David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

I rise to speak against these two AUSTRAC supervisory cost recovery levy bills. Once again, it is telling that Labor and the coalition deem these dogs of bills to be 'noncontroversial', to be waved into law over lunch with no divisions and next to no-one in the chamber. For the benefit of those watching at home, let me explain what these bills do. They increase a tax on around 1,000 financial institutions, increasing revenue by around $80 million over four years. The tax increase will fund the collation of financial data for child support, tax, law enforcement and security agencies. The level of taxes will rise in line with the operating costs of the collating agency, called AUSTRAC.

The current tax on financial institutions only funds activities that assist financial system integrity—namely, regulations that counter money laundering and terrorist financing. That is not an issue. The government says it is replacing a 'cost recovery levy' with an 'industry contribution', but what it is really doing is introducing a new tax. This is the same government that said that:

… there should be no new tax collection without an election.

This is the government that said:

What you'll get under us are tax cuts without new taxes.

With these bills, the government is singling out financial institutions to pay for general activities—such as the management of child support—which seek to create benefits that fall outside the financial system. So these bills are the first step towards the policy of the Greens—a general purpose tax targeted at the banks. I am surprised so few senators from the Greens are here to cheer on this bank bashing and to claim victory in their crusade against the banks. But perhaps they feel they do not need to be here because the government is doing their bidding.

An extraordinary feature of this new tax is that it will be set at whatever level is required to fund the government agency. This is a recipe for agency inefficiency. Each year AUSTRAC will put in their budget bids for more money and the government will have little incentive to scrutinise these bids, knowing full well that any increased spending will automatically be funded by an increased tax on financial institutions.

The tax is poorly designed. Part of it comprises a tax on earnings, involving a number of arbitrary thresholds. If an institution increases its earnings beyond one of these thresholds, its increased earnings can be more than wiped out through increased tax.

Another aspect of this is a tax on the number and value of transactions. That makes it a stamp duty. It is a stamp duty like the ones the coalition sought to abolish with the introduction of the GST. Stamp duties are widely recognised as the most inefficient of taxes as they discourage voluntary transactions that make people better off. In this instance, this is a stamp duty that discourages an efficient amount of borrowing and lending in the economy. For this reason, the Henry tax review recommended the abolition of stamp duties, and the forthcoming government white paper on taxation will probably repeat this recommendation.

Of course, these recommendations will not stop the Greens from supporting stamp duties on financial institutions, referred to among economists as 'Tobin taxes'. Previous coalition and Labor governments have recognised the madness of Tobin taxes and have rejected calls from the Greens for their introduction. It is of great concern that the coalition's current approach to getting things through the Senate is to adopt the policy of the Greens. To anyone who is listening, please know that I, alone, in this almost empty chamber, oppose the otherwise untrammelled passage of these dogs of bills.