This ex-post model would be done in conjunction with increased capital adequacy requirements being imposed on the banks.

Sceptical about progress

But Mr Hockey questioned the ability to impose of levy on banks after one or more had failed, and he expressed scepticism about the pace of progress regarding capital adequacy discussions.

"Look, there's very few countries that impose a levy after failure," he said, nothing that was why the Council of Financial Regulators proposed an ex-ante model.

"Self-evidently, because the four major banks in Australia basically have the same business model, if there is a financial failure, god forbid, of any scale, it would have systemic ramifications.

"So you're not going to impose a tax on, you know...on whoever's left."

When the financial system inquiry report was released, Mr Hockey said the key recommendation to increase bank capital was a matter for the Australian Prudential Regulation Authority. APRA closely supervises Australia's financial institutions to ensure heir levels of equity are sufficient to safeguard the system in a time of crisis.

Mr Hockey told the Financial Review that APRA would have to be mindful of global discussions on increasing the capital requirements of systemically important banks, a process he indicated was going nowhere.


"Of course, naturally enough, there's a failure to come to agreement globally on this," he said.

"There's delays. Predictable delays."

Mr Hockey said the government would not make a final decision on the bank deposit levy until its formal response to the Murray inquiry which would be after the budget. That made it "conceivable", but unlikely, that the government would change its mind before January 1, 2016, and adopt the Murray proposal instead.

For now, it was the government's policy to proceed with the upfront levy.

"Unless you change the policy, you stick with the policy. We haven't determined we're changing that policy yet," he said.