Budget 2017 live reaction and analysis
Tony Abbott steers away from criticisms of the government, saying he’s pleased measures from his 2015 budget remain.
- Abbott’s budget verdict
- Bank levy to hit customers
- Turnbull grilled by Jones
- Today’s front pages
- Banks warned
Budget 2017 Reaction: Here’s how The Australian’s coverage of the reaction to the 2017 budget played out today. We’ll bring you more commentary from Canberra on Thursday.
Top stories:
• Bank bosses have responded to a $6.2bn slug outlined in the budget, warning it will be a “stealth” tax on ordinary Australians - Read here.
• What we learned in Question Time - Read here
Rosie Lewis 6.50pm: Leak? What leak?
Government sources appear to have played down independent senator Derryn Hinch’s allegation of a pre-budget lockup leak about the big banks tax, saying rumours and speculation are reported in the media before every budget.
The Australian understands Treasury has advised that it has no knowledge of any budget leak during the six-hour lock-up, in which journalists and other attendees pledge to not communicate, broadcast or disseminate publicly any information before 7.30pm.
PRIMROSE RIORDAN 5.55pm: Abbott delivers budget verdict
Former Prime Minister Tony Abbott has appeared to back the Coalition’s budget.
“There was a lot to support in last night’s budget,” Mr Abbott told 2GB.
“There were important reforms to welfare which are going to ensure people are fair dinkum about seeking work, there was a lot of really good infrastructure, particularly the Western Sydney airport. The National party obviously is very pleased about the Melbourne to Brisbane inland rail link.”
The budget included an overhaul of Australia’s welfare system, along with tough jobseeker compliance measures and a new drug-testing regime.
Mr Abbott said he was pleased that some measures from his 2015 budget remained, including a sweetener for small business and increased military spending.
“The instant asset write off which was the key feature of the 2015 Hockey Abbott budget was continued for another year and that’s very very good for small business and obviously the increase in defence spending its very important that we get to and at least maintain 2 per cent of GDP on defence in an uncertain world, all excellent measures in last night’s budget.”
Mr Abbott also appeared optimistic about the bank tax, which blindsighted the sector. He said Australians should wait and see whether the banks would pass on increased costs from the levy to customers and investors.
“Well let’s see if the banks are fair dinkum about improving their standing with the public they will try to ensure that they absorb this. In the end it’s their call.”
The comments are in contrast to his more recent interventions, which has seen him rebuked by his colleagues for too heavily criticising government policies.
Listen to Tony Abbott’s full interview with 2GB below.
5.30pm: Howard canes ‘political’ budget
Former Liberal prime minister John says Scott Morrison’s blueprint represents a divergence from conservative ideals - full story here.
4.40pm: Criminal budget leaks: Hinch
Indepedendent senator Derryn Hinch has written to the Australian Federal Police, seeking an investigation into the leaking of confidential budget measures, his office says.
“Measures in the budget included a levy on the major banks,” Senator Hinch said. “It appears this budget measure was leaked, leading to a massive drop in the value of share prices for the major banks.
“Shares in the major banks began to plummet three hours before the budget lock-up. This drop saw a reduction of $14 billion in the value of shares in the major banks.
“This appears to be a classic case of criminal insider trading, possibly involving a federal government employee, or even a politician. I would like to know who the short-sellers are and did they have links at Parliament House?”
David Crowe 3.45pm: What we learned in Question Time
Nothing is fully-funded when you have a budget deficit of $37 billion. Malcolm Turnbull and Bill Shorten both needed a reminder of that ugly fact during Question Time today as they traded barbs over whether the nation could afford their preferred spending programs.
This is no academic argument. The call for a “fully-funded” national disability insurance scheme lies at the heart of the $8.2 billion tax increase on Australians though a bigger Medicare levy, but there can be no agreement on the revenue hike until parliament gets over a petty quarrel from the past.
The biggest outcry from the Labor benches in Question Time today, the first big chance to debate the budget, came when Malcolm Turnbull claimed the levy was needed because Labor had not fully-funded the NDIS in the 2013 budget. This is an obstacle for Labor in any deal on the levy increase because it cannot admit the levy is needed while it continues to deny the funding shortfall.
A deal will be done in the end, of course, and Scott Morrison was careful not to rule out changing the way the 2.5 per cent levy hits the poorest workers if that will help get the change through the Senate. Until that deal is done, however, Labor will try to defend its flawed 2013 budget – a document that promised cash for the NDIS based on a surplus that never materialised.
There were other echoes of the past in Question Time when Shorten and Labor’s treasury spokesman, Chris Bowen, tried to trip Morrison with a question about gross debt. Morrison had the facts at hand after Labor challenged him on the increase in the commonwealth’s borrowing cap to $600 billion on Tuesday night.
It was a bit cheeky of Labor to ask about debt when its past leaders, such as Kevin Rudd and Wayne Swan during the 2009 budget debates, could not even bring themselves to utter the word “billion” when asked how big the deficit was going to be. It took days until the prime minister and treasurer could say the word and admit their second budget was full of red ink.
The projections in May 2009 were the first time the nation was warned about the scale of the commonwealth debt. The gross debt was projected to be $310 billion by June 2013. It ended up being $304.2bn.
