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

I thank Senator Macdonald for his contribution and his questions. Firstly, in relation to recommendation 1, the government of course supports the Senate's role and the role of the Senate committee system in reviewing legislation. Ultimately referrals to the Senate Economics Legislation Committee are a matter for the Senate. If the Senate in future considers that these matters should be reviewed at that time, that is of course entirely within the Senate's prerogative, and from the government's point of view we are completely comfortable with that occurring at that time.

In relation to recommendation 2, the committee recommends that Treasury closely examine issues relating to the technical aspects of the bill to determine whether changes are required to avoid double taxation and/or to narrow the liability base. Treasury has already undertaken extensive work and examined issues relating to double taxation. Consistent with the UK, it is expected that any double taxation will be prevented through the use of international tax treaties and that Treasury will monitor the practical operation of the law and make recommendations to government if necessary.

In relation to recommendation 3, I have actually in responding to Senator Xenophon's amendment explained why the government does not think it is a good idea to exclude foreign banks. Foreign banks are actually covered by this legislation; it is just that there is not a single foreign bank operating in Australia that is a major bank in Australia. But if a foreign bank were to exceed the $100 billion liability threshold in the future then the levy would apply to it. To do otherwise would reduce the level of competition in the banking sector in Australia, and Senator Whish-Wilson has also made a very accurate observation that we are not at liberty to discriminate in the Australian market between domestic and foreign banks. The same policy has to apply on the same basis.

In relation to recommendation 4, the committee recommends that the legislation be amended so that the Treasurer may, on the advice of APRA, suspend the application of the levy to any or all authorised deposit taking institutions in extreme financial or economic circumstances. Given the strength of the major banks, the government does not believe that this is either appropriate or warranted, and we do not believe it would send the right signal for the government to indicate that such a measure is required by supporting any initiative to that effect. Consistent with the levy being deductible, like other expenses for tax purposes, the expectation is that the banks will manage the cost of the levy as with all other expenses.