Bank tax bipartisanship won’t fix budget black hole: Bowen
The Turnbull government's proposed tax on Australia's major banks passed its first hurdle on Monday afternoon but the big four and Macquarie look to have won some concessions.
Lower house MPs voted in favour of the 0.6 per cent levy on Westpac, ANZ, Commonwealth Bank, NAB and Macquarie, with the legislation now returning to the upper house where it is expected to be addressed as a matter of urgency.
Parliament is in its final sitting week before breaking on Thursday for the customary six-week winter hiatus. The bank levy will need to pass both houses before then if it is to be implemented from 1 July as proposed.
While Labor supports the tax in theory it spend much of Monday’s debate criticising the government on a number of points around the bank levy.
Government fig leaf
Labor MP for Griffith, Terri Butler, described the bill as a smokescreen for the government's unwillingness to take on the big banks and called for a royal commission.
“As you know, Labor said and made very clear that we would not oppose this bill. But we have also expressed some significant scepticism about the intention and the seriousness with which this government is pursuing this new levy, this new tax, particularly given that the government remains obstinate in refusing to support public calls for a royal commission into the banks,” she told parliament on Monday.
“Instead we have this levy which is really a fig leaf for the government's refusal to take on the banks. Given the projections that have been made, it is a levy that would raise less than would be given back to the big banks through the government's corporate tax cuts, in the event they can be successful in getting their corporate tax cuts into law.”
Shadow Treasurer Chris Bowen said there was “a very significant shortfall” in the government’s numbers with the big four banks plus Macquarie Bank on a post-tax contribution of $1.015 billion – “which falls significantly short of what the Treasurer told us in his budget speech”.
“If you take that over the forward estimates, you get to a $2 billion black hole in the Treasurer's budget. This comes to the matter of competence. This is the point we make,” he told parliament.
“We sometimes get pleas for more bipartisanship, but, when the Labor Party offers the government bipartisanship, time and time again we see the implementation being bungled. The fact of the matter is it is now incontrovertibly the case that the Treasurer has a black hole on his hands.”
Chest-beating tough guys
Bowen added that the Treasurer should be honest about the tax being borne by consumers.
“The Prime Minister and the Treasurer have been out there beating their chests, being 'Mr Tough Guy' and saying that it would not be passed onto consumers, that they would be very angry with the banks if they attempted to pass it on to the consumers and that the ACCC was empowered to deal with it,” he said.
“When we had a bank levy, which was, admittedly, 10 times smaller than the Treasurer's bank levy, we were upfront about the fact that it might be passed. The Treasurer continues to deny it, but his Treasury officials are more honest.”
According to the Senate committee report, tabled in parliament on Monday following a public hearing in Canberra on Friday, "on the basis of the evidence provided, the committee considers that the proposed levy will contribute to the budget repair process, assist in making retail banking services more competitive, and will not undermine the stability of the financial system.”
While recommending that the Bill be passed, the committee added that a review be conducted by the Senate Economics Legislation Committee in a minimum of two years to examine: the efficacy of the policy in fulfilling its stated objectives; the effect on competition in the Australian banking market; and whether the levy is required in perpetuity, including the need for a further review at the time the stated objective of the levy is achieved; that is when the budget has been 'repaired'.
Macquarie, foreign banks
The committee also recommended that Treasury “provide greater explanation as to the rationale for the method of liability calculation which presently excludes foreign banks, and specifically provide an explanation as to why Macquarie Bank is subject to the levy while foreign based competitors are not”.
The Australian Bankers’ Association on Monday welcomed the Senate Economics Legislation Committee report on the major bank levy.
“The Committee has made a number of recommendations which recognise that the consultation process was truncated,” ABA chief executive Anna Bligh said. “The ABA supports the Committee’s recommendation for a Parliamentary review in two years’ time to examine the impacts of the tax, including if it is appropriate to introduce a sunset clause once the Budget is in surplus.
“This review was recommended by a number of banks and I’m pleased to see the Committee take the concerns of affected banks seriously. We urge the Federal Government to more fully investigate the issue of double taxation, as recommended by the Committee, to ensure that Australian banks are not disadvantaged when they compete offshore.”
UPDATE: The bank levy passed the Senate late on Monday night.