No surprises here for regular readers.
From today’s Australian Financial Review:
The federal government will prop up the budget bottom line with a new levy on banks that will be badged as providing insurance in case future bailouts are needed.
The Australian Financial Review has learned that the government’s economic statement, set to be released Friday, will contain a deposit insurance levy as recommended by the Council of Financial Regulators, which will raise funds to underwrite any Australian bank should it need assistance in the future.
The proposed levy would be between 0.05 per cent and 0.1 per cent. Presently, the government guarantees deposits up to $250,000 without charging the banks.
Actually, the AFR has it wrong. Or at least, incomplete.
Yes, the Council of Financial Regulators may have “recommended” this.
But the real shot-callers, are the banksters at the IMF and the Financial Stability Board.
Recently, we saw that the IMF criticised the 2007 Rudd Government’s deposits guarantee scheme, introduced in a panic in response to the GFC. They said that, because of the “extreme concentration” in the Australian banking system, the Rudd scheme “increased moral hazard greatly”:
Australia: Financial Safety Net and Crisis Management Framework. Source: IMF (click to enlarge)
The IMF’s suggested solution to this “moral hazard” problem, was to make the banks pay “premiums” towards a “reserve fund” that could be used to support payouts under a depositor guarantee.
However, the IMF also noted that even if a requirement for premium contributions was established, Australia’s banking system is so highly concentrated that “it may be difficult to establish a fund of sufficient size that the deposit guarantee would seem credible” –
Click to enlarge
So what we have now, is the Rudd Government doing what the IMF says — introducing a “premium” levy on the banks — to (supposedly) establish a “reserve fund” for the deposits guarantee scheme.
But according to the AFR’s “source”, what the ALP will actually use this fee for, is to fill some of their ever-growing budget black hole:
A senior source said the levy would build up funds “over time” and would take several years to reach the billions. He said it would raise less than $1 billion over the forward estimates but build over the outer years.
The revenue raised by the levy will also be added to the budget bottom line, helping the government offset a forecast plunge in revenues since the May budget and meet its target of returning to surplus in 2016-17.
“It won’t fix the surplus problem in itself but it will help,’’ the source said.
The source said while the money collected would count as revenue, should the fund ever be drawn upon it would count as expenditure.
What we have here, then, is a supposed “fix” to the deposits guarantee scheme.
A “fix” that even the IMF says is not “credible”, because of the “extreme concentration” in our banking sector.
A “fix” that means the banks will now take more money off you (fees), to pay the new levy.
A “fix” that the government will really use for political purposes — to make its ever-deteriorating budget numbers look better.
How long will it be until we get our first bank bail-in, I wonder?
Related info here:
IMF Says Rudd’s Depositor Guarantee Scheme “Increases Moral Hazard Greatly”
Australia Plans Cyprus-Style Bail-In Of Banks In 2013-14 Budget
G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits… In 2010
Moodys Warns Of Australian Banking Collapse
UPDATE:
As I was saying (a week ago). This from the ABC –
Finance Minister Penny Wong would not comment on the reports but says a levy is something the Government has been looking into.
“The IMF and the RBA have put a view to the Government for a need for a fund to cover deposit protection,” she said.
…
Treasurer Chris Bowen is meeting with representatives from the Australian Banking Association in Sydney this afternoon to further consult on a possible deposit-protection levy.
Mr Bowen pointed to a report from the International Monetary Fund (IMF) which he says highlights a gap in Australia’s public policy when it comes to “provisioning for any potential bank or deposit-taking institution failure”.
As expected.
The government will point to the IMF’s report, as justification for their action.
Conveniently neglecting to mention, of course, that the IMF also indicated that the real problem is the “extreme concentration” in our banking sector, and because of that, establishing a reserve fund is not a credible solution to the problem of convincing depositors (ie, deceiving them into believing) that their deposits are protected.
UPDATE:
Reports that the “levy” will raise $733 million; banks to pass on the cost to customers; the money supposedly “quarantined” but the government will add the number to its Budget bottom line anyway, “for accounting purposes” (from the Guardian):
A new levy on Australia’s banks will raise $733m, adding to a tobacco tax rise worth $5.3bn to be unveiled in the Rudd government’s looming economic statement.
