Wednesday, 23 February 2011
Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011; Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011
I am very proud to be able to join my parliamentary colleagues today to speak about this important legislation. The Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the cognate bill are the foundation stone for this Labor government to rebuild our damaged nation. As I have noted previously in this House, many heroes and helpers stood tall in responding to the natural disasters that have struck over the past few months: our emergency service personnel, volunteers who flocked to help and those who just found themselves in the wrong place at the right time and lent an outstretched hand. The spirit and the stories of the rescue phase of these disasters still echo in this place, through the moving anecdotes of the Prime Minister, the Treasurer, the member for Oxley, the member for Wright and many others.
As we have all observed, the aftermath of the dramatic events of the last few months has seen a great outpouring of generosity from the Australian people. This legislation honours the service of these first responders. It also honours the commitment of those who have opened their hearts and their wallets. As a responsible government we need to take a responsible, fair and measured approach to rebuilding our damaged nation. Let us be clear about the need for this legislation. The reconstruction task ahead of us is massive. Yes, donations are still rolling in, in cash and in kind. That is to the immense credit of the generosity of the Australian people. It is an indication that the people understand what those opposite do not seem to—that there is still a great deal of work to do, which we should pay for as we go as much as we can.
I know that on the Central Coast the flood fundraisers are still continuing. A team of volunteers, the Central Coast Caravan of Angels, are heading up to Ipswich for the second time in as many months this weekend. This humanitarian group are going to help people in need. I take this opportunity to wish Samantha Schuetze, Vanessa Betland and all their fellow Central Coast angels very well on their mercy mission. They are leaving the Central Coast on Thursday morning and will hit the ground running on Thursday night. They have some clean-up and gyprocking jobs lined up in Bundamba and Redbank, and they have some donated wiring and appliances to deliver.
Their group for this visit is made up of 26 people and includes three builders and SES and RFS volunteers. They have been supported by a number of other generous local organisations, whose generosity I would like to acknowledge before the parliament today: Health Services International at Tuggerah; Mighty Lag services at Tuggerah; Budget Rent a Car at East Gosford; Factory Seconds at Erina, who donated a washing machine; RSH Electrical at Mona Vale; and the Melt Bar in Sydney, who raised $1,500 in a fundraiser of under-25-year-olds. I wish them a safe journey and my heart goes out to them for their wonderful compassion.
Such acts of giving and selflessness are powerful reinforcements to me of the innate goodness of the Australian spirit and of human nature in general. While I am paying tribute, I would like to put on the record my gratitude to Ron Arkoll of AFS Products in Goulburn. Ron and his company donated 20,000 square metres of plasterboard, worth approximately $100,000, to the rebuilding in Queensland. I was very pleased, in my own small way, to have been able to assist Vanessa of the Central Coast angels and Linfox to get the plasterboard from Goulburn to Ipswich, where it is still sorely needed and apparently well stored, out of water’s reach, at the moment.
The national response to the emergency has been phenomenal. The Queensland Premier’s Disaster Relief Appeal has raised $221 million so far. In acknowledging all these efforts, the big-picture reality is that this will not be enough to rebuild Queensland. There is a need for positive federal government intervention in the form of today’s legislation. As the Treasurer has noted, the recent floods may well end up being the most costly disaster in Australian history. Initial estimates put the cost to the Commonwealth’s budget at somewhere close to $5.6 billion—and that is even before Cyclone Yasi. It would simply not be right to leave disaster victims across Queensland, Victoria and elsewhere to fend for themselves as they move into the reconstruction and recovery phase of this disaster.
It saddens me that the opposition—for purely self-interested political purposes—has refused to take a bipartisan position on the disaster relief initiative. As the member for Oxley noted earlier in this debate, if the shoe were on the other foot in this debate there would be no debate today because the Labor Party has proved, time and time again, that it is a party that acts in the national interest, not in self interest.
There is a clear contrast on show in this place day after day. The Labor members in this parliament believe in teamwork. For those opposite this is just another opportunity to trot out their pat spin and smear lines about so-called waste. For what one can only conclude are cynical political purposes, the Leader of the Opposition has chosen to send his coalition down the track of dissent and division by not supporting today’s legislation. Shame on him for doing this at a time when the people of Queensland need confirmation of our support and a commitment to getting on with the job!
The Leader of the Opposition has not chosen the bipartisan path. He is wilfully treading the path of cynicism. As the Treasurer has said in this place in recent days, the poor judgment of the Leader of the Opposition reveals again that he is all opposition and no leadership. The Leader of the Opposition was in the House this morning invoking the spirit of the rescuers—not in the name of everyone pulling together for the reconstruction, though; the Leader of the Opposition was invoking their name in order to make the reconstruction more difficult. What a shameless and disgraceful act of cynicism! What contempt for the people of Queensland! What contempt for the people who have suffered! What a slight to the Queensland members of this House, whose constituents have suffered! What contempt for this House!
But it gets worse. In the same breath he had the gall to suggest that the government should go further in its assistance. What enormous hypocrisy! Yet those opposite, like the member for Mitchell, stand up here and oppose flood recovery measures and still boast about how they are attending flood fundraisers in their electorates. Well, I sincerely doubt that they have the courage to say, up front, to those people attending these events what they are actually doing. Maybe the member for Mitchell was talking about attending a fundraiser for the Liberal Party to oppose the flood recovery levy, as suggested by the Leader of the Opposition in his email to Liberal Party faithful, earlier this year!
I know there are compassionate members opposite who are uncomfortable with the political tactics of the Leader of the Opposition. I urge them to find their voices, as the member for Pearce did earlier this week, and speak up for doing the right thing, not the politically cynical thing. The nation deserves more.
Lest we be misrepresented further in this House, let me spell out what this legislation will deliver. This piece of timely legislation will create a temporary flood recovery levy on Australian taxpayers with taxable incomes of $50,000 or more in the 2011-12 income year only. What is it for? It is to rebuild roads, rail, bridges and other essential infrastructure.
The flood recovery levy will be applied at the rate of 0.5 per cent of taxable income between $50,000 and $100,000 in the 2011-12 income year. Why? To rebuild roads, rail, bridges and other essential community infrastructure. The levy will be applied at the rate of one per cent of taxable income of $100,000 or more in the 2011-12 income year. Why are these people on $100,000-plus contributing one per cent of their income over that figure for one year? They are doing that in order to rebuild road, rail, bridges, and other essential community infrastructure.
The levy will not apply to low income earners with a taxable income of $50,000 or less in the 2011-12 income year. These bills will give exemptions from the levy for people who have been affected by a natural disaster. Nationally, about 50 per cent of taxpayers will pay nothing. More than 60 per cent will pay less than $1 per week.
I am mindful of the generosity that we have seen in the lead-up to this day, coming freely and without request, from Australian people. Sixty per cent will pay less than $1 a week. About 70 per cent will pay less than $2 per week and over 85 per cent will pay less than $5 per week. What is it for? Let us remember: it is to rebuild roads, rail, bridges, and other essential community infrastructure. We need to advance this for the people of Queensland. We need to advance this rebuilding program and we need to pay for it, as much as we can, as we go, in a fiscally responsible manner.
In the seat of Robertson I believe that roughly 20 per cent of the electorate will pay something towards this levy. The total impact of the levy will be $1.8 billion over the forward estimates period 2011-12 to 2014-15. Because we are a responsible government, we are covering the majority of the reconstruction costs with savings and rephasing of infrastructure projects in other parts of Australia. That seems fair to me, given that so many of us in other parts of the country were spared the phenomenal devastation of the wild weather, floods, cyclones and fire. There are two dollars of savings for every one dollar of levy. It is a fair and measured levy that demonstrates leadership—leadership with Labor values at its heart.
We want the levy to commence on 1 July this year. For that to happen—for Australians to support one another and for us to get on in a responsible way and rebuild roads, rail, bridges and essential infrastructure—the bills need to be passed in the autumn sitting of parliament. I urge the opposition: stop playing politics with this most important matter. Stop playing politics with disaster relief. Pass this legislation now.
Labor would have passed this levy if we were in opposition. It is time for those opposite to get on board or get out of the way and let us get on with the job of working for Australians hand in hand, without the miserly and negative approach that we are constantly seeing across the chamber.
I rise to oppose the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011. I have to begin by making a curious observation for the member who has just sat down, the member for Robertson. It seems that there is an inherited disorder for Labor members for the seat of Robertson, and that is to have a nasty streak. She certainly has displayed that this afternoon. Claiming that if the shoe was on the other foot the Labor Party would support the proposals of a coalition government? What absolute rubbish. She must, sadly, have the memory of a goldfish, because I remember a long list of important reforms passed by the Hawke-Keating government that this opposition supported. I also remember that in the term of the Howard government not a single important economic reform was supported by the Labor Party—not the GST nor any other single reform. So perhaps, instead of trying to trump her other nasty newbie members who were elected at the last election, a bit of time dedicated to some political history would give her an appreciation of what has gone on in the House before, and this may prevent her from embarrassing herself in the future.
We find ourselves here today in somewhat familiar circumstances. I want to make the point from the very beginning—let’s not be conned by the tricky language, the Orwellian language, used by the Labor Party—this debate is not about flood reconstruction; this debate is about a government being incapable of managing the budget in order to provide for the much-needed reconstruction right across Australia. After the devastation of this summer I think both sides of the House are equally committed to rebuilding the lives of those who have been affected and devastated by flooding events. My electorate of Indi, in north-east Victoria, is no stranger to the devastation of natural disasters. We have had damage from successive floods from September last year right through to this month. So I do understand very well, as anyone else would, the need to roll up our sleeves and get on with the job of trying to rebuild from the ground up. This is a debate essentially about how we fund the reconstruction effort.
