Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the document.

I rise to take note of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Act 2018 statutory review of the operation of schedule 1 to the act, dated December 2022. This legislation dealt with what is referred to as sales suppression technology when it was first introduced into the Senate. What is sales suppression technology? Sales suppression technology is technology that is used and marketed to be used at point of sale in retail businesses to essentially change the records of sale. Why do you do that? You do that in order to bring down the records of your revenues in terms of your sales information in order to avoid paying tax—simple. This sort of technology is being deployed all across the world. In the United States it's referred to as Zappers, and it's also applied in Canada, Scandinavia and across the whole of the OECD.

In 2019 this place, before I came to the Senate, adopted some laws which came out of the Black Economy Taskforce report undertaken by Mr Michael Andrew AO into the black economy in Australia, and we should note the size of the black economy in Australia is substantial. It was estimated—and this was back in 2012, at the time of the report—to be worth at least $25 billion, or 1.5 per cent of GDP. So this is a material issue in terms of the raising of tax revenue for the Australian people, but it's also a material issue in relation to all those small businesses, especially small businesses who are out there doing the right thing, who aren't using this sort of technology, who meet their obligations under industrial relations laws and workplace health and safety laws and incur the costs involved in meeting those laws and discharging those obligations and who are materially disadvantaged when their competitors adopt schemes and scams—ways in which to avoid their lawful obligations.

It is interesting to read this report and the impact that the legislation, the penalties that were adopted, has had in relation to the promotion and use of this sophisticated technology. What have we learned from the report that has been provided by the ATO and by Treasury? There are a number of interesting observations in this regard. There have actually been a total of 31 cases with prosecutions and penalties levied against Australians in relation to: possession, with 10 cases; use, with eight cases; aiding and abetting possession, with six cases; and aiding and abetting use, with seven cases. That's a total of 31 cases where this sort of electronic, or what's referred to as ESST, technology has been utilised and discovered and where enforcement action has been undertaken. I'd like to take this opportunity to commend everyone in the ATO who's been involved in these compliance activities. It's estimated that the total amount of revenue that's been recovered or preserved as a result of this activity undertaken by the ATO is over $7 million, so we're actually talking about quite a significant amount of revenue.

Another observation that can be made is that, following the COVID-19 pandemic and the increase in the digital economy, this sort of technology is becoming more and more prevalent, so those who are marketing this sort of technology are actually pitching it to businesses as they enter into the digital economy. This is becoming a more prevalent issue, and the technology is becoming far more advanced, which means that the ATO needs to be appropriately resourced with the capability to uncover this sort of conduct. The first thing, of course, that occurs when the initial discovery is made is that the perpetrators try and destroy the audit trail and make it extremely difficult for investigators to actually build a case.

The other thing I should note—and apparently this was raised in this debate; I'm not sure if it was raised by any of my colleagues who are here in the chamber—are the legitimate questions and concerns about penalties being applied for accidental possession or use of ESST software. Maybe you have a software system which has been uploaded to your system, you really didn't know what it was and you weren't using it, and you've been discovered to be using this sort of software. The ATO has found that it has not received any complaints about penalties being applied, despite accidental possession or use of ESST software. So I'd just like to take the opportunity to commend everyone at the ATO and Treasury on this important reform, where the law is working as it should. I seek leave to continue my remarks later.

Leave granted.