A meeting between the Treasury and high level banking executives around the Federal Budget’s bank levy has been slammed by those who attended.
In a report by
The Australian, sources described the briefing as a “complete shambles” after
bank heads were summoned at the last minute the day after the Budget was released.
“These people were roaming across our balance sheets without any understanding of the components and the likely impact on the economy,” one attendee told the paper.
“We’re going to be penalised for the high level of liquid assets that the regulators say we have to hold, which means six basis points in tax for every dollar of assets.”
The source said the measure was “crude” and would make safety at the banks a lot more expensive.
Another attendee said that while the main justification for the tax was to help reduce the deficit, four different reasons were provided for implementing this policy. This included as a payment for the banking industry’s implicit government guarantee, levelling the playing field for the smaller banks, and helping the major banks become unquestionably strong.
“It was a complete shambles,” the source told the paper. “In the end we were told the meeting was to discuss technical issues in relation to the tax, not a debate about its merits, and we should direct those questions to the minister. When inconsistencies were highlighted, the Treasury people said they were only public servants implementing government policy.”
The briefing was held to outline the technical legislative design of the major bank levy, a Treasury spokesperson told
Australian Broker.
“As is routine with industry consultation, assumptions underlying the design of the levy were tested and feedback sought. As is often the case, some technical issues were raised that will require further consideration over coming days,” the said.
Anna Bligh, CEO of the Australian Bankers’ Association, also criticised the meeting for leaving more questions than answers.
“Not only has the government kept the banks and the public in the dark on this new tax, it is now clear that they have kept Treasury in the dark too,” she said.
This was “policy on the run” which played fast and loose with the banking sector, she said. “Alarmingly, Treasury officials also confirmed the government was abandoning normal processes in preparing the legislation.”
The banks have been given until today (15 May) to make a submission with the Treasury confirming it will provide draft legislation to the banks on Wednesday (17 May). The banks will have 24 hours to respond and the draft will not be released for public consultation.
“Serious questions need to be asked about the indecent haste with which this new bill is being shoehorned into Parliament in a way that will avoid normal drafting and review processes and the scrutiny that should accompany such a critically important piece of legislation,” Bligh said.
"At the very least, the government needs to put this process on hold and start where it should have started in the first place, and that is detailed discussions with banking representatives who understand the daily business of banking, both here in Australia and globally, before they take this any further."
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