Blowback from banks over Budget levy

It’s one of the biggest revenue-raising measures in the Budget: a new levy on the country’s five largest banks that will bring in more than $6 billion over four years.


The federal Treasurer said he expected industry resistance, and the pressure has been mounting.

Andrew Thorburn is the head of the National Australia Bank.

“A tax, Prime Minister, is borne by people: customers and shareholders of any company. Normal folk. Secondly, let’s work together. Let’s look forward. Let’s build a plan that can make a better Australia. I and we want to be part of that. Let’s not make this us versus them and adversarial.”

But Treasurer Scott Morrison is standing firm.

The five banks earned a combined profit of around $30 billion last year, so the government says they should be able to absorb the tax without passing the bill to their customers.

“I want banks to be unquestionably strong, but I also want them to be unquestionably fair and I want them to be unquestionably competitive for consumers as well. The four major banks have taken up a much bigger space in our market over the past 12 years, and particularly since the Global Financial Crisis.”

Crossbench senator Nick Xenophon says the Treasurer has a point.

He says the levy will help smaller banks compete, and any move by the biggest five to shift their costs on to consumers will only drive them away.

“If the banks, the big banks, want to slug their customers – which they shouldn’t – if they take steps like that then I think that will actually drive more people to those smaller banks, those regional banks like Bank of Queensland, the Bendigo Adelaide Bank and those community-owned banks such as People’s Choice, which will give people, I think, more of a choice and more competition in the marketplace, which is a good thing.”

The banks met Treasury officials to discuss the new levy, wanting to know how the government’s estimates were calculated.

But the head of the Bankers’ Association, Anna Bligh, says Treasury failed to answer their detailed questions.

“The government’s attacks on the major banks is now fraught with even more uncertainty after bank representatives left a meeting with treasury officials this morning with more questions than answers.”

Scott Morrison, though, says the levy is here to stay.

And with Labor indicating it will support the measure, it should easily pass into law.

“This levy is in. This tax is staying, on the banks. This is a fair and reasonable tax.”