The government will create a financial stability fund recommended by the International Monetary Fund, the Reserve Bank of Australia and the Council of Financial Regulators, paid for by the levy on the banks.
The fund is designed as insurance in the event that a big Australian bank requires a bailout owing to global instability.
Er … owing to “global” instability?
We’ve plenty of internal instability to worry about. Just ask Moodys ratings agency.
The levy will be collected by the banking regulator, the Australian Prudential Regulation Authority, and deposited into a fund administered by a government agency. The money will be quarantined but, for accounting purposes, will go to the bottom line. The measure will help the government meet its surplus target for 2016-17.
The levy is not expected to take effect until January 2016. The government envisages imposing a notional 5 basis points levy on deposits of up to $250,000 for each account holder at every bank, mutual bank or credit union.
Banks are expected to pass the cost of the levy to their customers.
Which just goes to prove what a complete, total deceit a government budget really is.
A mass of shoddy “forecasts” and “projections”, cunning “revisions” and dishonest accounting tricks, all designed to make the government of the day look good .. for one day .. in May .. when they announce it.
Barnaby Is Right 
Reblogged this on The Voice Of Australians and commented:
1st they throw us into debt, then when you piss them off some more they throw us into further debt
Oh well, if “Bail-Ins” are necessary to “save the system, I guess they can have my $64.75.
When/if folks find out about the bail-in plans, then Banco de Mattress will start looking good to some.
Some day. Maybe.
Q: So what we have now, is the Rudd Government doing what the IMF says — introducing a “premium” levy on the banks — to (supposedly) establish a “reserve fund” for the deposits guarantee scheme.
Q: But according to the AFR’s “source”, what the ALP will actually use this fee for, is to fill some of their ever-growing budget black hole.
Could this also not be step one (that they will grab the revenue from while they can) of the Socialist G20 E.U NGO pushed “Robin Hood Tax” that they are all itching for to fill the 100 Billion a year GEF?
Possibly. Though my understanding of the “Robin Hood tax” proposal (otherwise known as a “Tobin Tax”, I believe), is that it would be applied to transactions (ie, flows of $$). Not deposits (ie, stocks of $$).
As usual, what they are supposed to achieve is just a cover, a smokescreen for other aims. If you search around the ‘net, I believe you will find plentiful critiques arguing that a Tobin Tax would not be efficacious in achieving the claimed end results.
Randy Credico is running for Mayor of New York on the platform of taxing Wall St with a turnover tax of 0.5%.With all the derivatives and share transactions, this will raise $ trillions for real production.
Our banking system alone, has derivative exposure of $21.5 trillion. Just a small tax will raise $ billions for infrastructure and services for the real needy. Which one of our polistitutes has the balls to do the right thing?
How do you think the levy aka theft will be introduced? Will it be applied to all existing accounts? Or future deposits?
Too early to say, I’m afraid. Let’s see what the government actually announces — this is all based on a leak, remember — and, let’s see how the banks react.
I imagine it will be well featured in the news, whatever is ultimately decided.
Australian federal election, 1983
In response to an attack from Fraser on the security of the banking system to protect people’s savings in which he asserted that ordinary people’s money was safer under their beds than in a bank under Labor, Hawke laughed and said “you can’t keep your money under the bed because that’s where the ‘commies are’.
Bob Hawke should know all about the ‘Commies’ as he was a Rhodes scholar and educated in the Rothschild banking morals of usury for the mob…. that’s you mate!
Old Mal turned out to be on target but what he didn’t enlighten us with was that usury money is inflating faster than the printing presses can produce and it would have been better to stuff it IN your mattress for added warmth… not under for wealth….. Gus
Indeed. Note too, that Tony Abbott is a Rhodes scholar as well.
Bob supported Israel also…. Gus
FEDERAL Opposition Leader Tony Abbott gave a strong endorsement of Israel’s right to defend itself during a speech at the Central Synagogue last Friday night. March 16, 2012
“In so many ways, [Israel is] a country so much like Australia, a liberal, pluralist democracy,” he said, “A beacon of freedom and hope in a part of the world which has so little freedom and hope.”
