Expanding the controversial bank levy to include foreign lenders has been attacked by the Greens as un-serious, likely unworkable, and almost certain to trigger challenges from aggrieved trade partners.
As crossbench senator Nick Xenophon made his party’s support for the bank levy conditional on it being applied to foreign banks, Greens treasury spokesman Peter Whish-Wilson warned there was no policy justification for the move.
The Greens have long called for the imposition of a bank tax to enable the government to recoup the cost to taxpayers of providing the big four with an explicit guarantee when the global financial crisis erupted in 2008.
Extending that impost to offshore banks would make no sense if it didn’t also include the nation’s second-tier lenders, whom Treasurer Scott Morrison has been eager to say will be the beneficiaries of a levy on the five largest banks.
Labor last week hinted that it would consider backing a levy on foreign banks as well.
Senator Whish-Wilson said the Greens have not yet formalised their position on the issue, but said the party wasn’t taking the proposal seriously at this stage, accusing Labor of using it as a way of making life difficult for the government.
“If they come with a serious amendment or proposal, we’ll have a look at it,” Senator Whish-Wilson told The Australian Financial Review.
“But the fundamental thing for us is that whatever we support, it has to be workable, and I have my doubts that a levy on the big four and the offshore banks would be workable.
“It would certainly take the pressure off the big banks, and the underlying reason we support a levy on the banks is to get back the implicit guarantee and some money for the explicit guarantee following the GFC.”
Senator Whish-Wilson added he was concerned that including foreign banks – and exempting second-tier lenders – would trigger challenges under free trade deals Australia has signed up to.
“You’d definitely get a challenge under these trade deals. It’s got to be workable and we’re not going to jeopardise 10 years of campaigning from us to get a bank levy.”
Senator Xenophon said on Sunday that he supported the broad principal of hitting offshore banks as a way of providing regional and community banks with a “leg up to be able to compete more fairly”.
“I also think it’s important that the foreign-owned banks that have a big presence here in this country also be hit with this levy, because that could raise about $750 to $800 million over the forward estimates,” Senator Xenophon old the ABC’s Insiders program on Sunday.
“That itself could fund a last resort compensation scheme for the many tens of thousands of victims of financial mismanagement and fraud in this country.”
He added that his support would hinge on whether Labor would back an extension of the levy.
“That’s something that I will sit down and talk to the ALP about, but it makes sense. The big banks are saying, ‘Well, if you are going to hit us with this, why aren’t you hitting the foreign banks’ and I think they have a point.”