As expected, David Gonski has taken a pragmatic approach to the political complexities of the banking levy.
The ANZ Banking Group chair broke his silence on the touchy subject of the $6.2 billion budget measure on Thursday with a four-point plan. Gonski, who is also the federal government’s education adviser and one of the most politically-savvy businessmen in the country, knows the tax is unbeatable.
The best thing the banks can do now is minimise the future damage it can cause rather than hurling insults at politicians even if they privately believe the tax is dangerously stupid.
The worst nightmare for ANZ and the other banks is that Treasury will have the discretion to impose a levy in future years rather than the Parliament. Gonski says the level of the tax should be set in legislation so it cannot be increased in the future without the agreement of both houses of Parliament.
He also wants the levy to be cut off when the budget is repaired for any future adjustments referred to the Council of Financial Regulators.
They are all reasonable proposals which the federal government could agree to without losing face, or the $6.2 billion it expects the levy to raise. Gonski’s fourth proposal for the tax to apply equally to large foreign banks in Australia will be a harder sell.
Gonski’s proposals are in line with the thinking at Commonwealth Bank and Westpac which have been leading the defence strategy. National Australia Bank is also on board. Bank executives are alarmed by the feedback they have received from foreign investors during post-results roadshows about Australia’s sovereign risk. They have expressed concern to the banks about government intervention which could potentially hurt future earnings.