‘Disastrous consequences’ could flow from bank tax, says ABA

The Australian Banking Association’s chief executive Anna Bligh has written to Scott Morrison MP, asking that he immediately release Treasury modelling of the $6.2 billion big four bank tax announced in the federal budget last week.

Ms Bligh insisted that it was "no longer acceptable" to keep the banks or the Australian community "in the dark" about the $6.2 billion tax, which she believes would have a major impact on all sections of the Australian economy.

“Senior executives of the major banks in good faith attended what they expected to be a comprehensive briefing from Treasury [last week], only to find to their dismay that Treasury was also in the dark,” she said.

“Fundamental questions about how this tax has been calculated and how the $6.2 billion figure was reached have not been answered. Yet the Treasurer Mr Morrison continues to maintain that this tax will be ready for implementation by 1 July, which is only around six weeks away.

“The major banks are terribly concerned about the risk of major unintended consequences of this new tax, and there is an urgent need for more detailed information so we can properly assess its impacts.”

Ms Bligh emphasised that the process is already breaking rules and conventions about major taxation implementation, including no prior consultation, no exposure draft legislation for public comment, and an "extraordinarily" brief timetable before the "hastily designed" tax is presented to the Parliament.

“Disastrous unintended consequences could flow from this rush,” Ms Bligh said.

The ABA's letter to the Treasurer indicated that the Association is seeking further information by close of business today on various aspects of the bank levy, including:

• Treasury’s modelling on the economic impacts of the bank levy, including the wider impact on Australian households and businesses.
• Treasury’s technical analysis that underpinned the design of the tax, including the coverage of banks and the design of the levy.
• Treasury’s modelling including assumptions of the total revenue projections to be collected by the bank levy over the forward estimates.

"The ABA believes releasing the analysis we have requested is one small step to ensuring we can limit the unintended consequences and economic harm to Australians," the letter concluded.

Further, in a letter to Treasury yesterday, the association called for the government to release analysis of the impact of the levy on the broader economy.

“It is an understatement to say that this tax requires a thorough Regulatory Impact Statement (RIS),” ABA chief executive Anna Bligh said.

“Under the government’s own guide to regulation, only the Prime Minister can exempt a government entity from the need to complete a RIS, and we urge Prime Minister Turnbull not to do this,” she said.

In a submission lodged to Treasury yesterday, the ABA said the introduction of the proposed new major bank tax disregarded the government’s own best practice guidelines.

“The government has failed to meet its own criteria around transparency and accountability in decisions, evidence-based policy development, and effective administration of regulation,” Ms Bligh said.

“Further Treasury analysis is imperative, including on the modelling of the economic impacts of the tax, and banks should be given at least four weeks to respond to the Treasury analysis, the draft legislation and explanatory memorandum.

“A longer consultation period, including engagement between banks and all affected regulators, will help to avoid unintended consequences on the economy and financial system,” Ms Bligh said.

[Related: Budget's bank accountability measures ‘a positive step’]

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Francesca Krakue

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