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Tuesday, 18 October 1983
Page: 1824

Mr TUCKEY —by leave-First, an allegation has been made against me that I have been the receiver or the stealer of documents. I reject that statement wholeheartedly. I am quite able to prove that the documents were neither of the things that were claimed and that they came to me quite properly from an owner of these documents. Nevertheless, the Minister for Finance (Mr Dawkins) seems suddenly extremely concerned for the rights of individuals and their private correspondence. It is a pity that in the previous Parliament the honourable member for Wills (Mr Hawke) did not follow the ideas of the Minister. I have already called his attention to the fact that page 1710 of Hansard of 22 September 1982 shows that the honourable member for Wills brought into this Parliament a private telex which had presumably fallen off the back of a truck. He thought he had the then Minister for Aviation cold because that private telex was about the employment of an American citizen.

Mr Lionel Bowen —I raise a point of order, Mr Speaker. Leave was given to the honourable member to address his remarks to the facts related to this issue. We have had four hours of debate on this matter. I do not want to reduce the legitimate time available to the honourable member for O'Connor, but there is to be no rambling debate as far as I am concerned. There are to be specific answers to what has been said.

Mr SPEAKER —Order! The Leader of the House knows that leave was given to make a statement. It is not within the province of the Chair then to restrict the honourable member's remarks.

Mr Lionel Bowen —No, but it is within the province of the Government to indicate that we have a lot of matters on the Business Paper. I do not mind the honourable gentleman speaking. In fact I have made arrangements for him to talk to a Bill later today. In no way is he being restricted, but I will not tolerate a wide-ranging debate on what happened last year or some other time.

Mr SPEAKER —Order! I am allowing the Leader of the House indulgence, but I indicate that I cannot take action.

Mr TUCKEY —I think I have made enough of that point. I now turn to the other point that seemed to represent the bulk of the Minister's case in regard to my charges of tax minimisation. I hope everybody realises that the letter the Minister brought from the Commissioner of Taxation deals purely with references to bottom of the harbour companies and certainly not to tax minimisation. At best the bottom of the harbour issue would have cost the revenue a few hundred dollars. In the case of the matters I raise we are talking of costs to the revenue of closer to $70,000.

The Minister for Finance has raised the point that I contacted the liquidator. I did that to inform the liquidator of some of the statements that have been made in this place regarding him and his actions. In fact, I confirm that the liquidator said to me 'Yes, I did the negotiating and I made the arrangements regarding this matter'. What the Minister did not tell us was that he also said to me that he expressed great concern to the shareholders when they were prepared to enter a deal in which $40,000 was the sole deposit on a property of over half a million dollars, and that, of course, he was extremely concerned about that and would not have done that had there not been some support from those involved. What is more important is what the liquidator did not know. Like this Parliament, the liquidator was taken for a ride.

Of course, the gentleman who might have been mentioned today and who may be giving a sworn statement would have been Graeme Robertson, who was the purchaser on behalf of Frenesi Pty Ltd, a company which I gather he owned. The fact is, of course, that Mr Robertson was a frequent visitor to the Dawkins's residences and , I believe, in the case of some of the shareholders, a close friend. It was he who was dealing with the Minister for Finance and others, discussing this scheme , its price and then contacting the liquidator by telephone on Monday morning saying that he wanted further negotiations. When the liquidator went forward to make his negotiations the purchaser knew the bottom line. That is what occurred in regard to this shameful event. That is why I say that the Minister constantly has misled this Parliament. The Minister should produce evidence from the purchaser that he never ever took part in the negotiation of this sale. That is the type of evidence he possibly should have produced today, rather than that concerning the liquidator. Of course the liquidator will say and continue to say that he carried out his responsibilities and conducted this negotiation. Of course, he cannot say that this property represented about a third of the total estate or that it was not a compulsory liquidation. Quite naturally, as any liquidator would tell one in these circumstances, he would keep in close contact with the members of the company.

