Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

I thank Senator Xenophon for his contribution. Firstly, foreign banks are not excluded from the application of the major bank levy. It just happens to be the case that no foreign bank in Australia is a major bank. What is relevant is the RD liabilities under the Australian licence, and no foreign bank operating in Australia is a major bank in Australia. No foreign bank operating in Australia has liabilities of $100 billion or above. If in future any foreign bank operating in Australia grows to have a large presence with a subsidiary above $100 billion in total liabilities, they would be subject to the levy on the same basis.

The concern of the government is that, if we were to support the amendment that Senator Xenophon has moved, the effect actually would be a lessening of competition in the banking market. It was indeed none other than former Labor Prime Minister Paul Keating who made a very significant effort to strengthen competition in the banking market in Australia by attracting foreign banks into the Australian market. If we were to assess foreign banks not based on their liabilities in Australia but on their liabilities worldwide, it would obviously put them at a significant disadvantage in terms of their activities in Australia, which would lessen competition, which would not be good for consumers. That is why the government has proposed to structure this major bank levy the way we have.