Australia’s banks say the federal government has kept Treasury in the dark about how a new levy to raise $6.2 billion over four years will work.
Treasury officials were unable to answer key questions at a briefing today with banks in Sydney, according to Anna Bligh, CEO of the Australian Bankers’ Association.
“Not only has the government kept the banks and the public in the dark on this new tax, it is now clear that they have kept Treasury in the dark too,” she says.
The levy announced in Tuesday’s 2017 budget is a six-basis point charge on the big banks’ liabilities starts on July 1. It applies to the Commonwealth, Westpac, NAB, the ANZ and Macquarie.
Treasurer Scott Morrison described the levy as an “additional and fair contribution” from the major banks, and is similar to measures imposed in other advanced countries.
However, the banks say the levy is a “stealth tax”, with customers and shareholders ultimately paying for in either reduced dividends or higher charges.
Bligh, a former Labor premier of Queensland, says the officials could not address more than 20 important issues, including how Treasury calculated the $6.2 estimate, how the new tax would affect transactions between the five banks and the Reserve Bank, and how that might impact the broader economy.
She says the officials couldn’t even provide a clear answer on which of the banks’ commercial activities would be captured by the levy.
“It is even more clear that this is policy on the run, playing fast and loose with the most critical sector of the Australian economy,” she says.
“Alarmingly Treasury officials also confirmed the government was abandoning normal processes in preparing the legislation.”
Bligh says the banks have been given only until midday Monday to make submissions to Treasury about the new tax.
She says Treasury also confirmed that it would only provide draft legislation next Wednesday, giving banks only a day to respond.
And the draft would not be released for public consultation.
“Serious questions need to be asked about the indecent haste with which this new bill is being shoehorned into Parliament in a way that will avoid normal drafting and review processes and the scrutiny that should accompany such a critically important piece of legislation,” says Bligh.
“As we said on Tuesday, this is bad public policy concocted on the run as a political tax grab to fill a Budget black hole.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.