It is a pity that the Minister did not tell us about the annual general meetings that have been held since the liquidation commenced and that are still being held. I hope to be able to bring some evidence of some of those meetings before the Parliament in due course. This Minister has told us time and again, on some six or seven occosions, that he had absolutely nothing to do with the negotiation of this sale and that, in fact, none of his brothers in the company or his mother had anything whatsoever to do with that negotiation. I say that they were in constant negotiation for over 12 months with Mr Robertson. It is time the Minister brought before the Parliament something a little more substantial than the results of a phone call from Mr Robertson who says that he denied ever having talked to the members of the family about this matter, he denies knowing them and he was not a frequent visitor to their home. Nobody can tell me that, even if he was not a frequent visitor to the home, he would not, of course, have discussed this half a milion dollar deal, which was probably one of the biggest things that had happened either to him or to the Dawkins family.

The issue at hand, as I said, in regard to bottom of the harbour schemes is not the huge cost to the revenue. The issue we are talking about and the issue I have raised is that of capitalisation of interests. Some interesting situations arise from the documents I have tabled. I am sure the Minister would be interested in a few more I could table. I refer to the letter of final offer that Mr Robertson wrote to the liquidator. In that letter, which is one of those I have tabled, having made his plea for a reduced price because of the circumstances of his not being able to get the original yield out of his subdivision, he turned round and offered them $550,000 on $40,000 deposit. He signed the letter and in his own handwriting across the bottom-I remind you, Mr Speaker, that the reference to stealing these documents obviously authenticates them; there is no suggestion that they are not for real-he writes:

P.S. The original asking price was $540,000.

That might not seem very significant, until we look at the memo to members of Coomel Pty Ltd which, I remind you, Mr Speaker, the Minister for Finance has yet to deny having received a copy of, and of which the liquidator informs me he would certainly have sent a copy to all members of the company if it was addressed to all members. When we look at that particular document we find that the liquidator is telling the members of the suggested sale price. He is referring to this letter. He also put a 'With Compliments' slip on it which says :

Copy of letter received on 6.4.1979. May we have your comments as soon as possible?

The letter to Mr Colin Gardner, the liquidator, is dated 6 April 1979. In fact, he gives them his advice and his summary. He says:

The suggested sale price--

this is what is contained in the offer to which I refer-

is $550,000 on $40,000 deposit and the balance over two years. The true present worth of this sum is approximately $438,000.

According to my calculations, that is a differential of $112,000. He goes on to say:

Under the existing contract the sale price is $680,000 on $40,000 deposit. The true present worth of that sum is $540,000--

exactly the price that the offerer suggested was the original cash price for the property. What do we learn from that? If we take the original cash price of $540 ,000 and we deduct $40,000-and, of course, I guess it is only coincidental that this leaves a nice round figure of $500,000; but that deposit figure stuck through the whole deal-that leaves us with a balance of $500,000. If we calculate interest at the rate of 14 per cent on $500,000, we find it is $70,000 per annum or $140,000 over two years. Again, by coincidence, if we add $140,000 to $540,000, we find that the figure adds up to $680,000-the figure mentioned by the liquidator when he sent this notice out to the members.

Let us go back to the final deal that was struck. We find that by this time, of course, the arrangements were in place and all we had to talk about was the final price. The final price was $550,000. The liquidator points out that the true present worth of that amount is $438,000. If we deduct $438,000 from the $ 550,000, we get a difference of $112,000. When we divide that figure by two- because the terms are over two years-we find that the difference is $56,000 a year. If we deduct the $40,000 deposit from the $438,000, which is called the true present worth, and get $398,000 and calculate interest at 14 per cent on $ 398,000, we find that the figure is not $56,000, Mr Speaker; it is only $55,720. In fact, that is probably why the liquidator said that figure was only approximate. So in fact, in each case, there is a clear example that the interest rate was to be 14 per cent and that nothing had changed.

