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Australia’s five largest banks have been given a temporary reprieve by the Turnbull government to respond to draft laws that would impose an extra $6.2 billion in tax on them.
The banks were given copies of draft legislation late on Wednesday that would establish the new tax – with a requirement to sign non-disclosure agreements – and had been asked to formally respond by close of business on Thursday.
They will now have until 9am on Friday to respond to the complex legislation.
The extended deadline was granted after Treasurer Scott Morrison called for one of the big five to break ranks and not pass on the cost of the new tax to customers.
At the same time, Australian Competition and Consumer Commission chairman Rod Sims admitted the regulator would not be able to stop the banks from passing the levy on to customers or shareholders.
“We don’t have power to stop the banks from doing anything,” Mr Sims said.
Labor shadow assistant treasurer Andrew Leigh said this admission stood in “stark contrast to Treasurer Morrison’s claim that the government can force banks not to pass on the levy to consumers”.
Fairfax Media revealed on Wednesday the five big banks – Commonwealth, Westpac, NAB, ANZ and Macquarie Group – were furious at being asked to sign the agreements.
They have fiercely criticised the government’s new 0.06 per cent levy and warned the cost of it will ultimately be borne by customers, shareholders, or both.
But the Treasurer said on Thursday that “the first bank to say to Australians that they’re not going to pass this on I suspect will get great support from the Australian people”.
“I challenge the banks to do that; they can wear this cost,” he said. “The UK banks have already worn a similar cost because they understood they had to do the right thing by their customers.
“And if the banks actually really want to prove something to the Australian people that the perceptions that many have about them is not true, the first bank to break ranks and say, ‘No, we’re not going to insult the Australian people; we’re going to do the right thing by the Australian people’, then I think they will get a lot of support from Australian customers.
Mr Morrison said it was not irregular for banks to be asked to sign confidentiality agreements, pointing out that recent multinational tax-avoidance laws and diverted-profit laws had a similar requirement. It is, however, unusual for an exposure draft legislation not to be publicly released.
Labor has criticised the secrecy around the proposed laws and compared it to the Treasurer’s approach to Operation Sovereign Borders, which he enacted while immigration minister and which clamped down on information and transparency while stopping asylum seeker boats.
“Scott Morrison needs to understand that dealing with the financial system and major new tax measures requires transparency, not a cloak of secrecy that typified Mr Morrison’s time in the immigration portfolio,” Labor treasury spokesman Chris Bowen said.
“Australian publicly listed banks have continuous disclosure obligations as well as obligations to update boards, staff, customers and shareholders of the potential impact of the bank levy design. Mr Morrison should have waited until the end of market trading yesterday and publicly released the exposure draft legislation on the major bank levy.”
Labor has suggested the foreign banks should also be subject to the new tax.
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