Bligh, when she wrote to the federal government on 10 January telling them that she wanted to invoke the national disaster relief agreement, to say, ‘Let’s include the not-for-profits in this group.’ She did not. From conversations I have had, it would appear that leaving them out was a complete oversight of hers. It took five weeks for Premier Bligh to ask the federal government to provide some sort of emergency funding to the thousands and thousands of community groups that are the backbone of our community. This is something that was acknowledged even by Premier Bligh when she was involved in the pre-18-February announcement on this. These are the organisations that keep people going. Riding for the Disabled, near Caboolture, lost everything except their horses. They lost their saddles and everything else. What they lost was probably the result of hundreds and hundreds of hours of volunteer fundraising, raffles and the like. We all know what goes into getting $10,000 or so of resources for a not-for-profit organisation—I hope we all know what goes into getting $10,000 worth of resources for a not-for-profit organisation. Yet it apparently had not occurred to the Premier what sorts of organisations had to be rebuilt in order to maintain communities and community spirit in those areas.

Even worse, the Queensland Alliance, which is the peak body for the mental health organisations of Queensland, supplied to the Premier and to others at the end of January a survey of the capacity of mental health organisations in Queensland to meet the needs from the floods. They pointed out that 30 per cent of their organisations had damage to premises. They pointed out that the ability of the organisations surveyed to deliver mental health services was reduced by about one-third state wide. Most of these organisations are not-for-profit ones. Yet where was the quick emergency reaction to these groups? It did not exist. It was not until 18 February, after vast amounts of advocacy and lobbying, that the not-for-profit organisations finally got some assistance.

Looking now at the criteria for paying the flood levy: people who earn under $50,000 do not pay anything, people who earn between $50,000 and $100,000 pay 0.5 per cent and people who earn over $100,000 will pay one per cent—0.5 per cent plus 0.5 per cent. That is fine. I want to look at some of the groups who are going to be seriously affected by this decision. I would like to talk about a family that have farmed near Esk on the Brisbane River for well over 100 years. They have done the sorts of things that farmers have needed to do to survive. They have planted trees so that they have a timber component. They have leased land to a quarry so that they have another income stream. And guess what. The paulownia plantation that they had has been destroyed. Their farm has been destroyed. But, because they will earn income because they have a quarrying business occupying some of their site, they will pay the flood levy. I am sorry, but we are still back to that ‘What is flood damaged and what is flood affected?’ dichotomy. It is ridiculous that there are thousands of businesses that are required to pay the flood levy because a person is only exempt from the flood levy if they get the $1,000 payment.

We believe that there has already been a huge influx of people. Many people who were inconvenienced in a minor way, such as by having to stay with friends overnight. That means they meet the criteria for not being able to get home for 24 hours. Or they might not have had power for two days—they might have had a generator, but they did not have mains power for two days. These people had not done anything about getting flood compensation. If they claim that flood compensation now, they will be exempted from the flood levy. And yet that only applies to a personal levy. We have many people who are very deserving of that flood compensation. But others who had a minor inconvenience did not claim it or, as someone earlier said, claimed it and donated it because they did not feel that they needed that money or that they were entitled it. Like many proud Queenslanders, they did not want the help unless they desperately needed it.

But now we have businesses in many rural areas in which people have diversified where the income of the company will be such that these people will have to pay the flood levy, irrespective of the fact that their major source of income has been completely destroyed. There is no heart and there is no shame in this government in terms of the way that it attacks commerce and enterprise. You cannot live in most parts of Queensland right now and not be flood affected. Lots of places were not flood or cyclone damaged, but the damage that was done by the floods and the cyclones was not just to property or lifestyle. Damage was done to business and chains of supply. This is about people going about being part of a community and earning a living within a community. This levy as proposed by the Labor government has absolutely nothing to do with reality in Queensland. It ignores the fact that people in Queensland do not want help on this basis. They want personal help. It ignores the fact that vast numbers of people in Queensland who have been hurt are not in any way assisted by this attempt at a levy.

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

This has certainly been a summer of catastrophic flooding in Australia. There have been floods in Queensland, Victoria, Tasmania and in WA. Great rivers, such as the Gascoyne, have flooded and there has been flooding in the Pilbara and the Kimberley from recent cyclones. According to the Insurance Council of Australia, the current insurance claim for these floods—not including WA—is $2.757 billion. That is a lot of money. This will inevitably continue to rise. The total number of claims is over 104,000, which shows that many people across this country have been the victims of the flooding that has occurred over this last summer. The Insurance Council of Australia, while giving these statistics about the total number of claims and the total value of these claims, admits that the total cost of restoration, including of infrastructure and uninsured properties, is not known.

Tonight we are debating the Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011, which impose a levy to pay for flood damage. But, given that flooding is so common in Australia, I think we have to ask ourselves whether imposing a levy is really good public policy or whether we should be looking at other things. Should the money come from other sources, such as government, or should it come, for example, from insurance? I find it curious that this levy is being imposed before, apparently, a full evaluation of the total cost of the damage caused by the recent flooding in Queensland has been made. I think it is rather curious that the government has decided to impose a levy to raise $1.8 billion to be used to restore damage in Queensland before the total cost of that damage has been assessed.

