Terry McCrann: The levy you will pay and pay ... forever

THERE are a number of things to be said about Scott Morrison’s big bank levy. First, you will pay it, writes Terry McCrann.

Treasurer Scott Morrison. Picture: Kym Smith

THERE are a number of things to be said about Scott Morrison’s big bank levy. First, you will pay it. You will pay it either as a shareholder, as a borrower or as a depositor — and most probably as a mix of all three.

BANK TAX RATE RISE ON THE CARDS

There are no big pots of gold sitting under the desks of Ian, Andrew, Shayne and Brian, oh, and of course Nicholas — the CEOs of the big five banks, respectively Ian Narev, Andrew Thorburn, Shayne Elliott, Brian Hartzer and of course Nicholas Moore — which belong to some disconnected entity: “The Bank.”

All the money coming in to each of the banks, as indeed with any company, comes from borrowers (customers); all the money going out is paid to depositors and other lenders (suppliers); what‘s left belongs to shareholders.

Second, it really is trivial in the scheme of things — that’s to say, in the two schemes of things.

It’s trivial in terms of the Budget. It will raise $1.5 billion or so a year. Compare that with the $433 billion total of revenue that will be raised this coming year, heading for $526 billion in 2020-21.

Almost every one of those dollars will also be paid by you, but that’s also another — albeit, maybe, the — story. You can pay some of the money via the levy or you can pay it by another tax.

Commonwealth Bank of Australia chief executive Ian Narev and ANZ chief Shayne Elliott. Picture: AAP

Now, this coming year the deficit will be $29.4 billion; without the levy it would have been around $31 billion. In 2020-21 a surplus — ha-ha — of $7.4 billion is forecast; without the levy it would still be — if you’ll excuse me, ha-ha, it’s hard to stop laughing — nearly $6 billion.

In fiscal sum and in fiscal short, neither here nor there.

It’s somewhat less trivial in terms of the banks themselves, but still not that overwhelming. Next year the five are headed for a combined pre-tax profit of around $50 billion.

That’s an entirely reasonable number and one you should be happy about. Trust me, you would not find pleasant an Australia in which the big five banks were only earning, say, $5 billion together.

THE levy will as noted take $1.5 billion of that $50 billion; the banks will then get roughly $500 million back in lower company tax as the levy’s deductible; so it’s actually going to cost them around $1 billion of the $50 billion. Cost you.

Third, the levy is forever. It will never be abolished; it will almost certainly never be reduced; it might be increased at some future date.

The banks wanted the legislation to have a “sunset clause”; that the levy would either just go away after a number of years (like the 2014 Budget emergency high-income levy is supposed to, come July 1) or “when the Budget was back in surplus”.

The government was never going to do the first.

Westpac chief executive Brian Hartzer and NAB chief Andrew Thorburn. Picture: AAP

The history of the high-income levy demonstrated that — when it was imposed it was going to end at the start of the coming fiscal year when the deficit would be all but disappeared at just $2.8 billion.

As noted, the 2017-18 deficit is forecast to still be $29.4 billion. So you can see, by the by, why I am — to use a gentle word — sceptical of the deficit supposedly now all but disappearing in 2019-20, just two years “late” when it’s forecast to be a curiously similar just $2.5 billion.

As a consequence, in my judgment, the second form of “sunset clause” also wouldn’t have helped the banks. As the deficit is never going to disappear we are never going to arrive at that “sunset”. So far as Budget deficits are concerned we could be living in the world of the midnight sun.

But even, so, do you really think this government, any government is going to cut a tax on “big nasty, hugely profitable banks” ahead of any of a myriad other taxes? Of course not.

Now who exactly ends up “paying” the levy will depend on market dynamics and what happens after we lose our triple-A credit rating and the big banks themselves are consequently downgraded.

My advice to the Treasurer is to “butt out” of trying to tell the banks how they should apportion it.

Minister for the Environment and Energy, Josh Frydenberg. Picture: Kym Smith

CCS WILL CAPTURE YOUR MONEY

THE government of course needs your money by the multi-billion to waste on climate change boondoggles and “alternative or renewable energy” main-chancers — where “alternative” and “renewable” are euphemisms for “useless”.

The once-was-rationalist Josh Frydenberg wants to authorise the Orwellian titled “Clean Energy Finance Corp” to waste taxpayer money in so-called “carbon capture and storage” boondoggles in addition to its normal wind and solar wastage.

Frydenberg says, “access to finance” is one of the “barriers” to investment in CCS.

As far as I know, there’s no law against investing in CCS, only the law of arithmetic. The only “barrier” to “investing” in CCS is rationality: it is, it always has been, and always will be a waste of money.

Apart from the fact that we’ve got as much chance of building a CCS power station as we have of building a nuclear one.

Do you really think Kool-Aid drinking Climatistas are going to embrace a big new coal-fired power station or 10 on the “promise” that its/their CO2 emissions will be pumped underground and stored for eternity, just like spent nuclear fuel?

Indeed, I would suggest we are tantalisingly close to the point where they “jump the shark” with hysterical claims that the CO2 plant food you breathe out is more dangerous than spent nuclear fuel.

We might just get lucky; that the Greens and Labor might actually do something rational, by preventing Frydenberg from directing taxpayer money to at least THIS climate boondoggle and a whole new group of climate main-chancers.

Originally published as Terry McCrann: The levy you will pay and pay ... forever