Even Wayne Swan has expressed concern that the $1000 flood relief payment may be rorted. According to the Sydney Morning Herald,
Anyone who was “stranded within their home or unable to gain access to their residence for at least 24 hours, or whose principal place of residence was without electricity, water, gas, sewerage or another essential service for at least 48 hours” is eligible for the payment, while anyone who can demonstrate a direct loss of income from the floods is eligible for the income subsidy.
Even if they don’t need these payments, affluent households may still claim them simply to avoid the flood levy, and so many of those living in multimillion-dollar homes along the Brisbane River may well be exempt from paying.
This of course has an interesting interaction and moral hazard with the proposed flood levy. A person claiming the $1000 flood relief payment is likely to avoid the levy – this could make the levy (sorry, tax) quite regressive allowing some high income earners to avoid the tax.
Now, what happens if the independents succeed in getting the Government to make the tax permanent rather than for the 2011-12 financial year? Would those in receipt of the $1000 flood relief payment be permanently exempted from the tax?
The flood levy is a serious strategic mistake by the Gillard Government. It is likely to be the new resource super profits tax in its impact on the Government.
The flood levy is a bad policy, but all rather mute at the mement as events are about to pass it by.
Severe Tropical Cyclone Yasi looks like it might track north and hit innisfail, Gordonvale and Cairns as a high cat 4 if not cat 5.
These towns and cities are very low lying and up against the mountains, limiting exit routes.
Yasi will hit at the same or stronger intensity as STC Larry, but its diameter is twice the size, a monster storm.
THe only two saving graces are that it is fast moving, and is expected to cross at spring low tide.
If it slows down and doesn’t cross until mid morning Thursday, it will coincide with a spring high tide and Cairns could go under (a lot will anyway, this is a big, big storm). This will make what happened in Brisbane look like stepping in a puddle and getting your socks wet.
The biggest issue will be human safety, and it could turn into our worst ever natural disaster. The big one will finally hit Cairns.
Joolia can forget about her budget surplus, and she might as well toss the levy out the window too.
Oh, that $1000 issue? I personally know people who had chosen not to take it up as they would have felt guilty as they had only lost power for a couple of days. No biggy. They have no applied for it so they are not required to pay the levy. They might have once had scruples, but more so, do not like being ripped off.
entropy
1 Feb 11 at 8:02 am
that would be “moot”. The levy in its current form will end on Thursday morning.
entropy
1 Feb 11 at 8:06 am
A “permanent” disaster fund is a bad idea.Politicians would not be able to keep their hands off it – “it isn’t really costing anything, it’s in the fund”.
I don’t know what the final hit to the commonwealth for the floods will be – let’s say it is $10 billion – spread over a few years, that is not a huge amount. You buy insurance, or set up funds, if a one time hit would be catastrophic.
ken n
1 Feb 11 at 8:40 am
A permanent fund is ostensibly like self-insurance, with the key difference that Parliament can’t bind itself from raiding that piggybank whenever election time rolls around. At least if they literally took out insurance on their own infrastructure, they wouldn’t be able to make a pile of cash that could be spent easily.
I think compulsory insurance for housing is inevitable. I mean you are forced to take it to own a car — it might help exercise people’s thinking about the risk of living in flood-prone areas.
Jacques Chester
1 Feb 11 at 9:26 am
Jacques – the problem with that would be that the insurers would have control over where people can build – what risks they are willing to take.
And I don’t know what would be done about all the stuff already built in high-risk areas.
ken n
1 Feb 11 at 9:30 am
Jacques, the only compulsory car insurance is THIRD party insurance. You yourself aren’t covered by it for damage to your own car. This is completely different from the proposed compulsory house insurance.
The government is big enough to self insure anyway. If they insured their infrastructure they would be paying the same in premiums averaged over time PLUS the insurance company margin. Bad idea.
Eyrie
1 Feb 11 at 10:07 am
So in the link about rorts a JP called Jacqui Kennedy comes close to identifying a person and comes close to accusing said person of a crime with no evidence. Still what ever the outcome of that, Samuel J can relax. As a single mum living out of town near Blackwater she just is not going to have a taxable income high enough to pay the levy.
In the event that the government was stupid enough to make this tax permanent, why on earth would they allow anyone who had ever received disaster relief exempt from paying the tax ever again. So he can relax about that also.
I doubt that there will be too many “rich” people queuing up to have their carpets damaged so that they can avoid the levy either. So he can probably relax about that.
As I said in my blog, on balance Julia Gillard will loose over this tax. She certainly lost ground by losing her temper on talk back trying to claim that there was no politics behind introducing it.
peter
1 Feb 11 at 10:53 am
I agree with Jim Soorley, former Lord Mayor of Brisbane, and with the flood maps, that the flooded area of Brisbane was “minute” compared with the total area of the city.
Severe temporary dislocation was caused by flooding of major roads e.g. Coronation Drive, Milton Road & others.
Flooding was exacerbated by a number of bridges built recently in the Brisbane River e.g. massive Gateway #2, Gobetween Bridge, pedestrian bridges, and by CityCat terminals.
There is no doubt in my mind that the people of Brisbane would vote overwhelmingly to keep the bridges and Citycats & put up with minor flooding now & again.
Outside Brisbane, road damage (e.g. Warrego Highway, Toowoomba Range) was exacerbated by previous poor maintenance by a South-East corner focussed State Government.
The case for a new Toowoomba Range crossing (as promised by the Federal Coalition) seems to have been made.
Thomas Esmond Knox
1 Feb 11 at 10:57 am
… and? We should instead subsidise people to live in flood-prone areas?
People will steadily move away due to the cost of insurance. Thus reducing collective risk.
Jacques Chester
1 Feb 11 at 11:03 am
In kind it’s different, but the concept is the same. People systematically underinsure themselves, government gets stuck with the bill. I would rather forcefully privatise the risk than socialise it.
Oh noes, somebody might make a profit?!?!?!1!
Anyway, paying the profit premium is itself worth it because it insures against the much higher risk that a self-insurance pool would be raided for pork funds.
Jacques Chester
1 Feb 11 at 11:07 am
“We should instead subsidise people to live in flood-prone areas?”
Nup, but thee should be room to make one’s own risk assessment.
The insurers will not have premiums varying with the risk – they would (and do) decline risks that are too high.
BTW I have just learned (from Kevin Kelly’d beaut book What Technology wants) that the Amish do not insure house barns or anything else.
ken n
1 Feb 11 at 11:10 am
Which is probably a hint that people shouldn’t build there.
Jacques Chester
1 Feb 11 at 11:34 am
Sure, if you are happy for the insurance company to make the decision for you.
ken n
1 Feb 11 at 11:43 am