Former Treasury Secretary Ken Henry wants an inquiry into the bank levy. But not all agree. Should the banks be careful about what they wish for?
nab – Chairman Ken Henry
Ross Greenwood: Debate over the bank tax still rages. Certainly, one of the most powerful forces in Australia’s economy, Ken Henry, the former treasury secretary, now the chairman of the National Australia Bank has weighed in. Basically calling for the government to hold an inquiry into this bank levy that would collect some six billion dollars from Australia’s four largest Banks plus Macquarie over the course of four years, so one and a half billion dollars per year. But by the same token, there’s no doubt that the government is not for moving. Let’s pick up just a little of treasurer Scott Morrison today.
Scott Morrison: Big Bank Chairman Ken Henry says don’t have us pay more tax. That’s not hardly a surprising headline. Ken Henry is welcome to his view but Australians know that the very modest levy that we’ve put in place on the banks is a fair levy. It would be helping us to pay for hospitals and for schools and for pensions, not just for the next few years but well into the future.
The bank tax and in fact when Ken was treasury secretary, he had actually advocated a tax on bank deposits. Now, we don’t think a tax on pensioners’ bank accounts is a good idea nor did we think his suggestion about a mining tax was a particularly good idea either.
Ross: There you go. That is of course a reference to the resource super profits tax that was ill-conceived. There is no doubt because it was actually taxing the wrong part of the mining industry at that time. As people would remember, that particular tax collected absolutely nothing. What is undoubtedly going to occur is that any tax on the banks, if the banks have not got significant competition against them, is going to be passed on. If it is not passed on to the customers, it will actually be held back in regards to the shareholders of the bank. It will affect them either in terms of profit and/or dividend growth, whatever it might be. Somebody ultimately will have to pay for the tax.
nab calling for an inquiry into the bank levy
That being said, Ken Henry calling for some form of inquiry I think is something of well, a step too far. Do bear in mind that one of the things that the big banks do not want right now, they do not want a royal commission. If the government were to austere at the next election, well there is no doubt Bill Shorten told me last week, Chris Bowen told me last week, the Shadow Treasurer, that it would certainly happen. By the same token Chris Bowen last week and Bill Shorten both told me that they would support this bank levy.
Well, now it would appear as though the Labor Party is having to bob each way, suggesting maybe they’d throw the bank levy out to a senate committee not only to delay it and potentially embarrass the government but also then to try and see what else they could possibly dig up on the way through.
But on budget night last week, so one week from today, I did speak with the Shadow Treasurer and put that very question to him. Here is what he said.
Tax on the banks?
Chris Bowen: We won’t oppose that. Ross, this is 10 times bigger than the tax that the Labor Party put in place on the banks. You might recall, which the Labor Party said would end Western civilization. I’m not going to give them a light pass on the hypocrisy. At the same token, and this budgetary circumstance with the pressure on the budget, we’re also not going to oppose it.
Ross: But the other interesting side this afternoon, and I think this might have legs, is Westpac has called that if the Australian local large banks, the biggest employers, all that type of thing, if they need to pay the tax then maybe foreign banks should also pay the tax. I think that would resonate with a lot of people in Australia as well.
Anyway, today it wasn’t just Scott Morrison out there having a bit of a response to Ken Henry and what he had to say, but also the Prime Minister Malcolm Turnbull was out today on ABC radio.
Malcolm Turnbull: Look, he’s talking his own book, right? He’s the chairman of a bank. He knows as well as I do that the banks can well afford to pay this.
Ross: So that’s what taken place.