Australian Prime Minister Tony Abbott said on Friday that his government would sign up to the new Asian Infrastructure Investment Bank (AIIB) if there were better " transparency and governance rules."

Abbott said his government was engaged in discussions with the Chinese government about taking part in the bank despite it not signing a memorandum of understanding with China last week.

"We would like to join but it's got to be a multilateral jurisdiction with the kind of transparency and the kind of governance arrangements that, for argument's sake, the World Bank has," Abbott told Australian Associated Press.

Abbott's comments followed harsh criticism from former Australian prime minister Paul Keating of the government's decision not to become a founding member of the AIIB with 21 other Asian nations.

"The government's decision to decline founding membership of the Chinese-proposed Asian infrastructure bank is the worst policy decision the government has taken since assuming office," Keating told the Australian Financial Review.

"It is the worst because of the far-reaching implications and consequences of deciding to have nothing geo-economically to do with China at a time when China is prepared to step up to greater responsibilities in the region."

Former Australian ambassador to China, Geoff Raby, also told a business conference this week that it was important for Australia to join the new bank because of the rising power of the Asian region.

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