by Madonna King
Once, in New York, he joined John Howard for dinner with Sandy Weill, the then chief executive and chairman of Citigroup. That relationship, which continues today, grew quickly, and later Joe would pick up the phone to try and cement a job offer and move to New York. On another occasion Robert Rubin, who had been Treasury secretary in the US before becoming part of an advisory committee at Citibank, was in a meeting in a room next to Sandy Weill. Joe asked Weill whether he would introduce him. And next, Joe was sitting back chatting with the 70th US secretary of the Treasury. On free weekends, Joe would fly from New York to Washington, to catch up with a couple of congressmen he might have met earlier. On one trip, one of Joe’s staff quipped that it was difficult to differentiate between Joe’s ambition for Sydney and the zeal he showed for his own advancement.
The strategy to make Sydney the Wall Street of Asia was always going to be a big call. Location was vital and most big companies were home in London and New York. If Asia was where their customer base was, Sydney was still a distance away despite being in the same time zone. The 1999 Budget provided $7 million to set up a Sydney-based international financial centre task force, with the aim of jumping some of those hurdles that prevented Australia from being a global finance base, but its strategy ended up being more defensive than offensive. Les Hosking, who headed that unit, says the Australian contingent used our strong workforce and good regulatory environment to try and entice companies to headquarter in Australia. Hosking had taken on the job despite being a touch sceptical about moving from the Sydney Futures Exchange, and many of his colleagues expressed curiosity, too.
‘They used to say to me, Hockey is only pretty new in this area and he’s already got this name of “Sloppy Joe” and he’s not a patch on Minchin and Costello,’ Hosking says. ‘I found that not true. I thought Joe worked hard. He was ambitious. He wanted to be the next treasurer.’
With few exceptions, Joe was able to win people over and paint a picture of his vision. Hosking was also impressed at how he thought outside the square. For example, on their first mission to New York he took his shadow ministerial colleague Stephen Conroy. Each day, Joe and Conroy would catch the same car down to Wall Street; Conroy would be looking up what was happening in Australia in his Party, and Joe was checking on his own. To Les, it seemed surreal, but it worked wonders in meetings, with the bipartisan approach forcing open a few closed doors. Australia’s economy, which boasted 4.8 per cent annual growth, was a big selling point, along with its time-zone advantage over Europe, its skilled workforce, its political stability and its liquid markets. Its massive superannuation pool was also used as a lure. But despite going into every meeting bragging about having the fourth-largest foreign exchange, the seventh-largest stock exchange and the biggest futures exchange, they were still up against the big boys, the true global money centres of Hong Kong, Tokyo, New York and London. Apart from its remoteness, Australia’s tax system, in terms of corporate tax and personal income tax, was not as competitive as those offered by Singapore and Hong Kong either, and in the end, positive small steps were made, but that’s all.
The Sydney sell-job was only one issue in Joe’s inbox. He was also charged with corporate law reform, played a role in reforms to the financial system that stemmed from an inquiry headed by Stan Wallis, and was involved in the government’s business tax review. Under Joe’s ministry, a new takeovers panel was born. But all his good work was soon pushed aside by a mistake on the GST that coloured his performance in 2000, just as he should have been hitting his strides.
January each year is deserted in Parliament House. Senior journalists are often away on vacations, as are the big players in politics. And that’s how Joe Hockey found himself in hot water. Treasurer Peter Costello was taking an annual break. Senator Robert Hill was the acting treasurer, while Joe, having been assigned several portfolios as well as his own, was enjoying a Friday afternoon at the cricket with his press secretary, Matthew Abbott, who had also just started his annual holiday.
The GST had been the focus of a radio interview Joe had done with the John Laws program earlier in the day, but it had all seemed straight up and down. ‘What the ACCC has said, is if there is an odd number, within a dollar range, then a company can round it up to a dollar or down to zero but they’re not allowed to make any money out of it,’ Joe told listeners. He was right. That was the ruling of the ACCC under the chairmanship of Allan Fels.
