The Morrison Government is expecting Australia’s major banks to renew their historical reliance on offshore funding over the next four years as access to new lines under the Reserve Bank’s Term Funding Facility shuts down at the end of next month.
Forward estimates published in the 2022 budget papers show the government expects revenue from the Major Bank Levy to rise by more than A$230 million over the next four years.
The levy is calculated at 0.015 per cent of the wholesale funding liabilities of the four major banks and Macquarie.
Retail sources of funding such as most personal deposits are excluded from the formula for calculating the levy.
The government collected $1.612 billion from the levy in 2020 and is on track to collect $1.65 billion this year.
However, the revenue haul is projected to rise to $1.85 billion in 2025 as the major banks are forced to progressively replace a portion of their domestic funding – including TFF drawdowns – with more expensive term funding from overseas markets.
Major banks are expected to make a final rush for cheap three- year wholesale funding through the TFF next month.
The banks are waiting until the end of June to complete TFF drawdowns to ensure they push out their refinancing horizons to June 2024.