You would think after the
Gerard tax fiasco last year the new budget might address the procedural and
funding deficiencies in some government agencies. However the Howard government appears much
keener to chase Centrelink prosecutions instead of exposing big tax cheats. Extra funding of $93 million has been directed to
various government agencies (ATO, DIMA, AFP and Centrelink) to crack down on
welfare fraud with a particular emphasis on more sophisticated methods to
infiltrate the cash economy.

Another
$13 million has been provided to the DPP in anticipation of an extra thousand welfare
fraud cases being referred to it. The
director, Damien Bugg QC, must be rubbing his hands in
glee at such easy work. Welfare
cheats accounted for two-thirds of cases handled by Bugg last year, provoking
regulators and experts to accuse him of chasing soft targets while ignoring
white-collar criminals.

On
top of this the AFP declared in its last annual report that in June 2004, a service
agreement between the AFP and Centrelink was established. This service
agreement specifically related to the outposting of federal agents to Centrelink
for the purpose of assisting Centrelink in improving its performance in
identifying, detecting and investigating fraud offences.

The AFP currently has ten federal agents outposted to Centrelink
offices across Australia. In comparison only one AFP agent was seconded
to the ATO. In my view the DPP and AFP are not proactive enough with
the ATO and vice versa. The AFP should have a permanent presence in all
cases emanating from the following ATO compliance units: Serious
Non-Compliance Unit, Large Business and International Business line and
the High Wealth Individuals project.

The DPP should also be available for advice when required and should
have extra resources to attack big tax cases (other than Operation
Wickenby). The Gerard case should not have slipped through the system
like it did. The ATO has developed a nasty entrenched culture where the
big tax cheats are given a de facto immunity from prosecution as a
carrot to settle their cases. It’s a de facto immunity because the case
never becomes known to the other authorities. The taxpayer is not
exposed to prosecution publicity and the ATO gets its money.

Peter Fray

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