by John Howard
Australia’s leadership role in East Timor won international acclaim. It brought warm praise from the Secretary-General of the United Nations. It was also seen in many parts of the world as a model for a UN-sanctioned peacekeeping operation.
This was due to the fact that Australia was geographically on the spot, with the military capacity and political stability to provide leadership when asked to do so by the United Nations. Fortunately, none of the permanent members of the Security Council had a vested interest in frustrating the will of the international community. Unlike the tortured circumstances of the Balkans, with the Russians unwilling to support a Security Council-sanctioned operation against their traditional allies the Serbians or the mindless obstructionism of the French in relation to Iraq, everyone was on side or, at the very least, indifferent when it came to East Timor.
Sergio de Mello, the deft Brazilian UN diplomat who had headed the UN High Commission for Refugees (UNHCR), took over the UN administration in East Timor following the Interfet withdrawal and did a superb job, remaining in that position until Independence two years later. He was a polished envoy who was tragically killed by al Qaeda-backed terrorists in Iraq in 2003.
The success of the operation in East Timor was a real setback for many of my regular political critics. For the Labor Party it was a huge problem. East Timor had been on the conscience of many people in the Labor Party for years, and it rankled with them that the policy change had occurred under my prime ministership. History would record the Howard Government as having reversed a quarter of a century of Australian weakness towards Jakarta in relation to East Timor.
Without question, Australia’s diplomatic and military initiative on East Timor had placed strain on the always delicate relationship with our nearest neighbour, incidentally, the world’s most populous Muslim nation. Nonetheless, links with Indonesia, although disturbed, remained essentially intact.
The characterisation of Indonesia as the most populous Muslim nation would have been a passing one in 1999. It was just under two years before the world was to be turned on its head by terrorists who obscenely used the Islamic religion to justify their actions. To those who continue to question the actions of my Government in relation to East Timor, I pose the hypothesis: if the events of 1999 had not occurred, and support from Australia for separation of East Timor from Indonesia had arisen several years later, how much more difficult would relations with Indonesia have been in the wake of 11 September 2001? The opportunity to do something came when it did — the Government seized it when it was there, and a further opportunity may never have occurred.
East Timor had a profound impact on my thinking about Australia’s Defence preparedness. I was not alone. I realised that for a long time into the future, Australia would need to spend a lot of money on Defence. We had mounted a hugely successful operation, but launching and sustaining it had put an enormous strain on our military resources, particularly our ground forces and strategic lift assets. The decision, in March of 1999, to bring the 1st Brigade to readiness had been timely, but had the situation deteriorated, it might not have been enough.
The absence of adequate lift capacity for our forces was plain for all to see. The standout vehicle to carry our forces had been the Incat vessel constructed for civilian ferry purposes. It had worked brilliantly in East Timor, but would that be the case in other operations? My concern on this never left me and was, some years later, directly responsible for my persuading the cabinet to invest some $4 billion in the purchase of the giant C17 transport aircraft, as well as acquiring large amphibious lift vessels. I have known since East Timor that for years into the future, one of the prime responsibilities of the ADF will be involvement in peacekeeping operations in our own region.
I was also aware that we would have to strengthen the Australian Army, not at the expense of the navy or the air force but as a commitment in its own right. This was to be realised with my Government’s subsequent investment in the hardening of the army program, and most significantly in 2006 with the decision to establish two new army battalions, which would restore the army to a force level not seen since the time of the Vietnam War.
When I left office as Prime Minister I pointed with some pride to the fact that under my Government defence expenditure had risen by 47 per cent in real terms. Whilst not all of this flowed from the experience of East Timor, that involvement and what it told me about the resources available to the ADF was the beginning of a process of committing an ever-increasing amount to defence. It was the beginning of our awakening.
East Timor had a significant psychological impact on Australians. Most thought that their country had done the right thing in East Timor. They felt proud of the way in which our forces had conducted themselves, that it had been a successful operation and with virtually no casualties. They were deeply impressed by Peter Cosgrove’s leadership, and he remains a popular figure in the Australian community. East Timor also accelerated the revival of Australian, particularly younger Australian, pride in our country’s military history and traditions. When our troops returned from East Timor, the Australian public did not need its Prime Minister to exhort them to offer a warm welcome home. The huge turnout for the parade through the streets of Sydney on 19 April 2000 could not have been in starker contrast to the way in which so many Australian diggers returning from Vietnam were, to this country’s shame, almost secreted in under the cover of darkness.
For some years, young Australians in particular had been exhibiting growing pride in what Australian soldiers had done in past conflicts. This sentiment was gathering strength in any event, but East Timor gave it a mighty boost.
30
AN EXCESS OF EXCISE — THE PRE-TAMPA RECOVERY
Politically, 2000 was a year of consolidation, with the extremely successful introduction of the new tax system on 1 July.
