logo
Published on Webdiary - Founded and Inspired by Margo Kingston (/cms)

Costello burns Gerard candle at both ends

By John Miner
Created 03/12/2005 - 05:03

John Miner

 

DECEMBER 2 UPDATE 2 PM by Margo: Gerard quits [1] - will this save Costello? Should it? Costello tried to save himself by abandoning Gerard via the Oz today - see Costello rejects Gerard's defence [2]. [3] ATO did soft settlement with Gerard Co. after appointment - see Gerard's $75 million to settle tax 'sham' [4]. 

John Miner is a Webdiary columnist [5],  a journo and ex-staffer to premiers and a prime minister, and founding member of The New Institute, which argues for a place in national debate for Australians who live beyond the capital cities. John's last Webdiary piece was The Dismissal and the legacy [6]. His IR power to the feds: the Australian people always say no [7] gives an idea why the Howard government is rushing its unpopular IR and Welfare to Work legislation through parliament. Margo's piece on the Costello/Gerard scandal is at Nowhere to hide, Peter, on the Libs' million dollar man [8].   


DECEMBER 1 POST

I am not sure any of the commentary about Robert Gerard, in the media or parliament, has come to grips with the central issue.

It's not the question of how Mr Gerard came to be appointed to the Reserve Bank board.  It's not the question of whether he was guilty of tax evasion.

The real issue is how the ATO arrived at a settlement with Mr Gerard and his companies.

Beginnings are one thing.  Endings, in the public commentary we have seen, read and heard, seem to be something else. 

In this case, the ending is not separate from the beginning.  They are merely opposite ends of the one process.

As a nation, we seem to have become accustomed to the practice of out-of-court settlement of prosecutions. 

When it comes to offences against the taxation laws, this is hardly surprising. As the Treasurer indicated last week by announcing [9] the excision of 2,100 pages, there's a lot of ridiculous and complicated nonsense in the tax laws.  It must be very hard sometimes to prove intent, almost as hard as it must be sometimes for the taxpayer to comply perfectly.

A difficulty with settlements is that the evidence is customarily not made public.  "Difficulty" if you're a member of the public: it's a positive advantage to those who, for one reason or another, don't want the evidence made public.

It should be borne in mind, also, that prosecutions are judicial, settlements administrative. Yes, settlements are arranged by lawyers, but those lawyers are instructed by public servants.

So the it was the servants of the ATO who agreed to settle with Mr Gerard and his companies.

And to whom do they answer?  Who is their Minister?  The Treasurer, the same person who put forward Mr Gerard as suitable for appointment to the Reserve Bank board.

I wouldn't suggest for a second that the Treasurer would interfere with the regulatory function of the ATO by ordering or suggesting that a prosecution be dropped.  He might wish it; he's allowed to do that.

There must come a time in the administrative process when it crosses the mind of a public servant that the departmental policy does not include embarrassing his or her Minister.

Does he or she want to stay living in that house in Griffith, where the kids can walk to Canberra Grammar? 

Or will the kids enjoy Sulphur Springs High after Dad gets "seconded" to the Department of Agriculture and posted to Woop Woop West? 

Will Mum enjoy sacrificing her salary because there's no work in Sulphur Springs since the drought?  Will she happily fill her social calendar with visits to Kathy's Kolorful Kuts, the leading hairdresser on the Desolate Highway, just 128 km from their home overlooking Lake Disappointment? And what of their membership of the Australian National Gallery, the subscription to Musica Viva, the kids' classes at the Alliance Francaise?

Will the couple enjoy playing tennis with people who think it's a social event? High-flyers know that every game exists to be won, that there's no such thing as a friendly fight. You can't even throw a game against your boss because he wants to see that killer instinct.

Most of all, how does Dad get back to Canberra if he's posted out of sight and out of mind of the high-flyers, if he's not available for the 9 o'clock Mass at St Christopher's, Friday evening drinks at the Hyatt, or the occasional lunch with the Commissioner at the Commonwealth Club?

Welcome to the nightmare of the high-ranking public servant.

So, would a public servant in the ATO like to embarrass Peter Costello by ensuring that all the activities of his nominee to the Reserve Bank board were put in the public domain?

We reiterate that we are not alleging Peter Costello leant on anybody. He wouldn't have to, would he?

The process of settling a legal prosecution is lacking in transparency. It would be better for all concerned if it didn't happen.

At least one commentator, in The SMH, believes the whole thing will be forgotten if Mr Costello makes a good recommendation next time (which will be when Frank Lowy leaves).

I beg to differ.  Mr Gerard and the Treasurer had their destiny in their own hands. Either Mr Gerard should have resigned from the Bank, or the Treasurer should have ensured that justice was not only done but seen to be done.

Now it's too late.

Robert Gerard cannot clear his name or uphold the reputation of his companies. 

And Peter Costello, even on the most generous view, can never be seen to have done the right thing when he sits at both ends of two obscure processes, the appointment of a new member to the Reserve Bank board and the out-of-court settlement of tax matters involving the same person.

They'll both carry it around their necks for a long time, especially if Mr Costello wants the leadership of his party. (Did I say "if"? Good Lord.)


Source URL:
/cms/?q=node/1030