By Online parliamentary correspondent Emma Rodgers
Prime Minister Kevin Rudd has accused Opposition Leader Malcolm Turnbull of "clutching at straws" and "hyperventilating like a kid on red cordial" over claims that he misled Parliament about advice received from Treasury.
The Government has denied a newspaper report which claimed the Reserve Bank of Australia (RBA) was concerned its plan to guarantee all deposits was distorting the market.
RBA governor Glenn Stevens has since said he thinks the guarantee is "sensible".
The Opposition has accused the Government of misleading Parliament over the specific advice it received on the guarantee plan and Malcolm Turnbull again pressed Mr Rudd in Parliament today to explain what the RBA advised.
"In the interests of clarifying the confusion of his previous answers, will the Prime Minister say simply and clearly whether the Reserve Bank recommended to the Government that the deposit guarantee be unlimited - yes or no?" he said.
Mr Rudd insists the Government's Budget committee was told by Treasury head Ken Henry it had the support of all regulators for its plan.
"At the time that the options, that were then adopted, were being considered by that committee of the Government the question was explicitly put to the Secretary of the Treasury - is this the advice of the financial regulators including the Reserve Bank? - to which the answer was unequivocally yes," he said.
"The Reserve Bank governor has blown the credibility of the Opposition.
"I say to those opposite they should get real with the economic interests of this country get behind the Government's package of support for the economy."
Mr Turnbull then asked Mr Rudd if Mr Henry would be sacked if it was later discovered he misled the committee over the RBA's advice.
"Given that the Prime Minister was too busy to speak to the Reserve Bank governor himself on the deposit guarantee matter, if it turns out that Reserve Bank governor did not, in fact, expressly recommend an unlimited deposit guarantee will he dismiss the Secretary of the Treasury for misleading the Cabinet?" he said.
Mr Rudd described Mr Turnbull's question as "irresponsible".
Deposit premiums
Mr Rudd also revealed to Parliament that there were discussions last week and more are continuing as to whether deposits above $1 million should be subject to an insurance premium.
"The guarantee in terms of deposits remains absolute," he said.
"The question at issue is whether deposits above $1 million and beyond have an insurance premium attached to them consistent with the insurance premiums which are relevant to wholesale term deposits which apply to the term wholesale lending arrangements of the major commercial banks."
Meanwhile, a Senate Estimates committee has heard the Finance Department was not included in initial discussions about measures to protect overseas lending.
Finance officials did work on the deposit guarantees plan before it was released but department Head Dr Ian Watt says it was a further week before they were included in overseas lending discussions.
Dr Watt says he can not answer why the department's advice was not sought.
"I can't answer that question because I'm not the person seeking the advice," he told the committee.
