top of page
  • Writer's pictureMark Walbank

The Treasurer admits that cash payments are a critical component of our economy.

The Treasurer, Josh Frydenberg, admits that cash payments are a critical component of our economy and must be protected by policy and law in a new official report.

Finally, our policymakers are beginning to realise the cash-loving Australian public, cash rights activists like Jason Bryce, business owners like Stuart Mackaway, many others and I have been pointing out for many years. For my blog on this issue, click here.

Payments system review
Download PDF • 3.22MB

The Australian Treasurer, on 30 August 2021, released the official Payments System Review. I am attaching a copy of the whole report for readers who want to know more.

I must say that I was very pleasantly surprised that the report is not all about new payment technologies. Quite to the contrary, cash is mentioned 34 times in the report, and the Treasurer makes an obvious point about how critical cash is to the Australian economy and national security.

The report says that non-cash payment systems are inherently unreliable because they can suffer 'technical malfunctions or operational mistakes' (Payments System Review, 2021: 7). Furthermore, as I said elsewhere in my blog, these non-cash payment systems are open to outages (communications and electricity), hacking by malicious hackers and cyber-warfare.

The Treasurer's report further affirms that: 'While the use of cash may continue to fall in use over time relative to other means of payment, it is expected to remain an important method of payment well into the future, not only for vulnerable customers, bust as an important "back-up" from of payment not tied to the digital economy' (Payment System Review, 2021: 7).

Contrary to the Treasurer, I believe that the use of cash payments in Australia might increase, especially now that merchants are becoming quite aware of the costs they have to carry regarding accepting non-cash payments. Further, with the possibility of a COVID-19 induced prolonged recession/depression, more consumers might start paying in cash. In times of financial crises, a very significant number of people want to keep cash under their mattresses and pay for cash for all small to medium purchases. Reports from the RBA confirms this. I have quoted only one of the RBA's reports on cash intake during financial crises.

I had personally heard a story from bank workers here in Brisbane who told me that they had customers when the COVID-19 pandemic broke out coming with suitcases demanding to withdraw all their savings. The sums they wanted to withdraw ran from tens to hundreds of thousands of dollars. The bank could not oblige immediately, which created an angry reaction in these particular customers. The bank needed a few days to get the required cash for these customers.

I don't want to live in a society and economy where I cannot withdraw all my money from my bank immediately for any reason. Do you?

This bank's customers were not interested in plastic cards or numbers on their computer or smartphone screens. Instead, they wanted something that they could touch, smell, and that had an actual store of value. They wanted something they could put away somewhere safe. They wanted cash. They wanted something real.

The Treasurer report sums the Australian Government's position on cash by stating that: 'Given this, the distribution of cash will also remain a critical system that ensures that there is an adequate supply of cash available across the economy' (Payments System Review, 2021: 89, my emphasis).

In other words, what the Government is reaffirming is that cash is the only reliable payment system. You can use it when we have bushfires and floods, and consequ