After legislation was rushed through parliament, the government will from May 31 be able to transfer all money from accounts that have not been used for three years into their own revenues.
Legislation amended late last year means any account that has not seen activity within three years can be transferred into the Commonwealth’s hands – previously the rule was seven years.
This will mean that accounts with anything from $1 upwards that have not had any deposit or withdrawals in the past three years will be transferred to the Australian Securities and Investment Commission and thus hundreds of millions of dollars in inactive bank deposits are likely to flow to the Federal Government from May.
As the new law comes into effect at the end of May 2013 banks are advising customers to make transactions as small as a dollar to ensure they are not transferred to ASIC.
Experts warn this will have a negative impact on people that may have put money away in a special account for their children’s education or decided to put an inheritance in a separate account for a rainy day.
The banking industry believes the Government’s changes to inactive bank accounts legislation is just revenue raising.
Mr Munchenburg says the legislation was rushed through at the end of last year.
“A lot of suspicion at the time that the Government is rushing this through because they were more concerned about their own financial bottom line than they were about reuniting consumers with their accounts,” he said.
“It was never clear to us why it had to be rushed through if it was only focused on reuniting consumers with accounts.”
Mr Munchenburg says three years seems an arbitrary time limit as the Government failed to consult the industry on the change.
“I don’t know why three years has been chosen over seven,” he said.
“Certainly, if the Government believed that seven years was too long, we would have expected them to talk to us about what is an appropriate timeline or how to deal with accounts where people have deliberately left them alone, and then we’d avoid some of the problems that we are concerned will affect customers.”
This cash grab comes as economists warn the government is on track to hand down a $15 billion budget deficit in May as company tax receipts collapse.
Before Christmas, Treasurer Wayne Swan junked the government’s previously “rock solid” promise to produce a surplus in 2012-13. The government had also been committed to surpluses in future financial years, too.
In the UK this practice also exists and has for quite a number of years, with the exception that in Britain the dormancy period is a far greater one before assets are seized from such, supposedly, dead accounts.
While, it would appear, in Australia the money seized from such “dormant” accounts will be gobbled up by the treasury in the UK, at least, the money goes for so-called “good causes”, though decided upon and administered by the government.
The act of the Australian government, as the banking expert said, appears to be aimed at bolstering the country’s finances and nothing more.