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Thursday, 2 April 1987
Page: 1774


Senator VIGOR(8.38) —The Australia Card Bill 1986 [No. 2] is an admission of the failure of the current law to control both the taxation and welfare areas. I repeat that the ID card is an admission of defeat. The ID card is not only an admission of defeat but it is an invasion of privacy. It is not the card itself, the little piece of plastic, that is the invasion of privacy, but the associated database and the access to it. Thirdly, the ID card is yet more red tape and regulation which will weigh down the people of this country.

The ID card proposal will cost more than it saves, since the Government in its estimates has failed to take proper account of the costs to business and the private individual. I shall return to that matter later. The Government has failed to listen to the Auditor-General regarding the poor procedures for collecting and distributing moneys in both the Australian Taxation Office and the Department of Social Security and taking reasonable steps to do so at a minimal cost. It has failed to estimate savings realistically using the available information from the departments that it runs. So the Government has over-estimated the savings considerably and neglected very much cheaper ways of making them than introducing such a thing as the Australia Card. The Government has failed to take proper account of the risk of cost inflation and cost over-run which is the normal rather than the abnormal fate of current government projects. All I need do is mention the new Parliament House to underline that fact. The Government has failed to tackle the real problem of tax evasion. This can be dealt with much more cheaply by closing the loopholes in the law, with possible gains of at least 100 times the amount that the Government estimates it will recover from the Australia Card. It only has to introduce a simple system for taxing the corporate sector in this country rather than run its current system of corporate welfare.

The Australia Card is an infringement of the basic rights and freedoms of people in our society, particularly our right to privacy and our right to protection from abuse and harassment by bureaucracy and abuse by criminals and exploitative big business-all groups which can wield excessive powers over the individual. It is a breach of our freedom to trade and our freedom to live how and where we wish while fulfilling our responsibilities to ensure the same freedoms, protection and privacy for others.

The ID card is an admission of defeat. The Hawke Government and its predecessors have failed absolutely to control the existing taxation system. The Government has failed to ensure that tax and social security equity is available for all people in Australia. Instead, it has provided this charade and given it a jingoistic name. It promised us tax reforms. Instead of controlling our major tax rorts and lowering taxes for ordinary working people, this Government has given us taxes that are higher than ever. The rich and powerful, however, continue to evade taxes on a grand scale and red tape has spewed out and threatens to engulf the whole of Australia's small business in a complete mess which is strangling it. In fact, the ID card is a fraud on the people of Australia. It is an attempt by the Government to prove that it is taking some kind of action, that no expense is being spared and this is without its making any attempt to put the house of government in order.

The Government is blaming ordinary citizens of Australia for the failure of its tax and social security administration, its failure to provide security of employment and its failure to keep its election promises. It is taking no action whatsoever to stop the large tax rorts, to stop transfer pricing, to crack down on corporate takeovers exploiting interest deductibility for tax, or to stop the widespread use of overseas tax havens and other tax avoidance devices by high income earners. This Labor Government's main concern seems to be corporate welfare. Corporate welfare is being provided for its big mates-the press barons, the corporate raiders and those people for whom the Government sees itself as an agent. Instead, the Government seems to want to pin an unavoidable label on each of us as ordinary citizens. It wants to track our movements from birth until death. It wants to hold this information on cross-indexed files which, in the wrong hands, pose a potential threat to safety and at best a threat to privacy and the livelihood of every single Australian.

The Government blames the unemployed, the elderly, the sick, and the poor for taking advantage of bureaucratic sloppiness by taking a little more than they are entitled to. The Department of Social Security itself admits that only 0.6 per cent of overpayments are deliberate frauds and that 99.4 per cent are really the result of departmental sloppiness. Nothing is happening about that. The Auditor-General has criticised the Australian Taxation Office for its failure to cross-check interest and dividend payments with income declared by recipients, even though its computing facility would, if properly used, en- able it to carry out this simple check. By suitable procedures in the Australian Taxation Office, the Government could recover almost all the savings it hopes to make by introducing this expensive identity card. This is really the problem that we face.

