Parliament Speech - Bank Levy

Mr PICTON (Kaurna): It is a pleasure to get up tonight and speak on behalf of my community in support of this year's state budget, and not just in support of the Appropriation Bill but also in support of the accompanying Budget Measures Bill, which is equally as important and usually gets support from both sides of the house. I hope that sense will prevail during the course of the next few weeks and that both those bills will get support from both this house and the other place.

I particularly want to thank the Treasurer for the ability to work with him over the last few months on this budget. It is a very strong budget that is really focused on the particular need we have to get more jobs in South Australia, more jobs for all of our population across the whole state. I am sure almost everybody in this chamber would agree that is a very important goal, and that is something this budget is focused on delivering. In particular, it is about investing in a new jobs fund that will deliver investments into our growing industries like defence, like medical technologies, like IT—those growing industries that we need to focus on in South Australia, as well as infrastructure spending.

In the next financial year, there will be $2.2 billion spent on infrastructure investments in South Australia. That compares with something like $200 million when we first got into government back in 2002. There has been a tenfold increase in the amount of infrastructure spending that this government has invested in. I will have more to say about that later on in the grievance debate, about how that is benefiting areas like the southern suburbs of Adelaide.

Of course, we are also continuing our investments in Job Accelerator Grants. These have been a huge help for small and medium-sized businesses that want to grow their staff, that are growing businesses. We are helping them with an up to $10,000 grant for each new employee they put on, and this budget has extended that to up to $15,000 for each new apprentice and each new trainee those small and medium-sized businesses in South Australia put on. We want to see more and more tradies and more and more apprentices getting work, and we think there needs to be extra support for those businesses that are willing to do that.

There is a measure to help fund those new investments in jobs in this budget, and that is that we will impose a major bank levy in South Australia, modelled very similarly to the major bank levy that the federal Liberal government has imposed.

Yes, the state Liberals support the federal levy but not so much the state levy. I think all of us have a relationship with banks. We all grew up having a relationship with banks. I fondly remember the days of having a Dollarmites account back at school. You felt like the bank was your friend. You felt like the bank was there to support you and help you out. I guess back in those days the Commonwealth Bank, which had the Dollarmites accounts, was owned by the people of Australia so it probably was there to help you out, but not so much these days.

I think one of those things about becoming an adult is that you realise that banks are not your friend and that banks are not there to help you out of the good of their heart. Banks are there to make money, and make money they do in Australia. They certainly make a lot of money, and good on them; that is great. We have the most profitable banks in the world here in Australia. The five major banks combined—NAB, ANZ, Westpac, the Commonwealth, and the Macquarie Group—make over $30 billion profit each and every year; that is, $30,000 million profit that they make each and every year.

That is a significant amount of profit, more than any other bank in the whole world makes in terms of their profits, and those profits are largely coming from ordinary Australians. They are coming from mums and dads and businesses across the country who use those banks, who invest with those banks, who get their home loans through those banks, who get charged exorbitant fees through those banks and who use those banks for their investment advice, sometimes to their detriment. That is where those profits come from. At the same time, these banks have been closing their service offerings to Australians. They have been closing branches all around Australia, focusing their closures on regional branches, which have been closing all over the country, particularly in South Australia.

They have been withdrawing services, they have been offshoring jobs—they have been sending jobs overseas out of all of those banks—and there have been a number of scandals where those banks have been offering plainly dodgy financial advice in the past few years to the people of Australia. Lots of people have lost money, unfortunately, because of the bad advice they have from those banks, which were not there to look after the people of South Australia but were there to look after their own bottom line.

You just have to look at Westpac. They run around with their BankSA label, pretending that they are the piping shrike ads—I think defacing our state emblem of the piping strike in this state—saying what great South Australians they are, but if you look at what they have done, they have closed 21 branches in our state over the past couple of years.

I am sure lots are in the regional areas, which the honourable member is very concerned about. They have also cut 387 jobs from South Australia. They are withdrawing from South Australia in terms of both their branches and their jobs at the same time that they are making record profits.

At the same time, you talk to businesses all across the state, and I have done this in my own electorate. I have done it when I have gone into the regions. I specifically remember meeting businesses in the Riverland that were saying that they were desperate to expand—desperate to get loans to expand—but the banks would not help them. The banks are not interested in helping them. Unless you are from Sydney or Melbourne, the banks are not interested in helping people from South Australia, despite what their ads may say. Because of this, they are making a significant amount of money.