It is obviously no surprise to us on this side of the House that again we are arguing about a tax. I think 2011 will be the ‘year of the tax’. It is not the ‘year of the rabbit’; it is the ‘year of the tax’. Every time there is a problem, every time the government comes up with another challenge, they will try and pull another tax out of the hat. This flood tax is a tax we do not need. It is a tax that Australians cannot afford. It is certainly a tax that we can do without—if they actually do their job properly.
We have an incredible situation, where the member for Lalor, otherwise known as the Prime Minister—although she is not very prime ministerial so I will call her the member for Lalor as I am entitled to—would dare compare herself to previous coalition administrations. She would dare compare herself to the actions taken by a giant in Australian politics, the former Prime Minister Mr John Howard. What an insult. Compared to someone like John Howard, the member for Lalor is a political pygmy, and she will remain so. Every policy area she touches—and has touched both in opposition and in government—from the Medicare gold fiasco to the Building the Education Revolution has turned the opposite of gold. She has the reverse Midas touch. So let her not try and be tricky and say ‘governments have always introduced levies’. She cannot in any way whatsoever compare this administration and her own behaviour and tenure to the previous coalition administration.
The Prime Minister and the Treasurer love to stand up in this place and talk about making tough decisions in the national interest. They said it was a tough decision to throw $900 cheques in the mail. They said it was a tough decision to put free fluff in people’s roofs. They said it was a tough decision to spend $800,000 a pop on tin sheds on school grounds. They do not understand the meaning of tough decisions. That is why they need yet another tax; it is yet another opportunity to put their hands in the pockets of hardworking Australians because they cannot control themselves. They cannot make the hard decisions and reprioritise spending in order to fund very important reconstruction work, and indeed to fund any works that are unforeseen after an emergency.
Let’s look at the details of this tax. To begin with, the damage bill in Queensland is expected to top $6 billion and that figure does not even take into consideration the damage caused in other states like New South Wales and Victoria. The tax itself is actually only a percentage of the total cost. The tax itself is expected to raise $1.8 billion. So the government has quite rightly taken the axe to some of their ridiculous spending programs, programs like cash for clunkers, which was possibly one of the most embarrassing promises of the last election campaign, although there was great competition with the people’s assembly.
Cash for clunkers has now been scrapped, but when we said that it should be scrapped there was vitriol and absolute hysteria from the other side, claiming all sorts of doom and catastrophe. But guess what? In the quiet of the night, cash for clunkers has disappeared. Cash for clunkers was a scheme that would have cost $430 per tonne of C02 reduction—an extraordinary price to pay for a program that would have achieved nothing.
They have also taken the axe to the Green Car Innovation Fund, although I do not think the minister had much to do with that. This follows the hypocrisy of their criticising the coalition for saying it was an ill-devised, extraordinarily expensive program. At least I have given them a leave pass by saying, ‘We’ve criticised these programs, so you can get away without too much criticism by cutting them.’ I would like to congratulate the government for heeding my advice and my words and making cuts in these particular areas. But I think that is where the congratulations need to end.
Before I go on, it would be remiss of me to allow the earlier comments of the member for Melbourne to pass into Hansard without a reply. The member for Melbourne stood here, without shame, calling on the government to reinstate the very programs that I have just discussed. In typical fashion, the Greens have used this tragic disaster to push their own political agenda. They began by blaming the floods on climate change—a claim that scientists have refuted. They then took aim at the mining industry, an industry that actually provides enormous support and enormous funds to the coffers of the Australian government, through taxes. In typical shameless fashion they point the finger and resort to the basest of all political tactics, the politics of envy, referring to the coal barons and blaming them for the disaster and demanding that they foot the bill. What do you expect from a group of people whose ideology is to fundamentally consider human beings a disease on the earth? They are the sort of people who do not look at the realities of everyday survival, do not understand the anxiety and the concern that the increasing cost of living is having on families, on pensioners and on young people who are trying to carve a path for themselves. Their disgraceful behaviour is symptomatic of a political party that has no responsibility for the living standards of Australians, no accountability for the sort of damage they will cause. They stand in this place, wrapped head to toe in some distorted ideological purity, and expect to escape unscathed from scrutiny. But they are forming part of this government, and, come 1 July when they become melted on to the Labor brand even more, they will be held accountable for every single decision—particularly every decision that damages this country, that causes costs to go up and that leaves less and less money in the pockets of hardworking Australians. Their contribution to this debate has been nothing short of reckless and shameful.
The most concerning thing about the contribution of the Greens is that Labor has actually responded. Like a little puppy dog, Labor has responded. We have heard it before, but we need to keep repeating it: Labor may well be in government but the Greens are definitely in power and in control. When the Greens called on the government to reinstate some of these ridiculous environmental programs, the Prime Minister did not even think twice: she bent without so much as a whimper. With the swipe of a green pen, Labor made a $360 million backflip—a very concerning and very dangerous sign of things to come.
This is a debate about responsible fiscal management. It is a debate that separates the weak from the strong. This is a debate that separates the tax hikers from the tax fighters. The coalition believes that the very best way to fund disaster recovery is through a strong budget surplus. That is what we have done in the past, and that is what I would hope all governments aim to do. But that just does not happen. That requires the discipline and the ability to make hard choices over a sustained period of time.
We went to the last election with $50 billion in savings and cuts to the Rudd-Gillard government’s reckless and wasteful spending. We would have cut government advertising, reduced consultancy expenses, put a freeze on public service recruitment and cancelled the NBN. These are not popular decisions but they are responsible decisions. You cannot have everything. You need to make choices. Coalition governments have always been put in the difficult situation of fixing up the mess and trying to get the debt under control that they inherit from short-visioned, spendthrift Labor governments.
The savings that I have just mentioned would have paid for the flood levy more than 27 times over. Following the announcement of Labor’s flood tax, the coalition found a further $2 billion in savings—more than enough to cover the revenue the flood tax would raise. These cuts are not easy, and some of them were in my portfolio. They are difficult decisions. But we understand that you cannot please everyone all the time. You are elected to act in the national interest. The budget is full of fat, and you do not need to take my word for that. Just look at what the Prime Minister has said. When she used her Press Club address to announce her new tax, she was asked what the government would do if the damage bill exceeded original estimates. She conceded that, in the event that damages exceeded $5.6 billion, further savings would have to be found. Why won’t she do it now? She does not have the guts. She would prefer to hit families with yet another new tax when they can least afford it. They are totally out of touch with mainstream Australia and the issues that keep people awake at night.
But it does not stop there. This year alone Labor is planning two more taxes. There is the carbon tax. The Deputy Prime Minister called ‘hysterical’ those who claimed that the carbon tax would happen, and now he is in denial himself. We know from a recent AIG report that this measure alone will increase household energy costs by $300 per annum. All up, the government will be introducing three new taxes this year. I would hate to think what this will do to Australians right across the country. It is disgraceful that the government have used human misery and suffering for political gain and to try to force the coalition to support another tax. (Time expired)
The events of this summer will go down in history as some of Australia’s worst-ever natural disasters—possibly only rivalled by the Cyclone Tracy tragedy that levelled Darwin on Christmas Eve in 1974. As this House sits we currently have a cyclone off the Western Australian coast that has already done significant damage to the town of Karratha by way of a mini tornado and crosses the North West Cape as I speak. Unfortunately, I have a real concern that the wroth of this summer is not yet over. Cyclones, floods, fires and freak storms have literally taken all before it with devastating disregard for life and property. I offer my sincere condolences to those who have lost loved ones, property and irreplaceable personal effects.
The first week of parliamentary sittings this year saw an outpouring of raw emotion on what had happened over this devastating summer. There is no doubt that all Australians have felt the pain of those who have suffered. We saw the grief-stricken families who have lost loved ones, those who have lost everything they own apart from the clothes on their back, cars washed down roadways like corks, roads and bridges just disappearing. We all watched the television in awe, seeing millions of dollars worth of infrastructure and private property crashing down the Brisbane River, ending up in the bottom of Moreton Bay. Further south, towns in Victoria and New South Wales were enveloped by massive expanses of water and communities were isolated for days without power and other services. Members of this House in affected areas have struggled to recount the numerous stories of extreme sadness that their constituents and friends have endured. The sheer enormity of this summer’s devastation could not have been more raw and palpable than when the member for Wright recounted the devastation and loss in his electorate and state. The events of this past summer have literally ravaged communities, physically and emotionally, and it is beholden upon this House to act.
In this debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and related bill so much has been said about the government’s mismanagement of the insulation program, the Building the Education Revolution program and other projects—criticisms that I have also levelled on occasions. We need to remind ourselves that we have had an election since that time and this government was returned—not by my hand, I would add. There have also been calls for the Building the Education Revolution program to be scrapped, which I totally disagree with. During the election campaign, I considered making some political mileage, as many others did, out of the apparent waste and lack of value for money. The minute I approached a school or a parents and friends group, the shutters would go up, simply because these schools were getting some much-needed infrastructure. It may not have been exactly what they wanted and it may have been seen to be too expensive and lacked value for money, but it was much-needed infrastructure all the same and it had been a long time coming. If you go to many of these schools now they proudly show you their new buildings. It would be now totally unfair on those schools that are at the end of this program to not be included. By all means, the government needs to ensure that the remainder of this program is managed in a prudent and professional manner, but certainly not for the program to be cut to the detriment of those waiting schools.
