The auditor’s office has released a report slamming Treasury over its implementation of the recommendations of a taskforce into the black economy.
The taskforce was established in 2016 to develop a whole-of-government strategy to address the issue.
In its report released in October 2017, the taskforce made 80 recommendations to combat the shadow economy, which it warned was growing and evolving.
It also found there was a need for better governance in the public sector to address shadow economy risks, saying: “we do not have a single policy and strategic home for the black economy within government; no central body examines emerging trends and vulnerabilities from a whole-of-economy perspective”.
A total of 15 entities were involved in implementing the report, with Treasury, the ATO and Home Affairs having primary responsibility for implementation, as well as ongoing management of the whole-of-government response.
Treasury is not implementing the recommendations that it has responsibility for in an effective manner
ANAO
The national audit office found Treasury had failed to establish a framework to assess the implementation of the report.
“As such, it is not evident that outcomes have been achieved,” the ANAO report released on Monday says. “Treasury is not implementing the recommendations that it has responsibility for in an effective manner.”
The audit also found Treasury didn’t effectively coordinate the government’s response, didn’t establish governance arrangements, and didn’t adequately monitor or report on implementation.
It said the ATO and Home Affairs were implementing the recommendations they had responsibility for in a “largely effective manner”.
A total of $921 million has been budgeted to implement the taskforce’s recommendations between 2018 -2026. As of March this year, only 12 of the 27 recommendations had been implemented.
PwC fingerprints
The Black Economy Advisory Board was established by Treasury in 2018 to provide advice to the government in relation to reforms. One of its former members was PwC partner Peter Calleja who has since stepped down at PwC over the company’s tax leaks scandal.
Green finance spokesperson Senator Barbara Pocock, who has been pursuing the government over its use of consultants in committee hearings, said The Auditor-General’s report confirmed that big consulting firms such as PwC should have nothing to do with ensuring tax integrity.
“This is another blatant example of the inappropriate use of external consultants to develop and implement government policy,” she said.
“When you’re developing policy to stop people avoiding tax, it would make sense to not invite people into the tent whose business it is to help companies avoid tax.”
The ATO estimates that the shadow economy in Australia accounted for $12.4 billion (30.6 per cent) of the gross tax gap for 2019-20.
The Taskforce estimated that the size of the shadow economy had grown from 1.5 per cent of GDP in 2012 to three per cent in 2017.
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