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Federal

Jan 21, 2011

Labor's lazy levy

There's something faintly absurd about a government with a budget loaded with superfluous spending and the lowest debt levels in the developed world insisting that it needs a new tax to pay for the impact of natural disasters.

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A flood levy to pay for the cost of the catastrophic Queensland floods would be lazy policy from a fiscally lazy government.

There’s something faintly absurd about a government with a budget loaded with superfluous spending and the lowest debt levels in the developed world insisting that it needs a new tax to pay for the impact of natural disasters — especially when this government itself has been arguing that climate change will cause more extreme weather and preaches “adaptation” to Pacific Island states.

It also suggests this is a government that feels more comfortable playing on voters’ sympathies for the victims of the floods than about making the case for cutting spending in politically sensitive areas.

Remember that illuminating moment before the election, when Julia Gillard herself announced an expansion of the education rebate available to Family Tax Benefit A recipients. That’s a key voting demographic that had strayed from Labor and that the Labor brains trust, obsessed with micro-policies, wanted to win back.

It was Labor that took the first steps to start winding back the endless middle-class welfare spewed out by the Howard government in an effort to keep buying votes. It introduced a $150,000 threshold for Family Tax Benefits in 2008. Problem is, below that level, you start to eat into middle-income demographics with a lot more voting power than high-income earners. The expansion of the education rebate, and the Coalition’s election campaign response of offering to expand it even more, appears to have sounded the death knell for hopes either side would risk making serious cuts to middle-class welfare. Slapping a one-off levy on voters and telling them it’s for the floods is clearly more politically palatable than telling voters they’ve gotten used to levels of government spending that aren’t sustainable in the face of an ageing population.

One-off levies were a favourite tool of the Howard government, despite its reputation for handing out tax cuts. It slapped a levy on sugar to bribe the sugar industry to accept restructuring. There was a dairy levy imposed on milk for a similar purpose for nearly a decade — it only ended in 2009. But levies weren’t just for bribing influential National Party constituencies. There was an airfare tax after the Ansett collapse. There was also the East Timor levy, via an increase in the Medicare levy on income tax, introduced in 2000-01.

For those trying to predict the politics of a flood levy, remember that the East Timor levy — to pay for our peacekeeping commitment to that country — got the Howard government into trouble. Not because people objected to paying it — in fact, the opposite. The levy was only imposed on people earning more than $50,000, and doubled to 1% for those earning more than $100,000. The government immediately copped criticism that it was only targeting high-income earners, when the burden should be shared right across the community.

Levies appeal to politicians because one-off levies can be justified as dealing with one-off hits to the budget, and because the hypothecation of revenue from industry-specific levies can be sold as politically palatable “structural adjustment packages”. But all they do is hide long-term fiscal problems — expenditure that lacks discipline and revenue measures that are inefficient and jury-rigged to address political needs.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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109 comments

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109 thoughts on “Labor’s lazy levy

  1. Norman Hanscombe

    1. Perhaps the most relevant aspect of the difference between artesian and sub-artesian bores is that an ever-increasing number of formerly-artesian bores have become sub-artesian, because it’s not just a simple matter of them being automatically ‘topped up’ by rainwater. Water at a Great Artesian Basin bore site has taken millions of years to reach there from where that water first fell. It reached this spot only because of the nature of the geological layers above and below it which contained the slow-moving waters in their ‘underground rivers’ and kept them flowing in that direction under the pressure of newer waters slowly soaking into the ground in the distant north.

    When bores were introduced, the waters began to be reduced at far faster rates than they could enter the system at their source, thus causing the necessary pressure to be reduced, resulting in many artesian bores becoming sub-artesian, and many natural springs drying up, because our needs for water in inland regions have always out-stripped whatever nature could provide. I have no I.T. link for these matters. I recall collecting quite good material on artesian water at the Department of Conservation’s stand at the 1947 Sydney Easter Show, but although Easter is almost upon us, I suspect they won’t have a stand there these days, and even if they did, it mightn’t have material on a subject matter where sincere belief is all that’s needed.

