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Friday, 19 April 1985
Page: 1250

Senator WALSH (Minister for Finance)(11.55) —I have not heard the entire debate on the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1985 and the Dividend Recoupment Tax Bill 1985, but I assume that most of the speakers delivered the set piece speeches which they have delivered in the past. One or two new senators also spoke. I think Senator Jack Evans gave a very good summing up of the case. It is a pity that the best of the Australian Democrats senators will not be here after the end of June. Two reasons have been advanced by the people who will vote again to protect the ill-gotten gains of tax evaders. The first is a claimed objection in principle to retrospective legislation. That argument could perhaps be legitimately used by Senator Chipp or Senator Haines, who have always voted against retrospective tax legislation. It could legitimately be used even by a number of people in the Liberal Party; I do not have all their names.

Senator Peter Rae —I am one of them.

Senator WALSH —Senator Rae tells me that he is one of them and I concede that. However, it is not an argument which can legitimately be used by Senator Harradine or by 14 of the present Liberal-National Party senators who voted for retrospective legislation in 1982 and have voted against retrospective legislation ever since. In defence of the Liberal-National Party senators who have that contradictory voting record, one could enter a plea of mitigation; that is, that they were under party pressure, party discipline, to vote the way they did in 1982. For Senator Harradine, of course, no defence whatsoever is admissible. Senator Chipp has long been on the public record claiming that he was offered half a million dollars to vote against legislation of this type. It has always been my view that Senator Chipp had an obligation to state to the Senate who it was that made that offer, but I accept his statement that such an offer was made. I believe, as I have said before, that short of a death threat an attempt to bribe a member of Parliament is the greatest possible contempt of Parliament. I wish that the people who purport to have some respect or some affection for the claimed dignity of the Parliament and the Senate would stand up and take some action when the integrity of the Parliament is threatened in the most fundamental way.

The second reason advanced for voting against the Government's legislation-for which the Prime Minister (Mr Hawke) gave a specific commitment in his policy speech during the election campaign last year and for which the Government therefore has a mandate-is that there is no longer any need for retrospective legislation of this type because, it is asserted, the Part IVA amendments to the Income Tax Assessment Act of May 1981 have closed off for all time the possibility of similar fraudulent tax avoidance. That claim is wrong. It has been refuted by the success of trust stripping for charity donations-what has become known as the new generation trust strips. Under that scheme donations to charity, which are payable 80 years hence and which therefore have a negligible present value, have been fully deducted from current taxable income. It has been upheld in the courts. The perpetrators of that scheme, thanks again to the actions of the same honourable senators who will defeat these Bills, have been allowed to walk away with $9.5m, essentially on the same spurious grounds-that they were opposed in principle to retrospective legislation.

I know Senator Rae will not like what I am about to say because I think it succinctly sums up the attitude of honourable senators who will vote against this Bill. What they are saying to would-be tax avoiders or tax evaders-whatever you like to call them-is this: 'If you have been robbing the till all week and we find out on Friday that you have been doing this we will say that if you continue to rob the till you will have to pay back any further money that you steal but that what you have stolen to date you can keep'. Essentially that is the attitude of the people who will defeat this legislation. They are telling thieves that they will be under no obligation to repay what they had stolen before the theft was detected; they will be obliged to repay only what was stolen after the theft was detected.

Senator Chipp —Don't you concede that these thieves involved in the bottom of the harbour scheme were doing it legally? There is a great deal of difference.

Senator WALSH —If Senator Chipp wants to introduce one of those fine casuistic lawyer's distinctions, that is so. I expect he introduces it as a point of law. As Malcolm Fraser used to say, there ought to be an obligation on citizens over and beyond the strictest requirement of the law. However, I am indebted to Senator Chipp for raising that point because it opens up the whole question of the ethics of the legal profession, a question to which I think the legal profession ought to address itself. For instance, we had the spectacle in Dublin last year of one of the most prestigious QCs in the United Kingdom arguing before a court for weeks that it could not extradite a man because he was not Robert Trimbole. The same QC appeared in court the next week and said: 'All right, that was a fib, he is Trimbole. But you still cannot extradite him'. He then gave some other reason. No odium whatsoever accrued to that prestigious QC for so arguing a case. The morals of the legal profession are so flexible that they will accommodate anything. There seems to be no limit on the degree or amount of anti-social action which the legal profession will accommodate.

Senator Chipp —I agree with you 100 per cent and I commend you for saying what you have just said.

Senator WALSH —I suggest that as Senator Chipp is still a qualified lawyer he ought to take the matter up with the legal profession. The ethics of the legal profession are appalling.

I really do not think there is any point in going into this matter in any more detail, except to state once again the simple proposition-proven by the success of the new generation trust strips-that Part IVA of the Income Tax Assessment Act does not provide an iron clad guarantee. I make the concession to the legal casuists that such actions may not be technically fraudulent but they are certainly in every other sense fraudulent. Actions aimed at defrauding the public revenue are not precluded by Part IVA. The only way to ensure that potential perpetrators of fraud of the public revenue will not be allowed to keep the gains from their fraud is for this Parliament-which in the present context means this chamber-to serve notice on the community to issue a credible threat of retrospective legislation and retrospective recovery. If such a threat were issued the tax avoidance industry would be killed.

Senator Peter Rae —Capital punishment never cut out murder.

Senator WALSH —That was a rather silly interjection. Unlike claims made to the contrary during the debate, this legislation does not impose any criminal penalties. It seeks to recover money which ought to have been paid to the Commissioner of Taxation years ago. It imposes no criminal penalty. Until this Parliament issues a credible threat of retrospective legislation perpetrators of tax avoidance-evasion schemes will be able to continue to practise their anti-social craft with at least some prospect of success.

Senator Harradine —Mr Deputy President, I claim to have been misrepresented by the last speaker.

The DEPUTY PRESIDENT —Senator Harradine, do you claim that something you said in this debate has been misrepresented?

Senator Harradine —I claim that something Senator Walsh said-

The DEPUTY PRESIDENT —No, do you claim that something you said has been misrepresented by Senator Walsh?

Senator Harradine —No, Mr Deputy President. I seek leave to make a personal explanation in respect of that matter.

Leave not granted.

Senator Harradine —Mr Deputy President, I seek leave to make a statement in respect of my not being on the speaker's list by reason of the fact that I believe the Government wanted this legislation out of the way today.

Leave not granted.

Question put:

That the Bills be now read a second time.