The proposed deposit insurance fund may reach A$19 billion over time, a little scrutinised regulation impact statement from the Department of Finance and Deregulation reveals.In early August 2013, the then treasurer, Chris Bowen, announced the establishment of a Financial Stability Fund. The fund will collect money through a levy on authorised deposit-taking institutions. The levy will start in January 2016 and will be set at 0.05 per cent on deposits of up to $250,000.Analysis conducted by the Department of Finance, produced before the election, contemplates a levy at twice this level and uses the higher level as the basis for the forecast of a $19 billion fund.The department also offers more analysis on the rationale for the levy and its impact on the industry."As the four major banks make up around three quarters of ADI deposits, the major banks will contribute the most to the fund.""However, the levy will have a higher proportionate impact on small ADIs. This is partly due to FCS protected deposits making up a higher proportion of small ADIs' funding when compared to the major banks."The department observed that "ADIs do not currently pay for the right to offer explicitly guaranteed deposit accounts under the Financial Claims Scheme. They benefit from free insurance that is not available to other entities (such as finance companies and managed funds).""The Government is not compensated for the insurance it provides through the FCS."Somewhat controversially, the regulation impact statement goes on to say: "In addition, systemically important ADIs do not pay for the benefits they derive from the market-perceived implicit government support.""As the IMF noted in its report on Australia's 2012 Financial Sector Assessment Program, [this fosters] lower funding costs [for major banks] than their competitors."The department said establishing a Financial Stability Fund would "act as a fiscal buffer by providing a ready source of assets that could be used to meet the costs of ADI resolution.""Secondly, imposition of a levy to build up a Financial Stability Fund would partially compensate the Government for the insurance it currently provides to ADIs. "Depending on its size, it would also off-set to some extent the benefit that ADIs receive from the capacity to offer FCS protected deposits (or, for those that are perceived by the market to be too systemically important to be wound up, the benefit of lower funding costs)."