Former Howard government treasurer Peter Costello has been reappointed as chair of the $150 billion Future Fund for five years by the Morrison government, raising concerns over potential conflicts of interest.
Mr Costello was appointed three months before his previous term expired and just weeks before his term as chairman of the beefed-up media group Nine-Fairfax is due to commence.
The confluence of those events has heightened concerns of politicalisation and conflicts of interest.
Corporate governance expert Julie Garland McLellan said given Mr Costello’s political history there were always going to be dangers of conflicts of interest.
“I think there is always going to be potential for conflicts when someone with a strong political history is nominated by the government to a financial services group in a role that is non-political,” she told The New Daily.
“Josh Frydenberg (the Treasurer) has said Peter Costello will be his mentor from whom he will seek advice about how to be Treasurer but Peter Costello is chairman of a fund that is supposed to be non-political. (Under a Coalition government) he is likely to be involved in setting the regulatory environment (for the Future Fund),” Ms Garland McLellan said.
Loyalty and affection problematic
The Corporations Act defines conflicts of interest as “pecuniary interests or ties of loyalty, duty and affection”, Ms Garland McLellan said. So given the situation the parties would have to “work hard at maintaining independence,” she said.
Gerard Noonan, chair of Media Super, former editor of The Australian Financial Review and an independent director of The New Daily, said one concern about Mr Costello was that he had been appointed before his term expired in the run-up to a general election.
“The re-appointment to the Future Fund for five years of former conservative political leader Peter Costello so close to an election is a sure sign the conservatives are genuinely concerned they’ll lose power,” Mr Noonan said.
“But it also raises questions for Mr Costello’s role as chair of the Nine group, which is on the cusp of taking over the Fairfax newspapers Sydney Morning Herald and The Age – two of the most challenging and investigatory papers in the country,” he said.
Ian Ramsay, a professor of corporate law at the University of Melbourne, disagreed, saying he did not see major problems with Mr Costello’s position.
“In the abstract you could come up with scenarios, but there would be systems in place in both companies to deal with that,” he said.
Early appointment inappropriate
Labor shadow treasurer Chris Bowen said, “This is, yet again, another inappropriate appointment by the Abbott-Turnbull-Morrison government”.
“Here we have a government that is addicted to politicising key appointments … and also making appointments way ahead of time.”
The appointments of Mr Costello and new Treasury Secretary Philip Gaetjens (appointed in August) weren’t due until next year.
“The government needs to explain why it’s so desperate to bring forward Mr Costello’s appointment,” Mr Bowen said.
“This was an inappropriate appointment. We were not consulted about it, despite an election being imminent,” he said.
A spokesperson for Mr Frydenberg said “Peter Costello has performed strongly as Chair of the Future Fund since 2014, having first been appointed as a member of the Future Fund Board by Labor in 2009. Appropriate processes are in place, to manage any conflicts if and as they arise”.
“The Future Fund Board of Guardians operates independently from the government and is subject to high governance standards under the Future Fund Act 2006.”
Former Australian Competition and Consumer Commission chairman Graeme Samuel said: “Mr Costello has been chairman of the Future Fund for a number of years and there’s been no conflict. There are processes in place to deal with it.”