The ANZ bank has signalled that it will make an announcement then.

The three other big banks will be watching closely.

Meanwhile, the Federal Treasurer, Wayne Swan, has some advice for Australians who find that they are expected to pay more.

Put bluntly, it is “walk.”

“We’ve empowered the consumer,” Mr Swan said.

“So if the bank takes a decision with which they disagree they can walk down the road and get a better deal.

“ The standard variable rate on average from the major banks at the moment is 7.3 per cent.

“You can get far better deals than that elsewhere in the financial system right now,” Mr Swan said.

Where?

He had some hints to offer about that, too.

“We’ve strengthened the credit unions,” Mr Swan said.

“We’ve strengthened the smaller banks.

“What I want to see is red hot competition out there.

“That’s what we need in this system,” the Treasurer said.

Once again, Mr Swan described Australia’s big four banks are “extremely profitable.”

“So the notion that our banks can cry poor in this environment is simply not credible,” he added.

The banks are insisting though that they must be able to cover the now higher costs of the funds they borrow overseas, to lend to Australian home buyers and small businesses.

The Reserve Bank acknowledged that Australia’s banks are, indeed,  having to meet higher costs of this kind.

It did that when it surprised markets on Tuesday by keeping its marker rate at 4.25 per cent.

One well placed source said offshore funding accounted for about 20 per cent of the funds raised for  bank lending.

He estimated that this would add at least 0.1 per cent to their costs.

Another small cut had been widely expected.

However, the Bank’s Governor, Glenn Stevens, said  a “moderate” economic expansion is occurring in the United States.

He said too that  “acute financial pressures” in Europe  had been “alleviated considerably” late last year.

Mr Stevens also said that the two rate cuts, that the bank announced late last year, had left the rates Australia’s borrowers pay close to their “medium term average.”

“With (domestic) growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment,” the Reserve Bank Governor added.

The decision has, at least, postponed a looming stand off between the Federal government and Australia’s big four banks.

The Treasurer, Wayne Swan, had called on those banks to pass on any rate cut in full.

He said that  banks which did not do so would be acting to protect their “huge profitability.”

The banks might well have resisted that demand, if the Reserve Bank had cut its marker rate.

Bank executives, including Westpac’s chief, Gail Kelly, argue that the costs Australia’s banks now incur, raising funds for home and business loans, has risen as a result of the European debt crisis.

The risk of an all out confrontation between the Federal government and the banks eased when the Reserve Bank kept rates on hold.

Mr Stevens did admit that more needs to be done to bring Europe’s debt problems under control,

“Much remains to be done to put European sovereigns and banks on a sound footing, but some progress has been made,” he said.

Mr Stevens admitted, though, that financial market sentiment “remains skittish.”

He also said : “information on the Australian economy continues to suggest growth close to trend,

Mr Stevens admitted, though, that differences between sectors still persist.

“Labour market conditions softened during 2011 and the unemployment rate increased slightly in mid year, “ he said.

However unemployment had been steady over recent months.

Consumer price inflation “has declined as expected,” he added,

Mr Stevens said that had happened as fresh food prices eased, as the large rises resulting  from last year’s floods, passed.

“Year-ended CPI inflation will fall further over the next quarter or two,” he added.

“In underlying terms, inflation is around 2½ per cent,” Mr Stevens said.

Despite an improvement in the latest Herald Neilsen poll, published in The Sydney Morning Herald  today, Labor still trails the Coalition 47 -53.

Ms Gillard also saw a 6 point rise in her approval as Prime Minister.

Even on these figures, though,  Labor would still be soundly defeated in a general election.

Even so, that was still an 8 point improvement for Labor.

Meanwhile, the Opposition Leader Tony Abbott has also virtually ruled out an attempt to bring down the Gillard government, by mounting a no confidence motion, when parliament resumes this week.

Instead, the Prime Minister told reporters she was looking forward to a planning session with Labor MPs, when she arrived for a Caucus meeting yesterday.

The meeting decided to attack the opposition on the economy, with MPs saying Mr Abbott had failed to set out an alternative plan for Australia’s economic management, when he addressed the National Press Club last week.

