David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

These amendments moved by the government will essentially make it impossible for the banks to take advantage of the tax cuts. I just wish to speak briefly on my position regarding that. As a general principle, it is not at all good policy to regulate banks or any sectors of the industry via tax policy. The idea that you can discipline the banks or somehow teach them a lesson about their misbehaviour, as exposed in the royal commission, via tax policy is extremely bad policy. It is an extremely bad idea. Nonetheless, it is not quite as bad as the idea that a company with over $500 million in turnover should also be denied the advantage of lower taxes. That policy, which emanated, I gather, from Senator Hinch, is cockeyed—like many ideas that emanate from Senator Hinch—and I certainly can't be supporting that under any circumstances. That would be a tax on success. It would be signalling to companies: 'Don't get too big, otherwise we will punish you.'

On the other hand, while the idea of exempting the banks from the tax reduction is a bad policy, I am willing to support it. I am willing to support it on the basis that the banks are big enough and capable enough of looking after themselves. The difference between the rate of taxes that the banks pay and the rate that other large businesses pay would only kick in in about 2026. I can envisage a situation where the banks are facing that scenario of paying 30 per cent tax, while all other companies are paying 25 per cent tax, and the banks would say: 'We can't sustain this. This is not acceptable.' So one bank one week would say, 'All right; that's 2,000 people who are now going to be made redundant.' That would gather quite a lot of headlines, and people would say: 'That's pretty bad. Maybe we've made a mistake.' Then a week later another bank might retrench 2,000 people. By that stage, people would be saying, 'That's really quite bad. I don't think we can continue with that.' And, if a third bank then says, 'Okay. We've got 2,000 people who we don't need either because of this high tax rate,' even if it was a Labor government in coalition with the Greens and they were inviting us to celebrate the socialist nirvana, they would find it politically unacceptable to be witnessing redundancies at that sort of rate.

I guarantee any government would back down and say, 'Okay, you can also have the tax cut.' On the basis that the banks are capable of looking after themselves—and I've just suggested one way in which they could look after themselves—I am prepared to accept that amendment from the government and vote for it. However, I signal that I absolutely will not be supporting the other amendment, which we'll be considering later today, which is to have a threshold for the tax reductions of $500 million in turnover—that is totally unacceptable.