Division
Rebekha Sharkie The Nick Xenophon Team is a strong supporter of the Major Bank Levy Bill 2017, and we support this additional contribution from Australia's most profitable sector, the banking sector, towards budget repair. However, beyond the general argument of repairing the budget, there are several good arguments that make the major bank levy good policy. Although many Australians have cause to dislike the banks, there are fundamentally good policy reasons for the bank levy as well. The first policy argument relates to the guarantee scheme for large deposits and wholesale funding. In 2008, the then Labor federal government introduced a guarantee scheme for large deposits and wholesale funding and provided a $180 billion debt facility for Australian banks. In short, this was a too-big-to-fail arrangement. Together, these measures have put our banks at a significant competitive advantage and boosted their earnings, substantially, to the cost of the taxpayer. Although this scheme only lasted two years, global ratings agencies now consider Australian banks to be government backed. As a result, Australian banks now enjoy stronger credit ratings than they would have otherwise obtained, which delivers them a further competitive advantage because they can borrow offshore at a discount. One of the purposes of a similar bank levy introduced in 2011 in the United Kingdom was for the banks to make a full and fair contribution in respect of the potential risk they pose to the wider economy. This only reinforces the argument that major Australian banks should make a fair contribution—an insurance premium, if you will—towards the potential cost of this implicit too-big-to-fail guarantee from the federal government. The second argument relates to the undertaxing of financial services by GST, because they are, for very practical reasons, input taxed rather than output taxed. According to the 2016 Tax Expenditures Statement from the Treasury, the forgone revenue was estimated to b
House of Representatives, 2017-06-19. affirmative: ayes 76, noes 70.
Question
Rebekha Sharkie The Nick Xenophon Team is a strong supporter of the Major Bank Levy Bill 2017, and we support this additional contribution from Australia's most profitable sector, the banking sector, towards budget repair. However, beyond the general argument of repairing the budget, there are several good arguments that make the major bank levy good policy. Although many Australians have cause to dislike the banks, there are fundamentally good policy reasons for the bank levy as well. The first policy argument relates to the guarantee scheme for large deposits and wholesale funding. In 2008, the then Labor federal government introduced a guarantee scheme for large deposits and wholesale funding and provided a $180 billion debt facility for Australian banks. In short, this was a too-big-to-fail arrangement. Together, these measures have put our banks at a significant competitive advantage and boosted their earnings, substantially, to the cost of the taxpayer. Although this scheme only lasted two years, global ratings agencies now consider Australian banks to be government backed. As a result, Australian banks now enjoy stronger credit ratings than they would have otherwise obtained, which delivers them a further competitive advantage because they can borrow offshore at a discount. One of the purposes of a similar bank levy introduced in 2011 in the United Kingdom was for the banks to make a full and fair contribution in respect of the potential risk they pose to the wider economy. This only reinforces the argument that major Australian banks should make a fair contribution—an insurance premium, if you will—towards the potential cost of this implicit too-big-to-fail guarantee from the federal government. The second argument relates to the undertaxing of financial services by GST, because they are, for very practical reasons, input taxed rather than output taxed. According to the 2016 Tax Expenditures Statement from the Treasury, the forgone revenue was estimated to b
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