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Tuesday, 9 December 1986
Page: 3595

Senator AULICH(3.41) —The Australia Card issue provides a unique opportunity for us all to re-examine our priorities for the type of society in which we want to live. We need to ask ourselves two basic questions: Do we want a society where there is, first, fairness and equality in the tax system and, secondly, the delivery of government benefits only to those who have a rightful claim to them? We realise, of course, that as a government we need to balance against that any possible threat to civil liberties and privacy that could be created or posed by the introduction of a universal identification system. We are debating this issue today because this Government has had the courage and the foresight to tackle the twin problems of creating a fairer taxation system and stopping cheating in the social security system.

At the outset the Senate needs to be reminded that the Australia Card was first mooted at the National Taxation Summit as part of a total package of reforms for Australia's tax system, reforms that were long overdue after years of the previous Government fiddling at the edges of the problem. We all know that taxation systems work only if there is a high degree of voluntary compliance by individuals and companies who have a belief that, generally speaking, everyone is paying his fair share. I believe, over the last decade Australian society has reached a critical point in that delicate equation. Successive investigations and royal commissions have brought before the public the alarming growth of the tax avoidance and tax evasion industry. There is a widespread belief among experts that this industry became a growth industry under the Fraser Government and it has only now been wound back by the constant and determined campaign being waged against it by the Hawke Government. Every step of the Hawke Government's campaign has been challenged vociferously by self-interested groups and by those who represent them in this Parliament. An integral part of that campaign involves the use of the Australia Card as a method of collecting revenue from those who seek to evade their tax responsibilities. Successive polls have shown just how popular the Australia Card is amongst the general public; a reflection, I believe, of the community's concern about the tax cheats who have always considered themselves above the law, protected as they have been by the apathetic, compromised tax policies of the previous Government.

Put quite simply, the major problem with governments attempting to make the taxation system fair and equitable is the lack of capacity in the taxation system to draw together all the records of disparate incomes earned by individual taxpayers. For example, less than 5 per cent of interest in bank accounts and share dividends is actually reported to the Australian Taxation Office. Many accounts and trust funds are set up in false names or in the names of children. The provision for a universal numbering system under the Australia Card will make it easier and more convenient for the Tax Office, which has been criticised here today, to draw together those disparate sources of income.

The Joint Select Committee on an Australia Card agreed that the estimates of evaded or unnotified taxable income are in fact conservative. There is little disagreement about the Government's estimate of tax losses of more than $4 billion over a 10-year period. Those of us on that Committee who wrote the minority report believe the figure is almost double that. The cost of establishing and running the system over the same 10-year period was estimated at less than $1 billion. Basically, that is $4 returned to the Government for every $1 spent setting up and running the system. So much for the cost effectiveness criticism being advanced by opponents of the Australia Card today.

The cost of compliance with the Australia Card on the part of private enterprise is another interesting question raised by Senator Peter Baume. The opponents of the card have thrown around a figure of $2 billion. They cite as evidence the need to set up new reporting and recording systems to take on board the inclusion of an 11- or 12-digit Australia Card identifier. It takes five seconds to write down 12 digits if one is slow like Senator Peter Baume; four seconds for others. Yet the figure cited is $2 billion according to the Opposition's estimate. Let us take a suitable quotation from an authority that knows something about these matters; that is, the Australian Bankers Association. It makes the Liberal Party's opposition look like a joke. It was prepared to put a figure on costs. Its compliance figures were $60m setting up costs plus $4.6m per year to run the system. Its estimate makes a mockery of the estimates advanced by the Liberal spokesmen such as Mr Porter who the other day was, quite rightly, ridiculed by John Laws on his radio program about the same problem. I finish on the matter of compliance costs to private enterprise, by making this point: The Liberals' estimate of $2 billion to private enterprise over 10 years was based on a simple doubling of the estimated cost to government-sheer irresponsible and scaremongering guesswork that was calculated primarily to frighten private enterprise off the Australia Card. All I can say is that I am glad Senator Puplick and Mr Porter from the Liberals are not doing my tax return this year if that is how they do their sums.

The other question raised by Senator Peter Baume concerns the protection of civil liberties and privacy. I guess, like many people, I believe that somewhere over the rainbow there is a party that is consistently dedicated to individualism and freedom, but I am afraid that the Liberal Party's record on protecting privacy and civil liberties is such an appalling one that it certainly does not fall into that category. This is the record of a party which opposes the Australia Card on the basis that that card will invade privacy. Where were those people during the Vietnam war, when 20-year-olds in this country were forcibly conscripted into the Army for two years and sent to fight in an unjust and immoral war and to die in another country-for a war that failed in every objective that we established for it? Where were they then? Where were they when 20-year-olds were dragged forcibly out of their homes and put in Holsworthy for two years because they refused to recognise the legitimacy of that war? So much for civil liberties on that angle.

