The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 30/11/2005

Interview with Catherine McGrath
ABC AM

Wednesday, 30 November 2005
8.20 am

SUBJECTS: Robert Gerard

MCGRATH:

Treasurer, you have come straight from meetings, good morning.

TREASURER:

Good morning Catherine.

MCGRATH:

Should Robert Gerard go from the Reserve Bank Board?

TREASURER:

No, Robert Gerard brings a very important perspective to monetary policy in Australia. He is probably one of Australia’s best known manufacturers, he has employed 3,300 people, he has been honoured in the Order of Australia for his services to export industries, his Clipsal brand is well known, not only in Australia, but throughout the region and he brings an important perspective to the discussions of the Australian economy and to monetary policy.

MCGRATH:

It is not just the Labor Party, of course, Bernie Fraser says he should do the right thing, the decent thing, and go.

TREASURER:

Well, you know, Bernie Fraser is entitled to his position but Bernie Fraser was always very politically attuned. You will recall without going back through it…

MCGRATH:

It is easy to dismiss…

TREASURER:

Well, well, you would…

MCGRATH:

It is easy to dismiss that but he is a respected person…

TREASURER:

Well hang on, you will recall the famous statement of the then Treasurer Keating, that he had the Reserve Bank in his pocket. It probably did more damage to the Reserve Bank Board than anything else in modern times.

MCGRATH:

Well let’s focus on today’s issue if we can.

TREASURER:

So, we ought to go back, we ought to remember why that statement was made.

MCGRATH:

Now did you or did you not say to Robert Gerard in a phone call, “I know there’s an issue with the Tax Office but I don’t have a problem with you on the Board”?

TREASURER:

What I said to him is that he would have to give an assurance as to his tax affairs:- that he was eminently suitable for the Board but like any other person he would have to give an assurance as to his tax affairs. He said he was able to give that assurance. He did give that assurance. And what is more the Commissioner gave that assurance.

MCGRATH:

We know that. That’s on the record. But did you say to him in a telephone conservation as he told the newspaper yesterday, “I know there’s an issue with the Tax Office but I don’t have a problem with you on the Board”? Yes or no?

TREASURER:

No. What I told him was that seeing that he had given the assurance and the Commissioner had given the assurance his nomination could go forward. But it is the giving of the assurance that is the warrant as to tax affairs. That is what I told him. If he could give that assurance and if the Commissioner could give that assurance, well I didn’t tell him about the Commissioner, but if he could give that assurance then he was eligible to sit on the Board. He gave that assurance and what is more, the Commissioner did. Now can I just go on, I just heard Mr Swan say that the Tax Office had serious problems and allegations with Mr Gerard. That is false. The Commissioner of the Taxation Office said he had…

MCGRATH:

Well I can read from the Tax Audit in March 2000…

TREASURER:

…well…

MCGRATH:

…in a moment…

TREASURER:

Please do.

MCGRATH:

… you’re talking about the Tax Commissioner…

TREASURER:

Please do, because the Commissioner…

MCGRATH:

…well the ATO…

TREASURER:

…and the Commissioner, just let me finish, the Commissioner of Taxation who is responsible for the taxation system said there were no current disputes. The Commissioner could have gone on and said, by the way I have these allegations against Mr Gerard. The Commissioner did not say that. The Commissioner did not raise any objection to Mr Gerard.

MCGRATH:

I will just quickly read an extract from what the Tax Audit found in March 2000, they said “There was a deliberate and knowing intention on the part of Gerard Industries acting through its directors R.G. Gerard and others to avoid the payment of tax. It was a flagrant disregard of the operation of the taxation law.”

TREASURER:

Well let me make this clear and I think Mr Gerard’s solicitors have said this, that is not a proven fact, that is not a conclusion of the court. These are matters that were to put to courts by the Tax Office but no finding has ever been made. In Australia, as far as I am aware, you are still innocent unless a court finds to the contrary.

MCGRATH:

Did you ask the Taxation Commissioner yourself about his affairs?

TREASURER:

No, because the Commissioner sent me a letter saying that he had no current dispute. And by the way, when this came up, I have checked with the Commissioner since, who informs me that he stands by that letter.

MCGRATH:

All right, the Attorney-General was received correspondence from Mr Gerard in 2002, five months before the appointment to the Reserve Bank Board, asking the then Attorney-General Daryl Williams to intervene. Did you know about that?

TREASURER:

I didn’t know about the letter to the Attorney-General. No.

MCGRATH:

Did you know about any correspondence, any comments, any discussion?

TREASURER:

Letters to the Attorney-General are not referred to me. But can I go on and say this point, any Australian citizen can make a representation to their Member of Parliament or to a Minister. There is nothing wrong with that. Just as any company, by the way, is entitled to dispute a tax assessment. It is not a crime to dispute a tax assessment and in this case it was disputed and settled. Now can I say Catherine, if a taxpayer disputes a tax assessment that is not a crime, that is your legal right…

MCGRATH:

What about that Labor is saying…

TREASURER:

…you are entitled to take it to the court…

MCGRATH:

…Labor is saying…

TREASURER:

…and it was settled.

MCGRATH:

Just finally, (inaudible) Labor is saying the highest standards of propriety are necessary in this sort of job.

TREASURER:

Well, here you have somebody - some company not a person - who was entitled to contest a tax assessment, they did and the matter settled. And the Commissioner said he had no disputes.

MCGRATH:

Peter Costello thank you very much for speaking to the AM Programme this morning.

TREASURER:

Thank you.