Morrison warns big banks to absorb new tax

Treasurer Scott Morrison addressed the National Press Club in the Great Hall at Parliament House in Canberra on Wednesday 10 May 2017. Photo: Andrew Meares Photo: Andrew Meares

The federal government and Australia’s five largest banks are on a collision course, with Treasurer Scott Morrison demanding they “pony up” for budget repair and the banks threatening to hit households with higher costs.

In an extraordinarily blunt message from a federal treasurer, delivered during Mr Morrison’s post-budget National Press Club address, Westpac, ANZ, NAB, Commonwealth and Macquarie Group were challenged not to pass on the cost of the tax, which will raise $6.2 billion.

Instead, Mr Morrison said, the banks should be mindful of their $30 billion annual profits and absorb the cost of the new levy – just as small businesses and families do with their rising costs.

The 0.06-percentage-point levy on money the big banks borrow to fund their lending excludes deposits of less than $250,000.

The banks have already started to fight back, warning that borrowers and shareholders could be forced to pay the cost of the tax, which could be passed on to customers.

And former prime minister John Howard has delivered a less-than-enthusiastic response to the budget, telling a PwC post-budget briefing in Melbourne he was “troubled” by powers given to a new Banking Executive Accountability regime by the Turnbull government, while arguing the document was created to pass a “recalcitrant” Senate.

The banking levy, he said, “was a tax on banks” that would be impossible for the Labor Party and the Greens to vote down.

His treasurer Peter Costello, at a separate budget briefing in Canberra, said the budget was politically smart and said the banking industry was “completely blind-sided by this, which shows how much influence they have in Canberra and how tapped in they are in Canberra”.

The banks’ warnings came as a surprised Labor Party indicated it would back the bank levy, which means it is certain to pass the Parliament.

Mr Morrison’s message to the banks – families have to absorb costs, and so should the banks – will likely resonate with voters.

“The banks want to send a message to their customers about how much they value them? Don’t do what they may be contemplating doing [raising rates or reducing returns]. Don’t do it.”

“They already don’t like you very much. Prove them wrong. Don’t confirm their worst impressions. Tell them another story. Tell them you will pony up and help fix the budget.

Mr Morrison also flagged personal income tax cuts to tackle bracket creep, which pushes taxpayers in to the next-highest tax rate as wages grow with inflation, in the next four years.

And he spoke at length about his brother-in-law, Garry Warren, who has multiple sclerosis, and his wife Michelle Warren, during the speech, as he outlined why the government had decided to raise the Medicare levy to fund the National Disability Insurance Scheme.

The decision to take on the five biggest banks and hit them with a new tax was a major surprise on budget night and is one of a number of measures that underscores a significant shift by the Turnbull government away from the austere policies of the Abbott-Hockey 2014 budget and towards new spending on infrastructure, health and schools.

???Politically, the Turnbull government will be hoping the shift to the political centre will blunt Labor’s attacks over fairness and equity, while arresting its slide in the polls.

Australian Bankers Association chief executive Anna Bligh said the banks would meet with Treasury officials on Thursday to receive more details and and added: “I don’t believe the Treasurer has thought through the implications of this tax”.

“Right now, the major banks of Australia are very angry; they feel they have had a tax imposed on them uniquely that does not apply to any other part of the business community,” she said.

Westpac chief executive Brian Hartzer said the levy was a “stealth tax” that would reduce the international competitiveness of the sector, while flagging a possible increase in interest rates for borrowers, job cuts, or a reduction in returns to shareholders.

Commonwealth Bank chief executive Ian Narev said there had been a “lack of detail and the absence of any consultation” about the tax.

“However, as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.”

NAB chief Andrew Thorburn said the tax “cannot be absorbed”.

“This tax is borne by these people. It is not possible to impose a tax without an impact on people,” he said.

Deutsche Bank analysts estimated the impact on profitability of the five banks would be 3-6 per cent.

When news of the levy leaked on Tuesday ahead of the budget, investors wiped $14 billion from the value of banks stocks. Their share prices fell further on Wednesday.

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‘Absurd, ridiculous’: Joe Gutnick denies trying to hide assets

Joseph Gutnik appearing at the Federal Court in Melbourne. 27th April 2017. Photo by Jason South Photo: Jason South

Bankrupt businessman Joseph Gutnick has denied taking steps to hide assets from his future creditors ahead of his bankruptcy last year.

