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Friday, 4 May 1984
Page: 1580


Senator Dame MARGARET GUILFOYLE(9.39) —The Opposition supports the Income Tax Assessment Amendment Bill 1984 introduced by Senator Jack Evans on behalf of the Australian Democrats. As will be realised, the Bill is in accordance with the attitudes expressed by the Opposition when dealing with an earlier Income Tax Assessment Amendment Bill on this subject in March. That was a Bill to which we took exception on the grounds of its retrospective application to 1 July 1977. The Income Tax Assessment Amendment Bill introduced by Senator Jack Evans is one that concords with the Government's proposals but which removes the retrospective element. It ought to be said at this time that the Bill also is in accordance with a notice of motion found in the House of Representatives Hansard of 30 March which was moved by Mr Howard, the Opposition spokesman on Treasury matters, to the effect that we would support the reintroduction of the measures that were contained in the Bill that we had defeated if the retrospective element were removed.

I think that those who followed the debate on the earlier Bill in regard to this matter of employer superannuation funds will recognise that we were unable to have information provided to us that gave grounds for the necessity of the retrospective application. When introducing the Income Tax Assessment Bill (No. 2)-now on the Senate Notice Paper-and in reintroducing the same measures, the Treasurer (Mr Keating) pointed out that the policy of retrospective application of anti-avoidance legislation was one which the Government put before the people of Australia on 5 March last year and was one on which it was elected to government. He said:

In the Government's view these tax avoidance practices are clearly in that category of schemes which we intended would be covered by our retrospective policy.

He said earlier in that second reading speech:

It is one where the losers are the taxpayers of Australia, and the winners are those who seek to enjoy the benefits and privileges of living in this country without meeting their rightful share of the tax burden.

It should also be said that the losers under the schemes that are described are the employees who do not benefit from the superannuation schemes supposedly set up for their benefit. That was a point made particularly by Senator Harradine and other honorable senators in this place. They said that employees have not been covered by the legislation introduced by the Government but rather the retrospective application of tax measures will be for the benefit of the public revenue. I take this opportunity to repeat that any statements made by the Government to the effect that the Opposition is acting as a friend of the tax avoidance industry--


Senator Walsh —Mr Deputy President, I raise a point of order. I was not in the chamber earlier today but I understand agreement was reached to the effect that there would be a cognate debate on the Australian Democrats' Bill, that is the Income Tax Assessment Amendment Bill, and the Government's Bill, the Income Tax Assessment Amendment Bill (No. 2). If I am correct Senator Dame Margaret Guilfoyle technically is addressing the Democrats' Bill but is speaking to both. That is quite acceptable as far as I am concerned. It has not been formally declared that this is a cognate debate. I request that this be so declared.


The DEPUTY PRESIDENT —From the point of view of procedure it will make very little difference if the Bills are debated cognately because they are substantially the same, with only one difference. I would not have ruled any honourable senator out of order for discussing both Bills simultaneously. Is it the wish of the Senate to have a general debate covering these two measures? There being no objection, that course will be followed.


Senator Dame MARGARET GUILFOYLE — Mr Deputy President, I am quite happy to proceed along those lines although I was not aware that a formal arrangement had been made that there would be a cognate debate. It is a simple matter for me to address my remarks to the Bill which the Government has before the Senate. In that context I assert very strongly that in taking the view that we have, the Opposition is not acting as a friend of the tax avoidance industry because the record will show that as a government we brought more tax avoidance legislation into the Parliament than any government that preceded us. The Minister for Finance (Mr Dawkins) when addressing a meeting of accountants in Sydney a couple of weeks ago made it clear that the tax avoidance industry in Australia was finished as an issue. It therefore sits rather peculiarly with those words to find that we have a reintroduction of a Bill introducing retrospectivity to a date in July 1977. The Prime Minister (Mr Hawke) has said that he would make an issue of tax avoidance. Whether this is one of the elements of that issue remains to be seen.

In a more general way the Opposition would be very grateful if it could have answers to the questions posed by a number of honourable senators when we were last dealing with the Bill. All sorts of questions were raised, and answers were not given to matters that were raised, with regard to the incidence of this activity. One notorious case is cited again and again. We are not given information as to what is the incidence of this activity and why the application of the legislation should date back to 1977 other than, as I see was noted in the instructions to the parliamentary draughtsman, that this was the first date on which the Commissioner of Taxation became aware of the problem. That date in 1977 sits uneasily with the information that was provided on the last occasion that we debated this legislation, and information further provided by Mr Howard in the House of Representatives-when we dealt with it again-on the correspondence that he had with the Commissioner of Taxation when he was the Treasurer. On 7 September 1979 Mr Howard sent a memo to the Commissioner in which he said:

I continue to sign a lot of mail replying to people-many in the Life Insurance Industry-who complain about the level of tax avoidance in regard to superannuation schemes.

