Identity Cards: The Major Issues
Education and Welfare Group
The Australia Card Proposal
The Type of Identity Card
Uses and Advantages of Identity Cards
Comments Supporting the Introduction of
Arguments Against Identity Cards:
Case Study –
possible wider uses of specific purpose cards
Arguments Against Identity Cards:
Appendix 1: Methods of Identifying Social Welfare
Recipients in Selected Countries
Appendix 2: Arguments Related to Tax Evasion
One of the hardy perennials of Australian politics and public
debate is the issue of whether or not Australian citizens should be
issued with identity cards. Every so often someone in the community
calls for identity or ID cards to be issued, describing them as the
answer to a particular problem.
This paper seeks to contribute to the current debate by
presenting some of the major issues. The first part identifies the
factors which have generated the present public debate. Then
follows an outline of the Commonwealth’s proposals for a
national identification scheme, called the Australia Card. The
discussion then turns from the specific proposal to the issues
which relate to any plan for ID cards, national identification
systems, Australia Cards or whatever they may be called, First,
there is discussion of the uses and advantages of such a system and
a review of the opinions of those who support or do not oppose the
idea of all Australians being issued with identity cards. Secondly,
the paper considers the arguments and opinions of opponents of any
such national system of identification. Finally, there are two
appendices: one discussing methods of identifying social welfare
recipients in selected overseas countries; and the other, the use
of ID cards to reduce tax avoidance.
There have been three factors which have prompted the current
debate on ID cards.
First, David Simmons, M.P., moved the following resolution at
the meeting of the Federal ALP Caucus on 7 May 1985:
That the Government examine the feasibility of issuing
photographic identity cards to all Australian citizens and
permanent residents as a positive means of combatting fraudulent
practices in Commonwealth Government administration.
In supporting the resolution Mr Simmons made the following
points, inter alia:
- the use of identity cards of one sort or another is now
required by many governments throughout the world including Canada,
Denmark, West Germany, Sweden and the United States;
- the issue and use of identity cards will create problems of
achieving a balance between efficiency and individual privacy;
- it should not be compulsory to carry the card;
- Australians are now used to carrying various cards and forms of
- the card could be used in the following situations –
using Government services such as legal aid, obtaining pensions and
benefits, beginning employment, opening and changing bank
Secondly, Mr Eric Risstrom, Secretary of the Taxpayers
Association, has in recent times been campaigning for the
introduction of an identity card as a means of reducing tax
avoidance. Mr Risstrom’s arguments are discussed in the body
of the paper.
Thirdly, the recently published White Paper Reform of the
Australian Tax System raised the subject of ID cards. In its
discussion on tax avoidance, the White Paper suggests that, in the
search for ways to reduce avoidance, ‘ … consideration
might also be given to ... the introduction of a national
identification system, involving the issue of a unique identity
card to individuals’.
The Australia Card
On Monday, 24 June 1985, the Federal Cabinet considered a report
from an Interdepartmental Committee (IDC) formed to consider the
introduction of a national identity card system. The IDC comprised
representatives from the Tax Office and the Departments of Prime
Minister and Cabinet, Treasury, Social Security, Health,
Attorney-General and Immigration and Ethnic Affairs. According to
newspaper reports during the week before the Cabinet meeting the
IDC report covered, inter alia: tax benefits which might
be gained from the introduction of an ID card; the
‘cost’ of the loss of civil liberties; what supporting
legislation would be required; and possible uses for the ID card,
such as when opening new bank accounts.
On 21 June 1985, the Sydney Morning Herald reported
that Minister for Health, Hon. Neal Blewett, M.P., had been given
charge of the identity card project. This move was apparently the
result of Dr Blewett’s role in the successful introduction of
the Medicare Card in 1984 by the Health Insurance Commission.
During the period September 1983 to February 1984, 95 per cent of
Australians had enrolled with Medicare and had received a Medicare
At the afternoon session of the Tax Summit on Tuesday, 2 July
1985, Dr Blewett presented the Commonwealth’s proposal for a
national identity card. In an explanatory booklet, the Commonwealth
outlined its proposals:
The concept is simple. A system which is a national register of
all Australians, designed to assist with identification. It would
provide every adult with a personal card, similar to a Medicare
card or credit card, containing only basic information: name,
identification number and colour photograph.
Whilst assisting the government to establish records and verify
information, the card would not reveal any more than that. In this
way the privacy of every individual would be maintained.
The principal objectives of the system and the card would be
- Generally assist government agencies to carry out their
functions more effectively. In particular, prevent or reduce the
incidence of: tax avoidance and evasion – incorrect payment
of benefits and other government monies – other abuses of
other government programs.
