Labor calls for a bigger bank levy
The Morrison Government has not yet responded to calls from the Labor Opposition to increase the major bank levy.In an interview on Sky News on Sunday, shadow treasurer Jim Chalmers said an increase of the levy should be considered as part of a wider package to help improve competition in the banking sector."All of these options should be on the table. Not just the bank levy, which is a policy implemented a little while ago, but Labor took to the election a Banking Fairness Fund - about $160 million a year levied on the biggest banks to pay for financial counselling, to get the micro financing system right, all of these sorts of things," Chalmers told Sky."All of those options should obviously be on the table. "We're up for a conversation about that because we do have a problem here. "We do want our financial system to be as competitive as possible."No senior figure in the government has since ruled out the prospect of increasing the rate of the levy, which is currently set at 0.15 per cent of the wholesale funding liabilities of the four major banks and Macquarie.The government's silence might be an indication that it is considering hiking the rate to preserve its revenue take.A problem for the government is that the major banks are losing market share in residential lending and several other lending activities.This has resulted in a slowdown in the expansion of the major banks' wholesale funding liabilities.Treasurer Josh Frydenberg's special financial statements published on 19 September already show that the government is not meeting its revenue targets for the levy.According to the financial statements, the government raked in A$1.56 billion from the levy in the 12 months to the end of June - $134 million less than it originally forecast.If the major banks continue to lose market share then the government's revenue estimates for current and future years are likely to be severely tested.The easiest way for the government to preserve or enhance its revenue is to boost the rate at which the levy is enforced.While that would no doubt elicit a furious reaction from the Australian Banking Association, the government would be unlikely to cop pushback from other community organisations.