should phase out cash in three years in a bid to stamp out tax evasion, an economics professor says.
Prof Richard Holden from the University of New South Wales said the black economy was costing the government $10billion a year in GST revenue – and depriving workers of income tax relief.
He made the call as a key Reserve Bank official voiced concerns about the future of ‘s key cash delivery company, Armaguard.
‘I acknowledge that it would need to be a transition and some people are very attached to cash but I really think it will go the way of cheques,’ Prof Holden told Daily Mail .
‘We could transition fully away from cash, I think it could be done in about three years or so – you’d probably start by eliminating the $100 bill and the $50 bill in a year and you work your way through.
‘We have very, very high income taxes and if we’re leaving several billion dollars a year on the table, by letting tax cheats use cash to evade the taxes the rest of us pay, I just don’t have a lot of sympathy for those people.’
Despite a decline in the use of banknotes, Treasurer Jim Chalmers is proposing a cash mandate that would come into effect in January 2026, requiring all businesses to offer the option of paying in banknotes.
‘They’re just playing politics,’ Prof Holden said. ‘I’m sure that’s been focus grouped to death and that Jim thinks it’s a political winner – that’s fine, he’s a politician, I’m an economist.’
With banks closing down branches and taking away ATMs, Prof Holden said Post outlets could have digital kiosks where staff helped the likes of the elderly pay their utility bills.
‘As far as I’m aware, every town has an Post outlet of some form or another,’ he said.
He also refuted the privacy argument about governments accessing our bank details, arguing this was based more on avoiding the n Taxation Office than standing up for civil liberties.
‘The government can’t just go and get your bank records without the appropriate legal right to do so,’ he said.
‘What are we trying to hide? What’s the legitimate purpose of using cash to hide it from the ATO if it’s not tax avoidance.’
Cash delivery issues
Michelle McPhee, a Reserve Bank assistant governor in charge of business services, said cash was difficult to transport around , and feared for the future of ‘s near monopoly cash delivery company Armaguard.
‘We saw cash use take a step level down during Covid and that created significant difficulties for those who distribute cash around the economy,’ she told the Economic Society of .
‘One of the great challenges, as you point out in , is our geography is so disparate and we have cash users in the regions so it creates a lot of difficulty to try and structure a cash distribution model that’s effective if you have low volumes and you also have great distances to cover.’
The nation’s key cash deliverer company Armaguard is struggling financially, despite having a near monopoly of banknote transportation.
The Big Four banks, supermarket giants Coles and Woolworths and retail group Wesfarmers last month helped stump up $25.5million for Armaguard that would last until December.
‘Armaguard did find themselves in some difficulty – they merged with Prosegur and that organisation covers about 90 per cent of cash movements in this country,’ Ms McPhee said.
‘When you have one player who dominates to the extent that they do, it’s a key risk for the infrastructure that provides cash.’
The Council of Financial Regulators – which includes the Reserve Bank, Treasury and the n Prudential Regulator Authority – has recommended a Minister for Cash be appointed.
‘It’s very important that we do not make the cost of moving cash around so exorbitant that merchants can’t sensibly access it and then we see those costs passed on to consumers,’ Ms McPhee said.
The regulators also suggested the government may have to intervene in the cash distribution business, with Reserve Bank data from 2022 revealing just 16 per cent of in-person transactions are done in cash.
‘The decline in the use of cash for payments in has challenged the economics of the cash distribution sector, upon which access to cash relies,’ it said.
‘Challenges in the cash distribution sector include the long-term decline in the use of cash for payments, and a high degree of concentration and limited competition in parts of the market.’
Cash withdrawals at record highs
But new Reserve Bank figures show a record $104.4billion worth of banknotes are in circulation with $245million worth of cash issued last week.
In June, cash withdrawals in were worth $9.2billion.
Cash Welcome founder Jason Bryce said this data refuted a suggestion from the n Banking Association that consumers were turning away from cash.
‘There has never been more cash on issue, showing strong demand and consumer support for cash,’ he said.
‘The n Bankers Association says consumers don’t want or need physical banknotes and coins but these numbers tell a different story.’
The ABA has consistently issued media releases suggesting cash use is in decline, arguing annual banknote withdrawals had fallen from $120billion in 2018 to $80billion in 2024.
But a closer look at RBA data showed the total value of cash withdrawals during 2024-25 was worth $108billion.
The Reserve Bank has said only a small proportion of in-person transactions are done in cash but a cash use attitudes report also found just 29 per cent in 2022 carried no cash at all in their wallet.
Mr Bryce said that suggested ‘that 70 per cent of Aussies carry cash every day’.
But Prof Holden said cash was still useless during a blackout or a natural disaster.
‘There’s a mass power outage: shops aren’t going to be open, supermarkets, convenience stores, nobody opens their shop when the power’s out,’ he said.