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Wednesday, 10 December 1986
Page: 3756

Senator WALSH (Minister for Finance)(10.00) —What seems an interminable time ago Senator Peter Baume opened the debate on the Australia Card Bill and said that the legislation was opposed by Joan Coxsedge, Hugh Morgan and Peter Garrett and, therefore, there must be something very wrong with it. I am afraid that that list did not impress me at all. The debate from the Opposition side since then has deteriorated steadily and, although there are some people with genuine objections to what is being proposed, the debate, as it came out of the mouths of the Opposition, was overwhelmingly intellectual dishonesty, in some cases supplemented by pig ignorance.

Senator Chaney would have us believe that the Opposition is opposing this legislation on principle and not because it is the party which protects tax evaders and welfare cheats. I might have been more persuadable on that point were it not for the fact that only one week ago that same Opposition voted against legislation which sought to strike down a wildcat decision of the Supreme Court of Queensland which, had it been allowed to stand, would have lost $900m in revenue. It concerned people who had set up paper tax avoidance schemes in the late 1970s, who had been assessed by the Commissioner of Taxation but from whom the debt had not been collected within a six-year period because legal processes were not exhausted. What the Opposition sought to do on that occasion was to cancel $900m-worth of debt owed to the Commonwealth of Australia by the people who set up contrived paper tax avoidance schemes in the 1970s and for whom the possibility of the repudiation of that debt was opened up by a wildcat decision of the Supreme Court of Queensland. The Opposition voted against that legislation. Only one week ago this Opposition voted to take $900m off the honest taxpayers of Australia and donate it to the people who set up paper tax avoidance schemes in the 1970s which were disallowed by the Commissioner and which ultimately failed in the courts.

Senator Maguire —What is new about that?

Senator WALSH —I just make the point that it does rather colour one's view of the commitment of these people who sit across the aisle to the stamping out of tax avoidance.

I do not want to say too much about Senator Georges except that the major point he made just happens to be wrong as a question of fact. He made much of the allegation that some person who might have been convicted of some peccadillo in youth like joyriding in a motor vehicle or a bit of housebreaking would be forever damned if the Australia Card came in with the name under which that conviction was recorded. As a question of fact that is wrong. There are provisions which enable people at quite low level to adopt a new name and to say `I wish to be known by this name in future', but the system and the integrity of the card are protected by matching that alteration against the birth certificate. At a much higher level, at the personal discretion of the General Manager of the Health Insurance Commission, more complete changes of identity may be accommodated. It is a pity that before Senator Georges raised that question and made it the major feature of his argument he did not bother to check out the facts.

So far as the civil liberties argument is concerned, again I accept that in many cases the people who raise that argument are sincere. But I find it very difficult to accept the sincerity of a civil liberties argument coming from the people who gave us the Vietnam war, coming from the people who, 14 years ago, were still conscripting Australian youth to fight in the Vietnam War and yet they have the effrontery to talk about civil liberties. If the Liberal Party really had a valid argument to put against this legislation it would not have needed to resort to gross distortion and false assertion to the extent that it did. Foremost among the false assertions was the contribution of our old friend Senator Baume.

Senator Maguire —Which one?

Senator WALSH —Michael Baume, or whatever he calls himself these days. He said that anybody could get information on anybody by putting in a freedom of information request. It is a pity that Senator Baume did not take the trouble to have a look at the legislation before boring the pants off everyone for yet another half hour with his contribution to the debate. All information on the Australia Card is covered by a secrecy provision in clause 169. Section 38 of the Freedom of Information Act states that all information covered by a secrecy provision is exempt from access. Australia Card information cannot be released under the Freedom of Information Act except to the subject of the information. I suppose that we could not expect too much accuracy from a senator who, in his former incarnation, used to write the prospectuses for Patrick Partners.

The second false assertion, and the one most commonly repeated, was the false assertion that, put in two forms, the Australia Card is an internal passport and everybody will be forced to carry it. I personally heard Senator Short making the second false assertion. The plain fact is that there will be no need to carry a card at all; there is no requirement to do that. There will be no need to produce a card except in situations where proof of identity is already required. The difference will be that proof will be effective with an Australia Card and, without it, it is not. But perhaps the most fraudulent of all the false assertions made and repeated by almost every speaker on the Opposition side concerns social security fraud and the allegation that social security fraud amounts to only 0.6 per cent of total social security payments. That comes from a misrepresentation of the evidence given to the Joint Select Committee on an Australia Card and the report produced by it. The Joint Select Committee stated:

The Committee . . . notes that the . . . estimate of 0.6 per cent . . . is not a reliable estimate. It only relates to fraud that is known and does not include the amount of fraud that exists but which has not been discovered . . .