Where are the Liberals' views, for example, on private databanks that have existed in this country, particularly those that are related to credit reference information? I have been back through Hansard to 1981. I cannot find a single comment in Hansard from any member of the Opposition about the dangers posed to civil liberties and privacy by these growing databanks and credit reference organisations-not one word from them; not one public word to be found in any of the clippings in the Library. So much for that. There is a great deal of silence from that side of the House on that particular issue. Where are their comments, for example, on the powers of the Australian Taxation Office, particularly under sections 263 and 264 of the Income Tax Assessment Act which allow the Tax Office access to people's records, books and homes without warrant? Where are the comments on this? There is not one word.

On the matter of the late Justice Lionel Murphy, that Party on the other side of the House used this chamber to pillory and to libel that man before he ever had the option of a fair trial. Honourable senators opposite based their attacks on the so-called Age tapes-tape recordings which were illegally obtained and which normally under our own civil and criminal law, that they espoused a quarter of an hour ago, would be inadmissible as evidence. No such legal niceties about privacy and civil liberties concerned them then when they set out in this chamber to destroy that man's reputation, ensuring that he could not get a fair trial anywhere in this country. Where was their concern about a person's inalienable right to a fair trial? Where was their concern about a person's right not to have illegally obtained tape recordings used against him? Further, we have seen in the last week what Neville Wran's reputation has had to suffer in this chamber from the very people who talk about privacy, civil liberties and rights. They have turned this Senate into an abattoir of people's reputations. So much for their concerns.

The minority report of the Joint Select Committee on an Australia Card, of which I was a member, acknowledged the concerns of many witnesses about the purported invasion of privacy posed by the introduction of an Australia Card but concluded that compared with many databases already in operation the Australia Card would appear to represent at most a minor intrusion into the average citizen's privacy. Let me list in a little more detail some of those areas where little or no privacy currently exists. I have already mentioned the powers of the Australian Taxation Office under sections 263 and 264 in particular of the Income Tax Assessment Act. They provide virtually unlimited powers to the Commissioner of Taxation to gain full and free access to all buildings, places, books, documents and other papers without warrant and without the necessity even to notify the individuals under investigation. Has there been any comment from the Opposition on that? There has been none.

I have also mentioned the massive growth of databases in the private enterprise area. Banks, for example, appearing before the Select Committee indicated that they routinely double check with other banks information given on loan application forms-without customer approval I might say. We are all aware of the two-way trading of credit information that occurs in the system. One credit reference group based in New South Wales has more than four million individuals on file. An examination, for example, of the American Express International Inc. application form shows that the customer must agree to `authorise American Express to confirm and exchange credit information concerning my financial affairs'. The situation is similar with Bankcard. I quote from a Bankcard application form. It states:

I authorise the Bank to make any inquiries necessary concerning my credit from any source.

With these private databanks few individuals are aware of what is on their file. Indeed, only in New South Wales do consumers actually have a legal and convenient right to examine the accuracy or otherwise of the information on their file, let alone to make corrections. The minority report on the Australia Card Select Committee put it:

The consequences of this are not trivial: It is obvious that a poor credit rating constitutes a severe handicap in a society where access to credit is an integral part of people's lives. If that credit rating is based on incorrect information, it can have serious consequences for the affected individuals.

Yet despite this I have seen no comment on this matter from any member of the Opposition. Government departments also maintain data bases on citizens ranging from Medicare files through to State and local government records. Many of those records are now readily accessible as a method of establishing telling profiles on individuals-as any private inquiry agent will tell honourable senators. Similarly, insurance companies are protecting themselves against fraud by establishing computer programs to draw together disparate information about claimants. Once again I quote from the minority report, which said:

In short absolute privacy does not exist in a society which has up-to-date technology and accepts the use of that technology. If one is born, marries or begets children, if one buys or sells a house or land, if one borrows money, if one votes or receives an award wage, and if one pays tax, one is on a file somewhere and technology is already being used to draw those separate items of information together.