This week’s budget shows how the scale of the problem has grown. The same line item, total interest bearing liabilities on the government sector balance sheet, is forecast to grow from $564.4bn last year to a peak of $663.8bn in 2020 before falling a little the next year. This is the market value. Asked about this peak, Morrison told parliament the face value of those borrowings, which will be $606bn.
Whatever the number, the outlook is dire. Whatever the rhetoric from Labor or the Coalition, the result is a shared failure.
3.30pm: Albanese ‘re-energised’
Labor frontbencher Albanese gets jeered by government MPs as he takes to his feet, presumably as a result of speculation of leadership tension between him and Opposition Leader Bill Shorten.
Albo asks the PM whether he can confirm that in this financial year, federal infrastructure funding has been cut by $1.6 billion to $7.6 billion and will continue to fall by $4.2 billion by 2021.
Mr Turnbull jokes that Albo has been “re-energised”.
“I don’t think it’s the infrastructure section in the budget papers that’s done that,” he says. “He knows that we’re getting on with the big infrastructure projects Australia needs.
“He didn’t make the decision to build the Western Sydney Airport. Oh no. That was taken by the Abbott government, continued by the Turnbull government, and we’re going to build it.”
3.25pm: ‘Not scared of a royal commission’
Bill Shorten has a go on the bank levy, asking what the punishment for banks who pass the “new tax” on to their customers will be, and when the government will set up a banking royal commission.
The Prime Minister responds by accusing Shorten of wanting to be the “pin-up boy” for barristers who would benefit from a royal commission.
“What is a royal commission into the banks going to tell us that we don’t know?” Mr Turnbull asks.,
“The honourable member may be more interested in litigation than action - we’re interested in protecting Australian consumers and customers of the banks right now.
“Can I tell the honourable member - I’ll let him into a little secret. The banks aren’t scared of a royal commission, sunshine - they’ve got plenty of lawyers and big law firms. What they’re concerned about is being held to account, and that’s what we have done.”
3.20pm: A look at the Treasurer’s bank measures
3.15pm: Welfare changes under scrutiny
Liberal backbencher Andrew Laming has a dixer for Social Services Minister Christian Porter on welfare reform.
Porter says the government wants to make the system simpler by consolidating seven payments into one, redrafting the mutual obligation rules and removing gaps in the system that create passive welfare dependence.
“There are about 100,000 people who persistently fail to comply with the basic requirements of mutual obligation,” Mr Porter says. “We think about half of those are people who genuinely need help, and we need to identify them sooner.
“The other half are persistently failing to comply without any real penalties being instituted in the system.”
Mr Porter said Human Services Minister Alan Tudge’s department was not aware of a single person who suffered a financial penalty for a failure to search for a job last year.
3.10pm: Labor accused of ‘cruel hoax’
Shadow Treasurer Chris Bowen attacks the government on housing affordability, claiming the government is continuing to give investors buying their sixth or seventh home more support than a young couple trying to buy their first.
The PM says this budget has delivered unprecedented support for housing affordability and refers the question to Treasurer Scott Morrison, who accuses labor of seeking to put a “cruel hoax” on the Australian people on housing with their negative gearing policy.
“Those opposite seem to think that, if they say to the mums and dads who actually put a roof over the head of some 25% of the country that, if we put up the rents, that’ll somehow make housing more affordable,” Mr Morrison says.
“Negative gearing has enabled a roof over the head of a quarter of the country, Mr Speaker.
“Those opposite want to take a chainsaw to the housing market at the peak of the housing boom.”
3pm: ‘Jacking up fees’
Labor’s education focus switches to universities, with a question for the PM from Tanya Plibersek who asks how it’s fair that the government is “going after university students by jacking up their fees while funding $50 billion in business tax cuts”.
Mr Turnbull says the purpose of higher education is to ensure that young people can get a job, and the best way of ensuring they can get a job is for Australian companies to be globally competitive.
“You cannot be competitive tax rate at 30 per cent when the US is heading to 15 per cent,” he says.
2.55pm: Don’t mention the ‘d’ word
Shadow Treasurer Chris Bowen has more to say on debt, asking why Mr Morrison didn’t mention it in his budget speech.
“How can it be that taking the national credit card beyond half a trillion dollars cannot rate a mention?” Mr Bowen asks.
Mr Morrison repeats that the Turnbull government has reduced the rate of growth of debt by two-thirds.
“What we’ve done is we’ve set a new debt limit in accordance with the regulations of the legislation that is required that has been tabled in the ordinary course of events, and the government will always seek to ensure that the government has lower debt than it otherwise might have,” he says.
“Those opposite, Mr Speaker, are the authors of the debt we have today.
“They are the initiators of the debt we have today, because they set fire to the budget, Mr Speaker, and have poured petrol on it in Opposition.”
2.50pm: ‘Knock yourself out’
Bill Shorten asks Mr Morrison for the figure at which gross debt will peak in his budget.
The Treasurer says the figure is $606 billion.
“Look it up! It’s in the budget papers! Knock yourself out!” he says.
“I can also inform him that gross debt peaks as a percentage of GDP at 30.70% in 2018-19. That’s what it says in the budget, Mr Speaker.
“But I’ll tell you something else about debt, Mr Speaker. What this government has done - by constraining expenditure - is we have lowered the rate of growth and debt by two-thirds, from what those opposite left to those on this side of the House.”
2.45pm: SA crying poor?