This government are well and truly on notice that this levy and the infrastructure spend associated with it will define them in this term of government. If they are to put the insulation program and the Building the Education Revolutions program behind them, this infrastructure rebuild needs to be successful. Approvals and expenditure must be timely and prudent. There will never be a better time for them to get it right. To this end, I welcome the appointment of John Fahey, former New South Wales Premier and federal finance minister, to oversee the recovery project. I worked with John during the days of my involvement with the Royal Flying Doctor Service, and I am confident that the reconstruction effort will be well served by him.
The fearsome bushfires of Lake Clifton and the Perth hills, bringing the devastation much closer to home, were a stark and further reminder that this summer has thrown nature’s worst at us. Fortunately, no lives were lost in those fires, but the anguish of property loss and the loss of never-to-be-replaced items can never ever be reconciled. I would like to make mention of the people of the Gascoyne region of Western Australia who were devastated by floods in December and have been threatened on several occasions since—and, as I speak, Cyclone Carlos crosses the North West Cape. My thoughts are with this very resilient community. I would like to recognise the state member for North West, Mr Vincent Catania, for the tireless work that he has undertaken in the last two months in Carnarvon and the surrounding areas.
There has been much talk in this debate of a natural disaster fund being established, mainly via the media, and this will no doubt be given more credence following the tragic turn of events in New Zealand. I would take this opportunity to echo the sentiments of others in this place on that tragic event. This notion of a disaster fund is worthy of further consideration; however, it should not be intrinsically linked to this debate. Whilst such a measure may prove beneficial for future governments and future disasters, we have a situation here and now that requires the government to take action.
I must say that I feel for those members who have had infrastructure projects cut or delayed as a result of the response. It is not easy to have projects delayed or postponed and explain that to your constituents looking forward to improvements in their communities. I hope that the Australian community will understand that, given these exceptional circumstances, hard decisions had to be taken.
Some members of this House from Western Australia have taken shots at the disaster response saying that Western Australians affected by disasters will not receive any assistance from the levy or indeed the Australian government. This is simply wrong. The Natural Disaster Recovery and Relief arrangements are jointly funded between the Commonwealth and the state. These arrangements include hardship and distress payments, income recovery, interest rate subsidies, freight subsidies for primary producers, professional advice grants and clean-up and recovery grants for small business and farmers.
The Liberal-National government in Western Australia, led by the Hon. Colin Barnett as Premier and the Hon. Brendon Grylls as Minister for Regional Development and Lands, is supportive of the flood levy. They have commented publicly that the WA state government will not be calling on the federal government for financial assistance through the Natural Disaster Recovery and Relief arrangements and instead have opted to fund the infrastructure repair and replacement process from state revenue. This commitment by the state government should in no way preclude them from making a request of this government in the future and that request being honoured.
I have sought and gained assurances from the Prime Minister that victims of the floods and fires in Western Australia will be exempt from paying the levy; furthermore, that there are no plans to cut infrastructure spending in Western Australia. This assurance highlights, in my view, the importance of Western Australia to the national economy, a topic that will no doubt be the subject of another debate in this House. I support this one-off levy because it is the right thing to do. There could never be, in my mind, a better time for Australia to take such an action to help rebuild our nation after what has been and continues to be a relentless and fearsome summer.
Many members of this House made some very eloquent and heart-wrenching speeches in this place when speaking on the condolence motion with respect to the Queensland floods. I did not contribute in that debate, so, firstly, I take the opportunity to express my sympathy and my condolences to the families who lost family members as a result of the Queensland floods and also to all of the families who perhaps lost their home, their possessions or suffered in any way as a result of floods. I can only imagine that the experience would have been horrendous for them. I was not there but—as, I assume, most members of this House—saw the footage at the time, read the newspaper reports and heard the stories firsthand about what was occurring within the communities.
Regrettably, similar events seem to be occurring right throughout the nation. I extend the same feelings of empathy towards communities wherever they might be that are also going through extreme weather events causing them grief. Right now we know only too well what is occurring to our New Zealand friends in Christchurch. Again, looking at the footage, all I can say is that our thoughts are with those people, and right now the most important thing is to provide them with every bit of support we can to ensure that we can help as many people who have suffered, and are still suffering, as we can. As we all know, life continues and the task ahead is to rebuild infrastructure, homes and lives in any community affected. The government has, through the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011, and related bill, proposed a very responsible plan to do that for the people of Queensland. It is responsible because it spreads the burden of the cost of recovery fairly, evenly and right across all sectors of the Australian community.
In the brief time I have available today, I want to address three matters. Firstly, the merits of the levy itself; secondly, the opposition’s alternative strategy; and, thirdly, the likelihood of further destruction because of extreme weather events in the future. I turn to the merits of the levy. When a disaster occurs, to the extent that it is possible, the burden of recovery should be spread as evenly as practicable across the nation to those who can most afford it. This levy does exactly that. It does that because anyone earning less than $50,000 a year does not pay any levy at all. For those earning between $50,000 and $100,000, the levy will be 0.5 per cent of their taxable income. For those earning over $100,000, the rate will be 0.5 per cent for income between $50,000 and $100,000 and one per cent for income above $100,000. In fact, 50 per cent of taxpayers pay nothing; 60 per cent of taxpayers pay less than a dollar a week, and eligible victims of the flood will also not pay the levy. The levy is for the 2011-12 financial year only. It proposes to raise $1.8 billion, with the balance of the funding estimated to be around $5.6 billion, not including the effects of Cyclone Yasi, coming from expenditure savings, deferrals and cuts.
When budget cuts are made the costs are borne by those communities who would have benefited the most from the program from which the budget cuts are made. In other words, a narrow group of Australians wear most of the burden. That is the inequity of the opposition’s proposal to fund the reconstruction entirely from budget cuts. That is why a combination of budget cuts and a modest levy is the fairest response to meeting the costs. It spreads the burden as evenly as possible across all sectors of the community. I have heard speaker after speaker on the other side come in here and criticise the economic management of this government. Interestingly, economists from the ANZ, Westpac, the CBA, CommSec, Citibank and Rismark have all commented that it is a responsible response to meeting the costs of the reconstruction required in Queensland. I have not heard any members opposite suggesting that they are better economists than the economists who represent all of those leading financial institutions.
The second matter I want to refer to is the opposition’s alternative proposal to fund the entire reconstruction from cuts. What has been interesting in the course of this debate—and I have listened to many speakers from the other side—is that I have not heard one come into this place and defend the opposition’s alternative proposal. They have come in here and criticised the government and they have come in here and criticised past actions of the government in other areas, but not one of them has come in here and specifically defended the alternative proposal to find the funds to rebuild Queensland.
If that is what you believe—and I am not sure if you have made a contribution in this House—why did you not articulate the cuts that have been proposed by your leader and defend them in this House? I have not heard one member from the coalition do that.
What has been exposed by the opposition leader’s proposal to find the funds by making cuts is his contempt for, and neglect of, South Australia. South Australia would bear the brunt of the proposed opposition cuts. I say that for these two reasons. If you look at the two areas where the opposition would find their funds, one is the deferral of the $600 million of water buybacks and the second is the cut of $500 million from the Automotive Transformation Scheme. Both of those have a very big direct impact on South Australians.
The automotive sector, as most members of this House know, is vital to South Australia. Even though we have lost Mitsubishi, General Motors Holden is still a major employer and a major sustainer of the manufacturing economy in South Australia. My understanding is that there are in the order of 70,000 direct and indirect jobs as a result of the motor vehicle industry in South Australia. It is certainly important to the people I represent. Cutting $500 million from the Automotive Transformation Scheme means that the automotive sector will be hit again. The automotive sector, as we all know, has already been through some very difficult times. In South Australia, General Motors Holden is now starting to rebuild and recently advertised for more people. It has started the production of its new Cruze motor vehicle and things are looking up. The last thing that the sector now needs is for the opposition to come into this place and say, ‘If we were in government we would be cutting more of the funds that sustain your industry.’
I now turn to the water buybacks. The water buybacks are critical to restoring the balance in the Murray-Darling Basin system. What again is clear is that the Leader of the Opposition is prepared to turn his back on South Australian irrigators and that Senator Joyce dictates Murray-Darling Basin policy when it comes to the coalition. As a supplementary member of the Standing Committee on Regional Australia currently inquiring into the Murray-Darling Basin, I am acutely aware of the devastation caused to communities right across the basin as a result of the prolonged drought. I am also acutely aware that uncertainty about the Basin Plan is adding to the grief of those communities. To suggest to them that water buybacks should be deferred is to say to them, ‘We will add to that uncertainty.’ Right now no community across the Basin Plan would be in agreement with that. The committee has already, as an interim measure, contacted the minister’s office with respect to strategic water buybacks. It is a measure that is supported.
When it comes to South Australia, only yesterday there was a report by the Winemakers Federation in the Adelaide Advertiser saying that if we do not develop a sustainable Murray-Darling system, and if we cannot restore water entitlements to growers, South Australian winemakers will be hard hit, and that winemakers in the Riverland and Langhorne Creek in particular will suffer and may well go out of business. That is how important the water buybacks are to South Australia.
I turn in the few moments I have left to the final point I want to raise, and that is the likelihood of more frequent and extreme weather events and the destruction that will obviously come with them. I do not think anyone in this House would deny that it almost seems that in the last two years we have gone from one event to another. We seem to go—if not in this country, certainly around the world—from one devastating weather event to another. What that tells us is that those scientists who have been telling us for years and years that extreme weather events are going to occur more often were right—it is actually already upon us and we are seeing it. Only a week or so ago we had another two scientific reports which confirmed the likelihood of more frequent and more extreme weather events into the future. These are not just normal weather cycles. I accept that over the years there have been changing climate and weather patterns in a cyclical way. But what we are now seeing are not normal weather events. Rebuilding Queensland is certainly important, but we need to look into the future, because we are likely to be confronted by similar occurrences—as the member for O’Connor talked about happening right now in Western Australia—on a frequent basis. That means we cannot continue to ignore climate change.
