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Wednesday, 3 October 1984
Page: 1094


Senator JACK EVANS(11.56) —This is a series of Bills aimed at carrying through a number of measures, including new tax scales, that the Government gave notice of on Budget night. There has been one fairly radical move taken in the legislation before us-the introduction of five-step tax scales . That is an improvement. It certainly alleviates the tax burden on a number of people. However, it does not provide the alleviation that was sought and is desperately needed by people at the lower end of the tax scale, as would the raising of the threshold. I speak on behalf of the Australian Democrats in indicating that we feel that the Government muffed this particular shot because by raising the threshold it really would have benefited something like three million of our citizens who are living on the poverty line or below it. We have a desperate plight to contend with, and this Government has missed this opportunity with this Budget to meet the problems of at least some people-the low level wage earner group.

Instead, this Government, like all governments when they are coming up to an election, has once more directed the benefits of the Budget to those in the middle income level because that is where it perceives the swinging voters to be . Middle income earners will benefit, as will upper income earners because they also get some benefit from these new tax scales. They will benefit at the expense of those on lower incomes. That is a very unfortunate thing for a Labor Government to have carried out-a revision of tax scales which gives benefits to those at the top and those in the middle but does not give all the benefits which it had available in this Budget to the people at the very bottom of the scale.

I would have thought also that this Government, with this Budget, would change its emphasis. It has indicated for some time that it has recognised the need for reducing its revenue derived from personal income taxes. We have had speech after speech, particularly out on the hustings and particularly prior to the last election, from members of the Australian Labor Party who have indicated that the Government is changing its emphasis and is planning to change the tax system. One would have hoped that during the life of this Parliament we would have had that change implemented. The change would have brought about some increases in indirect taxes, particularly consumption taxes for luxury items and items that are not categorised as necessities of life. At the same time, the increased revenue from that area could be directed towards the reduction of personal income taxes.

That would have had a very dramatic effect on the whole economy because it would have given small businesses particularly the opportunity to pay lower increases while their employees received the same take home pay as a result of reduced income tax levels. That would have flowed on right through the system and would have increased productivity throughout Australia as a result of reducing costs of production. Those are simple measures that could have come about as a result of this Budget. Instead, as I said, the Government has muffed it. It has thrown the issue to a few committees and other people to think about it and, who knows, in the next parliament or the parliament after that we may have a revised tax system.

One thing we can be certain about is that in the next Budget we will have some new tax rates. The Government will not sit pat on this new set of tax scales. That means that the benefits that flow from these new tax scales will probably not even run for a full year. The scales will probably be amended in the next Budget, and nobody can be sure when that will be; it may be next August, but most pundits have indicated that the next Budget will be a mini-Budget round about March next year. Whenever it comes about, it will ensure that these new tax scales do not run for a full year. So anybody who is under the false impression that he or she will benefit from at least one year of earnings at the new tax rates will be disillusioned. People will be particularly disillusioned when they assess their tax for the year ending 30 June 1985 because that will be a pro rata tax rate, partly based on the old tax rates and partly based on the new ones. Therefore, the benefits they thought might be applicable to the whole of this financial year will certainly not be so applied.

I put in a fervent plea to the Government as it runs into the next election to make a promise which we, the Australian Democrats, will help it to keep. I plead with this Government to promise that we will have a radically changed tax system . Part of that radical change, I beg the Government, should be the changing of our tax laws, to simplify them. Later this week we will be debating a series of amendments to our tax laws which are so complex that Australia's leading tax lawyers and tax accountants are having great difficulty coming to grips with them. Those are just the amendments, never mind the existing legislation which everyone is supposed to know because there is no acceptable plea of ignorance of the law. As I have said previously to this Parliament, there is not a person living in Australia at this moment who fully understands the tax laws of this country. There is not one undisputed point of view on the tax laws of this country. Yet everyone of us, every taxpayer in Australia, is expected to know, to understand and to be able to conform with tax legislation which this Parliament has passed over the years and continues to pass amendments to year after year.

