by David Crowe
The revolt was confected and the numbers distorted, but the unease over energy was real. Just as marriage equality had the power to divide government MPs on social affairs, so too could energy and climate change split them on economics and science. One key question — were coal-fired power stations to be subsidised or not? — could send blasts throughout the Liberal and Nationals party room and leave MPs huddled in rival camps according to whether they believed wind and solar were to be welcomed, coal was to be protected and, most importantly, whether a reduction in greenhouse gas emissions needed to be achieved at all. The disagreements meant the government’s policy could never be settled by consensus.
Abbott was arguing against his own decision, as Prime Minister in August 2015, to reduce the nation’s carbon emissions by 26 to 28 per cent by 2030. Turnbull tried to meet this target in electricity generation but had to soften every plan to appease restless government MPs, not least the man who had agreed to the original goal. Australians favoured action on climate change but also wanted lower prices, while the energy industry said a settlement on the first was the only way to provide enough certainty to solve the second. The government could not act with speed or resolve. The argument dragged on when the best interest of the Coalition, and the nation, was to decide a policy and hold firm.
Turnbull and his Energy Minister, Josh Frydenberg, played down the challenge from Abbott but knew they had to step carefully through the minefield of internal politics. They advanced a policy, the National Energy Guarantee, with the promise that it could achieve three things: ease pressure on prices, improve reliability and reduce emissions. It would do this by requiring electricity retailers — primarily the big three of AGL, Energy Australia and Origin Energy — to obey new rules that set twin benchmarks on reliability and emissions in the market for wholesale electricity. The rules, in turn, would be mandated by the federal government in an agreement with the states and territories that jointly managed the electricity grid along the nation’s east coast. The beauty of the scheme was the ability to enforce the policy without a vote in federal Parliament on the rules themselves. The ugliness was the need for an agreement with the states and territories instead. Turnbull and Frydenberg had announced the National Energy Guarantee the previous October, after walking away from Finkel’s proposal for a Clean Energy Target, but they were a long way from gaining the approval they needed.
Turnbull was confident the National Energy Guarantee could succeed because it was a logical compromise on policy questions that could not be ignored. To reform the electricity grid without any mechanism to reduce emissions would be to expose the government to claims it was doing nothing on climate change. The stronger rules on reliability were essential to deal with the increase in supply from wind and solar power, which were intermittent by nature. The policy had been approved at its first test by the Coalition party room in October with only three MPs speaking against it: Abbott, Christensen and Matt Canavan, who was a backbencher at the time and restored to cabinet as Resources Minister at the end of that month.
The Monash Forum was a sign that Abbott and others were preparing for a second clash. A central question was whether the government would legislate a 26 per cent cut in emissions from electricity generation to act on its commitment at the Paris climate change talks. There might be no need for this legislation until the new guarantees started in 2020, but the government would not say if it would bring such a bill to Parliament before or after the election. In the meantime, the government had to get the National Energy Guarantee through months of industry consultation, an ‘initial design’ agreement with the states in April and decisions on the final design in June and August. The timetable set up a series of political checkpoints with the states, the Coalition party room and possibly with the Parliament.
Turnbull was dismissive of Abbott’s attacks. Asked on 2GB about Abbott’s call to quit the Paris agreement, he was cool: ‘You mean the Paris agreement that Tony Abbott agreed to sign?’ Asked about Abbott’s suggestion of a compulsory acquisition to keep the Liddell power station open, he deployed ridicule: ‘Well, nationalising the means of production has always been a policy of the left of politics, not the right.’ When radio host Ben Fordham asked him why he was subsidising renewable energy, he pointed out that his policy was to end subsidies as scheduled under the Renewable Energy Target. ‘I assume you’re talking about the same [RET] that under the Abbott Government was amended and relegislated,’ he said.5 Turnbull had logic and history on his side, as well as the regulators and the industry, but this was not enough when his party room was divided.
