AS the Morrison government thrashes around trying to stave off defeat or just save the furniture, it reminds one historian of the ill-fated McMahon administration. The run up to the Coalition’s 1972 ousting is detailed […]
HYPOCRISY! Hypocrisy and greed. These are the hallmarks of Australia’s four big banks.
For years they have been mercilessly ripping off ordinary Australians through outrageous interest rates on credit cards and sneaky bank fees. Now they are crying poor over a 0.015 per cent levy on bank liabilities.
The latest round of appalling behaviour by the banks emphasises why Australia badly needs a Royal Commission into banking in this country.
The huge banks with their massive profits pay less corporate tax than people on the lowest income-tax brackets. It gets worse. The banks are now crying poor because SA has found a way to add a levy of just 0.015 per cent on the banks’ liabilities. In SA the Treasurer, Tom Koutsantonis, says the levy will raise around $100 million a year.
The Commonwealth Bank’s net profit after tax (NPAT) for the half year ended December 31 was $4895 million. I should write that as $5 billion. The previous full year was $9.4 billion. The same bank claims it has “low-rate credit cards” with 13.24 per cent for purchases and 21.24 per cent cash advance. A rip off – simply usury! In June the Reserve Bank of Australia “cash rate” was just 1.5 per cent.
The banks have come out fighting. “Lights out on new investment. Lights out on jobs” screamed a full-page advertisement in a major paper by the Australian Bankers’ Association. Apparently, 0.015 per cent is going to bring the banks to their knees.
NSW Treasurer Dominic Perrottet has indicated that his state might follow suit. The ACT Chief Minister and Treasurer, Andrew Barr, should keep an open mind.
The conservative federal government has already been hooked into the campaign and has asked for advice on the legality of the tax. In the meantime, Koutsantonis argues that SA is “satisfied with the legal advice we have”.
The campaign smells. No, it stinks. It has all the hallmarks of the campaign against the super profits mining tax in 2010 under PM Kevin Rudd. I wrote at that time: “The Minerals Council of Australia understood that the best fabrications are based on some truth enhanced by exaggeration, fear and uncertainty. They used threats of doom and gloom for the mining industry and had international CEOs claiming intention to withdraw from Australia”.
The same pattern is being followed. Arguments are about the risks to the viability of the banks, jobs, mum and dad investors and “sovereign risk”.
Commonwealth Bank CEO, Ian Narev, fronted the arguments in an opinion piece in “The Australian Financial Review“. He argued this tiny taxation will undermine the willingness and confidence of huge international investors including pension and superannuation funds. Apparently ordinary people will be the losers. No. It is the large investors that will really have to pay this minute percentage of tax.
The banks are also angry at the Federal government. Narev says that this tax is only possible as the SA government “walked through the gate the Federal government left open”. He accuses both governments of “unprincipled bank levies”.
This is why we need the Royal Commission. It is not elected governments levying taxes as part of their role that is “unprincipled”. Rather, it is the greedy, hypocritical banks who object to contributing a small share of tax (0.015 per cent) when the lowest-income taxpayers contribute a third of their salary.
According to the banks it’s not only unprincipled to place a 0.015 per cent levy, it’s also reckless. And the banks are supported by (Surprise! Surprise!) – big business.
London-based Jason Pidcock, of Jupiter Asset Management’s $875 million Asian income fund, is reported in the same paper describing this tiny tax measure as “grand larceny”. His colleague Matthew Haupt, of Wilson Asset Management, described it as a “disgrace”.
Shroud waving is alive and well. It illustrates how vulnerable the banks are feeling. However, the vulnerability is not about money, investment or sovereign risk. It is about the danger of their own practices and deceits being exposed through a proper and thorough inquiry. Ironically, the appallingly poor behaviour of the banks simply throws fuel on the fire for a Royal Commission.
Michael Moore was an independent member of the ACT Legislative Assembly (1989 to 2001) and was minister for health