Dear Department of the Treasury,

Please provide documents containing all submissions received in relation to the consultation on the exposure draft of 'Commissioner's power to modify law'.

Yours faithfully,

Patrick Conheady

Dear Department of the Treasury,

Could you please let me know the status of this request, your reference number for the request, and the expected date for a response?

Yours faithfully,

Patrick Conheady

Dear Department of the Treasury,

I refer to my FOI request dated 20 March 2016 and my follow-up email dated 6 April 2016.

Could you please let me know the status of this request, your
reference number for the request, and the expected date for a
response?

Yours faithfully,

Patrick Conheady

Dear FOI Team,

Thanks for your email.

Does the Department assign reference numbers to FOI requests?

Yours sincerely,

Patrick Conheady

Dear Treasury,

I apologise for my delay in responding to your notice. I hope that you will extend the time for me to contest the charges. If you do not do so, please treat this email as a fresh request under the FOI Act (or preferably under administrative access) in the same terms as the one your notice related to.

I respectfully request a waiver or reduction of the charges under s 29(5)(b) on the basis that the disclosure is in the public interest or of interest to a substantial section of the public.

Footnotes are indicated with numbers in brackets, e.g. '[1]', and the associated text appears at the end of this email.

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1. Relevant FOI guidelines
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See FOI Guidelines, Part 4 'Charges for providing access', paragraph 4.58. The current request matches several of the examples of types of requests that will attract a waiver or reduction:
* The document relates to a matter of public debate, [...] and disclosure of the document would assist public comment on or participation in the debate or discussion.
* The document is to be used by a community or non-profit organisation in preparing a submission to a parliamentary or government inquiry [...].
* The document is to be used by a member of Parliament in parliamentary or public debate on an issue of public interest or general interest in the member’s electorate.
* The document is to be used by a journalist in preparing a story for publication that is likely to be of general public interest.

An important principle is that government documents should be available to enable interested individuals to make submissions and engage in the political process before Parliament, and that FOI charges should not stand in the way of that.

I am seeking access to the documents for the purpose of helping stakeholders to better understand what is really being proposed under the banner of a 'remedial power', and of opposing the passage of this measure through Parliament.

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2. Public interest in this issue and in the scrutiny of attempts to influence tax policy
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The proposed Commissioner's power to modify the law is an unprecedented power which has been keenly anticipated by a number of vested interests. Over the years since the idea was first floated, a number of examples have been proffered as situations in which the exercise of the power would be desirable. These examples have included some far-reaching ideas for letting taxpayers off the hook, such that it is far from clear whether the Government or Treasury agrees with some, all or even any of them. So far, Treasury has provided only one example, an example which in fact would not even be valid under the proposal[1]. It is far from clear what Treasury or the Government think that the power will be used for but, logically, it does not make any sense for the Government to commit to a legislative measure without a clear idea of what the power will be used for. Therefore the release of the submissions sought in this FOI request are critical to the public -- and Parliament -- understanding what the Government is actually getting at with this proposal.

The documents relate to tax and, in particular, complex tax planning by multinationals and wealthy individuals. This is a matter of public importance as demonstrated by:
* the Senate corporate tax avoidance inquiry, which has been extended several times on account of the importance of the subject;
* the recently-announced Tax Avoidance Taskforce, which has received special funding in the Commonwealth Budget;
* numerous media articles over a sustained period of time.

Furthermore the documents illustrate the involvement of professional advisors, wealthy taxpayers themselves, and potentially lobby groups or other special interest groups in the policy-making process. An analogous example was the involvement of the Family Office Institute of Australia in the public inquiry into the corporate tax transparency measures (publication of taxable income figures for large private companies); it was revealed that the Institute had few members and was controlled by lawyers representing wealthy individuals controlling large private companies; this revelation of alleged 'astro-turfing' received media coverage and directly affected the vote of at least one Senator, resulting in the changes supported by the Institute being overturned.[2][3]

Submissions to earlier consultation processes (where the measure was known as the 'extra-statutory concession power') in relation to the proposed Commissioner's power have included a desire to:

1. Allow multinationals to avoid so-called 'technical' requirements of the thin capitalisation rules [4]. The thin capitalisation rules are intended to prevent or at least contain the loading of debt onto Australian subsidiaries by multinational enterprises, a major element of the aggressive tax minimisation that is of such concern to the public at this time. Therefore the Commissioner's power is intimately and inseparably connected to the current public debate on tax avoidance and the question of whether the wealthiest and most powerful taxpayers pay their fair share.

2. Retrospectively reconstruct a tax minimisation scheme where the advisor later discovers that they missed an opportunity to save even more tax for the client [5]. This is an example of how the power will apply primarily to taxpayers already pushing the tax laws to their limits at the expense of the wider community, rather than to ordinary Australians.

