Michael Hatton (Blaxland, Australian Labor Party) Share this | Hansard source

The Tax Laws Amendment (2007 Measures No. 1) Bill 2007 is an interesting bill—as is all tax legislation. It is an omnibus bill with a range of measures in it. The key is that it is tripartite. We are looking at a widening of provisions for the tax commissioner, in certain circumstances, in regard to an existing project, Operation Wickenby, looking at fraud against the ATO on an international basis. The funding for this program is due to run out at the time the sunset clause for this bill will run out. So when the funding runs out, the task force comes to an end—Operation Wickenby—and these two will come together.

The proposal is to change a fundamental provision of the tax act—that is, it is not normally the case that the commissioner will allow the private affairs of any individual to be communicated to another, a so-called ‘third person’. The specific provision here in regard to Operation Wickenby is this: under certain circumstances, members of the task force will be allowed to gain access to taxpayer information—normally private and secure—for the purpose of making an assessment as to whether or not there has been fraud against the Commonwealth.

There is a related provision, which on the face of it is a bit unusual, given that this particular task force is proscribed in time and has a sunset clause in relation to it. The wider provision, or the extension of it, is that if in the future there are task forces of the same nature as Operation Wickenby they can be encompassed by this legislation. They can be designated as such by the government and, under regulation, the tax commissioner could have the same effect—that is, he can allow private information to be communicated to the officers of those designated task forces.

I do not have a problem with that in any shape or form because the fundamental in this is always the key principle: how do you secure the Commonwealth’s ability to not only tax but in the gaining of the revenue ensure that those who would otherwise defraud the Commonwealth do not succeed? There are cases of massive amounts of fraud. Historically, we have seen case after case where those who were in the best position to do so, those who were richest, those who had the greatest capacity to buy their way out of not only their duty as citizens but their liability for tax, so arranged themselves and their circumstances to not pay much tax at all.

Wickenby is an important operation that has been ongoing for a number of years. The specific provisions we entirely support. If you look at the date in the sunset clause, 30 June 2012, you see that the task force ends and that is where the provisions end. If you look at the scope of Wickenby, you are looking at major fraud that is transnational. The expectation is that it will cost something in the order of $300 million, which has been allocated over the seven-year period of Wickenby; that is a lot of money. The expectation is that, over four years, there will be $323 million in revenue back to the Commonwealth. Despite the fact that people have second-guessed and said, ‘Maybe that’s not going to be the case,’ the evidence of the Commissioner of Taxation to the Senate estimates committee has re-endorsed that argument and says that that is the order that we are looking at. That is a first initiative in this regard.

There is a second initiative which is expected to include standardising the provisions into a new framework, a single piece of legislation. So where at the moment changes to the secrecy and disclosure rules are limited to Operation Wickenby and future large-scale tax avoidance and evasion task forces, those proposals will be carefully looked at by Labor on a case-by-case basis. But the government will effectively be able to do this simply by regulation; it will not necessarily come back to us here. My major point: Labor has always been about security of the taxation revenue of the Commonwealth. Labor, before it came to power in 1983, argued against the bottom-of-the-harbour practices, which involved hundreds of millions of dollars, where the failure of the current Prime Minister who was then Treasurer to take action against the bottom-of-the-harbour schemes completely eroded the Commonwealth’s ability to ensure there was enough money coming in the front door to be expended on Commonwealth government programs.

When it came to power Labor ensured that there was rigorous prosecution of people who were involved in those campaigns. Throughout its period in government Labor was a very efficient economic manager and, not only that, was an active participant in ensuring that the Commonwealth controlled what happened in the taxation area. Provision was made for the department of taxation to go after those who sought to defraud at the bottom or at the top. So I support this initiative, as does Labor.

This is an omnibus bill. What is the third element? I will save the best for last when I come to the superannuation guarantee just before two o’clock. The third element, which involves the Income Tax Act and the other acts here, is to extend the employee share scheme concessions to certain stapled securities. So what is that about? Australia has not had a good history of incorporating employees into sharing the profits of a company. There are significant examples in the United States, particularly in Silicon Valley and in a range of other innovative areas, where employee share schemes have been the very basis of the innovation that has driven the United States economy and where the idea that, whatever a person’s skills, if they have a part to play in a company in producing not just for the company but the community and country at large, the smart thing to do is not to treat them like cattle or chaff but to make them an integral part of that entire process of production.

Those schemes have worked well. Okay, you could argue: that is very innovative; that is the stuff that ran out of Stanford University and has been the core of the transformation of Silicon Valley, and effectively the transformation of the most modern elements of the American economy and the leading-edge elements of what we have seen in the technological transformation of our world. We know that there are employee share schemes in operation in Europe, and they have worked very well. Take Germany, for instance: whatever its problems at the moment, in Germany we have seen a fall from the ‘grand coalition’ government, we have seen a fall from 12 per cent to 10 per cent in unemployment and we are now seeing 2.7 per cent growth over the past year. We have seen a country that has absorbed the whole of eastern Germany and has made itself a greater Germany, a country that will play a much more significant part in the future. But the core of Germany’s postwar success has largely relied upon seeing its companies as an extension of its communities and ensuring that, in cooperation between the unions and the employers, the riches for Germany are created both for the people who run the place from the boardroom—and the Germans actually incorporate the unions at the boardroom level—and for the people on the factory floor producing good-quality goods for the world.

