I rise today to speak on the Budget Measures Bill 2017. The Commonwealth Major Bank Levy within this bill is nothing but a desperate attempt to stave off the collapse of an ever-dwindling pool of revenue, by a government bereft of ideas. You cannot and never will tax your way to prosperity. Taxation upon further taxation does nothing, but stagnate growth and investment. You cannot rely on continuously draining the taxpayer and expect to create a flourishing economy. The government has attempted to play this levy off as standing up for the little guy, by going after our biggest earners. However, this levy will be nothing but a drain on the everyday taxpayer, thinly veiled as a tax on the big end of town.
The government has tried to seek out an economic scapegoat. Someone or something to pin their blame for their abject failures and economic mismanagement of our great state. In their musings, they have come across an easy target – the major banks. The treasurer describes the banks as “undertaxed.” In his eyes, their profits are something unsightly which must be reclaimed. What he fails to mention is that these same banks are the largest corporate taxpayers in the country. They are recklessly targeting success with this measure, as they do not have the capacity to foster it themselves. How can such a measure give business enough confidence to attempt to prosper in this state? What incentive does this tax give to business in order to take risks, invest and become successful in their own right?
It is difficult to see how the government can reconcile itself by dubbing this year’s fiscal measures as a ‘jobs budget.’ I do not see how this is possible, when they plan to inflict the people of this state with a brand-new levy. Additional taxes are not job creators, they are job and investment killers. This is something that is obvious to the rest of the state, but it seems lost on the government. In a recent BDO survey 72% of small to medium South Australian businesses were opposed to the levy measures in this bill. They have good reason to be. If we were to implement such measures, these same businesses would struggle to gain access to further lending. For the majority, it is an already difficult market. There would be less incentive from the major banks to invest their money in South Australia. On a national level we would be viewed as an uncompetitive option overnight. Such a loss of investment would mean that potential job opportunities for South Australians would go with it. With the state already losing much of its younger workforce interstate, the likelihood that the levy would propagate the problem further is quite high.
We have already seen the beginnings of the kind of hindrance this tax will have on the state. A number of high profile investors have come out against the Major Bank Levy and the fallout has started to take effect. Jupiter Fund Management has specifically cited the Bank Levy as a key reason it is reducing its exposure in the Australian market. It has described such a measure as “entirely unreasonable and a misguided policy.” A succinct description of a debilitating tax on jobs and investment. Bank SA immediately halted its move to expand its back-end office operations in June. This has resulted in the suspension of a further 150 jobs within their automated processing centre. ANZ began to offload millions of state-backed bonds at the same time, of which the major banks are the largest proprietors. This is just a taste of the cost that the people of South Australia will have to absorb, if this bill is to pass, while at the same time illustrating my exact point. Increased taxation costs jobs and it costs investment.
The treasurer has sounded out that these measures will not hit customers. This could not be further from the truth. It will be everyday South Australians who will have to once again foot the bill for the government, as they have done so many times in the past. They would like to have you believe that the only stakeholders to feel the impact of this measure are the major banks. What they fail to elaborate on is the flow on effect and to accurately articulate just who could be classified as a stakeholder of a major bank. As with any company, there is a cost to doing business, increasing these costs will cause significant repercussions. The impacted parties are far-reaching. Mum and dad investors and even those with investments through superannuation, would have to wear any additional costs. They would see the impact that the levy would have firsthand through their dividends and return on investment. Stakeholders such as shareholders, employees and customers will ultimately lose out. To put this in perspective, the government wishes to inflict further, immediate strain on 146,500 shareholders, 6,500 employees and 900,000 customers within South Australia. A measure such as this is nothing more than another dip into the pockets of ordinary, hardworking South Australians. The same hardworking South Australians who already face exorbitant taxes, such as the increase in the Emergency Services Levy. The Government has run the state’s economy into the ground, this tax will aid not rectifying their mistakes.
In terms of population South Australia is a small market, both on a global and domestic scale. As such, we must be forward thinking in the manner in which we aim to attract outside investment. There are some areas of business where we cannot compete, such as the scale of our market and labour costs. However, our ingenuity and resourcefulness gives us an edge. It is the responsibility of the government to create the conditions that give South Australians the opportunity to use these skills to flourish. To do so it must be delivering budget measures which make it easier to start up and invest in business. Introducing a state-based bank tax works against any competitive advantage we could deliver. We will not find economic success through increased regulations and taxes. Instead, we will lose all incentive for investment. With additional costs filtered through and lines of credit harder to obtain, how can anyone find the right incentive to invest in this state? The Bank Tax further impinges on direct investment, which has already been diminished with high power costs, the cost of doing business and red tape.
In order improve the economic fortunes of South Australia, we must shift our focus away from costly short-term gain. We must give business, particularly our small businesses the capacity to grow. To do this requires limiting costly taxes. Only when we drive the cost of business down, can they then increase their investment opportunities and seek to employ more South Australians. While this measure, if implemented will increase revenue for the state in the immediate future, it will do so at an inordinate price long-term. The conditions will not be there for increased direct investment from outside of South Australia. Businesses will funnel their earnings into the rest of the country or more damagingly, avoid South Australia altogether.
Other states are aware of just how economically disastrous a tax on the banks could be. Western Australia has recently rejected any notion of introducing such a damaging measure themselves. Their treasurer is happy to let South Australia take the risk and go it alone. He realises that a levy on the major banks, does nothing but have the potential to threaten jobs and investment. Other Labor governments in this country are not willing to bring on these measures themselves, due to the potential ramifications it could have on economic growth. This fact alone should send message to the Labor government in this state that these measures will not work. It is once again placing the people of South Australia in the role of test subjects for their own ideological gain. As they have already done with electricity, it will be everyday South Australians who are forced to bear the brunt of the costs.
This measure does nothing to improve South Australia or its people. It does nothing in addressing the systemic and structural economic issues we are facing. Instead, it further exacerbates them. When all is said and done a levy such as this could have a net-loss on the state, due to missed investment. Further taxation is not the answer for South Australia. We should be doing all we can to free up investment and bring down taxes to make it easier for South Australian business to compete and grow.
With measures such as the Commonwealth Major Bank Levy, the only conclusion one can reach is that this is an ill-conceived bill. It does nothing but prop up the government’s ailing bottom line at the expense of average South Australians. The role of a good opposition is not to sit back and watch as such measures are passed. It is to call out the government when it makes poor decisions and attempt to reverse them where possible. This is why I speak against the Bill and why I see it as being of vital importance to oppose the draconian bank levy.