Labor calls PM’s bank deal ‘a lettuce leaf’

OPPOSITION leader Bill Shorten has rubbished as "weak and pathetic" the prime minister's attempt to hold the banks to account.

On Thursday, angry that the big banks had not passed on the 0.25 basis points interest rate cut in full, the prime minister announced they would be required to face the Economics Committee once a year to give an account of how they run their affairs.

But on Friday Mr Shorten insisted the measures were not significant enough to ensure the Australian people were getting the best deal possible.

"Mr Turnbull yesterday flogged the banks with a wet lettuce leaf," he said.

"Having been humiliated previously, the previous day, by being ignored by the big banks who he's been running a protection racket for, by not offering and proposing a royal commission, which the Australian people want, into our banks.

"He comes up with this con job where he says that he will invite the banks to come down once a year to Parliament to explain their conduct. If this strategy was already going to work, it would have worked, because periodically the banks do come down in front of these inquiries."

But Mr Turnbull defended his position on breakfast radio on Friday, saying banks needed to earn confidence and forcing them to explain their actions would indeed make them accountable.

"Members of the committee will be able to raise issues, they might be issues that have arisen at the time or longer-term issues and of course this accountability means that when banks decide not to pass on the full extent of an interest rate cut from the Reserve Bank - they will know that they are going to have to explain themselves in the full glare of a public parliamentary committee room," Mr Turnbull said.

Despite well-publicised record profits, the big four banks say their hands are tied and although they would like to pass on cuts in full, they are restricted by elevated wholesale funding costs and higher regularity capital costs.

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