Nick Xenophon Team MP Rebekha Sharkie is concerned that only $3.1 billion of the $75 billion announced last night in national road and infrastructure funding is earmarked for her home state of South Australia.
The Prime Minister highlights a $1.7 billion commitment to the Flinders Link rail project before referring the question to SA MP Christopher Pyne.
Pyne talks up $70 million in spending on the Adelaide to Tarcoola rail line, and various commitments in his portfolio of Defence Industry, such as naval shipbuilding, which is intended to boost jobs in South Australia.
2.40pm: ‘Medifriends’ and ‘Medifrauds’
Shadow Health Minister Catherine King asks whether the PM has really got the message on Medicare, given his cuts “continue for years”.
Health Minister Greg Hunt says the government committed in the budget to unfreeze Labor’s freeze on Medicare.
“We are investing in Medicare. We are guaranteeing Medicare,” he says. “We’re putting $1 billion of additional expenditure into removing Labor’s indexation freeze. We’re putting $2.4 billion into Medicare overall. We’re putting $10 billion into the health system.”
Mr Hunt said the government had shown it really believed in Medicare.
“At the end of the day, the Medifriends are on this side, and the Medifrauds are on that side.”
2.30pm: Labor gaffe exploited
In response to a question from Shadow Education Minister Tanya Plibersek, Malcolm Turnbull zeroes in on Mark Butler’s stumble which we mentioned earlier over Labor’s claim that the government is cutting $22 billion from schools.
“It was hard to hear the Deputy Leader of the Opposition over the gasps of disbelief from her own side when she had the gall to mention $22 billion,” the Prime Minister says.
“Because only this morning, after being pushed four times on Adelaide radio to answer if the Labor Party was committed to their $22 billion commitment for school funding, the Member for Port Adelaide (Butler) said, ‘It’s not going to be $22 billion, necessarily’.
“And then, of course, only a few days ago - six days ago on May 4, the deputy leader herself (Plibersek) was asked about this.
“’Are you still committed to the additional $22 billion over the next decade?,’ asked David Speers.
“The deputy leader said, ‘Well, we’ll have to work out exactly what the figures are as the next election approaches.’
“Well, Mr Speaker, the fact of the matter is, Labor never had the $22 billion when they promised it. It was never there.
“The fact is, we have fully funded our schools commitments, in accordance with the Gonski recommendations, over $18 billion over the next 10 years going from $17 billion this year to $30 billion 10 years hence.
“It’s fair, it’s equitable, it’s needs-based and it’s consistent.”
2.15pm: PM defends budget
Question time kicks off with Bill Shorten attempting to wedge Malcolm Turnbull on fairness, questioning why millionaires will receive a $16,400 tax cut in this year’s budget while every other Australian has to pay more tax.
The PM turns the tables on the Opposition Leader.
“How is it fair to sell out low-paid workers at Clean Event and trade away their penalties rates? How is it fair to promise parents of disabled children that there is a national disability insurance scheme and never fund it? How is it fair to go to an election with a finance plan that involved flinging $16.5 billion of additional deficit on the shoulders of Australians? The Labor Party has no concept of fairness.”
Rachel Baxendale 2.05pm: Morrison plays down market volatility
Mr Morrison has downplayed market volatility as a result of the bank levy.
“Markets are volatile and will move about,” he said. “We will see how this pans out. I know the banks will be pleased to know, that Goldman Sachs is still recommending to buy (bank shares).”
Asked why he had spread the cost of the Medicare levy down the income scale, rather than focusing on high income earners, Mr Morrison said the government’s policy did mean higher income earners would pay a higher levy.
“If you earn less, you pay a lower levy,” he said. “And for lower income earners, particularly low income earners, they don’t pay the Medicare levy, and if you have more children there’s a higher cut in rate on income for those families.
“This is an insurance levy. We’re all affected by it. I’ve shared with you my personal story on this today from my family. I can go to every table I suspect and get a similar story or an associated story. This is all of our responsibility. All of us but for the grace of God could find ourselves in that situation and we’d be expecting and hoping our mates would be looking after us.”
Asked whether he would have preferred that the NDIS was funded through the “zombie cuts” which the Senate refused to pass, rather than through a Medicare levy increase, Mr Morrison said the point was “moot”. “If you’re practical, you don’t dwell on things like that. You deal with the situation you have,” he said.
2pm: NAB - ‘A tax on every Australian’
NAB CEO Andrew Thorburn has also responded to the ‘bank tax’.
“The major bank tax will impact millions of everyday Australians who are employees, customers or shareholders of banks,” he said in a statement.
“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.
“These people include: The 10 million NAB customers – depositors and borrowers; the 570,000 direct NAB shareholders – retirees, and mums and dads who are building their nest egg for the future – as well as the millions of Australians who own shares in NAB through their superannuation; the more than 1,700 suppliers to NAB, and the 34,000 people who work at NAB and serve our customers.
“A tax cannot be absorbed. This tax is borne by these people. It is not possible to impose a tax without an impact on people, and therefore the wider community.”
Rachel Baxendale 1.50pm: ‘The public don’t like you’
Mr Morrison defended the government’s bank levy, by saying that Australian’s would respond to the banks’ opposition with “give me a break”, given the big four banks’ combined $30 billion profit.
“A company has its value in the way it treats its customers,” he said.
He said that if the banks wanted to send a message to their customers about how much they value them, they should not pass on the cost of the levy.
