The second term Labor Government already needed to respond to the shadow treasurer's bank policy activism over the last two weeks, and the CBA's home loan rates decision yesterday only intensifies the need for the "reform package" foreshadowed yesterday by Treasurer Wayne Swan. Swan said yesterday that he will announce those reforms next month. He said: "In the last few months, the Government has been consulting with our regulators and we are working through, in a responsible way, a further package of reforms to make our banking system more responsive and to make it more competitive." The championing by Opposition treasury shadow Joe Hockey of a more activist policy toward banks is forcing the Government to search for a fresh round of initiatives on banking. No doubt the Government's, and the Treasurer's, innate caution will limit this reform package. At the same time, Swan, his political advisers and his department have been consulting on their options for some months, so some expansive options may be under review within Treasury. Swan will, after all, be looking for visible but credible proposals. Some banks may shrug all this off as the latest wave in a steady cycle, in which a periodic frenzy over banks produces a lacklustre response and little change follows. One pillar of the reform package will have to be the thresholds that will apply to any continuing guarantee on bank deposits. The present threshold of $1 million lasts for 11 months. There is pressure from smaller institutions to continue the present scheme, and pressure from bigger banks to water it down, possibly to less than $200,000. APRA will be left to reform capital and liquidity in line with international norms, however much this may discomfit some banks. Structural defects in the industry deserve attention but may not receive much. These include entrenched costs and the all too slow pace of investment in long-standing areas of operational weakness. Genuine portability in bank numbers is one technocratic option Treasury may look at. Ownership innovations - including any flavour of a Post Bank - may be some pundits' picks but seem a low prospect of engaging the Government, which has reviewed the issue in the past and shown little enthusiasm for it. Centrelink is a better candidate to be the operating core of any government-owned bank in any event, not that anyone is seriously suggesting this. The Department of Human Services has been reviewing options to improve its own payment, and thus banking, relationships, and Treasury and the DHS might find some plans could be roped into Swan's package. There will be pressure for the Australian Office of Financial Management to invest more in favoured types of loans from preferred, and smaller, lenders. Price controls of some sort may