The budget measure will be revisited to check its effect on competition and whether it is ‘required in perpetuity’

This article is more than 3 years old

This article is more than 3 years old

Government senators have bowed to a demand from Australia’s biggest banks to review the $6.2bn bank levy in two years’ time to examine whether the measure is “required in perpetuity.”



The agreement came in a report on Monday from the Senate economics legislation committee after a short inquiry into the budget proposal, which has been resisted fiercely by the big banks.

The committee recommended a review be conducted in two years to examine “the efficacy of the policy in fulfilling its stated objectives; the effect on competition in the Australian banking market; and whether the levy is required in perpetuity, including the need for a further review at the time the stated objective of the levy is achieved; that is when the budget has been repaired”.

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It also recommended that treasury closely examine whether the levy measure amounted to double taxation and provide more information about why foreign banks were excluded from the levy – a call echoed by Labor senators on the committee.

The committee report also recommended that the legislation be amended so that the treasurer may, on the advice of the banking regulator, suspend the levy “in extreme financial or economic circumstances”.

The Australian Bankers Association – the lobby group representing the financial services sector – used the short parliamentary inquiry process to ask that the levy be reviewed in 18 months to ensure there were no unintended consequences, given what it said was the rushed nature of the legislation.

The ABA and the banks caught by the levy also called on the government to consider making the tax a temporary measure to be lifted once the budget returns to surplus.

Treasury officials admitted in a public hearing last Friday that their costings assume that some of the $6.2bn bank levy will passed through to customers.

The banking levy looks set to pass, with Labor’s support.

The Senate began debate on the legislation on Monday night, and the proposal was expected to be voted on later in the evening.

Nick Xenophon is planning to move amendments to extend the levy to foreign banks, but these can only be framed in the Senate as a request to the House of Representatives as the measure is a revenue bill.

Labor has not ruled out supporting the Xenophon amendments, but the NXT leader saidon Monday he believed Labor’s support was unlikely.