State Budget 2017: Banks shed jobs, start ad campaign, consider further retaliation over SA Government levy

BANKS have launched an all-out assault against the State Government’s tax hit, shelving 150 new jobs, starting an advertising campaign and threatening further retaliation. What do you think — VOTE NOW

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BANKS have launched an all-out assault against the State Government’s tax hit, shelving 150 new jobs, starting an advertising campaign and threatening further retaliation.

The $370 million tax on banks, announced in Thursday’s State Budget, on Friday prompted Bank SA to halt plans for 150 jobs at a new Adelaide office.

Treasurer Tom Koutsantonis reacted angrily last night, saying the threat personified “everything people hate about banks”.

The Australian Bankers’ Association is also rolling out a major campaign condemning the tax on the big four banks and Macquarie Group.

Advertisements warn the impost would turn “lights out” on new investment and jobs in SA, referencing the September blackout which had a devastating effect on businesses still struggling to recover.

READ BELOW: Inside story on shock grab

Prime Minister Malcolm Turnbull cautioned the tax — which mirrors a federal model — could put South Australia at a competitive disadvantage, while financial experts said banks could respond by slugging SA homeowners and businesses with targeted rate rises.

This could include raising SA mortgage and corporate loan rates, rationing credit in the state, or threatening to move call centres and processing centres elsewhere.

BankSA chief executive Nick Reade said it would “put on hold” plans to open a new backroom office in Adelaide that would have created 150 jobs, blaming the bank tax. Mr Reade said the automation centre could open interstate instead. He estimated the new tax would cost his company “tens of millions (of dollars)”.

“It would’ve been much better to have consultation (with the industry),” he said.

“My phone has been ringing hotfor the last 24 hours with business customers who are angry. They’re telling us that this is now a deterrent to investment. People will be thinking twice (about investing in SA).” Mr Reade said the bank had made “no decisions” about any further actions it may take but he did not rule out passing on costs to the lender’s 800,000 customers.

Bank SA CEO Nick Reade

Treasurer Tom Koutsantonis

The bank also has 38,000 local shareholders and employs 3800 South Australians.

Mr Koutsantonis labelled BankSA’s response as “hysterical” and “appalling” behaviour and doubted whether the bank was actually committed to creating the extra 150 jobs.

“This is just threats ... a political stunt,” he said. “This is the type of behaviour by banks that people hate.”

Mr Koutsantonis said he would not back down from the bank tax plan. “It’s not coming off the table,” he said, adding that legislation to implement the change had been put to Parliament after he delivered the State Budget on Thursday.

Earlier, BankSA pulled its sponsorship of a post-Budget lunch held by Progressive Business — Labor’s SA fundraising arm — saying it “will not support the State Government’s Budget”.

However, Mr Koutsantonis laughed off the move, telling The Advertiser “we have a no-refund policy”.

The tax would net the State Government $370 million over four years and is a significant plank holding up the Budget.

Business SA’s Anthony Penney said it would likely cause the state “some brand damage”. NAB’s Andrew Hagger said the levy made SA a “less attractive” destination for the bank to invest in. “This ... is not a good symbol for pro-business — it’s striking a dagger in that,” he said.

Banking analysts said SA’s move had opened Pandora’s box. “We believe it is possible the other states may follow SA’s lead and introduce further levies on the banks,” UBS banking analyst Jonathan Mott said. Opposition Leader Steven Marshall maintained criticism of the tax but conceded his party would support the budget measure to pass Parliament. “(This) massive new tax increase will create no new jobs,” he said.

- with Luke Griffiths, Adam Langenberg, Jade Gailberger

INSIDE STORY ON SHOCK GRAB

By Lauren Novak

FEDERAL Treasurer Scott Morrison opened the door, and his state counterpart, Tom Koutsantonis, walked right through.

That — in a nutshell — is how South Australia ended up with a surprise new tax on the major banks.

The State Government had previously pushed for changes to the tax system by adding the goods and services tax to financial services, but that failed.

The Commonwealth suggested we could start raising our own income tax instead, but that wasn’t going to fly.

So when Mr Koutsantonis saw in Mr Morrison’s May Budget that he would apply a tax to the big four banks and Macquarie Group, he saw his opportunity.

While the idea evolved for local application, it was sparked by the Federal Budget measure.

All SA needed was assurance it was legal and achievable. So, Mr Koutsantonis “swiftly” sought the advice of constitutional lawyer and University of Adelaide Professor John Williams as well as from Crown lawyers.

It is understood he believes he’s on “solid” constitutional ground — although no one would be surprised to see the banks throw everything, including the kitchen sink, at a bid to stave off the impost.