Mr ROCHER (9:31 PM) —It seems an eternity ago since my remarks were interrupted because of question time some time last week. I must say I do not admire the government for the way it has handled the passage of this legislation, but that is another story. I think at that time I was talking about the remittances required by electronic means and the implications that had for businesses forwarding payments by cheque which hither to have been perfectly normal in terms of commercial transactions in this country. I know it would not fit within the definition, but it is almost to the extent that legal tender is replaced, because of precedents and acceptance, by payment of cheque.

I started to say, if I remember how events concluded when we last were debating this issue, that if the government or the Australian Taxation Office have a problem they need only to have the current tax act amended to reinstate the measure which once deemed that payment by cheque had not occurred until the amount of the cheque had actually been collected. The fact that Treasury has not pursued this alternative indicates to me—perhaps wrongly but I do not think so; I will be charitable and say `perhaps wrongly'—that improving the equity of the overall tax system has been superseded rather by another tax grab.

In the interim, since we last spoke on this bill to confirm that, I have had correspondence from the Chamber of Commerce and Industry in Western Australia, the CCIWA. Amongst other things, whilst they gave credit to the government for its attempt to rationalise and improve the system of remittance, they have the same concerns as me. They talk, in correspondence with me, about the need for clarification and that the first of the clarifications required is why there should be the need for, in many cases in large businesses, remittances of up to two a week.

A large entity which makes a PPS or RPS payment on a daily basis, under the proposals before the parliament, will in the future be required to make two remittances per week under the proposed section 220AAE. Some remittances will be required to be made within four working days of the payment; that is, for deductions made on a Tuesday and Friday. They have to make their remittances electronically within four days. That is quite unreasonable and anyone outside the bureaucracy with a knowledge of business and the constraints on it, even in this computer age, would understand what I am talking about. A system which is based on a maximum of one remittance per week surely would be more realistic, although, in my opinion, not all that acceptable. The CCIWA seeks the support of members of this parliament to amend the bill in that way accordingly.

A second proposal, which is the move to force large firms to use electronic means of payment of funds to the Australian Taxation Office, absolutely lacks any rational basis. The move to penalise firms that choose to pay by cheque, hitherto totally acceptable and normal in a commercial sense, is questionable at best but stupid at worst. The present proposal, as I understand it, requires large remitters to be obliged to—no choice—remit solely by electronic funds transfer. On top of that, they will be penalised a minimum of $500 per remittance paid by other means. (Extension of time granted)

There are proposed to be up to 104 remittances required each year by the large remitters of these tax deductions and prepayments of one sort or another from 1 July 1998. That means a minimum potential liability of $52,000 per year for large employers who choose to pay by cheque. I emphasise again that that was previously perfectly acceptable and normal commercial practice. Irrespective of whether those payments are received and cleared by the Australian Taxation Office within the desired time limit, for large remitters with only PAYE obligations the minimum penalty would be $26,000 where they pay salary on a weekly basis or $13,000 where they pay salary fortnightly.

You have the situation that the relevant part of the legislation proposed in 221AAW does not seek to penalise late remitters, it seeks to penalise large remitters who choose to use some other more normal and commercially acceptable mode of payment such as a cheque. To put it another way, they are seeking to make it an offence to use other than normal and commercially accepted modes of payment. The justification, as far as I can tell—I might be wrong on this—is that some large remitters may seek to defer payment by delivering a cheque on the due date of payment knowing that it will take some time for the cheque to be cleared. If this is a genuine concern—and I ask the question sincerely—then surely the answer would be, as I remarked earlier before this debate was interrupted, to make the offence rely upon the failure of the payment to have been cleared by the end of the day—that is, the due date of payment. That is a relatively simple matter and not unprecedented. Former regulation 60 of the income tax regulations, which, incidentally, were repealed in 1994 under the previous government, provided that payment by cheque was not deemed to have been made until the amount of the cheque had been collected. Such a regulation would surely be sufficient to overcome supposed mischief, at which proposed section 221AAW is aimed.

This proposal seems to be aimed at shifting the ATO's administrative costs onto the large business sector. That is plainly unacceptable. In another context it might even be said to be discriminatory. If there is to be a penalty then surely there must be an offence. An offence in this case is missing. The proposed section will penalise withholders who have complied with all their obligations and remitted cheques in payment of tax in sufficient time to enable the Australian Taxation Office to clear those cheques. In such a circumstance I submit to the parliament and to any reasonable person listening that there is no offence. Yet there is a penalty attached.