Regrettably, we had a motion in this House only today by the opposition in which opposition speakers were suggesting that climate change was not real and that governments should not be doing anything about it. Effectively that is what they were saying. If that is their view, what I say to them is this: look at the cost to this country as a result of the floods in Queensland. The 75 per cent alone that the federal government is contributing, because it has to meet 75 per cent of the cost, is in the order of $5.6 billion. That means that the total amount is somewhere around $8 billion, just from that one event. That does not include the Victorian floods, the Tasmanian floods or the Western Australian floods. It does not include Cyclone Yasi. The costs run into billions. Look at the costs of trying to rectify and restore the balance in the Murray-Darling system—billions of dollars. This government has committed $13 billion just for that task alone.
We cannot continue to meet those kinds of costs if we do not properly prepare and take whatever action we can to minimise the events in whatever way we can. And we can do that if we take a responsible attitude, take the advice of our scientists that climate change is real and that we need to act. The sooner we do so, the sooner we will start to reduce the kinds of costs that we are now incurring almost on a daily basis. I close where I started. This is a responsible bill because it spreads the burden of reconstruction as evenly as possible across Australia on those who can most afford it. For those reasons, I support it.
It is a sad day when human tragedy is used to cover up a government’s failure to properly manage the finances of our country. That is what the Gillard government’s opportunistic proposal to impose yet another tax on Australians, in the form of a so-called flood levy through the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011, represents. Simply put, it is a disgrace. It is a tax without fairness or equity. Large parts of my electorate of Ryan were flooded. I have seen the devastation the floods caused and the toll it is continuing to take on my constituents—all of my constituents. When an area is flooded it is not only those who lose their homes and possessions that are affected but also their families, friends and colleagues.
When the Prime Minister and the Treasurer claim that those affected by the floods will not pay the flood tax it simply shows how little they understand the depth of this disaster. I challenge the Prime Minister and Treasurer to find a resident of the Ryan electorate who has not been affected in some way. It is beyond doubt that Ryan residents lent a hand in any way they could. Countless residents donned their gumboots and gloves to help clean up strangers’ houses. Households took in families of flooded friends who needed a safe refuge. Thousands donated to the flood appeal and all who saw the devastating images on the news and in the papers felt their heartache.
The Prime Minister and Treasurer will not find anyone in Ryan who has not been affected by these floods. There is no doubt that this help was given in good faith. However, I have a great concern that our Australian community now has a reason to be cynical, after giving so much assistance and responding so generously to calls for donations—monetary and in kind—only to have the government turn around and impose a tax. When people are in need Australians always give generously. They give all they can. Invariably they are the first to respond, both at home and abroad. We do not need to be commanded through legislation to help our mates. What faith can Australians now have, when we face the next disaster, that the government will not use it as leverage to impose yet another opportunistic tax?
Even more telling of the lack of understanding shown by the government is the sheer number of people who are already struggling to recover financially from the floods and who will now be slugged by the Gillard government’s flood tax. They are the small business owners of Bellbowrie who were inundated, the small business owners of St Lucia who lost all of their goods, who lost the structural integrity of their buildings. They are the small businesses such as Simon’s Gourmet Gallery, just across the road from my electorate office, who lost power for five days, or even longer in some cases, and could not operate and lost thousands of dollars worth of refrigerated produce. They are the small business owners who cannot yet go back to work and have no income and revenue yet are still trying to support their staff. They are property owners, small investors who have lost tenants out of their rental properties, yet do not get to stop their mortgage payments. They are members of the body corporate for the unit blocks around the University of Queensland who now face tens of thousands of dollars in electrical repair costs yet are not eligible for compensation. They were all flood affected but, because their homes were left unaffected, they will all pay the government’s flood tax.
There was money in the bank when this Labor government took office. This government was left a legacy—one that it did nothing to earn—that would have been enough to cover the reconstruction of vital infrastructure destroyed by floods, cyclones and bushfires. This Labor government has destroyed that legacy. There is now nothing but a black hole of debt left in the coffers. Not only are there no funds to cover the reconstruction costs but also there are mountains of irresponsible spending and the consequential interest repayments we now have to make. In fact, the interest paid on Labor created debt in the 2010-11 financial year alone was $4.38 billion—2½ times what the flood tax will raise to rebuild Queensland and Australia.
This Labor government has misspent taxpayers’ money—misspent your money. It has treated public funds with absolute irresponsibility, and now it is asking for more. Why should taxpayers have any faith or trust that, should the government get its hands on more of our money through this flood tax, it will suddenly start spending responsibly? Why should we have any faith that the extra funds will not simply be wasted again, just as they were wasted with Building the Education Revolution, pink batts, GroceryWatch, Fuelwatch and the proposed cash-for-clunkers scheme—yet another program scrapped; another promise broken. How can this Labor government expect Australians to trust its economic credentials when it does not even trust itself? To find someone capable it has had to appoint a Liberal, John Fahey, to head up its reconstruction spending decisions.
It is clear that this Labor government does not understand responsibility; neither, it seems, does it recognise it. I have a copy of correspondence written back in 2005 by the Lord Mayor of Brisbane, Campbell Newman. This correspondence concerns a report undertaken by the Brisbane City Council’s suburban flooding task force and recommends actions that should be taken to mitigate the severe effects of flooding that Brisbane faced. The lord mayor understood the serious risk of creek and localised flooding. The lord mayor also understood that such a mitigation effort could not take place without the cooperation of all three levels of government. So he wrote to representative members to seek their support for action or, at the very least, their recognition of flood risks in their electorates. The lord mayor never received a response to this correspondence, which was sent to the member for Griffith, the Hon. Kevin Rudd.
It seems that the member for Griffith is not alone in behaving this way. His old school mate also appears to like shirking responsibility. In fact, the Treasurer, Wayne Swan, held a press conference on 16 February this year and tried to apportion all the blame for failing to provide flood reconstruction relief for Brisbane to Lord Mayor Campbell Newman. In true ALP style, when they get it wrong they shoot the messenger. The Treasurer claimed that, before the lord mayor had submitted projects to the federal government for assistance, he went to the media demanding a payment be made. This simply is not true.
On 19 January, the Lord Mayor of Brisbane met with Prime Minister Gillard to seek financial assistance for flood damage. The lord mayor then wrote to the Prime Minister on 4 February with the costs of flood damage to vital infrastructure and asked for assistance through the natural disaster relief and recovery arrangements grants. On 10 February, the lord mayor repeated this request for assistance, with detailed costings of damage caused by floods. Once again, the Treasurer has got it wrong—although perhaps the Prime Minister only consults the Treasurer on matters of leadership spills rather than matters of national policy.
Many members opposite have accused Queensland MPs of abandoning their state. I was told to hang my head in shame by the member for Blair for not supporting a raid on the wallets of my constituents—my constituents, who are already paying out for their own recovery—and for standing up for their right to donate through goodwill, not because of a legislative obligation. I believe that other Queenslanders have abandoned their state: the member for Griffith, for ignoring the lord mayor’s early warnings; and the member for Lilley, for refusing to commit support for Brisbane and then falsely laying the blame with the local government.
It seems that this Labor government is happy to point the finger of blame at anyone but themselves when, in reality, there is no passing the buck for the budget being in such a disgraceful position that there are simply no funds available for urgently required reconstruction without imposing yet another tax. When is this government going to learn that you cannot solve every problem by simply imposing a new tax on Australians? The alcopops tax, the luxury car tax, increasing the tobacco tax, a carbon tax—the government is simply taking more money from taxpayers, rather than reflecting on their own policy and taking measures to be more responsible with public policy.
Yet another tax will raise the cost of living for households. The devastation caused by these natural disasters—the increased produce prices, the hit taken by the mining industry, the dip in savings that individuals and businesses will have to take as they reconstruct—will already affect the economy, making times just that much harder for Australians. Despite all this, the government is still taking steps to increase costs even more through this flood tax. To those opposite claiming that previous levies justify this tax hike, I say: this flood tax proposal takes more money from taxpayers in one year than any previous levy took in three.
Perhaps if members of this Labor government—the Prime Minister, the Treasurer, the former Prime Minister—recognised responsibility, understood responsibility and took responsibility we would not be here today debating an unfair and opportunistic burden on the Australian taxpayer, there would still be money in the budget for emergency reconstruction, there would not have been billions of dollars wasted and there would be no need for Australians to bear the burden of this Labor government’s incompetent management.
As we speak about what is, in effect, a disaster relief measure, I would like to add my voice to those who have already been heard in this chamber expressing their sympathy for and condolences to our New Zealand brothers and sisters. In particular, I would like to send out my greetings to the members of the New Zealand Defence Force, good friends of mine who I know will be very busily engaged right now.
It is very disappointing to be here participating in this debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and cognate bill. This should have been a moment in time when the chamber united behind the flood levy measure. It is extremely disappointing that, instead of sending that message of unity and cooperation, we are divided and engaging in partisan political debate over this issue. It really does underline what we are experiencing with the coalition leadership of the Leader of the Opposition. I know there are many fine and decent men and women on the opposite benches. I have great respect, of course, for the member for Wentworth, who is at the table, and many others of his colleagues. We are seeing now, I believe—I hope—a line being drawn on the descent we have seen the Leader of the Opposition take his party and his coalition on.
