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Australia's shock bank levy: who'll pay?

Wednesday, May 10, 2017 - 01:46

Australia's biggest banks have been hit by a surprise A$6.2 billion ($4.56 billion) government tax. But, as David Pollard reports, many analysts expect them to pass it straight on.

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They're big, they're powerful and among the most profitable in the developed world. And that, say their defenders, makes Australia's top five banks easy targets for a government snatch and grab. (SOUNDBITE) (English) AUSTRALIAN TREASURER SCOTT MORRISON SAYING: "My message to them is, they have to do their fair share for budget repair and that's what they are being called on to do." To the tune of around six billion Australian dollars a year, in the form of a new levy. The banks notified, it's reported, just an hour before an announcement in Tuesday's annual budget. (SOUNDBITE) (English) AUSTRALIAN BANKERS ASSOCIATION CEO, ANNA BLIGH SAYING: "The new tax on banks is very poor public policy and it is a policy that every Australian will end up paying for." Commonwealth Bank and NAB echo that warning - NAB saying 10 million customers could be affected. While Westpac warns it'll damage their ability to raise capital and lend. But the government wants to reform an industry whose big players are seen - among the public - as too dominant. (SOUNDBITE) (English) AUSTRALIAN TREASURER SCOTT MORRISON SAYING: "It's not on depositors' accounts. It's not on mortgage holders. So if banks tell you they're changing their pricing because of this on your mortgage or on your deposit interest rates, they're not telling you the truth." It's keen consumers shouldn't take the hit. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "A lot of that will be determined by whether the government hand in hand with this bank levy can also promote a lot of competition in the mortgage and lending market. Which means it isn't necessarily the consumer that pays, but quite possibly the shareholder." That thought already undermining share prices of the five unfavoured banks. Whilst boosting smaller lenders by as much as five per cent - on the hope the levy will give them a new competitive edge.

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Australia's shock bank levy: who'll pay?

Wednesday, May 10, 2017 - 01:46