Senate debates

Monday, 21 March 2011

Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011; Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011

In Committee

Bills—by leave—taken as a whole.

7:50 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I note that the minister has tabled the Natural Disaster Relief and Recovery Arrangements Determination 2001 (Version 1.0). I also note that attached to that document is a Natural Disaster Relief and Recovery Arrangements Guideline 12011. If I can take the minister to the differences between this and the 2007 document, so that it is placed on the record and that there is no ambiguity in how this would operate, is the minister in a position to indicate the key differences between this document and the 2007 document? Perhaps if I could get the minister, for the sake of time, to confirm if the key differences with this document are clauses 4.5, 4.6 and 5.13 which relate to the requirement for the states to have reasonably adequate access to capital in relation to insurance, and they need to look at, but are not limited to, mechanisms such as commercial insurance, reinsurance, any state COAG reinsurance fund or pool and state department premium contributions—that is, internal state funds.

Further, could the minister confirm that under 4.6 of the NDRRA the state must submit independent assessment of state insurance arrangements and that the Commonwealth will conduct a review of the state’s independent assessment in conjunction with the state? I want confirmation of that and some of the mechanics, which I will get to shortly.

7:53 pm

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

As Senator Xenophon has outlined, I can confirm that on page 8 of the document I have tabled 4.5 says, ‘State must have reasonably adequate capital or access to capital’ and a range of details are listed. Under 4.6 it says, ‘State must submit independent assessment of state insurance arrangements’. A number of subparagraphs flow from there to the middle of page 9. They are new. On page 10 under 5.13, it says, ‘Reduction in state of assistance’. That paragraph outlines the action taken if a state fails to take appropriate action within a reasonable time. They are new provisions.

Before we move to the next part and the mechanism which Senator Xenophon has mentioned, I can acknowledge the senator’s positive contribution in seeking the inclusion of these provisions in the document. It is a consequence of his discussions and, indeed, insistence that these new provisions will be placed in the determination.

7:54 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I thank the minister for that. I refer to the insurance requirements guideline under the natural disaster relief and recovery arrangements 2011. Could the minister confirm that the manner in which the determinations are made by the Attorney-General will be in accordance with those guidelines and will involve a forensic look at the way the states go about seeking either insurance or reinsurance and also arrangements to ensure they have reasonably adequate capital to cover a natural disaster?

7:55 pm

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

Yes, that is correct. Any person reading the new provisions in this would come to the reasonable conclusion that it will be a rigorous method. You used the term ‘forensic’. If you look at the provisions outlined, it is indeed very rigorous.

7:56 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I want to acknowledge the work done by the Prime Minister’s office. There has been a lot of work in amending this document over the last few weeks. I am grateful to the Prime Minister’s office for some very robust discussions and negotiations in relation to this. I also acknowledge the advice from John Tsouroutis who is on my staff. He was former head of the Territory Insurance Office in the Northern Territory who has provided me with invaluable advice in relation to this. The last time this document was amended was back in 2007. I would like to table a document I received from the Prime Minister—and I will seek the permission of the opposition to do this—which indicates this is a long-term change to the document. When is it proposed to review the new determination? I imagine there are processes that will take the next 12 months. It is a process that allows for the Auditor-General to be involved. Could the government indicate that they regard this as the determination that will stand for some time, given what has occurred with the Queensland floods and given the need to ensure that states and territories behave prudentially in relation to insuring or securing their assets?

7:57 pm

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

I can confirm that this is a new and updated document. It is the document that has standing in the context of disaster relief and recovery arrangements. There is no review period as such set down for this document. It will continue to have that standing with the amendments that we touched on earlier.

5:28 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I have just provided Senator Parry with a copy of the letter I received from the Prime Minister’s office in relation to this particular legislation. It is undated, but I believe it was received on 3 March. It says, ‘The government will ensure that the process set out in the attachment to this letter’—the process being the guidelines in identical format—‘will become a guideline to the NDRRA and that the provision will have a continuing application’. I seek leave to table that document which is a true copy of the original.

Leave granted.

I am grateful to the minister for tabling the document. I think that this deals satisfactorily with the concerns that I have raised about insurance arrangements with the states. I think there will now be a fundamental change in the way that the states need to consider the insurance of their assets. I have supported this levy, but I have done so on the basis that I believe that as a result of these new arrangements I cannot imagine circumstances in which a levy would be required again, given that there will now be a rigorous set of arrangements to ensure that the states do the right thing regarding their assets. This would generally involve some form of insurance or reinsurance, or taking other prudential steps, for their assets in the event of a natural disaster.

8:00 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

On behalf of the opposition, I thought I would put a few things on the record again. When we started this debate Senator Xenophon had not made up his mind yet about how he was going to approach this piece of legislation—I think the negotiations with the government were furiously ongoing—so I thought I would just go back to what this is all about.

What we are dealing with here is yet another ad hoc Labor Party tax, which quite frankly should not be required. We are dealing with this tax because the government has fundamentally mismanaged our public finances. Any government that has its public finances under control should be able to fund the important reconstruction effort in Queensland, which we of course strongly support, without having to resort to an ad hoc tax introduced in this fashion.

I draw the attention of the chamber again to the fact that we are having a budget in May. This particular tax is supposed to come into effect on 1 July 2011. The proper process to pursue the necessary Commonwealth funding contribution towards the reconstruction effort in Queensland would have been to assess all of the revenue and spending priorities in the budget and to reprioritise those spending commitments. The point has been made that our annual budget is about $350 billion. This increase in the income tax for all Australians earning more than $50,000, unless they are exempt, is supposed to raise $1.8 billion out of a budget of $350 billion. The point has been made that if you had $350 in your pocket and you had some spending commitments do you think you could find $2 in order to deal with an urgent priority? Any Australian knows that they would be able to do so.

Why is the government bringing this tax on now? It is politics. They know that they can take advantage of people’s goodwill towards the people of Queensland, even though this is not going to do anything to rebuild any houses or anything—this is all about rebuilding the infrastructure for which the state Labor government in Queensland did not take out proper insurance. The Commonwealth government wants all Australians earning more than $50,000 to pay more tax because their finances are out of control and they cannot reprioritise their spending to find $1.8 billion, and because the state Labor government in Queensland did not take precautions by taking out appropriate levels of insurance.

What is becoming obvious is that only the Liberal and National parties will stand up for lower taxes in this parliament. Only the Liberal and National parties will be voting against this tax because we do not think this is the way to run the finances of the Commonwealth. In a $350 billion budget this government should have been able to reprioritise all of its wasteful and excessive spending in other areas to find $1.8 billion, particularly if you consider the $2.4 billion wasted on pink batts and all of the money wasted on school halls. With the money that is being wasted day-in and day-out by this government they cannot find $1.8 billion to help fund the necessary and important reconstruction effort in Queensland.

We think it is quite disgraceful that it has come to this. We are very disappointed that Senator Xenophon has finally succumbed to the Prime Minister’s overtures on this. We think that this is a bad way to run fiscal policy in Australia. We think the proper way to run fiscal policy in Australia is through a proper budget process. Given the fact that this tax is not to come into effect until 1 July 2011, the more honest and more proper way to deal with this would have been through the budget process when the government should look through all of their spending commitments.

Bear in mind that the expenditure for the Queensland reconstruction effort has not been properly quantified yet. It is said to be about $5.6 billion or thereabouts, but that did not include Cyclone Yasi. It is a rough estimate and it is likely to be more. When we asked the finance minister during recent estimates about what the government will do if the actual spending will have to be more than the initial estimate, she said, ‘We will just save some money.’ If you can save money then, why can you not save money now? That is a very important question.

We are dealing with this tax because the Labor Party instinct is to go for a tax whenever they think they can politically get away with it. They want to whack it on because they know of people’s goodwill towards the people of Queensland and they think this is a tax they can politically get away with. They are bringing up all these cuddly names for it, such as ‘flood levy’ and ‘mateship tax’, but it is all politics. It is all about going ahead with this con at the expense of the Australian people. Every person across Australia earning more than $50,000 will have to pay the price for Labor’s mismanagement of our public finances.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I have some questions that I want to ask that I flagged in my speech in the second reading debate. I am surprised to see that the Greens are not here because I indicated that I was particularly keen to get input from the Greens political party on this levy. As is always the case, when there is not a photo opportunity Senator Brown is never around. I am very impressed when Senator Brown rails against multinationals during debates on this tax and many other taxes that the Labor-Green alliance is proposing to introduce. I indicated in my speech on the second reading that I was going to ask some questions to the minister about this and I was hopeful that the Greens might have been able to participate as well.