What are the implications of this deal, which I suggest was worked out by the Minister for Finance, his brother and other members of the company? Let us remember that the opening statement of this liquidator, who never spoke to anyone and took all his own decisions, was: 'I spoke with Jeremy today'. Jeremy is the Minister's brother and also a shareholder and a beneficiary of this arrangement. To suggest that the liquidator could say in one breath 'I spoke to Jeremy' and that he was not seeking advice on what was going on is ridiculous. Jeremy is a town planner, of course. He happens to work for the city of Fremantle. I do not suppose he was getting professional advice from a council employee. He was talking to someone just as he talked to everybody else. It is probable that he did not talk to the Minister for Finance very often, because the Minister for Finance knew what he was about. The Minister for Finance was known to say: 'This is a great idea, but don't count me in on it. I can't be seen to be agreeing'. He probably then said: 'How much do I get?

We have to look at the tax implications of this arrangement. The facts are that in the normal commercial transactions which go on when one lends somebody money- it does not much matter if it is built into a property sale or anything else- interest is paid. I have already drawn to the attention of the House that when the mortgage was drawn up it was suddenly decided that if the period was to go over that settled for this arrangement and the subdivider was unable to meet his commitment to repay the money, there would have to be interest. Natural commercial arrangements demand that interest be paid. Quite clearly interest was calculated in that arrangement.

Usually the Commissioner of Taxation gets some protection from these types of deals because in the normal commercial transaction we find that the purchaser has the right to claim his interest payments as a tax deduction. He will therefore not agree to the capitalising of the interest, as has occurred in this transaction. I am aware of two occasions when this does not occur. The first is when a subdivider makes a purchase. He can claim both the capital purchase for the land and any interest paid, if there is any, as a cost of his development. As the Treasurer (Mr Keating) would know, he deducts it and what is left over after his other costs are covered is his profit. So he does not care if he pays more or less in interest for the land. The Treasurer and the Minister for Finance were well aware of this arrangement.

The second occasion, one about which the Treasurer must worry, occurs in the case of home owners. They do not get a tax deduction for interest and, as such, if sellers or vendors wanted to lend them finance to buy their homes, they too could be attracted to accepting the same type of arrangement whereby they capitalise the interest. It is possible that the vendor would sweeten it up a little by offering a lower rate of interest to be built into the capitalisation. When that happens, we have a situation where the income tax revenue is denied again because the seller puts his money up, he gets it back and he does not officially get any interest. Of course the Commissioner of Taxation cannot charge him tax on a capital gain. If that practice is to become widespread and if it is given the support of the Treasurer, as it will be when he supports the Minister, it will be good for all Australians and not just selected people who are smart enough to work it out. It should be publicised. It could be called the Dawkins scheme, or the Dawkins/Keating scheme, if the Treasurer is in it too. The situation will occur wherein all Australians can benefit from this arrangement.

Let us look at what the case of Coomel has meant to the revenue. I think it is quite clear, from what the liquidator told the shareholders, that they were denying the revenue tax on $112,000 over two years taxed at the company rate. The company rate is about 46c in the dollar. It does not matter much whether we take 46c on $56,000 a year or $112,000. The facts are that company tax on the higher amount of money would have been $51,520. But that is not all. Under proprietary limited company-tax law the shareholders would have been obliged to distribute 90 per cent of their earnings for that year as dividends. After company tax that would have amounted to $60,480. In fact the beneficiaries-the shareholders-included a member of parliament, a city planner, a very highly paid doctor etcetera. It is clear that they would not have been paying tax on this sum at the rate of 30c in the dollar, they would have been paying it at the higher rate. If we pluck out a figure of 46c in the dollar, again as a fair average, we find that the revenue would be further denied $24,494. In fact, this scheme-if it is such, and all the evidence points to it-has cost the revenue $76 ,000. As I reminded the honourable member for Lilley (Mrs Darling) the other night, that would have helped a lot of poor people in her electorate and maybe people in the electorates of a few of the honourable members sitting on the Government side of the House. They seemed so anxious on Thursday night to stop debate on an important Bill in order to support a Minister who has been party to all this.

