Bowen defends bank levy Treasurer Chris Bowen has suggested some banks may absorb the cost of Labor's planned 0.05 per cent bank deposit levy, after taxpayer guarantees helped the big four amass profits of more than $92 billion in the last four years. As he handed down a pre-election mini budget on Friday, Mr Bowen defended the levy as a sensible move that was backed by the nation's top financial regulators. The Australian Bankers' Association has slammed the move, but Mr Bowen argued some lenders may absorb the cost as a way of winning over more customers. "It could be that a bank or banks try to absorb some of that cost to make themselves more attractive to customers and make a virtue of that, I would be unsurprised if that were the case," Mr Bowen said in Canberra. I want big and strong and profitable banks, but the big four banks had had profits in excess of $92 billion collectively over the last four years ... One or more of them could make a decision to absorb that cost. Under the policy, a levy of 0.05 per cent will be placed on all deposits below $250,000 that are guaranteed by the government from 2016. All funds raised will be put in a stand-alone fund to be used in the event of a bank collapse. Mr Bowen said banks may also pass on the levy, but it could cause people to think about moving their money. The government stepped in to guarantee bank deposits free of charge during the global financial crisis, and Mr Bowen said this had been vital to their success in recent years. With all seriousness and respect to the bank ... this government stepped in during the global financial crisis and made an important step to guarantee bank deposits. More than one person has pointed out it was absolutely vital to the survival and prosperity of our banks," he said. "Unsurprisingly people in Australia's banks would prefer that the taxpayer continued to provide the guarantee with no charge to banks," he said. With about $670 billion in guaranteed bank deposits, the levy is forecast to raise $733 million in its first 18 months. The target is to develop a fund that is eventually worth 0.5 per cent of all guaranteed deposits. The policy was recommended Reserve Bank governor Glenn Stevens, Australian Prudential Regulation Authority chairman John Laker, and Australian Securities and Investments Commission chairman Greg Medcraft, who said countries overseas had similar levies in place. Mr Stevens, Mr Laker, Mr Medcraft are not known as radical or rash men. They are generally regarded as amongst the world's best financial regulators, and when they make a recommendation, the government should listen," Mr Bowen said.