APO resource visit counts have been improved. For more information, see our Policies & Guidelines

Report

The major bank levy: we’re all going to be hit

19 Jun 2017
Description

The major bank levy was proposed in the 2017–18 Budget. The levy has numerous flaws including:

  • The costs of the levy will likely be passed on as higher interest rates for mortgages and business loans, harming households and business investment which is very weak.
  • The levy won’t materially change the expected surplus, based on current forecasts and therefore will minimally impact Australia’s AAA credit rating.
  • If the big banks have ‘unfair’ advantages, it is far better to remove those advantages than impose a levy.
  • If the levy is supposedly pro-competitive, this prejudges and devalues a separate Productivity Commission (PC) inquiry into this issue, which has been compromised before it even starts.
  • The development of the levy breaches numerous requirements for best practice regulation and increases sovereign or regulatory risk.
  • The levy cannot be ignored as being small relative to the economy. A bad policy is bad no matter what its size, and the levy is likely to be increased to a more harmful level.
  • Banks will be encouraged by the levy to use funding that is more risky for the financial system or taxpayers.
  • If the levy confirms large banks are Too Big To Fail, this contradicts official work to ensure this does not occur, and will increase financial market risk.
Publication Details
Identifiers: 
ISSN: 
2204-9215
ISBN: 
978-1-922184-93-1
License Type: 
All Rights Reserved
Published year only: 
2017
45
Share
Share
Subject Areas
Geographic Coverage
Advertisement