The policy would never meet with Abbott’s agreement because the former leader would not accept a compromise in Parliament. He wanted a fight with Labor instead.
Abbott lacked numbers inside Parliament but could count on support beyond it. While most of the media reported his battle cry on energy with reasonable doubt about his argument and motive, two media outlets responded with enthusiasm. Sky News had turned its evening programs into a platform for conservative opinion and a sympathetic outlet for Abbott. With Credlin at six o’clock, Andrew Bolt at seven o’clock and Paul Murray at nine o’clock, the evening programs were consistently hostile to Turnbull and sharply opinionated. The shift to a more strident conservative message had begun in the months before the 2016 election, when Rupert Murdoch’s News Corp Australia took sole ownership of the channel.
The ratings for the pay television channel were modest, with 31,000 viewers in the five biggest cities watching Bolt and 36,000 watching Murray on weeknights, compared to more than 600,000 on most nights for the ABC’s 7.30 program, but the appeal to conservative households and the influence over Liberals was significant enough to convince Liberals and Nationals they had to be seen on Sky.6 This was a platform where Abbott could express his opinions without a significant risk of difficult questions and with confidence that his views would be reported by other media the following day.
The reception was just as welcoming at 2GB, the home of Alan Jones and Ray Hadley. The station, owned by Macquarie Media, controlled in turn by Fairfax Media before its takeover by the Nine Network, dominated Sydney radio with 677,000 listeners every week, almost half of them older than 64.7 Jones was on record wanting Abbott to become Prime Minister again, while Hadley had not had a conversation with Turnbull in years.
The Abbott agenda had vocal support in the pages of News Corp Australia newspapers and websites, not least those where Bolt and Credlin held sway, but the spectrum of opinion was more diverse than critics acknowledged. It was Miranda Devine, conservative columnist at the Daily Telegraph, who coined the term ‘delcon’ to describe the ‘delusional conservatives’ who agitated for Abbott’s return to glory. ‘The Delcon movement is tiny but viciously punitive to those it regards as heretics,’ she wrote. Devine became the ‘wicked witch of the Left’ to this base.8
The discord over energy policy reached a point where the Liberal Party’s most stable source of authority, John Howard, implored colleagues to end the division. In the feverish days after the ‘backbench revolt’ of the Monash Forum, the former Prime Minister said his exhortation to all Liberals was that they carried the ‘hopes and aspirations’ of millions of supporters. ‘They want you to work together, they want you to bury differences, they want you to make certain that we speak as much as possible with one voice,’ Howard said on ABC’s 7.30 program.9 Yet even this leader could not bring the party together.
Dutton hedged when he came under pressure from Hadley to declare where he stood on this new threat to Turnbull in April. Hadley compared the government to a crew that was in a sinking ship with Turnbull as captain, waiting only for Dutton to lead them to a seaworthy vessel. The assumption, untested but aired with full confidence on 2GB, was that Dutton could save them all.
‘Well, Ray,’ said Dutton, ‘as I say, from my perspective, mate, I don’t serve in the cabinet if I can’t be loyal.’10 He sent the same message in other interviews: a minister who was not loyal to t
he leader should resign from cabinet. By the end of the first week of April he was more explicit. ‘Of course I want to be prime minister,’ he told Guardian Australia, before pausing. ‘One day.’ He presented himself as a conviction politician and hinted he could be recruited for leadership. ‘I think it’s best to be honest about that, that’s an ambition long-held and is only realistic if stars align and an opportunity comes up.’ It was a clear signal of his availability, obvious to his cabinet colleagues.11 They noted his remark and watched him even more closely, regardless of comments from MPs that there was no mood for change. ‘We can’t keep changing leaders — we are not a disposable society,’ said Luke Howarth, a friend of Dutton and the anxious occupant of the marginal seat of Petrie in Queensland.12 How long would that assurance last?
