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Monday, 23 September 2002
Page: 4609


Senator COOK (2:22 PM) —My question is to the Assistant Treasurer, Senator Coonan. I refer to the Assistant Treasurer's press release issued this morning claiming that:

The responsibility for pursuing matters of moneys which are already collected by tobacco companies lies with the states and territories.

Given that the High Court has held that the states and territories do not have the constitutional power to levy these taxes, how can the states and territories now recover these moneys?


Senator COONAN (Minister for Revenue and Assistant Treasurer) —Thank you, Senator Cook, for the question, which misconstrues and misconceives what was said in the press release, which was that the states and territories agreed to recover moneys that related to funds or moneys that were owing prior to the High Court case. Let us be clear about this: what is really being suggested by the opposition is that we should be undoing events that happened some five years ago, and it appears that what the Labor Party is running up and down about is wanting to do something which the states and territories specifically agreed that they would do themselves. In fact, prior to releasing my press release, I checked with the agreement, and clause 8 of the agreement between the Commonwealth and states at the time says:

Because of constitutional constraints, the Commonwealth would not be able to legislate to force taxpayers to pay BFFs which became due prior to 5 August but were not paid. The recovery of such amounts, where possible, would be the sole responsibility of the States and Territories.

I am not aware whether the states or territories have made any attempt at all to recover those funds. But, given the terms of the 1997 agreement, it is difficult to see why they should automatically be expecting the Commonwealth to try to collect money which they themselves did not try to collect. If the states, and in particular the New South Wales Premier, claim to have some advice that they can recover funds, to my knowledge this certainly has not been made available to us.

For the Commonwealth to take action it would require laws to be retrospective back to 1997. Whilst sometimes there can be a good case for retrospectivity, it is certainly not very often the case. In effect, it would require moneys to be confiscated that are held by retailers and wholesalers—moneys collected, as they properly thought, under the existing state law. While Senator Cook is correct that the situation arose because of a 1997 High Court case—that is, Ha and Anor, which concluded that the state and territory franchise fees were unconstitutional—it was only at the request of the states that the Commonwealth entered into an agreement to help them protect state revenue for business franchise fees, because it had contributed to over $5 billion in state revenue.

The 1997 safety net agreement between the Commonwealth and the states, as most senators would know, provided for the Commonwealth to collect an equivalent to the business franchise fees for the states on an ongoing basis and included provisions to protect the revenues that the states had. It certainly did not include any agreement to collect franchise fees that had previously been incurred and that were the subject of a specific agreement. It is not much good popping up five years later and trying to pop the Commonwealth and suggest that the Commonwealth should be taking retrospective action to collect something that it has no basis to collect.


Senator COOK —Mr President, I ask a supplementary question. I remind the Assistant Treasurer that she said in her press release today that the states could collect it, and in her answer now she said that they could not, with reference to the High Court. Will the minister now give a guarantee that, if the states and territories cannot recover these moneys, the government will legislate so that the Commonwealth can? Or does the government want to leave a $250 million windfall in the hands of tobacco wholesalers and retailers?


Senator COONAN (Minister for Revenue and Assistant Treasurer) —I do not know whether Senator Cook was listening to my answer, but what in fact I said was that the uncollected franchise fees related to a short period before the Commonwealth agreement. The agreement said that the states undertook to do whatever they could to collect it. There was never any guarantee by the Commonwealth that those particular business fees would be collected. Five years later, the Commonwealth is not about to impose on people who obviously thought that they were collecting the franchise there according to the law. The Commonwealth is not about to pop them five years later, when it is in fact the states' responsibility. It should have been raised at the time.