Small banks, as well as some economists, have urged the government to raise the annual charge on major banks’ liabilities to help the budget bottom line.
Any move by Labor to lift the major bank levy would undermine the strength of the banking system and add to the uncertainty facing financial markets after the collapse of Silicon Valley Bank, Australian Banking Association chief executive Anna Bligh says.
“These things exist, and they are strong and they are profitable, because of a regulatory system that supports that, and a lot of very effective and good management over a long period of time,” Ms Bligh told“The last thing we need, I think, in Australia’s banks is any further uncertainty. And those four major banks, at all times, play a kind of anchoring role for the whole system.”
The big banks have always opposed the levy, describing it as a “tax on all Australians”. But smaller banks support it for helping to level the competitive playing field and to price the subsidy that has resulted in big banks receiving higher credit ratings. This lets them raise funding in wholesale markets more cheaply than smaller banks.
“The bank levy last time it came on, I think it was in the last week of the budget preparation,” she said.Ms Bligh said Scott Morrison, the treasurer when the levy was introduced, had framed the tax as a measure to repair the budget. But, she added, it soon became about charging banks for being too big to fail after questions arose about when it would be removed.The bank levy on the four major banks and Macquarie raised $1.
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