It’s a big week. On Friday I meet with Fairfax NSW Managing Director James Hook and John Carman Advertising Director to talk about adult services advertising with The Sydney Morning Herald and the Sun-Herald. Last month Crikey exposed the discriminatory rates of advertising the adult industry is charged by The Daily Telegraph. A builder gets charged $100 for an ad while a legal brothel is slugged $1,000 for the same size ad.

After reading the Crikey article I was contacted by Fairfax to see if the Adult Business Association (ABA) was interested in talking turkey. “How many potential advertisers do you represent?” they said. I told them the ABA has 48 legal brothels in NSW of which 45 are in Sydney. “Let’s meet next week”, he said excitedly.

I am conscious the Herald readership is generally of a conservative nature and I have been told by a senior journalist there that the mere mention of the F word results in the blue rinse set diving for the keyboard to complain to management.

Fairfax needs to weigh this up against a fall in revenue from their classified advertising (once described as “rivers of gold”) to the net. The message I have given Fairfax is if the price is right we will shift our advertising to them. If we can make the deal this will mean another multi-million dollar advertising loss to The Daily Telegraph coming hot on the heels of the ANZ debacle last week.

ABA members have reported to me this week about botched Australian Taxation Office clandestine attempts in gathering intelligence against the industry. There is a dispute going on between the ATO and the ABA about who pays the GST on the girls’ payment. The ABA position is quite clear. Brothels only make money out of room hire. The service provider contracts separately with the client and she puts the money away in a padlocked letter box in the girls’ room. The money is never held by the brothel so there is no GST payable.

The ATO however is trying to link the girls to the brothels by saying it is akin to an employer/employee arrangement. To establish an employee relationship the courts have determined that you must firstly have a master/servant relationship. That means the master being the brothel can direct the servant (or the s-x worker) to undertake s-x.

I hate to have to inform Michael D’Ascenzo but that is against the law and as a result the ATO are potentially inciting brothels to break the law if they determine such an arrangement exists. The Keystone Cops routine in the past week by ATO investigators has given everyone in the industry a laugh! Try these for size:

– A female ATO officer goes in to the brothel for an interview for a job. After the interview she returns to the car park and jumps into a waiting car where the driver of the government vehicle was the auditor who conducted the audit on the brothel.

– A male ATO officer phones up a brothel and asks about services provided. The brothel receptionist can hear in the background phones ringing and people answering saying: “Tax Office Adult Project Team……can I help you?”

– A male ATO officer phones up a brothel and asks how much control the establishment has over the girls. “But can’t you make them do this and that”, he says. Sounds like he was rattling off the standard questions straight out of the ATO handbook!