by John Howard
From the moment he took the leadership of the Labor Party, Kevin Rudd had a Teflon quality. There were several instances where he was let off the hook by the media. In 2007 he wanted the timing of a dawn service which he was attending at the Long Tan Memorial in Vietnam altered so as to accommodate the program scheduling of the Seven Network, and then pleaded ignorance, despite the clear involvement of his staff. Similar conduct by one of my ministers, let alone me, would have drawn withering press abuse. He escaped largely unscathed.
The same could be said of his association with Brian Burke, the former, highly controversial Labor Premier of Western Australia. Burke had been referred to several times in WA’s Criminal Justice Commission, and declared persona non grata by his own party in the west. Rudd had attended a dinner with Burke, which he initially denied. At that time he was campaigning hard for the leadership. When sprung, he pretended that he had simply gone along as the guest of his WA colleague Graeme Edwards, who was a long-time associate of Burke’s. That, also, was later disproved, with the release of email traffic suggesting that the context of Rudd’s contact with Burke was indeed Rudd’s future.
Rather than hurting Rudd, it ended up terminating Senator Ian Campbell’s ministerial career. Campbell, a West Australian, was the Minister for Human Services. When news of Rudd attending the Burke dinner surfaced, we decided to hit the ALP leader very hard. Peter Costello attacked Rudd in parliament, saying that anyone who dealt with Burke was morally and politically compromised. Then it emerged that Ian Campbell had seen Burke several months earlier, in his former capacity as Minister for the Environment. In other circumstances that would not have mattered, as the contact had been innocent and predated some of the more recent allegations against Burke.
Unfortunately, Campbell told no one of his meeting with Burke. He must have realised the potential embarrassment if that meeting became public, which it surely would once Costello elevated the attack on Rudd. The press had become aware of the meeting by the following day, and knowing that it would break as a big story the day after, Campbell then told my office about it. Politically, Campbell had been wrong not telling us of the Burke encounter and allowing Costello and others to go out and attack Burke, only to be left high and dry when the meeting with Burke was revealed.
I indicated to Campbell the next day that he should resign. He did so with little demur. He knew that he had let us down politically. It was a tough price to pay, but the stakes were high. Here was an opportunity to dent Rudd’s credibility and our attack had been derailed because of his failure to tell us of the Burke meeting. I felt sorry for Campbell, but there was no option.
The public seemed unshaken in its desire to have a new government. The economy powered ahead, with unemployment continuing to fall. But there was a growing disconnection between these two indicators and the public mood. Despite the aggregate strength of the economy, it was the relative position of citizens that mattered. Most Australians paying off their homes in 2007 would have borrowed to buy their homes when interest rates were lower than they were in 2007. Their relative position had deteriorated. The fact that rates had been much higher years earlier cut no ice with them. Petrol prices were higher, which added to the squeeze on many families. The drought had affected food prices, as had rises in food costs around the world.
There were logical explanations for all of these things and little blame could be sheeted home to the Howard Government, but that did not diminish the growing sense amongst a lot of Australians that, ‘This economy of ours might be going gangbusters, but I’m getting squeezed a lot and need help.’ Rudd exploited this mood with fraudulent gimmicks such as Grocery Watch, which he cynically abandoned after about a year into government. Our problem was longevity. The longer we were there, the less likely it was that the public would see a risk in change. In any event the people seemed more and more of the view that the economy practically ran itself or was driven by external factors.
In this climate the Coalition’s best line of attack had to be that there was a risk to the steady management of the Australian economy in electing the Labor Party. Surveys always showed that economic management was our prime asset. This, though, was not enough. People might think we could run the economy better, but this did not automatically mean that they thought Labor would be incompetent economic managers. We had to elevate in the mind of the public that there was a risk in electing Rudd. This was best done by emphasising trade union influence on a future Labor Government.
