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Bank won't rule out SA rate hikes to pay for tax

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Bank SA has not ruled up driving up variable mortgage rates in response to the Weatherill Government’s planned bank tax, and may also axe a range of community sponsorships, as the political fallout from last week’s budget rages on.

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The Opposition remains coy about its intentions, unwilling to block the budget bill but refusing to rule out trying to amend it, after the Upper House’s two Australian Conservatives MPs yesterday flagged a disallowance motion on the contentious new levy.

Bank SA CEO Nick Reade today told ABC Radio Adelaide the Westpac-owned institution had “made no decisions” about how to recoup the impost, but insisted it was “clear” it would “have to be paid for somehow”.

He suggested shareholder dividends, superannuation returns and suppliers could all bear the brunt, and wouldn’t rule out the prospect of local customers feeling the effect through higher interest rates.

“There’s a range of ways, but at the end of the day we just don’t know yet,” he said.

“I don’t know where it could come from [but] it’s going to have to come from somewhere… there’s not a big pile of cash under the table, because banks distribute their profits to shareholders, that’s what happens.”

Reade said it was too early “to understand the implications” of Tom Koutsantonis’ proposed bank tax, which is expected to reap $370 million over four years from its introduction next week.

“We haven’t seen the legislation – I don’t understand how it all works,” the bank chief said.

“We’re trying to get more information on it, but on the surface – we’re going to have to look at our operations… I don’t know what will happen. It’s come as a big surprise to us.”

He insisted the bank – which last week pulled sponsorship of a post-budget Labor fundraiser and halted a back office expansion it said would have created 150 new jobs – wouldn’t punish major events such as the Adelaide Fringe or the Royal Adelaide Show, which it currently supports.

But he said other sponsorships may go by the wayside instead.

“We are looking at new sponsorships… potentially new ones that we were looking at may not happen,” he said.

“The Fringe, we’ve been there for 12 years, we’ve been with the Royal Show for many years… I’d like to continue those, but there are others that perhaps are on the radar that I might have to think twice about.”

He refused to elaborate on specific events, citing confidentiality, but insisted the budget had sent a message to the nation that SA was “not open for business at all”.

“We were looking forward last week to a jobs’ budget and what we’ve got instead is an arbitrary, discriminatory tax that is sending a big message to investors – not just in Australia, but globally – that we’re going to become less competitive in SA,” he said.

“The message I’m hearing loud and clear is that we’ve now got a political risk in SA and that is affecting people’s intentions now to invest.”

Liberal leader Steven Marshall, asked about whether the Opposition would pursue a similar gambit to the Australian Conservatives, told FIVAaa: “We’ll be discussing it within our team this week.”

Marshall, who will deliver his budget reply next week, has previously said while he opposed the tax, it was traditional not to block the supply bill.

But asked about amending it to axe the tax, he said “it would be unorthodox, but I think… watch this space”.

“What we need to do is to take a look at it,” he said.

“Let’s draw breath, see what the implications are going to be… we want to look at the Budget Measures Bill and what the opportunities are there.

“We feel that this tax could be a real problem for businesses here in SA and ultimately for families who have got mortgages here… we’re not even convinced of the constitutionality of this measure.”

Asked by InDaily to clarify the Liberals’ position, Marshall said in a statement: “We certainly won’t be blocking supply (the Appropriation Bill) but we’ll be taking a very close look at the Budget Measures Bill.”

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