The Government’s proposed restrictions on the use of cash bill which would ban cash payments over $10,000 is a disproportionate and ineffective way of tackling the illegal activity of the ‘black economy’.
Businesses are already required to report cash transactions over $10,000 to the Australian Transaction Reports and Analysis Centre.
An outright ban would only negatively affect law abiding citizens while those engaging in money laundering, deliberate tax evasion or other illegal activities are likely to find other means of exchange, or will continue to use untraceable cash undeterred by restrictions.
While the move toward digital transactions has been increasing, there are still many Australians who choose to transact with cash. Research from the Reserve Bank of Australia published in 2016 found that 37 per cent of transactions are made with cash, with higher rates of cash usage among older people and those from lower income households.
People hold and use cash for a variety of reasons, but with growing concerns over the use of data and personal information it is perfectly legitimate for individuals to take measures to reduce their digital footprint without being subject to government suspicion.
As with all intrusions on privacy, it is argued that if you’ve done nothing wrong, you’ve got nothing to hide. But this implies the government must be privy to every private transaction, regardless of wrong-doing or even suspected illegal behaviour.
This line of argument doesn’t stop at banning $10,000 cash transactions, but to a full blown surveillance state the likes of which you might read about in a dystopian novel.
Privacy concerns shouldn’t be dismissed as a cover for illegal activity. Growing concerns over the use of personal data by Google and Facebook are clearly not motivated by illegal intentions.
And neither was the rush of many Australians last year to opt out of the centralised My Health Record initiative that crashed the website and phone line due to high demand.
The proposed cash restriction should be viewed as part of a broader war on cash.
Already, the big four accounting firm KPMG has called for the ban to be implemented on cash transactions as low as $2,000. There have even been calls to remove the $100 note from circulation.
And then there is the prospect the Reserve Bank implementing negative interest rates as a way of stimulating the economy in the event of an economic downturn. This radical anti-savings policy was flagged by RBA governor Phillip Lowe when he spoke to the Standing Committee on Economics earlier this month. This could result in individuals being charged to hold their own money at the bank.
However, for this to work, the freedom to withdraw money from the banking system would have to be severely limited. With negative interest rates, there would be a stronger incentive to hold cash. Restricting the ability of Australians to operate in cash would remove a safeguard against radical monetary policy that could work to erode your savings and make it more difficult to invest for the future.
But the clearest picture of where we may be heading was painted by the Black Economy Taskforce – the same taskforce which recommended the $10,000 cash – which stated in its 2017 report that “we are not yet calling for the abolition of cash” (emphasis added).
Not yet, perhaps, but it is seemingly just a matter of time before holding a banknote in your wallet or purse could land you in jail.