“Don’t do it,” Mr Morrison said. “They already don’t like you very much. They don’t like us as politicians universally that much either, so we understand your pain, but prove them wrong on this occasion. Prove them wrong. Don’t confirm their worst impressions. Tell them another story. Tell them you will pony up and help fix the budget.”
1.30pm: Narev - lack of consultation
Commonwealth Bank chief Ian Narev has also come out to chide the new levy, saying there was a lack of consultation by the government in the lead up to the announcement and sparse detail following the release.
“As with the many recent new regulatory imposts, we need to take some time to work through the implications,” said Mr Narev. “This is particularly so given the lack of detail and the absence of any consultation. However, as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.
“We look forward to Treasury outlining how this tax will apply in practice.
“Once we have received all the details on the new tax, we will do our best to strike the right balance to ensure we continue to enhance the financial wellbeing of people, businesses and communities.”
Rachel Baxendale 1.15pm: Morrison shares personal NDIS story
Mr Morrison has opened his post-budget address to the National Press Club by telling the story of his brother-in-law, who has Multiple Sclerosis and with his family relies on assistance from the National Disability Insurance Scheme.
The government announced an extra 0.5 per cent Medicare levy from 2019 to fully fund the NDIS. Mr Morrison’s wife Jenny’s brother Gary Warren, and his wife Michelle, were visibly moved as Mr Morrison spoke of how Mr Warren was diagnosed with progressive MS as a young firefighter in 1999.
“His oldest son at that time was just 8 years old,” Mr Morrison said.
“The youngest son had not been born.”
Mr Warren continued his very physical role with the fire brigade for five years, and later continued to work there in a training role.
“He has sought to work every single day from then until now,” Mr Morrison said.
Mr Morrison said Mr Warren had told him Australians were extremely generous towards him, as someone with a disability.
“Not just happy to help, but keen to help,” Mr Morrison said.
“(Gary) said, ‘it’s not flash being disabled, it’s not flash. But if there’s anything good about it, he said, it’s that you’re disabled in Australia.’
“I don’t know a finer man than Gary Warren, so last night I was very proud to declare that as a Treasurer in the Turnbull government, we would fully fund the National Disability Insurance Scheme. That’s what this is about.”
Mr Morrison said the government was asking Australians to “chip in” for a compassionate cause.
“When the unfunded component of the NDIS starts (in 2019), that’s when we will ask Australians to come to the table and share with all of us to ensure that this program can be delivered,” he said.
“Australians look after their mates.”
David Rogers 1pm: Westpac CEO says bank levy to hit customers
Westpac CEO Brian Hartzer has warned the government’s new bank levy will hit the retirement savings of millions of Australians, as well as all bank customers.
In a release this afternoon, Westpac has warned the levy will be a tax on ordinary Australian’s life savings, and will adversely affect competition in the banking industry.
“Yesterday, $14 billion of value was wiped off Australian bank shares because of speculation around this new tax,” Mr Hartzer said. “There is no ‘magic pudding’. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees.” More in BusinessNow.
Rachel Baxendale 12.55pm: Labor confusion over school funding
Labor frontbencher Mark Butler appears to have contradicted his party’s claim that the Turnbull government’s schools plan represents a $22 billion cut.
Asked four times on Adelaide radio, Mr Butler was unable to guarantee that Labor would provide an extra $22 billion should they win government at the next election.
“It’s not going to be $22 billion necessarily, between now and the next election we’ll be updating all of our funding commitments,” he said.
Mr Butler’s comments came as Opposition Leader Bill Shorten said Labor believed in a “sector-neutral” approach which prioritises needs-based funding, but claimed Catholic schools had been disadvantaged by the government’s new policy.
“On behalf of the parents of 765,000 children who go to Catholic schools, many of which predominantly are parish schools, those parents in many cases are not rich,” Mr Shorten told ABC radio.
Education Minister Simon Birmingham said Labor was a “confused mess” on schools.
“(Education Minister) Tanya Plibersek is contradicting Bill Shorten who’s contradicting Mark Butler. They’re all over the place,” he said.
“The Turnbull government is delivering the real, needs-based, sector blind funding system that David Gonski and his panel of experts envisaged.
“While Bill Shorten and the Labor Party are busy trying to get their spin right and lining up with special interest groups, we’re focused on ensuring our $18.6 billion boost for schools gets to the students who need it most so we can give them the support they need to succeed.”
Chris Kohler 12.45pm: ASX recovers as bank pain eases
The local market has regained positive territory as investors ease their punishment of the banks following last night’s federal budget.
At 12:15pm AEST the S&P/ASX 200 was 0.4 per cent higher for the day at 5861.9 points after earlier dropping as much as 0.4 per cent.
CBA, Westpac and NAB all remain in the red, down 0.3 per cent, 0.8 per cent and 0.1 per cent, respectively, while ANZ is 0.7 per cent higher for the day. More in BusinessNow.
12.30pm: Morrison in National Press Club address
The Treasure is making his annual post-Budget address. We’ll have all the key lines.
Rachel Baxendale 11.40am: Budget delivery
The budget isn’t the only thing new dad and Assistant Treasurer Michael Sukkar has played a part in delivering this week. His son Leo decided to make his way into the world on Monday, meaning Mr Sukkar is spending the week at home in Melbourne, rather than making the trip to Canberra.
