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Tuesday, 12 March 2002
Page: 1020


Mr LATHAM (4:47 PM) —What we have just heard from the Treasurer is 15 minutes of irrelevance, 15 minutes of evasion. This Treasurer did not for a single moment address any of the issues that have been raised by the member for Fraser. This Treasurer did not for a single moment address his own guilt in this shocking financial scandal. He is guilty of the greatest financial loss in the history of the Commonwealth, greater than any of the state government losses, greater than any of the federal losses in the past—$5 billion worth of lost taxpayers money. The Treasurer is guilty of these things and all we got from him was 15 minutes of ducking and weaving.

Our charge against the Treasurer is simply this: he knew from 1997 onwards that currency swaps were a bad investment, and he did nothing about it. He knew for four or five years that currency swaps were a bad investment and he did absolutely nothing about it. The dog was asleep on the porch while the Commonwealth lost $5 billion. The Treasurer did nothing while the Treasury lost five thousand million dollars. It sounds like a lot of money. It is a lot of money and, unfortunately, there is a human cost in these sorts of losses. There is a human cost to the nation. Five billion dollars would buy every Australian child a computer to aid their education; $5 billion would double the size of the Australian Army; $5 billion would deploy enough labour market and employment schemes to get every unemployed person in this country back into work; $5 billion would build another 15 public hospitals; $5 billion would do a lot of work in the health portfolio. Imagine how excited Michael Wooldridge would have been if he had known that there was $5 billion available! He could have built a thousand buildings, a thousand headquarters for the college of GPs. While we are talking about government fiascos, $5 billion would pay for the entire Pacific solution in their asylum-seeker policy.

Five billion dollars is the greatest waste of taxpayers' money in the history of this parliament. The Treasurer's defence is that nobody told him until November 2000. This defence is simply fantastic. We are being asked to believe the currency swaps lost $2 billion in 1997-98, yet nobody told the Treasurer. We are being asked to believe that currency swaps lost $1.1 billion in 1999-2000, yet nobody told the Treasurer. We are being asked to believe that currency swaps lost $5 billion between 1997 and 2000, yet nobody told the Treasurer. It is said that the Treasurer is watching the Prime Minister's job. I would say that he is watching too closely, because what he is doing is imitating the Prime Minister's defence in these sorts of matters. The Prime Minister's defence in `kids overboard' was to say, `Everybody knew but me. I am only the Prime Minister. Don't blame me, I'm only the Prime Minister.' Now we have a Treasurer who loses $5 billion on his watch, and his defence is, `Don't blame me, I'm only the Treasurer. Blame everyone else.' He spent 15 minutes talking about everyone else, from Paul Keating when he was Treasurer to Paul Keating when he was Prime Minister, the member for Fraser when he was a senator, the member for Kingston, and on he went. He talked about everyone bar himself and his own guilt in this shocking financial scandal. They threw the truth overboard and now they have thrown the money overboard as well.

You only need to restate the Treasurer's defence to understand its absurdity: `Nobody told me until November 2000.' Either way he is damned. If he did not know that the Treasury was accumulating losses of $5 billion in the four years to 2001, he should not be the Treasurer. If he did know about these losses, he has misled the parliament, he has misled the public, and he should not be the Treasurer. So, either way, on the absurdity of his defence, he is damned. The point is this: he should have known. As the Treasurer of the Commonwealth, he should have known, and we say he must have known. You only need an elementary understanding of economics to understand what is going on. The only reason for engaging in currency swaps was if two economic conditions were met: firstly, that United States interest rates were substantially lower than Australian interest rates, and, secondly, that the Australian dollar was in a strong position against the United States. Well, wakey-wakey, Treasurer. These conditions have not been met since 1996. These conditions have not been in place since the end of 1996, yet the Treasurer did nothing. He did nothing in 1997. He did nothing in 1998. He did nothing in 1999. He did nothing for most of the year 2000. Four wasted years wasted $5 billion of public money. Four wasted years produced a record loss of taxpayer funds in this parliament.

