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Thursday, 13 April 2000
Page: 15913


Mr ROSS CAMERON (11:26 AM) —The member preceding me, the honourable member for Wills, has taken the opportunity to have a very wide-ranging discussion of matters relating to the tax system and has presented his proposed amendment. Can I suggest that if you want to have a discussion of integrity in relation to compliance and the taxation system the record of this government and the one that preceded it provide a study in contrast, beginning with the introduction by the Treasurer of the Charter of Budget Honesty, shortly after we were elected in 1996. It said that, if we are going to expect taxpayers to abide by a higher standard of honesty and compliance, governments ought to submit themselves to the same sort of scrutiny. That followed the extraordinary situation where the Australian people and the then opposition were led to believe that the books of the government were in good shape. When we came to government we found that we had an annual hole in the budget of roughly $10,000,000,000. We then submitted ourselves to the scrutiny of the public gaze and ensured that every future government of the country would do the same thing through the charter of public honesty, and public policy in this country is much better and more transparent for that result.

In relation to compliance and tax avoidance, we then bit the bullet and tackled fundamental tax reform. Through the new tax system we introduced measures which will result in a huge clamping down on the cash economy, which has regrettably been a feature of this country for many years. The introduction of the business tax numbers for small businesses throughout the country for the first time gives a powerful driving economic interest in compliance when, for so much of the life of the current sort of wobbly, creaking and groaning tax system, there has been this powerful incentive to non-compliance and to creating a black economy or a cash economy. We have now created settings in the legislation which are going to flush out the cash and give businesses an incentive to get receipts and to declare income, otherwise they will not be able to claim back the GST they have paid on their inputs. That represents a watershed shift in culture. So we see that while the government is leading by example through the Charter of Budget Honesty we also have the guts to tackle fundamental tax reform, to encourage disclosure, to encourage one set of books and to clamp down on the cash economy.

Australians fundamentally are entitled to know when they pay their share of tax that others are likewise contributing their fair share. That is largely what the bill before the House is about; not this wild, speculative fishing trip which the member has just indulged himself in. I note the remarks in the Sydney Morning Herald today that the member is brave under parliamentary privilege in making allegations and impugning the reputation of other state political leaders, particularly Kerry Chikarovski. Of course, she is not in the chamber and does not have the opportunity to defend herself or her family. The cloak of privilege is obviously emboldening the member. He is welcome at any stage of the day to walk outside and give a press conference to the same effect, but frankly I would be stunned if he did.

This measure before the House is about giving assurances to the working PAYE taxpayers in my electorate of Parramatta, those who do not have the capacity to engage in complex schemes of arrangement. It is about ensuring that the honest PAYE taxpayer is not getting slugged to make up for the deficiencies in revenue created by tax evasion. In fact, the bill before the House has a number of different purposes, the principal one of which is to correct an anomaly in the double taxation agreements arrangements. That anomaly arises by virtue of the fact that the current legislation relating to double tax agreements has allowed interests in property to escape the net. It arises as a consequence of a recent case in which a taxpayer was allowed to avoid liability for tax for alienation of interests in real property in Australia by the creation of interposed entities. The complexity of the arrangement is illustrated by a paragraph of commentary on the Lamesa case from the Parliamentary Library's Bills Digest , and I quote:

In this case a US business decided to acquire an Australian mining company through interposed entities. A US limited partnership was created and it acquired an Australian subsidiary company. A Netherlands company, Lamesa BV (the taxpayer), was interposed between the US partnership and the Australian company. The Australian subsidiary (Australian Resources Limited) then acquired another Australian subsidiary (Australian Resources Mining Pty Ltd). Australian Resources Mining Pty Ltd then acquired all the shares in a listed mining company, Australian Resources and Mining Company NL, through a takeover. Australian Resources and Mining Company NL owned a subsidiary, Arimco Mining Pty Ltd which owned mineral exploration rights.