We need a better tax legislation program and concomitant with that we need a much improved tax plan overall. I believe that the only way we can achieve that is to get all the political parties in this country to agree to a long term tax plan. We must all put aside the party rhetoric, the political rhetoric, and agree to what will benefit all Australians in the next decade, the next 20 or 30 years in terms of a long term tax plan. This is possible; it is done in other countries and it can be done here. It is probably easier to do it in Australia because of the existence of the Australian Democrats, who are a binding force and who tend to pull the parties together and even allow the extremists in the other parties to have their say but not to dominate those parties so that we can achieve consensus. That is possible provided the Government which comes through the next election as the government of 1985 and for the following couple of years, is willing to seek consensus with the other political parties in the tax system and in the tax laws. This consensus would lead to a stable tax system, that not only pay as you earn taxpayers but business taxpayers, those who have to plan a long way ahead, can accept as a basis for the next decade or so.

I was very disappointed to hear a scathing attack by a member of the Government on the Australian Democrats over our attitude to bottom of the harbour legislation. I am the first to acknowledge that the loss of that legislation had an impact on the Bills before us and therefore is relevant. I am the first to acknowledge that that legislation was contested around Australia, with very strong arguments for it and equally strong arguments against it. The principle of retrospectivity, a vital principle in the view of some, was upheld by those people as an absolute principle in tax legislation. Those who have maintained that anti-retrospective stance right the way through, whether in relation to the bottom of the harbour legislation introduced by the Fraser Government or similar legislation introduced by the Hawke Government, and to be admired and not admonished, because they have fought against a principle which, if left unleashed in this Parliament, could result in draconian measures being implemented against pay as you earn taxpayers or against any taxpayer in this country at any time in the future, particularly if the government of the day controlled this Senate and was able to plough unimpeded through this Parliament and inject into Australia's taxation system any measures on a retrospective basis. We have a number of measures coming before the Parliament later this week which could, if applied retrospectively-and such a provision could be sought by the government of the day-have people around this country imprisoned because of misdemeanours, errors of judgment or other simple errors they have made. That could have been the case now if this Senate was controlled by the government of the day and it decided that it had carte blanche to apply retrospective tax laws to any tax legislation coming through this Parliament.

Not all the Australian Democrats agreed with that point of view. It is interesting that, just as half the people of Australia agreed that the retrospective principle should remain inviolate, the other half agreed with me and another Australian Democrat, Senator Colin Mason, that legislation covering the collection of taxes avoided through dubious means, including illegal means, should be passed. I make it very clear that I voted for the Hawke Government's retrospective tax legislation. I say that unashamedly because I believe that, despite its retrospective application, as long as I am a member of this Parliament there will be a very clear distinction between that kind of legislation and any other form of retrospective tax legislation. I believe that the Democrats will remain in this Parliament as a balance of power to ensure that retrospective provisions of any sort are very rigidly controlled by the Senate. So I have no apology to offer to this Government. I have supported all of its bottom of the harbour legislation, subject only to amendments that I have put to the Treasurer (Mr Keating) and which he was willing to accept.

Given that there has been an interference by the Senate with the Government's tax program and therefore that these Bills have been influenced by the rejection of the bottom of the harbour legislation, one would have expected this Government, as a fighter of people who avoid paying their taxes, to embrace warmly legislation which has been passed through this Senate to claim taxes from the so called cherry-pickers, operating under the section 23F provisions of the Income Tax Assessment Act, and rapidly to pass that legislation through the House of Representatives.

Mr Acting President, I know your opinion of this Senate and the role that it has to play in this Parliament. You hold it in very high esteem, as I do. I know that members of the Senate will share my dismay that the Income Tax Assessment Amendment Bill 1984 (No. 2), passed by this chamber on 4 May this year, is sitting in the House of Representatives waiting for the Government to pick it up and pass it through that House. It is a Bill which attacks the cherry-pickers who are operating at this moment unimpeded because the Government has not passed that legislation. Let me make it quite clear: The Government has no problem with the principles of the Bill, because the Bill is identical to the Government's own legislation on cherry-pickers.

