Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

There is a little bit of a pattern here. Today, the parliament is dealing with a number of matters where the opposition has tried to give the government bipartisan support, yet the government is bungling the implementation as we go. In the other place we are dealing with the GST threshold issue and in this place now we are dealing with the major bank levy. Let me be clear that the Labor Party will support this legislation in this House and in the other place. But I take the opportunity to remind the House of some of the difficulties, and the Treasurer's incompetence, in dealing with this matter.

Firstly, there is history here. There are two people in this building who know how to introduce a bank tax: me and the Treasurer. We have both done it. When I was Treasurer I introduced a bank levy. The now government, the then opposition, said it would end Western civilisation, bring hordes of locusts upon us, wreck our economy and affect households. They did not proceed with that bank levy and a deal of revenue has been lost in the meantime. Now, lo and behold, the budget brings in a bank levy and the Treasurer says that it is different. Well, it is different, I will grant him that. It is 10 times bigger, in terms of revenue, than the levy I introduced as Treasurer. So, a levy that was 10 times smaller was terrible for the economy but a levy that is 10 times bigger is somehow fine, according to this Treasurer's way of thinking. So there is a lot of hypocrisy going on here on the part of the government when it comes to the bank levy, and it needs to be called out.

But what we will not do his behave like they did. They opposed the bank levy when we introduced it. They were obstructionist. They said that they could not support it, but we are not going to play that game. We will support the legislation. It is very important for the budget that we do. But we are not going to give this Treasurer a leave pass for his incompetence. It all started even before it was announced in the budget, when it was leaked. There are leaks out of budgets—of course there are. There are intentional leaks and unintentional leaks and all the time things are announced before they are announced in the budget speech. But rarely is it something as market sensitive and important as this. This was a very big leak from the budget and it moved the stock market as a result. The fact of the matter is that when the stock market moves so substantially some people make money and some people lose money, and this is what happened as a result of this leak. There are serious questions that continue to be asked about this and need to be answered. We asked the secretary of the Treasury at Treasury estimates. He said:

… on the basis of what we have been told by our staff, on the basis of informed discussion with my senior executives as to who knew what and when, I would be devastated … if I thought that one of my staff had been responsible for this. I have seen nothing in the time I have been secretary to make me think that it came from Treasury.

He said that there was only a small number of people at the Treasury who knew about this—five or so Treasury officials who would have been in a position to do this. How and when it was leaked is a very serious matter. It will continue to be assessed and probed. I note that there is an ongoing ASIC investigation into this matter, as there should be.

Then I move to the matter of the government denying reality about it being passed on to bank customers. Again I go back to when we introduced a bank levy when I was Treasurer. This Treasurer says, 'You said it would be passed onto customers'—referring to me. I was honest about it. I was prepared to tell the Australian people the truth and say: 'Banks will consider passing this on—it is a modest levy and may be added to some transactions that banks put on it.' I was prepared to call it how it was. This Treasurer cannot find it within himself to be honest with the Australian people about this matter. He says, 'It won't be passed on and the ACCC will make sure it is not passed on.' The ACCC has been given the grand total of $1.2 million to monitor the situation. That is not going to do very much.

The fact of the matter is that when a bank is faced with a levy like this it has the choice of absorbing it and reducing profits—that is what absorbing means: reducing profits and returns to shareholders—or passing it on. Banks have shown in the past that they are certainly prepared to do that. I thought it was interesting that not only do I say that, but the government's own documents say that. After a whole series of denials, once the legislation was released we saw the regulatory impact statement. It says:

…it can be passed through to those the banks lend to (in respect of residential mortgages, business lending and personal credit), deal with or provide services to, or their non-equity funding sources (wholesale capital markets, depositors) or be borne by the banks themselves (through reduced profits, or via increased efficiency or other cost-cutting measures).

When the government's own regulatory impact statement says it will be passed on, and the Treasurer denies it, I think we have a very serious problem.

