Tuesday, 31 October 2017
Bank on Trial
Cameron England | Adelaide Advertiser
Bill returns to Parliament as international pressure grows THE State Government’s bank tax is entirely unreasonable and misguided, a major investment fund has warned, as debate on the measure returns to State Parliament today.
THE State Government’s bank tax is entirely unreasonable and misguided, a major investment fund has warned, as the controversial measure shapes as a key State Election issue.
The warning comes as debate on the tax returns to State Parliament today, with the Bill set to face a difficult passage through the Upper House.
Jupiter Asset Management, a UK fund that manages more than $80 billion in assets, said it had already reduced its exposure to Australia because of its “increased level of political risk” and said they “strongly urge the protagonists to reconsider” the bank tax.
The Australian Bankers Association and Business SA also renewed criticism of the tax, which ABA chief executive Anna Bligh said “will discourage investment, put a handbrake on growth and impact jobs”.
Ms Bligh said she had written to all state MPs ahead of debate on the tax, urging them to vote it down. But Treasurer Tom Koutsantonis has vowed neither to back away from the tax itself, nor split it off from the rest of the Budget.
He is fresh from a win over the weekend when he sealed a deal with Dignity Party MLC Kelly Vincent to support the tax in return for $41 million over four years for disability measures.
“The State Government expects the Budget to be passed in full and will not be separating any measure from the Bill,” Mr Koutsantonis said.
The bank tax – which will be levied on the big four banks as well as investment bank Macquarie Group – was budgeted to raise $370 million over four years, with that figure increasing to $417 million in the most recent estimates.
Both the Treasurer and Premier Jay Weatherill have said that, if pressed, they would fight next March’s state election on the issue, and with other upper house crossbench MPs currently adamant they will not support the tax, that looks increasingly likely.
Independent MP John Darley and Australian Conservatives Dennis Hood and Rob Brokenshire were holding firm in their opposition to the tax late yesterday, meaning the bank tax – and by extension the entire state Budget – is destined to be blocked.
That may happen as soon as today, depending on how many MPs want to speak on the issue, and for how long.
The Government needs only one extra upper house vote to pass the tax, and as the deal with the Dignity party shows, they are willing to horse-trade on the issue.
If the vote goes against the Government, it will return to the lower house to be debated once again, however wider Budget measures such as a $200 million business support package dubbed the Future Jobs Fund and other business tax cuts will remain in limbo.
Business SA chief executive Nigel McBride said it was disappointing that SA was attracting international attention for the wrong reasons.
“The Weatherill Government are protesting that there’s never been better inbound investment, it’s all nonsense,” he said.
“The truth is the major investments have been leveraged by government subsidies and taxpayer incentives.”
Deloitte Access Economics’ Investment Monitor, to be released today, supports Mr McBride’s criticism of the State Government’s economic record, saying that the SA economy “faces a number of longrunning challenges”.
It shows that in 2016-17, the SA economy grew by 0.7 per cent, which was the slowest rate of growth in five years and well below the 2 per cent national growth in real GDP.
Jupiter Asset Management spokesman Jason Pidock said he saw “sector-specific” taxes as entirely unreasonable and a misguided practice.
“They deter investment and make investors wary and distrustful of the politicians who try to implement them,” he said.
“For a single State Government, in this case South Australia, to implement extra taxes on Australian banks, is highly irregular.”
Mr Koutsantonis said if Mr Pidock’s comments were true, “how does he explain SA climbing business investment rankings to third of all the states and Tesla, Neoen, Solar Reserve, BHP, OZ Minerals, SkyCity, GFG Alliance and Macquarie Group investing billions in the SA economy in recent months?” he said.