That advice had lobbed into Joe’s in-tray months earlier, as it had done with Howard and Costello, and other ministerial colleagues with any oversight of the GST. Indeed, it was hardly surprising: with no 1- or 2-cent coins in circulation, some things would need to be rounded up. It was also perfectly legal.
‘The guidelines were drawn up as a technical thing without much feeling for how the politics might play or the opportunities for The Daily Telegraph and others,’ Allan Fels says now. Fels had always liked Joe, but was wary of him, too. Earlier, as a backbencher, Joe had used the media to question the ACCC publicly. They raised an issue about whether the ACCC had made inappropriate use of lawyers in a particular case. ‘He had me on the back foot,’ Fels says. ‘He was at least right, if not fully right.’
Media subsequently had a shot at Fels and his team, and the ACCC chair decided then and there not to underestimate the young minister. But he found him easy to work with, too. The ACCC had a big role, and Joe liked Fels’s strategy where it was not just seen as cops who went touting examples of overcharging. Fels also knew that Joe’s bosses, Howard and Costello, were keeping a close eye on Joe. ‘They broadly thought he was promising new minister material but also a little junior and new to the game, so to keep an eye on him.’
Joe’s comments on rounding up might have been technically legal, but they proved politically explosive. The next morning, Joe picked up Sydney’s The Daily Telegraph and almost choked on his breakfast. Splashed across the newspaper, and picked up quickly elsewhere, was the news that voters would be slugged more than 10 per cent when the GST was introduced later that year. And it sheeted confirmation of that back to Joe himself. Howard was on the phone early, followed quickly by Costello. Neither was happy with their young financial services minister. Joe stood his ground; that’s what the advice was, he told them. Howard told Joe to fix it.
‘He said, “I know you’ll lose some bark on this, but you’ve got to,” ’ Joe says.
A few hours later, Joe was backtracking fast on his earlier comments. ‘I have today told [the ACCC] that rounding beyond the 10 per cent GST will create confusion and uncertainty for consumers and is not in line with our policy that no price will increase more than 10 per cent,’ he told the media.
That didn’t help matters: one moment the government, through its junior minister Joe Hockey, was saying that some prices would rise by more than 10 per cent; and 24 hours later, he was vowing it would not be tolerated. Voters were confused, but so were businesses charged with carrying the GST. ‘His answer was loose,’ Costello says now, ‘and the press went after it just like they went after every loose answer that Howard gave or loose answer that I gave.’
The stakes were high with the GST because it applied to every business in Australia, on every transaction made every day. Indeed, a few months later, when the GST began, the nation would wake up to a billion price changes. That didn’t help Joe at the time though, and things went from bad to worse. Everywhere he turned, he was asked the price of something else once GST became law. A couple of days after his radio interview, he stumbled again on the Nine Network’s A Current Affair by trying to explain the impact of the GST on a bottle of soft drink. It was a John Hewson moment, reminiscent of the former Opposition leader who was left flummoxed trying to explain the effect of the GST on a birthday cake.
Costello says it was always going to happen. ‘For two years we’d been taking questions on the GST, the most minute detail of the GST, day in, day out. It was extremely complicated and whenever I got on talkback the Labor Party would have people ring in w
ith tricky questions. How does the GST apply to horse race winnings? How does it apply to an insurance payout? How does it apply to a time share? Unless you were living and breathing this stuff and studying it day in, day out, there were bound to be a lot of questions that you couldn’t answer,’ he says.
Senior journalists began returning to work and picked up on the mishap, which gave it new oxygen. Howard was breaking his holiday daily, telling Joe he was doing well and to keep fighting the public perception that prices were going up. Costello was calling, too, telling him to get out of the media. ‘I was being smashed,’ Joe says. Newspapers were having a field day, at his expense, and so were cartoonists. Every time Joe tried to clarify something it got worse.
‘I was saying to him, just stop talking,’ Costello says. ‘The more you say the more trouble you’ll get into. And the more he did talk the more trouble he did get into. And in the end I broke my holidays and came back.’ But before that, torn between Howard’s advice to keep fighting the perception that prices would rise and Costello’s advice to bunker down, Joe decided to take the latter. And that’s when, as acting immigration minister also, he received a delegation of bureaucrats to his office, announcing that a boat carrying asylum seekers had just arrived on Christmas Island.
