The Coalition called the federal government's newly-revealed banking reforms package as mere political patches and insisted that the proposals' shortcomings would prove inadequate in solving the ills of the Australian banking system.

Federal Treasurer Wayne Swan released over the weekend his new banking tweaks that calls for the abolition of exit fees on new home loans by July 2011, the setting up of credit unions and building societies as banking alternatives with up to $4 billion worth of government guarantee and the further empowerment of the Australian Competition and Consumer Commission (ACCC) to conduct inquiries on allegations of price signalling.

The reform measures, however, was labelled by opposition treasury spokesman Joe Hockey as mere political ploy, with its provisions structurally flawed.

Hockey admitted though that a number of initiatives pushed by Swan are commendable as he insisted that the government could have pushed the limits and should have adopted the recommendations tabled by the opposition.

The Coalition would be generally supportive of the reform measures, according to Hockey, but they would keep their vigil on Swan's commitment to further cut back banking fees and ease down interest rates imposed by Australia's giant banks.

On its part, the government has expressed confidence that its sanctioned banking reforms would prove effective and enduring and would spawn the highly-anticipated banking competition and economic prosperity, regardless of the opposition's backings or criticisms.

Yet critics are quick to point out that scrapping bank's exit fees could backfire and hurt small lenders, which would be forced to pass on lost revenues on consumers by imposing higher interest rates.

Also, former ACCC chair Allan Fels told ABC that the reform package may have come a little too late to push for more competition in the industry as he argued that the government should have not permitted the Westpac-St George merger, which he stressed effectively erased the possibility of having a fifth pillar in the sector.

However, present ACCC chief Graeme Samuel insisted that the merger would not make any difference even on the sector's current competition environment as he advised critics that focus should be trained on efforts to stamp out price signalling among banks, which he said is very much active in the industry.

Meanwhile, independent Senator Nick Xenophon welcomed the government's reform initiatives though he admitted that the measures need more fine tuning in order to establish the real intentions and priorities of Australian banks.

Senator Xenophon pointed out that at this time, the general sentiment of banking clients pointed to the notion that "banks' priority has been to maximise shareholder returns and that's come at the expense of the millions of bank customers out there."