Daniel Wills: State bank tax is set to start a game of chicken in SA Parliament which could run all the way to the election in March

PREMIER Jay Weatherill’s bank tax isn’t dead. It’s just resting, and could yet be revived as a state election battleground, State Political Editor Daniel Wills writes.

Treasurer Tom Koutsantonis arrives at the State Budget Lunch, where BankSA withdrew its sponsorship. Pic: Simon Cross

IN the middle of Australia’s great modern period of transformation, former prime minister Paul Keating famously quipped that every parrot in the petshop was screeching about micro-economic reform.

Today, SA Treasurer Tom Koutsantonis has the state squeaking about a bank tax that more resembles Monty Python’s parrot. It’s not dead, just resting.

You’d be forgiven for thinking Opposition Leader Steven Marshall’s delayed show of public resolve last month was enough to stop the tax in its tracks.

But you’d be wrong.

There is now a looming game of chicken between the State Government and Upper House that will test the strength on both sides.

When the Budget legislation containing the bank tax makes its slow and sleepy arrival in the Upper House sometime between next week and October, there will be a blocking coalition big enough to stop it going through.

Together with the Australian Conservatives and Nick Xenophon Team, the Liberals have the numbers needed to oppose the tax and Labor lacks the muscle to force it straight through.

From there, the result is a complete deadlock between the houses that can only be resolved by someone giving in.

The bank tax is tied to a bigger bit of legislation which contains a few other Budget goodies.

The Upper House can’t pick and choose which it likes and those that it doesn’t. It can ask the Government to cut up the pieces, but won’t get much help from Mr Koutsantonis.

Speaking to The Advertiser this week, Mr Koutsantonis said he expected the Budget measures to be passed in full.

He threatened the Liberals would be held accountable for also torpedoing payroll and land tax cuts, off-the-plan stamp duty discounts and charges on foreign investors who buy SA property if they kill the banks tax Bill.

Asked if this was an all-or-nothing pitch, Mr Koutsantonis said: “Yes. We expect our Budget to pass, like every other year”.

“Every government in the state’s history has had its Budget measures passed. I’m not playing chicken with anything, it’s the Opposition,” he said.

“They are risking a precedent which has served this state well. Are they prepared to trash a long-held principle that Budget measures should pass?”

Ominously, he added: “We are not prepared to change our minds”.

Upper House Opposition Leader David Ridgway is saying the same thing in the other direction, yesterday insisting “we are not backing down” and that the Liberals had the courage to make sure a tax that is “bad for business and bad for the state” never comes to pass.

That scenario will spark a new public argument, where both sides must again argue the strengths of their own positions. While the Liberals will face little pressure from their base or supporters to bring about a tax on foreign investors, they will be met with calls to ensure tax cuts come into law.

Labor will have to defend driving such a hard bargain as it holds other measures hostage to the fate of a bank tax which hasn’t delivered the popularity boost it expected and threatens to finish as a net political negative.

When this last happened, it was Labor who backed down. Faced with no hope of passing the carpark tax in 2014, Mr Koutsantonis cut his losses and took it out of the Budget package. The stakes this time are much higher. The bank tax has been launched on the eve of an election and will feed into two of the campaign’s biggest themes — unemployment and the cost of living.

In that longer and more important race, Labor has time on its side.

Labor’s biggest call will come in the election campaign. Even if the Upper House opposes the tax, Labor can roll it into a campaign platform and go to the election seeking a mandate.

State Parliament’s lethargy means that Mr Koutsantonis has until very late in the year to weigh up his next move. A first vote is not expected there until as late as October and a drop-dead decision on the legislation may come until December.

Anything could happen in that time, including interest rate rises or more allegations of wrongdoing by banks that sends their public approval back into the basement and gives Labor new ground to say they deserve a slap.

The smartest market watchers believe interest rates are likely to start edging up just before or after election day in March, and the Commonwealth Bank has a major crisis on its hands after this week being accused of failing to comply with strict money laundering and counter-terrorism financing laws.

Keeping the bank tax as an election issue would provide a handy distraction from toxic topics including the energy crisis and Holden closure or unemployment, and the sleeper subject of how long Premier Jay Weatherill would stay in his job should Labor be returned.

Or, assuming the Upper House refuses to buckle, Labor could just accept defeat and the balance of public polling by junking the tax entirely. That would vastly minimise the danger of a multimillion-dollar splurge from the banks during the campaign. But it does come with the political cost of being another obvious backflip that follows the grand capitulation on Transforming Health.

Both options have a cost, and Labor will eventually have to choose which it thinks will deliver the biggest pay-off.

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