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Case Study: Combatting the Black Economy

In December 2016, the Government established the Black Economy Taskforce (the Taskforce), chaired by Michael Andrew AO, to recommend a whole-of-government strategy to reduce the impact of the black economy on businesses, individuals and the economy. The black economy refers to people who operate entirely outside the tax and regulatory system or who are known to the authorities but do not correctly report their tax obligations.

The Treasury provided the secretariat for the Taskforce. There was an extensive consultation process involving public hearings, round‑table discussions and 149 submissions. An interim report was released as part of the 2017‑18 Budget, followed by a consultation paper in August 2017. The final report was provided to the Government in October 2017 and was released with the 2018‑19 Budget.

The Taskforce’s work highlighted the complexity of the problem and showed that a concerted effort was needed to halt or reverse growth in the black economy. The final report found that the black economy is harming those less able to protect themselves and those doing the right thing, undermining trust and creating an uneven playing field. The Government announced its response to the Taskforce’s recommendations in May 2018 with a multi‑pronged approach to target the black economy in its many forms.

The Treasury established a designated team to progress the Government’s response. The Treasury is working across portfolios to implement challenging reforms through a whole-of-government approach to directly combat the black economy. This ensures a whole-of-government coordinated response to the report.

This team will coordinate the response across government though:

  • implementation of the policy recommendations, including consultation on recommendations such as the introduction of a $10,000 cash limit and changes to the Government’s procurement rules so that businesses with an unsatisfactory tax record are unable to tender for certain contracts;
  • tracking implementation of cross portfolio projects;
  • providing black economy perspectives into existing processes and reviews; and
  • updating Treasury ministers on progress.

Implementing the Government’s response is an example of how the Treasury’s policy capabilities can be used in a challenging policy environment. We are analysing the drivers of, and trends in, black economy activity and targeting those recommendations, which will have an immediate positive effect on achieving the Government’s broader goal of changing community attitudes to participation in the black economy as it is now and in the future.