Mr Sukkar said baby Leo’s arrival was a little unexpected, but his wife Anna is doing well.
“The best laid plans can come unstuck, so baby Leo thought that he would rearrange my budget week and rearrange our whole lives,” he told Sky News.
“Anna has taken the reins and she’s doing a brilliant job as a mother, and I sort of feel like I’m just getting in the way half the time, but I’m trying to do everything I can.
“I’m disappointed obviously not to be in Canberra for budget week, but I thought Leo and Anna needed me a bit more than the Treasurer did, so it’s a really exciting week and it’s all happening at one time.”
Congrats @MichaelSukkarMP & Anna on birth of Leo. He arrived early so Assistant to Treasurer will miss Budget day! pic.twitter.com/CSTtb4rRRl
— Rob Harris (@rharris334) May 8, 2017
Mr Sukkar is the second member of the Coalition’s finance team to have welcomed a baby in the lead-up to the budget.
Financial Services Minister Kelly O’Dwyer gave birth to her second child, Edward, last month.
Rosie Lewis 11.10am: Joyce defends welfare test
Deputy Prime Minister Barnaby Joyce says there should be a “contractual obligation” between taxpayers and those looking for work as he defends new trials to randomly drug test welfare recipients.
“You are not going to be ready for work if you are drunk or smashed on drugs. This is a two-way street,” he told ABC TV.
Samantha Hutchinson 10.55am: PM ‘ratting on Victoria deal’
Tensions between the Victorian Premier Daniel Andrews and the Federal Government have flared in the wake of the federal budget, which has awarded the state just $1 billion of an expected $1.45bn asset renewal incentive earmarked for a sprawling regional rail network.
The Andrews Government revealed plans earlier in May for a $1.45bn regional rail revival funded entirely by a $1.45bn asset recycling incentive the state believes it is owed for the Port of Melbourne sale. Full story here.
Rosie Lewis 10.30am: Discharging the zombie measures
Now that the government has decided to drop $13 billion in so-called zombie measures, the legislation has to be officially “discharged” from the parliament.
Scott Morrison said last night the Coalition had exhausted “every opportunity” to secure savings from its 2014 and 2015 budgets and now wanted to “reset” by reversing the cuts.
Social Services Minister Christian Porter has moved the discharge order in the House of Representatives. The bills include the government’s revised paid parental leave scheme and youth employment legislation to make young people wait four weeks for the dole.
Labor is having a field day, claiming it’s all about “survival” for Malcolm Turnbull.
Chris Kohler 10.20am: What the analysts say
The biggest names in Australian market analysis have taken aim at the federal budget, pulling out what they see as the key chunks of policy and how the market will likely see the document. Here are a few excerpts:
Credit Suisse — Chief Equity Strategist Hasan Tevfik
The Federal budget was the perfect opportunity for the government to show much needed economic leadership and lift the economy out its post-financial crisis, post-mining boom morass. It was missed.
The cost of debt for Australia lingers around generational lows but the government refuses to use it to finance the heavy lifting our economy needs.
Macquarie
This was not a particularly positive budget for the equity market. Most concerning for equities — tax and increased oversight for banks.
Citi — Senior analyst Craig Woolford
We expect little movement in share prices for retail following the 2017 budget. Electronics and hard goods retailers such as JB Hi-Fi, Harvey Norman and Bunnings retailers should have a strong June 2017 as more small businesses benefit from the accelerated depreciation.
Rosie Lewis 10.15am: Time to breathalyse pollies
A number of MPs have suggested the government introduce breathalysing politicians after announcing random drug testing for welfare recipients in yesterday’s budget.
“It’d be funny if they ever introduced drug and alcohol testing for cabinet ministers, wouldn’t it?” Bill Shorten says.
And Greens MP Adam Bandt has tweeted this:
Gov now drug testing poor people. Presume they'll be happy to breathalyse & test their own MPs too. pic.twitter.com/AijpxEpAAv
— Adam Bandt (@AdamBandt) May 9, 2017
Rosie Lewis 10am: Labor response
Tomorrow night at 7.30pm Bill Shorten will deliver his budget reply speech. In the meantime, the Opposition Leader says Labor will weigh up whether to make the 2 per cent deficit levy on high-income earners (a tax which the government removed in yesterday’s budget) permanent.
“Mr Turnbull’s discovered this word ‘fair’, you can just see it in the focus groups, the Liberals have said ‘oh we better describe things as fair’. They plaster it up everywhere, fair fair fair. They think the constant repetition of the mantra ‘fair’ makes things fair, no it doesn’t,” Mr Shorten told Sky News.
“Fair would’ve been to scrap the freezes on the rebates patients get in the Medicare system last night, but they haven’t done that.
“Fair would be not to cut the funding to schools by $22 billion. Fair would be to do something fair dinkum and reform negative gearing, the unfair tax concessions which give property investors and speculators an unfair head start over first home buyers.
“When there’s still a budget deficit, fair would’ve been not to give the millionaires of Australia a 2 per cent tax reduction.”
9.50am: Banks warned
The Turnbull government has warned the big five banks not to lie to their customers if they pass on a new $6 billion levy, AAP reports.
There are suggestions the banks may move quickly to raise mortgage rates by up to 0.15 per cent to compensate for the budget measure.
Prime Minister Malcolm Turnbull said that would be unwise.
