Budget Night 2018: The view from payments

Our Policy Manager, Merric Foley, was in Canberra last night for the 2018-19 Budget. The Budget contains a number of measures that will have implications for payments in Australia including Open Banking, Combatting the Black Economy and Digital Identity.

Open Banking

The 2018-19 Budget includes additional funding for the implementation of the ‘consumer data right’ (CDR). In the budget speech, Treasurer Scott Morrison announced:

  • We are also moving forward with our Open Banking Regime and consumer data right, giving small businesses and households more control, more choice and better deals.

On last year’s budget night, the Treasurer announced the introduction of open banking in Australia. Subsequently, Treasury commissioned an independent Open Banking Review—the Farrell Report—to investigate an appropriate model. AusPayNet’s submission stated that a robust governance framework and an effective accreditation process would help ensure all parties had confidence in the system. The Farrell Report was released in February 2018.

As outlined by the then-Minister for Digital Transformation Angus Taylor in November 2017, open banking will be the first tranche of an economy-wide CDR. This was reiterated in the Government’s response to the Productivity Commission Inquiry, Data Availability and Use, which was released in May.

The 2018-19 Budget provides $44.6m over four years for the Australian Competition and Consumer Commission, Office of the Australian Information Commissioner and CSIRO to assist in the implementation of the CDR. This includes developing and implementing the rules to govern the data right and standards, assessing the privacy impact of the CDR and support to the CSIRO in its role as the data standards setter.

Combatting the Black Economy

The Budget also saw the release of the Black Economy Taskforce's (BETF) Final Report with the Treasurer saying in the budget speech:

  • Honest and fair businesses and taxpayers are being ripped off by those who think they are above paying tax. In response, we will be implementing the recommendations of our Black Economy Taskforce, targeting sectors where there is a higher risk of under-reporting of income.

Since late 2016, the BETF has been working on developing ‘an innovative, forward-looking whole-of-government policy response to combat the black economy in Australia’.
Several of the proposals put forward involved the payment system – including the role of cash and digital payments. Consultations took place in the second half of 2017, and AusPayNet was pleased to provide a submission.

The recommendations relevant to payments include:

  • The introduction of a cash payment limit of $10,000 on payments made to businesses. Further consultations will occur on how to implement this payment limit.
  • All salaries and wages are paid directly into the employee’s financial institution account, and incentives to small businesses to adopt entirely non-cash business models, including tax instalment timing relief and preferential treatment as trusted taxpayers.

The BETF has also made several recommendations relating to merchant routing and interchange fees. In its response to the BETF’s Final Report, the Government stated that it ‘supports measures to place downward pressure on non-cash payment costs and will refer this recommendation to the Payments System Board for consideration.’

Digital Identity

The 2015 Australian Payments Plan identified digital identity as an area of strategic importance for the payments industry. Through the Australian Payments Council, the payments industry has continued to progress work on an industry-led framework.

The Digital Transformation Agency (DTA) has also been building a public sector trusted digital identity framework, GovPass. Last night’s Budget saw the announcement of an additional $92.4m in funding for the DTA to accelerate this initiative.

Next Steps

The Government has announced that it will continue to consult on how to implement some of the Budget measures. In addition, there are still several areas still outstanding – for example, the Government has not yet released its response to the independent Treasury Open Banking Review.

Over the coming weeks and months, we can expect that more details of these announcements and consultations will be revealed. We will continue to monitor these developments.

Further details on the Treasurer's 2018-2019 budget can be accessed here.