[reb]

As anticipated, the Prime Minister, Julia Gillard, has announced the introduction of a flood levy to help fund the rebuilding of Queensland in the wake of the devastating floods.

Speaking at the National Press Club earlier today, Ms Gillard announced $5.6bn in flood funding, with the introduction of a levy on middle and high income earners who are unaffected by the disaster.

While announcing the levy, Ms Gillard also re-stated the Government’s commitment to bringing the budget back into surplus by 2012-13.

In addition to the introduction of the levy, the Government will also make some $2.8 billion in spending cuts, with those funds to be directed the recovery and reconstruction efforts.

This includes:

• Canning the “cash for clunkers” car rebate scheme

• Reducing and deferring spending on the Carbon Capture and Storage Flagships and Solar Flagships programs and the Global Carbon Capture and Storage Institute

• Abolishing the Capital Development Pool from 1 January 2012

• Discontinuing funding for the Australian Learning and Teaching Council

• Reducing the National Rent Affordability Scheme dwelling target

• Redirecting funds from the Priority Regional Infrastructure Program and Building Better Regional Cities Program

• Capping annual claims under the Liquefied Petroleum Gas (LPG) Vehicle Scheme

• Capping funding for the Renewable Energy Bonus Scheme – Solar Hot Water Rebate

• Not proceeding with Round 2 of the Green Start Program

• Capping funding for the Solar Homes and Communities Plan

• Withdraw funding to the O-Bahn City Access project.

Furthermore, the Government has hinted at financial assistance for job-seekers that may wish to relocate to Queensland to assist in the recovery effort.

“Up to 4,000 eligible jobseekers who want to get a job helping out will now receive support to move to QLD and to make a difference” she said.

Under the terms of the flood levy, an individual earning $60,000 per annum will pay just under $1 extra each week, while those earning less than $50,000 per annum will pay nothing. Individuals earning $100,000 a year will pay just under $5 extra each week.

The levy will apply only in the 2011-12 financial year.

In a speech which Laurie Oakes described as “the most prime ministerial Gillard performance so far,” Ms Gillard slammed Tony Abbott’s opposition to the levy saying 'If a levy was good enough to fund your election promises, why not now.”

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[Miglo]

I'll be quite happy to pay my $450 a year. I'll even pay Abbott's levy seeing that he has such an issue about it.

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[Senexx]

It makes me laugh, only 4000 job seekers when we have have 550000 unemployed, and it doesn't take into consideration costs of moving. Or if we include underemployment, we have over 1.9 million Australians underemployed. With all economic indicators suggesting a decline in the Australian economy and the government imposes a new tax (the levy) instead of just relying on the deficit.

I continue to laugh when it is clear that this is nowhere near full employment. Unemployment is not low and participation is not rising, the most recent data indicates participation is falling. It was evenly recently reported that for every job interview we shrunk from 4 applicants per position to 3 applicants.

The fact that Gillard said that solely borrowing to rebuild from the floods is a soft option reflects a considerable lack of economic understanding. Especially when borrowing typically means the government borrowing from itself via the RBA.

I note with some distress that they're going to push the emphasis on bringing in skilled migrants instead of skilling some of the 1.9 million underemployed Australians thus keeping them unemployed and underemployed.

The skilling rebuilding is one of the few good ideas in the package but implemented incorrectly.

Given the alleged housing shortage (there's not but there is where they want them) I don't think capping the National Rental Affordability Scheme is helpful to those in the area especially eligible job seekers.

Even Saul Eslake, probably Australia's most well respected economist disagrees with a levy. He is in favour of a larger deficit and a delayed return to surplus. You can listen to him on the Radio National Breakfast program.

*NB: by skilling I mean training, it was Gillard's use of the word. I continue to use it in her context
** Underemployment = Unemployed + Underemployed

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[Eb2]

For 1.8 billion it was hardly worth the effort.
I thought it was a bad idea last week and I have not changed my mind since.

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[reb]

Fascinating. For most people, it will mean a dollar a week. Honestly, the way Joe Hockey and Tony Abbott are carrying on you'd think it was asking for people's first born.

Personally, I'm glad to see the hair brained schemes like the "cash for clunkers" scheme go, (which was probably going to be ditched in the May budget anyway).

I can appreciate the argument that suggests it would have been better to delay getting the budget into surplus, and opting for a larger deficit, but both sides of politics have been harping on about how important it is to get back into surplus by 2013 (regardless of the logic underpinning that argument) so it was never going to be a politically palatable option.


The Coalition would have savaged Gillard had she gone down that path...

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[Senexx]

Straight out of the blocks, a subsidary website of Menzies House - http://www.stopthelevy.com

For reasons I've all ready outlined above I agree with them on this issue. That is my stance from a macroeconomic perspective.

However, from a more individual personal public perception perspective I think the progressive tax (levy) appears reasonable. After all what is a $1 a week? or $5 a week if you're earning $100k+

What I think is more interesting however is that the Gillard Labor government considers $50k to be low income. That said I will not be affected by the levy.

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[Miglo]

I'm laughing at how news.com can consider middle income earners as being those that earn about $105K a year.

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[Senexx]

That dovetails into nicely to a conversation we've been having at the mulestable.net (a private microblogging service) thus I think it important to note according to the ABS the 2007/8 median household income is around $66800, so you're correct to laugh Miglo. If we factor in the top end of inflation, that would be around $70900 today. Good thing I dispute these figures as well.

reb, on 27 January 2011 - 01:54 PM, said:

I can appreciate the argument that suggests it would have been better to delay getting the budget into surplus, and opting for a larger deficit, but both sides of politics have been harping on about how important it is to get back into surplus by 2013 (regardless of the logic underpinning that argument) so it was never going to be a politically palatable option.

