Mr ELLIOTT —I direct my question to the Prime Minister. Can the Prime Minister tell the House what arrangements were in place regarding the operation of Loan Council business when this Government took office and whether there was a need to reform those arrangements at that time? Can the Prime Minister say whether further refinement of the existing Loan Council arrangements is necessary and, if so, what the Government's intentions are in this matter?

Mr KEATING —It may come as a surprise to the House, but it will not to the honourable member for Bennelong—

  Mr Costello interjecting—

Mr SPEAKER —Order! If the honourable member for Higgins interjects again, I will name him.

Mr KEATING —that, when I became Treasurer, only 25 per cent of State authorities' borrowings were under the control of the Loan Council—only 25 per cent. So it was okay then for 75 per cent of borrowings to go totally without any Commonwealth scrutiny. But it is now a crime if one borrowing only does not have the authority of the Treasurer.

  I have just asked my staff, because I have a reasonable memory for these things, to turn up Budget Paper No. 4 of 1984-85. It had this to say about the new system of global borrowings introduced by me as Treasurer and about Loan Council authorities:

It also highlights the extent to which, in recent years, the proportion of State and local authority borrowings subject to Loan Council approval has declined substantially as authorities resorted extensively to financing techniques not subjected to Loan Council approval—the so-called `off-program' borrowings. In 1979-80, Loan Council approved programs accounted for 95 per cent of the total State and local authority borrowings, but that proportion had fallen to about 25 per cent by 1983-84.

That is, 95 per cent in 1979-80, 25 per cent in 1983-84.

  Government members interjecting—

Mr KEATING —Hang on; it gets better; just restrain yourselves. It continued:

The main factors accounting for this development were the decision at the meeting of the Loan Council on 24-25 June 1982 to exempt, for a trial period of three years, the major electricity authorities from the need to obtain approval for the domestic borrowings, and the growth in `off-program' borrowings from 1981-82.

In other words, the reason for the decline from 95 per cent to 25 per cent was a government decision taken when the honourable member for Bennelong was Treasurer, advised by the honourable member for Wentworth. It went on to say:

Under the arrangements applying prior to that meeting—

Listen to this—this is 21 June 1984—

Dr Hewson —Is this your defence of the cover-up?

Mr SPEAKER —Order! The Leader of the Opposition will cease interjecting.

Mr KEATING —It continued:

the Loan Council had very little influence over the totality of authorities' borrowings.

Mr Tuckey —They decided not to.

Mr SPEAKER —Order! The honourable member for O'Connor!

Mr KEATING —It continued:

One consequence of that was that neither the States nor the Commonwealth had adequate information about the likely demands of the State and local government sector on the capital market and real resources.

Can you believe this—that today on the blue sheet—

Mr Cadman —You kept that program going.

Mr SPEAKER —Order! The honourable member for Mitchell!

Mr KEATING —is a discussion of a matter of public importance about `the continuing erosion of Loan Council standards under the Keating Government'. Guess who it is proposed by? The honourable member for Bennelong! This is the guy who took the Loan Council authority over State borrowings from 95 per cent to 25 per cent. We are the guys who have put it back to 100 per cent. And he is proposing a matter of public importance against us about the erosion of Loan Council standards! As I have said before, you have more front than Mark Foy's, son. But this one surprises even me.

  When I became Treasurer the States could do as they wished; they borrowed and they had all sorts of chicanery to get around Loan Council requirements with the so called off-program borrowings. It says here:

Against the background of the above developments in State and local government borrowings, the Commonwealth proposed at the Loan Council meeting on 21 June 1984 that a system of `global' limits on Commonwealth and State authority borrowings be adopted.

Guess who was in government on 21 June 1984? We were. In other words, we established the global borrowings to bring back under control that which you had let run rampant. That is, you were asking us then to pull down the Commonwealth deficit, which you left us—nearly 5 per cent of GDP—and, while that was happening, blurting out the back of the public sector were State authorities' borrowings, totally out of control.

