Federal Treasurer Wayne Swan has been accused by the opposition of acting like the head of one of the big four banks by telling Australians they should not expect the full benefit of an interest rate cut.
The government has refused to pressure the banks to pass on an expected cut in the official cash rate on Tuesday in full, saying Australia was in a "more complicated environment" than when rates were cut last month.
It is widely expected that the RBA will cut the official rate of seven per cent by as much as half a percentage point.
Deputy Opposition Leader and treasury spokeswoman Julie Bishop said the banks were "hiding behind" Mr Swan and that he had to explain why they should not pass on the full benefit of next week's foreshadowed Reserve Bank cut to interest rates.
"The banks have not given an answer and we're only hearing from the treasurer," Ms Bishop told reporters in Perth today.
"In the Reserve Bank's latest financial stability review it is pointed out that our banks are strong, they are well capitalised, and they are making record profits.
"Yet on the other hand, Mr Swan is telling the Australian people that banks cannot afford to pass on an interest rate cut should the Reserve Bank cut interest rates next week.
"Mr Swan should stop acting like the CEO of one of the big banks and act like the treasurer of Australia."
Ms Bishop said Mr Swan should explain how much he believed the banks should be able to retain of the profits they received through an interest rate cut.
Earlier this year, the banks put up their margin half a percentage point above the official cash rate, saying they were facing increased costs, she said.
"That's when interest rates were going up and yet they still recorded record profits," Ms Bishop said.
"And so Australians are effectively paying half a per cent more in an increased margin that they were previously.
"We need the banks to step out from behind Mr swan and tell the Australian people why they should get the benefit of an interest rate cut and not the small businesses, the home owners, the families who need relief at this time."
She said that amid record profitability and decreasing interest rates, Australians should be told what level of profitability the banks needed to maintain "in these difficult financial times".
Ms Bishop said she believed the US bailout package was "a solid start" in dealing with that country's credit crisis, but that the extent of the global financial crisis was yet to be seen.
"I don't believe we have yet seen the full extent of the fallout, most certainly not yet in the UK or Europe, and course there will be a flow-on effect through Asia and into Australia," she said.
"I think we have some months of difficult times ahead.