I also want to ask Senator Xenophon in the course of consideration, or ask the minister and perhaps Senator Xenophon can contribute, about this deal that Ms Gillard put to him that encouraged him to support this quite iniquitous tax. I will come to that question later, but the question I want to put to the minister at this stage is why is it that this tax, which he and the Greens have told us is so absolutely important for the recovery of my state of Queensland—and other states as well but principally Queensland—is being levied only on individuals? I do not have the figures in front of me, but I am sure the minister will so he will be able to tell me what percentage of the total tax revenue take do individuals pay, and what total contribution to the overall tax take do company, corporate and other tax revenues provide. We know the Greens’ penchant for attacking multinationals, those big companies that rip the profits out of Australia and take those profits overseas. We hear this from the Greens all the time.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

And Labor.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

And the left wing of Labor, yes, we do hear that—

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

And the National Party.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

No, the National Party is not like that—not when it comes to ‘ripping all this money out of Australia and sending the profits overseas’ and ‘Why aren’t they paying their fair share; we have to have a mining superprofits tax to make sure those corporate Bs pay their share.’ Why is it, Minister, that with this recovery of my state of Queensland, and of New South Wales and Victoria and I guess Western Australia with the fires, it is only individuals—read ‘small business men and women and wage earners—who are picking up the bill? With these great social engineers in the Labor Party and the Greens who do not want the poor people to pay, only the rich people, why are we having this tax only on individuals and not on those ‘big multinational money grabbing companies that send all Australia’s profits overseas’? Why is this happening in this way? I am seriously interested to hear the excuse from the minister. I would love to have heard Senator Brown try and bumble his way through an answer to that.

Senator Xenophon has very clearly and actively and aggressively pointed out that this tax is not all about rebuilding Queensland. Queensland will be rebuilt, I can assure you. It has been rebuilt after every cyclone that has hit that state in the last 150 years. After all the floods and the droughts we have had in Queensland in the last 150 years, Queensland has been rebuilt and it will be rebuilt again following the most recent floods and the cyclone. We need a levy because the Queensland state Labor government is so incompetent, so bereft of any financial management skills at all, that it is broke. Quite clearly, my state government is broke. How is it going to pay for this rebuilding? It picks up the phone to its Labor mates in Canberra and says it cannot afford to pay for it itself so let us have a levy. Queensland have not been sensible enough, like South Australia and other states, to take out insurance. Do you know why they did not take out insurance? They could not afford the premium. I think Senator Xenophon, through the committee system, has shown—or did I read it in the paper?—that the premium is $50-$55 million. They could not afford it so they winged it, knowing that when things went bad their mates in the Labor Party in Canberra would come to their rescue.

But their mates in the Labor Party in Canberra are not coming to the rescue out of the general revenue; they are going to impose a special levy—not on the money grabbing multinational companies that send all their profits overseas but on individuals, Australians, who cannot send their profits overseas even if they want to. If you are a decent government worried about social equity, wouldn’t you say to the Australian public, ‘Look, the progressive taxation system that has been so important in Australia over many years has got out of kilter a bit and the poor people are paying too much and the rich people are not paying enough.’ Wouldn’t you think you would say, ‘Let’s adjust the tax system, let’s make it more progressive.’ But, no, the Labor Party will not do that, because they are dishonest and they know there would be a voter backlash against them. So rather than doing the taxation reform that perhaps they think needs to be done, they approach it in a different way. If they did it out of general revenue, then the really big earners in Australia—those ‘money grabbing multinationals who send all of their profits overseas’—would have paid a fair bit towards the cost of rebuilding Queensland. Those people on $200 million or $300 million a year income would have paid a lot towards the cost had it come from general revenue, because we have this progressive taxation system. But, no, we are not doing that. We are introducing this special flood levy.

Again, as I pointed out in my speech on the second reading, we have a flood or a drought or a cyclone every year. Are we going to have a flood, drought or cyclone levy every year? This is why I have predicted, as I did in my speech on the second reading, that this flood levy will become a permanent part of the Australian taxation system while Labor is in power, because they simply cannot be trusted with money—they cannot manage money, they cannot manage taxation and that is why, when anything happens, they bung on a new tax.

It is a long preamble to my question, but I want to get from the minister the understanding, the policy reason as to why only individuals are paying for the rebuilding of my state of Queensland—not companies, not the multinationals which are ripping the profits out of Australia and sending them overseas. Why are they getting a free ride when it comes to rebuilding my state, New South Wales, Victoria and Western Australia? What is the policy rationale for doing that? Now do not get up and say, Minister, that you have a Medicare levy and that is how it works there, so this is how it will work here. This is supposed to be all about rebuilding my state and others after massive floods because my state government was too incompetent to have money aside to do it themselves.

Photo of Fiona NashFiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | | Hansard source

Senator Nash interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

It is a Labor government in Queensland; it is broke. That does not surprise anyone.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

That is what happens when Labor is in government for too long.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Absolutely, Senator Cormann. Senator Cash raised the point about how the minister determines a class of individuals who will be exempt. Senator Xenophon might be interested in that. I made the quite ridiculous comment that perhaps the minister could exclude people who were members of the Australian Labor Party. Not for a moment do I think the minister would do that, but, as I read the legislation, he could. It will not help you, Senator Xenophon. You do not have a political party, so they cannot exclude the Xenophon independents from paying it but they could exclude the Australian Labor Party from doing it. This is legislation we are going to pass tonight. Would you believe that? The minister can determine a class of individuals for the purposes of subsection (2)—that is, paying a tax—if the minister is satisfied that the class was affected by a natural disaster which happened in Australia between July 2010 and 2012. I can tell you now that there are some members of the Australian Labor Party in the north and in Queensland who have been affected. Perhaps they could be excluded. As I say, not for a moment do I suggest that the minister would do that but there has to be some constraint on it. I will come back to that later. At this stage, my question to you, Minister, is—

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party) Share this | | Hansard source

That’s embarrassing.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

It is embarrassing.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

Senator Macdonald, pay no heed to interjections. Please proceed with your speech.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I would be embarrassed if I were know a member of the Australian Labor Party and I was exempted from paying this tax. I and Senator McLucas know a lot of people who really did not want the $1,000. Do you know why they took it? Senator McLucas knows. Because they would not have to pay the tax then. That is true. Senator McLucas does know people. We both know the same people who took the $1,000—they donated it to charity—but they will not be subject to the tax any more. What sort of legislation is this? Minister can you tell me please the policy rationale—I was hoping Senator Bob Brown would be here to assist you in an answer—behind the fact that individuals will pay for the rebuilding of Queensland but not all of those mining companies which, according to Senator Brown and some in the Labor Left, are ripping billions of dollars out of the ground in Queensland. If I read Senator Brown correctly, he is accusing those coal-mining companies of being a cause of the floods and the cyclones. Are they going to contribute any of their income to the recovery of Queensland? Why are they exempt? Why is it that these multinational companies, which are ripping billions of dollars out of the ground in Queensland and, according to Senator Brown, causing the floods and the cyclones—going to be let off scot-free, but in my home town my butcher and my baker will be paying this levy? BHP and Rio will not be. Woolworths and Coles will not be. Why should my butcher and baker have to pay this levy but Coles and Woolworths do not? Why do Rio and BHP escape scot-free from rebuilding Queensland when my motor mechanic will have to contribute to the levy? I would be very interested, Minister, if you could set me right on the policy reason. Please tell me I have misread the bill.

8:20 pm

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

In a long, rambling, contradictory and somewhat repetitive contribution from Senator Macdonald, there were two questions, which I will go to. He asked for the contribution of major taxes—it is in budget paper No. 1 as a percentage of Commonwealth tax revenue. In respect of personal income tax it is 45 per cent of total Commonwealth revenue, company tax 22 per cent, GST 17 per cent. The second issue went to exemptions. We have restricted the scope of exemptions to those affected by disasters in the legislation in the form and manner which I read out in my concluding remarks to debate on the legislation. We published the draft determination on the Treasury website.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Do you think we might get it tabled here?

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

It is on the Treasury website.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

This is the chamber of the parliament. Perhaps it might be tabled here.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

I understand it has been tabled, Senator Macdonald.