It then goes on to a second paragraph which also flushes out the complexity of the arrangements. The court found it not to be evasion, but to be legitimate minimisation. The government is saying that the average, honest PAYE taxpayer is carrying his or her weight and paying their fair share, but here we have a transaction where the profits assessed to Lamesa were $76 million for the 1993-94 income year and $128 million for the 1995-96 income year.

Clearly we had an anomaly which is flushed out in the double tax arrangements with the Netherlands and the government has simply moved to fix it and close the loophole, and that is the purpose of this bill. It does involve a degree of complexity. The measure is saying that an interest in property is taxable, as well as the real property itself. That creation of interposed entities, which vest interests in corporations and then allow the transfer of those interests by a transfer of shares, will also be caught under the provisions of the double tax agreements. That is a perfectly conventional and appropriate measure in the sense that we want to ensure that the big end of town carries its weight.

The bill has a number of other purposes, one of which has a particular interest to me as the federal member for Parramatta, because the bill extends tax deductibility to the St Patrick's Cathedral Parramatta Rebuilding Fund Appeal for another two years. Perhaps I can just re-acquaint the House with the facts of that matter. I recollect the day absolutely vividly in February 1996—just about a week before the election on 6 March—when I stood outside St Patrick's Cathedral with a crowd of others gathered with Father John Boyle, the parish priest, and watched this magnificent old sandstone building erupt in flames and be almost entirely consumed. It had been the practice of the church—and still is—that the church should be kept open for as long as possible to allow parishioners and others who happen to be passing by to go inside for a moment of reflection. On this occasion the young man who went inside was a bloke with some history of mental illness and he set about to burn the building down, and was ultimately quite successful. For many of my constituents who had held christenings, weddings and funerals in that building it was a tremendously moving, tragic and emotional time. The Catholic community of Parramatta is really to be congratulated on the way in which they have rallied together. There has been nothing in the spirit of vindictiveness; just a determination quietly to regroup and rebuild, and the supplementary purpose of this bill is to provide some assistance to them in that regard.

The Bishop of Parramatta, Bishop Kevin Manning, has gained the assistance of the firm of architects—Mitchell, Giurgola and Thorp—who had responsibility for the design of this Parliament House, and they have agreed to take on the task of assisting with the cathedral rebuilding. They have come up with an excellent design, and following the payment of insurance moneys Bishop Manning estimates a shortfall of about $3.3 million. One of the problems was that, when Parramatta became a diocese and St Patrick's became a cathedral, St Patrick's was manifestly inadequate for the needs of the diocese. I regret to say that to this day—or up until the time the cathedral burnt down—any school in the parish that had more than 600 or 700 students could not have their annual mass or graduation service in the cathedral because it simply was not big enough. So we had a situation where students from Parramatta had to go to St Mary's in the city because no cathedral in Western Sydney was big enough to house them. So it is particularly gratifying to me that we have in prospect the rebuilding of the cathedral and a worship hall next door which will have the capacity to seat 850 people.

The Governor-General, Sir William Deane, is acting as patron of the fundraising appeal, which was launched in May 1998. Since then the local community and businesses have contributed over $500,000 to the fundraising effort, but there still is this gap of $2.8 million outstanding. That is the objective of the next two years. It is a source of some regret to me that we have not been able to do more for St Patrick's than provide this deductibility, and it was particularly disappointing to me to see that the St Patrick's Cathedral submission to the Federation Fund was unsuccessful. It was a well-constructed and argued submission, but as all of us in this place are aware the number of great causes which do not receive government funding is very large indeed. I wish the Bishop, the Most Reverend Kevin Manning, Father John Boyle, the fundraising committee, the Governor-General and the local community well.

It is a very extensive community indeed. This diocese contains 46 parishes and 74 schools with 43,000 pupils. It services a very large number of Australians, and not just in my electorate. It takes in the local government areas of Baulkham Hills, Blacktown, the Blue Mountains, Hawkesbury and Penrith and in my electorate both Holroyd and Parramatta, so it has a vast community to serve and look after. That provision of the bill gives me particular pleasure, and I commend it to the House.