The Age’s Jason Koutsoukis got a fascinating leak
from very senior sources in the Howard Government this morning
declaring that Donald McGauchie would not be re-appointed to the
Reserve Bank board because of his behaviour as Telstra chairman.

John Howard and Peter Costello have clearly decided they’ve had enough
of McGauchie yet they don’t have the guts to vote him off the Telstra
board. Instead, he will be punished next March by not getting a second
five year term on the Reserve Bank board, a fate that Solly Lew
suffered in 1997 despite the best lobbying efforts of Michael Kroger.

The government actually attended the Telstra AGM and voted its
controlling stake in favour of McGauchie getting another three years on
the Telstra board just four weeks ago, as you can see from the election
results on October 25.

The government seems to have forgotten that McGauchie has a
responsibility to serve Telstra shareholders, not the Howard
Government. If that means declaring war on regulation and Cossie’s
great mate at the ACCC, Graeme Samuel, then so be it.

If the government moved on McGauchie at Telstra, the rest of the board
would also have walked, possibly along with Sol Trujillo’s new
management team. Therefore, taking away the RBA sinecure is a less
damaging way of exacting revenge, which they clearly want to be known
publicly through today’s leak.

Koutsoukis also missed one of the biggest parts of the story when he
reported the following: “Meanwhile, Ron Walker, chairman of Fairfax,
which owns The Age, has
emerged in Government circles as the frontrunner to take the RBA board vacancy
to be created next month by the departure of Westfield boss Frank Lowy.”

Hang on a minute, didn’t Ron declare at Friday’s Fairfax AGM that he
has absolutely no ongoing public or private relationship with the
Liberal Party? As the chairman of a major independent publishing house,
he should not be accepting new Federal government gigs, especially at a
time when media ownership laws are being reviewed. Given the fate that
McGauchie is now suffering for speaking out, don’t expect the Fairfax
chairman to ever publicly criticise the Howard Government, no matter
what they do with the media laws.

After all, Ron will want two five year terms on the RBA board, not just one.

If the government had any sense, it would at least wait a few months
before appointing Walker because his timetable is already ridiculously
busy. Chairing the Commonwealth Games will be like a full-time gig for
the next few months, but he’s also got a Grand Prix to run each March,
a major media company to chair and a seat on the Primelife board.

There are already plenty of Liberal Party backers on the RBA board
including major donor Rob Gerard and former WMC boss Hugh Morgan.
McGauchie was also one of these Liberal types after his efforts during
the 1998 waterfront dispute. His original appointment to the Telstra
board later in 1998 was a reward for this but it was the board that
then selected him to replace John Howard’s mate Bob Mansfield as
chairman last year.

That annoyed John Howard in particular, but both he and Costello have
reportedly been infuriated by the recent antics at Telstra which have
driven the share price lower and probably put back the timetable of T3.