- Aid the fight against organised crime and drug
- In the longer term, rationalise the many government
identification systems currently in operation and simplify dealings
with government for all Australians.
The system could be operated by the Health Insurance Commission,
which currently administers the Medicare programs.
The system could aid identification for tax, social security,
employment and other purposes.
This would make it easier to track tax evaders and also reduce
health and welfare fraud.
And with a fully operational system, the reduction in tax
evasion alone could be up to $800 million per year.
It could also help detect illegal immigrants and open up
employment opportunities for legal residents.
This would lead to substantial reductions in the payment of
unemployment and other benefits.
And because the data on all Australians would be complete,
totally up to date and available from a single source, the
community as a whole would benefit from the elimination of much
duplication of effort by government agencies.
The system could also provide improved demographic data to allow
for much better planning of community services.
This register could take on even more significance in
emergencies. Through the system, arrangements might be made to
provide hospital and other emergency services with life-saving
information at a moment's notice: blood groups, organ donors, next
of kin and name of family doctor. Information that is vital.
Diabetics could be quickly identified, as could people with rare
diseases or those requiring special medication.
But the option to include this type of information on the
register would be at the sole discretion of the
The proposal for the Australia Card also estimated the financial
costs and savings associated with the introduction of an identity
card. Tax savings were estimated as $150m in the first year, $450m
in the second year, $750m in the third year and $800m in each
subsequent year. Other savings in government expenditure, the
proposal continues, would accrue from the reduction in unemployment
‘and other welfare benefit costs’.
As well, government identification systems could be rationalised,
thereby reducing administrative costs.
The establishment and operating costs of the Australia Card, as
estimated by the Health Insurance Commission are, in 1985 terms,
$38m for establishment and annual operating costs of $49m. The
estimate of costs is accompanied by the rider that they may vary
from the estimates because they ‘will be dependent upon the
implementation strategy decided by the Parliament.’
The proposal document then describes how the Australia Card
system will operate:
In most cases, cards would be issued to the individuals
concerned from Medicare offices. This would protect privacy, ensure
correct delivery and allow recipients to check and amend details on
the spot. Special arrangements could be made for those who do not
have ready access to a Medicare office.
Having identified individuals, the Commission would write and
invite them to call at a convenient location to collect their card.
At this time a photograph would be taken and affixed to the card.
The details on the card and in the register would be checked and
amended if necessary. Children would be recorded in the register
but cards generally not issued for them.
The register could be updated with information from other
government sources and cards would be reissued
According to the Commonwealth’s proposal ‘the
privacy and security of an individual’s information will be
paramount’. This discussion on privacy
and security said that the national identification system’s
register will contain basic identifying information such as name,
sex, date of birth and address. The register would not include
information from other government sources such as medical and
taxation data. It is proposed that the
legislation needed to establish the Australia Card would
‘tightly define the uses of the card’. One particular claim made in this section of the
proposal is ‘the Health Insurance Commission already has a
proven record of security and is totally familiar with the need to
protect sensitive data’. During the
recent New South Wales doctor's dispute the Sydney Morning
Herald published information concerning the claims for
Medicare benefits made by prominent doctors. Those doctors and
their organisations accused the Health Insurance Commission of
being the source of the journalists information but this matter was
Finally, it is worth noting that nowhere in the glossy booklet
which outlines the Government's proposal for the Australia Card, is
the term identification card or ID card used. This perhaps reflects
the Government' s appreciation that the term ID card implies to
some Australians a de facto internal passport which must
be carried at all times and produced on demand.
The Type of Identity Card
The use of identity cards of one sort or another is required by
many governments throughout the world. Generally, these fall into
- a multi-purpose identity card containing such personal
information as name, birth-date, sex, marital status and sometimes
a photo; similar to that advocated by Eric Risstrom;
- a system of numbers usually linked to a central computer where
the number on the card serves as a key to more detailed information
and to certain identification, as exists in USA; and
- specific purpose cards, like the Australian Medicare card.
Uses and Advantages of Identity
Some countries enforce the universal use of identity cards for
internal security purposes and to monitor the movement of
individuals within the country. They serve as internal passports
and as an easy means of identification of individuals in their
dealings with the State. In these circumstances identity cards may
be a useful aid in maintaining law and order.
In some countries identity cards are used to obviate abuses at
the ballot box by requiring citizens to produce them before they
vote. They are also widely used for purposes of identification in
the course of private commercial transactions – in much the
same way as a driver’s licence is often demanded in Australia
as evidence of identity when writing cheques.
A system of numbers as a form of identification is used in some
countries for recipients of social security benefits. The number
serves as identification and authentication of the recipient of the
pension or benefit and is aimed at preventing multiple registration
either by using false names or by registering at various offices.
