Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (5:44 PM) —The government would like to thank the honourable members who spoke in this debate for their contributions to what is a very important reform and the delivery by the Howard government of yet another election promise. Given the importance of the measures contained in the Inspector-General of Taxation Bill 2002, it is hoped that the government will receive the support of the House in relation to its speedy passage.

The impact of taxation law, its administration across all sectors of the Australian economy and its importance to the Commonwealth budget all mean that it is critical to ensure that the taxation system is optimally efficient. The government announced the creation of the office of Inspector-General of Taxation as an election commitment, thereby branding it as a key element of government economic policy. It is very strange that the opposition is seeking to force the government to break an election promise which we as a government made to the Australian people prior to the 2001 election. Unlike the opposition, we place a very high store on the importance of keeping faith with the Australian people. We all recall the infamous situations in the past where Labor was prepared to do anything and promise anything to get elected, everything from l-a-w tax cuts to promises not to sell the Commonwealth Bank and Qantas. Yet, having been elected, they tear up the promise and throw away their commitment to the people.

You would expect that an opposition would be seeking to hold the government to its promises. We are in the process of delivering in full and on time with respect to every single election promise we made to the Australian people, and the Inspector-General of Taxation Bill 2002 is another instalment in keeping faith with the Australian people. It is therefore extremely disappointing to note that the opposition has shown a complete disregard for Australian taxpayers, and in particular through the person of the shadow Assistant Treasurer, by indicating that it and he will oppose the establishment of the office of Inspector-General of Taxation.

Turning briefly to some of the comments made by speakers, the chief opposition speaker, the member for Kingston, referred to clause 25 of the bill and the ATO right of reply and he expressed a concern that this would slow down the reporting process. I am happy to reassure the honourable member for Kingston, who has now returned to the chamber, that clause 25 requires the Inspector-General of Taxation to provide a reasonable opportunity for the commissioner to make submissions and this will not unduly delay completion of a review. The member for Kingston also referred to clause 9 with respect to reporting to the minister and industry groups concerns. The inspector-general will not duplicate the public reporting role of the ombudsman or the Auditor-General. Formal public reporting is time consuming. It requires extensive resources and delays remedies being introduced. Madam Deputy Speaker Gambaro, you would be interested to know that the inspector-general will advocate the views of taxpayers directly to Treasury ministers.

Mr Cox —That makes it even more frightening.

Mr SLIPPER —The government can release reports at the same time as announcing any reforms.

The member for Rankin, who was a late addition to the speakers list, claimed that the Inspector-General of Taxation will be an instrument for the government's involvement in the tax system. The facts are that the inspector-general will close gaps in the accountability regime for tax administration. The Ombudsman examines individual complaints and can report to parliament. The Auditor-General can conduct performance audits of the Australian Taxation Office. The inspector-general will review systemic tax administration issues and can recommend improvements for the benefit of all taxpayers.

Mr Cox —The Ombudsman can do that already.

Mr SLIPPER —The Inspector-General of Taxation will strengthen accountability arrangements in tax administration and in doing so the inspector-general will make tax administration more transparent. Running through the thread of the opposition argument is the suggestion, as was made by the member for Rankin, that the inspector-general will not be independent but will do the government's bidding. That is purely laughable. The bill creates an independent statutory office of the Inspector-General of Taxation. The bill provides for the inspector-general to be appointed by His Excellency the Governor-General for a fixed term, with strict conditions governing dismissal. The Inspector-General of Taxation has own motion powers to initiate reviews into tax administration and the inspector-general's annual report to parliament must detail any directions given by the minister to the inspector-general to conduct a review.

Mr SLIPPER —I think even the member for Kingston, who ceaselessly interjects, would recognise that the above features that I have just outlined highlight the truly independent status of the office of Inspector-General of Taxation.

The member for Rankin also made what was really a most peculiar claim that the inspector-general will nobble the tax office and stop the ATO from closing down tax avoidance schemes. That is just out there in lala land. The member for Rankin clearly is not focusing on the debate. He ought to have known from looking at the legislation—probably he did not even read it—that the inspector-general cannot direct the commissioner in his tax law administration functions. The inspector-general can only require the commissioner to disclose information for review and the inspector-general will investigate systemic tax administration issues, not interpretation of the tax laws. The minister may direct the inspector-general to review a matter and report to government, and such directions must be reported in the annual report to parliament. So I would have thought that we have really good accountability mechanisms written into the bill which is currently before the House.

