Friday, August 02, 2013

New Rudd Government tax on bank deposits will hit you

BANKS are expected to cut interest on deposits to make up for $733 million being taken by the Rudd Government as an insurance levy that will prop up its embattled Budget.

The "savings tax" would mean a customer with a $100,000 deposit could lose $4 a month in interest.

But the Government says the typical household has $10,000 in the bank and the loss would be less than 50c a month.

The change, to be announced in today's mini-Budget by Treasurer Chris Bowen, could spark a battle with the banks who say the .05 per cent levy is unnecessary.

Senior banking sources last night told the Herald Sun it was likely to be passed on directly to customers.

The change will apply to deposits of up to $250,000 for each account in banks, mutual banks and credit unions from January 2016.

More than $4 billion was wiped from the value of the nation's major banks yesterday on fears the levy will crimp earnings and hurt dividend payouts and superannuation.

Shares in the Commonwealth Bank - Australia's biggest savings bank with a deposit book of more than $170 billion - fell 1.5 per cent.

The bank tax is being made on the advice of Reserve Bank governor Glenn Stevens and the International Monetary Fund to build up a buffer to protect deposits if a bank was to fail.

Today's mini-Budget will also contain a $5.3 billion increase in tobacco tax.

The smokes tax will increase the price of a pack of 20 cigarettes by $5.25 over four years.

In just three months since the Budget was handed down, the revenue that was expected has deteriorated by about $20 billion.

Mr Bowen will announce more spending cuts to plug the hole and stay on track to return to surplus by 2016-17.

"That does require some difficult decisions, he said. "But we're not going to cut right back to the bone, we're not going to cut basic services, we're not going to cut schools and hospitals."

Opposition Leader Tony Abbott said the Government couldn't control its spending.  "Whether it is a bank deposit tax, whether it is an increase in cigarette tax, it's all a hit on you," he said.

After meeting Mr Bowen yesterday, Australian Bankers' Association chief executive Steven Munchenberg warned the proposal was "unnecessary" and would hurt depositors.  "We already have a very safe and well capitalised banking system," he said.  "We don't support it and don't think it is valid and it is ultimately likely to be passed on to customers."

Under existing rules, if a bank collapsed the Government would cover the cost of protecting deposits by winding it up, and could put a levy on other banks.

The change would collect money gradually into a special fund as insurance against any crisis, but would also improve the Budget bottom line by $733 million.

Households have just over $600 billion on deposit, according to the latest data from the Australian Prudential Regulation Authority.  This is almost double the pre-GFC period when they hit a low of $307 billion.

Analysts warned any knocks to confidence in the banking sector would be bad for the economy and bank stocks in particular.

Australia's big four banks generated more than $13 billion in profits in the first six months of this financial year.

Opposition finance spokesman Andrew Robb said today's economic statement will be "an emergency mini-budget, because on the eve of an election the chickens have finally come home to roost. "They've constantly over-egged revenue forecasts and cry 'woe is me' when money doesn't come in," he said.


As utilities bills soar, South Australians to pay $90 extra a year to account for solar rebate

HOUSEHOLDERS will pay an extra $90 a year for the next three years on their power bills to pay for the State Government's generous solar rebate scheme.

Retailers are bracing for a late rush on solar systems as the scheme enters its final month for new customers to sign up, which could inflate the cost of the scheme even further.

SA Power Networks (formerly ETSA) estimates the scheme will cost $1.53 billion over 20 years - and every South Australian is paying for it via their electricity bill.

It has forecast the average amount recovered from residential customers to subsidise the solar rebates will be $90 a year for the next three years, before dropping to $72 from July 1, 2016, when the 16c scheme closes.

A staggering 140,000 householders have so far installed a solar meter - 17 times more than the 8,000 then-Premier Mike Rann estimated when he launched the scheme in 2008.

They are receiving either 44 cents or 16 cents per kilowatt hour - depending when they signed up - for the energy their systems generate back into the power grid.

New details of the added costs to power bills are the latest blow to family budgets.

Consumers will pay an extra $30 a year to prune trees near power lines, as revealed in The Advertiser yesterday.

Households have also been hit with rises up to $100 a year in gas prices, while petrol costs have reached their highest levels in five years.

Water bills have also soared to pay for the $1.83 billion dollar desalination plant.

The state's leading welfare lobby group, the SA Council of Social Services, says the combined impact of these price rises on household budgets is "massive".

"Especially for those on fixed and low incomes," SACOSS executive director Ross Womersley said.

"And its impossible to avoid these cost increases because they are essential services and we need them."

The solar scheme costs were an "unfair burden" on low-income earners because they "can't afford solar panels but they are subsidising those who can and who are reaping the savings on energy bills," Mr Womersley said.

However, solar system retailer Zen Energy said the power being put back in the grid by panel owners was reducing transmission costs.

"If it weren't for solar panels SA Power Networks would most likely have to spend more money on the grid to supply that extra electricity," Zen Energy founder Richard Turner said.

When the solar scheme was launched in 2008 the government estimated it would attract 8,000 customers.  But the scheme's generosity has resulted in a massive blowout in uptake and a subsequent cost to electricity consumers.  The total cost of the solar subsidy scheme - which runs until 2028 - will average out at more than $1100 per householder.  This year alone SA Power Networks said the scheme will cost $100 million.

And the company expects a rush of new customers will sign up before the September 30 deadline for the 16c feed-in tariff is reached.

"We anticipate in excess of 10,000 customers may sign up and have metering installed for the 2016 scheme before it closes," a spokesman for SA Power Networks, which recovers the cost of the scheme on behalf of the government, said.  "On our current expectations, it is likely that total scheme payments will exceed $1.53 billion dollars by 2028."

