TONY JONES:
Good morning to you Kelly.
KELLY O'DWYER:
Good morning Tony.
TONY JONES:
When I say the $100 notes might not be around anymore, they're under review are they?
KELLY O'DWYER:
What we've announced today is we've announced as part of a crackdown on the black economy, a Government wide Black Economy Taskforce that will look at the issue that we're facing in relation to $100 notes. We've got three times as many $100 notes in circulation as $5 notes. This is at a time where increasingly, you've got more and more people who use electronic payment systems. So the question really is I wonder why that's the case and we know the black economy accounts for around about 1.5 per cent of our Gross Domestic Product which is around about $21 billion. This means that fair minded Australians who are doing the right thing, paying their tax are actually paying higher taxes as a result of someone else not paying the tax they are supposed to pay. It makes them angry and rightly angry by it, and the Government is doing something about it.
TONY JONES:
It's great you are doing something about it, I guess we're following the lead of India are we?
KELLY O'DWYER:
No, I wouldn't say that we are following the lead of India. I think you're probably referring to the fact they took out some of their currency and people woke up the next day and found it was worthless. No, what we're doing –
TONY JONES:
But that was to stamp out the black market.
KELLY O'DWYER:
Certainly it was looking to address similar sorts of issues that face economies right around the world. It's fair to say that crypto currencies like bitcoin, there's a new issue, the sharing economy is a new issue, the black economy has always been an issue for people who are in organised crime and engage in criminal activity but increasingly with people wanting to stay out of the electronic payment systems and people not declaring the cash that they do have or the income they are receiving. This is a big issue for the Australian citizen who needs the money to pay for important services like schools and hospitals. It's basically dudding the everyday Australian when people don't pay the tax they should pay.
TONY JONES:
It is staggering. Aside from all that, you mentioned earlier that there are three times more $100 notes in circulation than $5 notes. I'm staggered by that.
KELLY O'DWYER:
So am I and I think you were saying just before the break that you haven't seen too many $100 notes and I can say to you neither have I. They certainly don't come through my wallet very often.
TONY JONES:
You pollies don't need money; you get everything paid for don't you.
KELLY O'DWYER:
Oh no, let's not go there.
TONY JONES:
So what's your gut feel here? Is your gut feel that we will eventually just eradicate the $100 notes from our currency?
KELLY O'DWYER:
What we've asked Michael Andrew to do, and he's a former global head at KPMG, he's a tax expert, he is getting together the ATO, the Reserve Bank of Australia, the Australian Federal Police, the Department of Human Services, Immigration, AUSTRAC, APRA and ASIC and doing for the very first time a whole of Government review of what we need to do to crack down on this particular problem because we need to be able to get a much larger percentage of that Gross Domestic Product that currently is going begging – which means people are paying much higher taxes than they would otherwise need to pay because some people aren't paying those taxes. I'll give you one example, for instance the person who is receiving a welfare cheque from the Government and is also doing some work cash-in-hand – they're dudding the honest Australian taxpayer in two ways. One, because they're receiving a welfare payment that they're not entitled to and two, because they're actually not paying tax on the income that they're earning.
TONY JONES:
Is there going to be a crackdown? We've had a bit of trade work done around the house recently and I'm amazed at some of the tradies that come through potentially trying to get the job and are quite upfront – it's cash.
KELLY O'DWYER:
It's interesting, there have been some pilot schemes that have looked at particular areas of industry and the construction sector has been one where they have increased the reportable payment systems through the ATO and that has garnered, and will continue to garner, hundreds of millions of dollars through increased reporting that has been imposed on certain segments of particular industries. Now again, that is the sort of thing that the Taskforce will be able to consider. They'll be able to also look towards the international experience where for example in France they no longer allow people to be able to make cash payments of over €1,000 for goods or services because they've got concerns about where that money has come from and the fact that perhaps tax hasn't been paid.
TONY JONES:
So what's the law here in terms of cash payments for jobs?
KELLY O'DWYER:
We don't actually have a law against cash payments and there are many instances where…
TONY JONES:
That's just tax evasion isn't it?
KELLY O'DWYER:
No, so long as you're actually reporting it there's no problem with making cash payment. The problem comes when people actually don't report it and aren't paying tax. There are certainly problems where people are deliberately using cash because they're engaged in criminal activity like the sale and distribution of drugs. This tax Taskforce that is looking at the black economy, it will reduce and eliminate money laundering opportunities for criminal activities, it's going to level the playing field for honest citizens, it will reduce and eliminate welfare fraud and ultimately we want to uphold the integrity of our taxation system so people can have confidence in it. We've been doing that at the top end of town with multinationals, it's critical that multinationals pay the right amount of tax and we have brought in some of the strongest laws in the world to actually crack down on them. But we have a missing part of this puzzle and that was around the black economy and we're looking to fix that too.
TONY JONES:
Again just with the tradies, you say that they're probably declaring that so they are paying their tax as such. But you'd have to be pretty naïve to think that if you've got a tradie in and he wants $1500 cash that he is going to declare that in full.
KELLY O'DWYER:
There are obligations on people in those circumstances too. If a person doesn't have an ABN and they are demanding a cash payment and you've got concerns about it, there are rules in place where you actually should be withholding a certain amount of that payment as part of the tax payment. Now, admittedly a lot of people don't actually do that.
TONY JONES:
No, so what are you suggesting? So if you're paying someone $1,500 – I know we are getting off the track here Minister and I'm sorry for that, these are questions without notice. But if you're paying someone $1,500 cash are you suggesting by law you can withhold $500 for tax purposes?
KELLY O'DWYER:
Yes. So there are laws…
TONY JONES:
That'd go down well with the plumber.
KELLY O'DWYER:
There are some laws currently in place that say you actually have to withhold a certain proportion for the tax that should be payable. Now, as I said to you, part of the concern here is that that doesn't always happen and there are some people who if they are being paid in cash, are not actually declaring their income. They are committing a fraud on their fellow Australian citizens in doing that and ultimately what it means is that, those people who are doing the right thing are paying more tax as a result of somebody else not paying the tax they are supposed to pay and it's just not fair.
TONY JONES:
Well it's not. Anyway getting back to the original thing, we might be seeing the end of the $100 notes but it's all for a good cause and it's just sort of bringing back a level playing field.
KELLY O'DWYER:
We haven't actually said we are getting rid of the $100 note but we've said that the Black Economy Taskforce can look at all of the international experience and can look at what it is that we can do to effectively deal with issues around crypto currency, the sharing economy, cash payments being made, whether there are particular problems in particular industries and look at how we can actually tackle this at a holistic level for the first time.
TONY JONES:
Good luck with that and have yourself a great Christmas. How are you spending it?
KELLY O'DWYER:
I am actually going to be packing up the car with my husband and my baby daughter Olivia and we are going to drive to Sydney, like the Griswolds, we're on a road trip.
TONY JONES:
What for? Where are you going? Is it relevant?
KELLY O'DWYER:
We're doing a house swap with friends so they're coming to our house and we're going to theirs.
TONY JONES:
You sure you're a politician? Shouldn't you be on some fact finding tour of New York?
KELLY O'DWYER:
I am very much looking forward to spending some time with my family so it will be really lovely.
TONY JONES:
Terrific. Alright you have yourself a fantastic Christmas.
KELLY O'DWYER:
You too Tony.