The ANZ Bank says the new levy will mean lower shareholder returns

ANZ CEO Shayne Elliott giving evidence at a parliamentary committee enquiry. Image: Screenshot

The ANZ has made a formal response on the federal government’s new $1.5 billion a year levy on the big four banks and Macquarie.

CEO Shayne Elliott says the levy will a have an impact on the cost of consumer lending and on returns to shareholders.

The bank calculates that 85% of its liabilities will be hit by the new levy.

“This includes the majority of funding for customer lending in Australia,” Elliott says in a letter to Treasury.

He told Treasury the levy will mean “lower shareholder returns” but he didn’t put a number to it.

However, he said the ANZ paid about 80% of its profits, or $4.7 billion, to shareholders in 2016 as fully franked dividends.

The Australian Bankers’ Association (ABA) today called for the federal government to release Treasury analysis of the impact of the bank levy on the broader economy.

“It is an understatement to say that this tax requires a thorough Regulatory Impact Statement (RIS),” says ABA Chief Executive Anna Bligh.

“A poorly-designed tax could have consequences for the nation’s finances and for everyday Australians.”

The five banks have 24 hours to comment on the draft legislation before it is finalised this week on Thursday, May 18. It is due to be introduced to Parliament by May 31.

The banks say they are alarmed with the truncated time for consultation, as well as the fact there was no prior consultation and the that draft legislation will not be released for public comment.

“Further Treasury analysis is imperative, including on the modelling of the economic impacts of the tax, and banks should be given at least four weeks to respond to the Treasury analysis, the draft legislation and explanatory memorandum,” says Bligh.

The ANZ Bank says the tight timetable for introducing the tax, July 1, has economic and financial risks.

“We propose that the implementations schedule should be extended to allow for sufficient time for the design of the legislation to be properly considered prior to the first payment due for the September 2017 quarter,” Elliott writes.

Ellott also says the levy will mean reduced international competitiveness.

“While ANZ understands the government’s objectives regarding domestic competitiveness, the current proposal gives large foreign banks a significant competitive advantage over major Australian banks in domestic and offshore markets,” Elliott writes.

“ANZ recommends the new major bank tax should be applied to the domestic liabilities of all banks operating in Australia with global liabilities above $100 million.”

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