  We have set up a system since then which has put the globals back in place. We roped into the globals such things as operating leases. We have got enhanced reporting standards on all State Budgets so that they are the same, as the Statistician would require for the compilation of national statistics. We have dealt with people who want to erode the globals, as I did with Victoria when I was Treasurer under the VEDC. When the then Premier, Mr Cain, sought to imply that equity should become debt, I made him unwind the arrangements. But one Treasurer borrows and turns a short term borrowing into a medium term borrowing—no more money is borrowed; a short term borrowing just becomes a medium term borrowing—without telling our Treasurer and our Treasurer immediately responds and tells him he has to regularise it and you, who let 75 per cent of borrowings run everywhere, have the gall to get up and talk about the Loan Council and to set up a Senate committee. Then you want a Minister from the House of Representatives chamber to wander over to the unrepresentative» chamber and account for himself. You have got to be joking. Whether the Treasurer wished to go there or not, I would forbid him going to the Senate to account to this «unrepresentative» «swill over there—

  Opposition members interjecting—

Mr SPEAKER —Order! The House will come to order.

Mr KEATING —where you are into a political stunt.

  Mr Downer interjecting—

Mr SPEAKER —Order! The honourable member for Mayo will cease interjecting.

Mr KEATING —There will be no House of Representatives Minister appearing before a Senate committee of any kind while ever I am Prime Minister, I can assure you. Let me make this point: the Opposition totally corrupted the finances of this country by letting the Loan Council run riot and letting it fall to pieces. The coalition parties, who were supposed to be the sentries at the gate, let the whole system run amok. You are the people who let the finances haemorrhage all over the place. As usual, it took a Labor government to sweep up after you, to put the new global requirements around States' borrowings—

  Mr Reid interjecting—

  Mr Carlton interjecting—

Mr SPEAKER —Order! The honourable member for Bendigo! The honourable member for MacKellar!

Mr KEATING —and to let the authorities in. Then, when one Treasurer of a State in a decade turns a short term borrowing into a medium term borrowing, you think you have a national issue. Well, you can think again. As the Treasurer said quite eloquently a few moments ago, whatever happens over in the Senate—they want to inquire about these processes—the history of the Loan Council will be very interesting when it reflects upon the honourable member for Bennelong and the honourable member for Wentworth. He was the adviser. He was giving advice about how they ought to let the States run riot in their borrowings. How much front do you need to have to actually pursue that policy and then climb all over the government which has corrected what it thinks is a major problem?

  Dr Hewson interjecting—

Mr SPEAKER —Order!

Mr KEATING —I just had to show how duplicitous you were, and the honourable member for Bennelong. Look at Howard's little number: `The continuing erosion of Loan Council standards under the Keating Government'. I quote:

`The main factors accounting for this development' were that `in 1979-80, Loan Council approved programs accounted for 95 per cent of total State and local authority borrowings, but that proportion had fallen to 25 per cent in 1983-84. The main factors accounting for this development were the decision, at the meeting—

  Mr Cadman interjecting—

Mr SPEAKER —I warn the honourable member for Mitchell.

Mr KEATING —This is not a long term thing; this is actually induced by the policy of a Treasurer—the honourable member for Bennelong—at Loan Council on 24 and 25 June 1982. He presided over a Loan Council meeting with a recommendation from him—the honourable member for Bennelong—to allow 75 per cent of States authorities' borrowings outside of the Loan Council. And he has the gall a decade later to get up and talk about the continuing erosion of the Loan Council under us.

  This is a joke. The Victorian Premier made it clear yesterday when he said, `I'm not interested in this matter in the past. That's been regularised. Let's get on with it and do things for the people and public of Victoria'. Let that make it clear to the people and public of Victoria that J.L. Hewson—

  Opposition members—J.L.?

Mr KEATING —the Leader of the Opposition, has set about delaying their economic recovery. He is about up-ending the progress.

  Mr Somlyay interjecting—

Mr KEATING —You can have your nervous laugh; you know it hurts.

  Mr Bradford interjecting—

Mr SPEAKER —Order! The honourable member for McPherson.

Mr KEATING —He is about standing between the decisions of the Kennett Government and this Government to restore the momentum of Victoria's recovery by getting the finances of the Victorian Government sorted out and regularising these Loan Council arrangements. At the coming Loan Council meeting which the Treasurer said we will have concurrently with the COAG meeting in December, we will be looking at certain changes to procedures. These will all be in advance of any Senate committee hearing. That is why the Senate committee hearing in the hands of the Liberal Party will be, as every other thing it has ever proposed, a stunt.