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

Senator Macdonald asked a series of questions—in, as I said, a somewhat rambling and repetitive manner—about where the government had drawn its inspiration from for this levy approach. Senator Macdonald and I came into the Senate together in 1990. Senator Macdonald has been in this place for the same length of time I have, almost 21 years. He does not have the excuse that Senator Cormann has. Senator Cormann has not been in this parliament for too long and would not know some of the history behind levies.

If you want the truth, Senator Macdonald, we were inspired in our approach by none other than the former Liberal-National Party government of which you were a member. We were inspired by the Liberal-National Party government in our levy approach—you had six of them when you were in that government, Senator Macdonald. If we include the super surcharge, there were seven.

I am showing my age, but in 1996 we had this promise: ‘No increase in taxes, no new taxes and no increase in existing taxes.’ And what were we presented with after the election? Senator Macdonald knows because he was here. We were presented with the super surcharge. Do you know how much this temporary levy or surcharge raised? It raised $1.48 billion. It was a temporary superannuation surcharge, but do you know how long it went on for? It lasted nine years. This temporary super surcharge lasted nine years. Senator Macdonald and quite a number of us know that because we received surcharge statements and we are still getting them. Do not come into this place and give us a lecture about levies when we have seen the impact of the super surcharge. Despite the election promise of those opposite that there would be no new taxes, that super surcharge went for nine years—well beyond when the budget went back into surplus.

But there is more inspiration. There was the milk levy. It raised $1.74 billion thanks to the National Party. How long did the milk levy last? I do not think most Australians knew that they paid a milk levy. I think it was 11c. It went for nine years. Again, that is a far longer period than it took for the budget to go into surplus, Senator Macdonald. That was the milk levy. There was the sugar levy—the third levy under the previous Liberal-National Party government. It raised $86 million. That one went for three years. That was the third levy. Then there was the Ansett levy. That one went for about three or four years. How much did that raise? It raised $369 million.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Was it on individuals?

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

I will get to the issue of whether it was on individuals in a moment, Senator Macdonald. There was the gun buyback. The gun buyback was projected to raise $550 million and the East Timor levy was to raise $855 million. Let me read through these figures of the party that does not agree with levies or surcharges—$1.48 billion for super; milk, $1.74 billion; sugar, $86 million; Ansett levy, $369 million; and gun buyback, $550 million. This is from a party that says it does not agree with levies. But it is opposed to increases in taxes. That is where we drew our inspiration from, Senator Macdonald—none other than your government. When you were in government, you introduced six levies, not including the super surcharge.

And then there was the piece de resistance—we even had a levy on shipping containers. That was the seventh. For the former Liberal-National Party government, the piece de resistance was putting a levy even on shipping containers. So if they were not whacking your super, your milk, your sugar, your airline flights, your guns or funding the East Timor dispute, there was a levy on shipping containers. That is seven levies over 12 years. That is where we got our inspiration from, Senator Macdonald—none other than yourself. You were a member of that government for almost 12 long years. So do not come in here and give us your hypocrisy about levies, Senator Macdonald. Stop wasting the Senate chamber’s time.

8:27 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I will not thank the minister for the answer after that gratuitous playing of the man and not the ball. It is always the way the Labor Party act—if they do not have an argument, they start attacking the man. Senator Sherry did not answer my question. I asked him for the policy rationale behind the rebuilding of Queensland being charged to individuals rather than multinational companies who are ripping profits out of Queensland and Australia and sending them overseas. That was the question, Senator Sherry. You did not answer that. I suspect you did not answer it because you do not have an answer for it. You chose to attack me and say that the coalition had levies. As I recall, the milk levy was on a bottle of milk. Is that right?

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

Yes, it was. Shame!

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

The Ansett levy was on airfares, paid principally by those corporate multinational giants who fly all around the place. The shipping container levy was, I understand, on shipping containers—not on individuals.

I will repeat my question, and do not bother giving me another tirade of ‘the Howard government had levies’. I seem to recall you opposed every single one of them, Senator Sherry, very volubly and aggressively. You have had a bit of a conversion on the way to the market, have you not? Do you not see a difference between putting a levy on containers paid for, perhaps, by those multinational companies and putting a levy on the incomes of individuals, or between putting a levy on the incomes of individuals but not on the incomes of multinational giants ripping off profits and taking them out of Australia and sending those profits overseas? I hasten to add, for Hansard and for the thousands of people who I know will be reading this and following it online, that I am not attacking the multinationals for making profits and paying shareholders. But that is the line you get from the Labor Party Left and from the Greens.

So I will repeat my question, Minister, and hope that you might give me an answer. I am not after the policy rationale for levies; I am after the policy rationale for why in this instance you would charge individuals—that is small business men and wage earners—with the cost of rebuilding Queensland because the Queensland state Labor government was too incompetent to manage its finances to do it itself, the same as every other state does. Why is the levy on individuals and not on the large multinational companies? I will repeat it for you, Minister, in case you have forgotten, as you seem to have missed the question last time. If you took it out of general revenue then the really wealthy in the community would pay more because of our progressive taxation system, and the big multinational companies and the big mining companies, which Senator Brown said are the cause of the floods and the cyclones, would be paying. But under this legislation supported by you and the Greens, those big multinationals, who caused, according to Senator Brown, the cyclone and the floods, are getting away scot-free. Can you please explain the policy rationale? Do not give me a tirade of: ‘The Howard government did it. We opposed it but because you did it and got it through we are going to do it here.’ Tell me what the policy rationale is for individuals—the butcher, the baker, my motor mechanic—having to pay this levy while Coles, Woolworths and the multinational mining companies do not have to make a contribution to the rebuilding of Queensland.

8:32 pm

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

The levy is progressive based on income, as I outlined and defined in my concluding remarks in the second reading debate. It is fair and equitable, Senator Macdonald. That is why we based it that way, and that was the same approach in respect to the gun buyback and the East Timor levy, which I referred to in my previous remarks. As for the taxation of multinationals, which was an issue that you claim was referenced in Senator Brown’s remarks—I do not know whether it is true or not because I did not hear Senator Brown’s remarks and he is not here—that is for him to explain. No member of the government that I am aware of suggested in their remarks anything other than the approach that is reflected in this legislation and has been outlined. It is not the intention, and it does not happen in this legislation, to take the Greens’ approach with a base for the levy.

8:33 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Minister, you still have not answered my question. Again, you are saying that because we did it for the guns buyback then it is okay to do it here. Let me take you through this. This levy is to rebuild Queensland and other states because of the floods. If you accept that the levy is a reasonable thing to do, rather than expecting the state to do it as every other state is required to do, the Australian public as a whole should contribute to rebuilding Queensland. Why, Minister, is it that individuals have to pay for this recovery yet major multinationals do not have to? Coalmining companies, Rio Tinto and BHP do not have to contribute one cent towards the rebuilding of Queensland. Why is that? That is what I am genuinely wanting to understand.

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

Senator Sherry interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I know Bob Brown really is the Prime Minister but I would have thought, Minister, that you were still maintaining the pretence that you ran the government and I thought this was your legislation. Your legislation imposes this obligation on individuals—the butcher, the baker, my motor mechanic. What was the policy rationale that said: ‘Okay, Coles, Woolworths, Rio Tinto and BHP do not have to contribute to the recovery of Queensland’? That is the real issue. This is why I have been opposed to the levy and this is why many on my side are opposed to it. That is what I am asking you. Please do not say: ‘Well, the Howard government put in a levy so we’re having a levy and it’s only on individuals because that’s what the Howard government did.’ That was perhaps so with shipping containers and Ansett as well, but I am not asking about that. I am asking: why in the rebuilding of Queensland are individuals having to fork out but Coles and Woolworths are not? My baker and my butcher have to pay but Coles and Woolworths, who compete with them, do not have to pay. Rio and BHP get away scot-free but the excavating contractor down the end of my street has to pay. Can you explain for me why individuals should rebuild Queensland and not the big income earners in our country?

8:37 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I am not sure if Senator Macdonald wanted me to respond to some of the remarks he made earlier about the nature of the Natural Disaster Relief and Recovery Arrangements. I am happy to elaborate on it. Do you want me to elaborate on it? I am very happy to.

