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Big-spending Aussie Budget is supported by hefty taxes

17 Mai 2017

It's all bad news for Australia's banks as the shock A$6 billion ($6.4b) levy revealed in Tuesday night's budget sinks in with market watchers. Morrison told CNBC in the budget lock up.

It is thought to be a bid to bury the disastrous 2014 Budget once and for all, the Budget where former Treasurer Joe Hockey infamously declared "the age of entitlement is over".

"We understand that while Australia has grown ahead of large advanced economies in the world and that our national growth against strong headwinds has been impressive. that not all Australians have felt the experience of that growth personally", he said.

The government expects a slightly larger-than-expected deficit of A$29.4 billion in 2017-18 but plans to finally deliver a surplus of A$7.4 billion in 2020-21.The surplus, if achieved, would end 12 years of deficits.

For average families, Budget night meant thousands of dollars and they were the people that kept John Howard in The Lodge for more than a decade.

But Sales wasn't having any of it.

The affected banks all came under immediate share price pressure late on Tuesday and again on Wednesday morning, before some of their losses were pared.

Most notable was the 0.06 of a percentage point levy on the liabilities of the five biggest banks which would rake in about A$1.5 billion a year, he said in a note to clients.

ANZ CEO Shayne Elliott has said that the new bank tax is "regrettable policy", adding that he believed it was really "a tax on the millions of ordinary Australians who are bank shareholders and bank customers". "Why such a drastic change?"

Sales pointed out that there would be 0.5% increase in the Medicare Levy, which would see most taxpayers forking out extra money each year.

Shadow treasurer Chris Bowen said the opposition would take time to respond to the proposed increase.

"Both Medicare and the NDIS are funded out of consolidated revenue".

"While we wait for further information about how this tax is proposed to work, our focus at NAB remains on supporting our customers during what is a critical time in the Australian economy".

Peter Costello has criticised the second Scott Morrison budget.

According to Deloitte, the theme of this new Budget is to "bury the ghosts of Budgets past" - an appropriate assessment of this new spending spree, as it's been playfully dubbed in the media and social networks as a "Labor Budget" delivered by a Coalition government.

"I think that's a very reasonable amount".

Analysts said the Budget was largely created to try to restore the political fortunes of the Coalition, which is trailing the Labor opposition in opinion polls.

Meanwhile Hanson told Sky News she was "not happy at all". There will be a drug testing trial for 5,000 new welfare recipients.

In perhaps the biggest surprise of the 2017 Budget, the Liberal Party has gone after the big four banks to wear the biggest share of budget fix. Was Leigh Sales too hard on the Treasurer?

"[They are] tackling businesses that make a profit, simply because they make a profit".