Financial Services Minister Kelly O’Dwyer has repeatedly refused to admit the Turnbull government was wrong to staunchly oppose a banking royal commission for two years as her leader racked up his 31st consecutive Newspoll loss.

While Sunday night’s poll was another loss for the Coalition, it was a dramatic turn of fortunes, with a one percentage point bounce bringing the government back to 49 points to Labor’s 51.

It was the government’s best two-party polling since September 2016, The Australian reported, as Treasurer Scott Morrison’s “Santa Claus” budget looms.

After enduring months of political pain, the polling turnaround was well-timed for a budget on May 8 that is likely to be an election pitch with a federal poll due within the next 12 months.

In another good sign for Mr Turnbull, he remained preferred PM at 38 per cent to Opposition Leader Bill Shorten’s 35 per cent.

But while the government’s popularity improved, one of the key sellers of its message, Ms O’Dwyer, put on a widely panned performance on the ABC’s Insiders earlier in the day.

Ms O’Dwyer was asked 10 times whether she had been wrong to oppose or criticise the case for a royal commission.

Ms O’Dwyer, who once said the inquiry would be a “talkfest” and “dangerous”, would say only she was “very happy to concede that we have taken the right action”. 

“Barnaby Joyce conceded you got it wrong. The four banks have all conceded they got it wrong. Why are you so reluctant?” host Barrie Cassidy asked. 

Ms O’Dwyer replied: “Because, Barrie, governments need to be sober and deliberate in how they go about the business of government.” 

Mr Cassidy presented the minister with her history of comments slamming the proposal for a public inquiry.

“You said it was very dangerous. Were you right or wrong when you said it was very dangerous?” he asked.

Ms O’Dwyer replied: “We also have to have as a government a very sober view, not only on the issues around corruption and misconduct, but also around financial stability.”

Mr Cassidy persisted: “It’s an easy question to answer. Were you right or wrong?”

Ms O’Dwyer: “Barrie, I’m trying to actually answer your question. And that is – the financial services sector accounts for about 10 per cent of our economy. You can’t rush into these things as a stunt.” 

She said Labor was wrong to claim credit for the royal commission.

“In fact, when the government established the royal commission at the beginning, they said it was going to be a whitewash,” Ms O’Dwyer said. 

“Then they said the banks had written the terms of reference – and now they want to claim credit.”

The Victorian MP argued the government had been taking steps to address problems in the financial services industry.

“Clearly, we have all been appalled by a number of issues that have been aired at the royal commission. There is no question of that,” she said. 

“But the government has been very alive to the problems in the financial services industry and we have been acting from the get-go.”

Labor’s shadow finance minister Jim Chalmers described Ms O’Dwyer’s interview as a “trainwreck”.

“Kelly O’Dwyer can’t bring herself to say that she was wrong to run a protection racket,” she said.

After blocking a royal commission for two years, the government backflipped in November last year when a group of Nationals threatened to create one with Labor, the Greens and other crossbenchers.

Speaking from Europe overnight, Mr Turnbull admitted that commentators were right to say he would have had less “political grief” if the government acted earlier to launch the commission.

“I understand when you’re writing the political criticism, you say the government would have had less political grief if it had set up a royal commission two years ago – you’re right, clearly, with the benefit of hindsight,” he told reporters in Germany.

Treasurer Scott Morrison said the decision to establish the royal commission was “regrettable” at the time.

The government is now dealing with the fallout after damaging revelations that AMP charged customers for financial advice they never received.

Mr Joyce’s admission he was “wrong” to oppose the royal commission has heaped pressure on government frontbenchers to admit they also had been mistaken.

On Friday, Mr Morrison announced the government would increase the maximum penalties for banking executives and institutions found guilty of misconduct.

But Mr Morrison also refused to admit he had been wrong or apologise for his opposition to the royal commission.