Jennifer Westacott - AM, ABC Radio

Event: Interview with Sabra Lane, ABC Radio – AM

Date: 10 May 2017

Topics: Budget 2017


SABRA LANE: Has Scott Morrison picked a potentially damaging fight with Australia's major banks by hitting them with a levy on their liabilities? The Business Council of Australia worries the new tax on banks sounds like the Coalition's version of Labor's tax on mining companies. Its chief executive, Jennifer Westacott, is speaking with the ABC’s senior business correspondent Peter Ryan.

JENNIFER WESTACOTT, BUSINESS COUNCIL CHIEF EXECUTIVE: I think this is a poor policy precedent to set, saying ‘look we can't as a parliament sort out how to get the budget in order so we’re going to tax the most successful part of the economy – we’re going to double-tax the successful part of the economy’. Our banks have been the pillar of our economy and we've got to keep them strong.

Peter, I understand the politics; I just don't get the policy.

PETER RYAN: So who will end up paying for this tax? The government will be watching very closely of course, but banks can always find a way of packaging in any new cost.

JENNIFER WESTACOTT: You know this will be a matter that obviously will be debated and discussed over the weeks but it just doesn't make sense. They either have to be paid for by lower dividends to shareholders, many of whom are mum and dad investors, or there has to be lower dividends to the big superannuation organisations who heavily invest in the banks and their good returns.

I mean eventually this finds its way back into the broader economy. I mean, where does this stop, Peter? You know, are we going to go back to mining tax?

PETER RYAN: Do banks have a right to be angry, or do they deserve this? The Bankers Association says there was zero consultation.

JENNIFER WESTACOTT: Go back to the principle here. Do we start saying we’re going to double-tax companies because we don't like them? Really?

These five banks pay $11 billion a year in tax already. They employ 130,000 people. They are driving the superannuation benefits of most Australians.

PETER RYAN: Do you sense though that this levy is a form of payback against the banks from an angry Treasurer?

JENNIFER WESTACOTT: Look, I'll leave the political commentary to others. My issue with this is the policy integrity and the policy principle.

PETER RYAN: So what should the government be doing if the banks do pass these additional costs onto borrowers?

JENNIFER WESTACOTT: I think we are a long way from that. I think the simple reality is that these things eventually find their way to somewhere and obviously the government is setting up arrangements to monitor that.

PETER RYAN: And do you sense that this is perhaps a little bit of a desperate move by the government to fend off a royal commission into banks?

JENNIFER WESTACOTT: I think the reality is this: we've had years and years of overspending, we've had a gridlocked senate that won't come to terms with the sorts of things that need to be done to get spending in order - not to cut spending but to make sure that taxpayers are getting better value for money - so the government obviously has to take steps that we would regard as poor policy. You know, we all wish we were in another place but I do think there will be unintended consequences here.

PETER RYAN: Just to the broader budget, you have welcomed it as practical and workable, but you say the projected surplus is fragile. That's not exactly a great endorsement.

JENNIFER WESTACOTT: Look, the fragility comes from the assumptions around revenue and the assumptions around growth. We're still very heavily reliant on revenue measures rather than doing the structural reform of the spending programs, and we’re relying heavily on growth. And that means business has to do the heavy lifting.

SABRA LANE: That's Jennifer Westacott from the Business Council speaking to the ABC’s senior business correspondent Peter Ryan.


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