    2. I’d hoped while I was away that someone might finally have realised artesian referred to bores or natural springs where water came up without the need of pumping, while those requiring pumping [from various depths and with varying degrees of difficulty] were sub-artesian. As others pointed out above, the quality/nature of that water varies enormously. I’ve lived/worked out west where artesian bores a few miles apart could be drunk at one but the other was useful for little more than a steam engine. At another spot, in the Snowy, with two natural artesian springs perhaps 200 metres apart, one was delightfully warm all year round, so ideal for a winter dip, while the other was always cold, so ideal for hot summer days.

    Perhaps the most relevant aspect of the difference between artesian and sub-artesian bores is that an ever-increasing number of formerly-artesian bores have become sub-artesian, because it’s not just a simple matter of them being automatically ‘topped up’ by rainwater. Water at a Great Artesian Basin bore site has taken millions of years to reach there from where that water first fell. It reached this spot only because of the nature of the geological layers above and below it which contained the slow-moving waters in their ‘underground rivers’ and kept them flowing in that direction under the pressure of newer waters slowly soaking into the ground in the distant north.

    When bores were introduced, the waters began to be reduced at far faster rates than they could enter the system at their source, thus causing the necessary pressure to be reduced, resulting in many artesian bores becoming sub-artesian, and many natural springs drying up, because our needs for water in inland regions have always out-stripped whatever nature could provide. I have no I.T. link for these matters. I recall collecting quite good material on artesian water at the Department of Conservation’s stand at the 1947 Sydney Easter Show, but although Easter is almost upon us, I suspect they won’t have a stand there these days, and even if they did, it mightn’t have material on a subject matter where sincere belief is all that’s needed.

    An example of blind adoption of convenient ‘data’ is provided above by poor Cathy’s garbled reference to “a whole stack of Creative scientists– who maintain scientifically, that the cause of The Great Flood..yes, Noah’s Flood.. was not caused by a raining downpour of 40 days & nights alone, but by water that surged up from the depths of the earth in combination with the torrential rain.” Although I’m not (and never have been) a theist, I did read (and more importantly remembered what I read) books with which I disagreed, so even in primary school I knew the Bible claimed that the second factor behind that flood was waters ‘pouring out’ of the ground. Unlike Cathy I knew enough about artesian water to not make the quaint assumption artesian water was involved. Far more likely was the assumption that the ‘explanation’ proffered for Noah’s Flood by the Bible’s authors derived from the (for them) seemingly mysterious annual rise of rivers without there being accompanying rain. Those ancient scribes can be forgiven for not understanding how melting snows, for example, in distant lands the existence of which they had no idea were causing river levels to rise and flood their fields. I’d suggest, however, that there’s less excuse for Cathy being unaware of how the artesian cycle works?

    3. BARRY O9, if you genuinely think I’m a believer in ANY of the Religions of the Book, if I may (slightly) misquote the Bible, Barry’s mind moves in mysterious ways.

    4. Jimmy, there often has been subsidence caused by extracting ground water, and the report to which you referred made the news briefly, but only because it affected property owned in an area where ‘the locals’ were vocal (and more important?) and the potential loss of value was greater than was usually the case, and it was of interest to urban dwellers who after all constitute a significant demographic for the media.

  2. Mobius Ecko

    Howard’s Lazy Levies (courtesy of Shane of Qld)

    I would like to point out the hypocrisy of these kneejerk comments in comparison to the levy for everything government he was a member of between 1996 and 2007.

    In 1997 our budget DEFICIT was 5.4 billion and a gun buyback levy was imposed as a result of the tragic massacre in Tasmania. While this was a tragedy and the removal of guns fully supported by myself, there was no natural disaster or infrastructure decimation. The levy imposed simply bought back guns people owned. The Levy went from Oct 1996 to Sep 1997. We were in deficit so OK we needed a levy for a one off event.

    In 1999 our budget SURPLUS was 4.3 billion and a Stevedore Levy was introduced out of ideological determination to break the MUA and Industrial Reform. This levy lasted from 1999 to May 2006. We were in surplus so under Abbott’s rulings this levy should not have been introduced as we had enough money collected as taxes already.

    In 2000 our budget SURPLUS was 13 billion and an 11c a litre levy was introduced as a result of ideological determination to deregulate the dairy industry which forced thousand of farmers off the properties to pay them an exit grant. This was supposed to reduce milk prices to the public. It simply reduced milk prices to the farmers sending thousands of them to the wall. This levy was in existence from 2000 until it was abolished by the Rudd Government in 2009. This was an extremely expensive levy placed on the public as milk is a staple. We were in surplus so under Abbott’s rulings this levy should not have been introduced as we had enough money collected as taxes already.

