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Thursday, 26 August 1999
Page: 9181


Mr TANNER (10:18 AM) —You really have to question the motives of the government when it wants to put through legislation of this kind and backdate it to 1 July 1998. The Taxation Laws Amendment (Political Donations) Bill 1999 concerns tax deductibility for political donations and, effectively, it is legislation to repay those who have donated to the government's slush funds at the last election. The 1999 version of the bill will have the same effect as the 1998 bill and the same start-up date. This bill should be rejected by the House.

The government tried to ram this bill through just before the 1998 election, but they were frustrated in their efforts to do so. However, without even a blush, here it is again. The government are quite shameless in their attempts to get the public to subsidise their corporate political fundraising. It is worth noting where the deductibility of political donations came from—and the current government have a lot of form on this particular matter. The tax deductibility of donations to political parties was first introduced into our tax laws in 1991 by an amendment moved by the now disgraced Senator Parer. It was the Liberal Party's idea. In 1991, they wanted no limits on the amount that could be claimed for a deduction for a donation to a political party. They wanted it without the $100 cap. No doubt that is still their agenda. But now the brains trust at Menzies House have devised a two-step process. First, they want to increase the limit—the current cap of $100—to $1,500, and then no doubt at some point in the future they will want to get rid of that limit altogether.

I now turn to the key points in the legislation. The Taxation Laws Amendment (Political Donations) Bill proposes amendments to the Income Tax Assessment Act 1997 to increase the maximum annual tax deductibility threshold for donations to political parties to $1,500; allow companies to make tax deductible political donations; broaden the definition of `donation' to cover contributions as well as gifts; bring donations to independent candidates in line with donations to political parties; and allow for tax deductible donations to be made to political parties registered under state or territory electoral legislation. If the government has its way, the measures are to come into effect from 1 July 1998, cynically backdated to ensure that all of the conservatives' mates can get a bit of a handout with their tax returns.

We have a bill here which is in effect about putting $45 million over three years from taxpayers into the coffers of political parties. If it is passed, some of that money will go to my party—not a very big proportion, but some. We would be better off to some extent. We would have some more money for fighting elections. But the body politic—the Australian democratic system—would be significantly worse off. When I refer to $45 million, that is not the amount of extra money that political parties will have; that is the effective cost to the taxpayer, according to the explanatory memorandum to this bill. Some of this money will come from corporate donors and some from private donations.

I assume that somewhere between $100 million and $130 million of donations will be going to political parties through this system—a minority of that amount to the Labor Party, most of it traditionally to the Liberal and National parties, and very little to the Democrats and the other minor parties. The real issue here is the coalition's longstanding agenda to maximise the advantage they hold in attracting large corporate donations and donations from wealthy individuals. The sum of $1,500 may not seem large to many of the wealthy individuals sitting on the other side of the parliament. But, for those ordinary Australians who effectively will have to pay the price of this legislation through the cost to the taxpayer, this sum is a considerable amount.

I would like to see most ordinary Australians just pull out $1,500 worth of loose change and pursue their involvement in the democratic process. That seems to be an assumption which is built into this proposal. It is a fundamentally flawed proposal, and we on this side of the House understand why. If you look at these matters, what you can see at first glance as something that looks apparently reasonable—extending the deductibility of donations from $100 to $1,500—is in fact designed to make the political environment easier and more effective for the Liberal and National parties.

I am not suggesting that this bill is inherently about dishonesty. We are very critical of the infamous Greenfields rort that the Liberal Party have perfected. The Liberal Party are playing hide and seek with the Electoral Commission on that. They know it is dodgy, but I do not think there is anything in this legislation that is designed to induce impropriety. The bill is just fundamentally flawed and wrong in principle. This side of the House is essentially saying, `We don't agree with the notion that the taxpayer should give additional funding, through providing tax minimisation opportunities to wealthy donors to the Liberal Party, to political parties.'

For example, we would like to go out and ask people: `We have a proposal to spend $15 million of taxpayers' money a year. What is the most important way that you would spend it? There are a few options. One of them is that you could help out the Liberal Party, the National Party and the Labor Party with some tax deductibility.' Anyone asked that question would no doubt laugh. Here we have a government that is prepared to spend $15 million of taxpayers' money to enhance deductibility—on a backdated basis to cover their last election campaign—for their political mates but can only find $1½ million to aid the suffering of tens of thousands of people in Turkey at this very minute. They should hang their heads in shame at their approach on that issue. Yet they are happy to throw $15 million of taxpayers' money to facilitate greater donations to their own political coffers. That is outrageous.

