The people's bank, State Bank Victoria, is broke. For 146 years the State Bank served Victoria well. In the past two years, because of the Labor Party's direct intervention and mismanagement, the State Bank has been crippled and now has to be sold for a pittance.

The government's response to the cause of the State Bank's losses has been a mixture of lies, half-truths and a cover-up.

The terms of reference announced yesterday by the Attorney-General to establish a Royal Commission into Tricontinental Corporation Ltd are cynically designed to ensure that the cover-up continues. The sole purpose of the terms of reference is to ensure that the blame stops in Elizabeth Street and does not stop in Spring Street.

The intention of the government is clear. It does not want the former Treasurer, the honourable member for Doveton; or the former Premier, the honourable member for Bundoora; or the present Treasurer, or other Ministers who are culpable to be held responsible for their actions.

The intention of the government is clear: it wishes to find a scapegoat and it hopes that the Royal Commission fulfils that purpose. The Royal Commission's terms of reference, as announced by the government, are calculated to conceal the truth and divert attention away from the government's direct failures. They are designed to find a scapegoat.

The terms of reference have been carefully structured and worked out by Cabinet to quarantine the lines of inquiry. I believe the terms of reference and the intention behind them are dishonest and misleading and, as a result, the inquiry will be dangerously inadequate.

Today the Opposition says that the terms of reference must be changed or the inquiry will not have the credibility it so richly deserves. If the terms of reference are not changed the inquiry could never be called comprehensive. If the terms of reference are not changed the issue of who is responsible for the billions of dollars lost will never be put beyond doubt.

Victorians want a lesson to be learned from the mistakes of the Tricontinental saga but this inquiry has been structured so that Victoria cannot learn the lessons. It has been structured so that full attention is paid to the directors, employees or auditors of Tricontinental rather than being quite clearly an inquiry into anyone associated with Tricontinental.

The divided and dispirited government is still relying on the old excuse:"We had nothing to do with it." It is still relying on the old escape route - the cover-up.

The Opposition completely rejects the terms of reference that have been put forward because they do not go far enough. The powers of the inquiry appear to be adequate but a powerful inquiry is useless if it is limited in the scope of its work.

The Opposition draws on two most unusual sources in support of its claim that the inquiry must be broadened. The first is a comment made by the Federal Treasurer, Paul Keating. He is reported in today's Sun newspaper, which states he said:

The Federal Treasurer knows who the crooks are; he knows who is to blame for the billions of dollars lost, but the terms of reference established by the government are designed to ensure that the Federal Treasurer's cause of concern cannot be properly investigated. If the concerns were investigated it would be incidental or even accidental but not deliberate. A professional Royal Commission cannot be held if the terms of reference do not give a guide to the Royal Commissioner as to areas of inquiry that he should inspect.

The second person who believes the inquiry is not good enough is none other than the Secretary of the Victorian Trades Hall Council, John Halfpenny; his comments show a breadth of concern. On 29 August he was reported in the Sun newspaper, which states:

John Halfpenny, like Paul Keating, knows that the inquiry will not get to the nub of the problem.

The terms of reference of the inquiry have been deliberately constructed to guide the Royal Commissioner to the board and employees of Tricontinental, and to guide him or her in one direction. Every explicit reference to a person in those terms of reference is about the director or directors, or the officers, the auditor, the valuer, or the advisers to the group. Indeed, the silence is deafening. There is no specific reference to government Ministers, government departments, Ministerial advisers or other individuals who are associated with Tricontinental.

It is overwhelmingly clear that the Royal Commissioner is expected to look inside Tricontinental but not beyond it.

Hon. D. R. WHITE (Minister for Industry and Economic Planning) - On a point of order, Mr. President, the terms of reference as contained in the press release concerning the matters to be investigated include, at point 2, reference to what matters, events or circumstances caused the collapse of the group.

Hon. M. A. Birrell - What is your point of order?

Hon. D. R. WHITE - Mr. Birrell is trying to indicate to the House that the terms of reference are somewhat inadequate and will not enable the royal Commissioner to call a Minister or a public servant, and that is not correct.

