Budget will pump $550m into bank regulators in response to royal commission | Australia news


The Morrison government will boost funding for the corporate and banking watchdogs by $550m over the forward estimates when it hands down a pre-election budget likely to include tax cuts and infrastructure spending, as well as a surplus in 2019-20.

As part of the response to the Hayne royal commission, the government will allocate $400m in additional funding to the Australian Securities and Investments Commission and $150m for the Australian Prudential Regulation Authority over the next four years.

The government will also allocate $35m to the federal court, anticipating cases brought by the regulator in the wake of the banking royal commission, with the funds covering the appointment of two judges, salaries for 11 registry and support staff, and new facilities.

Justice Kenneth Hayne recommended 24 cases of misconduct be referred to the financial regulators for consideration of civil or criminal action. The referrals involved all the major banks except Westpac.

Tony Abbott cut $120m from Asic in the 2014 budget, funding that was later largely restored by Scott Morrison as treasurer, partly by imposing a levy on the banks.

In a pre-budget interview with Guardian Australia, the treasurer, Josh Frydenberg, did not rule out bringing forward the income tax cuts currently scheduled to take effect in 2022, which would cost about $8bn a year, or offering voters a one-off pre-election payment to boost consumption at a time when growth in the economy is faltering.

Stage two of the already legislated tax cuts, which begin in 2022, is directed at taxpayers earning over $90,000.

Frydenberg confirmed the budget would point to a surplus in 2019-20, and he said the surplus would be accompanied by “responsible targeted spending”, including infrastructure investments to boost productivity growth, and funding for the disability royal commission.

The Coalition is hoping the budget will help reset the government’s political fortunes before the May election, but Frydenberg said he did not feel pressure to singlehandedly deliver a political bounce from his first economic statement as treasurer. “No. I’m focused,” he said.

“It’s been terrific working with a prime minister and a finance minister who have more experience in putting together budgets,” the treasurer said. “My goal is to get the economic settings right, to grow the economy, deliver the services and balance the books, and the politics will take care of itself.”

Frydenberg insisted the economy was in good shape despite the weak performance in the recent national accounts figures, which confirmed the economy grew by 2.3% in 2018 and 0.3% in the quarter. But he acknowledged the economy was “facing some emerging risks”.

He said trade volumes had slumped because of the trade war between the United States and China and because of continuing uncertainty over Brexit, and said growth had slowed in Japan, China and the European area.

“We have concerns about lower house prices spilling over to building approvals and to softer household consumption, which matters because household consumption is close to 60% of GDP,” Frydenberg said.

He said falls in dwelling investment had detracted from growth in the December quarter, the drought was affecting agricultural production, and the impact of the Queensland floods had not yet registered in the economic data.

Frydenberg said the risks would be managed as long as policies at the federal level gave businesses confidence to invest and consumers confidence to spend.

Asked whether the government would bring forward income tax cuts to boost consumer confidence, Frydenberg said the Coalition was always “the party of lower taxes”, but “I’m not ruling anything in or out”.

He said the budget would help to frame the looming election contest “which will be about what kind of nation Australians want over the next decade”.

Despite the obvious pressure to deliver spending to assist the government’s chances at the election, Frydenberg insisted he pushed back during the expenditure review committee (ERC) process.

“Of course there’s lots of no’s in the ERC process,” the treasurer said. “I’m not going into the specifics. This ERC process was no different to any other”.

“Ministers come forward with proposals. Some are approved and some are not. It’s all about what can be included in the envelope and what’s in the best interests of the economy and the community”.



Source link Finance News Australia

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