Treasury targets big banks with $6B levy

Australia’s Big Four may be fuming over the $6 billion tax they were slapped with in last night’s budget but Treasurer Scott Morrison had four words: “Cry me a river.”

The Australian reported Morrison uttered the phrase in the budget lock-up yesterday when it was suggested the four biggest banks in Australia plus investment bank Macquarie, may be unhappy.

“They make $30B in profits and this is just $1.5B (every year for four) out of that,” Morrison said.

The budget revealed a series of measures intended to establish an accountable and competitive banking system, including the major bank levy, an authority to help Australians get a fairer deal from the banks, and a regime holding the banks’ top executives answerable.

Prime Minister Malcolm Turnbull told ABC News today the bank levy would not be passed down to customers.

“The ACCC will be keeping a very close eye on that,” he said.

“You have to remember that the banks are hugely profitable.

“They do not need to pass this on.

“They will still be very profitable.”

The Prime Minister said it was only fair the banks pay the levy to help bring the budget back into balance, considering they benefitted from “implicit support” of the government.

“The banks are the most profitable banks in the word, $32 billion in profits,” he said.

“Levies like this are common right around the world.

“This is a very conventional approach … that will assist us in bringing the budget back into balance and ensuring that our children and grandchildren are not burdened with a mountain of debt.”

The major bank levy will come into effect from 1 July 2017 and is expected to raise $6.2B over four years excluding other taxes, particularly corporate income taxes.

“For the system to be fairer, there needs to be greater competition and accountability – now,” Scott Morrison said last night.

“The levy will only affect our five largest banks with assessed liabilities of $100 billion or more and does not apply to superannuation funds or insurance companies.

“Importantly, customer deposits of less than $250,000 and additional capital requirements imposed on the banks by regulatory authorities are excluded from their assessed liabilities

“Unlike the previous bank deposit tax, this is specifically not a levy on pensioners’ and others’ ordinary deposit accounts, nor is it on home loans.”

In a bid to give Australians a more simple, accessible and affordable one-stop shop to resolve disputes and acquire binding outcomes from banks and financial institutions the Australian Financial Complaints Authority will be established.

Additionally, all senior executives will be required to register with APRA with the introduction of a new Banking Executive Accountability Regime.

“If in breach, they can be deregistered and disqualified from holding executive positions and be stripped of their significant bonuses,” Morrison said.

“Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements.

“If banks breach misconduct rules, they will also face bigger fines starting at $50 million for small banks and $200 million for large banks.”

Read more: Macquarie Group CEO salary revealed

The Treasurer says the levy won’t be passed down to customers, do you believe him?