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Thursday, 22 August 2002
Page: 5501


Mr McMULLAN (3:28 PM) —This week in parliament during question time we have seen a pattern of behaviour by the Treasurer revealed: the Treasurer has been warned time and again about problems emerging across a range of issues within his portfolio and on every occasion he has failed to act. He will talk, he will perform, if pressed he will call another inquiry, but he will not act. The government like to talk big about their desire to make sure big business behaves properly when it comes to reporting properly and fairly their financial affairs. But the performance in question time this week by the Treasurer makes it clear that he is all talk and no action. He is a flashy actor, but his performances are hollow. He has not done the work to back up the rhetoric. In fact, as he has done in so many other areas, he has demonstrably failed to act on repeated warnings that the current regulatory regime is not up to scratch.

We have asked the Treasurer a number of questions this week, all aimed at seeking his response to repeated warnings that the system to prevent corporate cover-ups is not working properly. Time and again we find evidence that he does not have the faintest idea of what is going on in his portfolio. In question time today, when he got up to answer a question about his failure to respond to the committee's report—which 18 months ago he said was right and that he would adopt it—we heard him trying to explain that it was going to be resolved by the final implementation of the new accounting standards, failing to recall that 18 months ago he told the parliament, `The government considers it would be inappropriate to use accounting standards.' He has no idea. He is such an actor. He thinks he can get up and put on a theatrical performance and that nobody will analyse what he says. I am sorry, but now he is campaigning for Prime Minister people will put what he has to say under closer scrutiny. It is no good just being the flashy actor. It is no good just resorting to the Shakespearean bluster and bombast. The fact is that he has not answered a single one of the questions.

It is clear that the Treasurer will not do anything—at least not until he receives findings from the HIH Royal Commission. But the royal commission is not due to report until the end of February next year. That means there will be no legislation before 2004. So what we know is this: the Treasurer is counting on not being the Treasurer anymore by the time action needs to be taken. He has hopes of having been Treasurer for eight and a bit years, at the end of which he will have managed never to act on any of these warnings. The government has been warned repeatedly about these and other problems, and the Treasurer has simply sat on his hands. He has been asleep at the wheel. He will not do anything about this issue because he does not think it is important. It is part of a pattern of behaviour that, before a magistrate's court, a police prosecutor would be able to say has become incriminating.

We all remember the Treasurer's $5 billion bungle over foreign currency when he was asleep at the wheel. Every Australian is conscious of the emergence of the public liability insurance crisis and other insurance crises, while the Treasurer has been asleep at the wheel, passing the buck to his colleagues, who have failed to act. Also, he has repeatedly failed to heed warnings over serious problems in audit and accounting standards that have allowed some less scrupulous members of the business community to indulge in some outrageous corporate cover-ups. Let us think about some of these examples of warnings.

In 1997—five years ago—the Ministerial Council of Corporations produced a working paper recommending a number of changes to improve auditor independence. But since 1997 the Treasurer has done nothing. In 1998 the Labor Party moved an amendment in the Senate to the Corporations Act to require the disclosure of details of executive remuneration in a company's annual report. That is the clause the Treasurer keeps referring to when he says `that's the solution'. Do you know why that clause is there? We amended the government's bill in the Senate to put it in. The government did not want the amendment; government members said that they did not support the amendment. They said, `We want to send it off to a committee for more investigation.' But eventually, when the Senate insisted, the government did not oppose the amendment and it became part of the law. But, since the enactment of that amendment in 1998, the government has ignored the widespread failure to enforce it. So, with the assistance of some government backbenchers, we acted again: in October 1999, the Joint Parliamentary Committee on Corporations and Securities advised on changes that were needed to make the law work, to make it clear. The committee, with a majority of government members, recommended that provisions in the Corporations Act requiring disclosure of executive remuneration be clarified. But since that day the Treasurer has done nothing.

On 6 February 2001, the government tabled a response to the report. Eighteen months ago the government did not say that report was wrong; it said it was right—but it has still done nothing. That was the basis of the question today that led to that little disquisition about accounting standards, except that the government's response has been that accounting standards are not the appropriate way to deal with this matter. But the Treasurer does not seem to be aware of that either.

In March 2000, the then chairman of ASIC told a parliamentary committee that ASIC could not enforce the law requiring companies to disclose details of executive remuneration, but the Treasurer ignored that warning. You do not think that before he went to the parliamentary committee and said this in public he might have told the Treasurer in private? Everybody who has ever met a senior public servant would know that, before March 2000, the chairman would have been to the Treasurer, warning him that this law could not be enforced. But nothing has happened.

In October last year Professor Ian Ramsay handed down his report on auditor independence. He said quite explicitly that some of his proposals were the same as those suggested back in 1997. Clearly he had some frustration that after 4½ years nothing had happened. But he did not need to worry; he was going to be treated just the same. Since October last year the Treasurer has ignored Professor Ramsay's advice as well.

