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Wednesday, 17 November 1993
Page: 3045

Senator WATSON (4.47 p.m.) —I wish to take this opportunity to congratulate Senator Parer on his contribution in presenting the Joint Committee of Public Accounts Report No. 326.

  Few revenue collecting agencies around the world in recent times have attracted such public attention as the Australian Taxation Office. In recent years both the law and the office itself have undergone enormous changes with implications for both tax officials and taxpayers.

  I wish to be associated with the joint committee report No. 326, entitled An Assessment of Tax. This was a report of an inquiry into the Australian Tax Office and although its presentation has taken longer than I would have wished, it is nevertheless an important document. The changes that have been undertaken by the Taxation Office in its reform between the presentation of submissions and hearings reflect to the credit of the Taxation Office because many of the difficult issues were addressed prior to the presentation of this report.

  Unfortunately, I have not had quite the input since August when I stepped down from my position as Vice-Chairman of the Joint Committee of Public Accounts because of my duties as chair of the Senate Select Committee on Superannuation. I wish to thank the members of the committee publicly for their unanimous agreement to invite me to have a final input into the draft report. This I did, and I thank the committee for that. I also wish to acknowledge that this report is a balanced report with criticisms for and against the tax office. Ultimately, while not perfect, it does reflect the many thousands of hours of research, hearings and deliberations that were put into this final report.

  I think that without the submissions from outsiders the quality of the report would have been less than it is at present. I wish to thank all those people from the private and public sectors who put so many hours into the manner and the professionalism of their presentations. While naturally not agreeing with every aspect of its contents, I nevertheless believe that it will make an important contribution to the further development of the Taxation Office, to tax administration and, hopefully, to the reform of taxation law.

  I also wish to join with my colleague Senator Parer in paying tribute to all those members of the public accounts committee and the secretariat who have worked so hard in terms of the final outcome; it has taken many months to prepare. I particularly draw attention to the contributions of Mrs Laraine Brennan for her typing and secretarial skills, to Mr Simon Edwards, who is from the Department of Finance, for much of the writing of the report, and also to Mr Peter Dowling, a partner of the accountancy firm of Ernst and Young, who acted as both a consultant and a technical adviser to the committee during the finalisation of that report.

  I would also like to place on the public record my acknowledgment and deep appreciation to my colleagues both in the parliament and the secretariat for a rather special dinner and the presentation of a signed encomium as a tribute to my 15 years on the public accounts committee. I was deeply moved by both the dinner and the encomium.

  I thank Senator Bishop for her remarks about my contribution to her minority report. I think her minority report reflects matters that are of deep importance to Senator Bishop and that she felt compelled to put them on the public record in the way in which she has done. I commend people to read that minority report, which is attached to the end of the major report.

  In fact, during the 1960s and 1970s, it is now recognised that there was widespread tax avoidance. In more recent years, the pendulum has swung very much, in fact too much, the other way. I believe that it was the movement of this pendulum that was the essential concern to Senator Bishop throughout the deliberations of the hearings. I think this is reflected in her very thoughtful contribution.

  But there is one matter that I must draw attention to that received a great deal of media attention—that is, the vigorous exchange between my colleague Senator Bishop and the Commissioner of Taxation. In fact, one friend of mine suggested that perhaps the title of the report should more appropriately be called `The Bishop and the tax collector' because of that media exchange.

  This is an issue that I have thought long and hard about. In considering the very long involvement of the previous commissioner, Mr Boucher, and his leading role in the development of the modern Taxation Office, I do think the report rightly acknowledges that Trevor Boucher was the architect of the modern office and, therefore, he needs that recognition.

  Therefore, I think neither the proceedings that took place leading to that report nor the report itself really should contain a reflection or a stain on his character, and I make no apology that I sought to achieve this end. I do not believe that Senator Bishop sought to do that. But, at the same time, as a parliamentarian, I respect her right to ask the sorts of questions that she did; they were pertinent at the time. I think my conduct during the debate adequately reflected that Senator Bishop had the right to ask those questions.

  At the same time, I believed that it was important, especially as it was on the eve of Trevor Boucher's retirement, that neither the proceedings could be construed nor should the report be written in such a way that could have reflected to future generations any possibility of stain. Naturally, if there was any reflection, I certainly sought to remove it, and I make no apology for that.

  Senator Bishop also had concerns about distancing the commission, as recommended, from the parliament. I would like to think that having had such close parliamentary contact with the Taxation Office, the issues that I hope that I put into the report will ensure that those parliamentary links with the Taxation Office will not only be preserved but also strengthened.

  I also draw attention to the enormous amount of time that parliamentarians put into these reports. I think it is important to draw the attention of the Senate to the fact that following a long evening—we often had heated exchanges as to how issues should be expressed—my colleague from the House of Representatives Mr Alex Somlyay unfortunately suffered a heart attack. I think it is appropriate that we should place on the record our wish of a speedy and complete recovery from his hospitalisation. I think it reflects the fact that we work hard in this place, that we put in long hours and that from time to time one of the consequences is ill health. I commend you, Mr Acting Deputy President, on the role that you are playing in attempting to have more sensible hours in this place.

  While there have been many calls for the rewriting of the tax act, I issue a warning that it is not necessarily the Income Tax Assessment Act but perhaps the Fringe Benefits Tax Act that contains the greatest pitfalls nowadays or the greatest problems for taxpayers. I note my colleague Senator Bishop's comments in this regard. But in all these calls for the rewriting of the tax act, we have to acknowledge that, if the underlying premise is fundamentally wrong, plain English will not solve taxpayers' problems. It will be a complex task, and I urge the involvement of practitioners and academics outside the Taxation Office in that rewriting exercise.

  I think that one of the difficulties that taxpayers face nowadays is the failure, perhaps of the Taxation Office, to always acknowledge the important rule of law concept of precedent because without the acceptance of precedent there can be no certainty before the law. I think there are enough cases to indicate, perhaps, a need for a direction to the tax office in upholding this very important concept of precedents.

  There is also the other question of the emphasis of audit on grey areas. Certainty before the law is an utmost requirement in any taxation which relies on self-assessment. Therefore, in closing, I commend honourable senators to read the majority report and also the minority report, written by my colleague Senator Bishop. I think both these documents, and the attachments, will reflect significantly the further developments and modernisation of the tax office. I wish tax offices and others who will be involved in this process well.

  Question resolved in the affirmative.


  Consideration resumed.

The CHAIRMAN —The committee is considering amendments Nos 6 to 9 moved by Senator Watson.