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Tuesday, 8 October 1996
Page: 3660


Senator KERNOT (Leader of the Australian Democrats)(4.19 p.m.) —There are two issues in this matter of public importance. One is what the Treasurer, Mr Costello, said overseas and the second is how he handled the public revelation of what he said. I think that takes us to the notion that there formally exists an accepted standard of ministerial behaviour. I have been around only six years but long enough now to witness both a Labor and Liberal government from which I think some inescapable conclusions can be drawn.

There are two quite separate and quite distinct sets of ministerial standards. One is the public up-front standard contained in documents like the draft code of ministerial conduct, which senators have already quoted from today. This document, in one form or another, has been around this place for about seven years now. It has not yet been formally adopted. The other standard is the one set by the previous Labor government, which I think is now being assiduously followed by the Liberal government. That code of ministerial conduct basically goes like this: deny everything at first and tough it out no matter what the evidence.

The last draft of the code, the framework of ethical principles for ministers and presiding officers, has at point 2 the heading `Honesty'. It reads:

Ministers and the Presiding Officers must be frank and honest in their public dealings and in particular must not mislead intentionally the Parliament or the public.

It goes on:

Any misconception caused inadvertently by a Minister—

I agree that this was hardly an inadvertent action—

or Presiding Officer must be corrected at the earliest opportunity.

So that seems quite straightforward. Under that standard, it would seem inescapable that yet another minister—in this case Treasurer Peter Costello—has breached the draft code. I say `yet another minister' not just in regard to this government but also in regard to the previous Labor administration because we do remember Carmen Lawrence, Ros Kelly and Graham Richardson and the debates we have had in this place about ministerial accountable. Under the coalition government I believe we can add Treasurer Costello, foreign affairs minister, Alexander Downer, and communications minister, Senator Richard Alston.

I want to look at these contemporary examples. I think it is relevant because Prime Minister John Howard is the one who raised the high jump bar of acceptable parliamentary standards in his Governor-General's address in opening this parliament on 30 April. On the basis of the evidence presented from first-hand accounts in the media, there is no doubt that Treasurer Costello trotted out beaming from his confidential meeting with the chair of the US Federal Reserve and he blabbed, not exactly in the terms of the Financial Review as first attributed but he did blab. He could not help himself. When strutting the international stage I think there is always a big temptation to take oneself and one's status very seriously.

As Treasurer, Mr Costello would have known—he should have known—that this was a big mistake. He should have kept this exuberance in check. The jury is out, I think, on the damage that has been done. Certainly I believe it has done damage to Mr Costello for future meetings—not just in the United States, but also elsewhere in the world. I guess there is another matter of what damage it has done to Australia's international reputation.

Once Mr Costello's comments hit the papers, instead of admitting that he may have been a little overexuberant, he said some things he should not have. The test, we should ask, is: what did Mr Costello do? Well, he denied that he said anything in the first place. The comments attributed to him in the Financial Review were `fanciful', he said. So he followed the tried and true method of `if in doubt, claim to have been misquoted'.

Journalists who were there produced a tape of what he said and the tape confirmed the direct quotes in which Mr Costello can be heard to say he `closely questioned Mr Greenspan on whether he could see any threat to the inflation outlook in the future' and that Mr Greenspan `indicated to me that he saw no threats to inflation down the track'.

As we all know, inflation is one of the primary determinants of interest rates. Mr Costello went on to say that he did not think there was `any expectation at the moment' of a rise in US interest rates and that Mr Greenspan `indicated to me that there was no reason to expect a change on the current scene as he sees it'. So really, that all adds up to a pretty open-and-shut case of commenting on interest rate expectations in the United States.

But the evidence was not enough to stop Peter Costello. He still denied that he had commented on United States interest rates. I am indebted to Senator Sherry for the suggestion that the Prime Minister should send Senator Short and Senator Gibson overseas because we could be certain that they would not say anything.


Senator Ferguson —Very kind.


Senator KERNOT —Meant kindly. Denial is, of course, one of the stages of grief. Anger is another stage. No doubt we saw expressions of Mr Costello's anger at the media, but I am doubtful as to whether another step in this normal process, the step of acceptance, is close at hand, although I think we should acknowledge that today in question time in the other place Mr Costello made some sort of qualified acceptance of the criticism directed at him. It was not a full acceptance, though. It was a qualified acceptance which revolves around a contention that his remarks were `misinterpreted'. He will not say straight out, `Yes, I was wrong. I did say those things. It was intemperate, it was a mistake and I am correcting the public record.' What he did in qualifying his comments was adhere to the other code of ministerial conduct, the `tough it out' one.

I think I should mention in passing Senator Richard Alston's attitude to this code of ministerial conduct. During the election campaign Senator Alston, and indeed Prime Minister Howard, clearly and unambiguously promised a public inquiry into media ownership. They made it a very clear point of distinction between the coalition and Labor. On the PM program on 1 February, Senator Alston said:

We want to have a public inquiry so people can make submissions on the appropriate structures. . .

He said that after having accused Labor of wanting to keep the matter `in private, so they have a blank cheque to favour their mates after the game'. The then Leader of the Opposition said at the release of the coalition's communications policy on 23 January:

There will also be interest in the commitment of the Coalition to have a public, and I underline the word public, inquiry into the appropriateness of cross-media rules.


Senator Ferguson —What has this got to do with the MPI?


Senator KERNOT —Because this is about ministerial standards and accountability and the difference between what you say, how you can tough it out, and what you say when you are found out. I think it is totally relevant. We find that there will be no public inquiry. We find yet another breach of standards. People are entitled to change their minds, I suppose—we should always be willing to acknowledge that—but when does that changing of mind happen? Does it happen after talking with mates? Does it happen after somebody leans on you? Instead of saying, `I got it wrong,' or, `I changed my mind,' what do we get? We get a denial. We always get a denial. I think the conclusion is that there is the same kind of instincts of ministers in this government as there were in the previous government.


Senator Ferguson —You will never be a minister, so you don't have to worry about it.


Senator KERNOT —Well, we'll see about that. That instinct is to adopt the second code: the `tough it out' one. That is why we are still waiting for the official adoption of the framework of ethical principles. It seems on all the evidence so far to the Democrats that in matters of public honesty this government is no different from the last. The fact of the matter is that the faces and the bodies might change sides, but the script remains the same.