SAUL ESLAKE

Economist

SAUL ESLAKE

Economist

‘Welcome to my website …
I’m an independent economist, speaker, company director
and Vice-Chancellor’s Fellow at the University of Tasmania’

Peter Costello at close quarters


News | 26th November 2007

Peter Martin | Peter Costello at close quarters | 26th November 2007

Costello “liked to weild the power that had been bestowed upon him.”

There was “an implicit threat of unspecified retaliation”

Question time has lost its spark. No-one in parliament could hold a candle to Peter Costello as an entertainer.

All the talk about him “throwing the switch to vaudeville” if ever he became leader ignored the fact that vaudeville was what he did.

His daily routines whenever the parliament was sitting made watching a thrill.

Without Peter Costello making people laugh and taking them along with him for the kill the new Opposition will lack oomph. Whoever else is elected leader may well be good, but in terms of parliamentary pizzazz will be no Peter Costello.

However, as a winner of hearts and minds in his role as Treasurer Peter Costello has cost the Coalition dearly…

Saul Eslake is the chief economist of the ANZ bank. He hasn’t felt free to tell this story until today.

He made it known to me and a number of other people some time ago on the condition that that nothing was printed until either he or Peter Costello was no longer in his job.

As Eslake put it to me in an email: “much as I would love to see this brought to the attention of a wider audience, I obviously can’t allow that to happen in circumstances where Costello could inflict damage on the ANZ”.

Outwardly relations between the ANZ and Peter Costello have been good. His wife Tanya Costello is a senior manager with ANZ Philanthropy Partners.

But beneath the surface things have been tense.

In February 2002 Eslake was asked at a chartered accountants conference whether the Howard government had ever engaged in creative accounting.

He replied that it had: in its accounting treatment of the GST; in its timing of Reserve Bank dividend payments; and in using its sell-off of Canberra buildings to appear to improve its underlying cash surplus when it has really improved little.

But he stressed that what it had done had been “no worse than any previous government”.

Saul Eslake says Peter Costello phoned the ANZ head John McFarlane and threatened to take what McFarlane subsequently described as “regulatory action which ANZ would not like” if Eslake said that sort of thing again.

Eslake says a member of the Treasurer’s staff also sent a copy of a news report about Eslake to the chairman of the ANZ Charles Goode with an offending quote circled.

McFarlane asked Eslake to ring Costello “to square things off” but Costello wouldn’t take the call.

Eslake has told me that “since then there have been other examples where Costello’s office has complained to McFarlane’s office, or to our media relations people, about things which I have said in terms which have conveyed an implicit threat of unspecified retaliation”.

I know of another chief economist who has described similar behaviour on the Treasurer’s part.

He has told me that he was asked to leave his job as a result.

I put Eslake’s claims to the Treasurer’s office last night but received no response.

In his negotiations with political stakeholders the man who was able to captivate parliament proved similarly unsubtle.

Richard Denniss is these days the chief of staff for the Greens’ leader Bob Brown. In 2002 he was the chief of staff to the then Democrats’ leader Natasha Stott Despoja. In Mr Costello’s budget speech that year he had announced that pensioners and other concession card holders would have to pay more for their medicines. Their co-payment would climb from $3.60 to $4.60 per prescription.

The Democrats said they would oppose the measure in the Senate. Some weeks later Senator Stott Despoja and Dr Denniss were summoned to the Peter Costello’s office.

Denniss says Costello took them through page after page of laminated graphs, talking at them for the best part of an hour. The Treasurer seemed surprised to discover that they hadn’t been won over.

“At one point Costello said: Natasha, you don’t appear to understand the numbers. To which she replied: I do understand the numbers Peter, you don’t have them in the Senate and you won’t be passing this bill”.

A few days later the two were summoned to the Prime Minister’s office. Denniss says he had expected Mr Howard to be even worse.

Instead they found Howard “effusive in apologising for being late, come in sit down, can I get you a cup of tea – lots of chit chat, lots of actual conversation”.

The Prime Minister said “I know you spoke to the Treasurer last week and I’m sure he showed you all his graphs” and I understand your position: “we are trying to drive up the price of medicine for sick people, of course the Democrats are going to oppose it”.

And then he said: “How about ten cents? That wouldn’t hurt anyone.” “It absolutely floored us.”

Howard said: “Natasha, you’re the leader, I’m the leader, can’t we just settle this right now?”

Denniss says he found the Prime Minister almost impossible to resist. “His genius was to make us feel powerful.”

Costello by contrast “wanted to wield the power that had been bestowed upon him.”

As a student Peter Costello studied law rather than economics. He mastered his portfolio in the impressive way that lawyers master briefs. Observing him during several budgets I have never seen him excited about economics. But I have seen his eyes light up at the mention of commercial law.

As Australia’s longest-serving Treasurer and the Howard government’s best parliamentary performer Peter Costello had many of the qualities needed to be a great Treasurer. But perhaps not all.

Posted: Monday, November 26, 2007
Labels: commonwealth budgets, election, Liberal Party, Treasury

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