Webdiary - Independent, Ethical, Accountable and Transparent
header_02 home about login header_06
sidebar-top content-top

Nowhere to hide, Peter, on the Libs' million dollar man

G'day. There's a big vibe at Parliament House today - lots of little outbreaks of independent thinking in the Coalition and a nightmare headache for Peter Costello when he wants to be on the front foot on leadership next year. Howard announced to the partyroom this morning that there'd be a conscience vote on allowing the abortion pill RU486 to be used in Australia, and lobbyists on both sides of the debate almost immediately held private briefings for pollies. Howard then postponed partyroom debate on the terror laws and the IR laws till later in the week. His squashing of three gigantic pieces of legislation which will transform Australia's values - terror, IR and welfare to work - into exercises in minimum time between publication and passage and frantic parliamentary inquiries to meet his end of year deadline has already made this last Parliamentary sitting for 2005 more heightened than usual.

But journalist Morgan Mellish's very big deal allegations in today's Fin Review about the fitness of Costello for office stole the show. It's a story which chipped the protective wall between the people and the real power elites in Australia. We glimpsed where the real power is in NSW recently, when Bob Carr got out just in time as Premier to be immediately employed by the big business which made a mint under his Government, Macquarie Bank.

Robert Gerard is a big businessman in South Australia.  In Chapter 1 of my book Not Happy, John!  I detailed Howard's attempt to keep his personally compiled guest list to his barbecue for George Bush at the Lodge in October 2003 secret from the people of Australia. It finally came out that the companies of six invited businessmen had between them donated more than a million dollars to the Liberal Party. One of them was Rob Gerard, chariman and managing director of private company Gerard Industries. His company donated $244,806 to the Libs for the 2001 election campaign, and $187,000 in 2002/03. All up, according to Mellish, his company has donated $1.1 million to the Libs since 1998 (Labor = 0).

Mellish revealed today that Cabinet agreed to Costello's recommendation that Gerard be appointed to  the Reserve Bank Board, Australia's premier financial institution, in early 2003, after an Australian Tax Office Audit had accused his company of tax evasion on a massive scale. According to Gerard himself, Costello knew about that matter when he appointed him. Mellish quotes a 'senior government minister' as saying:

I think most people in Cabinet thought it was an appropriate appointment. There was certianly no mention of tax issues... Like we all do, he would have raised it with the Prime Minister's Office before taking it to Cabinet.

Gerard told Mellish:

I told the Treasurer to check with all the departments before I went on the Board. He rang me back and said, 'I know there's an issue with the  Tax Ofice but I don't have a problem with you on the Board.'

Costello failed time and time again to deny this today. His persistence in answer avoidance was, to say the least, dogged, and red herrings numbered - well you tick them off.

AFTER the RBA appointment, a confidential settlement was reached in mid 2003, under which Gerard agreed to sell his 50% owned Clipsal electrical empire to French multinational Schneider for $750 million, and Schneider wrote a cheque for $150 million to the tax office. Mellish:

According to the ATO, Mr Gerard and his right had man, Bill Henderson, went overseas in 1985 to set up an insurance company called FAI Insurances NV based in the Netherlands Antilles and managed from Bermuda. The ATO alleged FAI NV (which had no connection to the well-known FAI Insurances) was used in a series of round-robin "sham" transactions between 1986 and 1998 aimed at avoiding tax payments.

The name FAI NV, according to the ATO, was designed to hide the Gerard Industries scheme and make it appear as though it was part of the real FAI Insurances Ltd, then run by the Adler family.

The ATO also alleged Mr Gerard and Mr Henderson made false and misleading statements during the investigation in 1994 and that the company did not 'provide a reasonable level of cooperation'.

"It is concluded that there was either a deliberate and knowing intention on the part of Gerard Industries, acting through its directors RG Gerard and WR Henderson, to avoid the payment of tax or that there was a flagrant disregard for the operation of taxation law that cannot be excused in people of their skill and experience in business practice and taxation law," the ATO's 2000 audit report for Gerad Industries stated.

Mellish's yarn is based on secret Tax Office docos, which raises the interesting question of who leaked what and why. Murky. Very murky. Gerard put out a statement today. AM's follow up is here.

For the first time for a long while, every Labor question in Question Time was on one issue, to Costello and Howard, and Howard took the trouble to return to the House to listen to Costello's speech during Labor's censure motion against him.

The hapless Liberal speaker rubbed salt into Costello's wounds early in Question Time, when he asked: "Has the leader completed his answer? Sorry, the Treasurer."

Costello acted nonchalant, and so did Howard. Exaggeratedly so. But Costello was pale, and unusally for him dodged all the key questions. All of them. And he played the don't-take-me-on-or-I'll-throw-mud-right-back-at-you line - usually saved till much later in a scandal - very quickly indeed.

Shadow Treasurer Wayne Swan led the censure motion for Labor, but his seconder Julia Gillard stole the show with a devastating speech which reminded me of her speech nailing Ruddock a few years ago on his dealings with the shady Dante Tan. (See Ruddock opens heart, Liberals fill wallet and Ruddock's inferno.)

This stuff also reminds me of Tony Abbott's 'Honest Politics Trust' scandal, the one where he refused to disclose the donors to his vehicle for destroying One Nation - contrary to electoral donor disclosure law - in the Courts while claiming he wanted stop Hanson breaking electoral laws. Most of the ten donors - $10,000 grand each - are still secret. Two were revealed. Trevor Kennedy kicked in, was later hawked around by Costello and co to be managing director of the ABC, and then fell in a heap when the AFR revealed secret Swiss Banks Accounts in relaton to a failed public company held by him and by Rene Rivkin, who later committed suicide when convicted of insider trading. (The NSW Labor Right's Graham 'whatever it takes' Richardson was also caught up in the scandal.) I wonder, was Rob Gerard one of the blokes who could be relied on by the Libs for a quick ten grand or so to destroy the competition?