At the same time, these banks are exempt from GST. They have a special deal under the GST arrangements where they are undertaxed. The federal budget papers make it clear how much they are undertaxed. It is to the tune of $4,650 million this coming financial year. They are making $30,000 million profit, and they are avoiding GST to the tune of $4,650 million this financial year. This is an extremely special deal that these banks have, and I am sure there are businesses all across the state that would love to have this special deal. For every other service provider business in the state and the country, one-eleventh of everything they charge has to go to the taxman in GST, but not our banks.

Because of this, this state government and this Premier have been raising this issue on the national level for a number of years, saying that we need to address the undertaxation of these banks. That GST revenue, of course, goes to the states and goes to fund important services like health and education as well as the important things we want to invest in in terms of jobs for South Australia. The response of the commonwealth has been to introduce a levy. We think that is good; we support that levy they have introduced. That is a levy to the tune of $1,500 million per year out of that $30,000 million a year profit that those banks are making. Whereas that GST, if it were introduced, would come to the states, none of the commonwealth levy is coming to the states at all.

The commonwealth is keeping all of that money despite the enormous cuts they have made to their health and education spending over the past few years of the Abbott-Turnbull government. They are keeping all of that money, and at the same time the commonwealth says, 'The states should raise more of their own revenue.' They are putting the emphasis on the states going out and raising more of their own revenue. They have in fact even said states should consider raising their own income tax taxes.

What have we done? We have considered this very carefully, and we have introduced our own major bank levy as part of this budget. This is a very small levy in comparison to the profits the banks are making, in comparison to the undertaxation of the banks and also in comparison to the federal bank levy. Our levy would only raise $97 million a year out of that $30,000 million a year profit that the banks are making. It works out to about 0.3 per cent of their profits. The tax itself is on the bank liabilities, and that works out to just $3.60 for every $1 million of those bank liabilities.

Why are we doing this? Because we want to invest in jobs here in South Australia. We want to support those growing businesses, many of which cannot get support from the banks. We will back them to invest in this state through our jobs fund, a $200 million jobs fund which is part of this budget which is funded thanks to that new budget measure, the major bank levy.

It only affects five major banks: the NAB, ANZ, Westpac, Commonwealth Bank and the Macquarie Group. It is only those five, not smaller banks and not credit unions. It is very consistent with the commonwealth levy that has been put in place, only reflective of our proportion of the gross national product, about 6 per cent of what the federal bank levy is. It is quite a small proportion of what they have introduced. This only applies to liabilities and major deposits; it does not apply to jobs, everyday savings accounts, home loans, business loans and those things. It is completely consistent with what is happening at the federal level.

The banks themselves have admitted that it is affordable here. The head of ANZ went on the radio the other day as part of their scare campaign, but he could not help but admit that actually we can afford this. He said the banks can afford this because it is such a small proportion of the huge profits they are making. They have started a scare campaign in South Australia. They are campaigning very hard. You cannot help but open a newspaper and see a whole bunch of ads for the banks or turn on a TV or open your Twitter account and see ads from the banks defending themselves and trying to stop this tax from coming in.

They could have almost paid for the whole tax with the amount that they are spending on TV ads at the moment in South Australia. All their propaganda that they are putting out is full of scare tactics. They are petrified. They do not really care too much about our tax, because it is such a small tax, but they do not want to see this extending to other states. They do not want to see other states doing what we have done here, so they are trying to stop us here so that no other state would dare consider this.

Of course, commonwealth Treasury have considered this and have demonstrated that their much larger major bank levy will not impact the economy whatsoever, or to a very marginal extent, which is what the secretary of the commonwealth Department of the Treasury said. That is advice from the commonwealth Treasury on this and, like the commonwealth, we have included in our Budget Measures Bill here protections for South Australian customers to ensure that it is not passed on to customers in their bank accounts or their home loans or their business loans.

That same protection at the commonwealth level has ensured that there has not been anything passed on to account holders from the much larger major bank levy at the national level, nor would they want to, which I think is pretty clear, because if they were to do that, either at the national level or at a state level, people would very easily walk to another bank, whether to another bank that would not be imposing those fees or to a credit union. It is not in their interests to do so at all, nor could they justify it, because nothing in terms of our levy applies to those accounts or loans. It is only on their liabilities, essentially their bonds and other investments that they have.