The former Rich-lister has also taken another swipe at “fake news” about his bankruptcy and a dispute last year about the eviction of his brother from a home he once owned.

Mr Gutnick told the Federal Court during the public examinations into his bankrupt estate that he refuted the allegations that were made by his brother Abraham Gutnick in a separate legal matter.

Last year, lawyers for Abraham Gutnick told the Supreme Court of Victoria there were “rumours within the family that Joseph Gutnick was trying to hide assets” as early as 2015.

“I refute all of his absurd and ridiculous allegations,” Mr Gutnick told the Federal Court on Wednesday.

“If you are trying to extort assets that don’t belong to you, you say these things,” he said.

Lawyers for Abraham Gutnick made the allegations last year while trying to stop Abraham Gutnick and his family being evicted by the new owners of a property he had long rented from one of his brother’s companies.

The property was sold to newly formed company Balaclava Heights in 2015 and shortly after it sought to evict Abraham Gutnick.

The property sale came just after Joseph Gutnick lost a legal battle in Singapore on May 7, 2015, brought by the Indian Farmers Fertiliser Co-operative (IFFCO) that would end up costing him $54 million and sending him bankrupt.

Joseph Gutnick told the court on Wednesday that his brother remained at the property but he no longer pays the rent for his sibling.

“It is unfortunate that our family feuds have been splashed all over the newspapers and will be again,” Mr Gutnick said.

“A question like that could have been asked privately. But that’s life,” Mr Gutnick said.

Mr Gutnick was also taken through several transactions between his family’s Hoydu Family Trust No.1 and other entities and parties. Hoydu is listed as one of Mr Gutnick’s largest creditors with the fallen mining magnate owing the family trust $42 million.

The court heard the Hoydu debt was accrued through daily expenses including charitable cash handouts to visiting members of the Jewish community to the Gutnick home, a donation to an Israeli politician, payments to friends of his son and to family friends as well as his brother’s rent and car registration.

Carl Moller, lawyer for Mr Gutnick’s bankruptcy trustee Gess Rambaldi from Pitcher Partners, told the court all of these expenses and many more were recorded as loans to Mr Gutnick.

“They’re friends, you help friends out. You help brothers out. You don’t expect something in return.”

The court also heard Mr Gutnick paid rent on his primary residence and a beach house using funds from a family trust or associated company by way of a loan to the family companies that owned the properties.

Responding to the questions, Mr Gutnick said: “I don’t always understand why they (his financial advisers) make entries. A businessman like myself relies on lawyers and accountants.”

The examination continues.

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‘I’m not saying no to Gary’: Treasurer reveals personal struggle behind NDIS decision

Scott Morrison has delivered one of the least conventional, and most effective, post budget sales pitches in memory – and ratcheted up the pressure on Bill Shorten in the process.

Budget week is governed by set plays and one of the more important is the speech the Treasurer delivers to the National Press Club the day after the night before.

Usually, it is more a slide show than a speech, with the Treasurer taking his audience through the more important tables and projections in the budget papers before taking questions from reporters.

Usually, it is one for the pointy heads in the room, not the mums and dads watching TV at home.

But not this time. ScoMo spent much of the first 15 minutes relating the story of his brother-in-law, Gary Warren, a former fireman who was in the audience, and his long battle with a very aggressive form of multiple sclerosis.

“It’s not flash being disabled,” Morrison recalled Warren saying, “but, if there is anything good about it, it’s that you’re disabled in Australia.”

What the story amounted to was a justification for the Coalition government increasing the Medicare levy by 0.5 percentage points to fully fund the National Disability Insurance Scheme. “I’m not saying no to Gary, and the 500,000 Australians counting on this,” the Treasurer declared.

Forget Labor-lite, this was Morrison channelling Gough Whitlam.

It is one thing to attempt to neutralise Labor strengths, as this budget has done in tick-a-box fashion on health, education, housing affordability, infrastructure and more.

It is another to go after easy targets to reduce the national debt, as this government is doing in a massive way with the big banks (who are less likely to bite back than the mining giants).

But it is something else altogether to go further than Labor to ensure a $55.7 billion funding gap over the next 10 years will be closed, and to guarantee that the NDIS will be fully funded by committing to a new tax.

The political cleverness is reflected in the initial response. Labor was like a boxer confronting a wily opponent in the ring: probing away with jabs, looking for an opening, but not yet finding one.