The other scandalous fraud of the Government lies in its attempts to foster racist hostility and unrest in Australia. The Government is attempting to justify the Australian citizens' identity card-ACID-by promoting the card as `a disaster for our illegal immigrants'. In his second reading speech, the Minister for Health (Dr Blewett) promoted this Bill by dwelling on the disastrous problems that it will create for the 60,000 illegal immigrants living in Australia. I point out that the so-called illegal immigrants are, in many cases, people who are so desperate to rejoin their families in Australia or to escape from persecution in their own countries that they have come to Australia as visitors and stayed on after discovering the brick wall of our immigration red tape and overloaded backlogs. The reason there are so many illegal immigrants in Australia is again due to government incompetence in the failure of the Department of Immigration and Ethnic Affairs to deal with applications for entry promptly and sympathetically.

Not only is the proposed ID card a fraud, but also the name itself is a misnomer. It should be called the Australian Citizen Identification Data-base, or ACID, or the Australian Government Citizens Identity Card as Alan Ransom, of Macquarie University, remarked in an excellent letter to the Sydney Morning Herald summarising many of the wrongs which may be expected to follow the introduction of this ID card. I seek leave to incorporate in Hansard the text of his letter, since I believe that it is highly pertinent to this debate.

Leave granted.

The letter read as follows-

The ID card is a fraud on the people

SIR: Having served as counsel to the Judiciary Committee of the US House of Representatives, I saw numerous proposed legislative schemes designed to make it easier for the Government to keep tabs on the populace.

Thankfully, Congress, ever mindful of the legal implications of constitutional challenges under the Bill of Rights (among other things), knocked back the vast majority of them. The Australian people (through the marriage of ideology and political expedience represented by the coalition and the Democrats) should do the same with the Australia Card.

The name itself is a misnomer: it should be called the Australian Government Citizen Identification Card. Simply put, the Australia Card is a fraud. It is not designed to deter cheating on taxes or income where it really counts: it is designed to make the people think the Government is doing something about it, while permitting those who avoided (but not necessarily evade) taxes by making use of so-called ``loopholes'', to continue doing so.

The Minister for Health, Dr Blewett, has conceded (Herald, November 18) that the new income reporting requirements to be introduced in conjunction with the Citizens Identification Card, would not catch the ``small fry''. As for big fish, tax avoidance is largely legal, anyway. And if the scheme is illegal, it is not so because of the identity of actors (that can always be forged); it is a matter of the legality of the scheme itself.

The real point, as Ian Temby, parliamentary reports and others have pointed out, is that neither the Tax Office nor the Department of Social Security have effective recovery systems.

Cross-filing of information is essential to schemes such as Dr Blewett's. And, inevitably, such schemes will be abused by government-any government. Even in the US, which has more legal safeguards than any other democratic society-and a litigious population willing to use them-such abuses have occurred by both major political parties.

For, fundamentally, governments do not trust their citizens; and citizens should never trust their governments. Governments want a docile populace with, as Malcolm Fraser put it, politics off the front page and sport back on it.

If governments will abuse it, private business will, as a matter of convenient and inevitable course, require it for almost every financial transaction. Without this, the ``paper trail'' plan of the card simply won't work.

Nor should one believe that a Liberal or coalition government will repeal the legislation. All governments are in favour of plans that increase government's ability to keep track of its citizens, particularly when it is paraded as a revenue-enhancing mechanism at the expense of ``tax and welfare cheats''.

It is thus no wonder most citizens supposedly favour the Citizen Identification Card. The average citizen has only the barest concept of civil liberties, anyway. Footy is much more exciting, and it is sad, but predictably true, that as Washington Irving put it, ``They who drink beer will think beer.'' For the most part, they are quite at home with the ``What have you got to hide?'' mentality of the McCarthy era.

In the final analysis, it is this passivity which the Government is trying cynically to exploit by a crass resort to patriotism, in order to instil a surveillance system worthy of any Balkan bureaucracy.

Alan Ransom,

Macquarie University,

Ryde.

November 30


Senator VIGOR —I thank the Senate. By using the term Australia Card, the Government has descended to the cheapest tricks of advertising and fraud. Senator Georges has described the so called Australia Card as `a licence to live, and a licence to exist in our society'. He rejects absolutely the right of any government to impose such restrictions on human freedoms. His stand for his vital principle led him to sacrifice his lifetime commitment to the Australian Labor Party rather than compromise the freedom of Australian citizens. I agree with him.

