Australia’s most overly-celebrated land holder is at it again today:
Senator Nick Xenophon’s return to South Australian politics is poised to drive a final nail into the coffin of the controversial bank tax.
The senator, who is expected to hold the balance of power after the March election, said the tax would have a “disastrous effect” on the economy and he was vehemently opposed to it.
On Sunday, Senator Xenophon said he remained “resolutely opposed” to the state-based bank tax, which was to be applied to the four major banks – ANZ, CBA, NAB and Westpac – plus Macquarie.
“It will just have a disastrous effect in South Australia,” he told The Australian Financial Review on Sunday. “A tax like this at a state level will just drive investment away,” he said.
What complete twaddle. How is this effect going to be “disastrous”? What are the banks going to do? Apply discriminatory pricing to SA customers? That’s illegal, Nick.
I’m the first to acknowledge that the policy process towards the bank tax was awkward but that’s not to say that it’s a bad outcome. It’s not.
The RBA notes that the banks receive 16bps of free public support to their liabilities. That under-estimates it, frankly, but it will do for the purposes of this discussion. The Do-nothing Government is only charging 6bps with its new levy. The states are perfectly entitled to charge some pro-rata version to make up the balance. They should.
To the extent that it makes mortgage more expensive that’s good. We need that, as the RBA and APRA have both acknowledged vis the bubble. Moreover, as a fiscal charge it is permanent and even better. A form of structural reform that pressures banks at the margin to lend less which will result in a lower dollar. That helps shift the national growth drivers away from the property bubble and towards sustainable tradable sectors. SA has a much higher share of those than do eastern states. It will be better off in the long run.
But that doesn’t work for Xenoponzi and his land holdings does it?