Photo of Annette HurleyAnnette Hurley (SA, Australian Labor Party) Share this | | Hansard source

I would prefer that senators addressed their questions through the chair.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Madam Chair, seeing the minister does not have an answer to my questions and just wants to do what the Labor Party typically will do, push this under the counter, not answer the difficult question—

Photo of Jan McLucasJan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary for Disabilities and Carers) Share this | | Hansard source

Senator McLucas interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Perhaps you could contribute then, Senator McLucas. Ask individuals in Cairns when you are up there why they should contribute but—I was going to say, ‘the big companies in Cairns do not have to’, but you have got rid of all of those with your Labor government legislation. There are not too many big businesses left in Cairns, I regret to say. You do have a Woolworths, you do have a Coles and I think some of the big mining companies have offices in Cairns. Why aren’t they contributing, Senator McLucas? If Senator Sherry cannot answer this perhaps you can get up and assist him.

The Temporary Chairman:

Senator Macdonald, would you address your questions through the chair please.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Thank you, Madam Chair. I was answering an interjection.

The Temporary Chairman:

Please do not answer interjections at this point.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Okay, I will seek your protection, Madam Chair. Thank you very much. Senator Sherry seems incapable or in the typical Labor way just does not want to answer the difficult questions. Senator Xenophon referred earlier to a letter he said he had from Ms Gillard. He clearly knew what it was about and Ms Gillard and her minions here on the government benches and the Greens will know what that was about. I was wondering if Senator Xenophon could explain to the Senate the import of that assurance from the Prime Minister. What was in that assurance that assuaged Senator Xenophon’s very genuine concerns about the lack of insurance taken out by the state government in Queensland?

8:39 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

There is no great secret to this. On 3 March, when agreement was reached between the government and me in relation to the whole issue of Natural Disaster Relief and Recovery Arrangements, I put out a media release. I attached to the media release a copy of the letter from the Prime Minister and also the new guidelines to the Natural Disaster Relief and Recovery Arrangements which are attached to the determination 2011, version 1. I can indicate there has been complete openness and transparency in that process.

Essentially the determination itself has been amended. I understand the Attorney-General will also table it tomorrow in the other place. It requires a number of things. Firstly, a state must have reasonably adequate capital or access to capital. That can be done through a number of measures including but not limited to the following mechanisms: commercial insurance or reinsurance or any state COAG reinsurance fund or pool and state department contributions—that is, internal state funds. We know, given the questions of Senator Macdonald, the issue here is one of the Commonwealth having to bear 75 per cent of the brunt of any natural disasters under the arrangements that were in place from 2007 until now, arrangements that were largely in place for a number of years under both this government and the previous Howard government. The state must submit an independent assessment of state insurance arrangements and that includes having state Auditor-Generals being involved, for example, so the states need to tell the Commonwealth what they are doing in relation to insurance. The states must publish the outcome of any independent assessment, which in turn is assessed independently by the Commonwealth, and the Department of Finance and Deregulation has a role in that. I will refer to that process as well.

The first independent assessment must be published and provided to the Attorney-General’s Department by 30 September 2011, with further assessments required no greater than every three years. If there is any significant change in the insurance arrangements of a state, including any reduction of the policy limit purchased, then there will need to be a review of that state’s independent assessment in conjunction with the state. The review will be guided by principles including: that the state has a responsibility to put in place insurance arrangements which are cost-effective for both the state and the Commonwealth for the financial exposure borne by taxpayers at both levels of government; that the onus is on the state to explore a range of insurance options in the marketplace and assess available options on a cost-benefit basis; and that, in the event as a result of that review the Attorney-General makes a determination, which must be published and transparent, and the state fails to follow that recommendation, the amount that a state would be reimbursed under this determination will be reduced in accordance with these principles. In other words, the rate of assistance will need to be reduced if the states fail to take prudential steps in relation to that.

In terms of the mechanism and how it will work there is a 15 paragraph document which relates to the guidelines which sets that out. It would involve a whole range of steps and safeguards including using the Attorney-General and the Department of Finance and Deregulation and ‘utilising such external actuarial expertise required in order to ensure a full and rigorous assessment.’ In other words, it is anticipated that there will be some external expert advice. Each review will include an examination of matters such as the following: the nature of any insurance or reinsurance sought and offered, the amounts of any premiums and excesses, the events and extent of assets covered, the amount covered per event, the maximum possible loss, the reinstatement terms, and the claims experienced in any related matters. It is very comprehensive. The document does have in it any insurance sought and offered because if a state or territory wants to be disingenuous and to say, ‘We got this premium offer which is totally unrealistic,’ it depends what they sought.

For instance, if Senator Macdonald wants to insure his home and insure every nook and cranny and wants full replacement value for every item in that home, replacing items such as antiques—I do not know what he has in his home; I have not been there—he can load the dice so that he will get an extraordinarily high premium if he is seeking an unrealistic term of insurance. There needs to be a question of reasonableness, because I think some of the statements made by the Queensland government have been quite extraordinary where it is saying, ‘It’s going to cost us billions to insure the state’s assets.’ That is patently absurd, from the discussions I have had with those in the insurance industry. I am very sad that the Queensland Treasurer has resorted to personal abuse in relation to my position.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Senator Ian Macdonald interjecting

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I think it is unfortunate that that is the approach. Senator Macdonald needs to know that the Commonwealth government will ask the Commonwealth Auditor-General to periodically conduct audits at intervals no greater than three years to assess the adequacy of the Australian government’s responsibilities under the NDRRA, including determining whether the processes are appropriately transparent and whether there is best practice in determining when material is commercial-in-confidence. I really am grateful for the hard work of the advisers in the Prime Minister’s office. I am sure they got pretty sick of me towards the end of the process, maybe earlier in the process. They diligently and in good faith conducted this process with the aim of having a good outcome. That was my primary concern. If there is going to be a flood levy, I want it to be the last flood levy we have.

No longer can states hide behind the previous arrangements which were that the Commonwealth will always pick up the bill to the tune of 75 per cent. There has been a huge moral hazard here and that moral hazard has been quite apparent as a result of these terrible natural disasters in Queensland. I find the attitude of the Queensland government to be quite extraordinary. But this is a fair, robust and transparent process. It requires a review to be published within 90 days of receipt by the Department of Finance and Deregulation. The Attorney will consider the report and make recommendations to the states in light of that report. If the Commonwealth Attorney-General does not accept any part of the recommendations in that report, the Attorney will table a statement in the parliament explaining the grounds for rejecting the recommendation. The Commonwealth Attorney-General will advise the state in writing of his or her final decision, including any decision not to reduce the rate of assistance provided, to be published within 14 days. There are some tremendous transparency mechanisms here, and I think this is a very good piece of public policy.

This is not a criticism of the coalition but, back in 2007, a decision was made by the Commonwealth not to self-insure their assets. I wonder whether these new criteria, while not directly applying to the Commonwealth, will set a new benchmark in how we determine these issues—although, to be fair to the Commonwealth, the assets that the Commonwealth has in terms of roads and infrastructure are much, much less than what states and territories have. So I hope this has answered Senator Macdonald’s concerns in relation to the document, but that was my key concern. I am looking at the big policy picture. The reason why we are having this debate and why we are having this levy in the first place is, I think, because the Queensland government decided, quite foolishly, not to take out insurance on its assets. I would like to think this will stand Australian taxpayers in good stead for a number of years. The transparency mechanisms are quite extraordinary. Again, I think this is the result of negotiations with the Prime Minister’s office which were hard, but which were conducted in good faith.

8:48 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I do thank Senator Xenophon for perhaps the most useful answer that has been given in any debate in a committee stage in this chamber for a couple of years. He actually answered the question and knew what he was talking about. His answer did raise one issue, which I will ask the minister, but assuming the minister will not answer perhaps Senator Xenophon might take up the question for me. Perhaps you did explain this, Senator Xenophon, and perhaps I missed it. How can we be sure that this arrangement, which you have just explained very clearly, will be put in place? We on this side have a bit of hesitation in accepting promises made by the current Prime Minister, and I think most Australians will, too, after the ‘no carbon tax in any government I lead’ issue—but I do not want to go into that. What are the mechanisms that make Senator Xenophon confident that this arrangement—which he has almost single-handedly, I might say, arranged with the current government—will be put into effect?

8:49 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I am grateful to Senator Macdonald for his question. Again, I acknowledged previously that I did receive assistance from Mr John Tsouroutis, who was the former Group Managing Director of the Territory Insurance Office. He ran the Territory Insurance Office from 2003-08 and did so very successfully. Both sides of politics were quite praiseworthy of his expertise in turning that organisation around. He has some great experience in this sort of insurance. I did get advice from a number of people. I am also grateful to those individuals who risked their jobs, who risked their careers, by providing me with information that I thought was quite telling in terms of the Queensland government’s conduct.

