Mr BOWEN (3:34 PM) —We have just seen the Treasurer of this nation resort to a shameful attack on an opposition member to divert attention from the fact that there is no substance to his defence. He is not able to defend the indefensible. We saw the Treasurer do it yesterday, and he has done it again today. He is under attack, and he resorts to an attack on the opposition—a scurrilous attack on the member for Lilley.

We have seen the Treasurer and the Prime Minister valiantly try to characterise Mr Gerard’s difficulties with the Australian Taxation Office as a simple disagreement, as some trifling argument over deductions. The Prime Minister said yesterday:

Mr Swan interjecting—

Mr Costello interjecting—

Mr Brough interjecting—

The DEPUTY SPEAKER —Will the member for Lilley, the Treasurer and the Minister for Revenue stop the conversation across the table.

Mr BOWEN —The Prime Minister says this like we are talking about some disagreement over whether Mr Gerard was entitled to claim a tax deduction for his dry-cleaning. The context that he tries to put it in is that this is some sort of trifling dispute between an honest citizen and the Australian Taxation Office. The Treasurer has just tried this fallacious argument again today, but of course this is a blatant misrepresentation.

Mr Brough interjecting—

The DEPUTY SPEAKER —The Minister for Revenue might wish to contribute to this debate later.

Mr BOWEN —Mr Gerard was required to pay to the tax office $150 million. But this was not back tax; $36 million of this was tax penalties. The Australian Taxation Office audit team demanded that the maximum penalty be imposed. This was not simply a disagreement. Mr Gerard did not simply say, ‘We don’t agree with the tax bill we’ve got, but we’ll pay it.’ A penalty of $36 million was imposed. For the layman in the street there is another word for a tax penalty, and that is a fine. He had to pay a fine of $36 million for tax evasion. We are not talking about tax avoidance. We are not talking about a lawful way of reducing your tax bill. We are talking about tax evasion.

The Taxation Office alleged that this tax evasion occurred over a period of 12 years. This was not a slip-up or an accounting error; this was 12 years of tax evasion. The tax office made the case that Gerard Industries set up a company and deliberately made it look like it was part of another group of companies. The ATO also argued that Mr Gerard made false and misleading statements during an investigation and did not provide ‘a reasonable level of cooperation’. Yet with all the eminently qualified industrialists in this land, with all the heads of industry with impeccable credentials—none of which would have been questioned by the Labor Party—and with all the economic experts available for appointment to the Reserve Bank board, the Treasurer thought Mr Gerard was the best Australian that he could appoint.

There is evidence that there was plenty of information available at the time to suggest Mr Gerard was not an appropriate appointment to the Reserve Bank board. It is not the case that the Treasurer appointed Mr Gerard and then later an issue arose. Mr Costello could then have come into the House and said: ‘I trusted Mr Gerard, I thought he was the best appointment, but he let me down. I made a mistake and I am sorry I appointed him.’ A reasonable observer would say that was fair enough. But the Treasurer cannot say that because Mr Gerard says he knew. And if the Treasurer did not know, he should have, because there was plenty of information on the public record at the time. There was plenty of information on the record of the Supreme Court of South Australia for the alarm bells to ring in a very serious way. At every level this is a scandal of the highest proportion.

The Treasurer was quick to point out yesterday, and he did it again today, that this was a cabinet decision. ‘It’s not all my fault,’ he said, ‘the whole cabinet is responsible.’ We have seen some ducking and shoving from cabinet members. Yesterday in the Australian Financial Review a senior unnamed cabinet member was quoted as saying that Mr Gerard’s tax record was not discussed around the cabinet table and that the Treasurer did not reveal it. Mr Costello had an obligation to say to his cabinet colleagues, ‘This is the man I want to appoint to the Reserve Bank board. He’s in a major tax evasion case with the Australian tax office, which answers to me as Treasurer as well, but I want to appoint him anyway.’ The cabinet could then have made an informed decision. But, judging by the statements made by the senior unnamed cabinet minister yesterday, that is not what occurred. Some ministers would have known about the tax evasion problem, particularly ministers from South Australia, I would presume, but others would not.

What about the Treasurer’s other line of defence? He brandishes a letter. He says, ‘This letter vindicates my position—this is my defence.’ But the letter was signed by none other than Mr Gerard. It is a letter of self-defence. This is the weakest line of defence that has been used in this House since Doc Evatt stood up 50 years ago and said, ‘There are no Russian spies in Australia because the Russians told me there aren’t.’ The Treasurer has adopted the Molotov defence. Mr Gerard said there was nothing in his tax record to embarrass the government. I think he got that wrong. Next the Treasurer relied on a letter from the Commissioner of Taxation. He brandishes this as exhibit B in his defence. He says the tax commissioner signed off that there was nothing wrong with Mr Gerard’s tax records. But, of course, there was a very important caveat in that letter: it said that the tax office had no dispute with Mr Gerard’s personal tax record. It did not indicate anything about Gerard Industries, in which Mr Gerard happens to be a 50 per cent shareholder. These defences are convenient for the Treasurer, but they are fallacious.

All government appointments are important and should be handled with great care. But the board of the Reserve Bank of Australia is a particularly important appointment. The Reserve Bank of Australia does not just set interest rates, as important as that task is—that is its highest profile role. The Reserve Bank has several other responsibilities. It is responsible for maintaining financial stability. It is also the banker to the government and conducts foreign exchange on behalf of the government. The term ‘bank’ in its title is not symbolic; it is called the Reserve Bank because it is a bank. I have stood in the foreign exchange room of the Reserve Bank with the Governor of the Reserve Bank and with other members of this House, including members opposite, and watched the foreign exchange being conducted. The Governor of the Reserve Bank regularly makes the point that the Reserve Bank is, in some ways, just another bank.

If it were just another bank, then there would be certain rules as to who could be appointed to its board. There would have had to have been an assessment as to whether the applicant to the board had (1) been criticised by any regulatory body, (2) been obstructive, misleading or untruthful with any regulatory body or (3) demonstrated a lack of willingness to comply with regulatory requirements. If any one of these requirements had been enforced, then Mr Gerard could not have been appointed. Of course, these requirements do not apply to the Reserve Bank; it operates under its own act of parliament. But wouldn’t you have thought that the Treasurer of this nation would want at least the same level of integrity in the appointment of board members to the Reserve Bank as would apply to any other bank in this nation from the smallest to the largest? Wouldn’t you have thought that that would be at least the minimum requirement of the Treasurer? You would think so, but apparently this is not the case.

The Treasurer thought it was more important to appoint a Liberal Party mate—a long-term member of the party and one of its major donors. Heather Ridout belled the cat on this issue yesterday in the Financial Review when she indicated that Mr Gerard is close to the Prime Minister. This is a Prime Minister who boasted about higher moral standards in government when he came to office. We saw how long that lasted.

The Treasurer says, and it is true, that it is not a disqualification for appointment to government boards to be close to certain government figures. It is quite true that donating money to the Liberal Party is not a disqualification from serving on government boards. The Labor Party are not making that charge and never have, but we do say that people appointed to senior government roles should be of the highest integrity. Donating $1 million to the Liberal Party should not be enough to buy you a seat on the board of the Reserve Bank of Australia. The people of Australia deserve better than this lack of integrity from the Treasurer, the Prime Minister and the most senior levels of this government. They deserve transparency and honesty. They deserve integrity. This scandal makes it clear that they will not get it from this government or this Treasurer. He has appointed a long-term mate of the Liberal Party to the board of the Reserve Bank, and he should hang his head in shame. (Time expired)