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Tuesday, 8 October 1996
Page: 3656


Senator SHERRY (Deputy Leader of the Opposition in the Senate)(3.54 p.m.) —Regrettably, this country has an out-of-touch, arrogant and boastful Treasurer. The office of Treasurer, many would argue, is politically the second most important position in government in this country today. On many occasions, the office of Treasurer of a country is, in fact, more important than that of the Prime Minister because the Treasurer is the principal economic spokesperson for the government, and certainly the most important individual in this country when it comes to economic matters.

It is not lightly that we raise this issue today. This is the second occasion in six months on which we have had to raise an MPI regarding the Treasurer, Mr Costello, and his behaviour. I said in my introductory remarks that he is an out-of-touch individual, he is an arrogant individual, and he is a boastful individual. These characteristics got him into very serious trouble in the United States in respect of comments he made about US interest rates.

This is not the first occasion; the previous MPI concerning the Treasurer—I will reflect on this in some detail a little later—related to his comments in the lead-up to a Premiers Conference. Unfortunately, this Treasurer has a habit of putting his foot in his mouth, with very serious consequences for this country.

Three serious consequences flow from the behaviour of the Treasurer in the United States a week ago. Firstly, he broke a confi dential discussion with arguably the most important economic figure in the United States and arguably one of the most important economic figures in the world today—Dr Greenspan. The Treasurer broke the confidential discussions that took place in that meeting.

Secondly, by breaking those confidential discussions and making public utterances that should not have been made, he caused the various money markets in the United States and round the world to soar. There are serious consequences flowing from the Treasurer's comments in respect of money markets.

Thirdly, and certainly most importantly and seriously of all, when confronted with evidence that he had made these remarks, breaking the confidence of the meeting with Dr Greenspan, he denied it. Despite tape recordings and, indeed, a film clip showing that he had made the remarks, he denied that he had.

What were the remarks that Mr Costello made? I will come to those a little later. A number of people observed Mr Costello's remarks. Before he made the fateful remarks, the media observed him at a press briefing that he gave—he was all very gung-ho to do press briefings up to the point of making his comments with regard to Dr Greenspan.

He was described as being in an `ebullient' mood. The Age reported that he, Mr Costello, had spent a satisfying day with Dr Greenspan:

He had enjoyed a very satisfying day in the big time and was only too delighted to share it. How was he to know—as he happily munched . . . drank coffee and chatted—that he was about to rally the US bond market and help push Wall Street to its highest level ever?

Mr Costello, of course, had been touring the United States, putting on the record the strengths of the Australian economy. I might say that much of the strength of the Australian economy has weakened since the budget. Certainly, much of the strength of the Australian economy is the result of Labor's legacy and hard work in 13 years in government. The Australian Financial Review referred to Mr Costello as the mythical Greek god Icarus, and, like Icarus, Mr Costello crashed to the ground last Thursday when he ventured too close to the sun.

What we saw from Mr Costello is typical of the Costello arrogance that has become second nature to him. As he flitted around the United States trying to impress the economic and financial markets, and as he went to the IMF conference trying to bask in the `glories' of our economy, he did not acknowledge, of course, that the strong economic growth of the last three years—the low underlying inflation rate; the 700,000 new jobs that had been created, reducing unemployment by 2.85 per cent; the second lowest taxing country in the OECD, second to the United States in respect of spending as a percentage of our gross domestic product—was the legacy of Labor. He tried to take all the credit, basking in all the glory. But he brought himself undone. It is not uncommon, and I am sure that Senator Short, when he took his trip to Japan or the Philippines—


Senator Short —The US, actually.


Senator SHERRY —You were in the United States again. I will come back to your visiting the United States when I conclude my remarks, and you will be flattered by what I say, Senator Short. When economic spokesministers and ministers in general go overseas, they do need to be involved in confidential discussions with heads of government. That is accepted. It is very important for our ministers to be involved in confidential discussions: it is not only what you can do on the record but also it is the messages and the negotiations that occur off the record that are very important for this country's future. I do not think anyone would have believed that a treasurer could go into a meeting with Dr Greenspan and come out telling the world some of Dr Greenspan's views and comments.

What we have here is a Treasurer who has breached the confidence and the understandings that should be observed by an Australian minister and, as far as I know, have been observed by all Australian ministers and Prime Ministers, certainly in the last 20 or 30 years that I have been involved in politics. But he breached those confidences following his meeting with Dr Greenspan. What did Mr Costello say? He said that Dr Greenspan:

. . . was very optimistic. He indicated to me that he saw no threats to inflation down the track. I don't think there is any expectation at the moment that (US) rates are going to rise.

