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May 12th 2017 print

Marija Polic

Scott Morrison Woos the Campus Trots

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...

radical studentWalking 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

Comments [21]

  1. Meniscus says:

    Trust me when I say that this is hands down the best budget analysis I have seen anywhere. It should be compulsory reading:

    https://themarcusreview.com/2017/05/11/the-2017-18-federal-budget-taxing-our-way-to-prosperity/

  2. Bill Martin says:

    “And for the love of God, let businesses conduct business.”

    Hear, hear!

    Which a!so means, among other things, that big corporations should stick to providing services to their customers and earning an income for their shareholders while staying well clear of politics, like supporting same sex marriage, denouncing fossil fuels and all the other fashionable socio-political fads of the day.

    Apologies to the author for straying off the subject, but it seemed so appropriate to do so.

  3. Gbees says:

    George Bernard Shaw had a suggestion for members of SALT who expect hard-working Australians to fund the lifestyles and life choices of non-productive others, like SALT members. If they cannot justify their existence, not pulling their weight, not producing as much as they consume, then we can’t keep them alive. They are useless to society.

    https://www.youtube.com/watch?v=B-Ljkoh_vmE

  4. ianl says:

    An essay like this has two problems.

    First, it’s quite pointless. Venting from a despised minority (ie. those rich bastards) achieves nothing of practical value but basically, don’t let that stop you. I abhor censorship and venting lets off steam – at best.

    Second, Waffle and Morrison are not stupid. Untrustworthy, devious, intellectually dishonest, treacherous … yes, all of that. Of course banking organisations will pass on increased costs split between shareholders and savings depositors. Waffle *intends* that. It’s a critical part of his long war on the Liberal base. Raiding savings accounts is just a mini-Cyprus (long anticipated by those of us who can smell the coffee). The rate of raiding will be increased as the retiring demographic increases in population size. Most of the younger population will not be immediately affected as interest on loans, especially mortgages, will not be permitted to rise – Treasury, APRA and the RBA will monitor that with industrious glee.

    There will be grim amusement watching King Henry, now of NAB, backtracking about tax increases never being passed on to customers and shareholders as increased costs … when Treasury Secretary he blabbered that constantly about the “mining” tax. Economics 101, he miscalled it. Ho ho !! (Cue the resident trollster).

    It’s very obvious that the Robin Hood myth never dies. Any enterprise that finds a purple patch will be clobbered with a pick ‘n choose tax increase. Envy rules, ok ?

  5. Don A. Veitch says:

    The problem with the Trots/SALT is they are wimps, and lack gonads.
    The REAL defenders of capitalism are in the real world and know that banks need a good bash before they destroy us all.
    Read Forbes magazine, July 14, 2015 Mike Collins, not a Trots mag by any stretch of the imagination. The Forbes article writes that the operating principles of the big banks is from a ‘cesspool of greed, and criminal intent and they give a very bad name to free market capitalism’. The following points are made:
    • Banks were given ( in the US alone) a $16.8 trillion dollars bailout for a GFC of their making (shorting, Ponzi schemes, credit default swaps, collaterised debt obligations and a host of contrived markets);
    • The Justice Department wants $5 billion in restitution from Standard and Poor’s for its part in falsifying ratings;
    • HSBC bank did money laundering for Mexican drug cartels to the tune of $881 billion according to the Justice Department;
    • JP Morgan was fined $296.9 million and Goldman Sachs was fined $550 million for actions;
    • Insider Trading –The jailed billionaire Raj Rajartmn made nearly $One million a minute by getting inside information from Goldman Sachs.

    Who can possibly argue that criminal behaviour should go unpunished?

    • ianl says:

      And how is any of that a good reason to raid people’s savings account ? Just answer the question, Don, not some other question you may prefer.

      I expected some irrelevant rant here. Anything to avoid the core issue. Envy rules, aided by hysteria.

