Saturday, January 29, 2011

Further musings on the flood levy

I don't really have anything substantive to add on the levy to the views expressed on Flood levy's, public policy & the Australian spirit. However, I did do a bit of a browse round this morning looking at some of the comments.

On Nine-MSN, an on-line poll on will the Government flood levy stop you from donating, the numbers are running at 110,516 yes to 32,489 no. In the Australian, Stefanie Balogh and Jamie Walker report that, according to early polls, most Australians are against the levy, with The Australian's online poll recording more than 81 per cent of the 12,700 respondents opposed to it. Fairfax's online poll of 50,000 people had 74 per cent giving it the thumbs-down.

Looking at the blogs, writing just before the announcement, John Quiggin thought that the foreshadowed package was about right. He was especially pleased to see that cash for clunkers was dead. John's commenters generally took a different and far less sympathetic view on the package.

One thread related to the environment and climate change. This was an example of a the type of thing that was going to happen with climate change. We should be addressing that, not adopting a short term response. A second thread focused on building on flood plains.

 On the other side of the spectrum, Sinclair Davidson wrote two posts on Catallaxy Files, one just before (Rebuilding Infrastructure), one just after (The Panic-Attack Tax) the announcement. In the first, he said:

It’s widely expected that the Federal government today will announce a temporary increase in the Medicare levy to pay for the flood damage that has occurred in Queensland and other parts of the country. Early reports suggest that people affected by flooding will be exempt while those not affected will have to pay. I’m not sure how that’s actually going to work – in some places people living over the road from each other may or may not be liable for a Commonwealth tax based simply on an accident of geography. (I suspect constitutional lawyers will want to keep an eye of that issue.) Then there is the issue of defining ‘flood damage’ if it is associated with a lower tax rate. There is more than a little moral hazard associated with this proposal.

What concerns me, however, is that policy makers have been somewhat limited in their thinking about financing the rebuild effort. Levy or spending cuts? Given that choice I reckon spending cuts should, at least, be the dominant source of financing. (Cuts could and should finance the entire rebuild, but that is a choice they obviously have already considered and rejected).

So what to rebuild? Should all the pre-existing infrastructure simply be replaced? or upgraded? A lot of careful thinking should go into that decision. Who gets to make the decision? The Commonwealth who is levying the tax, the taxpayers of other states who pay for it, or the people who are the direct beneficiaries of the spending?

In the second, he linked the need for a levy to previous Government overspend, concluding that there was some good news; "a lot of pie-in-the-sky green programs have been cut or deferred". He also observed: 

I don’t know if the Federal government has thought hard enough about this, the letter page of the Herald Sun today indicated a lot of anger.

Catallaxy commenters were all over the place, but with a consistent negative theme. One commenter had already organised a web site along with Twitter and a Facebook page to oppose it. Ah, the joys of social networking!

On Club Troppo, in Any alternatives to a levy?, Fred Argy more or less comes down in favour. The comments here are generally more positive, with a focus on the limited political choices facing the Government. There is also discussion of one specific expenditure cut. Here Ken parish wrote:

I agree that the cuts to the National Rental Affordability Scheme are the major unequivocally bad decision in Gillard’s package. It’s not only a betrayal of fundamental Labor values (presumably to appeal to the middle class and aspirational marginal seat voters) but bad policy in itself. With rents at prohibitive levels through much of Australia, lots of workers and families are simply being priced out of any reasonable housing.

On Transition Town Kenmore in Paying for the floods: Rail devolution? and a billion dollar cut to solar power, Mike focuses especially on the cuts/deferrals at both Queensland and Commonwealth levels. His assessment of the Federal cuts is negative, again on climate change and environmental grounds.

In one of the few positive blog reactions, (Relatively) calm in the face of a storm, Michelle focuses on Julia Gillard's performance under hostile media fire. Liz, too, is sympathetic, breaking into verse:

dear stingy bastards,
the amount you will pay for
the flood levy is

nothing compared to
the loss that has occurred. Stop
being such a jerk.

That includes you, Premier-lady.

While personally skeptical about the levy, Marshall King takes a critical look at media coverage; Darren Freak provides a comedic view; while Little Miss P.I. is clearly an opposition supporter. On Life in Question, Joshua Hewitt aims to unpack the issues in Gillard’s Test; Questioning the flood levy with negative results.

Finally, Larvatus Prodeo provides links to a number of posts, including several looking at the positive aspects.

This little run-round has taken a lot longer than I intended. Overall, I am struck by the negative nature of so many of the responses, at the way that different issues run together.

In my previous post I said that I was not personally opposed to the idea of a levy. My concern lay in the way that the whole thing had been put together and presented.

Reading the posts and comments, looking at Mr Abbott's responses including the way he is attempting to set up the circumstances for a Government defeat on the floor of the House, I think that the whole debate deserves more objective analysis.

The debate has not been helped by the NSW's Premier's remarkably silly intervention, something that I dealt with very briefly in Keneally wins crap of the week award. The idea that Sydney people deserved special treatment provided ample fodder for talk back radio in that city.

I will continue to monitor the debate, but that's all for present.    

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