by John Howard
Then, in the middle of August 2007, little more than three months before a probable election date, a story broke regarding what Peter Costello had allegedly said about the leadership issue during a meal with three journalists at the Waters Edge Canberra restaurant on 2 June 2005. It was common ground that those attending were Costello, his press advisor David Alexander, Tony Wright of the Age, Michael Brissenden of the ABC’s 7.30 Report and Paul Daley of the Bulletin. Costello and Alexander claimed that the discussion was an off-the-record one, meaning that what was said should not be divulged, even on a non-attributable basis. The journalists disputed this, claiming it was background, thus allowing use of the information transmitted during the dinner, but without attribution. They claimed that, the day after the dinner, Alexander had rung them and pleaded that the comments of the Treasurer be treated as off-the-record.
For a long time at least, it was treated as an off-the-record discussion and no reports of the dinner emerged. Approximately a year later, Daley alluded to it, but in a way that did not attract much attention. He was more specific in a Bulletin column on 7 August, where he alleged that Peter Costello had told them that I could not win the election, but he could.
When questioned, Peter Costello denied the Daley story. This denial provoked both Brissenden and Wright into going public with their detailed and similar accounts of what they claim Costello had said. They both asserted that as Costello had denied what they had heard him say, they were justified in breaching the confidentiality of the discussion.
Perhaps a fine piece of journalistic ethics turned on the matter, but what concerned me were the bad headlines. Under a heading of ‘He Can’t Win. I Can’, Tony Wright told the readers of the Age his version of the dinner in 2005. It was that Costello had set a deadline of April 2006 for me to hand the leadership to him, and that if that did not happen he would challenge, and if, as anticipated, that did not succeed he would go the backbench and ‘carp’ at my leadership and ‘destroy it’. He said that he was prepared to do this because ‘He [Howard] will lose the election. He can’t win. I can. We can, but he can’t.’7
Costello publicly denied the alleged comments with a dismissive response that he did not know where journalists got these stories. Both Wright and Brissenden claimed to have a common note of the discussion. In addition, both the timing of the dinner and the alleged remarks about my having an April 2006 ‘deadline’ within which to retire were consistent with briefings which had so obviously been given on other occasions about what I supposedly had to do to avoid a challenge. The whole story hurt Costello within the party but, most importantly, added yet again to the impression of the crumbling of a once united and impregnable government, particularly at the top. At no stage did Peter Costello seek me out privately to deny the story. Given the long association we had had, this suggested to me that it was true.
In the light of these incidents, the constant mantra of an unceasingly loyal deputy had worn thin. That aside, the two incidents were bad for the Government. They would not have endeared Peter Costello to those of his colleagues who held marginal seats and faced the fight of their electoral lives.
In August 2007, Malcolm Turnbull raised our difficult political position with me. He said he had been kept awake the previous night worrying that I might lose my seat at the election. He said that would be a terrible end to such a wonderful career. I expressed a rather more philosophical view about it, pointing out that given its marginal character, it was inevitable that Bennelong should be at risk. We also discussed the position in his own seat, which on 2004 figures was even more precarious than Bennelong. He was nervous about Wentworth, an electorate which was unrepresentative of middle Australia, and would have contained many people who opposed my stance on border protection, Iraq and aspects of Indigenous policy. Turnbull suggested that I consider resigning the leadership. This was different from the Malcolm Turnbull of a year earlier, who had been passionate that I should stay.
APEC was scheduled to meet in Sydney on 2–9 September. On 4 September there was another depressing Newspoll, showing Labor ahead by an astonishing 59–41 on a two-party-preferred basis. Later that morning Alexander Downer called to see me in my Sydney office and we had the frankest possible discussion on the political scene. I said that I had to face the reality that the Government was headed for defeat and that part of the outcome would be my losing Bennelong. We agreed that nothing the Government had done had shifted public sentiment and that voters had plainly decided to get rid of us.