The PRESIDENT - Order! There is no point of order. The Leader of the House is seeking to answer the argument of Mr. Birrell in advance of it being made. No doubt Mr. Birrell will be referring in some detail to the terms of reference.

Hon. D. R. White (to Hon. M. A. Birrell) - If a Minister or public servant can be called, what is your point?

The PRESIDENT - Order! Mr. Birrell has virtually not started upon his argument.

Hon. D. R. White - He has not got an argument.

The PRESIDENT - Order! He has not had an opportunity of advancing it.

Hon. Robert Lawson - The point of order is interrupted.

The PRESIDENT - Order! Mr. Birrell may proceed with his case. There is no point of order. He may refer to the terms of reference and develop his argument.

Hon. D. R. White - You have to show how they are inadequate.

Hon. M. A. BIRRELL (East Yarra) - As Paul Keating and John Halfpenny said, the terms of reference are inadequate.

Hon. D. R. White - In what form?

Hon. M. A. BIRRELL - In every aspect of the terms of reference.

Hon. Licia Kokocinski - Don't ramble; what are they?

The PRESIDENT - Order! Mr. Birrell is entitled to develop his argument in his own way, as other honourable members will be entitled. I ask the House to let Mr. Birrell proceed with his argument.

Hon. M. A. BIRRELL - Extra terms of reference are needed if this inquiry is to have any standing.

I seek to look no further than the terms of reference that were set for the Royal Commission into what was known as the lands deal. I ask the government, if it has any integrity, to rely on those terms of reference as a model. I contend that the government has not used those terms of reference as a model because it is trying to cover up the guilt of its mate.

I suggest three extra terms of reference to make this inquiry credible. The first deals with whether the Royal Commissioner should be able to inquire into whether there was dishonesty, impropriety, malfeasance or negligence on the part of any person.

Hon. G. A. Sgro - Any crooks whatsoever should be brought forward.

Hon. M. A. BIRRELL - Mr. Sgro says he agrees with it.

Secondly, the Royal Commission should be able to inquire into whether there was any failure on the part of any Minister of the Crown, officer or government department to conduct appropriate administration, supervision or monitoring.

Thirdly, the Royal Commission should be able to inquire into whether government policy caused or contributed to any losses incurred.

There is an overwhelming argument that the inquiry should be expanded to cover the State Bank group, not just Tricontinental Corporation Ltd. It is part of the ruse and cover-up that the inquiry is being restricted solely to Tricontinental companies rather than the State Bank group. By doing that the government is not only saying the Royal Commissioner will not have the scope of reference that he needs but also that he will not even be allowed to inquire into the State Bank group as a body.

The Opposition demands that those three extra terms of reference be given to the Royal Commissioner. If they are not, another Royal Commission will be needed. On behalf of Victorians who will have to pay for the losses, the Opposition makes it clear that it will not accept the terms of reference that are proposed for the quasi Royal Commission. The proposal is dishonest and it will restrict the activities of the Royal Commissioner.

I ask the Minister for Industry and Economic Planning, who I hope will respond promptly on behalf of the government, to reflect on the Victoria Government Gazette of Wednesday, 20 June 1979, where the appointment of the Royal Commissioner into the land deals was announced. That Royal Commissioner was given one particular power to inquire into whether there was "dishonesty, impropriety, malfeasance or negligence on the part of any person".

That power was given to the Royal Commissioner to inquire into the land deals but the same power is not proposed to be given to the Royal Commissioner inquiring into State Bank Victoria losses. Instead, the government has tried to con the public and the media into believing that the powers somehow exist under the second term of reference which asks "what matters, events or circumstances caused the collapse of the group", but no-one with any legal training or understanding believes that the Royal Commissioner, who will hopefully be someone of senior legal standing, will read one term of reference in isolation from the others. They are read together, and the whole tenor of the terms of reference is that every single specific reference to any person is to a director or a senior member of Tricontinental Corporation Ltd. There is no specific reference to a general right of inquiry into the Tricontinental failure, and the government has made sure in its meeting of Cabinet that there cannot be a general inquiry.

