What Happened
Simon Birmingham, the former Finance Minister who now leads the Australian Banking Association, appeared before a Senate committee hearing this week examining Australia's productivity. He warned that so-called liar loans, mortgage and business loan applications supported by AI-doctored documents, are becoming a serious and worsening problem for the sector.
"Artificial intelligence is making fake payslips and doctored statements frighteningly easy to produce," Birmingham said. "The single best defence against fake income documents is real income data, and the ATO already holds it."
Major lenders have been pushing for a mechanism to access ATO income data for credit assessment purposes. Birmingham framed the proposal around consent: applicants would authorise lenders to verify their income directly against ATO records rather than relying on documents the applicant provides.
"A single, authoritative source of income data is the most effective way to address the risk of fraudulent loan applications," he said. "Secure, consent-based access to ATO-held income information would give lenders a robust central point of truth, materially improving the integrity of lending decisions."
Why It Matters
Generative AI tools have lowered the technical barrier for document fraud to near zero. A convincing fake payslip no longer requires specialist skills or equipment. For lenders assessing mortgage applications, this creates a verification gap that existing document-checking processes were not built to close.
The consequences extend beyond individual loans. Fraudulent income declarations distort credit risk across a lender's book and, at scale, can contribute to systemic instability. Birmingham also connected the issue to broader financial crime, noting that "both the extension of anti-money laundering obligations and access to ATO income verification can make a meaningful difference to reduce loan fraud and criminal activity."
Key Details
The proposal centres on consent-based data sharing. Borrowers would authorise their lender to query ATO records directly, rather than submitting payslips or employer statements that can be forged. Birmingham described this as a productivity benefit as well as a fraud control: "Secure access to ATO data isn't just a fraud prevention measure but a productivity measure that can make loan applications simpler for consumers and give them faster, more accurate approvals processes."
The banking sector's position is that the government has already signalled openness to the idea. "Banks welcome the government commitment to explore granting access and recognise there are important considerations required but hope these processes can progress as quickly as possible," Birmingham said.
Background and Context
The ATO holds income and employment data for Australian taxpayers through the Single Touch Payroll system, which employers use to report wages and superannuation in real time. That data sits with the tax office and is not currently accessible to private lenders for credit assessment. The banking sector has long argued that closing this gap would cut fraud and reduce friction in the lending process. The Senate productivity inquiry gave Birmingham a formal platform to press the case, and the government's stated willingness to explore the option marks a shift from earlier resistance to sharing tax data with commercial entities.
The ATO, for its part, has been focused on encouraging compliance among small businesses. Its recent public guidance urges businesses to keep accurate records and engage proactively with the tax system, a posture that sits alongside, rather than against, the banks' push for read access to verified income figures.
What Comes Next
The government has committed to examining the proposal, but no timeline has been set. Birmingham's Senate appearance signals the banking sector intends to keep pressure on. Any scheme would require legislation or regulation to authorise ATO data sharing with lenders, along with privacy safeguards under the Privacy Act and oversight from the Office of the Australian Information Commissioner. The anti-money laundering extension Birmingham referenced is a separate but parallel reform track, and the sector sees the two moving together as the stronger outcome.