Friday, January 28, 2011

A Flood of Antipathy

I'll say it right up front. I don't want to pay the flood levy. Call me un-Australian if you will but what's wrong with people donating money to worthy causes because they want to. There are many people who regularly, and I'm talking on a weekly basis, give money to various organisations which help people less fortunate than themselves. Even irregular givers, and those who spend their discretionary income on fuel for their jet skis and motorbikes, or on cartons of cigarettes and cases of beer, have dug deep into their pockets over the last few weeks to find some extra dollars to support what is the most immediate and worthy cause in our nation: the floods crisis.

The impact of the floods in Queensland and Victoria has not been overstated, so nothing more needs to be said. The generosity of Australians in times of crisis is well known and has again been demonstrated very clearly in their response to the flood disaster. At charity sporting events like the Legends of Origin game and cricket's KFC Big Bash, at fundraising concerts, through radio and television appeals, and at sausage sizzle stands around the country, Aussies have been coughing up for a very good cause. It is doubtful that there is anyone who has not made some sort of contribution to flood relief efforts. On top of all the donated money comes insurance which, although problematic due to mean spirited insurance companies, will also provide financial assistance.

Now the government wants to impose a one off flood levy. If you earn under $50000 a year you don't have to pay, but above that, you do. Presumably this includes all the families who were directly affected by the floods, and all the people who have already made donations to the various appeals. It's a small amount of money the government proposes to tax us; between one and five dollars per week, but it's not the money, it's the principle. The package announced by Julia Gillard includes government spending cuts to the value of two dollars for every one dollar collected by the levy. Why not have the whole thing funded by spending cuts? Or why, as every economist in the country, and around the world probably says, not simply borrow some money?

Heres' the argument. Suppose you are working on a plan to pay off your credit card debt by 2013. You are committed to this course of action as you believe it is necessary for your financial health. Suddenly and without warning, your car develops serious engine troubles and because you need your car, you have to get it fixed. The repair bill is in the thousands. How will you pay for it? Spending cuts aren't going to help, it's too much money and you need it now. You can't impose an engine repair levy on your friends and family, so you use your credit card right? And you say, oh well, I'll just have to adjust my credit card debt retirement plans due to unforeseen circumstances.

The recent floods were definitely unforeseen, a natural disaster which nobody could have predicted. So borrow some money to pay for infrastructure rebuilding Julia. We already pay income tax, and we've already donated money. You pay to fix the roads and bridges, that's your job. The reason why the government won't take on more debt when nobody would mind if they did, is because of politics. They promised to return the budget to surplus and damn it all they are sticking to that promise. The Prime Minister was questioned about this in light of the sensible view put forward by economists and every one else with half a brain, that the deficit should be added to, and said she disagreed with them, and had made up her mind to go down the flood levy path.

I think it's stupid and I resent it. I'm tired of governments and politicians who talk about making tough decisions to disguise the reality of their stupid, gutless and short sighted decisions. Ill conceived, poorly executed policies which achieve nothing. The next disaster to hit the Gillard government may well be the flood of antipathy towards it which results in its destruction. The great worry is that the opposition is just as bad. Maybe the next deluge to fall from the sky will wash away all the politicians.

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