by John Howard
My decision to stay was quite an easy one. It was what the public, the Liberal Party and all of my senior cabinet colleagues, except Costello himself, wanted. I was physically very fit and had plenty of enthusiasm for the responsibilities of the job. On 2 June 2003, I saw Peter Costello in my Canberra office and told him of my decision. He should not have been surprised yet he affected to be, both privately and, later, publicly. I had given plenty of warning of my likely decision when we discussed the issue in February. He did not raise the discussion involving Ian McLachlan nine years earlier, in December 1994, nor allege that I had broken an undertaking to hand over the leadership.
I told the party meeting the next day of my decision. It was warmly received. It was what the majority of my colleagues wanted.
Peter Costello displayed public disappointment at my decision. In doing so he missed the point with his colleagues. Most of them were happy with my decision. It had been welcomed in the party room and also, quietly, by the National Party. He would have done himself a greater service if he had taken the decision a little more in his stride. Costello said that in future he would assert his right, as Deputy Leader, to speak more frequently on a broader range of issues. I said immediately that this was his right as Deputy Leader.
A diary entry I made on 8 June 2003 reads, ‘He argued during our hour-long discussion last Monday morning that the Party’s best interests would be served by a transition now. Future events could prove that he was right. There was, however, overwhelming support in the parliamentary party for me to stay. There has been a very positive reaction to the decision.’
The issue of leadership slipped from the radar screen. When I had told the party room in July 2003 that I would stay I said that I would continue to lead the Liberal Party for so long as it wished me to, and if it was in the best interests of the party that I did so. From then on, when asked about the issue, that was my comfortable response. That should always have been my public position because it directly reflected the true position.
I called the 2004 election on 29 August. During an interview the following day, Peter Costello was pressed to rule out a leadership challenge if the Government were re-elected. He answered as best he could, given that I never expected him to categorically rule out a challenge. We had scheduled a joint news conference in Canberra that same day. Anxious to kill off the leadership issue for the campaign, I raised the matter directly with Costello before the news conference. I stressed how important it was that the leadership matter not dog us in the campaign; that I understood his desire to lead the party; that this would probably be my last election and that it was better that he succeed me in government.
Using more direct language than he had earlier, Peter Costello deflected the leadership issue at our news conference. It always seemed to me that my deputy’s best response on the leadership was to endorse my own language. He could simply say that I should remain leader for so long as the party wanted me to and that it was in the best interests of the party that I continue. If, in the future, he did launch a challenge, he would have been testing whether or not the Liberal Party wanted me to stay and self-evidently declaring that, in his opinion, it was no longer in the party’s interests that I remain as leader.
The size of our win in 2004 surprised me. It further strengthened my hold on the leadership of the Liberal Party. Peter Costello said nothing to me about the leadership matter. Life in the Coalition resumed its normal settled and stable pattern. Within weeks Mark Latham had self-combusted and Kim Beazley, minus his avuncularity, was back. He acknowledged that he was prolix, but I knew that nothing had changed when he declared that ‘henceforth simplicity will be my talisman’.
2004 had been a remarkable victory, particularly winning control of the Senate. I had now led the Coalition to four straight election wins. I would be 68 by the time of the next election. Healthy though I was, and much and all as I was stimulated by the job, I knew that I had to retire at some point. If I stayed and fought yet another election, and were successful, that would take me to 70 before I might properly step down. I thought that would be staying too long and tempting fate. Shattered the ALP might be after our increased majority in October 2004, but politics was always volatile.
Janette and I kicked the issue around, and I concluded that it would be in the party’s best interests, all things being equal, if I retired before the 2007 election, giving my successor, who I assumed would be Peter Costello, plenty of time to establish himself. From early 2005 this became my working assumption; it was not set in cement — nothing like that ever could be — but it was to remain my working assumption until blown apart by the events of July 2006.
