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Tuesday, 28 August 2001
Page: 30427


Mr EMERSON (8:34 PM) — The Taxation Laws Amendment Bill (No. 4) 2001 contains a number of modest anti-avoidance provisions. They are provisions that we welcome and will support because, unfortunately, in this country there is now a culture of tax avoidance. By and large, that is a culture that has been encouraged by the inaction of this government and, in some cases, the deliberate and positive statements towards avoidance by the Treasurer of this country. Before this government came to office, when the then Labor government was seeking to crack down on tax avoidance through the abuse of executive share schemes, the then shadow Treasurer and now Treasurer boasted about the coalition's opposition to those measures. In fact, he said that he would be opposing those measures `root and branch', and that is exactly what the government did. He also boasted at one point, given that the government had tried this three times, `Once, twice, three times and you're out; three strikes and you're out.' This was a shadow Treasurer who effectively, through those sorts of statements, was telling the tax office and the Australian people that tax avoidance through executive share schemes was okay.

The government's inaction on those very matters is a matter of great regret in this country because to this day, although there is evidence of rampant tax avoidance through those schemes—evidence that has been given to a parliamentary committee through the Second Commissioner of Taxation, who likened these schemes to the paper rorts of the late 1970s and early 1980s—and despite all of those warnings, despite all of that evidence, the government has failed to legislate against them. It is a pattern of inaction by this government in relation to tax avoidance.

Another classic example of that is that in the government's response to the Ralph Review of Business Taxation it said that it would bring in a strengthened general anti-avoidance provision, a toughening of part IVA. There is no good reason why—given the very long passage of time since it made that statement, well over a year ago—legislation could not have been brought to this parliament to toughen the general anti-avoidance rule, but of course there is no such legislation. It is for those reasons that I support the second reading amendment moved by the member for Wills, and in particular two paragraphs—firstly, that this parliament condemns the government for:

... creating new tax avoidance opportunities, despite addressing some existing avoidance opportunities in this bill;

Secondly, at paragraph 4, we condemn the government for:

... applying one set of tax rules for the Liberal Party and another for small businesses.

Mr Deputy Speaker, today I am wearing black in anticipation of attending the political funeral of the small business minister. This is a minister who has misled the Australian people seven times in just five days.


Mr DEPUTY SPEAKER (Hon. I.R. Causley)—Order! The member should read standing order 76. He cannot reflect on a member of the House unless by substantive motion.


Mr EMERSON —This is a minister who has provided over the last five days a number of conflicting statements which indicate certainly a large degree of confusion on his part. In my view they indicate a pattern where he has changed his story on numerous occasions. The minister took a punt during the censure motion and the preceding question time last Thursday that Labor did not have documents, because he said:

If they have any proof, have them table it ... what they are relying on are discussions that supposedly took place at FECs of the Liberal Party—


Mr DEPUTY SPEAKER —Order! The member is still flouting standing order 76. I will repeat: under standing order 76 you cannot reflect upon a member in this House unless you move a substantive motion.


Mr EMERSON —I am quoting directly from the member for—


Mr DEPUTY SPEAKER —You are reflecting upon a member of the House.


Mr EMERSON —I am simply quoting from what the member said in this parliament.


Mr DEPUTY SPEAKER —You are reflecting upon the Minister for Small Business, who is a member of the House. Standing order 76 specifically says you may do that only by substantive motion.


Mr EMERSON —I repeat: I am quoting him. If I am reflecting on him then he has reflected on himself. I am in the middle of a quote that the member—


Mr DEPUTY SPEAKER —I will make it clearer: if you continue, I will ask you to resume your seat.


Mr EMERSON —The member went on to describe Labor's pursuit of these issues during question time as a wild goose chase. As at today there are at least seven occasions on which the minister has at the very least—


Mr DEPUTY SPEAKER —The member for Rankin will resume his seat.


Mr Stephen Smith —Mr Deputy Speaker, I raise a point of order. I can understand you wanting to ensure that the member does not breach the standing order to which you have referred, but when you sat the member down he was simply reading into the Hansard the words of the minister himself previously. The minister is in the chamber; he is perfectly able to protect and defend himself if he so chooses. The point of order is that the member for Rankin has done nothing which would cause or warrant you to sit him down. He has made no allegations or suggestions which would fall within the general remit of requiring a substantive motion. He has simply repeated to the House the minister's own words and matters in respect of which this House is well aware, given the proceedings of the last three or four sitting days.


Mr DEPUTY SPEAKER —The member for Perth has been in this House for some time, and I will read the standing order to him:

All imputations of improper motives and all personal reflections on Members shall be considered highly disorderly.