Australians did not support a leadership spill even though they had preferred Labor over the Liberals ever since the aftermath of the 2016 election. Asked in the first week of April if they thought the Liberal Party should change leaders, 62 per cent of voters favoured keeping Turnbull while 28 per cent told Ipsos they wanted change. The support was even greater among Coalition voters, 74 per cent to 21 per cent, in a corrective for those who were convinced the ‘base’ wanted Turnbull gone.13 This was small consolation two days later when the government lost another Newspoll survey, a result played to the soundtrack of Turnbull’s own words from his challenge to Abbott.14 We have lost 30 Newspolls in a row. Turnbull had set the benchmark for removing a leader by saying people had ‘made up their mind’ about Abbott. He was now exposed to the charge that they had made up their mind about him as well.
‘I certainly wish I hadn’t referred to 30 Newspolls because, while it was not telling anybody anything they didn’t know at the time, it certainly is proving a distraction from the real issues that we’re dealing with today,’ Turnbull said.15 This meant little when others kept talking of leadership change. Joyce, free to speak as he liked on Sky News from his position on the backbench, said it was stating the ‘bleeding obvious’ to consider a change towards the end of the year. ‘Near Christmas, you’d have to start asking those around you what do they believe is the proper course of action from that point forward,’ he said.16 A notional deadline was set.
The tension with Dutton would not go away. A cabinet leak revealed Dutton had argued for a reduction in the permanent migration intake from 190,000 to 170,000 a year and had been backed by Joyce, only to be opposed by Turnbull and Scott Morrison.17 Turnbull was furious: ‘It is completely untrue, it is completely untrue, it is completely untrue,’ he told reporters, only to discover within hours that Dutton was saying the opposite.18 ‘Of course there are discussions of what the figures should be,’ the Home Affairs Minister said. ‘There was obviously a debate within cabinet.’ This was an open contradiction.19
Concerns over congestion, infrastructure and population growth made this an inflammatory issue. A cut to the intake was one of Abbott’s constant themes in his call for a more conservative government, and now there was proof, to conservatives at least, that Dutton was fighting for a cut and being blocked by Turnbull. This was the start of a long debate on immigration in which Dutton talked of a smaller intake while Morrison argued the treasury case for more skilled workers and family reunion. Dutton won the debate when he was able to prove, months later, that he had reduced permanent migration from 183,608 to 162,417 over the year to the end of June.20 This was a significant policy change that would set expectations for future years, an indirect legacy of the jostling for leadership.
There was no escape from the personal friction when Turnbull and Dutton were at odds in public over a cabinet discussion and Abbott was calling the Prime Minister ‘tricky’ for denying the original story. Frydenberg tried to laugh off the Abbott remark.
‘Tony Abbott, I mean, he’s always going to try to cut across what the Prime Minister has been saying lately,’ Frydenberg said on the Nine Network.21
‘Really?’ asked the interviewer, Ben Fordham.
‘Absolutely.’
‘I thought he was a member of the team?’ replied Fordham.
‘I think you’re covering up the biggest secret in sport right there.’
Frydenberg paid the price for that quip. At her next chance in the Sky News studio, Credlin rebuked the Energy Minister for his attempt at humour and said it had diminished him and weakened his support among the Liberal base.
‘I’ve had a conversation with him,’ Credlin told Bolt. ‘I’m not going to go into it on air, but I don’t think you’ll see that again.’ It was an assertion of Credlin’s influence over a cabinet minister, a claim that she could tell Frydenberg how to behave and a warning to others that Abbott was not to be mocked.22 The cabinet minister was made to look like a schoolboy.
Bishop warned Turnbull to prepare for a challenge. She went over Dutton’s remarks on cabinet loyalty and leadership. ‘That is not the form of words of someone who supports you,’ she said. ‘Those are not the words of someone who will not challenge.’ Bishop told Turnbull to plan for a vote in the party room on his position, but Turnbull would not believe it. He had made Dutton the Minister for Home Affairs, expanded his empire, taken his advice on the same sex marriage postal survey and relied on him to hold firm against the sniping from Abbott. He could not accept that Dutton might think himself capable of becoming Liberal Party leader and Prime Minister. He thought it obvious that Dutton was not up to the job.