This system is also intended to help in speedier and more accurate
delivery of State services to eligible citizens, and is
particularly useful where many citizens have the same name, e.g.
Smith or Jones.
The advantages of identity cards arise from the purposes to
which they are put in any particular country:
- in countries such as the Federal Republic of Germany they
provide a means of checking on the movements of individuals for
internal security purposes;
- in South Africa they identify different racial groupings and
control the movements of non-whites;
- in the United States they are used to register social security
- in Israel they are used for internal security and to obtain
social security benefits.
It can therefore be seen that the advantages would be perceived
differently according to the extent to which the State’s
right to control and have knowledge of its citizens is
Comments Supporting the
Introduction of Identity Cards
Among those who do not strongly oppose the introduction into
Australia of ID cards, there are two groups of opinion: those who
advocate the introduction of the ID cards; and those who, while not
directly advocating such an action, are not completely opposed to
the idea. Both of these groups appear to build their opinions from
the same premise: that Australians already carry many forms of
identification which they may be required to produce. Mr Eric
Risstrom of the Taxpayers Association is quoted as saying,
‘Everybody already has credit cards or Medicare cards and the
like, so what have they got to fear?’
This argument was also promoted in an Australian
The average Australian today has a Medicare card, a Bankcard and
probably one or more other credit cards issued by department
stores, credit unions or organisations such as American Express or
Diners Club. The Australian Taxation Office has a record of his
income and tax-deductible expenditure, and the Immigration
Department knows if he has a passport and has travelled overseas.
The Electoral Office has a record of his address and occupation,
and his State Government knows if he has a driver’s licence
and owns a car.
It is hard to see how a single card bearing a photograph and
encoded with information such as address, tax file number and
perhaps blood type could infringe the liberties of someone about
whom so much is already known.
No proposal along these lines could be totally immune to the
devices of determined cheats. But it would benefit the majority of
honest Australians at no cost to their civil liberties.
The Canberra Times editorial of 7 June 1985 followed a
similar line to that taken by Mr Risstrom and the
Australian, when it advocated the use of ID cards for
Australian citizens. It concluded:
Citizens in a democracy have obligations as well as rights, and
it should be an obligation to carry an identity card, not only to
prevent the unprincipled from cheating the system but to ensure
that people unconscious or dead after an accident can quickly be
identified. Honest people would have nothing to fear, but would
benefit from an assurance that others are not misusing
taxpayers’ funds or avoiding paying their share of the tax
In its issue of 28 May 1985, the Age quoted the views
of various people for and against identity cards. Among them was
Professor Colin Howard who, while not advocating identity cards,
did not see them as significantly contributing to the invasion of
the privacy of individuals. While supporters of the ID cards quoted
above took the line that Australians were used to being asked to
identify themselves, Professor Howard’s argument was that
government at all levels, and in all guises, already knows a great
deal about all of us. Therefore any new identity card would not
really add a further threat to our freedom. According to the
… the whole debate is too late for Melbourne
University’s Professor Colin Howard. He points to the
innumerable ways we are already on official social security and tax
files, electoral rolls, employment records – everything from
birth to death certificates.
‘It is easy to get out of touch with the times’, he
says. ‘The idea that in some sense we can preserve some sort
of privacy by not having ID cards seems to be somewhat of an
‘We have all been brought up to believe that we live in
the best possible system, and nobody should tamper with it, Just
the very expression “ID card” puts people off. If they
were called something else, it might not produce the same
Professor Howard says an ID card would not make it any easier
than now for a government to abuse citizens’ rights.
‘It is only the force of public opinion that keeps them in
Identity Cards: Philosophical
The so-called philosophical arguments against the introduction
of identity cards for all Australians have two themes. The first
concerns the idea of Government assuming the role of ‘Big
Brother’ and the consequential invasion of the civil rights
of citizens as Australia moves towards becoming a police state. As
will be obvious from the reactions below, the advocacy of ID cards
attracts strong and emotional responses. In a letter to the editor
of the Australian, Ron Castan Q.C., President of the
Victorian Council for Civil Liberties, highlighted the major
SIR – Your editorial (8/5) supporting the introduction of
identification cards reflects an appallingly naive view of the way
in which bureaucracies function.
In totalitarian countries one of the most effective means of
control of the population is the monitoring of every
citizen’s activities, by a process of registration. In order
to undertake such a monitoring exercise it is necessary that each
person be issued with a ‘pass card’ (as in South
Africa), or an ‘internal passport’ (as in the Soviet
This must be produced on every occasion on which the citizen
changes residence, travels across State or municipal boundaries,
has any dealings with any governmental agency or joins any
Controls on freedom of movement, thought and action of citizens
cannot be effectively implemented unless each citizen carries a
The first stage in the destruction of the liberty of the
individual is the requirement that every person carry the
‘pass’, which can be required to be produced on all
occasions desired by the State.
Once such a system is introduced, the occasions for its use will
proliferate. Every governmental organisation will find it necessary
to require production of the ‘pass’. And every time the
pass is produced, the computer records will be updated.
Your editorial suggests that the introduction of such cards will
only affect the dishonest and only harm those who have something to
The same argument is put in relation to every proposed intrusion
into our civil liberties. The argument is spurious.
Unless we are vigilant to prevent the establishment of a system
which facilitates the control of our lives by the State, that
system, once introduced, will inevitably lead to that very control.
The introduction of the ‘pass’ will itself become the
reason for the use of it in an oppressive manner.
In considering such a proposal, the fundamental starting point
must be that the bureaucracy is not to be trusted. An
additional instrument for the control of people’s lives
should not be placed in the hands of government upon the assumption
of a misplaced faith in the ability of governmental bureaucracies
to administer such powers fairly and well.
Experience demonstrates that massive governmental bureaucracies
do not administer such powers fairly or well. They are not geared
to the protection of the rights of the individual. They are geared
to the promotion of their own systems.
The proposal for the introduction of a ‘pass’ is
outrageous and should be resisted at all costs.
Opponents of ID cards fear that if the cards are introduced for
one or two specific purposes, such as to reduce social security
fraud or tax evasion, the number of purposes for which the cards
are used will increase rapidly as other government agencies, and
perhaps non government organisations, realise the value of such a
system of centralised information and data. The existence and rapid
improvement in computer technology adds to their fears:
The President of the New South Wales Court of Appeal, Mr Justice
Kirby, warns: ‘What is at stake is nothing less than the
nature of our society, and the power and authority of the state in
relation to the individual’.
Mr Justice Kirby says technology has starkly thrown up key issues
for our society. ‘Will we retain our British traditions and
keep great power under control?’ he asks. ‘Or will we
succumb to the destruction of personal autonomy and privacy as a
result of a frightening combination of amazing new technology and
enthusiastic efficiency experts who would throw away our
In past years as attention has focussed on organised crime in
Australia, the suggestion has been made that any attempt to combat
such crime would be made easier if all Australians carried
identification cards. This, for example, would make it more
difficult to obtain a false passport. In his 1983 Royal Commission
Report on Drug Trafficking, Mr Justice Stewart said that Australia
had not reached the stage where the community would find a
compulsory system of identification acceptable. According to the
Age, Mr Justice Stewart’s views ‘still
At the moment a system of compulsory identification cards, or a
statutory requirement that any citizen must be able to produce
satisfactory identification, ‘would be repugnant to many
Australians as resembling too much the apparatus of
Of course, the idea that identity cards constitute a threat to
personal liberties by offering opportunities for Government to
centralise all personal data and use it as it wishes, is not a
recent one. In a report in June 1976 the Federal Advisory Committee
on False Identification in the United States rejected proposals for
a national identity card. One of the grounds for rejection was that
it represented an invasion of personal privacy, and data required
for citizenship identification could be abused by government or
In Australia in the 1970s, during the debate preceding the
introduction of Medibank, the Committee of Enquiry into Protection
of Privacy in its Second Interim Report to the then
Attorney-General, Senator Murphy, looked at various aspects of
proposed health insurance cards and considered that such details as
date of birth, sex, address and signature should not appear because
they constituted an undesirable invasion of privacy.
It is the existence of computerised data banks to which identity
cards may be linked which constitutes the major threat to privacy.
A card may have only a simple identification or even a number but
by means of a computer link much more detailed information can be
readily obtained whether it is relevant to the purpose for which
the card was presented or not. For instance, in Australia Taxation
Department files are said to be confidential but the exemptions
under the secrecy provisions of the Taxation Act include Boards of
Review, the Repatriation Commission, the Director-General of Social
Security, the Director-General of Health and others. This means
that information from a variety of government departments could be
pooled in a way not originally intended.
Case Study – possible wider
uses of specific purpose cards
In the USA, 98 per cent of households hold social security
cards. Social security legislation was first
passed in 1935 and by the end of the first year of operation 45
million social security accounts were opened and numbers issued to
account holders. Because of the advantages associated with
participation in Social Security, the number of accounts rose
quickly to approximate the number of employed persons. By mid-1983
there were 205 million active accounts, each with a Social Security
number and card corresponding to it. Some 5.5 million new accounts
are being added each year. Because nearly every economically active
adult in the United States has a Social Security number, the number
is ideal for other surveillance and management purposes. Since
1961, the Internal Revenue Service (IRS) has adopted the use of
Social Security numbers for ordering income tax records and for
The use of a person’s social security number as both a
means of identification and as a method of collecting data is now
much greater than must ever have been envisaged in 1935. Some
- To open a bank account, one has to quote one’s social
security number. The new account is then reported to and recorded
by the IRS.
- The same occurs when a person buys shares.
- Some US States now use a person’s social security number
as the number for their drivers licence.
The second philosophical objection to the use of identity cards
or any form of compulsory identification system is the
de-personalising effect of such systems. The number or card
replaces the person:
The danger is that the personality becomes not the living flesh
and blood but the face on the card. Just as the person needing
medical care is not the body but the Medibank number. Or the person
wanting credit is the Bankcard or Diners Card.
To be a number for official purposes has a dehumanising effect.
This has been found in prisons and the Nagle Royal Commission into
Prisons in NSW in 1978, recommended that the use of numbers be
abolished. Prison activist Brett Collins recently wrote,
‘Because its members have worn numbers and names on their
chests for decades in prison, the Prisoners Action Group finds the
proposition for a universal ID system shocking’.
Commenting on this aspect of the ID card system as mentioned in
the Tax White Paper, Peter Cole-Adams wrote,
If Bob Hawke and Paul Keating have their way, Australians in the
closing years of the 20th century will be confident of their
existence only if they have a little plastic-coated card to prove
Identity Cards: Practical
The actual costs involved in establishing and maintaining a
national scheme of identification will obviously vary according to
the type of system adopted and the purposes for which it is used.
However there are some costs which will be common to any type of
system using an ID card or number:
- establishment costs – e.g. publicity, mailing, computers,
recruiting, materials; and
- costs of maintaining and policing the system – e.g. size
of bureaucracy needed to maintain system and to check applications
for new cards or renewals; pursuing forgeries; handling information
At the time of the establishment of Medicare, estimates of the
cost of issuing Medicare cards were:
- Set up costs – machinery, postage etc.:
- if sent to all households – $11.2m
- if sent to all individuals – $14.5m
- Cost of replacement every two years:
- to households – $2.5m
- to individuals – $4.6m
In its 1976 Report the (US) Federal Advisory Committee on False
Identification also listed as a major objection to a national ID
scheme, the expense involved in verifying and storing information
supplied by cardholders.
As discussed earlier, the Government’s proposal for the
Australia Card includes estimates of the costs of its establishment
and operation. They are, in 1985 terms, $38m for establishment of
the system and annual operating costs of $49m.
A further objection is the fact that such a system would be
subject to defeat by imposters and counterfeiters taking advantage
of careless inspection of documents or through the corruption of
officials. The forging of identity cards would not be difficult and
attempts to make this more difficult by the use of photographs or
fingerprints would complicate the system and arouse strong
In an attempt to reduce forgery attempts, the proposed Australia
Card includes a holographic diagram of the map of Australia and the
Specific Purpose Identity
Since its introduction the Australian Medicare card has
maintained a low profile. It has attracted little attention because
the only time it is really needed is when a doctor bulk bills a
patient, or when being treated in some public hospitals.
Furthermore, it is not compulsory to carry the card. There has been
little or no publicity about the card being demanded for other
However, as already discussed, the US social security number is
an example of how easily an identification system and its
centralised data and information facilities can be used for
purposes other than the original one. The growing use of social
security numbers for a wide variety of purposes caused concern in
the United States, and in 1974 became the subject of a federal
investigation. Although a 1939 law guaranteed that information in
social security files would be used only for that program, so many
exceptions had been granted by Congress that it was stated in
… the Social Security Administration is a fount of
information for Federal, State and municipal-government agencies.
In at least 30 situations, personal data from Social Security
records may be released to other agencies without the consent of
the individual involved.
In addition to the official agencies which had access to the
files, the federal inquiry was investigating why social security
numbers were often included on mailing lists sold commercially.
Social Security Fraud
According to reports in the Age and the Australian Financial
Review the submission on identity cards from
the Department of Social Security was less than enthusiastic. As
well as commenting on the costs of such a scheme and its possible
effect on the privacy of its clients, the Department, according to
press reports, offered the following opinions:
- ID cards would assist in correcting overpayment problems.
- Unless the security of the cards was virtually absolute, the
existence of the ID cards might exacerbate the degree of fraud.
While the cards might deter the amateur, it might have no effect on
the professional defrauder. ‘They argue that once a card is
forged the whole system is unlocked.’