On another front, Sydney — and Australia — enjoyed some of the finest days imaginable with the September Olympic Games. Our team put in a stunning performance, and the open hospitality of the Australian people, best evidenced by the magnificent volunteers, displayed Australia to the world in a most positive fashion. At the Brunei APEC meeting in October of 2000, I was showered with unsolicited compliments regarding the Sydney Olympics.
Janette and I made the deliberate decision to attend as many Olympic events as possible to cheer on Australian competitors. It was enjoyable and popular with the competitors, as evidenced by the enthusiastic reception they gave me at the post-Games event at the Capitol Theatre. The athletes genuinely appreciated their Prime Minister so closely identifying himself with their efforts. We endeavoured to do exactly the same at the Paralympics, attending numerous events with the same level of commitment and enthusiasm.
The smooth introduction of the new tax system was a success of another kind. This new system had a lengthy bedding-down period.
The night before felt very much like Christmas Eve had seemed to me as a child; there was plenty of eager anticipation, but I didn’t quite know what the following day would bring. I decided to observe the public reaction in my electorate of Bennelong, firstly going to a small shopping centre in Top Ryde, and then on to the much larger regional shopping centre, Macquarie.
I found retailers well prepared, complimentary about the change, and quite positive in describing the reaction of their customers. I stopped several groups of Saturday-morning shoppers at Macquarie Centre and asked them about the new tax system. The reaction was either one of shrug-of-the-shoulders indifference or comments to the effect that to their surprise some items were actually cheaper. The latter reflected the impact of the abolition of wholesale sales tax on certain items.
There was intense media interest in the issue. By lunchtime I was breathing easier. The evening television bulletins provided blanket coverage which, in overall terms, was quite favourable. Some days later, Laurie Oakes, the Channel Nine veteran, told me that, before writing his story, he had spoken to two of his very experienced cameramen who had been
on the spot with me. They both reported a generally favourable reaction. This was an interesting reminder of how valuable an experienced cameraman can be, even to a hardened correspondent such as Oakes. These two men in particular, Mark Jessop and Doug Ferguson, have been around for a long time, are highly intelligent and good judges of public reaction.
The Labor Party was disappointed at the lack of public hostility, and contented itself by adopting Kim Beazley’s phrase that it would be ‘a slow burner’. It did turn out to be something of a slow burner, but the person it ended up burning most was Kim Beazley himself.
In completely thumbing its nose at the mandate given at the 1998 election for the introduction of a new tax system, the Labor Party obviously believed that it could win the next election off the back of hostility to our tax reforms. Beazley felt that all that was required was the promise of a rollback in certain areas, plus sustained criticism of the new system. He famously told his caucus towards the end of 2000 that the Labor Party would ‘surf to victory’ off the back of hostility to the GST.
As the early months after the introduction of the GST passed, it looked very much as if Kim Beazley could not have been more wrong. There were, however, two issues which began to eat away at the initially favourable reaction to the new tax system. One of these issues affected a vital constituency for the Coalition, small business. The other affected just about everyone, namely, the price of petrol.
The new system required all businesses to complete Business Activity Statements, monthly, quarterly or annually according to the volume of sales. For most small businesses, this meant a monthly or quarterly return. The Business Activity Statement (BAS) required the listing of sales, the calculation of GST collected and, where appropriate, a remittance of GST to the Australian Taxation Office.
From the very beginning, the BAS was too complicated. By September or October complaints were flowing in about the time consumed in preparing the BAS. Yet the Treasury resisted change, and at this stage so did the Treasurer. He took the view, mistaken in my opinion, that any change to the BAS connoted a retreat.
Australians are always sensitive to increases in the price of petrol, and although they understand that the main driver of fuel costs is the world price of oil, they are ever ready to criticise government decisions which might add to the cost of their petrol. The price of petrol rose in the months following the introduction of the GST, resulting in even greater public scrutiny of government behaviour potentially affecting petrol prices.
Naturally the GST applied to fuel sales, but the Government had pledged that the price of petrol at the bowser would not go up because cost reductions elsewhere would offset the impact of the GST on the price of petrol.
Almost all of those cost reductions were accounted for by a cut in the excise on petrol by 6.5 cents per litre. Regrettably, the small remainder flowed from a complicated calculation by Treasury that the introduction of a GST would have the effect of reducing production and other costs feeding into fuel prices.
No doubt soundly based in pure economic terms, this was a next-to-impossible concept to sell to the punters. The result was that we were never able to say, unconditionally, that the effect of the GST was fully cancelled out by an excise cut — something people could have easily understood. Thus the public had the nagging suspicion that the GST had lifted the price of petrol. Continued high bowser prices only aggravated this.