Ms Gillard told the meeting that Labor needed to present its message more clearly.

She also called for discipline, warning MPs to stop backgrounding reporters.

Meanwhile the Treasurer, Wayne Swan, who strongly supports Ms Gillard, reminded the public of Labor’s achievements, since it took office.

Mr Swan said families with a typical $300,000 home loan,  are now saving $3,000 a year on repayments, through lower interest rates.

He also said the Reserve Bank’s marker cash rate, which had been 6.75 per cent, when Labor came to power, is now 4.25 per cent.

Mr Swan also described Australia’s big four banks as “hugely profitable.”

He said they would be well able to pass on any rate cut the Reserve Bank might announce on Tuesday, in full. (see separate story)

Mr Swan claimed, too, that the government’s record of job creation is “outstanding” with 700,000 Australians gaining jobs over the past four years.

Tony Abbott, though, insisted that Australians still  needs a “better government right now.”

“I think we need an election,” Mr Abbott said.

However, Mr Abbott  said that while ever Craig Thompson is in Parliament “I think this government is firewalled against a no confidence motion…”

In a television interview, Mr Abbott also accused Fair Work Australia “or elements of it” of collusion with the government, in the Craig Thompson case.

Fair Work Australia has been investigating allegations that Mr Thomson, now a Labor MP,  misused union credit cards.

However FWA has not yet produced a report on the case, despite long proceedings.

Mr Rudd, the Foreign Minister, who is overseas on duty, did not attend the Caucus meeting, which was followed by a barbeque Ms Gillard held for Labor MPs, at the Lodge.

Although she is likely to survive as Prime Minister, at least in the short term, Ms Gillard’s position remains weak.

Both public and private polling has shown, consistently, that she does not have the public support she would need, to win the Federal election due next year.

That polling also shows that Kevin Rudd, the man she deposed from the nation’s top job, would have a much better chance of victory in that election.

Ms Gillard dismisses talk of a Rudd challenge as media “chatter.”

But Labor party bosses are not completely convinced.

And the chance of even a highly embarrassing victory next year, with a recycled Rudd leading the campaign still tempts them.

The Treasurer was speaking, in a television interview,  just days before the Reserve Bank board meets to review Australia’s interest rates.

A third rate cut, also of 25 basis points, is widely expected.

However, bank executives, including Westpac’s chief Gail Kelly, have been signalling that they might not pass on the full amount of any rate cut, that the Reserve Bank might announce on Tuesday.

Mr Swan’s pre-emptive response was swift and sharp.

“Customers would have every right to be angered if their bank decided to hang on to part of a rate cut to boost their profits,” he said.

“There’s no doubt Australia’s major banks are hugely profitable,” the Treasurer added.

“Despite the current global volatility, their net interest margins are still around pre-crisis levels and are around their average over the past decade.

“Their return on equity is much higher than most of their global peers,” Mr Swan said.

That is not what the banks have been saying.

Ms  Kelly, for example, has said that the funding costs Australia’s banks face rose quite strongly in the second half of last year.

Westpac, itself, admitted last week that it is planning to cut 300 to 400 jobs and union sources have said that as many as 560 jobs could well disappear at that bank.

The ANZ bank, too, has already cut more than 100 jobs and more jobs are expected to go at the ANZ over coming months.

Other banks are also understood to be reviewing their staff levels, in the light of recent developments.

Mr Swan described recent announcements of job cuts,  most notably in the banking and car industries, as “disappointing.”

Speaking principally of the car industry, he said: “There’s no doubt that many sectors are doing it tough at the moment, particularly with the high Australian dollar.”

Westpac is the latest to announce cut backs, admitting that 300-400 jobs will go.

The Prime Minister Julia Gillard refused to comment, saying the bank had not made a formal announcement when she met reporters.

However she insisted that the nation’s  finance industry has “a bright future.”

News of the planned Westpac cuts came shortly after the Australian Bureau of Statistics reported that home building approvals fell by 1 per cent in December.

The Housing Industry Association said approvals  fell three times in the last four months of last year.

The association’s chief economist, Harley Dale, urged the Reserve Bank to lower interest rates, yet again, when its board meets next Tuesday.