What we have seen in the past few days is the Leader of the Opposition show that he is completely in the pocket of those big banks and has surrendered completely to the scare campaign. On budget night, the Leader of the Opposition came out and said, 'We are not sure we agree with this; however, we will continue to support the budget measures, as the opposition party always has in the Legislative Council.' In fact, he said that the Premier should get his budget, as delivered in the budget papers.

Unfortunately, that did not last very long. It only took one meeting from the CEO of the ANZ who came here, flew to Adelaide and met with the Leader of the Opposition, who then suddenly changed his tune completely and said, 'We might block this. We might throw out 150 years of tradition of supporting the democratically elected government's budget measures, throw that completely out the window and block the Budget Measures Bill because we are scared of the banks and we want to put their big profits, their massive super profits, ahead of the interests of South Australians and ahead of investing in jobs for South Australians.'

There has not been one peep from him criticising the much larger federal major banks levy, and of course, never would he ever criticise the federal Liberal government on anything, but when it comes to South Australia imposing a measure, which will support jobs in this state, that is worth throwing out 150 years of tradition in supporting a democratically elected government and their budget because he is worried about the banks.

I think it is worth noting some of the research that came out of The Australia Institute today, which has been looking into this and researching this matter and has come out with its impartial advice on the South Australian major bank levy. It said that it looked at examples of bank levies globally, which are common, and points out that the IMF recommends a safe maximum for a bank levy of 20 basis points. In comparison to that 20 basis points safe levy, what do you think the South Australian levy is? Do you think it is 15, 10 or 5? No, it is 0.36 basis points, compared with a safe level of 20.

So, it is comparatively very small compared with what the IMF thinks is a very safe level. As The Australia Institute states, 'Australian banks can well and truly afford it.' They have said that it is just $3.60 in every million dollars of bank liabilities. They have said that bank levies are common around the world and that, combined, the state and the commonwealth levies are only a third of the IMF safe maximum level. The bank levy could be an employment creator if the money is used in employment-intensive services like health and education, which of course this government is investing heavily in, unlike what we are seeing at the federal level where they have turned their back on education funding and health funding.

The bank levy simply cannot deter investment in South Australia, as it is levied on a proportion of the bank's national liabilities. All this hoopla and spin and scare campaign that we have heard—saying that banks will try to avoid investment in South Australia because of this levy—are not true because the levy is based on their national liabilities and a proportion of that. They have also said federal and state governments are suffering revenue problems. They have a choice of either raising taxes on workers or taxing the world's most profitable banks. Obviously, we have taken the latter option.

If the opposition were to be believed, either (a) you would not invest in those jobs funds and you would not support those growing industries in South Australia, or (b) you would have to impose a tax on something else instead. You have to impose a tax that would hurt South Australian families, that would hurt them when they are sitting around the dinner table trying to pay their bills.

What spending do they not want? Their other option, (c), would be to cut services from the budget. You hear the opposition leader saying, 'There is waste that we are going to cut. Waste, waste, waste.' But at the end of the day the vast majority of everything that this government spends goes to hospitals, schools and community services. At the end of the day, if you are going to make big savings, you have to cut into those services.

The pressure is going to be on, if we are apparently five minutes to the election, as the Leader of the Opposition says, to make the case as to which of those services they would cut if they came into government. They are not going to have this source of revenue. They have said that they are going to bring back remissions for ESL to help people with their $2 million homes. So, what are they going to do instead? What services will be cut instead? I think that everybody in South Australia will be asking those questions of the alternative government in the lead-up to the next election: what services will they cut?

I think it is very disappointing that 150 years of tradition have been turned on its head just because the Leader of the Opposition became scared of the CEO of one of the major banks. It is very disappointing that they are putting at risk the investments we want to make into growing jobs in this state and supporting our industries that are growing. I think it is very disappointing that they will not come clean with the people of South Australia about what services or what increased taxes they are going to put the people of South Australia at risk of by their dangerous actions in not supporting this levy.

 

Chris Picton MP, Member for Kaurna
Speech in House of Assembly
04/07/2017

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