CANBERRA (Reuters) - The Australian arm of News Corp will have to answer "hard questions" in Australia following the growing phone hacking scandal in the United Kingdom, Australian Prime Minister Julia Gillard said on Wednesday.
Gillard said Australians had been "disturbed" by events in Britain, where Australian-born Rupert Murdoch and his son James defended at a parliamentary hearing on Tuesday their handing of events that have shaken the family's grip on their media empire.
"When there has been a major discussion overseas, when people have seen telephones hacked into, when people have seen individuals grieving have to deal with all of this, then I do think that causes them to ask some questions here in our country, some questions about News Ltd here," Gillard told reporters in New South Wales.
"Obviously News Ltd has got a responsibility to answer those questions when they're asked," she said.
The influential Greens, who control the balance of power in Australia's upper house Senate, have called for a parliamentary inquiry into media laws in the wake of events in Britain, with Gillard agreeing to discuss a review.
Gillard said Australians generally had "hard questions" that they wanted answered by News executives, but cautioned she was not jumping to any conclusions about the company's conduct and news gathering practices at home.
Senior Australian ministers have for months accused News Ltd of biased treatment targeting the minority Labor government, with Communications Minister Stephen Conroy this week accusing the company of campaigning for "regime change.
News Ltd, the Australian arm of News Corp, controls 70 percent of Australia's newspaper readership market. Lawmakers will decide whether to support a review when parliament resumes in August, after the current winter break.
News Ltd chief John Hartigan denied last week that there was any widespread campaign against Labor, defending the company's newspaper coverage as aggressive but fair.
Responding to Gillard's comments on Wednesday, he said: "There is absolutely no connection between events in the UK and our business in Australia."
"There is no evidence that similar behavior has occurred at News in Australia," he said in a statement, adding that News Ltd had answered all questions on the issue openly.
"If the Prime Minister has more questions we would be happy to respond."
News Corp's woes have been front page fodder in Australia and coincide with a decision by Gillard's government to re-open a bitterly fought tender involving Murdoch's part-owned Sky News for the country's taxpayer-funded overseas TV service.
An independent panel set up to decide the A$223 million Australia Network tender unanimously backed Sky over the incumbent ABC, but was reportedly overruled by the government which decided to impose a new "national interest" hurdle.
The scandal has also knocked shares in a News Corp takeover target, Australian pay-tv company Austar, which has agreed a $2 billion-plus takeover offer from its bigger rival Foxtel, which is owned by News Corp's News Ltd division, billionaire James Packer's Consolidated Media Holdings, and telecom company Telstra.
(Reporting by Rob Taylor; Editing by Ed Davies and Daniel Magnowski)