Federal Budget: $8 billion tax hike won't just hit banks

Ivan Schwartz
May 20, 2017

The government gave up on making cuts in health and education spending that the Senate has been rejecting as unfair to the poor since the ruling coalition's first budget in 2014.

Among other losers were the nation's largest banks, which will face a new tax that will collect A$6.2 billion over the next four years.

Labor was less welcoming about other aspects of the budget, accusing the government of using tax increases on healthcare and in other areas to fund tax reductions for big business.

The much-hyped housing affordability package in the budget is not a silver bullet, Treasurer Scott Morrison has said, with the government opting against angering the base.

Among its initiatives directed to avoiding a future "Mediscare" campaign, the budget promises to "guarantee" Medicare, progressively unfreeze the Medicare rebate, and maintain the bulk billing incentives for pathology and diagnostic imaging services. Growth this year is expected to be 2.5 per cent.

"The levy will only affect our five largest banks with deposits of $100 billion or more and does not apply to superannuation funds or insurance companies", he said.

Older Australians impacted by the pension assets change introduced earlier this year will have their pensioner concession card restored.

Downsizers over the age of 65 will be able to make a non-concessional contribution of up to $300,000 into their super fund from selling the family home.

The budget forecast economic growth of 2.75 percent in 2017/18, strengthening to 3 percent through 2020/21.

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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.

Then there were the big-dollar announcements to get the country moving and to create jobs: $5.3 billion over 10 years for the Badgerys Creek airport; $8.4 billion to start building the Melbourne to Brisbane inland rail link; the opening of discussions with Victoria and NSW to buy back shares of the Snowy Hydro.

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

He said pay packets were set to rise by three per cent over the next four years while the national economy would expand by three per cent in the coming two years.

While the general provisions of negative gearing are untouched, the government will disallow deductions for travel expenses related to the properties.

"What's important is that we have all of our industries, all of our businesses being competitive".

Now, Australian Bankers' Association new chief executive Anna Bligh, a former Labor premier of Queensland, warns the tax could lead to job losses.

Treasurer Scott Morrison said it would reflect a government "living within its means" as he attempts to deliver a previously pledged surplus by 2020-21.

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.

Other reports by GizPress

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