I didn’t tell Peter Costello or any other colleagues. There was no need to. Apart from anything else, it would have found its way into the media, and my authority would have been undermined, with immediate calls for me to name the date of my departure. Some would have called on me to go quickly. For myself I felt that I would need to leave my successor at least a year in the saddle before facing the people. That would mean a retirement before Christmas 2006.
Peter Costello failed to understand the impact of the 2004 result on leadership dynamics within the Liberal Party. By winning again, I had become the most successful election winner for the Liberal Party since Menzies. For a proud political party that meant a lot. With each successive election victory, more people came into parliament who felt that they owed their success to me as leader. To them, talk of entitlement to inherit the leadership, coming from Peter’s barrackers, sounded discordant.
The leadership dynamic post-2004 meant that Peter Costello had two available options. The first and most sensible one was that he could simply accept the obvious and wait until I chose to retire. That was the Harold Holt approach, which Peter cited but would not emulate. Having won four successive elections, the great bulk of the party wanted me to stay as long as possible, and would react angrily to pressure applied or deadlines imposed by Peter or his acolytes. The other alternative was to plan and endeavour to execute a challenge. That was his right. He was entitled to openly confront the Liberals with a choice between him and me.
Regrettably he chose neither of these options. Instead he entered the grey area of both advocating himself and having others, on his behalf, argue the case for an orderly transition. Notional deadlines were set, after which unspecified action would be taken. The implication always was that if I did not go by the appointed time then he would challenge. Peter thought that he was entitled to the leadership. This cut no ice with Liberal MPs. They didn’t want the status quo changed. They respected his ability, revelled in his rhetorical skills in question time but, by an overwhelming margin, wanted him to stay as Treasurer in the Howard Government.
If Costello had chosen the first option and recognised that in no way would I be pressured out of the leadership, he would have become PM towards the end of 2006. There would have been no regular briefing of the press about deadlines, and importantly he would have handled the December 1994 story in mid-2006 differently. There may not even have been such a story.
In electing to approach the leadership as he did, Peter Costello completely misread both my temperament and my personality. Having worked closely with me for a decade it surprised me that he imagined I would succumb to the sort of rank amateur pressure placed on me through media briefings and the like. Those who understood me realised how counterproductive such a tack would become.
The Canberra press gallery had a natural obsession with the leadership issue. Every answer I gave about a forthcoming event which might be more than a few months away was scoured for clues about my future. When I announced that Sydney would be the venue for the 2007 APEC meeting, I was promptly asked who would host the meeting. I replied that the host would naturally be the PM of Australia. So the game went on. Questions, originally designed as trick ones, became so predictable that they were easy to handle.
I still don’t know how to categorise the question Steve Lewis, of the Australian,
asked me in Athens about my capacity to beat Kim Beazley again. My response became the foundation of the so-called Athens declaration, which caused Peter Costello to hit the roof. It was during a sit-down interview with two print journalists from Australia, Steve Lewis and Malcolm Farr. Many of the questions were about the leadership. I joked about the trickiness of their questions. I would later be accused of exhibiting hubris because in answer to a question from Malcolm Farr as to what jobs I might seek in a post-PM life, I said, ‘I’m not planning on going anywhere.’ That answer was not only literally correct, but I also knew that even to answer a question about my life beyond politics would be to invite a headline like ‘Howard Ponders Life After the Lodge’. The journalists knew that also; that’s why one of them asked the question.
Towards the end of the interview, focus shifted to Kim Beazley, who had not been back in the job for long. I said that I did not treat him lightly. Steve Lewis then asked, ‘You reckon you could best him three times?’ Taking the question as a hypothetical one, which, given the way it was phrased, I was entitled to do, I replied, ‘Yes. I hope so. Try.’ Lewis followed with another question, ‘You like the challenge?’ There was nothing hypothetical about that; I replied, ‘There’re those curly ones again.’
