Current Issue #488

Is the Bank Tax a 'Dumb Idea'?

Is the Bank Tax a 'Dumb Idea'?

The proposed SA banking tax is bad for business, argues Nigel McBride, Business SA’s chief executive.

We live in a state which is famed for its high-quality wine regions, natural beauty, approachable standard of living, freedom of speech, affordable housing, ground-breaking festivals and ability to put on a great event or three. Last month, Adelaide cemented its fifth placing on the World’s Most Liveable Cities list.

Yet South Australia is being bashed on a national stage from pillar to post — our unemployment is the highest in the nation, we have the most expensive power in the world and our share of the GST is constantly being questioned.

The Weatherill government has spent years trying to win contracts to support employment, including defence projects, as Holden closes and the automotive supply chain winds down, and has lead the nation when it comes to our infrastructure spend.

Yet instead of helping encourage investment at a time when our state most needs it, the state’s Labor government has taken steps to introduce a bank levy to claw back funds which it says will be spent on job creation.

A sceptic would say that jobs growth funding would have come from general revenue anyway, and the bank tax is just another ploy to penalise (what’s left) of the ‘big end’ of town.

Jay Weatherill continues to argue the five banks do not pay their “fair share” of tax at time when they are already some of the largest taxpayers in the country. He also fails to recognise how many people they employ and the services they provide to almost every South Australian.

He has also argued that the business sector, the opposition and the cross benchers are scare-mongering and the banks will not pass the tax on, without acknowledging they can legally lift state-specific interest rates.

The Premier says he will not be lectured to by the banks, but he is not listening to their customers or local staff either. The bank levy will be passed on to consumers, whether it be through an increase to business lending interest rates, new job centres being put on hold, a decrease in returns to ordinary shareholders or to superannuation funds. None of us want to see our super account balances drop.

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The growing fear that investors will be slugged higher banking fees if they build, buy or establish businesses in South Australia, is also deterring investors at a time when they are already paying sky-rocketing power bills thanks to an ideologically-driven focus on renewables.

Again, we are making national and global headlines for the wrong reasons. This proposed SA banking tax is bad for business, and it is a big, fat negative for our state at a time when it needs it the least.

We need to keep our entrepreneurs and graduates in jobs, and not lose them to interstate opportunities where wages are often higher but standards of living lower. We need optimism. Public opinion has turned. Poll after poll, including Business SA’s Survey of Business Expectations, shows the SA small business community is hurting and does not want this tax.

Our survey found more than a third of South Australian businesses are facing higher overhead costs and more than half are spending more on materials than in the first quarter of this year.

The survey, taken after the State Budget, shows 46.7 per cent of businesses paid higher average wages than anticipated in the June quarter.

An independent Galaxy poll released earlier this month found a staggering 81 per cent of small businesses believed the bank tax would worsen the state’s competitiveness compared to other states which did not have such a tax.

The Galaxy poll of 400 small business found 70 per cent believed consumer confidence would worsen because of the bank tax, 69 per cent thought the state’s economy would deteriorate and 65 per cent feared unemployment would rise.

Both have followed BankSA’s post-Budget State Monitor, which found confidence had fallen to a four-year low.

Net pessimism ratings dropped to – 46 per cent for business, compared to –10 per cent after last year’s State Budget.

The tax is simply a dumb idea and if the Labor Party fails to acknowledge it has made a mistake, the voting public may well remember at the March 2018 State Election. Business SA represent business and employers. We are not aligned with any political party or independent. After recognising the concerns of our city and regional members, we cannot sit quietly and wait for this tax to be introduced without fighting it. We cannot allow our state’s seriously bruised reputation to suffer any more than it already has.

Nigel McBride, Business SA Chief Executive

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