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Loan council affair no 9: Dawkins reveals Victorian precedent

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Peter Reith Γ■ DEPUTY LEADER of the OPPOSITION PRESS RELEASE ■ SHADOW TREASURER1 November 1992LOAN COUNCIL AFFAIR NO.9: DAWKINS REVEALS VICTORIAN PRECEDENTThe notes provided to the Treasurer (released by him today) which advise him of the protocols to be observed in his Loan Council dealings, reveal a precedent on dealing with the Victorian Labor Government.The notes reveal the following"It is worth noting that the minutes of the May 1988 Loan Council meeting (extract attached) show that both Victoria and Queensland initially refused to accept their allocated limits but that Victoria fell into line later in the meeting.- This was after the then Chairman of the Loan Council had responded to the Victorian and Queensland positions by making it clear that the Commonwealth would reduce grants to the States to the extent that borrowings exceeded the proposed limits."The 1988 Premiers' Conference was particularly acrimonious. In the public address stage of the conference, the Queensland Premier was incensed by the cut in Queensland's share of loan funds. For the first time ever, the Loan Council session of the conference, where borrowing levels are fixed, broke up without agreement. At one stage, Mr Cain, who wanted an extra $50 million and Mr Ahern were refusing to negotiate.When Mr Keating threatened to withhold the customary Commonwealth guarantee and stated that for every dollar raised by either state over and above the loan allocation, their financial assistance grant would be cut back by an equivalent dollar, he was doing so to both Queensland and Victoria.In the end, Mr Cain accepted an extra $50 million, but Mr Ahern was offered nothing and defied the threats. Mr Keating then walked out and made his public statement, confirming that he would carry out his threat against Queensland.The critical aspect of this precedent is that at that time Victoria was threatened by Mr Keating with the same treatment as Queensland.COMMONWEALTH PARLIAMENTARY LIBRARY\ t i MICAH


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The question now for Mr Dawkins is, why did he not issue the same threat to Victoria over the $1,267 billion dollar breach of the global borrowing limit. Mr Keating issued his threat over $50 million dollars but Mr Dawkins went quiet over a breach of $1,267

billion dollars. Why Mr Dawkins?


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