11 December 2017
Transcript - #2017046, 2017

In the role of: Minister for Revenue and Financial Services [19 July 2016 - 28 August 2018]

Interview with Leon Byner, FIVEaa

SUBJECTS: ABNs; black economy; Royal Commission into the banks

LEON BYNER:

Kelly O'Dwyer thanks for joining us today and Merry Christmas.

KELLY O'DWYER:

Merry Christmas Leon to you and your listeners.

LEON BYNER:

Tell us what happened.

KELLY O'DWYER:

Well look, I don't want to obviously go into individual cases, but clearly some issues had been raised around the ABN integrity process. It is important that the ATO does maintain integrity around Australian Business Numbers because it goes to where the people are getting their proper entitlement. But there had been some complaints that perhaps they haven't taken all of the relevant factors into consideration when making their determinations and I obviously have raised this issue at the highest level with the Australian Taxation Office and I understand that they have put in place a new internal review process to make sure that people can be confident that all of those relevant factors are being looked at when the ATO make their decision in the administration of the law.

LEON BYNER:

Yes because Robert Gottliebsen's columns that normally have a lot of cred were really getting stuck into the tax office and I thought, gee this is unusual.

KELLY O'DWYER:

Well I've got to do a bit of defence here of the ATO. I know that it's not always the most popular organisation with everyone because we all have to pay our tax, me included. But let me say this. They do a very complex job. They need to ensure that everybody pays the right amount of tax so that the burden doesn't fall on those people who are, in fact, doing the right thing. And there are over about seven million active Australian Business Numbers at the moment. During the last financial year alone, the Australian Taxation Office has issued around about 850,000 new ABNs. We think that this is a terrific thing because it says that small businesses, small and medium sized businesses, are prepared to have a go, to have a crack, to make something of themselves, to provide opportunity for others and it is a vote of confidence in our economy more broadly. And as you know, I'm a former small business minister, I am passionate about small business. I particularly am passionate because I know that 97 per cent of all business in this country is actually small business and they are an engine room of our economy, employing over 6.5 million Australians. And the Government has put in place measures around tax to ensure that those small and medium size enterprises are not paying 30 cents in the dollar if they're a company but are paying 27.5 cents in the dollar and that they have got access now, particularly those businesses between $2 and $10 million in turnover, they've got access now to the instant asset write-off so that they can invest in their businesses.

LEON BYNER:

I want to talk too about the plea that came out late last week where the tax office said, look, if you pay tradespeople, please don't pay them in cash. How serious is this cash economy issue? Because obviously you've discussed it around the Cabinet table and whilst that stuff's confidential, but in general terms, how big a problem is the cash economy minister?

KELLY O'DWYER:

Well we do know that there is a significant issue with the cash economy and it's something that we know because we asked Michael Andrew, who's a former global chair at KPMG and chair of the Board of Tax, to actually conduct a Black Economy Taskforce review. Around about $23 billion each and every year is considered to be the black economy, which includes the cash economy, and that means that there are people out there who are not doing the right thing by their fellow Australians, they're not paying the tax that they owe.

LEON BYNER:

Are these people just paying in tax, are these people that are not using bank accounts or receipts or that sort of thing?

KELLY O'DWYER:

That's right. Some people obviously don't want to make it clear that they're either receiving cash payments for the jobs that they do and in some instances they're doubling dudding the Australian people because they're not only receiving those cash payments and not declaring any income and therefore paying tax on it, but they're also at the same time going to the welfare system and actually drawing down on welfare payments that they're not entitled to. And that's clearly wrong and the Government is very focused on fixing it.

LEON BYNER:

Alright so what is it you're asking? Is it just about paying tradies in cash in the hope that you get a better price?

KELLY O'DWYER:

Well look, I mean there'll be some people who have had work done around their home and anybody who needs to get their plumbing fixed or get some of the electronics in their house fixed, will have often heard the view that there's a cash price and then there's the other price. What we say is you should ensure that the person that you are giving business to is actually doing the right thing and paying the right amount of tax. If they're asking for cash, there's a very big question mark as to why that would be. And there is a confidential ATO hotline that you can dob people in who are doing the wrong thing and I'd ask people to use it.

LEON BYNER:

So you don't want people to pay cash, you want them to do it via bank accounts, credit card…

KELLY O'DWYER:

There's no reason in today's world as to why it is that people would in fact need, if they're in business, to be using just cash only. I think we see the signs where people say I'm only accepting cash, cash only. If you're going, for instance, to, it might be a small café, there's no reason with the electronic payment system that we have now, that people can't actually access that system. The costs have come down unbelievably and it's much, much easier to audit and to track if people are using those payment systems. That's not to say that we're trying to get rid of cash, we certainly are not. Cash is absolutely important in our economy, we know that. But we do think that there certainly have been issues, particularly in certain industries where cash payments are made, where cash payments are made to employees. There's no reason a cash payment should be made to employees. Money should be put in people's bank accounts where it can be properly accounted for and where there is a proper audit trail.

LEON BYNER:

Look, while I've got you there, the financial services inquiry will include insurance won't it?

KELLY O'DWYER:

The Royal Commission absolutely does include insurance. The entire financial system, in effect one way or the other, is actually captured. Whether it's superannuation, insurance or our banks, we believe that the Commissioner should have full scope to look at the conduct and where community expectations have not been met in the financial system and the Commissioner, Ken Hayne, will have the full ability to do just that.

LEON BYNER:

Kelly O'Dwyer, thank you for joining us.