The " Black " Economy !

The government knows that a staggering amount of money is in circulation funding the " black " economy and dodging the best efforts of the taxation department to gain a legal share of what we earn.   Unfortunately, in the eyes of the average Australian, avoiding paying tax is something akin to a national sport.

It starts early !   A Saturday night celebration for someone's birthday.   You need a babysitter for a few hours - and that nice high school student from up the street is offering - and when you return home it is clearly understood that she will be thanked and sent on her way with a cash payment.

You need some work done around the house.   You get several quotes and the asking prices frighten you.  You dicker and bargain, and a small contractor asks what method of payment you intend to use.   You suggest " cash " - and suddenly the price drops magically.   You understand that the people who will do the work will not be paying tax and your money will go to reimbursing them on a  cash in hand " basis.

This " cash in hand " economy operates across all walks of life.  So many restaurants, coffee shops, small stores and service stations employ people who are getting paid well below the award rates that apply because unemployment has depleted their bargaining power.   There are plenty of others ready to take their place if they refuse.

Some of the politicians rant on about how honest workers are being " robbed " of their just rewards, but the rules put in place by both the Federal and State governments enhance the black economy. Unemployment benefits are deliberately meagre by intent to provide an incentive for the unemployed to make every effort to find a job.    Those living in public housing have their weekly rental dictated by what they earn.   There is a positive disincentive to earn more and many turn to the black economy to supplement a comfortable life style.

The government has announced that it will implement measures to wind back this cash economy.   In the past, the villain in their sights have been the employers.   Heavy fines and even prison are the deterrents imposed on those caught deliberately underpaying workers.   It is likely that we will see a law forbidding settling bills above a certain level - possible a thousand dollars - in cash.  There are already reporting laws where cash above ten thousand dollars is banked.   That will also probably trend lower.

The government may even take out a measure adopted by the Indian government, which withdrew all high denomination banknotes from circulation.   Should the Australian government withdraw all hundred and fifty dollar bills and make the twenty the highest denomination in circulation, paying in cash would become a tedious affair.    Even worse, if the five dollar bill became the only form of paper money.    The black economy would evaporate if electronic payment was forced on the public.

That is a natural trend that is fast finding favour.   Withdrawals from ATM's are diminishing and young people now pay for incidentals with their smartphones.  In fact, cash is becoming a cost in the commercial world as the banks refuse to accept and count it - free of charge.  We seem to be heading towards a cashless society.

Expect ramifications in not only the way we do business, but also in the laws that apply to commerce as the Mandarins of Treasury do battle with the Australian psyche and try and reign in the cash economy.