He asked them what they expected him to do. They said he needed to stage a press conference. Joe had already decided his face would not appear, if he could help it, on the news any more that week. ‘I said look, you know I’ve never been comfortable about this detention business,’ Joe told them. They stared back. ‘I’m acting immigration minister and I don’t like locking up, particularly children. Can we release people from these detention centres today?’
Joe laughs, remembering the conversation. ‘They said that would need to go to Cabinet. I said well can you prepare me a paper and I’ll say it at the press conference?’ The bureaucrats changed tack immediately. Perhaps it was best that he didn’t have a press conference today, they told him. ‘You think so?’ Joe responded. They assured him the department would put out a statement and that there was no need for him to speak publicly. ‘I said that’s probably a good idea. Can you get that paper together for me though?’ Joe says he’s never wondered why he’s not been made acting immigration minister again.
But the GST continued to dog him, and the next time Joe had help from Allan Fels. It was a few months later on a Friday afternoon, when Joe took a call from Fels, who had just done an interview with David Koch. ‘Minister, I might have accidentally dropped that some prices might go up by more than 10 per cent,’ Fels said down the line. The interview was due to air on television on Sunday.
‘What?’ Joe yelled, incredulous.
‘Well, some things might go up by more than 10 per cent,’ he replied.
‘You’re kidding me, aren’t you?’ Joe shot back, before walking into Costello’s Melbourne office and relaying the phone call. ‘This is after all the blood-letting over the bottle of Coke,’ Joe says. ‘I couldn’t believe it.’
Costello told him to order Fels to re-record the interview. And just as Joe was working out how he might do that, John Howard walked in. ‘What’s going on?’ he asked.
‘It was like a scene out of Fawlty Towers,’ Joe says now. Howard agreed with Costello. So Joe was forced to call Fels back and tell him that he had no choice but to call David Koch again, and re-sit the interview.
‘How am I going to do that?’ Fels asked.
‘I don’t know,’ Joe replied. ‘Think of something.’
Fels called David Koch back. ‘Look, David, I really want to give you an exclusive about this insurance company that’s ripping off its customers. I forgot to mention it. Do you think we could re-record the interview?’ Any journalist will say yes to a bigger story, and Koch was no different. ‘I did it and gave him the scoop,’ Fels says, ‘and when he came back to the 10 per cent, I had a convincing story that it could never go up by more than 10. Had the original interview gone to air, we would have had to spend several days trying to explain this thing to the public and we would have been in big trouble.’
David Koch had his exclusive. And another near-miss on the GST was averted, although not for long.
It was politics, not policy, that was also played out in Joe’s clash with Woolworths chief executive, Roger Corbett. Corbett didn’t like the GST one bit. In fact, Joe saw that Big W were putting tags on every item of clothing before the GST came in, providing one price if the customer bought the item now, and another to reflect how the item would be priced come 1 July. ‘They put it on every tag,’ Joe says.
Howard was apoplectic; Costello called Joe and told him he didn’t care how he convinced him, but Roger Corbett had to stop it.
Joe put in a call to Corbett. ‘Roger Corbett, who is cantankerous, had an argument with me. I said, listen, Roger, if we’ve got to have a body swinging from a lamppost in Martin Place and it’s yours, so be it,’ Joe says.
Corbett wanted to know if that meant Joe was threatening him. ‘No,’ Joe shot back, ‘but the ACCC can come down and help.’
Corbett had a tag on every item Big W was selling across Australia. He asked what Joe expected him to do. ‘Pull every tag,’ Joe responded.
‘But we’ve got millions,’ Corbett said.
‘I know,’ Joe bit back. ‘That’s why I’m giving you a week.’
Allan Fels watched from the sideline. The path Big W had embarked on was not illegitimate, but he could see it was politically embarrassing for the government. ‘He needed to really put the heat on Woolies to get that result,’ Fels says now.