For any of those who are interested in the facts-I do not expect that there are too many across the aisle-the Joint Committee's reference in paragraph 1.48, states:

While the Committee accepts the Department's difficulty in establishing the amount of social security fraud due to false identities, it believes that there is still significant fraud within this area.

That was the conclusion of the Committee. Who would have thought that, if they had been listening to the false assertions that have been pouring out of the mouths of the people on the Opposition side for the last 30-odd hours? The 0.6 per cent relates only to the fraud which is known and does not include the amount of fraud which exists but has not been discovered by the Department.

The next assertion is: The Australia Card will not attack the cash economy. The Australia Card would not eliminate entirely the cash economy, and nobody on the Government side has ever claimed that it would. However, it would provide something very close to a watertight guarantee that in every case where the employer claimed the payment as a deduction from the employer's taxable income, that payment would be accurately reported to the Taxation Office, and in the correct name of the employee. In other words, for those people who are presently doing a bit of moonlighting under a false name given to the employer, the employer meeting the employer's obligation of making the appropriate pay as you earn deductions and so on for somebody who had only one job, that practice will be eliminated by the Australia Card. Through chasing the money trail-I would have thought that, since so many people opposite seem to be interested in what Mr Costigan's views on this matter are, they might have paid some attention to his comments about chasing the money trail-even in those instances where the payments received are not claimed as a deduction from taxable income by the payer, the Australia Card, through facilitating the chase along the money trail, will catch those who are operating in the cash economy to a very significant extent. It is freely acknowledged that it is unlikely to catch those people who mow the lawn for $10, or somebody who comes in to do a bit of domestic cleaning for, say, $20 or something like that and is not deriving a great deal of income from that source. Sure, it is not likely to be effective against such people. In other areas of the cash economy it will be either very substantially or entirely effective.

It was also implied, of course, that just about every department of the Government would have access to the Australia Card and that each agency would leak the details. Firstly, only three agencies would be involved: The Health Insurance Commission, the Australian Taxation Office, and the Department of Social Security. In every case they would be subject to existing secrecy provisions, and most importantly, all attempts to access the computers in those agencies would be logged. That is a very important point, and I think I should expand on it. It was taken up by Professor Whalan, Professor of Law at the Australian National University, who said in evidence to the Joint Select Committee:

If we do have an Australia Card it is vital, I believe, that we have both very carefully circumscribed limits on its use and a protective body with similar independence to that possessed by the Ombudsman. Perhaps one irony would be that if we do have an Australia Card with all those protections . . . our privacy may be better protected than it is now.

I interpolate that that is the proposal: To have an Australia Card with all those protections. Professor Whalan continued:

On the one hand, a person's privacy I think ought to be protected; on the other hand, an individual citizen ought not to be able to use that shield of privacy . . . to defraud the state . . . or anyone else . . .

Senator Kilgariff —What are you going to do about the Taxation Office to recover all that money that has been lost?

Senator WALSH —I am coming to that. Do not be so impatient. Another popular false assertion, especially from the rednecks of the National Party of Australia, is that people who are in remote areas will have to fly 500 miles if they want to open a bank account or for any number of other matters. Under the certificate of identity provisions there is provision for the issue of a certificate provided that someone who holds an Australia Card and quotes his or her Australia Card number testifies that the person making the application is who he or she claims to be.

One thing that an Australia Card would do is eliminate a practice which I have mentioned in the Senate before. It was a common practice some time ago in the wheat belt town of Merredin in Western Australia, near the area from which I came, for stock agents such as Elder Smith and others, even before John Elliott took over Elders, to come along to a pig sale with a gladstone bag full of #10 notes, or $20 notes in the present denominations. The farmers brought in their pigs to sell under invoices in such creative names as Bob Menzies, Ned Kelly and so on. Ten pound notes were handed over to the people who sold their pigs and the only information the Commissioner of Taxation ever got about that sale was that Bob Menzies had sold #20,000 worth of pigs at Merredin last Wednesday. I do not expect that he ever received an assessment from the sale. That sort of fraud and wholesale tax evasion would be totally eliminated. The individual farmer, once having established his identity with an agent, will not be required to produce the card for subsequent transactions.