The Government's decision to establish a data protection agency to defend individual privacy against the misuse of government files is a major step in the right direction and should be supported in this House by all parties. Similarly, logging of access to the Australia Card Register is a new element in privacy protection. For those unfamiliar with the process, logging will require a public servant wanting to see a person's Australia Card file to record each request together with the reasons for wanting that access. Access to the Register cannot be obtained until those requirements have been fulfilled. That record of access-that is, who looks at a person's file and why-will then be available for periodic inspection by the individual. Professor Whalan of the Australian National University, a noted civil libertarian, said in evidence to the Committee:

Perhaps one irony would be if we do have an Australia Card with all those protections . . . our privacy may be better protected than it is now-

and I cannot help agreeing with him.

The question of crime is a matter that our friends on the other side of the House so often seek to neglect when they come into a debate on this issue. Australia is at the cross-roads in terms of its tax and income morality. There is a widespread awareness that much wealth has been obtained through illegal activities, especially in the sale and distribution of prohibited drugs. There is also a deep-seated concern that much of that wealth has been amassed through the avoidance and evasion of tax obligations by the individuals concerned. The Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union, the Stewart Royal Commission of Inquiry into Drug Trafficking and the McCabe-Lafranchi Report of Inspectors Appointed to Investigate the Particular Affairs of Navillus Pty Ltd and 922 other Companies have all lifted the lid on an unsavoury aspect of Australian society which has grown in the last two decades, accelerated, I might add, if not actually begun, by the Vietnam war and the thousands of desperate young Americans brought here on rest and recreation leave during those years.

The problem is therefore recognised, but where political parties and informed individuals differ is in their views about the most effective way to combat this scourge. Costigan and Meagher, for example, prefer to upgrade the techniques they pioneered of targeting surveillance through the extensive use of computer cross-checking. Others call for special task forces and royal commissions. Some agree that the whole panoply must be used. All are agreed, however, that illegal or black money inevitably must return to the legal system of banking, real estate and property transactions, share dealings and other forms of investment.

When opponents of the Australia Card talk about the capacity of criminals to defeat the challenge posed by the card, they are forgetting one consistent trait of those who are winning high financial returns from illegal activities. That trait is the compulsion to maintain a lifestyle commensurate with the rewards from their illegal activities. Real estate is bought; legal investments are made; and cash is generally converted to assets or investments-all creating a money trail that will be easier to follow with a universal identification system such as that proposed in the Australia Card. The Tax Office will then be able to link all sources of income to the one number. Royal Commissioner Costigan, quoted by Senator Peter Baume in another context, put it most succinctly in his report when he said:

Criminals seek to possess wealthy homes, land, expensive cars, yachts, and incur high living expenses . . . They may pay for much by cash; but ultimately . . . they find the normal financial institutions far more convenient and seemingly no less safe to use . . .

. . . This leads to the creation of large accounts with many taxation vouchers. Once located, those vouchers provide a fertile source of intelligence to the investigator.

One person in the semi-criminal fraternity, whom I know, told me that the biggest problem with the cash economy in terms of these people-the big drug pushers, the Mr Bigs of the crime world-is the simple fact, as he put it most succinctly, that the chauffeur cannot carry a million dollars around with him because he often goes to the nearest airport and does not go home when he is told. I think that puts it most succinctly in terms of why these people inevitably end up putting their money back into the legal system, no matter how carefully they launder it.

Both Commissioners Stewart and Costigan recognised the need to tighten banking procedures, to ensure that false identities are not used to open bank accounts and in investment dealings that are beyond the purview of the Australian Tax Office. Whilst Commissioner Costigan did not finally opt for the use of an Australia Card, it is difficult to reconcile his concern for privacy with the computerised surveillance targeting that he employed as an essential part of his royal commission inquiries. The linking of individuals through a sampling technique based on suspicion, I believe, has more consequences for a potential invasion of privacy than any possibility offered by the use of the Australia Card. Nevertheless, the conclusions of Costigan and the Government about organised crime and tax evasion are one and the same. To quote again from Costigan:

It should be clear from the contents of this section of my report that, to assist the containment of illegal drug trafficking in Australia, I favour an approach which hits hard at the financial structures built up by the drug traffickers. This might even be to the exclusion in some cases of the imposition of criminal sanctions where there can be great difficulties in obtaining admissible evidence and convicting the offenders. With the attack on the finances-which would involve in the forefront the use of income tax legislation-would be coupled public exposure.

The choice then is a society which still observes the mores of decency or one which increasingly is corrupted by the uncontrolled growth of illegal activities based primarily on the sale and distribution of illicit drugs. The Australia Card has a key part to play in that choice that we have to make.

