Scott Morrison has really thrown the major banks a curveball. The banks know they’re not popular with their customers and Morrison’s playing on that.
But he’s hit them with a $1.5 billion tax per year and you can’t take that lying down. In the normal course of events, we can expect them to mount a campaign similar to that which the miners mounted against the mining tax.
That campaign was very clever.
It showed lots of pictures of handsome young engineers, both male and female, the Kimberleys, building Australia’s future. Lots of emotive images.
All designed to show what a terrible thing the mining dictionary. It was bullshit but it was very effective bullshit.
But the banks won’t have the appealing graphics that you can get from the mining industry. Pictures of bank tellers and accountants aren’t quite as appealing as big trucks and trains full of coal.
The mining industry campaign was also helped by the fact that it had the Opposition leader Tony Abbott campaigning stridently against the mining and carbon taxes.
The banks don’t have any of these advantages this time round. The Opposition leader, Bill Shorten, is no friend of the banks. He wants a Royal Commission. The other opposition leader, Tony Abbott would probably love to join in shouting “great big new tax” but is probably feeling a bit hamstrung at the moment.
And this just highlights another major problem for the banks: they don’t have any allies in this fight: not the opposition, not the public, probably no other industry groups, certainly not the government.
Their major advantages that they do have good narrative namely that the government is simply shifting responsibility for taxation onto the banks’ shoulders, that they are shirking their responsibility and this is not fair.
Someone is still going to have to pay for this, you can’t simply conjure $1.5b out of thin air.
To say that it is going to be “the banks” is disingenuous because the banks represent all of us, everyone who has a deposit, a mortgage, a loan, shares in a bank or who belongs to superannuation fund (and that includes everybody who is or was working). So when push comes to shove, everybody is going to pay this levy.
The challenge for the banks is finding some way of convincing the general public that this is the case. This is going to be difficult because the counterargument will be that this is simply the banks passing their costs on to the consumer the way they have always done.
This argument is unfair, it’s simplistic, it’s glib but it’s effective.
Jessica Irvine wrote an interesting piece in The Age today entitled Let banks eat humble pie.
Irvine argues that the bank levy is good policy and that the levy is a reasonable trade-off against the bank deposit guarantee which is the way the government guarantees the banks’ borrowings.
She also argues that banks are essentially a low-risk investment and that their returns are disproportionately high so a reduction would not be an appropriate. It’s an interesting article and worth reading if for no other reason that it indicates that there is some informed opinion that supports Turnbull and Morrison’s actions.
So what should the banks do?
Well, one clever thing would be to cop it sweet. They are hiding to nothing on this one.
So stand up and say, “Okay, lifters and leaners. We are prepared to be lifters. Good citizens. Shoulders to the wheel. Doing our share. Making Australia great again.”
Take a page from BHP’s notebook, from today’s AGE.
And then pass on all the levy costs, plus a small premium for the ad campaign.