I must confess that I am a fan of the TV series Red Dwarf, which was on the ABC. It was a wonderful series. The other day, the Leader of the Opposition put me in mind of something: it was an episode of Red Dwarf that described a creature that was a shape-changing, parasitic mutant known as a polymorph, a creature that fed on negative emotions. In this parliament, we have now seen the incarnation of the polymorph in the Leader of the Opposition. He is a man who trawls this country seeking out and feeding on negative emotions, and seeking to play partisan political point-scoring with those negative emotions. He has nothing to contribute, no policy direction to offer this country, and this discussion on the flood levy is a prime example of that. I do hope that we have now reached the limit of the direction that the Leader of the Opposition had been taking, with the well-timed and commendable revolt we are seeing on his back bench.
In relation to the specific targets of the flood reconstruction levy, getting out and touring the flood affected areas of New South Wales was part of my responsibilities this summer—towns like Dubbo, Parkes, Narromine, Wee Waa, Narrabri and all of those places in New South Wales that have suffered tremendous damage to infrastructure, including damage to roads and bridges. We saw a bridge near Wagga where the bridge itself was still intact but the approaches on both sides had been completely washed away, leaving a major engineering challenge.
This will require a major effort. It is not just that crops were destroyed in the process of this flood and damage done to farming properties. For the crops that still remain, the challenge is to get those crops to market and, for the future crops that will be planted, to take advantage of the ground moisture we now enjoy. It is very critical that we tackle this infrastructure challenge.
That challenge cannot be met by any other means than by the Commonwealth weighing in heavily to assist the states. This measure of course, bringing in this levy, will help us do that and perform at the same time the very necessary task of enabling us to return to surplus in 2012-13. I should emphasise that the money that is being deployed through this levy and through the overall sums that will be used in this challenge also include areas outside Queensland and those areas in New South Wales that I mentioned. At this stage the proportional amount indicated was $1 billion, but of course that will relate to the overall sums that are determined when the damage is fully assessed. So those areas in New South Wales and even in my own electorate stand to gain from that investment and that deployment of funds.
Returning to surplus in 2012-13 is extremely important. It is important for the reasons that we should well understand of taking the pressure off private capital out in the open marketplace and thereby contributing to good sound fiscal policy and alleviating pressure on interest rates at the same time. It sends a very important signal to the market and to all those out there who are seeking capital, that the government is going to play its part. But also, very importantly, we have to understand that we cannot foresee the future, and nothing should have illustrated that more effectively than the follow-on cyclone that we endured following the floods. So what lies out there now for us in the future, what further challenges will there be? It is important that we return to surplus as soon as possible in order to meet those potential challenges, those challenges that we cannot foresee even today. So it is important on those particular grounds to return to surplus.
It is an interesting phenomenon to see the opposition debating the question of levies. It has been well aired in this chamber that the Howard government certainly resorted to this measure many times in its lifetime. Of course we know about the superannuation surcharge from the 1996 to 2005 of 15 per cent, and the gun buyback levy has been referred to many times. But very interestingly, when you look at the subsequent levies that were introduced, in 1999 to May 2006 there was the stevedoring levy which was introduced when the government was in surplus to the tune of $4.3 billion at the time. We had the milk levy in relation to dairy deregulation, which was imposed over a period of 10 years and which raised effectively the same amount of money that we are talking about in relation to this flood levy. At the time, the government was in surplus to the tune of $13 billion. The East Timor levy that was proposed in 2000 was also in the context of a government surplus of $13 billion. The Ansett levy that was introduced in September 2001 through to June 2003 was when the government was in surplus to the tune of $5.9 billion. From January 2003 to November 2006, the sugar levy that was imposed was when the government was in surplus to the tune of $7.4 billion. So the Howard government was a regular resorter to levies even when they were significantly in surplus. It is highly hypocritical of them to take issue with this measure at this time in the context of the current budgetary situation we are in.
Further to that, in my own portfolio responsibilities I am charged with signing off on increases in levies in relation to specific industry support. I think it might interest the chamber to know that we in fact have about 70 industry levies in place at this time that the government is engaged in with sectors of industry—in other words, a levy is raised from the industry and the government provides matching funding. It has been an excellent mechanism for improving the research and development of many of our sectors. They are wide and varied levies. There are 29 in the horticultural sector—almonds, avocados, bananas, cherries, pears, chestnuts. You can go through an extremely long list. There are nine grain levies, 14 livestock levies, three wine levies and about 17 other different ones including a queen bee levy—which maybe Julie Bishop might be interested in, but there are certainly a wide range of levies there that have been in place—
Certainly, Mr Deputy Speaker. The Deputy Leader of the Opposition might be interested in that one. There are 70 of these levies in place and it demonstrates quite clearly and quite effectively, I think, that this country has always resorted to and relied upon and accepted the levy mechanism as a way for the people of this country to work as a team. We work as a team nationally when we face particular national challenges and we work as a team sectorally when there are advantages to be gained from particular industrial sectors. So the levy mechanism has been a fine tradition in this country. It is a way of dealing with issues like this equitably so that the burden is distributed equitably, but also efficiently as well.
We know that the donations that have come in from a very generous and compassionate Australian community are being directed towards those specific victims’ domestic homes and people who have suffered loss, and they are helping those people directly. It is a wonderful thing. Those direct donations are tax deductible in themselves. But those people who are benefiting from many of the provisions that we have put in place to alleviate the suffering will not find themselves the subject of this further levy action. It is a very small price to pay, I think, for those who will be asked to pay. We are talking about 60 per cent of taxpayers having to put forward only about $1, and of course this is in the context of all the tax relief that has been delivered by this government. The three tax cuts in a row have certainly put those people in a much better position in any event, so this one-year levy for this tiny amount of money will not have a significant impact on those tax cuts they have already received from this government.
What we have seen from the coalition in this discussion is the offer of ‘savings’. It has been very interesting to see the sorts of savings they have offered. It really does underline the farcical budgetary circus we saw right through the campaign last year with the $11 billion black hole and their inability to come to grips with putting a budget together, with counting, basically, in some cases.
When I look specifically at the offerings the coalition have put forward, it shocks me because it underlines further the deeply evident lack of understanding in relation to our security needs and basic market dynamics. For example, to propose cuts to the water buyback program fails to understand that right now is a good time to engage in these buybacks because it is the cheapest time to buy. So we will be achieving significant savings out there in the marketplace in relation to the water buybacks. Certainly that system is being refined, but the principle of buying in these good times is one that should be well understood and well appreciated. This is a good time to buy. So it is a false economy that the coalition proposes with respect to the water buybacks.
More deeply concerning to me—and I know it is deeply concerning even to a range of conservative commentators in the community—has been the proposal to cut the Australia-Indonesia Basic Education Program. It is a program that the Howard government introduced, to its great credit. I spoke here in this House in the Afghanistan debate and I emphasised in that speech that what we are facing is not a war on terrorism; it is a war on ignorance. Those were the words that I used. When you look at the tactics and the approach of our enemy in this respect, you see that they are waging a battle for the human mind. When the Taliban overran the Swat Valley in 2009, what was the very first thing they did? The very first thing they did was to blow up 100 schools and in their place establish radical madrassas. That is the challenge we face: the battle to win the minds of the Muslim world, to encourage and support the moderate thinkers, moderate Islam. The way we do that is by running these very programs in Indonesia, our great friend and neighbour who is facing the challenge of attempts to infiltrate and influence their community by radical Islamic extremists. As the Minister for Foreign Affairs said, this program will only be smiled upon by the Leader of the Opposition and by Abu Bakar Bashir. It really emphasises the failure of the Leader of the Opposition to understand where our national security interests lie and how to pursue the security future of this nation. I think the Leader of the Opposition will be universally condemned and will continue to be condemned for that fact.
I know issues have been raised in relation to the oversight of the reconstruction task. It should be well noted that that has been significantly and securely addressed by the introduction of the Reconstruction Inspectorate. The inspectorate includes Mr John Fahey, a former federal finance minister, as the chair, and also Martin Albrecht, Matt Sheerin and Brad Orgill, who performed such good work in oversighting the BER Implementation Taskforce. So the issue of oversight is well and truly addressed. There will be rigorous scrutiny of rebuilding contracts. The task force will inspect projects to ensure that they are meeting progress milestones and will investigate complaints et cetera. So the mechanism is in place. It is definitely a good way to deal with this issue. But in this debate we have seen the lack of a moral compass, no fiscal responsibility and no understanding of national security by the coalition. (Time expired)
We have had some very eloquent speeches in this chamber as a result of the condolence motion—stories about the devastation in Queensland and Victoria. We have heard about the courage and hope of the people who are set to rebuild their lives after suffering much tragedy and devastation. We in the coalition believe very strongly in supporting the rebuilding effort. Make no mistake about that. How it should be funded is the central issue in this debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011.
I am a member of the House of Representatives Standing Committee on Economics, which recently conducted an inquiry into this new tax. The coalition members’ dissenting report of that inquiry outlines the reasons for opposing this new tax in full. Today, in the limited time that is available, I want to focus on the overarching issue, the fact that this new tax goes to the economic credibility of this government, which is why it must be opposed.
Why is there a need to bring in this new tax? Throughout Australia’s history the federal government has not deemed it necessary to impose a new tax to deal with natural disasters. Whether it was the Victorian bushfires of 2008-09, Cyclone Larry in 2006, the Ash Wednesday fires of 1983, Cyclone Tracy in 1974 or the Brisbane floods of 1974, the government did not seek to impose a further tax burden on the people. Instead, the money came from consolidated revenue—money that has already been collected in taxes by the government from you and me and businesses. Not even Gough Whitlam, the most profligate of Australian prime ministers in terms of government spending, suggested that a new tax be imposed on the Australian people to deal with the effects of Cyclone Tracy. Not even Gough Whitlam, whose reputation for waste and inefficient programs is surpassed only by this current government, felt the need to bring in a former Liberal minister to provide credibility to a government package.