I shall read the first proposed term of reference. Once again, it is part of the con. The people who wrote the terms of reference have been too smart by half because the first point refers to "an inquiry into whether any person has contravened or failed to comply with legislation". It is saying that the Royal Commissioner is specifically prohibited from inquiring into anything other than broken legislation by any person - that is all. He is not allowed to look at policy failure, incompetence, malfeasance or negligence.

Hon. D. R. White - Read point 2!

Hon. M. A. BIRRELL - All right, I shall go to the second term of reference. It makes no reference to individuals and gives no guidance to a Royal Commissioner. From what the government and the Attorney-General have been saying publicly, and from what has been reported in the Herald, the inquiry will be looking at catching the directors and staff of Tricontinental. The Opposition does not accept that, and the government will not be allowed to get away with another chapter in the book of cover-ups.

There are extra terms of reference to the two I have cited. I want to hear the Minister say one of two things: either that he will incorporate those terms of reference or that he will write to the Royal Commissioner on behalf of the government saying he believes the three terms of reference that the Opposition put forward are embraced in his general powers. He must either write to tell the Royal Commissioner that he can inquire into those matters, or he must change the terms of reference. The Opposition wants to ensure that the inquiry is not just into Tricontinental but also the State Bank group. What is the fear?

Hon. D. R. White interjected.

Hon. M. A. BIRRELL- I look forward to the Minister's comments. If he agrees with the Opposition that its terms of reference are acceptable, I challenge him to include them.

Hon. D. R. White - Read the second one.

Hon. M. A. BIRRELL - It is not good enough! The Minister cannot expect the Royal Commissioner to turn to Hansard to read a sly interjection saying it is all covered. The Royal Commissioner must be unequivocally clear as to what his powers are. If the Minister is prepared to expand the Royal Commissioner's powers beyond what is on the face of it unclear, the Opposition will accept it.

Hon. D. R. White - Refer to the second alternative.

Hon. M. A. BIRRELL - Will the Minister write to the Royal Commissioner on behalf of the government to outline the terms of reference and explain that they include an unambiguous power to inquire into dishonesty, impropriety, malfeasance or negligence on the part of any person?

Hon. D. R. White - We are saying the second alternative should be proposed.

Hon. M. A. BIRRELL - That is the second alternative; that was it. The Minister does not listen and cannot be trusted. He should change the terms of reference or make it quite clear in a letter what the terms of reference are - that is, that they are the terms of reference I have proposed.

Hon. D. R. White - The terms of reference sweep up those powers.

Hon. M. A. BIRRELL - The Minister is not prepared to make those powers available. It is obvious from his behaviour that he wants to restrain the Royal Commissioner. The Opposition wants to know exactly what the Royal Commissioner will be able to do because it is not prepared to see a tame cat inquiry set up that catches a few small players and lets the major players go.

The Opposition does not only want Ministers to be questioned before the Royal Commission; it wants Ministers and their agents to be the subject of the Royal Commission.

The Tricontinental losses did not happen on their own. They happened because of deliberate government policy. The terms of reference that the Opposition are calling for must be put in place and must be unambiguous to the Royal Commissioner, otherwise he will be investigating only a small part of the problem. The Opposition wants the Royal Commissioner to be asking questions about whether the Treasurer or Cabinet required independent advice on the acquisition of Tricontinental before approving the purchase by State Bank Victoria. It wants the Royal Commissioner to be able to ask the questions, but under the terms of reference that is in doubt. It should not be accidental or incidental; it should be a deliberate, specific statement.

The Opposition wants to know what reporting mechanisms were put in place by the Victorian Cabinet, particularly the Treasurer and the then Minister for Industry, Technology and Resources, after the acquisition by State Bank Victoria of Tricontinental Corporation Ltd. Was any testing done on behalf of Victorians to ensure that the bank would not lose all the money that it ended up losing? What did the government put in place, or did it do nothing? The answers to those questions will not be found unless the terms of reference are altered, giving the Royal Commissioner a wider brief to include the State Bank group in all the investigations and calculations. The inquiry cannot be into only Tricontinental.

Unless the government is trying to cover up for the people that it fears will be caught, why would the Royal Commission inquire into only Tricontinental?

