Release Date: 
1 September 2015

Topics: Labor’s bank deposit tax

PETER VAN ONSELEN:  Thanks very much for being there.

ALAN TUDGE:  G’day Peter.

PETER VAN ONSELEN:  Appreciate your patience. Let me get your reaction to this. Why call it "Labor’s bank deposit tax" where Joe Hockey, alongside the Labor Party as a follow up to the Labor Party in April this year, said that he was looking at including the bank deposit tax in the May Budget?

ALAN TUDGE:  Well it’s Labor’s bank deposit tax because they were the ones that introduced it in 2013. They put it in the forward estimates. They spent against it, but they of course never legislated for it.

We’ve made the decision today that we are not going to proceed with this bank deposits tax. It will be another tax we are taking off the agenda to make it easier for the Australian public on their cost of living and their general taxes on business.

PETER VAN ONSELEN:  But it was no more their tax than yours. They may have had it in the forward estimates but as you say, it wasn’t legislated. It was in your forward estimates as well. That’s why the Treasurer in April said that he was planning to continue to include it in the May Budget which he did.

ALAN TUDGE:  They’re the ones who introduced it back in 2013. At the time, if you go back and look at when they did introduce it Peter…

PETER VAN ONSELEN:  But it wasn’t legislated.

ALAN TUDGE:  ...I think you’ll find that we called it right then and there that this was just an ordinary tax on everyday depositors and we were against it at the time.

PETER VAN ONSELEN:  But it wasn’t legislated and you said via an interview with the Treasurer to the AFR on the 12 April that you were going to keep it.

ALAN TUDGE:  We’ve made the decision today Peter not to proceed with this. We said all along, right at the get-go we said we didn’t like this tax. We then said when we came into government that we’d put this decision to the David Murray inquiry. David Murray came back and his recommendation was also not to proceed with this bank deposits tax. We’ve accepted that recommendation.

Instead what we’ve asked the banks to do, in line with the David Murray inquiry is to increase their overall capital and so that’s what they’re doing so we don’t need this bank deposits tax and what that will end up doing is make it easier for everyday Australians because they won’t have this tax on their deposits. Only the Labor Party is proceeding with it.

PETER VAN ONSELEN:  Not necessarily. The point that the Treasurer made is exactly the point you just said then Alan Tudge, that because of the capital requirements that are being progressed with, therefore you don’t need the bank deposits tax which was what Murray said.

The Labor Party, presumably, will now take the view. They didn’t have the capital requirements then. Now that we do have them, this tax, that both sides of politics was supporting, now can go.

ALAN TUDGE:  They had the choice at the time. They could have also gone down that path of increasing the capital but they didn’t.

PETER VAN ONSELEN:  But so could you in April when the Treasurer decided on the exact same thing as the Labor Party.

ALAN TUDGE:  We said we would follow a proper process Peter. We were against it when Labor introduced it. We said when we came into government that we’d put it to the David Murray inquiry. That’s what we did. David Murray came back and said here’s the proper course of action.

We of course, in our DNA, want to get rid of taxes. We want to lower taxes. That’s why we scrapped the mining tax. That’s why we scrapped the carbon tax. That’s why we’ve lowered tax on small business. This is another measure which reduces the tax burden on everyday Australians.

Now it’s up to the Labor Party. They Labor Party should come out today and say that they support this measure, that they support getting rid of Labor’s deposits tax once and for all.

PETER VAN ONSELEN:  But it was a tax that was to be paid by the banks rather than paid by individual customers. Don’t get me wrong, I know that they would pass it on, but equally the capital requirements is going to result in the banks if they want to maintain their profits having to pass on some form of fee rise as well. It’s really six of one and half a dozen of the other isn’t it?

ALAN TUDGE:  The tax was a direct tax, just so that your viewers understand this, it was a direct tax on every single bank deposit in the nation. It was going to raise $1.5 billion. Inevitably that was going to get passed onto everyday customers.

This was on top of Labor’s desperate grab for deposits that were left stationery for several years. Labor passed a measure which if a deposit was left stationery for several years without being touched then Labor would just grab that money. We’ve also reversed that decision so that if that money’s there it’s your money, it’s not the government’s money.

Likewise here. If you’ve got a bank deposit there, we don’t want to be touching it, we don’t want to be taxing it, rather we want to reduce your tax burden.

That’s one of the key differences now between the Coalition and the Labor Party. We want to reduce taxes, they typically want to raise them.

PETER VAN ONSELEN:  Alan Tudge I like the ultimate decision but it just makes me wonder what on earth the government was thinking back on the 12 April when you were looking at actually implementing it…

ALAN TUDGE:  Peter we went through a process. Now you sometimes criticise us but we went through a thorough process here where we said what we would do and we did what we said and then we made a conclusion. That’s what we’ve done. That’s what good government is about.

PETER VAN ONSELEN:  I’d like to have gone on but we need to get to a break. Apologies about that, the Prime Minister stole both of our thunder on this one, appreciate you joining us Alan Tudge, Parliamentary Secretary to the PM, thank you very much.