I'm not picking a fight with the banks: Australia Treasurer tells CNBC
- Author: Leroy Wright May 18, 2017,
May 18, 2017, 2:43
The federal government is now on a collision course for a protracted battle with the "four pillars" of the nation's retail banking sector, along with Macquarie Bank, after Scott Morrison imposed a new "Major Bank Levy" that could wipe billions from their bottom lines.
Australia's conservative government pledged to deliver a small budget surplus in four years to end more than a decade of deficits that have threatened its prized triple-A credit rating, but blew out the 2017/18 shortfall by abandoning so-called "zombie savings" that have been blocked by a hostile Senate.
Aussie IT providers that hire recruits from overseas on skilled worker visas could be slugged with an annual levy that could come to thousands of dollars per worker each year, under new measures in the 2017 Federal Budget.
"The banking levy effectively represents double-taxation of some of Australia's most successful companies, which already pay Aus11 billion in company tax each year, employ about 130,000 Australians and contribute to the superannuation (pensions) of millions more", she said.
Morrison says he will outline a budget for the next fiscal year that will be fair and rein in mounting debt.
Foreign ownership in new developments will be restricted, there will be steeper charges, less favourable tax treatment and charges on those with empty properties.
Rumours of the new tax sent bank shares tumbling on Tuesday, wiping Aus14 billion from their value, and the sharp falls continued Wednesday.
He was expected to scrap the four-year Medicare freeze for Global Positioning System and fully fund the NDIS. "But it must be on our terms and we must skill more Australians to secure jobs", he said.
It sees the unemployment rate at 5.75 percent in 2017/18, easing from a 13-month high of 5.9 percent now while it pegged the consumer price index (CPI) at 2 percent, climbing to 2.5 percent by 2020/21.
Spending on hospitals will increase by $2.8 billion over four years.
An inland rail linking Melbourne and Brisbane will get an $8.4 billion, with the project set to begin in the next financial year.
But Prime Minister Malcolm Turnbull may struggle to win the support of right-leaning members of his own party, who favour spending cuts and debt reduction.
But the scale of that borrowing immediately rose today when Mr Morrison issued a directive boosting loans from the $500 million ceiling set by predecessor Joe Hockey to a new high of $600 million.
More broadly, Mr Morrison said the government must guarantee "essential services" in order to reduce cost of living pressures on Australians.
The budget deficit has widened to $37.6 billion for 2016/17 from the $36.5 billion estimated in the mid-year update.
Banks aren't miners, but they employ more people and have a much more direct impact on far more Australians.
"This measure is meant to encourage foreign owners of residential property to make their properties available for rent where they are not used as a residence and so increase the number of dwellings available for Australians to live in", Morrison said.