Bill Shorten is set to hit banks and financial institutions with a new levy for a $640 million fund to support victims of misconduct as Labor sharpens its attacks on poor corporate behaviour ahead of the expected May federal election.
The opposition will today announce a “banking fairness fund” to be imposed in addition to the Coalition’s banking levy and be paid by financial institutions among Australia’s top 100 listed companies, with the amount they pay linked to their market capitalisation.
The pre-election pledge would raise $160m in new taxes a year for four years, hitting not only the big four banks — Commonwealth, NAB, Westpac and ANZ — but also Suncorp Group, Bank of Queensland, and the Bendigo and Adelaide banks. Financial institutions AMP and Macquarie Group would also pay.
The move could increase tensions between Labor and big business, which have been strained since the opposition led the charge against Malcolm Turnbull’s corporate tax cuts for businesses with a turnover of more than $50m, forcing the then prime minister to dump the plan.
Half the money from the bank tax would be used to double the number of taxpayer-funded financial counsellors, from 500 to 1000, giving free advice and advocacy to an extra 125,000 people a year.
“These 500 new financial counsellors will be able to assist Australians to pursue fair compensation through the Australian Financial Complaints Authority under significantly increased compensation caps announced by Labor last week,” the Opposition Leader said.
“Financial counsellors provide invaluable assistance, free of charge, to Australians who find themselves in disputes with their banks and other financial service providers.”
Labor will reveal later this week how the remaining $320m would be spent.
The big four banks and Macquarie Group were slapped with a 0.06 per cent levy in the Turnbull government’s 2017 budget, which is forecast to raise more than $6 billion over four years. The banks claimed the costs of the levy would be passed on to consumers or shareholders.
The big four banks will pay the lion’s share of the Labor tax, given it will be levied as a proportion of each company’s market capitalisation. Mr Shorten said the move was part of Labor action on the recommendations in the Hayne banking royal commission.
“Commissioner Hayne recommended that Australia’s hardworking financial counselling sector should be given ‘predictable and stable funding’,” Mr Shorten said. “Commissioner Hayne noted in his final report that ‘their services, like financial services, are a necessity to the community’, but that the sector currently ‘struggles to meet demand, which is increasing’. “Labor fought for the banking royal commission — unlike Scott Morrison and the Liberals who voted against the royal commission 26 times.”
Mr Shorten announced last week financial institutions could be forced to pay up to $2m to customers who have been humiliated, stressed or inconvenienced by a bank’s behaviour. The current cap is $500,000 for financial-based claims and $5000 for non-financial loss.
Josh Frydenberg yesterday increased his attack on Mr Shorten over his handling of the banking royal commission, after a leaked email from the financial services lobby poured doubt on Labor’s commitment to early action on the recommendations. In an email to members, obtained by The Australian, Financial Services Council director Allan Hansell said he met with “key shadow ministers” last week and was left with the impression the proposed bill would not be dealt with before the election. Labor last week attempted to wedge the government by tabling a private member’s bill on uncontroversial measures in the royal commission recommendations.
“It appears very unlikely Labor will seek a suspension of standing orders to facilitate a debate about why their bills should be dealt with as a priority,” Mr Hansell wrote.
“It appears Labor is not engaging in significant consultation with industry on the bills, with more than one Labor office suggesting the bills would not be dealt with by parliament prior to the election.”
“The legislation drafted by Labor had serious flaws,” Mr Frydenberg said. “Now there is further proof that Labor’s clumsy legislation was nothing more than a stunt.”
Opposition Treasury spokesman Chris Bowen said it was the government’s fault Labor’s proposed legislation could not pass the parliament before the election.
“The Liberal Party is content with a part-time parliament and won’t schedule more sitting weeks to deal with legislating the royal commission’s recommendations, which obviously makes the passage of our legislation impossible,” Mr Bowen said.
Mr Frydenberg has accused Labor of backflipping on its vow to accept all 76 recommendations of the royal commission after it last week announced it would not push to ban commissions for mortgage brokers. Labor has accused the government of failing to adopt 15 of the recommendations.
This article appeared on The Australian on 25 February, 2019.
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