Melissa Price (Durack, Liberal Party) Share this | Hansard source

It is pleasing to see the Greens' support for this very important legislation that we are debating here today. The Treasury Laws Amendment (Major Bank Levy) Bill 2017 will introduce the major bank levy for all banks with liabilities of at least $100 billion, raising around $1.5 billion per year. This is a great arrow in the quiver for the Australian taxpayer to use against the banks that have unquestionably had an armchair ride in Australia, and have had for some time. This represents a fair additional contribution from our major banks in recognition that their size and scale poses a structural risk to the economy. Banks, as we know, hold a very special social licence in our community. Compensation to the community through this government bank levy is, I believe, appropriate.

This measure provides a more level playing field for smaller banks and non-bank competitors. It is not unique. In fact, many other advanced economies, including the United Kingdom, have a bank levy. The United Kingdom has a bank levy several basis points higher than what is being proposed in this bill—and their financial sector is undoubtedly one of the strongest in the world. With that in mind, it is appropriate to note that Australian banks are the second most profitable in the world.

This measure contributes to budget repair in the short term but is a permanent structural change to the way major banks will be taxed. This is a very small levy by the banks' standards, at only six basis points. Debt funding costs for the major banks are estimated to have fallen by around 35 basis points over 2016. So, by comparison, this levy is a drop in the ocean. It is entirely possible for these large banks to absorb these changes without having to offload even one mortgage or one staff member or raise interest rates by even one basis point. Any argument from the bank that they will have to raise interest rates in order to recoup the cost of the debt levy is blatantly false—and it should be called out whenever it is repeated.

But it appears that those opposite are only interested in parroting the talking points provided to them by the banking sector. How unbelievable is it that we have the opposition front bench, and also the Leader of the Opposition, using the same rhetoric that the banks have been using when obviously, by any measure, they can afford to pay this levy. We on this side thought that those opposite were interested in actually tackling the issues with the banks; but it would appear that, when it comes to how much money the banks contribute to our economy, their voices are silent.

The banking sector has made hay in this country for years. Following the GFC, there was a belief in the financial sector—appropriately—that these banks, which place systemic risk in our financial system, would be backed by the taxpayer in the event of their collapse. That policy support has allowed the banks to borrow at a far lower rate than their small and medium-sized competitors. That lower borrowing rate has allowed them to muscle even further into the heart of our economy and increase their market share. In doing so, they have increased the risk they pose to the economy should they collapse.

The levy is set in legislation at a rate of six basis points and will apply only to the big four banks and Macquarie Bank, with each currently having liabilities greater than $100 billion. But there are exceptions. We know that the large banks are highly profitable, earning total profits of over $30 billion a year after tax, benefiting from their dominant position in providing essential financial services. The levy will raise around $1.5 billion annually, or some $6.2 billion over the forward estimates. It is in the interests of the banks, the government, the opposition and, most importantly, the taxpayers of this country for the banks to accept this levy and simply move on.

The banks can choose to absorb the cost of the levy in the same way that small businesses around the country, and also families, absorb the increased costs they may face from time to time. To guard against the banks trying to use the levy as an excuse for significant changes in mortgage interest rates, the ACCC will undertake an inquiry into residential mortgage pricing. The Turnbull government has fully resourced the ACCC to undertake that inquiry, which I fully support.

Consumers have a choice as to who they bank with, and would I certainly encourage them to consider that if they do find that their costs are increasing as a result of the banking levy. We know that banks in other countries were able to absorb the cost, and this is ultimately in the best interests of the corporate citizens of the country.

I commend the bill to the House.

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