I served on the South Australian Liberal Party state executive with Rob Gerard and like the bloke – which makes it rather hard for me to comment on the controversy over his appointment to the Reserve Bank board when he had a few little issues outstanding with the taxman.

Luckily, I don’t really need to. Dennis Shanahan and Richard Gluyas say almost everything that needs to be said in three paragraphs in today’s Australian.

Leadership aspirant Peter Costello stumbled politically yesterday as he was forced to defend his appointment to the Reserve Bank of a major Liberal Party donor who was under investigation for a $150 million tax evasion scheme.

The Treasurer refused to deny Adelaide businessman Robert Gerard’s claim that Mr Costello told him he knew there was an ‘issue with the tax office’ but it would not stop his nomination to the board of the central bank in March 2003.

Former Reserve Bank governor Bernie Fraser said yesterday that Mr Gerard – who tax office investigators accused of making false and misleading statements over sham insurance transactions in a Caribbean tax haven designed to give his company a massive tax break – should do ‘the decent thing’ and resign from the board which sets the nation’s official interest rates.

Too damned right. Paying penalties might make a problem go away – but surely that’s also an admission of some kind of wrongdoing. And the angles to do with the Treasurer are of greater consequence at the moment, anyway.

Fraser has more to say:

But Mr Fraser said: “If what I read is correct, then I’d have thought the decent thing for (Mr Gerard) to do would be to resign.”

The former governor said it was critical for the Reserve Bank to maintain its public credibility.

“The bank has built a reputation for putting the interests of the country ahead of anything else, and not bowing to political pressures,” he said.

“In a case where there’s sufficient evidence of someone not measuring up to the code of conduct, then the Treasurer and/or the governor could have a quiet word and say ‘It’s time to move on’.”

This, surely, is a matter of judgement – a matter of judgement that the man who would be Prime Minister has failed comprehensively. And that dovetails into the comments Steve Lewis had in The Oz yesterday.

He headed his story “Liberals wary of change.” No wonder!

Does Peter Costello have the ticker? The Treasurer has shown admirable discipline over the leadership issue. But he will need more than patience to convince his Coalition colleagues and the public that he is the real deal. In short, he will need to shed an image as a sometimes petulant, thin-skinned politician who critics argue lacks the iron-forged resolve necessary for the top job.

“Costello yearns for the keys to the Lodge but among senior Liberal figures there is more than a sneaking suspicion that he doesn’t deserve them. Not just yet. There remains a significant question mark as to whether he would make a successful transition to prime minister; it’s feared that he lacks the necessary character and gravitas, that he is more smirk than substance…

What on earth does this episode do for those feelings? Judgement, judgement, judgement!

Lewis is right when he writes:

Compared with John Howard, Costello has led a privileged political life. He entered parliament in 1990 and within a few short years was deputy leader of the Liberal Party… unlike Howard (or, for that matter, Kim Beazley), he hasn’t done the hard yards in penitentiary. Critics within the Coalition argue this is one of a number of flaws with the putative leader: that he has not earned his spurs. His impatience showed in 1999, when he ventured that he had one or two budgets left in him. It was a silly remark and Costello has been trying to live it down ever since. For all of his parliamentary flair and ability to prosecute a brief, Costello has yet to make a convincing case that he would be a safe pair of hands, that he has the necessary toughness when it’s needed…

How would Costello fare as PM, subject to the white-hot glow of seat-of-the-pants politics, day in and day out? One glaring weakness is an inability to deal maturely with criticism. His office is known to badger reporters who don’t toe the line. The Treasurer himself is brittle when it comes to adverse press coverage…

Howard cannot go on forever. But many Liberal MPs, particularly those hanging on to marginal seats, would much prefer to contest 2007 with Howard at the helm. Conversely, the Costello team argues that now is the time for change. A question remains about his temperament. Making fun of ambitious Liberal MPs such as Malcolm Turnbull may be good sport, but it displays a weakness of character. It will need rectifying if Costello wants to become a truly great leader.

Forget about the leadership test. Costello has already failed the judgement test, and if Gerard isn’t out by the end of the week, he has also failed the competence test.

We have said this before. Hundreds of people were inspired to join the Labor Party because of Treasurer Keating. Has anyone ever signed up to the Liberals because they want to enlist in Costello’s crusade? The man doesn’t have one – unless it’s branch stacking in Victoria.