We have heard the Minister tell us: 'I might have got this thing. I, of course, was carefully taking no notice of anything the liquidator was doing. It was not right for me to do that'. But considering his stand on taxation, going right back to his maiden speech in 1974, and his hate of the capitalist system, surely when he read that document and read that there would a capitalisation of interest he would have rung up the liquidator and said: 'Mr Liquidator, you have to count me out of this. I refuse point blank to be involved'. There will be questions in regard to the Minister's involvement. I am sure that if a proper investigation were carried out and sworn evidence were requested from the purchaser and from other people who have contacted my office, whom I can make available, as I said in the very beginning, we would find that some of the Minister's statements regarding his total lack of involvement and the total lack of involvement of his brothers and others would not be substantiated. I suggest that it has not really been substantiated by what he has tabled in regard to the statements of the liquidator.

As I said, there is good reason for the liquidator to make the statements he has made, and that is all there is about it. The liquidator believed that he was carrying out the business. He did not know that the people who were employing him were running around behind his back doing deals. The Minister for Finance has done his best to mislead this Parliament and he could not help misleading the liquidator. The poor old liquidator, he believed all sorts of things. He really believed he was doing everything. The Minister knows that he talked to Graeme Robertson, and that is where the money was. The liquidator was the middle man.

If we think this event was just a passing aberration which just happened to the poor old Minister for Finance and he just forgot to get out of it and to deny his brothers and other beneficiaries of the will the right to defraud the revenue, which surely he thought he had the right to do, it might be interesting to look at another meeting he attended quite some time before, in June 1975. The Minister is listed as being at the meeting of Coomel Pty Ltd. The purpose of this meeting was to establish a five-year plan. I do not know the real significance of a five-year plan but I know the Russians have them. The fact is that those present at that meeting were S. Geroff, Messrs, J. S., J. E., S. L. and P. A. Dawkins. They wanted to discuss the future of all the assets that their father had accumulated for them. They made certain assumptions and then looked at some options. They eventually concluded that they would probably sell the assets. They then looked at the options as to what they might do with the money. I thought option No. 5 was wonderful. It states:

Investment in non-economic philanthropic ventures particularly with a view to benefiting or involving the shareholders.

That is the old donate-an-over-valued-painting-to-an-art-gallery trick. It is no good the Minister for Finance saying that he was not there. There is no record of his protesting violently when discussing that matter. Who was Mr Geroff anyway? He was the manager of Coomel at the time. I am told he worked for that other great defender of the public revenue, Senator Walsh. I believe he was his research assistant at a later date. No doubt Senator Walsh's ideas on tax avoidance and evasion were greatly improved by the advice he got from Mr Spencer Geroff. If we do not think the Dawkins family's idea was to buy a painting, we find out that Spencer Geroff is now a part owner of an art gallery and has been for four or five years. I do not know whether the Minister for Finance, his wife or someone else has a share in that art gallery. I think it was the previous Treasurer who put a stop to that fancy little trick.

What we are talking about is intent. We are talking about a Minister who was prepared to be party to all these events. He said: 'Oh, I was not in it. It was a nasty old highly-paid liquidator who did all these things to me while I innocently flitted around the country trying to destroy people's reputations'. That is not so. He constantly and continuously was in negotiations with the purchaser. He knew him as a friend. I think his brother Roger knew him as a close friend. If he wants to stand up and deny that it is a fact that Graeme Robertson was a visitor to Melaleuca, let him do so. I have suggested to the Minister once before that he should not ask other people to stick with him too far and to perjure themselves.

The circumstances here are clear. Interest was capitalised consciously. Had the property value been other than the original asking price of $540,000 and had it been sold at $540,000 free of interest, it could have been suggested that because of that close friendship with Mr Robertson the members of the Dawkins family were anxious to assist him to get on with this business. The facts are that as soon as terms were mentioned the price jumped to $680,000. If Mr Roberston wants to deny that that is his writing on the back of that document, let him do so.

If we need a little more support to show the intention of these people, we can look at another memo. I have already drawn the attention of the House to the fact that, prior to the signing of the $1.64m statement of solvency by the Minister and another one or two of his brothers when they went into liquidation, a lot of property had already left the company at what I believe were very low prices. That included Lot 553 which was transferred to one R. Dawkins in 1977 for $25,000. Then we find another little document. It has on it some handwriting which no doubt the Minister for Finance would recognise. It says:

Replied agreeing 6/1/79.

