Big banks fume over hefty new Australia levy

The Australian Bankers’ Association (ABA) has accused the Federal Government of policy on the run and of failing to appropriately consult with Treasury before announcing the banks levy in Tuesday’s Budget.

The big four banks plus Macquarie face a levy that will raise $6.2 billion over four years.

The Treasurer also warned the banks not to try and pass the new tax on to their customers, saying they had no right to do so because it did not apply to mortgages or deposit accounts.

The banks have already started to fight back, warning that borrowers and shareholders could be forced to pay the cost of the tax, which could be passed on to customers. A hostile Senate blocked several key planks of that budget.

“The question mark is still the timeline of returning to surplus, I still think there’s some baked-in optimism there”, he said.

“It’s unlikely the government will lose votes whacking a tax on big banks, although the banks will certainly squeal, and parts of the (government’s) conservative base won’t like these tax measures, meaning its political effectiveness depends a great deal on them sucking it up and keeping their mouths shut”. These cuts appear unlikely to pass the Parliament, at least in this term, but the government remains committed to them.

Mr Morrison’s message to the banks – families have to absorb costs, and so should the banks – will likely resonate with voters. Prove them wrong. Don’t confirm their worst impressions.

Mervyn Tang, director of Asia-Pacific sovereigns at Fitch Ratings, said the new revenue measures in the budget implied a faster reduction in the government deficit.

Labor accused Mr Morrison of using a healthcare levy increase to fund tax cuts for big business.

In response the Treasurer claimed the principles in the budget were “very important to the Liberal party” and pointed out that the decision to raise the Medicare Levy to fund the National Disability Insurance Scheme was “a shared commitment” of every parliamentarian.

The Australian budget delivered last night is about tax increases, new levies and big spending in education, health and infrastructure.

“It was most encouraging that the Coalition government has set funding of the NDIS as a priority for the budget, after the years in which the high aspirations were never matched with funding from either the previous Labor government or the current coalition government”, Professor Kendig said. Tax reform has effectively stalled and without it, there’s little security around the financial outlook for Australia. Westpac said the financial impact of the levy was not immediately clear while representatives of CBA and NAB declined to comment. “It’s not a tax on mortgages”, he said.

“The sad lesson of first-home owner grants is that any extra cash in the pocket of people looking to buy is eaten-up by price rises”, Mr Shorten said. It is taking a swipe at the banks as part of a package of limited measures created to head off the banks’ real nightmare – the prospect of a comprehensive royal commission into the financial sector, which would expose the full extent of their rip-offs of the community.

In perhaps the biggest surprise of the 2017 Budget, the Liberal Party has gone after the big four banks to wear the biggest share of budget fix.