E 0 E PROOF ONLY
TRANSCRIPT OF INTERVIEW WITH MIKE WILLESEE 2* 7 SEPT 1985
WILLESEE: Is it satisfactory that a man who has been
working for a relatively short time with a government
authority gets sacked with a half a million dollar, mostly
tax free, golden hand shake.
PM: In the circums-t. ances it is not satisfactory Mike. And
I think I have made it clear that it is not satisfactory.
WILLESEE: What went wrong?
PM: Well, let me give you the sequence of events as briefly
as I can. I spoke with Mr Reid and said to him that on all
the evidence available to me, it was best if Dr Armstrong's
employment should be terminated. I have deliberately not gone
into the details of that because, I think you know me over
many years, I don't seek to impose hurt on people if I can
possibly do it, and I haven't gone to details. I discussed
it with Mr Reid. Hie came back to me on the 19th and said
alright, that is what would happen because he had the
authority. I could not instruct him under the law, but I
made my point of view known. He said, very well, it will
cost a fair bit of money because there will be 6 years of
a contract to buy out and associated things like long service
leave.-Now that was put to me that that what was required
and that is what he would proceed to do. So that is the
point about the amount. Then secondly, there is the question
of tax. When Mr Reid gct in touch with me and said, at the
end of August, well here is the amount. It was an amount
which was of the order that was represented by what hie had
said before. It was a somewhat different composition but
because I didn't have any feeling at all that there would
be any question of tax minimisation I didn't go to it.
And when I did speak to Mr Reid on the 10th of Septem-, ber,
I said to him then that I was puzzled by the difference
in the composition, because the amounts that were broken
up only had a small amount in regard to salary and long
service leave and had this big hunk, $ 240,000, in another
category. And I was puzzled by this change. And then
there was reference made by him to tax advantage. And I
to h~ 2anyt to ao Ia'i~ l
tax minimisation or avoida. nce. I wa nt you to give mc
in writing a detailed account of what is involved.
And I wrote to him then on the 17th, spelling that out.
PM cont: Now I find, last night, when I see the contract for
the first time, that it is not a question of 6 years or
years, but termination by either side with 4 months notice.
Now, I am simply saying, there are the facts. And it was
not acceptable to me. I am not going to questions about
Mr Reid's integrity. I am not going to that. I am simply
saying it was not a satisfactory answer and inthose
circumstances I had to ask more and I received/' tnd I
thank Mr Reid for the way in which he did respond. Because
I think it was the appropriate response.
WILLESEE: What responsibility do you take personally for
this matter in toto?
PM: Well, I have explained my actions and I accept the
responsibility and am proud of the fact that I have discharged
the responsibility in a way which is appropriate at all times
in terms of the information available to me. And when, at the
first moment, there was any suggestion of improper course of
action in regard to tax matters, I immediately within the
second, went to it. And I have now referred the correspondence
on the matters to the Solicitor-General to be advised as to
whether in regard to what has happened there is anvthing which
should be done in regard to this amount.
T. ZLLESEE: Afe you now concerned that you may face a censure motion in the House?
PM: I tell you what, nothing could please me more
because on the basis of what Mr Howard has done today in
his statements, if there is a censure motion it will be the
Opposition by us, because he has deliberately misled the people.
He is saying that in the papers that I tabled that we left out
a page of the document. Mr Howard knows that I went to him
in the House and I said this document is in here by mistake,
the first page had been put in, it was put in by mistake. He
knew that that was there by mistake because it contained a
reference to a personal matter. He agreed to the deletion of
the personal matter. The one paragraph that was on the second
page that wasn't tabled, because this page had got in by
mistake, the one matter that was covered in that had been
totally covered by me in all that I had said in the Parliament
and outside.
WILLESEE: But in a press statement or press notes on
SEptember 11, you said that Mr Reid and Dr Armstrong had
concluded that the best interests of the ABA would be for
Dr Armstrong to leave its service?
PM: Yes.
WILLESEE: Now was that really the truth?
PM: It was a totally accurate statement and a statement, let
me say, that was cleared with Mr Reid. My whole concern from
the beginning of this matter Mike, was to ensure that what
was done, that was necessary for the welfare of the Authnrity
should be done. yXo t io to add to s-a,
anything that would unneco2u:, zily cause hurt emb* arr. t.., s
to Dr Armstrong. And that statement was cleared by Mr Reid.
WILLESEE: Why would Mr Reid agree with that when he made
it clear in his discussion with you and in the notes
of that discussion recorded by your staff that he wanted
to keep Dr Armstrong?
PM: You see, get the sequence right that I have put to you.
I spoke to him on the 15th of August. And I put to him that
for the reasons that I advanced, I believed it was in the
best interests of everyone that there should be this termination.
I could only put that view to him. I could not instruct him.
Held listen to what I had to say and put points in defence of
Dr Armstrong. And he said, well I will go away and think about
it. And he then came back to me on the 19th. and said well I have
thought about what you have said. We will go ahead and do it.
But he insisted and rightly insisted because that was what
the legal position was, that the negotiations now in regard
to this matter was entirely for him and must be with him.
