Greens Deputy Leader and banking spokesperson Adam Bandt has outlined a proposal for a 'Public Support Levy' on the big four banks in return for the implicit “too-big-to-fail” policy of the government that underwrites their activities.
The 20 basis points levy on bank assets in excess of $100 billion has been costed by the Parliamentary Budget Office and would raise $11 billion over the forward estimates.
The levy mirrors similar levies in Europe that raise on average approximately 0.2% of GDP and is based on International Monetary Fund proposals.
“For many years, especially since the GFC, the big four banks have benefited from an implicit ‘too big to fail’ policy, as the IMF has made clear,” Mr Bandt said today.
"Under Labor, the big 4 banks are making more from mortgages, dominating more of the market and enjoying record profits."
"Everything Labor has done has made it easier for the big 4 banks to make bigger profits off the backs of consumers."
“It is time the big four banks paid a fair contribution for the public support they receive.”
“The big banks get a discount on their wholesale funding because of the ‘too-big-to-fail’ policy of the government. If they went to wall the taxpayer would bail them out, which means the big 4 get cheaper funds than their competitors, so the taxpayer should get a fair return for this de facto contribution to big bank profits.”
"The big four banks are taking all of the profits while the taxpayers are wearing all of the risk.”
“This moderate levy of 0.2 per cent is in line with IMF proposals and is a fair contribution from the banks for the support they are provided by taxpayer.”
"By limiting the levy to those big 4 banks that are truly 'too big to fail', the levy won't be passed on to consumers as the big banks will face competition from smaller banks who aren't paying the levy."
“A levy of this size would be in line with a dozen countries in Europe and would assist in addressing the structural revenue problem in the budget.”
“Such a levy would improve bank competition, going some way to equalising the wholesale funding advantage government policy gives systemic banks over smaller institutions.”
The IMF has recommended charging a fee equivalent to 70% of the funding cost advantage enjoyed by systemic institutions. (IMF, Australia: Addressing Systemic Risk through Higher Loss Absorbency – Technical Note, Nov 2012)