Senator MURRAY —My question is to the Minister representing the Prime Minister, and I wish to follow the line of questioning from Senator Collins. My question is about trusts, and I preface it by declaring a personal interest as a member of a trust, and this is declared in the pecuniary interests register. Minister, I refer to media reports of yesterday's joint party meeting and ask: why has the Prime Minister interfered in the tax office's review of trusts—a review actively promoted by his own Treasurer—by assuring coalition MPs that small business trusts will be protected for tax planning purposes? Isn't the tax commissioner now under extreme pressure to narrow the ATO review to conform with the PM's remarks, if he expects government support for legislative changes? Is the government still concerned that income being funnelled through tax minimising trusts is rising at more than twice the rate of the PAYE system and is now over $116 billion a year? (Time expired)

Senator HILL —If the Prime Minister said, as was reported yesterday, that the government would not be doing anything that would bankrupt small business, then I can quite understand that, because we are actually on the side of small business. Not surprisingly, a review of taxation would take that into account.

We actually believe that small business is the key to job creation in this country. That is why we have put so much emphasis on policies that have enabled interest rates to come down five times since we got into government, on policies that keep inflation low and on the reform of the industrial relations system, to give greater flexibility to benefit small employers in their employment. And that is why we are looking in part at taxation reform as well—in order to support small business.

I regret that you seem to have misunderstood the outcomes of yesterday's discussions—or what was reported—because I can assure you that any adoption of taxation reform will be consistent with our wanting small business to grow and prosper.

Senator MURRAY —Madam President, I ask a supplementary question. Minister, given your statement, if I can rephrase it, that your party is totally committed to pursuing trusts, will the Prime Minister ensure that the tax commissioner and the Treasurer are able to pursue trusts which are being used for tax avoidance or undue tax minimisation? Will you give that assurance to the Senate?

Senator HILL —Nothing has changed from the announcement in the budget that a discussion paper on the taxation of trusts will be released. Obviously, there are issues relating to taxation of trusts. I agree with what Senator Murray said: the expansion of trusts has been considerable. And there are, particularly in relation to large business, questions of equity relating to that. That will be taken into account. So it has not been affected at all. But I reiterate that this government is firmly on the side of small business, and taxation reform, to which we are committed, will actually be designed to support small business growth, particularly in order that we might expand employment.