I would like to thank all members who have contributed to the debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011. I also believe it is only right to begin the summing up of the debate by acknowledging and thanking all those members of our Australian community who have contributed and will continue to contribute to the flood relief and reconstruction efforts. So many of our fellow Australians are continuing to do their utmost day after day, week after week, month after month. There is much to be done. During the times ahead the relentless recovery workers will have their sleeves rolled up and their minds intensely focused on the physical and emotional effort of rebuilding. We include, of course, the engineers, the bridge builders, the asphalt crews and the council workers. We are talking about the electricians, the plumbers, the carpenters, the gardeners and the concrete pourers. We are talking about our modest ordinary fellow citizens who will literally pick up the pieces and put the flood and cyclone devastated parts of our country back together again.
We are talking about our farmers. Our farmers went through six major rain events between November and January. This resulted in widespread flooding to an almost unprecedented extent. Vegetable crops, grain, cotton and sorghum have all been affected. The cash flow of our farms has been hit hard. Sugar volumes, while still too early to measure, have been significantly affected, with estimated losses of three to five million tonnes. 'Banana central' has been hit very hard. We will not know the extent of the livestock losses until the second muster in May, June and July but we should be prepared for hard news.
What is especially frustrating is that the decimation of crops has occurred at a time of high commodity prices. Whilst I recognise that higher yields may compensate for reduced crop sizes this is tremendously disappointing for literally thousands and thousands of farmers who have experienced many years of drought and now cannot realise the boom which was on the horizon for them. At the same time, farmers are seeking to have equipment finance contracts waived, loan repayments deferred, temporary overdrafts arranged, access to financial facilities without fees and even second mortgages. Times are tough for those on the land, especially for those who were under duress before these floods and storms. Our flood affected farmers have focused on the physical—cleaning up, restoring fences and collecting stock.
At the same time the vital transport links to market have been sorely hit. Many railway line foundations were washed out. Highway services have been torn up in great slabs and literally washed off the roads. Great gutters have been gullied out underneath the foundations of our highways, arterials and country roads. In the case of key transport arterials, such as the road down the range from Toowoomba or the rail line from Toowoomba to Brisbane, we have seen the foundations literally washed away. The volume of water was unimaginable, the damage impressive. Clearly, our farmers, primary producers and commodity producers have a major issue with road and rail damage. They cannot move stock and crops; it is a big impact on their cash flow. It is reported that slaughterhouses are 85 per cent down on last year's numbers because stock movement is curtailed. We need to line up our farmers' confidence with commodity prices and there is real stress in the transport sector. Smaller transport operators have to take longer routes with higher costs and indeed travel on lesser roads with lower limits. The extra distances mean extra cost and delay. As I have said, the times are tough and the landscape is not like anything that we are used to, but all sorts of Australians are going to help fix this up and indeed make it better.
This piece of legislation is our government's contribution to backing up our people. It is about ensuring the country as a whole can give to the hardworking builders of Brisbane's future, Ipswich's future, Toowoomba's future, the Lockyer Valley's future, Tully's future and the future of so many other places in Queensland, Victoria and northern New South Wales.
These bills are about making sure the national government can give them the full funding support to get the job done and done quickly. In backing the recovery effort with this progressive and balanced levy, we unequivocally back all of our people engaged in recovery, from all walks of life. They are building Australia's future and we thank them profoundly for what they are doing.
The natural disasters of this wretched summer have hit many Australians hard, but the worst thing has been the tragic loss of life in the most heart-wrenching, heartbreaking and difficult of circumstances. Every death resulting from the floods has saddened us all. We have seen the widespread damage, but we saw also the widespread damage after the Black Saturday Victorian bushfires. We have seen how people rebuild and we can do it again after the storms and floods. Australians are a resilient lot when times are tough and I think we have all been impressed and inspired by the sense of community and shared spirit that has been so evident in this story of natural disaster.
Tough Australians deserve a federal government that has their back, and that is what this levy legislation is about. In addition to the enormous human impact, the impact on public property and infrastructure has been massive. The total estimate for the rebuild is in the order of $5.6 billion. This is a significant promise which Australians should honour to those who have been affected.
We will need to rebuild a remarkable amount of public infrastructure that has been destroyed or severely damaged by the floods. This bill will substantially help the rebuilding of our public infrastructure with the imposition of a one-year flood reconstruction levy.
It is important to distinguish this levy, which will be used to rebuild infrastructure, with the charitable donations that many Australians have already generously made. In recent weeks many Australians have donated to charitable funds to assist people affected by the floods, to help them with their personal costs. An extraordinary $220 million has been raised so far in charitable donations, a fact which speaks volumes about the generosity of ordinary Australians and the Australian spirit of helping out your friends. These funds held by charities will help individuals and families affected directly and personally by the floods to rebuild their lives, rebuild their homes and indeed replace some of their possessions.
The flood levy on the other hand will help to rebuild the essential infrastructure damaged by the floods, such as the schools, the bridges, the hospitals, the parks and the Warrego, Carnarvon, Bruce, Capricorn and Cunningham highways to list just some. As I have said the total estimated cost to the Australian government to help communities recover and rebuild infrastructure in flood affected regions is estimated to be around $5.6 billion. There were calls by some witnesses to the House of Representatives inquiry that we should take the full cost of the government's share of reconstruction onto the budget by taking debt. This is not what we will do. We will pay as we go.
