Monday, 19 June 2017
Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017; Third Reading
It is appropriate that we have a third reading debate on this matter because more evidence has come to light in the Senate inquiry—which occurred last week on Friday—since the House last met. There are two matters, in particular, that go to the revenue—the costing involved in this and passing it through to consumers. The House is familiar with the issue around the costings and the fact that, a short time after the budget was brought down, the government has a rather large black hole on its hands. The Treasurer has tried all sorts of excuses to deal with this, including moving the goal post between fiscal and underlying cash, but, of course, one of them has been that Macquarie is yet to report. It is true that Macquarie Bank is yet to report to the Australian Stock Exchange. They can report at any time of their choosing, but they did give evidence before the Senate inquiry on Friday and indicated a post-tax liability.
That post-tax liability leaves a very significant shortfall for the government. In fact, if you take the big four banks plus Macquarie Bank on a post-tax contribution, you get to just over one billion dollars—$1.015 billion—which falls significantly short of what the Treasurer told us in his budget speech. If you take that over the forward estimates, you get to a $2 billion black hole in the Treasurer's budget. This comes to the matter of competence. This is the point we make. We sometimes get pleas for more bipartisanship, but, when the Labor Party offers the government bipartisanship, time and time again we see the implementation being bungled. Although I will confine my remarks to this particular bill, the same applies to a matter that was just dealt with in the other House in relation to the GST and low-value threshold, which we will deal with later.
The fact of the matter is it is now incontrovertibly the case that the Treasurer has a black hole on his hands. It would just be better if the Treasurer admitted it and if he was just honest about it and if he just said, 'Yes, that was the best estimate at the time. We were working in the dark, we were working in a hurry and we got it a little bit wrong.' We would accept that. In fact, he might get some points for his honesty. But, alas, the Treasurer continues to deny the fact that the black hole exists. And the black hole is, if I could put it this way, in black and white. The black hole is in black and white—there for all to see. It is in evidence before the Senate inquiry. It is in the disclosures to the Australian Securities Exchange on behalf of four of the five banks, and then the fifth has given evidence to the Senate. If there was any grey area, it is gone. The Treasurer should just come to the dispatch box and admit the black hole.
There is another matter that the Treasurer should be honest about as well. This is the matter of the levy, or the tax, being borne by consumers. The Prime Minister and the Treasurer have been out there beating their chests, being 'Mr Tough Guy' and saying that it would not be passed onto consumers, that they would be very angry with the banks if they attempted to pass it on to the consumers and that the ACCC was empowered to deal with it. It just would have been simpler, as the Leader of the Opposition and I, and the entire opposition team, have pointed out, if the Treasurer was honest about this.
Just be upfront about it and say, 'Yes, it might be passed on.' That is what we did when we introduced a bank levy. The Treasury criticises me for that. Well, I was honest about it and said, 'Yes, the banks might pass it on.' I actually believe the Australian people deserve the truth. I think they are mature enough to have that conversation. When we had a bank levy, which was, admittedly, 10 times smaller than the Treasurer's bank levy, we were upfront about the fact that it might be passed. The Treasurer continues to deny it, but his Treasury officials are more honest. Treasury officials, giving evidence before the Senate inquiry, in terms of a question on notice, said: 'The banks' responses to the imposition of the levy were included in the modelling,' and these responses include, 'some pass through of the levy to customers, as evidenced by previous behaviour by the banks.'
We already knew that this was the Treasury view to some degree because it is in the regulatory impact statement—assuming a pass through to consumers. But now have yet another piece of evidence that this will be passed through to consumers. Again, the Australian people are mature enough to hear this. This is a measure which has the support of both sides of the parliament, but we want the government to implement it competently and we want the government to the honest about the impacts. So here we have two instances where the Treasurer is bungling the implementation of what should be a relatively straightforward and simple matter because it has the support of both sides of the House. It just goes to the point that the Labor Party always takes with a grain of salt what the government tells us when it comes to fiscal matters because their lack of competence when it comes to these things is there for all to see.