The journalists present believed that they had a huge story. According to them, I had made a declaration that I would stay and lead the Liberals to the 2007 election. I had done no such thing. I don’t know how else I was expected to answer the question about beating Kim Beazley. It had, after all, been hypothetical. My press secretary, David Luff, warned me that the journalists would take a baseball bat to my replies. He was right. It became a big story. Given Luffy’s assessment, I rang Peter Costello to warn him of the story. He already knew about it from my office and was not ready to accept my assurances that my responses carried no implications for the leadership issue. He seemed only too happy to act the wounded deputy rather than see things in a different light. Perhaps he thought that the bigger the drama the better for him.
The media was close to united in its opinion that my Athens interview represented a declaration that I intended to stay and fight another election. My belief that it was nothing more than fending off suggestions that I had decided to go found little support. For example the Australian, in an editorial on 2 May 2005, dismissed as ‘nonsense’ my interpretation of the Athens interview. It said that I had ‘challenged [my] own deputy to come and take the leadership or go away’.2 I should not have been surprised at this; leadership tensions within a political party are the stuff of wonderful yarns for the regular political correspondents.
Typical of the ‘deadline’ tactic adopted by Peter Costello and his backers was a story in the Age of 4 May 2005. Written by Michael Gordon and Misha Schubert, it stated that Costello would not stay on as my deputy or Treasurer beyond early the following year. According to ‘well-placed sources’ the option of me contesting another election with Peter Costello as deputy was not viable. The ‘Costello forces’ spoke of following the Keating path when he challenged Bob Hawke. The first challenge would fail, but he would get it the second time. An unnamed source said, ‘Howard needs to understand that there will be a transition this term — the only question is whether it will be smooth or messy.’3 This story had been carefully and deliberately briefed. It was a world away from what Harold Holt had done.
In his memoirs Peter Costello confirmed what I had suspected, that he took my call about the Athens interview whilst having dinner with a group of journalists in Melbourne, all from the Age newspaper. They were Misha Schubert and Michael Gordon, the author of the ‘deadline’ story on 4 May, Shaun Carney and Jason Koutsoukis. Peter Costello wrote that the purpose of the dinner had been to improve relations between the Government and that newspaper. Given that the dinner was just a few days before the Schubert ‘deadline’ story appeared, I am entitled to assume that some other things were discussed at the dinner as well.
The leadership issue remained a latent theme in the stories of regular columnists. Given the time I had already served in the job, it would have in any event, but the regular stimulation it received from sources guaranteed that. The ‘deadline’ of autumn 2006 was still there, but did not trouble me. My working assumption about departing some time towards Christmas 2006 had not changed, and I did not think that Costello would mount a challenge, as there was negligible support for that within the party.
Politically, 2005 ended on a note of achievement for the Coalition. We had secured passage through the Senate of the sale of the final tranche of Telstra, our additional workplace reforms and, right at the end, a prohibition on compulsory student unionism. I was proud that at long last my Government had been able to keep faith on something which went to the fundamental Liberal value of freedom of association.
The first half of 2006 saw the lifting of the ‘deadline’ of autumn 2006, the time by which I was meant to have indicated when I would retire. Writing in the Sydney Morning Herald on 22 April 2006, Louise Dodson said, ‘But now they [Costello’s supporters] acknowledge the leadership decision is Mr Howard’s to make whenever he chooses. Mr Costello has no plans to challenge for the leadership.’4 She wrote in the same comment story that I could wait until January (2007) before I made up my mind on a leadership handover. This, she asserted, was in substitution for the previous ‘deadline’ of May 2006.
It was quite plain that Peter Costello would never mount a challenge because there were insufficient supporters in the Liberal Party to make it credible. There had also been a half-hearted realisation that setting deadlines was counterproductive, as my failure to respond to them merely underlined how little support there was for him to mount a challenge. Yet, having abandoned, in the first half of 2006, the deadline strategy, my deputy and his close spear-carriers never completely saw the wisdom of genuinely allowing me the freedom to go at a time of my choosing; his inept handling of the December 1994 story in July demonstrated this.