- The existence of ID cards will not assist the Department of
Social Security in its major problem of people supplying false
information about their income levels and domestic
It is up to each individual to decide whether he or she agrees
or disagrees or even cares whether Australians should be issued
with identity cards. This paper has sought to raise the issues on
which this decision might be based. Probably the practical
objections are not as important as the philosophical arguments. The
decisions made on certain issues and the assurances offered by a
Government responsible for the proposal to introduce an ID cards
scheme will probably sway public opinion for or against the idea.
Those issues include:
- whether or not it will be compulsory to carry the card at all
- what information the card will contain, e.g. will it carry only
a number or many personal details, with or without a
- whether the card will be for a specific purpose or whether its
use may be changed by the Government of the day;
- whether Australian citizens can be assured that the information
that they are compelled to supply will remain confidential and will
not be passed between government agencies and even commercial
- what rights Australians will have to see their files to ensure
that all information is accurate, and whether there will be avenues
of appeal against incorrect, unfair or inaccurate entries;
- finally (and impossible to answer), how will Australian
citizens know whether or not they can trust the Government of the
day and the bureaucracy not to abuse the power which is presented
to them by centralised, computerised information on every citizen
Identity cards or numbers as such are neither good nor bad. It
is in their potential for abuse that the danger lies. If they are
adopted in any form it would seem to be necessary for the
controlling authority to ensure that their use is not extended to
unrelated purposes, that access to the collected data is not
exploited and that the privacy of individual Australians is
So the question of accepting or rejecting ID cards is a question
of balance. There are those people who completely reject the idea
because they see them as a threat to the rights and liberties of
individual Australians. To such people assurances from governments
that there will be no abuses of power, intentional or
unintentional, are not good enough: identity cards are merely Big
Brother’s foot in the door.
On the other side of the debate are those people who feel so
strongly about a particular issue, such as social security fraud or
tax evasion, that they advocate identity cards as a method of
overcoming these problems. They do not see the dangers to be as
great as feared by opponents of the idea. As has been asked, which
is a greater abuse, an identity card or having to pay more than
your fair share of tax? David Simmons M.P. commented on this
You have to balance out with considerations of civil liberties.
There have obviously got to be questions of cost-benefit, balancing
the efficiency of the bureaucracy with the privacy of the
Perhaps the answer is somewhere in between these two positions.
A final word of warning is contained in a 1927 comment from Mr
Justice Brandeis of the US Supreme Court,
Experience should teach us to be most on our guard when the
Government’s purposes are beneficent. Men born to freedom are
naturally alert to repel invasion of their liberty by evil-minded
rulers, The greatest dangers to liberty lurk in insidious
encroachment by men of zeal, well-meaning, but without
Appendix 1: Methods of
Identifying Social Welfare Recipients in Selected Countries
Canada. The SINCARD system, introduced more
than ten years ago, was originally intended for social security
purposes but has expanded in use, despite widespread protests. By
computerisation it links into income tax as well as social
security. The individual has a SINCARD giving name and number but
there is no provision for signature, photo or finger print. The
number is essential for employment. However, its main advantage is
convenience; as a means of identification it has little advantage
over a driving licence, for example.
Denmark. Each individual has a postal
registration card, with a number based on birth date and year: this
is used for social security registration and identification. Social
Security is administered by a single centralised, computerised
system which is the main control mechanism.
Federal Republic of Germany. Each individual
has an ID card with photo and other details as in a passport
(address, date of birth, signature, height, eye colour) and a
number based on name and birth date, Control of illegal payments is
effected by the requirement for individuals to register annually
and to update family circumstances. Payments are made through a
bank account or personally on production of identification.
Netherlands. There is no national ID system.
Abuse of the social security system is made difficult by the fact
that each adult is subject to registration of address with the
local authority. The social security system is computerised and
centralised, and all benefits are paid by the GIRO system (the
postal banking system) for which there is no charge and which all
beneficiaries are required to use.
New Zealand. The situation in New Zealand is
similar to Australia. There is no national ID system, nor is there
a specific social security card. The main means of control are
through the efficiency of the preliminary registration system and
the requirement to re-register or report periodically. There is
also a benefits control division, as in other countries, which
investigates suspicious cases or allegations made by members of the
Sweden. Each individual has an identity card
and. the number is used by banks and for taxation and social
security purposes. There is an elaborate Data Act to limit and
prevent abuse of the ID card and related information systems.
United Kingdom. The social security system in
Britain is funded through individuals (as well as employers’
and government) contributions. An essential document for employment
is the social security card which keeps account of contributions
and is used for social security benefits as well. The only
identification is the name, number and signature.
United States. All employees in formal
employment (other than federal and some other government
employment.) have a social security card which carries the name and
number but no signature or other identification. It is used for
income tax as well as social security.
