Qantas brands banks a 'distraction' as company tax plan struggles

"I think every Australian is disappointed with what they are hearing at the royal commission," Ms Westacott said.

"We clearly have to act on the egregious behaviour and we need to make sure that we don't throw the baby out with the bathwater."

But she dismissed independent Senator Hinch's demand to exempt the banks from the cut as a "populist punishment action".

"To use tax policy to punish the sector is only going to punish shareholders and staff. Why would we punish a bank manager in a regional community?" she asked.

Business Council of Australia chief executive Jennifer Westacott.
Photo: Wolter Peeters

Qantas chief financial officer Tino LaSpina endorsed Ms Westacott's comments and warned gross domestic product would fall by 1 per cent without the tax cuts. He told the inquiry the number of flyers travelling with Qantas historically corresponds with rises in GDP.

Asked by Labor senator Kristina Keneally whether he was disappointed in the actions of some of the country's largest financial institutions, Mr LaSpina said: "You're right to say it would be great to focus on company tax cuts without being distracted on what is happening with the banks."

Hopes of getting the bill through the Senate when it resumes in May took another hit on Tuesday after Senator Storer confirmed he could still not support the bill in its current form, leaving the government two votes short of the nine crossbenchers needed to pass the cut.

"The economic benefits are modest compared to the cost," Senator Storer said.

He remains open to a revamped package should the government propose one, and does not believe the banks should be exempted despite being "shocked and appalled" by their actions.

Independent senator Tim Storer.
Photo: AAP

Senator Storer revealed infrastructure spending and a boost for social welfare were among his key priorities, but maintained he would not horse-trade to finalise a deal.

His desire to see an increase in the Newstart allowance could find support from the Business Council of Australia, which on Tuesday reaffirmed its support for an increase.

"People will bargain political deals but we have supported an increase in Newstart," Ms Westacott said. She declined to comment on whether she would support any move to tie its increase to the passage of the company tax cuts.

"We have always been supportive for single people, time and time again, providing it is also linked to reform of jobs service arrangements."

The government has already passed legislation to gradually lower the company tax rate from 30 per cent to 25 per cent for businesses with a turnover up to $50 million.