Melissa Richards, of Unley Park, said installing solar panels was a "no-brainer".  She and husband Heath installed a solar system 12 months ago at a cost just under $7,000.

"Solar obviously decreases power costs and the 16c feed-in tariff combined with a top up from our retailer is a bonus which definitely helps," the 26-year-old full time mum from Unley Park said. "We have probably halved our electricity bills which were running at $300 a quarter." [At the cost of everyone else]


No hospital beds for ill newborns in Victoria

Overwhelmed Victorian hospitals are closing their doors to critically ill infants, putting pregnant women and their newborns at risk of being transferred interstate this week.

Leaked documents show all of Victoria's neonatal intensive care units at the Royal Children's, Royal Women's, Monash Medical Centre and Mercy hospitals were either "closed" or "restricted" for new patients on Thursday.

The closures coincided with the transfer of a critically ill infant from Victoria to a South Australian hospital in the middle of this week. It is unclear, however, if the flight was forced by a lack of resources in Victoria.

The confidential report from the Victorian Perinatal Information Centre also revealed that all four hospitals were working beyond capacity, with more patients in their intensive care units than they are usually staffed for.

Reasons cited for the closures in the report included "no staffed beds", "nursing staff"', "no physical space" and, in the case of Mercy and Monash, "equipment".

Doctors who did not want to be named told Fairfax Media that overflowing units running at 100 to 105 per cent capacity were becoming too common in Victoria.

They said the stretched units were putting vulnerable babies at higher risk of medical errors and infections while also causing some pregnant women and their infants to be transferred between hospitals for stays that could last months far away from their homes.

The doctors said road and air transfers were particularly risky for critically ill infants.

In some cases, they said, a lack of resources had caused twins to be separated from each other and their mothers for significant periods of time.

A spokeswoman for Victorian Health Minister David Davis said two babies had been transferred interstate this year, with one from Horsham, near the South Australian border, occurring this week.

The Victorian branch president of the Australian Medical Association, Dr Stephen Parnis, called for "a significant and urgent injection of resources" and said the report confirmed the state had been caught unprepared for the baby boom of recent years.

"What it's saying is that there is little or no slack in the system if you are a very sick newborn," he said.

The closures come amid growing concern that the former Labor government built the new Royal Women's and Royal Children's hospitals without enough capacity to meet growing demand.

In 2011, the Victorian Auditor-General said the government had failed to plan for changing demand for maternity care, causing hundreds of women to give birth in Sunshine Hospital's emergency department.

While the Coalition promised to add 800 new beds to the system in its first term, Mr Davis has repeatedly refused to detail where all these beds are.

A spokeswoman for the minister said the government had allocated $2.2 million in the recent budget for five additional cots, "which makes a total increase of 11 cots since coming to government".


NSW Scandal will drag down federal Labor, says Rees

Former premier Nathan Rees believes the NSW corruption inquiry has wounded federal Labor's election chances and has told ALP members who continue to resist party reform to "get out".

He said the infamy of former ministers Eddie Obeid and Ian Macdonald would affect the federal election campaign.  "My estimation is that the ICAC revelations have dragged Labor's federal primary vote down 2 to 3 per cent in NSW," Mr Rees said. "In what is likely to be a tight election, this is clearly an issue."

Mr Rees said party members who have been pushing for reform have had to "argue, push and cajole every inch of the way".

"In the aftermath of the ICAC revelations, anyone who doesn't think we have to reform has rocks in their head," he said.

"If people don't understand the need for reform at this point, then they never will. Those people should not be the handbrake on our efforts to modernise the party."

Mr Rees said there were people within his party who have argued against a need for change and who have insisted the 2011 state election was just a cyclical problem that would correct itself over time.

He said his message to those people was to "get out" and to stop using the Labor Party as their "plaything", "fiefdom" or "social worker".

Prime Minister Kevin Rudd has said he was "disgusted" by the revelations from the hearings and his intervention in the NSW branch was based on the core principle of "zero tolerance for corruption".

The ALP national executive met on Thursday afternoon and unanimously endorsed a package of NSW reforms which include scrapping faction-controlled tribunals and replacing them with an independent judicial body. Any NSW ALP member found guilty of corruption will be expelled from the party and anyone investigated for corruption and who brings the party into disrepute will be suspended.

A senior party member said Thursday's meeting was a "sober reflection on the events of the last 24 hours but a unanimous endorsement of the report and the direction of the reforms". NSW Labor's administrative committee meets on Friday morning.

Opposition Leader Tony Abbott has said the Prime Minister could not wash his hands of the party bosses and the Sussex Street machine. "We hear Mr Rudd saying that he is disgusted by corruption, but Mr Rudd is only Prime Minister because the NSW Labor Party put him there. And if he ever seriously tackles the rottenness at the heart of the NSW Labor Party, he will be dealt with by the warlords of Sussex Street again as he was back in June of 2010," he said.

Mr Abbott said the federal ALP could not escape its state branch, claiming the Prime Minister's acceptance of NSW general secretary Sam Dastyari into the Senate and former assistant secretary Matt Thistlethwaite, running for the seat of Kingsford Smith, was a symptom of the "NSW disease moving to Canberra".

He said Mr Rudd needed to "come clean" about the dealings his ministers had with Mr Macdonald and Mr Obeid. This included Foreign Affairs Minister Bob Carr, who appointed Mr Macdonald to the ministry when he was premier, and Immigration Minister Tony Burke, who had stayed at the Obeids' ski lodge, Mr Abbott said.


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