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Monday, 27 August 2001
Page: 30238


Mr BEAZLEY (2:24 PM) —My question is to the Minister for Small Business. Minister, do you recall being asked last Thursday in this House whether you knew about the Groom GST scam? In your answer you said:

I am not aware of anything untoward that has been done in the FEC.

Have you seen the comments by Liberal Party stalwart David Watts yesterday, who said:

I think that statement was dangerously untrue.

Minister, given that you have now admitted that you knew about the GST scam as early as 18 December last year, isn't Mr Watts right and didn't you mislead this parliament?


Mr IAN MACFARLANE (Minister for Small Business) —The Leader of the Opposition asked me whether I have misled the House and I am happy to address that question. Last Thursday the opposition made a number of allegations against me and tabled documents that they claimed supported these allegations. Last Friday, after examining the documents tabled by the opposition and refreshing my memory from minutes of meetings and diaries, I issued a detailed statement outlining the circumstances surrounding that issue. I table a copy of the statement. I remind members of the House that in parliament on this matter I said:

I am not aware of anything untoward that has been done in the FEC. My understanding is that the books of the FEC have been audited. I am not aware that the auditor has any concerns with regard to the financial operations of the FEC.


Mr Beazley —What a big smile!




Mr SPEAKER —Leader of the Opposition! I remind the member for Batman and the member for Bruce of standing order 55. They might care to refresh their memories in the next five minutes.


Mr IAN MACFARLANE —I would like to provide some details regarding the operational aspects of the Groom FEC finances as well as my involvement in the administrative and financial matters handled by the Groom FEC. Like most members of the House, I do not involve myself in the day-to-day financial affairs of my FEC. My position is that it needs to meet its legal, financial, tax and other obligations. It is my understanding that the Groom FEC has always sought to do so and I consider this is, in fact, supported by the documents tabled by the opposition last week.

Let me talk about the actual circumstances surrounding this matter. On 23 November I was delighted to host a function involving the Treasurer.


Mr Costello —It was a good function.


Mr IAN MACFARLANE —It was a good function. It was held at the Picnic Point function centre and was well attended. Catering was provided by Picnic Point, and the documents tabled reveal that the total account was $9,090.55, including a GST component of $826.41. As the documents tabled show, an invoice was made out to the Liberal Party, PO Box 777, Toowoomba, and a receipt was issued for the payment of that amount. The account was paid by Mrs Watts on behalf of the Groom FEC the day after the dinner. The account was paid in full, including the GST. Subsequently, in December, I understand from a discussion that I had with Neville Stewart, a member of the FEC and Queensland state executive, that accounts over $2,000 were to be paid by the Queensland division of the Liberal Party. I understood from the discussion that the arrangements were based on advice received from the Queensland division. My attention has since been drawn to minutes of a meeting of the FEC on 21 November, a copy of which I table. In those minutes it was noted that the chairperson notified the treasurer, Mrs Watts, that C. Galtos and G. Jaeschke, state president and state director, requested that tax invoices for the dinner be forwarded to them. While I attended this meeting, I was not there for all of it, as I arrived late after attending the launch of a retirement village in my electorate. Mrs Dellys Kelly, who attended that FEC meeting, has informed my office today that she has a diary note stating that, on my arrival at that FEC meeting, I apologised for being late.

As I have indicated in the statement I issued on Friday, on 18 December I received a telephone call from Mrs Margaret Watts expressing her concern about the process proposed by the Queensland division for the settlement of the account for the fundraising dinner held on 23 November. I informed Mrs Watts that the FEC finances were an organisational matter to be determined by the FEC executive. I did this because I had confidence in the Groom FEC executive. I was aware that a meeting of the Groom FEC executive was to take place the next day. As members may be aware, the next day it was announced that I was to be appointed as the Minister for Small Business. I am still grateful to the Prime Minister for that; it has been very enjoyable, I have to say!

As well as attending the meeting of the Groom FEC executive, I had to deal with other matters. For example, I was receiving calls from friends and colleagues as well as from the media. I was also being interviewed by a journalist. While the documents tabled last week show that I attended the FEC executive meeting, I was understandably not in attendance for all of the meeting. There was a range of issues discussed at the meeting, as set out by the meeting agenda and minutes tabled last week. I was not present during the discussion of financial matters. That has been confirmed to me in a number of statutory declarations that I have, and I table those documents.

