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Transcript Senator John Coulter doorstop - 2pm, 2 November 1992 Victorian Loans Affair



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SENATOR JOHN COULTER DOORSTOP - 2 PM, 2 NOVEMBER 1992 VICTORIAN LOANS AFFAIR

Senator Coulter: Well, this morning we had a meeting with both Mr Reith and Senator Short and one of his advisers and we had a meeting with two Treasury officials. We were disappointed that Mr Dawkins did not come to our party meeting to personally advise us on this situation as there were not only technical matters involved here but clearly there are political matters as well.

There were a number of issues that were canvassed at those meetings which were quite lengthy and they go really to the matter of financial accountability, both with respect to the Commonwealth and the States and the Commonwealth/State relationships through the Loans Council.

It seems as though the way in which States keep their accounts is unsatisfactory and the matter may extend well beyond Victoria to other States as well, and particularly again in relation to the Loans Council. We believe that on the evidence that we have at the present time, Mr Dawkins was not nearly tough enough with Victoria, that there was

sufficient evidence over recent months for him to have formed an opinion that Victoria could well have been in breach of the limit arrangements under the Loans Council agreements and that therefore he should have taken some pre-emptive action to ensure that the Victorians were either brought into line or at least, if there was concern over the technical question of whether they were public or private debts, to issue instructions to Victoria that the public debts were not to be converted into private debts, which seems to be one of the things that might have been done.

The whole nature of the Commonwealth/State financial arrangement seems to be very unsatisfactory in that many parts of it are essentially dependent upon "gentlemen's agreements" and it seems that it is long past the time when these arrangements need to be more formalised and need to be perhaps legislated for, so that these situations can't

develop again.

We will be seeking a meeting this afternoon, not only with Mr Dawkins, but also with Mr Stockdale. We understand he is coming up this afternoon from Victoria and we will seek further clarificatioti on a number of these points. We will have a further party meeting tomorrow and at that party meeting we will consider that further information.

Q: So you have made no decision yet on whether there will be a Senate inquiry?

Senator Coulter: In relation to a Senate inquiry, we have not made a decision yet as to whether there will be an inquiry, but we will make that decision tomorrow.

Q: It sounds like you are leaning towards one though, with saying you have got concerns about the Loans Council?

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Senator Coulter: There are a number of issues which are clearly of very serious concern.

Q: So you have dismissed the suggestions that Mr Dawkins has made, backed up by the Treasury briefing note, that to have revealed any of this publicly would have been to threaten the Australian economy?

Senator Coulter: Thank you very much for that point. That was another point that had I been able to read my notes past these microphones, I would have made and that is that there is a considerable inconsistency in what Mr Dawkins is saying on that front. On the one hand, he appears to be saying that Yes, you had all the information, you had the Nicholls Report and you had other information, albeit aggregated State information in some of the supplementary budget papers - and on the other hand, he is trying to claim that to reveal that information would, as you say, destabilise the markets and lead to higher interest rates. Now he simply cannot have it both ways.

Q: Doesn't what's happened to interest rates in the last week bear out the need for confidentiality? ,

Senator Coulter: Well, it certainly doesn't bear out the need for confidentiality now. Those interest rates and the credit rating with respect to Victoria moved up the week before last and I think that indicates that the claim that the information was made available in the Nicholls Report back on 23 September simply undercuts the claim that to reveal that information now would destabilise the markets.

Q: But to headline, to highlight that information, haven't we seen the results of that?

Senator Coulter: Well, I don't think so. The claim is now being made by the Treasury officials and it was made to us this morning that to pursue this m atter further would bring into doubt the whole of the federal budget process and that could even further destabilise the money markets. We Simply don't accept that. The longer that this matter is left hanging it seems the greater doubt there is and the more damage that will be done in the long run.

Q: Is there any substance in the Opposition claims to stand the Treasurer down?

Senator Coulter: Well, again I think it is premature to make that sort of claim. If further investigations do lead to an inquiry then of course it would be appropriate for the inquiry to come to that conclusion and not for us to prejudge the results of that inquiry.

Q: In this climate there is very little chance for the inquiry to turn into anything other than a witch hunt of Mr Dawkins, isn't it?

Senator Coulter: On the contrary, the wider issues of the Loans Council arrangements and the formalisation of those arrangements in a legislative way is something that we believe should be pursued and that that would be far wider than simply a witch hunt for Mr Dawkins' scalp.

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Q: Are you concerned that a long inquiry into the Loans matter might be damaging to * the Australian economy ... trying to recover ...?

Senator Coulter: Well it may be. As I say, we have made no judgement at this stage about whether we would support an inquiry or not. We will do that tomorrow. .

Q: But is there a situation where at the moment, you are leaning toward an inquiry and it is really up to Mr Dawkins to try and convince you to go the other way. If he fails to do so, th e n ...?

Senator Coulter: We were very disappointed that Mr Dawkins did not come along this morning but sent two Treasury officials, particularly as these matters really are in many respects, political rather than technical.

Q: So you think he has put himself into deep water by failing to come along, that's an influence on you, is it?

