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Monday, 8 October 1984
Page: 1415


Senator JACK EVANS(8.11) —What appropriate legislation to have before us on the evening that an election has been announced. The legislation imposes taxes and tax penalties and it sets out in a variety of ways the whole philosophy of the Government. We are able to hear in a variety of ways the responses of the alternative government, the Liberal Party of Australia. The Australian Democrats, as is now known and highly respected, hold the balance of power in this Parliament. As a result of holding that balance of power the Australian Democrats are able to do a number of things that hitherto would never have happened and did not happen in this Parliament. That will happen with the legislation that is before us; it will happen with a lot of legislation that will be before the Senate over the next week or so despite the pressure that is on us not to amend it and not to return it to the House of Representatives because that House will have already risen.

The Democrats will, as we always have, look at each piece of legislation. Where we believe it to be appropriate we will modify that legislation and improve it, and we will do that with the support of the Liberal Party in the Senate. I acknowledge the support that we get from the Liberal Party and the National Party of Australia when we do make modifications to improve legislation. We will support the Government particularly in terms of ensuring that it keeps its pre- election promises, and that applies to whichever party is in government. At this moment it applies to the Hawke Labor Government which looks like bolting home in the forthcoming election, whether people in this Parliament like it or not. Therefore we will have the responsibility once more of keeping the new government honest. We will have that responsibility again weighing heavily on us because there is a problem in the Senate without the Democrats-we have seen evidence of it right throughout today-that debate can move away from the topic and move into hyperbole, which does occupy the great bulk of the time of the House of Representatives in particular. Regrettably it does occupy a lot of the time of the Senate quite unnecessarily. To demonstrate that point, we have calculated that over the last two years, including some time of the previous Fraser Government, 72 per cent of the time of this Parliament was spent on such vital factors-I say that with the utmost sarcasm-as flights over the Franklin River, and such issues critical to the future of Australia as Paddington Bears. It includes all of the nonsense that one could imagine being debated in this Parliament, and the people of Australia pay us to spend our time in this Parliament looking after this country's needs. Regrettably, we waste 72 per cent of our time on those ridiculous and insignificant matters.


Senator Crichton-Browne —If Senator Walsh were here he would clap you in his normal fashion.


Senator JACK EVANS —I have not taken Senator Walsh's side or Senator Crichton- Browne's side. They are a couple of Western Australian heavies who do slug it out in this Parliament and who, regrettably, take up the time of this Parliament in that sort of activity. I am sorry for both of them because they both suffer from the consequences of those personal attacks. I acknowledge the interjection by Senator Crichton-Browne because when that happens not only does he suffer but also the whole Parliament suffers.

The difficulty that the Australian Democrats have with legislation such as this is that we have to walk a tightrope because we are the party with the responsibility in the Senate for ensuring that legislation is acceptable to the greatest proportion of the community, not just to the pressure group which heavies the Liberal Party or the trade union heavies imposing their influence on the Australian Labor Party. The Australian Democrats are certainly pressured very heavily by 100 per cent of the community because our door is open to the total community, including representatives from all of the big business groups. We walk that tightrope and we save the Liberal Party's hide quite frequently just as we save the hide of the Government frequently.


Senator Crichton-Browne —Like when?


Senator JACK EVANS —Like tomorrow when I will be saving the honourable senator's hide and the hides of many of his friends when we vote not to repeal sections 45D and 45E of the Trade Practices Act. In that sort of tightrope walk we protect the interests not of the heavy pressure groups, but, for instance, the interests of small businesses right around Australia which, until the arrival of the Democrats, had no party in this Parliament representing their interests. Beyond that tightrope walk in here, trying to work out legislation with the people who are debating it in this Parliament, we have the responsibility outside the Parliament of negotiating legislation even before it gets into this Parliament, just as Senator Janine Haines negotiated the Medicare legislation to ensure that the chronically ill were not disadvantaged and that the private funds were not put out of business. We had the responsibility of seeing that the National Crime Authority had enough teeth to be functional, to be able to operate. We had the responsibility with the assets test of ensuring that people' s homes were not part of the assets test and that the thresholds were increased to an adequate level.

It is not just a matter of the tightrope walk. In this legislation the Government has picked up Australian Democrats' initiatives such as its acceptance of an Australian Democrats Bill to grant tax exemption to rural producers who made donations for people who were harmed in fires or other serious catastrophes. That was-and credit should be given where it is due-an initiative from the Democrats and the Democrats' Bill is in this Parliament as living evidence so it cannot be denied that it was a Democrats Bill.


Senator Missen —Mine never got on.


Senator JACK EVANS —I am sorry, it has gone on and that is the great thing that is happening in this Parliament. The Labor Party has picked up the legislation and is running with it, and it will be passed this week thanks to the Democrats' vote and thanks-


Senator Jessop —Oh yes.


Senator JACK EVANS —No, the votes of the Liberal Party are irrelevant on that Bill because we will vote with the Government to get that piece of legislation through. So the balance of power has a very positive effect in this Parliament.

