Monday, 18 October 2010
Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010
Debate resumed from 29 September, on motion by Mr Shorten:
That this bill be now read a second time.
I rise to speak on the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010. As members of the House would be aware, this bill was introduced in the first week of sittings. TheTax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2009 collapsed prior to the election. It was introduced in November 2009 by the now Minister for Trade, the member for Rankin, then asMinister for Small Business, Independent Contractors and the Service Economy and Minister Assisting the Minister for Finance and Deregulation. The 2009 bill followed, as the Assistant Treasurer pointed out in his introductory speech, a long period of consultation which really began some years earlier.
The bill was referred to the Senate Economics Legislation Committee, which reported in March of this year. I will come back to that because the relevant Senate committee examined the bill in great detail. As the Assistant Treasurer has pointed out, the purpose of the bill is to consolidate the tax secrecy and disclosure provisions that are in his words ‘scattered across 18 taxation acts’. The purpose and the aim is to consolidate that into a single framework. He outlined that purpose during his speech and I have to say on behalf of the shadow Assistant Treasurer, Senator Cormann, whom I am representing at this time, that the coalition of course supports the principles that underpin this bill. We support the consolidation and voiced that when we were in government. In fact, I think it was in 2006 that the public consultation process on just this sort of outcome commenced.
As I said, the bill that proposes this new framework to ‘protect the confidentiality of taxpayer information’ was subject to considerable inquiry by the Senate committee and that Senate committee reported some months ago, in March of this year. The new framework places a general prohibition on the disclosure of taxpayer information and, as I have said, we support this intent. We support effective attempts to provide taxpayers, the ATO and stakeholders with important clarity and certainty about tax laws.
I will surmise briefly because the bill is quite technical. The bill does permit the disclosure of taxpayer information among government agencies where the public benefit associated with such a disclosure outweighs the need for taxpayer privacy. Such a determination is to be made with regard to the purpose for which the information is to be used, the potential impact on the individual from the disclosure and the subsequent use of the information and whether the new disclosure would represent a significant departure from existing disclosure provisions.
The coalition agrees that effective enforcement of the law might warrant transfer of such information on occasions. However, we would hope and expect that the government would think that this parliament must be vigorous in ensuring that the legislation is subject to appropriate safeguards. The concern of the coalition—and this was voiced many, many months ago in that Senate inquiry, which is why I quite specifically referred to it in my opening remarks—has always been that the legislation as currently drafted does not provide all the safeguards it could and should. Indeed, the Senate inquiry report raised two issues—one unanimously and the other by the minority coalition senators. The first issue relates to the taxpayer privacy specifically but is about the authorisation by a tax officer. The report states in paragraph 3.9 on page 15:
The bill in its current form is silent as to who will make the determination that a specific disclosure is required on the basis that the public benefit of the disclosure outweighs a taxpayer’s privacy. In their submission to the inquiry, the Rule of Law Association of Australia (RoLAA) suggested that such a decision should rest with a senior Tax Officer with at least the classification of Assistant Commissioner. RoLAA further suggested that the officer responsible for making this decision should be required to be independent of the particular business line area which is seeking to disclose the information to ensure impartiality.
That Senate committee, comprising Labor and coalition members and—now I look at the membership of that committee—Independent senator Nick Xenopohon, reported unanimously that:
…. the Government consider amending the bill to reflect that in instances where a determination as to whether the public benefit of a proposed disclosure outweighs taxpayer privacy concerns needs to be made, any decision is required to be made by an appropriately authorised tax officer.
The bill does not do that as it stands today in its current form. To quote the Senate committee:
The bill in its current form is silent on that issue.
That was so compelling to the members of that committee that there was a unanimous recommendation to include additional safeguards in this bill.
The government’s response as far as we can tell, as far as Senator Cormann can tell and as far as his other coalition Senate colleagues can tell, was to remain silent on their own silence in the legislation. To our reckoning the government has not responded to that in any way, shape or form. In fact, when the Assistant Treasurer introduced this bill again in the first week of sittings just a few weeks ago, he referred to the committee report. He said it had been considered by the Senate Economics Committee which recommended it be passed by parliament. He, for whatever reason, failed to mention the other recommendation that the government consider amending the bill to correct this deficiency. The Labor senators on that committee—Senator Hurley, Senator Cameron and Senator Pratt—sat through the hearings, read the submissions and came to the view, which the coalition still holds today, that the bill should be amended. From March 2010 through to the election, the former Assistant Treasurer ignored that recommendation. With the reintroduction of this legislation in this new parliament following the election, the new minister has unfortunately also ignored this recommendation. He referred to the Senate Standing Committee of Privileges, which suggested some amendments, and points out in his speech that those amendments have been adopted, but he is silent on that unanimous recommendation.