The ID card has been sold to the people of Australia on the furphy that the Government is doing something to eliminate cheating in the tax and social security areas. In fact, the Government is continuing to allow wholesale tax avoidance by its rich and powerful friends. Corporate tax is avoided in large quantities. We have a corporate welfare state with suppression and control of the individual as an adjunct. Transfer pricing is a right which companies think they have but it is a rort on society. It is a rort which is imposed by transnational networks of companies where goods and services are imported at inflated prices or exported at reduced rates in order to minimise the Australian tax liability. Most of our large companies, or a large number of them, actually enter into this type of operation and the Australian Taxation Office says it cannot do anything about it. Personal taxation is avoided by the wealthy who hold earnings in overseas companies in tax havens in order to avoid Australian tax as far as possible. The Government seems powerless to stop them, since it is afraid to offend people who have control of the media and the economic power in this country.

The ID card will not affect these large tax rorts by the wealthy and the powerful, yet the amounts of money that are involved are much larger than the amounts of money alleged to be saved by the card, even if they can be saved. The ID card will not affect any of the multitudinous schemes currently used for tax avoidance by the rich. Very little tax fraud is due to small pay as you earn-PAYE-taxpayers. Once again the Hawke Labor Government is spending big to tax the small. The PAYE tax avoiders are a mere drop in the ocean compared with the big players in the avoidance industry. Moreover, the cost of paying PAYE taxes is high and almost equal to total PAYE tax revenue, although most of that cost is borne by business, not by government directly. Since small business is the major employer in Australia, it is small business which bears most of the direct cost of PAYE tax. They are the tax collectors for the Government. However, ultimately those costs come home to roost since they are deducted from the earnings of the business before their tax is assessed.

It is very unlikely that the Australian Taxation Office will be any more efficient in its administration of the Australia Card information than it is in the administration of any other tax information. The simple extension of use of the tax file numbers on shares and other documents of financial interest would, I believe, and the Australian Democrats believe, allow the Tax Office automatically to match interest and dividend payments to taxpayers, and to eliminate most of the inadvertent tax avoidance of which it complains.

The simplest remedy for the problem of corporate fraud is the introduction of a turnover tax at a very low rate. A turnover tax is unavoidable. It is simple and it is cheap to collect. The tax can be passed on to the consumer, and it is likely that this would indeed happen. It would be a tax on consumption rather than a tax on production, which we sorely need at this stage of our economic development. It is therefore vital that any changes to consumer or corporate turnover taxes be accompanied by a guaranteed minimum income so that the poorer members of our community are not harmed by such a measure but enabled to pay their share also for the provision of essential community services. The overwhelming advantage of a corporate turnover tax is the opportunity it provides for effective encouragement of responsible resource use and for positive encouragement of employment.

The current taxation system exempts raw material costs and all other costs on an equal level. This does nothing to discourage waste and it does not encourage in any way the recycling of scarce resources. Discriminatory payroll and other taxes on employment, together with accelerated investment allowance, positively encourages the replacement of people by robots and automation in general. One would have thought that a Labor government, which supports union views, would support a turnover tax exempting wage and salary costs from the tax, which would give a positive incentive for employment. In fact by exempting that and the cost of materials on which tax has already been paid, we would get recycling and good resource management in the community. In this way a corporate turnover tax could become a materials added tax and an effective tool for government policy, which taxes equitably and unavoidably according to consumption, and stimulates employment while allowing most people complete exemption from income tax.

This is the type of visionary measure that this Government needs to introduce, rather than the ridiculous concept of the Australia Card. It is a pity that the Government does not have the gumption to proceed with its promised tax reforms; in fact it is taking this cowardly, dishonest and fraudulent way out of trying to solve the problems of inefficiency in its tax collection and social service system.

I turn to the costs of the card. Having looked at the estimates which the Government has made, I believe they are quite unrealistic and do not correspond to the estimates which have been made by private sector entities, such as the Business Council of Australia. The Government estimates the cost at $1 billion over ten years, but this will probably blow out to at least $2 billion over ten years, it we are to believe the Business Council of Australia, which puts the cost to business also at $2 billion. The cost to private individuals has been completely ignored by the Government. It is likely to average out at around $50 per adult per annum, which includes the time taken to obtain and look after the card as well as producing it for transactions for which it will be necessary. The Government seems to have taken no cost account at all of the people's time and the cost of managing the card and of checking that the information, which is on the databases associated with the card, is correct.