I interviewed Abbott at the height of the scandal and when I asked why he wouldn't reveal his donors he replied that 'there are some things the public has no particular right to know'. In-bloody-deed.

Here is Gillard's speech, then the Question and Answers from Question Time. Morgan Mellish's  5 page spread makes today's Fin definitely worth buying.


GILLARD (Lalor—Manager of Opposition Business) (3.30 pm)—The proposed motion to censure the Treasurer is about getting clear and honest answers to questions which were not answered by the Treasurer in question time today, and certainly not in the contribution he has just made. Every member of the House here today heard the Treasurer and the Prime Minister in question time, and the Treasurer during the debate on this motion to suspend standing orders, basically contend to this House that Mr Gerard is a good and honest man—he is a man who has a series of important appointments. That has been the case that the Treasurer has put before the House today. He is staring at me and not demurring from that. He was putting the case that Mr Gerard is a good and honest man.

Let us have a look at what this ‘good and honest man’, on the Treasurer’s version, said. This ‘good and honest man’, on the Treasurer’s version, said the following words. I quote from today’s Australian Financial Review:

Costello, Peter, MP —And you say he’s not.

Gillard, Julia, MP—You said he was good and honest. As reported in the Financial Review:

Mr Gerard told the AFR he had told Mr Costello about his dispute with the ATO.

And the Treasurer’s ‘good and honest man’ said:

I told the Treasurer to check with all the departments before I went on the board ... He rang me back and said, ‘I know there’s an issue with the Tax Office but I don’t have a problem with you on the board.’

So the issue for the Treasurer is, if Mr Gerard is a good and honest man, are these statements in the Australian Financial Review the truth or a lie? The Treasurer was asked about that several times today and he never at any point said Mr Gerard was lying. He never disputed this account in the Australian Financial Review. So we are entitled to accept that it is the truth that the Treasurer said to Mr Gerard, ‘I know there’s an issue with the Tax Office but I don’t have a problem with you on the board.’

Why would the Treasurer have been talking to Mr Gerard about tax? It cannot have been about a personal tax liability because the Treasurer has gone out of his way to produce pieces of paper to indicate that Mr Gerard did not have a personal tax liability. Indeed, he has a letter from the Taxation Commissioner that says that. So if Mr Gerard and the Treasurer were talking about tax, they could only have been talking about one tax matter—Mr Gerard’s business tax affairs. The Treasurer cannot have it both ways. If Mr Gerard is a good and honest man and he has told the truth to the Australian Financial Review, the Treasurer was talking to him about tax, about his business tax affairs, and he was saying that did not worry him in terms of putting Mr Gerard on the Reserve Bank board.

The alternative case is that Mr Gerard is not telling the truth, in which case he is not a good and honest man and the Treasurer has appointed to the Reserve Bank board someone with a predisposition for lying. So let us make it clear here—either the Treasurer knew about the tax liability or Mr Gerard is a liar. There are only two routes home here. I think I know which one is the truth. Of course the Treasurer knew about Mr Gerard’s tax liability on the business side. This is not a tax liability where a man has had a little quibble about his tax return. It is not that kind of tax liability. It is a tax liability where allegations of dishonesty have been made against Mr Gerard—serious findings by the Australian Taxation Office against him. The shadow Treasurer, the member for Lillee, read these out—that effectively they found either a deliberate and knowing intention to avoid the payment of tax or a flagrant disregard for the operation of the tax law that could not be excused by people with their skill and experience. The Treasurer knew about that, and he still appointed him.

Why did the Treasurer still appoint this man to the Reserve Bank board? It is crystal clear—Mr Gerard had bought it, and the going price was more than a million dollars. Mr Gerard had bought it. This government is so arrogant, so conceited and so disregarding of the ordinary standards of public life that, if you front up to the Liberal Party with $1 million-odd, you can get yourself anything. Despite a track record of dishonesty, you can get yourself anything. What this man got himself was a position on the Reserve Bank board. That is the allegation the Treasurer should have answered in the 10 minutes he had to speak on this matter in this parliament. That is the allegation he refused to answer, and he will not answer it because it is true.



Mr SWAN -   (2.00 pm)-My question is to the Treasurer, and relates to Mr Gerard's appointment to the Reserve Bank board. Did the Treasurer say to Mr Gerard: I know there's an issue with the Tax Office but I don't have a problem with you on the board.

Mr COSTELLO - I have no problem with Mr Gerard as a member of the Reserve Bank board. I think he brings a great understanding of Australian manufacturing industry to the board. But seeing as this question today was totally anticipated, let me answer the question in some detail. Any person who is considered for an appointment to any Commonwealth government body is required to sign a declaration of interest which states that they have no private interests, including those of a taxation nature, that would conflict with their responsibilities or cause embarrassment to the government. That I think was the declaration of interest which was signed by all appointees under the Labor government, and indeed was signed by Mr Gerard.

In addition to that, Mr Gerard forwarded to the government a letter from the Commissioner of Taxation dated 3 March 2003, which reads as follows-and I will table this:

As requested, I am writing to confirm my previous advice that there are no current disputes with the Tax Office in respect of your personal affairs.

So not only did the taxpayer sign that declaration and warrant, but indeed the Commissioner of Taxation. Tax matters are matters between taxpayers and the commissioner. I have read today's Financial Review.

Opposition members interjecting-

Mr COSTELLO - I thought the honourable members opposite would be interested in the facts.

Mr BEAZLEY -   interjecting-

Mr COSTELLO - When the Leader of the Opposition ceases interjecting, I will go on with the facts.

The SPEAKER - Order!