That is the only date on this thing. It says:

Graeme Robertson has advised that Roger Dawkin's land will be acquired on a capitalised figure of $128,532. Robertson works this out on the following basis:

(1) There is to be a deposit of $1,000--

That is again a magnificent financial transaction of $1,000 down on a $100,000 deal--

taken out against the original sum of $100,000 . . .

So again it is quite clear what the asking price was-$100,000. Suddenly that jumps to $128,532. No doubt the Treasurer has already worked out what that was going to cost the revenue. To continue:

. . . leaving $99,000 yet to pay.

(2) Interest will run from the commencement at 10 per cent--

apparently things were getting tough--

and after six months interest on the $99,000 is calculated at $4,950.

(3) The $4,950 is added to the $99,000, making a total of $103,950.

(4) At the expiration of the six months period a further $9,000 is paid and this is deducted from the sum of $103,950, leaving a balance of $94,950. 10 per cent interest on the latter sum for a futher six months equals $4,747 which when added makes a total of $99,697.

At the end of the second six month period Robertson will pay a further $10,000, leaving a balance of $89,697 and 10 per cent will accumulate on that over two years. An offer and acceptance is to be prepared allowing for this calculation and the purchaser will be Rekuna Pty Ltd, which is a company controlled by Robertson.

When we finish the calculations on that amount outstanding at 10 per cent, we find that all those little bits that they added on by way of interest total $28, 532.

That is not directly the action of the Minister. It just happens to be the adjoining block of land that his brother bought from the company for $25,000 and which two years later was to be sold for $100,000. Apparently they could not get the sub-division approved. These documents contain some lovely stuff on how they used to try to get sub-divisions approved against the Tonkin Government and a few little things like that, including little letters which they wrote to each other saying: 'Right'. Apparently that fell in a hole because the property, I am advised from my other inquiries, was later sold to brother Jeremy for $82,000, which was just 300 per cent of the original figure. All in all, it would appear that my charge of attempting to defeat State stamp duty stands up alongside my charges that the Taxation Office was consciously defrauded and that quite clearly every effort was made to ensure that no probate was paid.

In a previous speech I mentioned that a loan of $73,210 was outstanding on the death of Dr Dawkins and that the will made a special provision that that would be forgone on his death. When we look into other public documents-not stolen documents-relating to the Death Duty Assessment Act, we find that a serious attempt was made by the solicitors, quite clearly authorised by the family. Let us remember that poor Dr Dawkins was dead. These were not his tricks. They were the tricks of the beneficiaries. They say in Schedule No. 11:

Immediately prior to the date of his death the said deceased was owed a sum of $73,210.45 by Coomel Pty Ltd, such debt being released by the operation of his will. Accordingly, at the moment of death there was no debt owing and there was no gift. It is claimed that this debt does not form part of the estate of the deceased either as an asset of the estate or a notional estate for duty purposes .

The sum is just $73,210! I can advise the House that that was not successful and that the assessor decided that the Bowen case no longer applied. But it was done consciously and quite clearly with the approval of a beneficiary, namely, the Minister for Finance. All this adds up to one thing-deliberate attempts to defraud the revenue. They were quite legal attempts. The best solicitors were engaged to ensure that the Dawkinses hung on to everything they could and that the Government got the least. There is nothing illegal about that. All the actions taken to get around probate were quite legal. They were a little unusual . Most people who put their affairs into a proprietary limited company or a trust at least have the decency to leave them there and to pay company tax or distributed profit taxes. But, of course, that was not the case here. Once the company had served its purpose, once Dr Dawkins was dead, action was immediately taken to get all the assets out of the company into the hands of the beneficiaries. That is what is unusual about this arrangement. That is what labels it a device-a legal device and a proper device which thousands of farmers and other people have used, except that most of them still have their properties in the company which goes on for generation after generation.

