Bank Mooted To Boost Infrastructure

The Age

Thursday December 4, 2008

Michelle Grattan and Eric Johnston, with Katharine Murphy

THE Government is believed to be considering a national infrastructure bank that would borrow billions of dollars to lend to the states to invest in projects.

The Opposition asked about the plan in Parliament yesterday. Use of the bank would avoid the funds affecting the budget bottom line and get round problems that the Government's unlimited bank deposit guarantee had caused for state borrowings, the Coalition said.

Opposition Leader Malcolm Turnbull asked Prime Minister Kevin Rudd whether he was planning to set up the bank, and whether the NSW Government had complained that the guarantee had made it difficult for the state to compete for funds. Mr Rudd said he knew of no representations from NSW. But he said the Government continued to examine "all appropriate measures to properly support infrastructure investment. That is the normal thing you would expect any democratically elected government to do".

A spokesman for Treasurer Wayne Swan said: "A range of ideas have been floated in our discussions with a range of stakeholders."

It also emerged last night that former Commonwealth Bank chief executive David Murray may spearhead a delegation to the Middle East on behalf of the Government aimed at drumming up investor support for local banks.

It is believed the roadshow would focus on the United Arab Emirates and Qatar, in late January. Mr Murray, chairman of the Future Fund, had raised the idea with the Big Four banks' CEOs.

It is believed Mr Rudd raised the plan to chief executives at a Business Council of Australia dinner last month.

Mr Murray would not comment last night, but one top bank executive welcomed the plan as a "positive step" as it would market the strength of the Australian banking system to global investors.

The executive noted Australian banks regularly undertake roadshows to international investors.

Still, Mr Turnbull suggested that the move was reminiscent of the Whitlam days of loan raising.

"It's the Kev-lani Roadshow. This carries eerie echoes of the ghosts of Labor governments past. Rex Connor rides again."

The possibility of an infrastructure bank comes before a Senate confrontation today over new legislation in setting up the Government's multibillion infrastructure funds. -- with KATHARINE MURPHY