What has been the situation in Australia? Comparatively it has been pretty poor. It is not an integral part of the way we go about things. We have had a British model in which it is a case of excluding people rather than including them. We have not learnt the postwar lessons that Japan learnt. Go to the Honda plant in Japan or to Toshiba or to Sony and what you will see is not only a vast number of suggestion boxes around the place but a culture within which people are actively part of the production process, and there is a continual betterment of what is being produced.

They have employee schemes in operation there, because they understand that if you create something that is strong and unified it can endure. The Japanese have done a lot of things postwar that were wrong. They have not invested heavily in their own domestic needs and their own domestic infrastructure in the way that they should have, but they have got a lot of their corporate culture right in the way they have incorporated their employees.

What this offers for Australians is a chance to participate in the wealth that a company or an enterprise creates. You can staple securities to this. Stapled securities are available. It is a way of adding on to an initial set of shares. The terminology they use is that you can get this extra thing; there is a company employee share as part of that scheme and you can staple it to existing shares. They are specific because it is not part of the generality of what has been provided in terms of people taking up an interest in the company. This is a good and sensible move on the part of the Commissioner of Taxation, as are the fundamental moves that have been made in the other of the three areas that this bill deals with.

Commissioners of taxation are usually sensible; so is the Treasury secretary, Ken Henry. Ken Henry was sensible when he ran our operation in Paris, when he was Australia’s lead man in economic policy and Treasury policy in Paris. He just happened to do that after he had spent some considerable time in Treasurer Keating’s office. The person who is now the secretary of Treasury, who left Treasurer Keating’s office, went to Paris, extended his skills and is so significant as a public employee that even this government saw the benefit of picking him up and utilising his skills, who is someone sensible—Ken Henry—knows just about everything there is to know about the superannuation guarantee.

The nine per cent superannuation guarantee that we have now is dealt with in the third element of this bill:

... amends the Superannuation Guarantee (Administration) Act 1992 to allow the Commissioner of Taxation—

or an ATO officer—

to provide information to an employee in response to a complaint that an employer has not complied with its superannuation guarantee obligations.

You would think the scope of this would be narrow and confined. The fundamental scope is such that, at the moment, if you make a complaint that the employer has not kept up his end of the nine per cent, you go to the tax office and they say, ‘Sorry, pal, we can’t do anything for you,’ because the secrecy provisions are such that you cannot get any further with this. So what do these provisions do? When these amendments go through, a person in that position can say, ‘I have been rorted; I have not got my nine per cent.’ They can be told (1) what steps have been taken to investigate the complaint; (2) what actions have been taken in relation to the complaint; and (3) what steps have been taken to recover any superannuation guarantee charge from the employer.

I applaud these specific measures that will make it easier for someone who has been diddled out of their superannuation guarantee to hold the employer to account. But I would like to enlarge it for every person who is in receipt of that nine per cent superannuation guarantee. So we should take the provisions here and apply them to the federal Treasurer. We should be able to make a complaint against the federal Treasurer, because there was a nine per cent superannuation guarantee in place when he came to power and the government’s express intent was to move towards taking that nine per cent guarantee to 12 per cent and then to 15 per cent so that we could provide not just a superannuation guarantee but a living wage for people in retirement. Who nicked the other six per cent? It was the federal Treasurer. When he came to office he made a giant hullabaloo about the l-a-w law tax cuts, and year after year he went on about it.

The reality is simply this: under the impress of the circumstances faced at the time of the 1994 budget, a fundamental decision was made that tax cuts would be delivered early. The first tranche was delivered one year before it was expected to be delivered—in full. That was the first half of the bargain. The decision was made that the second half of the bargain would be that the next three per cent, the productivity dividend to people, would not take the form of a tax cut but would be commuted by a Labor government into a further extension of the superannuation guarantee, and it would move from nine per cent to 12 per cent. Who took the extra three per cent of superannuation guarantee? This federal Treasurer and this government.

So, under the aegis of this, where an individual citizen is meant to check with the ATO as to whether or not they were diddled out of their superannuation guarantee entitlement, we should be able to put the federal Treasurer in the stocks and say to him simply this: why did you and this government move to take the superannuation guarantee as the final statement for all low-income employees in Australia? Why did you make provision for those at the top but say to people in the vast bulk, in particular the baby boomers, ‘You have not provided for yourself before, but you can look forward to a pension rather than to a superannuation guarantee,’ where they could have a living superannuation guarantee into their future?

The provisions of this bill for individual complaints should be enlarged as a class action by every Australian who would want to take it up against the member for Higgins in that he nicked the other six per cent of superannuation guarantee when he came to office as Treasurer. He did not invent the superannuation guarantee. That nine per cent, which is now over a trillion dollars worth of ballast in the Australian economy, is there not because of the member for Higgins but because the former Labor government put it into place. They also put into place the steps to go to 12 per cent and then to 15 per cent.

The provisions of this bill—where a single Australian can go to the ATO and say: ‘I want to know where the rest of my superannuation guarantee has gone; I want to know who has stolen it. I want to know why the employer has made sure that I do not get it’—should be extended to the current Treasurer. Every Australian should be in a position in retirement to benefit from a 15 per cent superannuation guarantee. The only reason we have not got it is this federal Treasurer.

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