    In 2000 we also had the East Timor Levyevy at a time when our budget was in surplus by 13 billion dollars. We were in surplus so under Abbotts rulings this levy should not have been introduced as we had enough money collected as taxes already.

    In 2001 Our budget SURPLUS was 5.9 billion and a levy of $10 per return flight ticket was introduced to compensate workers who lost their entitlements due to the collapse of a privately owned business who did not provide allowance for employee benefits. This levy lasted from Sep 2001 to June 2003. In addition $100 million of the funds raised was used for airport security and nothin to do with Ansett employees. We were in surplus so under Abbott’s rulings this levy should not have been introduced as we had enough money collected as taxes already.

    In 2003 our budget was in SURPLUS by 7.4 billion dollars and a 3c per kilo levy on sugar was introduced as a result of ideological determination by the government to deregulate and reform the sugar industry. This levy ran from Jan 2003 to November 2006. Once again a savage levy on the general public. We were in surplus so under Abbott’s rulings this levy should not have been introduced as we had enough money collected as taxes already.

    So while the levy for everything government has massive surpluses they slugged us via levies with a summary as follows.

    1996- Gun Levy
    1997- Gun Levy
    1998- No Levies
    1999- Stevedoring Levy
    2000- Stevedoring Levy-Milk Levy-East Timor Levy
    2001 – Stevedoring Levy-Milk Levy-Ansett Levy
    2002- Stevedoring Levy-Milk Levy-Ansett Levy
    2003- Stevedoring Levy-Milk Levy-Ansett Levy-Sugar Levy
    2004-Stevedoring Levy-Milk Levy-Sugar Levy
    2005- Stevedoring Levy-Milk Levy-Sugar Levy
    2006- Stevedoring Levy-Milk Levy-Sugar Levy
    2007- Milk Levy

    (there were other levies implemented on businesses as excise like the PSO levy in 2001. ME)

    In addition other than the gun buyback and Ansett levy the other levies were political ideology deregulation levies. Not one levy was as a result of a natural disaster effecting thousands of people but rather ideology busting.

    (Let us not forget Abbott also proposed a levy on business for his paid parental scheme. ME)

  3. Jimmy

    Norman – So despite an independent report investigating all claims of waste etc from any individual, employed by the state or just a parent (after a vehement campaign by News Ltd to paint it as an abject failure) showing it to be a success you still say it was a failure just no one bothered to complain because something they apparently didn’t want and alledgedly cost to much is getting “something for nothing”? Face it achieved all it’s objectives.

    Also as I said if you can show me the extra spending on new housing in the stimulus I’d be grateful as I looked on the website and didn’t find it.

    The problem in the GFC involving housing was an over supply of houses at inflated prices, not the case here as we still have an under supply. Extra money to stimulate new houses (they do get a higher grant already) is one way to solve the problem but releasing more land (as Victoria has just done) and encouraging more dense population is cheaper and more effective.

    As for the public/private aspect, it wasn’t a mjor factor in the “home owner gifts” but it was in going with the BER, the fact that there was “shovel ready” projects that didn’t rely on obtaining private finance in a time when finance was contracting, bypassed the need for council approval and had a known demand was very important.

    As for here not being the place to discuss “that issue” isn’t that exactly what here is for to discuss the issue not just criticise others or make others feel small without proposing alternatives or proving how tall you are.

  4. Norman Hanscombe

    Cathy, Oh Cathy. What can be done to help you understand you need help? Even Divine Intervention mightn’t be enough. I assure you I’d NEVER be so grossly unfair as to judge all women by you. Honest. My grandmother would have run rings around male ‘academics’ I’ve seen recently, and the only advantage in life that she had [apart from not being born a slow learner, of course] was leaving her rural Queensland school at 13 in 1893, which fortunately for her was long before standards slipped. I wish Gran’s friend and frequent visitor to her home, Jesse Street, was still around, because [in light of your sexist obsessions] you might accept advice from her? Although, now that I think about it, it’s a good thing you weren’t there, because their discussions mightn’t have fitted your dream-world obsessions, and it would be a shame to have had you attacking Mrs Street for being sexist.