This tax sets a poor precedent for the way in which governments go about funding unforeseen events. Instead of planning for the future and ensuring that the government has enough resources to deal with emergency situations when they arise, the government is creating a bias against proper and prudent planning and compromising the nation’s emergency response capability. If it needs to impose this tax, there is clearly a much bigger problem that needs to be rectified. But, rather than look at this, the government accuses any opponents of this tax of being hard-hearted and lacking compassion for the victims of these terrible tragedies. For that suggestion, they should hang their heads in shame.
In the Prime Minister’s National Press Club address she said:
… sound budget principals say we should pay as we go …
But, Prime Minister, Australians are already paying as they go. Australians are already paying taxes that, since Federation, have been designed to deal with floods and fires and other emergencies. This new flood tax has no precedent in our history. It is a new disaster tax. With this new disaster tax Australians will be paying even more for the government’s waste and inability to manage the budget.
This new tax might be a more credible proposition if the government had not shown a propensity to waste taxpayers’ money on programs, such as the pink batts program and the school halls program, that have failed miserably in providing value for money. The pink batts fiasco was a policy failure with devastating consequences—not only the loss of homes through 94 associated house fires but, significantly and very tragically, the terrible loss of four young lives. This was a policy with a cost blow-out of $1 billion, and the cost of fixing it will be an extra $500 million. The government could have provided the funds for reconstruction had it simply not embarked on this program in the first place.
Just recently we have heard from the Orgill report that public schools in Victoria, New South Wales and Queensland were paying much more for their school halls than independent schools were. In aggregate, they paid $1.5 billion more, despite no differences in the quality of the projects. When compared to the independent school sector as a whole, the waste grows to $2.6 billion. This paints a very bad picture of the government’s ability to deliver a government program. It is clear that, if the government had not wasted taxpayers’ money in this manner, there would be no need for the government to compel taxpayers for even more money. It is no wonder they have now called in John Fahey, former Liberal Minister for Finance. I do note that they have neglected to call in Lindsay Tanner, Paul Keating or Ralph Willis.
There is room in the budget to cut at least $1.8 billion of further expenditure—the $1.8 billion that this government says it needs. The coalition has offered to help the government find these savings. Indeed, the Leader of the Opposition said he would sit down with the Prime Minister to find these savings. On having that offer rejected, we set about providing a comprehensive list of over $2 billion of savings on our own. This brings me to my next point: the mirage of Labor government savings. It appears on the horizon in the economic desert as though it were real yet, as soon as you get close, it disappears. The government made much of its announced $2.8 billion in savings, which included some cuts and deferrals. It was, of course, a fig leaf for this new disaster tax. Where are these cuts now? Like the mirage, they are fast disappearing.
As of today, the government has reversed $364 million of announced expenditure cuts to the Solar Flagships program and the National Rental Affordability Scheme to—you guessed it—buy off the Greens. Nothing should get in the way of the Greens-Labor marriage. What is $364 million between partners? What was the price of the support of the member for Denison? Fifty million dollars. The reversal of expenditure cuts for the Australian learning and teaching fund secured the support of the member for Denison.
Having gone back on these expenditure cuts, the government is in no hurry to let us know what additional cuts will be made to make up the shortfall. The government needs to guarantee that it will not seek to increase the levy nor extend it to try to make up the difference. I fear that, even if the government were to guarantee it, even if it were to make a promise, if history is any guide the promise will not mean much. We only need to look at the Prime Minister’s promise before the last election not to introduce a carbon tax, not to impose it on the Australian people. Yet, already it is not a matter of whether she will bring it in but when.
So who is actually going to pay for this tax? According to the Prime Minister and the President of the ACTU, Ged Kearney, it will be borne by wealthy Australians, who can afford to pay more. During the inquiry of the House Standing Committee on Economics into the flood tax, the President of the ACTU said that she supported the tax because people on low incomes would be exempted. But, of course, she then admitted, after further questioning, that the threshold for the tax of $50,000 was below the average wage of around $65,000 a year—not the median wage but the average wage. She also said that the tax would affect around half of the workers that she represents. This tax will go directly to the cost of living for average Australians, who are already battling higher food prices, higher electricity prices and higher interest rates.
There is no economic argument in favour of a new tax. Economic expert Mr Saul Eslake provided very strong evidence to the recent inquiry into this tax. He said that the introduction of a new flood tax was one of ‘political choices rather than economic imperatives’. According to the evidence presented, the weight of economic opinion was that it would be highly undesirable to fund disaster reconstruction and relief with new taxes as a matter of both principle and precedent. Mr Eslake went on to say:
… if you continue to increase marginal rates of tax on a segment of the population by large amounts or with high regularity over time then there could well be some adverse consequences for incentives to work, save, invest and the like, which have been well documented in the economics literature.
Professor McKibbin, a senior economist and member of the RBA board, said in his evidence:
Most economists who study public finance would support the view that taxation is not the optimum way to finance the reconstruction of infrastructure after a natural disaster. The argument has a long tradition in economics.
I leave the final word to Professor McKibbin, who also 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 then we end up becoming a banana republic. We have to be very careful that all decisions, even the small ones, are done in the appropriate way.
This is why the coalition cannot support this flood tax; this is why we cannot create a new precedent; and this is why I will be opposing it.
I rise in support of the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011, which will introduce what we call the flood levy. I have listened carefully to the contributions of the speakers from the opposition, including the honourable member for Higgins, who spoke about why she is opposing the levy. After listening to the debate for a while, I can see that the only reason the opposition is opposing the levy is pure political opportunism on the part of the Leader of the Opposition. He saw it as an opportunity to create a wedge, further divide the parliament and promote his own personal political interests. It has backfired. Listening to this debate, one might think that levies are something new—that they were just invented last week or the week before. I can remember there being eight levies during the previous administration, when Mr Howard was Prime Minister, six of which were implemented. I remember the East Timor levy, which was popular but it was decided that it was unnecessary, and another levy that I do not recall the name of, but there were two that were not taken up for which there was widespread support. And there were six levies that were taken up.
So I find it rather incomprehensible that the Leader of the Opposition is leading the charge against a levy. It was all right to have six levies when he was a member of the government, the cabinet and the executive—there did not seem to be any problem with them. They were levies where one could have equally argued that the money should have come from consolidated revenue. One can always put up that argument, but the fact is that things happen in Australian life where we might need to raise extra money. I cannot remember many Australians opposing the gun buyback levy. Some people did not want to part with their guns, but I cannot remember a huge outcry from the parliament about that. It was seen as an expression of good leadership—and this levy, under the current Prime Minister, is no different. The natural disasters we have had, particularly the floods and particularly in Queensland, are absolutely without precedent. It is necessary to raise some extra funding fast. It will be spent where it should be in rebuilding infrastructure.
This is a bit of a digression, but I note that Major General Mick Slater is heading up the Queensland reconstruction task force. I had the privilege of working with him in different circumstances, in Timor-Leste, on an almost daily basis. I worked and liaised with him and, when I saw that he had been appointed, I thought, ‘What a good appointment.’ You could not appoint a better person—he is a really straight soldier—to work with and give confidence to the community in performing the formidable and, I would say, daunting task that he is presented with. I offered him some unsolicited advice on certain things via SMS, but I am very pleased that he is there, because he will serve Queenslanders, our nation and the community well. And he is fiercely independent, which is very reassuring.
If you look at the flood levy, about 50 per cent of taxpayers will pay nothing. My memory of the gun buyback levy is that over 80 per cent of taxpayers contributed and there were no major objections. I also heard opposition members saying that the Leader of the Opposition has offered to sit down with the Prime Minister and help find savings. What a ridiculous notion—who believes that? It is just political posturing at its worst. When I looked at the plan that the honourable Leader of the Opposition put up for flood reconstruction, none of it added up. We had weeks of him saying it would be easy to find savings and then we got deferrals, double-counts and backflips and it was all over the place, around and around. There was a double-count of around $700 million in savings. They said that they would use the savings to rebuild Queensland, but they had already earmarked those savings to fund other spending priorities. It is a bit hard to spend it twice, although I suppose it does not matter if it is just a paper and political posture exercise. They also claimed over $100 million in savings from the Building the Education Revolution that is already allocated to projects committed or underway, but 99.9 per cent of projects have been completed or commenced, which is pretty easy information to find if you look. Then the coalition reversed their position on foreign aid. I will discuss that further a little later in my speech.
I would like to read some comments from constituents in my electorate of Page. One was an email and one was a letter to the editor of the Clarence Valley Review. We had about seven floods in my area during the time that the floods were happening over the Christmas period. There were a couple of minor floods, a couple of moderate floods, two major floods and then another flood. When I was speaking to the condolence motion earlier today, I said that we did not whinge—we dare not whinge, because there was no tragic loss of life. There was certainly loss, but there was no loss of life, so we got on with the business. Thank God for our wonderful volunteers, who responded so well, so ably and so calmly and looked after us in those times.
The email says:
Today I have sent the following to the MP.
That is me. It goes on:
I am an old-age pensioner, and we have an income well below $60,000. I have recently had two metres of flood water through my house—Clarence River’s floods. I am sick and tired of Mr Abbott carping on about the flood tax, and I want you to know that I am more than happy to pay my $52 towards the rebuilding of those communities affected by the recent natural disasters in Queensland and elsewhere. Please send me an account and my cheque will be in the mail.
