Prime Minister Malcolm Turnbull has warned the upcoming federal budget will not be about a “fist full of dollars” but rather focused on prudence.

Addressing the Victorian Liberal Party conference in Melbourne, Mr Turnbull confirmed there would be changes to taxes in the May budget but cautioned the government had to live within its means.

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“This budget will not be about a fist full of dollars, it will be about prudence, fairness and responsibility to our future generations,” he said on Saturday.

Meanwhile, the federal government has dismissed the idea of extending its royal commission crackdown on unions to the scandal-plagued big banks, as Labor considers the idea and economists urge action.

On Thursday, Treasurer Scott Morrison confirmed the government was not proposing a bank inquiry, accusing the Opposition of “seeking to play politics” in order to divert attention from union corruption.

He was echoed by Finance Minister Mathias Cormann, who said he saw no need for such an inquiry because white-collar criminals were already subject to harsh penalties.

Talk of a royal commission began on Wednesday when Mr Turnbull, at a Westpac Bank event no less, lashed the big banks for poor treatment of customers and culture of greed – comments described by one senior economist as a historic first.

Mr Turnbull told bank executives to clean up their act or risk losing their “social license”, and accused them of not always treating their customers as they should “despite the public support offered at their time of need” – presumably a reference to government guarantees during the global financial crisis.

But the PM dodged a question from a reporter that same day on a potential bank royal commission. His government’s position was clarified a day later by senior Cabinet ministers.

An election fought on bank misdeeds could be brewing, with the Australian Financial Review reporting on Thursday evening that internal Labor discussions on a bank royal commission have been “fast tracked”, according to an unnamed source.

Mr Turnbull’s rebuke was a response to alleged insurance and financial advice scandals at the Commonwealth Bank, ANZ and Westpac.

The latest allegation is that Westpac employees colluded to manipulate the bank bill swap rate, according to phone conversations taped by corporate watchdog ASIC.

The government’s response under Tony Abbott to reports of trade union corruption was a royal commission.

Mr Turnbull has also threatened to call a double dissolution election if the Senate blocks his attempt to restore a construction industry watchdog, the Australian Building and Construction Commission (ABCC).

Opposition Leader Bill Shorten said on Thursday that the Prime Minister’s bank criticism pointed to the need for an inquiry.

He called on the PM to “stop ruling out quickly” the option of a royal commission, but stopped short of promising one if elected.

“I think Australians are sick of politicians who talk tough and do nothing,” he told reporters in Brisbane.

Economists urge action

Industry Super Australia chief economist Dr Stephen Anthony told The New Daily the banking sector is one more scandal away from impacting business confidence and hampering economic activity at “exactly the wrong time in the business cycle”.

Dr Anthony said the banks’ business model and practices were not aligned with community expectations of fair and ethical conduct, and that it was now time for the government to “send the appropriate signal to the sector so that this can never occur again”.