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Thursday, 26 March 1998
Page: 1665

Mr COSTELLO (Treasurer) (10:35 AM) —Mr Deputy Speaker, I happen to be here this morning, as you know, to introduce the biggest shake-up of the Australian financial sector probably in two decades. I was not aware that the Deputy Leader of the Opposition (Mr Gareth Evans) was going to try this stunt. Seeing as I am here, I will respond to his stunt. It will not take very long.

This is the Deputy Leader of the Opposition who is engaged on this little stunt because yesterday he said that he discovered yesterday Australia had a tax problem. The basis on which he says he discovered yesterday that Australia had a tax problem was the release by the Australian Taxation Office of statistics about the growth in the number of trusts between 1991 and 1995.

Mr Gareth Evans —Mr Deputy Speaker, I raise a point of order. Is it in order for the Treasurer to mislead this House by misquoting and incompletely quoting my statement yesterday, which was that we had a tax problem in relation to the scale of creation of new trusts, not more generally?

Mr DEPUTY SPEAKER (Mr Jenkins) —There is no point of order.

Mr COSTELLO —There is no point of order, and you know it. Yesterday you said you had discovered that there was a problem on the basis of statistics that were released about the growth in the number of trusts between 1991-92 and 1995-96—a period during the whole of which, with the exception of March 1996 to June 1996, you were in government; a period during the whole of which, apart from those three months, the now Leader of the Opposition (Mr Beazley) was the finance minister; a period during the whole of which you had the capacity, if you were genuinely worried about that, to do something about it; but a period during the whole of which you did nothing.

Gratuitously, the Deputy Leader of the Opposition discovered yesterday, on the basis of his own failure, a problem. What you discovered yesterday, the honourable member for Holt, is evidence, according to you, of your own default and failure. You come in here in relation to these amendments, which bear no wit of relation to what you have just addressed, and try to sneak around this issue and put false and misleading slurs upon the government.

The truth of the matter is this: this was the government that legislated to prevent trafficking in trust losses. The measures that were always intended were to prevent trafficking in trust losses. They were not to prevent those people who had legitimately incurred losses being able to offset those losses against income, as would be the case for an individual.

Let me go through it. If you as an individual incur a loss on some part of your income and you make a profit on another, you set off the profit against the loss and you pay on the balance. It is an obvious principle of tax collection. You do not have to pay tax on the profit and disregard the loss. If you made a loss on your rental property and you made a gain on your share trading, as an individual you can set the profits and the loss off and you pay tax on the balance. The same should apply in relation to a trust. The amendments that you speak of were applied in relation to a trust. So if a family group had losses and income, it could offset them. It is an obvious point and a point which, if you had turned your mind to it, would have been agreed from the outset.

The second point which you conveniently and repeatedly overlooked was that the changes we made actually tighten the definition of family. In your speech you referred to a wife's grandfather. What you omit to say is that we narrowed the definition of family because under Labor Party proposals you would have included great-grandparents and great-grandchildren and a far wider class of person than is allowed by this current legislation.

The proof is in the estimates. When the changes were made, the actual revenue estimates provided by the Treasury were for increased collection. To stand up here and say that this could in some way harm the revenue, when it produced an increased collection, is entirely false.

The amendments that have come back here this morning from the Senate are accepted by the government. The legislation should be allowed to be put into place. It is good legislation, and the government fully supports it.