The Rudd government is about to start lending money to the next Christopher Skase or Alan Bond, the coalition says.

Labor’s $2 billion bailout of the commercial property sector would lead to disastrous losses similar to those experienced through WA Inc and the failure of Victoria’s state bank, Opposition finance spokesman Joe Hockey said.

In the 1980s Australian governments lost billions of dollars as a result of bad loans and corporate collapses.

“It should not be the government that starts lending money to the next Christopher Skase or Alan Bond as is being suggested here,” Mr Hockey told Fairfax Radio.

“Mark my words: this is going to be Tricontinental, Western Australia Inc, State Bank of Victoria all over again.”

He said it was bad policy for the commonwealth to lend money to commercial property developers.

The government will invest $2 billion of taxpayers’ money, matched by the big banks, to meet any shortage of credit caused by foreign lenders exiting the Australian market due to the global financial crisis.

“We believe it is bad policy, the Reserve Bank thinks it’s bad policy (and) David Murray, the head of the Future Fund, a very respected banker, said yesterday it is bad policy,” Mr Hockey said.

“There is no precedent in the world for this.”

Australia’s banks were expected to post a $15 billion profit this year and they should expand borrowings to developers.

“So that they are the ones that determine whether a property development is a good credible development or another Christopher Skase or Alan Bond.”

The “Ruddbank” was a “big mistake”, Mr Hockey said.

AAP