Mr HAWKER —My question is directed to the Treasurer. What steps has the government taken to ensure that foreign corporations pay tax in Australia? Furthermore, does the development of foreign tax havens pose a challenge to the Australian taxation system?

Mr COSTELLO (Treasurer) —The government has been very active in ensuring that foreign corporations pay Australian tax. We have introduced thin capitalisation rules to ensure that foreign corporations are not able to take advantage of excessive deductions in Australia. We have introduced new foreign investment fund rules to do the same thing and we have been active in relation to transfer pricing.

Australian residents who derive income from businesses or personal exertion in Australia would normally be expected to pay Australian tax and the money would come through the Australian system. So I was rather surprised to see that one of the co-owners of One Nation Ltd, Mr David Ettridge, who was apparently paid $150,000 according to the Sydney Morning Herald, was receiving payments through a company which was incorpo rated in Port Vila, a company called Global Communications Ltd.

Just to give a bit of background to this, Mr Ettridge was prosecuted by the Australian Taxation Office for unpaid taxes in August 1992. In September of 1993 a company called Global Communications Ltd was incorporated in the republic of Vanuatu. According to the Sydney Morning Herald, on 13 September 1997 World Vision paid $150,000 to this company, not in Port Vila but in Sydney. According to the Sydney Morning Herald the company Global Communications is not required to pay income tax or exchange duties in Vanuatu.

When another of the co-owners of One Nation Ltd, David Oldfield, was asked about this on television on Sunday he said that Mr Ettridge had been employed in Vanuatu. He said:

He works for somebody in Vanuatu. He is employed by them at that end. That is how the fundraising business that he was involved in where he was working for World Vision.

That is certainly not World Vision's account. According to World Vision, the business was in Australia and the money was paid in Australia, not in Vanuatu, which is a foreign tax haven.

I raise these issues for this reason: the public is owed an explanation. There may be an innocent explanation. It is becoming quite apparent that Mr Oldfield and Mr Ettridge have grabbed control of the One Nation Party and are two of the directors of One Nation Ltd. It is clear from revelations in today's press that they are directing the activities of the company and the party. The party's national spokesman ought to have a thorough investigation into the Vanuatu connection. The party's spokesman should hold an immediate press conference and detail the nature of the commissions that Mr Ettridge is on. There should be a full explanation as to whether or not Australian source income has been properly accounted for in relation to taxation matters and whether an advantage is being taken of a foreign tax haven.

If it were the case that Australians who are Australian residents were able to divert funds through foreign tax havens the only losers would be the honest Australian taxpayers. They would be the losers because it is the honest PAYE taxpayer, who has to pay full tax in the dollar, who will have to make that up. They do not have the opportunity to set up companies in Vanuatu.

All I am saying is what is on the public record, but the public is now owed a full explanation and the sooner it is given the better.

Honourable members —Hear, hear!

Mr Howard —Mr Speaker, I ask that further questions be placed on the Notice Paper .