I rise to support the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018, and I commend the minister for introducing it to the House. In case any members of this House or, indeed, any residents of Australia are in any doubt, I would like to briefly draw on the words and work of the Black Economy Taskforce. The task force was convened by the Minister for Revenue and Financial Services, the honourable member for Higgins, and chaired by Michael Andrew, AO. I note that the interim task force report stated as follows:
The black economy refers to people who operate outside the tax and regulatory system or who are known to the authorities but who do not correctly report their tax obligations. It encompasses a wide range of practices, including understatement of takings, the payment and acceptance of cash wages off the books, welfare fraud, sharing economy contractors not declaring their income, grey trading, activities in the so-called dark web, moonlighting and phoenixing (where businesses deliberately liquidate to avoid paying employees and creditors). Complex interactions with illegal activities, including money laundering, must also be taken into account.
As you can see, it encompasses a wide range of activities, including those involving organised crime to not declaring income.
The government requires resources to function. As we all know, taxation is essential for every government program or initiative from our defence and border security to Medicare, the NDIS and the Pharmaceutical Benefits Scheme, which saves the lives of so many Australians every year. Funding our social welfare system and our education system and the billions this government is pouring into infrastructure and development in our communities—all these essentials require taxation revenue. Government revenue is critical to every process or action in the aid of Australia, so it's in people's interest and the nation's interest to be addressing the issue of the black economy.
According to the Australian Bureau of Statistics, the black economy is estimated to be worth up to 1.5 per cent of GDP, or $25 billion in current dollar terms. That's an enormous figure. There is a huge amount of money circulating outside the Australian tax system. I think we should also note that, in terms of employees being part of the black economy and superannuation not being paid, it's often the workers who are the victims because they don't get the benefits of superannuation and wages can be underpaid. In some cases these workers don't receive any superannuation at all. Again, the sum of $25 billion is absolutely vast. The point of this is that, if we want those services and if we want our workers to be looked after, then this issue does need to be addressed. That is the price we pay for living in a society that provides the infrastructure and the services that are required to function.
The Black Economy Taskforce looked at particular occupations and industries that are more prone to operating outside of our tax and superannuation systems. Under the taxable payments reporting system, the ATO has already experienced a lift in contractor tax compliance and reporting of income by participants in the building and construction industry. It, therefore, makes sense to extend this reporting system, which the bill does through schedule 2. It addresses two industries—courier and cleaning services. Courier and cleaning services businesses will be required to lodge a simple annual statement with the Australian Taxation Office. This statement will essentially identify payments they've made to other businesses for such services—that is, if they subcontract cleaning or delivery services, they need to identify the annualised payments made to those subcontractors.
Extending the taxable payments reporting system is a simple measure—and a simple reporting commitment, for that matter—that will contribute around $132 million to essential government services over the forward estimates. Again, very substantial dollars will flow to the federal government. It will close the loop on reporting and payments in these industries and, indeed, could be extended to other cash-intensive industries should it become necessary.
With respect to the amendment to schedule 2, the government has acted on concerns raised by stakeholders that mixed businesses providing courier or cleaning services may have a disproportionate compliance burden where the provision of those services is merely a small part of the overall activity of the business. The introduction of the threshold test will mean that businesses that receive payments for courier or cleaning services that are less than 10 per cent of the business's overall GST turnover for the reporting period will be exempt from reporting the payments they make to contractors commissioned to complete these services.
Another feature of the bill is that it creates offences for the manufacture, distribution, possession, sale and use of electronic suppression tools—that is, the software that deliberately distorts records of businesses so that they can reduce their tax. As this House has already heard, this software has no legitimate purpose. According to the OECD, the use of this software has been spreading globally and has been specifically identified in Canada, the United States, Germany and Sweden, and these jurisdictions are moving on the issue. They're not going to tolerate it, so it's important that this government and Australia also take steps to crack down on this as well. There are no reasons for Australian businesses to be using these suppression tools. This is an important and timely measure. I think that most Australians would be supportive of not only this measure, but the whole bill. So I would like to thank the minister and the task force for its work, and I commend this bill to the House.