I believe that most tax savings could be realised by better computer checking of interest and dividend payments in the Taxation Office. The cash economy will not be at all affected by the card-totally untouched-and corporate fraud will also be quite unaffected because we will not have corporate identity cards. Only 0.6 per cent of the $300m or $1.8 billion lost in 10 years in the social security area is due to fraud. As we have said, the rest is due to mistakes in overpayments. It is hoped to collect an extra $3,000 in annual tax from each of the 60,000 illegal immigrants that are now estimated to be in Australia. The Government assumes that the desperate refugees are costing $3,000 per annum in services to which they do not contribute, and this will all disappear into thin air. I believe that if we do a calculation, a reasonable and realistic estimate of the saving in this area is $0.2 billion. To save time I seek leave to incorporate in Hansard a table which shows that rather than the Government showing an eventual gain at the end of ten years of $4.3 billion, as it estimates, it is much more likely to show a loss of nearly $300m at the end of ten years.

Leave granted.

The table read as follows-

Table 1

Government estimates:

Costs

$1 billion/10 years to government

$1 billion/10 years to business

$2 billion/10 years total costs

Savings:

$4 billion in tax fraud

$0.3 billion in social security

$2 billion in stopping illegal immigrants

$6.3 billion

Government profits

$4.3 billion in 10 years

Realistic estimates:

Costs (private sector estimates)-BCA

$2 billion/10 years to government

$2 billion/10 years to business

$0.5 billion/10 years to private people ($50 p.a. to adults)

$4.5 billion/10 years total costs

Savings: (dept. figures) (personal guess)

$4 billion in tax fraud

$0.018 billion in social security

$0.2 billion in stopping illegal immigrants

$4.218 billion

Losses

$0.28 billion in 10 years

No Australia Card:

Costs (private sector estimate)-BCA

$0.5 billion/10 years to government

$0.5 billion/10 years total costs

Savings: (dept. figures)

$4 billion in tax fraud

$0.22 billion in social security

$4.22 billion

Government profits

$3.72 billion in 10 years

This option is the low risk, high return option, and has no disadvantages of invasion of privacy or freedom.


Senator VIGOR —When it is considered that $4 billion worth of tax saving could be achieved by merely using existing and projected computer facilities and staff, at an increased cost of around $0.5 billion in ten years, so realising close to the same savings as the Government now proposes with the ID card, the total madness of the ID card project is seen in its realistic terms. Risk analysis alone, with the high probability of cost blowout, as happens in most large government projects, points to the high probability of econ- omic failure of the Australia Card.

Not only is the proposed Australia Card legislation a fraud and an admission of failure by the Government, but also it is an invasion of privacy. It is an invasion of people's basic rights in society for protection, for freedom and for the ability to have a private life. Privacy becomes very much more precious as society demands more communal control over our lives. Life in modern society is regulated completely by society in terms of health, safety, education, defence and economics. We are already required to register almost everything significant that we do, from birth, to marriage and death. We must obtain licences to trade or barter, to manufacture or to distribute. We depend on matriculation certificates and trade certificates for employment and visas to travel abroad. We pay in one way or another for every privilege and convenience which modern society offers us. The only privacy which remains, apart from our thoughts, our dreams and our loves, is that no single public body, no single bureaucrat, no all knowing person could hold all this public information and know everything about us. This separation of public control of our lives is the last vital protection of our privacy.

Bureaucracy rules and regulates all the public aspects of our lives. To give one bureaucrat, one person, complete knowledge is to give power to that person. This power we normally reserve only for those we love and trust, and nature provides a bond of love which normally protects family members from misuse of this knowledge and power. Most crimes of violence happen within families for this reason. This legislation proposes to give the power of complete knowledge to bureaucrats and to bureaucracies, which have none of the natural constraints of love and common understanding which exist within the family structure.