Mr COSTELLO - I thought the Leader of the Opposition would be interested in the facts. The facts are these. It is quite common for people to have disputes with the Australian Taxation Office. Every taxpayer is entitled to take those matters to court if they so wish. I would be very surprised if there were not numbers of directors from numbers of companies who have served on the Reserve Bank board whose companies have not had disputes with the Australian Taxation Office.

Mr BEAZLEY - -Mr Speaker, I raise the point of order on relevance. I know he is talking about this in generality, but a particular quote was put to him. It is a quote that Mr Gerard said passed from the Treasurer to himself at the time of his appointment in which he said:

I know there's an issue-

that is, the Treasurer said-

with the Tax Office but I don't have a problem with you on the board.

We asked if such a statement was made. Did he say that?

The SPEAKER - The Leader will resume his seat. The Treasurer is answering the question. I call the Treasurer.

Mr COSTELLO - Because I know the members of the opposition will be interested: I would very surprised if there were not other companies who have directors on the board of the Reserve Bank whose companies have not been in dispute with the Australian Taxation Office at one time or another. They are entitled to contest their rights in court. Any company is entitled to do that. As I read the Australian Financial Review-and I cannot vouch for the accuracy of that-the allegation that is made in relation to Gerard Industries is that it settled all of its affairs with the Australian Taxation Office in their entirety, including primary tax, interest-

Mr BEAZLEY - -Mr Speaker, I take a point of order. It goes to relevance and the specific character of the question. Did the Treasurer say to Mr Gerard that he knew Mr Gerard had a problem with the Tax Office, but that this did not pose a problem for the Treasurer?

The SPEAKER - The Leader will resume his seat. Has the leader completed his answer-sorry, the Treasurer?

Opposition members-Ha, ha!

Mr COSTELLO - Yes, Mr Speaker.


Mr SWAN -   (2.10 pm)-My question is to the Treasurer. Did the Treasurer say to Mr Gerard, as Mr Gerard says: I know there's an issue with the Tax Office but I don't have a problem with you on the board.

Mr COSTELLO - I have already answered this question. What I said to Mr Gerard was that he would have to give an undertaking as to his tax affairs. Mr Gerard said that he was able to give that undertaking and in fact did give that undertaking.

The SPEAKER - The Leader of the Opposition on a point of order?

Mr BEAZLEY - -Relevance, Mr Speaker. I cannot think of more explicit question that could be asked in this place.

The SPEAKER - The Leader of the Opposition will resume his seat. The Treasurer has only just begun his answer. I call the Treasurer.

Mr COSTELLO - Mr Gerard not only said that he would be giving the undertaking-he did one better than that: he sent a letter from the Tax Commissioner, which I have just tabled in the parliament, saying that the Tax Commissioner had no dispute with him. From that point of view, the government had both an undertaking from the taxpayer and a statement from the commissioner which indicated that there was no dispute in relation to his tax affairs and the matter went to cabinet in the ordinary way.

Opposition members interjecting-

Government members interjecting-

The SPEAKER - Order! Members on my right!


Mr SWAN -   (2.15 pm)-My question is to the Treasurer. Given that the Treasurer has not denied that he said to Mr Gerard, 'I know there's an issue with the tax office but I don't have a problem with you on the board,' did the issue at the tax office which you were aware of involve your understanding that Mr Gerard's company was using tax havens as tax avoidance schemes to the value of $150 million?

The SPEAKER - Order! Before I call the Treasurer, I remind the member for Lilley that the use of the word 'you' is to be discouraged.

Mr COSTELLO - Of course, the member for Lilley tries to make an insinuation which is false in the first part of his question. I have said precisely what the nature of my discussion with Mr Gerard was. I expect that Mr Gerard himself, knowing his tax affairs, will most probably make a statement about what the Australian Financial Review says, but can I indicate that, from the government's point of view, both the taxpayer and the commissioner-and the commissioner is a person of a certain weight in this-said that there was no dispute. I also indicate that the Australian Financial Review says that all matters have been settled, and not only primary tax but interest and penalties have been paid.

Also, in my experience, where a case is settled, it is usually settled without admissions, and no admissions necessarily follow from that settlement. Having mentioned all of those matters, can I say why I believe that Mr Gerard is eminently suitable to be a member of the Reserve Bank Board. As Chairman and Managing Director of Gerard Industries Pty Ltd, his company has employed 3,300 people.

Mr BEAZLEY - -Mr Speaker, I raise a point of order on relevance. He can arrange his own dorothy dixers for these things, but the Treasurer has been asked an explicit question about whether or not he is aware of the uses of that tax haven to the tune of $150 million, and whether that was the issue-

The SPEAKER - The Leader of the Opposition will resume his seat. The Treasurer is answering the question.

Mr COSTELLO - And these of course are questions that go to whether or not Mr Gerard should be a member of the Reserve Bank Board.

Mr SWAN -   interjecting-

Mr BEAZLEY - -No they don't.

Mr COSTELLO - Oh, they don't? An opposition member-No, they don't.

Mr COSTELLO - Okay, so we now have three questions which are irrelevant to whether or not someone should be on the board, Mr Speaker. We have just had an admission that he is not interested in whether or not Mr Gerard is fit for the board. We now know that the opposition-you may not have intended to say it-supports Mr Gerard being on the board. If that is the case, what is the point of the questions? We all agree-there is bipartisan agreement-that he is a fit and proper person to be on the board. It is quite bipartisan: both sides of the parliament agree now, by admission from the Leader of the Opposition, that he is a fit and proper person to be on the board.

Mr Crean interjecting-

The SPEAKER - Order! I warn the member for Hotham!

Mr COSTELLO - And why? Let me tell you: because his company employed 3,300 people in Australia-

Mr BEAZLEY - -Mr Speaker, I raise a point of order. This is pathetic. It is a question here-

The SPEAKER - The Leader of the Opposition will come to his point of order.