Bishop tried to get Turnbull to consider the situation through Dutton’s eyes. That is not how Dutton sees himself. Whether the challenger could succeed at the job was not the point. What mattered most was whether he thought he could.
Turnbull heard a similar warning soon afterwards from an old friend. Russell Broadbent, the Victorian Liberal backbencher, had urged Turnbull to be careful in 2015 and now gave him the same advice almost three years later. A few days after Anzac Day, he visited the Prime Minister to talk about refugees, an issue he raised regularly to seek better treatment for those seeking asylum. As the meeting ended and he began to leave, Broadbent offered Turnbull a parting thought.
‘Do you realise your leadership is under threat?’ he asked.
‘What do you mean?’ Turnbull replied.
‘Greg Hunt and Peter Dutton.’
Turnbull let out a laugh. Broadbent remembered it later as a guffaw, an expression of Turnbull’s total confidence that he could see off a threat from any alliance between Dutton in Queensland and Hunt in Victoria. He was still smiling when he turned to Broadbent to reply.
‘Russell, I’ve been through every scenario and I’m untouchable.’
Broadbent urged Turnbull to check with his backbenchers. It was irrational for any leader to be so sure of his position. He thought Turnbull’s assurance had a parallel in Abbott’s disbelief at the idea the Liberals would remove a first-term Prime Minister. Who could be so certain? The Victorian Liberals had removed a first-term state Premier, Ted Baillieu, in March 2013, and the party had been smashed at the next election. There was no evidence the federal party room had learnt from history.
Turnbull focused instead on the immediate priority of the May budget and his objective, vital to the government’s chances at the next election, of reducing the deficit while leaving room for tax cuts. The government needed a bigger and more daring proposition to prove to Australians that the budget offered something for them. Cabinet ministers believed they were in a position to cut personal income tax rates on a massive scale.
The result was an income tax cut worth $144 billion over a decade for more than ten million workers. A small team of ministers and officials had been working on the plan since the second half of 2017, before Turnbull used a speech to the Business Council of Australia in November of that year to signal his ambition of cutting personal income taxes. Turnbull, Morrison, Cormann and the Revenue Minister, Kelly O’Dwyer, finalised the policy before the end of April. It was the smoothest budget since the Coalition had taken power in 2013.
This was a le
ap of faith on a ten-year weather forecast for the global economy, an assumption economists treated with caution if not disbelief, but it included an immediate handout with a hard political deadline: budget day was 8 May and the first tax cuts began on 1 July with an offset worth up to $530 a year for millions of workers. To fight on tax helped unite a government backbench that would always rally behind a budget that returned money to Australians, especially if the greatest benefits went to wealthier workers who were more likely to support the Liberals and Nationals. The intention was to offer something that Shorten could not match, contrasting the Coalition’s tax cuts with Labor’s tax increases on negative gearing for property investors, capital gains tax and dividend imputation on shares.
Turnbull gained the policy divide he was seeking when Shorten announced, after weeks of consideration, that Labor would oppose the second and third stages of the tax plan and seek to repeal them if it took power. Labor proposed its alternative but could not stop the government getting its way in Parliament. The government’s personal tax cuts were legislated in full by 37 votes to 33 in the Senate on 21 June, after Cormann secured support from One Nation and its leader, Pauline Hanson, as well as seven other members of the crossbench. Turnbull claimed victory alongside Morrison and Cormann at a press conference where he made sure to thank the Finance Minister for his leadership in the upper house.
The debt to Cormann was immense. He had lifted the Coalition’s fortunes with a success in the Senate that led colleagues to marvel at the way he could persuade a quarrelsome crossbench to vote for a government bill. Yet this confidence in his powers, never higher and shared by all, led to a dangerous miscalculation when the government turned to the next item on its agenda.