New Banking Legislation -comments

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Comment on New Banking Legislation

The Currency (Restrictions on the Use of Cash) Bill 2019 will indeed stop us making cash transactions above $10,000, but who does this anyway, except for nefarious purposes? Tim O'Dea suspects there could be a side-effect, forcing people to keep cash in the bank even if interest rates go negative, and that would be unfair on someone who rightly or wrongly does not believe the banks can be trusted with their money. Someone might believe a financial crash is likely, so that person might want to keep their money "under the mattress".

There is a web page for this bill, it is here: https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/CurrencyCashBill2019

On this page you can find an explanatory memorandum for the bill. The memorandum includes this statement:

1.25 The new offences only apply to making and accepting payments in excess of the cash payment limit. Nothing in the Bill makes it an offence to be in possession of cash of any amount.

With this, we don't have to worry that we are being forced to keep money in the bank. It is just that we have to put money through the bank when paying for something. So I might take $11000 out of a hole in my backyard to the bank, deposit it and transfer it to Terry's account. He takes it out the next day and puts it under a mattress. This would be quite legal and the risk that the bank crashes taking our money with it is reduced to a minimal level.

Robert Durkacz, 19 Nov 2019

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Comments on New Banking Legislation Terry O'Donoghue

Thanks for your comments Robert, it is nice to have some feedback.

Although I do object to the cash limit from a personal rights perspective, and I feel these bills are the thin end of the wedge in regard to our civil liberties. I also believe these bills strengthen the position of the big four banks, when we should be legislating to do the opposite.

The restriction proposed by the cash payment limit is unjustified because;

  • this bill will have little effect on tax evasion and criminal activities associated with large cash payments. In the context of the black economy, the areas of concern are likely to involve payments of less than $10,000, rather than over $10,000.
  • Cash is legal tender. To link all large cash transactions to criminality is absurd. The proposed offences can lead to an individual being convicted, fined and/or jailed for up to two years for merely using cash, regardless of the purpose or nature of the transaction.
  • The proposed measure to limit cash payments is neither fair nor likely to be effective. It is not fair as it will make criminals out of otherwise law abiding citizens who for a range of reasons wish to use cash.
  • There are circumstances where the payment by credit or debit card attracts transaction fees and charges which the consumer does not want to pay.
"Despite a fall in the number of cash transactions made in the economy, cash continues to play a significant role as a store of value and medium of exchange in the Australian economy. In our initial submission we referred to comments by the RBA that the demand for cash for precautionary purposes had in fact increased over the past decade and is an essential instrument in the event of a future financial and economic crisis. Policies that act to penalise the use of cash undermine its legitimacy as legal tender and this is problematic to the stability of the financial system.” Australian chamber of Commerce – Submission to Currency (Restrictions on the Use of Cash) Bill 2019
"We are concerned that cash would be eroded as legal tender and store of value which may have significant consequences to the economy and financial system in the event of a financial or economic crisis. There are already concerns being expressed that in today’s low, even negative, interest rate environment that it is a poor time for downgrading the value and usefulness of cash. A truly modern payments system should provide Australians with further options for payment rather than limit them. An issue as small as a power outage, or cyber security threat would essentially bar businesses from transacting with one another and their customers. Cash must and should remain an option for payment for all business transactions. While we commend the RBA’s effort on introducing the New Payment Platform and readily acknowledge the growth in digital transactions, we are not yet close to a global cashless society.” Australian chamber of Commerce – Submission to Currency (Restrictions on the Use of Cash) Bill 2019
“The government is seeking to criminalise behaviour in the absence of underlying serious criminal conduct.” NSW Young Lawyers – Submission to Currency (Restrictions on the Use of Cash) Bill 2019

The thin end of the wedge, “… the task force that wrote the paper in favour of this legislation are already trying to reduce this amount to $2000 even before this bill is passed.”

“The cash payment limit (CPL) should be set lower than $10,000, ideally at $5,000 or even $,2000. Where the legislation is enacted with the CPL at $10,000 , it should include provision for the CPL to be reduced according to a specified time table and via legislative instrument, rather than requiring a future amendment to the act.” KPMG – Submission to Currency (Restrictions on the Use of Cash) Bill 2019

The original taskforce for the Dark Economy was headed up by Michael Andrew, former head of KPMG

The bills are cloaked in the terminology of the dark economy, aimed at the little Australians, but that is not the onjective. If the Australian government was serious about corruption they would introduce an American style RICO Bill that puts money launderers and corporate racketeers in jail, and the banks are by far the most nefarious entities in these matters.

These institutions are already classed as "too big to fail", and any legislative reform of the banking system should be looking at ways to minimise the impact these institutions could potentially have on our economy, not make it worse. The government does not need to legislate against the Australian people, they need to fix the system.

The big banks treat the Australian community with contempt and operate in our economy with impunity. They do not deserve the position they occupy, that we have gradually allowed them over decades. Their is no reason why these institutions could not be broken up, and with legislation, introduce real competition in this sector, put in law a restricting the size they are allowed to become, and stop the constant take over of emerging competition.

These banks should only be allowed to operate in the Australian evonomy on terms that are favourable to us, the citizens of Australia, not put our very well being at risk. The social impact of one of these banks failing and the subsequent domino effect it would have, would reek havoc on hundreds and thousands of Australian families. We would potentially be exposed to a generation like that of the great depression.

Terry O'Donoghue 21/11/19