This determination is a unilateral determination by the federal government because the federal government pays the bills. So it is not a question of it having to be signed off by COAG. That is the nature of the document. It is unilateral in its nature because it is the Commonwealth that provides the funding under this relief recovery arrangement. Obviously there has been consultation with the states but this is a document that does not require any of the states or territories to tick off on it. The document is very explicit in its timetabling and in its structure that the states need to undertake an independent and appropriate assessment of their insurance arrangements. It anticipates that it could be a state Auditor-General—it does not have to be—but they need to publish the outcome of such assessments. They need to do so by 30 September 2011. They need to do so every three years but the first one will be given to the Commonwealth.

The states need to say how they look after their assets, whether it is a case of commercial insurance reinsurance, any reinsurance fund or pool—and that is something that I would like COAG to look at, because that would create enormous economies of scale—or internal state funds. The Commonwealth Attorney-General will then request the department of finance to utilise their appropriate expertise to provide a full and rigorous review of the independent assessments submitted by the states. That will establish benchmarks for the appropriateness of each state’s insurance arrangements. You cannot have it across the board, because Queensland will have different insurance needs than South Australia, Victoria or another state. That is only part of the answer.

8:52 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

My concern is how you can know that this arrangement is going to be put in place. That was really my question. I appreciate the answer that you have given so far, Senator Xenophon, but is this going to be legislated? Is it going to be a regulation? Has it already been done? Perhaps I missed it. If so, has it been done in a way such that a government can say, ‘Yeah, we’re going to do this’ one week and then say the next week, ‘Look, things have changed and we’ve had to form a coalition government with the Greens and so we’ve had a change of heart—sorry about that, Senator Xenophon’? That was really my question. What assurance have you got that this arrangement that you are talking about will actually happen? Is it going to be legislated?

8:53 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I do not know if I should be getting a penalty rate for assisting the government like this.

Photo of Nick SherryNick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | | Hansard source

We’ll give you a penalty; you started this!

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Yes, I started this. The position is this: the previous natural disaster relief and recovery arrangements—the arrangements for a number of years under both this government and the previous government—have been undertaken through a determination. That is how it has been done.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

A determination made by who?

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

A determination made by the Attorney-General or the appropriate minister.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

How do you know that he is going to do it in this instance?

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Firstly, the document has been tabled, so this is the new determination. This determination replaces or supplants the previous determination of 2007. It has been tabled.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

They can do another one next week.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

The government could also change the legislation next week, next sitting session or after 1 July.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

It would have to come into the chamber.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Yes, but—

Photo of Annette HurleyAnnette Hurley (SA, Australian Labor Party) Share this | | Hansard source

Senator Macdonald, if you have a question, you need to ask it properly.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I am sorry; I was trying to expedite things.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I know that interjections are disorderly, but they were helpful interjections from Senator Macdonald.

Photo of Fiona NashFiona Nash (NSW, National Party, Shadow Parliamentary Secretary for Regional Education) Share this | | Hansard source

Always.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I do not know about ‘always’. The position is this: I considered that, but I did not think that it was necessary to incorporate it as a piece of legislation given that this government and previous governments have worked on the NDRRA by determination for a number of years—for many years. It goes back to post Cyclone Tracey in terms of how these determinations operated. There will be a series of hurdles, safeguards and transparency arrangements. If those were to change, they would be the subject of appropriate scrutiny through this parliament. I am satisfied with the arrangements because I think that the Commonwealth knows that these arrangements protect Commonwealth taxpayers in a reasonable and prudential way. It is a quantum leap forward in terms of transparency and accountability arrangements and requiring states and territories to do the right thing when it comes to insurance arrangements. So I am satisfied.

There is nothing to stop the government from trying to change it in three months or six months. The parliament will change in six months time. For the government to capriciously change them would carry with it some considerable risks for the government. They know that. But the government has done the right thing in terms of making a significant improvement in the arrangements to deal with natural disasters and relief and recovery arrangements. Even if this were set in legislation, you cannot bind a parliament; one parliament cannot bind another. I have simply taken the approach that these determinations have been dealt with previously in this way. I was happy for that to continue. I accept in good faith that we have some pretty good changes here. I expect that those changes will be with us for some considerable time—at least until there is a review by the Auditor-General in three years time. If the Auditor-General makes recommendations to improve or alter the arrangements then, that can be the subject of further scrutiny and debate at that time.

8:57 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I am sure that Senator Xenophon and I and most other Australians accepted in good faith the promise, ‘There will be no carbon tax under a government I lead.’ We all accepted that in good faith. We thought that she actually meant it. Here we are a couple of months later and she did not mean it. You have answered my question, Senator Xenophon; I am not going to argue with you further on that. Remember the old Keating thing, the l-a-w law tax cuts back in the 1993 election? Senator Sherry raised this point—he was there then—I think that he was probably part of the government that legislated for these l-a-w law tax cuts. They had the election, won the election on that, and immediately got rid of it with the help of the Democrats, as I recall—the other left wing party that used to be here.

Senator Xenophon, if this were in legislation, if they wanted to change it, they would have to go through not only this chamber—and I accept that, after 1 July, with the Greens very much the ultraleft wing of the Labor Party, they would support it and it would probably get through this chamber—but the other chamber, in which it might not find such an easy passage. If it were legislated, you could be more assured. Perhaps you do not want to answer this; perhaps you would only repeat what you have already said. But you are accepting the word of a government that has proved that you cannot accept their word that they will do this, that they will issue these determinations, that the Attorney-General will do this. I am sure that when they made the arrangements with you they probably believed that they would. But perhaps the Greens will come along and say, ‘We do not want you to do that for X, Y and Z reasons,’ and the Prime Minister will get up and ring her hands and say: ‘Oh, things have changed since I promised Senator Xenophon that we would do this. The Greens have formed a coalition in Queensland with the Queensland state Labor government and they do not want to go through this any more.’ It is up to you what you accept of the government’s word, but it seems to me to be pretty flimsy. You may want to comment on that.

I want to ask Senator Xenophon one final question. If this arrangement had been in place, say, a year ago, could Senator Xenophon indicate in rough figures—not using exact figures because I appreciate he would not have them here—from his, I know, very diligent research into this whole issue, what the case would have been then—what it might have cost the Queensland government to insure and what they might have got back from the Commonwealth under the NDRA arrangements? That is one question. Then compare that with what is going to happen now when this arrangement was not in place. Has Senator Xenophon actually done those calculations to indicate what the difference would have been had this arrangement been in place?

9:01 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Going to the first issue, I will not respond directly to some of the remarks made by Senator Macdonald. I am satisfied that the agreement that has been reached is one of good faith. I am satisfied that the Attorney-General of the Commonwealth will implement the terms of this agreement, as the minister responsible for that. I am satisfied that it is something that will have bipartisan support because it actually protects taxpayers’ funds in a way that is quite reasonable and robust and because there are transparency mechanisms in it.

I am also satisfied that the government knows and I know that, if the government tears this up in the next six months, which I do not anticipate occurring in any circumstance, the government knows that would be a gross breach of faith. I do not expect that to happen.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

What about ‘no carbon tax under a government I lead’?

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

But I do not expect it to happen. I urge Senator Macdonald to look at this document in detail. It is actually very robust. Every word in those guidelines in the new determination has been carefully weighted to ensure that Commonwealth taxpayers’ funds are protected, but in a way that is reasonable also to the states, as long as the states take reasonably diligent steps.

Senator Macdonald is also aware that we have a Senate Economics Committee inquiry looking at the whole issue of the insurance arrangements in the state of Queensland. I would be very interested to see what offers for insurance were made, because I think that they will vindicate the concerns that Senator Macdonald and I and others have had about the arrangements or lack of arrangements of the government of Queensland, which goes to the latter questions that Senator Macdonald asked.

