Turnbull says bank levy rate won't be increased once law is passed

Malcolm Turnbull has ruled out increasing the bank levy rate of 0.06% once it is legislated, meeting a key demand from the big banks.

The Greens senator Peter Whish-Wilson has criticised the decision, saying he holds Labor responsible for “playing politics” with the issue for two weeks and forcing Turnbull to rule out any increase in the levy.

The Greens would now be moving an amendment in the Senate to put a floor on the revenue collected by the bank tax.

“If we’re going to have the levy, we want it to raise a decent amount of money,” Whish-Wilson told Guardian Australia.

Turnbull confirmed on Friday that his government would enshrine the 0.06% bank levy rate into legislation.

“That’s the commitment, it will be in an act of parliament,” he told 3AW’s Neil Mitchell.

That will be a relief to the Australian Bankers’ Association, and the ANZ chairman, David Gonski, who called on the Coalition this week to enshrine the levy rate in law so it could not be increased in future without the agreement of both houses of parliament

Gonski also called on the government, in a letter to shareholders, to ensure that any future proposed adjustment to the levy be referred to the Council of Financial Regulators.

His intervention came after Deutsche Bank and Morgan Stanley analysts warned that the Coalition might have to increase the level of the bank tax toreach its revenue target of $6.2bn, given that early estimates showed it could fall short by half a billion dollars this year.

Whish-Wilson, a former banker, was the first to voice concerns about the levy, saying it might raise $1.5bn less than expected over four years, considering that the cost of the levy would be tax-deductible.

Labor picked up on those concerns, and the shadow treasurer, Chris Bowen, called on the government to rule out raising the rate to make up the shortfall.

Whish-Wilson said it was far too early for the government to be promising not to lift the levy rate, given that it was still not clear how the levy would be structured.

He also criticised Labor for joining forces with the big banks to wedge the Coalition.

“If there are issues with the structuring of the bill, then we’d urge the prime minister to at least keep an open mind about it, particularly if it can be gamed by the banks when it comes to the liabilities that will be taxed,” he said.

“I am astonished that Labor seems more interested in playing crass politics and providing political cover for the big banks than in raising revenue to be used for schools and hospitals.

“They should join with the Greens in trying to make sure that the levy raises the amount of funds that it was supposed to.”

He said the Greens would move an amendment to the bank levy bill so that the Council of Financial Regulators could adjust the levy annually to account for the too-big-to-fail premium the big banks receive and to ensure the levy is also sufficient to maintain competition in the sector.

Bowen did not respond to Whish-Wilson’s criticism.