Monday, 31 July 2017 00:00

STATE BANK TAX

This year’s budget introduced a state tax on the big banks.  The SA Labor government hopes to raise $370 million over four years from ANZ, Westpac, Commonwealth, NAB, and Macquarie banks under the proposed bank tax which is currently before Parliament.  We need to look at this a bit closer.


The big banks are doing very, very nicely at the moment, and that is a good thing. Two of the sayings I always ran in my business were, 'Turnover is vanity; profit is sanity.' If you are making a profit, you are staying in business. You can build your business, you can employ people, you can take on extra people and you can expand your business. You can spend that money in other businesses.

 


Let's have a look at the first half-year profit for the banks. The banks made $15.5 billion in the first half of the year. Each individual bank did exceptionally nicely. The Commonwealth Bank made $4.9 billion, ANZ made $3.4 billion, NAB made $3.2 billion and Westpac, which of course owns the Bank of South Australia, made $4.02 billion.


Return on equity is something that we all in businesses look at. You want to get some return on your investment. It is a good thing that you are getting healthy returns on investment, and banks in Australia are doing exceptionally well. I think they rank second in the world on return on equity. The NAB is 14 per cent, Westpac is 14 per cent, ANZ is 12.5 per cent and CBA is 16 per cent. The banks are very, very powerful businesses and they are doing exceptionally well.


The problem is that with that power comes responsibility, and they are not acting in a responsible manner in the way they have addressed this state bank tax. They have said this tax will pass onto the mums and dads. It is a disgrace that they are using the mums and dads and the businesses of this state as a human shield to protect their profits.


Yes, on one hand they have the duty to look after their shareholders, to protect their profits, to pay the dividends and to reinvest in Australia through all the various investments they have. That is a good thing, but they admit that they will pass this tax on to the businesses and the mums and dads of South Australia, and that is the reason that I cannot support it. The reason you cannot support a tax like this is that it is a retrogressive tax; it is back to the BAD tax, the FID tax, the pre-GST taxes. You cannot tax people this way.


I know the government and the Treasurer will say that they can protect South Australians from the banks, but they cannot. We know they cannot, and that is the whole problem with this tax. If the Treasurer could put this tax in another frame, where the mums and dads were not being put in jeopardy and businesses were not being put in jeopardy, you might want to take another look at it, but this tax is not a tax that South Australians should accept. It is not a tax that South Australians should be paying the penalty for, because they will pay the penalty.


Do not forget that the banks are backed by the federal government: $250,000 for every account. We did not engage in quantitative easing, we did not print money during the global financial crisis, but the banks were guaranteed by the government. They are still guaranteed by the government. Wouldn't that be a nice position to be in? The banks, their hypocrisy and their crocodile tears of saying, 'Well, this is a terrible tax. This is setting a terrible precedent.' That may be, but they are making incredible returns on their investment, and I think there is some need there to show a little bit of social conscience, not just the financial conscience they are showing.


I would like to remind you of a huge issue in South Australia.  Let us look at what Robert Gottliebsen, an economic commentator, has said in The Australian about Arrium and about the goings on with the banks and Arrium. The people who are looking at buying out Arrium—and good on them, I hope it works and I hope it goes really well—are being backed by both federal and state governments, by taxpayers' money.


Look at what happened with Arrium when Arrium was going ahead and wanted to develop. Who backed Arrium then? The four banks backed Arrium then. They backed Arrium with unsecured loans, and when Arrium went down the tube they dropped $1 billion. The banks dropped $1 billion on Arrium. That was not good business; that was not smart business. But now, the banks are looking at the taxpayers of Australia, the taxpayers of South Australia, to bail them out, and then they are expecting the state and federal governments to come and help Arrium—which we want to happen.


The banks cannot have it both ways. They cannot threaten the people of South Australia with increased fees and charges because of the so-called state bank tax and at the same time have their hands out to accept taxpayer funds to prop them up because of their mismanagement of their unsecured loans with Arrium. The banks are not being fair here, they are not being straight—and we know why people call the banks what they call them.


This is a terrible position for the state to be in in the first place. We should not have to be going down this path, looking at putting in retrogressive taxes, old taxes that we got rid of years ago. The state should be better than that.
I understand the bank tax will be blocked in the upper house. It will be an interesting discussion with the Treasurer and with the Premier on how they going to manage that hole in their budget.


They created the mess and it is now up to them to fix it. They knew this was not going to work. A lot of people have said that the bank tax was just a convenient diversion away from Oakden, away from the new RAH, away from the increased prices and taxes people are paying in South Australia and—let us not forget—the highest electricity prices in the world. How could we get to that? How could we get to the highest electricity prices in the world? This is a country that is the largest exporter of natural gas in the world with massive coal reserves. How could we get to the stage where we have the highest electricity prices in the world?


There are a lot of questions and a lot of answers needed on this, because South Australian businesses cannot afford this. Just recently, we saw the example of a recycling company's power bill going from $80,000 to $180,000. I know people who are shutting down their air-conditioners, shutting down their heaters, because they cannot afford the power. I know that my constituents down in Jetty Road at Glenelg are really struggling with high rent and high overheads, and one of those high overheads is high power bills—the highest power prices in the world. The government should hang their head in shame. They cannot blame other people for their own inadequacies, their own ideology has brought us to this state.


There was one moment when I thought that I could perhaps support the bank tax, if the bank tax was going to be hypothecated to reinstate the emergency services remissions, put those remissions back. That was one time when I thought that perhaps if the government came up with that proposal, I could probably support the bank tax. There is still the problem of the banks passing on their fees and other South Australians paying again, one way or another.


It takes courage to stand alone in the Parliament as an Independent. That is what I am doing now and that is what I will continue to do as long as I possibly can and as long as the people of Morphett want me. That is why I will stand up for all South Australians and not support this new tax.

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