Senator Coulter: I have just been asked a question in relation to Mr Dawkins losing his job. It's a bit strange that as we are in a balance of power situation in the Senate - I mean we will largely determine the outcome of any inquiry or any other processes which go on in the Senate - that Mr Dawkins didn't think fit to come along to our meeting.

Q: So could you favour an inquiry out of a fit of pique?

Senator Coulter: No, no! The Democrats wouldn't do that.

Q: What do you see as the political aspects rather than the technical ones?

Senator Coulter: Well, the political aspects are that it appears that when Queensland said to the Loans Council that they wanted to exceed the limits, they were very promptly brought back into line by the Prime Minister, then the Treasurer and in this case with Victoria and with a Labor Government - the Queensland one was with a conservative Government - with a Labor Government, the Treasurer has been bending over

backwards rather to not reveal this information to the public, or indeed to the other participants in the Loans Council, to the States in other words.

Q: You don't recognise there being a completely different situation to Queensland which is in a much better position to withstand t h e .... ?

Senator Coulter: The Government has claimed that they are different situations but precisely the same conditions could have been applied to Victoria, at least by way of a threat. In other words Victoria could have been told that - if you proceed to convert these loans that under that process, we will then withdraw some of your public funding, under the same terms as was threatened with Queensland. .

Q: On the evidence available to you so far, how would you characterise the Treasurer's behaviour?

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Senator Coulter: It seems on the face of it as though the Treasurer has behaved differently with Victoria from the way in which the Prime Minister, then the Treasurer, behaved with respect to Queensland and that strongly suggests a political motivation, particularly as one was a conservative Government and the other was a Labor Government.

Q: And that would be enough for you to call an inquiry, if you were finally convinced of that? '

Senator Coulter: Well, we need to look at a lot of the technical questions also. What the Treasury officials are claiming is that Victoria had not breached the terms of the Loans Council limits, that what they had in fact done was to increase their borrowings from public instrumentalities and that was not in breach of the agreements. They are also saying that the state - and this is a matter of great concern - that the state of financial keeping, the accounting in States and not just in Victoria and the other States is so loose that they would have no confidence in the figures which are presented to them at all and went on to say that the figures which are printed as a supplement to the budget are

figures in which they could place no confidence at all. In fact their recommendation was not to even publish them.

Q: You have mentioned other states - what other states are you concerned about?

Senator Coulter: Well in view of this looseness of accounting methods and the communication of those accounts to the Commonwealth, I think all states need to be brought into line. We need a much better accounting system in this country.

Q: You described the setup as a "gentlemen's agreement" and you were concerned about the lack of enforcement in a gentlemen's agreement. Others describe it as

Commonwealth/State co-operation. Are you just rejecting that altogether?

Senator Coulter: As I understand it, and as we were told this morning by Treasury officials, having agreed to a global limit, that is simply minuted in the proceedings of the Loans Council. The Premiers don't even sign that they will agree to that global limit. There is then further, having set an overall global limit, there is then an agreement between the States as to how that will be divided up between the States. Now under those circumstances that seems to be a very unsatisfactory situation, particularly when you add on to that the State Governments can evidently provide virtually any figures they wish to the Commonwealth, the Commonwealth has no check on the veracity of those figures and therefore has great difficulty - and this is where part of Mr Dawkins' defence lies - in ensuring whether the States have exceeded the global limits or not.

Q: The issue here is that the Victorians did supply the figure of $1.2b in additional borrowings to the Commonwealth and when that went into the budget papers, that reference was taken out so that it was concealed in the budget papers. Victoria told the

Commonwealth, the Commonwealth didn't tell Parliament?

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Senator Coulter: Well, what happened in the Budget, in that supplement to the Budget, was that it was an aggregated figure. It was not separated out which could identify the Victorian figure although that figure was clearly shown in the Nicholls Report. So one could argue that there was an attempt to cover up by aggregating that figure together with the other States.

Q: So are you going to agree to an inquiry, I just got here? .

Senator Coulter: Well, I am sorry you weren't here earlier, David but we will be considering further matters. I am seeking a meeting later today with M r Dawkins and also with Mr Stockdale. We will seek other information and tomorrow morning we will have another party meeting and we will consider then the matter of an inquiry.

Q: Have you spoken to the Opposition yet?

Senator Coulter: Well, we had a long meeting with the Opposition this morning.

Q: Would you be supporting Government moves to give Victorian State award workers an escape hatch from the Industrial Relations reforms in that state?

Senator Coulter: This is the use of the corporations power. What I observed yesterday and I find a very interesting thing and that is that both the Government and the Opposition now are saying they would use that section of the constitutional power to protect workers or on the one hand to at least set industrial relations at the

Commonwealth level and yet both Of them - both of them - have denied the use of that power to protect the environment. Specifically the Government has promised to use that power. Now we would like to see the Commonwealth use that power more widely and consequently we would support the use of that power but exactly how it would be applied in the case of Victoria we are yet to see. '

Q: So you don't have a position yet on that?

Senator Coulter: No, we haven't seen any legislation or even any proposed legislation.

Contact: Jenni Mack (06) 277 3646

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