Tony Cole deserves to be remembered for a great service he performed on behalf of Australian democracy during his brief term as head of the Commonwealth Treasury in the early 1990s. Soon after taking the job, an official review of the criminal law gave Cole a tempting opportunity by that more domineering personalities may have unable to resist.
The review, by a former chief justice of the High Court, Sir Harry Gibbs, recommended that anyone who leaked, or published, information causing “substantial damage” to the economy should cop a seven-year gaol sentence. The Foreign Affairs department enthusiastically endorsed the recommendation.
But Cole wrote to Gibbs saying, “In reflecting on Australia’s economic history, I can recall no example, where even in a subjective sense, I would ascribe substantial harm to the Australian economy as having resulted from unauthorised disclosure of information”. Gibbs dropped the recommendation.
The present head of Treasury, Ken Henry, might baulk at a seven-year sentence for anyone who harms the economy, but was he hardly a proponent of open government during his appearance before a parliamentary committee last Wednesday. Henry was particularly upset by a report in The Australian referring to a letter he received from the Reserve Bank Governor, Glenn Stevens, expressing concern about aspects to the Rudd Government’s unlimited guarantee for deposits with banks, building societies and credits unions during the next three years.
Henry told the committee, “In my view, it would be better if we had not had any media reporting on this issue. [This would] allow the officials the opportunity to reflect soberly and deeply upon the implications of the various options ”. On the contrary, more public discussion may have lead to an outcome that caused less disruption in the financial markets than the subsequent freezing of mortgage funds and so on.
At least Henry did go as far as the Australian Federal Police Commissioner, Mick Keelty, who earlier this year called for a ban on defence lawyers and journalists criticising the role of police and intelligence agencies in a terrorism case “until the full gamut of the judicial process has been exhausted''. Such as ban would have been extremely convenient for the AFP after terrorism-related charges against Mohammed Haneef were dropped last year after it was revealed that there was a complete lack of evidence.
While not as brazen as Keelty, Henry went in much too hard in telling the parliamentary committee that the report in The Australian was categorically “wrong”. The report was correct in one important respect. It broke the news that Stevens had written to Henry on October 17 saying he wanted a cap on the deposit guarantee to be as low as possible. But the paper did not back-up a sub-heading about Treasury and the Reserve being “at loggerheads” before the Government announced the guarantee on October 12.
The Australian later published the text of Stevens’ letter (or email). This showed he explicitly said, “We need to clarify the retail cap [on deposits], the lower the better”. This would normally mean he wanted to limit the guarantee to a relatively low amount. Stevens has not publicly clarified this specific point, but the Government and Henry are proceeding on the basis that he really meant a threshold beyond which an insurance premium will be paid.
Presumably, the Treasurer Wayne Swan would not have said so bluntly on October 21 that “the Reserve Bank is not arguing for a cap”, if he had known that Stevens had earlier written to Henry saying he wanted a “cap” — unless he believed Stevens meant it in the normal sense of the word. In any event, Swan announced last week that there would be an insurance fee on deposits above $1 million.
However, in announcing the guarantee for deposits on October 12, Kevin Rudd made no mention of an insurance premium for the deposit guarantee, but did so for a separate guarantee for the wholesale borrowing.
It would have been better if Rudd had said that a fee would also apply to large deposits. When Rudd said he had “received advice from the Governor of the Reserve Bank of Australia”, he should also have been careful not to imply that Stevens had spoken or written to him about the guarantee. Rudd later told parliament he had relied on Henry to convey the Governor's views on the guarantee. It would have been better if he had spoken directly to Stevens to hear what problems the Reserve saw down the track.
When the opposition leader, Malcolm Turnbull followed up The Australian’s report in parliament, Rudd’s initial reaction was completely over the top. He even accused Turnbull of having being on the “strong red cordial”. In his appearance before the committee, Henry criticised Turnbull for earlier calling for guarantee limited to $100,000, saying it was “unhelpful” to canvas the issue publicly.
Turnbull refused to accept that either opposition politicians, or the media, should stay silent. He said, “We live in a democracy. With great respect to Dr Henry, while it might be desirable from his point of view if the civil servants of Australia could make all these decision out of the gaze of the public, and no doubt the politicians, that's not the type of society we live in”.
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