Banks welcome Treasurer Jim Chalmers' release today of draft regulations to lift the cap on covered bond issuance, a practical step that would help small and mid-tier banks access cheaper, more stable funding.
ABA CEO Simon Birmingham said these changes, including streamlined reporting for smaller banks, are a welcome part of the Government's broader productivity agenda.
"Lifting the cap means small and mid-tier banks have more room to price competitively and invest in better services, which is good for competition and good for customers," Mr Birmingham said.
"This was a clear recommendation from the Council of Financial Regulators' review into small and medium-sized banks, and it's good to see the Government getting on with it.
"We also welcome plans to streamline reporting for smaller banks. Rules should reflect the size and risk of each bank, and less time spent on paperwork means more time and resources for customers."
Mr Birmingham also said the changes build on the Government's other reforms to help boost productivity, increase banking competition, reduce regulatory burden and costs in the financial sector.
"Sensible reforms like these cut unnecessary cost without lowering protections for customers. That helps build a more productive economy, which means higher wages and a better standard of living for Australians," Mr Birmingham said.
"The ABA reaffirms our calls for all levels of Government to commit to a 25 per cent reduction in regulatory costs by 2030, and for our financial regulators to commit to greater coordination in their regulatory approach through the Regulatory Initiatives Grid.
"Now it's about finalising the increase in the covered bond cap from 8 to 12 per cent quickly so banks can put it to work. Banks will keep working constructively with the Government and regulators on the next steps."
