The Gerard affair

I’m not a huge fan of political scandals, but I’ve seen enough of them unfold to have a pretty good feel for the process. The vast majority can be put into one of three categories: beatups, stonewallers and one-hit wonders.

Beatups are bogus scandals where claims that look damaging turn out to have an innocent explanation, or at least a plausible rationalisation. Mostly these do the government concerned no harm.

Stonewallers are cases where the government’s response is to brazen the whole thing out, on the principle “never apologise, never explain, never resign”. Some governments are more given to stonewalling than others, and (after a brief and costly period of upholding high standards) this has been the Howard government’s response in nearly all cases.

Finally, there are one-hit wonders. In these cases, the pressure is severe enough to force the resignation of the person most directly concerned, usually an expendable junior minister or public servant. Once the resignation has taken place, attempts to push the issue further, and look at the involvement of more senior figures go nowhere.

When the Fin reported that companies owned by businessman and Liberal Party donor Robert Gerard had been involved in a major brawl with the Tax Office over sham transactions at the time of his appointment to the Reserve Bank Board, I immediately diagnosed a one-hit wonder, as did Peter Hartcher. The details of the transactions described in the Fin were damaging, and the sensitivity of the RBA is such as to make it obvious Gerard could not last more than a few days. Still, it seemed like pretty small beer compared to say, children overboard or the lies that led up to the Iraq war.

When Gerard resigned on schedule, choosing a Friday, I thought that would be the end of the matter. This was even more so because, as Philip Gomes noted in a piece called ‘Howard’s luck’ the whole thing took place in a week dominated by the execution of Van Nguyen, which took place on the day of Gerard’s resignation.

Yet here we are four or five days later and the scandal is still headline news. The obvious explanation is that Howard’s luck is working, but his objective is not to kill the scandal but to keep it alive. Howard’s remarks on Insiders, putting the blame entirely on Costello, are the only public manifestation of this, but it seems clear that the whole thing is being given oxygen by forces within the Liberal party. (Who, for example, decided it would be a good idea to reveal that Gerard had turned down the job of Party Treasurer?) It is noticeable that, with the inevitable exception of Glenn Milne, none of the government’s usually reliable chorus of supporters in the press has defended Costello.

This of course raises the question of how the Fin got the story in the first place, nearly three years after Gerard’s appointment. An obvious possibility is that someone within the Liberal party pointed the Fin in the right direction.

I don’t share the widespread admiration of Costello as either a politician or Treasurer. I think he has the strengths and weaknesses of a school debater. He’s quick on his feet and can get on top of a brief, but rarely takes the trouble to understand the issues on which he is making debating points. But I can’t get excited about the Gerard affair. It’s time to move on, I think.

Update Tim Dunlop has more

30 thoughts on “The Gerard affair

  1. Finally, lost in the stupid belatedness of this Who Knew What When game is the extremely light (= non-custodial) “sentence� Robert Gerard received for large-scale tax evasion. Personally, I think that some details on the strings surely pulled here would make a much more interesting story than the low-down on what newspapers the hapless – and basically honest, AFAICT – Peter Costello may have read in March 2003.

    I agree entirely

  2. there’s a couple of aspects of this whole thing worth commenting on. First, any government appointments are scrutinised closely by the Prime Minister’s office before they go to Cabinet. I would be astonished, and it would be a first for this government, if the Gerard appointment had not been discussed between the respective offices (ie the personal staff) of Costello and Howard before it went in to the “swinging from the rafters” Cabinet meeting that Costello cites. so for the PM to attempt to distance himself from the appointment decision is just misleading (at best). second is the much bigger principle – should the government make appointments to as important a body as the RBA Board without any external scrutiny? I know, and am the first to acknowledge, that the US confirmation hearing process has its defects – but it would be better than what we have here.

    by the way, in terms of monetary policy it hardly matters – in recent years the RBA Board has wisely gone along with anything the governor proposes, and in that sense there is not a real problem in terms of overall macro policy settings. I suppose the issue is that it might have done something stupid in that time…in which case the government appointments to the Board would really have mattered.

  3. stephen bartos hits the nail on the head: no-one could be appointed to the RBA board without Howard’s staff checking that the appointment would be to Howard’s advantage.

    At first I was surprised that someone would roll a member of the RBA board or a very generous financier of the Liberal Party for factional advantage. This is playing for keeps with high stakes. Then I remembered that we are talking about the same people who sent hundreds of women and children to their deaths on SIEV X.

  4. At first I was surprised that someone would roll a member of the RBA board or a very generous financier of the Liberal Party for factional advantage. This is playing for keeps with high stakes. Then I remembered that we are talking about the same people who sent hundreds of women and children to their deaths on SIEV X.

    I quite sincerely believe that in their world, the loss of a major donor is a far bigger issue than the drowning of a bunch of reffos.

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