If the Federal Government approves the Currency (Restrictions on the Use Of Cash) Bill 2019, homebuyers who make cash deposits exceeding $10,000 in order to facilitate property transactions may face imprisonment or fines.
This proposal was initially announced in the 2018-19 Budget, as part of efforts to eradicate “black economy”. According to the government’s Black Economy Taskforce, setting a $10,000 cash limit for transactions between individuals or businesses would help stop tax evasion as well as money laundering.
If the bill is passed, it would apply to all transactions made using an Australian Business Number. It would also apply to vehicle and house purchase. Those who exceed the $10,000 cash limit in Australia could face fines up to $25,000 and two years imprisonment. The bill will go into effect in January 2013.
Breach of civil liberty
Market watchers opposed this proposed law, arguing that it would only limit Australia’s civil rights. Matthew Lesh, Fellow at Institute of Public Affairs, stated that the cash ban was disturbingly intrusive and an attack upon the fundamental liberty of free trade.
The cash ban was designed to make transactions more easily accessible so the government could track them. “This sets a creepy precedent and will foreshadow Big Brother’s future ability to monitor your purchases,” he explained ABC News. He was referring specifically to George Orwell’s classic novel 1984.
John Adams, an economist and adviser to Arthur Sinodinos (Liberal Senate), expressed similar views. He added that the proposed law would prove “anticompetitive”.
He believed that Australians should have civil and economic rights to safeguard their private wealth. This right is independent of commercial banking.
Some legislators have already voted against this bill. Senator Pauline Hanson has been loud in her opposition.
Hanson posted on Facebook that “effectively, someone keeps cash to use them to purchase a smaller car for purchase, for instance.”
Australia Party Leader Bob Katter attacked the bill as well, claiming that the bill would harm freedom of speech.
“While the government will state that this is the only initiative to end the black markets, once the bill is introduced and passed, they will be able amend it many times. Katter stated that the bill will give police control over cash above $10,000.
Are you going too far?
CPA Australia informed Treasury that there was no evidence to support the use of legal tender.
Gary Pflugrath (CPA Australia) stated that there are “many existing checks and balances in the system to address criminal enterprises already” and that tying large cash transactions with criminality is too extreme.
The bill was supported by others, however. Michael Croker, the tax leader at Chartered Accountants Australia & New Zealand CAANZ, stated that the limit should be lowered to allow cryptocurrency usage.
This would allow the law to be more easily enforced, make black economy participants more difficult and reduce bureaucracy. Cryptocurrency, which offers the same anonymity, is an obvious alternative to cash. He stated that the exclusion of cryptocurrency from these reforms would only encourage its use by those in the black economics.
Australia’s declining cash usage
Shadow Assistant Treasurer Stephen Jones stated, “The Labor party will investigate the details” of the bill. He believes it is probable the party will support his proposal.
He stated that he can’t remember the last time cash was used for anything. He did however say this.
Recently, the Reserve Bank of Australia published a paper about declining cash usage. This could lead to fewer ATMs or other cash-access points.
“This trend seems likely to continue. Although it will probably have a small impact on those living in urban areas, it is important to ensure that reasonable cash services are available for those who live in rural or remote locations as long as they require them,” the study concluded.