Australian banks lick wounds after tax hit

19 May, 2017, 14:49 | Author: Leticia Walters

Angry bankers say they've been left with more questions than answers after meeting with Treasury officials over the $6.2 billion levy the biggest five institutions are set to pay in a surprise new Budget measure.

The Turnbull Government announced the end of the troublesome Medicare rebate freeze which has been forcing up the cost of GP visits and threatening the spread of bulk billing. Growth this year is expected to be 2.5 per cent.

The Australian government announced plans to invest A$75 billion ($55 billion) in major infrastructure projects over the next 10 years, including an expansive inland railway and the potential purchase of a larger stake in the Snow Hydro Scheme, as it attempts to kickstart the country's next growth phase.

"The only people that will pay more tax on July 1 are banks and multinationals", Mr Morrison said.

Among revenue boosting measures was a six-basis point levy on the liabilities of banks with liabilities of more than A$100 billion from July 1, a move that will help the government raise A$6.2 billion through 2020/21 to aid budget fix.

There will be tougher rules for foreign investors in the housing market.

The Government has also heard the anger over housing prices.

$216.6 million over four years cut from funding for aged care - a cut of around $1670 per resident per year.

Morrison on budget night finally buried the $13 billion in so-called "zombie" savings previously blocked by the Senate.

Chief executives of Commonwealth Bank, National Australia Bank, ANZ and Westpac have all labelled Mr Morrison's levy a "bank tax", with three of the four explicitly saying the cost will be passed on.

Revenue is expected to grow 7.8 percent next year to AU$444.4 billion ($326 billion), and the deficit to shrink to AU$29.4 billion ($21.6 billion).

Borrowing would be limited to spending on capital works - infrastructure counted as assets and thus removed from debt calculations.

"This is good, common-sense financial management", Mr Morrison said.

"I know this has put real pressure on Australians and on their families". Early in his speech he even lamented the families which had been "broken" by the financial strains of the the post mining boom.

"I believe though that we are now moving towards the end of this hard period".

The government plans to clamp down on the hiring of foreign workers and to impose hefty taxes and charges on overseas investors in property that will collect an extra A$600 million over the next four years.

He was expected to scrap the four-year Medicare freeze for Global Positioning System and fully fund the NDIS.

"If we continue to see sustained cuts to health funding in tonight's Budget, it will translate into fewer doctors and nurses on the front line, fewer of the services they deliver, and longer waiting lists that will follow".

"The Treasurer has jettisoned decades of conservative fiscal orthodoxy around deficits and, particularly, debt", said business commentator Ian Verrender on the ABC News website.

The Medicare Guarantee Fund will be more than the Government demonstrating a commitment to the health scheme.

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