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Thursday, 24 March 1994
Page: 2158

Senator WATSON (11.32 a.m.) —Yesterday, during the debate on Taxation Laws Amendment Bill (No. 4) 1993, there was considerable discussion as to whether certain government amendments should be moved as requests. I remind the committee that requests are formally made by the Senate to the House of Representatives in respect of certain money bills with which the Senate has some difficulty.

  The government advice, if accepted, would tend, I believe, to have the effect of upsetting some long-term traditions about where bills which increase the burden on taxpayers could

originate. The traditional view is that money bills should originate in the people's house—in our case, the House of Representatives—rather than in the house of review, the Senate. I am always one for propriety of the Senate's rights, but I think we must be very careful as a house of review about intruding into so-called new territory in relation to money bills.

  I believe that acceptance of the opinions that the government has tendered has very widespread implications as to how in future the Senate may deal with tax legislation. I believe that the ramifications of such words in the opinion as `increasing the burden of tax' are not necessarily correct, although certainly wide ranging. I remind the Senate that, generally, high courts will adjudicate on issues generally involved in section 55 of the constitution, whereas section 53 items are generally to be resolved between the two houses of parliament on issues that affect them, their rights and responsibilities.

  This issue, I remind the committee, has been referred to and examined and reported upon by the Senate Standing Committee on Legal and Constitutional Affairs. It has put down its opinion. I do not believe that referring the issue back to that committee will change the stance or the opinion or the report of that committee in any way. However, I do put it to the government, through Senator Cook, the minister responsible in this chamber, that I think it is incumbent on the government to examine further and resolve the issue and seek wider opinion, because we believe there are certain deficiencies in what has been tendered to us to date.

  Given the hour and the need to pass this legislation, we think that the appropriate measure to adopt is to move a declaratory amendment to the motion that the report be adopted. I indicate now that at the time the motion is moved that the report of the committee be adopted, we will move:

  At the end of the motion, add:

", and the Senate declares that its agreement, on the motion of the government, to make requests to the House of Representatives for amendments of the bill does not indicate that the Senate considers that requests are appropriate or that the Senate has formed a conclusive view on the application of section 53 or 55 of the Constitution to the bill".

I draw the committee's attention to that at this point. I thank the government for the opportunity of considering the great amount of detail it provided yesterday to the Senate. Yesterday was not an appropriate time for adequate consideration, given the length of the opinions and the supplementary documents that were appended to those opinions. Overnight we have had the opportunity of referring those documents and those opinions to the Clerk of the Senate. The Clerk of the Senate had tendered me his advice. I take the opportunity of publicly thanking him for the quality of that advice. I will seek leave of the committee, for the purpose of expediting the debate, to incorporate that opinion in Hansard. I suggest that Senator Cook may like to tender his advice that was circulated in the chamber yesterday and incorporate that in Hansard. By so doing, the readers of the Hansard can then draw their own conclusion as to the future direction, because the issue should be resolved. It is really an issue of the mechanism for the best resolution of the problem before us.

  I mentioned earlier that I do not wish to delay the passage of this bill, but I thank Senator Cook for giving us the opportunity of considering that. I also point out that the Clerk's view on those opinions, which we endorse, has been considered by our shadow Attorney-General, Daryl Williams QC, a man of considerable expertise, and by others. They concur with the views laid down by the Clerk, which we are seeking to incorporate in the Hansard today. I regret that so much pressure was placed on so many people overnight on such an important and sensitive issue but, essentially, the issue was very much in the government's hands. Had it proceeded in the normal fashion, this prolonged debate on constitutionality would not have arisen.

  It is always a moot point as to whether a bill is a taxing bill or not a taxing bill, but when the government deliberately sets out on a course of action and refers to procedures that are not the usual ones, in the form of requests, then we, as members of a responsible house, have to take such issues on board, examine them appropriately and consider advice given to us. I suggest that honourable senators read very clearly and diligently the views to which we agreed, which were put down by the Clerk and dated 23 March 1994. I thank him for what he has given.

  The TEMPORARY CHAIRMAN (Senator Zakharov)—Is leave granted for the incorporation of that material?

  Leave granted.

  The document read as follows—


23 March 1994



As requested I have examined the brief advice dated 23 March 1994 from the Attorney-General's Department to the Commissioner for Taxation supporting the contention that certain of the government amendments to this bill should be moved as requests. This advice was in response to questions asked by Senators in debate and a note of 22 March 1994 which I sent to members of the Legal and Constitutional Affairs Committee.

The purpose of my note was simply to make the point that the moving of the government amendments in the form of requests again draws attention to the difficulties involved in the classification of taxation bills expounded by the government's legal advisers. These difficulties were explored in some depth in evidence before the Legal and Constitutional Affairs Committee during its consideration of the taxation legislation arising from the budget last year. The view which was then put by the government's legal advisers to justify that legislation was basically that legislation could increase taxation without being legislation to impose taxation within the meaning of sections 53 and 55 of the Constitution.

It was submitted to the Committee by various witnesses that this view should not be accepted, not only because it flies in the face of common sense, but because it was not soundly based on relevant judgments of the High Court and would probably not be accepted by the Court if the Court were given the opportunity definitively to determine the question. In my submission to the Committee I pointed out that this view would probably not be acceptable to the Court because it leads to absurdity. It leads, for example, to the following absurd conclusions: a bill can increase taxation without imposing taxation; a number of increases in different taxes can be combined in one bill; such a bill could be introduced in the Senate, but the Senate could not amend its own bill to increase further the taxation affected by the bill, and nor could such amendments be made by way of requests because the bill would not have come from the House of Representatives.

