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Wednesday, 10 December 1986
Page: 3741


Senator COOK(8.32) —People listening to this parliamentary broadcast and those in the gallery would not know-I am sure that many honourable senators would not know-from the last address what this debate is all about. Grinding on to a massive anti-climax, we are debating cognately the Australia Card Bill 1986 and the Privacy Bill 1986 because there is a major problem with our taxation system. Over many years of conservative government the taxation base of Australia has haemorrhaged so that ordinary wage and salary earners bear an extraordinarily disproportionate share of taxation. Those who have an income which enables them to fiddle their tax are able to escape taxation and thus get off scot free, or almost scot free. Thus the tax bill for the Commonwealth is met by most ordinary, honest Australian wage and salary earners who have their tax taken from their wages when they receive them. All the others manage to fiddle their tax returns and responsibilities to escape their burden.

This debate is about one of the pieces of the mosaic which came out of the National Taxation Summit and which was canvassed widely in Australia last year in the White Paper on taxation reform, one of the pieces of the mosaic which fits together with all the other items of legislation and administrative changes we have made to try to guarantee that the tax burden in Australia falls equally on all according to their obligations and that those who meet their full obligations know with complete integrity that no one else is escaping his obligations and everybody is paying equally.

That is the central proposition from which this legislation arises. It cannot be seen in isolation from the whole tax reform package or from the revenue implications there will be if these Bills are passed. There will be significant revenue implications. It is estimated that the Australia Card, by wiping out welfare fraud, will be responsible for the recovery of about $1 billion. That will enable the burden of taxation to be shifted. The Government will be able to give tax cuts to ordinary wage and salary earners, as it did last week in honouring one of the fundamental promises of its tax reform package. It will be able to reduce the taxation burden on wage and salary earners by reducing income tax in the significant tax break that it initiated last week.

The introduction of the Australia Card will also mean that as a Government we will be able to honour again the undertaking that we gave to reduce taxation and to make the system fairer for ordinary wage and salary earners on 1 July 1987. We will be able to finance those two tax cuts because the taxation system will be made fair and more honourable. The integrity of it will be better guaranteed and the burden of taxation will rightly fully shift from those who are at the lower and middle wage levels on to the shoulders of those who have been escaping paying their fair share of taxation. Our whole program has been aimed at achieving that outcome.

I am told that the Australian Democrats and the coalition parties opposite will combine to defeat these Bills in an effort to prevent and frustrate this Government from achieving a fair tax outcome. It is not surprising that they would do that because they have a history of interfering with tax legislation to prevent fair tax outcomes. We as a government have presented no more than four Bills in our period of office under the Hawke Administration in order to recover revenue lost through tax avoidance and evasion in bottom of the harbour schemes. The Opposition and some Democrats-certainly not all-combined to defeat that legislation and prevent the recovery of tax dollars that had been illicitly evaded by bottom of the harbour and other fraudulent schemes. They combined to do that, just as they may combine again tonight to frustrate the legislation before us.

Figures that I have indicate that the revenue base has been frustrated by in the order of $1 1/2 billion. However, the fairness of the tax system is not one of the Opposition's strong points. It has never been the jewel in the crown of the Liberal-National Party coalition. We know that under the Fraser Government taxation avoidance and evasion ran rampant in this country. Virtually nothing was done by that Government to introduce equity and fairness in the tax system.

One of the reasons why the Hawke Labor Government was elected to national office in this country was its promise to reform the tax system. One of the hardest jobs any democratic government has is reform of the tax system. We as a government have not shirked that task. We have been told by political commentators that tax reform is a poison pill and that we should spit it out. But we have pursued logically and systematically the course of trying to bring tax justice to this country. It is those opposite, who now seek to interject and frustrate the point that I am making, who have tried to prevent that from happening. They have argued and voted in this place on the side of inequity, unfairness and injustice. The measures that we have introduced started with a wide scale public debate last year on the White Paper which we brought out and which canvassed the options of tax reform. Three options were considered by the National Taxation Summit.


Senator Parer —Tell us about option C.


Senator COOK —The honourable senator asks about option C. Let me tell him about it. Option C was properly canvassed, along with options A and B. We are not a government of confrontation, we are not a government that says: `You shall cop this no matter what', as the Fraser Government, particularly in industrial relations, was notorious for doing. We canvassed the hard and difficult question of tax reform at the National Taxation Summit in June last year. Out of that summit we got sufficient community opinion to be able to move to reform the taxation system in the way in which we have. We have moved to do that by introducing fairness, by lowering the burden of tax of the ordinary taxpayer and by holding up, as a precept, that those who have the ability to pay tax should pay tax. We have introduced the fringe benefits tax on a small proportion of taxpayers who were, by virtue of getting benefits in kind, rather than in money, escaping their taxation obligations. We have introduced a capital gains tax, which admittedly is a mild one, so that those who make income by capital gains can meet their obligations to the tax base. We have introduced legislation concerning negative gearing to prevent that tax avoidance technique, and we have outlawed the free lunch.