Of course, we also have the matter of the leak of the bank tax. This is a very significant matter. As I have said before, budgets leak—we accept that—sometimes intentionally, sometimes unintentionally. These things happen. But this is a leak which is very significant because it moved the markets. Some people made money; some people lost money. The fact of the matter is: when market sensitive information is leaked while the markets are open, that is a very regrettable thing. It should not happen. Where it does happen, people should be honest about it. We had the Treasury secretary being honest about it before the Senate on a different occasion, saying that he did not believe that it came from the Treasury. If it did not come from the Treasury, the House is entitled to ask where it came from. It did not come from the Treasury, and the number of Treasury officials who knew about the tax was very limited indeed.
So let's cut the nonsense from the government and the Treasurer. Why doesn't the Treasurer take the opportunity in this third reading debate, which we facilitated and gave leave for, to come and fess up and say that he got it wrong on the matter of the costings and that he has a black hole. While he is at it, perhaps he could reveal to the House where the money is coming from. What is going to be used to fill the hole? Well, more banks will be taxed. There are only five banks paying this tax at the moment. Maybe he is going to double it to 10. Well, we can have that conversation. Let's hear it. Let's hear what the government's plans are. Is he going to increase the rate of the tax? Perhaps. Or is he going to accept that it is not going to make the money necessary and cut it elsewhere? Is he going to make cuts to family payments or increase taxes on families to make up his shortfall? Or will he see the budget deficit blow out further on his watch?
These are the options available to the Treasurer. These are the only options: seeing the debt and deficit worsen or making it up through increasing the bank tax and applying to all banks and seeing families paying.
While the Treasurer is at it, why doesn't he fess up about the fact that consumers will pay? Again, the Labor Party thinks that this is a matter worthy of being honest about. When you increase a tax on the banks, the banks will consider it and in some instances will pass it on. In fact, it gets worse than that, because the Treasurer says it is all about competition and it is all about putting the small banks on a more level playing field with the big banks. The ACCC has views about this. Let's just think this through. If you gave the Treasurer the benefit of the doubt for a moment and said it is about competition, at a certain level that only works if it is passed on. It only puts the big banks on a more level playing field with the small banks if they pass on the tax, because the smaller banks and institutions have higher borrowing costs and higher funding costs which they pass through to consumers—that is why they are at a competitive disadvantage—so, if this tax is going to fix it, the only way it is fixed is by the big banks passing it on as well. I think the Treasurer could have that conversation. I think he could explain that. He could have that debate and people would say, 'If there are competition aspects, let's hear them.'
It really comes down to the fact that the Treasurer gets himself caught up in sixes and sevens when he keeps coming up with excuses on these things. He just keeps making up new alibis. He just keeps denying the reality. The Treasury will not deny the reality. The Treasury are not going to cut corners when it comes to the facts; the Treasury are going to tell the truth, as they have done repeatedly before the Senate. They have said, 'Yes, this will be passed on.' And the banks have a legal obligation to report to the Australian Stock Exchange accurately on their liabilities and the impact on their budget bottom line, and they have done it. They are not going to mislead the Stock Exchange. It would be illegal for them to do so, with very considerable legal ramifications for the banks and their senior personnel. They are certainly not going to do that.
The only person who is willing to obfuscate on this matter is the Treasurer himself. He is not prepared to acknowledge that there is a black hole and he is not prepared to acknowledge that it will be passed on to consumers and, in fact, that it is at least part of the policy rationale for it when it comes to competition. The regulatory impact statement told us that and now testimony before the Senate by the Treasury officials confirms that. We welcome the fact that that testimony is there and we welcome the fact that this is now out in the open. We thank and congratulate the Labor senators who got this information, particularly our colleague Senator Chris Ketter from Queensland who led the questioning and did so very effectively so that now the Australian people have more of the facts at their disposal. It is with thanks to Senator Ketter and his colleagues; no thanks to the Treasurer and his government colleagues sitting on the other side. They would prefer that the Australian people did not know. They would prefer that the Australian people did not know about the shortfall, the black hole, and the fact that it will be passed on. It says a lot about the government: even when they have bipartisan support, they are not prepared to be honest about the implications.