Opposition Finance spokesperson Helen Coonan says the government ought to be harder on the banks, taking steps to make them pass on the full amount of Reserve Bank cuts in official rates.

A perennially popular move.

But is this really the best the opposition can up with? This is not offering new options. It is simply repeating what the government has said, just a bit louder. A few days ago Wayne Swan said the banks deserved a kick up the bum for not passing on the rate cuts.

There are two things wrong with the apparently united view of Wayne and Helen on this.

Firstly, official rates are not the only factor in the cost of money to banks. Expecting them instantly to be able to pass on the full amount of any Reserve Bank rate reduction is naive. Such a suggestion does not inspire confidence in the knowledge and competence of either government or opposition.

Secondly, the banks are not charities. Nor are they in business to please their chums in government. They are in business to make a return on investment for their shareholders. That is their primary responsibility. That does not mean that can or do charge what they like.

The home and business loan markets in Australia in are highly competitive. It is easy for consumers to check rates. Market competition is the most effective way of ensuring the best possible terms to bank customers. Pouting and posturing by members of parliament may make good headlines. It may even win a few votes, or it might if government and opposition were saying anything different. But it won’t make any difference to the banks.