3. Have a 'second bite' at obtaining a tax concession which was deliberately omitted from the substantive tax legislation, for example in relation to loss recoupment in relation to widely-held (e.g. publicly-listed) companies: [5]. An example provided by the ICAA in 2009 cites a 'defect' whereby a company fails the 'continuity of ownership' test where a new company is 'interposed' between it and its original owners, because the 'notional' shareholder representing the aggregated small interests in the company before and after the interposition are regarded as having different identities. However, this was in fact an issue that Treasury and the Government were aware of before the relevant loss recoupment rules were introduced into Parliament, and they consciously chose not to address it. It is likely that it was not considered to be a defect at all, because a common circumstance in which it occurred was where the original company was in fact acquired by another listed company, so it was entirely appropriate that the continuity of ownership test be failed. In any case, it would be highly inappropriate for an administrative power to be used to second-guess Parliament's policy decisions, but this is what the industry is seeking in this measure.

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3. Costs would have been incurred anyway
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The costs associated with the disclosure of these documents are costs that would be incurred by Treasury anyway. The Department's usual practice is to publish submissions once the measure is finally dealt with (such as by the passage of legislation). This process would involve exactly the same costs as disclosure under FOI, doing exactly the same thing (confirming with submitters that they are still happy for their submissions to be published as indicated at in the original call for submissions). Imposing an FOI charge in this case would, anomalously, result in an FOI applicant subsidising ordinary departmental operations.

The rationale for the Department's practice of deferring the release of submissions until the passage of the relevant measure is not clear; Treasury does not have a written policy on this issue. A Treasury official described it verbally as being the long-standing preferences of successive Ministers. Taking the circumstances and the effects of this policy objectively, the most likely explanation is that the Government would prefer to control the public debate on a measure at least until they have secured their political objective through the passage of legislation. The clear policy intent of the Freedom of Information Act is to reduce the extent to which the Government of the day can selectively withhold documents for political advantage; the intent of the Act is to put those documents in the hands of members of the public. Therefore no aspect of the long-standing policy of withholding submissions until 'the end' can be allowed to be weighed against the public interest in those submissions being immediately released.

The current point in the policy process -- legislation has been introduced into Parliament -- must be kept in mind and this situation should not be conflated with the classic 'deliberative process' scenario. This is not a situation where the Government is consulting as part of its ongoing 'thinking' processes, where its decision-making could conceivably be prejudiced by public disclosure of those processes. The Government has finished thinking and has made a decision to put a measure before Parliament; there is no longer any legitimate reason for it to hide the documents that informed the development of this measure.

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4. The submissions are not confidential and the consultation is nominal
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None of the twelve submissions covered by this FOI request were marked confidential. When Treasury calls for submissions, it tells potential submitters that their submissions may be published on the Internet, and that they should mark them 'confidential' if they wish to have Treasury withhold them from publication (subject to the FOI Act). Therefore, the consultation required will be brief and nominal: 'Are you still happy for your submission to be published?'

Furthermore, given the pattern of previous tax-related consultations, it is likely that most if not all of the submitters are professional advisory firms, lobby groups, professional bodies or barristers. The individuals involved (the test in section 47F relates to individual privacy, not corporate privacy) are all public figures with a public role in relation to tax policy, who have furthermore taken steps specifically in relation to this measure to influence public policy. Therefore, it is inconceivable that those individuals have a legitimate claim that the disclosure of their views on this policy would be unreasonable.

Therefore, it is highly unlikely that section 47F applies and the required consultation will be brief and nominal. This, firstly, reduces Treasury's costs and, secondly, exacerbates the injustice of requiring an FOI applicant to pay for token consultation.

Footnotes:
[1] The exposure draft explanatory memorandum contains an example granting a totally new, extra-statutory rollover for property investors whose tenants are affected by a natural disaster and who, as landlords, are offered the chance to swap their land for land elsewhere. This proposed exercise of the power is said to fall within the 'purpose' of the existing rollover for taxpayers whose assets are lost, destroyed or compulsorily acquired, even though the legislation already deals with the case of landlords whose property is damaged -- and explicitly only gives them a rollover for repairs, not for replacement land under a voluntary scheme.
[2] http://www.smh.com.au/federal-politics/p...
[3] http://www.theguardian.com/australia-new...
[4] Australian Bankers' Association submission to Treasury's 2009 consultation on the 'extra-statutory concession' power: http://archive.treasury.gov.au/documents...
[5] Institute of Chartered Accountants in Australia submission to Treasury's 2009 consultation on the 'extra-statutory concession' power: http://archive.treasury.gov.au/documents...

* * *

Please do not hesitate to contact me if you would like to discuss this matter.

Yours sincerely,

Patrick Conheady