The second recommendation within that Senate Economics Committee report—I stress this was a recommendation by coalition senators in additional comments—related to another safeguard issue. It obviously reaffirmed the support of those senators for the unanimous recommendation, but it also raised another important issue that had come to light during the course of the inquiry, which was that with this act, with this consolidation and with these changes there should be regular reviews and regular reporting on the operation of these new provisions and the act itself. Given the issues at stake, which are recognised by everyone in this parliament I would have thought, it is important that there should be that sort of safeguard put in place. In particular it would be for the Commissioner of Taxation to prepare and furnish to the minister a report every two years on how the act is working and on some of the detail behind the decisions taken under the powers within the act. The intention is that the minister receive this report as soon as the commissioner is reasonably able to provide it after 30 June every second year. That report should also ultimately, after a short period of time, be tabled in the parliament. That was an important safeguard that coalition senators recommended in their additional comments in the report way back in March.
I make those very detailed points because the government has had every opportunity to respond to the Senate committee report. It may well be the case that the government was of a mind to simply ignore the Senate committee report and to ignore the considered views of its own senators. The point for this parliament is that those safeguard amendments have been there on the public record for six months or so and the government, in reintroducing the bill, was either ignorant of them or arrogantly dismissive of them, but at no point has it sought to actually address them.
As I said at the outset, this is an important bill. It brings together and consolidates 18 separate acts of parliament that currently contain the powers and it adds some new ones as well. But, as with any bill, it is never right the first time. The government knows this and the Assistant Treasurer will get to know this very well. Later in the week we will be debating a tax law amendment bill and tax law amendment bills contain all manner of things. They contain changes the government has implemented. They contain the implementation of new policies. But they also contain corrections, adjustments and rectifications of errors made in previous legislation.
This legislation has been a long time coming. There has been public consultation and the Senate inquiry at the start of the year was a very important part of it. But the government should listen to the senators who worked on that inquiry. They have ignored the report and they have ignored, with respect to one of the recommendations, their own senators.
The coalition think the government should put in place these appropriate safeguards. On behalf of the coalition and my colleague Senator Cormann, who has followed these issues very closely and who, of course, will deal with them in the other place, I will move two amendments that give effect to precisely these two issues that we regard as important. We regard the safeguards as issues that the government has ignored and we will move the amendments in the hope that the government sees and accepts the need for some improvements on a bill that all members of parliament, I am confident in saying, would regard as an important and necessary piece of legislation. It would be a very arrogant and ignorant government that automatically began this new parliament by doing what they did in the last parliament, which was to ignore the need for these safeguards.
We have some more speakers in this debate but I will circulate the amendments that give effect to those two issues, which I do so on behalf of the coalition and Senator Cormann, the shadow Assistant Treasurer. And I call on the government to accept the need for these safeguards in a spirit that recognises that difficult and complex pieces of legislation need safeguards in place. So often we come back to legislation again and again, particularly in relation to tax law, to try and correct things that could have been dealt with earlier on.
I sense that we will return to this issue tomorrow, given the hour of the day, but I will circulate the amendments. We urge the government to consider them and to consider the need for them, to see commonsense and not to ignore the bipartisan work of that Senate committee. I refer there, of course, to the unanimous recommendation.
No doubt I will be here at this dispatch box again tomorrow addressing these issues. I know there are some additional speakers in the debate tonight prior to 7.30 pm but I will leave the amendments on the table on behalf of the coalition and urge the government to do what it has not done up until now and that is to address those issues.
I speak in support of the R4441Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010. This bill gets the balancing act of the legitimate right of Australian taxpayers to privacy and the public benefit in disclosure of information right, particularly for organisations such as the Australian Taxation Office and ASIC in areas involving fraudulent or criminal activity.
For a long time we have seen names and phrases seeping into the knowledge and understanding of Australian business, accountants and taxpayers such as ‘bottom of the harbour schemes’, ‘Operation Wickenby’ and ‘phoenix activity’. Names like that get out into the public and people start to understand.
No-one wants to see the Australian taxpayer ripped off. When people lose faith in the taxation system and do not pay taxes the Australian public suffers and then we do not have the financial integrity and capacity to deliver on health and hospital services, roads and community infrastructure, education and defence or on other things that matter to the Australian public.