This is the right thing to do in an economy that is approaching capacity. We have a mining boom that is driving sustained terms of trade the likes of which we have not seen in many decades and a huge investment pipeline. In those circumstances it is the right thing to do to bring the budget back into surplus in 2012-13. I say again that, in an economy that is growing strongly, it is important that we pay as we go. The government will therefore fund around two-thirds of this reconstruction bill through spending cuts and the deferral of infrastructure projects. This includes $1 billion of infrastructure deferrals that will free up not only money but workers and equipment. The remainder of the cost will be met through a one-year flood reconstruction levy and this levy will end at midnight on 30 June 2012.
The levy will be paid through the tax withheld from regular wages and salaries, like personal income tax and the Medicare levy. The levy is modest and the levy is progressive, meaning that those who can pay slightly more will do so. It is based on taxable income earned by individuals—that is, assessable income minus allowable deductions. Taxable income is what is used for the Medicare levy and taxable income is what was used for previous levies such as the gun buyback levy and the proposed East Timor levy under the coalition government.
The flood levy is modest in terms of the amount required from any one individual given their income. Anyone with a taxable income in 2011-12 of $50,000 or less will not pay the flood reconstruction levy. Taxpayers with a taxable income of between $50,001 and $100,000 will pay half a per cent of their taxable income over $50,000. Taxpayers with a taxable income of over $100,000 will pay half a per cent of their taxable income between $50,001 and $100,000, and one per cent of their taxable income over $100,000.
It is modest in that a person on average wages, which is around $68,000, will be paying $1.74 per week. For a person on $80,000, it is worth $2.88 per week. That is less than the price of a cup of coffee and about a tenth of the $29.81 weekly tax cut they have received from the first three years of this government.
A taxpayer with a taxable income of $100,000 will pay $250 in 2011-12, or $4.81 a week. That is just 12 per cent of the $41.35 weekly tax cut that they have received from the first three years of this government.
Importantly, taxpayers affected by the recent disasters— not just the floods but also Cyclone Yasi and the Western Australian bushfires—will not have to pay this levy if they meet certain criteria. There will be an exemption from the levy for many taxpayers. There will be an exemption for those who received an Australian government disaster recovery payment for a disaster that occurred in 2010-11. There will be an exemption for those who were ineligible for an Australian government disaster recovery payment but have been affected by a disaster declared under the National Disaster Relief and Recovery Arrangements and meet at least one of the Australian government disaster recovery payment criteria. Finally, there will be an exemption for those who are New Zealand non-protected special category visa holders who received an ex gratia payment from the government in relation to a disaster that occurred in 2010-11.
Employees who are exempt from the levy will be able to ask their employer to not have the levy withheld from their regular pay with other tax withheld. Alternatively, at the end of the year the Australian Taxation Office will assess Australian taxpayers' tax liability, taking into account their exemption from the levy. I might add that the Australian tax office has implemented a range of support strategies for those affected by the floods. Over the last month or so, those affected by natural disaster have had more to worry about than sorting out their tax affairs. So, where necessary, the ATO has provided extra time to pay debts and lodge business activity statements. The tax office has helped reconstruct tax records where documents have been destroyed, as well as provided an emergency support information line.
The government is also supporting flood affected businesses and primary producers through assistance under the Natural Disaster Relief and Recovery Arrangements. These arrangements provide concessional loans, clean-up and recovery grants, and freight subsidies for primary producers. In addition, the government has activated the disaster income recovery subsidy for individuals, including business owners whose income has been affected by a recent disaster event.
In recognition of the exceptional nature of Tropical Cyclone Yasi and the damage it has caused, we have activated additional assistance for businesses and primary producers in these affected areas. This includes concessional loans of up to $650,000 and a grant component of up to $50,000. Wage assistance for employers, including primary producers, has been made available to help maintain the viability of businesses and the local community. A $20 million Rural Resilience Fund has been established, jointly funded by the federal and Queensland governments, to help fund business and community support measures such as farm clean-ups, counselling and social support measures.
As part of the debate on the bill, we have heard a number of comments that demonstrate that those opposite have a long way to go before they can offer a responsible alternative. We have heard those opposite say that the levy is too big. The coalition conveniently forget that their extravagant spending promises at the last election required them to campaign on the back of a levy that was $3 billion per year and had no end date.
We have heard those opposite say that they just wish the global financial crisis had never happened; it would be so much easier if revenues had not been downgraded by $110 billion, because then parliament would not have had to make a hard choice. In government we understand that the global financial crisis was real and Australia needed to respond. The fact is that the opposition opposed the measures that helped keep Australia out of recession. If they had had their way back then, we would have been in a much worse position than we are now to respond to these disasters today. They have claimed it is easy to find savings, but then they pitched up $700 million of savings that they had already counted to offset their other spending. In government we understand that a saving cannot be counted twice. It is inconceivable to me that any Queenslander in this place could line up against a bill designed to help rebuild their homeland. How can there be MPs who would rather go for some fairly unsophisticated politics over soundly developed policy? It is as strange as it is disappointing.
This levy is an important part of rebuilding after the natural disasters that we have seen over the last few months. I believe it is part of the Australian way, where everybody chips in to help a neighbour who is in distress. I believe that those citizens who are most affected by the floods want this parliament to get on and make its decisions so that they can concentrate on their recovery. I think that people in other places affected by the floods expect the people in this place to do their part to help them move through the natural disasters that they have seen in the first part of this year. Once again I would like to thank members for their contributions to the debate on this bill which is of such importance for Australia's response to the recent devastating floods and storms.