Mr BEAZLEY - -A very explicit question was asked of him-

The SPEAKER - The Leader of the Opposition will come to his point of order.

Mr BEAZLEY - -about whether he knew about the $150 million in the tax haven-an explicit question that requires no elaboration. All we ask of this Treasurer-

The SPEAKER - The Leader of the Opposition will resume his seat. The Treasurer is answering the question.

Mr COSTELLO - I repeat again: there is bipartisan agreement that Mr Gerard is a fit and proper person to be on the Reserve Bank Board, as the Leader of the Opposition said. He is a major employer, a major manufacturer, South Australian of the Year-

Mr BEAZLEY - -Mr Speaker, I raise a point of order. There are standing orders in this place, and they are very clear-that is, answers must be relevant to the question. We want to know from this fellow whether he was aware, explicitly, when he took this recommendation to the cabinet, that the issue was-

The SPEAKER - The Leader of the Opposition will resume his seat. I call the Treasurer, and I ask the Treasurer to come back to the question.

Mr COSTELLO - He is South Australian of the Year, the sponsor of the Clipsal 500 in South Australia and an officer in the general division of the Order of Australia, with the Commissioner of Taxation saying that his affairs were not in dispute with the tax office. I would have thought that that is the reason why there is bipartisan agreement in this parliament that he is fit and proper to be on the Reserve Bank Board. Workplace Relations


Mr SWAN -   (2.24 pm)-My question is directed to the Treasurer. When did the Treasurer become aware of the tax issue involving Mr Gerard's corporation that led to the tax office findings against Mr Gerard, including his deliberate evasion of tax or flagrant disregard of tax law, his misbehaviour toward auditors and the penalties imposed as a result of this behaviour?

Mr COSTELLO - I am not aware of any such thing. The Australian Financial Review purports to report on a tax investigation which would never be given to a Treasurer or any other member of parliament and which, as I understand it, would be confidential to the commissioner and the taxpayer. To ask whether I would be aware of a tax investigation into an individual's affairs is basically to ask whether I would breach the secrecy act and demand documents or investigations on particular taxpayers. I would no more demand them in relation to Mr Gerard than I would demand them in relation to the member for Lilley.

Imagine if tax investigations or taxpayers' affairs were given to politicians, Mr Speaker! Can you imagine the proper political outcry that there would be? I am very surprised that the question has actually been asked. Even if the report were true, to suggest that a politician would get their hands on the tax investigation into a taxpayer when there are secrecy provisions in relation to the Australian Taxation Office is a very dangerous precedent and certainly one which this side of politics would not endorse.


Mr SWAN -   (2.35 pm)-My question is to the Treasurer. I refer the Treasurer to declaration of interest by Mr Gerard that he tabled today that only referred to his personal tax affairs. Treasurer, what about his business tax affairs? When did the Treasurer know about the ATO findings against Mr Gerard involving deliberate tax evasion? When did you know, Treasurer, or are you expecting us to believe it was yesterday?

The SPEAKER - The Member for Lilley, that last part was a reflection on an individual. The rest of the question is in order, but the last part should be addressed on the Notice Paper. I call the Treasurer. The Treasurer is not required to answer the last part of that question.

Mr COSTELLO - I have already answered that question by saying that tax investigations are not given to members of the government. I read in the Financial Review that it purports to have such an investigation, but it certainly is not an investigation which has been given to the government and certainly not one which has been given to me. In fact, I may read out an answer on a very similar question: The secrecy provisions of the Australian income tax law prevent the Commissioner of Taxation and his officers from disclosing the income tax affairs of an individual taxpayer without express authority to do so.

The answer goes on:

I am therefore unable to answer this part of the honourable member's question.

That was an answer giving given by PJ Keating on 5 April 1989 to a question about the tax affairs of Sir Peter Abeles, a Labor appointee to the Reserve Bank board. I table that answer. Resources


Mr SWAN -   (2.42 pm)-My question is to the Treasurer. Is the Treasurer really saying that he or his office had no knowledge until today of the ATO audit into Mr Gerard's business or of public court proceedings arising from those proceedings?

Mr COSTELLO - I have already answered this question on two occasions. Could I indicate that, as is always the case in relation to Commonwealth government appointments, a statement is sought from a taxpayer. Unusually, in this case, the taxpayer also provided a letter from the commissioner. The taxpayer and the commissioner seem to have no dispute between them. I do not believe that it is the role of an MP to call for tax returns, and no Treasurer has done it.

I have already indicated that this was the procedure adopted by the Australian Labor Party and by Mr PJ Keating and that these declarations were the practice of the Australian Labor Party. The secrecy provisions of the tax act have been in place for a long time. The answer that was given to Mr PJ Keating in relation to tax affairs was precisely the same. I would say to the member for Lilley that I would move his suspension and censure quickly because he is running out of steam.


Mr SWAN -   (2.48 pm)-My question is directed to the Treasurer. I refer the Treasurer to his previous answer when he said that Mr Gerard unusually provided a letter from the tax commissioner about his personal tax affairs. Did this letter, Treasurer, follow the conversation between you and Mr Gerard, in which you said: I know there's an issue with the tax office but I don't have a problem with you on the board.

Mr COSTELLO - Again, of course, he misrepresents in his question what I have told the House. I refer back to the Hansard of what I told Mr Gerard. I told Mr Gerard what I tell everybody who is being considered for a Commonwealth appointment-that they will be required to sign a declaration, which everybody signs, which was signed under the Australian Labor Party. Mr Gerard not only signed that but forwarded to me a letter from the Commissioner of Taxation, which confirmed that the Commissioner of Taxation also had no problems. If the taxpayer gave the undertaking and the commissioner gave the undertaking, to me he got from both sides of the equation a very strong position.


