Public debate surrounding the proposed bank levy is a “symphony of hypocrisy” and governments need to govern in the public interest, free of corporate interference, writes Andrew Hunter.
The 2017 South Australian Budget included a bank levy. The levy would apply to bank bonds and deposits over $250,000 but exclude mortgages and household deposits. The money raised would help pay for services of the quality demanded by the people of this state. The Budget was delivered in late June. Events moved swiftly. The first shot fired by the banking industry convinced the Opposition to blok the measure, which calls into question many things. Not least the strength of our system of democracy.
Australian banks earned profits of around $44 billion last year — they are the most profitable in the world — and the so-called ‘big four’ banks take the overwhelming share of this lucrative market. The privatisation of banks in Australia was intended to generate competition. Instead, they act in concert to protect their interests. Protected, as they are deemed too big to fail, they act together to exert significant influence. Their campaign against the bank levy recalls the most harmonious of symphonies.
The crusade to reject the bank levy is predicated on the idea that it would result in job losses. Ironically, the CEOs of the ‘big four’ (who each earn millions annually for their labour) earlier this year argued together that a reduction of 20,000 jobs nationally would be needed to further enhance the banks’ profitability, delivering billions in ‘savings’. Public debate on the bank levy is a symphony of hypocrisy.
Other obvious inconsistencies have been ignored. The argument that such a levy would be a barrier to investment in South Australia is dubious. There is no sovereign risk. What role do banks play to assist South Australian businesses to attract capital anyway? They do make vast sums from financial speculation, which benefits an elite minority — the shareholders — not the mass of people who once considered banks trusted institutions that serve the community.
On the other hand, the South Australian Government, within one fortnight of the budget, announced significant investments to support steelworks and important power infrastructure in the form of a giant lithium battery. State governments not only work to attract investment to their jurisdictions, they also have responsibility for the delivery of important public services like health and education. The bank levy would raise several hundred million dollars for spending on these services.
A victory for the banking lobby will do more than rob South Australians of additional funding to such public goods and services. It will call into question the strength of our democracy. If well-resourced industries can reverse decisions of elected governments by saturating public debate with dishonest arguments, the idea that power lies in our parliament is tenuous.
We have heard this music before. In 2010, the resources industry invested vast sums into a campaign that aimed to reverse the Resource Super Profits Tax. Their aggressive media campaign was so pervasive it contributed to the downfall of a government, mid-term. Each decision overturned by self-interested but well-resourced private sector groups will embolden the next to campaign against requests that they contribute reasonably to the common good.
There is good money to be made in such campaigns. Anna Bligh is the Chief Executive Officer of the Australian Bankers Association. Bligh is a former Labor Premier; but she is certainly not the only champion of the labour movement to take the limousine to the big end of town. Former senior Labor ministers now lobby on behalf of casinos, banks, and mining interests. To wipe a tear from every eye is a calling for true believers but some now see politics as a temporary vocation; an entrée to a more lucrative career in which their inside knowledge can be sold to the highest bidder.
States have, over recent decades, gradually ceded their power to raise taxation. But in our federation, they still have the right to raise revenue. If the bank levy is rejected, state and territory governments will become even more reluctant to introduce politically challenging measures to raise revenue. All this when the Commonwealth is arguing that they are too reliant on it for revenue-raising.
Governments should be free to govern. Public services come at a price. Quality public services cost more. In a functioning democracy, our government should be free to use all levers at its disposal to demand taxation to pay for services, attract investment, and uphold the principles on which a vibrant society is founded. South Australians should resist undue influence from vested interests. The pervasive, expensive campaign against the bank levy will test our resolve.