Fed: We've made no decision on new gov't bank, Treasurer

AAP General News (Australia)
12-04-2008
Fed: We've made no decision on new gov't bank, Treasurer

CANBERRA, Dec 4 AAP - The federal government has made no decision about setting up
a national bank to help states borrow billions of dollars for infrastructure projects.

State Labor treasurers have written to the government saying its bank guarantee scheme
has frustrated their attempts to borrow funds on overseas capital markets.

The guarantee - aimed at helping banks borrow offshore - has lowered effectively the
credit rating of state governments.

They have floated the idea of a national infrastructure bank that would borrow money
on their behalf.

Federal Treasurer Wayne Swan has confirmed the states had written to him about a number
of options to address the problem of raising funds.

There had been a "wide variety" of ideas from the states and private sectors, including
the establishment of a government-backed bank.

"We're considering those and we've reached no conclusion," Mr Swan told ABC Radio on Thursday.

The bank guarantee scheme was not the only reason for the states' inability to borrow
money, he said.

He rejected a suggestion the commonwealth buy up state bonds on the understanding the
states would repay them.

"I'm not attracted to that idea."

He also ruled out the commonwealth borrowing billions of dollars in its own right and
handing over the money to the states.

The government had no intention of making changes to its bank guarantee scheme to accommodate
the states.

"I'm most certainly not, the bank guarantee does not go to the core of the issue here,"

Mr Swan said.

He rejected opposition jibes about reports that Prime Minister Kevin Rudd had flagged
taking bank chiefs to the Middle East to drum up investment in Australia.

They have likened it to the Khemlani loans affair which dogged the Whitlam government
in the 1970s.

The opposition was resorting to silly political games, Mr Swan said.

AAP rl/ldj

KEYWORD: INFRASTRUCTURE SWAN

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