Published: Fri, May 26, 2017
Economy | By Melissa Porter

Australian conservative government to raise taxes on five biggest banks

Australian conservative government to raise taxes on five biggest banks

"There is clearly the potential for better days ahead".

"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.

The Treasurer has jettisoned decades of conservative fiscal orthodoxy around deficits and, particularly, debt.

"It's been a fair while since most hardworking Australians have had a decent pay rise", he said.

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

Labor said the government's "package of half measures" was no substitute for a royal commission.

Now the nation's top five banks - the Commonwealth, NAB, Wespac, ANZ and Macquarie - will be hit with a 0.06 per cent bank levy on their deposits, starting from July 1 this year.

The Treasurer has already warned them not to pass it on to consumers, and noted that if they do then the rest of the banking sector would get an advantage.

Treasury officials are set to brief bankers in Sydney on Thursday.

The federal government still anticipates meeting its slated return to surplus in 20210-21, despite the projected deficit for this year rising slightly.

In a surprise move, the Turnbull Government will bring back a trial on drug testing welfare recipients. "The Prime Minister has announced our intention to further develop the Snowy Hydro with Snowy 2.0".

Spending to be frozen for two years from 2018, resulting in an effective A$303 million cut.

Jobseekers could lose payments if they are found to be avoiding job interviews. It's a sign of how much damage the Labor campaign on health and Medicare did to the Coalition.

Mr Morrison also flagged personal income tax cuts to tackle bracket creep, which pushes taxpayers in to the next-highest tax rate as wages grow with inflation, in the next four years.

At the same time, schools will face a $22 billion easing in funding and the Medicare GP rebate freeze won't come off in its entirety. Morrison said this would "provide transparency about what it really costs to run Medicare and the PBS and a clear guarantee on how we pay for it". At $1.5 billion each year, that's less than 5% of the major banks combined $30 billion annual profits.

Budget 2017-18 - Leaving the ghosts of Budgets past behind.

"Our equity colleagues estimate the impact on profitability will be 3-6 per cent. Bank stocks fell 3 per cent yesterday, reflecting reports on the possibility that such levy would be introduce", they said. "But by adopting a comprehensive approach, by working together, by understanding the spectrum of housing needs, we can make a difference".

The contributions will receive the tax advantages of superannuation, with contributions and earnings taxed at 15% rather than marginal rates.

First home buyers will be able to salary sacrifice to buy their first home.

Westpac chief executive Brian Hartzer said the levy was a "stealth tax" that would reduce the global competitiveness of the sector, while flagging a possible increase in interest rates for borrowers, job cuts, or a reduction in returns to shareholders.

The Western Sydney airport is getting $5.3b over ten years.

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