That man is from Brushgrove, which was cut off for quite a few days during the flood. I will not say his name because I did not seek permission to do so, but I think the message speaks for itself. I have received a lot of messages like that. There are always some people who say that they do not want to pay a levy, but they are in the minority. There are very few people who do not want to pay.
This message from Ken Crampton OAM in Maclean is a bit longer, so I will just read a few excerpts from it. He is a constituent of the honourable member for Cowper, but my electorate borders that electorate. He says:
We are on a part age pension as I still do casual work but would still be happy to pay part of the levy. Like many other families, my wife and I have made a donation to the flood appeal through our local Lions Club. This way you know there is nothing taken out in administration—
so that is a good plug for the Lions—
but I also agree with the proposed flood levy, as it is only a small price to pay.
He then continues in that vein. That message is typical of the tone and tenor of the emails and telephone calls that I have been getting and the conversations that I have been having. There is no reason not to support the levy. We have had a major natural disaster, there has been a huge loss of life and people have suffered, so why can’t the Leader of the Opposition get on with it and see that, at a time like this, the last thing we need is this division and discord in the community for nothing other than rank political opportunism?
The levy is a one-year measure—it is a one-off. I can remember some of the other levies that were introduced under the Howard government. Some of them, I have a memory, went on a lot longer than one year. In fact, I think the dairy industry levy went on for quite some time. I supported that levy, particularly given the fact that I hold a rural seat, in which there is a very good and viable dairy industry that is suffering at the moment because of the milk price issue with Coles and Woolworths. I have always given strong support to the dairy industry, and I remember that levy. I also approved of the levy for the Ansett workers. That levy was for corporate failure, yet we put our hands into our pockets across Australia in the same way to fund it.
Some people could question that. They could ask, ‘Why are we funding corporate failure?’ We did it for the workers, and we did it for exactly the same reason we are doing it here—primarily to help people in Queensland as well as in other places that have been affected by flooding. In Queensland, we need nearly $6 billion that we know of. I am sure it will be more, because when we put in the cost estimates after floods we always know that more money could be required as we go along and see the extent of the damage, particularly to the roads and bridges. I know that through experience in my electorate of Page, having lived in an area where we have had a lot of floods over many years and being involved in the recovery efforts there.
These bills will provide the government with funding to assist in rebuilding or repairing essential infrastructure that has been damaged as a result of flooding, and this funding will cover all rural and regional areas—it has to because that is where the flooding happened. Sometimes it is harder for those areas as there are a lot more roads and a lot more bridges. I have five local government areas in my seat of Page, and among them is one shire where there are about 438 bridges. During the latest floods, some of those were affected, and obviously they will need to be repaired.
So much goodwill has emerged out of these tragedies, and it would be wonderful if that goodwill could prevail in this place too. I know there are a lot of members in the opposition who do support the flood levy. They see it as being a normal and natural thing to do. So I target the Leader of the Opposition—
I am not making it up. The Leader of the Opposition saw it as a political opportunity to go out and gather some support around himself, but he has not done that. It has really blown up in his face. He wanted to cut the aid funding to Indonesian schools. That funding was a great initiative of Mr Downer—I remember when it was approved—and it makes sense to have that funding go to those schools in Indonesia. We all support it, and I know the coalition do too. Their opposition to the funding was just one of those rushes of blood to the head. I commend these bills to the House. The quicker they pass, the sooner we can get the money out to Queensland and beyond. (Time expired)
I am certainly pleased to speak on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011, which you could call ‘the flood tax bills’. For me, this is an important piece of legislation because I have had a unique insight, as a member and deputy chair of the House of Representatives Standing Committee on Economics, to actually hear all the evidence that was put to the committee by the various witnesses over the course of the single day of inquiry that the committee had. Really, the arguments against this new tax are compelling and overwhelming.
But personally I find that the single most compelling argument against the way in which Labor has conjured up this completely arbitrary flood tax has been one simple fact: the tax that the House is discussing this evening and that has been the subject of parliamentary debate for around one day—and it will no doubt go on into late this evening and possibly even tomorrow—raises for the Labor Party $1.8 billion. The estimated cost of repairs as a consequence of these awful natural disasters is around $5.6 billion. So they are raising $1.8 billion of the $5.6 billion, and the connection between the two numbers is completely arbitrary—there is none.
Most compelling of all is one simple fact: if it had not been for Building the Education Revolution, if it had not been for the failed pink batts scheme, if it had not been for the so-called green assessors scheme and if it were not for Fuelwatch or the money wasted on GroceryWatch or just about any other program you want to talk about, this government would have had $1.8 billion, plus some. There would have been absolutely no need whatsoever for the Australian people to reach into their pockets and pay another so-called mateship tax, as the Prime Minister quaintly likes to put it.
They are masters of spin on that side of the chamber, but they are not masters of finance. If they had any ability whatsoever to actually ensure that taxpayers got value for money and that their initiatives did not blow up into money pits, they would easily have been able to find $1.8 billion and avoid the necessity for the Australian people to pay a new tax. Typically of the Labor Party—consistent with Labor DNA and absolutely consistent with its past form—every time they get their hands on the Treasury benches this Labor Party does what just comes naturally to it: tax and spend.
It has always been a party of taxing and spending and it always will be a party of taxing and spending, because that is what the Labor Party does. It taxes when there is a problem and it hopes that by spending as much money as possible it will overcome the problem. Once again, we find ourselves with the Labor Party conveniently saying to all Australians, ‘Look, it’s not that we’re useless as a government; it’s just that we want to look after those Australians who have been adversely affected,’ and the way to do it is through a so-called mateship tax. There is no mateship involved in this tax; all there is is fiscal ineptitude.
I think it is a great shame that Australians are led down the garden path by this government. Australians do instinctively try to do the right thing. At this time of incredible tumult and tragedy—a time when so many Australians were truly suffering—we saw the resilience and the shine of community spirit as people rose up to lend a hand, to put their hands into their pockets and to help make a difference. And this completely fiscally reckless government has now tapped into that sentiment and said, ‘We need you to do it one more time; it is only for the cost of a cup of coffee’.
It may only be a cup of coffee a week that is at stake, but there is something much more fundamental at stake than that, and that is a principle: the principle that for the first time in recent memory that I am aware of—in fact, it may be ever—a government is responding with a new tax to help pay for a natural disaster. That is despite the fact that we also know that under the gaze of economic experts such as Mr Saul Eslake and Professor Warwick McKibbin the evidence is very clear. There is no economic rationale for this new tax. Not only could it have been funded by a government that was more in control of its spending but it could also have been done through other mechanisms.
Effectively, the economic experts who appeared before the committee outlined three pathways: debt financing, a new tax or cutting spending. But one thing that both Mr Eslake and Professor McKibbin were clear about was that the very worst of the three pathways was the approach the government was taking. It is not even a case of taking my word for it as a coalition member of parliament; you can rely on two of the foremost economic commentators in Australia, who are not members of the political process, who actually bring a level of objectivity to this debate and who made it clear that Labor’s approach is the worst approach to take.
There are other reasons why you would not support this tax. The reality is that there are also very significant risks—that there will be what is termed by Professor McKibbin and touched upon by a number of others as the unintended consequences of this new tax. There are two in particular that I would like to touch upon as part of the debate this evening.
The first is the unintended consequence that as a direct result of Labor imposing this new tax we will potentially create the situation that when there is a future natural disaster—and unfortunately this country has a long history of being prone to natural disasters—Australians will say, ‘Well, I’ll just hold off donating, because chances are that the government’s going to introduce a new tax.’ That does not sound that implausible. If we talk about a very significant natural disaster, something equal in terms of the magnitude of damage to what we have just seen off the back of Cyclone Yasi and the floods, then we know that it is not implausible in the slightest for Australians to say: ‘Last time this happened Labor introduced a new tax to help pay for it. Why wouldn’t they do it again?’
I will come to that point. It is a very interesting point that the member opposite raises, and I am going to go to it very shortly. So stay in the chamber and we will discuss precisely that point. Stay right there; I have lots of good information for you. The interesting thing is that we will have this issue of unintended consequences, and I might point out that there might be some unintended consequences over on the other side too, and we will go into my website poll in just a moment. The issue is that understandably, if in future we had a similar magnitude-sized natural disaster, Australians would very reasonably say, ‘I won’t donate because I will have to pay a tax to help cover it.’ That is the first of the unintended consequences that are quite foreseeable as a direct result of this precedent-setting new tax by the Labor Party.
There is another unintended consequence. Witnesses before the House of Representatives economics committee told us that Queensland took a different decision to other state governments insofar as Queensland chose not to seek reinsurance on public assets. What is interesting about that is that in other states—and many of them have state Labor governments—we have the governments choosing to take out reinsurance on public assets, but the Queensland government did not. When I questioned the Queensland Under Treasurer, Mr Bradley, about why that was, he made it clear that as a consequence of the long-term arrangements under the Natural Disaster Relief and Recovery Arrangements they did not believe it was worthwhile. He actually said it was not commercially feasible, or words to that effect. I am not claiming that to be a direct quote but it is a paraphrase of what he said. So the Queensland government effectively decided not to seek reinsurance with the full knowledge that their liabilities were underwritten by the Commonwealth government. The only reason there are potentially some checks and balances on that is that there is some political pressure associated with that cost: political pressure as it does not look good and the people of Queensland in this particular case—and who knows which other jurisdictions it might be in future—might scratch their heads and say, ‘That wasn’t a wise decision.’ As a direct consequence of this precedent-establishing new tax we know that in future the state government will simply be able to wash their hands of responsibility. They will wash their hands of responsibility because they will say, ‘The Commonwealth is introducing a new tax on this; it’s the Commonwealth’s problem.’ So the moral hazard for the Commonwealth as a direct consequence of the exposure of the Commonwealth to liabilities that may arise at a state government level because of damage to public infrastructure is very real and made even more prominent as a consequence of this new tax.
