THE BLOG

Budget 2017: The Politics Of Picking A Fight With The Banks

It's easier to sell than picking on pensioners.

10/05/2017 8:30 AM AEST | Updated 10/05/2017 12:43 PM AEST

When Treasurer Scott Morrison arrived at Parliament on Tuesday morning ahead of delivering the 2017 Federal Budget, he said the document would disappoint the ideologues.

And indeed Morrison's speech was free of the kind of themes which have dominated Coalition budgets of the past -- aside from a small swipe at drug-using welfare recipients, there was no 'lifters and leaners', attacks on dole bludgers, intergenerational sniping or class warfare.

Karen Barlow: Zombies Out, Medicare Levy Up, Better Times Ahead

Tory Maguire: The Budget At A Glance

Josh Butler: There's Not Much For Housing Affordability In This Budget

Indeed the biggest revenue measure, more than $8 billion, hits almost all Australian taxpayers -- a 0.5 percent increase in the Medicare levy, designed to close the funding gap in the National Disability Insurance Scheme.

The Treasurer wasn't picking fights with Australians, he was feeling their pain. Early in his speech he even lamented the families which had been "broken" by the financial strains of the the post mining boom.

How did he pull this off? Well, apart from an incredibly optimistic set of economic predictions, Morrison picked one huge fight on Budget night, slugging the biggest five Australian banks with a levy worth more than $6 billion.

He made official a relationship breakdown which had been brewing for months, escalating with the appointment of former Queensland Labor premier Anna Bligh as chief of the Australian Banking Association, ahead of a senior Morrison staffer who was also in the running.

The banks thought making Bligh their chief lobbyist was a stroke of genius, the theory being it might settle down Labor calls for a Banking Royal Commission.

Instead it seriously antagonised a Treasurer looking for a swift, neat, way to sweep billions off his budget deficit.

Bligh was incredulous on Tuesday night, calling the policy a "reckless move" and claiming it undermined the stability and security of the Australian banking industry.

"They've done it because we're an easy target and that's lazy policy," Bligh told Sky News.

"The stock market closed today with $14 billion wiped off the value of Australian banks. That's what happens when government makes policy on the run, without consultation."

By Wednesday morning there was speculation the big four would immediately move to increase interest rates by as much as 15 basis points.

The Prime Minister warned the ACCC "would be watching very, very closely" and invited customers to shop around the smaller banks.

He described Bligh's warnings of instability as "nonsense".

In simpler times, the banks and the Coalition have been political fellow-travellers. Now a former-banker prime minister and his treasurer have picked a fight they've judged a political win for them.

But if the banks fight back with rate rises they'll sheet straight home to Morrison, things are only going to get uglier.

Click below to follow HuffPost Australia Politics on Facebook!

ALSO ON HUFFPOST AUSTRALIA

Former Intelligence Chiefs Unload On President Donald Trump

The Honorable James R. Clapper, Former Director of National Intelligence of the U.S., testifies before The Senate Judiciary Committee on Russian Interference in the 2016 United States Election, in the Senate Hart building on Capitol Hill, on Monday, May 8th, 2017. (Photo by Cheriss May) (Photo by Cheriss May/NurPhoto via Getty Images)

Read Jared Kushner's Statement On His Meetings With Russians

WASHINGTON, DC - JUNE 19: Senior White House adviser Jared Kushner, the president's son-in-law, leads the inaugural meeting of the American Technology Council in the Indian Treaty Room at the Eisenhower Executive Office Building next door to the White House June 19, 2017 in Washington, DC. According to the White House, the council's goal is 'to explore how to transform and modernize government information technology.' (Photo by Chip Somodevilla/Getty Images)

Mike Pence Cements His Trump Bromance With Gushing Love Letter

US Vice President Mike Pence (R) speaks while standing next to US President Donald Trump during a ceremony before the signing of an Executive Order on Promoting Free Speech and Religious Liberty in the Rose Garden of the White House on May 4, 2017 in WashingtoTrump issued an executive order on Thursday making it easier for churches and religious groups to take part in politics without risk of losing their tax-exempt status, a senior White House official said. / AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)

Ivanka Trump Mocked On Twitter Over Unfortunate Misquote About Facts

WASHINGTON, DC - JUNE 27: Ivanka Trump delivers remarks at the U.S. State Department during the 2017 Trafficking in Persons Report ceremony June 27, 2017 in Washington, DC. The ceremony honored eight men and women from around the world whose efforts have made a lasting impact on the fight against modern slavery. (Photo by Win McNamee/Getty Images)