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Friday, 4 May 1984
Page: 1593


Senator CHIPP (Leader of the Australian Democrats)(11.07) —I will not detain the Senate long. I believe that it is appropriate that I speak because accusations that the Income Tax Assessment Amendment Bill is a friend of tax cheats are being levelled in public. Once again I record my views on tax cheats and retrospectivity. No honest person-I do not put it any higher than that-could accuse me, with over 24 years of parliamentary experience, or my colleagues, Senator Macklin and Senator Haines-or for that matter any member of the Liberal Party-of being friends of tax cheats. That is a monstrous accusation. Such an accusation should be made only in the face of evidence. As I said before, I put it no higher than that. No honest person, or person purporting to be the most honest man in Australia, should ever make such an accusation, even if it is made in the heat of politics.

After having said that, the Australian Democrats and I commend the Government for trying to close the loophole of the cherry picker scheme. The fact that an Australian Democrat senator, Senator Jack Evans, has introduced a Bill that will do that and that the Liberal Party is supporting the Bill, indicates their concurrence that this scheme should be stopped. The scheme is iniquitous and evil. It is a scheme which Senator Walsh quite properly described as ripping money off one's mates, one's fellow taxpayers, for one's personal gain. What is entailed is that a business, normally a smallish business, would deduct salary payments for payment into an employee's superannuation fund, get a tax deduction for those amounts and then when the employee became entitled to payment from the scheme-sometimes employees do not even know that such a scheme had been raised in their name-that employee would be retired early, sacked or retrenched by the owner of the business or the trustees of the fund who put the money tax free into their own pockets. That is a damnable, rotten and despicable scheme which should be stopped. The passing of this legislation will do that.

As with the bottom of the harbour legislation the Democrats and the Liberals are totally united in their opposition to people who cheat the system. That is one principle. My colleagues Senator Mason and Senator Evans agree also with this. However, they go further. As was described by the previous Prime Minister there are two conflicting principles. One such principle involves chasing and punishing tax cheats-an activity with which I believe all of us concur. However, another principle involves retrospectivity in legislation. My colleagues Senator Jack Evans and Senator Colin Mason have succinctly described their reasons for believing that chasing tax cheats is more important in principle to them-a principle which they passionately and genuinely hold-than the principle of retrospectivity. All members of the Labor Party honestly believe that also. I do not think that any member of the Labor Party would not believe that retrospectivity is evil. There is a question of judgment here as to which is the greater evil-abrogating a principle which I believe is dear to all people who hold to the rule of law or chasing after those despicable creatures who cheat their mates at tax.

I hold the view that once retrospective legislation is regarded as the norm, once a Parliament allows it on one occasion, there is an enormous danger that governments or politicians will follow it in other directions or will similarly legislate in other areas. I say, as do my colleagues Senator Macklin and Senator Haines, that once we have a society in which penal retrospective legislation becomes normal in our law making then we no longer live in a truly democratic society. It is as serious as that. I believe that governments and politicians have been to blame for the situation where tax cheats have been able to cheat the system for so long. I understand that politicians-I lay no blame on the Australian Taxation Office-knew about bottom of the harbour schemes as early as 1975-76. Politicians were asked by the Taxation Office, quite properly, to do something about it. Successive Labor and Liberal governments did nothing for five or six years. There was no fault on the Taxation Office but there was certainly fault on the politicians. Now the Parliament is being asked: 'We did not do anything about this for four or five years, will you fix it up by back dating five or six years or even longer?'. As far as I am concerned, on a matter of principle I will not accept that.

As with other senators I speak a great deal to schools, universities and other such groups. It is interesting that one of the questions I am asked is about retrospective taxation. Lately I have retorted by asking the class-only this week I spoke to two groups of 50 students all doing their Higher School Certificate or fifth form-'Be honest with me and put your hands up if you would know how to describe to your friends the meaning of retrospective legislation. How many of you would be confident of getting five out of 10 for your explanation?'. Inevitably only two or three kids put their hands up.

