Australia’s Black Economy Taskforce (BET) has called for a war on cash and has revealed 35 different methods of eliminating cash. The taskforce placed the blame on the consumers for encouraging the use of cash, which is being manipulated and utilized by criminals to fund large-scale fraudulent organizations.
In an interview with News.com.au, the Australian federal government’s Black Economy Taskforce (BET) chair Michael Andrew explained that consumers are part of the problem and that the government will punish those that purchase products or services with cash:
“We intend to examine the merits of consumer-focused sanctions, including the loss of consumer protections, warranties and legal rights for people who make cash payments without obtaining a valid receipt. This is not simply of matter of imposing new penalties, but part of a wider cultural change agenda.”
In addition to drug traffickers and money launderers, the BET intends to regulate and crackdown on people that operate outside the tax and regulatory system of Australia. In order for the government to properly regulate the country’s financial system, Andrew noted that it needs to enforce strict rules on spending habits and usage of cash.
However, analysts and experts including Consumer Action Law Centre senior policy officer Katherine Temple criticized the submission of BET, stating that the enforcement of such policies are unrealistic and completely unfair toward consumers.
“Broadly we support efforts to combat the black economy because vulnerable or disadvantaged people are often victims, but we think punishing everyday Australians for businesses not complying with their obligations is completely unfair. Consumers can’t make rational payment decisions based on keeping rights that they aren’t aware exist. [Policy] that is based on the notion that a consumer will make payment decisions based on rational concepts sets an unrealistically high bar which most consumers should not be expected to reach,” Temple explained.
Analysts also criticized some of the inefficient methods proposed by the financial regulation arm of the federal government to integrate nanochips on A$50 and A$100 notes and establish short-term expiry dates on each banknote, as it would lead to a drastic increase in expenses and confusion for general consumers. Even though it is far from reality, such a consideration reinforces the attractiveness of bitcoin as a store of value and we are reminded of the demonetization in India, which led to an explosion in the use of the cryptocurrency.
Still, the federal government and BET intend to focus on the implementation of necessary policies to restrict and regulate the usage of cash. BET estimated the size of Australia’s black economy to be worth up to A$50 billion ($39.45 billion). Additionally, the government revealed that tax avoidance through cash costs the government over A$10 billion ($7.89 billion) annually.
In May, the Australian government announced the elimination of a tax on bitcoin and officially recognized bitcoin as money as a part of a larger initiative to encourage the development of bitcoin, the blockchain, and fintech.
“The Government will make it easier for new innovative digital currency businesses to operate in Australia. From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes,” the Australian government wrote in its 2017/2018 budget for “Backing Innovation and Fintech.”
More to that, the government stated that it would protect bitcoin and blockchain-related businesses, with the aim of evolving Australia into a leading global fintech hub:
“Innovation will drive productivity growth in Australia. That is why the Government’s A$1.1 billion ($0.868 billion) National Innovation and Science Agenda (NISA) is designed to enable Australia to take full advantage of new economic opportunities. The Government is committed to establishing Australia as a leading global financial technology (fintech) hub and is announcing a new package that aims to position our local fintech industry as a world leader.”
It is an interesting period for the Australian finance industry, as the federal government is trying to restrict the use of cash and move its economy toward fintech and bitcoin. In the upcoming months, regulation on cash may tighten significantly as demand for bitcoin continues to increase.