  6. Don A. Veitch says:

    ianL

    Raid peoples savings account? – a bit hysterical! Banks have been gouging consumers for decades

    It’s very good politics. It is a clever left-flanking movement around Shorten and the Greens, Pauline, Hinch will all go for it. Howard ‘understands’ the reason for the tax; Costello backs the levy; Abbott backs it. Ianl does not?

    The banks, through their spokesman, Anna Bligh are squealing like stuck pigs. BUT, they would NEVER be happy until they (their shareholders, directors etc.) pay NO tax. Let’s share the pain!

    Australian banks, because of their cartelised, oligopolistic symbiosis will possibly/probably get away with the flick past to the account holders. Yes, the pension funds, superannuants etc. will suffer. We have all suffered because of toxic bank behaviour so it’s best a ‘conservative’ takes them on now. Lets reform them now.

    The details are yet unknown (Tier 1/Tier 2 Basel assets ???) and are probably deliberately vague as a basis for Treasury-Bank reform deals in the lead up to an election and theh Royal Commission into banking. The side that supports the banks against the people will be slaughtered. Kapisch?

    • Wayne says:

      Why don’t we just nationalize them. That will really please everyone that hates the banks. We can then milk them for all their worth and no one will ever be made to pay their mortgage again. Heaven. Comrades I can see the future and it is utopia.

    • ianl says:

      > “Australian banks, because of their cartelised, oligopolistic symbiosis will possibly/probably get away with the flick past to the account holders”

      And why do the account holders get bashed because of someone else’s behaviour over which they have no control ? Of course I kapisch the politics, you dill – but it’s you who refuses to address the point of my question. The Robin Hood myth never dies. Views such as yours ensure that.

      > ” Lets reform them now”

      Reform them to what exactly, Don ? Now’s your chance to jettison arm-waving hysteria and front up a real answer. One with actual detail, you know, accountability.

    • padraic says:

      I agree Don. It’s a good political strategy, this budget. It is designed to get Shorten off their backs with his duplicitous whining and confected class warfare and to teach the hyper-politically correct banks to cease their public opposition to Coalition policies such as 1. a plebiscite on gay marriage and 2. the Coalition’s position on “climate change” (with their sick, hypocritical position on coal). Banks are supposed to be a business serving the whole community, not just the activists’ groups. By stirring the bank possum the Government will get support from both those who see the levy as soaking the rich and from those see the banks getting their just desserts because of straying into divisive social policy. But you won’t get the Campus Trots ever voting for the Coalition because of their servile, grovelling nature.

    • Lo says:

      Isn’t it a “flick pass”?

  7. Don A. Veitch says:

    My understanding of the budget LEVY is to forestall another bank balance sheet meltdown. It is to adjust assets/liabilities with penalties and incentives. The revenue ‘grab’ might not even occur if the zombie bank’s bank balance sheets are made solvent.
    It will protect savers, so stop the silliness.

    • ianl says:

      Your understanding is running on empty, so stop the arm-waving rhetoric. Deal in reality.

      • Don A. Veitch says:

        The Morrison bank ‘thing’ is about bank regulation and not taxation and stealing savings.It is very clever, but some people are easily fooled

        The Bank for International Settlements has a Basel code of Tier One and Tier Two liabilities. It is this that Morrison seems to be targeting with a levy to manipulate banker behaviour and fix balance sheets, beyond this even Treasury officials are confused about what is being attempted.

        Yes, help me. Can you explain this to me?

        • ianl says:

          We’re talking about the $6bn tax impost over 4 years, Don, not some other aspect you keep crab-walking to. You’ve evaded the tax issue four times now. You are way beyond help. Very predictable, too.

          End of story, at least my part of it.

  8. Jody says:

    Morrison and Turnbull will wear the opprobrium of the community when the banks inevitably pass on their charges. I think this is a budge because “we need to be re-elected” but I predict these will become famous last words.

  9. Keith Kennelly says:

    Yeah Tony will replace Malcolmv

  10. padraic says:

    “The Campus Trots”. What a great name for them.