The member for Lowe came in and talked about what he saw as the need for the Australian Taxation Office to have more resources, saying that if they had more resources there would be no need for the Inspector-General of Taxation to collect revenue. I suspect that the member for Lowe did not actually talk to the member for Kingston, because even the member for Kingston would not have made such a suggestion. The inspector-general does not have any role in the administration of the tax laws or collection of the revenue. The Commissioner of Taxation has autonomy in the administration of the tax laws. With the mirth being displayed by the member for Kingston, it is pretty clear that he was not very impressed—

Mr Stephen Smith —That was directed at you.

Mr SLIPPER —It was directed at the member for Lowe. He obviously was not impressed with what the member for Lowe had to say.

The member for Kingston claimed that there was no appropriation for litigation between the Australian tax office and the Inspector-General of Taxation. The inspector-general's power to compel disclosure of information is clear and it mirrors similar statutory information-gathering powers in the ombudsman's act and in the Auditor-General's Act. It is highly unlikely that there would be any legal challenge.

The member for Dawson mentioned that the tax office needed to foster a culture of professionalism and be responsive and sensitive to client needs. It is obvious that the member for Dawson is supporting this bill, and it is important for taxpayers to have confidence in the Australian tax office.

The inspector-general will examine systemic tax administration issues, including issues raised by taxpayers based on their experience with the Australian Taxation Office, and improve tax administration for the benefit of all taxpayers—and that really is a positive thing. That is the genesis of this bill and the reason the government promised the Australian people prior to the last election that we would bring in the position of Inspector-General of Taxation.

Mr Cox —It is a $2 million stunt.

Mr SLIPPER —The member for Kingston ought to look at the results of the 2001 election: we won, they lost. It means that the Australian people are entitled to have our policies implemented, not theirs. The crucial element of the government's policies in seeking re-election was the institution of the position of Inspector-General of Taxation. Regardless of whether or not people support the Australian Labor Party, most people in the community would be appalled by the fact that this opposition is seeking to force the government to tear up an election promise.

The opposition claims that the Inspector-General of Taxation is a waste of money and creates another level of bureaucracy. It is pretty obvious that the member for Kingston, the shadow Assistant Treasurer, simply does not understand the provisions of the Inspector-General of Taxation Bill. Maybe I should be understanding and forgiving; maybe he is not really across his brief on this matter and maybe that is why he is taking what most people would see as a very strange position with respect to the implementation of this election promise by the Howard government.

The opposition argues that the systemic issues in tax administration should be addressed and that the Taxation Ombudsman is already empowered to investigate systemic issues in tax administration. In fact, while the ombudsman may initiate own motion inquiries into matters of public administration including tax administration, there is no formal mechanism for the government or for the parliament to trigger inquiries. Furthermore, the ombudsman's office must allocate its resources across all areas of public administration. It is not that the ombudsman does not have the resources to conduct own motion inquiries into tax administration, as claimed by the opposition; it is that the ombudsman is prioritising inquiries across a broad range of areas of public administration. That is why the ombudsman is doing a good job and why the Inspector-General of Taxation, when established, will do a good job for the Australian taxpayer.

The inspector-general's resources will be targeted entirely at systemic tax administration issues. It is unarguable that it is desirable to have resources targeted at improving tax administration systems. The member for Kingston must surely have had complaints from constituents unhappy with the system of tax administration and must know that, if the Office of the Inspector-General is established, then his constituents as well as those of all other honourable members in the House will be greatly advantaged.

The Inspector-General of Taxation can be directed or requested by the minister to conduct an inquiry into a systemic tax administration issue. The inspector-general will also have own motion powers to initiate reviews, including those that result from approaches by taxpayers or tax professionals, and the parliament will also be able to request the inspector-general to examine a systemic tax administration issue. Indeed, even the Commissioner of Taxation himself or herself may also request a review by the inspector-general.

