Senate Economics Legislation Committee [Part 2], , 54:32 to 1:00:42
Commissioner Hefron outlines the timeline of the RBA's credit card surcharge decision and the ATO's internal process for deciding to cease accepting credit card payments.
Topics: Government spending, Procurement
Speakers: Rob Heferen, Speaker 6, Unknown Speaker
>> Thank you very much chair. >> I have some questions around credit card sir charges. So, Commissioner, it was in March 2026 that the RBA announced it its decision around credit card searchcharges. And it was in July 2026 that our federal Labor government knew that the ATO were intending to stop taking payments of tax by credit cards. And you kindly let us all know on the 1st of October. Uh why didn't you tell us earlier than than
>> Uh thank you, Senator. the the timeline um is probably not uh probably not quite correct. Um so um just going back to the uh the RBA's announcement, we went through the process of the consultation paper and through the consultation which uh of course we were uh involved in with our colleagues at the treasury. Um we had the uh once minister Mulino as a minister responsible wrote out to uh all all agencies and um all ministers on I think at the uh end of April to say that the search charge ban would be in place. We then started to we obviously been working on this in the treasury uh in the ATO for quite a while with our colleagues in the treasury. uh that brought it to a sharp head uh and so then we were discussing with the colleagues in the treasur about possible ways forward um and then on the say in the 20th of July I met with the assistant treasurer and discuss those now uh as you I guess would expect there's a range of options uh at that stage um it and still possible of course for the ATO to continue to search uh the minister of course is the author of the letter to portfolio ministers to say there was no search charge from government. We uh that was off the table and we approached it in a somewhat um kind of binary uh way that either we uh continue to accept credit charge uh credit cards and and and seek some additional funding for the cost that we would bear or we'd cease credit cards. So in discussing with the assistant treasur on the 20th of July, he uh uh obviously understood the gravity of it and he said look we need a lot more detail uh and so he asked us to ask me to follow up the experience with the states and territories uh who are in particular revenue officers our revenue agencies are in similar position and also the international experience. So I went through that process to uh as it happened I had a meeting with the state and territory revenue officers uh the next week. and so discussed it with them. They were still a lot of them were in the preliminary stage of still thinking what we'd all gone through the debit card uh uh issue. Some had taken a step forward on the on the credit cards. Um and then armed with that information back to the assistant treasurer uh uh uh a few weeks later and said actually what we've uh discovered from our work overseas or or conversations with um I understand what's happening overseas and with state and territory colleagues we think the idea of having to limit the use of credit cards is the preferred way. He said
>> sorry who told you that? >> Who said that?
>> Uh I said that >> you said that to him. I said that to the assistant treasurer. >> Uh he was um uh still kind of seized of the importance of this. So he said look uh so through this process the RBA who is our banker they've been having the conversations with um uh with uh the three credit card companies.
>> So this is in August 2026 we're up to in
>> Yeah. And the RBA had been doing this for quite a while. And um so part of the obviously part of the overall package was that with the searchcharge uh ban put in place, the lower interchange fees would um uh come into force. And so the lower interchange fees um would uh you know provide that proper competition in the in the market to actually reduce uh reduce the overall cost uh and the economy. So I said go back to them. Can you get a better deal? Because you have a obviously the ATO was quite a um quite a presence that stage we had the calculation of around the you know the order of magnitude about $700 billion we collect uh about 14 or 15 billion was paid through credit cards. So in scheme of things quite a small proportion but in absolute terms quite large. So I said go back. So I wrote to the credit card company start of September to say look I'd like to meet with your best and final offer. I know we've been working with the RBA. So um uh with colleagues from the RBA we went through those meetings uh in um midepptember and then going through that process we were still then at the stage where whilst the credit card companies engage in that discussion very constructively I say um uh credit credit to them sorry um uh they gauge very constructively and uh but the price that they could provide us uh was still such that we felt it was difficult to um uh to afford. Uh and so accordingly we then made the um went through the process of advising our minister that we felt this was something that we would have to cease. uh recognizing there would be um uh a need for some transition for people to use credit card, we then proposed we have a a two-month transition and as the I think the public record shows that the um uh the assistant treasurer discussed that with with his colleagues. Uh that was the first announcement. uh and then of course turns out with the feedback that was provided the uh government has made um asked us to extend that until the end of June. So going back sorry there was a context I thought would be useful just for the committee's So on the uh in July um a decision had been made.