Arthur Sinodinos (NSW, Liberal Party) Share this | Hansard source

Sorry, Madam Acting Deputy President. As usual, you are right, and I will proceed. It reminds me very much of the mining tax exercise, where either the consultations with the private sector did not occur or the private sector was not listened to. You get the situation where the government has to hurry back to the parliament and has to put together these measures in order to protect this revenue and protect a revenue gain in the forward estimates.

When the 2010 legislation came into force, the industry predictions came true. Companies did take advantage of the higher deductions permitted by the government's flawed legislation, exactly as had been predicted, and there was a collapse in anticipated revenue. The Board of Taxation looked into the matter and confirmed everything that the government had previously been told about the higher deductions and the associated lower tax revenue. So there we have it: another botched consultation; another botched listening exercise.

Retrospective legislation is pernicious. If people are moving ahead on the basis of what they believe to be a set of settled arrangements, there is nothing more unsettling and more a breach of trust than to suddenly find themselves liable for something that they had had peace of mind that they were not going to be liable for. I remember that John Howard was burnt considerably in the early eighties when he introduced some retrospective tax legislation to do with the waterfront, to do with some of the bottom-of-the-harbour schemes that were uncovered as a result of the Royal Commission on the Activities of the Federated Ship Painters and Dockers Union. He paid a high price for years, particularly in Western Australia, where they are great federalists and great believers in following the principles of tax law. People should have learnt from that exercise that retrospectivity in the tax law, as in other parts of the law, does not serve the interests of the government or the governed. It is a breach of an important trust between taxpayers and the government. Breaching that principle alone, I think, should condemn this particular bill.

I turn now to the managed investment trusts which were withdrawn from this bill in the House of Representatives, I gather at the behest of the Greens. It is very interesting how the Greens, on occasion, can be greater economic rationalists than the government—sorry, yes, they are the government. The Greens had acknowledged, had recognised, that if the measure went ahead to increase the withholding tax rate—