That is the standing order. If the member wants to continue with the bill, he may do so, but if he reflects upon any member of this House then I will sit him down.


Mr EMERSON —During the discussion that has occurred inside this chamber and outside it over the last few days in relation to the Liberal Party's fundraising activities in the electorate of Groom, Mr Watts, who is the husband of the treasurer of the Groom FEC, made reference to shadowy figures behind the GST scam. He did that on Sunday on a television program. Shortly after, we received a phone call from Liberal Party sources, who informed us that the shadowy figure is none other than Santo Santoro, the former member for Clayfield. Clayfield is a state seat in the federal electorate of Lilley. I draw attention to the activities of the former member for Clayfield because he has now publicly admitted that he has been operating an account called the `Clayfield staff account'.

I am also informed by the same sources of the purpose of the memorandum that was issued on 14 June 2000 by the then state director of the Queensland Liberal Party, which accurately sets out the treatment of the GST within the Liberal Party. I am informed that there was a particular paragraph that was directed at the Clayfield staff account. I will read from that memorandum. It says:

Any branch or FEC which believes it might have a turnover in excess of $100,000 per annum should contact me at the earliest opportunity.

It was strongly believed that the Clayfield staff account did have a turnover of more than $100,000. The Liberal Party secretariat in Queensland wanted the former member for Clayfield to come forward and declare that. He had not done that. He had not declared it in his pecuniary interests statement—and was forced to do so subsequently, a copy of which I have here—nor had he declared it in his political disclosure statement. Mr Santoro is one of the shadowy figures in this whole scam; the other is Mr Neville Stewart, who seconded the motion putting the Groom FEC scam into place. Mr Stewart is the Queensland vice-president, who enjoys the patronage of the former member for Clayfield. So there are two of the shadowy figures.

We know why the scam was put in place—because further documents came to light over the weekend. The main reason the scam was put in place was alluded to in a report by the federal director of the Liberal Party, a copy of which we obtained over the weekend—


Mr Ronaldson —Mr Deputy Speaker, I raise a point of order. I have looked at both the bill and the amendment, and I cannot for the life of me see how these comments from the honourable member for Rankin in any way make reference to or are relevant to either the bill itself or the amendment moved by his colleague. I would ask you to direct him to come back to the matter before the House—either the bill or the amendment.


Mr Stephen Smith —Mr Deputy Speaker, on the point of order: the second reading amendment, in part, states:

(2) creating new tax avoidance opportunities, despite addressing some existing avoidance opportunities in this bill;

The member was simply detailing extensive taxation avoidance arrangements.


Mr DEPUTY SPEAKER —The amendment is very wide ranging, and I believe the member to be in order.


Mr EMERSON —The Federal Director of the Liberal Party of Australia, Lynton Crosby, says in this report:

How could a relatively small and resource-starved secretariat be expected to get on top of all the necessary state campaign preparations when, over the past few years, a majority of time, resources and intellectual capital were spent on internal wrangling, irreconcilable personal disputes among state parliamentarians and coalition tension over specific seats?

It goes on, under the heading `Rebuild the finances immediately', to say:

The financial problems which the division faces must be addressed immediately.

And they were. They were addressed in part through a GST scam, which started in the federal electorate of Groom but which, we have learned, spread to other federal electorates: Lilley, within which the Clayfield staff account of the former member for Clayfield has been operating, and also Leichhardt. Liberal sources have mentioned a number of other FECs in which the scam has been perpetrated.

There is further evidence of the motive behind this scam. I have just obtained a letter of 4 July this year, and it is to all Liberal supporters who supported an art union by buying tickets. The letter says:

Unfortunately, due to reasons beyond our control, the art union had to be cancelled. We have been told that there is nothing to stop contributors from donating the value of their original tickets.

What happened is that the art union flopped. They could not raise enough money to cover the cost, so they asked those who had bought tickets not to ask for a refund of those tickets. The letter says, `Your donation would be very much appreciated.' This is a cash-strapped state branch of the Liberal Party that was highly motivated to find new sources of money, and it did. It found new sources of money through the GST scam. The Prime Minister has called upon Labor to provide all documents. We have been providing all documents in a timely fashion, and I can assure the House that I will provide all documents as they arrive, because they continue to arrive.