    So, my poor little befuddled babbler, since you continue to be unable [or unwilling?] to direct me to where you ‘think’ I said what you claim I said, how can I help you? You do realise it’s an odd request from you that I provide the evidence for claims I haven’t actually made? Then again, you probably don’t realise it? The Bible could have had Cathy in mind when it (almost) said, Forgive her Lord, for she know not what she does. Either way, it’s in my nature to forgive those who err in good faith, so I shan’t make a harsh comment.

    Finally, dear lady, there’s little point in you bluffing about having, “no alternative but to discontinue this discussion.” You have never really participated in a discussion, but rather sat like a kid in a gum tree, firing your toy popgun at imaginary dragons — dragons which everyone else knows aren’t actually there.

    As for you FED UP, you owe Cathy a VERY big apology. She did NOT play the gender card. She MISPLAYED it. Now be a man [[I hope that’s not a sexist? term]] and tell her you’re sorry.

  5. Norman Hanscombe

    Cathy, I’ll try to put this even more simply, just for you:

    You simply do NOT understand the difference between artesian and sub-artesian. Learn about that basic difference and you’ll se how irrelevant some of your comments are. Since I knew the difference before I’d reached my teens without making any effort, is it unfair that I assume you SHOULD be able to handle that?

    If there’s a good example of what YOU believe to be unfair/unjustified “abusive rhetoric” or better still an example of “outright slandering” directed at you, please explain.

    If you REALLY can’t understand what’s wrong with your comment that “(you) have not seen one single piece of information of evidence regarding your assertion that artesian or “sub” artesian water is not millable or cannot be used for agriculture or industry” I guess out of sympathy for your plight, I have to explain why this poorly expressed non sequitur is NOT a worth-wile contribution:
    Read my words, dear lady, I never made that absurdly irrelevant claim. Was that simple enough to be understood? Should you wish to continue claiming your red herring is in fact a true statement, direct me to where I said such nonsense, and embarrassed as I’d be to learn I’d uttered such nonsensical statements, I’d apologise — both generously and promptly. May I make one (hopefully helpful) suggestion, however? When you find what you believe (however genuinely) to be the loaded gun, check with a reasonably literate friend re what it actually means before responding, because I really don’t think there’s much to be gained by it blowing up in your face. The goal is that you be educated, not humiliated.

    Try to remember, Cathy, I’m able to empathise with you re your problem, and my earlier helpful comments weren’t an attack on you as a person but rather an attempt (hyper-optimistic as it may have been) to help you overcome your obvious difficulty understanding the issues.

    Does that clear up your misunderstanding?

    P.S. Cathy, before you start advising Rohan, you really should — . No. It’s not a good idea to ask too much of you too soon.

  6. Jimmy

    Norman – If you are saying the govt shouldn’t have offered a first home buyers grant he below link is to the govt stimulus page after a search on “first home”, it doesn’t come up with anything. The first home buyers grants have been around snce 2000 well before this govt and I think they were increased well before the stimuls package, although I would be happy to be shown otherwise.

    http://www.economicstimulusplan.gov.au/search/pages/default.aspx?searchterms=first%20home

    I agree that providing an incentive to build new homes would of been a benefit to the economy but as you pointed out it wouldn’t of been put into the economy as qucikly as it would of been up to private invesstors to make the decision to spend, then planning permits would of had to have been sought etc etc. One of the big successes of the stimulus was that it was “timely” and prevented a significant slow down in the economy and loss of employment. this meant that in the long term less tax income was lost and less money had to be spent to pump the economy.

    The BER also resulted in vital spending on public schools with 97% of the schools very happy with the result.

  7. Norman Hanscombe

    Cathy, congrats on understanding the first point, but:

    You still have no clue re the difference between artesian and sub-artesian bores, but IF you can manage to understand that, your second point will evaporate faster than a desert puddle. Really.

    Not having had any problem, even in primary school, discussing artesian/sub-artesian water, unless you have a speech impediment, I really can’t explain why you mention it in your thirdly point. As for what lesson I need to explain why you have this difficulty, you’ll have to give me a clue, because your problem remains a mystery.