We have tried, as I have said, to introduce some retrospectivity to recover money that has been lost to the revenue by tax avoidance techniques. The Opposition fails to recognise that if this Parliament and the Senate were to carry legislation which said that once we clearly identify a tax avoidance operation which defrauds the revenue base, we then retrospectively move to recover the ill-gotten gains from that defrauding, the whole purpose about defrauding taxation is lost. If those who indulge in tax avoidance and evasion know that once they are uncovered, retrospectively their ill-gotten gains will be taken from them, the whole purpose about taxation avoidance and evasion is lost. Once they know that we can guarantee the integrity of the tax base.

But the Opposition has voted against that. We have tried to introduce that. We have introduced tax cuts which, as I have said, in terms of the overall give back to taxpayers amount to $4 1/2 billion. Taxation raising measures amount to $1 1/2 billion. So there has been a net reduction in the burden of taxation in this country. That is what we are doing. As part of that we also need to stamp out the tax evasion that is indulged in through false identity and through false names. We also need to be able to guarantee to taxpayers that their tax dollar is being spent wisely, and that those who need support in the welfare system get genuine support, by guaranteeing that people do not defraud the welfare system by claiming more than their due. One of the arguments I have heard in this debate is `Effectively there is nothing in it for us in terms of welfare fraud', because the total of welfare fraud based on false names is less than one per cent.


Senator Parer —That is right.


Senator COOK —I am glad Senator Parer confirms that, because that is a view which has constantly come from the Opposition benches. But where the honourable senators opposite are dishonest about that argument is that they do not say any more about it. If Opposition senators were to say any more about it, they would say that that is the known and detected level of defrauding. If we have a high integrity identification card we will discover how widespread that defrauding is. All the studies indicate that the defrauding level is much higher than the Opposition says it is. Therefore if we are to recover money from the people who are defrauding the system, we will have more available to pay to those in real need. That is a matter of fundamental principal. Why should the defrauders be able to get away when there are people in this country who do need the assistance of the welfare system and who do suffer? It is our objective to make sure that they do not suffer. It is on that basis that this legislation comes forward.

Let me deal with this legislation in its direct form. Let me deal with it first by citing a number of quotations. I am glad that some of the members of the coalition have left at this point because it is uncomfortable for them to hear the quotations. Let us take Mr Ray Braithwaite, the shadow Minister for Trade, who was quoted in the Brisbane Courier-Mail of 16 May 1985 as saying:

What we need in Australia to effectively fight all forms of abuse is a proper identification of each Australian with a number, photograph and even a fingerprint.


Senator Maguire —What party is he from?


Senator COOK —He is from the National Party of Australia. We do not think that the draconian view of Mr Braithwaite should hold sway in this country. My God, a finger print! That is ridiculous. That is not our position. But Mr Braithwaite occupies that position, unless somewhere along the road to Damascus he has been stood over, because I am sure that he is numbered among a number of members of the coalition who would like to cross the floor, vote with the Government, and carry this legislation. Of course, the rumours are rampant in this place about what has been going on in the Party room of honourable senators opposite to stand over individuals who might want to express their own views on this, cross the floor and vote with the Government. We know that probably no honourable senator opposite will have the guts to do it, even though the Party celebrates the right of individuals to do these things.

Let us just move on because Mr Braithwaite is not alone; he is not the only swallow who makes a spring. Mr Ralph Hunt, Deputy Leader of the National Party, in a media release-if there is anything to be said about Mr Braithwaite's shooting off the top of his head, at least a media release is a considered comment by a spokesperson from the Opposition-said:

The use of plastic cards for an effective means of identification would streamline the collection of tax revenue, imposing a greater accountability on that small minority of taxpayers who sought to evade their responsibilities to the community.

That was a quite responsible response from Mr Ralph Hunt. He is not the only one. There are several more. Charles Blunt, the shadow Minister for Social Security, in a media release-again a considered comment-of 8 June 1985 said:

The introduction of a national identification system using ID cards offered benefits to the Australian people which outweighed any civil liberties considerations.

He went on to comment further:

With the Government's White Paper on tax reform recommending the introduction of ID cards, there is now broad bipartisan support for this measure. It should therefore be implemented.