The connection between these matters and the questions now arising in relation to this bill is that the interpretation of the third paragraph of section 53 of the Constitution which is now put forward by the Attorney-General's Department, and which is the basis of some of the government amendments to the bill being moved in the form of requests, flows from the advice of the department in relation to the question of legislation imposing taxation arising under sections 53 and 55, and leads to the same kind of absurdity.

As I pointed out in my note of 22 March, this view involves the absurdities that a bill may not be a bill imposing taxation but an amendment to the bill may increase a "proposed charge or burden on the people" within the meaning of the third paragraph of section 53; and that the Senate may not be able to amend a bill which the Senate is nevertheless empowered to introduce (because it is not a bill imposing taxation).

The advice from the Attorney-General's Department now seeks to deal with these difficulties by declaring that a provision in a bill may increase a proposed charge or burden on the people without imposing taxation. This is consistent with the views put earlier by the department. The example given, however, is that a change making tax instalments payable weekly instead of monthly would increase the burden on taxpayers. Presumably such a change would not involve an increase in the total tax liability of a taxpayer. The explanation that was given to me by the Office of Parliamentary Counsel for the amendments being moved in the form of requests is that they increase the tax liability of taxpayers; this is the line of argument taken in the other opinions accompanying the advice. It is consistent with the department's view that tax liability can be extended by a law which is not a law which imposes taxation within the meaning of the relevant constitutional provisions. The example now given appears to contemplate that a provision can increase a proposed charge or burden on the people without affecting the tax liability.

This extends the application of the third paragraph of section 53 into a much more nebulous area than has hitherto been contemplated. It has always been thought that the third paragraph of section 53 refers to legislation if not imposing taxation at least affecting tax payable, and to legislation appropriating money. The word "proposed" in the third paragraph, which is a stumbling block to loose interpretation of the paragraph, is explained away as referring to a tax or an appropriation proposed to be affected by a bill. It now appears to be contemplated that a "charge or burden" may not relate to taxation actually payable or to appropriations but to a much wider and undefined area.

Apart from this difficulty, there is still the other dimension of absurdity to which I have referred. Taking the example used by the Attorney-General's Department, the Senate could introduce a bill to provide that taxation instalments are payable weekly instead of monthly, but having introduced that bill would then be powerless to amend the bill to make the instalments payable daily instead of weekly, although it could introduce another bill to achieve that end. This interpretation turns the third paragraph of section 53 into an utterly empty procedural formality which does not even preserve the financial initiative of the House of Representatives, supposedly the main purpose of section 53.

In the signed version of the advice of 23 March 1994 provided to Senators, at the end of paragraph 5, the following sentence occurs:

"It follows that the Senate should not purport to increase rates set out in such a Bill [this refers to the example of a bill making tax instalments payable weekly instead of monthly] where that Bill originated in the House of Representatives."

This sentence appears to be an attempt to overcome the difficulty to which I have referred, of the Senate not being able to amend its own bill while having the capacity to introduce a new bill containing the proposed amendments. The sentence implies that the third paragraph of section 53, as interpreted by the Attorney-General's Department, applies only to bills originating in the House of Representatives. This, however, involves a further absurdity: the restriction imposed by the third paragraph of section 53 would operate according to whether a bill had been introduced in the House of Representatives or the Senate, which would make it even more of a dead letter as a safeguard of the financial initiative of the House. The sentence also, by referring to increasing rates, glosses over the distinction between increasing the taxation payable and merely affecting the way in which the tax is paid, as in the example given in the advice.

This sentence has been deleted from the version of the advice which was tabled in the Senate. I suggest that the sentence has been deleted because it was realised that it exposed the absurdity to which the Attorney-General's Department view leads.

As was strongly argued before the Legal and Constitutional Affairs Committee, the arguments advanced by the government's legal advisers, which arise from their artificial classification of bills, put the interpretation of the relevant constitutional provisions in a state of confusion. As I indicated in my earlier note, this confusion could be avoided by adopting a different classification of bills for the purposes of sections 53 and 55, and a different and clearer interpretation of those sections, with less risk of challenge to legislation under section 55. If the matter is subjected to further investigation, I could make some suggestions as to how the confusion could be cleared up.

As suggested in paragraph 6 of the advice, the question of whether the Senate proceeds by way of amendment or request is probably not justiciable. As I have also suggested in previous advices, it also does not affect the substantive powers of the Senate. Therefore it may be of little consequence whether the Senate agrees to the course suggested by the government of making the amendments in the form of requests. The Senate's action, however, may be introduced into arguments about the meaning of the expression "laws imposing taxation" in section 55 of the Constitution, which is justiciable, and which would necessarily influence the interpretation of the same expression in section 53, and thereby influence the interpretation of section 53 as a whole.

I therefore suggest that, if the Senate decides to proceed by way of requests, this action is accompanied by a declaratory resolution, similar to those passed in relation to sales tax legislation in 1981 and the tax legislation arising from the budget last year, to the effect that the Senate's decision to proceed by way of requests does not indicate that the Senate considers that requests are necessary or that the Senate has arrived at any conclusive view as to the application of the constitutional provisions to the bill.

Yours sincerely

Harry Evans