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Wednesday, 17 April 1985
Page: 1243


Mr MAHER(11.03) —The Government is not, as the honourable member for the Northern Territory (Mr Everingham) said, engaged in a pointless exercise. We are fulfilling an election undertaking to the people of Australia that we will re-introduce the bottom of the harbour Bills. We have done that today. I am appalled that the honourable member for the Northern Territory should say it is a waste of money. Fortunately I was recently in Darwin. I saw the enormous cultural centre being built at great expense in that city which has not even one permanent theatre company. If the honourable member for the Northern Territory wishes to discuss waste of public funds, I could tell him a few things about that. There is also the question of the salaries of members of parliament in the Northern Territory. Their large electorates average 2,500 people. Their salaries are equivalent to the salaries of members of this national Parliament. It is an appalling waste. The electricity subsidy in the Northern Territory, paid for by the taxpayers of Australia, is something in the vicinity of $67m.

This legislation is introduced in the hope that honourable senators will find their consciences, that they will do the right thing, that there will be some decency in Australian politics and that the Senate will let these Bills through and recoup and recover the ill-gotten gains in the sum of $270m from the tax cheats. In 1982 and earlier they got away with an appalling situation-highway robbery of this nation. The people who sit on the Opposition benches are the ones who are responsible.

I was in this House in 1982 when it all broke. We had the report of the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union presented in this Parliament and the McCabe-Lafranchi report on tax avoidance in Australia presented in the Victorian Parliament. I well remember sitting here until 3 and 4 o'clock in the morning while the honourable member for Bennelong (Mr Howard), the then Deputy Leader of the Government, talked at great length in pious platitudes about tax reform and yet did nothing in all the years he was in government. The honourable member for Bennelong is listening, so I draw to his attention his error in stating that his Government-the Government of which he was a Minister-did something about reducing the size of the Australian Public Service. Between June 1975 and June 1983 the Public Service grew by only 2.3 per cent. That is true. However, when the records are examined, it is seen that the number of Second Division officers actually grew by 19 per cent, Third Division clerks by 12 per cent and Fourth Division permanent clerical assistants by 15 per cent. The reduction was achieved when the Government sacked the labourers in the Department of Housing and Construction. The numbers of such workers went down from 8,600 to 3,800. There was a 50 per cent reduction literally in the tradesman's level or ordinary day labourers. That is how the Government kept the number of public servants down. So it was all a thimble and pea trick. It is absolute nonsense for the honourable member for Bennelong to talk here today about what the previous Government did and what we are doing now.

The Australian people were outraged when the bottom of the harbour scandal broke. No prudential person, business manager, taxation official or accountant, if they were at all honest and properly trained, could have taken part in the scheme that was involved-the burning of books, destruction of records, appointment of sham directors who might have been prostitutes or painters and dockers. Criminals were put in as directors of these companies and the money was just stolen. This largely resulted in the Labor Party coming to office. There is nothing surer than that the Australian people rejected the Liberal-National Party coalition on that basis. Then we had the appalling deficit of $9.6m. The Liberal-National Party Government was proved to be incompetent. It was an incompetent manager and has been also so adjudged; in the last election it was so adjudged. Its crazy proposal for income splitting was also rejected by the Australian population. Income splitting is one of the most common tax dodges in our nation at present.

The salary we receive of $38,000 is about 1.5 times average weekly earnings. In 1955, 55 per cent of the income tax came from people who were earning 1.5 times average weekly earnings. Now these people pay only 21 per cent of the personal income tax. That means that a lot of the people who are on reasonably high incomes are into tax minimisation. They are into negative gearing and all sorts of tax shelters, but mainly they are into income splitting. When the honourable member for Bennelong talks about the married couple without children being lucky Australians, they are not lucky if they are public servants getting high salaries because they are paying tax at the marginal rate of 60c in the dollar plus the Medicare levy. They are not lucky if they are on average weekly earnings because they are paying tax at 46c in the dollar. So if a person is paying half his income in tax I do not know how that person is lucky in this country or any country. This situation was left to us by the outgoing Government. The whole basis of taxation has been eroded and personal income tax is being avoided as never before. Today we have had another attempt by the Liberal-National Party coalition to defend tax cheats and tax frauds-people who are, again, being protected and defended. They are being defended in the Senate by the Australian Democrats, much to their shame, and by Senator Harradine. I have a cutting from an Australian Financial Review of 1981. The heading is self-explanatory. It says: 'Government chickens out of tax reform'. It would do nothing about tax reform.

It knew that the whole basis of taxation was collapsing, that those who were on one and a half times average weekly earnings were not paying their tax. This graph did not just drop suddenly; it started down from the mid-1950s, until at present it is down to 21 per cent of personal income tax. That means that people on high incomes are avoiding paying their tax.

The legislation before the House, which will recoup $270m, aims to catch, as it were, the second payment of tax on a company's profits. A big complaint from companies is that their profits are taxed twice. A company pays tax on any profit it makes and, when the profit is paid to the shareholders by way of dividend, it is taxed again as income earned by the shareholder. This matter may well be raised at the taxation summit; I am sure it will be raised. In this country we have more companies registered per head of population than any other nation in the world. Company tax while it is a very big issue in this nation nevertheless has a declining base. However, the profits of every company in Australia are taxed twice. They are taxed when the company declares its profit and when the shareholders receive their dividends.

This legislation aims to catch the deemed dividend. The crooks who avoided tax by bottom of the harbour schemes took all the profits of the companies; every penny was taken, purloined and put into their pockets, and they walked away. Under the threat of exposure, of having their names published, many of these companies have paid the company tax which was robbed from the Treasury. This Bill will recoup the personal income tax of the shareholders on the income which they received illegally. Thus this legislation is about the second bite at the cherry.

How Opposition senators, many of whom are decent, honourable people, can reject this legislation is beyond me. The company's part of the taxation has already been paid and recouped. I cannot understand, and I know the public will never understand, how the Senate can keep rejecting this legislation. It is defending the indefensible. I know that many members of the Opposition benches are decent and honourable people. As the honourable member for Charlton (Mr Robert Brown) said, many of them are competent and add much to public life. But how they can come into this House and oppose this legislation is beyond me and beyond members of the Government.

The Taxation (Unpaid Company Tax) Assessment Amendment Bill and the Dividend Recoupment Tax Bill are brought forward today in fulfilment of an election undertaking by the Prime Minister (Mr Hawke) to resubmit the bottom of the harbour legislation. The Australian public expects this legislation to be passed by the Senate. It believes there should be justice and equity in payment of income tax. The Australian electorate believes and knows that the people involved in the bottom of the harbour schemes were tax cheats. They were not only cheats; they were crooks. They took part in a series of actions which any prudent person would say were dishonest. Such action was not just a tax dodge like income splitting, which of course the Opposition never costed in the election campaign but which would have left a bigger Budget deficit than was left to us in 1983; the bottom of the harbour schemes were unconscionable. They involved a series of acts which any person with a shred of decency would disapprove of.

Without delaying this debate, I call upon members of the Opposition to rethink their attitudes in this matter and to support the Government. I call on the Australian Democrats particularly. They make such a show in the electorate of being fair dinkum and all things to all men, but they cringe and crawl into a corner and, with independent Senator Harradine, reject this legislation to recover money from the tax cheats.