Something which is superficially attractive as an alternative to the Government's Australia Card proposition, until it is delved into a bit further, is a tax file number. Most of those who advocated that alternative put up a proposition that people who have a five-year history with the Australian Taxation Office would not be required to do anything else and those who do not have a five-year history with the ATO would be required to establish their identity through, it was suggested, an interview with an officer of the Department of Social Security. The big problem with that is that false identities are already in the system. Those people who have false identities now, or more than one identity, would be totally protected by that proposition, provided their false identity or identities were of more than five years' duration. People with false identities are the types of people who have second jobs under false names and in many cases are involved in criminal activity. No attention is paid by those who put that argument to the fact that very considerable resources would be required in the Department of Social Security to deal with the remainder. As the Taxation Commissioner said:

I expect that by the time you take all the steps that need to be taken to get high integrity into, say, a tax file number, then there's the same effect, the same costs, the same privacy questions that you'd get with the Australia Card.

Indeed, that also applies to much of what Mr Costigan had to say. What Mr Costigan advocated was very little different from what is taken up by the Australia Card. One of the reasons why an agency such as the Department of Social Security could not under that alternative tax file system adequately deal with the people who do not have a five-year history with the Australian Taxation Office is that agencies such as the Department of Social Security in those circumstances would not have access to either the Australia Card Register or the centralised register of births, deaths and marriages. In other words, the Department would have absolutely no means of validating the documentation offered by the applicant as proof of identity. A proper identification system must have a secure document linked to both the verification procedure and, most importantly, the person to ensure that this time and effort is not wasted. The tax file system falls down on both counts. It falls down also, at least to the same extent as the Australia Card proposition, on civil liberties grounds for those people who are genuinely concerned with civil liberties-a group among whom I do not count the members of the Opposition.

It has also been suggested that an interest withholding tax is a satisfactory alternative. There is only one way in which one could guarantee that all interest payments due would be collected by an interest withholding tax, and that is if the withholding tax were levied at the maximum marginal tax rate and as a once only and final payment. If that were not done tax could still be evaded at any lower rate of interest withholding tax if people had interest bearing accounts under false names. It could still be evaded even if the rate was something lower than the maximum personal tax rate, for the same reason as when people have false accounts. Instead of having one income that might aggregate to $100,000 or whatever, the records of the Australian Taxation Office would show that four different people had income of $25,000 each and, therefore, their average tax rate was very much lower than it ought to be. There would be no way, in the absence of what the Government is proposing, that the Tax Office could determine with certainty that the four names on its records were in fact the same person.

Let us follow up the interest withholding tax a little further. The Opposition's interest withholding tax proposal would have this effect: Every pensioner in the country who has a bit of money with a building society would have some of that money stopped at source, whether or not the pensioner ultimately had a taxation liability. That is what the Opposition is proposing with an interest withholding tax. It is proposing to put a tax on every pensioner in Australia who has a bit of money earning interest in a building society account.

I guess that nobody can guarantee absolutely that there will not be attempts at forgery. The fact, however, is that the equipment required to produce the Australia Card is extremely expensive and if anybody wanted to go into the business of producing an Australia Card that person, as an economic reality, would have to be selling into a mass market. It is highly unlikely, to say the least, that anybody could forge and market on a mass scale Australia Cards without being detected. An analogy has been drawn between forging a passport and forging the Australia Card. It is a false analogy, if only for the reason that the card has a computer printed photograph in the card itself. A passport has a detachable photograph that can be slipped in or out without any trouble at all.

Senator Vigor, in a flight of fantasy-it is worth noting, since Senator Vigor made one of the more passionate contributions to this debate, that he is so highly regarded within his own Party that he is No. 3 on the South Australian Democrats ticket-suggested that this was the first step in the introduction of a totalitarian society and so on. If anybody wants to believe that nonsense, let it be noted also that these countries are on the way to becoming totalitarian societies: Austria, Belgium, Finland, West Germany, France, Greece, Switzerland, Spain and Portugal. They all have identification cards. I know it is true that some of them have had totalitarian societies, and in the not too distant past, but in fact they are moving away from totalitarian societies and not towards them.

Opposition members have used the Australian Taxation Office as a smokescreen, or as camouflage, to hide infamy of what they are doing this week, added to the infamy of what they did last week. First, the reports they have quoted refer to events which happened more than two years ago. They do not refer to what is happening now. Many of the matters raised in reports of the Auditor-General had already been acted upon within the Tax Office before those reports were published, let alone before the Opposition became aware of them. It is a matter of record that the present Commissioner has under way a major program of change to provide for more effective and efficient administration of the tax laws. In the area of technology, for example, the Tax Office is finalising detailed plans that provide for a major computer re-equipment and systems redevelopment program.