Shorten’s first question was to ask why the government was giving millionaires a tax cut while every other Australian would have to pay more through the higher Medicare levy.

The answer is that it would have been a breach of faith to continue the “temporary” budget repair levy Tony Abbott introduced in July 2014 for a fixed, three-year period, and that the increase in the Medicare levy will not begin for two years and has a very different purpose.

As Morrison told his National Press Club audience: “This is an insurance levy. We’re all affected by it. I’ve shared with you my personal story on this today from my family. I can go to every table I suspect and get a similar story or an associated story. This is all of our responsibility.”

Whether Turnbull and Morrison will reap a political dividend will become clear soon enough. Will voters reward the Coalition for their Medicare “guarantee” and their embrace of needs-based funding of schools, or see the commitments as half-hearted? Will their projections on wages growth prove hopelessly optimistic?

More broadly, will they accept that the outfit that delivered the 2014 budget is now utterly pragmatic and has entered the “era of the achievable”? Will they believe the man who ruthlessly politicised refugees for political gain is now sincere when he declares: “We’ve got to stop looking at these issues as conflicts”?

One measure of Morrison’s confidence was a joking aside during his speech. After describing Peter Costello as the country’s finest treasurer, he conceded he was not troubling Costello on this front yet. “Might take 10 years, but l’ll give it a crack,” he quipped.

A bit premature, I reckon.

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Senator calls on police to investigate budget leak

Australian Federal Police officers lockdown the ministerial entrance to Parliament House in Canberra on Monday 22 September 2014. Photo: Andrew Meares Photo: Andrew MearesSenator Derryn Hinch has called for the Australian Federal Police to investigate a leak that led to $14 billion being wiped off banking stocks in the hours before the federal budget.

“The biggest story today wasn’t the super tax on banks, it was the leak,” Senator Hinch told Fairfax Media.

The independent senator wrote to AFP Commissioner Andrew Colvin on Wednesday accusing the government of insider trading and requested a full investigation into the release of market sensitive information hours before the budget.

“It appears to me to be a classic case of criminal insider trading involving the federal government,” he said. “It is a very serious thing, it could be a politician.”

Senator Hinch said the AFP should investigate who shorted bank shares on Tuesday in the lead up to the budget.

Reports of a bank levy were first aired on Sky News on Monday night, triggering a 3 per cent fall for the country’s biggest bank, the Commonwealth Bank, when the market opened on Tuesday before stabilising.

It shed another percentage point on Tuesday afternoon as more detailed reports of the levy started to emerge.

At 12.20pm on Tuesday – seven hours before the budget was officially announced and in the middle of market trading- the Australian Financial Reviewpublished details of the policy, quoting “banking sources” who confirmed the tax would apply to banks’ aggregate liabilities and come out of retained profits. All of the details contained in that report, including the $6 billion revenue figure, were later confirmed in the budget.

By market close the other big four banks and Macquarie all fell several percentage points, wiping $14 billion from their value

A Macquarie spokeswoman said that “while there was media speculation earlier yesterday of the possibility of a bank levy”, the bank only learnt of the government’s policy as the budget was being delivered and after the market had closed.

Macquarie was in compliance with ASX disclosure rules, she said.

Treasurer Scott Morrison said on Wednesday at his National Press Club address he had “not seen any evidence” of a leak and suggested the media had fuelled the market through “budget speculation”.

“I’ve worked out how it works with the media. You work out every potential scenario that could possibly happen in the budget, you write it in the paper and at the end of the day, you predicted dawn,” he said.

He added that if there were any serious issues that needed to be addressed, “the [Treasury] secretary and I will be addressing them appropriately on the basis of the evidence.”

Senator Hinch has called on the AFP to investigate leaks in the hours leading up to the lock-up.

It is understood Treasury monitors laptops and smartphones capable of transmitting information during the lock-up, which begins at 1.30pm, and it has no knowledge of any budget leaks. iFrameResize({resizedCallback : function(messageData){}},”#pez_iframe_tipstar_348″);

Dean Paatsch, director at the governance advisory firm Ownership Matters, said “anyone with half a brain” would have known that news of the policy would move the market.

He said it was worth investigating whether traders were selling based on the media reports or if they were acting on more detailed leaks of the policy.

“There’s plenty of people who knew, there’s plenty of opportunities for leaks,” Mr Paatsch said.

“It’s worth investigating who knew what when, and whether that actually impacted on trading. We can’t run a market based on what an advisor might have whispered to someone.”