Rudd knew this was his vulnerability, so he played down union links, even pretending not to know the name of the union to which he belonged. Given his career background, he was the least easily typecast as a servant of the union movement of all of Labor’s recent leaders. Despite this there were times when the union factor began to work against Labor. The draft industrial relations policy produced by the Labor Party conference in April 2007 was much too radical, and after an outcry from the business community and fierce criticism from the Coalition, Rudd forced Gillard to water it down.
Militant building unions, especially in Victoria and Western Australia, worried Rudd. The ugly faces of union militancy in building were Kevin Reynolds and Joe McDonald, both from Western Australia. McDonald had been caught on camera threatening people on a building site. Sensing a problem Rudd prevailed on the WA branch of the Labor Party to suspend McDonald’s party membership. He also said that a Labor Government would retain the Australian Building and Construction Commission (ABCC) until 2010, when it would be absorbed into Fair Work Australia, the umbrella agency it was intended would run industrial relations under a Labor Government. Rudd and Gillard kept attacking unlawful behaviour in the building industry and repeating the mantra that they would have ‘a tough cop on the beat’. In government, Rudd and Gillard weakened the ABCC in advance of its proposed disappearance into Fair Work Australia.
Such was the hunger of Labor MPs, party officials and leading union figures for the return of a federal Labor Government that they all fell into line when confronted with any union militancy which might prove unpopular with voters. They all knew that the Howard Government was far from unpopular, and that the desire for change could easily disappear if the public sensed that was a risk in opting for Labor. Their collective discipline meant that Rudd could get away with superficial assurances and contrived toughness whenever confronted by union excesses.
The unions were particularly well disciplined. Greg Combet, the ACTU secretary, knew what was at stake for his movement. If the Coalition won again, the industrial relations landscape would be changed forever. The transformation of the previous decade would be consolidated; the possibility of some future Labor Government restoring the privileged position the unions once occupied would be virtually non-existent.
Combet showed a far more sophisticated appreciation of the historic importance of the 2007 poll for industrial relations than did most business leaders in Australia. Although they supported the open and more balanced workplace system we had put in place, they failed to realise the obverse of the Combet nightmare, despite my repeated public warnings. If the Coalition lost, and the perception was that the loss had been due to its industrial relations policies, then for a long time into the future no Coalition opposition would be willing to campaign too hard for industrial relations reform. That certainly proved to be the case.
Despite the continuing poll gloom, the Coalition kept its policy nerve. The announcement in June of an emissions trading system was followed within weeks by the dramatic intervention in the Northern Territory, which overturned 30 years of failed Indigenous policy based on the doctrine of separate development. My Government intervened because the Territory Government had failed to provide the most basic of all services to Aboriginal children in the Territory, namely protection from child abuse. That matter is explored in Chapter 25.
Awkward news intruded. Inflation for the June quarter at 1.2 per cent was higher than expected. My heart sank when I heard it in the Perth studio of the ABC, as I knew imm
ediately that with the economy growing so firmly the RBA would lift interest rates at its monthly meeting in two weeks’ time. The cold political reality was that another rate hike in August 2007 made it five rate increases in all since the 2004 election. It hurt us a lot. We dared not contemplate it at the time, but worse was to come.
Other awkward news was the decision of the AFP to abandon altogether any action against Mohamed Haneef, the Indian doctor employed in a Queensland hospital and detained on suspicion of a link with a terrorist attack in Glasgow, Scotland. Even though Haneef had been released, Kevin Andrews cancelled his visa and the man returned to India. The detention and charging of Haneef had occurred independently of the Government. The AFP had acted on the advice of the Director of Public Prosecutions (DPP), who later admitted that the advice given had been faulty. Even though Andrews had adequate reason on character grounds to cancel the visa, the Government was heavily attacked for trying to exploit fear of terrorism for political gain. The AFP’s decision to abandon the case against Haneef bolstered, however unfairly, that attack on the Government.