And it is in that context that the statement was made and
the statement is a statement of total accuracy.
WILLESEE: So he changed his mind from his discussion with
you until a day or two later?
PM: You can ask whether he changed his mind. It may still
be that he would think rather not to if he had his way. But
he had listened to the Prime Minister who had no legal
authority to dismiss Dr Armstrong. I had no authority
because under the legislation passed by our predecessors
the Authority was put away from the government and the
Parliament. So I had no rights. All I had was a responsibility
in terms of the public interest, to out a view and I put it
strongly to Mr REid. Now he went away and thought about that
and talked with Dr Armstrong and reported back to me on the
19th and said alright this is going to be done, but Mr
Prime Minister it is my responsibility and I will proceed
to the negotiations.
WILLESEE: You are clearly not happy with the amount paid
to Dr Armstrong let alone the manner in which it was paid.
But it seems that you were first made aware of that when
Laurie Oakes revealed it on television on September
PM: Well, that is no-one's understanding, Mike. The position
is this. That when I spoke on the 19th of August to Mr Reid,
and he said alright I am going ahead with this. He said it
will be a large amount of money because there is 6 years of
the contract to buy out. And at the salary of Dr Armstrong
plus the long service leave entitlements etc, that is associateA.
with it, that is the sort of ball-park figure, because there
is 6 years of the contract to be bought out. And so he said,
I am going away and negotiating on that basis because that
is what is required. So off he went. When the letter came
to me at the end of August, the amount was in that ball-park
that he talked about and I noticed that there was a different
or in the a~ olunts. He ~ hve fiqrmcr
question of tax siiniply did. n't ari-L,, in rciy: thc.. tt
would be any suggestion of minimisation of tax. It was only
then when I spoke to Mr Reid on the 10th, I said to him,
look I am puzzled by this change in the composition of this
amount and it was in response to that observation of mine
PM cant: about my puzzlement as to the amount that he
referred to tax advantage for Dr Armstrong. I said, wait
a minute and I immediately said this Government is not going
to be any part of any contrivance to minimise tax or avoid
tax. I want you to get in touch with me and set out the
facts of this matter. And I then followed that up with a
letter on the 17th of August saying exactly that. Now it
wasn't until last night that I got the written response from
Mr Reid and attached to it, the letter which dealt with the
terms of the contract which was certainly not in the terms
that had been talked about on the 19th.
WILLESEE: But bairk on August 19, you got a letter from
Mr Reid which detailed those relevant parts of the settlement
and one was a restraint of trade.
PM: There was nothing in that letter which indicated any
change from the structural basis, that is 6 years of salary.
If you want to..
WILLESEE: But it said restraint of trade?
PM: But, if in addition to the things that he mentioned to
me, he was saying there were certain things that had to be
taken into account, well that was for him to undertake in
the negotiation. But what I am saying is that the amount,
the order of the amount that he talked about was in terms
of 6 years of salary, in the event the amount that he came
up with was virtually the same as would have been arrived at
by the six years time salary, but differently composed. And
the difference in te composition which I went to when he
referred to tax advantage was simply that if it had been
done in the way that was put to me of six years salary there
would have been tax attached to it. When it was made up
in the way it was, this 240,000 didn't attract tax at all.
WILLESEE: But the fact is that on August 19 you had from
Mr Reid a letter which, among other things, said that he
wouldn't be allowed to work in competition etc, etc, a
restraint of trade. Now did you know that restraint of
trade invokes a tax free allowance.
PM: I don't know whether you are trying to avoid the point.
What I am saying to you, I spoke to him on the same day.
The letter was telexed up. I spoke to him. And it was in
that conversation that he put to me that what would be involved
was a large amount, he put the order of it, over 400,000,
because it was 6 years times the salary. Now that was put
to me on that day, the 19th of August, that you are talking
about. And that established the ball-park of the figure.
Six years of the salary at that amount, with the associated
figures of long service leave. Now that was the explanation
that was put to me on the phone. And to be totally fair to
Mr Reid, he has never in any subsequent discussion including
last night, challenged at all, he2 has agraeod that tht--Is h'
was said. Now the amiount turnsun it is thC'e same
waa talked about by that sort of method. But when I talked
to him about it and said well look I am puzzled by the
difference in composition. He said, oh well, tax advantage.
PM cant: And tax advantage, as it emerges, because if you
explain it that way and describe it that way, the 240,000
doesn't attract tax. And it is that which is unacceptable.
WILLESEE: But that is the point of my question. That I
accept what you are saying, but we don't expect the Prime
Minister to analyse every line of every document, but
did your advisers not pick up that restraint of trade factor.
PM: Because there was no point, in terms of the conversation
which I had with him on that day, Mike, which you don't
seem to grasp..
WILLESEE: But I have read the letter.
PM: Sure. But the letter of the 19th had been written. He
then spoke to me on the phone. And so this was the same day.
And so in regard to that day's conversation, the position that
you have is that the-p~ rime Minister was told there will be this
amount of money of this sort of order because it is six times
the annual salary, that gets up with the other associated
long service leave and so on. Now, and there are other
conditions and so on in regard to a contractual basis. And
it was in that context WThere I said to him that I understood
there was some contractual arrangement. I said if there are
entitlements make sure that you err on the side of generosity.