The proposal may also be unconstitutional in that if there is no offence the penalty may amount to the levying of a tax. I do not know whether that has crossed the minds of the government, the advisers in the box, the bureaucracy generally, the ATO or Treasury. But it is my understanding that a tax bill may impose tax or levy tax, but not both. That seems to be a criterion which is missing in this case. (Extension of time granted)

The area requiring clarification is whether the three types of obligations covered by the proposed measures—that is PAYE, PPS or RPS—would be required to be amalgamated or whether they should be paid separately. It is not clear. Amalgamated payments would cause greater compliance costs for businesses given that payroll is usually handled by a part of a particular large organisation that is different from the part that handles PPS or RPS. On the other hand, if payments are meant to be made separately this could and will, I suspect, substantially increase the penalties. Potentially they could be more than double and possibly treble the number and amount of penalties to which each large remitter is exposed. Equally, the four payments specified in the proposed section 220AE are treated as separate remittances for penalty purposes even though the legislation suggests that they would normally be amalgamated into two payments. The potential minimum penalty referred to earlier of $52,000 per annum would double to something like $104,000 per annum. It is hardly a hanging offence. I offer the opinion that in the circumstances $104,000 is tantamount to a hanging offence.

Since the government announced its amendments, and given the unintentional—nevertheless helpful—elapse of time that has occurred since I last addressed this question in the debate on the detail stage, I have had correspondence from the Taxation Institute of Australia. The TIA has in great depth conveyed to me—and I hope to others; but if not at least to me—that the amendments foreshadowed by the Assistant Treasurer (Senator Kemp) on 9 March as they affect division 7A have very real defects.

The bill itself has been the subject of a hearing—as you may or may not know, Mr Deputy Speaker—before the Senate Economics Legislation Committee, which was due to report only yesterday. We are debating legislation in this place without the benefit of the outcome of that hearing. I know I have had something to say quite recently about whether the Senate should be conducting inquiries on matters before the House of Representatives which would warrant their assuming that the legislation is going to be passed by the House of Representatives unamended. I simply acknowledge that there is a difficulty with that. But the point in this case is that that committee is in fact deliberating. I do not know whether it has handed down its report, but given that it was conducting hearings only yesterday I would have to suspect that it has not.

In the event, here we are in the House of Representatives in the detail stage of a complex bill of nine or 10 separate and disparate measures talking about a measure which is under active consideration and, by dint of the activities of the relevant Senate committee, that committee is considering the very matters which are of concern to me and to my constituents and, above all, to the Taxation Institute of Australia. The TIA has given evidence to that committee and, of course, it was critical, as am I, of certain aspects of the bill, particularly the deficiency in consultation in relation to the proposed changes to division 7A. (Extension of time granted) The TIA is still of, and I am still of—

Mrs Sullivan interjecting—

Mr ROCHER —The honourable member for Moncrieff and the Parliamentary Secretary (Cabinet) to the Prime Minister (Mr Miles) might be having trouble following the argument and I can understand their humour. I am having trouble following it myself, but that is not because I do not understand it but because of the stupid way your government conducts the legislative program in this chamber. But that is not your fault, Mr Deputy Speaker. It is certainly not the member for Moncrieff's fault or, indeed, that of the Parliamentary Secretary (Cabinet) to the Prime Minister.

The TIA remains of the view, as I do, that division 7A and schedule 8 of this bill, which refers to the anti-dividend streaming and anti-avoidance provisions, should be excised from the bill and subjected to rigorous debate to ensure that the provisions do not continue to create compliance problems with Australian businesses. The continuing problems with division 7A have been tabulated by the Taxation Institute of Australia, but only as a result of the late last minute amendments introduced, in conjunction with the detail stage of this bill, by the government. I have to say, once again, that they have not had time to consider them but have done a remarkable job in analysing and dissecting clause by clause the need to put this legislation into some sort of sensible form.

I do not want to pursue that any more. I think I have made the point, but I am not sure that it will be registered by my colleagues. Although I understand the very sincere attitude of the parliamentary secretary, I think he has been underinformed and misinformed or whatever it is by the bureaucracy in this circumstance.

I want to revisit schedule 5, because there was something I said before the debate was adjourned at question time a week or two ago. I was talking about superannuation accounts in schedule 5 and the treatment of them for tax purposes. I want to add some remarks about the situation of casually employed individuals who have several separate superannuation accounts—and there are many hundreds of thousands of such accounts, and perhaps they are in the millions, I am not sure—with only very small balances in each. The predicament and interests of those people could be resolved under the terms of this legislation.

Current estimates put the number of accounts which form part of the ATO's `lost member fund facility' at around $1.5 million, amounting to approximately $1.5 billion in benefits that employees have failed to claim. That is a significant figure, and that money is sloshing around in the system somewhere. I do not know where it is, but I think the ATO is rubbing its hands because it is going to cop that sooner or later.

While the coalition is right to implement legislation that will improve the portability of superannuation entitlements, and I have already acknowledged that, it seems to me that the government is all too prepared to neutralise the full benefits of the initiative in its attempt to push the bill through this parliament. That is regrettable, but not exceptional, unfortunately. At a time when the government has set in place a number of initiatives that it hopes will facilitate improved levels of national savings and investment, the new tax treatment of franking dividends will have the opposite effect. I am on record as having asked the Treasurer (Mr Costello) a question today, and I am somewhat reassured by his reply, but the trouble is, and I have said it earlier—(Time expired)