So the comparison is between the ombudsman, with a broad role to review public administration including tax administration, and a specialist review body. The inspector-general will have specialist expertise in the area of tax administration and will establish strong links with all stakeholders. The specialisation of the review function of the inspector-general will result in strong, independent advice to government on tax administration issues. The opposition has contradicted itself; it claims that the role of the inspector-general and the role of the Taxation Ombudsman are indistinguishable but then acknowledges that the ombudsman reports direct to parliament whereas the inspector-general will report to the Treasury ministers. This distinction is of critical importance. The ombudsman has a public reporting role and reports to parliament, and the parliament can hold the government to ransom over the findings of a review by the ombudsman. The inspector-general will not duplicate this role; rather, the inspector-general will complement the role of the ombudsman as well as that of the Auditor-General.

The inspector-general will fill a gap in review arrangements for tax administration. The inspector-general is being established as an independent adviser to the government on systemic tax administration issues. The inspector-general will advocate the views of taxpayers direct to government, and that is a positive thing. The inspector-general will recommend improvements to tax administration that the government can act upon quickly if necessary. The government will release reports by the inspector-general which will allow for announcements of any reforms to be made at the same time that recommendations are made public, avoiding speculation and uncertainty about the tax system. To make sure that there is absolutely no duplication in the efforts by the three bodies reviewing tax administration from different angles—

Mr Cox —That is two, not three.

Mr SLIPPER —that is, the inspector-general, the Ombudsman and the Auditor-General—that is three, as the member for Kingston points out—the bill requires the inspector-general to consult with the Ombudsman and the Auditor-General at least once a year. The opposition has raised concerns about independence—I have covered that particular matter before.

The opposition has cited submissions and advice provided to the Board of Taxation without recognising that the proposals in this bill have been refined from the preliminary proposals in the consultation paper to take account of stakeholder views and the recommendations of the board. It is disappointing that the opposition would pursue a policy direction that was rejected in public consultation on the government's proposals for the Inspector-General of Taxation. The government released a consultation paper on the inspector-general in May this year, which formed the basis for public consultations by the Board of Taxation. This paper raised for discussion the option of establishing the inspector-general function within the Ombudsman's office. This option was rejected by most stakeholders as well as by the Board of Taxation.

Mr SLIPPER —Maybe the member for Kingston was not aware of the fact of that rejection. The board explicitly recommended that the inspector-general be established outside the Ombudsman's office.

Mr SLIPPER —The board considered it would not be appropriate to combine the inspector-general's advisory function with the Ombudsman's role of reporting to parliament. The government has heeded the advice of the Board of Taxation and to those who have contributed to the debate.

Mr SLIPPER —The government has not accepted the views of the member for Kingston, who continues to interject, or indeed the Australian Labor Party. This bill establishes the new statutory office of Inspector-General of Taxation as an independent adviser on tax administration issues to the government. The office will thereby strengthen the advice that government receives on tax administration and process. The Inspector-General of Taxation will improve the administration of the tax laws for the benefit of all Australians by providing a new source of independent advice to the government on the effectiveness of tax administration. The office will identify systemic problems in tax administration largely by listening to the concerns of taxpayer representatives and tax professionals and with authority to initiate its own inquiries on systemic issues in tax administration. The office will therefore become, as appropriate, an advocate to the government for concerns and issues raised by taxpayers and their representative organisations.

The inspector-general provides the basis for tax administration to be more responsive to the legitimate needs of users and further allows for taxpayers and tax professionals to provide creative input towards the enhancement of the tax administration system. The inspector-general will seek to identify and resolve systemic problems in tax administration rather than handle individual complaints about tax administration, which remain the responsibility of the Commonwealth Ombudsman.

Mr Hockey —Hear, hear!

Mr SLIPPER —I am pleased to receive the support of the Minister for Small Business and Tourism. All the other existing avenues of appeal against tax administrative decisions will remain in place. The Office of the Inspector-General therefore adds a new dimension to the review of tax administration but will in no way inhibit the independence of the Commissioner of Taxation nor supplant the role of the Commonwealth Ombudsman in determining the fairness of individual tax cases.

The government is particularly proud that this initiative will contribute to making tax administration fairer, more efficient and more accountable. These measures have been the subject of extensive public consultation—the government has gone out there and listened—convened by the Board of Taxation. The government has largely adopted all recommendations of the board arising out of that consultation process and can therefore be confident that the measure has broad public support. I am particularly pleased to commend to the House the implementation of this very important government election promise.

Question put: