I S S N 0726-3244

G Commonwealth o f A u s t r a l i a 1985

The views expressed i n t h i s paper a re those o f t h e a u t h o r and do n o t n e c e s s a r i l y r e f l e c t those of t h e L e g i s l a t i v e Research Serv i ce , o r t h e Department o f t h e Par1 iamentary L i b r a r y .

Pub1 i shed by t h e Department of t h e Par1 iamentary L i b r a r y , J u l y 1985.

Printed by C. J . THOMI~SON, Commonwealth Government Printer, Canberril

CONTE~T$

The Australia Card Proposal 3

The Type o f Identity Card 5

Uses and A~vantages o f Identl'ty Cards 6

Comments Supporting the Introduction o f Identity Cards 7

Arguments Against Identity Cards: Phi 'sosophical 8

Case Study - possible wider uses o f specific purpose cards 11

The Dehumanising Effect 12

Arguments Against I ~ ~ ~ ~ ~ i ~ y Cards: ~ ~ a ~ t ~ c a l 12

Costs 12

Forgeries 13

Specific Purpose Identity Cards 13

Social Security Fraud 14

Concl usi on 14

Methods o f Identifying Social Welfare Recipients in Selected Countries 17

Arguments Related to Tax Evasion (Michael Peacock) 18

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I d e n t i t y Cards - The Major Issues

INTRODUCTION

One o f t h e hardy p e r e n n i a l s o f A u s t r a l i a n p o l i t i c s and p u b l i c debate i s t h e i s s u e o f whether o r n o t A u s t r a l i a n c i t i z e n s shou ld be i ssued w i t h i d e n t i t y cards. Every so o f t e n someone i n t h e community c a l l s f o r i d e n t i t y o r I D cards t o be issued, d e s c r i b i n g them as t h e answer t o a p a r t i c u l a r p rob l em.

T h i s paper seeks t o c o n t r i b u t e t o t h e c u r r e n t debate by p r e s e n t i n g same o f t h e major issues. The f i r s t p a r t i d e n t i f i e s t h e f a c t o r s which have generated t h e present p u b l i c debate. Then f o l l o w s an o u t l i n e o f t h e Commmonwealth's p r o p o s a l s f o r a n a t i o n a l i d e n t i f i c a t i o n scheme, c a l l e d t h e A u s t r a l i a Card. The d i s c u s s i o n then t u r n s f rom t h e s p e c i f i c proposal t o t h e issues which r e l a t e t o any p l a n f o r I D cards, n a t i o n a l i d e n t i f i c a t i o n systems, A u s t r a l i a Cards o r whatever they may be c a l l e d , F i r s t , t h e r e i s d i s c u s s i o n o f t h e uses and advantages o f such a system and a rev iew o f t h e op in ions o f those who suppor t o r do no t oppose t h e i dea o f a l l A u s t r a l i a n s be ing i ssued w i t h i d e n t i t y cards. Second'lly, t h e paper cons ide rs t h e arguments and op in ions o f opponents o f any such n a t i o n a l system o f i d e n t i f i c a t i o n . F i n a l l y , t h e r e a r e t w o a p p e n d i c e s : one d i s c u s s i n g methods o f i d e n t i f y i n g s o c i a l w e l f a r e r e c i p i e n t s i n s e l e c t e d overseas c o u n t r i e s ; and t h e o the r , t h e use o f ID cards t o reduce tax avoidance.

5 A C K ~ R O ~ ~ ~

There have been t h r e e f a c t o r s which have prompted t h e c u r r e n t debate on I D cards.

F i r s t , David Simmons, M.P., moved t h e f o l l o w i n g r e s o l u t i o n a t t h e meet ing o f t h e Federa l ALP Caucus on 7 May 1985:

T h a t t h e Government examine t h e f e a s i b i l i t y o f i s s u i n g photograph ic i d e n t i t y cards t o a l l A u s t r a l i a n c i t i z e n s and permanent r e s i d e n t s as a p o s i t i v e means o f c o m b a t t i n g f r a u d u l e n t p r a c t i c e s i n Commonwealth Government adnii n i s t r a t i on e [ X 1

I n s u p p o r t i n g t h e r e s o l u t i o n M r Simmons made t h e f o l l o w i n g

t h e use o f i d e n t i t y cards o f one s o r t o r another i s now r e q u i r e d b y many governments t h r o u g h o u t t h e war1 d i n c l u d i n g Canada, Denmark, West Germany, Sweden and t h e U n i t e d Sta tes ;

p o i n t s , i n t e r a l i a :

t h e i s s u e and use o f i d e n t i t y cards w i l l c r e a t e problems o f ach iev ing a ba lance be~ween e f f i c i e n c y and i n d i v i d u a l p r i vacy ;

1, David Simmons, M.Pe, L e t t r t o Members o f ALP Caucus, 26 A p r i l 1985 P

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Identity Cards - The Major Issues

e i t should not be compulsory t o carry the ca rd ;

e Australians are now used t o carrying various cards and forms of identification; and

the card could be used in the following s i tuat ions - using Government se rv i ces such as lega l a i d , obtaining pensi ons and benefits begi nni ng empl oyment., openi ng and changi ng bank accounts e

Secondly, Mr Eric R-isstrom, Secretary of t he Taxpayers Association, has in recent times been campaigning f o r the introduction of an identity card as a means of' reducing t a x avoidance. M r Risstrom's arguments are discussed in the body of the paper.

Thirdly, the recently published White Paper Reform o f the ra i sed the subjec t of ID cards . I n i t s

dance, the White Paper suggests t h a t , in the search for ways t o reduce avoidance, l o a a consideration m i g h t also be given t o ... the introduction of a n a t i o n a l identification system, i n v o l v i n g the issue o f a unique .identity card t o individuals' .[2]

THE AUSTRAL KA CARD PROPOSAL

O n Monday, 24 June 1985, the Federal Cabiriet considered a report from a n Interdepartmental Committee ( l D C ) formed t o consider t h e introduction o f a national identity card system. The XDC comprised representatives from the Tax Office and the Departments o f Prime Minis ter a n d Cabinet , Treasury, Social Secur i ty , Health, Attorney-General and Immigration and Ethnic Affairs. According t o newspaper reports during the week before the Cabinet meeting the I D C report covered, in te r a l i a : t a x benefits which might be gained from the introduction--"%i-"TD card; the ' cos t ' o f the loss of c ivi l l i be r t i e s ; w h a t supporting legis la t ion would be required; and possible uses for the ID card, such as when opening new bank accounts.

O n 21 June 1985, the reported t h a t Minister for Health- Hon. Neal Blewett, M.P., had been qiven charqe of the identity card project. This move "was apparently the resul t 6f Dr Blewett's role in the successfu'l introduction of the Medicare Card in 1984 by the Health Insurance Commission, Dur ing the period September 1983 t o February 1984, 95 per cent of Australians had enrolled with Medicare and had received a Medicare Card.

A t the afternoon se sion o f the Tax Summit on Tuesday, 2 July 1985, Dr Elewett presented ,the C~mmo~iwea~t~~ ' s proposal for a national identity card. In an explanatory booklet the Commonwealth out1 ined i t s proposal s :

-- n ~ ~ x a t i o n S y ~ t ~ t n ~ .___ White Paper, AGPS,

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I d e n t i t y Cards - The Major Issues

The concept i s simple. A system which i s a n a t i o n a l r e g i s t e r o f a l l A u s t r a l i a n s , des igned t o a s s i s t w i t h i d e n t i f i c a t i o n . I t would p r o v i d e every a d u l t w i t h a personal card, s i m i l a r t o a M e d i c a r e c a r d o r c r e d i t c a r d , c o n t a i n i n g o n l y b a s i c i n f o rmat i on : name, i d e n t i f i c a t i on number and c o l o u r photograph,

W h i l s t a s s i s t i n g t h e government t o e s t a b l i s h reco rds and v e r i f y i n f o r m a t i o n , t h e c a r d would no t revea l any more than t h a t . I n t h i s way t h e p r i v a c y o f every i n d i v i d u a l would be mainta ined.

The p r i n c i p a l o b j e c t i v e s o f t h e system and t h e c a r d would be t o :

e Genera l l y a s s i s t government agencies t o c a r r y o u t t h e i r f u n c t i o n s more e f f e c t i v e l y . I n p a r t i c u l a r , p revent o r reduce t h e i n c i d e n c e o f : t a x avoidance and e v a s i o n - i n c o r r

A i d t h e f i g h t aga ins t o rgan ised c r ime and d rug t r a f f i c k i ng.

I n t h e l o n g e r term, r a t i o n a l i s e t h e many government i d e n t i f i c a t i o n systems c u r r e n t l y i n o p e r a t i o n and s imp1 i f y d e a l i n g s w i t h government f o r a1 1 A u s t r a l ians .

The sys tem c o u l d be o p e r a t e d b y t h e H e a l t h I n s u r a n c e Commiss ion, w h i c h c u r r e n t l y a d m i n i s t e r s t h e M e d i c a r e programs [3]

The B e n e f i t s

The system c o u l d a i d i d e n t i f i c a t i o n f o r t ax , . soc ia l s e c u r i t y , empl oyment and o t h e r purposes.

T h i s would make i t e a s i e r t o t r a c k t a x evaders and a l s o reduce h e a l t h and w e l f a r e f raud .

And w i t h a f u l l y o p e r a t i o n a ~ system, t h e r e d u c t i o n i n t a x evas ion a lone c o u l d be up t o $800 m i l l i o n p e r y e a r s

It cou ld a l s o h e l p d e t e c t il t s and open up employment o p p o r t u n i t i e

T h i s would l e a d t o s u ~ ~ t a ~ ~ t i a ~ r e d u c t i o n s i n t h e payment of unempl oyment an o t h e r b e n ~ f i t s ~

3 , A u s t r a l i a C a r

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I d e n t i t y Cards - The Major Issues

And because t h e da ta on a l l A u s t r a l i a n s would be complete, t o t a l l y up t o da te and a v a i l a b l e f r o m a s i n g l e source, t h e community as a whole would b e n e f i t f r om t h e e l i m i n a t i o n o f much d u p l i c a t i o n o f e f f o r t by government agencies.

The system c o u l d a l s o p r o v i d e improved demographic da ta t o a l l o w f o r much b e t t e r p l a n n i n g of community se rv i ces .

T h i s r e g i s t e r c o u l d t a k e on even more s i g n i f i c a n c e i n emergencies. Through t h e system, arrangements m igh t be made t o p r o v i d e h o s p i t a l and o t h e r emergency s e r v i c e s w i t h 1 i f e-savi ng i n f ormat i on a t a moment ' s n o t i c e : b l ood groups, o r g a n d o n o r s , n e x t o f k i n and name o f f a m i l y d o c t o r . I n fo rma t ion t h a t i s v i t a l . D i a b e t i c s c o u l d be q u i c k l y i d e n t i f i e d , as c o u l d people w i t h r a r e d iseases o r t hose r e q u i r i n g s p e c i a l medicat ion.

.cardho'l der. [4]

The proposal f o r t h e A u s t r a l i a Card a l s o es t ima ted t h e f i n a n c i a l c o s t s and savings assoc ia ted w i t h t h e i n t r o d u c t i o n o f an i d e n t i t y card. Tax sav ings were es t ima ted as $150111 i n t h e f i r s t year , $450~1 i n t h e second year , $750m i n t h e t h i r d y e a r and $800m i n each s u b s e q u e n t y e a r . O t h e r s a v i n g s .in government e x p e n d i t u r e , t h e proposal cont inues, would accrue f rom t h e r e d u c t i o n i n unerripl oyment I and o t h e r we1 f a r e b e n e f 1 t c o s t s ' ., e53 As we1 1 , governmen t i d e n t i f i c a t i o n sys tems c o u l d be r a t i o n a l i s e d , t h e r e b y r e d u c i n g a d m i n i s t r a t i v e costs .

The establ ishment and o p e r a t i n g c o s t s o f t h e A u s t r a l i a Card, as es t ima ted by t h e H e a l t h Insurance Commission are, i n 1985 terms, $38m f o r es tab l i shmen t and annual o p e r a t i n g c o s t s o f $49~1. The e s t i m a t e o f c o s t s i s accompanied by t h e r i d e r t h a t t h e y may va ry f rom t h e es t ima tes because t h e y 'will be d e endent upon t h e implementat ion s t r a t e g y dec ided by t h e Par1 i ament e [ 6 P

The proposal document then desc r ibes how t h e A u s t r a l i a Card system w i 11 operate:

I n most cases, cards would be i ssued t o t h e i n d i v i d u a l s concerned f rom Medicare o f f i c e s . T h i s would p r o t e c t p r i v a c y , ensure c o r r e c t d e l i v e r y and a l l o w r e c i p i e n t s t o check and amend d e t a i l s on t h e spot. Specia l arrangements c o u l d be made f o r t hose who do n o t have ready access t o a Medicare o f f i c e ,

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I d e n t i t y Cards The Major Issues

Having i d e n t i f i e d i n d i v i d u a l s , t h e Commission would w r i t e and i n v i t e them t o c a l l a t a conven ien t l o c a t i o n t o c o l l e c t t h e i r card. A t t h i s t i m e a photograph would be taken and a f f i x e d t o t h e card. The d e t a i l s on t h e ca rd and i n t h e r e g i s t e r would be checked and amended i f necessary. C h i l d r e n would be recorded i n t h e r e g i s t e r b u t cards g e n e r a l l y n o t i ssued f o r them.

The r e g i s t e r cou ld be updated w i t h i n f o r m a t i o n f rom o t h e r government s o u r c e s and c a r d s w o u l d b e r e i s s u e d p e r i o d i c a l ly , [7 ]

Accord ing t o t h e ~omino~ iwea l th ' s proposal ' t h e p r i v a c y and s e c u r i t y o f an i n d i v i dual ' s i nformat i on w i 11 be paramount ' e [€I] Thi s d i s c u s s i o n on p r i v a c y and s e c u r i t y s a i d t h a t t h e n a t i o n a l i d e n t i f i c a t i o n s y s t e m ' s r e g i s t e r w i l l c o n t a i n b a s i c i d e n t i f y i n g i n f o r m a t i o n suc as name, sex, da te o f b i r t h and address. The reg-i s t e r would o t i n c l ude i n f o r m a t i on f rom o t h e r government sources such as medica l and ' taxat on dataa.[9J It i s proposed t h a t t h e l e g i s l a t i o n needed t o esta .I i s h t h e A u s t r a l i a Card would ' t i g h t l y d e f i n e t h e uses of t h e c a r d [:IO] One p a r t i c u l a r c l a i m made i n t h i s s e c t i o n of t h e proposal i s ' t h e Hea l th Insurance Commission a l r e a d y has a proven r e c o r d o f s e c u r i t y and -is t o t a l l y f a m i l i a r w i t h t h e need t o p r o t e c t s e n s i t i v e da ng t h e r e c e n t New South Wales

Hera l d pub1 i s hed 1' n fo rmat i on concern i ng t h e c l a ims f o r Medicare b e n e f i t s made by promi nent doc tors . Those d o c t o r s and t h e i r o r g a n i s a t i o n s accused t h e H e a l t h Insurance Commission o f beir ig t h e source o f t h e j o u r n a l i s t s i n f o r m a t i o n b u t t h i s smatter was never r e s o l ved.

d o c t o r ' s d i s p u t e t h e ---

F i n a l l y , i t i s wor th n o t i n g t h a t nowhere i n t h e .g lossy book1 e t whi ch ou t 1 .i nes t h e ~ o v ~ r n m e n t ' s proposal for t h e A u s t r a l i a Card, i s t h e t e r m i d e n t i f i c a t i o n ca rd or ID ca rd used. Th is perhaps r e f l e c t s t h e Government's a p p r e c i a t i o n t h a t t h e t e r m I D card i m p l i e s t o sorne A u s t r a l i a n s a de f a c t o i n t e r n a l passpor t which must be c a r r i e d a t a l l t imes and p r o d i ~ c ~ e m a n d ~

The use o f i d e n t i t y cards o f one s o r t or another i s r e q u i r e d by many governments t h r o u g ~ o ~ t the w o r ~ ~ * Genera l l y , these f a 1 1 i n t o t h r e e

1 I) a mu1 ti - i ~ u r ~ o ~ e i d e n t i t y ca rd c o n t a i n i ng such personal i n f o r m a t i o n as name, b i r t h ~ d a t e ~ sex, m a r i t a l s t a t u s and sometimes a photo; s i m i l a r t o t h a t a d v ~ c a ~ e d by E r i c Risst rom;

7. 2 9 I b i d p e 6 e

8- 2 9 I b i d p.7. 9, Ib id . , p.7. 10, J P * l * 1 1 e .ide, p.7.

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Identity Cards .- The Major Issues

2. a system of numbers usually linked t o a central computer where the number on the card serves as a key t o more detailed information and t o certain identification, as exis ts i n USA; and

3. specific purpose cards, l ike the Australian Medicare card.

USES AND ADVANTAGES OF IDENTITY CARDS

Some countries enforce the universal use of identity cards for internal security purposes and t o monitor the movement of i nd i vidual s w i t h i n the country. They serve as internal passports and as an easy means of identification of individuals i n t he i r dealings w i t h the State. In these circumstances identity cards may be a useful a i d i n m a i n t a i n i n g law and order,

I n some countries identity cards are used t o obviate abuses a t the ballot box by requiring cit izens t o produce them before they vote. They are also widely used for purposes of identification i n the course of private commercial transactions - i n much the same way as a d r ive r ' s licence i s often demanded i n Australia as evidence of identity when wr i t ing cheques*

A system of numbers as a form of identification i s used i n some countries for recipients o f social security benefits. The number serves as identification and authentication of the recipient of the pension or benefit and i s aimed a t preventing multiple registration e i ther by using fa l se names or by registering a t various offices. This system i s also intended t o help i n speedier and more accurate del i very of State services t o el i g i b l e c i t i nens and i s p a r t i cul arly useful where many cit izens have the same name, e.g. Smi th or Jones.

The advantages of identity cards ar ise from the purposes t o which they are p u t i n any particular country:

e i n countries such as the Federal Republic of Germany they provide a means of checking on the movements of individuals for internal security purposes;

e i n South Africa they identify different racial groupings and control the movements of non-whites;

e .in the United States they are used t o regis ter social security accreditations; and

i n Israel they are used for internal security and t o o b t a i n social security benefits.

I t can therefore h a t the advantages would be perceived extent t o w h i c h the S ta t e ' s r i g h t t o

i t s cit izens i s ace

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I d e n t i t y Cards - The Major Issues

COMMENTS SUPPORTIIV THE I I V T ~ O ~ U ~ ~ I O I V - OF IDENTITY CARDS

Among those who do no t s t r o n g l y oppose t h e i n t r o d u c t i o n i n t o A u s t r a l i a of ID cards, t h e r e a re two groups o f op in ion : t hose who advocate t h e i n t r o d u c t i o n o f t h e I D cards; and those who, w h i l e no t d i r e c t l y advoca t ing such an a c t i o n , a r e n o t comple te ly opposed t o t h e idea. Both o f these groups appear t o b u i l d t h e i r op in ions f rom t h e same premise: t h a t A u s t r a l i a n s a l r e a d y c a r r y many forms o f i d e n t i f i c a t i o n which they may be r e q u i r e d t o produce. M r E r i c R iss t rom o f t h e Taxpayers A s s o c i a t i o n i s quoted as saying, 'Everybody a l ready has c r e d i t cards o r Medicare cards and t h e l i k e , so what have they go t t o f e a r ? ' [ 1 2 ] T h i s a rgument was a l s o p rdmoted i n an A u s t r a l i a n e d i t o r i a l .[1.3]

The average A u s t r a l i a n today has a Medicare card, a Bankcard and p robab ly one or more o t h e r c r e d i t cards issued by department s to res , c r e d i t un ions o r o r g a n i s a t i o n s such as American Express or D i n e r s Club, The A u s t r a l i a n Taxa t ion O f f i c e has a r e c o r d o f h i s income and t a x - d e d u c t i b l e expend i tu re , and t h e Immig ra t i on Department knows i f he has a passpor t and has t r a v e l 1 ed overseas. 'The E l e c t o r a l O f f i c e has a reco rd o f h i s address and occupat ion, and h i s S t a t e Government k,nows i f he has a d r i v e r ' s l i c e n c e and owns a car.

It i s hard t o see how a s i n g l e ca rd b e a r i n g a photograph and encoded w i t h i n f o r m a t i o n such a s address, t a x f i l e number and perhaps blood t y p e cou ld i n f r i n g e t h e ' l i b e r t i e s o f someone about whom so much i s a l r e a d y known.

No proposal a long these l i n e s c o u l d be t o t a l l y immune t o t h e dev ices o f determined cheats. But i t would b e n e f i t t h e m a j o r i t y of honest A u s t r a l i a n s a t no cos t t o t h e i r c i v i l l i b e r t i e s .

The Canberra Times e d i t o r i a l o f 7 June 1985 f o l l o w e d a y Mr Riss t rom and t h e A u s t r a l i a n , when i t s i m i l a r l i n e t o t h a t

advocated t h e use o f I D cards f o r A u s t r a l i a n c,r't..izens. It concluded,

C i t i z e n s i n a democracy have o b l i g a t i o n s as w e l l as r i g h t s , and i,t should be an o b l i g a t i o n t o c a r r y an i d e n t i t y card, n o t o n l y t o p revent the u n p r i n c i p l e d from c h e a t i n g t h e system b u t t o ensure t h a t people u n c o n s ~ ~ o u s o r dead a f t e r an acc iden t can q u i c k l y be i d e n t i f i e d , Honest people would have n o t h i n g t o .fear, b u t would b e n e f i t from an assurance t h a t o t h e r s a r e n o t misus ing t a x p a ~ e r s ' funds or a v o i d i n g pay ing t h e i r share o f t h e t a x b i l l e

12, e r a l d , --_I".. 5 June 1985, p.35, 13, A u s t r a l i a n , 8 May 1985,

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Identity Cards The Major Issues

In its issue of 28 May 1985, the & 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 o f the privacy of individuals, While supporters o f the ID cards quoted above t ook the line that Australians were used to being asked t o identify themselves, Professor Howard's argument was that government at a l l levels, and i n 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.

. * . 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 roll s, employment records - everything from birth to death certificates.

According to the I__ Age,

'It is easy to get out o f touch with the times1 he says. 'The idea that in some sense we can preserve so'me sort of privacy by not having ID cards seeins to be somewhat of an i 1 1 us ion.

'We have all been brought up t o 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 reaction.'

Professor Howard says an ID card would not make it any easier than now for a govern~e~t to abuse citizens' rightss. 'It is o n l y the force of public opinion that keeps them in

-- - The so-called phi~oso~hica~ arguments against. the introduction of identity cards for a l l Australians have two themes. The first concerns the idea of ~ o v ~ r ~ m e ~ t assuming the role of 'Big Brother' and the consequential invasion o f the civil rights of citizens as Australia moves towards becoming a police stale. As will be obvious From the reactions below, the advocacy o f ID cards attracts strong and emotional responses, In a letter t o the editor o f the Australian, Run Castan Q.C., President of the Victorian Council for Civil Liberties, high1 ighted the major philosophical worries:

SIR - Your editorial ( ) ~ u p p o ~ t ~ n g the introduction of j~entification cards ~ ~ ~ ~ e c t s an appallin ly naive view of the way in which b u r ~ a u ~ r a c i ~ ~ function ~

14. -.-...-I Age May 1985.

- 9 -

I d e n t i t y Cards - The Major I ssues

I n t o t a l i t a r i a n c o u n t r i e s one o f t h e most e f f e c t i v e means o f c o n t r o l o f t h e p o p u l a t i o n i s t h e m o n i t o r i n g o f e v e r y c i t i z e n ' s a c t i v i t i e s , by a process o f r e g i s t r a t i o n . I n o r d e r t o under take such a n i o n i t o r i n g e x e r c i s e i t , i s necessary t h a t each person be i ssued w i t h a 'pass c a r d ' (as i n South A f r i c a ) , o r an ' i n t e r n a l passpor t ' ( a s i n t h e S o v i e t Union).

Th is must be produced on every occasion on which t h e c i t i z e n changes r e s i d e n c e , t r a v e l s a c r o s s S t a t e or m u n i c i p a l boundaries, has any d e a l i n g s w i t h any governmental agency o r j o i n s any organ i s a t i on.

C o n t r o l s on freedom o f movementg thought and a c t i o n o f c l ' t i zens c a n n o t b e e f f e c t I v e l y imp1 emented u n l e s s each c i t i z e n c a r r i e s a ' pass

The f i r s t stage i n t h e d e s t r u c t i o n o f t h e ' l i b e r t y o f t h e i n d i v i d u a l i s t h e r e ( ~ u ~ r ~ m ~ ~ i t t h a t every person c a r r y t h e 'pass ' which can be r e q u i r e d ,to be produced on a l l occas ions des i red by t h e Sta te .

Once such a system i s ~ n t r ~ d ~ ~ ~ d , t h e occasions f o r i t s use w i 11 pro1 i f e r a t e u Every g o v ~ ~ ~ i m ~ n , t a ~ a r ~ a n . ~ sa t i on w i 11 fi nd i t necessary t o r e q u i r e p roduc t i on o f t h e ' pass ' , And every t i m e t h e pass i s produced, t h e computer reco rds w i l l be updated e

Your e d i t o r i a l SU ges ts t h a t t h e i n t r o d u c t i o n of such cards w i l l o n l y a f f e c t ,the d ishonest and o n l y harm those who have something t o h i d e s

The same argument i s p u t i n r e l a t i o n t o every proposed i n t r u s i o n i n t o o u r c i v i l l i b e r t i e s e The argument i s s p u r i ous

Unless we a r e v i g i l a n t t o p revent t h e es tab l i shment o f a system which f a c i l i t a t e s t h e c o n t r o l o f ou r l i v e s by t h e S ta te , t h a t system, once ~ ~ t ~ o d u ~ ~ d ~ w i l l i n e v i t a b l y l ead t o t h a t very c o n t r o l e The i n t r o d u c t i o n o f t h e ' pass ' w i l l i t s e l f become t h e reason f o r t h e use o f i t i n an oppress ive m a n n e r

I n c o n s ~ ~ e r i n g SUG a p ~ o p a s a ~ t h e fund~rnen ta l s t a r t i n g point. must be t h a t An addi t i onal i n s t runient for t h e c o n t r o l o f peopl e ' s 1 i ves should no t be p laced i n t h e h s of government upon t h e a s s u m p t i o n o f a r n ~ s p . ~ a c ~ d t h i n t h e a b i l i t y o f ~ o v e r n m ~ n t a ~ ~ u r e a u ~ ~ a c i e s t o admini s tep such powers fa i r l y and we1 1

he b u r e a u ~ r a c y i s ~ no t t o be t r u s t e d .

- 10 - I d e n t i t y Cards - The Major Issues

i n d i v i d u a l . They a re geared t o t h e promot ion o f t h e i r own systems.

The proposal f o r t h e i n t r o d u c t i o n o f a 'pass ' i s outrageous and should be r e s i s t e d a t a l l cos ts . [ l5 ]

Opponents o f I D cards f e a r t h a t i f t h e cards a re i n t roduced f o r one o r two s p e c i f i c purposes, such as t o reduce s o c i a l s e c u r i t y f raud o r t a x evas ion, t h e number o f purposes f o r which t h e cards a r e used w i l l i nc rease r a p i d l y as o t h e r government agencies, and perhaps non government o rgan isa t i ons , r e a l i s e t h e va lue o f such a system o f c e n t r a l i s e d i n f o r m a t i o n and data. 'The ex i s tence and r a p i d improvement i n computer techno logy adds t o t h e i r f e a r s :

The Pres iden t o f t h e New South Wales Court o f Appeal, M r J u s t i c e K i r b y , warns: 'What i s a t s take i s n o t h i n g l e s s than t h e na tu re o f our soc ie ty , and t h e power and a u t h o r i t y o f t h e s t a t e i n r e l a t i o n t o t h e i n d i v i d u a l ' e

M r J u s t i c e K i r b y says techno logy has s t a r k l y thrown up key i s s u e s f o r o u r s o c i e t y . ' M i l l we r e t a i n o u r B r i t i s h t r a d i t i o n s and keep g r e a t power under c o n t r o l ? ' he asks. ' O r w i l l we succumb t o the d e s t r u c t i o n o f personal autonomy and p r i v a c y as a r e s u l t o f a f r i g h t e n i n g combinat ion o f amazing new techno logy and e n t h u s i a s t i c e f f i c i e n c y exper t s who would th row away ou r f r e e d o m s ~ ' ~ 1 ~

I n pas t yea rs as a t t e n t i o n has focussed on organ ised c r ime i n A u s t r a l i a , t h e suggest ion has been made t h a t any a t tempt t o combat such c r i m e w o u l d be made e a s i e r i f a l l A u s t r a l i a n s c a r r i e d i d e n t i f i c a t i o n cards. This , f o r example, would make i t more d i f f i c u l t t o o b t a i n a f a l s e passpor t . I n h i s 1983 Royal Commission Repor t on Drug T r a f f i c k i n g , M r J u s t i c e Stewart s a i d t h a t A u s t r a l i a had n o t reached t h e s tage where t h e community would f i n d a compulsory system o f i d e n t i f i c a t i o n acceptable. Accord ing t o t h e -9 Age M r J u s t i c e S t e w a r t ' s views ' s t i l l s tand ' :

A t t h e moment a system o f compulsory i d e n t i f i c a t i o n cards, o r a s t a t u t o r y requi rement t h a t any c i t i z e n must be a b l e t o produce s a t i s f a c t o r y i d e n t i f i c a t i o n , 'would be repugnant t o many A u s t r a l i a n s as resembl ing t o o much t h e apparatus of d i c t a t o r s h i p 8 e

O f course, t h e i dea t h a t i d e n t i t y cards c o n s t i t u t e a t h r e a t t o personal 1 i b e r t i e s by ~ f f e r i n g o p p o r t u n i t i e s f o r Government t o c e n t r a l i s e a l l personal da ta and u i t wishes, i s no t a r e c e n t oneo I n a r e p o r t i n dune 1976 t h e Adv isory Committee on Fa1 se

158 20 May 1985. 16. 1985 e

170 -

- 11 - I d e n t - i t y Cards - The Major Issues

I d e n t i f i c a t i o n i n t h e U n i t e d S ta tes r e j e c t e d proposa ls f o r a n a t i o n a l i d e n t i t y card, One o f t h e grounds f o r r e j e c t i o n was t h a t i t represented an i n v a s i o n o f personal p r i vacy , and da ta r e q u i r e d f o r c i t i z e n s h i p i d e n t i f i c a t i o n c o u l d be abused b y government o r p r i v a t e i n t e r e s t s .

I n A u s t r a l i a i n t h e 1 9 7 0 ~ ~ d u r i n g t h e debate preced ing t h e i n t r o d u c t i on o f Medi bank t h e Commi t t e e o f Enqui ry i n t o P r o t e c t i on of P r i v a c y i n i t s Second I n t e r i m Repor t t o t h e then At torney-Genera l , Senator Murphy, looked a t va r ious aspects o f proposed h e a l t h i nsu rance cards and cons idered t h a t such d e t a i l s as da te o f b i r t h , sex, address and s i g n a t u r e s h o u l d n o t a p p e a r because t h e y c o n s t i t u t e d an undesi r a b l e i nvas i on o f p r i vacy.

It i s t h e e x i s t e n c e o f compu~er , ised da ta banks t o which i d e n t i t y cards may be l i n k e d which c o n s t i t u t e s t h e major t h r e a t t o p r i v a c y . A c a r d may have o n l y a s imp le i d e n t i f i c a t i o n o r even a number b u t by means o f a computer l i n k much more d e t a i l e d i n f o r m a t i o n can be r e a d i l y ob ta ined whether i t i s r e l e v a n t t o t h e purpose f o r which t h e ca rd was presented or n o t B For i ns tance , i n A u s t r a l i a T a x a t i o n Depar tmen t files a r e s a i d t o be c o n f i d e n t i a l b u t t h e exempti ons under t h e s ~ c r ~ c ~ p r o v i s i ans o f t h e T a x a t i on Act i n c l ude Boards o f Review, t h e R e p a ~ r i ~ t i o n Commission, t h e ~ i r e c t o r ~ ~ e n e r a ~ o f Soc ia l S e c u r i t y , t h e D i ~ ~ e c ~ ~ r - ~ ~ n e r a ~ o f Hea l th and o thers . Th is means t h a t i n f ormat i on f rom a v a r i e t y o f government departments coul d be pooled i n a way no t o r ~ g i n a ~ ~ y in tended,

s o f --- I n t h e USA, 98 pe r cent o f h ~ u s ~ h o l d s h o l d s o c i a l s e c u r i t y cards.[18] S o c i a l s e c u r i t y l ~ ~ ~ s ~ a t i o n was f i r s t passed i n 1935 and by t h e end o f t h e f i r s t y e a r o f o p e r a t i o n 45 m-i 11 i o n s o c i a l s e c u r i t y accounts were opened and numbers I'ssued t o account ho lders. Because o f t h e advantages assoc ia ted w i t h p a r t i c i p a t i o n i n S o c i a l S e c u r i t y , t h e number o f accounts rose q u i c k l y t o approximate t h e number o f employed persons. By mid-1983 t h e r e were 205 m i l l i o n a c t i v e accounts, each w i t h a S o c i a l S e c u r i t y number and ca rd cor respond ing t o it, Some 5,5 m i l l i o n new accounts a r e b e i n g cldded each year, Because n e a r l y every economica l l y a c t i v e adu' l t i n t h e U n i t e d S ta tes has a Soc ia l S e c u r i t y number, t h e number i s i d e a l f o r o t h e r s u r v e i l l a n c e and management purposes, S i rice 1963. t h e I n t e r n a l Revenue Serv i ce ( I R S ) has adopted t h e use o f S o c i a l S e c u r i t y numbers f o r o r d e r i n g income t a x records and f o r i d e n t i f y i n g t ~ ~ x p a ~ ~ r ~ * ~ ~ ~

The use o f a pe rsons ' s s o c i a l s e c u r i t y number as bo th a means o f i d e n t ~ f i ~ a t i o n and as a method c o l l e c t i n g d a t a i s now much g r e a t e r t han must ever have h ed i n 1935, Some examples:

$ . B e e t a l . I d e n t i f i c a t i o n and Mass

- 12 - I d e n t i t y Cards - The Major Issues

To open a bank account, one has t o quote one 's s o c i a l s e c u r i t y numbere The new account i s then r e p o r t e d t o and recorded by t h e I R S .

The same occurs when a person buys shares.

e Some US S t a t e s now use a person 's s o c i a l s e c u r i t y number as t h e nurnber f o r t h e i r d r i v e r s l i cence .

The second p h i l o s o p h i c a l o b j e c t i o n t o t h e use o f i d e n t i t y cards or any form of compulsory i d e n t i f i c a t i o n system i s t h e de -pe rsona l i s ing e f fec t o f such systems. The number o r ca rd rep laces t h e person:

The danger i s t h a t t h e p e r s o n a l i t y becomes no t t h e l i v i n g f l e s h and b lood b u t t h e f a c e on t h e card. J u s t as t h e person needing medica l ca re i s no t t h e body b u t t h e Medibank number. O r t h e person want ing c r e d i t i s t h e Bankcard o r D i n e r s Card. [2Q]

To be a niimber f o r o f f i c i a l purposes has a dehumanising e f f e c t . This has been found i n p r i s o n s and t h e Nagle Royal Commission i n t o P r i sons i n NSW i n 1978, recommended t h a t t h e use o f numbers be abol ished, P r i s o n a c t i v i s t B r e t t C o l l i n s r e c e n t l y wrote, 'Because i t s members have worn numbers and names on t h e i r ches ts f o r decades i n p r i son , t h e P r i soners A c t i o n Group f i n d s t h e p r o p o s i t i o n f o r a un'l versa1 TU system shock ing ' .E211

Commenting on t h i s aspect of' t h e ID ca rd system as mentioned i n t h e Tax White Paper, Pe te r Cole-Adanrs wrote,

If Bob Hawke and Paul Kea t ing have t h e i r way, A u s t r a l i a n s i n t h e c l o s i n g yea rs o f t h e 20 th cen tu ry w i l l be c o n f i d e n t of t h e i r ex i s tence o n l y i f t hey have a l i t t l e p l a s t i c - c o a t e d ca rd t o prove i t . [223

Costs

The a c t u a l cos ts i n v o l v e d i n e s t a b l i s h i n g and m a i n t a i n i n g a n a t i o n a l scheme o f i d e n t i f i c a t i o n w i l l o b v i o u s l y vary acco rd ing t o t h e t y p e of system adopted and t h e purposes f o r which i t i s used. However t h e r e a re some cos ts which w i l l be common t o any t y p e of system us ing an I D ca rd o r number:

m e s t a b l i s h m e n t c o s t s - e s g . p u b l i c i t y , m a i l i n g , computers, r e c r u i t i n g , m a t e r j a l s ; and

20. ~ a n b e r ~ a Times, 27 ~ o ~ e m ~ e r 1977.

22 * 8 June 1985, p o l l o 21. e 9 9 May 1985,

- 13 - I d e n t i t y Cards - The Ma jo r Issues

e c o s t s of m a i n t a i n i n g and p o l i c i n g t h e system - e.g. s i z e o f bureaucracy needed t o m a i n t a i n system and t o check a p p l i c a t i ons f o r new c a r d s o r r e n e w a l s ; p u r s u i n g f o r g e r i e s ; h a n d l i n g i n f o r m a t i o n about card-holders.

A t t h e t i m e of t h e es tab l i shmen t o f Medicare, es t ima tes o f t h e c o s t o f i s s u i n g Medicare cards were:

Set up c o s t s - machinery, postage etc . :

i f sent t o a l l households - $11.2m e i f sent t o a l l i n d i v i d u a l s - $14.5~1

,, Cost o f replacement every two y e a r s :

e t o i n d i v i d u a l s - $4.6me e t o households - $2,5m,

I n i t s 1976 Repor t t h e ( U S ) Federa l Adv iso ry Committee on F a l s e I d e n t i f i c a t i o n a l s o l i s t e d as a major o b j e c t i o n t o a n a t i o n a l I D scheme, t h e expense i n v o l v e d i n v e r i f y i n g and s t o r i n g i n f o r m a t i o n suppl i e d by ca rdho lde rs

As d iscussed e a r l i e r , t h e Government's proposal f o r t h e A u s t r a l i a Card l 'ncl udes ~ ~ ~ . ~ ~ ~ a t ~ s o f t h e c o s t s o f i t s es tab l i shmen t and opera t i on . They are, i n I985 terms, $38m f o r es tab l i shmen t o f t h e system and annual o p e r a t i n g c o s t s o f $49m.

A f u r t h e r o b j e c t i o n i s t h e f a c t t h a t such a system would be s u b j e c t t o d e f e a t by imposters and c o u n t e r f e i t e r s t a k i n g advantage o f c a r e l e s s i n s p e c t i o n o f documents o r t h rough t h e c o r r u p t i o n o f o f f i c i a l s . The f o r g i n g o f i d e n t i t y cards would n o t be d i f f i c u l t and at tempts t o make t h i s more d i f f i c u l t by t h e use o f photographs o r f i n g e r p r i n t s would comp l i ca te t h e system and arouse s t r o n g o p p o s i l i o n .

I n an at tempt t o reduce f o r g e r y at tempts, t h e proposed A u s t r a l i a Card i n c l u d e s a h o l o g r a p h i c diagram o f t h e map o f A u s t r a l i a and t h e A u s t r a l i a n f l a g .

S ince i t s i n t r o d u c t i o n t h e A u s t r a l i a n Medicare ca rd has ma in ta ined a low p r o f i l e . It has a t t r a c t e d l i t t l e a t t e n t i o n because t h e o n l y t i m e i t i s r e a l l y needed is when a d o c t o r b u l k b i l l s a p a t i e n t , o r when be ing t r e a t e d i n some p u b l i c ho p i t a l s . Furthermore, i t i s no t compulsory t o c a r r y t h e card, There has been l i t t l e o r no p u b l i c i t y about t h e c a r d be ing demanded f o r o t h e r purposes.

However, as a l r c dy d ~ s ~ u s ~ e d ~ t h e US s o c i a l s e c u r i t y number i s an example o f ho e a s i l y an i d e n t i f ~ c a t i o n s y s t e m and i t s

d da ta and .i can be used f o r purposes

I d e n t i t y Cards - The Major Issues

o t h e r than t h e o r i g i n a l one. The growing use o f s o c i a l s e c u r i t y numbers f o r a wide v a r i e t y o f purposes caused concern i n t h e Un i ted States, and i n 1974 became t h e s u b j e c t o f a f e d e r a l i n v e s t i g a t i o n . A l though a 1939 law guqranteed t h a t i n f o r m a t i o n i n s o c i a l s e c u r i t y f i l e s would be used o n l y f o r t h a t program, so many excep t ions had been g ran ted by Con res5 t h a t i t was s t a t e d i n 1975,

... t h e S o c i a l S e c u r i t y A d m i n i s t r a t i o n i s a f o u n t o f i n f o r m a t i o n f o r F e d e r a l , S t a t e and m u n i c i p a l - g o v e r n m e n t agencies, I n a t l e a s t 30 s i t u a t i o n s , personal d a t a f rom S o c i a l S e c u r i t y r e c o r d s may be re leased t o o t h e r agencies w i t h o u t t h e consent o f t h e i n d i v i d u a l involved.[23]

I n a d d i t i o n t o t h e o f f i c i a l agencies which had access t o t h e f i l e s , t h e f e d e r a l i n q u i r y was i n v e s t i g a t i n g why s o c i a l s e c u r i t y numbers were o f t e n i n c l u d e d on m a i l i n g l i s t s s o l d c o m m e r c i ~ ~ l y ~

t o r e p o r t s i n t h e and t h e A u s t r a l i a n F i n a n c i a l t h e submission on t y cards

u r i t y was l e s s than e a s t i c . A t h e c o s t s of such a scheme and i t s p o s s i b l e E i t s c l i e n t s , t h e Department acco rd ing t o press r e p o r t s o f f e r e d t h e f o l l o w i n g o p i n i o n s :

e I D c a r d s w o u l d a s s i s t i n c o r r e c t i n g ove rpaymen t problems.

e Unless t h e s e c u r i t y o f t h e cards was v i r t u a l l y absolute, t h e e x i s t e n c e o f t h e ID cards m i g h t exacerbate t h e degree o f f r a u d . Whi le t h e cards m i g h t d e t e r t h e a m ~ t ~ u r ~ i t m igh t have no e f f e c t on t h e p r o f e s s i o n a l de f rauder . 'They argue t h a t once a ca rd i s f o r g e d t h e whole system i s unlocked, ' E

., The e x i s t e n c e o f I D cards w i l l n o t ass-ist t h e Department of S o c i a l S e c u r i t y i n i t s major problem o f people supp ly ing f a l s e i n f o r ~ ~ a t i o n about t h e i r income l e v e l s and domest ic c ~ r c ~ m ~ t ~ n c E ~ ~

It i s up t o each i n d i v i d u a ~ t o dec ide whether he o r she agrees or d isag rees o r even cares w ~ e t ~ e r A u s t r a l i a n s should be i ssued w i t h i d e n t i t y cards. T h i s paper has sought t o r a i s e t h e i ssues on which

23 (. mber 1975, p.50. 24. ~ i n ~ n ~ i a ~ R e v ~ e w ~ 27 and 28 June

25. A ~ s t r a l i a n F i n pII___

Identity Cards - The Najor Issues

this decision m i g h t be based. Probably the practical objections are not as important as the philosophical arguments. The decisions made on c e r t a i n i s sues a n d the assurances of fe red by a Government responsible for the proposal t o introduce an ID cards scheme wi l l probably sway public op in ion for or aga ins t the idea. Those issues i ncl ude :

e whether or not i t will be compulsory t o carry the card a t a l l times;

what information the card will contain, e . g e will i t carry only a number or many personal de t a i l s , w i t h or w i t h o u t a pho tograph ;

e whether the card wi l l be for a specific purpose or whether i t s use may be changed by the Government o f the day;

whether Austral?an ci t izens can be assured t h a t the informat ion t h a t they are compelled t o supply will remain confidential and w i l l not be passed between g ~ v e r n ~ e n ~ agencies and even commercial organisations;

. what r ights Australians wi l l have t o see the i r f i l e s t o ensure t h a t a l l ~ n f o r m a ~ ~ o n i s accurate, and whether there wi l l be avenues o f appeal a g a i n s t incorrect, u n f a i Y' or i naccurate entr ies ;

f ina l ly (and impossible t o answer), how will Australian c i t i z e n s k n o w whether or n o t they can t r u s t t h e Government of the day and the bureaucracy not t o abuse the power which i s presented t o them by centralised, computerised information on every ci t izen i n Australia.

Identity cards or nurnbers as such are neither good nor bad. I t i s i n the i r potential for abuse t h a t the danger l ies . I f they are adopted i n any form i t would seem t o be necessary for the controlling authority t o ensure t h a t t he i r use i s not extended t o unrelated purposes, t h a t access t o the collected d a t a i s not exploited and t h a t the privacy o f i n d i v i d u a l Australians i s completely safeguardede

So the question of accepting or rejecting ID cards i s a question o f balance. There are those people who completely reject the idea because they see them as a threat t o the rights and l i be r t i e s of individual Australians. To such people assurances from governments t h a t there will be no ab[ wer, intentional or unintentional are not good enough: ide s are merely Big Brother's foot i n the door.

On the other s ide are those people who feel so strongly about a p a ~ t i c ~ l ~ r issue, security f r aud or t a x evas-ion, t h a t they advocate as a method o f

hey do n o t see the danger^ t o be as great 1ems.

... 16 - Identity Cards - The Major Issues

as feared by opponents of the idea. As has been asked, which is a greater abuse, an identity card or h a v i n g t o pay more t h a n your f a i r share of t a x ? David Simmons M.P. commented on th i s s i t u a t i o n ,

You have t o balance o u t w i t h cons idera t ions of c i v i l l iber t ies . There have obviously got t o be questions o f cost-benefit, balancing the efficiency of the bureaucracy w i t h the privacy of the individual.[26]

Perhaps the answer i s somewhere i n between these two positions. A f i n a l word of warning i s contained i n a 1927 comment from Mr Just ice Brandeis of the US Supreme Court,

Experience shou'ld teach us t o be most on our guard when the Government's purposes are benef i ci ent e Men born t o freedom are naturally a l e r t t o repel invasion o f t he i r l iber ty by evil-minded rulers. The greatest dangers t o l iber ty lurk in insidious encroachment by men of zeal, we1 1 -meani ng , b u t without understanding.[27]

July 1985

I_F__I

26 e 6 June 1985. 27 * 1985,

- 17 -

SOC I Ab W ~ ~ F ~ ~ ~ REC I P I E TS I N SELECTED COUNTRIES

Canada. The SINCARD system, i n t roduced rnore than t e n yea rs ago, was o r i g i n a l l y i n tended f o r s o c i a l s e c u r i t y purposes b u t has expanded i n use, d e s p i t e widespread p r o t e s t s . By compu te r i sa t i on i t l i n k s i n t o income t a x as w e l l as s o c i a l s e c u r i t y . The i n d i v i d u a l has a SINCARD g i v i n g name and number b u t t h e r e -is no p r o v i s i o n f o r s igna tu re , photo o r f i n g e r p r i n t . The number i s e s s e n t i a l for employment. However, i t s main advantage i s convenience; as a means o f i d e n t i f i c a t i o n i t has l i t t l e advantage over a d r i v i n g l i c e n c e , f o r example.

Denmark. Each i n d i v i d u a l has a p o s t a l r e g i s t r a t i o n card, w i t h a number based on b i r t h da te and y e a r : t h i s i s used f o r s o c i a l s e c u r i t y r e g i s t r a t i o n and i d e n t i f i c a t i o n . Soc ia l S e c u r i t y i s admin i s te red by a s i n g l e c e n t r a l i s e d , computer ised system which i s t h e main c o n t r o l mechanismn

P

Each ind ’Pv idual has an I D c a r d w i t h as i n a passpor t (address, d a t e o f b i r t h ,

s igna tu re , h e i g h t , eye c o l o u r ) and a number based on name and b i r t h d a t e e Cont ro l o f i l l e g a l payments i s e f f e c t e d by t h e requi rement f o r i n d i v i d u a l s t o r e g i s t e r a n n u a l l y and t o update f a m i l y circumstances. Payments a r e made through a bank account o r p e r s o n a l l y on p r o d u c t i o n of i d e n t i f i c a t i o n .

Nether lands. _l_l_l* There -is no n a t i o n a l I D system, Abuse o f t h e s o c i a l s e c u r i t y system i s made d - i f f i c u l t by t h e f a c t t h a t each a d u l t i s s u b j e c t t o r e g i s t r a t i o n o f address w i t h t h e l o c a l a u t h o r i t y . The s o c i a l s e c u r i t y system i s ~ o m p ~ ~ t e r i s e d and c e n t r a l i s e d , and a l l b e n e f i t s a r e p a i d by t h e G I R O system ( t h e p o s t a l bank ing system) f o r which t h e r e i s no charge and which a l l b e n e f i c i a r i e s a r e r e q u i r e d t o Use,

New Zealand. The s i t u a t i o n i n New Zealand i s s i m i l a r t o A u s t r a l i a . There i s no n a t j o n a l I D system, nor i s t h e r e a s p e c i f i c s o c i a l s e c u r i t y card. The main means o f c o n t r o l a re th rough t h e e f f i c i e n c y o f t h e p r e l i m i n a r y r e g i s t r a t i o n s y s t q n and t h e r e q u i r e m e n t t o r e - r e g i s t e r o r r e p o r t p e r i od i c a l lye There i s a’l so a b e n e f i t s c o n t r o l d i v i s i o n , as i n o t h e r c o u n t r i e s , which ~ n v e s t ~ g a t e s susp ic ious cases o r a ~ l e g ~ t ~ o ~ i s made by members o f t h e p u b l i c .

-----=--

Sweden. Each i n d i v i d u a l has an i d e n t i t y ca rd and t h e number i s used ks and f o r t a x a t i o n and s o c i a l s e c u r i t y purposese There i s an

e l a b o r a t e D a t a Act t o l i m i t and prevent abuse o f t h e I D ca rd and r e 1 a t e d i n f o r m a t i o n systems.

e The s o c i a l s e c u r i t y system i n B r i t a i n i s funded t h r o u g h i n d i v i d u a l s ( a s we9 1 a s e m p l o y e r s ’ and govern men^) c o n t r i b u ~ i o n s ~ An e s s e n t i a l document f o r employment i s t h e s o c i a l s e c u r i t y ca rd which keeps account o f c o n t r i b u t i o n s and i s used f o r s o c i a l s e c u r i t y b e n e f i t s as w e l l . The o n l y ~ d e r i t i f i c a t i ~ n i s t h e name, number and s ~ g n a t u r e ~

U n i t e d ~ t a . ~ e s ~ A l l e rmal e m ~ ~ o y m e n t ( o t h e r than f e d e r a l and some o t h e r ment) have a s c i a 1 s ~ c ~ r ~ ~ y c a r d whi c h c a r r i e s mber b u t no s g n a t u r e o r o t h e r i d e n t i f i c a t i on, w e l l as s o c i a l s e c u r i t y .

ARGUMENTS RELATED TO TAX EVASION Commerce Group

I f i d e n t i t y cards were i n t r o d u c e d and laws enacted t o r e q u i r e people t o produce t h e cards f o r t a x a t i o n purposes, t a x evas ion i n two areas i n p a r t i c u l a r would be c u r t a i l e d i f n o t e l im ina ted . These areas a re d iscussed b e l ow.

( a ) C u r t a i l m e n t o f evas

By way of background, t h e genera l PAYE t a x i n s t a l m e n t s c a l e takes i n t o account t h e zero r a t e o f t a x t h a t a p p l i e s on t h e f i r s t $4595 o f a pe rson ' s income ( t i t l e d t h e 'General Exemption' f o r PAYE purposes). The t a x i n s t a l m e n t s d e d u c t i b l e i n accordance w i t h t h e genera l s c a l e app ly t o t h e g r e a t m a j o r i t y o f employees who do no t c l a i m concess ional reba tes (e.g. t h e dependent spouse r e b a t e ) and t h e i n s t a l m e n t s i n t h a t s c a l e a re reduced f o r people c l a i m i n g concess ional reba tes f o r PAYE purposes by t h e weekly v a l u e o f t h e r e b a t e ( s ) c la imed.

Another sca le , which s e t s o u t t h e PAYE i n s t a l m e n t s t o be deducted where an employee has a second job , makes no a l lowance f o r t h e ze ro r a t e s tep no r i s t h e s c a l e reduced by t h e va lue o f any concess ional rebate. Furthermore, t h e s c a l e ( d e s c r i b e d as t h e ' no d e c l a r a t i o n s c a l e ' i n these no tes ) assumes t h e employee earns a c e r t a i n amount o f income i n h i s o r her main j ob . I t i s necessary t o make t h i s assumption i n o r d e r t h a t t h e h i g h e r marg ina l r a t e s o f t a x t h a t app ly a t t h e h i g h e r l e v e l s o f income a re r e f l e c t e d i n t h e PAYE deduc t ions made f rom earn ings i n second jobs.

To have t h e genera l s c a l e a p p l i e d i n de te rm in ing t h e PAYE deduc t ion from h i s / h e r pay an employee has t o l odge w i t h h i s l h e r employer a completed Income l a x I n s t a l m e n t D e c l a r a t i o n form c l a i m i n g t h e general exemption. Any concessi onal reba tes t o which t h e employee i s e n t i t l e d may a l s o be c la imed i n t h a t d e c l a r a t i o n . L e g a l l y employees may have o n l y one d e c l a r a t i o n i n f o r c e a t any t ime. Acco rd ing l y , an employee w i t h two j o b s who compl ies w i t h t h e law and fu rn i shes a d e c l a r a t i o n t o o n l y one o f h i s l h e r employers would have t h e genera l s c a l e ( o r t h a t s c a l e l e s s t h e va lue o f any concess ional rebates c la imed) a p p l i e d by t h e employer t o whom t h e d e c l a r a t i o n was furn ished, and t h e no d e c l a r a t i o n s c a l e a p p l i e d by t h e o t h e r eniployer.

A l a r g e number o f employees a re overcoming t h e r u l e t h a t an employee may have o n l y t h e one Income Tax I n s t a l m e n t D e c l a r a t i o n i n f o r c e a t any t i m e - perhaps i n some cases w i t h t h e c o l l u s i o n o f t h e i r employers - by work ing under a f a l s e name i n one o r more o f t h e i r jobs. Some o f these employees a l s o i n s e r t f a l s e dependants i n t h e i r f a l s e d e c l a r a t i o n s t o e n s u r e t h a t no P A Y E d e d u c t i o n s , o r o n l y n e g l i g i b l e amounts o f deduct ions, a re made f rom t h e i r earn ings. O f course, t h e second Job earn ings o f t hese people a re n o t shown i n t a x a t i o n re turns^

Other categories of emp~oyees who use false names and who claim false dependants for PAVE 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 o f tax deducted each week this avenue of tax evasion would be closed off.

(b) I__ Curtailment of evasion of tax on dividend and interest income

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 ~ a x a ~ i ~ n Office the interest (or interest over a certain moderate amount) that they have paid to each account holder, Also , dividend pa,yments are checked by the Taxation Office from company records e

Reports ind-icate that the program i s having only ,a limited effect$ mainly because i t i s 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 ~ f ~ t h e ~ / s o ~ for example) and a large number of people change their address each year,

Apart from the difficulty o f 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 advlser8s company in a false name to avoid the assets test affecting the person’s pension. Is i t possible then that suggestions to this effect ar eing made to people concerning evading tax on such payments as inter

Identity cards would overcome the problem o f 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 great1 effective task to a re~atively simp’le and very effective one. Miti identity cards in ope ratio^ the banks, building societies, credit unions, trusts and businesses payin interest to other than banks, building societies and credit unions are referred to as financial institutions in interest, dividends

i

It may be though t t h a t t h e evas ion o f t a x by way o f i n t e r e s t arid d i v i d e n d payments n o t b e i n shown i n t a x a t i o n r e t u r n s cou ld be s imply overcome by w i t h h o l d i n g t a x f rom such payments a t source. Under such a system t h e f i n a n c i a l i n s t i t u t i o n s would w i t h h o l d t a x f rom i n t e r e s t , d i v i d e n d s and u n i t t r u s t payments a t t h e t i m e o f payment, o r c r e d i t i n g o f payments i n q u e s t i o n i n t h e same way as employers w i t h h o l d t a x f rom t h e pay o f employees under t h e PAY& system.

The problem w i t h such a system would be t h a t t h e f i n a n c i a l i n s t i t u t i o n would have no means of knowing a t what r a t e t a x would be pa a b l e by a person on h i s / h e r payments. That r a t e would depend on n o t o n l y t h e payment concerned b u t on t h e pe rson ‘s n e t income f rom o t h e r sources, and i n some cases t h e pe rson ’s e n t i t l e m e n t t o t a x reba tes , Acco rd ing l y , un less avenues a r e t o be l e f t open f o r those on t h e h i g h e r incomes t o evade t a x by n o t i n c l u d i n g t h e i r d i v i d e n d s and i n t e r e s t payments i n t a x a t i o n r e t u r n s , t a x would have t o be w i t h h e l d frorn t h e payments i n q u e s t i o n a t t h e maximum r a t e o f t a x .

I t may be s a i d t h a t t h e o v e r w i t h h o l d i n g o f t a x f rom i n t e r e s t , d i v i d e n d s and un. i t t r u s t payment^ would n o t be a serl’ous problem, as t h e amount w i t h h e l d would be a l l owed as a c r e d i t a g a i n s t t h e pe rson ’s t o t a l t a x l i a b i l i t y a t t h e assessment s tage f o l l o w i n g lodgment o f income t a x r e t u r n s . Any excess over t h a t necessary t o assessed t a x would then be refunded t o t h e taxpayer , o r deduc ed from t h e t a x payable on income f rom o t h e r sources. Desp i te t h i s , a l a r g e number o f people would, no doubt, t h i n k t h a t because t a x was be ing w i t h h e l d a t t h e maximum r a t e o f t a x t h e Government was t a k i n g h a l f o r more o f t h e i r i n t e r e s t r e c e i p t s i n tax .

Fay the

A w i t h h o l d i n g system would be p a r t i c u l a r l y i nconven ien t ( o r eous) f o r t hose p e n s i o ~ e r s who supplement t h e i r pension

from i n t e r e s t d i v i d e n s o r u n i t t r u s t s , and who, because t h e i r t o t a l income -is l e s s than t h t a x t h r e s h o l d , a r e n o t r e q u i r e d t o pay t a x . With a w i t h h o ~ d ~ n g system o p e r a t i n g these pensioners would e i t h e r have ,to l odge t a x a t i o n r e t u r n s ( i n t h e meantime go ing w i t h o u t t h e income t h a t was w i t h h e l d f o r t a x ) o r app ly t o have t h e i r i n t e r e s t exempt f r o m w i t h h o l d i n g . I n t h e l a t t e r case they would, i n e f f e c t , be

.to t h e f i n a n c i a l i n s t i t u t i o n s t h a t t h e i r t o t a l income each s low t h e t a x t h r e s h o l d .

The pensioners and b e n e f i c i a r i e s whose income i s o f a l e v e l t h a t r e q u i r e s them t o pay o n l y smal l amounts o f t a x would a l s o be d i s a d v a n ~ a ~ e d by hav ing t o w a i t , f o r up t o a year , f o r t h a t p a r t of t h e w i t h ~ o ~ d i ~ g deduc t ion t h a t was i n excess o f t h e t a x a c t u a l l y payable on t h e i r i n t e r e s t payments.

A f u r t h e r p o i n t a g a i n s t a w i t h h o l d i n g system f o r i n t e r e s t and d i v i d e n d payments i s t h a t un less some method cou ld be found t o enable t h e Taxa t ion Qff tce t o r e a d i l y i d e n t i f y people who had been p a i d i n t e r e s t and who were e n t i t l e d t o c r e d i t f o r t a x w i t h h e l d , t h e f i n a n c i a l i n s t i t u t i o n s would have t o i s s u e c e r t i f i c a t e s t o a l l t h e i r

h o l d e r s showing t h e i n t e r e s t and t a x w i t h h e l d . There r e q u i r e d and t h e e x e r c i s e an e n o r ~ ~ o u s number o f c e r t i f

c o s t l y f o r t h e f i n a n c i a l i n s t ~ t u t i o n s .

- 2 1 -

(e) 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.

Curtailment of some other avenues of tax evasion

(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.

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 PAVE and other taxation purposes, there would be few points against the issue of cards from a taxation point of view.

A number o f 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 1 ittle 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 o f 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,

Other Cur ren t Issues B r i e f s r e c e n t l y pub1 i shed by t h e Leg i sl a t i ve Research Serv i ce

1984 - NO. 1

NO. 2

No. 3

NO. 4

No. 5

No. 6

1985

No. 1

No. 2

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NO. 3

No. 4

No. 5

No. 6

Leigh, M., 'B rune i - Independence f o r Whom?'

Larmour, C., ' A f f i r m a t i v e A c t i o n : The US Exper ience and A u s t r a l i a n Proposals t o Combat Sex D i s c r i m i n a t i o n ' .

Newman, G. and Klason, A., 'New South Wales E l e c t i o n s , 1984 ( P r e l i m i n a r y R e s u l t s ) I .

Baxter , E., 'Su r roga te Mothers - The! Legal I s s u e s ' .

P a n t e r , R., ' A C h r o n o l o g y o f I n V i t r o F e r t i l i s a t i o n : A u s t r a l i a , January 1983 t o August 1984'.

C a s t l e , M., ' A Summary o f L e g i s l a t i o n R e l e v a n t t o t h e Impending E l e c t i o n ' e

Brown, G., ' A Shor t Guide t o Nuclear Weapons and Warfare Termi no1 ogy' e

Beyer, M., 'The World Sugar Market and Prospects f o r a New I n t e r n a t i o n a l Sugar Agreement'.

M a r k e r , A., ' I n d u s t r i a l R o b o t s i n A u s t r a l i a : An I n t r o d u c t i o n ' .

Makinda, Ss, 'The Coup i n Sudan: I n t e r n a l and I n t e r n a t i o n a l Imp1 i c a t i o n s ' e

Angley, J . , 'The New South Wales D o c t o r s ' D i s p u t e ' .

Fraser , D., ' T e l e v i s i o n and t h e S a t e l l i t e : t h e s t o r y so f a r ' e

If you wish t o r e c e i v e copies of any of t h e above p u b l i c a t i o n s p lease c o n t a c t t h e Pub1 i c a t i o n s O f f i c e r , Department o f t h e Par1 iamentary L i b r a r y , K u r r a j o n g Annex, Ba r ton ACT 2600, o r phone 72 7551.