Big banks in court threat to Australian gov't

Big banks in court threat to Australian gov't

The major banks have said that they are prepared to take the South Australian government to court over its plans to impose a new bank tax, the Australian Bankers’ Association (ABA) has warned.

ABA chief executive Anna Bligh pulled no punches, saying “The South Australian government will face a high court challenge if it introduces its proposed bank tax.”

And Bligh (pictured left) indicated that other states, eyeing up the A$370m over four years that the new tax is expected to raise, should expect a robust judicial battle with the association if they try to follow suit; “Other states will also face a constitutional challenge in the high court if they propose to single out banks for new taxes,” she said.

The measure narrowly made it through the South Australian Parliament’s Lower House when the ruling Labor-majority government secured the support of a former Liberal MP, but it needs to be passed in the Upper House before it comes law.

South Australian Treasurer Tom Koutsantonis said he was not surprised by the announcement, but was assured that the ABA had no legal basis upon which to launch and win any court action.

“The reason they’re puffing up their chest now is that they’re worried about this tax being introduced in other jurisdictions,” he said.

“They’re trying to frighten the other states into thinking this is unconstitutional.

“Our advice is that it is, our advice is that we’re on very solid ground, our advice is that this legislation is valid and we hope it passes.”

‘Political, not legal, matter’

He conceded that the government had arithmetical problems in terms of garnering cross-bench support in the Upper House, but that this was a political matter, not a legal one.

“The idea that a government wouldn’t be allowed to pass its budget is ridiculous — of course it will pass,” he said.

“The Upper House will make its initial views known, then I think they’ll see the government’s view.”

It is not simply the banking sector that is alarmed at what they see as a windfall tax. Business SA, the main body represent business in the state, said that that it was natural that the banking sector would want to challenge what it calls an “arbitrary measure”.

“Every industry sector would want some understanding of the power of any state to apply what looks like a very arbitrary tax,” said its chief executive, Nigel McBride.