Otherwise, he warned,  housing starts will fall to a level below that experienced during the depth of the global financial crisis.

Dr Dale also urged Australia’s banks to pass on any rate cut, in full.

There have been signs that at least some of the banks may be reluctant to do that, even though banking profits are still strong.

Ms Gillard admitted that job losses present family problems..

“…. for anybody to lose their job or to be confronted with a redundancy is a very tough moment for them and for their family.

“… they have all of our thoughts and all of our support,” she added.

But she  was optimistic.

“…when we look at the future, we can see a bright future for financial services,” Ms Gillard said.

“We live in a region which is growing. “

The  middle classes in both China and India are growing.

“ So I believe our financial services sector has a very bright outlook,”

However the Finance Sector Union described the latest job cuts as “a disgrace.”

Its national secretary Leon Carter told the ABC:”Times are tough out there.

“… the only people who aren’t doing it tough are big banks like Westpac that are making multi-billion-dollar annual profits.”

The Bureau said approvals fell by 16.7 per cent in Victoria, 9.1 per cent in South Australia and 5 per cent in New South Wales.

But they rose by 24.6 per cent in Queensland, 15.6 per cent in Tasmania and 6 per cent in Western Australia

Fair Work Australia  granted rises of between 23 and 45 per cent to about 150,000 workers that Ms Gillard said are among the lowest paid in the nation.

The Prime Minister said 120,000 of threse workers are women, working with difficult jobs in a caring industry.

Their work included counseling families in crisis, running homeless shelters and working with victims of domestic violence and sexual assault.

Fair Work Australia had previously identified these workers as  underpaid.

The ABC reports that in its ruling today, Fair Work Australia said the highest paid employees would receive a 41 per cent, or $24,000 pay rise, bringing their annual salary to $83,000.

Workers on the lowest award rates will receive a rise of 19 per cent, an increase of around $6,000 per year.

The new rates would be phased in over an eight-year period beginning on December 1.

Ms Gillard said an appropriate phasing in period is “unquestionably needed.”

This scene is reflected in two new reports.

Another report, by the Housing Industry Association,  also showed that new home sales fell by 4.9 per cent in December.

The Bureau of Statistics reports that, on average, the price of established homes in the nation’s capitals fell by 4.8 per cent last year.

That included a fall of 1 per cent in the final three months of the year.

The falls, throughout 2011, ranged from a high of 6.7 per cent in Brisbane, to a low of 2.6 per cent in Canberra.

The comparable falls in other capitals were Sydney 2.7  per cent,  Melbourne 6.1 per cent, Adelaide 6.4 per cent, Perth 4.9 per cent, Hobart 4 per cent and Darwin 5.4 per cent.

Meanwhile, the National Australia Bank reported that its property index had turned “slightly positive” in the December quarter.

It said this has happened as “the pace of national house price decline slows and rental growth accelerates.”

The bank said this  followed two quarters of  “negative results.”

“Although  conditions improved in all States, there is considerable variation in State performance,” the bank said.

Conditions are still weakest in Victoria and Queensland and strongest in New South Wales and Western Australia.

“National house prices are still falling, but the pace of decline slowed” to 2 per cent in the December quarter from 2.4 per cent the previous quarter.

The bank said it expects house prices to fall by another 0.54 per cent in 2012.

That is slightly above the nation’s adjusted inflation rate of 3.1 per cent.

Although directly comparable wage figures are not yet available,  the best indications suggest that wage growth, over the same time, would have covered that rise.

The latest available wage figures show average weekly earnings in Australia rose by 4.7 per cent in the 12 months to the end of August.

The Bureau of Statistics also reported today that the average cost of living for Australian pensioners rose by 3 per cent in 2011.

Both groups benefited from lower fruit and vegetable prices in the final three months of last year.

The main price rises, for working families, were in the cost of domestic holiday travel and accommodation, rents and interest charges.

The living costs, faced by pensioners, fell by 0.4 per cent in the December quarter.

They made some savings on lower pharmaceutical charges but, like other Australians, pensioners also faced higher rents in that time.

Self funded retirees saw their living costs fall by 0.1 per cent in the final three months of last year, but their costs, too, rose by 3.3 per cent over the year.