Mr BEAZLEY -   (2.52 pm)-My question is to the Prime Minister. In relation to the 2003 appointment of Mr Robert Gerard to the Reserve Bank board, is the Prime Minister aware of comments reported in the Australian Financial Review today quoting an unnamed senior government minister who said: 'Like we all do, he'-that is, the Treasurer-'would have raised it'-that is, the appointment of Mr Gerard and the circumstances of his tax avoidance-'with the Prime Minister's office before taking it to cabinet'? Prime Minister, what discussions did you or your office have with the Treasurer or his office about the appointment of Mr Gerard and the tax scam allegations?

Mr HOWARD - -The appointment was handled in a correct, appropriate manner. It went to cabinet. I think Mr Gerard is an excellent member of the Reserve Bank board.


Mr BEAZLEY -   (2.56 pm)-My question is to the Prime Minister. Prime Minister, are you aware that the ATO audit on 24 March 2000 into the affairs of Gerard Industries concluded:

There was either a deliberate and knowing intention on the part of Gerard Industries Pty Ltd, acting through its directors, RG Gerard and WR Henderson, to avoid the payment of tax, or there was a flagrant disregard for the operation of taxation law, and that cannot be excused in people of their skill and experience in business practice and taxation law. Do you think somebody with a finding like that is an appropriate person to serve on the Reserve Bank board?

Mr HOWARD - -I will make a couple of observations as part of the answer I give. The first is that, by his own admission, the opposition leader is not disputing the suitability of Mr Gerard to be on the board of the Reserve Bank. This is not an exercise about the integrity of Robert Gerard; this is an attempt by the Australian Labor Party to discredit my friend and colleague the Treasurer.

Mr BEAZLEY - -Mr Speaker, I rise on a point of order. The Prime Minister is deliberately misleading parliament in a way irrelevant to the answer to this question. We and the country-

The SPEAKER - Order! The Leader of the Opposition will resume his seat. I remind the Leader of the Opposition that, if he wants to make an allegation against a member of this House, he has to do so through other forms of the House. Secondly, the Prime Minister has only just begun answering his question. I call the Prime Minister.

Mr HOWARD - -The second observation I would make is that it is often the case that people have differences of opinion with the Australian tax office. Taxpayers have a right to have a difference of opinion with the Australian tax office; there is nothing particularly revolutionary about that. But at least Mr Gerard appears to have filed his tax return, which is more than can be said about some other people who are of lesser memory in the context of a debate like this. I remind the Leader of the Opposition-

Opposition members interjecting-

Mr HOWARD - -In your dreams! You are having a bad day. You gave yesterday away. Now what are we-at three o'clock and not a question on IR! I don't understand it. The relevant point about the dispute between Mr Gerard and the Australian Taxation Office is that, by hand of the letter from the commissioner, all the outstanding matters were resolved. So what is the fuss all about?


Mr SWAN -   -   (3.03 pm)-My question is directed to the Treasurer. When was the Treasurer first aware that Mr Robert Gerard and his corporate vehicles have been substantial donors to the Liberal Party since 1998 and that Mr Gerard is a director of the Liberal Club Ltd?

Mr DOWNER -   interjecting-

The SPEAKER - Order! The Minister for Foreign Affairs!

Mr DOWNER -   interjecting-

The SPEAKER - The Minister for Foreign Affairs is warned.

Mr COSTELLO - It has taken us until the 10th question from the opposition, but finally we have a question which reveals the true nature of the objections that the Labor Party has to Mr Gerard. The true nature of the objections was framed in that question-that Mr Gerard is unfit for public office because he has made donations to the Liberal Party. That is the real objection that Labor has to Mr Gerard. It took 10 questions to get here, but that was disclosed by the nature of that question.

Can I say-and I suppose I do not speak for both sides of the House-that we do not think that supporting the Liberal Party is a disqualification from office in Australia. We do not think that. We do not think that supporting the Liberal Party is a disqualification from holding ministerial office, prime ministerial office, Treasury office or other offices in Australia. There might have been some attempt by the Labor Party to dress it up-that somehow they were against anybody who had supported a political party being on the Reserve Bank board. Mr Speaker, let me remind you of some of the appointments to the Reserve Bank board made by Labor governments. First of all, Labor appointed ACTU president Bob Hawke to the Reserve Bank board. Notoriously independent when it came to political matters, Mr Bob Hawke! When he retired, we had Nolan. I forget his name, but I am pretty sure that Nolan was an ACTU-

Mr HOWARD - -No, no, Peter Nolan.

Mr COSTELLO - Peter Nolan was a trade union official of some kind or another. Then there was a Fitzgibbon. I might be wrong about it, but I would not be surprised if that was also a Labor appointee. He served right up until we got another notorious independent on the Reserve Bank board, one William Kelty, the ACTU secretary, who served on the Reserve Bank board. And just in case you thought that the Labor Party only appointed unionists, we had Sir Peter Abeles, who served on the Reserve Bank board. I could go on and on. Janet Holmes a Court served on the Reserve Bank board.

So for all the bluster, for all the pretence, for all the questions that if you have been a supporter of one side of politics it disqualifies you from the Reserve Bank board, let me make it clear that the Labor Party, in government, practised as an art form the appointment of Labor apparatchiks, in the case of Kelty and Hawke, to the Reserve Bank board.

Let me finish off by saying why Mr Robert Gerard is suitable to go on the Reserve Bank board. He is a major manufacturer, and his companies have employed 3,300 people in Australia. He is an officer in the Order of Australia, he is South Australian of the Year and his Clipsal companies were sponsors of the Clipsal 500. South Australian Premier Rann was proudly standing with Mr Gerard when his companies were sponsoring the South Australia Clipsal 500. Premier Rann apparently did not have any great objections to Rob Gerard when it came to him endorsing the grand prix. He did not have a problem at all, and he stood there proudly. He did not have a problem taking the sponsorship. It is only when Mr Gerard goes on the Reserve Bank board that he suddenly becomes unfit for public office.