Downer said that he had noticed a hardening of attitudes amongst people in both Adelaide and Melbourne the previous weekend. He reported that people were saying that they were ‘over John Howard’. No particular policy issue was mentioned by my colleague.
I then said to Downer, ‘Do you think it would help if I went? Could Costello do better than I could? Perhaps a new leader would upset Rudd and turn things around?’ Downer’s response was that he did not know but it might be worth a try. I said that I wanted to know the attitude of cabinet colleagues. I gave him authority to call them together during APEC events, as most of them would be in Sydney.
I told Downer that I would not leave in circumstances of cowardly flight. In no way would I countenance the appearance of going because I was afraid of defeat. If, however, my cabinet colleagues were strongly of the view that they had a better chance of winning under Costello — he was the only possible alternative — and made that plain to me, then I would go. But they had to publicly ‘own’ the request.
Downer did as I asked and assembled most of the ministers in cabinet on Thursday, 6 September at the Quay Grand Apartments in Sydney. Having spoken to a good number of those who were present, I am satisfied of a number of things. Downer told them of my pessimism about both the election outcome and my own seat. They were genuinely shocked by this. The majority of them did not think that the Government could win under my leadership but were unconvinced that it would be any better under Costello, although some believed he would have a better chance. Several of those present related ‘war stories’ of their dealings with the Treasurer; there was little enthusiasm for him. Downer encouraged ministers to speak to me direct with their views.
Downer saw me the next evening at Kirribilli House, Janette also being present. He reported on the meeting. I asked whether the cabinet would be willing to ‘own’ a request to me to stand aside. He replied that there was absolutely no support for this. They would not do it. They felt they would suffer in their electorates if they were seen to be pushing me out. My response was that if they were not prepared to publicly ask me to go, then a resignation by me would look like cowardice. I would rather go down fighting than desert on the eve of the battle. Downer pleaded with me to talk to them as they were quite depressed.
Naturally Costello had not been at the meeting; nor had Nick Minchin, Tony Abbott or Mal Brough. Downer had obviously discussed the issue with Costello, as it subsequently emerged that part of the understanding amongst quite a few colleagues was that if Costello were to replace me, then Downer would become Deputy Leader and, presumably, Treasurer. Mal Brough was not part of such an understanding, rather angrily telling me the following week that he would not support Downer as deputy.
At this stage news of the ministers’ meeting had not seeped out, but it was only a matter of time before it did. I discussed the whole issue with my own family over the weekend. Janette and my three children were adamant that I should not look as if I were running from an electoral fight. Their attitude was that I should only give up the leadership if publicly requested to do so by my senior colleagues. That was my attitude as well. We agreed that I should not put the party through a ballot if that public request were to come. I doubted that it would. I was right.
This all occurred during APEC. We returned to parliament the following Tuesday, with an address from the Canadian PM, Stephen Harper, to a joint sitting, returning the compliment paid to me the previous year. News of the Downer-led discussion had begun to get around
. Some of the coverage portrayed certain ministers as plotting against me. That was not right, as I had inaugurated the whole discussion in the first place. The next day I had a meeting with Costello and Abbott at which it was agreed that I would announce that if the Coalition were returned at the election, I would stand down midway through the next term. I subsequently told a meeting of Liberal MPs that I did not feel any of my ministers had been disloyal and that I would retire during the next term, if we won. That evening I appeared on the 7.30 Report and announced my conditional retirement plans. It was a poor performance on my part as I sounded defensive and indecisive. Several ministers, including Downer and Minchin, had gone on the media earlier in the day and killed the idea that I was going. It had been a messy few days.
I had made a serious mistake in asking that Downer sound out the cabinet members. The continued bad political news had affected my judgement. In retrospect, the idea of changing the leader in those circumstances, that close to the election, was preposterous. There was never any prospect that my cabinet colleagues would publicly request me to resign. The majority of the parliamentary party members still wanted me to lead them to the election, despite our dire electoral position.
