Federal Treasurer Wayne Swan says a reform package aimed at improving competition in the banking sector will put pressure on the major banks to better behave.
As the government waits for other major banks to follow the Commonwealth Bank’s lead in raising variable mortgage rates, Mr Swan took aim at the sector.
“There’s a culture of arrogance among the banks,” he told ABC Radio on Wednesday.
The Commonwealth, Australia’s biggest lender, took advantage of a surprise decision by the Reserve Bank of Australia (RBA) on Tuesday to almost double the official rate rise of 45 basis points, hiking its home loan rate to 7.8 per cent.
Westpac, NAB and ANZ have yet to announce their intentions but previously have flagged increases above official rate movements.
Mr Swan says the government has been working on a reform package with regulators.
“It will put pressure on the major banks to behave in a better way,” he told ABC Radio on Wednesday.
The package would go beyond the reforms outlined in a nine-point plan put forward by opposition treasury spokesman Joe Hockey, who says not enough has been done so far.
The government had not done a thing about a decline in banking competition following the global financial crisis, Mr Hockey said.
But Mr Swan said the government already had put in place measures aimed at improving competition.
“For example, our reforms to unfair mortgage exit fees start on July 1,” he said.
“I’ve always made it clear there would be further reforms because what you need here is very careful, methodical reform.”
Mr Swan said there was no silver bullet to improving competition.
“There’s no amount of hot air from Joe Hockey can solve the structural problems that we have in our banking sector.
“They have to be addressed over time with reforms that Mr Hockey and his colleagues never, ever contemplated in the 12 years they were in office.”