Assistant Treasurer Daniel Mulino concedes he knew of ATO’s credit card ban plans in July

Assistant Treasurer Daniel Mulino has conceded the government knew the Australian Taxation Office (ATO) was considering banning credit card payments in July, months before the decision was made public.

The ATO’s decision in late September to stop accepting credit card payments from December 1 sparked backlash from the business community.

That outrage eventually forced an intervention from the prime minister and the treasurer to underwrite the costs and allow credit cards to be accepted by the tax office until mid-2027.

Mr Mulino today said he and Treasurer Jim Chalmers were first made aware of the ATO’s intentions months ago.

“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 admission comes after the Australian Financial Review yesterday revealed the ATO had privately informed the government about its credit card ban and presented the government with options.

The ATO’s decision followed changes from the Reserve Bank of Australia to scrap card surcharges from October 1, which the bank has said was “in the public interest” and was costing consumers about $1.6 billion a year.

Mr Mulino was asked why the government did not push for the ATO to continue accepting credit card payments from small businesses back in July.

Small businesses were informed of the ATO’s decision on September 30, a day before it was made public, and given a two-month grace period.

“But the transition period, as it turned out, from stakeholder feedback, wasn’t enough. And so that’s where the government stepped in,” Mr Mulino said.

He was asked if he had any regrets about not stepping in earlier.

“We’ve changed our position. So I’ve listened to stakeholder feedback, as has the PM and the treasurer,” he said.

“So, obviously we’ve changed tack and we’ve listened to feedback. And that’s a sign of a government that is putting in place important big reforms.”

Earlier this month, Mr Chalmers said he was informed by the ATO ahead of their decision, but did not give a specific timeline.

“The ATO made this decision late in September, not to accept credit card payments. Obviously, we were aware before then that they were grappling with this issue,” he said.

Opposition says

Mr Mulino denied the government had a “hands-off approach”, saying they “didn’t get into all of the details” but insisted that the ATO should continue to negotiate with credit card companies.

Shadow Treasurer Tim Wilson slammed the government, saying they “had three months to fix this” and “only stepped in when the backlash got too loud to ignore”.

“At every point the Albanese government has failed to understand the implementation consequences of their higher taxes,” he said.

He questioned Mr Mulino’s assertion that the ATO made the call as an independent agency, only for the government to then fund the transition period for credit card payments.

“You can’t claim it’s somebody else’s decision while you’re the one paying for it,” he said.

Australian Chamber of Commerce and Industry (ACCI) chief executive Andrew McKellar said it was concerning these discussions were happening in July when businesses were only informed the day before it became public.

“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 ATO initially defended its decision, saying it was not tenable for the agency to absorb the $200 million cost and that it would result in less revenue being collected and therefore less funding for government services.

Taxation commissioner Rob Heferen said the ATO “would have preferred to continue accepting credit cards” but that credit card companies did not offer a low enough rate.

Small businesses felt the move was a double standard, since they were expected to wear the costs of the RBA’s surcharge changes themselves, and they also feared losing the ability to use credit card payments to the ATO as a tool to manage their cash flow.

Issue hints at leadership tensions

The debacle, and its timeline, has also exposed some tension between the treasurer and prime minister.

Mr Albanese said he intervened after receiving a text from ACCI’s Mr McKellar the day before.

“My door is always open. Andrew did text me last Thursday morning, and by Friday morning we had an announcement,” he said.

Mr Chalmers denied he was “rolled” and said he and Mr Albanese discussed the issue on the Wednesday prior.

Mr Wilson on Sunday suggested the prime minister “enjoys humiliating his treasurer” and described the relationship as a “psychodrama”.

Industry Minister Tim Ayres denied there were underlying frustrations between the pair, and told News24 that Mr Albanese was “a remarkably collegial prime minister”.

“This is a cabinet-style government that’s working very well, it’s very stable,” he said.

“It’s a real contrast to not just what’s happening around the world, but a real contrast to what’s happening on the other side of politics, which is a total mess.”

Mr Ayres was asked if the government might permanently waive the ATO’s credit card decision.

“I don’t think that there’s any prospect of this issue being managed that way. We’ve made a big decision to defer this question to allow credit card payments to continue being used,” he said.

“There’s a significant budget cost to that. It’s the right call to make in these circumstances.”

Mr McKellar said ACCI wanted a “permanent outcome”.

“We think that will most likely involve a long-term solution for credit card payments to continue to be accepted, but let’s not pre-empt those discussions,” he said.

He said a key question was how that cost would be funded, and added it would be a welcome step if credit card companies lowered their fees.

“We don’t want small business to be left carrying the can for this decision,” he said.