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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

damaged goods « Previous | |Next »
December 2, 2005

Over the last couple of days I watched the Costello defence of Robert Gerard's 2003 appointment as a director of the Reserve Bank in the House of Representatives. This was done at a time when Gerard Industries was being chased by the Tax Office for big time tax evasion using a Caribbean tax haven. Not a good example of corporate social responsibility is it?

Costello was not convincing. Apart from the 'didn't know' and 'wasn't told' it was a barrister engaged in hair splitting in response to justified ALP criticisms concerned to make the executive accountable. Costello should be held accountable for Gerard's appointment, and Parliament was exercising its legitimate muscle in questioning the lack of diligence. Howard and Costello's ducking and weaving all over the place only made matters worse.


After watching it all my judgement was that Rob Gerard, a Liberal party donor, should look after the reputation and independence of the Reserve Bank by resigning from the Board. He is damaged goods and should not remain. No doubt Gerard will become the fall guy to protect the Howard Government. Costello remains tarred.

It is time political appointments (party mates) to the Reserve Bank Board by both political parties ended. Both parties should take the independence of the Reserve Bank seriously. It is one one of the few public institutions that retains its independence and stands between the arbitrary power of the executive governmnet and the citizens.

Update: 3 December 2005
Gerard has done the right thing. He resigned on Friday afternoon. Though he still refuses to acknowledge that he does not pass the requirement of 'fit and proper person ' test, as he says that the accusations against him were out to destroy his reputation and damage the Howard Government. Gerard seems to have forgotten about the need to independence of the Reserve Bank, the need for checks and balances on power in a liberal democracy, and the lack of a proper scrutiny in the appointments system.

Future appointments to the Reserve Bank Board should be the subject of scrutiny by a joint committee of both houses of Parliament, and the appointment should require the support of two thirds of both houses of Parliament. Will the ALP have the political courage to call for this?

| Posted by Gary Sauer-Thompson at 12:29 PM | | Comments (5)


When you have been in power for so long there are many favours that need to be returned, and only so many appointments that are available. Because of this I would contend that governments tend to make more inappropriate appointments the longer they are in office. All sides do this. Gerards appointment is a very fine example. What else was available....Chairman of the Australian Cheese Board??
Of course he could just have received a handshake, a smile and a thankyou after his handsome donation, but how many millionaires give away their money for such a poor return?
Obviously there is the prestige that goes with the RBA post, but are there other advantages to a businessman of Gerards stature in seeking such an appointment?

Yeah you're right. it is an example of cronyism by which both parties seek to co-opt and control public institutions. When cronyism is the means to do this only lip service is then paid to the idea of independent public institutions.

It's political corruption.

Gerard was a big figure in Liberal circles; a part of the inner network with close connections to both Howard and Costello. He had probably had direct access--an indication of his power and influence--and probably bankrolled the SA Liberals.

The suss appointment reflects badly on Costello. His performance in Parliament was defensive, and he lost his political lustre.

As a good liberal lapdog Gerard's main role on the RBA board was easy; "No interest rate rises!"

what's interesting here is how entrenched the divide is between Costello and Howard - "did not know", "was not advised" were perfectly reasonable excuses for Vanstone, Ruddock, Reith, and even the Prime Minister himself. But the Impudent in Waiting makes one mistake, and the wrath of all Murdoch and Fairfax are upon him. Strange days indeed.

it probably discloses the significance of the Reserve Bank and the need for it to be independent to ensure a healthy functioning financial system.

It was the Australian Financial Review that lead the charge and did the investigative groundwork. The ALP followed.