The Government and Opposition are about to push through laws to hobble the cash economy, laws based on advice from KPMG. Michael West looks at the real reasons behind the jihad on cash.

What a soaring irony it is that KPMG, one of the world’s premier architects of global tax avoidance, is driving a crackdown on tradies, espousing laws which will benefit it and its large corporate clients at the expense of small businesses and individual liberty.

They claim it will curtail tax fraud. It will, at the edges, but the big skullduggery in tax comes from the Big Four accounting firms themselves. What the cash ban will really do is to further entrench and enhance the grip of large financial institutions over democracy in Australia.

Under the proposed laws, if you pay, for instance, more than $10,000 cash for a car, you face fines and a jail sentence.

Among its suite of feel-pinions, the KPMG-led taskforce behind the push claims “the black economy could have doubled since 2012”. Similarly, the Government’s Black Economy Report, is full of fuzzy projections and dire warnings but ignores detailed work by the International Monetary Fund (IMF) which has found Australia’s black economy has substantially declined over the past two decades.

According to Melissa Harrison’s Exposing the Black Economy Report:

“I can see no reference to Medina & Schneider’s 20 year study of black economies around the world. These IMF papers have measured that Australia’s black economy significantly declined over the past twenty years, almost halved – yet the Black Economy Taskforce estimates a 50% increase over the last few years”.

Compared with the billions which might be raised by cracking down on multinational tax avoiders – advised by KPMG and its Big Four peers EY, PwC and Deloitte – the revenue to be raised by the Black Economy jihad is negligible.

If you strip out project costs and the one-off $3.6 billion from a tax on tobacco stored in warehouses, that leaves $950 million. That’s based on numbers in the parliamentary website itself.

The Big Four themselves already rake out $700 million a year in consulting fees from the Federal Government alone. Add that to consulting revenue from the states (which is poorly disclosed, if at all) and just these four firms book more than the mooted $950 million revenue to be raised by the jihad on cash.

Yet the report is replete with almost comically unwitting hypocrisies such as government cracking down on “measures … which enable businesses to ‘hide’ transactions”, and measures to tackle “tax evasion in high risk industries”.

Who are the really big hiders and evaders? There is no more high risk industry than the Big Four, the global engineers of tax dodging who have been growing their own revenues – yes, revenues, not profits – at a double-digit clip and whose own financial statements remain an utter mystery. Their profits are a secret. They don’t even divulge who their own auditors are, have been embroiled in financial scandals across the globe, yet successive governments continue taking their advice.

The Government established the Black Economy Taskforce in December 2016 following an initial investigation by the Board of Taxation which showed that a concerted effort was needed to halt or reverse growth in the black economy, says the taskforce report.

Josh’s Shark Pool: meet the Treasurer’s tax advisors

Forget for a moment that the Black Economy appears to have shrunk with no regulatory intervention, but the Board of Taxation is stacked with Big Four types including five partners from KPMG alone.

Then there is the New Payments Platform (NPP), the body charged with operating the payments scheme. A familiar name bobs up here: Indue, the LNP-linked group mysteriously awarded the mandate to operate the cashless welfare card. Besides Indue, other partners are the big banks – ANZ, NAB, Macquarie, Westpac and CBA – and one HSBC, among the world’s most egregious money launderers.

Besides striving to capture small-time tax dodgers – while the multinationals continue to run amok – the other purpose of the proposed Cash Ban relates to global economic factors. Interest rates have been falling relentlessly around the world. In some countries such as Switzerland and Germany they have fallen below zero.

This means that in order to have the government look after your money – via investment in bond markets – investors actually get a negative yield. They have to pay the government rather than receive a return on their bonds.

In a zero interest rate world therefore, investors are more likely to stash their cash rather than invest it. This takes money out of the banking system, out of the hands of banks and their advisers such as the Big Four.

This argument has been fiercely denounced in the business press as a conspiracy theory, despite being fairly obvious, even dragging Adolf Hitler into the debate and claiming one of the critics, right-wing group CEC Australia as an anti-Semitic conspiracy theorist.

Similarly, ABC reporter Nassim Khadem came in for criticism for her coverage. The facts are these: the cash ban will tackle the black economy, it will tackle tax avoidance, but it will also deliver greater control to large financial institutions who are responsible for far greater tax avoidance and who already exert too much control over governments.

The black economy is not growing. Yet cash is a competitor and the cash economy contributes to economic activity. It should stay. And while on the subject of black markets and money laundering, the anti-money laundering legislation (AML-CTF) which was supposed to be introduced ten years ago is still in limbo, opposed by the Big Four, Big Law and the real estate industry.

The AFR and other business press have assiduously avoided coverage of this issue despite the Financial Action Task Force (FATF) – the international body fighting money-laundering and terrorism financing – putting pressure on the Australian Government to fall into line with AML legislation.

Forget tradies. As former ASIC chairman Greg Medcraft said, before he was compelled to withdraw his comments, Australia is a paradise for white collar crime.

Australia on watch-list as China billions pour into property

Public support is vital so this website can continue to fund investigations and publish stories which speak truth to power. Please subscribe for the free newsletter, share stories on social media and, if you can afford it, tip in $5 a month.