Mr SWAN (3:04 PM) —The Treasurer has not upheld the highest standards of probity in appointing members to the Reserve Bank board. The Treasurer has not told the truth in the House today. He has misled the House today—

The SPEAKER —Order! The member for Lilley will have to move a substantive motion—

Mr SWAN —No, I said he misled. I did not say he deliberately misled; I said he misled. It was entirely in order, Mr Speaker, because the Treasurer did mislead this House today—

The SPEAKER —Order! The member for Lilley said ‘the Treasurer has not upheld the truth’. He either withdraws that or moves a substantive motion.

Mr SWAN —Mr Speaker, on a point of order: it is entirely within the standing orders to say that the Treasurer has misled this House. What is not in order is to say that he deliberately misled this House. And my point today—

The SPEAKER —The member for Lilley will be aware that I was asking him to withdraw the previous statement.

Mr SWAN —I never said ‘deliberately’, Mr Speaker, but if you think I did I withdraw it.

The SPEAKER —No: the previous statement. The member for Lilley will withdraw, thank you.

Mr SWAN —I withdraw. The Treasurer of this country did not come into the House and tell the truth today. He asserted that Mr Gerard’s tax affairs were in order before he was appointed to the Reserve Bank board. That has been his defence right through this debate and it is simply not the case. Mr Gerard’s personal affairs may have been order, but his business tax affairs were not settled until September. Mr Gerard was appointed to the board of the Reserve Bank in March 2003, but the Treasurer cannot admit that because if he did admit that he would have to acknowledge that someone under investigation for tax evasion had been appointed to the Reserve Bank board. And that is his problem. Such a person would never have been appointed to the board of a major bank in this country if they were in a situation similar to Mr Gerard, because he would have failed the fit and proper person test under the Banking Act. He would have been disqualified for board membership. That is the fact.

Let me just quote from the RBA code of conduct as it relates to board members. It says:

an unparalleled reputation—

Let us go to the Banking Act. Let us look at the fit and proper person test, which says that the relevant APRA criteria would include an assessment of whether the person has (1) been criticised by a regulatory body, (2) been obstructive, misleading or untruthful with a regulatory body, (3) demonstrated a lack of willingness to comply with regulatory requirements or (4) been involved in business practices that appear negligent, deceitful or in other ways improper. He fails all of those tests if you look at the results of the ATO audit team.

So we say that this Treasurer has not upheld the highest standards of corporate governance in the appointment of Mr Gerard. In the last 48 hours he has not provided one satisfactory explanation for any of the allegations made against him in this affair. He has sought to cover up his knowledge of Mr Gerard’s business dealings to create the impression that his appointment was above board. On AM this morning we got more evasion, but one essential fact remains—one hurdle this Treasurer cannot jump over. He cannot deny, and has not denied, that Mr Gerard said that the Treasurer said to him, ‘I know there is an issue with the tax office but you can go on the board anyway.’ You have never denied saying that, Treasurer. The Treasurer has never denied saying that Mr Gerard could go on the board anyway, despite all of the evidence from the ATO audit.

So what is the situation we are dealing with here? You can get on the Reserve Bank board through the size of your donation but you cannot have a probity process that applies the highest standards of integrity. In the case of Mr Gerard those standards have not been applied. You could see in question time today the embarrassment on the faces of the backbenchers over there, who have all deserted the Treasurer. The Liberal supporters on the back benches are disappearing like an Australian Idol audience—the numbers just get smaller and smaller. Look at them over there. There are two or three supporters of the Treasurer; they would fit into a Tarago van. You can see that your colleagues are cringing, Treasurer. They do not want to know you today. They do not want to go back to their electorates on Thursday night and defend your actions in this affair.

Mr Wilkie interjecting—

The DEPUTY SPEAKER (Hon. IR Causley)—The member for Swan has already been warned. There will be no more warnings.

Mr SWAN —They do not want to go back to their electorates and explain to their voters that their interest rates are being set by a Liberal Party mate and that the fate of their mortgages rests with a Liberal Party donor who has been put on the RBA board despite there being substantial reasons not to put him there.

Treasurer, there has been no clamour to support you today from the frontbench. There has not been a peep from the member for Bradfield. Did anyone hear what he had to say? There has not been a peep from the member for Warringah. There has not been any support there. There certainly has not been a peep from the member for Mayo, who looked very embarrassed when we were raising questions about his role in the affair. And there certainly has been nothing from the member for Wentworth. So there has been stunning silence from the Liberal Party backbench because they know there is a stench associated with this affair. They want it to go away and you will not tell the truth.

Mr Kelvin Thomson interjecting—

The DEPUTY SPEAKER —The member for Wills has already been warned.

Mr SWAN —The Australian people always knew there was something sneaky, tricky and arrogant about the Treasurer, and this whole affair simply proves it. What are the facts that we are dealing with? What are the facts of this affair that condemn this Treasurer and prove that he has been misleading the House? The first point is that there has been an argument going on with the tax office for 14 years. The Treasurer and the Prime Minister got up and talked about Mr Gerard as if he had made a mistake in his personal tax pack. They did not talk about the fact that, following the conclusions of the ATO audit, $150 million was at stake in Mr Gerard’s negotiations with the tax office.

We should remember what the conclusions of the ATO audit were. The audit concluded that either there was a deliberate and knowing intention on the part of Gerard Industries to avoid the payment of tax or there was a flagrant disregard for the operation of taxation law that could not be excused in people of their skill and experience. Does that sound like a recommendation for a member of the Reserve Bank board? It certainly does not. Does that sound like the standard of probity that we expect of members of the Reserve Bank board? Absolutely not. It was simply a no-brainer that he could not be appointed to the Reserve Bank board. We want to know what went on in the Liberal Party backrooms when this appointment was made. We want to know what the conversations were. We do not want the continual misleads that we are receiving in this House.

