The Albanese government knew the Australian Taxation Office was considering banning credit card payments three months before it intervened to delay the move following a backlash from businesses.
Assistant Treasurer Daniel Mulino conceded on Sunday that the government was aware of the ATO’s preferred approach in July despite small businesses only being informed of the decision in late September.
The admission has sparked fresh criticism of Labor’s handling of the issue, with the opposition accusing Treasurer Jim Chalmers of covering up the government’s involvement.
“In July, the government became aware that the ATO was looking at options and that at that point their preference was to not accept credit cards,” Mr Mulino told ABC’s Insiders.
“The indication we gave to the ATO was that they should continue to engage with the credit card companies, and that there should be a transition period.”
The ATO announced in late September that it would stop accepting credit card payments for tax bills from December 1, following RBA reforms banning card surcharges from October 1.
The move prompted criticism from business groups, which warned losing the payment option would place further pressure on small business cash flow.
Prime Minister Anthony Albanese and Mr Chalmers subsequently intervened to extend credit card payments until June 30, 2027, with the government covering the associated merchant fees in the interim.
Mr Mulino acknowledged the original two-month transition period had some government support but said Labor changed its position following feedback from businesses.
“The transition period, as it turned out, from stakeholder feedback wasn’t enough, and so that’s where the government stepped in,” he said.
He defended the government’s reluctance to make the arrangement permanent, warning of the cost to taxpayers.
“Accepting credit card payments going on indefinitely would have very serious fiscal ramifications for the budget,” Mr Mulino said.
Shadow treasurer Tim Wilson accused Labor of failing to act despite having months to address the issue.
“They had three months to fix this,” Mr Wilson said in comments reported by the ABC.
He accused the government of only intervening when the backlash became too loud to ignore.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar criticised the handling of the decision, saying businesses had been left in the dark.
“Business wasn’t made aware until just hours before the surcharge ban took effect in October,” he said.
“This looks like a completely deficient policymaking process that took small business for granted.”
The controversy has also raised questions about competing accounts from Mr Albanese and Mr Chalmers over who secured the delay.
Mr Albanese said he received a text message from Mr McKellar on Thursday, October 8 with an announcement following on Friday.
Mr Chalmers maintained he had already discussed the issue with Mr Albanese on the Wednesday and had been engaging with business groups.
Industry Minister Tim Ayres rejected suggestions of tension between the pair during an appearance on News24 on Sunday.
“No, he’s not,” Mr Ayres said when asked whether Mr Albanese was frustrated with Mr Chalmers.
He described Mr Albanese as a collegial leader who worked closely with ministers to resolve issues.
The ATO estimates continuing to accept credit card payments without passing on merchant fees would cost taxpayers about $200m annually.
Taxation commissioner Rob Heferen said the agency would have preferred to retain credit card payments but was unable to negotiate sufficiently low fees with card providers.
The government has maintained the extension is temporary, while business groups continue to push for a permanent solution.