Let us look at some of the things that are coming through in these pieces of legislation. The Taxation Laws Amendment Bill 1984 is essentially an anti-tax avoidance measure because it substantially increases the penalties for tax offences including failure to file a return, failure to furnish information and the submission of false returns. It provides for the Taxation Office to push more prosecutions through lower courts to speed up the Taxation Office's recovery of outstanding tax.

I applaud the Government's initiative in moving in that direction. The Australian Democrats stand foursquare behind me in applauding the Government's moves to stop tax avoidance and tax evasion by any other name. Particularly do we support the Government when the measures are in prospect and not in retrospect.


Senator Jessop —When it suits you.


Senator JACK EVANS —Senator Jessop should be careful. I personally have supported every piece of legislation against tax evaders and tax avoiders, and he knows that as well as anyone in this chamber.


Senator Jessop —So have I.


Senator JACK EVANS —I hail the honourable senator for that support, for all tax avoidance measures. We also believe that there needs to be legislation before this Parliament for the cherry pickers, those who have avoided their tax obligations through setting up false superannuation schemes quite deliberately aimed at avoiding their taxes and have then stripped the money out of those schemes, having sacked or retrenched their employees, or let them go, and have then got benefits of those superannuation funds without paying one cent of tax. That is known as the cherry pickers scheme, or the section 23F scheme. The Democrats have supported the abolition of that scheme, to the point at which I personally moved legislation in this chamber to have such legislation in place even while the Commissioner of Taxation is looking at ways of picking up that money that has previously been lost through the existing provisions in the tax Acts. I believe that the Government will carry through that measure which the Democrats initiated in this House to ensure that the cherry-pickers scheme is dead from this day forward. I believe that we shall have the support of not only the Opposition but also the Government in seeing that that form of tax avoidance is killed.

There is a very interesting facet of taxation for which many people around Australia are very grateful to the Democrats. It needs to be brought to the attention of the House.


Senator Jessop —On a point of order, Mr Acting Deputy President: I draw your attention to standing order 406.


The ACTING DEPUTY PRESIDENT (Senator Townley) —There is no point of order. I believe that the honourable senator was only quoting from copious notes.


Senator JACK EVANS —I was quoting from a single line-without any interruption and without any advice from Senator Jessop.


Senator Jessop —Mr Acting Deputy President--


The ACTING DEPUTY PRESIDENT —We are not debating the point of order. I have ruled on that.

(Quorum formed)


Senator JACK EVANS —This legislation is anti-tax avoidance. The Democrats will support it despite having some misgivings. Those misgivings arise because of the additional penalties which are given to the Commissioner of Taxation. The Commissioner and, I stress, any deputy or any authorised tax officer has the power, literally, to prosecute, to adjudicate, to determine the penalties and to execute these penalties. It will also have the effect of penalising directors and managers for tax offences committed by their companies by holding them responsible for the offences unless they can prove that they were not personally implicated. This reverses the normal legal custom whereby the accused has the right to be presumed innocent until proven guilty. It also authorises the Commissioner to prevent, subject to appeal, the departure overseas of a person with a tax liability. It is a good thing that tougher penalties are coming in, because we need to spell it out loud and clear to everyone in this country: 'You have an obligation to meet you tax payments. If you do not meet your payments, your next door neighbour or other people who may be far less able to meet increased taxes will have to make up the balance'.

With these increased penalties, the Commissioner of Taxation will carry a very heavy responsibility. I have discussed the issue with the Treasurer (Mr Keating) and the Commissioner of Taxation, particularly because of the vulnerability of pay as you earn taxpayers. A PAYE taxpayer could, in theory, as a result of submitting a late return or as a result of making a simple error--


Senator Jessop —What does the Treasurer say?


Senator JACK EVANS —Wait for it-it would have come five minutes earlier if Senator Jessop had not called for a quorum. The Commissioner of Taxation will have the ability to treble the tax paid, because he has the ability to impose a 200 per cent fine. That worried me and it worried the Australian Democrats, to the point that we felt we must take action.


Senator Jessop —Therefore you need our support.


Senator JACK EVANS —Therefore we took the action. We did not just sit back on our behinds, as Senator Jessop obviously is content to do, and let nature take its course. What we have done is to ensure that taxpayers in Australia are adequately protected--


Senator Jessop —You cannot do it on your own.


Senator JACK EVANS —We are doing it, with a majority, which we always do when we get improved legislation through this House.


The ACTING DEPUTY PRESIDENT (Senator Townley) —Order, Senator Jessop. I would be grateful if you would let the honourable senator make his speech in silence.


Senator JACK EVANS —What has happened is that the Commissioner of Taxation has agreed, following representations from the Australian Democrats, that the same guidelines will apply for the imposition of tax penalties for the PAYE offences, to which I have just referred, as applied previously. In other words, as a result of this legislation, there will not be an increase for PAYE taxpayers who may make an innocent breach or who may even make a more serious breach; the penalties will not be increased in that area. The penalties will be for the real tax evaders-avoiders. As I have said, the Commissioner needs and justifies, as a result of the things that we have seen over the last five or 10 years, the additional powers to get at those tax evaders. So the Democrats will be allowing that part of the Bill to go through.

