Senator SHERRY —My question is to Senator Kemp, the Assistant Treasurer. In relation to the tax consequences of individuals corporatising themselves, has the Assistant Treasurer seen yesterday's warning by Mr John Ralph:

I've said to the government, you have the choice of either tackling it . . . or you do nothing about it and you say it's okay for everybody, and then I think it might have a cost to revenue of something like 3 billion dollars.

Will the Assistant Treasurer guarantee that the Howard government will close off this $3 billion tax loophole?

Senator KEMP (Assistant Treasurer) —We have announced as part of our tax package a wide range of integrity measures. As a result, if you look at the costs from the tax package and the revenue raised you will see that after the second stage is brought in the measures will be revenue neutral. That is the objective of this government, and the Treasurer has made a number of very important announcements on that. We are very proud of this tax package; we are very proud to have taken a wide range of anti-avoidance measures—measures which, I might say, the Labor Party when it was in office did not take. When we came into government the taxation system was full of loopholes.

Opposition senators interjecting—

The PRESIDENT —Order! Senators will have an opportunity to ask their own questions at the appropriate time and should not be shouting out other questions during the time that Senator Sherry's question is being answered.

Senator KEMP —I find it extraordinary that Senator Sherry is standing up and asking me about tax loopholes when it was his government that left the taxation system in such poor shape.

Senator George Campbell —What are you doing about trusts?

Senator KEMP —Let me tell you what you did about trusts, Senator George Campbell. You had 13 years to do something about trusts. At the final siren, suddenly we had a bill brought in on trust losses. That was the first thing you did. For 13 years we saw a very lacklustre Labor government in relation to tax avoidance. We saw senior frontbenchers, such as Senator Cook, supporting R&D syndicates—which, as I said in response to an earlier question, was in many ways a welcome mat for tax bludgers. So, Senator, you should have no fears that this government will not move strongly on areas of tax avoidance. We have already shown in relation to the Ralph committee that we have been prepared to announce a number of extremely important measures, measures which, when it was in government—only in government for 13 years, mind you!—the Labor Party was not prepared to take that type of action with. We are a government which is determined that people pay their fair share of tax. We are a government which is determined to close down on loopholes, and I think our record successfully shows that.

Senator SHERRY —The point is that you are widening another loophole and not providing any solution in respect of individuals corporatising themselves. Is the government's reluctance to shut down this tax loophole comparable to its refusal to implement im mediately the taxation of trusts proposal? Or are changes to taxation of trusts on ice because so many members of the front bench have family trusts—such as Senator Heffernan, who has no less than six family trusts through which he can avoid tax?

Senator KEMP (Assistant Treasurer) —One thing that you can always be sure of with Senator Sherry is that when he gets up on a supplementary he plays the man. That is what he does. Senator Sherry is never interested in playing the public policy issues. Senator Sherry plays the man and gets in a completely gratuitous and unfair swipe at my colleague Senator Heffernan. Senator Sherry, I say to you and your colleagues that, if you want to libel and defame people on this side, use the Senator Robert Ray rules—remember? Ten yards to courage, Senator—and then we will see whether you are genuine or not.