The document tabled last week relating to this meeting confirmed that in the memorandum to members of the Groom FEC executive, signed by Mrs Watts, Mrs Watts outlined a conversation she had with Graham Jaeschke regarding accounts over $2,000. The notes of the accounts dated 19 December also show that Graham Jaeschke had also raised this with the FEC chairman. The notes then went on to outline how this process would apply to the Picnic Point dinner. Additionally, I note that the notes to accounts indicate that, if the FEC executive agreed to the proposal, Mrs Watts was prepared to finalise the arrangement the next day. The minutes also note that there was a discussion in relation to GST and the ABN issues and the meeting undertook to request further advice as soon as possible from the state director `on the policy for claiming GST on campaigning or, if there was not a current policy, how far away is it?'

At a subsequent meeting of the FEC, on 23 January, the minutes of the 20 December meeting were amended to specifically note that the concerns raised by Mrs Watts were correctly recorded. Further, it was noted `after much discussion and on the advice of Neville Stewart, Queensland vice-president, that the FEC should accept the direction of the secretariat on this matter'. These documents show that the Groom FEC received verbal advice from the Queensland division that bills over $2,000 were to be forwarded to head office for payment. The minutes of the December meeting—both the original and those amended at the request of Mrs Watts—record discussion in relation to the GST and make it clear that Mrs Watts's concerns were raised and discussed and a decision was reached to abide by the verbal advice received from the Queensland division and that clarification was being sought from the Queensland division on the policy for claiming GST. Subsequent to the December meeting, I took leave over the Christmas period prior to taking up my appointment as Minister for Small Business. As best as I can recall, the next time this issue was raised with me was after the 23 January meeting of the FEC, which I did not attend. I was advised by the chair that at this meeting Mrs Watts had announced her resignation.

Mr Speaker, this paragraph is particularly important. The minutes of the January meeting also show that the executive again sought advice from the Queensland division on this issue and also took the precaution of seeking formal written advice from a local accountant. This advice was sought by the FEC executive to ensure that the FEC would meet its tax obligations, not avoid them. This advice was sought at the formal direction of the executive. Additionally, at this meeting the executive resolved to freeze the funds in question—a sum of $826.41—until the issue was resolved. Following the January meeting and before the February meeting, when the Queensland division realised they had made a mistake with their advice to the Groom FEC they advised the Groom FEC and apologised in person—Graham Jaeschke attended the meeting on 20 February—for the confusion at the FEC meeting held on 20 February.

It was then the Queensland division's responsibility to amend its December quarter BAS return to the amount of $75.12 when it lodged its March quarter BAS return, as is the procedure under GST law. The Queensland division also disclosed this discrepancy voluntarily to the ATO. At all times, the Groom FEC acted on the basis that the advice from the Queensland division was correct and, when told of a mistake by the Queensland division, the Groom FEC accepted that advice immediately.

I made my statement to this House the other day that I was not aware of anything untoward that had been done in the Groom FEC, based upon my understanding that the Groom FEC had at all times acted in an appropriate manner. I was not aware of the mechanics of the process initially proposed by the Queensland division to settle the account for the dinner. Comments made by Mr David Watts on ABC television yesterday support this. The statement that I made, that I was not aware that anything untoward had been done in the Groom FEC—that is, my FEC—was correct. I was not aware of anything untoward that has been done by the FEC. In fact, I think they have acted on the basis of advice at all times.

As I outlined in my statement issued on Friday, at the FEC executive meeting of 20 February an auditor's report for the period 1 July 2000 to 23 January was tabled. This report did refer to the issue. The auditor's report said:

As this was entirely a branch function there appears to be no reason why the Queensland Division should be involved.

The Groom FEC accounts were subsequently audited for the period 1 July 2000 to 31 March 2001. The auditor's report covering this period does not raise any concerns in regard to the financial operations of the FEC as, by the time of this audit, the matters in relation to the GST had been dealt with. My statement that the books of the FEC had been audited was correct, as is my statement that I am not aware that the auditor had any concerns in regard to the financial operations of the FEC.


Mr McMullan —I request that the minister table the document which he just read into the Hansard.


Mr SPEAKER —Was the minister quoting from a confidential document?


Mr Ian Macfarlane —Yes.