Labor to End Debit Surcharge Fees for Government Services

An EFTPOS machine being used with a smart watch. AAP Image/Supplied by Tyro

The Albanese Labor government has announced plans to eliminate debit surcharges from the Australian Taxation Office (ATO) and Services Australia, aiming to reduce Australians’ financial burdens.

Starting Jan. 1, 2025, these surcharges, often added to government payments, will no longer be passed on to Australians.

The move follows the New South Wales (NSW) government’s discovery that Service NSW and Revenue NSW had unlawfully collected merchant fees, prompting a federal-level taskforce to investigate the issue.

The Commonwealth Entities (Payment Surcharges) Bill 2024 will formalise Commonwealth entities’ collection of payment surcharges, ensuring they are legally authorized, both retroactively and prospectively.

The legislation will apply retrospectively from January 2003, when the Reserve Bank of Australia (RBA) first established and regulated surcharges.

Shadow Treasurer’s Response

Shadow Treasurer Angus Taylor said the Opposition would support the bill in the House, but that there were some concerns that need to be addressed.

“The opposition is concerned that there are not appropriate incentives to ensure compliance with the surcharge policy,” he said.

The Opposition will finalise their position in the Senate based on ongoing discussions with the government.

Taylor also outlined the bill’s importance, saying that it would provide the finance minister with the authority to set surcharging policies across Commonwealth entities.

This power would ensure consistent surcharging practices while aligning with broader reforms to reduce payment fees across the economy.

Legislation to Authorise Existing Surcharges

In a statement released by Finance Minister Katy Gallagher, the government said that the move is aimed at clarifying and uniformising surcharging policies, particularly for government services such as those provided by the ATO and Services Australia.

“These bills will fix the historical issue to ensure existing surcharges are authorised by legislation,” Gallagher said.

The legislation also addresses the need for immediate changes, including halting the passing of debit card surcharges on payments to these entities.

“The practical benefit to Australians is that they will save money because they won’t be charged a fee simply to use their debit card,” Gallagher added.

While the RBA continues its review of payment surcharges across the economy, the government is also preparing to potentially ban all surcharges on debit cards permanently by 2026, pending the outcomes of the RBA’s review.