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Friday, 19 April 1985
Page: 1230

Senator ELSTOB(9.47) —We are discussing today the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1985 and the Dividend Recoupment Tax Bill 1985. Yesterday I was saying that the taxation system in this country is viewed by many people in the community as being very unfair. It is unfair when we see so many instances where people virtually can pay or not pay. In other words, they treat tax as optional, whereas the majority of wage earners are forced to pay their tax through pay-as-you-earn taxation system.

If the laws are not recognised by the people as being fair and are not seen to be fair, there will be a tendency for people further to dodge their responsibilities. No country such as ours can afford to let that happen. I remind the Senate that this country is very large and our responsibilities for roads, communications and transport are immense. To build roads in this country and to provide services such as telephones, electricity and water are immense undertakings. We all like our quarter acre block of land and our cities are expanding. Taxation in this country will never be low because of the desires we have. It is only fair that people who live in isolated areas should get the same services as city people. Years ago there was a lot of danger because people in isolated areas had no communications-no telephones, radio or any other facilities. Today we are looking at the possibility of satellites bringing television and other necessities to people living in isolated areas. If we are to be a great nation and a nation that thinks something of its population, this is the way we must go. But all this costs money.

While we allow our wealthy people not to pay their taxation, which provides the right services for our population, our task is almost impossible. Because of the lack of government direction in the past-by the Fraser Government from 1975 to the time when it was put out of office-this situation developed to such an extent that we estimate that $7 billion was lost to taxation. This means something like $30 a week in round figures for the average wage and salary earner. The level of taxation in this country is too high. This Government is trying to reduce that level.

Yesterday Senator Watson said that it is bad for the economy to try to recover taxes. Senator Haines said that it was very unfair to use retrospective legislation. Is it unfair that laws should be seen to be just and equitable? I believe that the only way to stop taxation dodging, evasion and avoidance is to have retrospective legislation in this area. Go and ask the wage and salary earners-

Senator Haines —What about other things you don't like?

Senator ELSTOB —Senator Haines had her say yesterday. Ask the wage and salary earners whether they believe the wealthy and the privileged of this country should not pay their share. No one can substantiate an argument that wage and salary earners should foot the bill for these people.

As I said when I was speaking in this debate yesterday, if this situation is allowed to continue, other people will be encouraged to do the same. If one is having a drink at a club and mixing with people who have been dodging or avoiding the payment of tax one is asked: 'What is wrong with you-are you a fool? Why don't you dodge tax?' Consequently people are encouraged to follow the leader and evade paying taxation by this sort of peer group attitude.

We understand that taxation has to be paid if we are to enjoy the fruits of our labour. We have to pay taxation so that this country can be defended and feel secure. No one is going to complain about that. Australians have the right to live the way they want to. I would prefer that we did not spend large sums on defence. However, the reality of the situation is that most certainly people will try to take away from us what we have if we do not defend ourselves. That reality has been proven many times over. It is right and just that we provide a reasonable level of social security for our people. Australians who are ill or out of work are paid a sum. This type of arrangement does not exist in all countries. If we do not provide these services there would be a tendency for other ideologies that are foreign and unacceptable to us to be adopted in this country. There are all sorts of reasons why there is a need for a decent standard of living and some assurance that we will be protected. However, to do that we have to have a reasonable tax return. People have to be shown that it is in their interests to pay taxation.

Yesterday Senator Haines cited the example of Adelaide Steamship Co. Ltd paying tax of 1.11c in the dollar. She also mentioned the amount of tax paid by some other companies. This sort of thing is a disgrace. Companies are deliberately employing virtually hundreds of tax consultants, lawyers or accountants to do nothing else but look for loopholes in the law so that the payment of tax can be avoided and evaded. How many wage and salary earners can afford to employ tax consultants, lawyers or accountants to look for these things? Is it morally right that this sort of thing should happen? In my opinion, it is unforgivable.

If we cannot close off these loopholes with legislation, perhaps we should be setting down guidelines about people's responsibility to pay tax and saying to the Commissioner of Taxation: 'You will apply these'. In that case, we would have to give more discretionary power to the Commissioner. Many politicians with whom I have spoken say: 'That is not right'. As I have always said, either we should give more discretionary powers to the Commissioner or we should use the retrospective taxation laws to recover unpaid tax where people have tried to avoid or evade taxation. It is only legal loopholes that they are exploiting.

Senator Hill —Why don't you get the laws right in the first place?

Senator ELSTOB —It is probably impossible for parliaments anywhere in the world to legislate to close all loopholes in taxation laws. I honestly believe that. We, the law-makers of this land, should be looking at either using retrospective laws in regard to this matter or giving the Commissioner of Taxation more discretionary powers. The laws must be fair. If they are not fair, we encourage all sections of the community to break them, and that is unpalatable.

Senator Hill —Who determines whether it is fair?

