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Thursday, 26 May 1983
Page: 1081

Mr DAWKINS (Minister for Finance)(9.45) —I have listened attentively and patiently to the remarks of the Opposition. Nothing new has emerged this evening which was not patently clear last night. Opposition members are searching and thrashing around like beached whales trying to defend the indefensible. The Deputy Leader of the Opposition (Mr Howard) said that it is inaccurate to describe what we are doing tonight as having anything to do with bottom-of-the-harbour schemes. Yet, in his remarks earlier this evening, he indicated that we were dealing with only an aspect of those companies which had been involved in bottom-of-the-harbour schemes. What he likes to ascribe is that it is only the wet Slutzkin part which can be described as bottom-of-the-harbour and not the dry Slutzkin component which is partially the subject of the extension of the measures which we are discussing tonight. But, where an attempt has been made to retrieve the personal income tax, it has, in every instance, been associated with the bottom-of-the-harbour scheme and the Deputy Leader of the Opposition knows that.

Mr Spender —Absolute nonsense.

Mr DAWKINS —It is not complete nonsense because if the honourable member looks at the legislation--

Mr Howard —You don't understand your own legislation.

Mr DEPUTY CHAIRMAN (Mr Drummond) —Order! The honourable member for North Sydney and the Deputy Leader of the Opposition have both had adequate opportunity to speak.

Mr DAWKINS —The pompous prig from North Sydney is having a marvellous night out. I hope some day someone will give him an interesting job because obviously he is totally frustrated in the mindlessness of the Opposition. I hope that he learns to get used to it or gets out and finds something more to his-

Mr Spender —No, I find you a very easy target. You will stay there for some time -a year or so.

Mr DAWKINS —You will be staying there for quite some time.

Mr DEPUTY CHAIRMAN —Order! I invite the Minister to address his remarks through the Chair. I advise the honourable member for North Sydney to cease interjecting .

Mr DAWKINS —The honourable member for North Sydney tries to ascribe to me certain notions of deceit and dishonesty. The fact is that last night I perfectly happily acknowledged that if the companies with which we are concerned tonight had, in fact, liquidated, of course, the capital profits would not have been taxed. He made a big issue of that tonight, as though it had never been mentioned. It was mentioned last night quite clearly. I mentioned it again tonight. The point is that if the people involved in these operations had been interested only in not paying the tax relating to the capital profits no doubt they would have liquidated because that would have been the clear course for them to get out of paying that tax. But they did not liquidate and the reason they did not liquidate--

Mr Howard —But there was no tax. You don't pay tax on capital profits.

Mr DAWKINS —Exactly. I understand that. If that was what they were interested in that is what they would have done. But that is not what they were interested in.

Mr Spender —You are taxing on capital profits, aren't you?

Mr DAWKINS —I said that tonight and I said that last night. If anyone has an incapacity to understand I suggest that it is the honourable member for North Sydney. If the people involved in these companies were concerned about whether their capital profits would be taxed they would have liquidated, surely. But, of course, that was not what they were interested in. They were interested in dodging the tax on the revenue income of those companies whether they were current year profits or whether they were accumulated profits. That was their primary objective. That is why they chose to bottom the companies. If, as I said , they had been interested only in liberating the capital profits from the companies and getting those profits into the hands of the shareholders clearly they would have liquidated as any sensible person would have liquidated. That is not what they were on about. Usually, when a company liquidates it does not continue in business. In fact, most, if not all of the companies involved in these exercises continued in business in another name or in another form. So, to describe these transactions as being analagous to liquidations is, I suggest-I am sure the honourable member for North Sydney (Mr Spender) quite clearly understands-quite wrong.

The next point that the honourable member for North Sydney rebukes me for is some helpful comments which I tried to offer to the honourable member for Curtin (Mr Rocher) in respect of the publication of the names of the people who failed to pay the tax. He said that I do not understand what is in the legislation and that I do not understand the obligations which the legislation imposes on the Commissioner of Taxation. He obviously ignored the fact that the Commissioner of Taxation is not required to publish the names of people who fail pay. The Commissioner may--

Mr Spender —It is a discretion which he invariably exercises according to certain guidelines.

Mr DAWKINS —Now we have the qualification. Now the great Q.C. from North Sydney offers the qualification which he did not offer a few moments ago when he sought to rebuke me for giving inadequate information to the honourable member for Curtin. What I said to the honourable member for Curtin-he, if not the honourable member for North Sydney, acknowledged that it was a helpful remark- was that it was not a mandatory requirement of the Commissioner of Taxation to publish the names of those who failed to pay within 30 days. The honourable member for North Sydney, in a way which he obviously finds entertaining but the rest of us find totally boring, decided to make some great issue of that point. I was challenged-the Deputy Leader of the Opposition, the honourable member for Bennelong, led off on it tonight-in respect of my comments about the consequences of Part IVA which is, after all, the piece de resistance of the honourable member's efforts.

Mr Howard —It is a very good piece of legislation.

Mr DAWKINS —The legislation was passed unanimously in this chamber which means but one thing. That would be crystal clear even to the Deputy Leader of the Opposition and maybe even the honourable member for North Sydney-that is, we supported it. What the Deputy Leader of the Opposition cannot escape from is that if a company was involved in behaviour which this legislation ceases to attack, and if it indulged in that behaviour after the application of Part IVA, the consequences would be exactly the same as in the legislation which we introduced and which will pass through the Committee tonight. The honourable member has suggested that we have introduced something new.

