Labor treasurers were not asked to top up RBA reserve fund

Previously secret Reserve Bank documents reveal neither of Joe Hockey's two predecessors as treasurer was ever asked to top up the bank's reserve fund by the $8.8 billion he said was needed.

The top-up, announced within weeks of taking office, as well as the $1.2 billion of extra funding for schools announced this week have the potential to add $10 billion to government debt, boosting the case for an increase in the $300 billion debt ceiling.

Treasurer Joe Hockey and Greens leader Christine Milne spoke by phone on Tuesday about a way out of the deadlock over the ceiling, which the Coalition wants to raise to $500 billion and Labor wants to limit to $400 billion.

The Greens demanded four changes in return for voting with the Coalition to abolish the ceiling:

A statement to the Parliament every time total debt increases by $50 billion or more.

Debt reporting standards to give information in the budget about gross and net debt at nominal and market value, and a breakdown of publicly guaranteed debt exposure.

Publication of grants to state or local governments for infrastructure.

Changes to budget papers to extend the forward estimates horizon from four years to 10 years.

"The Greens want every single dollar of government debt to be justified and debated," Senator Milne said. "We want more scrutiny, not less."

A spokeswoman for the Treasurer described the talks as "high-level, ongoing and personal".

Ms Milne said after years of hysterical debate about the debt ceiling, no one was any the wiser about what the debt was raised for. A breakdown, with the opportunity for the Parliament to examine the debt every time it increased by $50 billion, would provide better scrutiny than proposals to lift the ceiling every few years.

Mr Hockey insisted in his second Canberra news conference as Treasurer that he had decided to grant the Reserve Bank $8.8 billion to boost its reserve fund to the "target" of 15 per cent of the bank's assets at risk.

However, correspondence released under freedom of information rules to The West Australian show the bank never mentioned such a target to either Mr Hockey's immediate predecessor Chris Bowen or his predecessor Wayne Swan.

The nearest the RBA came to identifying such a target was in a letter sent to Mr Bowen on July 13, two months before the Coalition took office. It said the fund was "about $4.1 billion short of the board's target relative to balance sheet risk".