Senator ELSTOB —The Parliament. We are elected as representatives of people of this nation, and it must be within our power to determine that. The tax laws are so important. In regard to general law, people say that Australia's laws are fair, and they are seen to be fair; but our taxation laws are not fair-and that is the great difference. It is about time we changed that situation.

The Prime Minister (Mr Hawke), in his policy speech last year, promised the public that, once re-elected, the Government would re-introduce the twice rejected bottom of the harbour legislation, which would recoup only a few hundred million dollars from those who have sought to escape their taxation responsibilities. It is probably impossible to recoup the $7 billion which some people have avoided paying. This measure will bring back only a few hundred million dollars, but it is important as a warning to those who would, in the future, attempt to avoid and evade taxation responsibilities. Parliament should bring in these laws and penalties. They are only very small penalties; they do not involve the full loss that has occurred over 12 years or more. It is important for the Parliament to show that it is prepared to recover this money. This would serve as a warning to others who may attempt to avoid their responsibilities. That is the important point.

If we are to have a united nation, which should be the principle behind every politician, no matter the particular party, that is important. But we are not doing that in this regard. The people who get up early in the morning, travel to work, take off their coats and do a job know that they are discriminated against. When one talks to them one hears the attitude: 'Why should I do this when I am paying the majority? Why can't the business people?'

Senator Hill —That is a fault of the existing tax laws, which should be remedied. Why does the Government not concentrate on that?

Senator ELSTOB —Why does Senator Hill continually oppose this? He will be speaking after my speech. Senator Hill will say what a terrible thing it is to recover this money. That is why those opposite were put out of office. When the Liberal Government appointed Frank Costigan to look at the Federated Ship Painters and Dockers Union, it did not do so with the idea of overcoming all the difficulties and the rottenness in that union, of which I am ashamed, as an ex-trade unionist. Business people in high places were using the crooked people in that union to assist them in their illegal operations. That is a disgrace.

The majority of working people, small business people and everyone who contributes to this great nation were disgusted with what was happening. That is why the majority of business people are coming to Labor. They have deserted their traditional Party, the Liberal Party. One can see this. I see it in my office in Adelaide and many other politicians are seeing it, simply because the Opposition, as a political party, would not take the hard option. Those opposite are virtually saying to some of their friends in high places: 'We will let you avoid and evade taxation laws, but the working people, who really make this country, will pay'. That is a thorough disgrace.

We do not have the numbers in the Senate to bring this legislation into effect. This legislation would be fair, and would show the people of this nation that we are attempting to stop the rogues, the thieves and the vagabonds from not paying their tax. They will continue to get away with it, but the people of this nation will not forget it. The Opposition is being un-Australian in its attitude, by its opposition-

Senator Peter Rae —Un-Australian by not having retrospective penal legislation?

Senator ELSTOB —Yes, the Opposition is being un-Australian because for years everyone who has paid tax has been paying $30 a week too much. That is an outrage. The Opposition has given no warning to the tax dodgers. It has encouraged them to go on year after year in their avoidance and evasion. It has said to the people who really do the work in this country: 'You will pay'. Because of this the Opposition will never get back into power.

Senator Peter Rae —You cannot exercise retrospective penalties in the way you want to.

Senator ELSTOB —We need retrospective laws. How much can average working people take? They do not have the power or the money to employ people to look into taxation dodging. There is no doubt about it. The laws are meaningful but skilled lawyers and accountants find small holes in those laws so that the dodgers can be allowed not to pay their taxation. Do not tell me that that is fair or reasonable. The Opposition should ask the people outside if it thinks it is. That will not work. We all pay our taxation. There is no way we can get out of it. We are on a salary. There is very little anyone on a wage or salary can do, but those who can form another business are allowed to transfer money to that business, write that business off, sink it, collect the money and not pay taxation.

Senator Hill —If you see that as a distortion, that is what you should be seeking to overcome.

Senator ELSTOB —The honourable member will say that he opposes the legislation. He will never get back into government with that attitude. It is our duty to try to recover the money. It is important not only to get that money, but also to show the people that we are not prepared to allow the dodgers and the despicable people who do not pay their share to get away with it. That is what the Opposition is allowing them to do, and I think it is a disgrace. One can never condone it; it is totally unfair. It is just unbelievable that the Opposition persists in doing that and trying to make the taxation system in this country so unfair. That is the thing that will keep the Opposition out of office.

We will continually bring in these Bills until we get the numbers in this place. People will see that unless we get the numbers we cannot implement the legislation that will make this society fair and equitable. That is what it is about. It comes back to numbers. One can have the best argument in the world, but unless one has the numbers it means nothing. That is what we are showing to the people outside and will show them continuously until they understand it. It is costing them a lot of money by not allowing us to have the numbers in the Senate so that we can bring fairness and equity into society. That situation has to come about. No government can survive unless that happens. I plead with honourable senators to reconsider their attitude to this proposition. I think that Australians should look to a better and a fairer society. Unless the Opposition indicates support for this, less and less trust will be placed in politicians by the general population.