The Opposition wants the Royal Commissioner to establish what actions were taken after the purchase of Tricontinental to ensure that adequate controls were exercised over the activities of that organisation. If that is not done, we will not learn the lesson and the same mistakes may be made again.

Honourable members have discussed the Victorian Economic Development Corporation in this place. They have discussed the losses of the Victorian Investment Corporation and the losses of State Bank Victoria. To be frank, we did not think the situation would repeat itself about every four or five months. However, it will continue to repeat itself so long as this government remains, unless we learn the lessons. The Royal Commissioner should be able to pass on those lessons, but if he is allowed to examine only a limited area, he will be debarred from doing so.

The Opposition also wants to know what the elements of the capital losses of Tricontinental Corporation Ltd. were in 1989 and why the estimates were so far from the actual losses. That cannot be done properly unless there is an inquiry into the conduct of State Bank Victoria as well, and not simply Tricontinental, because to a large extent in many of their negotiations they were absolutely indistinguishable.

In addition, why should the Royal Commissioner not be able to inquire into the State Bank's losses? This year, in its ordinary operations, the State Bank made losses of several hundreds of millions of dollars, but that has been excluded quite deliberately from the terms of reference. The Opposition wants to know why, even forgetting Tricontinental, the State Bank made losses. What were the reasons for them? Was it because of the National Safety Council of Australia or other matters? How can we have trust in the financial position unless we have that full and unequivocal inquiry?

The three extra terms of reference and the broadening of the inquiry that the Opposition seeks today are absolutely necessary if we are to find out the truth. In particular, if these terms of reference are accepted we will be able to find out the answer to the most puzzling question: what was the relationship of the government, the Labor party, the bureaucracy and the State Bank in relation to some of the deals? We will be able to find out about the funny money arrangements about purchasers, where suddenly it was not the State Bank buying something but Tricontinental; or suddenly it turned out to be the Gas and Fuel Superannuation Board, and all the mates became the conveyors of the idea. Why did it occur? If the additional terms of reference are accepted we will be able to find our why the money was actually lost.

We have been told in this House time and again that there is no need for a Royal Commission; that there is no need for that type of inquiry. The Leader of the Government in this House, the Minister for Industry and Economic Planning, said "No" to a Royal Commission and voted against establishing a Royal Commission only a matter of months ago. He made it quite clear that he believed there was no need for one. He was strident in saying there was no need for a Royal Commission. He now shakes his head. I suggest that he read Hansard of 14 March 1990 and examine page 276 to see just how he voted; he voted again the motion to establish a Royal Commission. He was strident, confident and, dare I say, even cocky. It was a last burst of power from a man who had lost his factional base and who had to cover up for the losses of the State. The Minister is the last remaining member of the quadrella: Cain is gone, Jolly is gone, Walker is gone, and White is yet to go. The Minister arrogantly said there was no need for an inquiry.

I invite honourable members to examine the second term of reference. It does not actually say what the Royal Commissioner can do, but the government believes it is enough. It is not enough. It will not be acceptable.

The Minister should use the land deals Royal Commission as a precedent. If he does not use it as a precedent, people will know that he is running away. We have been told time and again in this Chamber that there is no problem, yet on 7 March 1990 the Minister said confidently and with a sense of optimism ringing in his voice:

I do not know whether the Minister has read the yearly results of the State Bank. The State Bank is weak and was weak. It lost hundreds of millions of dollars in its own right, regardless of the Tricontinental losses.

Hon. D. R. White - So we must have got a good price for it!

Hon. M. A. BIRRELL - Yet the Minister said on 7 March it was all good. To put the cream of incompetence on the cake of incompetence, the government could not even get a good sale price and sold the State Bank to the lowest bidder. That is another story, and it will be another part of the Labor government's epitaph. It will be remembered, not for its modern money management that it promised in 1982, but for the losses that we will have to live with for the next two decades. If the Minister can be proud of that, good luck to him, but it is the type of thing that I would be ashamed of.

Today, the Opposition is determined to add to the weight of public opinion by saying we will catch out the crooks. When the Minister for Industry and Economic Planning said on 7 March that the bank was fine and profitable, we know he was not telling the full truth.

