Australian banks lick wounds after tax hit

The opposition will support a levy on big five banks, which will raise $6.2 billion over four years for budget fix.

A Financial Complaints Authority will be set up as a one stop shop to deal with grievances customers have with banks and other financial institutions.

The federal treasurer appeared much more mellow and measured as he fronted journalists in the budget lock-up in Canberra on Tuesday.

Outside of infrastructure, the government has promised to greatly lift expenditure on health and education.

“It is important to invest in infrastructure, but we have to make the right choices on projects as part of a broader economic growth strategy”, he told Parliament.

And the ultimate sign of getting the message is the abandoning of the so-called zombie measures – the cuts from the 2014 budget the senate refused to pass.

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

The government examined the half per cent allowance already in the Medicare levy to help fund the NDIS and chose to add another half point – lifting the levy to 2.5 per cent total from July 2019. He said Fitch would look closer at new policy measures on the economy and housing market, “factors we have identified as rating sensitivities in our previous review”. “We could all potentially be recipients of this scheme”.

The Australian Government is also giving people aged over 65 incentives to downsize or sell their four or five bedroom houses.

In a final whack at the sector, a permanent team will be established within the ACCC to investigate competition in the nation’s banking and financial system, as recommended by the Coleman Committee.

The levy will apply to funding sources such as corporate bonds and large deposits and will only affect banks with debts above $100 billion – effectively limiting it to big players the Commonwealth Bank, Westpac, NAB, ANZ and Macquarie.

There will be a national housing finance corporation established from July next year to offer long-term, low-priced finance to community housing providers for affordable housing.

Rumours of the new tax sent bank shares tumbling on Tuesday, wiping Aus14 billion from their value, and the sharp falls continued Wednesday. A fee subsidy for New Zealanders is also to be ended.

“They can’t go and lie to customers”, he said. It’s a future where the government will drive economic growth, austerity has been replaced by spending, and taxpayers and banks will foot the bill.

Crossbench senator Jacqui Lambie predicted the banks would fight the levy all the way as she renewed her call for a royal commission into bank misconduct.

Morrison said the wider budget measures, which included the big bank levy and addition tax pressure on large multinationals, would put “downward pressure of the cost of living” for everyday Australians, saying it was “fair and reasonable” that the nation’s largest profiteers contribute to “fixing the budget”.

But Australian Bankers’ Association chief executive Anna Bligh criticised the new tax, which Morrison warned banks against passing on to consumers.

But from 1 July this year, tax deductions relating to expenses incurred while visiting properties in Australia will be completely scrapped.

“It just doesn’t make sense”, Ms Westacott said.