GOVERNMENT BILL: Budget Measures 2017
October 31st, 2017
On the 31st of October, Mark spoke to the Budget Measures Bill 2017.
The Hon. M.C. PARNELL: If we go back to first principles, the annual state budget is a reflection of the priorities of the government of the day. The questions we ask ourselves are: what funds are they proposing to raise, and how will those funds be invested to improve the lives of people and communities? So, it is a statement of the priorities and the goals the government has for our state.
But also, at the risk of stating the obvious, the budget will always contain elements that some people disagree with. The Greens have certainly come out criticising budgets in the past, where they have neglected important areas or where they have promoted activities that are ultimately harmful to people or to the environment. As a consequence, I think it is open to the parliament to amend the Budget Measures Bill—I think that is democracy.
We often hear—and the Hon. Rob Lucas has spoken at some length—about supposed conventions that put the budget and related legislation on a pedestal, and we are told that we cannot touch it because it is the budget. Well, I do not accept that. But, what I do find galling, what I do find hypocritical, is where parties use the supposed sacrosanct nature of the budget to oppose sensible amendments.
A number of times the Greens have proposed amendments to make budget measures fairer, only to be told by the Liberal Party that they cannot possibly join us because it is the budget and that the government is entitled to have its budget unamended. Two recent examples I can give: the passenger transport levy, which we moved to amend. The Liberals would not have a bar of it, not because they thought it was a bad idea but because it was in the budget and they 'don't touch the budget'. I tried to restructure some of the probate fees that were charged against the estates of deceased persons to make them a bit fairer. Again, the Liberal Party would not go near it, not because it was a bad idea but because it was part of the budget and 'the Liberals don't touch the budget'.
Having heard that excuse from the Liberal Party on many occasions, I now find it remarkable that they feel they are quite within their rights to make substantial changes to the budget by removing a major revenue raising measure, in particular the bank levy. As I say, I support the right of members of parliament to propose amendments but I do find the hypocrisy of the Liberal Party quite galling. They say one thing when it suits them, and they do another. They pretend the budget is on a pedestal, but they are happy to knock it off when it suits them or to claim impotence when it does not. As other members have said, they did this with the car park levy a few years ago, and they are doing it again now. I expect it will come back and bite them in the backside if they get to form government after the next election.
But I want to look at the bank levy. It is not the only measure in this bill but it is certainly the measure that has attracted the bulk of debate. The Greens believe that the test of a fair budget is that every South Australian should be able to access quality public services like schools and health care. This means that as a community we must all contribute fairly so we can continue to have these public services and a good standard of living. In my view, it is beyond doubt that the major banks in this country have been undertaxed for many years. The commonwealth Treasury's 2016 Tax Expenditures Statement showed that financial services are undertaxed by $4 billion per annum. In response, the Turnbull Liberal federal government announced a major bank levy.
The South Australian levy is designed in the same way as the federal bank levy and it builds on that levy; however, even after both levies are applied, state and federal, banks will still be significantly undertaxed. If the federal government had done their job properly in the first place and applied a fairer tax to the big five banks, then the states would not need to step in with a top-up bank levy. The Greens believe that it is time for the big five banks, which recently made $44 billion in pre-tax profits off the back of hardworking Australians, to start contributing more to our community.
I would like to address the current bank scare campaign that has dominated electronic and print media over the last several months. At the end of the day, the banks' orchestrated scare campaign is all about maintaining their enormous profits for themselves, their executives and their shareholders. The banks' campaign is dishonestly playing on people's fears about loss of jobs and economic stagnation. They have implied in their advertising that this levy is a direct impost on South Australian investment, South Australian business and South Australian jobs, but this is patently untrue. In actual fact, the way in which the proposed levy has been designed means that banks cannot avoid the levy by not banking or investing in South Australia.
It is built into the design of the levy that it is not imposed on any particular South Australian assets, so there is no impact on South Australia that is any different to the impact on any other part of Australia. To be really clear, the levy will therefore not disadvantage South Australia compared to other states or territories, but it will provide much needed funds for essential services. The levy proposes to raise about $90 million per year, which is only about twice as much as the five individual CEOs of the big banks were paid last year. The levy represents just 0.2 per cent of the $44 billion in pre-tax profits the big five made last year. People are asking, 'If the big banks really care about jobs, why are they closing branches, and why are they laying off workers whilst they are making record profits?'