Mr Howard —Retrospectively.

Mr DAWKINS —I am not going to the point of retrospectivity. I make absolutely no apologies for that. What I am saying to the Deputy Leader of the Opposition-the burden of his remarks last night was this this is a new tax-is that this is the same sort of tax which Part IVA would seek to impose prospectively. It is not a new tax. It is the same tax which was involved in Part IVA. I was particularly intrigued by the remarks of the honourable member for Barker (Mr Porter). He went to great pains to defend the people who were involved in these activities. He would have us believe that these people were as pure as driven snow and that they had quite legitimate motives in mind-the employment of Australian people. He knows as well as anybody that all the people who will be the subject of this legislation were involved in some kind of fraudulent activity which was the subject of legislation passed by the former Government last year. Try as I did I was not able to conjure up one single tear as a result of the honourable member' s heart-rending defence of people who, for years have defrauded the revenue of so many hundreds of millions of dollars.

Let me return to the opening remarks of the Deputy Leader of the Opposition last evening. In one breath he said: 'Now we have it: The new Labor Government, despite all its fulmination last year, is unable to uncover the $7 billion worth of avoided and evaded tax which we were able to identify last year'. In the other breath he disparaged our attempts to retrieve the massive amount of revenue which has been lost over the last few years. Yet when we do make an attempt, when we do introduce legislation to give effect to a clear undertaking, a clearly enunciated proposition which goes back for months--

Mr Howard —It is the only promise you have kept.

Mr DAWKINS —At least the Deputy Leader of the Opposition acknowledges that we made perfectly clear before the election that this is what we intended to do. When we do attempt to retrieve some of the revenue which his neglect allowed to be lost to the Australian taxpayers, he rebukes us again. I repeat what I said last night: The honourable members cannot have it both ways. I can provide a table-I will have it incorporated in Hansard if the honourable member and you, Mr Deputy Chairman, agree-which I have prepared. The table indicates the revenue foregone as a result of the former Government's neglect over the period from 1975 to 1982.

Mr Howard —Let me have a look at it.

Mr DAWKINS —I will table it. If the Deputy Leader of the Opposition would like it to be incorporated I will move in that direction. The table indicates that during that period, on the basis of clearly available and undisputable evidence, something in the order of $2.7 billion of tax was avoided as a result of the neglect of the former Government. That does not go to the point which the Deputy Leader made last night-that the amount of tax evaded exceeds many times the amount which was avoided under the schemes which were or were not the subject of legislation introduced by the former Government. A huge amount of revenue has been foregone as a result of the neglect of the former Government. In consequence of election promises and announcements we made during the debates last year, we have moved to retrieve part of that foregone revenue. We have, however, acknowledged that there is a limit to the amount of revenue which can be retrieved. Therefore, we have decided to limit the scope of this legislation only to those companies which were involved in the sorts of operations which were the subject of the legislation introduced by the former Government.

On the question of dishonesty and deceit, which seems to be the last remnant of the argument, I repeat that this Government, unlike the former Government, made absolutely crystal clear what we intended to do. During the debate last year we made crystal clear what we considered to be the inadequacies of the legislation. During the election campain we made crystal clear what we intended to do. We have kept faith with the people of Australia in respect of the measures which we introduced last night and which will be passed tonight.

I wish to refer briefly to one other matter. The Deputy Leader of the Opposition said that it was he who finally killed tax avoidance in this country. I have acknowledged, and will acknowledge again, his substantial, albeit delayed contribution. The cackling honourable member for North Sydney, who is trying to interject, might like me to go through a chronological critique of the telephone book of documents from last year to indicate the scope and extent of the neglect of the former Government during the years in which it sat on the advice of the Commissioner of Taxation without taking any action.

Mr Spender —You didn't understand it then and you won't understand it now.

Mr DAWKINS —It was long before the honourable member for North Sydney arrived in this place. When I want a mark out of 10 from him for the speeches I make I will ask for it. Notwithstanding the substantial, although belated, contributions to the statute books of the Deputy Leader of the Opposition when he was Treasurer, the one action which he failed to take, which this Government has now taken, will be the last nail in the coffin of tax avoidance in this country. That is the statement which I made earlier this year on 20 April when I indicated that our approach to any emerging tax avoidance schemes-that is, tax avoidance schemes which emerged during the period of this Government-would be that, in instances where there were blatantly and unambiguously contrived schemes that had no commercial value other than that associated with the avoidance of tax, we would go back to the time of first use of those particular schemes. That is the only sure deterrent which will eliminate the scourge of tax avoidance from the landscape in this country. Indeed, an instance of a scheme has emerged. I gave details of it on 28 April and, of course, the Government will act on it.

I expect that tax avoidance will be a thing of the past and that the legislation that we are passing tonight hopefully will be among the last pieces of legislation that will have to be passed in respect of tax avoidance. I thank the honourable members who have contributed to this debate. I think the legislation which will be passed by the House tonight-the second reading was passed last night and the third reading will be passed tonight-really does draw the curtains on the sorry saga of the bottom-of-the-harbour episode which, I repeat, would not have gathered the pace or reached the crescendo that it did had it not been for the neglect of successive Treasurers under the former Government.