Adam Langenberg: Political stakes much higher than South Australian bank tax bottom line

The proposed bank tax is predicted to raise just $370 million over four years. But its political repercussions will reverberate in the lead-up to the state election, writes Adam Langenberg.

• Upper House rejects bank tax
• Bank tax faces High Court challenge by major banks
• Banks step up fight against levy
• SA Budget 2017: Big Five banks to be hit with new state tax

IT’S an image that could be typical of the upcoming state election campaign — Treasurer Tom Koutsantonis next to despondent small business owners who say they can’t expand their operations without promised tax cuts.

Then you’ll see the Treasurer with young investors who were poised to buy off-the-plan apartments, but they too had been thwarted.

A defiant Mr Koutsantonis will thunder that these are the human faces thwarted by the Opposition’s refusal to pass the State Budget, and the three crossbenchers who supported them.

But most importantly, he’ll say, these everyday, hardworking South Australians have been thwarted by the major banks’ full-throated campaign against the bank tax.

The Government’s daily version of “this is why we can’t have nice things” could easily last until polling day on March 17 — only it is yet to declare if it will make the tax an election issue.

At the moment we’re in uncharted waters, courtesy of a political stare-off where all the key players refuse to blink. The Government is right to say setting the budget aside would be “unprecedented”, but it conveniently ignores that normally the ruling party does everything in its power to get its budget through.

That involves making concessions, just like Mr Koutsantonis did in 2014 when he removed the equally contentious car park tax from the budget Bill.

But he’s been crystal clear that won’t happen again. That means there’s a large chunk of culpability on the Government’s side if it doesn’t get its tax cuts, off-the-plan apartment discounts and foreign investor tax.

The Opposition, independent John Darley and Australian Conservatives Robert Brokenshire and Dennis Hood won’t budge. They hate the tax, refuse to endorse a budget that includes it, and don’t care who knows it.

In their corner is the high-powered banking lobby and Business SA, which similarly won’t be deterred.

You can bet your bottom dollar they won’t stop campaigning against the tax — forecast to raise $370 million over the forward estimates — until it’s dead, buried and cremated.

Treasurer Tom Koutsantonis has railed against Opposition moves to block the bank tax. Picture: DAVID MARIUZ/AAP Image

But on the other side is Mr Koutsantonis, equal parts bravado and cunning, but with more than his usual amount of wariness sprinkled on top.

While he and his party thunder about how blocking the budget would change SA forever, there’s lots of political mastery in the Government’s timing. It wasn’t an accident that the Treasurer was able to seize on NAB’s record $6.6 billion profit on Thursday, an announcement that included a plan to axe 6000 jobs.

The Budget Measures Bill took two months to pass the Lower House, despite the Government having the numbers, and only arrived in the Upper House on September 26.

Despite there being five sitting days before that, it only became a Government priority this week — after ANZ had announced its financial results, and just before NAB slashed jobs.

Every Galaxy poll on the bank tax has shown it’s unpopular with the general public, but announcements like NAB’s could help to change it.

At the very least, it’s not a good look for a financial giant fighting a roughly $30 million-a-year impost.

There were further delays on Thursday, when the Government didn’t immediately force another vote in the Upper House, putting off the next showdown for at least two weeks.

Mr Koutsantonis is making everyone sweat: the Opposition, the crossbenchers and a banking sector that has no idea how long the campaign will drag on. Crucially, Bank SA’s parent company Westpac will release its financial results next week, potentially creating more ammunition for the usually gung-ho Treasurer.

But amid all Mr Koutsantonis’s bravado there are lots of unanswered questions.

Will the Government take the tax to the election? The predicted growth in anti-tax minor parties joining the Upper House at next year’s poll means it’s particularly unlikely it would pass even if Labor did again gain power.

The Opposition would dearly love to line up with hundreds of small businesses that say the bank tax would be passed on to them, even though the Government says its legislation prevents it. Does the political benefit of tax-fearing small businesses outweigh that of those who desperately want payroll tax cuts? If it does, it could explain the Government’s apparent unwillingness to turn the election into a mandate on a tax.

The spending measures in jeopardy because of the great bank tax stand-off are worth just over $55 million across four years. Will anyone believe the Government can’t afford $14 million a year, especially given Under-Treasurer David Reynolds has confirmed the tax cuts and discounts could be enacted administratively?

The bank tax is financially insignificant compared with the sheer scale of the state Budget — generating just $370 million over four years.

But its importance should not be overlooked. It could play a huge role in deciding perhaps the most unpredictable election yet.