That was what Mr Costello said in a clear and direct reference to the views of Dr Greenspan. As I said earlier, Dr Greenspan is certainly one of the most important economic spokespersons, if not the most important, by virtue of his position in the United States and, certainly, in the world, arguably second only to the President of the United States.

Mr Costello, with his arrogant and gung-ho manner, in order to mix it with the Wall Street and economic financiers and ministers and impress them all, blurted out these comments at a media conference. I might say that he was very keen to give this media conference. Wherever he went, he had the media trailing him and he was very keen to give Mr Costello's view of the world, the Australian economy and, particularly on this occasion, the US economy.

What happened as a consequence of Mr Costello's breach of confidence at this meeting? As I said earlier, the markets certainly moved. They went up like a rocket. The graph in the Age newspaper of the US benchmark of the 30-year bonds for that day shows that, up until 1.30 in the afternoon when Mr Costello's remarks were made public, it was running very flatly and, at 1.30 when Mr Costello's comments became public knowledge in the United States, up it when like a rocket.

I am not going to quote the politicians or economic commentators in Australia. The Australian head of trading for the US bank Chase Manhattan said that it was very unusual, to say the least, to quote Dr Greenspan after a meeting. Worse still, a bond trader from a large investment house in the US was quoted as saying, `All the US banks are asking what the hell is going on.' Worse still, the Australian head of trading for Chase Manhattan said, `I think it took a while for people to work who the hell Mr Costello was and what he was doing talking about Greenspan so bluntly.'


Senator Ferguson —They don't know who Nick Sherry is.


Senator SHERRY —Well, they certainly do not, and I am pleased that I will not make the world stage, although, according to Senator Short, my utterances about superannuation have rocked the entire industry. So I will be flattered by Senator Short's comments.


Senator Conroy —Single-handedly.


Senator SHERRY —Single-handedly rocking the superannuation industry in this country by my criticisms of recent government measures. But there is one comment—


Senator Short —You'd better stay onshore.


Senator SHERRY —I am coming back onshore. Jeff Kennett, the Premier of Victoria, said that the upside was that the world would now know the identity of the Australian Treasurer. The effect of Mr Costello's comments on the markets was so profound that you have to wonder whether he is, in fact, a secret member of the re-elect Clinton campaign. I think President Clinton would certainly have been pleased to see the market soar and rocket to record levels as a consequence of Mr Costello's comments.

But worse was still to come. Mr Costello, having made these comments on the public record—tape recorded and filmed—denied that he said them. Of course, what is interesting, is: what was Mr Howard, the Prime Minister, doing? Significantly, during this event, Mr Howard, the Prime Minister, was saying absolutely nothing to rebut or rebuke Treasurer Costello.

Mr Costello went on to say, time and time again, that he had not divulged any confidential information. He said, `I was reporting my own assessment.' He went on to say that reports of his comments were fanciful. He said that, in the situation, when properly understood, nothing spectacular had happened. The bond market had only gone up like a rocket at 1.30 after his comments were made public.

Mr Costello then tried to avoid the issue again by saying that it was only a big issue in Australian newspapers, stating `the incident is only big news in Australia'. Mr Costello ought to have a look at some of the international newspapers, such as the Financial Times and the Wall Street Journal. They certainly gave it extensive coverage. When questioned about whether he did not or did not divulge information, he further said:

No, no, no. I have made it entirely clear I am not giving out views on interest rates. We look at published data, we make observations. We're not giving out any views on them.

But what did Mr Costello say on the public record? He said, referring to Dr Greenspan:

He was very optimistic. He indicated to me that he saw no threats to inflation down the track. I don't think there is any expectation at the moment that US rates are going to rise.

What we have, regrettably, is an arrogant, out of touch Treasurer who, touring the United States, anxious to prove his so-called economic credentials and credibility, gung-ho, really put his foot in his mouth.

Mr Costello has denied saying what he said, and it is clearly on the public record that he has misled us—and I could use a harsher word. The code of ministerial responsibility is very clear:

Ministers should ensure that their conduct is defensible, and should consult the Prime Minister when in doubt about the propriety of any course of action.

Also:

Any misconception caused inadvertently—

and it certainly was not inadvertent on this occasion—

should be corrected at the earliest opportunity.

(Time expired) .