Australia’s major banks have reacted with dismay to the South Australian government’s imposition of a new state-based bank tax with ANZ chief executive Shayne Elliott describing it as an “opportunistic and ill-considered cash grab”.
The Commonwealth Bank, Westpac, NAB and ANZ were seeking urgent legal advice on Thursday night and Friday after the surprising announcement by the South Australian government, with Prime Minister Malcolm Turnbull amongst many criticizing the decision.
While the Australian Bankers’ Association was quick to accuse the South Australian Treasurer of “triple dipping on tax for major banks”, Business Council chief executive Jennifer Westacott said the new bank levy exposed the desperation of a government that is unable to get its own budget and spending under control.
“The confused rationales for the tax are risible, and the knee-jerk approach to whacking job-creating businesses with ever higher taxes demonstrates how bereft we are becoming of good leadership,” she said. “The great shame is that, by imposing another ‘one-off’ burden on employers, this tax will make us an even less attractive place to invest and hire people.”
“The Turnbull government must bear responsibility for letting the genie out of the bottle. All of these ‘one-off’ government decisions, when taken together, have a chilling effect on business investment which is at its lowest level as a share of GDP since June 1994.
“Australia is becoming a laughing stock of global investment circles as erratic governments – state, territory and federal – carelessly undermine and chop and change the rules of doing business.”
'Poor policy without logic'
Shayne Elliott added that the tax would likely impact business investment in South Australia at a time when its economy is struggling with low growth, low business confidence and high unemployment.
“All businesses will rightly question the political risk associated with investing in a state with a government prepared to unfairly target an industry that has played a significant role in supporting its lagging economy,” he said.
“The comments attributed to the state treasurer show a clear lack of understanding of the role banking plays in supporting the South Australian economy and the damage that opportunistic and ill-considered cash grabs will have on the long term economic prospects of the state.”
Ian Narev, Commmonwealth Bank chief executive, argued that Australia’s economic potential would only be met when state and federal governments deliver sustainable budgets and don’t indiscriminately add new taxes or levies.
"Governments, state and federal, need sustainable plans to balance their budgets rather than penalising businesses that are creating jobs and driving economic growth,” he said.
In a media statement, Westpac said “this distortionary policy could influence decisions banks make about investments in SA”.
“We were disappointed by the federal government bank levy, but the SA proposal is double taxation and is a disgrace. The South Australian economy faces challenges but populism will not deliver the robust and sustainable economy South Australians deserve. As we have previously noted, there is no ‘magic pudding’,” the lender added.
A spokesperson for NAB said the announcement was “poor policy without logic”.
“The role of the Australian banks is to support customers and communities and drive economic growth and activity. It is not to be a blank cheque so governments can cover their own budget shortfalls.”