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Monday, 26 May 1997
Page: 4002

Mr MARTIN FERGUSON(5.37 p.m.) —Prime Minister Howard and his Treasurer, Mr Costello, have started a new debate on tax. We can safely call this debate the `political flatulence debate'. I enjoyed reading the Australian Financial Review 's economic commentator, Alan Mitchell, last week telling the story of former Prime Minister William McMahon's reminiscences of the Billy Hughes tactics. He suggested that Mr Hughes confided to Mr McMahon—one of the mentors of the current Prime Minister (Mr Howard)—that to get attention away from a problem, `Just let off a bit of political flatulence and then run like hell.' That was the advice to the former Prime Minister Mr McMahon.

Curiously, Australians were being asked to concentrate last week on a new issue just as the budget was being ridiculed by the public, and ridiculed it was. For example, I refer to such radio commentators as Alan Jones. He and others were making fun of the budget savings measures, appropriately pointing out that it was savings only for the rich. Mr Prime Minister, how is the budget one of keeping faith with the battlers? Is that not why the political flatulence went off? It gave up a huge stink. In essence, it was about getting people to forget about the budget and wonder what the hell the new smell was about.

It was a huge smell. The Minister for Industrial Relations (Mr Reith), for example, let off his own stink bomb when he had the gall—and I suggest it was real gall—to go on Jon Faine's ABC program in Melbourne last Monday and accuse working people of not paying their fair share of tax. Yes, the battlers were accused by the Minister for Industrial Relations of not paying their share of taxes. Yes, that is what he did, though he did try to hide it by suggesting that it was not workers in general but only union members skipping out on tax. More importantly, he went out of his way to libel people in the trade union movement when he said:

Some people in the trade union movement, who live in the cash economy, the last thing they want to do is pay their fair share of taxes, and they would use their political muscle within the labour movement to make the Labor Party use it as a scare campaign so they can go on skipping on paying tax.

That is the same minister who was reported in the Herald-Sun on 7 May 1996 as wanting to talk about battlers. I do not know how many battlers and trade union members, among them construction workers who built the new casino in Melbourne, Mr Reith was referring to, but it is interesting to note that in that Herald-Sun of 7 May 1996 there was a report about a huge discount of $43,500 given by one Mr Ron Walker, the treasurer of the Liberal Party, to the Minister for Industrial Relations for the purchase of an apartment in that Hudson Conway development in Melbourne. So we know who has got friends out there in the community and who is getting benefits. It is certainly not the working people who built the casino, the owners of which gave the Minister for Industrial Relations a huge discount with respect to the project that they had going in St Kilda Road for some new apartments.

I will never condone tax avoidance, but for the Minister for Industrial Relations to imply that working people hurt our tax base more than the rich who worm out of paying their proper taxes shows someone who is completely out of touch with the reality of our tax system. This government can have no real commitment to tax reform when time after time it is prepared to delay and avoid making the reform of the taxation of trusts. The taxation of trusts! Remember that? If Minister Reith was being fair dinkum, he would have attacked the wealthy who fund the Liberal Party—the type of people who give him discounts in St Kilda Road and use their political muscle to make sure that they skip out on paying tax. We have all got long memories about who protected them previously prior to 1983 with respect to the bottom of the harbour activities.

In the last election, in reaction to the Labor government's plans to pursue the rich who were using trusts to minimise their tax, the coalition went around saying, `Me too.' That, after all, was the `me too' election. We had the then Leader of the Opposition, the current Prime Minister, trying to be non-threatening and promising to be just like Labor—no different, `me too.' So the coalition was `me too' on taxing the rich. It promised to go after trusts, but what has happened since then? It is big on rhetoric, little on action; it reminds me a little bit about its performance on the unemployment issue. We have had promises of discussion papers and more discussion papers and now we find that the discussion paper has been delayed until later in 1997.

No real tax reform can happen in this country, I suggest, until this government is prepared to front up to the promises it made in the lead-up to this term of parliament and to face up to the issue of tax minimisation by the rich using trusts. They are the same people who are going to rort the savings initiative put in place by the current budget. It will not be $450 for those households. It will be $450 a couple of times over because of their capacity to rort trusts and to minimise tax.

But why have there been delays in moving against trusts? Let me suggest one reason. The power of the trust tax avoiders reaches right into the Howard cabinet room. The majority of those in the cabinet have good parts of their personal wealth tied up in trusts. And they dare to suggest that working people are tax minimisers! Only nine out of 28 Howard government ministers do not have any trust funds listed in the register of members' interests, a public document.

Some of the reputed wealthiest members of the Howard government have some of their money tied up in trust funds: the Minister for Defence (Mr McLachlan), the Minister for Foreign Affairs (Mr Downer), the Minister for Science and Technology (Mr McGauran) and, interestingly enough, the Minister for Small Business and Consumer Affairs (Mr Prosser). He is not just an expert; he is the prime expert on how to use trusts to minimise tax to his own personal advantage. How can the Howard ministry make an intelligent assessment about the tax debate and about real tax reform with so many of their ministers caught up in tax trusts? The Australian Taxation Office's high wealth individuals task force has informed this government that one of the biggest tax rorts is due to the use of complex trusts. That task force has argued that, if we can improve the compliance of high wealth individuals who use aggressive tax planning and minimisation arrangements with their trusts, we could recoup tax revenue estimated at $800 million a year.

When it comes to discussing the role of trusts in the tax reform debate, will there be 19 ministers involved in trusts standing outside the cabinet room and refusing to participate in the debate? I think that is a fairly relevant question to the issue of the tax debate at the moment. Will they sit outside the cabinet room while trusts—an essential component of the tax debate—are being debated by the remaining nine ministers? I will bet they are not silent: there is too much to lose. That will be a great press photo: 19 ministers waiting outside the cabinet room while they wait and wait to find out how their remaining colleagues have treated the issue of tax and the issue of their trusts and their wealth.

Where could the tax system collect more money more efficiently from? Not from the ordinary working people and their families who are taxed so ruthlessly, as suggested by the Minister for Industrial Relations on the John Faine show in Melbourne last Monday. The working people in unions are not the wealthy people who use unit trusts. They are not the wealthy people who minimise their tax and rip off the Australian public.

In conclusion, I suggest that no amount of stink bombs will cover the fact that this government has its hand in the till. It has its hands tied when it comes to moving against the big tax avoiders who use trusts. It is these ministers—not the people suggested by the Minister for Industrial Relations on the Faine program on 3LO—who skip out of paying tax. If you want a tax debate, then the responsibility of this government is to deliver on the promise of taxation reform which was given prior to the last election—not to continue to produce discussion papers while it sits on its hands. The tax system needs some reform: the reform spoken about before the last federal election.

More than one-third of this parliament is over. When will this government produce the goods on taxation reform? When will they start ensuring that the wealthy in this country who use trusts to minimise their tax start to pay their fair share, instead of attacking working people and their families? (Time expired)