    Ooops!! Having read your quaint contribution a tad further, Cathy, I now realise I erred in assuming your non-reference above to the first point meant you understood why I’d mentioned populist announcers who are as one with you on this issue. I see now that you genuinely don’t understand irony, do you?

    The more you try to address these issues, Cathy, the more it becomes clear you need to research the subject before opening your well-intentioned mouth. But at least [assuming you meant what you said] you finally acknowledge you’re (to use your word) simply “inventing” these weird suggestions. Sooner or later, though, you’ll have to face up to the fact that “inventing” ideas isn’t quite the same as facing reality.

    Finally, Cathy, don’t be too harsh on the poor boxed band. He knows he’s being absurd, which puts him slightly ahead of someone like you who’s also being absurd, but doesn’t know it.

  8. Norman Hanscombe

    Firstly Cathy, you missed the point of WHY I referred to what the “2GB tossers” said, but read previous posters said and you MIGHT get it.

    Secondly I was aware of your “concept of developing Central Australia” before the 1950s, but unlike you I understood what was involved. Even then much of what had been artesian had become sub-artesian [you do understand that simple but immensely important difference?] and it has become a far more significant issue since, even if you’re oblivious to that problem. I recall seeing the effects first hand in February 1958 in the Pilliga Scrub where the flow was still artesian, but what had once been a large lake with enormous freshwater mussels was now a small diminishing pond, and that was a spot with none of the heavy demands of extensive agriculture. You do, by the way, realise not all of our declining artesian reserves are suitable for agriculture?

    Thirdly (should you ever spend the necessary time to research the topic) you’ll appreciate the irony of your amusing comment, “I am not saying you are making it up, but perhaps ill-informed”. Cathy, I don’t say that about you because there’s no “perhaps” about your being “ill-informed”. You ARE ill-informed, and it’s a belief you share with a well-known 2GB identity, Alan Jones.

    Fourthly, of course (as you so irrelevantly say” “There is more potable and drinkable water under the desert than in Sydney Harbour 10 x times”, although your claim “it’s just below the surface” shows you’re in FAR more need of help than I first realised. That’s NOT “alot of water”, Cathy, so it mightn’t hurt to brush up on basic arithmetic too, before you start the very big task of coming to grips with basic economic geography?

    Fifthly, if you need a pump, it’s NOT “called Artesian” Cathy — but let’s add an understanding of the relevant “technology” to your need to understand basket anyway, shall we?

    Finally (to use your words, Cathy) “Nup!!! what (I’m) really saying is, there is no will” on your part to do the necessary easy research which shows clearly why you and your unwanted ally Alan Jones are talking populist nonsense. But I’m sure you mean well.

    FED UP, it’s after midnight and while I wish the possum fight on the roof hadn’t woken me, at least Cathy has helped illustrate WHY those radio commentators can be so influential if they pick a piece of populist nonsense which happens to appeal to the dreams of an audience member.

    Now back to the cot for a brief (hopefully possumless) sleep before the alarm starts my rush to make it for my excursion to the big smoke.

  9. Norman Hanscombe

    Barry 09, I’ve worked with many for whom English is a second language, so if you not having a translator to help you (with the resultant incoherent nature of some of your message) causes me to misinterpret your argument, please let me know. In no particular order then:

    1. Transport is primarily a State area, so you need to explain who are your (as you so eloquently put it) “tight arse bastards” and for what aspects of transport failure do you blame them? I trust that’s not asking too much.

    2. Your references to “conservative” car salesmen and Telstra is a tad unclear. Please explain.

    3. Re your quaint notion (and you REALLY did say this) that, “if Australia stopped pumping our shit out to sea and pumped it inland (use Rail/road /power corridors ) and put it though a worm farm , we would have great soil to grow and trillions of cheap workers paid with just your shit( food ) and living arrangments” it’s difficult to be sure where to suggest you start. Perhaps you might try to come to grips with the subject areas involved in your inappropriate suggestion? You’ll find it often helps to know what you’re talking about before you start talking.

    4. I suspect you may not be all that happy to learn, Barry O9, that your suggestion in point three is in line with the dribble one hears regularly from the “2gb tossers” to whom you don’t listen — although in fairness to them, while they’re unrealistic and ill-informed in these areas, they’re not quite as far off the planet with their approach as you are.

    Best of luck with any reading programme you undertake.

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