They are Federal spokespeople for the coalition, but they have been joined by voices from the States. On 13 November 1986 in the Adelaide Advertiser Mr Trevor Griffin, the Liberal shadow Attorney-General, was reported as saying that ID cards with photographs should be introduced. He went on then to propose a more draconian dimension, which we would not countenance or allow and which we would specifically forbid-that it should be used to prevent under age drinking. Obviously, as Senator Walters wants us all to believe, to achieve that people would have to carry the card all the time. Of course, that is not the intention of this legislation. The Leader of the Opposition, Mr Howard, has been one of those who has equivocated over this issue. In interviews on the Sunday program on Channel 9 and in other areas he has indicated tacit support for the proposition. In order to try to seize what he sees as a main political advantage, he has walked away from his earlier proposition. When he came to power as the Leader of the Liberal Party of Australia he said that he would reserve his right to speak out honestly on issues, but he has now been overtaken by John Howard, politician, and now he speaks out in order to try to take the sleazy road to political success and follow what he imagines wrongly to be a populist view on these matters.

They are some of the quotations of Opposition members. Because of those on the record remarks we know that there are a number of people on the Opposition benches who would like to cross the floor and vote for this legislation. Unfortunately, none of them will have the guts to do that and that is a sad commentary on the once great Liberal Party, which is now in disarray and tatters as it tries to regain its feet and as it wonders from one week to the next who will lead it. In Senator Walters's address she said that we do not need an Australia Card, that we just need to get the Australian Taxation Office going.

Senator Sir John Carrick accused this Government of being responsible for the social security fraud and tax evasion in this country. He was disgusting in his selectivity in ignoring the fact that he was one of those who voted to prevent the passage of three Bills that we proposed that would have recovered $570m in taxation rip-offs. That would have been the result had the Taxation (Unpaid Company Tax) Assessment Amendment Bill and two other Bills been carried. Nonetheless, in order to exercise his selective and creative memory he accused us. Let us go to the record to find the facts. The allegations made by both Senator Walters and Senator Sir John Carrick are just not true. In the case of the allegation by Senator Sir John Carrick, it was the Fraser Government that put a universal freeze on Public Service appointments and thus starved the Taxation Office of staff to carry out investigations of tax avoidance and evasion. The Fraser Government could have exempted the Tax Office but it did not; it starved it and for over three years a prosecution languished in the bottom drawer in the Crown Prosecutor's Office in Perth which could have been a landmark prosecution in tax avoidance. It is on that record that Senator Sir John Carrick appeals to us. We increased the staff of the Tax Office in order to seek out tax avoidance and evasion and we are presenting this legislation to the Senate to prevent the very things he complained to us that we are guilty of not confronting. He complains to us that we are doing nothing and votes down the very legislation aimed at achieving the result that we want.

I do not need to go into any detail about Senator Walters's remarks because they are covered by what I just said about Senator Sir John Carrick. They are equally wrong and inappropriate. An honourable senator who spoke today said that Australia will be the only country that introduces such legislation. Again we have an example of selective memory or selective information. That is not true. Other countries which have a strong democratic tradition and which have an inoffensive means of identification, as the Australia Card will be, are Belgium, Denmark, Finland, France, Greece, Portugal, Switzerland, Sweden, Spain, West Germany and there are others. Because of the operation of the social security number system in Canada and the United States of America there is an effective de facto means of identification in those countries.

The arguments that have been put here on privacy are, to say the best, specious. They start from the premise: This is what the legislation proposes but what if this, that or something else? The legislation proposes specific measures that do not allow the creative scenarios of the knockers of a system that guarantees the integrity of a card such as this to be realistic. Nonetheless, lurid scenarios have been painted in this chamber as to what might happen. The legislation is there; the legislation is clear. It provides a central registry.

Senator Walters, in her previous address, made the accusation that this legislation somehow will enable the gnomes of the Tax Office to fiddle with Medicare files. That is patently false. If she had bothered for one minute to read the legislation and to understand what it says she would know that what she was talking about was just rubbish. There will be specific, dedicated computer banks. One will be for the Australia Card file. This central file will contain just the bare essentials of information for national identification-name, address, an allocated number and a photograph. None of the other information that the Opposition suggested would be on the file will be on that specifically dedicated central bank. It will be distinctly different, and discretely so, from the Medicare file system. People who have access to one will not automatically have access to the other and of course, whilst the information will be kept by Medicare, the Tax Office will not have access to the Medicare files. Let us put that allegation also equally to rest.

There is another unfortunate dimension in this debate for the Opposition, that is, the proposal we are putting is popular as opposed to what those opposite are arguing. All the public opinion polls as to whether Australians want such a system are overwhelmingly--


Senator Boswell —It was 67 per cent; it is about 52 per cent now. After this debate it will be even Steven.


