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Transcript of doorstop interview: Parliament House, Canberra: Monday 5 December 2005: Costello-Gerard affair.

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Wayne Swan MP Federal Labor Shadow Treasurer



SUBJECT: Costello-Gerard affair

SWAN: Today the Treasurer tried to shift the blame to the Prime Minister for the appalling decision to appoint Mr Gerard to the Reserve Bank Board. We saw back-biting and finger pointing at its highest level in the Government and we saw it for all to see on the floor of the Parliament. The Treasurer gave the Prime Minister a taste of his own medicine and, in the process, what has been junked are the standards of this Government.

We need the highest standards of corporate governance, we need the highest standards of integrity when it comes to appointments to the Reserve Bank Board and all we had today in the Parliament was blame shifting between the Prime Minister and the Treasurer. They are more interested in their own internal divisions than they are in the people of Australia. More interested in their mates, more interested in the divisions between themselves than they are in the national interest, and it was on display for everybody to see.

Secondly, the Treasurer’s performance today concerning his knowledge of Mr Gerard was absolutely incredible and completely unbelievable. It beggars belief that alarm bells were not ringing in the Tax Office, the Reserve Bank and the Treasury about Mr Gerard’s affairs. The Treasurer expects us to believe that he had absolutely no knowledge about these affairs despite the fact they were public knowledge and despite all of the division in the South Australian Liberal Party. The Treasurer referred today to Cabinet ministers that were swinging from the rafters. Well one of them, Mr Downer, was very, very unhappy about Mr Gerard’s appointment.

So this Treasurer has very serious questions to answer, questions that he has not answered adequately in the Parliament so far. So there’s a long way to go in exposing the cover-up that’s been put in place by the Treasurer, Mr Costello.

Journalist: Is it possible to believe that in a city the size of Adelaide, with four Cabinet ministers, that those people would be so ignorant of what was happening in their own town that they wouldn’t have known about this?

SWAN: Of course all of the Cabinet ministers in Adelaide knew about this and they would have communicated their views in one form or another, not only to Mr Costello, but I also believe to Mr Howard. That is why the Government’s defence in the House today is unbelievable and is unbecoming from people who have high office, who are supposed to be looking after our national interest. I mean what would small business think when they’re trying to manage their overdraft about the Government behaving like this with appointments to the Reserve Bank board? Or what do families who’ve got a mortgage think that the Government could treat the Reserve Bank like this when it’s responsible for the very important question of interest rates in our community? All of these things show a Government that is simply divided with itself and not looking after the national interest.

Journalist: Well, where do you go with this next? You say this has a long way to go but the fact is Gerard’s gone; Costello attempts to disarm it with levity today. Where do you take it?

SWAN: Well today Mr Gerard was thrown overboard. He’s been the fall guy. He’s been now repudiated by the Treasurer. We then had the Treasurer repudiate the Prime Minister. We had more buck-passing. We had more back-biting. Internal divisions in this Government reflect the fact that they’re not looking after the national interest and it’s our job as a responsible Opposition to keep a Government that is as arrogant as this one, that’s been in power as long as this one, accountable. And we will do that, through question time, both in the Parliament and also out of the Parliament to keep this Government honest because at the moment they are riding roughshod over standards of integrity and independence.

Journalist: Yeah, but where do you take it? After a few more days of you saying “I don’t believe it, I don’t believe it”, people are going to be bored aren’t they?

SWAN: Because in the end, one way or another, the truth will come out. As you’ve correctly observed before, many people knew about this, senior members of the Government knew about this. One way or another, the evidence will simply trickle out.

Journalist: Do you have any problems with Roger Corbett on the board of the Reserve Bank?

SWAN: Look, I have a very high regard for Roger Corbett. I think he’s a good appointment, but Roger Corbett has not been appointed through a process which we believe is adequate. What we need for good candidates like Roger Corbett is a good appointment process which is why Labor has called for a new process, one which involves a full audit, if you like, of the activities of the appointee, one that would apply a test, say like a fit and proper person test that applies to appointments to commercial banks, and one where there is some public transparency and openness. So, I think Mr Corbett has many qualifications for a job and what we should be seeing is a new process which can deliver candidates who have been examined through an impartial process.

Journalist: But Joel Fitzgibbon’s raised some concerns about the ACCC involvement in Woolworths, as Chief Executive, he’s hands on.

SWAN: No, but what Joel Fitzgibbon was referring to is that we need a process which would highlight the concerns that people would have about those who may be appointed to the Board. At the end of the day if we had an independent process, Mr Corbett would go through that and if he passed that process he’d be appointed. I believe he is the sort of person we should put forward to the Board, but he, like all other candidates for the Board, ought to be subject to a process which is more open and more accountable.

Journalist: We gather that you’ve not yet finalised that process.

SWAN: No. We haven’t.

Journalist: But do you think it would involve, under a Labor Government, public hearings?

SWAN: Well there are many models around the world and public hearings occur in the United States. We’re examining that option but I’m not making a commitment to it at the moment. We want to take our time to put forward an alternative model which is credible and serves the country well. And we’ll take our time to do that.

Journalist: Why should the average Joe be worried about the Gerard thing?

SWAN: Well the average person ought to be very concerned that the Government could be so cavalier and have such low standards in appointing people to a Board which is responsible for setting interest rates in our community, which affects home mortgage rates, which affects, really in the end, the overdrafts of small businesses. This is the most important board in the country that has a fundamental impact on our macro-economic stability. That’s why the person in the street ought to be very concerned if there’s one standard that the Liberal Party has for their mates and entirely another standard for them. Because the Treasurer, you see, is also responsible for the integrity of the tax system. He’s appointed someone who has used tax havens to the Reserve Bank Board while he adopts a very harsh attitude elsewhere in the tax system, to struggling small business, people filling out their GST forms and so on. That’s why they should all be extremely concerned.

Journalist: Should Costello be reprimanded?

SWAN: Peter Costello has not lived up to the standards that are expected of a Treasurer. At the very least, Peter Costello ought to be moved from the Treasury for his failure to apply the highest standards of independence, the highest standards of

integrity, to appointments to the Reserve Bank Board. Let’s never forget what this is about. The Treasurer knowingly appointed someone to the Reserve Bank Board who was using tax havens and who was the subject of an audit from the ATO about

millions of dollars in tax avoidance. This is an extremely serious issue. But the problem is that the Government behaves like they haven’t done anything wrong. If you listen to the Prime Minister, if you listen to the Treasurer, neither of them appear to know right from wrong and I think it just shows how arrogant this Government has become.

Journalist: So Costello should go?

SWAN: Well Costello should be removed from the Treasury because he has not applied the sort of standards you’d expect from a Treasurer who is responsible for the Reserve Bank Board which in turn is responsible for interest rate policy amongst other things in this community.

Journalist: You’ve criticised the wording of the letter by Michael Carmody about Mr Gerard’s personal tax matters. How do you think that letter came about?

SWAN: The Treasurer won’t tell us how it came about. He is trying to camouflage the events surrounding that letter, and there remain there many questions unanswered. Questions he really refused to address in the House today.


Monday 5 December 2005 Contact Jim Chalmers 0417 141 676