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Wednesday, 25 March 1998
Page: 1533


Mr McDOUGALL —My question is addressed to the Prime Minister. Prime Minister, would you inform the House of the government's broad approach regarding taxation treatment of trusts?


Mr HOWARD (Prime Minister) —I thank the honourable member for the question. I think it is a very apposite question, given not only the report of the Taxation Office but also the matter of public importance that appears in the name of the newly rediscovered Deputy Leader of the Opposition, who is sort of trying to get back into the game after having been put in the shade a bit. He did not get much of the sort of conflict of interest actions, so he decided he wanted to get back into the game on this.

The other important aspect of this is the report of the Commissioner of Taxation about the growth of trusts in Australia. One of the most interesting things, of course, is that the Commissioner of Taxation's report entirely relates to the period that the Labor Party was in office before the last election. So let it first be understood that trusts exploded under Labor. It is under Labor that trusts exploded, and in case the Deputy Leader of the Opposition or indeed any other members of the opposition are minded to say, `What are you going to do about trusts?' I will reply, `Why didn't you do something about them over the last 13 years?' No doubt the retort will come back, `Oh, we were gonna do it in the 14th year.'

Let me say that again: if there is any argument about the explosion of the uses of trusts in this country, if there is to be criticism of that, that is a damning indictment of the administrative performance of the former Labor government, because it was under Labor that trusts became a fast growing industry. It was under Labor, if there are any alleged abuses claimed in relation to trusts, that those abuses occurred.

I want to say on behalf of the government that we naturally do not accept responsibility for what occurred under Labor, but once again, as with the deficit, although we were not responsible, we will endeavour to fix problems and we will endeavour to fix abuses. We had to fix the deficit. The Leader of the Opposition left us with a $10½ billion deficit. We not only had to fix that deficit but had to face obstructive tactics from the Labor Party in our efforts to fix that deficit.

Let me go further and make it very plain: our attitude in relation to any tax avoidance practices is that they will be addressed, and they will be addressed properly. I remind the parliament that only two nights ago the Senate passed some government legislation which prohibited trafficking in trust losses. That was an earnest of my government's determination to stamp out abuses, whether they occur under family trusts or whether they occur under any other area. May I repeat to the parliament, for the benefit particularly of the opposition, that the attitude of my government in relation to the taxation issue and in relation to family trusts is that the government parties in any taxation changes we make will not be acting in a manner which would seriously damage, or indeed damage at all, the small business community.

I also want to make it clear that we will take, if necessary, action against the abuse of trusts. We have always taken action against the abuse of trusts, and that will be the attitude we will bring to the formulation of our taxation policy. But let there be no cant and humbug from the opposition: it was under the Labor Party that the use of trusts exploded. The report of the Commissioner of Taxation was not about our period in office. Trusts did not arrive on the Australian political scene on 2 March 1996; they burgeoned, they flourished, they grew like wildflowers under the Keating and the Hawke administrations, and any attempt to pretend otherwise is absolute humbug.