Let us nail these allegations. Let us nail them before the member for Lilley gets up and moves his censure motion, which he has been dying to do for the last 10 questions and which he should have done much earlier when he had at least a bit of momentum. The real objection is that a successful manufacturer in Australia has, over the years, been engaged in politics. That is not a disqualification for office in Australia. His tax affairs were cleared by the Commissioner of Taxation, and he brings an important perspective from one of the smaller states and, in particular, from manufacturing industry to the Reserve Bank board. I now invite the member for Lilley to stand up and move his censure motion.

[ category: ]

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Appointing Robert Gerard to this position is just par for the course with Howard and Costello. Their arrogance in defending this decision today was embarrassing to watch. For Howard to declare that this man's problem with the ATO was a normal business practice just shows how out of touch he has become. When he began to refer to Keating's slackness in filing a tax return he really was scraping the bottom of the barrel. These 2 clowns should have asked Gerard to resign immediately. Instead they have left the problem to fester which it surely will. Howard has really lost the plot in his amazing fit of arrogance since the last election. The ministerial scandals he has riden out will be nothing compared to this. The great Gerard tax scandal can only get bigger and uglier. Costello should make the most of his own prime ministership when it's foistered upon him within the next year. Howard intends to go out while he's on top and will relish saying that the reason the Coaltion was thrashed at the next election, which it surely will be, is because he is no longer there. Backbenchers should be nervous for they are doomed, and deservedly so. Malcolm Turnbull's dreams of ever getting his tax reforms across ended today. I hope he thinks the boredom of Canberra was worth it.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Just one more example of why neither Howard nor Costello can be trusted with any serious business of the nation and why the RBA has nothing like the independence it tries to proclaim it has - not even remotely possible with this kind of corrupt appointment.

Disgusting, arrogant beyond measure and totally irresponsible.

re: Nowhere to hide, Peter, on the Libs' million dollar man

I watched the useful follow-up on the 7.30 Report tonight. The incident involving Gerard is no small matter. It is classic Howardist "Bottom of the Harbour" stuff. The real surprise is only that nothing changes.

The disturbing thing is that people will see the Gerard dodge as anomalous, when it is most likely the norm and a savage impost by default for the Australian public: PAYE earners, the unemployed and other welfare repients, the likely present and future victims of on-going victims of IR subjugation, aborigines, asylum seekers who are put through the mill to prove themselves. Millions must justify themselves almost to the point of breathing the air they breathe, while the likes of Gerard and his ilk go about their ignoble and greedy pastimes and practices.

Gerard is not anamolous; it is a glimpse at what is really killing this country and the wider world, as capitalism and its selfish neo-lib ideology continues to entrench itself as the "normal" way of being and doing for human beings.

One need not be hypocritical of course. If I see a twenty-dollar note sitting on the footpath I will "pick up", too. Gerard himself would probably would say " It was there for the picking, the attitude in my culture is to go ahead" and so we see,as Costello again tacitly encourages it, almost in the same arrogant way Howard tacitly encourages the death of Nguyen in Singapore by callously attending the cricket as a snub to his plight.

But HIH, Gerard, Hardies, Gunns, Halliburton and the like and their politician lackey protectors go beyond simply looking after oneself. What they do as a national leadership class as part of an international ruling class, impacts on wider national and global society. With Costello's tacit suport of Gerard, we see (again) the diefication of greed, unchristian selfishness and criminality when, or even because, it harms others.

re: Nowhere to hide, Peter, on the Libs' million dollar man

I walk through the streets of Robert Gerard's past and present business interests every day, and wonder, wonder, wonder. When I say walk through the streets, it's not possible to walk through all of them, as a couple were sold to Mr Gerard by our local council, and these are now behind the gates of a French owned company that (under Gerard's company banner) stretches from Adelaide to Russia.

The security signs on the fences tell a story. Some of the grounds are guarded by Clipsal Security, many by Gerard Security. Components of the former business empire were retained by its former owner.

The land that these businesses occupy is now the last part of the area remaining unsubdivided for property development. Many, including some Clipsal office staff, assume that the area will go to housing.

Some of the land still owned by Mr Gerard (or at least protected by his security) abuts the Bowden railway station. On the other side of track are a set of townhouses, across the lane from them is my family's business, The Governor Hindmarsh Hotel. (the story relevant to the latter two constructions was in the most recent Weekend Australian (Primespace, Page 3). I thus disclose that I have vested interests in what happens to the large acreage of land owned by both Mr Gerard and his enforced business associates.

Rumours of the imminent closure of the local Clipsal factory have abounded for years. The land, being only a few kilometres from the city centre, is considered prime real estate. Ironically, since the "defence boom" has increased the value of industrial property on the northern side of the city by 30 per cent, it's value as factory land has also increased dramatically of late.

The land is bordered by two railway lines- one to Port Adelaide, the other to Darwin. I could see potential in the creation here of an defence industry estate servicing these two destinations.

Everyone around here knows somebody who says the factory will be closed in a year, and I've been told from several different directions thar there's a perception of "mothballing" industrial sites rather than conversion.

Given that Clipsal Datacomm have connections to the defence industry, and that the company has connections to Halliburton/KBR through the creation of racing tracks for the events that it sponsors. I'd personally like to know if our pub is going to be nest to a new suburb of townhouses or a national defence-related transport facility. I'd also like to know how much money Mr Gerard stands to make out of either set of transactions.

One could argue that business is business, and that it's Robert's money to do with as he pleases, but in light of the revelations today it appears that it's been the finances of the Australian taxpayer that are involved in dealings with this lucrative land.

