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Thursday, 14 November 2002
Page: 6378


Senator KIRK (2:54 PM) —My question is to Senator Minchin, the Minister for Finance and Administration and Minister representing the Treasurer. Is the minister aware that, according to the AOFM web site, another 10 cross-currency swap contracts with a face value of almost $1.3 billion have matured so far this financial year? Isn't it the case that these contracts have resulted in further losses to the taxpayer of between $300 million and $400 million in 2002-03, in addition to the $1 billion of losses sustained last year?


Senator MINCHIN (Minister for Finance and Administration) —This shows how vital the opposition consider this issue to be: Senator Conroy and Mr McMullan gave a press conference on this matter at lunchtime on Monday, I think, and it has taken them until five minutes to three on Thursday for them to raise it with me in the Senate, so it is obviously a really pressing and important issue for the Labor Party in the Senate—a critical matter that they had to bring immediately to the attention of the Senate. Of course, they tried without any success whatsoever in the House of Representatives to make this an issue, and failed again. I note that Mr McMullan has issued a statement saying that they have given up asking any questions about it in the parliament and that they are going to refer the question to Senate estimates. We all wait in fear and trepidation for this fearsome line of questioning that we and the government officials will get at Senate estimates hearings.

This really is a very tired and pathetic line of questioning and attack from the opposition. Someone talked about a dog returning to its vomit, which I recall from the previous government—


Senator Faulkner —It wasn't Jeff Kennett, was it?


Senator MINCHIN —No, I think it was Paul someone or other who talked about that. This is very much in that vein, because this is all about the massive $96 billion debt that these people left us. It is about their method of dealing with that debt and the methodology that we inherited from them to manage their debt. That is what this issue is all about: how on earth do we manage down $96 billion of debt that the previous Labor government left us? When they came into government the debt was $20-odd billion and when they left it was $96 billion. They brought in this cross-currency swap methodology to try to manage down that horrendous debt. We inherited both the debt and the methodology and we have tried to manage down that debt as successfully as we possibly can.

The opposition have scoured through the AOFM reports. They lied about my position: they claimed that Senator Minchin, the Minister for Finance and Administration, had issued some directive to bury information released by the AOFM—a complete and utter lie. There was a directive issued by the former minister for finance, Mr Fahey, last year before this matter was ever raised and it only referred to the way in which the matters were to be presented. At no stage did the ministerial direction suggest at all that there should be any diminution in the information available in these reports.

As to this cross-currency swap procedure, which we inherited from them, the facts are as the Treasurer noted: the realised gain on the portfolio was $144.3 million in nominal terms and $777.4 million in net present value terms, from the commencement of the policy in 1987-88. Despite all the debt and despite that methodology, if you look at it over the whole program you can see that the Commonwealth is still ahead of the game by $700-odd million in net present value terms. The opposition will continue to try to look at various snapshots of this process as we manage down this debt and they will try to make nefarious claims about what it means, but the fact is that we inherited the debt and the methodology, and fortunately for the Commonwealth and for taxpayers we are still ahead of the game on this process.


Senator KIRK —Mr President, I ask a supplementary question. Is the minister aware of this comment by APRA:

If APRA detects a failure to exercise good risk management—for example, serious problems that are swept under the carpet—then we will not hesitate to deem board members and senior executives unfit for their roles and remove them.

Why shouldn't this apply to the Treasurer?


Senator MINCHIN (Minister for Finance and Administration) —It should not apply to the Treasurer, because this Treasurer is probably the most successful Treasurer we have had, certainly since the previous Treasurer in the Fraser government, Mr Howard. He is the one who is responsible for managing down the debt that the previous Labor government left us. He is the one who has reduced the debt by $60-odd billion and saved taxpayers $4 billion every year in interest payments. That is why your reflections should not pertain to the Treasurer, who has done such a magnificent job in managing down your debt.