Australian banks do the heavy lifting, our future prosperity relies on big tech pitching in too

This opinion piece by ABA CEO Simon Birmingham originally appeared in the Australian Financial Review.

In an attempt to avoid domestic regulatory scrutiny, large foreign multinationals have developed a curious rhetorical strategy.  

The larger their footprint in Australia’s financial system becomes, the more strenuously they insist they are marginal, incidental or merely technical intermediaries. 

For years, Apple has repeated a carefully constructed line in Parliamentary hearings and submissions: “Apple does not itself provide financial services or payment services in Australia.” 

Yet millions of Australians use Apple Pay every day to tap, transact and store payment credentials. When a service sits between consumers and their bank and earns revenue from the flow of payments, the claim that it does not provide payment services becomes far-fetched. In just one month, December last year, $34 billion worth of card transactions took place via mobile wallets. In 2018, it was less than $1 billion for the entire year.  

Nobody is interested in a sob story from banks. The scale and profitability of Australian banks, and their tax contribution is a lightning rod for commentary, much of it wrong. Far from dodging tax, Australia’s banks contribute more than $16 billion in taxes and levies to Australian federal, state and territory governments. They pay more tax than any industry other than mining, with the cumulative impact of taxes paid by banks imposing an effective tax rate of 40 per cent last year. 

Imagine where Australia would be without the tax paid by banks. That $16 billion supports a healthier, smarter Australia: funding the cost of 370 million GP appointments, the salaries of 180,000 nurses, or the annual education of nearly 900,000 secondary students. 

While banks aren’t going anywhere soon, risks to banks create risks of revenue and tax leakage for governments. These risks are real and growing, created by a regulatory imbalance that allows foreign multinationals to deliver bank-like services without bearing proportionate regulatory and fiscal responsibilities. 

The fact is Australia’s financial landscape has changed. In 2007, 70 per cent of transactions were paid for with cash. Today it is ten per cent and expected to decline to four per cent by 2030. Simultaneously, the use of digital wallets for payments has accelerated and now accounts for one in every two in-person transactions.  

Last year the Reserve Bank acquired expanded powers to regulate digital wallets, buy-now-pay-later providers, and card schemes. This is a welcome step forward, particularly because global technology platforms and multinational payments firms now provide services that look and feel increasingly like banking.  

Digital wallets, buy now pay later providers and international card schemes are now structurally embedded in everyday commerce. Yet the obligations they face are not equivalent to those of Australian banks. 

Tech firms and multinational payments platforms are notorious for their ability to reduce local tax contributions through complex accounting structures that shift revenue to low-tax jurisdictions. 

According to the latest ATO data, Apple paid just $154 million in annual corporate taxes while reporting $12.4 billion in revenue in Australia. That means Apple – whose market capitalisation is seven times that of the ‘big four’ banks combined – paid less company tax over an entire year than major banks paid in a fortnight.  

These disparities extend beyond corporate tax contributions.  

Australia’s payments infrastructure has been built at a cost of billions of dollars by domestic banks operating under strict regulations and price controls. That infrastructure supports the safety, speed and resilience of transactions across the economy. 

Global platforms like Apple or and Google Pay benefit from that system. They sit on top of it, intermediate it and monetise it. They enjoy the benefits but avoid the obligations: no equivalent regulation, no duty to invest back in the system that enables their operations.  

This imbalance doesn’t sit right with everyday Australians. Recent polling shows that 72 per cent of people believe the Government should force multinationals to pay their share to support Australia’s payments infrastructure.  

While banks invested over $2.5 billion in preventing financial scams and crime last year, the digital platforms on which scams originate have been dragging their feet. 

Meta has repeatedly failed to identify and remove fraudulent advertising on its platforms. That reluctance is unsurprising considering reporting that Meta derives about 10 per cent of its revenue from running scam ads. 

That’s why the Government’s Scams Prevention Framework – an approach designed to stop scams at their source by holding all parties within the scam ecosystem accountable – is a welcome step in the right direction. 

That same logic, the idea that corporations who benefit from operating in Australia should face equivalent responsibilities to Australians, must be applied across our entire economy. 

Governments will not be able to maintain services if a growing share of value generated from Australian consumers flows to foreign headquarters rather than circulating through domestic wages, tax receipts and infrastructure investment. Banks will struggle to sustain high-quality, safe and accessible services if profitable activities are cherry-picked by multinationals. 

This phenomenon is not unique to banking, or Australia. News media organisations know that well. Just as Australia has sought to lead in responding to such challenges, we should also look to learn from efforts in Europe to achieve regulatory equivalence, create competition, and maintain sovereign capabilities. 

It’s easy to complain that Australia’s banks are too big, or too profitable. And it’s right that they face appropriate scrutiny. But it will be to our peril if we just accept the weak excuses that big tech uses to dodge scrutiny or avoid paying their fair share of tax. They must pay their way too.