I will mention briefly illegal immigration because I think the arguments against that have been so thin that it is hardly worth wasting time in this chamber when many other speakers will be following me. It is estimated that there are more than 60,000 illegal immigrants in this country-people who have jumped the queue ahead of those who have applied in the appropriate manner. Those illegal immigrants are most vulnerable to exploitation by unscrupulous employers; they often pay no tax; and they often make demands on the social security system. By making employment more difficult through the production of an Australia Card, by registering financial transactions and by protecting the welfare and Medicare systems from abuse, the Australia Card will act as a major deterrent to illegal immigration.

The point that I make is that in illegal immigration terms the Australia Card has a deterrent effect. It will not necessarily catch people at the moment. That is not our major aim. Our aim is to get the message through loudly and clearly to potential illegal immigrants that if they come to this country and if they wish to share the benefits of this society they will not be able to do it as easily as they have done in the past, due to the introduction of a universal, identifying numbering system as contained in the Australia Card. That message, I believe, will get through very loudly and clearly because at the moment, in terms of potential illegal immigration, we in this country are considered as a pushover in international terms. Until we stop being considered a pushover, illegal immigration to this country will continue in the way that it has in the past.

Finally, I want to place in context the attitudes of the Liberal Party, the National Party of Australia and the Australian Democrats which oppose the Australia Card and which even opposed it before the Joint Select Committee came down with its recommendations. A large number of influential Opposition members have supported the Australia Card in the past but, for politically opportunistic reasons, they have changed their minds. I will list them so that their opportunism is placed on record: Ralph Hunt, Deputy Leader of the National Party; Ray Braithwaite, then shadow Minister for Social Security; Charles Blunt, current shadow Minister for Social Security; John Howard and Nick Greiner, leaders of the Opposition for the time being; and Senator Janine Haines. The list is endless. Senator Haines nods her head.

Senator Haines —She shook it actually; she said it should be investigated.

Senator AULICH —She shakes her head; she denies that she said it. In a statement at the National Taxation Summit in July 1985 Senator Janine Haines said:

Furthermore, the use of identity cards to limit tax avoidance-for example, the holding down of two jobs by people using different names-

I apologise for her grammar-

and social security fraud, including maintenance avoidance, must be considered.

So she is saying that we must consider the use of identity cards. Where is Senator Haines now? She is sitting on the other side for opportunistic reasons. She cannot shake her head again. She cannot deny that she has supported the idea of looking at this whole Australia Card concept. When it came time for these people to put up their hands, to act as the community wants them to act against crime, tax evasion and social welfare fraud, where did they go? They went back into their fox holes, hiding behind the wimpish excuses of civil liberties, cost effectiveness and other cop-outs, so beloved by negative oppositions unwilling to tackle crime and tax evasion. We have heard it every time. When we talked about retrospective tax legislation to kill bottom of the harbour schemes in this country where did they go? They went back into their fox holes over the other side and the Democrats joined them. That is why our attacks against tax evasion in this country have not been as successful as they should be. It is one of the reasons that we have the Australia Card legislation before us here today. That was one of the major faults in the system that were allowed to continue as a result of that wimpish response on the part of Opposition senators.

Even on the Select Committee examining the introduction of the Australia Card the Liberal Party and the Democrats sought to provide an alternative to the Australia Card. Their alternative of an upgraded tax file number was at best an ineffective and shoddy alternative, useful only to get them off the hook when they realised just how popular the Australia Card was out in the general community. But now, having spiked the Committee, they have dropped that alternative and are instead retreating to their bunkers uttering weird incantations of the type that Senator Baume was uttering today about improving the Tax Office, about making it `do its job', as they said-the very Tax Office that they were in charge of for seven years and failed to change.

If the Opposition, combined with the Democrats, sink the Australia Card in the Senate today there will be many guilty consciences on that side of the Senate, especially on the part of the large number who know that, in the fight against tax cheating, crime, social security fraud and illegal immigration, the Australia Card is the only way to go. They know that. They know it privately but they are not prepared to stand up publicly and say it because they have been instructed to oppose any option which gives the Hawke Government the opportunity to bring in increased revenue, to beat tax evasion, and to hand out better tax arrangements in the future. They know that they cannot allow that to happen, so therefore they will oppose it all the way down the line. Those people who sat there supporting the Australia Card in private will have it on their conscience. The tax evaders and the social welfare cheats in this country will applaud them all right, but the ordinary taxpayers and the honest citizens of this country will regard them with a contempt they deserve.