Joe Hockey and Mal Brough had both rung me over the weekend and said they believed I should stand down. Neither really pushed the issue, and I had the distinct impression that both were getting on the record for the sake of posterity. I did not hold it against either and respected their candour. They were the only ones.
Apart from Andrew Robb calling to see me at the Lodge on Sunday night a week later to inform me that he would start lobbying the next day amongst MPs to organise a request that I go, the whole issue fizzled out. The next Newspoll, the following Tuesday, was better than the one which had helped distort my judgement. It was only 55–45 against us! Robb argued that he was driven to do what he foreshadowed because I had said I would only stay for part of the next term, if we won. His logic was that I should commit to staying on into my 72nd year. That was not sustainable. Robb believed that my declaration had made me a lame duck. He said that if voters knew I was going, come what may, many would think it a good idea to accelerate that process in the name of having a change of government anyway. The British experience, where Tony Blair had said he would retire after the election and well into his new term, had not stopped the British Labour Party from winning the 2005 election quite comfortably. In any event, the Robb initiative went nowhere.
If the leadership were to have changed during what proved to be our last term, the time for that was in 2006. For the reasons I have explained, that did not happen. From then on, the die had been cast and, barring a spontaneous rising against me (à la Kevin Rudd in June 2010), with a public request for me to depart, to which I would have willingly acceded, the leadership should not have been canvassed again.
45
THE TIDE RUNS OUT
My favourite subject at Sydney University Law School was the Law of Evidence. It went to the heart of disputes between the recollections of people about certain events important to them and to the testing of those recollections in court. In 1960, when I did the subject, my year had a magnificent lecturer, Len Badham QC.
Badham taught us that human recollection is inherently frail, the more so with the distance of time. Therefore contemporaneous evidence, however given or recorded, is always the most reliable. I have occasionally remembered his commonsense counsel as I have reflected over the past three years about events during my Government’s last year in office and the reasons for our sharp change of political fortunes. Fortuitously, my habit of making diary notes on various occasions has enabled me to compare how I felt about certain issues several years ago, as compared with how they rate now.
On 8 November 2006, just over 12 months before the Government lost office, I entered a note in my diary which revealed my innermost concerns for my Government, and is worth quoting in full:
A very bad day; interest rates rose by 0.25 per cent. This is the 4th increase since the election. If there is another one next year we will be in a heap of trouble. I did my best but this is really quite damaging. It will eat away at our economic credibility. Coming on top of the past two weeks of seeming to be on the back foot over climate change and also the continuing bad situation in Iraq the political climate has become quite hard. Yet the 12 or so benchmark polls and the published ones don’t, as yet, show a systemic fall in our vote. But I do have the feeling that we are ‘running on empty’ and that sooner or later something will give.
As an unvarnished reflection, it was interesting for the subjects it mentioned, as well as for those it did not touch. Interest rates and climate change were cited, but not workplace relations. Iraq rated because the situation there was so bad in late 2006; this was before the surge, and the opposition had really hammered away at it in parliament. Early November 2006 was right in the middle of the perfect storm on climate change.
Interest-rate increases bothered me politically. My fears about interest rates were more than realised the following year. They went up again in August and also, most damagingly, in the middle of November 2007 — two weeks before the election. Given the strong campaign I had run on interest rates in 2004, any rise would be used heavily by the opposition, particularly against me.
The reasons why governments are voted out of office are usually more prosaic than either politicians or commentators wish to admit. There is rarely one single reason, although the longer a government has been in power, the desire for change becomes an increasingly potent consideration.
Naturally Beazley had to step in when Latham resigned unexpectedly, on 18 January 2005, but he was far from ready. He had wanted more time out of the limelight. And I don’t think that his health had fully recovered. There was warmth but not much excitement about Beazley’s return. Given the way in which he had departed, the Labor Party wanted to forget the whole Latham exercise. So did some of his more enthusiastic media backers.
