Big banks’ blunder over $370 million South Australian state bank tax

JUST when the big banks were handed a win by the Upper House rejecting the $370 million state bank tax, they shoot themselves in the foot.

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JUST when the big banks were handed a win by the Upper House rejecting the $370 million state bank tax, they shoot themselves in the foot.

The timing of NAB’s dual announcement on Thursday morning of a $6.642 billion profit and 6000 job losses by 2020 could not have been more appalling for the major banks’ anti-tax campaign.

It’s as if they were trying to prove correct the public stereotype about greedy banks hauling in huge profits while slashing services, axing branches and sacking thousands of workers.

The NAB result was revealed just hours after the Upper House rejected the controversial tax by a single vote about 10.30pm on Wednesday night, when the Opposition and three crossbenchers banded together to remove the tax from the Government’s Budget Measures Bill.

With a single stroke, any public relations gains from the Australian Bankers’ Association pouring bucketloads of cash into a blanket campaign opposing the tax are eroded dramatically.

NAB’s huge profit and mass job cuts will fuel public anger and stoke Labor’s accusations that opponents of its tax are siding with greedy, spectacularly wealthy banks run from the eastern states, ahead of South Australian job creation and small business tax cuts.

Premier Jay Weatherilll and Treasurer Tom Koutsantonis will revel in the words of NAB chief Andrew Thorburn, who was in Adelaide in August to lobby against the bank tax.

On Thursday morning, Mr Thorburn declared NAB had made “strong progress over the past three years” and was now announcing an “acceleration of our strategy” — an estimated $1.5 billion increase in investment and a workforce “reshape” mostly affecting business and private banking units.

The Labor case for a state bank tax raking in $370 million from the five big banks over four years just got a lot easier.

This is minuscule compared to the profits of just one bank, revealed just hours after the Upper House vote, which can afford to splash cash and sack thousands.

Unfortunately for the Opposition, its credible arguments about the Government relying upon a tax on growth and damaging business perceptions will be drowned out, at least in the critical next few hours and days.

National Australia Bank CEO Andrew Thorburn. (AAP Image/Lukas Coch)

Opinion polling has shown widespread opposition to the bank tax, likely in the belief the cost will be passed on to consumers, despite Mr Koutsantonis’s assurances that legislation will make this impossible.

Big bank chiefs, particularly Mr Thorburn, ANZ’s Shayne Elliott and Westpac’s Brian Hartzer have all made the trip to Adelaide to lobby Labor since the bank tax was revealed in June.

Their argument, at its most powerful, centres on the risk to SA of turning away business investment at a time when the state has great opportunities in resources, renewable energy, tourism and advanced manufacturing.

But the primary motivation has been to squash the state tax in SA before other states copy the measure and impose more unwanted costs on the banks’ balance sheets.

Labor has just been handed a counter-strike weapon of which it could only dream.

Their leadership’s confidence of switching a single crossbencher’s vote to their side will be significantly boosted.

If Mr Weatherill was wavering about whether to press ahead and, potentially, take the bank tax fight to next March’s election, his decision just got a whole lot easier.