Banks “set themselves up” for surprise Budget levy

The attitudes of the banks have been linked to the government imposition of a bank levy which has shocked the industry

Banks “set themselves up” for surprise Budget levy



The attitudes of the banks are responsible for the government introducing its surprise bank levy, according to certain political heavyweights.

“I think the banks have set themselves up for this,” John Hewson, former leader of the Federal Liberal Party, said on a panel at a PwC Budget wrap-up event, Prosperity or Peril, held in Sydney on Wednesday (10 May).

“The banks have a very significant social license and a very clear responsibility and they’ve been snubbing their noses at the political system for quite some time.”

The banks had left themselves exposed to this, noting that talk about a Royal Commission and inquiries into the excesses of the banks and the financial system in general had helped persuade the government to take this step.

“There’s a bank bashing mood out there and the government’s got a fertile ground from which to extract some money. You could call it a license fee because they’ve got a very significant privileged position. Our salaries go to them before we even see them,” Hewson said.

The government had plenty of arguments to run with this tax and would get away with it, he predicted. However, the Coalition would have to deal with the fear that this is the thin edge of the wedge and that other sectors could be next.

Also on the panel was former senator for the Australian Labor Party Graeme Richardson who said the banks were the softest target available.

“The arrogance of the banks is extraordinary. If we go back to the GFC, they’ve got that guarantee and that kept them existing,” he said.

“But you’ve got to remember that they’ve thumbed their noses at every government since. They’ve refused to pass interest rate cuts on in full, sometimes at all. And they did so while saying ‘See? You can’t touch us’ and they’ve got that horribly wrong.”

However, he urged the audience to remember one thing about the current bank levy: the banks wouldn’t pay a cent; we would.

“Every bit of that $6bn will finish up being in fees and charges to us so while I can celebrate this morning, I have a feeling over the next few years, they’ll take the smile off my face.”

Related stories:

Majors react to Budget’s bank levy

‘Bank tax’ may inflate mortgage rates

Government summons senior bank execs

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