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Wednesday, 25 March 1998
Page: 1541


Mr GEORGIOU —I address my question to the Treasurer. Has the Treasurer seen comments by the Deputy Leader of the Opposition this morning claiming that `we have a big tax problem' in Australia in relation to trusts? What has been done to address this `big problem' by this government, and what action was taken by previous governments?


Mr COSTELLO (Treasurer) —I was rather astounded by the comments of the Deputy Leader of the Opposition this morning. He never ceases to amaze us with the comments that he makes on his way into parliament. It may well be that I am the only person who ever reads them, but I would commend them to other members. They are a source of great amusement early in the morning.

Yesterday the Taxation Office released a report which showed the number of taxpayers in 1995-96 compared to the number of taxpayers in 1991-92. It is important that members understand the dates. The Commissioner of Taxation was reporting the number of taxpayers in the 1995-96 financial year. Members will remember that this government was elected in March 1996. These numbers showed that, whereas in 1991-92 there were approximately 300,000 trusts in Australia, in 1995-96 the number had grown to 398,000 trusts in Australia—an increase of 32.5 per cent between 1991-92 and 1995-96. Who was in government between 1991-92 and 1995-96? Who was the then Minister for Finance in the government?

The Deputy Leader of the Opposition cannot resist what he thinks is an opportunity when he sees one. He walked in to the doorstop this morning and, with all the solemnity that he could muster, said, `We have got a big tax problem.' He put out a media release which had these words: `We have got a big tax problem.' As I said, one of the advantages of actually reading what he says is that you can remember things. You can remember Gareth Evans, on the Nine Sunday program on 17 August 1997, saying this:

Those who say that the tax system is broke are really being quite a bit absurdly breathless.

We have a big tax problem. In 1997:

Those who say that the tax system is broke are really being . . . a bit absurdly breathless.

Gareth Evans at the National Press Club said:

Tax reform is a second or third order public policy economic issue.

Their whole case for the last 18 months has been this: there is no need to reform the Australian tax system because it ain't broke. This morning: `We've got a big tax problem.' We know there is a big tax problem in this country and we know who created it between 1991-92 and 1995-96. We know that. That is why we want to fix it. That is why, for example, this government passed legislation on Monday night clamping down on the trading and trust losses. This is why this government passed legislation addressing tax avoidance by the misuse of charitable trusts. This is why this government announced measures to deal with franking credit trading through discretionary trusts. This is why this government introduced the measures to deal with R&D syndicates.

When I became the Treasurer and I had a report from the tax office on the level of deductions that were being claimed under R&D syndicates, I was moved immediately to announce that we would be closing them down. One of the reports I had was that a company—this is a confidential report—with a gross turnover in 1996 of $930 million paid $14,000 in tax. The group first entered into R&D syndication in 1993, generating $39.2 million tax losses between 1993 and 1996. Who was in government between 1993 and 1996? Who was the finance minister? Who was the government that closed down R&D syndicates? And who is the opposition that wants to reopen them again?

The member for Hotham runs around after Senator Parer and trusts and he has promised on behalf of the Labor Party to reintroduce R&D syndicates. That is a Labor Party policy. And you have a weak Leader of the Opposition who cannot control his frontbench. He cannot control the member for Hotham. The member for Hotham, as anybody in the Melbourne business community knows, is running around the Melbourne business community offering tax breaks to whomever he wants as a chosen friend, and the Leader of the Opposition does nothing about it. We have a tax problem in this country and it was created by Labor. But we have a government in this country which is determined to fix it and an opposition which stands against tax reform, and we are not going to take any lectures from the authors of the R&D syndicates on tax.