Dr EMERSON (4:45 PM) — The more things change, the more they stay the same. We have a parade of Liberal members of parliament from Western Australia trying to crunch the Australian Taxation Office in support of aggressively mass marketed tax minimisation schemes. The member for Canning, who is on the speakers list, has just finished. He will be followed by the member for Curtin and the member for Moore.

More than 20 years ago the then Liberal government decided to set up a royal commission into the painters and dockers union—the Costigan royal commission. The government thought they would stitch up the painters and dockers union. The royal commission did, in fact, uncover very bad practices within the union. But what was not expected by the then government was that the royal commission would uncover enormous tax avoidance in this country, much of which was run out of the Western Australian Liberal Party. It brought to light the notorious bottom-of-the-harbour schemes—the wet Slutzkins and the dry Slutzkins.

Tax avoidance at that time was rampant, and the headquarters of tax avoidance in this country was the Western Australian division of the Liberal Party. So it does not surprise me that the government are lining up again to seek to nobble the tax office by supporting the setting up of a body which will not be independent but which they hope will nobble the tax office and prevent it from pursuing and closing down mass marketed schemes designed to avoid tax. So here we are again more than 20 years later and the Western Australian Liberal Party have not changed their spots; they will never change their spots. It is the place where tax avoidance in this country is most strongly defended.

I am advised that the Minister for Revenue, Senator Helen Coonan, had a meeting at the Royal Perth Yacht Club with the promoters of tax minimisation schemes, left the meeting on a Saturday evening and rang the Commissioner of Taxation, Michael Carmody, on her mobile telephone to put pressure on him to settle the ongoing dispute between the tax office and the aggressive promoters of tax minimisation schemes. Surprise, surprise! Very shortly thereafter the tax office was making an offer to the promoters of and the participants in those schemes.

That is a sign of things to come if this sort of legislation is passed, because it has one purpose only. Its origins were in the complaints, especially coming out of Western Australia, about the tax office's handling of mass marketed schemes. I am not saying that the tax office handled those schemes with great skill and dexterity. I was a member of the House of Representatives inquiry into employee share ownership plans, otherwise known as ESOPs. It was proposed to call the report `ESOPs fables' because it too, on a smaller scale than that which had occurred more than 20 years ago, brought to light aggressive tax minimisation schemes and the promoters of these schemes. In fact, Labor members tabled such a scheme after the tax office had already advised us that it had these schemes and the promoters of these schemes identified and well and truly under control. If that were the case, we would not have been able to table such a scheme. In response to that tabling, the tax office said, `We had better have a look at that.' It showed the extent to which promoters had gone, in the face of tax office action, to continue aggressively promoting tax avoidance or tax minimisation schemes in this country.

Complaints by the promoters of these schemes to senators such as Senator Helen Coonan, who is now the revenue minister, helped spawn this idea of creating an Inspector-General of Taxation. If this legislation goes through, the inspector-general's role in reality will be to nobble the tax office on behalf of the government so that the promoters of tax schemes could go to the government, say that they had been mistreated by the tax office and get the government to approach the Inspector-General of Taxation, who would then put pressure on the tax office to back off. This is the form of the Western Australian division of the Liberal Party over more than 20 years. As I said, the more things change, the more they stay the same.

The previous speaker on the Labor side—the shadow Assistant Treasurer, the member for Kingston—and I were staff members of Senator Peter Walsh, who spent a lot of time in the Senate exposing and bringing to public attention the behaviour of the West Australian branch of the Liberal Party in promoting and condoning tax avoidance not only in Western Australia but Australia wide. So that is the origin of this concept of Inspector-General of Taxation: to nobble the tax office.

The Tax Ombudsman performs all of the functions of the inspector-general as set out in this legislation, but there is one difference: the Tax Ombudsman is independent of government and the Inspector-General of Taxation would not be independent of government. The Inspector-General of Taxation would do the government's bidding on behalf of the promoters of tax minimisation schemes. So let us be clear about what is involved here.

The Treasurer boasts that he is a good economic manager and talks of his Charter of Budget Honesty. This is the highest taxing, highest spending government in the nation's history. But under the Charter of Budget Honesty the Treasurer is able to present a budget which has the GST as a state tax, although it is collected by the Commonwealth. Twenty-nine billion dollars of revenue is concealed by the Charter of Budget Honesty. It is obviously a charter of budget dishonesty. It is a charter that enables the Treasurer to produce the worst budget documents seen in this parliament for decades. It is a charter that allows him to conceal and deceive. It is a charter that allows him, by the device of excluding the GST, to put to the Australian people that there has been a significant fall in taxation as a share of GDP. Ask any member of the Australian community, `Who levies the GST?' and they will tell you that it is the federal government.

We were in this parliament for months and months debating legislation for a GST that the Treasurer now says is not a federal tax at all. It is as if we did not have that debate. It is as if the Democrats did not do a deal with the government in the Senate to pass the GST, because the Treasurer is trying to convince the Australian people that the GST is not a Commonwealth tax but a state tax. The Australian Bureau of Statistics disagrees with the Treasurer—it is clearly a Commonwealth tax as far as the ABS is concerned. The International Monetary Fund disagrees with the Treasurer, and every Australian disagrees with the Treasurer. This is the sort of concealment that the Charter of Budget Honesty allows. Similarly, as revealed today, with the $1 billion in losses on currency swaps—losses that the Treasurer said had not occurred because they had not been realised—they have been realised, and I will be very interested to see where they show up in the budget under the Charter of Budget Honesty.

