Banks are evil, or so the campus radicals at my university insist, and their unconscionable profits should be the property of proletarians exploited by wicked capitalists. You expect that sort of talk from scruffy undergrads, but from the Treasurer in an allegedly conservative government...
Walking down one of the main roads from the library at my university, I once was foolish enough to approach a member of Socialist Alternative (SALT) and ask how they proposed to fund fruitless schemes such as free university education. Their answer?
‘Tax the rich! Tax the big banks!’
Once again I was painfully reminded of how many people genuinely believe that taxes are the solution to all our problems, that it wasn’t at all selfish to ask hard-working Australians to fund the lifestyles and life choices of non-productive others. This is why I take a quieter path to uni every day, headphones on and head down.
As part of the silent majority at my uni, I was excited about the Budget. But when I looked over Treasurer Scott Morrison’s main policies in more detail, I was unpleasantly surprised. The 2017 Budget has brought in something that – or so I thought - could only be adopted as policy by the populist, ‘tax the rich!’, union-loving party of ‘the workers’. I’m guessing that these workers are mostly white Australians, for whom Australian jobs are reserved exclusively … right, Labor?
I could be referring to a plethora of bad policies: everything from higher taxes (yes, for everyone), to a levy on superannuants.
However, the biggest problem by far is the introduction of a six basis-point levy on the big banks (that’s a 0.06 per cent tax increase), amounting to a federal levy of $6.2 billion. In case you din’t know: a levy is a tax.
This is not a good thing. Because, guess what? Corporations don’t pay taxes in the end. People do.
It’s not going to achieve what populists (or, I suppose, people who don’t really understand economics) think it will achieve. A levy on the big banks is a major blow to shareholders and customers. It’s going to trickle all the way down to the average Joe, and it’s not going to be anywhere near a formidable equalising or redistributive policy for society. The Treasurer’s claim that banks can “absorb” is plain wrong. Obviously bank chiefs are fuming. The Australian reports that this tax is going to have a massive impact on 2.6 million shareholders and about 190,000 employees of the targeted big banks. These include the institutions in which we keep our savings, with which they’ve never had a problem: the Commonwealth Bank, Westpac, National Australia Bank, ANZ and Macquarie.
No matter how much student socialists at my university protest, and how much they believe that taxing the scary, evil bogey-man banks is a sensible and intelligent policy, their chanting and tacky posters won’t work. Sorry, kids. I’m sure you’re doing all doing well in your Sociology/Gender Studies/Film Studies/Art History major(s), but I’d stay away from issues about which you clearly know nothing. After this budget, that advice might be applied with equal justice to Messrs Morrison and Turnbull, who must tickled pink to find themselves echoing the sentiments of campus Trots.
So, what exactly is the rationale behind what is being called this Labor Lite™ budget?
The biggest winners will purportedly be smaller banks, as the proposal will likely force customers to choose alternate, less expensive banking services that have not been slapped with a levy. And, by imposing $200 million fines (up from $50 million) for banks hiding misconduct, it is meant to prevent and deter rorters of the system, namely big bankers and regulators.
But, once again, this will trickle down to superannuants and shareholders.
As the Australian Financial Review reported, the big banks have a track record of passing down their own levies and stifling regulations to their customers. Indeed, it was just this week that the Commonwealth Bank ‘wrote to all its super fund members telling them of a new regulatory reform fee of $102.50 a year.’
As for the smaller banks, who are we kidding? I don’t know anyone who isn’t with Westpac, Commonwealth or ANZ. And, my dear Treasury officials, I think there’s a good bloody reason for that.
It’s not convenient for time-poor working Australians to have to ‘shop around’ for the best deals for their savings. Especially in institutions we have never even heard of — let alone ones in which we’re asked to deposit our life savings. There is no way that smaller banks can even compete with, let along replicate, the efficient business models and services offered by the big banks.
ScoMo, in short, is severely overestimating the potential of misconduct in our banks; which, relatively speaking, have a pretty good record. But alas! The fear of Big Banks and Big Bankers has won the day. The fact that, as Willie Sutton noted, that is “where the money is” has not escaped the attention of this budget’s tax-loving architects.
Now don’t get me wrong – there are good aspects to the budget, as the Australian Taxpayers’ Alliance recently mentioned in a press release. The efforts to reduce the tax burden in recent years, the university fee changes and the stated desire to bring the budget back to surplus are all good things.
But when it comes to taxes, I think a lot of people and sensible politicians alike will hold the view that the lower they are, the better.
Cut taxes. Cut spending. And for the love of God, let businesses conduct business.
Marija Polic is a Research Associate at the Australian Taxpayers' Alliance
[This article first appeared in Quadrant]