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Shorten to fight for deficit levy in class-warfare budget reply

Labor leader Bill Shorten will accuse the Turnbull government of waging class warfare in the 2017 budget, arguing in his budget reply speech that it favours millionaires over middle income earners.

Labor will make keeping the $1.2 billion budget repair “deficit levy” on high income earners one of the first major, post-budget political fights.

Mr Shorten targeted Prime Minister Malcolm Turnbull personally on Wednesday during question time, asking how it was “a millionaire will receive a $16,400 tax cut” on July 1 while all Australians will pay more tax because of the budget’s plan to raise the Medicare levy to 2.5 per cent pay for the NDIS.

That prompted a furious response from Mr Turnbull, who accused Mr Shorten of ripping off Cleanevent workers while a union leader, and arguing the ALP “has no concept of fairness”.

The Opposition Leader’s budget reply speech will go further, flagging plans to force the government to keep the deficit levy – or re-introduce it under a future Labor government.

An ALP strategist said “all options are on the table” to keep the deficit levy, which raised the tax rate from 47 to 49 per cent for people earning more than $180,000 per year.

It is due to expire on July 1, three years after its introduction by Joe Hockey.

Mr Shorten’s fourth budget reply speech will also reject characterisations of the budget – which increased spending on infrastructure, schools, health and hits banks with a new tax – as a “Labor lite” document.

The Turnbull government has also dumped a series of politically unpopular so-called “zombie” savings measures that date back to the 2014 budget, and tacked back to the political centre ground.

According to draft speech notes seen by Fairfax Media, Mr Shorten will argue “this Prime Minister has chosen multinationals and millionaires over middle and working-class families. And he’s chosen his own political survival over everything else”.

“Only this Prime Minister could vote to give himself and his frontbench a personal tax cut, on the same day that 700,000 Australian workers will have their penalty rates cut. Only this Prime Minister could imagine that was ‘fair’.”

He will point out the 2017-18 budget deficit, at $29.4 billion, is 10 times the $2.8 billion forecast in the first Abbott-Hockey budget in 2014-15.

“At a time when the government is asking every other working Australian to pay a higher rate of tax – Labor will not support spending at least $1.2 billion each year on the wealthiest 2 per cent.

“It is not fair that – under this government – someone on a million dollars will be over $16,000 better off, ever year – while Australians on $30,000 and $40,000 will have to pay more.”

The move to keep the deficit levy is in line with the party’s 2016 election policy costings.

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Easing of Medicare rebate freeze ‘offers little relief for patients’

NEWS: AMA NSW Conference. (L-R) AMA president Michael Gannon and AMA NSW President Brad Frankum. Photo by Edwina Pickles. Taken on 17th Feb 2017. Photo: Edwina PicklesPatients will continue to be hit with rising out-of-pocket health costs under the Turnbull government’s slow thaw in the Medicare rebate freeze, experts have warned.

Health Minister Greg Hunt’s staged approach has left doctors divided, with the Australian Medical Association pledging its support for the government’s policy reset, and the NSW arm of the lobby group describing it as a “crushing blow” for GPs.

The policy took the focus in Federal Parliament on Wednesday, as Labor accused the government of building its health budget on “smoke, mirrors and false guarantees”, as Mr Hunt declared the Coalition were “Medi-friends” to the opposition’s “Medi-frauds”.

Under Tuesday’s budget, the government will gradually lift the Medicare rebate freeze starting this year, with bulk-billing incentives for GP consultation. GP and specialist consultations will be indexed from 2018, specialist procedures in 2019, and targeted diagnostic imaging services in 2020. The measures will cost the government $1 billion over the forward estimates, but only $9 million in the first year.

AMA federal president Michael Gannon praised the government’s moves, but the AMA’s leadership in NSW broke ranks to brand it a major disappointment.

State president Brad Frankum??? said the “small and incremental” increases to the Medicare bulk-billing incentive and Medicare rebate were not enough.

“This is not an encouraging start and we won’t see patients’ Medicare rebates indexed again until July next year,” Professor Frankum said.

“At this rate it will be many years before patients see an appreciable difference in out-of-pocket costs. This is a crushing blow for general practice in NSW and continues to be an ongoing problem for specialists and the patients who need their care in this state.”

Prime Minister Malcolm Turnbull defended the plan.