Robert Gerard was finally sent on his way from Clipsal this year with a star-studded event at the Adelaide Entertainment Centre (on the other side of our pub). One of the features of the event was "This Is Your Life, Robert Gerard", presented by now less than television host Mike Munro. The cost of this event.. who knows? However, one of the backstage crew told me that the black puff-and-drape curtains hung in the hall for the evening cost a cool fifty thousand, so I doubt anything else was done "on the cheap".

Mr Gerard, as you all know, is not a poor man, and he will soon become much richer. There are a number of people from different aspects of Adelaide life who are more than slightly annoyed at this possibility.

Tomorrow morning I'll be walking through the streets of "Gerardville South Australia" yet again, and I"ll be wondering even more.

Margo: Webdiairsts, Richard is our Halliburton watcher - see Halliburton's Adelaide.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Hmmm... Costello as a viable alternative, my friends?

But... meanwhile, Paul Walter, please... never let said corporate corruption allow you to mistake "capitalism" - which we haven't got - for the current mess we're in. Read John Ralston Saul for the difference - between capitalism (proper) and corparatism (what we have) - and hope that, someday, some Australian government will actually have the guts to push for the former...

all the best

re: Nowhere to hide, Peter, on the Libs' million dollar man

re: Nowhere to hide, Peter, on the Libs' million dollar man

JHC Yes, precisely. Far too many don't understand the distinction between the two ... which is part of why I suspect big business is so foolishly backing the IR reforms... they haven't connected the right dots.

re: Nowhere to hide, Peter, on the Libs' million dollar man

The Reseve Bank board is more independent now than it ever was in the Labor years. As can be seen by the stellar economy Australia now has. The Bank is also much more effective and respected.

What the hell was Bill Keelty for example ever doing on the board? Labor has no right to accuse anyone of doing anything wrong in relation to this matter.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Isn't it amazing that the rich and powerful can get away with anything time and again? If an ordinary working person owes the tax man a few measly dollars they are hounded and persecuted to the full extent of the law. As usual it is all about who you know.

This whole affair is disgusting. And as usual Howard will bury the whole thing and the media will roll over and play dead. And the rich get richer...

re: Nowhere to hide, Peter, on the Libs' million dollar man

I just wonder why this story came out at this point of time - just when Costello's leadership aspirations were yet again being aired publically, and questions about when Howard will step aside were being asked.

Nothing like a little diversionary tactic - remember Heffernan's ridiculous attack on Kirby everyone - to distract attention from one story to another.

Cynical, moi??

Margo: Hi Adam. It was a 5 page spread, a very detailed look at Mr Gerard. I'd discount a Howard play. Howard is under the gun on this story too. He invited tax evader Rob - evade tax, donate to the Libs, how cute - to the Bush barbecue in October 2003, and he's the man with the last say on all senior appointments by the Government, not just the really big ones like this one. I wouldn't be surprised if Howard suggested Gerard to Costello. There was a lot of odd body language between Howard and Costello in Question Time yesterday.

re: Nowhere to hide, Peter, on the Libs' million dollar man

The Australian Government, bought for you by big business, for big business...

re: Nowhere to hide, Peter, on the Libs' million dollar man

I've had a long held belief that corporation tax records should be in the public domain. The Gerard revelations are all the confirmation that I need.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Robert Gerard proves the rich certainly are different. Perhaps they qualify as a minority culture. They certainly have a unique slant on those strange terms "ethics" and "probity" and "accountability". And they certainly get different treatment from their Government. Is that some form of positive discrimination for an oppressed and disadvantaged minority?

PAYE taxpayers or social welfare beneficiaries who are subject to reams of paperwork and a constant and annoying examination of every little deduction claimed, every little child support or benefits or Ausstudy submission, take note.

Perhaps like the Amish or lost tribes in the Amazon, this interesting group deserves close anthropological and literary scrutiny. For instance one can only imagine what screenwriters Fran Walsh and Philippa Boyens could have done with that tender male kitchen bonding scene between those great corporate scions Packer and Murdoch. It was a dream sequence of course as was shown by the ensuing court transcript.

Lachlan and Jamie's Frodo and Sam Moment

Jamie I can’t do this, Lachlan!

Lachlan I know. It’s all wrong. By rights we shouldn’t even be here. But we are. It’s like in all the great business stories, Jamie. The ones that really mattered. Full of greed, intrigue, bloody-mindedness and oneupmanship.

And sometimes you didn’t want to know the end. Because how could the end be happy.

But in the end, it’s only a passing thing, this shadow. Even darkness must pass. A new day will come. And when the sun shines it will shine out the clearer.

Jamie I lost it Lachlan. (weeps and bangs head on Laminex)

Tricontinental, Ansett, HIH, Those were the stories that stayed with you. That meant something. But I think, Jamie, I do understand. I know now. Folk in those stories had lots of chances of turning back only they didn’t. Because they were holding on to something.

Jamie Err...yeah (snuffle My dad'll kill me. Your dad'll kill me.

Ouch. What are we holding on to, Lachlan?

Lachlan That there’s some greed in this world, Jamie. And it’s worth fighting for..

Ah the power of nightmares....

re: Nowhere to hide, Peter, on the Libs' million dollar man

Jay White, bringing up the issue of Bill Keelty is another of your (in) famous red herrings. You wouldn’t be trying to distract attention away from Howard and Costello’s cynical abuse of power by stacking every institution with Liberal Party Cronies would you?

The issues with Rob Gerard’s appointment to the Reserve Bank Board are twofold:

(1) he is the subject of a damning ATO Audit report and therefore hardly the type of person to be sitting on the Board of the Reserve Bank

(2) he is a very large ($1million plus??) donor to the Liberal Party - therefore the very real issue of political interference in the Board’s deliberations arises, eroding the Boards independence. The issue of Cronyism affects all Australians, you only have to see the corroding effects, over time, such a situation has on a country’s economic performance.

