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Thursday, 28 February 1985
Page: 353

Mr DUFFY (Minister for Communications)(10.57) —The amendment moved by the honourable member for Bennelong (Mr Howard) to omit 1 July 1980 and substitute 12 May 1982 is not acceptable to the Government.

I go back to where the honourable member for Charlton (Mr Robert Brown) finished, where he indicated that $9.5m of the $10m involved here would not be recovered if in fact the amendment was accepted. Only half a million dollars relates to the period 11 May 1982 to 28 April 1983. It is true, as indicated by the honourable member for Bennelong, that when he was Treasurer on 11 May 1982, he announced:

Should existing legislation be found inadequate to strike down any scheme of the trust stripping type, the Government will introduce appropriate remedial legislation.

It would be effective from 11 May 1982.

It is worth tracing the history, because the honourable member for Bennelong said this morning that there was no prior warning and no justification for this Bill, except the zeal of the Government for stopping tax avoidance. The fact of the matter is that there was prior warning and, secondly, the one correct thing that the honourable member for Bennelong did say was that this Government certainly has the zeal for stopping tax avoidance and will continue down that track.

After the statement by the former Treasurer, when the Hawke Labor Government came to office, on 28 April 1983 the then Minister for Finance, the present Minister for Trade (Mr Dawkins), announced in unequivocal terms that this Government would employ retrospective legislation wherever necessary to ensure that tax sought to be avoided under any blatant tax avoidance scheme that comes to light during its term of office will be collected, irrespective of when the scheme was entered into. As the honourable member for Charlton indicated, that has been the position of those now in government for a long time. This Government quite clearly indicated that when it was in opposition; in the 1983 election it was our position absolutely, and it was our position in the last election.

I must have spoken to different people during the last election campaign because certainly the feeling I had out there in the electorate was not the one that the honourable member for Bennelong had. In fact, the reflection of the views of the people in the community quite clearly was that they had had a gutful of tax avoidance. They were in fact prepared to say to this Government that the ordinary taxpayers of this country, the people who have no way out of paying tax, were not going to be treated in the way they had been in the past, when it was totally acceptable, and that this sort of contrived tax avoidance scheme was not going to be tolerated.

In accordance with that policy, this legislation is directed at that new generation of trust stripping schemes which were entered into after 1 July 1980. After all, that is the date when it was first known that they were being used. I repeat that of the $10m placed at risk by that new generation of trust stripping schemes, $9.5m relates to schemes entered into prior to the former Treasurer's statement on 11 May 1982, and $0.5m relates to schemes entered into after that date.

There has been no indication that trust stripping has been carried on after 28 April 1983, the date on which the then Minister for Finance announced the intention of the Government to employ retrospective legislation against the blatant tax avoidance schemes. The reason there is no evidence of that after the announcement by this Government of what it was going to do is that the tax avoidance industry believed what the Government was going to do. The industry had not taken any notice in the past, but it knew there was a government now in office which was fair dinkum about that matter, which was not going to tolerate the blatant tax avoidance which had gone on in this country for so long.

The explosion of tax avoidance during the period of the Fraser Government is one of the greatest scandals that has taken place in the history of this Parliament. Accordingly, the announcement of the Government's policy on retrospective legislation was completely effective in stopping those schemes. The fact of the matter is that the Commissioner of Taxation has advised that the existing law may not be adequate to combat at least some variants of the new generation trust stripping arrangements but this legislation will ensure that there is not the slightest possibility that the scheme will succeed, and that the $10m, at risk will be recovered.

This important legislation demonstrates clearly that this Government will move unequivocally to stop this type of practice in the future, and it will not be intimidated by this nonsense that because the legislation is retrospective we ought not proceed with it. The Government is committed to acting in pursuance of its retrospective policy, thereby ensuring that the tax avoidance industry will not operate again in this country.

Amendment negatived.

Bill agreed to.

Bill reported without amendment; report adopted.