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Thursday, 12 September 1985
Page: 505

Senator SIDDONS —My question is directed to the Minister for Industry, Technology and Commerce. In the Government's 1984 Budget changes were made to the Companies Act that allowed losses from particular companies to be offset against profits from the total group of companies. This has opened the door for corporate raiders to write off interest charges on money they have borrowed, mainly from overseas, against profits in both their own company and the target company. Such a technique was recently used in the Bond raid on Castlemaine-Tooheys. Does the Minister agree that these techniques now used by corporate raiders are essentially negative gearing, a practice which the Government recently outlawed for individuals? Is the Government aware that the present company law makes all companies, which wish to expand through increasing productive capacity and efficiency and by developing new markets and products, vulnerable to raiders who seek to expand through the easy, non-productive method of swallowing their competitors? Will the Government give consideration to legislation that discourages rather than encourages massive manipulation of the ownership of companies on Australian stock exchanges and the making overnight of massive multi-million dollar tax-free profits by individuals?

Senator BUTTON —Senator Siddons's question, if I might say so without being patronising, is a very important one. In saying that, I am distinguishing it from a number of others I have been asked this morning from the Opposition side of the chamber. It is a matter about which I have expressed some concern. I do not know that the changes made to group taxation in the 1984 Budget provide the only, most favoured and most available vehicle for corporate raiders, as suggested in the question. I am not sufficiently across the taxation regime to say whether that is so. I am also not able to answer the technical question as to whether these arrangements are the same thing as negative gearing. I have expressed concern publicly about activities in the Australian market-place which have not amounted, in my view, to wealth creation but to wealth accretion in other ways-by company takeovers and so on. The best that I can say is that I will alert my ministerial colleagues who are more responsible for the taxation regime to the contents of the question and obtain an answer as quickly as possible.