Bill Keelty who at the time was the head of the peak Union body in the country is as qualified as any head of Big Business to sit on the Reserve Bank Board. The issue is character and the ability of those with deep pockets to buy themselves influence.

Margo: Well said Jonathon! And both parties should clean up their acts, big time, on such appointments. This appointment reeks of Indonesian style cronyism, banana republic stuff, to the detriment of the reputation and credibility of a foundation stone of our financial system. And what about the ATO being put in the position of having to negotiate a settlement with a tax evader who is also a member of the Reserve bank Board! Makes you wonder, doesn't it...

Then there's Costello, whose job is supposed to be to ensure all Australians pay their fair share of tax. He appointed someone who tried to evade the system he is guardian of, for God's sake. Ethics overboard. One rule for them, and another rule for us... Peter Hartcher in the SMH today thought this scandal wouldn't matter to Costello leadership-wise. I disagree. I think it's potentially crippling. I've always been a bit of a fan of Peter, maybe because unlike others I've never seen his nasty side. But this appointment was unethical and inappropriate and I'm starting to wonder whether he's as self-interested and unprincipled as Howard. I've always thought Costello felt a duty to do the right thing in the public interest - sure politics intervenes but at least duty is a consideration, unlike Howard, for whom self interest and duty always coincide. Now I'm not so sure.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Jay, one other thing. It was a Labor Government that implemented an independant Reserve Board and that instituted Financial Deregulation. You seem to forget your history when it conflicts with your ideology.

re: Nowhere to hide, Peter, on the Libs' million dollar man

If "odd body language" is a concern, Margo, wait until Costello partners Ron Walker in the lambada to usher the Bagman onto the RBA Board.

Margo: Has there ever been a chairman of a media company on the RBA Board?! I have a feeling Ron may have to wait a while for this payoff after this scandal. Costello won't be game to do it when Lowy retires soon. I thanked my good timing - for once - when I terminated with Fairfax on August 22 only days before Walker was announced chairman. Talk about the merger of corporate and government power!

re: Nowhere to hide, Peter, on the Libs' million dollar man

There have been quite a few bad appointments to the Reserve Bank Board and tit for tat arguments don't get you anywhere. I agree that Gerard should resign though of course the target in these detailed leaks is Costello.
On a question of fact Jonathon James is wrong in saying that it was a Labor Government which implemented an independent RBA. In fact, it was the Menzies Government in the Reserve Bank Act 1959.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Australia's stellar economy Jay White?

The trade deficit increased by 13% in the September quarter. Net foreign debt is now $450 billion - about $22,000 per man, woman and child in the country!

Here we are, with the best terms of trade in a generation, and the morons in charge of the country still can't turn a profit. A nation that consistently spends 6.5% more than it earns is headed for bankruptcy.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Eureka! When Frank Lowry's RB position expires next year, Costello could give the position to Peter Reith!

The experience that "Reefy" has gained on the board of the European Bank, his Tenix consultancy (my, aren't Tenix and Transfield doing well these days), coupled with his knowledge of long-term Liberal strategy from his cabinet days, would make Reith the perfect substitute for Gerard as RB Board Liberal puppetter!

Either that, or all of Reefee's 'work experience" has been a waste of time.

re: Nowhere to hide, Peter, on the Libs' million dollar man

I really can't see what all the fuss is about. Don't the media and the ALP understand that the average person couldn't give two hoots about Gerard's appointment or his tax disputes - they only care about interest rates. No wonder the ALP got rolled at the last election - they listen to ignoramouses like Margo Kingston instead of the voters.

The reality is that the ALP and media don't like Costello or the Liberals and just want to throw mud. And they are inconsistent as well. They had no problems appointing their union mates to the board in the past. Also, many large companies, including the then government owned Telstra, have used tax havens to minimise Australian company taxes.

Individuals like Pat Rafter have done likewise. He deemed himself to be a resident of Bermuda so he wouldn't get taxed on his winnings! I don't remember the ALP complaining about that!

re: Nowhere to hide, Peter, on the Libs' million dollar man

While I hold no truck for the Coalition I was incensed to read in the Australian that Howard has distanced himself from Costello by saying that Costello had suggested Gerard to him. I have never believed a word that came out of the mouth of that man and I can't believe that he could be so vindictive - yes I can! I can imagine the hatred that Costello has for Howard now and to me it is quite justified. One can see the hand of Howard appointing Gerard, he may not have signed the paper appointing him, but now it has backfired he is wriggling out from under.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Richard Tonkin, why don't the Government go one better then old Reefy and appoint Peter Hendy to the RBA instead.

He learnt everything he knows from his old boss and I think he's well and truly paid his views by being one of the Government's main cheerleaders for the IR changes via his job at the ACCI.

re: Nowhere to hide, Peter, on the Libs' million dollar man

Well Andrew Kulikovsky, I consider myself an average Australian, and I do take exception to the whole putrid Gerard affair.

Howard and Costello like to talk tough about small business 'rorting' the system through the cash economy - part of their reasoning for the GST remember?

What is now blatantly obvious, is that rorters who are big financial backers of the liberal party, who steal millions from the tax dept, are treated entirely differently.

Gerard got a nice quiet out of court settlement and an appointment to the RBA.

So obviously defrauding the tax department is only a bad thing if you are not a million $$$ supporter of the Govt.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
© 2006, Webdiary Pty Ltd
Disclaimer: This site is home to many debates, and the views expressed on this site are not necessarily those of the site editors.
Contributors submit comments on their own responsibility: if you believe that a comment is incorrect or offensive in any way,
please submit a comment to that effect and we will make corrections or deletions as necessary.
Margo Kingston Photo © Elaine Campaner