Tony Blair had come to Australia in March 2006 to attend the Commonwealth Games in Melbourne and then go to Canberra to address a joint sitting of parliament, the first British PM to have been extended that honour. He and his wife, Cherie, flew with Janette and me on the VIP jet from Melbourne to Canberra on 27 March, and during the flight we had an intriguing discussion about leadership transition issues. Blair remarked that, unlike him, I had not nominated in advance an intention to retire at a particular time in the future. Prior to the 2005 election in Britain, Blair had said that if Labour won that election he would stand down in favour of Gordon Brown during the subsequent term. He rather ruefully reflected that it had probably been a mistake, as it had made him a lame duck.
Blair then turned to my position and said, ‘They [the ALP] are all waiting to see what you do. They think that Beazley can beat Costello.’ The implication was that there continued to be doubts in Labor ranks that Beazley could beat me. I had no reason to believe that this was other than a perfectly honest comment from the British PM. We were good friends and he would not have indulged in any partisan political game playing.
March 2006 marked the 10th anniversary of the election of the Howard Government. It would also mark a first in Australian politics. For a whole decade, the same three people had occupied the posts of Prime Minister, Treasurer and Foreign Minister. More than anything else, this symbolised the stability and unity of the Government.
The events marking the Government’s 10 years in office were deliberately low-key, and were accompanied by surprisingly little comment about the leadership issue. Contrary to claims made later, no colleagues approached me with suggestions that 10 years had been enough and now was the time to go.
In May 2006 I went on an official visit to the USA, and then on to Canada and Ireland. Due to the absence of Mark Vaile, the Deputy Prime Minister, from Australia during the same period Peter Costello was acting PM for a few days and performed well in the job, drawing praise from a number of commentators, as well as public compliments from several of his coll
eagues. On reflection this stint in the top job should have been an ideal prelude to an orderly transition later in the year. It was not to be.
Well into 2006, opposition to Costello replacing me began to emerge from within senior Liberal ranks. Brendan Nelson, then the Defence Minister, and I returned together from the funeral of Private Jake Kovco at Sale in Victoria on 2 May 2006. Kovco had died while off-duty in Iraq. During the flight Nelson said that he was strongly opposed to Costello becoming Liberal leader, that he hoped I would stay at the helm, and that if I were to go he would consider standing against Costello himself. He detailed several incidents involving what he saw as contemptuous behaviour by my deputy towards him.
Separately Alexander Downer strongly urged me to stay. During a conversation towards the middle of that year he had said, ‘Look, John, there’s no reason why you can’t go on doing this job into your 70s. You’re still very fit. I don’t know that I could work with Costello as PM. Stop thinking about retirement.’ Mal Brough had also told me that he did not want me to go, expressing doubts about Costello’s electoral appeal. Mal had extensive rugby league links in Queensland, and quoted the opinions of some identities in the game in aid of his assessment that I still had much electoral appeal. I had a lot of respect for Brough. He had won a new and marginal seat in 1996, and his knockabout style brought him into contact with swathes of middle Australia.
Then there was Malcolm Turnbull. He and Costello did not like each other, and that mutual disdain has continued. Costello thought that Turnbull was a carpetbagger with no deep loyalty to the Liberal cause. He had publicly opposed Turnbull’s preselection bid for Wentworth in 2004. He was needlessly sensitive to Turnbull when the latter entered parliament. Turnbull was never a threat to Costello as my successor. Costello would have wiped the floor with him in any leadership ballot, in Government or in opposition. As a mark of his needless sensitivity, Costello had totally overreacted when Turnbull produced a plan to reform the tax system. Instead of welcoming the initiative and promising to examine it, Costello publicly ridiculed the plan and its author, and privately complained to me, suggesting that something be done to discipline Turnbull. That was absurd as Turnbull had a perfect right to put forward ideas.