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Tuesday, 10 October 2000
Page: 18173

Senator MURPHY (2:01 PM) —My question is directed to the Assistant Treasurer, Senator Kemp. I ask the minister: why does the government support the indefinite deferral of tax on executive share and options schemes? Doesn't this mean that the government is prepared to allow, for example, a senior executive such as Mr Murray—the CBA's managing director, who has closed country branches and ramped up bank fees for small businesses—to indefinitely avoid paying tax on his $50 million-plus worth of CBA options, while at the same time the government will jump on any small businesses that are late in lodging their business activity statements and in paying their GST? Why do Mr Murray and his lucky 100 senior executives deserve an indefinite tax deferral on their multimillion dollar share and options schemes?

Senator KEMP (Assistant Treasurer) —I have heard some confused questions in my time, Senator, but that truly took the prize. As you will be aware, Senator—you might have read the paper—a report on employee share schemes has been brought down by—

Senator Murphy —Yes.

Senator KEMP —You have the report? Excellent! So you are aware of it. I sort of predicted that—I said, `As you will be aware, Senator,' and you held up the paper. So you were aware of it, and we are very pleased about that. In relation to the first point, there is a report out on employee share schemes which makes certain proposals to the government. Let me assure you that the government, as always, will look at the recommendations from that report and give a final response to it.

Let me tackle the next issue you raised: that we are somehow lax on tax avoidance schemes. The answer to that is `Dead wrong, Senator!' One important thing about the government is that we crack down on tax avoidance schemes. You might remember, Senator—actually, you may not remember because I do not think you were in the chamber then—that in the 13 dark years of the Labor Party the welcome mat for tax bludgers was put out. Our government came into office and, as in a whole range of areas, we had to repair the tax system that you left to us. You will be aware, for example, of things like trust losses, R&D syndicates, infrastructure bonds, thin cap rules and franking credits—a whole range of things in which the government have been very effective in cracking down on tax avoidance schemes. So the implication in your question that somehow we have been lax in this area is dead, dead wrong.

You also mentioned Mr Murray and employee packages. Provided they comply with the law, those employee packages are matters essentially for the shareholders of the Commonwealth Bank. If I remember correctly, Senator—correct me if I am wrong—was it the Labor Party that privatised the Commonwealth Bank?

Government senators—Yes!

Senator KEMP —I thought it was.

Senator Robert Ray —You've asked the audience, now why don't you ring a friend? You don't know one!

Senator KEMP —Senator Ray is worried about the waste of public funds. Senator Ray, I am glad you have finally come to that particular issue. As I have said before in relation to Senator Ray and wasted public funds, Senator Ray has form. You have form, Senator; no-one would argue that you do not. But let me return to the question, because I was unfortunately diverted by Senator Ray. The executive remuneration packages, provided they comply with the law, are essentially a matter for the shareholders. It is a matter for the directors and executives of the bank to account to the shareholders for. I think the Prime Minister has expressed some views in the past about some of these packages. In the end, as I said, they have to be justified to the shareholders of the bank, and I think there is some wider community concern about some of these packages.

Senator Forshaw —Oh, really?

Senator KEMP —Yes, there is wider community concern, and I for one share that wider community concern. I think I have dealt with your issues, but I always have more information to give you. (Time expired)

Senator MURPHY —Madam President, I ask a supplementary question. If there is any confusion in this issue, it is quite obvious where it lies. In answer to my supplementary question to the minister, perhaps he might like to inform the Senate whether the government members of the House of Representatives Committee on Employment, Education and Workplace Relations were reflecting the government's position in recommending the indefinite deferral of tax on executive share and option schemes in the committee report released yesterday on employee share ownership. If so, I ask the minister again to explain why senior executive share and options schemes warrant an indefinite deferral of the tax payable on their multimillion dollar share and option packages when the ATO has already identified many of these schemes as being at the centre of tax avoidance worth billions of dollars?

Senator KEMP (Assistant Treasurer) —There we are; it was clarified slightly. You conceded that this was a recommendation in a report, not a government policy, which you tried to cloud in your first question. But we are a wake-up to you and your tricks, Senator. This government believes that senior executives, along with all taxpayers, should pay their fair share of tax. Let me make that absolutely clear. You are quite right to point that out. In contrast to your first question, you pointed out that the government had cracked down on many tax avoidance schemes. That is exactly what I said in response to your first question. In your supplementary question you conceded, of course, that the government had cracked down. This is a report by a committee of the House of Representatives. As you correctly point out, the members of that committee may have a view and it is up to the government to make a determination. Let me make it absolutely clear that this government believes that top executives, along with everybody else, should pay their fair share. (Time expired)