My understanding is that the government of Queensland was offered insurance back in 2000, and in more recent times, with a premium in the order of $50 million. It would have been multibillion dollar coverage that would have included roads. The extent of the loss to taxpayers, had some appropriate arrangements been in place, would depend on the sort of excess that applied. The advice I have had from within the insurance industry is that, with these sorts of claims, you may have a fairly large excess per event. It might be $50 million, $100 million or a larger amount than that. The fact is that, instead of there being a total bill of something like $5.8 billion in total, the bill would be in the hundreds of millions rather than in the billions of dollars for those sorts of insurable events. I have no doubt that, if prudential arrangements had been put in place, the cost to Queensland taxpayers and, in particular, to Commonwealth taxpayers would be billions of dollars less. States and territories will not be able to hide behind what they are doing now and use glib excuses for why they have not taken out insurance, because they will now be subject to mechanisms that are very transparent and robust.

9:05 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I thank Senator Xenophon for that and I wish him well in his reliance on the word of a government that, as we all know, promised us just before the last election that there would be ‘no carbon tax under a government I lead’, and of course that will be the next major debate here.

With not a great deal of hope of getting any answer from this government, because it is a government that is unaccountable and does not believe that it has to answer to parliament for its legislation, I ask if the minister could identify something for me that I think he made mention of in his first answer: where is the minister going to specify—and I assume he has not done it yet because this legislation is not yet passed—a class of individuals for the purposes of the proposed subsection 2 of section 4-10 in the amendment bill? Where is he going to specify that he is satisfied that that class was affected by a natural disaster that happened in Australia between the nominated dates?

Photo of Annette HurleyAnnette Hurley (SA, Australian Labor Party) Share this | | Hansard source

Senator Macdonald, you have the call again.

9:06 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

It looks like the debate will come to an end because this Labor government minister simply chooses not to answer legitimate questions. How typical is this of the Labor Party! This government is only in power because of this new paradigm of ‘openness and accountability’. Here we have questions that do not go to the intellect of the minister at the table, the Minister for Small Business, but are questions from senators that I think deserve an answer and we have a minister that sits there and refuses to answer. I am particularly grateful to Senator Xenophon, who has at least put some legitimacy and truth into the debate by answering questions and explaining the legislation that we are going to vote on.

I am distressed that this legislation is going to become law very shortly. I cannot believe that only certain people are going to have to pay this additional tax. It has never before happened with a disaster in the history of the Commonwealth, yet people I know are going to have to pay this tax because of a bit of political mateship between the state Labor government in Queensland and the federal government. I cannot believe that people in Australia understand what this flood levy is all about. It is not going to be the case, as the Labor Party have been trying to pretend to people in Queensland, that this legislation is all about fixing their houses, replacing their furniture and helping rebuild the businesses of individuals. That is what people in Queensland have been led by the Labor Party to believe this flood levy is all about. It is anything but that. It is all about giving some taxpayers’ money to the Queensland state Labor government, a government that is so financially inept that it is broke and could not attend to recovery after a normal natural disaster.

We have had natural disasters in Queensland, I am sure, since time immemorial, certainly since recorded European times. We have never had a special tax levy for work which governments must understand they will have to do every year. Good heavens, if you listen to the Greens and the Left of the Labor Party you will know that cyclones are increasing in their occurrence, that floods are going to get greater, that droughts are going to get greater, that erosion and tidal inundation are going to get greater. Why would you not think the Queensland government would have understood this and put aside a bit of money for a rainy day, the same as Queensland governments have done for the last 150 years since Queensland became a state? They have always paid for this out of the general revenue of the Queensland government. Suddenly, for the first time in European recorded history, we are having a special tax on all Australians because the Queensland government cannot rebuild Queensland. I just cannot believe that this parliament has been conned, if I might say, into voting for this particular piece of legislation. It is a disgrace. It is a scandal.

I want to emphasise this, at the risk of repeating myself, by saying again to the people of my state of Queensland: you, as individuals, householders and business owners, are not going to get one cent of this flood levy despite what you have been led to believe by the Prime Minister and the Labor government. They have led you to believe that the coalition, by intending to vote against this, is being nasty to individuals by not fixing their houses and their businesses. Nothing could be further from the truth. Not one cent of this flood levy will go to individuals. It will go to the Queensland government to build roads and bridges and to build cyclone shelters that the Queensland government should have been building.

I do not criticise the Independents. I do not even bring the Greens into the equation—with such policy hypocrisy you do not even try to debate with them. But I must say I am distressed that the Independents are going along and slugging individuals—not all taxpayers, just a group of individuals—with this tax, with the money not going to householders and business people but going to the Queensland government. I am very concerned about this.

There are issues in this legislation—one is the specifying of a class of individuals—put forward by a government led by a leader who simply cannot tell the truth. This is the leader that promised hand on heart that there would be no carbon tax under a government she led—and we are giving that sort of ministry the ability to specify a class of individuals that will be exempted from this tax. I have asked the minister at the table to explain this, to put the parameters around it, to say how this is going to be dealt with—no answer, no accountability. This is simply another one of the Labor Party’s taxation arrangements to help a broke state Labor government in Queensland and to help a federal government that is increasingly showing its incompetence in financial management. But it is not too late. I say to the Independents: why is it that only individuals pay this? Surely that must be a question in the minds of the Independents. What is the policy rationale? I gave the minister two opportunities to convince us that there was some genuine policy rationale in only taxing a certain group of individuals, but he chose to attack the messenger.

I am genuinely at a loss. Please, anyone in the Labor Party—it does not need to be the minister—or even anyone on my side: can you tell me why individuals are paying this and not the coal mining companies, not Rio Tinto, not BHP? Why do my butcher and baker, as I keep on saying, have to pay for the road works and bridge works in Queensland when these major multinational companies are getting away scot-free? Do not ever let me hear the Labor Party or the Greens pretend that they are interested in individual Australians and lower income Australians when they are letting the most profitable people in our country off absolutely scot-free.

If it is a good tax and it needs to be done, if Queensland must have this money, why then is there only a certain few individual taxpayers who have to pay this and not major multinational, profit-making companies that, on the minister’s figures as I understand the one answer he gave me, contribute 55 per cent of Australia’s general taxation revenue? Why is not their 55 per cent going into rebuilding Queensland? Why is it only the 45 per cent contributed by individual Australians that is being taxed on this particular issue? If someone could give me a rationale for that I would sit down and walk out of here happily. Senator Xenophon is still here; perhaps you could tell me why you would tax individuals and let the big companies off scot-free. It just does not make sense. If someone could please explain to me why that is good policy I would leave the chamber disappointed that the bill went through but at least satisfied that there had been some policy rationale for it.

I do not want to delay the Senate all that much further. I just hope that the people of Australia who are all paying this levy will one day work out that they have been absolutely dudded yet again by the Gillard-Brown government. Individuals are paying for public works in Queensland whilst others get off scot-free. There are certain groups of individuals not yet identified who will not have to pay the flood levy and, gee, that must fill the chamber with horror. We are leaving it to this government, with a great track record for honesty and accountability and truthfulness, to determine which group of people are going to be slugged and which group of people are not going to be slugged. I just cannot believe that I am seeing this happen in the parliament of Australia. But I and my colleagues on this side have done perhaps all we possibly can do to alert the people of Australia to them being dudded yet again by this government. This will not be a temporary levy; it will continue because we will have a flood next year, we will have a cyclone next year, we will have a fire next year, we will have a drought next year. Having got this through this chamber, there is the precedent—‘Look, back in 2011 you agreed to this levy. Here comes another flood, so let’s have another levy.’

Sure, Senator Xenophon’s hard work might lessen the damage a bit but mark my words, this will not be a temporary levy. This will go on and on. They will find some excuse to continue it on next year. The Senate by then will be powerless to stop it. The Green-Brown-Gillard coalition will ensure that it gets through this Senate and Australians will be lumped yet again with another tax. I do despair. I hope against hope that when the final vote comes in the third reading perhaps a majority of this chamber will say, ‘No, this is just not good enough.’ If you need a flood levy, if you do need to get Queensland rebuilt, then let us get all taxpayers to do it—the big taxpayers, the 55 per cent who contribute to taxes in Australia. Let us get them to contribute, not just leave it to a couple of individuals.

9:20 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

It pains me to hear that Senator Macdonald is so unhappy that he has not had an explanation.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

I am unhappy. I really am.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

He is unhappy. I cannot speak for the government but it is my understanding that the previous levies under a coalition government were undertaken in the same way—that is, on individual taxpayers.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

No.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

They weren’t?

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

The container levy was on containers. The milk levy was on bottled milk.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Sure. I will not be distracted. Senator Macdonald is just trying to be helpful. My understanding is, very quickly, that it is administratively simpler to do it this way in the context of rather than dealing with corporations you have a greater degree of certainty as to the amount of levy that you will collect, and there are thresholds of income between $50,000 and $100,000. Below $50,000 no levy is payable and the levy rate changes at $100,000 and above, so there are some equity considerations in relation to that. But that was not the main reason why I got up to respond.

