... as Senate inquiry gives thumbs up

A Senate inquiry has backed a controversial bill to ban cash payments of $10,000 and impose two-year jail sentences on people using cash for purchases above that limit, meaning it will soon become law.

Key points:

• A controversial bill to limit cash transactions to $10,000 has received support from a Senate inquiry
• A dissenting report from the Greens raised concerns that the bill would restrict people's civil liberties
• With the support of Labor, the bill is expected to pass Parliament soon

The Currency (Restrictions on the Use of Cash) Bill 2019 passed the House of Representatives last year, but was referred to a Senate inquiry for further debate.

The Senate committee recommended that the bill be passed contingent upon several changes, including that the start date is extended to give businesses sufficient time to comply, and that the Federal Government review the penalty provisions to ensure they are not "overly harsh".

The law was due to take hold on January 1, but Treasurer Josh Frydenberg has given the Senate committee an undertaking that the law will not be applied retrospectively.

The bill has caused a stir among the Liberal Party, with some members arguing it is antithetical to the party's values.

The inquiry received 2,659 submissions by early December, with the majority of submissions opposing the bill, and many arguing the Government should not interfere with their legal right to spend cash how they wish.

Many submissions also raised concerns that the proposed law may leave people's bank deposits vulnerable to negative interest rates — a situation whereby, instead of receiving money on deposits, depositors must pay regularly to keep their money with the bank.

But the Federal Government has consistently argued the measure is intended to fight the black economy, by stamping out tax evasion, money laundering and other crimes.

The committee said while it recognised that the majority of submissions to the committee opposed the bill, many of them were "based on hypothetical scenarios" such as a situation where Australia may hit negative interest rates.

It also rejected submissions that had objected on the expectation that a government would eventually reduce the cash payment limit below the proposed legislated amount of $10,000.