Finally I come to the matter of the black hole in the government's figures here. It is a very big one. The Treasurer brought down the budget on budget day and said it would raise an amount over the forward estimates. We took that in good faith. There was no reason to dispute it. But then, of course, the banks are required under law to make a disclosure to the Australian stock exchange about their liabilities and material changes to their financial situation. They have done that. One after another the big banks made their disclosures to the Australian Stock Exchange and, lo and behold, it fell short. There were five banks affected. Four have disclosed to the stock exchange, and we are looking at a very significant shortfall. Macquarie is the only bank yet to disclose to the stock exchange. They are taking their time, as is their right. But anybody who thinks that Macquarie is going to make up the shortfall is whistling Dixie, because they are the smallest of the banks affected and their liability is going to be less than the others. To suggest that they are going to make up the shortfall is nonsense.

So less than a fortnight after the budget was brought down we had a $2 billion black hole over the forward estimates in the Treasurer's numbers. That is a shortfall of $2 billion. This is a significant issue. The reason I raise this as a significant issue is that it goes to the Treasurer's competence. It also goes to the fact that they will need to make the $2 billion up. Will they make it up through further cuts? Will they make it up through tax increases? Will they change the definition of the banks liable to get more banks in the net? They have told us about competition. Will they actually get some of the smaller banks in the net to make up the shortfall or will they simply see the deficit blow out by a further $2 billion over the next four years? Time will tell, but we know that there is a $2 billion shortfall in the Treasurer's figuring. The situation is that the government has refused to acknowledge this fact. In fact, I am obliged to say that they are being fundamentally misleading about this. The Treasurer stood there and said, 'You're using the wrong figures. You should be using cash, not fiscal balance.' He thought he was very clever at question time. He said, 'You should be using cash, not fiscal balance.' The problem is: the Treasurer was wrong. Either he misunderstands his own budget or he chose to mislead the House. That is the choice that we are faced with when we look at what the Treasurer said. The cash figure was different to the underlying fiscal balance figure for one reason and one reason alone: this tax is paid quarterly in arrears, so one of the quarters was not counted and the banks reported to the Australian Stock Exchange their full four quarters. That is the difference. So the Treasurer was wrong and he owes this House an apology for what he said in that question time, but I do not hold my breath that we will get it any time soon.

There is the final nail in the coffin for the Treasurer's competence when it comes to the bank tax. I made mention of Macquarie Bank and the fact that they have not yet disclosed their liabilities under the tax to the Australian Stock Exchange. They can choose when to do that. But we see the speculation that they will leave Australia. I do not know whether they will or they will not, but it is quite clear that this was put together so quickly, it was so rushed, because the Treasurer had a black hole in his budget that he needed to fill and he did not think through all of the ramifications. If Macquarie Bank is not domiciled in Australia, they will not be paying the tax in Australia. We know that the Treasurer had other ideas and they all fell apart at the last minute, so he had to come up with the bank tax at the last minute. That is why this has been so significantly botched by the Treasurer. I must say, I am not surprised. Most things that he touches manage to get botched.

I emphasise that we support the legislation because we are prepared to help the government in budget repair, but they make it hard sometimes. Gee, they make it difficult. You try to give them support and yet they manage to bungle the implementation so comprehensively. It is for that reason that I move the second reading movement, which has been circulated in my name, to allow the House to fully aerate these issues and debate the government's competence when it comes to this. Notwithstanding the second reading amendment, I commend the bill to the House. I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House notes:

(1) there is support in the Parliament for the major bank levy;

(2) the big four banks have made legal disclosures to the ASX that suggests there is a $2 billion Budget black hole in the major bank levy forecasts;

(3) the consultation process leading up to the tabling of this legislation was badly mishandled by the Treasurer;

(4) the Government should come clean on the potential impact that the levy will have on consumers;

(5) the Government has instituted at least 12 Government reviews and measures relating to the banks, doing everything other than institute a Royal Commission; and

(6) only a Royal Commission into the banks will deliver the systematic, structural and cultural change that the banking and financial services sector needs”.

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