It is also important that I put on the record the concerns that were raised in the Senate Economics Legislation Committee inquiry in relation to these bills. A number of my constituents raised issues on two aspects: one was the Stockport floods that occurred at the end of last year when a community in the mid-north of South Australia suffered as a result of floods. I am satisfied with the response from Treasury, that where there has been a declaration made under the NDRRA certain exemptions will apply.

On an issue that was raised about redundancy payments, I note that the circumstances in which redundancy payments are taxable or not taxable have been set out. Madam Chair, I think you have received some further information on this. I have received similar information from Treasury and from the government. That satisfies me.

In relation to Senator Macdonald’s concerns over whether this is something that will stick, I am reassured by a number of things. I know this may pain Senator Macdonald, but Senator Milne from the Greens is at one with Senator Macdonald when it comes to—he’s wincing!—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

There’s no need to be insulting!

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I hate to tell Senator Macdonald this, but Senator Milne shares the concerns that he has in relation to the Queensland government not taking out insurance. In fact she moved a motion in this place, which was passed, expressing those concerns.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Senator Ian Macdonald interjecting

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

He accepts that. Some of my fellow crossbenchers in the House of Representatives have expressed similar concerns about this. There are a number of crossbenchers—the Australian Greens, the Independents in the lower house—who share similar concerns about insurance arrangements, so that reassures me that this is a robust arrangement that will be in place for a number of years, at least until the Auditor-General undertakes a periodic review in three years time. So, if any precedent has been set, I think it is a precedent that it is going to be very difficult to argue that we should ever have another flood levy like this once these arrangements are in place. That is why I support this legislation. I think that there is going to be a good long-term policy outcome when it comes to the states and territories insuring their assets.

9:24 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

I have a couple of observations. My second observation will be in response to some of the remarks made by Senator Xenophon, but firstly I want to talk about the arrogance of this government and the arrogance of this minister in not being prepared to answer legitimate questions put to him by a senator representing the state of Queensland, the state that this tax hike is supposed to be for. These are legitimate questions being put by Senator Macdonald, a senator representing the state of Queensland, and the minister just sits there, refuses to get up and refuses to provide answers to the questions that are being put to him.

It is always easy to whack another tax on people right across Australia. Every Australian earning more than $50,000 will be asked to pay this tax—an increase in their income tax. Whatever cuddly name you want to give it, Minister, this is an increase in the income tax rates of all Australians earning more than $50,000, and it will no doubt get through this chamber with the support of Senator Xenophon. Minister, I urge you to just reflect on your attitude in this chamber in not answering legitimate questions that are being put to you by a senator representing the state that this tax is supposed to help fund the reconstruction effort for.

My ears pricked up when I heard Senator Xenophon try to answer a question that Senator Macdonald had put to the minister about the reason why this tax is exclusively imposed on individuals and not on others. Senator Xenophon put it in these words: that he had been told that it was administratively—

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

No, I didn’t say I was told that. That is my understanding.

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

So it is your understanding that intrinsically comes to you; it is not something that in the course of your negotiations the government has put to you? I find the proposition that we impose a new tax on all Australians earning more than $50,000—just because it is administratively convenient to whack every Australian earning more than $50,000—to be quite a bad way for us to go.

We are here in a circumstance where the government wants to raise $1.8 billion out of a budget of $350 billion. This is money the government should be able to find by reprioritising its excessive and wasteful spending across this budget. This tax is supposed to come into effect on 1 July 2011. That is after the next budget. We will have a budget in May, when this issue—the funding required for the reconstruction effort—can be dealt with. There is absolutely no need to deal with this now. The reason we are dealing with this now is that the Prime Minister, Julia Gillard, wanted to strike while the iron was hot and get a tax through the parliament while she thought that she could get away with it politically in the court of public opinion. She knows that tax hikes like this are unpopular, so she always is on the lookout for a political strategy to get away with a tax. She is always focused on the spin and the politics rather than on what is good public policy.

This flood tax, this increase in the income tax—to be passed by this parliament less than two months before the budget comes down—is not good public policy. It is not good public policy to set up a tax, supposedly for a one-year period, to raise $1.8 billion when, quite frankly, there would be an opportunity in less than two months to reprioritise our spending commitments in the context of the revised revenue estimates that will be before us at that point of time.

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Senator Xenophon interjecting

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

I know that Senator Xenophon well knows this, but Senator Xenophon—and I admire him for it—identified a public policy issue in relation to the state Labor government in Queensland not taking out proper insurance, and he saw an opportunity to leverage his vote to get a good public policy outcome on one side. Of course, the thing that he had to bargain with was his vote. If he did not bargain with his vote, then Senator Xenophon would not be able to force the Labor government in Canberra to force their mates in Queensland to do the right thing in the future. He has done that, and I understand where he is coming from, but the outcome is still an increase in the income tax for all Australians earning more than $50,000, unless they are in one of the exempted areas.

Senator Macdonald raised the issue of how the determinations are made in relation to those exemptions. Initially, all people who were impacted by a natural disaster that was a flood event were to be exempted. I asked questions about this in Senate estimates. Senator Macdonald, I am sure you would be quite interested in this. I asked: ‘What about the people in Kelmscott who were impacted by the bushfires?’ The secretary of Finance and, later, officials from Treasury told us: ‘No. People who are impacted by bushfires are not going to be exempt. They will have to pay the tax, because only those that were subject to a natural disaster that is a flood event will be exempt from this.’

108There were quite a lot of people who were quite concerned about this. In fact, the West Australian was about to write a story about it. The West Australian went to the Prime Minister’s office and asked: ‘What about the people who are impacted by bushfires? It is a natural disaster that is not a flood event but a bushfire. Why do they have to pay this tax?’ On the spot, the Prime Minister made policy on the run. She changed her mind and said, ‘These people are going to be exempt as well.’ Just like that. Of course, the story in the paper the next day, on the back of a quick policy decision by the Prime Minister on legislation that had not even gone through the parliament, was that they were going to exempt those people as well.

The problem was that when we started debating this legislation all of the fact sheets from Treasury and all of the official advice on the Prime Minister’s website were out of date because they still said that only those people who had been subject to a flood event were going to be exempt. There was no mention of the people who had been subject to bushfires and the like. So there is a lack of clarity, Minister, around how the exemptions are going to be handled if the Prime Minister can change it at the stroke of a pen when asked a difficult question by a newspaper out of Western Australia.

This government does not normally care about what people in Western Australia think. This government is a very eastern-state-centric government. I dare say that it is a government very much centred on New South Wales and Victoria. There is not much that they focus on outside of New South Wales and Victoria, but they took notice of a newspaper from Western Australia and—on the run—they put an exemption like this in. Of course, we welcome the fact that the people in Kelmscott will not have to pay this tax. We think that no-one across Australia should have to pay this tax. We think that all of the Australian people should be exempt from this tax.

I am sure that, as Senator Macdonald said, the minister would not be so bold as to exempt people based on political affiliation, but it would be possible under this legislation. Of course, that would be highly inappropriate. What other exemptions do the government currently have under consideration that go beyond what we have been told so far? Have other categories for exemptions been raised, Minister? I would be very interested in you answering this question.

Can you confirm, given that the fact sheets from Treasury have not been updated yet, the advice that was put to a journalist at the West Australian, through a spokesman of the Prime Minister’s office, that the people in Western Australia who have been subject to bushfires will be exempt from this flood tax? What about people who have been impacted by droughts? Droughts are natural disasters. Will people who have been impacted by droughts be exempt from this flood tax? What other natural disasters will fall within the category of exempt?

It is no longer just a flood event—we have established that, unless the spokesperson from the Prime Minister’s office was not telling the truth. If we can believe the spokesman from the Prime Minister’s office who was quoted in the West Australian as saying that the people of Kelmscott who were subject to bushfires would be exempt from paying the flood tax, what other people who have been subject to other categories of natural disasters will be exempt from this tax? You could argue that it is a disaster being governed by this minority Labor government, so maybe we should all be exempt because we are all subject to this natural disaster. You could argue that there should be a catch-all category of exemption here.

