Majors react to Budget’s bank levy

The major banks have issued their official reactions – some heavily critical, others neutral – to the Budget's proposed bank tax

Majors react to Budget’s bank levy



Senior executives from the major banks as well as the Australian Bankers’ Association (ABA) have come out against the $6.2bn bank levy proposed in the Federal Budget on Tuesday (9 May).

Andrew Thorburn, CEO of National Australia Bank (NAB), said the tax will impact millions of everyday Australians including employees, customers and shareholders.

“It is not just a tax on a bank. It is a tax on every Australian who benefits from, and is part of, our industry,” he said.

Those affected include 10 million NAB customers (depositors and borrowers), 570,000 direct NAB shareholders, over 1,700 suppliers to NAB and the 34,000 staff at the major bank, he said.

“A tax cannot be absorbed. This tax is borne by these people. It is not possible to impose a tax without an impact on people, and therefore the wider community.”

“While we wait for further information about how this tax is proposed to work, our focus at NAB remains on supporting our customers during what is a critical time in the Australian economy.”

Brian Hartzer, group CEO of Westpac, said the tax was a hit on bank customers as well as a “stealth tax” on the retirement savings of millions of Australians.

“Yesterday, $14 billion of value was wiped off Australian bank shares because of speculation around this new tax,” he said.

“There is no ‘magic pudding’. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees.”

The banks were already Australia’s largest taxpayers, he said, with Westpac paying more than 30% of its profits in tax.

“It is disappointing that the Australian Government has implicitly favoured large foreign banks over Australian banks operating in their home market.”

“In addition these reforms are directly counter to APRA’s objective of making the banks unquestionably strong, as higher taxes reduce the banks’ ability to generate capital that supports lending and stability in times of stress.”

ANZ had a more neutral tone when responding to the tax saying “at this stage it is too early to provide a definitive estimate of the financial impact on ANZ”.

An update to the market will be provided once an analysis is complete, ANZ said.

The Commonwealth Bank of Australia (CBA) also took a softer tone with CEO Ian Narev saying time was needed to work through the implications.

“This is particularly so given the lack of detail and the absence of any consultation. However, as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.”

CBA looked forward to the Treasury outlining how this tax will apply in practice, he said.

“Once we have received all the details on the new tax, we will do our best to strike the right balance to ensure we continue to enhance the financial wellbeing of people, businesses and communities.”

Finally, chief executive of the Australian Bankers’ Association (ABA), Anna Bligh, slammed the tax, saying it was a “direct attack” on jobs and growth which could hurt investment.

“Contrary to the government’s claim that the tax will only be levied on banking liabilities, the reality is that it will affect the entire banking system,” she said.

“This new tax is not a well thought out policy response to a public interest issue, it is a political tax grab to cover a budget black hole.”

She called the tax “naive and misguided” and expressed her disappointment at the lack of consultation with industry around the proposed levy.

“In a period in which there has never been more consultation between government and banks on a wide range of issues, on this issue there has been none.”

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