Those reasons alone provide a very compelling argument as to why this new tax should not be passed by the Houses. Of course, there is a more fundamental issue as well, and that is one of economic management. There is one inescapable reality—that is, with competent economic management there would have been enough fat built up in the federal budget for there to be no need for a new tax. Had the Howard government been in place—or, indeed, its successor, with Tony Abbott as Prime Minister—it would have been able to competently manage Australia’s economy and I have no doubt that we would not find ourselves nearly $100 billion in debt. We would have been able to accommodate the costs associated with this natural disaster out of existing government revenue. The reality is that this has happened many, many times previously. There were the unfortunate and tragic fires in Victoria. The consequence was the loss of so many homes and so many lives, and an economic cost that was estimated at around $4.4 billion. The recovery effort for that natural disaster was funded out of existing government revenue. There was no new tax. There was no need, because the previous government were competent managers.
What is interesting is that I have been running a website poll on my website on this issue. The member opposite, the member for Dobell, and earlier the member for McEwen made comments about the website poll, suggesting that in some way, shape or form my views in this chamber are inconsistent with the views of my electorate. What members opposite do not seem to get is that because it is a poll on my website I have all sorts of diagnostic tools available to me to find out where votes are coming from. Members opposite came and made a big deal about this poll in the 90-second statements before question time, and now the chairman of the economics committee is in here, trying to make a big deal out of it. Interestingly, there were 42 responses to the question on my website poll. Of the 42 responses, there were only 30 unique IP addresses. Two IP addresses which were responsible for multiple votes on my website happened to belong to the Australian Parliament House network. Who’d have thunk it? We have Labor members making a big deal about how a poll on my website does not seem to reflect the community mood, and yet so many of the multiple votes came from the Australian Parliament House network. It is almost as if you can see Labor members opposite clearing their cache, voting on the poll, clearing their cache, voting on the poll—and then coming in here and making a big song and dance about how the results of the poll were in some way inconsistent with the views of this side of the House. In fact, one of the votes even came from the United Kingdom, so at best there were 27 votes from one parliamentarian, originating in Australia. We are going to be running an audit on those 27 votes, but what we know is that the Labor Party has been caught out rigging a poll and coming in here to try to make a song and dance about it. We have the IP addresses. We know the Labor Party is skewing the results of this as it skews the results of everything. Not surprisingly, the old Labor adage is, ‘Vote often, vote early and try to make a big deal of it.’ (Time expired)
After the last contribution I thank heavens that we are dealing with the big issues in this chamber today. I start, on indulgence, by expressing my condolences to the people of New Zealand, particularly Christchurch. They have gone through a terrible tragedy. We know there are people from my electorate in Geelong who have been caught up in that, and that is reported in today’s media. My thoughts go out to their families, friends and loved ones.
We are debating today the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011. As members in this place will know, this bill provides for a one-year, one-off levy in the financial year 2011-12 of 0.5 per cent of income on those earning between $50,000 and $100,000 and one per cent on income for those earning more than $100,000. Those earning less than $50,000 will not pay the levy, and of course those who have been affected by the terrible floods which affected many parts of Australia over the summer will also be exempt.
This levy forms part of a much larger piece of architecture dealing with the reconstruction of the parts of Australia which were ravaged by the floods over the summer. I take this opportunity to thank all of those around Australia and those in my electorate of Corio and in Geelong who have made such generous contributions to those who have suffered as a result of these floods. And it was not just financial contributions; it was also offers of help, assistance and volunteering to friends, business colleagues and ordinary Australian citizens in Queensland. It makes one feel proud of the country in which we live to see Australians helping Australians in times of need.
I attended an ecumenical service on 16 January which was emblematic of the sense of solidarity that was being felt in Geelong for all of those who have suffered as a result of these floods. It would be nice to feel that the money raised through those donations would be enough to deal with the reconstruction bill associated with these floods, but of course we know that that is simply not the reality. To date $222 million has been raised in the Premier’s fund, and that is a fantastic achievement by the people of Australia, but the initial estimates of the bill to reconstruct Queensland and other parts of flood affected Australia is $5.6 billion. So it is the responsibility of government in those circumstances. It is obviously completely unreasonable to expect, as we have heard some of the speakers on the other side suggest in this debate, private donations to deal with the reconstruction of the flood affected parts of this country.
The levy is not the sum total of the architecture that is being put in place to raise the money; indeed, the levy will raise $1.8 billion of the $5.6 billion, which means that, roughly, for every dollar raised by the levy $2 is being raised through difficult budget cuts—which I will come to in a moment—and delayed infrastructure. The delaying of the infrastructure is important both to save money and to make sure that the resources exist to put towards the building of the infrastructure in Queensland and other parts of flood affected Australia. The levy component of this package is very modest. For somebody on $80,000 we are talking about $2.88 a week—the price of a cup of coffee. And, by the way, the same person who would be paying that has received the better part of $30 worth of tax cuts since this government came to power. So this is a balanced and sensible package of which a levy is a part.
From the other side during this debate you have heard a sense that levies are almost per se evil. But we know that when the Liberal Party were in power under John Howard we saw the gun buyback levy, the superannuation surcharge levy, the milk levy, the sugar levy, the stevedoring levy and the Ansett Airlines levy, the last four of which were introduced in years in which the federal budget returned a surplus. So there is nothing wrong with putting in place a levy, and one suspects that if John Howard were the decision-maker in this instance he, too, would be entertaining a levy of the kind being put in place now. But, of course, because of the debate that we now find ourselves in and because the opposition’s political strategy, as we have seen, is to pick a fight wherever and whenever they can—which is a real disappointment in the context of such an important issue as the reconstruction of this country in the aftermath of these terrible floods—we find ourselves in the unfortunately partisan debate that we are having now.
It raises the question: if there were not a levy, what ought we to do? What is being put forward by the opposition is that, rather than having a levy, there should be further cuts. We have heard lots of speakers talk about the fact that there is plenty of money there in the budget and it is an easy thing to find the entire $5.6 billion through cuts to the budget, yet we also know that when the shadow cabinet met to work out exactly where those cuts would occur we saw it fracture and atomise. It has been as if a hammer has shattered the glass pane of the solidarity of the shadow cabinet when they have had to come up with an answer to the difficult question of where those extra cuts would come from. So we have had crazy ideas such as cutting the aid budget by $450 million to remove a specific program which was implemented under the Howard government to provide money to schools in Indonesia and which Alexander Downer described as one of the most important counterterrorism programs that the Howard government put in place. All of that, of course, was done under the inspiration of a viral email campaign.
There is one other cut that I want to spend a moment talking about because it is very relevant to the seat of Geelong that I represent. It is the cut in relation to the car industry. As part of the cuts that we are putting forward in the overall package to raise the $5.6 billion, we are proposing a $400 million cut to the Green Car Innovation Fund. The Green Car Innovation Fund has been a wonderful success. To date, $500 million has been committed, which in turn has leveraged $2 billion worth of investment in the car industry. It is really important investment, not the least of which is a commitment of $42 million towards the Ford EcoBoost engine, which is very important in my neck of the woods.
Clearly we would not want to see a cut in the Green Car Innovation Fund, but we did not want to see the floods in Queensland either. When a tragedy of this kind occurs the pain needs to be shared across all sectors and so this difficult decision is being made. It is really important that people understand that the cut being proposed relates to uncommitted funds within the Green Car Innovation Fund. It does not affect any of the funds committed to date, which means that all the projects, including the Ford EcoBoost project, will be honoured to the last dollar. That is to say, the cut that we are proposing to the Green Car Innovation Fund will not affect a single activity within the car industry and it will not affect a single job within the car industry.
This government has been a massive supporter of the car industry. In Geelong, we all remember back in July 2007, in the dying days of the Howard government, the disappointment when Ford made its decision to close its engine plant. We also knew the joy that was experienced just over a year after that, in November 2008, when a new federal government was in place with new partnerships and new support for the car industry and we saw that decision turned around. It is important for people to understand it was not turned around by virtue of a commitment from the Green Car Innovation Fund; it was turned around through automotive program funding and it was fundamentally turned around through the ongoing support which this government has provided to the car industry.
The Green Car Innovation Fund is just one part of A New Car Plan for a Greener Future, which is in turn a $5.4 billion program. The vast bulk of that is unaffected by the cut we have proposed to raise the money for the flood affected parts of Queensland and other parts of Australia. However, the same cannot be said of what is being proposed by the opposition in the event that this flood levy is not approved by this parliament. The other side is proposing all the cuts that we have been putting in place plus $500 million through the Automotive Transformation Scheme.
The Automotive Transformation Scheme is an entitlement based scheme which helps R&D, plant and equipment and production within the car industry. The point is that this is a scheme which is built into the budgets of the car companies. If you cut that, then you affect the jobs of people in the car industry, and there is absolutely no doubt that if this flood levy is not passed and the opposition has their way in putting in place the cuts that they want to put in place there will be job losses in Geelong as a result. That is why I am so passionate about seeing this flood levy passed. This flood levy forms part of a balanced program. It is a fair and balanced program, which includes the levy, and importantly sees the rebuilding of the flood affected parts of Australia right now. For all those reasons it very much deserves this House’s support.