I want to refer to a report that came out in July this year by the Australia Institute's senior economist, Matt Grudnoff. This review of the economic impact of the South Australian government's proposed bank levy found that the banks are not only very capable of paying the 0.0036 per cent levy on the same liabilities that the federal government levy is based on, but also that the levy is good economics. In particular, the report notes that the unique structures governing banking in Australia which help make it the most profitable banking sector in the world, also provide justification for requiring those banks to contribute more to the community that ultimately props them up.
Key findings of the report were, firstly, that the bank levy represented only $36 in every $1 million of bank liabilities, so the amount is quite tiny. Secondly, bank levies are common around the world but the federal and state bank levies are only one-third of the International Monetary Fund's safe maximum limit for bank taxes, so it is a modest tax, and I would say too modest. Third, the bank levy could actually be used to create employment if the money raised was used in employment-intensive areas, and health and education are certainly two of those.
Next, as I said before, the bank levy cannot deter investment in South Australia because it is levied on a proportion of the banks' national liabilities. It is not tied to South Australian liabilities. The federal and state governments clearly are suffering revenue problems and they have choices ahead of them: 'Do we raise taxes on workers or do we tax the world's most profitable banks?' Certainly, the Greens support that latter approach. The final point I will mention from that report is that the federal government, according to the Australia Institute, should encourage other states to follow South Australia's lead, as the bank levy is a way for states to reduce their reliance on the federal government.
This final point is important because spending millions of dollars on a dishonest campaign in South Australia is aimed as much at the other state governments as it is aimed at South Australian citizens. The other states are watching South Australia. They are watching this debate and that is why the Australian Bankers' Association have gone all out. Mind you, most people who attend water coolers or barbecues would realise that the obvious question being asked by citizens is, 'So, they can't afford this tax but they can afford to take out full-page ads in the paper and ads on radio and television. Maybe if they hadn't spent the money on those ads, they could have afforded to pay the tax.' It is not rocket science.
I want to refer briefly to an article written by Richard Denniss in The Canberra Times on 1 July this year. I refer members to a couple of sentences from this quite enlightening article. Mr Denniss says:
The banks' attack on South Australia shows how scared they have become. When Scott Morrison announced his new bank levy on budget night with no consultation, and no apology, the big banks knew they were in big trouble. And when Jay Weatherill announced his own state-based top-up levy, their worst fears were realised faster than they ever imagined. The entire Australian political class had finally figured out that taxing big banks to fund health and education is quite popular.
The banks are worried. A bit later, the article goes on:
The reason that the South Australian government has introduced its new bank levy is to raise the revenue it needs to fund the high quality services that the people of South Australia want. As citizens of one of the richest countries in the world, there is no reason to suggest that South Australians "can't afford" high quality services. The issue is only whether they are willing to collect the revenues to fund them, and when it comes to the bank tax the answer is a clear "yes". The banks know that, which is why they have launched such an outrageous scare campaign about "jobs and growth". In scenes reminiscent of Gina Rinehart in the back of a ute chanting "axe the tax", the CEOs of the big banks have been doing everything they can to scare the citizens of South Australia into thinking they have to choose between high quality services and jobs for their kids.
And, as I said, there is no choice: we can and must have both. The article goes on:
Central to the strategy of the big banks is to play to the insecurity of the residents of smaller states that unless they genuflect before corporate Australia, they will "miss out" or be "left behind". In reality, if one of the big 4 banks actually packed up and "left" South Australia, the main winners would be the other big 3 who would stay behind and pick up market share. In fact, if one of the big four left, and a South Australian customer with a mortgage of $500,000 switched to a credit union or building society, they could save around $2000 a year from lower interest rates.
While the banks are quick to claim that they have "no choice" but to pass on any taxes to customers, they are strangely silent about the impact of their enormous profits on the interest rates and fees they charge. It's no accident that the not-for-profit building societies and credit unions offer identical products at much lower prices. And if South Australians paid two grand less on their mortgages and spent it in the local shops, it would deliver far greater economic benefits to the state economy than anything the big banks could do.
So, the big banks know that other states are watching. They fear that a contagious wave of fairness might engulf our nation. In conclusion, the Greens believe that we can have essential public services, good health care and quality education. We can also have a solid economy with jobs for our children. This is not some sort of trade-off, as the banks want you to believe. We do not need to choose between public services and jobs; we can choose both.
The Greens support this budget measure as a fair initiative. While these big five banks are making $44 billion in profit, it is only fair that they contribute a tiny amount of this back into our community. It will raise revenue for our South Australian government which will mean either more public services or less taxes paid by ordinary South Australians. The Greens believe that this measure is good for the people of South Australia and it is good for our state overall.
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