Big four look to stall levy, warn over funding costs

The respective bosses of the big four each wrote a submission to Treasury outlining their concerns with the levy, announced by the federal government last Tuesday.

ANZ estimates that around 85 per cent of its liabilities will be impacted by the new tax. Chief executive Shayne Elliott said “this includes the majority of funding for customer lending in Australia”.

Mr Elliott took issue with what he called an “extremely tight implementation timetable” and urged the government to extend the deadline to “allow sufficient time for the design of the implementation to be properly considered prior to the first payment”, which is due for the September quarter of this year.

Meanwhile, CBA chief Ian Narev said the government’s timetable is “not only ambitious but risks poor implementation and ultimately implementation failure”.

NAB slammed not only the implementation deadline but the short notice given to get its submission in.

“NAB appreciates the opportunity to provide this written feedback, but notes that being asked to do so in just two business days is highly unusual and reflects poorly on Australia’s public policy making process,” NAB group CFO Gary Lennon said.

“NAB has a long history of engaging with Treasury on reforms associated with the Australian economy and banking sector. While we are confident this will continue in the future, we note that the process involving this levy has been an aberration. It is in the best interests of all Australians that this matter be slowed down so unintended consequences and economic implications can be better understood,” he said.

Westpac expressed its concern at the “rush” with which the levy is proposed to be passed into legislation and the lack of a thorough consultation process.

“In the limited time made available to us, it is unlikely that we have been able to contemplate all such issues and therefore we recommend continued monitoring of the impact of the levy and the need to be able to quickly adjust the levy framework to correct for unintended consequences,” Westpac chief financial officer Peter King said. “We recommend that legislation be drafted with this intent in mind.”

All four major banks have argued that the levy is at odds with regulatory efforts sparked by the Financial System Inquiry to make the big four “unquestionably strong” by holding sufficient levels of capital.

The big four have also warned that the levy gives large foreign banks a competitive advantage over the major Australian banks in domestic and offshore markets.

More to come.

[Related: Majors tipped to hike home loan rates over levy]