Appendix 2: Arguments Related
To Tax Evasion
by Michael Peacock, Economics and Commerce Group
Arguments for identity cards
If identity cards were introduced and laws enacted to require
people to produce the cards for taxation purposes, tax evasion in
two areas in particular would be curtailed if not eliminated. These
areas are discussed below.
(a) Curtailment of evasion of tax deductions at PAYE stage
By way of background, the general PAYE tax instalment scale
takes into account the zero rate of tax that applies on the first
$4595 of a person’s income (titled the ‘General
Exemption’ for PAYE purposes). The tax instalments deductible
in accordance with the general scale apply to the great majority of
employees who do not claim concessional rebates (e.g. the dependent
spouse rebate) and the instalments in that scale are reduced for
people claiming concessional rebates for PAYE purposes by the
weekly value of the rebate(s) claimed.
Another scale, which sets out the PAYE instalments to be
deducted where an employee has a second job, makes no allowance for
the zero rate step nor is the scale reduced by the value of any
concessional rebate. Furthermore, the scale (described as the
‘no declaration scale’ in these notes) assumes the
employee earns a certain amount of income in his or her main job.
It is necessary to make this assumption in order that the higher
marginal rates of tax that apply at the higher levels of income are
reflected in the PAYE deductions made from earnings in second
To have the general scale applied in determining the PAYE
deduction from his/her pay an employee has to lodge with his/her
employer a completed Income Tax Instalment Declaration form
claiming the general exemption. Any concessional rebates to which
the employee is entitled may also be claimed in that declaration.
Legally employees may have only one declaration in force at any
time. Accordingly, an employee with two jobs who complies with the
law and furnishes a declaration to only one of his/her employers
would have the general scale (or that scale less the value of any
concessional rebates claimed) applied by the employer to whom the
declaration was furnished, and the no declaration scale applied by
the other employer.
A large number of employees are overcoming the rule that an
employee may have only the one Income Tax Instalment Declaration in
force at any time – perhaps in some cases with the collusion
of their employers – by working under a false name in one or
more of their jobs. Some of these employees also insert false
dependants in their false declarations to ensure that no PAYE
deductions, or only negligible amounts of deductions, are made from
their earnings. Of course, the second job earnings of these people
are not shown in taxation returns.
Other categories of employees who use false names and who claim
false dependants for PAYE purposes are seasonal workers and
employees in other casual employment, Some of these employees lodge
false declarations with all of their employers.
If people who are evading tax in the way described above have to
identify themselves correctly and have the appropriate amount of
tax deducted each week this avenue of tax evasion would be closed
(b) Curtailment of evasion of tax on dividend and interest
There is evidence that a very substantial amount of the interest
that is paid to people, and to a lesser extent dividends, is not
being included as income in taxation returns. Some of the income
distributed by unit trusts would also, no doubt, not be declared
for taxation purposes.
The Taxation Office has a program for checking that interest
paid to people is shown by the recipients as income in taxation
returns, For the purpose of these checks certain of the financial
institutions report to the Taxation Office the interest (or
interest over a certain moderate amount) that they have paid to
each account holder, Also, dividend payments are checked by the
Taxation Office from company records.
Reports indicate that the program is having only a limited
effect, mainly because it is difficult for the Taxation Office to
match information supplied by the institutions with information
extracted from taxation returns. This is because there are often
several people with the same name (father/son for example) and a
large number of people change their address each year.
Apart from the difficulty of checking that amounts paid to
people who have accounts in their correct names are declared as
income, there is also the problem that some people may be evading
tax by opening accounts in false names early in a financial year
and closing the accounts in the next financial year before the
Taxation Office can make its checks. The process can then be
repeated with another financial institution. It was recently
reported in the press that an elderly person had been advised by a
financial adviser to open an account with the adviser’s
company in a false name to avoid the assets test affecting the
person’s pension. Is it possible then that suggestions to
this effect are being made to people concerning evading tax on such
payments as interest?
Identity cards would overcome the problem of people avoiding tax
on interest and dividends and unit trust declarations by opening
accounts in false names. Furthermore, the cards would change the
Taxation Office’s task of checking that the payments in
question have been declared as income, from a time-consuming and
not greatly effective task to a relatively simple and very
effective one. With identity cards in operation the banks, building
societies, credit unions, trusts and businesses paying interest to
other than banks, building societies and credit unions (these
groups are referred to as financial institutions in this paper)
could report interest, dividends and interest payments by identity.
Details of these payments could then be inserted into a computer
and compared with amounts extracted from taxation returns which
could have the same identity number.