The Bill has many shortcomings. It is an indication of the lack of courage on the part of the Government that it was not willing to do some of the things with which it has been tinkering and playing around, considering and throwing to some of its committees. It has not had the courage to come forward in this Parliament 's term and legislate for them. It had a chance to set the example in Australia by eliminating payroll tax in the Australian Capital Territory. It is in this Bill as an amendment. It would have been possible for the Government to do away with payroll tax in the Australian Capital Territory and set an example for all State governments. Payroll tax is an iniquitous tax which an employer must pay for taking on additional employees, for having too many employees. It is an anti -employment tax. The Government had within its hands the power to repeal that law for just the Australian Capital Territory, to give the lead to the State governments and to show them that it felt as a government that it was an iniquitous tax. But it fumbled that ball and dropped it. All it will do is mildly modify the Pay-roll Tax (Territories) Assessment Act 1971.

It dropped the ball again with the time allowed for the payment of sales taxes. Probably not many people realise what an imposition this tax is on most small businesses, that under the existing legislation a small business has to pay its sales tax within 21 days of that item, goods or services having been sold. But normally it does not receive the funds for 30, 60 or 90 days. So it is picking up the tab for all the taxpayers around Australia. It is paying the money to the Commissioner of Taxation before it has even received the money. In this legislation the Government has extended that term. We believe that it should have extended the term to 60 days. We believe that that would be a fair and just extension which would not hit harshly the revenue of this country but would mollify the very severe cash flow problems which most small businesses of Australia still suffer.

We think that the Government could have modified its approach to the taxation of wines and, at the very least, could have exempted wines which are used for cellar door tastings. It could have given a little relief. It has not done so. We believe that in the Taxation Laws Amendment Bill the Government could have got rid of the iniquitous Division 7 tax which is imposed on one sector of businesses in Australia, the small, private businesses, the private companies. Public companies do not pay a Division 7 tax for undistributed profits. Only private companies, the small businesses, pay this tax. Incredibly, either because the Government does not understand how small businesses work or because it is still favouring big businesses at the expense of small businesses, as did the previous government, this Government has let the Division 7 tax stand. There needs to be some redress of that. I would have hoped that a Labor government would have redressed that amount. They are the things that we, the Australian Democrats, would have introduced if this legislation had been ours.

There are many areas of tax reform where the Australian Democrats would support this Government and have supported both it and the previous Government. The tragedy of Australia's taxes and the whole tax system is that it is a hodgepodge ; it is almost impossible for anyone to understand. I doubt that more than a handful of people in the whole nation really understand all of it. Unfortunately , the hodgepodge of legislation we have before us, which is going through in the last week or so of this Parliament with about 200 amendments to it, will be a further band-aid to a complex tax system which really lacks anything in the way of a planned approach to taxation. At the risk of repeating myself, I beg the Government to sit down with the Australian Democrats because we have such a plan but also with the Liberal Party of Australia and the National Party of Australia so that we can plan a long term tax policy for this country which will not need 200 amendments every few months such as we are seeing go through the Parliament now.

Let us have a tax plan which is easier to understand, which is acceptable and which will not be battered and messed up from Parliament to Parliament, from government to government and from party to party, but a tax plan which serves the people of Australia well. Let us have a tax plan which is universally accepted as fair and just, because this country needs a long term tax plan. If ever its economy is to recover and if ever businesses are to be able to see the way ahead for that recovery they need knowledge at least 10 years ahead of what is likely to happen in any tax plan with any government.

I suggest that the Bill we are now considering, which has a couple of problems we will go into during the Committee stage, including the reversal of the onus of proof, at least from the Australian Democrats' point of view, moves in the right direction. It moves towards spelling out loudly and clearly to all people in this country that if one is a tax avoider one's days are numbered. If one is a tax avoider, if the Commissioner of Taxation does not get one in year one he will have the tools, the ability and the powers to get one shortly thereafter so that tax avoidance will not only be a waste of time but also a costly exercise. I applaud that approach. The Australian Democrats applaud it. We wholeheartedly support it. Let any government of the future be on notice that if it wants to legislate to get rid of tax avoidance in this country in prospect it will have the unanimous support of the Australian Democrats.

I would like to see tax amendments constructively considered in this debate. I would like to see us give the Commissioner of Taxation the clearest possible indication that we are on his side, that we are right behind him in his drive, which we hope will be with renewed vigour, to chase up the tax evaders, to make it clear to tax avoiders that they do not have an enemy in the Taxation Office, that they can consult the Commissioner of Taxation before they make their steps into tax avoidance realms and that they can, as a result, be compelled to compete fairly with those businesses and individuals who are paying their share of taxes, because that is what tax is about. It is aimed not only at getting revenue for government but at equating for all of us the responsibilities that we have to pay our way in this community. We must not evade or avoid that responsibility as a result of having a sharp lawyer or a smart accountant that, as big business, we would be able to hire but, as individuals or as small businesses, we would not be able to hire. The Bill will address many of those areas and will give the Commissioner of Taxation the powers to deal with people who move into those realms. As a result it will have the support of the Australian Democrats.