I have been told that I am dishonest and that I got hold of some documents that maybe I should not have. The Minister tells us that I have raised this matter only because the Opposition is terrified of future disclosures. My understanding is that we have no objection to the Standing Orders Committee looking at this matter. It is quite clear that we took a lot more notice of that very experienced gentleman Nigel Bowen when he advised the government of the day of the great difficulties that can arise if there is not absolute and complete disclosure. I remind the House that the reason the Prime Minister was told that there was a company called Coomel was that the Minister for Finance was worried that someone was snooping around. That is what he said in his letter. He did not say: 'Sir, here it all is. I tell you the truth'. We have had to extract it from him like teeth. I hope that it is equally painful.

The Government now has to make a decision. If it wants to back a Minister who, in my opinion has misled the House time and again, that is fine. Politically it does not want the problems of a Minister having to go. The question that the Government has to ask is this: Is capitalisation of interest on these transactions fair and reasonable? Does it approve that device? For that matter, in the circumstances I have brought before this House, does the Commissioner of Taxation believe it is fair and reasonable? Does he want to have another look at it? What was he told the first time around? I will bet that he got that memo. I will bet he saw the one that was addressed to everyone telling them in fine detail how they could set up the sale of the other block which they just could not get. Is that the advice to the Australian people? If it is, fine, we all know where we stand. Every householder selling his block will be well advised to go down the track of capitalising interest, granting vendor terms and then discounting the interest because a profit can be made on it. The fact of life is that sub-dividers around Australia would be advised to arrange deals of this nature.

If honourable members go back to my first speech when I speculated on many things, they will find it amazing how they have all come true-right down to my speculation of a $73,000 debt forgone in the will. That was not done for nothing . It was done because the people involved thought they had a little perk. We also have to look at the fact that even after that probate was paid, probate was not paid on $2m. Good luck to the Dawkins family as far as I am concerned because, as I said, that was not an illegal device. It just happens to be associated with a Minister who day after day in this place has destroyed people who got away with $100 or $1,000. I hope I have an opportunity to advise the House at a later date what probate on $2m was in 1975, but the Treasurer will have no difficulty in telling us. He might even have the courage to tell us in his next speech what the figure is, for the information of some of his colleagues who, I am sure, would have preferred to spend that money on the poor people whose cause they frequently espouse.

We have looked at these documents and at their references. I have shown quite clearly that 14 per cent interest was charged on the first and second occasions. Those documents support those claims. The Minister has not denied their authenticity. He has stated quite clearly that the private documents were stolen . He knows they are correct. There are many other matters that he has failed to tell this House. I am sure there is a clear answer; that is, that people should have the right of an inquiry. I remind you, Mr Speaker, that when I first raised this issue in the Parliament I did not name the Minister and I did not name the company.

Mr Howe —Ha, ha!

Mr TUCKEY —It is no good laughing about it. I made an offer at the time to the Prime Minister. I said that he could have taken all of these documents, studied them and called a quite independent inquiry. But no; the Government decided it would bluff it out. Now the facts have been produced in this Parliament and they have not been denied. Contrary to the Minister's statements that all of these matters were not correct, that they are a pack of lies-'a litany of lies' was the phrase used-I challenge anybody to identify one thing on which I was wrong in what I have said in this Parliament in terms of money or a prediction of what the Minister and his brothers were about.

Let us get this straight: He has not only misled the Opposition; he has misled the Government and his Prime Minister. Every time we raise this matter the Prime Minister has to have another one hour or two hour talk with the Minister. Mr Speaker, those facts clearly demonstrate that the papers that I have submitted to you are correct. They show the major matter that I raised-one of capitalising interest to avoid company tax, to avoid personal taxation. I believe it is time that the Commissioner of Taxation came up with answers on this matter because I still believe he has discretion when such a blatant decision is taken.

Mr Howard —I seek leave to make a short statement in relation to this matter.

Mr SPEAKER —Is leave granted?

Mr Lionel Bowen —Talk about it during consideration of the Appropriation Bill.

Mr Howard —No, your colleague invited me to respond to something he said and I would like to take advantage of that invitation.

Leave not granted.