“What the government committed to in the budget was to unfreeze the freeze on indexation put in place by the Labor Party. It was your freeze,” he said in question time. “What we are doing is restoring indexation in a measured and consistent way.”

Policy expert Lesley Russell, of the Menzies Centre for Health Policy, said a vision for the future was “shockingly absent” from the health budget. She said the “glacial” pace of the Medicare Benefits Scheme indexation thaw meant many Australians would continue to face higher costs.

“We really have to ask questions about what this means for people who are already struggling to afford the specialist and allied health services that they need,” she said. “It seems to me that those costs are going to grow rather than shrink over the next couple of years.”

Stephen Duckett, health program director at the Grattan Institute think tank, said it was too early to tell whether the government’s plan would be enough to keep bulk-billing rates at their current levels.

“Practice costs and income expectations of staff have not increased dramatically over the freeze period as the consumer price index has been moving slowly,” he said. “But each additional day of a freeze means costs and revenues fall further out of alignment.”

AMA Victoria president Lorraine Baker said the budget would not make healthcare more affordable for people in her state for at least another 12 months.

“We would have liked to have seen the freeze lifted and indexed from now,” Dr Baker said. “But at least there’s been progress in the right direction, and that is that we have an acknowledgment from this government that the Medicare system needs to be supported.”

Radiologists complained about the long wait for indexation, while the Consumers Health Forum said: “The staged lifting of the freeze in the budget does mean that many families on average incomes still face the risk of co-payment increases they can ill afford for at least another year.”

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Political divide muddies Morrison’s ‘big heart’ NDIS solution

Scott Morrison’s plan to utilise Australia’s “big hearts” to fund the NDIS is under threat, with both Labor and the Greens raising concerns over the funding plan.

The Treasurer said it was time to put politics aside and ensure the National Disability Insurance Scheme was fully funded.

It was a shift to the middle for the government, which had previously linked funding the $22 billion scheme to its doomed Omnibus bill, ditching the threats and moving to an increase of the Medicare Levy to raise $8 billion over four years, spreading the cost across all working Australians.

On Wednesday, Mr Morrison made it personal, telling the story of his brother-in-law Gary Warren, a fireman who was diagnosed with progressive multiple sclerosis in 1999.

“People, he’s told me, are enormously generous, not just happy to help, but keen to help,” Mr Morrison told the National Press Club, where Mr Warren was in the audience.

“He said, it’s not flash being disabled, it’s not flash. But if there’s anything good about it, he said, it’s that you’re disabled in Australia. That’s an incredibly generous statement about the big heart of Australians. He and I both know they have big hearts. I don’t know a finer man than Gary Warren.

“So last night I was very proud to declare that as a Treasurer in the Turnbull Government, we would fully fund the National Disability Insurance Scheme. That’s what this is about. That story.” The funding of the NDIS has been finalised. Now the journey of opening up community, education & employment begins for many PWD & families.??? Kurt Fearnley (@kurtfearnley) May 10, 2017 iFrameResize({checkOrigin:false},’#pez_iframe’); var frame = document.getElementById(“pez_iframe”);

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Australia’s big banks hit back against ‘populist bank bashing’

Banks are warning they will try to pass on some of the government’s $6.2 billion bank levy to their millions of customers, with Westpac slamming the move as a “stealth tax” that will also hit shareholders and finance workers.

As most bank shares slumped further on Wednesday, Westpac, Commonwealth Bank and National Australia Bank signalled they may defy the government, and attempt to pass on the cost of the levy to depositors and borrowers. ANZ Bank and Macquarie Group – the other banks to pay the tax – said it was too early to determine the financial impact of the 0.06 percentage point tax on bank borrowings.

Market analysts have also suggested banks will be able to partly offset the levy by passing it on to customers, though shareholders will have to wear some of the pain.

After being blindsided by the tax – that the government says will help with budget repair and enhance competition – banks reacted angrily to the levy, which is equal to about 5 per cent of affected banks’ profits.

Brian Hartzer, Westpac’s chief executive, lashed out at the levy by arguing it would affect all bank customers, and that it would hinder efforts to make the banking system more resilient to future financial shocks.

“There is no ‘magic pudding’. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees,” Mr Hartzer said

Commonwealth Bank chief Ian Narev also said customers, shareholders, or both, would feel the sting from the tax. Senior bank executives will seek further detail from Treasury officials on how the tax will work at a meeting in Sydney on Thursday.