“That would be really excessive,” he told Sky News noting there was already a lot of concern about the conduct of banks.
The Australian Competition and Consumer Commission would be watching them “very, very carefully indeed”.
Treasurer Scott Morrison went further.
“What the commission will be doing will be keeping an eye on them to make sure they don’t lie to their customers about this,” he told the Seven Network. The $1.5 billion the levy raises each year would come out of corporate profits of $30 billion this year, Mr Morrison said.
9.30am: PM on Alan Jones
Listen to the audio here.
Rosie Lewis 9.25am: Shorten on the attack
“This is not a Labor lite budget, this is a Liberal budget.”
Bill Shorten is on the attack. While he has committed to supporting the levy on the big banks, the campaign for a royal commission has not diminished. Remember the government’s “big whack” to the banks was in part to neutralise calls — some from within the Coalition’s ranks — for a royal commission into the banking sector.
“Let’s be clear on the banks — we won’t stand in the way absolutely. We want to make sure though that Mr Turnbull takes more effort to protect customers and deposit holders because I don’t think he’s given that enough thought,” the Opposition Leader told Sky News.
“I think they’ve sort of looked at the cosmetic issues, checked with (Liberal Party pollster) Mark Textor what looks tough and plausible. But the problem is he’s giving them a bank tax, a levy on one hand, but then he’s going to give them a tax cut on the other hand. It doesn’t make sense, does it?
“Nothing less than a royal commission will satisfy Labor.”
Rosie Lewis 9am: ‘A big money grab’
Malcolm Turnbull might be happy the day after budget, the banks are anything but.
Australian Bankers’ Association chief executive Anna Bligh says the levy on the big banks is anti-jobs, anti-growth and “flies in the face of the government’s own economic mantra”. She’s calling it policy on the run and says there is deep concern a future government may increase the tax even further.
Ms Bligh says the banks have three options to meet their new tax obligations — to look at interest they pay on deposits, to look at what it means for shareholders, and to look at interest they charge on borrowings.
“There is no magic pudding here,” she tells ABC radio. “This is just a big money grab to fill a budget hole for the government and they’ve imposed it on the sector of the economy which they believe is a politically and easy target. When you hit the bottom line profits of banks, which are fundamental to the stability of the Australian economy, it will have an effect, you cannot take $1.5 billion out of banks and there not be some effect on jobs in those banks, on their ability to lend into businesses that are looking to expand.”
Ms Bligh’s warning to the government came shortly after the PM said any move by the banks to raise mortgage rates by 15 basis points would be “really excessive”.
“Let’s see how they react. They don’t need to pass this on, they’re profitable and the ACCC will be watching them very carefully indeed,” he told Sky News.
“It’s a competitive market and there are other banks that are not caught by the levy and of course there’ll be plenty of opportunities for people to go elsewhere if the banks do choose to raise mortgage rates but the ACCC will be monitoring it very, very closely.”
8.40am: Update: security incident
A woman has doused herself in petrol out the front of Parliament House. The incident occurred around 8am. The woman was able to walk assisted to an ambulance and has been taken to hospital for treatment.
Rachel Baxendale 8.30am: Shorten on bank levy
Bill Shorten said he supported the levy on the banks, but said that when Labor had proposed a bank levy, the Liberals had “screamed like cut cats”.
“We will not oppose the increase in the bank levy,” he said.
The Opposition Leader said he was, however, concerned about the banks passing the levy on to customers.
“I’d like to see Mr Turnbull and Mr Morrison embrace the bank levy to make sure that ordinary punters don’t get stung,” he said.
Mr Shorten said the real “missing link” in banking reform was a royal commission.
He said he was a “little concerned” about random drug tests for people on welfare.
“This is the ninth time that the government says that we’re going to have welfare compliance,” he said.
“It’s the magic pudding which helps fill in missing numbers in the budget.
“We expect and support the concept of mutual obligation. We’re not into putting the boot into people down on their luck for the sake of it to pretty up the budget numbers.”
8.25am:
Rachel Baxendale 8.20am: Security incident
A woman has doused herself in petrol out the front of Parliament House.
The woman is now being treated by paramedics and the fire brigade after a private security guard stepped in to prevent her from further harm.
The lawns in front of Parliament have been very busy this morning, with TV stations broadcasting live and unions staging protests.
Rachel Baxendale 8.15am: Shorten dismisses ‘Labor budget’ claims
Mr Shorten has dismissed claims thebudget is a “Labor budget”, attacking the Turnbull government’s Medicare levy hike as a tax increase for every working Australian at a point where “millionaires and multinationals” are getting a tax cut.
The Opposition Leader admitted there were some good Labor inspired measures in the government, such as ensuring that women who are victims of domestic violence can’t be cross-examined by their perpetrator in a court, but said it was not a Labor budget.
“On Medicare, people are going have to wait up to three years to see some of the freezes, some of the rebates that go to patients being restored,” he told the Nine Network.
Opposition leader @billshortenmp gives his take on #Budget2017. #9News pic.twitter.com/mKf4db9bed
— Nine News Australia (@9NewsAUS) May 9, 2017
“On schools there’s $22 billion cut out. University fees go up. Universities get cut.
“We’re still going to have the world’s oldest retirement age and right in the middle of all of this, is what the Treasurer neglected to tell people it’s in the fine print of the budget, he is clearing way in his budget by increasing the taxes of every Australian to give a $50 billion plus tax cut to large banks and to multinationals.
