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Treasurer Scott Morrison will announce at least $120 million in additional funding for corporate regulator ASIC as part of a suite of measures to be unveiled on Wednesday, after he and Prime Minister Malcolm Turnbull were challenged by the Coalition backbench on the need to crack down on bank behaviour.
The announcement will come a day after Mr Turnbull confirmed Australians will go to the polls in a double dissolution election to be held on July 2 and is designed to blunt the political impact of Labor's push for a banks royal commission.
The federal government's formal response to a capability review of ASIC, which was considered by the cabinet on Monday night, will more than restore the $120 million, four-year funding cut from the regulator in 2014.
In addition, government sources confirmed tougher civil penalties for wrongdoing and greater powers for ASIC were also on the table in a package designed to neutralise Labor's potent attack over banks.
The Senate crossbench, Labor and the Greens handed Mr Turnbull the trigger he needed for the poll on Monday and on Tuesday six backbench MPs raised the behaviour of the major banks - which have been involved in a string of financial scandals in recent years - during the last Coalition party room meeting before the May 3 budget.
After allocating three weeks for Parliament to debate the restoration of the construction industry watchdog, the two chambers rose after sitting for just a day and a half, kicking off the unofficial election campaign.
Late on Tuesday, government backbencher Dennis Jensen, who was dumped by the Liberal Party this month, said he was disappointed with the Turnbull government because "the strategic vision still doesn't seem anywhere".
"You still seem to have an issue where all of these pie in the sky ideas come out of nowhere," the MP, who called for Tony Abbott to be dumped in February 2015, said.
Mr Turnbull also faced questions over the apparent leak to Sky News of a planned advertising campaign that will trumpet $16 billion of savings over four years in the federal budget.
"After the budget, I will advise the Governor-General to dissolve both houses of Parliament and I will advise him to call an election on the 2nd of July," he said.
Mr Turnbull said no decisions had been taken with respect to the advertising campaign, while Foreign Minister Julie Bishop said those figures "are not ones that I've heard".
Labor has announced it will hold a $53 million, two-year royal commission into the banks if it is elected – an idea backed by 65 per cent of voters in Monday's Fairfax-Ipsos poll – but the federal government argues that corporate regulator ASIC is best placed to tackle issues in the sector.
Mr Turnbull and Mr Morrison stared down restive backbenchers in the party room meeting, arguing that voters wanted action, not a lengthy royal commission into the banks, and promising the government's plan to bolster ASIC would deliver a stronger "cop on the beat" in the banking sector.
In Tuesday morning's meeting, backbench MPs Warren Entsch, John Williams and George Christensen – all of whom have publicly called for a royal commission – and MPs Russell Broadbent and Sarah Henderson pressed the Prime Minister and the Treasurer to deliver a robust package of reform measures to crack down on banks' bad behaviour.
After the meeting, Mr Entsch told Fairfax Media he would continue to speak out for the victims of such behaviour and insisted "there needs to be greater penalties", though he conceded a royal commission "may not be the most effective way" to address the issue of banks' regulation and behaviour.
"I'll be all over this issue like a fat kid on a cup cake," he said. "Whatever the outcome is, I insist we have somewhere where victims can go with confidence and with no cap on payouts, so victims don't get paid a pittance."
Mr Entsch said he was "pleased" with the hearing he had from the Prime Minister and Treasurer, while Mr Christensen said he had argued that "if Labor give them [the banks] a black eye, we have got to give them two. And action would trump any inquiry but it would need to be serious action."
Mr Broadbent suggested the creation of a new banking tribunal – a proposal that met with approval in some sections of the party room – but that is understood not to be on the government's agenda.
In Parliament, Labor treasury spokesman Chris Bowen pressed the government on why it had "cut ASIC funding by $120 million and ignored at least 41 warnings from ASIC that they need greater powers and resources".
Mr Morrison fired back that Labor simply mentioned "royal commission and bank in the same phrase and they think that's a policy".
