Jacqui Lambie tax package deal: ACT also looking for debt relief

Tasmanian senator Jacqui Lambie announced on Thursday she would back the Coalition's full $158 billion tax package, in exchange for action on her state's $157 million social housing debt to the Commonwealth.

"Tasmania is paying 50 cents in every dollar of our state housing budget back to the federal government in interest and debt repayments," Senator Lambie said.

While Senator Lambie said the details of the deal were being worked out, Liberal Tasmanian senator Eric Abetz has said waiving the debt would only encourage bad behaviour.

But the deal also raises questions about the housing debts being paid off by other states

The ACT also has a Commonwealth state housing debt to the tune of $115 million.

This is separate to the $1 billion loan it took out for the Mr Fluffy crisis, and is an outstanding legacy debt that dates back to self-government.

The loans run for a fixed term to 2040 and 2042 at an interest rate of 4.5 per cent.

The territory paid an estimated $5.9 million in interest on that loan alone in the year to June.

The loan is expected to cost $20 million more in interest across the forward estimates.

An ACT government spokeswoman said the fixed rate that applied to those loans was "materially higher" than the rates the territory could currently borrow in the market.

There was also no mechanism from the ACT to make an early repayment of the debt to clear it, she said.

"The ACT government wrote to the Commonwealth on 17 June to seek a discussion on the terms of these loans so that we are able to reduce our financing costs," she said.

"At the same time, the ACT government sought a release from the Mr Fluffy debt."

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Asked whether the government would consider a better deal for the ACT in light of the promises made to Senator Lambie, Finance Minister Mathias Cormann said: "we are always happy to engage with senators in relation to issues of concern to them and their constituents".

He denied the government had been engaged in "horse trading" .

"We have been able to persuade Senator Lambie and Senators Patrick, Griff and Bernardi of the merits of the plan that we took to the last election," Senator Cormann said.

"Senator Lambie has been a very, very strong advocate. As I say, while the Labor party were playing political games, not focusing on the public interest, Senator Lambie was advocating for Tasmania.

"She was advocating to the government on issues that she feels passionately about. The government sat down with Senator Lambie and listened. Senator Lambie can have every confidence that we will work with her in good faith as we said we would do in relation to those issues."

ACT Labor Senator Katy Gallagher said at a minimum, the Commonwealth government should discuss how the ACT can reduce the financing costs on its existing loans.

"It's also a shame that Canberra's Liberal representative doesn't seem to care as much about delivering for Canberra as Jacqui Lambie does about Tasmania," she said.

Liberal Senator Zed Seselja is yet to respond to a request for comment.

Senator Lambie told ABC Radio that while the fine print of the deal was still being written, "the money I'm asking for is very little in the overall scheme of things".

Centre Alliance senator Rex Patrick told ABC Radio crossbench senators from South Australia and Victoria needed to extract as much as they could from the government in exchange for their support, because the states were underrepresented in the parliament.

"One of the roles of the crossbenchers particularly for South Australia and Tasmania is to balance out the very low numbers. We have another [Centre Alliance member] in the lower house. Tasmania has about five members in the House of Reps, South Australia has 10, we don't get much representation there.

"Jacqui [has] stood up and said I'm going to change the balance. I want some things for Tasmania just as we've said we want to have lower gas prices electricity prices of really big issue in South Australia."

More to come