On a more serious note, it is a very serious question. A spokesman from the Prime Minister’s office told the West Australian, contrary to what was said by the Secretary of the Department of Finance and Deregulation and contrary to what was said by Treasury officials at estimates and contrary to what is written in relevant Treasury fact sheets, that the victims of bushfires in Western Australia would be exempt from paying the flood tax. Can you confirm that on the record for the benefit of the Senate? Or is that just going to be another broken promise that was made under the pressure of the 24-hour news cycle?

9:34 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

What is this debate all about? What is this parliament all about when we have a legitimate request of the minister to confirm that some bushfire victims in Western Australia will not pay the tax and the minister just sits there? I think he was asleep. Perhaps he did not hear the question. Perhaps I could get Senator Cormann to repeat the question. By confirmation to this parliament, I would certainly like to know if the Prime Minister has said that a group of individuals in Western Australia will be exempt.

In this committee stage of the debate it is intended that we go through the provisions of the act. We have a look at what the words say and we can be satisfied that those words do encompass what the media releases have said will happen. Clause 4.10 of this bill says that you must pay extra income tax for the 2011-12 financial year if you are an individual. I emphasis that if you are an individual—if you are a blood-sucking multinational company that Senator Brown talks about then you do not have to pay—and your income exceeds a certain amount then you have to pay a levy. But it says that that subsection:

… does not apply if you are a member of a class of individuals specified in a legislative instrument made by the Minister for the purposes of this subsection.

Then it goes on to qualify that a little bit by saying:

The Minister may only specify a class of individuals for the purposes of subsection (2) if the Minister is satisfied that the class was affected by a natural disaster—

between certain dates.

Senator Cormann has told us about a newspaper from his home state of Western Australia that put the pressure on the Prime Minister and got a commitment that these fire victims in Western Australia would be excluded. I am not sure why we cannot get the same commitment here in the Parliament of Australia. Whilst fortuitously the drought in most parts of Australia has dissipated, and that is fortunate, I understand there are still some parts of Australia—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Particularly in Western Australia, as Senator Adams mentions, that are still in the grip of drought. I can perhaps ask Senator Cormann about this, because it is no use asking the minister as he just refuses to answer anything and refuses to be accountable, but the West Australian newspaper asked the Prime Minister if those people subject to the drought natural disaster in Western Australia would also be exempt, or was it just those who had suffered from the bushfires? Why are bushfire victims excluded but not people who are in drought?

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Senator Xenophon interjecting

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

Do not say ‘Ask the minister,’ Senator Xenophon—I am asking you, I am asking Senator Cormann, I am asking anyone who can tell me, because the minister refuses to answer. Some would say if these people had been in drought for several years they probably would not have an income; they probably would not reach the $50,000. That may be the case, but they may have some other investments that give them an income of $50,100—the same as many people who were subjected to Cyclone Yasi might have incomes well in excess of $50,000, but they will be excluded. So, Western Australians, if you are in the fire zone you will be excluded but if you happen to be in the drought zone, tough! This is great legislation; it is great stuff from this government.

I would love to know just what this class of individuals is, and what constraints there are on the minister. One would think, if this government were genuine, that it would be this Senate chamber of the Parliament of Australia where you would make clear who was going to be exempted from this levy; what class of individuals it was going to be. If Senator Sherry says that this has already been determined and the legislative instrument has been drafted, why does he not take the Senate into his confidence and table it in the Senate so we can have a look at it? There cannot be anything wrong with that. Perhaps we will find that there are some other holes in the legislation. I would be fascinated to see it. I note it is a legislative instrument, so I suppose it can be knocked off in the Senate; we can disallow it. If you disallow it because it does not include everyone, those that it does include are also knocked out so everybody has to pay the levy. The end result of that of course is that the Senate certainly would not disallow it because you would be cutting off the noses of a lot of distressed Australians to spite the face of those few people in, for example, the drought areas who are not going to be impacted upon.

This is bad legislation. Senator Xenophon tried to answer for the government when he said that the levy is on individuals rather than companies because it was administratively easier, he thought—that was his understanding. But that is hardly a basis for taxing Australians. The levy is raising $1.8 billion. That is all coming from individuals. If it were taken from general revenue, then Woolworths, Coles, BHP, Rio Tinto and Xstrata would pay 55 per cent of that $1.8 billion and we individual bunnies would pay the rest. Individuals in Australia would pay about $0.8 billion and these wealthy, according to Senator Brown, multinationals would pay the other $0.9 or $1 billion. But, under this legislation, they get off scot-free; it does not cost them a cent. Certain individuals—though not every individual—will have to pay the levy. What is the policy sense of that? How could anyone vote for legislation that imposes a tax on some individuals? We do not even know how many individuals are going to be excluded. How many of the people who contribute 45 per cent of the general revenue are going to be excluded? If a small percentage of them are excluded it means those remaining pay even more. What is the sense in that? How could you possibly justify legislation along those lines?

I have a few more things to say but I think Senator Back might have some questions as well, so I will leave it there unless the minister chooses to earn his money tonight and actually answer some of the questions being put to him in this committee stage.

9:43 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

My questions go to who gets exempted. In this place just recently I tried to establish the eligibility under the Australian Government Disaster Recovery Payment scheme for the $1,000 per adult and $400 per child payments. I asked—and I did not get a satisfactory answer—whether it was true that a community 1,700 kilometres north of Brisbane, just south-west of Cairns, was receiving the $1,000 cheques in consideration of the floods in Brisbane, 1,700 kilometres to the south, and then after Cyclone Yasi struck North Queensland there was yet another community half way up Cape York who were hardly affected, if at all, and yet people lined up to get their $1,000 per adult and $400 per child. In fact they did not even have to make an application to Centrelink; their’s was paid into their bank accounts.

What was interesting was that I was told in that circumstance—and this goes to the question I would like clarified—that there were people in North Queensland particularly who applied for, received and contributed back to various charities their $1,000 figure and their $400 figure. It was put to me that, having received the funding under the Australian Government Disaster Recovery Payment scheme, they too would then be exempted from contributing to this levy. I am keen to know whether that is true, whether it happened, to what extent it happened, how Centrelink or other agencies have been able to establish this and what action, if any, is being taken to recover those funds. It could not be a greater contrast at this time with the shocking events in Japan recently—the earthquake followed by the tsunami—to have the realisation that the Japanese government, prudent as it is, has just gone into its sovereign wealth funds to fund the recovery from that dramatic and disastrous event. It draws to our attention the fact that any intelligent, wise or prudent household or any prudent business would always put to one side funds to use in the event of some disaster befalling that household or business. In Japan we see the prudence of their government over time and its capacity to place savings to one side so that, in the event of a disaster, of whatever magnitude, they are not in a position of going to their citizens for this purpose.

I do not want to go over the ground of companies, trusts and other entities that will be exempted from paying this levy. It seems to me so ridiculous that we would frame the legislation in such a way that a group of individuals in the community would be so taxed but companies and others would not. How do we know that the $1.8 billion will be recovered in 12 months. What if it takes two years? What if it takes six months to recover these funds? What will happen then? If it is in six months, will the levy stop? Or if at the end of 12 months the $1.8 billion has not been recovered, will it continue? These are questions which I believe we have the right to ask and have answered.

Senator Cormann drew attention to the bushfires affecting people in Kelmscott and Armadale after the events of the floods. It also begs the question: what about the people in Lake Preston whose homes were destroyed prior to Christmas, who are equally in a situation of financial and emotional embarrassment. What about the Gascoyne where the worst floods in WA’s history in December wiped out most pastoral Gascoyne Junction properties, about 160 kilometres from Carnarvon. At the time I asked the question of Minister Ludwig representing the Attorney-General. Despite the Premier of the state calling it a natural disaster and, to her credit, despite the Prime Minister having said yes, this was a natural disaster category C in which the people of the Gascoyne should enjoy funding under the Australian Government Disaster Recovery Payment scheme, Emergency Management Australia had taken it upon itself to decide that it really was not a severe flood and no payments were to be made. It was only with the intervention of the West Australian newspaper with whom I consulted after question time that day, who put the questions to the Prime Minister’s office the very next day, being 11 February, that an edict was put out that, yes, those people in the Gascoyne themselves—

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

It is a very powerful newspaper.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

A very powerful newspaper and on that occasion they were very busy. I think the talkback on radio 6PR did not do any harm either. The question I want to come to in regard to the levy is the fact that the Gascoyne region itself will not be a recipient under any of these funds.

Progress reported.