He added that Australians “can hardly begin to comprehend” the existential threat Israelis live under. “It is so easy for us in Australia to get moral qualms, if you like, when we read about Israeli actions in – on the West Bank for instance – or Israeli involvement in Lebanon.”
“And yet, we are not threatened in the way Israel was and is, and if we were threatened in the way Israel was and is, I am sure that we would take actions just as strong in our own defence.
“When Israel is fighting for its very life, well, as far as I’m concerned, Australians are Israelis. We are all Israelis in those circumstances.”
It appears from history that ‘good old Oz’ has always welcomed the Jewish bankers into its bosom and should one consider that the Vatican/Rothschild’s are the power behind the so called ‘sovereignty’ in England then usury is as much Aussie as vegemite!…. Gus
On June 19th, Australian Prime Minister Billy Hughes, is quoted with the following statement in the Saturday Evening Post, “The Montefiores have taken Australia for their own, and there is not a gold field or a sheep run from Tasmania to New South Wales that does not pay them a heavy tribute. They are the real owners of the antipodean continent. What is the good of our being a wealthy nation, if the wealth is all in the hands of German Jews?”
Andrew Carrington The Synagogue Of Satan
The Montefiores are the Jewish Kings of Australia: the first to go there was Jacob (1801-95) who arrived in South Australia in 1843 as agent for the Rothschilds (B, Vol. VIII., p. 666) where his reception by the Governor and the people is described as “enthusiastic.”
Arnold Leese….. Gentile Folly: the Rothschild’s
Is not this interesting that the Montefiores son, Jacob, was the first in Aus and controlled its natural wealth?
Is not this fascinating that the ‘family of Jacob came to Egypt.’ and controlled its wealth via the control of the grain and gold that was its wealth?… Gus
When the proverbial hits the fan, will KRudd then announce he won’t allow those naughty rich banksters to charge anyone who draws government “wages” ,aka pensioners ,of all types?
(Sorry, SFRs ,–going on past actions of the World’s Worst Incompetents– will inevitably miss out again if this occurs)
This may be of interest, PSI (Public Services International) a new vehicle to push that UN,ILO Globalised agenda.
Click to access en_volume_3_resolutions_3-49_30-01-2013_web.pdf
Resolution 13 & 14 aligns to that being pushed in the G20 meetings.
I don’t understand the logic of this 0.5% theft on bank accounts of $250,000 +.It will never be enough to bail out any bank failure.Is the intention to create instability?
When people begin to remove deposits to safer havens such as precious metals this means our banks via the fractional reserve system of banking have a lesser power to create new credit.ie ratio of savings to new loans is $1 savings : $10 of new loans. This will make our banks even more dependant upon our global central banks for credit creation and we as a nation even more impoverished.
Putting money into precious metals also reduces the liquidity in our economies and slows economic activity. Are our international central banksters trying to create a crisis here for their own advantage yet again?
You’re right Ross. It won’t improve stability at all.
Correct Ross, it appears there are forces in stupidity, greed or outright fraud at work here. This new approach will just feed the debt beast more and more, Like a fiscal black hole spiraling out of control.
The system is broken, we shouldn’t even be trying to save it. We should burn it down and start again.
Just how often will this “tax” be applied?
eg for fun, imagine it’s going to be at the end of the fiscal year, ie June 30th annually.
Wonder how many bank deposits/parts thereof will miraculously disappear during June only to reappear somewhere else for another 11 and 3qtr months of earning interest?
Seriously, If KRudd is going to try to get any more of my hard earned, I’m not going to sit idly by an allow him access–let him ask Tubby for his pocket money, she’s got plenty
.BTW, I find it inexplicable that she must run her businesses on sound economic lines while he is a fiscal fool of the highest order, so don’t they talk money ideas at home?
Of course they do,don’t you remember the old saying…”Opposits attract”.
You all realise where this is heading don’t you??
Remember Cyprus.