There is massive ignorance out there of the meaning of retrospectivity and the evil that that represents. I will give two examples. I instance a splendid cartoon showing Mr Malcolm Fraser as the parking inspector writing out a ticket for a car parked illegally. Beside him was standing Mr Howard. The next cartoon showed Mr Fraser walking to the next car with Mr Howard with a portable 'no parking' sign over his shoulder and about to plonk it down at the next car which was then illegally parked. That is a facetious example. When that is translated in terms of a person's livelihood it can become devastating. Let me give an example. All over the nation there are small businesses-chemist shops, delicatessens, milk bars, newsagencies, manufacturing businesses-in which spouses join with each other as partners in the business. It is normally a respectable, honourable, legal arrangment. Because it is a partnership, the profits are halved or split in certain proportions and the result is that the total amount of tax payable out of the profits is diminished to the extent that the income is split. As I say, it is legal, honourable and within the framework of the law.

Let us assume that a future government, in regard to spouses-and I wish, Mr President, that we could change the plural of spouse to spice; it makes so much sense, but such innovations take time-decided to make those sorts of partnership illegal and to deem all of the income to be in the hands, say, of the husband. We might say that that was unfair, a bit rough, but if the political party of the day campaigned on that measure, won office and brought it in, we would say ' Fair enough, it had a mandate', whatever that means. But what if it backdated that law 10 years? The Taxation Office would then be obliged to reopen every assessment it had made over that period, issue an assessment against every male person who had been engaged in a partnership with his wife and tax him double the original amount with penal tax. That person in many cases would now be retired, would have some sort of prospect of looking forward to old age, and would be totally devastated. Every cent he owned would go to pay the taxes that had been retrospectively applied. That is what retrospectivity means.

I give one more example. It is graphic, perhaps, but because of the ignorance or lack of knowledge in the community as to what retrospective laws mean, I believe it is essential for those of us who believe in the rule of law to keep thumping this lesson home. Otherwise the untruthful statements of the Prime Minister (Mr Hawke), that because the Liberals and some Australian Democrats vote against retrospectivity therefore we are friends of tax cheats, will stick. If he is hounding us and thumping that home week after week between now and the election, I believe those of us who believe in the rule of law and who are against retrospectivity, similarly should repeat what are the evils of retrospectivity. The example I give is graphic but I believe it can be well understood. Today, at this time, somewhere in Australia, in every capital city, a termination of a pregnancy is taking place. It will be legal and totally within the law. It will be performed by a fully qualified medical practitioner in a public hospital. A qualified nurse will be in attendance and the operation will be known to the medical superintendent of the hospital, who will approve because it will be conducted within the framework of the law. It is a moral question, as is the question of tax evasion. Many senators in this chamber have very serious views about abortion, which I respect.

Let us assume that a political party gained office in this country on 1 December, that had as part of its platform that all abortions or terminations of pregnancies under any circumstances should be illegal, should be a crime and should be punishable by a mandatory gaol sentence. I could say: 'Fair enough, people have those strong views about abortion and if a political party puts that forward, it is quite entitled to do so'. If that political party were elected it would be absolutely entitled to bring in such a law. In that hypothetical situation that political party would bring in a law to make the performing of termination of pregnancies a criminal offence. But what if that political party dated it back 10 years? It would mean that the doctor who is at present performing the operation, the woman upon whom it is being performed, the nurse who is in attendance and the medical superintendent of the hospital would all be guilty of a criminal offence and all would go to gaol, even though now, when it is being performed, it is perfectly legal and five years ago when it was performed somewhere else it was perfectly legal. It would be deemed to be a crime because a government is elected and retrospectively dates its legislation.

Students of history will remember that Adolph Hilter used that measure with devastating effect in Germany. In 1938 he brought in a law that any meeting of Jews had to have the permission of the prefect of police of the district, and he dated it back to 1933. If any Jews met anywhere without a permit from the prefect of police they were guilty of a criminal offence. Every Jew who had been to a synagogue between 1933 and 1938 was immediately deemed to have committed a criminal offence and was put into a concentration camp. That is what retrospective legislation empowers politicians to do. While I am a member of this Parliament I will fight retrospectivity in every cause. I am desperately disappointed that those of us who stand up for this great moral principle of the rule of law under which we live and which we take for granted can be blackguarded as we are by the Prime Minister today. If he wanted to say to the people of Australia 'There are two conflicting principles here; we choose to abrograte one of them to satisfy another honourable principle, namely, to catch tax cheats' that would be one thing. But to call people who opposes his view, on the very respectable ground that the rule of law in a democracy must prevail, tax cheats is despicable and, as far as I know, unlike the man I knew to be Bob Hawke.