Westpac chief Brian Hartzer takes shot at bank taxes

Westpac boss Brian Hartzer has taken aim at the federal government’s bank levy and South Australia’s proposed tax.

Westpac chief executive Brian Hartzer. Picture: Nick Cubbin.

Westpac chief executive Brian Hartzer has thrown his support behind the bank regulator’s planned new rules for lenders to bolster their balance sheets, but warned the certainty that proposals have delivered are being undermined by the hostile policy environment towards banks.

Writing for The Australian, Mr Hartzer took aim at the federal government’s bank levy as well as the proposed South Australian bank tax, saying these imposts could hurt the economy.

“Certainty — or at least a level of predictability about the operating environment — is critical to any business. While we often hear about ‘business confidence’ as a driver of economic growth, that confidence is really a function of two things: opportunity and certainty,” Mr Hartzer said.

“Increasing taxes on successful businesses doesn’t create growth and jobs; giving businesses more certainty about the policy environment does.

“When I speak to our customers around the country, I often hear the same story: ‘I see the opportunity to invest, but I’m uncertain about the environment that I’m facing — so I’ll wait.’

“This will only change by providing the two critical ingredients — opportunity and certainty — so that private businesses will invest and drive growth, create jobs, and generate taxes that fund government services,” he said in a commentary, which is also appearing on the bank’s online publication, Westpac Wire.

“This is one of the reasons why we don’t agree with initiatives like the government’s new bank levy: the lack of thorough consultation and constantly shifting justifications by the government made it look like a budget action that was driven more by political calculation than sound policy justification. And both small and large businesses look at decisions like this and wonder: Am I next?”

He said the Australian Prudential Regulation Authority’s proposals this month for banks to hold more capital delivered certainty for banks — even though they will have to set aside more funds.

APRA raised the required capital buffer to 10.5 per cent of each bank’s risk-weighted assets. This means the nation’s banks will have to set aside more funds on their balance sheets to back their lending activity, helping them to withstand unexpected economic shocks.

APRA’s new rules will add 150 basis points to the current 9 per cent minimum by 2020.

“The recent announcement of new ‘unquestionably strong’ capital guidelines is good news for everyone who owns a home, runs a business, or collects a pay cheque. That’s because, after many years of uncertainty, banks now have certainty around how much extra capital they will need to hold,” Mr Hartzer said.