The Great Australian Crackdown

The top dogs are feeling the heat.

From the banks, to Facebook, to Cricket Australia, powerful institutions with unchecked power are being called out for misconduct in droves.

These institutions with extraordinary influence and iron reputations have been falling like dominoes into scandal. And in response, public trust has been dwindling, accountability looks uncertain and whistle-blowers are now heroes in the eyes of the public.

And with public outrage mounting on all fronts, investigations into industry malpractice are being stretched thin.

This week, the Royal Commission into banking announced that it has widened its scope of inquiries from the Big Four banks to include financial adviser and fund manager AMP, corporate regulator ASIC and other financial planning businesses.

Commissioner Kenneth Hayne cited his reasons for expanding the reach of the inquiry, which included wanting to explore the quality of financial regulators and managers, and checking whether financial planning companies were charging fees for services they hadn’t provided.

This announcement came as a shock to many, as it shifted the focus onto regulators and key government bodies. It’s a move that will no doubt add a new layer of tension to the proceedings.

And in light of recent events, many are arguing that the commission should bust open the Australian Tax Office’s doors and have a look around there too.

Whistle-blowers uncover ATO tactics

The Four Corners report that aired on Tuesday was akin to a bucket of ice water poured on Australian’s heads. The investigation into the tax office, which was conducted in partnership with Fairfax and former employees of the ATO, depicted stories of small business owners and individuals who were alleged to have been ‘aggressively pursued’ for debt that they didn’t owe.

The exposé highlighted the far reaching powers of the tax office and how they have the potential to be abused.

The tactics the ATO are alleged to have used to meet revenue-raising targets at the end of the financial year have been blamed on a ‘toxic’ workplace culture. One where staff are allegedly encouraged to hit revenue targets by pursing individuals or small businesses who were in the midst of appealing the audit.

The most damning of the allegations is that tax collectors utilised their power to seize funds from the bank accounts of people who were deemed to owe the tax office money — regardless of their circumstances. This was reported to have been conducted through garnishees, which give the ATO the power to siphon allegedly owed funds directly from the individual’s bank account.

Since the Four Corners report was aired, the tax office has acknowledged that mistakes may have been made in the past, but maintains that the workplace culture shown in in the report was not ‘representative of today’s practices’.  As the statement continued,

Where we have made mistakes, we will apologise and seek to rectify the position and restore the relationship with the taxpayer.’

As a government body with tremendous power to impact the financial situation and livelihoods of Australians, many have argued that the ATO may be in need of a restructure.

The current system dictates that if the ATO accuses you of tax fraud or of having outstanding debt, you are guilty until proven innocent. As this does not account for auditing mistakes, there has been calls to reverse the onus of proof in order to reduce the ATO’s sweeping powers.

As Former chairman of the Australian Competition and Consumer Commission, Allan Fels confirmed:

Normally when such powers are given to someone, we have certain checks on the exercise of that power but for various reasons various governments have let that power go unchecked.’ 

Prime Minister Malcolm Turnbull and Opposition Leader Bill Shorten have both pledged to investigate the issues raised by the whistle-blowers. Which will no doubt turn up the heat on the ATO’s alleged misconduct.

All that said however, being a tax collector isn’t an easy gig. You don’t get invited to a lot of barbeques, your profession is universally loathed and you’re always perceived to be the aggressor. As a career, it can truly impact your social prospects and sense of pride.

But while no one dreams of working at the ATO, it’s a job that is vital to keep our society functioning smoothly. And it’s essential that the job is done well and ethically to preserve the integrity of our financial system.

So in many ways, this perceived David and Goliath battle between the public and industry behemoths has brought key issues to light. And hopefully, this great Australian crackdown will lead to reforms that strengthen accountability in the institutions that we depend on.

This week in Markets and Money

Pieces of paper have immense value in our society. They’re what we trust for proof of marriage, participation and health. And when it comes to money, bank notes have a huge impact on how we perceive the dollar’s value.  As Selva delved into on Monday, we value purchases less when we go through the quick and convenient channel of digital payments. And as the world continues the trend of going cashless, we may lose our connection to what real the real value of money is…

To read the full story, click here.

Then on Tuesday, Selva spoke of the disruption that computer hacking can inflict on society. Especially when it affects an entire city, like the major cyber hack that occurred on 22 March in Atlanta City. With all of our information and services now laid bare in the digital world, we are all exposed to the dangers of personal or widespread cyberattacks. And with the threat to our security becoming more pronounced, now is the time to think about how to protect ourselves from digital destruction.

To learn how, click here.

The tech industry is booming. And if you live in a city where tech innovation is thriving, you may have noticed that property prices are following suit. In San Jose, California property prices are growing at almost $800 everyday, which is much higher than the daily $56 average. But as Selva revealed on Wednesday, that’s nothing compared to suburbs like St Kilda West where some properties are increasing by $1506 a day. And when you compare that figure to the national weekly average income, it’s no surprise that people are under mortgage stress…

To read more about this story, click here.

On Thursday, Selva reminisced about the days before Facebook’s downfall. With Mark Zuckerberg having just appeared before the US senate to explain Facebook’s involvement in the Cambridge Analytica scandal, this marks a new era for social media. Hopefully it will also shed light on the bias inherent in Facebook’s news algorithm. Because as the data on us mounts, so too does the personalisation of content, which can lead to a dangerous form of confirmation bias…

To learn more, click here.

Infrastructure spending is booming in Australia. The latest indicator of this is Malcolm Turnbull’s pledge to pay for a rail link between the Melbourne CBD and Tullamarine Airport. This is in line with the government’s plan to spend over $75 billion in the next 10 years on transport infrastructure alone. But as Selva wrote on Friday, with Australia’s rapidly growing population, high debt and low interest rates, those billions might not even be enough to keep the economy stimulated…

To learn why, click here.

Until next week,

Katie Johnson,
Editor, Markets & Money

Katherine Johnson, usually going by just ‘Katie’, is a member of Port Phillip Publishing’s editorial team, as well as the Editor of the Saturday edition of Markets & Money. Katie works with all of your editors to maintain the quality of their research and analysis. In her Saturday Markets & Money articles she specialises in cryptocurrency and technology stories, and brings you a recap of the week from your other Markets and Money editors.

Leave a Reply

Your email address will not be published. Required fields are marked *

Markets & Money