It was obvious from the outset that Beazley’s minders had convinced him that he had to be more belligerent towards me. There was to be no more Mr Nice Guy. Almost literally, Kim Beazley began to snarl across the parliamentary table at me, and referring to me as ‘Howard’, not Prime Minister or Mr Howard. It didn’t work; worse still, he didn’t look comfortable when he said it. On 31 October 2005, to mark 20 years of Beazley being in parliament I decided that I would make special mention of that fact. As a normal courtesy I had forewarned Beazley of my intention to do so. I made a short and friendly speech, praising his contribution to Labor, mentioning his father and remarking on his service to his constituents. I felt that it had been the right thing to do. To my surprise, Beazley did not reply personally. He delegated that task to his deputy, Jenny Macklin. It was quite pathetic. Nobody was the least bit interested in what Macklin had to say about Beazley. I had paid him a compliment which he deserved, and he should have replied direct. Tone-deaf minders had taken over.
Even worse had been Beazley’s decision, several months earlier, to vote against the tax cuts in the 2005 budget. With confected indignation, he denounced them as favouring the rich, which was ludicrous given that the lion’s share of earlier reductions had favoured low-and middle-income earners. The principal result of the personal tax cuts delivered by the New Taxation System in 2000 had been to leave at least 80 per cent of taxpayers with a marginal tax rate of no more than 30 per cent, which was a beneficial reform for low-and middle-income earners. The 2005 budget proposed tax cuts in the 2005–06 year for all taxpayers; in 2006–07 the proposal was to lift the thresholds at which the top two rates applied. That change was long overdue. The low levels at which our top rates cut in had a negative impact on incentives to work harder. All that filtered through to the public was that Kim Beazley had voted against tax cuts. In the end he capitulated, looking faintly ridiculous, and with many in his own ranks muttering darkly about his lack of judgement.
He never really recovered from this gross error of judgement. There wa
s some early enthusiasm about his return to the leadership, the feeling being that Labor had made a terrible mistake with Latham (which it had) and was now back on track, with Beazley making things competitive. In an April 2005 Newspoll, his satisfaction rating hit 52 per cent; by mid-July, two months after the budget, it had slumped to the low 30s. It ended 2005 at 36 per cent and well in negative territory, with more disapproving than approving of his stewardship. The experiment with an angrier Kim had not worked.
Beazley’s poor personal performance through much of 2005 had been masked by the Coalition’s difficulties with WorkChoices. By the end of the year we were behind in the polls, although that had not produced any widespread concern. As had been the case when we brought in tax reform, we were going through the process of introducing a major change, and it was only natural that in the early stages there would be public disquiet; in time that would subside. Long years in government had given my colleagues the capacity to experience extended periods of bad polls without panicking. It was a valuable asset.
Policy-wise, 2006 was dominated by the debate about industrial relations and the sale of the remaining public shareholding in Telstra. As a negative issue, the Australian Wheat Board (AWB) scandal was an irritant for the Government. We had established a Judicial Inquiry with the powers of a Royal Commission. Downer, Vaile and I had appeared, under oath, and although the affair attracted heavy press interest and enabled Kevin Rudd to obtain mountains of coverage as the chief opposition attack dog, it was not something that would bring the Government down. We had not done anything wrong. There had been no cover-up. As soon as I had got wind of concern from the Volcker Inquiry, established by the United Nations under the leadership of the former and highly respected Chairman of the Federal Reserve, that AWB might have been dragging its feet in responding to that inquiry, I had given firm instructions that there should be maximum cooperation and transparency. The Cole Inquiry was set up by the Government in direct response to the Volcker findings. Australia went further than any other country in responding to those findings. The Cole Inquiry found no wrongdoing on the part of any government ministers, and that AWB Limited had deliberately misled both the Australian Government and the United Nations. Cole’s findings directly repudiated Kevin Rudd’s allegations that I had deliberately lied over aspects of the issue.