Abbott sought advice on iron ore probe

Treasury and the prime minister's department seriously considered the idea of an iron ore price inquiry, a parliamentary commitee has learned.

Former prime minister Tony Abbott took the idea of an iron ore price inquiry so seriously he commissioned work by his department.

On May 15, Mr Abbott told broadcaster Alan Jones he believed there should be an inquiry into iron ore prices.

The comment came in the wake of Fortescue Metals Group chairman Andrew Forrest claiming BHP Billiton and Rio Tinto were flooding the market with ore to cut the price and drive smaller miners out of business.

Mr Abbott's former department has revealed in an answer to a Senate estimates question taken on notice that it provided advice to the then prime minister on May 14 - the day before the radio interview.

The advice related specifically to the idea of an iron ore inquiry.

It also progressed so far as to be discussed between officials from the Department of Prime Minister and Cabinet and Treasury.

The idea was dropped a week later after heated debate within the government and key industry players describing it as "ridiculous".