Treasury proposes increase in supervisory levies

Late last week, Treasury proposed a 1.5 per cent increase in the Financial Institutions Supervisory Levies for the 2023-24 financial year, with the increase attributable to a 3.4 per cent boost in APRA’s levies requirements.

According to Treasury papers, APRA’s funding from levies is proposed to increase from $214.8 million last year to $222 million in 2023–24, while the budget total cost for APRA is projected at $239.1 million, largely due to the movement of funds between financial years as well as changes in the government indexation framework.

Authorised deposit-taking institutions (ADIs) are proposed to experience a slight increase from $91.4 million to $91.6 million. This funding from ADIs in 2023–24 represents 34.8 per cent of the total levies, a slight decrease from 36.6 per cent in 2022–23.

The Treasury noted that in 2023–24, APRA’s supervisory activities in the ADI industry will focus on preserving trust in banks’ financial and operational resilience and embedding capital reforms for banks, to ensure Australia’s financial system remains safe and stable.

Total levies funding of $20.4 million is to recover the costs of APRA’s supervision of the life insurance industry, compared to $20 million in 2022–23. Levies funding from life insurers/friendly societies in 2023–24 represents 7.8 per cent of the total levies, which is consistent with the previous year.

Over the next financial year, APRA’s supervisory activities in the life insurance and friendly society industry will remain focused on the establishment of a sound basis for long-term product sustainability, ensuring good prudential outcomes for life insurers, and good long-term consumer outcomes.

The superannuation industry will see a significant boost in its levy funding with it said to hit $70.1 compared to $61.3 million a year earlier.

Looking ahead, Treasury confirmed, APRA’s supervisory activities in the superannuation industry will continue to focus on holding trustees to account to improve the member outcomes they are delivering, and to actively address deficiencies in their practices ensuring all Australians are well served by the superannuation system.

Funding for ASIC was scrapped from the 2023–24 budget, resulting in a saving of $100,000.

Treasury’s proposal is open for consultation until 9 June 2023.