A little while ago prominent economist Saul Eslake, speaking to a House of Representatives inquiry into this same matter, said there were three pathways available to government to meet the unanticipated costs of natural disasters. These were the imposition of new taxes, which is what this government is doing; borrowing the necessary funds and repaying the debt over time; and reducing spending. I think that, given this government’s track record, reduction of government spending is by far the most preferable pathway that should be followed to provide the money necessary for the restoration of infrastructure, buildings and facilities in Queensland that were damaged by the floods which are the responsibility of the government and which are not otherwise covered by insurance.

It is this matter of flood insurance that I would like to make a few remarks about. I think it is high time we expanded the coverage of flood insurance in Australia, because flooding is very much an annual part of the Australian calendar. In fact, according to the Insurance Council of Australia, flood is a persistent risk in the Australian community and it accounts for nearly one-third of natural hazard damage in this country. That is quite a remarkable statistic, I think. The floods in Australia are predominantly caused, according to the Insurance Council of Australia, by heavy rainfall associated with La Nina years, in which more floods, on average, occur than in El Nino years, and rainfall causes both riverine and flash floods.

Insurance for floods does exist in Australia, but unfortunately not a lot of people take it out. Appropriate insurance is also available for government requirements, at admittedly high premiums. But surely taking out such insurance would be a prudent action by a government whose jurisdictions are subject to frequent natural disasters, including flooding. I understand that in 2008 the Insurance Council of Australia sought to have the Australian Competition and Consumer Commission develop a standard definition of flooding, but the ACCC decided not to authorise the proposal put forward by the Insurance Council of Australia. For that reason, according to the representative of a very large insurance company in Australia who came to see me last week in my office in Perth, Australians are underinsured for flood damage. I think this is a matter that should be addressed both at government level and by the community. The chief manager of the Commonwealth Bank has supported the extension of flood insurance in this country.

The Insurance Council of Australia has said that Australia does not so much need a specific definition of floods—it certainly does not need a flood tax—as it needs a universal definition of flood so that insurance companies can offer appropriate cover to interested consumers. In March 2008 the Insurance Council of Australia lodged an application with the ACCC seeking authorisation of an agreement between its members to adopt, on a voluntary basis, a common definition of inland flood. The ICA’s proposed definition, which was put to the ACCC, went as follows:

Inland Flood is the covering of land that is not normally underwater by:

water that overflows or escapes from a naturally occurring or man made inland water course (such as a river, creek, canal or storm water channel) or a water pool (such as a lake, pond or dam), whether it is in its original state or it has been modified; or

water released from a dam whether it be accidentally released or intentionally released to control, mitigate, regulate, or otherwise respond to excess water, or

water that cannot drain or run off as a result of water that is overflowing or escaping from an inland watercourse or water pool preventing the escape of water.

That was the definition that the Insurance Council of Australia put to the ACCC for their consideration. But in July 2008 the ACCC issued a finding in which they declined to authorise that definition. They did this because, they said, they had consulted widely on the definition of inland flood put forward by the ICA and they found that significant concerns about the proposed definition of flood had been raised by a number of consumer bodies, including the Consumer Law Action Centre, the Consumers Federation of Australia, the Insurance Law Service, the Legal Aid Commission of New South Wales and Legal Aid Queensland. Obviously a lot of significant bodies had serious reservations about the definition put forward by the Insurance Council of Australia. These concerns related to the terminology chosen by the Insurance Council of Australia. It was argued that the ICA’s definition would in fact increase consumer confusion about the meaning and nature of flood cover rather than improve consumer understanding. The ACCC’s statement went on to say:

The ACCC is particularly concerned that the ICA definition of flood introduced a range of new concepts the legal implications of which are not clearly understood.

The ACCC said that they recognised that this was a complex issue and encouraged the Insurance Council of Australia to work with consumer groups and other interested stakeholders to develop a common definition of flood which would make it easier for consumers to understand what the term ‘flood’ means and the extent to which an individual’s insurance policy covers them for flood damage.

I understand that because of the recent floods in Queensland there is now a very definite movement to put forward another application to the Australian Competition and Consumer Commission to come up with a suitable definition of flood in order that larger numbers of members of the public, state governments and institutions can be covered for flooding. If the cost of flood damage were to be transferred to insurance companies, it would certainly take a great deal of pressure off governments and there would be no need for what appear to be little political stunts like levies to raise $1.8 billion for the Queensland flood situation before there has been any real assessment of the total cost of the damage in Queensland.

It is very important that a legal definition of flooding is developed and put in place to give comfort to private policyholders, institutions and governments to cover the problem of flooding in this country. As I said, flooding occurs on quite a large scale in this country, accounting for one-third of the cost of natural disasters each year. It is perhaps surprising to hear that flooding is a real problem in Australia, because it is largely a dry continent.

I think taking this kind of approach is far preferable to the government seeking to impose a levy. A levy would not address the basic issue, which is that people who expose themselves to the risk of flood need to be able to cover their costs should flooding occur. With that, I conclude this presentation, asking simply that the government and the community in general support the endeavours of the Insurance Council of Australia to develop an appropriate standard definition of flooding that is acceptable to the ACCC so that an authorisation for insurance for flooding purposes can be issued.