Let me explain this cherry-pickers legislation. It concerns those people who have deliberately distorted the provisions given to genuine superannuitants and companies which introduced superannuation schemes for their employees. The cherry-pickers are those who have used that legislation to avoid any payment at all of tax on the funds which were channelled into a mock superannuation scheme, a superannuation scheme which was set up by these people with a deliberate intention of avoiding, through the tax loophole that existed, the payment of any tax. The Government drew it to the attention of the Senate and the Senate, I believe quite correctly, referred the retrospective aspect of that legislation to its Standing Committee on Finance and Government Operations. Its report to the Senate contained three recommendations. The recommendation the Senate adopted was that the Commissioner of Taxation be given 12 months to endeavour to claim the tax avoided under the cherry-pickers scheme through the provisions already existing in tax legislation. The Senate believed that the provisions were adequate without introducing retrospective legislation to reclaim that lost tax, and that belief was demonstrated in our reference back to the Taxation Commissioner for him to apply alternative measures to pick up the tax which he claimed has been lost.

We went beyond that and adopted almost identical legislation. It had only one clause omitted, and that was the retrospective clause, the clause which backdated the Bill. We did that quite deliberately because we believed that the Government needed as quickly as possible a new Bill which protected this country from the cherry-pickers who exist today and who are still using the cherry- pickers scheme to avoid their tax obligations. So I find it incredible that a government which hits out at the people in this Senate who have on principle objected to its retrospective legislation and which claims that this objection has cost it revenue ignores the opportunity which the Senate handed to it on a plate. A piece of legislation has gone through the Senate and through all of the problems with tax Bills that are associated with the Senate and the changing balance of power. It was handed to the Government on a plate and the Government left it lying idle in the House of Representatives. The Government could pass the legislation today if it wanted to do so. One has to ask oneself the question : Is this Government dinkum? I put it to you, Mr Deputy President, that this Government has proven that it lacks credibility when it comes to collecting taxes that have been avoided in the past. The evidence is about to be produced for us. I throw down the gauntlet to the Prime Minister (Mr Hawke) and the Government which is in office at the moment. If the Prime Minister is genuine about the Government's concern, which was expressed through Senator Maguire today, that the Senate has rejected the retrospective bottom of the harbour legislation then he has a remedy.


Senator Robert Ray —What's that?


Senator JACK EVANS —He can call a double dissolution tomorrow. The Prime Minister has it within his power right at this moment to call a double dissolution. He knows, as we all know, that his Government will be re-elected. He knows also that the balance of power in this chamber will not be enough to win a joint sitting on the subject of the double dissolution which would be the bottom of the harbour legislation. He knows that that is within his power at the moment. If he is dinkum let him call a double dissolution. I put it to the government of the day that it is not genuine. It is not willing to call a double dissolution because all it wants, when it goes into the election, is a whipping boy. It wants three of the Australian Democrats, some members of the Liberal Party and Senator Harradine to be the subject of attack as they were in this simple bit of legislation based on the bottom of the harbour legislation.

The Government is not dinkum. Honourable senators heard the reaction from a couple of honourable senators in this chamber-two of the three honourable senators on the Government side who are sitting in the chamber at the moment-to the proposition. That is an involuntary response which we could expect from them . I will await, as I know the people of Australia will await, the response by the Prime Minister. If he is genuine he will announce a double dissolution and not a half Senate election. That way he can retrieve what he claims is the lost $550m. If he is not dinkum we will have a half Senate election. He knows that the effect of that will be that whilst he will win government the balance of power will be maintained by the Australian Democrats in the Senate and the Australian Democrats will hold firm to our principles. I have already enunciated those principles.

The Australian Democrats will pass this package of tax Bills unamended. We have no complaint. We believe the Government has conducted itself, as far as it has gone, in terms of the mandate for this legislation given to it by the people of Australia. I would applaud some measures contained in the legislation, including the fact that the exemption for bank accounts debits tax has been allowed to include educational, religious and benevolent institutions, which was the very provision I requested at the time of the last Budget. I thank the Government for including those items as exempt items under that tax provision. Regarding the other Bills, whilst we would have preferred to have been redirected towards indirect taxes, we accept that at this stage the Government is not willing to go down that path and that it has no alternative but to introduce these Bills. We applaud the five-step tax scale provisions and believe they will provide for a fairer tax system in Australia than previously existed.