Liberal governments tell us all the time how they are for small government, for cutting government spending and for cutting taxes. The rhetoric and the practice are completely at odds. Rather than cutting government spending on aggregate, the government has increased government spending and has increased taxation as a share of GDP to record levels. What has happened is that government spending is under different priorities. It cuts essential social services and now says that $2 million is needed to fund an Inspector-General of Taxation to do the bidding of promoters of tax minimisation schemes. That is a measure of the government's priorities: spend $2 million on an advocate for tax minimisation schemes but make cuts to the Pharmaceutical Benefits Scheme and make cuts to the disability support pension.

The Treasurer elect—as described by the member for Kingston, the shadow Assistant Treasurer—has applied for the job. He applied for the job here in the parliament when the Treasurer was away. Before he came into the parliament for question time on that memorable day, he thought, `I'd better get out the old Samuelson first-year book and see if I can scrub up on economics.' He walked in, got a question and, as soon as he possibly could in answering the question, said, `It's all about the elasticity of demand. I'm the Treasurer elect; I know about the elasticity of demand.' He made himself a laughing stock—a joke. The stewardship of the present Treasurer in relation to taxation and spending speaks for itself. He is the highest spending, highest taxing Treasurer in the country's history. But he does not, at least, have to come in here and say, `I know all about economics because I know about elasticity of demand.'

This inspector-general would not be independent; he would do the bidding of the government—most particularly, the bidding of the Western Australian branch of the Liberal Party. He would also assist the member for Groom, the Minister for Industry, Tourism and Resources. If there had been an Inspector-General of Taxation, his journey through the GST scam would have been much smoother. I note that the Minister for Industry, Tourism and Resources, in the Groom GST scam, which had spread to other parts of the Queensland division of the Liberal Party, was to be subject to a tax office audit report—an audit report that the Prime Minister said, as the Tampa sailed into Australian waters, would be made public. He said, `I will commission a report. I will instruct the tax office'—of course he did not have the authority to do that—`to conduct a thorough audit of the activities of the Queensland branch of the Liberal Party in respect of avoiding GST. And I will make that report public.'

That was more than a year ago, on 25 August 2001. As the Tampa sailed in, it saved the minister's bacon, because he was in deep trouble. To get the issue off the agenda, the Prime Minister promised an audit report. He promised that that report would be released publicly. It never has been released. The Prime Minister broke his promise. The Prime Minister said that the government had nothing to hide. He said, the Treasurer said and the minister for workplace relations said, `It was all an honest mistake in Queensland. There was only $75 or $100-odd involved.' But the audit report was completed. On the day that the new ministry was announced, a summary of the audit report was released publicly and reported on by only the AAP and two newspapers in small stories.

The AAP report, which reflected an interview with the federal director of the Liberal Party, reveals that there was a penalty tax applied in respect of the activities of the Queensland branch of the Liberal Party. When is a penalty tax applied by the tax office? When there is reckless or deliberate avoidance activity. The government has got away with this to date. The Queenslanders have picked up on the form of the Western Australian Liberal Party. The Queensland division of the Liberal Party was into GST avoidance; the Western Australian branch of the Liberal Party condones aggressive tax minimisation schemes. And that is not all. The tax office assessed GST on the activities of the Queensland division of the Liberal Party amounting to $13,000. This indicates that the Queensland division of the Liberal Party was not engaged in GST minimisation or avoidance of $100 or $200 but of more than $130,000. I will say it again: the Queensland division of the Liberal Party was engaged in GST avoidance activity involving more than $130,000.

We would know all of that, and what it was they were doing, if the Prime Minister had kept his promise that the tax office audit report into the activities of the Queensland branch of the Liberal Party would be made public. It was no honest mistake. This was an orchestrated scam that may well have been practised initially in the Groom FEC but spread to other branches of the Liberal Party, the FECs of the Liberal Party in Queensland. It was operated with the full knowledge and support of the headquarters of the Queensland division of the Liberal Party. If there had been an Inspector-General of Taxation, we could be assured that every effort would have been made to protect and conceal those activities by the Queensland division of the Liberal Party—just as we can be assured that, if there is an Inspector-General of Taxation under the direction of the government, the Western Australian division of the Liberal Party will be able to make direct representations any time the tax office tries to crack down on new forms of tax minimisation schemes.

The tax office botched the issuing of private binding rulings that had assisted in the proliferation of these schemes. The tax office at least has recognised that and tried to remedy it. But that is not enough as far as this government is concerned. It wants to nobble the tax office, to get the Inspector-General of Taxation to prevail over the tax office and prevent it from pursuing tax minimisation schemes. The more things change, the more they stay the same. The Queensland branch of the Liberal Party has picked up on the philosophy of the Western Australian branch of the Liberal Party. They are both supporters of tax minimisation schemes, and it would be a tragic day for decent tax and revenue collection in this country if this legislation were ever passed.