Report

Banking on an impact: the impact of the bank levy on the average Australian superannuation account

2 Jun 2017
Description

There is intense speculation about who will ultimately be affected by the new bank levy that has been proposed in the 2017-18 budget. In broad terms the levy could be passed onto either the customers of the big banks or it could be passed through to bank shareholders in the form of reduced dividends. The largest banks and their lobbying body the Australian Bankers Association (ABA) are keen to convince the general public that in either case average people will be substantially impacted. While convincing the general public that they will be impacted might help the big banks in their fight against the introduction of the levy, the problem they have is that it will have almost no impact on the general public. If it is passed through to shareholders, the banks claim it will impact on people’s superannuation balances. But an analysis by this paper shows that if the bank levy was passed through in full to shareholders in the form of reduced dividends then at most it would impact the average superannuation balance by $7 a year. If the banks pass some or the entire levy into customers this will not affect the many smaller banks and credit unions. Bank customers who are concerned about the financial impact the bank levy will have on them can shop around for a better deal. As this paper shows, customers that shop around could save over $6,000 in interest on an average sized mortgage in addition to avoiding the impact of the bank levy. While it might be surprising that the impact of the bank levy will be so small it should be remembered that it is only 0.06 per cent or six cents in every $100. It is also being levelled on Australia’s most profitable industry. The big four banks made pre-tax profits of $42 billion last year. While the banks and their lobbyists are keen to convince the wider Australian population that the levy will hurt them significantly, the reality is the impacts will be tiny and some of the impacts are completely avoidable.

Publication Details
Language: 
English
License Type: 
All Rights Reserved
Published year only: 
2017
72
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