Corbett’s story is very different. He says the two-tag strategy was to assist staff to remove the pre-GST price before doors opened on the first day the GST operated, and he had illustrated problems with the operation of the GST, causing embarrassment to Costello and the government. He says he refused to pull the two tags, despite Joe’s insistence, and eventually, after a meeting with Howard, mechanisms around introducing the GST were changed, for the better.
Even so, the GST had given Joe a rude awakening, and by the year’s end he had been asked 19 questions by the Opposition in parliament – all before the GST was introduced on 1 July. After that, the questions being asked of him were coming from his own Party.
TEN
IT WAS ON a Sunday morning in June 2000, not long before Sydney broke out in party for the Olympics, that Joe learnt he didn’t even have to be mentioned in the story to make the headlines, at least with his prime minister. As he strode out for a morning walk through Bondi, the sound of his mobile phone pierced his thoughts. ‘It was John Howard,’ Joe says. ‘He was screaming at me – who authorised this, who did this, where did this come from?’
Joe hadn’t read any of the morning newspapers, and was slow on the uptake. Howard had a word of advice there, too. ‘Have a look at the papers and fix it.’
Joe took a quick detour to the nearest news rack to find the Sunday Telegraph’s headline: ‘QUEEN EXILED – Face removed from $5 note’. The poster outside the store was even more direct: ‘OFF WITH HER HEAD’, it screamed. The news report explained that the Queen’s face would be removed from the $5 note, ‘banishing the monarch from Australia’s paper currency’.
‘Fantastic front page,’ Joe says now. ‘I laughed and laughed, then went – oh shit!’ Joe, who had not made any secret of his support for the republic, didn’t hear again from the prime minister that day but had a call from Costello soon after Cabinet sat the following day. ‘What have you done to John?’ Costello asked, before indicating that the prime minister wanted the Queen to return to the $5 note as soon as possible.
Joe should have seen this coming, because he knew how strongly the prime minister supported the monarchy. He knew she was about to be executed from the $5 note and that’s because he’d earlier had a cup of tea with Reserve Bank governor Ian Macfarlane. Joe, as minister for financial services, had responsibility for the Mint, but believes it is debatable whether currency sat under his portfolio
, or that of the treasurer Peter Costello. Costello believes it fell directly under Joe’s jurisdiction. But Joe’s belief, certainly in 2000, was that coins, not paper, came under his wing, and this decision, in any case, had been made by the Reserve Bank not the government. Macfarlane had shown him the new plates for the $5 note. In fact, Joe missed the change at first, and needed prompting to notice that Henry Parkes had bumped the Queen off. On the other side Catherine Helen Spence, the 19th-century journalist and campaigner for women’s suffrage, had usurped the position of Parliament House.
Given Joe’s acknowledged political nous, the Queen’s head being removed from the $5 note should have prompted an immediate warning, but it didn’t. In fact, he loved the idea. The old $5 notes were still in circulation, but the plan was to issue the new one for the centenary of Federation. Joe, an avowed republican, left his chat with Macfarlane feeling upbeat, and not giving the Queen another thought – until Howard’s phone call.
Costello says: ‘They said to him they were going to do this and he thought it was a good idea. I didn’t know about it. Even if I had it wouldn’t have worried me, but when it came out it certainly worried John Howard.’ Howard’s response confirms that. He was not amused, he says now.
A year earlier, in 1999, Australians had voted against a republic in a divisive referendum that pitted Liberal Party MPs against each other. Even within the ministry there were pro-and anti-republicans, and those groups had subsets of supporters, with some wanting direct election and others opposed. Tony Abbott and Nick Minchin joined their boss in fighting the ‘no’ case. The republicans were led by Malcolm Turnbull, but had Peter Costello on their side. Joe was still a junior minister but he took on Abbott, the minister for employment and workplace relations, at every opportunity, particularly when Abbott claimed republicans were intent on ‘ethnic cleansing’. It was a battle that illuminated the deep divisions in the party over the issue, and it was a difficult one for Howard to handle.