Australia’s big four banks have asked the Government for a Royal Commission into themselves. And the Turnbull Government has agreed.
Federal Cabinet met this morning and agreed to establish a Royal Commission that will report by February 1 2019, at a cost of 75 million dollars.
In a letter written to the government, the CEO’s of the four major banks say this is now in the ‘national interest’, despite warning that such a commission may being reputational damage to the industry.
This comes after years of the Government rejecting such a proposal (including during the election).
The Commission will be into ‘Misconduct into the Financial Services Industry’ and will include cases studies into banks, wealth managers, superanuation companies and the industry. It will then offer recommendations to the Government.
The Royal Commission comes a week before the House of Representatives was due to sit with the Government two votes behind on the floor due to by-elections, and several backbench National MP’s indicating they would cross the floor to establish an inquiry.
Malcolm Turnbull has secured his biggest victory yet as Prime Minister.
The Senate has passed Gonski 2.0 – an education funding bill that uses David Gonski’s funding model, developed in 2011. The model provides a ‘base’ level of funding for each student, followed by additional loadings, depending on socio-economic and other circumstances.
Turnbull’s Gonski 2.0 deal goes further by streamlining more than two dozen individual agreements with independent and private schools, as well as the states by Julia Gillard. The new model will see the government’s contribution increase to 23.5 billion dollars over six years after a cross-bench deal was struck. It was previously 18.6 billion over ten years.
These reforms have crushed the opposition, as education funding has notably been their biggest stick to beat the government with, not to mention that ‘Gonski’ funding is built into Julia Gillard’s legacy as Prime Minister.
Using the ‘I give a Gonski’ campaign, Labor and the Union movement have attempted to bust apart Gonski 2.0, but it’s clear to experts in the field (and the cross-bench) that this is the best deal for education funding over the next 6 years.
The most controversial measure of the budget passed last night in the Senate – the major bank levy.
The levy will raise 6.4 billion dollars over four years and will hit Westpac, NAB, ANZ and the Commonwealth banks. The Government argues it’s a just levy considering the support the Government would extend to the bank if they ever got stuck.
The bill passed the Senate with the support of the Labor party and the Greens.
There’s quite a bit happening for the finance sector, so strap yourselves in.
More than 16 billion dollars of spending cuts from the 2014 budget have been scrapped in this budget. This is because the Senate has refused to pass them. They were known as ‘zombie measures’.
The major banks will be levied more than 6 billion dollars over four years to assist with paying back the national debt. Labor has indicated they will support the measure, so this is done and dusted.
Banks will also face higher penalties for misconduct – 50 million for small banks and 200 million dollars for large banks.
The government will strengthen the laws surrounding corporate tax avoidance, by giving the ATO powers to investigate trusts and foreign partnerships. Last year’s budget measure of establishing a special task force designed to claw back lost tax revenue has raised 2.9 billion. The team is expected to raise 4 billion within the next year alone.
Scott Morrison has also asked the productivity commission to investigate the banking sector’s competitiveness.
Ever chosen the cheaper generic brand at the pharmacy?
As we edge closer to budget night, the government will drop more info about its measures. On Tuesday it was the Health area, with ABC’s 7:30 program detailing changes to the system that doctors use to prescribe medication. Instead of generating prescriptions by brand name, the system will be adjusted to generate prescriptions by the ingredients within the medication, which should result in increased used of branded medication, for generic brands
The change is expected to save taxpayers 1.8 billion dollars over five years. The Health Minister Greg Hunt is making it clear this morning that doctors will still have the power to choose whatever brand they would like. The doctors union, the AMA, is cautious but is waiting for more detail.
With less than a month to go it looks like housing affordability will be major plank of the government’s budget. It’s no surprise that the government is dropping details here or there – they are testing how the public reacts to them before they consider it further.
One idea to solve the issue is the concept of allowing first home buyers to access their superannuation in order to save enough money. The concept is controversial as many economists argue that it will raise the price of houses by default. A core group of 6 ministers will evaluate the plan in coming weeks.