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Monday, 3 November 2003
Page: 21733


Mr CAUSLEY (2:30 PM) —My question is directed to the Treasurer. Following his last answer, would the Treasurer inform the House of steps the Australian government is taking to combat the use of bank secrecy in offshore locations to avoid illicit activities?


Mr COSTELLO (Treasurer) —I thank the honourable member for Page for his question. I can inform the House that the Australian government has taken a number of steps to try to pierce the veil of bank secrecy which is sometimes used in offshore locations for illicit activities. In April 2000, in my capacity as the Chairman of the OECD that year, I brought to the council a report called Improving access to bank information for tax purposes. This was an attempt to get agreement between OECD countries to allow cooperation where there was reasonable cause and identification of sums concerned. The OECD members unanimously agreed to that report, including a recommendation to lift bank secrecy for civil matters by 31 December 2005, and to adopt a common definition of `tax fraud' which would provide the key to the lifting of that secrecy. I have unfortunately to report to the House that on 16 September this year four countries, led by Switzerland, vetoed those recommendations.

I raised this matter at the APEC finance ministers meeting in Bangkok on 6 September 2002 and it received agreement from those countries that were there to continue with the project. The weekend before last I raised the subject again in Morelia in Mexico, at the G20 finance ministers meeting. There was broad agreement around the table at that meeting of 20 finance ministers and central bankers that diplomatic efforts should continue to try to bring those countries which are not cooperating with the OECD project into an agreement and that, having achieved an agreement amongst the OECD, that the provisions would then be applied to non-OECD members that are suspect to allowing illicit activities or can be used as tax havens or indeed worse.

I make this point: banker secrecy cannot only be used for tax purposes or indeed corporate purposes; it could possibly be used for the financing of criminal activity, including terrorist activity. Australia is willing to exchange information on tax matters where requested by competent authorities with due cause to do so. We believe that the OECD recommendations represent the best way of taking this matter forward. We call on all countries, including Switzerland, to join that project and to accept that common definition. We believe that all countries have an interest in allowing the exchange between competent authorities, where there is prima facie evidence on the basis of reasonable cause, to enforce corporate laws in tax matters and indeed to crack down on the financing of illegal activities.


Mr Cox —Would the Treasurer table the document to which he just referred?


The SPEAKER —Was the Treasurer reading from notes?


Mr COSTELLO —No.