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Legislative Assembly for the ACT: 1997 Week 8 Hansard (26 August) . . Page.. 2475 ..

MR BERRY (continuing):

The Government's attempted censure against me centres on the claim that I misled the Assembly because I said that Fay Richwhite was involved in tax rorts. The Chief Minister is claiming that the New Zealand royal commission absolved Fay Richwhite of any wrongdoing. Well, maybe in her books, but not in mine. This is how Commissioner Davison described the transactions he was commissioned to examine:

The transactions evidenced in the winebox documents were largely the result of tax planners devising schemes to reduce or avoid tax by making use of loopholes in the Income Tax Act. The purposes of the schemes were to shelter income of New Zealand taxpayers which would otherwise be subject to New Zealand income tax and to prevent it being taxable by the New Zealand authorities.

That sounds like a rort to me, whether it is legal or not, and it will sound like a rort to every battler in Charnwood and Banks.

According to the Chief Minister, the type of people who devise schemes to avoid tax are people of good character and the type she has no qualms about having examine ACTEW's books. Had Fay Richwhite been employed by ACTEW instead of by the Chief Minister, ACTEW may have been able to avoid paying the Government the $100m dividend the Government is now ripping out of the corporation. Not surprisingly, it was Fay Richwhite who advised the Government on how to asset-strip ACTEW.

Getting back to the royal commission, there was no doubt to Commissioner Davison that these corporations implemented schemes designed to escape the impact of taxes - absolutely no doubt. The commissioner found that these schemes took advantage of loopholes in the New Zealand tax system as it stood at the time, albeit legally; but a rort does not have to be illegal to be a rort. To the punter in the street who has no option but to pay their tax as they earn, the news that the Chief Minister believes that a corporation that devises ways of avoiding millions upon millions of dollars is an okay firm to her would be insulting. Only a week ago the Chief Minister was backing her Prime Minister in his call for tax reform, including the introduction of the GST. If we were able to force large corporations like Fay Richwhite to pay their fair share in tax, then maybe we would not have to introduce such regressive taxes as the GST.

Commissioner Davison described the sorts of dealings of Fay Richwhite as a "tax industry" in which institutions and professional legal and accounting tax advisers sought to develop transactions to minimise the impact of taxation. He goes on to question the ethics of seeking to escape the impact of taxation, but finds that it was done within the letter of the law. I will go further. It is unethical for large multinational corporations to avoid tax in the country in which they do business. We give these corporations our business and the least we expect of them in return is to be good corporate citizens. But the people that the Chief Minister describes as beyond reproach are clearly responsible for what is arguably the most outrageous tax evasion scheme seen in the South Pacific. But, of course, according to the Chief Minister these rorts were legal and therefore acceptable. They will never be for me.

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