This investigation culminated in an audit by the ATO and court action. So this was not some minor dispute. As the Leader of the Opposition demonstrated at the end of question time, the ATO, through the DPP, had a very substantial claim on the assets of this man—to the tune, I think, of $250 million. That was put in court documents filed by the DPP—and the Treasurer comes into this House today and denies that there were any issues! In fact, he said that these matters were all resolved when Mr Gerard was appointed to the Reserve Bank board in March. But the documentation today proves that these matters were still outstanding months later—and that is despite the fact that there were press reports at the time of Mr Gerard’s appointment which proved that this was a matter of discussion within business circles in South Australia and, I believe, within the Liberal Party at a wider level. And there were documents in the Supreme Court registry in South Australia for over six months. But we are expected to believe that this Treasurer knew nothing about these things and that it was all okay. The man’s personal tax records and affairs were all okay and somehow they are completely distinct from his business life! The company is called Gerard Industries, Mr Treasurer, and for you and the Prime Minister to pretend in this House that there were no issues involving this gentleman sets a new standard in public life.

Now we come to the evidence from Mr Gerard. Mr Gerard has said that he rang up the Treasurer and said to the Treasurer, ‘Check me out.’ Did the Treasurer check him out? What checks were made after Mr Gerard made that invitation to him, as Mr Gerard says on the public record? Mr Gerard has also said that in a subsequent conversation the Treasurer said that he knew all about this but it did not matter to him. His standards of probity did not matter because no standards of probity applied.

What actually happened between when Mr Gerard first spoke to the Treasurer and the subsequent phone call when the Treasurer said, ‘I do not have a problem with your tax issue’? What went on in the Liberal Party? What went on in the smoke-filled rooms during that period to convince the Treasurer that this was all okay? There is a knowing smile on his face. Perhaps he is thinking: ‘The Prime Minister made me do it.’ Maybe that is his excuse. Maybe that is an excuse he may choose to use later on—that it really was not his fault that he did not uphold the highest possible standards that we expect of a Treasurer in this country.

Perhaps he did not do it because the Prime Minister did it or perhaps because the Prime Minister got Alex to do it or perhaps because the Prime Minister was speaking to Senator Minchin. There may be a whole set of implications regarding who was involved in this, but we certainly know that this Treasurer did not uphold the highest standards of office that we would expect from a Treasurer of this country for a body as important to us in economics as the High Court is in law. This is a body which has a fundamental impact on the lives of all Australians, a fundamental impact on the interest rates they pay and a fundamental impact on our macro-economic stability. This Treasurer, and indeed this Prime Minister, can be so ruthless with working Australians but so soft on their mates in the Liberal Party, particularly when they have become very large donors—in this case to the tune of $1.1 million.

So what I say to the people of Australia, Treasurer, is simply this: this is exhibit A in the case against you ever leading this country, exhibit A in the case against the Treasurer ever succeeding to the leadership of the Liberal Party. The whole episode is tied up in your ham-fisted and pea-hearted bid for the Lodge, and it should disqualify you from that job. The real import of this scandal is very simple, Mr Treasurer: if you are an ordinary PAYE taxpayer, it is impossible to dodge the highest taxes in the nation’s history, but if you are a million dollar donating mate of the Liberal Party you get rewarded for it. You get rewarded for this sort of action: you get elevated to the highest body in the land.

The DEPUTY SPEAKER —The member for Lilley will address the person by their title or by their seat.

Mr SWAN —Mr Gerard gets elevated to the highest body in the land.

Ms King interjecting—

The DEPUTY SPEAKER —If the member for Ballarat wishes to argue I will use 94(b).

Mr SWAN —The point is this: if you are a million dollar mate of the Liberal Party, you get rewarded for it. He gets a seat on the Reserve Bank board. You can be appointed to the Reserve Bank board with no probity checks whatsoever—and they hang their hat on their financial management credentials! You can see the reputation of the Prime Minister and the Treasurer of this country demeaned when they come into this House and pretend it was okay because there was a letter from the tax commissioner saying his personal affairs were in order, somehow expecting the country to believe that they did not know anything about his business affairs.

This is a very sad reflection on the Howard government. The truth is that the whole episode really points to a creeping arrogance in the Howard government and a moral decay at the heart of this government that goes to its approach in so many other areas: its suppression of the parliament, its use of terrorism to divide the community, its attack on working Australians through its divisive industrial relations legislation—all of these things are on a par with the record of this government. But, Mr Treasurer, no slippery barrister talk is going to get you out of this one—no more evasion, no more distortions or nondenials. We need answers from you, Treasurer, and we are going to hound you for the term of your political life because you are not worthy of the top job in this country and you are most certainly not worthy of the title Treasurer of Australia. If you cannot impose probity checks for appointments to the board of the Reserve Bank—

The DEPUTY SPEAKER —The member for Lilley will address people by their titles.

Mr SWAN —what else is going wrong within our financial and economic system? If you are so lax—

The DEPUTY SPEAKER —The member for Lilley!

Mr SWAN —If the Treasurer is so led by his personal ambition and the whole country suffers as a result, we have a responsibility to remove you from office—and remove you from office we certainly will. We will not drop this matter. It will be raised in this House for time to come, and by the time we have finished you will not be Treasurer of Australia. (Time expired)

The DEPUTY SPEAKER (Hon. IR Causley)—Before I call the Treasurer, I remind the member for Lilley that the chair will not tolerate the use of the word ‘you’ spoken across the table in a personal manner.