The Financial System Inquiry Final Report (Murray Report) was released on 7 December 2014. On 20 October 2015, the Federal Government released its reponse to the Murray Report, accepting the majority of its recommendations.

The Murray Report: Innovation and Surcharges

In the area of innovation, the Murray Report recommendations aim to improve efficiency, resilience and fair treatment in the Australian financial system. Government policies should enable innovation as it facilitates competition and reduces costs for consumers.

Recommendation 17: Improve surcharging regulation by expanding its application and ensuring customers using lower-cost payment methods cannot be over-surcharged by allowing more prescriptive limits on surcharging. 

Government Response

In its response to recommendation 17, the Federal Government has agreed to take action to improve interchange fee and surcharging arrangements. It states that, by mid-2016 it will phase in a legislated ban on surcharges that exceed the reasonable costs faced by merchants in accepting card payments. The ACCC will be responsible for enforcing this ban on excessive surcharging. 
Government will continue to monitor developments in the payments system, in particular surcharging arrangements, and assess whether further action is required.

What this means

the legislation is passed, it is likely that Local Councils will no longer be able to levy card surcharges which are more than their reasonable costs in providing that card payment service on the customer. When an additional card fee or surcharge is charged, the Local Council will need to demonstrate that the amount charged reflects the Local Council’s costs in providing the card payment service.