It may be thought that the evasion of tax by way of interest and
dividend payments not being shown in taxation returns could be
simply overcome by withholding tax from such payments at source.
Under such a system the financial institutions would withhold tax
from interest, dividends and unit trust payments at the time of
payment, or crediting of payments in question in the same way as
employers withhold tax from the pay of employees under the PAYE
The problem with such a system would be that the financial
institution would have no means of knowing at what rate tax would
be payable by a person on his/her payments. That rate would depend
on not only the payment concerned but on the person’s net
income from other sources, and in some cases the person’s
entitlement to tax rebates. Accordingly, unless avenues are to be
left open for those on the higher incomes to evade tax by not
including their dividends and interest payments in taxation
returns, tax would have to be withheld from the payments in
question at the maximum rate of tax.
It may be said that the overwithholding of tax from interest,
dividends and unit trust payments would not be a serious problem,
as the amount withheld would be allowed as a credit against the
person’s total tax liability at the assessment stage
following lodgment of income tax returns. Any excess over that
necessary to pay the assessed tax would then be refunded to the
taxpayer, or deducted from the tax payable on income from other
sources. Despite this, a large number of people would, no doubt,
think that because tax was being withheld at the maximum rate of
tax the Government was taking half or more of their interest
receipts in tax.
A withholding system would be particularly inconvenient (or
disadvantageous) for those pensioners who supplement their pension
with income from interest, dividends or unit trusts, and who,
because their total income is less than the tax threshold, are not
required to pay tax. With a withholding system operating these
pensioners would either have to lodge taxation returns (in the
meantime going without the income that was withheld for tax) or
apply to have their interest exempt from withholding. In the latter
case they would, in effect, be revealing to the financial
institutions that their total income each year was below the tax
The pensioners and beneficiaries whose income is of a level that
requires them to pay only small amounts of tax would also be
disadvantaged by having to wait, for up to a year, for that part of
the withholding deduction that was in excess of the tax actually
payable on their interest payments.
A further point against a withholding system for interest and
dividend payments is that unless some method could be found to
enable the Taxation Office to readily identify people who had been
paid interest and who were entitled to credit for tax withheld, the
financial institutions would have to issue certificates to all
their account holders showing the interest earned and tax withheld.
There would be an enormous number of certificates required and the
exercise would be costly for the financial institutions.
(c) Curtailment cf some other avenues of tax evasion
There are, no doubt, a number of other areas where the correct
identification of people would result in the closing off of tax
evasion avenues. For example, correct identification for foreign
exchange transaction purposes may be helpful in overcoming tax
evasion on off-shore transactions.
(d) Gain to taxation revenue
According to the White Paper on the reform of the taxation
system the gain to taxation revenue that would follow from the
introduction of identity cards is put at $800m annually within
three years of implementation.
Arguments Against Identity Cards
Leaving aside the civil liberties argument, the cost of issuing
the cards and the fact that the great majority of taxpayers already
correctly identify themselves for both PAYE and other taxation
purposes, there would be few points against the issue of cards from
a taxation point of view.
A number of taxpayers, especially those whose avenues for
evading tax were closed off, would criticise the cards as a further
discriminatory move against PAYE taxpayers or the ‘little
people’. They would point out that these people are already
disadvantaged, as compared with taxpayers with a business or a
profession, in that they are not able to split their incomes with
family members for taxation purposes. However, the great majority
of employees should welcome the introduction of the cards if they
can be convinced that the revenue that will be gained, as a result
of people being required to correctly identify themselves, will
permit a reduction in the tax payable by them
- David Simmons, M.P., Letter to Members of ALP
Caucus, 26 April 1985.
- Reform of the Australian Taxation System, White
Paper, AGPS, Canberra, 1985, p. 38.
- Australia Card, explanatory booklet,
- Ibid., p. 4.
- Ibid., p. 5.
- Ibid., p. 5.
- Ibid., p. 6.
- Ibid., p. 7.
- Ibid., p. 7.
- Ibid., p. 7.
- Ibid., p. 7.
- Sydney Morning Herald, 5 June 1985,
- Australian, 8 May 1985.
- Age, 28 May 1985.
- Australian, 20 May 1985.
- Age, 28 May 1985.
- Rule, J.B. et al., ‘Documentary
Identification and Mass Surveillance in the US’, Social
Problems, Dec. 1983.
- Canberra Times, 27 November
- Sydney Morning Herald, 9 May
- Age, 8 June 1985, p. 11.
- US News and World Report, 17 November
1975, p. 50.
- Age, 22 June 1985 and Australian
Financial Review, 27 and 28 June 1985.
- Australian Financial Review, 27 June
- Sydney Morning Herald, 6 June
- Quoted in Age, 28 May 1985.