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Monday, 20 August 2001
Page: 29790

Mr HAASE (10:52 PM) —I stand before the House tonight to bring to your attention the plight of thousands of investors in my electorate of Kalgoorlie. Many of these people are hardworking Australians who have been unwittingly caught up in tax minimisation schemes and have, as a result, had sizeable tax deductions disallowed by the ATO. These men and women believed that they were doing the responsible thing in making provision for their future wellbeing by investing prudently. We all know that ignorance is no excuse under the law. But, naive as they were, these high income earners were specifically targeted by the sharks who call themselves `financial advisers' promoting these tax minimisation schemes.

My electorate has one of the highest income brackets per capita in Australia, and these promoters were well aware of this when they came banging on people's doors, telling them how they could minimise their tax and invest for the future. Most of the people now burnt by the schemes are ordinary hardworking Australians, working long hours in sometimes isolated and rough conditions to make a living. They are not the high living, wine swilling elite trying to dodge tax, or those hiding their assets offshore to avoid paying what is rightly owed to the tax coffers. Most of the people in my electorate were conned and roped into these schemes by fast-talking, confident sales people who targeted these people specifically. The investors contributed in good faith and now are facing prospects of bankruptcy, failed marriages and relationships, business closures and, in the most extreme of cases, suicide.

What has happened to the promoters? Many have got off scot-free, with no penalty being imposed at all. I would urge this government to consider any recommendations from the ATO carefully, with a view to giving greater powers to both the ATO and ASIC to enable these promoters to be pursued, investigated and punished to the full extent of the law. I also urge this government to show some compassion for the predicament of these cash stricken investors by freezing collection of tax debts and penalties until test cases before the Federal Court have been determined.

I have had numerous discussions with the Assistant Treasurer, the Treasurer and the Prime Minister. They are well aware of my views and the plight of these investors. Many of these investors are at the end of their tether. They simply do not have the money being asked of them, and they are considering drastic steps that they would not normally consider as options. Many are being squeezed from both sides, with both the ATO and the scheme promoters demanding payment. I have had hundreds of letters and telephone calls to my offices in Kalgoorlie and South Hedland from investors mainly in the high income areas of the Pilbara and Goldfields. Many of the stories are similar, and in most cases the individual investor profited very little from receiving the substantial tax deductions. Contrary to popular belief, the majority of the deduction went directly to the promoter of the scheme. Tax minimisation schemes and the disallowance of deductions have effectively ruined the lives of these people. The financial implications are major, with billions of dollars now owed to the tax department. But in addition there is the emotional turmoil that has hit ordinary families throughout my electorate.

All we are asking is that the collection process and the penalties are frozen until the court process is complete, until the legitimacy of the said tax effective scheme is tested and determined. In our process of law, people are deemed innocent until proven guilty, and I believe that we need to keep that in mind and show that we are keeping it in mind at all times. I believe that this entire debacle is also an indication of the need to ensure that the whole system of taxation self-assessment is better clarified. People still believe that, if they claim a deduction and are sent a cheque from the ATO, that is the end of it. It is by no means the end of it, as more than 60,000 people burnt by tax effective schemes can attest.

There is another victim in this whole scenario—an innocent victim suffering simply by being associated with those schemes disallowed by the ATO. There are many legitimate investment opportunities, particularly in the plantation industries, which are finding it increasingly difficult to attract investment. `Tax effective' and even `investment' are dirty words in my electorate; few people are prepared to take the risk in investing in schemes even when the ATO has approved a product ruling. It is a backlash that could severely cripple timber industries in my electorate and put many jobs for contractors and employees at risk. Investment in this type of industry has virtually ground to a halt, and I believe that it will take considerable effort and promotion for the average person to regain the faith needed to invest. The wide ranging effect of these so-called tax effective schemes is going to be felt for many years by business, industry and families and in the economic wellbeing of small communities.

I believe that we as a government have a moral responsibility to ensure that in all our dealings we are compassionate, fair and just, and that all assistance is provided to help the individuals and communities affected. I ask that more measures be introduced to help us achieve this.