My favourite description of the Treasurer does not necessarily come from this side of the parliament. The best description of the Treasurer has always come from one of his colleagues Jeff Kennett, who called him `dog'—not `a dog' or `the dog', just `dog'. Of course, this is very much a case of the dog being asleep on the porch. Jeff Kennett said that he has all the qualities of a dog bar loyalty and keeping watch on public money—keeping watch as he should as the Treasurer of the Commonwealth.

The warning bells were ringing between 1997 and 2000. He had ample warning. In May 1997 the Treasurer approved the continuation of the 15 per cent benchmark. He could have abandoned the program at that stage but the dog was asleep on the porch. In mid-1997, Australian interest rates fell below those of the United States for the first time in a long while. It was the end of the interest rate differential. It should have been the end of the policy, but where was the dog? Asleep on the porch. In November 1997, the Treasury reviewed the policy—another chance, but the dog once more was asleep on the porch. And at the end of 1997, the Asian economic crisis hit. Anyone who was in the parliament at the end of 1997 would remember the lectures we got from the Treasurer about the Asian economic crisis. Blind Freddy could have seen that that crisis would have weakened the position of the Australian dollar relative to the US currency. Any high school economics student would have known that the Asian crisis would drive down the value of the Australian dollar. That was the big alarm bell that should have rung.

It was an unsustainable policy by the end of 1997, but the Treasurer once again was asleep on the porch. Of course, at that point, at the end of 1997, this became more than financial management; it became a gamble with the money of the Australian people—the greatest gamble in the history of the Commonwealth. No wonder the Treasurer's brother Tim Costello is running a personal campaign against gambling. Imagine the discussions they have over Christmas dinner: `Peter, what did you do this year?' `Oh, Tim, I gambled away $5 billion of Commonwealth money in currency swaps.' It just proves the lesson: Baptist boys should not gamble and treasurers should not take roulette risks with the funds of the Australian people.

The list of warning bells goes on: June 1998, August 1998, May 1999 and the Audit Office report in October 1999, which said:

... there is ministerial endorsement of the annual swaps strategy.

There was warning bell after warning bell but still the dog was asleep on the porch. Then, finally, we got to 15 May 2000 when it took the member for La Trobe to work out what was going on. The member for La Trobe has been asleep in this place for 10 years but he still knew what was going on in terms of these currency swaps. He put out a press release on that day as the Chairman of the Joint Committee on Public Accounts and Audit to alert the Treasurer to the problem. But still the Treasurer did nothing; still the dog was asleep on the porch. Warning bell after warning bell was unanswered.

We do need to amend Jeff Kennett's description. The Treasurer has all the qualities of a dog bar loyalty and the ability to guard taxpayers' funds. On his watch the government has lost $5 billion of valuable funds that should have been used elsewhere. And what of his other defence? His other defence is to say that it is all Labor's fault. It is a comical defence. The defence runs along the lines of, `Paul Keating made money out of this; I've lost $5 billion. Therefore it's all Paul Keating's fault.' It is absolutely absurd to blame Paul Keating for a policy which was successful in the early 1990s. It is like Warwick Fairfax saying when he sent the company broke that it was the fault of all those generations of Fairfax families and business managers who made money out of the Fairfax company, his predecessors. It is an absolutely absurd defence to try to blame Paul Keating. The one thing you can say about Keating is that he had his hand on the levers. One can only wonder where this Treasurer has had his hands in recent times. Keating at least had his hands on the levers. Where have this Treasurer's hands been?

He has not always blamed the ALP. He started his political career in Young Labor and the Social Democratic Association. For our financial credibility, I am glad we got rid of him. It would have hurt our financial credibility to have someone on this side of the parliament who was responsible for a loss of $5 billion of taxpayer funds. We are glad that he left Young Labor and the Social Democratic Association all those years ago. He has been oscillating around ever since in the Liberal Party, the HR Nicholls Society and now as the leader of the moderates. The truth is that he is all over the shop. He believes in nothing bar himself and, in public life, where there is no belief there can be no results. The sad result here is a loss of $5 billion. (Time expired)