Australia

Australia budget 2017: Treasurer implores banks to absorb tax

Treasurer Scott Morrison delivers his post-budget address on Wednesday Image copyright Getty Images
Image caption Treasurer Scott Morrison delivers his post-budget address on Wednesday

Australian Treasurer Scott Morrison has urged the nation's banks not to pass on a large new tax to their customers.

Australia's five biggest banks were the biggest losers in Mr Morrison's budget on Tuesday when they were handed a combined A$6.2bn ($4.6bn; £3.5bn) levy.

But industry experts have warned that the institutions may simply redirect the levy to customers.

Mr Morrison on Wednesday implored the banks not to burden customers as he confirmed the tax would be permanent.

"[Do] the banks want to send a message to their customers about how much they value them?" the treasurer of the centre-right government said.

"Don't do what they may be contemplating doing. Don't do it."

What do the banks say?

ANZ Bank, Westpac, National Australia Bank, Commonwealth Bank and Macquarie have not made any announcements.

However, local media quoted the Westpac and Commonwealth Bank chief executives as signalling that customers could be charged.

"The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees," Westpac chief Brian Hartzer said.

Image copyright Getty Images
Image caption The levy is designed to raise A$6.2bn ($4.6bn; £3.5bn)

Financial services firm Morgan Stanley estimated that the levy would reduce the annual earnings of the banks by 4.5%.

The head of the Australian Bankers' Association called the levy "a direct attack on jobs and growth".

What else was in the budget?

Mr Morrison also announced education savings which will see students pay a greater share of the cost of degrees.

He also lowered the salary threshold for university debt repayments from A$55,000 to A$42,000.

The treasurer allocated money for infrastructure projects, including a second Sydney Airport, and increased a healthcare levy to fund a disability insurance scheme.


Stealing Labor's wardrobe - Hywel Griffith, BBC News in Sydney

The budget involved a textbook manoeuvre by Mr Morrison - disarm your opponents by grabbing some of their ideas.

The surprise tax on big banks and a thaw on healthcare rebates could all have come from a Labor manifesto.

Throw in a promise to spend big on infrastructure, and, according to one Australian commentator, Mr Morrison didn't just steal the opposition's clothing - he took the whole wardrobe.

In reality, this was more about steering to centre ground rather than swerving to the left.

It moves the government away from austerity measures it introduced in 2014, but remains tough on key issues like welfare payments.

Mr Morrison and PM Malcolm Turnbull will hope that is enough to keep their party room content, and ensure the government's slim majority remains intact.


Other key announcements included:

  • Allowing first-time home buyers to put A$30,000 into their superannuation (retirement scheme) to save for a house.
  • A A$321m boost for the Australian Federal Police to counter the threat of terrorism.
  • Extra healthcare benefits for indigenous Australians who were exposed to radiation from British nuclear testing.
  • An end to subsiding university fees for citizens from New Zealand.

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

But Labor supported the tax on the banks.

The budget was the first since the government was re-elected on a tiny majority last year.

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