Budget 2026 establishes a prudential levy on banks, insurers, non-bank deposit takers and financial market infrastructure providers to fund Reserve Bank regulation costs.
Finance Minister Nicola Willis announced the levy, which is projected to generate approximately $209 million across four years. The funds will be paid to the Reserve Bank and returned to Government through an increased dividend.
The levy will fund the Reserve Bank's prudential responsibilities, including licensing entities, developing prudential requirements, monitoring financial health, supervising compliance, enforcement and crisis management.
The measure affects deposit takers, insurers and financial market infrastructure providers, including 27 registered banks, 14 licensed non-bank deposit takers, 81 licensed insurers across general, life and health insurance markets, and 5 designated financial market infrastructures. Those infrastructure providers handle the clearing, settlement and recording processes for payments, securities and derivatives transactions.
The four-year levy total represents less than 1% of the combined profits of the four largest banks alone. The approach follows the existing model used by the Financial Markets Authority and Commerce Commission, which already recover substantial portions of their costs through levies on market participants, and aligns with systems in Australia, Canada and the United Kingdom.
The Reserve Bank will begin consulting the sector after Budget day, with Cabinet targeting decisions in early 2027 and implementation mid-2027.