Opposition senators interjecting-

Senator WALSH —Mr President, does one have to put up with this gibberish? I am well aware of its purpose of course. Honourable senators opposite do not want the audience to hear the exposure and the debunking of the frivolous and fraudulent arguments which they advanced when opposing this Bill. I do not intend to make a complete defence of the Taxation Office. I think that is a job more for the Commissioner or the Treasurer than it is for me tonight. But, as evidence of the fact that the Taxation Office is not the inefficient organisation which those opposite would have us believe it is, I want to draw the attention of the Senate to views expressed in a letter by a large and respected firm of independent management consultants. The firm, incidentally, was rated in today's Australian Financial Review as one of the management consultants most favoured by Australia's top 150 companies. The firm to which I refer is PA Consulting Services, and I seek leave to have incorporated in Hansard a letter to the Commissioner dated 21 November 1986.

Leave granted.

The letter read as follows-

Mr T. P. W. Boucher,

Commissioner of Taxation,

Australian Taxation Office,

2 Constitution Ave.

Canberra, A.C.T. 2601

21 November 1986

Dear Mr Boucher,

You asked me for some general comment on the ATO, based on our recent experience of working with the organisation.

In the last two years, we have been involved in the following major projects:

Assistance with a wide ranging internal efficiency review,

participation in the project to introduce self-assessment,

assistance with a review of the top level organisation of the ATO.

We have also had input to a number of smaller projects and have submitted proposals in other areas.

This has given us the opportunity to form fairly detailed impressions of the managerial style and the effectiveness and efficiency of the ATO's operations both at Head Office and at most Branches.

The first point to make is that the ATO is a very large organisation which is subject to quite unusual pressures for change, due to the highly dynamic environment in which it operates. In 22 years as a consultant, I have not personally experienced an organisation which has to cope with so many major initiatives simultaneously.

The second point is that, in our reviews, we found an organisation which is systematically tackling these major change projects according to a clearly articulated set of priorities. In the opinion of myself and my colleagues, it is tackling them very well.

We believe that we have been able to contribute to the ATO's program. However, as I said at the meeting at which we helped to present the proposed Head Office structure, what we found was not an ``organisation in trouble'', but an effective organisation which had recognised the need for further adjustment to meet changes in the environment.

In terms of efficiency and effectiveness at operating level, everything we have seen has tended to confirm our view that standards of operation in the ATO are generally well up to the best we have seen elsewhere in the public sector.

Naturally, there are some areas of difficulty; many of these are areas which, by their nature, involve a long lead time, such as the development of the highly sophisticated systems required to support new taxation initiatives. The areas requiring improvement have largely been identified and priorities assigned to them.

It would be wrong of me to finish without mentioning the impact of your own management input and style. There is a clarity of purpose and a sense of urgency among the senior and middle management of the ATO which is rare in very large organisations, and there is no question that it comes from the top.

Yours sincerely


Manager, Canberra

Senator WALSH —Finally-and I have already recognised this-there are some people who have genuine civil libertarian concerns about this Bill. I believe they are misplaced civil libertarian concerns. But I cannot accept that the Party which gave us conscription and Vietnam has genuine civil libertarian concerns about anything. That is the first point. The second point, which is, I believe, of paramount relevance to the attitude that the Opposition has adopted to this Bill is the fact that only one week ago in the Senate the Opposition voted against legislation not to impose a tax liability but to recover the debts which have been legally found to be owing to the extent of $900m by those who perpetrated and devised failed paper tax avoidance schemes in the last 1970s. Honourable senators opposite showed then that they are in opposition what they were in government-the friends and protectors of tax evaders and avoiders. I believe that it is that motive which prompted them to take the attitude to this Bill which they have taken, not any concern about civil liberties, misplaced or otherwise.

I understand that there will not be any defectors, not because there are not plenty of people on the Opposition side who believe in this legislation, but because there are not any of them who have sufficient moral courage to do the right thing by Australia, the right thing by honest taxpayers, and vote for this legislation.

Senator Peter Baume —I rise to a point of order, Mr President. The Minister has now said that there is not a single person here who is willing to do his duty by Australia, and I draw your attention to standing order 418. The Minister's comment was clearly an imputation of improper motives directed towards the Opposition and I ask that the Minister be directed to withdraw it.

The PRESIDENT —In the course of debate, I do not regard that as a valid point of order. I call the Minister for Finance.

Senator WALSH —I have finished, Mr President.

Question put:

That the words proposed to be left out (Senator Peter Baume's amendment) be left out.