Major Bank Levy
Mr HOWARTH (Petrie) (13:00): ‘Labor will not stop the Liberals’ levy on the banks.’ Hallelujah! That was one of my favourite lines from the opposition leader’s budget reply speech, given he was responsible, as part of the previous government, for the deficits that the member for Rankin, who is opposite me, was just speaking about. When common sense prevails, it is a beautiful thing. If only we saw more of it from those opposite—from the negative Labor Party opposite that oppose everything and that created the mess that we are in with these massive deficits, since John Howard left, and compound interest that many of them might not understand. That has created the problem we are in today.
The major bank levy is common sense. It is a fair call for Australian banks, which are the second most profitable in the world. Australian banks outperformed their international peers during the GFC. They work hard, work smart and do well. The member for Mallee made a great point in his speech before about how the banks were supported during the GFC as well. The major banks are also major corporate citizens with a major social responsibility that flows as a result of their major market interest.
We want our major banks to be the most profitable in the world. We want that. It is a good thing. That is why the coalition government supports their success. We are also committed to reducing the debt that accumulated during Labor’s decade of deficits, and we all have a role to play in that—the major banks included. The five majors together account for more than 80 per cent of lending for housing, gross loans and advances. Reporting total profits of more than $30 billion after tax, their dominance and success is a result of more than just their strategy and savvy. They occupy, of course, a privileged position as providers of essential financial services and enjoy enviable success, which, by anyone’s measure, represents an excellent return on investment.
This bill requires of them a fair additional contribution, given their concentration. The major bank levy will apply to authorised deposit-taking institutions with liabilities of more than $100 billion and will tip $1.5 billion a year into the public kitty. Estimates are that the levy will pluck roughly four per cent from the banks’ bottom line. That is something I urge them to consider as an investment. Australians are fortunate to have many banking options, and I am inspired by the success of some of the smaller banks, community banks, credit unions and building societies. It is great to see some energy in that sector. The Treasury Laws Amendment (Major Bank Levy) Bill will contribute to meaningful budget repair and address the debt accumulated by a decade of Labor deficits. We have a responsibility to reduce this debt now so as to avoid it becoming our children’s unfortunate inheritance.
The coalition government is committed to the responsible financial management of our nation’s affairs. Budget 2017 represents a comprehensive solution to debt racked up under Labor. It addresses the rising cost of living, increasing energy prices and supply and housing affordability. It eases the pressure on hardworking Australians and their families. It tightens the safety net that supports Australians in tough times and guarantees essentials—schools, pensions, infrastructure and health care. It provides relief for small and medium businesses and drives job creation.
But the essentials cost money, and we cannot continue to live beyond our means. Those opposite, we know, have learnt nothing when it comes to that. At the last election they promised $16 billion in additional debt after the havoc they unleashed on the nation during the Rudd-Gillard-Rudd years. That is why, along with providing necessary funding, budget 2017 finds savings elsewhere, including the $6.2 billion over the forward estimates as a result of the major bank levy. The levy is set in legislation at a rate of 6c of every $100 of specified liabilities and only applies to the big four banks and Macquarie Bank, each of which currently has liabilities greater than $100 billion. It includes other bank brands operating under the same licence as the principal bank as well. It will be deductible for corporate tax purposes and, consistent with ordinary expenses, does not generate franking credits. The levy, of course, does not apply to deposits protected by the Financial Claims Scheme, which applies to protected deposit accounts of up to $250,000 per account holder. It also does not apply to mortgages. It also does not apply to additional tier 1 capital held by the banks to help meet their capital requirements, which protects the stability of the financial system, or to a bank group’s nonbank businesses—for example, insurance or superannuation.
The introduction of the major bank levy is just one way the coalition government is securing brighter days for all Australians, and that includes the banks as they stand to benefit as result of the retention of our outstanding credit rating. Bankers historically have had a reputation for trust. In the generation before mine, and even now in some cases, the bank manager was an influential and highly respected member of the community. It would be good to see that same sense of community from the major banks, who might use this as an opportunity to build loyalty with customers, to boost customer satisfaction and to do the right thing. Customers have tolerated increased fees, streamlining of services, cost-cutting measures and disappearing branches, as well. The Deception Bay community in the Petrie electorate, home to more than 20,000 people, does not even have a bank. I have written to some of the banks on several occasions and asked them to set up a bank in Deception Bay for the Deception Bay community. We cannot convince one of them to set up shop. It is a high-growth area and home to hardworking Australians, to young people, to retirees—they all bank their money but cannot do so locally. With Deception Bay’s 13,634 square metre shopping centre currently undergoing significant refurbishment, I hope they will consider moving into the neighbourhood.
Many major bank customers have been banking with the same bank all their life—it is a common thing. They signed up for the old coin-in-the-envelope primary school savings bank schemes and have remained loyal ever since. I would say to the major banks, it is easier than ever to switch. You can switch to the Bank of Queensland, Bendigo Bank, Suncorp-Metway or whoever it is locally. Banks invest good money in actively working to communicate with and retain their customers. Absorbing the bank levy rather than handballing the cost to your customers would be an excellent relationship builder and an exercise likely to pay dividends. Ensuring a strong financial position is in the financial interests of all of us.