Is the Treasury failing you? How Australia's shadow economy is stealing an unimaginable $12.4bn from tax revenues
- Replies 7
Just when we thought we only had to worry about the digital shadows that our internet history leaves behind (and the scammers trying to exploit it), it seems Australia has another 'shadow' to contend with — the very real and very costly shadow economy.
It seems, in the land of the fair go, not everyone is paying their fair share.
Now, I can hear some of you wondering, 'What on Earth is a shadow economy'? You're not alone. It is an underground economy, hidden in plain sight yet as elusive as a magician’s disappearing act. From tobacco dealings, wage underpayments, and unregulated gambling to motor vehicle fraud and drug importation. You name it, this underbelly of unlawful activities covers it, all happening discreetly beyond the reach of the tax system.
The shadow economy consists of all the dishonest or even criminal activities that operate outside our official tax system, and it's syphoning the country of a staggering $12.4 billion in tax revenue.
Recently, an auditor general’s report pulled back the curtain to reveal that the Australian Treasury — the team responsible for managing our government's finances (the nation's purse strings, if you like) — has been largely unsuccessful in controlling this shadow economy. Even more concerning is that they put the 'Closed for Business' sign up during the COVID pandemic, effectively pressing the pause button.
To read the report is to be tossed into a sea of seemingly insurmountable governmental indecision, budgetary blind spots, and a sheer lack of accountability.
The Australian National Audit Office report noted, 'Treasury’s management of information does not support effective governance and coordination.'
‘Its management of information impacts its ability to be accountable and transparent.’
‘It also creates risks around its ability to provide quality and timely advice and reporting on the shadow economy to the government, and to create an effective shadow economy policy environment.’
For us law-abiding citizens, this mismanagement contributes to an uneven playing field that leaves us feeling that we’ve been overtaxed while others find crooked paths to avoid paying their fair share.
Pressures on the government budget have far-reaching implications, from a higher pension age to fewer resources available to support Australian seniors.
In 2017, recognising the immensity of the problem, the government set up a shadow economy taskforce, ready to dispatch rogue activities from under-the-table transactions to tax avoidance strategies in the gig economy. The task force's ambitious list of 80 recommendations was met with a lukewarm response by the government of the time, which agreed to just 27. Here's the real kicker, only 44 per cent or 12 of these have even been fulfilled.
When the COVID pandemic came knocking, the Treasury's attention, quite understandably, had to focus on managing the health crisis. However, as any wise money manager knows, you can't ignore long-term savings plans–no matter the current climate.
Despite the doom and gloom, let's remember that we Aussies are a resilient bunch. In response to the auditor general's report, the Treasury has rolled up their sleeves and declared they are committed to addressing its findings.
It's undoubtedly time to be conscious of the integrity of the businesses with which we engage. Continuing to make our purchases, however small, with honest, hard-working local businesses could be our way of weakening the shadow economy.
We here at the SDC will do our best to stay on top of this crucial story, (always ready with our magnifying glasses and detective hats), keeping our eyes peeled and ears to the ground to update you on this evolving issue!
What are your thoughts on this story, members? We would love to hear from you. We would also like to extend a huge thank you to member Johnny for this topic recommendation.
It seems, in the land of the fair go, not everyone is paying their fair share.
Now, I can hear some of you wondering, 'What on Earth is a shadow economy'? You're not alone. It is an underground economy, hidden in plain sight yet as elusive as a magician’s disappearing act. From tobacco dealings, wage underpayments, and unregulated gambling to motor vehicle fraud and drug importation. You name it, this underbelly of unlawful activities covers it, all happening discreetly beyond the reach of the tax system.
The shadow economy consists of all the dishonest or even criminal activities that operate outside our official tax system, and it's syphoning the country of a staggering $12.4 billion in tax revenue.
In the land of the fair go, not everyone is paying their fair share. Image Credit: Shutterstock
Recently, an auditor general’s report pulled back the curtain to reveal that the Australian Treasury — the team responsible for managing our government's finances (the nation's purse strings, if you like) — has been largely unsuccessful in controlling this shadow economy. Even more concerning is that they put the 'Closed for Business' sign up during the COVID pandemic, effectively pressing the pause button.
To read the report is to be tossed into a sea of seemingly insurmountable governmental indecision, budgetary blind spots, and a sheer lack of accountability.
The Australian National Audit Office report noted, 'Treasury’s management of information does not support effective governance and coordination.'
‘Its management of information impacts its ability to be accountable and transparent.’
‘It also creates risks around its ability to provide quality and timely advice and reporting on the shadow economy to the government, and to create an effective shadow economy policy environment.’
For us law-abiding citizens, this mismanagement contributes to an uneven playing field that leaves us feeling that we’ve been overtaxed while others find crooked paths to avoid paying their fair share.
Pressures on the government budget have far-reaching implications, from a higher pension age to fewer resources available to support Australian seniors.
In 2017, recognising the immensity of the problem, the government set up a shadow economy taskforce, ready to dispatch rogue activities from under-the-table transactions to tax avoidance strategies in the gig economy. The task force's ambitious list of 80 recommendations was met with a lukewarm response by the government of the time, which agreed to just 27. Here's the real kicker, only 44 per cent or 12 of these have even been fulfilled.
When the COVID pandemic came knocking, the Treasury's attention, quite understandably, had to focus on managing the health crisis. However, as any wise money manager knows, you can't ignore long-term savings plans–no matter the current climate.
Despite the doom and gloom, let's remember that we Aussies are a resilient bunch. In response to the auditor general's report, the Treasury has rolled up their sleeves and declared they are committed to addressing its findings.
It's undoubtedly time to be conscious of the integrity of the businesses with which we engage. Continuing to make our purchases, however small, with honest, hard-working local businesses could be our way of weakening the shadow economy.
We here at the SDC will do our best to stay on top of this crucial story, (always ready with our magnifying glasses and detective hats), keeping our eyes peeled and ears to the ground to update you on this evolving issue!
What are your thoughts on this story, members? We would love to hear from you. We would also like to extend a huge thank you to member Johnny for this topic recommendation.
.png){kind=icon}
