Banks will suffer as Australia's teetering car industry finds itself among the few direct winners from a mini-budget on Friday designed to re-frame Labor's economic pitch and clear the decks for an election next month.
Treasurer Chris Bowen's pre-election economic statement, to be released at 1pm, will reveal the depth of Labor's fiscal black hole as revenues from personal and company taxes fail to keep pace with forecasts taking up to $30 billion off projected earnings in the next four years.
The update will forecast lower economic growth.
The confirmation the statement will be issued on Friday has added to speculation that Prime Minister Kevin Rudd could call the election at the weekend.
Cash for Australian cars: $300 million will be used to support car manufacturers. Photo: Wieck/GM
As Holden considers its future in Australia, the government has found about $300 million to support car manufacturers hit by what until recently has been a relentlessly high dollar, an Australian fascination with imported sports utility vehicles, and a government decision to tighten the fringe benefit rules applying to employer-provided and salary packaged cars.
Bank stocks fell on Thursday before recovering after news broke of a new deposits levy payable by banks in exchange for their government protection against failure.
The Australian Bankers Association head Steven Munchenberg said he knew this plan was being considered, but was disappointed it was going ahead.
''We had had some indications from the government that they were thinking about this, but it was only yesterday afternoon that we were told it was going to be happening,'' he told ABC Radio on Friday.
Mr Munchenberg said the fund wasn't necessary, as Australians’ savings were already well protected in a robust and secure banking system.
The extra costs borne by banks would most likely be passed onto customers, he added.
''This is simply a cost on Australians that is not really going to deliver any benefits in terms of what is already a very stable and safe system,'' he said.
In addition to the massive 60 per cent rise in tobacco excise over the next four years, adding more than $5 to the price of a packet of 20 cigarettes, bank depositors will face additional costs with the banks certain to pass on a 0.05 per cent insurance levy on deposits up to $250,000.
The government believes the levy will cut the return on a $10,000 deposit by ''less than 50¢ per month''.
Modelling suggests it would raise $733 million in its first 18 months, staying in place until a war chest of $15 billion was amassed to bail out banks in trouble. The scheme would start on January 1, 2016.
The banks are understood to have known about the plan since October.
The money would be collected from the banks, not from depositors, and placed in a new Financial Stability Fund, to be administered by the Future Fund or some other government agency, and invested in low-risk, high-quality assets.
Although quarantined for bank bailouts, the levy would be counted as revenue.
It was proposed by the Council of Financial Regulators, chaired by Reserve Bank governor Glenn Stevens, as an insurance payment for the risks the government takes on by guaranteeing their deposits.
The staged 60 per cent increase in tobacco excise is forecast to net the government by $5.3 billion over four years. Imperial Tobacco cast doubt on the forecast on Thursday, saying a 25 per cent rise in excise in 2010 boosted the trade in illicit tobacco, costing the budget $1.1 billion. The tobacco industry attacked the measure but the industry is unlikely to find too many sympathisers.
One opposition wag dismissed the mini-budget as ''smoke and car mirrors'' - a reference to the closure of the tax loophole on novated lease cars which has gutted that industry, and the tobacco move.
But health experts were delighted. The anti-smoking group ASH Australia wrote to Mr Rudd congratulating the government for acting on smoking but calling for further action to stop political donations and end public superannuation funds investing in tobacco company shares.
''Two policies that the government has explored but not yet adopted are banning political donations by tobacco companies and related third parties; and adopting a whole-of-government policy that excludes direct and indirect investments in tobacco companies,'' said its director, Anne Jones.
Also possible in the statement on Friday is a further delay to Australia's commitment to lift foreign aid to 0.5 per cent of gross domestic product. A one-year delay imposed in 2012 saved the budget $3 billion. An early sale of radio spectrum at present scheduled for beyond the budget could bring in $900 million.
The measures are needed to pay for the decision to move asylum seekers to Papua New Guinea and to partly make up a shortfall in tax collections of $20 billion to $30 billion over the next four years.
The update will forecast lower economic growth and a slightly higher unemployment rate.
It will continue to predict a return to budget surplus in 2016-17.
with Tim Colebatch
Correction: The original version of this story said an early sale of radio spectrum at present scheduled for beyond the budget could bring in $900 billion. This should have read $900 million.