“This is a budget where the real winners are if you earn quarter of a million dollars or a million dollars your taxes go down, and every other working Australian, well their taxes are going to go up.”
Asked whether Labor would support a 0.5 per cent increase in the Medicare levy to fund the National Disability Insurance Scheme, Mr Shorten said Labor did not accept that the NDIS was not fully funded, despite the government’s claims that there is a $3.8 billion hole.
“We like the NDIS, but when the government says there’s a big funding hole in it, they could fix any funding issue for schools for units, for TAFE, apprenticeships or the National Disability Insurance Scheme by not giving a massive corporate tax cut to a large corporations,” he said.
“This is a government who says the only way they can do anything is by increasing people’s taxes.
“That’s not true. It’s about priorities. Why didn’t Mr Morrison an Mr Turnbull drop the tax cuts for large companies?”
Emily Ritchie 8am: Turnbull grilled on Alan Jones
Malcolm Turnbull has been forced to defend the “rubbery figures” contained in last night’s budget and admitted that raising the national debt ceiling is worrying.
The Prime Minister was grilled by radio broadcaster Alan Jones on Sydney’s 2GB this morning over “rubbery” projections and raising the debt ceiling, with Mr Jones suggesting the government would not need to increase the debt limit if debt levels were under control.
“Here we are on the day of the budget increasing the debt ceiling to $649,000 million. It’s worrying the tripe out of people,” said Jones.
“It worries me too, that’s why we have had to increase tax on the banks and increase the Medicare levy from 2019,” said Mr Turnbull. “It’s all part of our program to bring the budget back into surplus.”
Mr Turnbull defended the projection of a surplus of $7 billion by 2020/21, saying the figures were “no more rubbery than any other forecast, whether it’s a forecast for the profitability of (Jones’) radio station or anything else.”
“We live in an uncertain world,” said Mr Turnbull, “but over the years in different businesses and so forth I’ve done plenty of projections and forecasts and the assumptions here are conservative.”
The PM argued the key figure to look at was net debt, which this year is predicted to be 19.5 per cent of GDP.
“That is too high,” he said. “That will rise into next year and then it will start to come down.”
Mr Turnbull described the budget as “fair and responsible”, reaffirming Treasurer Scott Morrison’s assertion that we have to live within our means.
“We have made a lot of savings during Tony’s time and my time but we have not been able to get all of our savings through the senate,” said Mr Turnbull. “We can’t be accused of not having a red hot go at it. But we have to be realistic, we have to be responsible and we have to live within our means.”
Rachel Baxendale 7.50am: Medicare levy ‘an additional tax’
Malcolm Turnbull has admitted that the Medicare levy represents an “additional tax on families by 2019”, but says the government has to support the National Disability Insurance Scheme.
A 0.5 per cent increase in the Medicare levy from July 2019, taking it to 2.5 per cent, is intended to plug the funding hole in the NDIS.
“All of us are beneficiaries or potential beneficiaries of it,” the Prime Minister told ABC TV.
“All of us know people who need support with disabilities, kids with disabilities, families struggling with that.
“This is a great national enterprise and we need to fund it responsibly and give that assurance to Australians that their government is standing behind them, guaranteeing those essential services.”
Turnbull on the bank levy
Mr Turnbull said it was “only fair” that the banks pay the government’s new levy to bring the budget back into balance, as some of the most profitable banks in the world.
He said the government’s new levy, which will cost the banks $6 billion over the next four years, was similar to others around the world.
“This is a very conventional approach and it is one that will secure that additional money, $6 billion over the next four years, that will assist us in bringing the budget back into balance and ensuring that our children and grandchildren are not burdened with a mountain of debt,” Mr Turnbull said.
“We will, with the projections in the budget, have $7.4 billion of surplus by 2021, a big improvement forecast in last year’s budget.”
Asked how he would stop the banks simply passing the levy on to customers through higher mortgage rates, Mr Turnbull said the ACCC would “keep an eye on it”.
“We are enhancing competitiveness,” he said.
“There are other banks and financial institutions competing with them.
“You have to remember that the banks are hugely profitable. They do not need to pass this on. They will still be very profitable and the most profitable banks in the world.”
Turnbull on welfare drug tests
Mr Turnbull said he was “so disappointed” that the Greens and other groups had been critical of the government’s plans to randomly drug test welfare recipients.
“Really, what is more important in the welfare area than getting people back into a job?” he said.
“The best form of welfare is a job. If people are on welfare and they have an addiction problem it needs to be identified and helped.
“They need to be helped and get off the addiction so they can get back into the workforce. This is helping people.”
He said there was “plenty of random drug testing” in other parts of society.
“If you are involved in operating heavy machinery, businesses have to do that,” Mr Turnbull said.
“There is a big correlation between substance abuse and unemployment, because, of course, people who are on drugs or got a serious alcohol and drugs problem of course they are not able to work therefore they become welfare dependent. We want to get people off welfare into employment.”
7.35am: Changes at home
Our production team has been busy crunching the numbers into interactive graphs, more to come throughout the morning.
7.25am: Round-up of front pages
Check out the budget front pages as the cartoonists work their magic.
7.15am: Labor to back bank levy
Federal Labor will not stand in the way of a new levy on the nation’s big five banks and remains open to a hike in the Medicare levy, Shadow treasurer Chris Bowen reiterates.
