Federal Opposition hounds Treasurer over appointment to RBA board, Gerard resigns

Friday, December 2, 2005 The Australian Federal Opposition has hounded the Treasurer, Peter Costello, over the appointment of Robert Gerard to the Reserve Bank of Australia (RBA) board. Mr Gerard announced on Friday 2nd that he will resign from the Board, citing the events of this week as the reason.

On Tuesday, November 29, Wayne Swan, the Shadow Treasurer asked of Costello in the first question of Question Time about an apparent statement that Costello made to Gerard, namely, “I know there’s an issue with the Tax Office but I don’t have a problem with you on the board”. Costello responded that he had no problem with Gerard, noting that “he brings a great understanding of Australian manufacturing industry to the board”, and that the obligatory declaration of interest was “indeed was signed by Mr Gerard”.

Later it was said by Swan in the House of Representatives that Gerard’s company was using “tax havens as tax avoidance schemes to the value of $150 million” and that the declaration of interest mentioned was only in regard to his personal affairs and on asking the Treasurer when he knew this, claimed that him actually knowing the information “would breach the secrecy act”. Later Swan revealed that Gerard “and his corporate vehicles” have been “susbtantial donors” to the Liberal Party. Costello maintained that the Government “[does] not think that supporting the Liberal Party is a disqualification from holding ministerial office, prime ministerial office, Treasury office or other offices in Australia”

Swan moved a censure motion to “provide this House with a full and proper explanation of…his communications with Mr Robert Gerard…and his knowledge of Mr Robert Gerard’s dispute with the Australian Taxation Office…”, which failed in the Government’s favour with votes 83 to 59 in division.

On Wednesday, November 30, Swan opened the House in a movement to suspend standing orders again to get information from the Treasurer, stating that “The Treasurer is in real strife” before the Parliamentary Secretary to the Treasurer moved the gag. In Question Time, the Opposition continued to ask every question in regard to the appointment of Gerard. The Leader of the Opposition Kim Beazley revealed in his question to the Treasurer that “some of his cabinet colleagues have privately said that they did not consider Mr Gerard was ‘a good choice’ in the first place for the Reserve Bank board”. The Treasurer responded that Gerard’s “appointment was supported by all members of the cabinet”

In the subsequent Matters of Public Importance debate, the matter selected was that proposed by Wayne Swan, namely, “The need for the Treasurer to uphold the highest standards of probity in the selection of candidates for the Reserve Bank Board.”

On Thursday, December 1, the Opposition again reserved a number of its questions for inquiring about Gerard’s appointment. Swan revealed in a question to the Treasurer that Gerard Corporation had “acquired an investment company in the tax haven of the British Virgin Islands eight months after the Treasurer recommended his appointment to the Reserve Bank board”. Costello responded to Swan referring him to “a statement about that allegation in the Australian Financial Review today…in which he makes it clear that no income has been derived.”

Later, the Leader of the Opposition tried to move a censure motion on the treasurer, but leave of the House was not granted, so he had to resort to moving a motion to suspend standing orders to move the same motion, to censure the Treasurer for his appointment. The motion failed due to Government numbers, but the Matters for Public Importance (which follows Question Time) which was selected as “The need for the Government to govern for all Australians not just a privileged few.” in order to draw a comparison with the unequal treatment of the Treasurer in supporting Gerard and the new industrial relations legislation, dubbed WorkChoices, and said how the Treasurer and the Prime Minister were “laughing up their sleeves”, that the Treasurer was “not fit to lead”, and Gerard “is the worst attendee on the Reserve Bank board.”

The Minister for Workplace Relations, Kevin Andrews, however focused elsewhere on the MPI, and drew the attention of the Australian Labor Party‘s ties to the unions, had described the Opposition as a “policy free zone”, said that “there is one group that represents privilege in this place and that is the Australian Labor Party”, and stressed the benefits of WorkChoices.

Craig Emerson noted that the Queensland branch of the Liberal Party participated in “deliberate tax evasion”, and that Mr Gerard “paid penalty tax in circumstances of deliberate tax evasion”. Emerson later said that the Liberal Party was “soft on tax cheats”, “soft on tax cheating Liberal Party donors…and members”.

The adjournment debate also brought up criticism of Gerard’s appointment in the adjournment debate. Christopher Bowen noted the “disquiet” in the media, and noted the previous Board member Bernie Fraser also calling for his dismissal. Bernard Ripoll called for a “full inquiry” into the Government’s “self serving public policy”.

Swan has said that Gerard had done the “honourable thing”, but that he will not let up on pressing the Treasurer for a full disclosal of the facts.

The House of Representatives as of this date sits next on December 5, 2005.