The bill clearly would not be popular out in the street when people understand what this government is actually doing, not necessarily in terms of shifting votes but in terms of just straight integrity and propriety—the degree of respect, which is already far too low, that Australians have for politicians and the political process. This is the issue that is in contention here. How is it in the public interest to increase deductibility for political donations to favour wealthy donors? It is very much in the Liberal Party's interest, it is very much in the National Party's interest and it is even, to a far lesser extent, probably in the Labor Party's interest—we will probably get a bit more money as a result of enhanced deductibility—but it is clearly not in the national interest. That is the fundamental obligation these laws should be directed towards, and that is clearly where they fail.

Another problem with the legislation is the extension of deductibility to political donations by companies. Tax deductibility for political donations was only ever intended to help or encourage individuals, in the same way as they are encouraged to donate to other organisations such as charities. Companies have enough means of their own to donate, and many donate well beyond the $1,500 offered in tax deductions here.

A point that does require clarification, and perhaps the minister may wish to address this when he speaks, is the question of associated entities. Will associated entities be treated in the same way as political parties for the purposes of attracting political donations for which donors can in turn claim a tax deduction? Associated entities, as defined in the Commonwealth Electoral Act, are `controlled by one or more registered political parties; or operate wholly or mainly for the benefit of one or more political parties'.

Infamous associated entities, such as the Liberal Party's Free Enterprise Foundation, attract significant and previously anonymous donations from individuals and organisations that are in turn forwarded to the Liberal Party. I wonder, for instance, if the current and prospective members of the Liberal Party's 500 Club will be able to claim tax deductions on their membership fees, fees that ultimately end up in the Liberal Party's coffers.

Again on associated entities, I suppose this legislation will nicely complement the coalition's money laundering approach through the Greenfields Foundation. The Greenfields Foundation, while still denying its status as an associated entity by exploiting an apparent loophole in the Electoral Act, attracts anonymous donations from people and organisations. The Greenfields Foundation then donates or `loans' massive sums of money to the coalition. End result: the subversion of the electoral laws with respect to that very basic consideration of disclosure.

This will continue until the Liberal Party and the Greenfields Foundation come clean and stop rorting this loophole in the Electoral Act and start disclosing the source of these anonymous donations as an associated entity. I guess the only gap here is that the donations to Greenfields may not be tax deductible, although I am sure that the government will find a way of changing the law in future to give a double free kick to its mates, retaining their anonymity and giving them a tax deduction.

Before concluding, I would like to draw the attention of the House to just how ham-fisted the government has been and how disorganised this piece of legislation is. Let us have a look at the 1999 Tax Pack: you would expect that the taxpayers would be given straightforward and accurate information by the Taxation Office about their rights and obligations. Generally, they manage to do that, but in this case they have not quite got it right.

Taxpayers get no information about the current law on deducting political donations. There is zero information as to what their rights under the law as it stands at the moment are. Instead, you get this statement on page 55 of the 1999 Tax Pack:

Under proposed legislation, intended to apply from 1 July 1998, you will be able to claim deductions of up to $1,500 for contributions you make to registered political parties and gifts to independent members, candidates and Members of Parliament.

There is no mention of the current law; there is only a mention of the legislation which the government hopes will get through the parliament but which may or may not get through the parliament. That is clearly misleading Australian taxpayers. I would like to find out who in Peter Costello's office was responsible for that one. I am sure there are plenty of suspects. They are all pretty good at that sort of thing. Maybe it was something that Lynton Crosby dreamed up down in Menzies House.

It would be interesting to know whether the Treasurer believes it appropriate for the Tax Pack to advise taxpayers of their current obligations with respect to deductibility of political donations or whether the Treasurer believes that the Tax Pack should advise taxpayers of legislative changes that have not been passed by the parliament and may well not be passed by the parliament without at the same time informing them of what the current law is. With taxpayers having to lodge their tax returns by 31 October, if the government's controversial changes to the law on political donations are not passed by both houses by that time, in effect the government has clearly misled the people about what the taxation rules are.

Is the Treasurer aware of how serious this is, or is this just another example of the government giving misleading information to Australian taxpayers and showing that it has not learnt its lesson from the time the ACCC found that its health insurance rebate advertisements were clearly misleading? If this government were serious about electoral reform and not just legislating to gain elector al advantage for its own side of politics and to help out its mates with their tax returns, it would not have tried to ram this bill through at the last minute just before the election last year, and it would not now be presenting the bill to the House, backdating its effect to 1 July 1998 in order to get the retrospective benefit of the legislation for their mates—for their wealthy mates—who donate substantial amounts of money to the Liberal Party. The opposition will continue to oppose this bill both in the House and the Senate.