A sound fiscal policy and a lean budget plan could help the federal government in effectively curbing runaway public consumption instead of over-reliance on tweaking Australia's interest rates.

More so, if the government wants to enhance competition in the banking industry, Suncorp chief executive Patrick Snowball said on Monday that deeper look on the sector's supply and cost funding should be undertaken soon.

Addressing the Australian Institute of Company Directors gathering in Brisbane, Mr Snowball said that lesser government spending would do more wonders in cutting back consumptions and encourage the accumulation of more savings.

He said that by strictly instituting microeconomic reforms in areas of taxation and infrastructure, the federal government should be able to reallocate its spending on more pressing concerns, with the direct result of reducing "the current heavy reliance on interest rate rises to control economic growth."

Also, the Suncorp executive said that more competition in the banking industry would arise if the government would rethink the sector's funding flows, which "influences the level of competition between the various providers of financial services and it is the major structural challenge we face."

Mr Snowball noted though that for the moment, funding reforms could encounter difficulties in implementing regulations that would regulate the movement of the industry's interest rates and banking fees as the issue is always attended by partisan concerns.

A more viable alternative, according to him, is the encouragement from federal authorities for banks to adopt a wider range of competitive funding options in light of the recent industry developments, where "banks have diversified their funding and in total currently obtain around 50 per cent from deposits, with regional banks obtaining up to 70 per cent of their funding from this source."

Mr Snowball said that the bank funding shift were moves made by the industry towards the appropriate path but he is quick to remind that such decision entails higher costs amidst the financial realities that pressures remain in global debts and shares market while the domestic supplies appear dwindling.