Why would a levy be wrong?

A poll quoted by Seven News on Thursday affirmed that 82% of Australians were against the Gillard flood levy. Leaving aside the issue of the obvious bias in polls generated on the internet, the seemingly unanimous resistance to the levy seems very out of place for many reasons.

First of all, it is worth noting that this levy will cost a grand total of $250 at most to the wealthiest Australians. What is $250 for people earning more than $100,000 a year? There are many people who, while earning less than the $50,000 threshold, willingly give this amount of money to various NGOs every year. Without conducting a poll, I am also certain that most of us would welcome such an initiative if it was us that had been struck by this disaster. If the wealthiest Australians are not ready to put this proportionately small amount of money towards the reconstruction of Queensland, we have reached a despairing degree of selfishness. Moreover, this levy is a one-off. Some might say, and indeed various news reports and analyses have said, that Australians have already been very generous and donated a lot of money. True, although the money donated barely reaches $200 million and is therefore far off the $5.6 billion needed. This leads to the conclusion that Australian generosity is in fact quite limited, even in disasters that take place in our own backyard. It is not surprising that the massive floods in Brazil and Pakistan, floods which have left millions of people in tragic conditions far more dire than in Queensland, have not resulted a vast outcry here.

More tragic yet is the relatively small sum that this levy demands, and that the consequences might actually be far worse than if it had covered the cost of the entire reconstruction. Yes, it would mean a tax increase of more than double. Yes, the coalition (and probably a large part of the Labor Party) might have argued that this money, coming straight out of hard-working Australians’ pockets, would have had a massive impact on the economy and just wouldn’t be fair dinkum. Yet this is only true if one only looks at short-term consequences, and has little care for more long-term concerns. So it remains unavoidable that the government foot the bill for the reconstruction. Therefore, whatever the government have to pay will have to be deducted from somewhere and, as Gillard’s plan outlines, this ‘somewhere’ is green policies.

This has three very clear consequences for the future of Australia. The first is that while many scientists have argued that global warming will increase the chances of freak environmental disasters, Australia will withdraw its already small efforts to tackle this global issue. It will therefore consciously increase the likelihood of more floods, droughts and other potential ecological disasters. The money we will ‘save’ by cancelling these policies now, we might end up repaying with huge interest in the next few decades. Can we be certain this will happen? Of course not, just as we cannot be sure our houses will ever burn down. Yet this has never prevented us from taking out insurance and making sure our fire alarms are in working order.

The second is that some of the abandoned policies will have a more dramatic impact on the Australian economy than an adequate one-off levy. In a world where green industry is thriving and is set to become the future norm, cuts affecting the Green Car Innovation Fund for example will in turn affect the competitiveness of Australian manufacturers. Never mind that most international car manufacturers have already planned the 2011 release of electric cars. It seems clear that these cuts are against the very health of our economy.

Finally, the cutting of some programs such as ‘cash for clunkers’ will affect many Australians who could have directly benefited from them. This program, or the Solar Hot Water Rebate scheme, would in fact have been of most benefit to those who will pay part of the levy. The people most likely to buy a new green car are those who have the means to do so. Similarly, only home owners with enough savings could invest in solar energy.

Therefore, while the Gillard proposal is insufficient and in fact very moderate, the coalition has proven once more its propensity to make use of the basest populist politics. Claiming that the levy is unnecessary and that the $5.6 billion could be funded through further cuts seems extremely short-sighted. Yet it appears very appealing to many voters who will only consider their short-term advantages. The coalition is due to release its alternative plan in the next few days and it seems unlikely that it will be anything more than demagogue politics, proving further the lack of depth, honesty and generosity in our political debate.

And to think that Rudd’s moderate super profits tax affecting only a tiny minority of Australians would have more than covered the cost of the Queensland floods.

This piece was written originally in January 2011


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