ANZ chief critical of deficit tax plan

A proposed budget deficit tax would be a band-aid measure that will do nothing but upset Australians, the head of ANZ Bank says.

Chief executive Mike Smith said the Abbott government should be encouraging the small and medium business sector, which is the nation's entrepreneurial heartland.

Workers earning more than $80,000 could reportedly be slugged extra tax for the next four years as part of the government's bid to plug the deficit.

"I think the wounds are too deep for band-aids," Mr Smith said as ANZ reported a record $3.5 billion half year profit on Thursday.

"If you are trying to encourage an entrepreneurial society and trying to encourage successful small businesses, the last thing you should be doing is taxing them more."

The economy is in pretty good shape, he said, with many sectors outside resources doing better than many perceive, including agriculture, education, manufacturing and services.

The government should focus on reforms that tackle "cost problems" for businesses, Mr Smith said.