No less than Australian Prime Minister Julia Gillard has joined the fray in publicly criticising the country's banks for imposing higher rates above that of the Reserve Bank.

In a morning show broadcasted today, PM Gillard said she is quite furious at the way banks acted in response to the recent increase in benchmark lending rates.

Ms Gillard has even urged the people "to vote with their feet and change banks if they aren't happy."

Other reports said Australia's Treasurer Wayne Swan is pondering: "To include government backing for the country's mortgage bond market."

The Australian also cited that Mr Swan is also considering a new safety net to replace bank deposit guarantees to increase banking sector competition.

The Treasurer was also said to have personally called on the banks to express his dismay over the rate increases imposed.

So far, among the four major banks in Australia, the Commonwealth Bank is the only one that has jacked up rates by 0.45 percentage points immediately after the RBA's announcement of its 0.25 point increase. The National Australia Bank, Westpac Banking Corp. and the Australia and New Zealand Banking Corp. have all deferred their rate adjustments amidst the public furor.

Before leaving for China and Japan on Wednesday, Mr Swan had issued a warning on the banking institutions not to underestimate the government's determination to increase competition in the sector if this will put an end to their unjustifiable rate adjustments upwards.

The Australian Bankers' Association, on the other hand, said in a statement that the banking sector's strength has been due to the regulatory functions of the Federal government and the robust growth of the Australian economy.

The country's four big banks have been criticised for charging higher rates albeit raking in huge profits in the last six months.

Steven Münchenberg, Chief Executive of the ABA, said: "Over the past year, the banks have paid out a record $15.8 billion in dividends. Dividends are paid to 'mum and dad' shareholders, to working Australians who are saving for retirement through superannuation accounts and to retirees who are increasingly dependent upon positive business profit growth. In the past five years, banks have paid out $70.5 billion in dividends."