“As with the many recent new regulatory imposts, we need to take some time to work through the implications. This is particularly so, given the lack of detail and the absence of any consultation,” Mr Narev said.

“However, as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.”

NAB chief Andrew Thorburn predicted the tax would affect “millions of everyday Australians”, including staff, customers, and shareholders.

“A tax cannot be absorbed. This tax is borne by these people. It is not possible to impose a tax without an impact on people, and therefore the wider community,” Mr Thorburn said.

In a media release, ANZ highlighted the need for banks and Parliament to bridge the obvious divide between them in the long-term interests of the Australian economy.

“While the banking industry has made itself an easy political target, the industry is taking action to significantly improve its relationship with customers and the community.” said ANZ chief executive Shayne Elliott.

“It is now time for all our leaders to move on from populist bank bashing so we can work constructively with Parliament and policy makers on how we can best support the Australian economy.”

Anticipating banks would seek to pass on the levy, the budget included funding for the competition watchdog to run a year-long inquiry into mortgage pricing, and analysts say this extra scrutiny could make it harder for banks to offset the cost.

David Walker, portfolio manager at Clime Asset Management, predicted banks would pass on the levy “eventually”, but it would be tougher for banks to offset than other increases in their costs.

“The political environment for passing on this is more difficult than it is for passing on garden variety increases in wholesale funding costs,” Mr Walker said.

The surprise measure, which will only be paid by the big four banks and Macquarie, is welcome news to smaller lenders, who have long argued they are disadvantaged by the assumption the major lenders are “too big to fail”, which cuts the large banks’ cost of funds.

Shares in Bendigo and Adelaide Bank jumped 3.9 per cent on Wednesday, while Bank of Queensland rose 3.6 per cent and Suncorp was up 2.8 per cent.

Regal Funds Management senior analyst Omkar Joshi said the levy would act as a further drag on banks’ returns, at the same time as revenue growth was weak and banks were being forced to cut costs.

While banks have previously passed on higher costs by pushing up mortgage rates, there is a risk that further rate hikes may pressure some borrowers and lead to higher defaults.

“I think shareholders have to wear some of it. Customers will have to wear some of it, but it’s not something they can simply pass straight through to customers,” Mr Joshi said.

Fitch Ratings said the levy would have a “negative” but “manageable” impact on banks. While the tax would not immediately affect the lenders’ credit ratings, Fitch said it could force banks to compete more fiercely for retail deposits, which are excluded from the tax.

Mr Hartzer acknowledged other countries – such as Britain – had similar taxes on banks but said these were introduced following the global financial crisis, when these governments had taken direct ownership stakes in ailing banks. In contrast, Australia’s banks had their borrowing guaranteed by the government during the crisis.

“No taxpayer funds have been used to prop up the Australian banks. In addition, international jurisdictions that apply measures such as this already have much lower corporate tax rates than Australia – for example, in the UK the corporate tax rate is 20 per cent,” Mr Hartzer said.

CBA shares closed 0.4 per cent lower, Westpac and NAB shares were down 0.7 per cent, and Macquarie Group shares fell 0.6 per cent. ANZ shares bucked the trend, rising 0.8 per cent.

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Senate inquiry to investigate the ‘future of journalism’ in Australia

The Senate will investigate the future of journalism in Australia amid sweeping job cuts and the cannibalism of content by social media giants.

It comes as striking Fairfax Media journalists return to work on Wednesday after walking off the job for a week, following the announcement that one in four newsroom jobs will be slashed.

The public inquiry, backed by senators Sam Dastyari, Scott Ludlam, Nick Xenophon and Jacqui Lambie, will examine the structure of media organisations and their tax arrangements, as well as the increase in so-called fake news.

Senator Ludlam said media professionals around the world were under increasing pressure to do their jobs, and that the Senate would examine how to make public interest journalism sustainable.

“We’re going into this ??? looking for solution,” he told reporters in Canberra on Wednesday. “We’re not looking here to give anybody a kicking.

“We want to know, what is the business model that allows any entity – public, private, third sector, whatever – to keep well-resourced journalists in the field, keeping this building and its people accountable and serving up the news and information that we need to maintain a healthy democracy.”

Senator Xenophon said the Australian journalism industry was in crisis. “These are matters that must be dealt with,” he said. “This goes to the heart of our democracy. If we want the fourth estate to be vibrant and diverse we need to deal with the issues that this inquiry raises, including fake news.”