The belief that we had a lot of fat on our political bones blinded the Government to the gathering storm on petrol prices, which broke with gale force in the early months of 2001.
Although our poll lead was far from overwhelming, the Government finished 2000 in a strong political position. There was still a perception that the opposition lacked policy direction and was relying too heavily on negatives against the Government.
2001 was shaping as an intensely active year. In a symbolic sense it would be dominated by celebrations marking the centenary of the inauguration of the Commonwealth of Australia. During 2000, I had led a largely bipartisan delegation to London to mark the centenary of the passage through the British parliament of the enabling act for the Australian Constitution. This event was marred by some Labor pettiness. After originally declaring his intention of participating, Kim Beazley decided to pull out. He then spent quite a bit of time, whilst I and a number of Labor premiers and two former Labor prime ministers, Gough Whitlam and Bob Hawke, were in London, attacking the whole exercise as a junket.
I thought that this performance from Kim Beazley, and the support it received from sections of the media, was nothing short of pathetic. Whatever one’s politics might have been, the centenary of the Commonwealth of Australia, and important landmarks associated with the coming together of the six colonies, was quite a moment in Australia’s history. There comes a stage when point-scoring over the cost of overseas travel by political figures demeans our national self-respect.
Just before Christmas 2000 I decided on a cabinet reshuffle. Jocelyn Newman had indicated for some time her desire to retire. She had had terrible health challenges, especially from breast cancer. She had been a great minister, putting aside her real disappointment at not being given the Defence portfolio when we won in March 1996. Jocelyn had a dogged, battling style which appealed across the political divide to many people. She had, however, reached the point where she wished, quite literally, to retire and spend more time with her family in Canberra.
John Moore was the other long-serving minister to retire. We had had a troubled relationship. He was very much the mastermind of the numbers-gathering exercise which in 1989 had toppled me from the leadership. For me, however, that was a long time ago. I had given him a senior portfolio, and he had been a good minister, both in Industry and then Defence. He wanted out, but on the understanding that he would both retire from the ministry and from parliament before the next election. I should never have agreed to this and accepted the inevitability of a by-election, even in a safe seat such as Ryan, which was Moore’s electorate. This error of judgement on my part only added to the problems which beset us just weeks later.
I was, however, driven by the imperative of Peter Reith needing another portfolio. He had been in Workplace Relations since the beginning of the Government, and had accomplished all he was going to in that portfolio. Additionally, he had taken a fearful hammering over the Telecard Affair. He had foolishly lent his telecard to one of his sons, who allowed it to be misused, and a huge bill had ensued. The bill was paid, so the taxpayer was not out of pocket. Unfortunately for Peter, it was an issue relating to perks that really affronted the community.
The reshuffle involved the retirement of Jocelyn Newman from Family and Community Services and John Moore from Defence. In Newman’s place I appointed Amanda Vanstone, thus restoring her to cabinet. I made Tony Abbott a cabinet minister, promoting him to fill the vacancy left by the promotion of Reith to Defence. To complete the reshuffle, I added Mal Brough and Ian Macfarlane, both Queenslanders, to the outer ministry.
Moore was as good as his word, resigning from parliament on 5 February 2001. A by-election to fill his vacated seat of Ryan was fixed for 17 March, St Patrick’s Day. At the time I was not apprehensive about the Ryan by-election. A poll conducted by the party in December showed the likelihood of a Liberal victory in the seat.
Over the Christmas holiday period, however, the petrol issue had refused to go away. It was the same with the BAS. More and more men and women in small business complained to me, ministers and members of parliament about the complexity of the form they were required to fill out. This was reflected in the comments of colleagues at the first joint party meeting in 2001.
When cabinet looked at the petrol price problem, early in 2001, John Anderson argued that we should make a further excise adjustment so that the explicit excise reduction was equivalent to the impact of the GST. Both Peter Costello and I saw Anderson’s point but felt that the Government should stick with the existing arrangements, believing that any change would be seen as t
he acknowledgement of a serious error, and would not in any event end public pressure for further excise cuts. John Anderson was right, and Peter Costello and I were wrong. I would fully realise this some weeks later.
In preparing for the general election due at the end of 2001, a lot of thought had been given to anticipating policy initiatives from Labor and, if appropriate, pre-empting them. One such area was science and technology and the associated fields of research and development. In a major statement late in January 2001 entitled Backing Australia’s Ability, I announced a range of policies to support innovation, commercialisation, science and technology. It had not been hastily cobbled together, and in part reflected the views expressed to me over many months by the members of the Prime Minister’s Science, Engineering and Innovation Council, which I had chaired on a regular basis since becoming Prime Minister. It caught Labor flat-footed. We needed that boost more than we realised.
Despite the many challenges we faced, there remained a generally confident air about our political position when parliament resumed early in February. This was about to be rudely shattered.