It’s been quite the innings for some of Australia’s wealthiest billionaires. Certain large proprietary companies owned by the establishment – Secret Rich-Listers as we call them – have been cloaked in darkness by government legislation for more than a quarter of a century. Luke Stacey reports how South Australian Senator Rex Patrick is fighting to buck the trend and demolish Australia’s Secret Rich List once and for all.
In an effort to heighten corporate transparency, Independent Senator Rex Patrick is once again circulating an amendment to repeal Paul Keating’s 1995 grandfathering exemption, the loophole which gives dozens of Australian billionaires the chance to keep their financial statements, and therefore how much tax they pay, or don’t pay, a secret.
This outdated protection racket has allowed many of Australia’s wealthiest billionaires from publicly lodging financial accounts for their large proprietary companies with the Australian Securities and Investments Commission (ASIC).
Despite being earmarked as a temporary measure by Paul Keating’s Labor Government, the provision has entered its 26th year. It was put in place to give these companies – some 2,000 at the time – room to adapt to a new financial reporting law introduced in 1995.
Exemption “not justified on any policy grounds”
In August that year, the Parliamentary Joint Committee on Corporations and Securities issued a report reviewing the amendments to the 1995 Bill. As for the grandfathering exemption, the committee argued:
“Although the provision will ease the transition for some companies from the existing legislation to the new structure, [extending this assistance indefinitely] is not justified on any policy grounds.”
The recommendation put forward was to issue the amendment with a ‘sunset period’ which would terminate the relief after three years. However, this proposal never saw the light of day as the Howard Government blocked a review of the grandfathering clause when it entered office the following year.
As has been the story ever since for this legislative loophole; sidestepping the many attempts at removing it from the Corporations Act.
As Senator Patrick previously told Michael West Media:
“Each time an amendment to eliminate the exemption has been debated in the Senate, the Coalition has come up empty-handed in explaining the policy rationale for retaining it.”
With all this time to conjure a compelling argument for keeping the exemption, the best the Coalition has managed was a “real concern” expressed by then-assistant treasurer Josh Frydenberg at the risk of these individuals and their families being kidnapped if their financial accounts were made public.
Although, this is ignoring the fact that their details can already be accessed via the ASIC corporate database. And for those harbouring significant wealth, their affluence is paraded annually on the Australian Financial Review’s Top 200 Rich List.
MWM has created a database titled ‘Australia’s Secret Rich List’ showcasing some of the country’s wealthiest and most prominent businessmen and women who are enjoying this exemption.
The list includes Australia’s wealthiest individual, Gina Rinehart, and protects many other notable figures heading major industries.
For instance, media moguls such as Kerry Stokes and Bruce Gordon, retail kingpins like Frank Lowy and Solomon Lew, agricultural empires such as Baiada and Manildra Group, and logistics magnates including Anthony Pratt and Lindsay Fox. It even lists a former Prime Minister in Malcolm Turnbull.
The database compiles all political donations made by these Secret rich-listers between financial years 1998-99 to 2018-19. Most notably, Anthony Pratt has donated over $9 million to those who have kept the protection racket going, with some $5.9 million pocketed by the Coalition and $3.1 million to the Labor Party.
Other significant donors with grandfathered companies include Manildra Group, owned by the Honan family ($3.3 million to the Coalition, $2.3 million to Labor) and property development giant Meriton, owned by Harry Triguboff ($2.1 million to the Coalition, $1.1 million to Labor).
In contrast to kidnapping concerns, these political donations are a clear indicator as to how this exemption has withstood years of debate in both houses of parliament.
No Treasury Bill is safe
Senator Patrick will not be swayed by past trends, however, pushing the amendment back on the legislative agenda.
Speaking about his plans with MWM, Patrick said:
“Getting rid of a ‘temporary’ exemption that has lasted more than 25 years is long overdue … [as it] favours some companies over the majority of others and could facilitate aggressive tax avoidance. I will be attaching my amendment to every relevant Treasury Bill that passes through the Senate until the amendment is accepted.”
In March, he attached it to the Treasury Laws Amendment (2021 Measures No.1) Bill 2021 where it has been idling in a state of limbo ever since.
Though there is hope yet for the amendment to get up, as even though the Coalition has consistently opposed repealing the grandfathering provision, the dissenting report for the bill concludes:
“Coalition Senators are firmly of the opinion that the bill should be passed at the earliest opportunity.”
Promising support for Rex
Senator Jacqui Lambie of The Jacqui Lambie Network has told MWM that she will be voting for the amendment to remove the grandfathering exemption.
Fellow cross-bencher Senator Stirling Griff said he would continue to support the amendment, “but not to hold up time-sensitive bills”. When asked whether he believed political donations held a significant bearing on keeping the exemption alive, Senator Griff said, “Most likely. Money talks.”
Shadow Assistant Treasurer Stephen Jones told MWM:
“I’m a great believer in tax transparency and so are my Labor colleagues. This loophole should not exist and we have consistently made attempts to close it in the interests of fairness.
Ordinary Australians don’t get to hide behind these rules and neither should billionaires.”
Senator Patrick had also tabled this amendment in August last year, which garnered support from Labor, the Greens and the majority of the cross-bench.
Although it was not called to division due to a last-minute backflip from Senator Pauline Hanson of the One Nation Party, tipping the scales in the Coalition’s favour.
Her vote will no doubt be critical this time around in splitting the divide between Government and the Opposition.
Promisingly, fellow One Nation Senator Malcolm Roberts has indicated to MWM that he will be supporting this amendment, arguing that:
“In anyone’s books, 25 years is long enough and any company on this list who dares claim they need more time ought to hang their heads in shame.”
Questions have been sent to Senator Hanson’s office.
MWM is yet to field a response to the following questions sent to several Coalition Senators:
- In keeping with past trends, will the Coalition continue to support this grandfathering exemption which conveniences some of Australia’s wealthiest billionaires? If so, why?
- Does the Coalition believe this exemption should be made permanent?
- Does this exemption not add to the lack of transparency in this country around issues such as tax minimisation and/or avoidance?
Luke Stacey was a contributing researcher and editor for the Secret Rich List and Revolving Doors series on Michael West Media. Luke studied journalism at University of Technology, Sydney, has worked in the film industry and studied screenwriting at the New York Film Academy in New York. You can follow Luke on Twitter