Flood-proofing levy has merit, but funds should go into Consolidated Revenue

Given Queensland’s budgetary challenges, there is merit in the Government’s plan to raise additional money to pay for flood-proofing projects through a special levy, as reported in the Courier-Mail this morning. I would, however, advise against having the money paid into a special fund, where it is ear-marked for flood proofing, which appears to be the Local Government Minister’s intention. The Courier-Mail reports:

Mr Crisafulli said the levy would have its own fund away from consolidated revenue and an end date.

“I am not talking about something that goes into consolidated revenue or lasts in perpetuity,” he said.

“I am talking about a levy that goes into a separate fund for disaster recovery, disaster betterment as part of that recovery and resilience to reduce your future payouts.

“To me it is something we should look at doing over a five-year period and collect about $1 billion. I think that would make a good start.”

I agree with the Minister that the levy should have an end date, but I’m concerned that allocating it to a special fund will limit the Government’s budgetary flexibility. It will mean that the Government may well end up having to pay $1 billion for flood-proofing projects, when it isn’t clear yet that this is the right amount of money to spend on flood proofing. Sure, local governments have identified $950 million of flood-proofing works, but are we really sure these are all necessary (and better value for money than spending additional money on education or health)? It would be better for the Government to have the $1 billion paid into Consolidated Revenue and only funding worthwhile projects that stack up economically. It should dedicate a small fraction of the levy money raised to assessing the feasibility and merits of funding applications.

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