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Wednesday, 7 September 1983
Page: 504

Mr GEAR(5.11) —Like my colleagues on this side of the House, I support the measures. I point out to the House that on 5 March the Hawke Australian Labor Party Government ended the Fraser years. As a new member I have no doubt that my presence in this place was in no small part made possible by the tax evasion industry and the compliance of the Liberal Party, especially in Western Australia, with that industry. There is no doubt in my mind that we have a mandate to stamp out tax evasion. In the last Parliament it was made painfully obvious by the present Minister for Finance (Mr Dawkins) and many others of the then Opposition that when we were elected to government we would stamp out the tax avoidance industry by retrospective legislation, if possible. I noticed that yesterday Senator Dame Margaret Guilfoyle came out against the retrospective aspects of legislation that was passed in this place last year.

I remind the House about an incident in Western Australia when Sir Charles Court saw no obstacle to using retrospective legislation with respect to a mining company which at the time was under challenge by a smaller mining company in Western Australia, the smaller mining company being locally owned and the larger mining company being a foreign multinational. The laws of the day were changed restrospectively so that the rights of the smaller company were taken away even though it had spent a considerable amount of money preparing its case before the court. So, Sir Charles Court never worried about retrospective legislation and I cannot see why Senator Dame Margaret Guilfoyle should do so.

The purpose of the legislation is not to limit the tax recouped from bottom of the harbour schemes to that owed by companies but to include the personal tax that was artificially turned into a capital gain rather than taken as dividends which would be subject to tax. In other words, we got only half the tax; we got that owed by the companies but not that taken by the individuals. They still got the money and hung on to it. This legislation aims to get that money back. The ordinary people whom we on this side of the House represent, the pay-as-you-earn taxpayers, cannot contrive, twist and turn their affairs so as to get out of tax . Their tax is taken out of their pay before they get it.

The Dividend Recoupment Tax Bill aims to bring some rationality into the taxation system. The distortions that occurred under the previous system whereby taxes were evaded by the use of smart lawyers and accountants is a matter of deep concern. The first time this legislation came before the Senate the Liberal and National parties were instrumental in its defeat; and we can see them jumping up and down again even though we have taken out some parts of that legislation which they found objectionable. They still oppose it, but that would not worry them because we know that they have been the protectors of wealth for quite some time now and that they are just continuing in that way. Fairness is foreign to them. We have only to look back to 1975 and, I suppose, once again to the Constitutional Convention this year to see that fairness is not part of their makeup. As the honourable member for Hunter (Mr Robert Brown) pointed out, by this legislation we are trying to get back not the close to $1 billion in real terms which was evaded but far less.

The honourable member for Stirling (Mr Ronald Edwards) pointed out the part of the Western Australian Liberal Party in this whole fiasco. In fact the fund raising committee of that Party reads like a Who's Who of the tax evasion industry. Even though the Western Australian Liberals might like to think that the worst has gone away, that is not the case because--

Mr Spender —The politics of character assassination again.

Mr GEAR —Not at all. All I am saying-and I will say it slowly-is that one Opposition parliamentarian will soon be exposed as a tax dodger when the Christo Moll affair sees the light of day.

Mr Rocher —Oh, it's like a page out of the Truth newspaper.

Mr GEAR —Well, you only have to wait. It will be very interesting to see, when that does see the light of day, what part you play and whether you still accept that person as a member of parliament.

Mr DEPUTY SPEAKER (Mr Mildren) —Order! Will the honourable member please direct his comments through the Chair?

Mr GEAR —I am sorry, Mr Deputy Speaker. The honourable member for Stirling also talked about the intention of companies. The intention of companies with respect to the activities they undertook was clearly to avoid paying tax. I would also like to look at the intention of the law. It seems to me that the people who could afford lawyers, QCs or whatever they were, to argue the cases before the courts tried to manipulate the words so that they did not really express the intent of the law. Clearly, they got away with it in some cases, but hopefully with the advent of retrospective legislation that will not be so in the future.

An argument used against the initial legislation was that it was a tax on capital. There is no worry about that. There is no rational debate about a capital gains tax in Australia; we can see how that can be twisted and turned by those on the other side of the House. I suppose that the example of the gentleman who takes over companies or fails to do so, realises a great capital asset and pays no tax at all when he in fact makes millions of dollars could be contrasted with the example of one of my constituents who wrote to me the other day because he owed $230 tax. He did not have any income for the whole year. His only income was from social security. It made me wonder about the equity of tax in this country when millions of dollars can be made and no tax paid on it; yet somebody who lives for a whole taxation year on social security benefits is pursued for $230 tax. So I have no qualms about the tax on capital.

Another argument used against the legislation was its effect on small business and employment. There seems to be a concern that hundreds of thousands will be put out of work. The evidence of that does not bear up because over 50 per cent of the assessments sent out under the former legislation have not resulted in that criteria being reached. We could point out too that, if the companies were to pay back the tax, they would merely change hands; they would not go out of business.

I conclude by pointing out that the Liberals have already signalled their intention to oppose the modified legislation. I was walking through the Senate corridor a few minutes ago when I overheard a conversation to the effect that Senator Chipp had already issued a Press release that three Democrat senators would oppose the legisation again. I do not know whether that is true. If it is, I would like to know from those opposite-none of them have said this but they still have a chance to do so-how we should raise the revenue which they would deny the Government. How are we to make up that short fall that they will cause? I conclude on that point and I wish the legislation well.