We appear to have had this issue under notice for a while.

What is the position?

Are there any blatant practices against which action should be taken?

This was followed up by another memo from Mr Howard's office on 20 November 1979 , when he asked for a reply and asked what was happening with regard to the schemes in question. On 8 February Mr Howard received a lengthy response from the Commissioner-and this was tabled in the House of Representatives-in which the Commissioner said:

The main problem in dealing with this matter is that the corrective measures that seem to be appropriate would also cause difficulties to the very large number of funds that must be regarded as completely genuine in every way. This will be evident from an examination of the kind of corrective actions that are indicated.

The Commissioner concluded his memo by saying:

Because, in revenue terms, we have larger avoidance problems in other areas and . . . because of the need to make certain that no avoidable difficulties are created in genuine superannuation funds, I would recommend that you await the comments of the Task Force before undertaking any corrective measures to deal with actual or potential misuse of the superannuation concessions.

That leads me to ask why, when the Commissioner said that in the memo, we have the sort of legislation that is before us with the retrospective effect to which we take objection. Mr Howard stated further than no evidence had been given to him that the advice that the Commissioner gave him in February 1980 was wrong. Mr Howard did not find convincing the supplementary letter produced by the Government in the previous debate from the First Assistant Commissioner of Taxation, Mr Bouchier, saying that there was nothing inconsistent with the advice quoted above and that which was now being given to the Government by the Department to go ahead with the retrospective legislation.

It would seem that we should have some access to information that has not yet been provided of the number of schemes that are affected and why at this time there should be legislative provision dating retrospectively to 1977, when in 1979 and 1980 it was said that there was no great problem involved. It is a matter of importance to us to see that the provisions of the Income Tax Assessment Act are upheld. When we looked at the provisions relating to these funds-section 23F and other provisions in the income tax Act-we were unable to be provided with any information as to why the Commissioner could not deal with the problem under existing law and, in particular, why he needed to have legislation that dated back to 1977, given that he now has Part IVA and that the date from which that takes effect would cover a large part of the ground which he now seeks to cover by this retrospective legislation. If he was saying in 1979 and 1980 that there was no great incidence of problem and there would be difficulty in acting because of the substantial number of proper funds that were being properly dealt with, we find some inconsistency with that advice and the repeated assertion that we now need some retrospective legislation.

I think that the notice of motion that is before the House of Representatives from Mr Howard and the Bill that is now before us from Senator Jack Evans adequately cover prospectively any difficulty that is unable to be met by existing legislation to cover improper use of employer superannuation funds. It would seem to me that if the Government is genuine in wanting to deal with this problem it ought to accept that the retrospective aspect of it should be covered adequately in information given to us. I could instance a number of questions that were raised in the earlier debate by Senator Chipp, Senator Hill, other speakers and me. We asked certain questions relating to the law and to the incidence of the problem. At one time we were given a figure of some 15 million concerning the effect of the legislation. But at no time do we feel that we have been given adequate information to substantiate the application of the retrospective element of this legislation.

It would seem to me that to continue to debate the matter of retrospectivity- something to which the Senate has objected in principle-and to continue to fail to provide information that would substantiate this, has led the Opposition to a particular course of action. Prior to the introduction of the Bill by Senator Jack Evans we had in our minds that we should refer the Government's current legislation to the Senate Standing Committee on Finance and Government Operations to see whether we could extract before that Committee the information that we are unable to extract in the Senate by asking questions of the Minister who is handling the Bill for the Government. We are still of the view that if there is a great problem in this area, if there is information that can be given to us-there are precise questions that have been raised and that are unanswered- a short hearing before the Finance and Government Operations Commitee should enable us to have the information that would substantiate the Government's reasons for a retrospective Bill.

The Opposition at all times has made it clear that it will support the prospective application of such legislation, although we still have some problem in understanding its need, because of the other sections of the income tax Act that could be used by the Commissioner. But we are also prepared to have that tested before the Finance and Government Operations Committee. We do not wish to adopt the procedure to delay the Bill. In fact, if it so happens that we require an amendment to refer the Government's Bill to the Finance and Government Operations Committee after the second reading stage, we would seek to have the Committee report back by 31 May this year so that the matter could be satisfactorily dealt with in this session of parliament. However, at the moment we have a cognate debate on Senator Jack Evans's Bill, which provides that all of the provisions of the Government Bill would apply from December of last year; that is, the date of the introduction of the first Bill by the Treasurer. I also foreshadow that, if it is required, at the appropriate stage I will move an amendment on behalf of the Opposition to refer the Government's Bill to the Finance and Government Operations Committee. I hope that this morning the Senate will be able to deal with this matter satisfactorily. As I indicated earlier, the Opposition supports the Bill that has been introduced by Senator Jack Evans on behalf of the Australian Democrats.