Federal Budget 2017: You’ll pay for $6b tax hit, bank chiefs warn

AUSSIES are being told to brace for higher mortgage rates and a whack to retirement savings as they bear the brunt of an ­escalating war between the Turnbull Government and big banks.

The nation’s most powerful financial bosses launched an unprecedented attack on the $6.2 billion levy on banks unveiled in the Budget. Picture: AAP

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AUSTRALIANS are being told to brace for the shock of higher mortgage rates and a whack to retirement savings as they bear the brunt of an ­escalating war between the Turnbull Government and the big banks.

The nation’s most powerful financial bosses launched an unprecedented attack on the $6.2 billion levy on banks unveiled in the Budget, ­accusing Treasurer Scott Morrison of treating them like a “magic pudding”.

They slammed it as a “stealth tax” on everyone that would hit account fees, interest rates and shareholdings.

Average Aussies could be whacked an extra $450 a year on a $300,000 mortgage as banks seek to recoup some of the damage, experts warn. ­Already $15 billion has been wiped off the market value of the ­big banks.

Prime Minister Malcolm Turnbull with Treasurer Scott Morrison outside Parliament House in Canberra. Picture: Kym Smith

WHAT THE FEDERAL BUDGET MEANS FOR VICTORIA

$14 BILLION WIPED OFF BIG BANKS AS NEW LEVY, FINES ADD TO PAIN

Under Budget changes, the Commonwealth Bank, Westpac, NAB, ANZ and the Macquarie will have to stump up the $6.2 billion over the next four years through the new levy. It will raise $1.6 billion next year.

Commonwealth Bank chief Ian Narev warned: “It is a simple fact of business that every extra cost needs to be borne by customers, shareholders, or a combination of both. There is no such thing as a cost being absorbed.”

But the Treasurer was not backing down, blasting the big banks’ threat to pass on the cost to customers.

“One and a half billion is raised and there’s an annual profit of those banks combined of more than $30 billion. Give me a break. That’s what Australians will also be saying,” Mr Morrison said.

The war may intensify on Thursday with top bankers being called to Canberra to hear ­details of the levy.

While Mr Morrison framed the tax as a way of levelling the playing field for smaller lenders, Mr Narev said it was “bad policy” and implied it was a simple tax grab.

“To cover a spending gap, the government will ask even more from its largest taxpayers,” Mr Narev said.

NAB chief Andrew Thorburn said the tax would “impact millions of everyday Australians who are employees, customers or shareholders of banks”.

“It is not just a tax on a bank. It is a tax on every Australian who benefits from, and is part of, our ­industry,” he said.

Westpac chief Brian Hartzer said the tax would undermine efforts to make the banks stronger in case of another global financial crisis.

“The way we run our business means there’s no ‘magic pudding’,” he said. “The levy is a stealth tax on Australians’ life savings, the shares in their superannuation accounts, and it will make Australia’s banks less competitive.”

ANZ chief Shayne Elliott said it was “now time for all our leaders to move on from populist bank bashing” and labelled the tax “regrettable policy”.

But Mr Morrison said banks were already held in low esteem and they should “pony up” to help fix the Budget.

He said Australian families and small businesses absorbed costs every day and they would expect banks to do the same.

“The banks want to send a message to customers about how much they value them? Don’t do what you may be contemplating doing. Don’t do it. They already don’t like you very much,” he said.

The big banks paid about $11 billion in tax last year, with the Commonwealth Bank paying $3.6 billion, Westpac $3.2 billion, NAB $2.4 billion and ANZ $2 billion.

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