“If we don’t grapple these issues as a matter of urgency you’ll see more journalists and camera operators and others that make the news happen losing their jobs. Because you simply cannot have a situation where you have Facebook and Google – between them raking $3.2 billion in ad revenue – and piggy-backing and cannibalising the content of Australian journalists and Australian newsrooms.”

Senator Xenophon said media organisations should be able to take on content aggregators, search engines and social media sites that cannibalise content.

Liberal Senator Eric Abetz, above, released a statement on Wednesday afternoon slamming the inquiry. He said senators would have the power to haul before the committee “any journalist who they believe is publishing ‘fake news’, propaganda, disinformation or ‘clickbait’ “.

“While the Senate rightly examines how taxpayer-funded broadcasters spend their money, individual journalists have never been dragged before Senate Estimates and the Senate shouldn’t be in the business of doing so,” he said.

“This insidious proposal will undermine the freedom of the media and must be called out for the totalitarianism that it is.”

Senator Dastyari said the strike at Fairfax Media highlighted the challenges facing Australian journalism and said it was the role of government and policy makers “to create a vibrant, free, independent press that allows Australian consumers to get the information they need”.

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The Magic Pudding lives, it’s every politician’s fondest fantasy

Malcolm Turnbull promised to govern from the “sensible centre”. In the new federal budget, he has found it.

After a long succession of right-ward concessions to his party’s conservative wing, Turnbull has crafted a budget that seeks to solve problems rather than serve right-wing ideology.

This is very deliberate: “This is not a budget to tickle the ears of ideologues,” Treasurer Scott Morrison put it to Fairfax Media in an interview last week. Decoded: “This is not the Abbott government.”

Some of the problem-solving in the budget is practical but mostly it’s political. Strikingly, it’s been crafted with popularity foremost, or, at least, political inoffensiveness.

In fact, if Turnbull and Morrison had tossed in a tax cut, this could very well be a budget for an election year.

It is ostentatiously more generous in spending on health, schools and public investment, spending more on road and rail and the Western Sydney airport, for instance. It seeks to placate pensioners as well as first home buyers.

And the only tax increases are painless for the voter, at least for now.

The Tax Office is mailing out the big new tax bills to the big banks, to foreigners or to the future – the increase in the Medicare levy isn’t to take effect for another two years.

Uni students may be unhappy about paying higher fees, but Coalition governments regard them as politically ungettable in any case.

Some of the elite schools are upset that their access to the public purse is to be reduced from super-privileged to normal, but Liberal-voting parents aren’t going to take their votes to Labor or the Greens over this issue – those parties are in agreement with the government.

So there’s more spending on voters, yet, miraculously, no increased tax on voters. The Magic Pudding lives, every politician’s fondest fantasy.

Another critical design feature is an effort to protect against the surging populist-nationalist movement. The budget seeks to build a bulwark against the rampaging right such as One Nation with some populist nationalism of its own.

Hitting foreign home-buyers with bigger charges, hitting firms that hire foreign workers with a bigger levy, and hitting the unemployed with some tough new tests all fall into the populist category. Hitting the big banks with taxes and new executive punishments is also a classic move from the populist playbook.

These may seem draconian, but they are designed to protect the political centre from the irresponsible right.

But it’s not an election year. This is the first year of a three-year term. Conventionally, this is the only real opportunity for a government to make unpopular decisions. By year two, a government already has an eye to the next election.

Pandering to the voters in year one is unconventional. It’s a sign of the times, the times where a prime minister cannot be confident of making it to year two, the times of the revolving-door prime ministership.

It’s a sign of a time when an incoming prime minister explicitly limits his own political viability in the job to a maximum of 30 losing Newspolls in a row. If Turnbull continues his losing streak in the polls, he will hit this mark by the beginning of the new year.

In other words, there is no longer any time in the political cycle for a government to take the difficult, unpopular decisions. Where are the economic reforms?

As the chief economist at Industry Super and former Treasury official Stephen Anthony says: “To say that this budget lacks ambition is an understatement – we need a high-growth, high-productivity growth path, and this gives us mediocrity forever.”

The political parties are not solely responsible for this failure, of course. The Australian public in recent years has shown every sign of an entrenched entitlement mentality. The Senate has faithfully defended this mentality, blocking most efforts by governments to make unpopular change.

The result is a budget that, like the government itself, muddles through. And because it has been designed with popularity and populism uppermost, it will muddle through the centre and muddle through the Senate.

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