As Lord Mayor of Brisbane, Campbell Newman decided not to charge ratepayers a flood levy to help with the recovery effort following the January 2011 floods, deciding to delay or scale back projects. He said
Delaying projects was not something we wanted to do, But it was the only responsible option if we couldn’t get the Federal Government to cover the massive cost of fixing things like ferry terminals and the riverwalk, so I thank them again for assisting the community in this way. Once the money begins to flow we will begin reinstating delayed projects, with our priority on getting our road and environment programs back on track. We will also be focussing on reinstating funding for suburban community initiatives.
Now it turns out that Mr Newman is the main advocate for a new tax to fund an NDIS. He even has the gall to cite the flood levy as an appropriate model. So we have the curious situation of a conservative premier proposing a new tax and a Labor PM rejecting a new tax.
Newman pointed out that the flood levy for Queensland, which had just expired, could simply be replaced by an NDIS levy.
Increasing the medicare levy by 0.5 percentage points is poor public policy. The medicare levy (which is on top of the top marginal tax rate and has quite a few exemptions) is a hit on income tax for which there is no reduction through tax deductions. It gives the impression to taxpayers that their medicare levy actually pays for health costs, when it covers less than 1/4 of health costs. Hypothecated taxes are generally inefficient because expenditure is not matched to the revenue and it provides inappropriate incentives for efficient management of a program. In the case of the medicare and so-called NDIS levies, it is worse since they are pseudo-hypothecated taxes – they appear to be for a specific purpose but in fact are just general revenue under a different label. In general the task of financing government expenditure should be held separate from the expenditure. It is the role of government within its fiscal strategy to produce balanced budgets – to raise revenue efficiently to meet the day-to-day expenditure of government.