MARK DREYFUS MP

There is an urgent, pressing need to repair the immense damage that has been suffered in the state of Queensland. There is indeed an urgent, pressing need to repair the damage from natural disasters that have been suffered in other states of the Commonwealth. There is going to be a huge drain on the budget of the Commonwealth. There is no doubt about the extent of the damage that has been suffered, particularly in Queensland. We just heard in some graphic and moving detail from the member for Kennedy about the damage that has been suffered from recent disasters in his electorate and we have heard from many other speakers in this debate about the damage that has been suffered right across the country, particularly from the devastating floods in Queensland, which have prompted the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the cognate bill before the House.

There is an urgent, pressing need to repair the immense damage that has been suffered in the state of Queensland. There is indeed an urgent, pressing need to repair the damage from natural disasters that have been suffered in other states of the Commonwealth. There is going to be a huge drain on the budget of the Commonwealth. There is no doubt about the extent of the damage that has been suffered, particularly in Queensland. We just heard in some graphic and moving detail from the member for Kennedy about the damage that has been suffered from recent disasters in his electorate and we have heard from many other speakers in this debate about the damage that has been suffered right across the country, particularly from the devastating floods in Queensland, which have prompted the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the cognate bill before the House.

Those devastating floods, as we have heard from many speakers, are rightly described as, if not the worst, certainly among the worst disasters that have been suffered by our country. There is agreement on both sides of the House about the need for a funding package, for the Commonwealth to come to the aid of the people of Queensland and of other states that are suffering from these natural disasters. Regrettably, we have not had agreement on the mechanism that is to be used to fund the Commonwealths assistance, which, there is no doubt, will be at a very high level. The $5.6 billion in this package is based on initial estimates of the level of assistance that the Commonwealth is going to be called on for.

On past occasions that there has been an unexpected hit on the Commonwealth budget, when the Commonwealth has been called on to fund unexpected expenses, one of the mechanisms that have been used has been the imposition of temporary, and sometimes not so temporary, levies; sometimes those levies have been in place for several years. I want to mention some levies that have been used since 1996 by the Commonwealth to raise money for various purposes, to fund programs and expenditures without hitting the budget bottom line.

I will start with the Howard governments superannuation surcharge levy 1996. That levy introduced extra taxes on the superannuation contributions of higher income earners. It was introduced as a temporary measure to tackle budget deficits and was supported by the Labor Party in opposition. It raised $1.48 billion in its first four years and more billions of dollars over its life. It was not until July 2005 that it was finally removed. A little while after that, also in 1996, the government introduced a 0.6 per cent increase in the Medicare levy to fund the cost of the gun buyback scheme. That was a temporary levy which ran only for the 1996-97 financial year. It raised an estimated $500 million and, again, was supported by Labor in opposition.

The stevedoring levy was introduced by the Howard government in 1998-99. It was a levy on the unloading of containers and vehicles in Australia, at $12 per container and $6 per vehicle, to meet the cost of redundancies resulting from the restructure of the stevedoring sector. We opposed that from opposition, but that levy lasted until May 2006 and raised $100 million. We could point to the milk levy, which we suggested from opposition should be amended but which we ultimately supported. That was imposed in 2000. It was an 11c per litre levy on consumers for all drinking milk, to fund an assistance package for the dairy industry. That levy ceased under our government in February 2009 but raised some $1.9 billion over its life.

The sugar levy was another Howard government levy. It was introduced in 2003 and opposed by us in opposition. It was a levy of 3c per kilogram of sugar. Like the milk levy, it was to fund an assistance package, this time for the sugar industry. It was abolished in November 2006 and raised some $97 million over its life. The Ansett airline levy was introduced by the Howard government in 2001. It was a $10 levy on plane tickets to recoup funds for worker entitlements after the collapse of Ansett airlines. That levy lasted until June 2003 and collected an estimated $369 million.

Lastly, I should mention the East Timor levy proposed by John Howard as Prime Minister, at 0.5 per cent for those earning between $50,000 and $100,000 and one per cent for those earning over $100,000 for the fiscal year 2000-01, to fund Australias defence commitment to East Timor. Like some of these other costs that levies were introduced to meet over the term of the Howard government, this levy was to meet an unexpected expense to the Commonwealth budget. That levy, which again Labor supported from opposition, was projected at the time of its proposal to raise some $855 million. In the end it was not proceeded with because of the state of the budget by the time the funds were required.

I mention these levies simply to make the point that the use of a levy as part of a means of raising funds for unexpected expenses by the Commonwealth is far from unprecedented. Far from it; it has been a regular tool of the Commonwealth in managing its financial affairs. Nor should it be thought that levies were only used by the Howard government at a time of deficit. The stevedoring levy was imposed when the budget was in surplus by $3.9 billion in 1998-99. The milk levy was imposed when the budget was in surplus by $13 billion. The airline levy was imposed when the budget was in surplus in 2001-02 and the sugar levy was imposed when the budget was in surplus in 2002-03. It can be rightly said that Mr Howard had a levy in each and every single year of his government.

Lest it be thought that the Liberal Party of Australia stopped proposing or favouring levies when they moved into opposition, we need to bear in mind that the current Leader of the Opposition, Mr Abbott, also favours levies, because he proposed last year a $2.7 billion levy on business to pay for the oppositions very expensive paid parental leave scheme.

The modest, progressive levy is part of the governments package. It is a $1.8 billion levy that is going to be funded just over the 20011-12 year. Very similarly to the proposed East Timor levy, it will be 0.5 per cent of taxable income in excess of $50,000 and one per cent of taxable income in excess of $100,000. No levy will be payable where a person has income of $50,000 or less. They will be very modest amounts indeed. For someone with an income of $60,000 the levy will be 96c per week. For someone with an income of $80,000 the levy will amount to $2.88 per week. It is a very modest levy indeed. One is forced to conclude, from the extraordinary level of opposition by those opposite to this modest, progressive levy, that as usual the opposition are simply playing politicsand petty politics at that.

The whole package has been supported by a very large number of economists across the country. A number of speakers who have preceded me in the debate have referred to the levels of support from economists and, one could add, other political leaders across the countrynotably the Liberal Premier of Western Australia, who said in very clear terms:

Instead of the decency and good sense that has been demonstrated by the Liberal Premier of Western Australia, what we have seen from this opposition is petty politics, crude slogansas usual their great big new tax has been rolled out in opposition to this very modest, progressive levyand meanspirited whinging. It is inconsistent and hypocritical for this opposition, in the face of that long list of levies that were imposed by the Howard government, to come into this place and suggest that there is anything at all wrong or untoward with our imposition of this levy. It is the kind of hypocrisy and inconsistency that we have come to expect from this opposition.