A key crossbench senator hopes a new levy on the nation's big five banks will even the playing field for smaller institutions.
Chief executives of Commonwealth Bank, National Australia Bank, ANZ and Westpac have already labelled the $6.2 billion levy over four years a "bank tax", with three of the four explicitly saying the cost will be passed on to customers.
Senator Nick Xenophon said community and regional banks could now be more competitive after doing it tough since the global financial crisis.
"If the big banks want to slug their customers, which they shouldn't ... then I think that will actually drive people to those smaller banks," he told reporters in Canberra on Thursday.
Senator Xenophon wants some of the revenue raised from the levy to go towards a compensation scheme for victims of financial misconduct.
Liberal Democrat David Leyonhjelm said the big five would probably be wishing they faced a royal commission instead of a new levy.
"I do have a message for the banks. What are you getting for all those donations you gave to the Liberal Party?" he said.
"There is more bank-bashing now from the Liberal Party than you were ever likely to have copped from the Labor Party."
Senator Leyonhjelm won't be supporting the levy and was open to taking the bank's donations.
Labor senator Murray Watt said the government was taking from the banks with one hand, but wanting to give them tax cuts with the other.
But the opposition wouldn't be standing in the way of the measure.
Deputy Prime Minister Barnaby Joyce said Australia's banks are very profitable and were supported through the GFC.
"I think this is a fair levy," he said.
Liberal MP Sarah Henderson said passing on the cost to customers was a silly move by the banks.
"They have got the capacity so they need to do the right thing," she said.
Treasury officials will on Thursday brief bankers in Sydney after Treasurer Scott Morrison urged them to "pony up" and not pass on the levy to consumers.
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