The privacy protection legislation which is also before the Senate is quite inadequate to protect our privacy, in the fact of linked files with common identifiers, covering births, deaths, marriages, passports, banking, taxation, social welfare, health and various other aspects of our lives, which are being proposed in the ID card legislation. What is more, the centralised government information has a commercial value commensurate with the cost of accumulating the information, plus the value derived from its completeness and its scarcity. In other words, the government databanks will carry an eventual value of around $20 billion. The temptation to copy even selected parts of this information will be enormous, and the value will far exceed the price of any person or persons whose responsibility it will be to maintain its security. This temptation to organised crime, to unfriendly nations, to unscrupulous business organisations, and even to money-hungry governments of the future, will inevitably prove irresistible, and no reliability can be placed on the security of such a wealth of data.

The associated problem of demand for forged identity cards and forged identities will also attract organised crime into supplying this new market opportunity. In the United States identity cards are bread and butter for the mafia. In Australia, the price of a forged drivers licence is currently around $30. They are readily available for young people wanting a passport into hotels and licensed clubs and discos. The price of a forged identity card is likely to be higher, and the criminal connections of the suppliers are likely therefore to be stronger, and open the people who seek it to the possibilities of blackmail. An Australia Card system as proposed will tend to deliver many of our young people experimenting with what they perceive to be life into the hands of forgers and blackmailers, from which they may find difficulty in extricating themselves. The higher the penalty for forged cards, the higher the price and the deeper the involvement of organised crime is likely to become.

The ID card is a threat to our personal safety, and it is bread and butter for organised crime. It could lead to a takeover of our country. It could deliver us into the hands of an unscrupulous government, as the German identity files did in Hitler's time. It destroys the protection we should expect from our society.

The privacy legislation is vital, whether or not the ID card legislation goes through. Yesterday, in an admirable maiden speech, Senator West made the point that a number of private organisations have access to growing databases, the amassing of personal information unbeknown to people. The increasing use of this information in screening people for jobs and credit requires privacy controls, not only in the government area but also in the private area.

The privacy legislation is overdue. I welcome the Government's initiative in introducing the Privacy Bill. Unfortunately, it is tied to the Australia Card. Currently, the information which is in private hands is available to be freely spread around without the knowledge or permission of the person concerned. Mailing lists of people are bought and sold, even by government agencies. These mailing lists may be of all the people who have shopped at a particular place, who belong to certain professional classes, who have income over a certain level or who have donated to a particular cause. Similarly, businesses receive junk mail because of a magazine's subscription list which might have been sold or which they might have bought from a particular supplier.

Even more pernicious is the use of this information by credit agencies. It is because of this type of use that the Democrats have modified and freed the privacy legislation from the constraint of being associated with the Australia Card. On the second day back in the next sitting period we will be putting this legislation as a private member's Bill to the Parliament. It is very important that this should be considered.

Privacy protection is needed to make it mandatory to inform a person that the information being held about him is available to him to allow him to check it, correct it and object to its being held if that is what he wishes. Privacy protection is required to ensure that where information is held it is not supplied to other parties without the permission of the person concerned. In particular, both government and private databanks and record systems need to be covered by the privacy legislation.

Our Privacy Bill will be independent of the Australia Card Bill and will establish the Data Protection Agency as a statutory body, independent of any government department. The Australian Democrats' Privacy Bill will cover information held by both government and private people and organisations. It will ensure that people can know and control information which others hold about them.

Other countries have long seen the need for such protection of privacy and individual rights, and have introduced privacy legislation of a similar kind. Sweden and Norway, which are countries of a similar size to Australia, were among the first to introduce citizen protection agencies. The privacy laws have proved very successful in those countries, and helped to soften the introduction of new information technologies in their societies. It is time that Australian citizens also have legal protection against the increasing misuse of computerised personal information.

In summary, the Australian citizens' identity database-ACID-legislation is fraudulent, costly and dangerous. It threatens our right to privacy, protection and freedom, and it is unnecessary. The privacy legislation, on the other hand, which the Government is introducing only as a sop to some of the opposition to the Australia Card is vital for the protection of the privacy of people, which is already being fast eroded and put into the hands of big business, big bureaucracy and big crime. I recommend that every senator should vote against the ID card and support the Democrats' privacy legislation.