Mr TUCKEY (6:22 PM) —The member for Werriwa raised a spark of hope in this place. At one point he indicated that the opposition would be supportive of a more generous response to the great difficulty in which many taxpayers throughout Australia have found themselves in various aspects of their tax affairs and their dealings with the commissioner, which to some degree the Tax Laws Amendment (Improvements to Self Assessment) Bill (No. 2) 2005 seeks to address. So I rushed down in excitement to get a copy of the proposed amendment put forward by the Labor opposition. As is typical, it is best described as a pious amendment. It reads:

I thought the member for Werriwa was going to tell us how further positive amendments might be included in this legislation, something that members and the signatories to the letter he referred to, of which I am one, might have taken an interest in. But what is in this pious amendment? It seeks to condemn the government for:

What change does that particular amendment bring to the House? The next clause states:

That is quite a good point, but there is nothing in black and white to support it. Finally:

Okay, if there is opportunity for amendment in that regard, and considering the fact that day after day in this place the opposition complain about their lack of opportunity to properly examine legislation, surely now is the time to put forward amendments of substance and have a discussion and a debate about them. They say these opportunities for debate are so important to them when, of course, if anyone listened to their contributions on the IR legislation, for instance, there was constant repetition of ‘the sky is falling in’ and no proper analysis of the legislation being debated—then or now.

It is not too hard to talk constructively about legislation of this nature. In a speech earlier today, I gave a tick to the member for Rankin for his very sensible remarks about petrol pricing. I live in hope that, when I conclude my contribution, he will bring some light to this debate in terms of positive measures to deliver to the Australian people the simplicity, certainty and equity that define a good tax. But he does not have much opportunity because, presumably, his caucus or his executive have decided that the amendment I just read out is the opposition’s position on this legislation.

I have said in this place time and time again that good tax law will be the responsibility of this parliament, not the government of the day. But I can say with some pride that when the Hawke government and, for that matter, the Keating government brought matters of substance into this place that gave the impression of being good for Australia, such as floating the currency and other matters, it was the opposition, of which I was a member, that said, ‘Good on you.’ I have said before—and I want to seriously discuss this bill—that when Keating as Treasurer proposed the sale of the Commonwealth Bank he was able to get that through caucus as an icon issue for the Labor Party because he could tell them there would be no mischief emanating from the coalition opposition. We believe in privatisation and we supported that measure. As I recollect, there was criticism by the minor parties in the Senate that they were sidelined in the debate because the two major parties actually came to a decision that they believed was right for Australia.

In tax particularly, where scare campaigns are so easy to run, it is time that there was a bipartisan view. It is not helped by the member for Werriwa complaining that his constituents did not get a big enough tax cut. When he is next handing out material that asks people to vote for him, he wants to just check out how many of his constituents actually fell into the previous 42c level. Obviously not all of them would have, but I will bet you there were too many. Of course, it is a fact that, many years ago, to break into those top marginal rates you had to earn 15 times average weekly earnings. Today the figure has reduced to between one and two—I am not sure exactly where it is at this moment. It is silly, it is wrong and it is not fair. It is not equitable. Therefore, there is an ongoing battle in the broader context of tax to have a review of taxation.

I note frequently people standing up and saying, ‘You can only erode revenue so far.’ I do not disagree with that. The Australian people, sometimes unwisely, seem to be more interested in having cash for an overseas trip than to pay the doctor. That is their view; it is not one to which I subscribe. On the other hand, governments are expected by the people to raise money to defend the country and provide certain services. That does not mean that we cannot revisit the structures of tax. As I have informed the House before, there are numerous ways that would allow us to reduce high rates of tax, which I think are very regressive, without significant reduction in revenue. It is not appropriate for me to go through those today having just suggested to another member, who got widely off the issue of income tax, to not speak about it.

The explanatory memorandum gives us clear advice that the principal outcome of this legislation is to address a serious problem for the community—that is, the legal capacity of the tax commissioner to revisit self-assessment arrangements years after the event. Having assessed that the claims previously made by a taxpayer were not consistent with the law—most taxpayers have never had the financial capacity to take the commissioner on in the courts, unless it is a collective decision—the commissioner can say, ‘You avoided x dollars tax. I am applying a 50 per cent penalty and interest rates as high as 11 or 12 per cent compounded up until the point of advice, until the point I have told you that I think you are wrong.’

Those who have dealt in the usury market would soon discover how gigantic compound interest can be. It can double a debt in a very short period. Some taxpayers, shocked by this arrangement, are sometimes reassured by, for instance, promoters of various schemes who say: ‘You’ll be right, mate; hang in there; we are going to take the tax office to court.’ If and when the taxpayer loses, the clock has continued to tick up until that point.

