Wednesday, December 7

Did Attorney General George Brandis run dead on 300 million in tax?

Laura Tingle (AFR 2nd December 2016) reports that what is at play is “About a government’s responsibility to protect the revenue due to taxpayers and its responsibility to protect the constitution”.

Here is the story so far:
It’s all about a $1.7 billion pot of money. 

Central to the issues is a pot of $1.7 billion of money arising from a settlement in 2013 by the Bells Group bankers (the Bell group went into liquidation in the early nineties) who lost their case.
Creditors making claims included the cash strapped Western Australian State Government whose state -owned Insurance Commission of Western Australia had already spent $240 million in litigation.
Other creditors argued the government-owned Insurance Commission of Western Australia’s subordinated bonds ranked further back in the creditors’ queue. The Commonwealth of Australia Taxation Office was a substantive creditor with its tax liabilities approximating $480 million. 

According to the Attorney General in April 2015 there had been an exchange of letters between the WA Treasurer and the then Federal Treasurer, Joe Hockey, in relation to settling the Australian Taxations claim(s).
This exchange of letters occurred just before the Western Australian Office proceeded to introduce a bill to enable it to gain control of the winding up proceedings in a timely manner as it saw fit. The inference here is the WA claims would be secured.  But in any event such a move appears to be extremely unusual step to usher in state legislation over a matter already before the courts and under federal jurisdiction the constitution is quite clear under section 109 where there is inconsistency between state and federal laws then the Federal laws shall prevail.    

A Bill by Western Australia to take control of winding-up proceedings. 

Nevertheless in May 2015 the Western Australian parliament introduced the Bell Group Companies Bill 2015 (WA) to cover winding-up proceedings in a "timely manner". By 19 November 2015, the bill was law but on 27 November 2015, unsurprisingly some Bell creditors launched a High Court challenge to the validity of the Bell legislation.

High Court Challenge and involvement by the Attorney General.  

On 3 March 2016, the Attorney General claimed his first personal involvement (apart from that of his office) and that this was also the first time he became aware of the arrangement with former Federal Treasurer Joe Hockey.

Apparently after discussion the decision was taken that the Australian Taxation Office should intervene in the ongoing High Court proceedings. The Australian Taxation Office lodged an application to the High Court to take part in the case and be represented by the then Solicitor-General, Justin Gleeson.

On 16 May 2016, the High Court of Australia ruled against the WA Government and the Bell Legislation, finding that the legislation was invalid under section 109 of the Constitution (Cth), because of inconsistency between its provisions and the provisions of the Income Tax Assessment Act 1936 (Cth) and the Taxation Administration Act 1953 (Cth).   

Report in the News Daily  
But in the News Daily it was reported "The West Australian‘s report claims the deal was scuttled by Mr Gleeson, who wrote a scathing submission to the High Court on behalf of the Australian Tax Office — which was separately trying to claw back $300 million — and that this strengthened the case against Western Australia.
Mr Gleeson’s intervention reportedly led to a “blazing row” between Senator Brandis and his West Australian counterpart Michael Mischin, and contributed to the break-down in the relationship between Mr Gleeson and Senator Brandis.

The Solicitor-General resigns
Justin Gleeson SC (SC equivalent of a QC) was the Solicitor-General of the Commonwealth of Australia until his resignation effective 7 November 2016, claiming his relationship with Attorney-General George Brandis is "irretrievably broken".

In his letter which you can read in the links here to the ABC article Gleeson claims a lack of consultation on laws on marriage equality and anti – terrorism laws. But what may have been the final straw concerned proposed provisions to preclude him from providing legal advice to anyone in the Government without the permission of the Attorney-General. This was a matter about which he claims he was not consulted but which the Attorney argues he was. Gleeson also maintains he was careful to set up protocols to ensure the Attorney-General was always copied in to all matters before him or arising independent to that which arose from the Auditor General.    

Mr Gleeson's intervention (as I have previously outlined) in the legal case before the high court was reportedly the reason for a "blazing row" between the Attorney General and his West Australian counterpart.
This event and matters leading up to it is reported as the reason for the break down in the relationship between the Solicitor-General and the Attorney General.

Laura Tingle aptly concludes her article “knowing what the Attorney General did about $300 million of taxpayer’s funds being siphoned off in a clear breach of the constitution, and why, should remain a question that doesn’t go away”.