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How bad is the loan council situation?



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Peter Reith

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HOW BAD IS THE LOAN COUNCIL SITUATION?

Treasurer Dawkins has a lot of explaining to do over his

management of the State Government borrowing limits - part of his role as Chairman of the Australian Loan Council.

The obvious question is, what did Mr Dawkins know about the massive breach of Loan Council rules by the former Victorian Labor Government?

Mr Dawkins must dispel accusations that he has been involved in a massive cover-up in a vain attempt to help his Labor party colleagues in Victoria.

If he does not he jeopardises the whole integrity of the Loan Council system.

A failure to dispel these accusations will also raise doubts about whether he has made special deals with his Labor Party colleagues in the financial disaster areas of South Australia and Western Australia.

The Victorian Treasurer, Mr Alan Stockdale, revealed yesterday that the Kirner Labor Government was in breach of Loan Council "global borrowing" limits by a massive $1.3 billion. This compares with Victoria's limit of $1,394 billion in 1991-92.

This is an enormous case of financial incompetence. It involves deception of the highest order.

It is understood from media reports that Mr Dawkins knew about the massive borrowing blow-out before the Victorian State election.

Reports say that a spokesman for Mr Dawkins said that the Federal Government had "demanded" the former State Labor Treasurer, Mr Tony Sheehan, address the breach during talks before the 3 October election.

It is simply not good enough for this serious matter to rest with some brief comments from the Treasurer's spokesman.

Mr Dawkins must answer the following questions:

. When did he first know about the Victorian Government's

breach of Loan Council Limits?

. What advice did he receive from the Federal Treasury on

this matter?

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

. When did he first contact the Victorian Labor Government that he was aware of the breach?

. What action did he request the Victorian Labor Government undertake? . ■ ' ■ ' ■ ■

. What was the official response of the Victorian Labor

Government?

. Was the Prime Minister informed of this serious breach, and when?

. Was the Prime Minister involved in any communication with Premier Kirner or other members of the Victorian Cabinet on this issue?

Not only do yesterday's revelation raise serious doubts about the integrity of the Loan Council processes, they put a huge question mark over the Government's fiscal policy.

An integral part of fiscal policy management is the Loan Council processes, which keep a cap on State Government borrowings.

Has there been an explosion in State borrowings, not revealed in statistics, that rivals the massive deterioration in the Commonwealth Budget?

27 October 1992 '

Adelaide

Contactϊ Hugh Logue (06) 277 4030 D169/92