We want to make sure we have a taxation system that people respect, that people feel they can trust, that the normal pursuits of their business and domestic activities can be undertaken and that the information they provide to the Australian Taxation Office in the normal course of their domestic and business arrangements will not be disclosed. There is a public interest in terms of privacy, but a public interest conflicting in terms of the need to disclose information to prevent criminal and fraudulent activity, which will be injurious to the Australian taxation system and to our financial and community life. How to balance this conflict is always difficult.
The legislation before us has aspirational provisions. I am a lawyer of longstanding. I love aspirational paragraphs at the beginning of subdivisions and divisions because they say a lot about what that piece of legislation purports to do. They can, by the way, also influence how judges, magistrates and other judicial officers as well as the public generally interpret that legislation. The objects of the relevant divisions in this legislation talk about the need to protect confidentiality of taxpayers’ affairs. It imposes strict obligation on Taxation officers and others who acquire protected tax information and encourages taxpayers to provide correct information to the Commissioner of Taxation. We need to do that. The commissioner cannot do his job if people do not provide accurate information. There is a need to facilitate efficient and effective government administration and law enforcement by allowing disclosures of protected tax information for specific and appropriate purposes.
Statutory law revision is not a particularly sexy thing. It is not the most inspiring and interesting thing that captures the imagination of the political commentariate. The fact that we have no-one except an AAP journalist up in the gallery is an indication that this is not the sort of legislation that inspires the editor of the Australian to put it on the front page their paper. I do not see members of the Fin talking about this stuff in their paper. I do not expect to see the member for Casey’s learned and lucid comments on the front page of the Australian Financial Review tomorrow. However, this is really important stuff; it really is. We have seen different drafting styles, terminology and nomenclature across a variety of pieces of legislation. What we are doing here is bringing it all into one piece of legislation. We are bringing some sense and simplicity into the disclosure provisions with respect to taxpayer information.
Statutory law revision is an ongoing process. The member for Casey is right: we amend lots of tax laws through schedules. Tax laws amendment bills are the most common pieces of legislation put forward in this House. Taxation law in this country has long reminded us of the need to protect the fundamental rights of the Australian public with respect to confidence in the operation of the system and to privacy. I am a supporter of a bill or a charter of rights. I said in my maiden speech years ago that I thought that was important. The protection of the privacy of taxpayers with respect to the pursuit of their ordinary businesses is really important.
The new framework contained in the legislation continues to prohibit through the provision of criminal offences the unauthorised disclosure of taxpayer information obtained by officials and others. It provides some standardised definitions on issues of tax law, which overcome eccentricities, idiocies and ambiguities. We have not really broadened the disclosure provisions in this legislation. It is not the intention of the legislation to rewrite the whole tax law or to provide the kind of breadth of revision that the member for Casey seems to be asking us to do. This legislation is a matter of clarification and definition. Clear rules are necessary for ongoing disclosure, and of course we have made it an offence for people to disclose information.
There is some history to this legislation; it goes back some time. It is not something that we thought up or that came to our knowledge the day after the election. This legislation has come as a result of a review of taxation secrecy and disclosure provisions undertaken by Treasury in the days of the Howard government in 2006. An exposure draft to the bill was made available when we were in power, back in March 2009. The acceptance of the recommendations of the Treasury review was made by the then Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon. Chris Bowen, MP. Many submissions were made to that initial review. According to my research, close to 40 submissions supported the idea of consolidation into a code to make sure that we could go to one place to see what the legislation provided. Governments took up the mantle accordingly. There was an exposure draft, which received an additional 12 submissions in which concerns were outlined in relation to it. There was a Senate Economics Committee inquiry into the legislation, which the member for Casey talked about. He would know very well that not every report made by a committee inquiry, bipartisan or otherwise, results in the government of the day, regardless of which side of politics is in power and sitting on the Treasury benches, accepting every single one of its recommendations.
The purpose of this legislation is to provide consolidation and codification. It provides a comprehensive solution to the problem. It is not about rewriting tax laws or the Income Tax Act, which should not be measured by words but by weight—it is so heavy. Taxation law affects all of us. I would say that no piece of legislation affects more Australians than the Income Tax Assessment Act. It certainly affects more Australians than any criminal code or criminal law of any state, WorkCover legislation or the child support regime under the Family Law Act. It covers all of it. Every taxpayer in the country is affected by the Income Tax Assessment Act and by the need for confidentiality and security under that law. There are benefits to this legislation. There are benefits to getting rid of inconsistency. There are benefits to making sure that there is a new framework that provides for prescribed offences, serious offences, that will act as a disincentive for taxation officials and others to misuse taxpayer information.