On Monday, 6 August there was a highly damaging leak of research analysis prepared on 21 June by Crosby/Textor, the firm comprising Lynton Crosby, the former Liberal federal director, and Mark Textor, who had done our polling for close to 15 years. I did not know of its existence until word of the pending publication of the leaked material reached my press office. It was highly critical of me, and could not have been leaked at a worse time. Its disclosure was calculated to cause maximum injury to the Liberal Party, and me in particular. The Daily Telegraph, to whom the material was leaked, made merry with it.
I was both angry and mystified about what had happened. In my time as PM, research material had not leaked like this. This had been designed to really wound me and the Government, and it did. With an election due in approximately three months, I had to put the incident behind me, particularly as Mark Textor, who was a good pollster, would continue to do our tracking and focus group research up to and including the campaign.
APEC met in Sydney in the first week of September; it was the most prestigious gathering of world leaders ever to come to Australia. All of the heads of government of APEC turned up, with the final communiqué — called the Sydney Declaration — containing a commitment from developing and developed nations alike to move forward on climate change. APEC was neutral for domestic politics. I had expected nothing else. Rudd won points for being able to speak Mandarin in public at the official luncheon for the Chinese President.
The captains and the kings having departed, all attention turned to the forthcoming election. The sensible option was to hold the election in November, and I ultimately decided on 24 November. There was no particular magic about this date. Given that the Coalition continued to trail the ALP in all of the polls, it made sense to give ourselves the maximum time, consistent with the election being held comfortably before Christmas.
It emerged, from a comparison of the polls on the day with those before the election, that the Coalition had made up a lot of ground during the campaign. Could the gap have been closed even more, so that the Liberal and National parties might have hung on? The answer must be in the negative, absent a calamitous mistake by the Labor opposition which might have cast real doubt on its ability to govern. Given its discipline since Rudd had taken over, that was not going to happen to the ALP.
In my opinion the Australian people were contemplating a change of government from as far back as the middle of 2006. But they had no real confidence in Beazley. If he had remained Leader, the ALP would not have won the election. The ‘It’s time’ factor, which I believe was the principal reason for our defeat, would not have overwhelmed their reservations about Beazley. After all, Rudd did not win in a landslide. His 2007 victory was the narrowest win producing a change of government since Whitlam’s in 1972. It fell well short of Hawke’s win in 1983, and was nothing like Fraser’s margin in 1975 or mine in 1996.
Although the Coalition clawed back Labor’s big poll lead during the campaign, it was dogged by the interest-rate issue and a series of individual incidents which all combined to rob us of any real momentum after the first week. We got off to a good start with our commitment to wholesale further tax relief, easily paid for out of the prospective surpluses across the forward estimates. This promise totally blindsided the Labor Party. We had grabbed the agenda. For five days Labor was silent, eventually matching our proposal except for some of the top-end cuts. Rudd redirected the money needed for these towards a rebate for laptop computers for all school students. Many already had them, but it played well, with his best line of the campaign being, I think, his description of the laptop as ‘the toolbox of the 21st century’.
Rudd was judged to have won the leaders debate. The published polls gave the Coalition little comfort. Any hope that once the real thing had arrived, the public might flood back to the devil they knew quickly disappeared. Our internal research was not much different, although on one occasion the aggregate of the track had us just ahead. Nothing suggested that we do other than hammer away on the economy and hope that Rudd or one of his foot soldiers would blunder.
Peter Garrett, shadow minister for the Environment, obliged — twice. During an AM radio interview, he said that Australia should commit to binding emissions reduction targets in advance of agreement from other nations to do likewise. I pounced on this and Rudd was forced later that day to overrule Garrett. Soon afterwards, Steve Price of Radio 2UE reported that, in an airport conversation, Garrett, when pinned on the difference between his pro-environmental rhetoric and Labor’s actual policies, had said, ‘Once we get in, we’ll just change it all.’3 This was dynamite and threw the ALP onto the defensive.
