Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

Indeed, in preschool! Members will recall the infamous Khemlani loans affair. It is now swirling around the Rudd government. Who would have thought, in our lifetime, we would hear echoes of Khemlani with another Labor government. Members might recall that the Whitlam government attempted to raise US$4 billion in loans from the Middle East, which was described as being awash with petrodollars, and that was all due to high oil prices. These massive loans were being sought by the Minister for Minerals and Energy outside Treasury guidelines and they were to fund infrastructure projects—a natural gas pipeline, the electrification of interstate railways and a uranium enrichment plant. There was a shady middleman named Khemlani. But the attempt to raise the loan was actually deemed to be illegal on the grounds that prior approval had not been obtained from the Loans Council, and it all ended in chaos. Rex Connor was forced to resign from cabinet and was replaced, so I believe, by none other than Paul Keating.

We have got this whiff of Whitlam about the Rudd government. Yesterday in question time the Prime Minister was asked about this proposal to set up a bank to channel funds from the federal government through a bank into state governments, essentially to prop up failing state Labor governments—and it would all be done off balance sheet, so the taxpayers of Australia would not know the impact on the bottom line of the Commonwealth from this scheme to channel funds through a bank to prop up state budgets.

In question time today, given the huge media and public interest in this zany scheme of the government’s, we asked the Treasurer a series of questions—four, in fact—about this proposal. While he obfuscated and ducked and weaved, he did not rule out this proposal. I asked him directly: ‘Will the Treasurer rule out the establishment of a new government bank?’ He did not rule it out. It speaks volumes. I think that we will see over the coming weeks, probably on New Year’s Eve, when everybody else is otherwise diverted, more information coming out about this proposal that was clearly cooked up on the eve of COAG between the state treasurers. Interestingly, the Western Australian state Treasurer was not invited to the meeting where this scheme was cooked up. In a hotel room somewhere in New South Wales we had the beginnings of the 2008-09 ‘Kevlani affair’.

Why would state treasurers be involved in a discussion with the Treasurer and the Prime Minister about a scheme to raise funds from overseas to channel through a bank to prop up state governments? That is because successive state Labor governments have failed to use the windfall from the GST to build necessary infrastructure and they have driven their budgets into deficit. They are driving their states into debt. We know that the hallmark of Labor governments around this country throughout history has been deficits and debt. Only today I was informed by the member for Mayo that the South Australian government has announced an 18 per cent increase in water rates to pay for their desalination plant. They cannot pay for their own infrastructure; they are passing it on to the taxpayers of South Australia by way of an 18 per cent increase.

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