The federal Treasurer delivered a speech at Parliament House in Canberra yesterday where he revealed that the first payment of the levy – to be collected by the ATO – will be delayed by three months “to provide additional time for banks to make necessary systems changes”.
The big four raised their concerns with the controversial bank tax in submissions to Treasury earlier this month. A submission from the Australian Bankers’ Association argued that the budgetary measure was “rushed” and “not in keeping with the government’s own best practice guidelines”.
While Mr Morrison may have buckled on the deadline he was ruthless in his appraisal of the big four banks this week.
“The House of Representatives economics committee’s ‘Review of the Four Major Banks’, commissioned by the government last year, concluded that Australia’s banking sector is an oligopoly and that Australia’s largest banks have significant pricing power which they have used to the detriment of everyday Australians,” he said. “This is not a situation that the government is willing to accept.”
In recent weeks, the major banks have warned that customers and shareholders will bear the brunt of the levy, which the government expects will raise about $1.5 billion a year. However, Mr Morrison stressed that borrowers will not be impacted.
“It is not a levy on depositors or savers or mortgage holders,” he said. “The major bank levy does not give any bank an excuse to increase costs for their customers.”
In an effort to enforce this, the Treasurer announced on budget night that the ACCC has been directed to undertake an inquiry into residential mortgage pricing.
“The ACCC will be able to use its information-gathering powers to obtain and scrutinise documents from any bank affected by the levy and to report publicly on its findings,” Mr Morrison said yesterday.
“The ACCC inquiry will illuminate how the banks respond to the introduction of the levy and give all Australians the information they need to get a better deal elsewhere from any of the more than 100 other banks, credit unions and building societies, as well as other non-bank competitors,” he said.
Levelling the playing field
The government is confident that the levy will help create a more level playing field for smaller banks and non-bank competitors. Mr Morrison said this will give existing and new players – “including fintechs” – a better chance to grow their businesses and deliver improved services and experiences to all Australians.
However, not everyone agrees that the bank levy will have the desired affect the government is hoping for.
Former Pepper co-group CEO Patrick Tuttle told Mortgage Business that the government is attempting to “retro-fit” the levy for an underlying social purpose.
“It should simply be called out for what it is, a tax on a highly profitable sub-set of five Australian banks to help fast-track a future budget surplus,” Mr Tuttle said.
“The levy will not in any way ‘level the playing field’ between the major banks, the regional banks, smaller ADIs and non-bank financial institutions,” he said.