Surprise levy a blow to Australian banks

Budget 2017: Tax changes and red tape cuts on the table as Scott Morrison “backs” small business

Federal budget 2017: Scott Morrison makes promise of better days for government -->

"Right now, the major banks of Australia are very angry".

Morrison unveiled a levy on the big banks' liabilities from July 1, but said that that liability calculation would not take into account customer deposits of less than $250,000.

She said the measure could "threaten the stability" of the financial system.

"Our banks pool 30 billion Aussie dollars in profits annually and this is 1.5 billion Aussie dollars in tax (per year for four years)", Morrison said.

"Unlike the previous bank deposit tax, this is specifically not a levy on pensioners' and others' ordinary deposit accounts, nor is it on home loan", the Treasurer said.

He assured Australians the government had listened to their frustrations about cost of living pressures and promised a practical and fair budget.

"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", Bligh said. "Without putting the burden on to families earning modest incomes", he said.

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

Rumours the banks were under attack leaked ahead of the federal budget.

"(This will be used) not only for budget fix, but for funding schools and funding public health". This will cover nearly half of the "zombie" savings measures the Turnbull Government has been unable to get through the senate.

The opposition will support a levy on big five banks, which will raise $6.2 billion over four years for budget fix.

Banks will also be forced to report any misconduct under new mandatory reporting rules.

The budget was the first since PM Malcolm Turnbull's government was re-elected on a tiny majority a year ago.

The federal government has projected a deficit of $29.4 billion for 2017-18, down from its projection a year ago.

Defence spending will hit two per cent of GDP by 2020/21.

It will be hard for Labor to argue against one of the biggest imposts in the budget - an $8.2 billion rise in the Medicare levy to fund the National Disability Insurance Scheme.

This means abandoning some $13 billion of saving measures that the government has been unable to pass through the Parliament and looking at ways to raise revenue instead; the government has "drawn a line and reset" Morrison said in a press conference on Tuesday.

" Labor will not support spending $19.4 billion [by allowing the deficit levy to expire on July 1] on the wealthiest 2 per cent of Australians".

The Turnbull Government announced the end of the troublesome Medicare rebate freeze which has been forcing up the cost of GP visits and threatening the spread of bulk billing.

Morrison outlined plans to deliver A$75 billion in infrastructure funding and financing over the next years as the base of Australia's next growth wave.

The extra funding will be paid for by a $2.8 billion hit to universities over the next two years.

And $1.2 billion in new medicines will be made available, including for people with chronic heart failure, which will be funded by an agreement with the pharmaceuticals companies. They would also have to pay between $3000 and $5000 to bring in a worker on a permanent skilled visas.

"This is good, common-sense financial management", Mr Morrison said.

"The public has got to understand that we have this political gridlock".

Contributions and earnings will be taxed at 15 per cent rather than at marginal rates.

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 Commonwealth will scrap the National Affordable Housing Agreement but will still provide $1.3 billion to the states and territories under new arrangements to boost the stock of affordable housing.

It's estimated to create 16,000 jobs at the peak of the construction phase.

The Commonwealth Government will also try to gain a larger share or outright ownership of the Snowy Hydro scheme.

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