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Dawkins, Kirner and Bannon should agree to give evidence to inquiry



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Senator Jim Short Deputy Leader of the Opposition in the Senate Shadow Minister for Finance & Assisting the Leader on Commonwealth/State Relations

SMF108/92

DAWKINS, KIRNER AND BANNON SHOULD AGREE TO GIVE EVIDENCE TO INQUIRY

The former Labor Premier of Victoria, Joan Kimer, and her two former Treasurers, Tom Roper and Tony Sheehan, as well as the former South Australian Premier and Treasurer, John Bannon, will be invited to make submissions and appear before the Senate Select Committee on the Australian Loan Council.

The Shadow Minister for Finance, Senator Jim Short, who is a member of the Select Committee, said this in a speech today to the Australian Institute of Bankers in Canberra.

Senator Short said it is expected that a wide range of submissions will be received, including submissions from financial institutions whose activities are affected by Loan Council decisions.

He said that the Treasurer, Mr Dawkins, has also been invited to present a submission to the Senate inquiry.

"I am particularly hopeful that Mr Dawkins will give evidence to the Committee," Senator Short said. "He is, of course, a pivotal figure both in regard to the overall function and operations of the Loan Council and in the events surrounding Victoria's $1.3 billion breach of the Council's borrowing guidelines.

Senator Short added: "The importance and influence of the Senate's committee processes is evidenced by the fact that Mr Dawkins is already reported to be moving to increase the monitoring of State Budgets through an expanded role for the Loan Council.

"It seems that the mere formation of the Select Committee has been enough to pressure Mr Dawkins into at least starting to address this issue seriously.

"It is only unfortunate that the pressure, via the Senate, has come after the Victorian Budget horse has bolted.

"The Commonwealth Government should have been aware of the potential dangers of the existing situation long before now and it is a matter for serious concern that the Government has not seen fit to make such a move before this.

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

"Where State Governments have signed up to a voluntary agreement like the global limits administered by the Loan Council, it is imperative that they stick to that agreement and that the agreement be enforceable.

"However, I also believe it is high time that the States were given more responsibility to manage their own affairs. It is Coalition policy that every State should be, as nearly as possible, responsible for its own financial affairs, both in terms of revenue raising and expenditure.

"To help achieve this we are favourably disposed to providing the States with a permanent share of income tax, while at the same time protecting the existing rights of the less populous States and ensuring that there is no imposition of a separate

State income tax.

"The ratings agencies now also have better access to information on the States' financial positions and thus are in a better position to rate the States individually, which is placing some market discipline on them.

"It is now widely known that New South Wales and Queensland are in relatively good financial shape and that corrective action is being taken in Victoria and Tasmania in response both to the dictates of the financial markets and the democratic process.

"The disciplines of the financial markets and the rating agencies tend to complement the intention of the Loan Council guidelines."

Senator Short concluded: "We should not lose sight of the fact that meaningful reform of Commonwealth/State financial relations is a goal to which we must accord high priority."

Canberra 20 November 1992

Contact: Rod Woolley (06)277 3119 (w), 288 9355 (h)