Because if there are entitlements, I believe that that was
appropriate. Now what changed was not the proposition that
you had to pay these things to achieve a position in regard
to restraint of trade. Nothing of the sort. The amount of
money was no different. What was different was that if it
had been, as was put to me, six years times the salary, then
there would have been tax attracted to it. When you rearranged
it and described it in this way which couldn't relate to the
fact any rate, then there was no tax. Now, as soon as that
question of tax was raised on the 10th, I said wait a minute
that is not on.
WILLESEE: When were you first aware that the basic requirement
to pay Dr Armstrong out was of four months notice?
PM:. I got that letter last night for the first time.
WILLESEE: But you were asked a question in the House on, I
think, August the 19th?
PM: On August the 19th?
WILLESEE: SEptember 19, I amn sorry.
PM: I was asked a question. What I am saying is that last
night for the first time we got from Mr Reid the letter which
was of-the, I think, the 12th of October 1979, in which the
full reference had been set out. I don't know whether you
want me to read it. t!-ere it ,. as for the first t~ l-e.
An-l let r. c say to y~ ' muf~~ i~~
a numbier of occasions thi -ae sc, 1, cnt datail . incd
about these sorts of contracts but they had been told by
the Authority that they were documents of a personal nature.
It was not until last night that we had the document put before
us which set out the contractual relationship between the
Authority and Dr Armstrong.
WILLESEE: Do you recall-on SEptember 19 being asked about
the four months provision?
PM: No, I don't recall being asked about it. But what I
am saying to you is this. That as far as the Department
was concerned there had been an attempt to get all the
details about the contractual relationship. They hadn't
been provided because it was said they were of a personal
nature. If you are faced with a situation where'you are told
by the Chairman directly on the phone that the requirement
is to pay out six years, then what reason did I have in fhose
circumstances not to accept what I was told. That was on the
19th of August.
WILLESEE: Prime Minister, I suppose most people are concerned
about the fact that here we have massive funds being spent
to what will be a very important event in our history and
we have all these problems and nobody knows what is going
to happen. You have now replaced the Chief Executive and
the Chairman. The Chairman has just had the support of the
Board by a vote and you replaced him with a man from the
Board who voted for him.
PM: Well, when I rang Mr Utz last night he immediately
accepted my request. He responded positively to my request
to accept the chairmanship in this interim way. So I think
that answers your question, doesn't it?
WILLESEE: Well, does it? He had just voted his support for
Mr Reid.
PM: Well, what I am saying to you is that subsequently to
that, and given the action I have taken, he immediately accepted
my invitation to take the chairmanship. And that was subsequent
to the vote to which you refer.
WILLESEE: Last Thursday on this program you said you supported Mr Reid.
PM: And I said on the program, and I said consistently
to all the media, that I was not going to be making a judgement
about Mr Reid. You will recall I have said consistently, it is
substantiated time after time, and transcript after transcript,
that it is not fair to Mr Reid to be making a judgement until
I see him. I said I am waiting until I see him on Thursday.
I waited until I saw him.
WILLESEE: Last question Prime Minister. You have got this
massive bicentennial authority with massive funds, none of
us have any idea what is being achieved apart from those
things which would have happened anyway like roadworks and
bridges. PM: Now that is totally unfair to Mr Reid and Dr ARmstrong and
everyone associated with the Authority. There are many things
that are already known. Just for example, let me tell you
that a couple of weeks ago in I'elbourne, I opened tho:
Australian exhibition. NO, 0w this is a i ccornXCC-,
funded in part by BHP, whom I have publicly thanked. This
is just a magnificent concept. It is going to be a travelling
exhibition, a number of pantechnicons which C2( C going to travel
all round Australia and expose to Australians. in1I think, it is
PM cont: 50 to 60 locations right round the countrythe
story of Australia's achievements, its vision, its future.
I just use that as an example. There are many other things.
There are 500 community organisations established around
Australia in regard to the bicentenAry. I am just making
a point MIke. It isn't fair to say that a substantial of
important work hasn't already been done.
WILLESEE: Prime Minister, are you satisfied that by the
end of 1988 the Australian people will say well done, well
spent. PM: Yes I am Mike. And I am glad you asked that question in
the end. Because while there have been problems Ernd some
legitimate criticisms that have to be dealt with, / Ind we
are making the changes which are going to improve it. The
basic work has been done. tlot all the basic work, but basic
work has been done, upon which now with improved leadership,
improved communication, and accountability that we have got
to get by agreement. We can't get it under the law because
the previous government brought in this legislation which
set the Authority apart from the Parliament and the Government.
And I believe that in discussions with Mr Utz and with the
new Chief Executive when appointed we will be able to get a
greater degree of accountability and reportability. Yes
Mike I am certain that in 1988 we will have a great year.
It will not simply be a year of celebration, but it will
also be a year
of the creation of permanent projects which will be a
reminder to future generations of the importance of 1988.
WILLESEE: Prime Minister, thanks for your time.
PM: Thanks Mike.
ENDS