I must add I agree with this despite the erroneous logic from both sides.

I also note in the Q&A session that in an answer to a journalist questions Gillard says she forms her own views despite what leading economists say. My initial response to that was "We're doomed". My view hasn't changed.

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This post has been edited by Senexx: 27 January 2011 - 02:27 PM

[EvanParsons]

I'm not opposed to the levy idea, but I fear that once again, Gillard has left an opening that Abbott and his MSM allies will exploit to their advantage.
Would the argument that we delay a return to surplus until QLD has been fixed up have been that hard to sell, especially if the general punter thought it meant he didn't have to fork out an extra few dollars or so per week(or those punters earning more than 50 grand per year)?
The government has made the tax thing the issue, and it's clouded what was otherwise a good set of initiatives from Julia - for eg. Cash For Clunkers was a daft idea, dreamed up by Arbib and Bitar, it had to go on to the scrapheap.

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[logos]

Help Queenslanders? Does anyone give a rooty toot about West Australians slaving in the desert to dig up all that gold? Where's the national levy then?

Whaddaya think? It's easy in the state of cashed-up bogans? We've all got beach houses to pay off... And then there's the heating in Olympic jacuzzis to pay for.

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[Bam]

I do not see a problem with the levy. Abbott is engaged in a political beat-up that shows breathtaking hypocrisy.

The Howard Government raised levies for all sorts of reasons. Most of these levies were raised when the budget was in surplus. Many of those levies were to satisfy the Howard Government's ideological wishes. The only Howard Government levy that would be justified according to Abbott's rules was the Gun Buyback Levy. Compensation to gun owners for surrendered guns was required because the Parliament is expressly forbidden by the Constitution to take property without providing fair compensation. The Ansett Levy and the East Timor Levy may also have been necessary but these were raised during a time when the budget was in surplus. The Stevedoring Levy, the Milk Levy and the Sugar Levy were totally unnecessary tax grabs for no other reason than to satisfy political ideology.

So while Abbott was content to be a part of a government that introduced levies for all sorts of reasons, he won't allow others to raise levies of any kind. What a hypocrite!

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[JJ]

One post went missing in the server changeover:

Miglo said:

Whip me if you must but I agree with reb on this one.

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[icey]

reb, on 27 January 2011 - 01:54 PM, said:

The Coalition would have savaged Gillard had she gone down that path...

That would be "damned if she does, damned if she doesn't'"

I can follow that .....

Also, I follow the fact that a lot of water (that would be money) has gone under the flooded bridges for BER, pink batts, cash for clunkers, solar and sundry green rebates etc. Let's not mention new a new Ethiopian embassy (and for now, a "great big new" tax on the carbon stuff).

But now .... sorry, the cupboard is (claimed to be and perhaps is) bare.

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[Senexx]

Don't worry Icey, it is impossible for the Australian cupboard to be bare.

Bam, once again I find myself discontent mainly because I agree with Abbott on something. The Gun buyback levy is/was fair (even though I didn't think so at the time) because it was a simple asset swap.

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[Epicurus]

I think the main issue with the levy is the social impact on donations. Already many are saying, why donate when we can cover the cost of disasters with levy's now.

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[Senexx]

That's a point, especially since Gillard mentioned even if the costs are considerably lower than expected, the levy will stay in place for the term it is set. As unsound as the economics behind it is, I think this may be the political problem with it even though the flood levy gamble appears to be politically sound.

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[Miglo]

I like what joni said at Café Whispers:

Now that the details of the Flood Levy have been officially released, the coalition is on the war path. What did Tony Abbott say?

“As soon as the Government puts on a tax, it is not an expression of generosity.”

Of course the first words out of Abbott’s mouth was that it was a TAX!!!

But wait a minute, hold the horses… what did Joe Hockey tell me when I posed the following question to him on Qanda back in May?

JON HARRIS: Over here. The Opposition will impose a levy on business to fund a paid parental leave. When does a levy become a tax?

JOE HOCKEY: When it becomes permanent.

TONY JONES: So when you propose it it’s not a tax, it’s a levy, but when…

JOE HOCKEY: Well, can I tell you I think…

TONY JONES: …you do it it’s a tax?

JOE HOCKEY: Look there are a vast number of levies. There have been gun buyback levies, sugar levies, Ansett levy. Remember that levy that was in place for a lot of travellers, and you would hope and expect and we have a history of it, that when you get the budget to surplus you get rid of levies. That’s what we do. We did that. We had the gun buyback levy. We had the Ansett levy and we got rid of them. We got rid of them once they had raised the funds necessary.

Oh I see – when the coalition proposes a levy it is just that, a levy, but when the ALP proposes a levy it is immediately labeled a tax. And note the parts that I put in bold.

I trust that Mr Hockey will be correcting his leader. I wont be holding my breath.

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[lenxyz]

If you agree with Abbott's position then you don’t support the levy but you do support spending cuts. How is such a person going to answer the poll at the top?

“Do you support the levy and spending cuts?”.

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[Senexx]

Given the condition of AND - your answer logically falls to NO

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[lenxyz]

Senexx, on 28 January 2011 - 01:16 PM, said:

Given the condition of AND - your answer logically falls to NO

That depends on whether we are talking Bolean algebra or plain english.

Quote

Care should be taken when converting an English sentence into a formal boolean statement. Many English sentences have imprecise meanings.
• In certain cases, AND and OR can be used interchangeably in English: I always carry an umbrella for when it rains and snows has the same meaning as I always carry an umbrella for when it rains or snows. An alternate phrasing would be I always carry an umbrella for when precipitation is forecast.

From Wikipedia

I'll assume the first.

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