Regrettably, just a few days before, the Weekend Financial Review had carried a story, which was true, that Malcolm Turnbull had argued in cabinet for ratification of Kyoto. The timing of the piece was atrocious. It meant that full pressure could not be applied to Garrett on an issue of straight hypocrisy. In one fell swoop, public attention was back on the Coalition’s refusal to ratify Kyoto, with the added bonus for Rudd that he could argue that even the Environment Minister in the Government disagreed with the Prime Minister. Try as we did, the attack on Garrett fizzled out.
On 24 October came the body blow. The CPI figure for the September quarter produced an underlying inflation rate of 0.9 of 1 per cent. The headline rate was lower, but it was the underlying rate which drove interest-rate decisions. The tipping point for a rate rise was seen as 0.7 of 1 per cent. At or below that meant there would be no movement in rates. Given the commentary which had been allowed to develop, the RBA must either lift rates by 0.25 per cent at its November meeting, an action with unmistakable political implications, or risk being accused of acting politically by not lifting rates. Inevitably the bank lifted rates on 6 November, just 18 days before the election.
This catch-22 had arisen because the bank had ignored the implied understanding which had existed between the Government and the bank, since full RBA independence in 1996, that the RBA saw to it that it kept out of the crossfire during election campaigns. There had been no rate increases in the 12 months before the 2004 election.
It could not seriously be suggested that the bank lacked independence. After all, it had already lifted rates in August, just three months from the election. It would have been well within its capacity and in no way compromising of its independence to have made it known, with its inimitable smoke signals, that in the absence of a serious spike in inflation (which the November figure clearly was not), rates were on hold until the beginning of 2008.
The markets would have understood, and no damage would have been done to monetary policy. After all, the case for a hike in November 2007 was marginal. If the increase in the underlying rate had been 0.7 and not 0.9, rates would not have changed. Monetary policy is anything but that precise. The other measurements of inflation in the September quarter figures had been more benign. So far from preserving
its aloofness from the political fray, the RBA had run the risk of being seen to enter the lists against the Government by lifting rates so close to the election.
I don’t claim that the rate increase in November cost the Coalition the election. However, from the moment the September quarter CPI was released, both the prospect and then the reality of the increase coloured reporting of the economic aspects of the campaign. It diverted attention from other features of the campaign which may have been more favourable to the Coalition.
Being on the defensive, as the Liberal and National parties were for most of the campaign, magnified setbacks such as Tony Abbott’s shocking day when not only was he late for his debate with the shadow Health minister, Nicola Roxon, but worse than that, he foolishly impugned the motives of Bernie Banton (now deceased), the frequent spokesman for James Hardie employees affected by asbestos.
I started the last week of the campaign, on 17 November, in Perth, where the reception was warm and the results, a week later, the best in the country, with the net gain of a seat in Western Australia. On Monday afternoon I called to see Matt Price, the gifted Australian columnist, stricken with cancer and surrounded by his adoring family. We chatted for 40 minutes or so about politics and sport. He displayed humbling courage and cheerfulness. Matt’s life was ebbing away; I only faced an election. It reminded me of life’s priorities. Sadly, he died just six days later at the age of only 44. He was a real loss to the profession of journalism.
Having spent five weeks treading water, some of the polls suddenly began to tighten. Galaxy came back to 52–48, still against, but a vast improvement on earlier surveys. Newspoll also began to shift. Just maybe there was a glimmer of hope. Then on Wednesday another hammer blow. Some Liberals, including Gary Clarke, Jackie Kelly’s husband, had been caught distributing bogus leaflets in the electorate of Lindsay, falsely claiming ALP support for the Bali attack and attributed to a fake allegedly Muslim organisation. It was outrageous, and contained an unjustified slur on the ALP. Those responsible were expelled from the NSW division of the party, and everything possible was done to disown this stupidity.