Banks face regrets over budget antagonism
Belligerent, even impulsive, commentary from the principal voices in the banking sector over the government's planned levy on wholesale liabilities of bigger banks attracted at least one contrary contribution from a big four CEO. Banks and Parliament need "to bridge the obvious divide between them in the long-term interests of the Australian economy," ANZ's chief executive, Shayne Elliott, said late yesterday. Elliott, a rare outlier, added "the bank tax ... is regrettable policy." Other banks affected, and their industry association, ramped up martial rhetoric throughout the day, the rubric "war" in many headlines in the business media and other places. Anna Bligh, chief executive of the Australian Bankers Association told one media briefing "right now the major banks of Australia are very angry," a sentiment unlikely to be reflected in opinion polling that will find its way into the media in coming days.Treasurer Scott Morrison, speaking at the National Press Club, put it simply: "They already don't like you very much," he said. "But prove them wrong on this occasion. Don't confirm their worst impressions. Tell them another story. Tell them you will pony up and help fix the budget." As it was, banks then were not. "This levy is a stealth tax ... and it will make Australia's banks less competitive," Westpac CEO Brian Hartzer said. ANZ's Elliot aired a version of the analytical alternative. "The sector has also significantly strengthened its capital and liquidity base to ensure it is unquestionably strong and does not have to rely on implicit guarantees from government. "We believe the initial public support for the tax will prove to be misplaced and the speed which it is likely to pass into law highlights how divisive the banking industry's relationship with many in Parliament and the broader community has become. "While the banking industry has made itself an easy political target, the industry is taking action to significantly improve its relationship with customers and the community." Plenty of banking voices will back Morrison and the government. Jamie McPhee, CEO of ME said "a more neutral regulatory environment is essential to improving competition in the overall interests of consumers. The bank levy assists in addressing this objective. "As part of the business community, ME typically argues for lower corporate taxes, not higher. "However, in our industry smaller banks are disadvantaged considerably by the major banks' 'too big to fail' status, which provides significantly cheaper funding as investors factor in the likelihood of support in the event of a failure. "The new levy will reduce this taxpayer provided benefit to some extent and further level the playing field, something we have been calling for since the Financial Systems Inquiry was established in 2013."