It would be irresponsible to rule out supporting it,” he told ABC radio this morning.
Mathias Cormann said the revenue from the bank levy would go directly to improving the budget bottom line.
“It is essentially a contribution towards budget repair,” he told Sky News. Asked whether it was essentially a super-profits tax, Senator Cormann said: “It is a $1.5 billion levy a year which comes out of about $30 billion a year in after-tax profits”.
Rachel Baxendale 7.10am: Bank levy an ‘unusual step’
National Australia Bank chief economist Alan Oster said the bank levy was an “unusual reaction” from the government.
“There’s always the problem that, you know, where does it start and where does it stop? How the banks are going to react? I don’t know. They’ll look at it,” he told ABC TV.
“I suspect they’re probably not thrilled. I think the share market, you saw yesterday afternoon, as it started to come out that there was going to be some sort of tax, share prices went down.
Asked whether it made sense for banks to pass the levy on to their customers, Mr Oster said it was hard to say.
“Obviously, you know, you’re taking a fair chunk or a chunk out of profits and banks will react and figure out how to go from there,” he said.
Mr Oster said the wages numbers in the budget and in particular an unexplained surge in 2021 were “very strange”.
“Currently wages growth is around 2 per cent and by ‘19-’20, they’re talking about 3 per cent and in the out years they’re talking about 3.5 per cent,” he said.
“We find that difficult to believe in an environment where unemployment is 5.5 per cent and they’re forecasting maybe 5.25 per cent.
“We worry about the credibility of the underlying assumptions.”
Mr Oster was more positive about housing policy, saying the supply side measures would help.
“I’m not sure about the superannuation,” he said.
“I think that — to the extent that you give people extra money, they’ll go out and bid it up.”
Rachel Baxendale 7am: Lambie — ‘not very inspiring’
Tasmanian independent senator Jacqui Lambie said the budget was “not very inspiring”, and seemed to have left her state off the map in terms of funding for infrastructure.
“There’s a $10 billion infrastructure fund in the next ten years and I don’t see Tasmania mentioned in this once,” she told ABC TV.
No fairness, security, or opportunity for Tasmania in #Budget2017 #auspol #politas pic.twitter.com/HH8rtHnPNA
— Jacqui Lambie (@JacquiLambie) May 9, 2017
Senator Lambie said she did, however, support the government’s bank levy.
“I think it’s a great idea,” she said. “Whether or not the banks are overstacked with lawyers so whether or not it will work, I think we’ll end up with a royal commission, no doubt about that,” she said.
Senator Lambie also welcomed the move to randomly drug test 5,000 new welfare recipients, saying she had called for it two and a half years ago. “It would be nice to see Parliament leading by example and do drug testing at their own doors,” she said. “You know what? They’re paid by the taxpayer, public servants and politicians, they could be doing random drug tests at the doors and leading by example and that way they won’t get so much flak.
“I think it’s heading in the right direction. I need to see it in black and white when they roll it out. I need to know what areas they’re going to roll it out in and how it will be conducted by. By second-guessing which ones they’re going to do rather than doing it full-on random, I’m not sure they’ll get the result they want to achieve.”
Rachel Baxendale 6.50am: Welfare groups worried over drug tests
Australian Council of Social Services CEO Cassandra Goldie said random drug testing of people on welfare was about “demonising” them.
“Compliance is already tough and the government wants to save $200 million a year, which means more and more people with no income,” she told ABC TV.
Dr Goldie said those who gamed the system represented a very small proportion of welfare recipients.
“The compliance is already tough,” she said. “We could have seen better resources for human services to make sure the rules were properly enforced, but what we see is we will be cutting people off from income and nothing to address the adequacy for the people on the single parent income, and unemployed.
“(There are) not enough jobs for people and people to get by so poverty won’t be addressed.”
6.40am: At a glance
What our experts made of last night’s budget.
Scott Murdoch 6.20am: BoQ could be beneficiary
Citigroup analysts have forecast the Bank of Queensland could be a major beneficiary of the Coalition’s big bank tax introduced in last night’s budget.
The six basis point levy will raise $1.5 billion a year which is the equivalent of 5 per cent of the profits from the big four banks and Macquarie. Speculation over the tax before it was introduced last night prompted $14 billion to be wiped off the banks’ market capitalisations yesterday.
In a research note today, Citigroup analysts have reiterated their sell recommendations on CBA, Westpac and NAB and the neutral call on ANZ. It said the Bank of Queensland should benefit from the changes.
6am: Key headlines
The budget stories leading The Australian’s coverage today.
• ScoMo steal Labor tax dream: The Turnbull government will impose $23 billion in tax hikes on banks, workers and foreign investors in a bid to “reset the budget” and turn the tables on Labor, writes David Crowe.
• PM turns flaws into political strengths: At last the true nature of the Turnbull government is revealed — it has stolen Labor’s popular agenda, writes Paul Kelly.
• Treasurer takes his revenge on banks: The big banks have just been given a very expensive lesson in politics, writes Simon Benson.
• Don’t hold your breath on these projections: The government’s latest budget has, once again, feather-bedded its bottom line with optimism, writes Adam Creighton.
• The government back in the game: For the first time since the 2013 election, Labor is being forced towards a deep self-examination, writes Dennis Shanahan.
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