This is a Liberal Party that is cash strapped and went into a GST scam. It is like Arthur Daley: a nice little earner for the Liberal Party. The Liberals say, `As far as the GST is concerned, there is one rule for the Liberal Party and another rule for the rest of Australia.' The Western Australian state director of the Liberal Party recently said, `Why mess around with the GST if you don't have to?' No small business in Australia has the option. They have to mess around with the GST—this so-called simplified new tax system for a new century. But the Liberal Party is saying, `Why should we have to mess around with the GST? We are just the people who put it in place.' It put in place an Arthur Daley nice little earner. It put in place a cut-rate GST. The member for Groom said, `The Liberal Party did pay GST on the fundraising dinner.'


Mr DEPUTY SPEAKER (Hon. I.R. Causley)—The member for Rankin is transgressing again. You are reflecting upon a member of this House.


Mr EMERSON —I am simply quoting the member for Groom—


Mr DEPUTY SPEAKER —I have told you: you are transgressing standing order 76. If you persist, I will ask you to resume your seat.


Mr EMERSON —Thank you, Mr Deputy Speaker. The comments that were made by the member for Groom, which I will not repeat—in deference to you, Mr Deputy Speaker—were endorsed by the Prime Minister, the Treasurer and, yesterday, the Minister for Employment, Workplace Relations and Small Business. The import of what they are saying is that the GST was paid on the fundraising activity. Every small business in Australia knows that, if you claim the input tax credit, you must pay the GST. What was the GST payable? I have a calculator with me. It was one-eleventh of the proceeds of the fundraising activity. The fundraising activity raised $18,350. If you divide that by 11—this is a pretty simple exercise—you get $1,668. That is the GST that was due on the fundraising activity. That is what any small business would have had to pay; but not the Liberal Party. They did not pay $1,668. The federal director of the Liberal Party said in a statement the other day that they paid $751. So the shortfall—$1,668, minus $751— equals $917. We have had various members of the government saying, `What is all the fuss about $75?' It is not $75. The shortfall is $917. So in fact the effective rate of GST for the Liberal Party on this nice little earner was not 10 per cent, as all small businesses in Australia face, but four per cent—a cut-rate GST just for the Liberal Party.

It has been said by government members, both in this place and outside it, that it was all a misunderstanding and it was all an error. Let us understand what actually happened. There was no misunderstanding. There was no error. What happened is that a transaction occurred in November where things were done correctly, under the guidance of the treasurer of the Groom FEC. Three weeks later, the treasurer of the FEC, or someone else, had to go to the Liberal Party headquarters and get another cheque, take it back to the catering company, and say, `Will you refund the Groom FEC the original cheque, because we now have a cheque from the Liberal Party.' The caterer regarded this as and said it was very irregular, and made a diary note to that effect. We have people on the government side saying, `It was all a misunderstanding.' There was no misunderstanding. The Groom FEC knew exactly what it was doing by reversing a transaction that occurred three weeks earlier—no misunderstanding, no error. It was only when the treasurer of the FEC became so uncomfortable with this and raised it with various people, including the Treasurer and the Minister for Small Business, that the whole scam was covered up. The scam was perpetrated and subsequently covered up, and various other transactions were said to have occurred. But what is absolutely clear is that the full GST was not paid. A four per cent GST was paid.

It is very interesting that the Minister for Small Business said yesterday that he did not enter parliament to engage in muckraking. I have with me a copy of the minister's adjournment speech of 30 November last year in which he smeared the member for Lilley. The minister comes in here and says, `I'm very high and noble; I don't engage in muckraking,' but he did on two occasions last year when he thought it was to his political advantage. So let us not have the hypocrisy of coming in here yesterday saying, `I'm noble, I'm well motivated and I don't engage in muckraking,' when of course he did.


Mr Ronaldson —Mr Deputy Speaker, I raise a point of order. Even leaving aside standing order 76, there is no way known that the last 20 seconds—


Mr Slipper —Twenty minutes.


Mr Ronaldson —That is right; 20 minutes, but particularly the last 20 seconds, of the speech from the honourable member for Rankin can in any way be relevant to this matter. He has strayed so far that it would be impossible for any reasonable person to say that he was speaking to either the bill or the amendment. The amendment has four parts to it. It does not relate to imposing a tax system, other opportunities, compliance or tax rules. I would ask you to rule that those last comments were totally irrelevant and therefore out of order.


Mr Stephen Smith —Mr Deputy Speaker, on the point of order: paragraph (4) of the amendment talks about `applying one set of tax rules for the Liberal Party and another for small business'. I thought the member for Rankin was making that point quite eloquently.


Mr DEPUTY SPEAKER (Hon. I.R. Causley)—I think the amendment does give the member for Rankin a wide scope, and he is in order.


Mr EMERSON —And it is on that point that I close. The Liberal Party has implemented one set of rules for itself and another for the rest of Australia. (Time expired)