The ABA says the 2026 Federal Budget lays the groundwork for reforms that enhance productivity across the financial services sector and the broader economy.
Projected improvements to the overall Budget position through lower deficits and a more sustainable fiscal trajectory are also welcome. Ongoing fiscal discipline, including spending restraint, will be key to placing downward pressure on inflation and interest rates.
ABA CEO Simon Birmingham said that increasing the focus on improving productivity and regulatory reform would be crucial to supporting business investment, creating jobs, lifting living standards and driving stronger economic growth.
"At a time when Australians continue to face cost-of-living pressures, lifting productivity is essential to sustainably growing wages and improving living standards," Mr Birmingham said.
"Budget measures that support productivity growth across the financial services sector are vital to maintaining a strong and competitive banking system."
Further steps to implement CFR review into small and medium-sized banks
The ABA welcomes moves to increase the covered bond issuance cap from 8% to 12% as well as other recommendations from the Council of Financial Regulators review into small and medium-sized banks.
"This change to covered bonds is particularly important for small and mid-tier banks, who can face higher funding costs and more limited access to capital markets. Supporting a more competitive banking sector will strengthen competition across the market and deliver better outcomes for customers.
"We continue to support the Government's implementation of the review's recommendations, to promote more proportionate regulation where appropriate and greater competition in the banking sector."
Signs of progress on ATO data sharing
Banks also strongly welcome initial work to explore the use of ATO data through the Consumer Data Right, a reform the ABA and other industry groups have been advocating for.
"Securely sharing ATO data with banks could make loan applications easier and faster for customers and reduce the risk of fraud by increasing banks' ability to identify fraudulent applications.
"Work to make ATO data sharing a reality should progress at pace to ensure the multitude of productivity benefits it can deliver are realised."
Productivity package
"The Government's broader productivity package aimed at reducing red tape and regulatory costs is encouraging, alongside reforms that incentivise business investment and innovation, such as making the instant asset write-off permanent.
"However, productivity reform must not be set and forget. An ongoing and ambitious reform agenda is required to deliver long-lasting productivity improvements.
"The ABA, as a member of the Alliance of Industry Associations, reaffirms our call for all levels of Government to commit to a 25 per cent reduction in regulatory costs by 2030."
Overall budget position
"This is a Budget being delivered at a time of heightened global economic uncertainty which has led to higher cost pressures for Australian households and businesses. "Projected lower deficits, strengthening the fiscal position by $44.9 billion over the forward estimates must be realised to reduce inflationary and interest rate pressures on households and businesses."