That is not good enough. An example that really concerned me was when a group of taxpayers sought relief from tax by contributing to an agricultural program that had received a product ruling from the tax commissioner of being acceptable under the tax act. Yet, later on, this group received a request for huge amounts of money because, in the view of the tax commissioner—eventually supported by a court—the promoter of the scheme had not complied with all aspects of the ruling. That is fine. You had better sue the promoter. Who does that? These taxpayers were not advised in a short period of that matter. The very high interest rate clock continued to operate.

This legislation is doing something about that. More particularly, it is a step in the right direction. Nevertheless, I am concerned that, if a taxpayer has made full disclosure of all their affairs—which I think is fundamental to self-assessment—but in that process has claimed a deduction for a scheme or other matters that might be in dispute by the tax commissioner, there needs to be a prompt response.

It appears that this legislation, in the normal course of business, will limit the tax commissioner’s opportunity in which to respond to a fair and reasonable tax return to two years. That to me is a fair and reasonable proposition. I am less enamoured of the fact that, where a scheme is involved, the response can be extended to four years. It is better than the never-never plan of the past, but it is still a long time if the clock is to be clicked back to the day of lodgment of the return. I may stand corrected by the member for Rankin, but my understanding is that this legislation says that the commissioner has up to four years but that the clock starts ticking after he writes back. I believe that that should be a component of any legislation. In other words, you cannot be charged, in the case of full disclosure, with interest or penalties until you get an objection to your self-assessment from the commissioner. I will continue to campaign for that arrangement.

I have been told by a very senior member of the tax office that that is possible. I have argued directly to the tax office on behalf of the people of Australia that you ought to be able to have a yellow, red or brightly coloured form that you put on the front of your tax return—I do not know how you transmit that electronically, but we are into coloured copiers now, so maybe it can be done—which says: ‘Red alert! I have participated in the woop woop scheme. Everything I tell you in this return is true. This is how much money I have taken, but I am claiming an additional reduction in my tax of $5,000’—or $10,000—‘because of my participation in this scheme.’ If you give that sort of notice, it seems simple to me that the commissioner’s clock has to start ticking. I would think that in those circumstances something measured in days, or a very short period of months, would be available to the commissioner in which to say, ‘No, I’m not happy with that. I advise you to pay your full tax. On the other hand, if future debate proves I’m wrong, I’ll give you your money back.’ Wouldn’t it be nice if the commissioner added a bit of interest!

The reality is that, whilst this legislation goes part of the way, it unfortunately does not address the circumstances that many people have found themselves in. There has been some moderation of the commissioner’s claims, and I thank the ATO for that. And this legislation does clear up a lot of the grey areas. It is summarised by the advisers in this area in the explanatory memorandum under ‘Summary of regulation impact statement’, which says:

All that is positive. I am in here to support the legislation. But I would have been much more comfortable if there had been a greater degree of retrospectivity. I voted against retrospective tax in this place when it was an imposition on the taxpayer. It was a very lonely day. I think six of us sat in splendid isolation on one side of the parliament whilst the entire Labor opposition and the then Fraser government members sat on the other side. We must have gone very close to the problem that Harry Quick had the other night with another piece of legislation.

The reality is that we held out very strongly against negative retrospective tax law or, for that matter, any negative retrospective legislation that shifts the goalposts after the event. I stand by that. But, as this would have been a positive measure, I think that probably we ought to have had a better response to taxpayers who got trapped in the schemes for an inordinately long period. I am not arguing in this place that people who incorrectly reduced their taxation should have got away with paying the tax. But if the ATO is unable to advise them of the failing of their request within a few months, it becomes unfair to the taxpayer, presuming they have made full disclosure. This legislation does not exclude people from the normal processes of the previous tax act where they have taken fraudulent or other actions that are means of evasion. The explanatory memorandum tells us:

I am not putting any argument there. But, where people make a full disclosure of their income and consequently seek to have certain reduction in that amount of money, then, if they do that through appropriate advice, they should not be subject to any penalties or interest until the tax commissioner disagrees with their claim. That is not part of this legislation at this point. I trust that the parliament might one day decide that that is a good idea.

As I said, when the parliament can get up and bring in a much more simplified tax system, it could be reduced to not many more items than exist in the new IR legislation when it comes to awards. That would be a good idea. I am a great supporter of the GST. It should be collected at a level that fully compensates the states for all their regressive taxes. I do not think they have one that is a good idea. When people are paying $30 a week throughout their life in stamp duty on their personal residence, that is just an example of how bad some of those taxes are.

All in all, I support this legislation. I would have liked it to go further, but I reject any suggestion that at this point in time the opposition has made any productive contribution to the legislation. Considering the public announcements of the member for Swan, the opposition had a responsibility to put up some decent amendments if it believed in them.