As recorded at page 59 of Hansard in the debate on financial management, the Minister also said with a degree of optimism:

Hon. B. A. Chamberlain - When did he say that?

Hon. M. A. BIRRELL - It was on 7 March 1990 that the Minister was telling the House that the government would look for increased profits from the State Bank. That is how incompetent Labor is at managing something that used to be profitable! Now, as a direct result of its incompetence and mismanagement, there is a loss.

In answer to a question asked by Mr. Hallam on 7 March, the Minister said:

He said the government had taken the necessary steps. I want the Royal Commissioner to inquire into the steps the Minister said the government took. If the Minister is confident that the Royal Commissioner can do it, he should take it on the chin and put in a specific term of reference. If he is not confident about that, he will look like a coward and be seen to be running away from the inquiry that people want. There were comments from other honourable members.

There was the real heavyweight of this place, Mr. Theophanous! What did he tell the House? On behalf of the government, because he is the chairman of the relevant economics committee of the caucus, Mr. Theophanous said, as recorded at page 304 of Hansard for 14 March 1990:

Poor old Mr. Theophanous was terrified that we wanted to privatise the State Bank! Heaven forbid that we should want to sell it! He went on to say:

Here is the future strength from the backbench of the Labor Party! The Opposition knows there is a vacuum of leadership, but look at what the Labor Party has to rely on now!

This is not directly relevant to the debate, Mr. President, but I must quote this statement because it is the piece de resistance of what we can expect from the Labor Party. During the debate on financial management that took place on 7 March Mr. Theophanous said:

The PRESIDENT - Order! Mr. Birrell is right in saying it is not relevant to the debate.

Hon. M. A. BIRRELL - I withdraw that Mr. President. It is unequivocally an indication that this government is bankrupt when it comes to leadership and direction. The government has lost its way, because its policies turned out to be failures.

We seek a full Royal Commission, not so that we can just penalise those who have made the mistakes but so that the mistakes will not be repeated. When we examined the terms of reference that were issued by way of press release by the Attorney-General last night, in an attempt to ensure that we covered all the possibilities of what can be done by that Royal Commission, we reached two conclusions. One is that the powers of the Royal Commission appear to be adequate. The second was that the work that the Royal Commissioner has been asked to conduct is woefully inadequate, unless the terms of reference are altered.

I have given the Minister for Industry and Economic Planning two options: to incorporate these new references in the terms of reference of the Royal Commission or to write to the Royal Commissioner saying on behalf of the government the new references are ones he believes the Royal Commissioner should follow. If that does not occur the cover-up will become legend.

The Opposition has said that one cannot be optimistic about State Bank Victoria and the finances of the State. One cannot be clever about the losses and one cannot continue the secrecy and the silence. This is a phoney Royal Commission designed by cynics to stop the truth coming out.

I conclude by referring to some of the important questions that have to be asked by a Royal Commission and a Royal Commissioner. The Age editorial of 28 August 1990 states:

The editorial then asked how these things happened:

The Opposition wants to know who the guilty people were, but it will not find that out from the inquiry unless by accident or because the Royal Commissioner reads his terms of reference to the extremes of possibility.

It is a matter of clear thinking. If the government believes the terms of reference are sufficiently broad, the Opposition is happy to adopt a bipartisan approach to the Royal Commissioner. The Opposition believes the terms of reference must be broader than they presently are and have to cover more than just Tricontinental Corporation Ltd.

The Opposition challenges the government to do something more than say that the Cabinet deal on the terms of reference is as far as it will go, because controlled and contrived terms of reference will not achieve the end that Victorians want in the search for the crooks and the fools who lost billions of dollars of taxpayers' money.

The Royal Commissioner must be unfettered in his ability to look for the causes. He should be given specific rights to inquire into the dishonesty, the impropriety, the malfeasance or the negligence of any person. He should be given an identical power to the Royal Commissioner who inquired long and hard into the land deals. Why should not that precedent be followed?

Today is another chapter in Victorians fighting back and saying, "We want the answers". The government has conceded the first round by saying that there is a need for at least some inquiry, but there will be a need for another Royal Commission unless this inquiry is widened. A phoney Royal Commission with limited terms of reference is not good enough.

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