Banks, and most of all the biggest banks "should pay for any support they receive from taxpayers via the Australian government," the final report from the Productivity Commission on Competition in the Australian Financial System makes clear."This simply reflects commercial reality in the finance sector," a three-member panel, headed by Peter Harris, chair of the commission, declared in the report, released on Friday.The report called on banks to "levy a fee [on their depositors] to guarantee the financial and contractual obligations of their customers."In turn banks can expect the government to levy a corresponding fee on them. The first instalment of such a fee - six basis points on "unguaranteed" deposits and wholesale liabilities, came into force last year.Addressing the sensitive debate over whether select banks are beneficiaries from "expectations around government intervention for 'too big to fail' institutions," the commission framed its commentary around the fact that each major credit ratings agency "holds similar expectations on government intervention."Questioning assumptions, the report observed "the views of ratings agencies and capital markets persist despite the absence of direct policies or statements from the Australian government to confirm support of any kind would be provided."The views rest on experience, since "the Australian government's conduct in the wake of the GFC did little to disavow ratings agencies, capital markets and depositors of the notion that support would be supplied."The ratings agencies' habits are part of the problem, the report argued, given "uplift for major banks [credit ratings] partly reflects government actions, they nevertheless exacerbate perceptions of 'too big to fail'."The Productivity Commission scratched at "quantifying the extent of any funding advantage from the uplift in credit ratings" which it labelled "a difficult task."Drawing on RBA analysis from May 2016, the report explained "the size of an ADI can affect perceptions of its creditworthiness but size is also part of the ratings agencies' belief that government support will be provided in a crisis. "Disentangling these two effects on the funding cost of ADIs is difficult if not impossible. "Notwithstanding this, the RBA estimated the size of this subsidy for Australia's four major banks at $1.9 billion a year. This represents the amount of interest major banks saved due to their lower funding rates."With the ratcheting up of the regulatory capital the major banks are required to hold since the RBA modelling was undertaken … the funding cost advantage of the major banks may have reduced from that modelled by the RBA," the report concluded.