You have probably heard the Treasurer blustering about additional money in this year's budget for ASIC. In the last election, Labor promised more money for ASIC but the government promised nothing. In this year's budget, after years of warning, ASIC finally acted. In its annual report in 1998-99, ASIC wrote:

We are under strain ... Achieving timely enforcement has put unacceptable pressure on our staff, to which they have responded very well. But we may now have too few staff on the ground to achieve the outcomes we and the government want.

That was from the 1998-99 annual report. You would reckon they might have already spoken to the Treasurer about that—and the Treasurer did nothing. We then had Ansett, Harris Scarfe, HIH and One.Tel all compounding the serious questions and concerns about audit practice and about auditor independence and accounting standards. They were summarised by ASIC in a study on auditor independence, released earlier this year, which found:

The provision of nonaudit services by audit firms to their Australian clients is widespread, at least in respect of major corporates. Audit firms are earning substantial fees for nonaudit services. Processes for dealing with potential conflicts of interest require attention. Rotation of audit partners remains inconsistent, and rotation of firms is almost nonexistent.

So with all that, if it has been reported publicly, we know that it was previously reported to the minister and he has done nothing. This establishes a clear pattern of negligence by the Treasurer—a pattern of continued failure to deal with the growing crisis of corporate cover-ups. On at least five occasions, the Treasurer has been warned publicly by committees, officials and reviews of serious issues that needed to be seriously addressed, and he has ignored every single piece of advice. He should take urgent action to deal with these serious problems, because they might not be important to him, they might not be on his road to the Lodge, but they are very important on the road to retirement for every Australian working family who depends on what happens in the share market for their superannuation, and for that growing number of families who invest directly in shares.

He has failed to act. He has shown in parliament this week a blatant lack of concern for the consequences of his failure to act. When you ask him one question he will perform like an actor, but if you ask him two or three questions he starts to sound like a parrot. You heard him today suddenly trying to turn the switch to vaudeville—there was something about creeps. I had this feeling he must have been looking in the mirror, but I was not quite sure! Anyway, he started trying to find an excuse to give us the travelogue he has wanted to do all week about what it was like in Longreach. Unfortunately, we kept asking him about the Treasury portfolio, when all he wanted to talk about was the road to the Lodge. He might get away with all that performing and posturing in question time, but the fact that he is not across the detail, the fact that he is an actor but he won't actually act on the matters before him will not serve as a very good basis for getting into parliament as the prime minister of this country. If he sits in that chair, he will have to be across a bit of detail.

He referred to the market research that was leaked to the Bulletin. If time permits, I might give it a mention, but I thought I might tell you about another piece of market research that is public but which the Treasurer has not referred to. News Limited had on its web site this week the question, `Would Peter Costello make a good prime minister?' They did not ask, `Is he your preferred prime minister? Would you rather have him than John Howard—


Mr Hockey —I would love to know the answer on Simon Crean.


Mr McMULLAN —Wait for it, Joe. The result was that 2,643 people voted and Peter Costello got 38 per cent. Given the government's propensity to get all the staff to vote yes in all these surveys, there could not have been anyone else voting yes—or perhaps some of them voted no. But what I want to tell you from this poll is: that makes the Treasurer just slightly more popular than the invasion of Iraq, which on the same web site got 34½ per cent. No wonder: the Australian people can spot a phoney when they see one.

In that research, reported in the Bulletin last week, Australians said they thought he was `shifty', `arrogant', `out of touch with ordinary Australians' and `too close to the wealthy and the rich in our community'. But they also said, `He is just after Howard's job.' That is what the research said, and I think that is the key to his behaviour. He is not interested in the problems of ordinary Australians and he is not actually interested in the job of being Treasurer anymore. That is why he is paying no attention to these critical issues that are affecting the welfare of Australian families; he is only interested in the road to the Lodge.

The Treasurer has also been making a number of significant claims. He defends his inaction by talking about the government's record in corporate law reform. He is trying to escape the blame for his own inaction. This is a process that we began—remember how often he has said, `It wouldn't have happened'?—when we started CLRP, the corporate law reform program, in 1996. What they did was change the name. The Corporations Law Simplification Task Force was set up by Labor in October 1993 and the First Corporate Law Simplification Bill was produced in July 1994.


Mr Hockey —Who wrote this for you? He should be sacked.


The DEPUTY SPEAKER (Hon. I.R. Causley)—Minister, you will have your opportunity.


Mr McMULLAN —The progress was simply adopted by the incoming coalition government and they changed the name. This is the great initiative they have taken.


Dr Lawrence —They did that in a lot of areas.


Mr McMULLAN —Exactly right. The point of all these concerns is this: 50 per cent of Australians now own shares, and 90 per cent of workers depend on shares to boost their retirement income through superannuation. They depend on treasurers, whoever they are, to be alert, to respond quickly as issues arise and to keep their mind on the job. Peter Costello has failed them. For five years he has failed. He has been warned about shortcomings and he has failed to act. When pursued in parliament, he said he would look at further reports next year and that he would act on other issues in 2005. That is just not good enough. Australians need a Treasurer with his mind on the job, not one just obsessed with chasing the Prime Minister's job.