Senator COOK —I thank Senator Boswell. It was 60 per cent and it is now 52 per cent. Although Senator Boswell comes from Queensland, where they think 39 per cent is a majority, I always thought that 52 per cent was a majority; and that is an overwhelming endorsement of this proposal by those who have responded to those polls. Senator Baume has been bold enough to allege that this will be some form of internal passport.


Senator Maguire —Which Senator Baume was that?


Senator COOK —I think it was Senator Peter Baume, if I remember correctly. He is in the chamber. He alleges that this will be some form of internal passport. He knows differently. He knows that that is not the case. He knows that this legislation does not propose that. Yet he stands in this chamber and alleges that it will be. He knows that it will not be compulsory to carry it. He knows that police cannot ask one to product it. He knows that it is only to do with certain transactions of a money kind at the bank and at the place of employment in order that we are able to verify who are the people who earn income so that that income can be correctly taxed. He knows all of those things.


Senator Crichton-Browne —What is the penalty for demanding the card?


Senator COOK —I would not open my mouth if I were Senator Crichton-Browne because we are never quite sure under what name he is carrying out business in this country. The allegation of Senator Peter Baume is, of course, patently false. One of the other allegations made in this debate is that the card will prevent people being able to conduct business by telephone.

It was alleged that every time people want to sell a pig or buy some shares or front up to a stockbroker, marketing authority or produce agent, they will have to produce their Australia Cards. Once again, obviously, those opposite have not read the Bill. The facts are different from what they allege. The Government has recognised that people living in isolated areas or those who lack sufficient mobility may sometimes find that it is difficult to visit their produce agents or marketing authorities who may not have sighted their cards. Just as occurs when people apply for a passport, the Government will allow certain individuals who are prominent within the community to sign certificates of identity. All politicians here know that they can witness an application for a passport. For the sake of convenient operation for the consumers in this country there will be some who equally will be able to sign certificates of identity.

The certificate of identity will work like this. Let us say, for example, that a person wants to open an account with a stockbroker in Sydney or Melbourne but, being a remote dweller, he is unable to travel there just to produce his Australia Card. He will go to a designated person in his local community who is authorised to sign certificates of identity. He will sight the Australia Card and sign a form verifying that he has produced it and that it would not have been reasonably practical for him to have physically produced his card to his marketing authority, bank, stockbroker or produce agent. His certificate of identity can then be posted to the stockbroker or whoever else he is dealing with on a business basis who will then use it instead of his Australia Card as proof of his identity and open his account. Recorded on the certificate will be the Australia Card numbers of both the cardholder and the authorised person filling in the form so that it will be possible to trace the person who provided the certificate. Those authorised persons will be made fully aware that if they knowingly make a false statement they face a severe penalty. Thus, both the security and the integrity of the Australia Card program will be assured, while a convenient service will be provided for those who might have been inconvenienced by any requirement to produce their Australia Cards in person.

Once an Australia Card has been sighted or a certificate has been received, customers may continue to transact all business in their preferred way, including by mail or by telephone. After the card or certificate has been produced once to an agent, marketing authority, or the like, and the number recorded, there will be no further need to produce the card for normal business with those bodies. Once a stock and station agent or marketing authority has recorded a farmer's Australia Card number the farmer may conduct further business over the telephone or by mail. Of course, an Australia Card will not need to be produced for one-off sales or for sales of livestock which are not conducted through a marketing authority or agent. So on the basis of the earlier allegations that this will inhibit the convenience of phone or mail transactions by country dwellers, on the very evidence of what the legislation contains that assertion by the Opposition, like so many that I have recounted, is palpably false.

In the few minutes left to me let me return to the basic premise of the legislation. We have set out to try to achieve what is fundamentally the most difficult political act any government can confront. It is so difficult, in fact, that the Fraser Government spat out the dummy in all the years that it occupied the treasury bench. It did not have the guts to proceed and, therefore, it smiled benignly while tax evasion and avoidance ran rampant in this country, while the revenue base was dudded and while ordinary wage and salary earners had to pay their full amount of tax, but those who could afford to manipulate the system got off scot-free. We have addressed that matter comprehensively. This is one essential part of the overall package, along with all our other tax reforming measures, that shifts the fundamental burden of taxation more fairly, that introduces fairness and equity into taxation for the first time in many years in this country and which guarantees that we can reduce the tax burden on the ordinary people of this country while properly taxing those who have got off scot-free.

This device, the Australia Card, a high integrity card, guaranteed to protect the essential requirements of privacy of ordinary citizens will be a method of making sure that there is not fraudulent manipulation of the social welfare system or the taxation system. Essentially, it is as innocuous as that. The guarantees that are inbuilt into the Privacy Bill which is before the Senate will make sure that the real interests of the community are properly protected.


The ACTING DEPUTY PRESIDENT (Senator Elstob) —Order! The honourable senator's time has expired.