THE government has cast doubt on the effectiveness of the guarantee that it proposes to offer banks undertaking overseas borrowing with the Finance Minister conceding that it would be unable to deliver on it without introducing special legislation.
The government plans to introduce no legislation prior to offering the guarantee to banks later this month, a practice the Attorney General Robert Mclelland told Parliament was constitutional.
Finance Minister Lindsay Tanner said it was the same process the former Prime Minister John Howard had followed when he committed troops to Iraq. "He didn't go to Parliament first and get money for that decision. He made a decision and the government made a decision to go to war without parliamentary authority, which he was entitled to do under the executive authority of the Commonwealth," he told Question Time.
But under questioning from the Opposition Leader Malcolm Turnbull Mr Tanner conceded that the government would need to introduce special legislation to deliver on the guarantee in the unlikely event that it ever had to...
"Should it ever be required that a guarantee of this kind must be delivered upon, then that will need to be appropriated," he said.
He said he was confident the Senate would pass such an appropriation bill.
The US credit rating agency Standard and Poor's has advised its clients not to regard a government guarantee as effective unless it is "unconditional, irrevocable and timely".
Mr Turnbull said that the guarantee offered by the Australian government would not fulfill those criteria and would put Australian banks at a disadvantage in competing for funds with British banks whose borrowings were properly guaranteed.