But there are also in the bill some new disclosure provisions in which the public benefit does outweigh taxpayer privacy, and they relate to information to the Australian Securities and Investments Commission, ASIC. I think they are important. I think we need to give ASIC greater powers to deal with areas of corporation difficulties, director malfeasance and taxation investigation because clearly large companies and wealthy individuals can get access to the kinds of information and assistance through accounting and legal advice that the average taxpayer cannot access. Having been involved in my old law firm in lots of different cases involving taxpayers in litigation, I can say that we need to empower ASIC with greater capacity to get information to ensure that fraudulent phoenix activity and other kinds of activity which are harmful to the Australian taxation system and its integrity and operation can be investigated. I am very happy to support legislation that will simplify and make more consistent taxation law in this country and I commend the legislation to the House.
I rise to support my colleague the member for Casey and, indeed, Senator Cormann in the other chamber on the Tax Laws Amendment (Confidentiality of Taxpayer Information) Bill 2010. As I understand it, this bill—and I appreciate that I have not been in this parliament very long—has gone out for consultation. One thing that we have been instructed on very clearly over the last few weeks is that this is the House, this is the chamber, which takes on board input from the community, input from inquiries, and this is the place to make amendments and to make them now before they go out into the public when it is too late and becomes too difficult. It strikes me that this is a very clear case where, once again, the Labor government has not listened to the recommendations, has not listened to the response and has not listened to the inputs.
These are fairly basic safeguards which it is imperative that we put in place at this time. Indeed, they are the recommendations of not just coalition senators but Labor senators as well. This is the opportunity and this is the time that we should act. In this legislation I am advised that we are looking at amalgamating several tax laws—up to 18 different ones—that are often unclear and inconsistent. In principle, we support these initiatives which seek to consolidate taxation secrecy and disclosure provisions that are currently found in numerous taxation laws into one identifiable and accessible framework. This process started when we were in government in 2006 and we began to address this issue. In fact, it was the then Treasurer, Peter Costello, who announced a review and released a discussion paper entitled Review of taxation secrecy and disclosure provisions for public consultation. Following that review in 2009, the Assistant Treasurer announced a draft bill to implement a consolidated framework calling extensively upon the work of the then Treasurer to govern the protection and disclosure of taxpayer information received from the Australian Taxation Office. In March 2010, the Senate Economics Legislation Committee handed down its report into this bill. The coalition supports the intent of this bill. However, this side of the chamber is extremely concerned that the Gillard Labor government has failed to recognise the appropriate safeguards as decided after extensive consultation by the Senate Economics Legislation Committee.
I appreciate that the member for Blair suggests that the AAP is the only media outlet interested in this bill, but I can assure this chamber that if these safeguard provisions are not acted upon it will be on the front page of every newspaper when something goes wrong later down the track; it will not just be AAP who are interested in making sure that the appropriate safeguards are in place. In his second reading speech the then minister declared it was not the intention of this bill to broaden the circumstances in which information could be disclosed. While this rhetoric may suffice, what remains clear is that the bill is silent on how safeguards relating to the release of information should be strengthened.
I am very proud to say that the Howard government believed in reform and did not just talk about it. Like so many of the former coalition government achievements, our policy work and initiative in the area of tax reform came about through the determination, strength and leadership of John Howard and Peter Costello. Unfortunately, and regrettably, the Labor way is to stall, talk, re-evaluate, send the problem to a committee, leave it in the too hard basket and then talk about it some more, perhaps get a community committee in place, bring them all to Canberra, talk about it and delay it. This is in stark contrast to the Liberal-National path which is about solutions, action and results, not just Labor spin. We believe in actual outcomes for hardworking Australians.
This bill also proposes a new framework to ‘protect the confidentiality of taxpayer information’. It places a general prohibition on the disclosure of taxpayer information—something that is long overdue and needed. As I said before, the coalition supports the intent of this bill. We support effective attempts to provide taxpayers, the ATO and stakeholders with clarity and certainty about the tax laws. The bill does not permit disclosure of taxpayer information among government agencies, whether or not the public benefit associated with the disclosure outweighs the need for taxpayer privacy. Such a determination is to be made with regard to the purpose for which the information is to be used, the potential impact on the individual from the disclosure and subsequent use of the information and whether the new disclosure would represent a significant departure from existing disclosure provisions.
The coalition agrees that effective enforcement of the law might warrant transfer of such information on occasion. However, it must be subject to appropriate safeguards. We are concerned that the Gillard Labor government has ignored the findings of a Senate Economics Legislation Committee inquiry into this bill on how these safeguards should be appropriately strengthened.