Venom

by David Crowe

  Labor had created the monster by knifing Kevin Rudd in his first term, with no hint to Australians that his position was in doubt. By the time the Liberals were tearing down Tony Abbott, the jaded electorate was giving up on its leaders regardless of their promises to deliver stability. Morrison had to address this concern if he was to have any chance of success.

  Morrison drafted new rules to stop the leadership carnage. The members of the federal parliamentary Liberal Party had operated for decades under rules that required only a simple majority for a spill, but Morrison accepted there should be a higher hurdle for any future spill. This was a backdown. Morrison had initially brushed aside questions about tougher rules when others had called for change. Linda Reynolds, the Western Australian Senator, had been so incensed by the chaotic spill that she wrote a proposal within days to set a higher bar than a simple majority.10 Another Liberal, Trent Zimmerman, called for rule changes on 21 October.11

  Morrison phoned John Howard to make sure his plan would have the support of the party’s most successful leader since Menzies.

  ‘He rang me and he explained it to me and I said, given the history, it was very clever,’ Howard said later.12 ‘It was very astute and quite transparent. And he was able to say without fear of contradiction that he couldn’t be removed. But that was a rule still within the sole remit of the parliamentary party.’ A key feature of the new approach was the way it varied from the Labor Party rules brought in by Rudd in 2013. The Labor caucus shared power over the leadership with the wider party membership, with each group holding 50 per cent of the votes. Howard believed this was a mistake. ‘I am strongly opposed to leaving the decision on the leader to anyone other than the parliamentary party. I am against a hybrid system — completely opposed to it.’ Howard’s view was that the decision should rest with those elected by Australians to represent them in Parliament.

  Morrison took the proposal to Frydenberg, who agreed that a way had to be found to stop the practice of revolving prime ministers, and then to federal cabinet. This was a swift and surgical change without time to create a media storm. The Prime Minister prepared the ground while returning to Australia from Argentina, where he had attended the Group of 20 summit in Buenos Aires, and presented it to cabinet soon after arriving in Canberra. On the evening of Monday, 3 December, he called a snap meeting of the Liberal party room and arranged for the party whips to ask the assembled MPs to endorse the plan.

  Morrison told the assembled MPs of his proposal: the party room could remove a leader with a simple majority in opposition, but could only remove a Prime Minister who had won the previous election if the spill motion had 75 per cent support. Some MPs bristled at this sudden curb on their rights. ‘You’re our leader, not our emperor,’ said one voice from the room. A few MPs, including Tim Wilson, argued for a lower threshold of about 60 per cent. Morrison agreed to a compromise: the spill motion would need two-thirds of the party room to succeed. Abbott welcomed the rule as a sign of cultural change and called it ‘atonement’ for the coups of the past. It was approved by consensus.

  The new rules were announced to the media rather than codified in a public document. Morrison told a sudden press conference that a ‘special majority’ of two-thirds would be needed to replace any Liberal Party leader who won an election and became Prime Minister.13 Could the rule be overturned by a simple majority? ‘No,’ Morrison told the media. ‘It requires a two-thirds majority.’ Would it apply to Liberal opposition leaders? No, again. Would it apply to deputy leaders? No. After clarifying each point, Morrison returned to the most important message from this change — that he had listened to Australians who were fed up with leadership instability. ‘They’re sick of it and we’re sick of it and it has to stop,’ he said. ‘That’s why we’ve put this rule in place; if they elect a Prime Minister by electing a government then they should have every reasonable expectation that that’s what should remain.’

  Morrison finally had a foothold on the path out of a political ruin. The new rules gave him an answer to the essential question at the election to come. He could promise Australians he would not be rolled like Abbott and Turnbull. Many voters would not know of the rules and others would not trust them, yet this moment was central to the recovery. After years of infighting, the members of the party room had formally agreed to restrain themselves.

  The election strategy was set. Morrison had announced he would bring the federal budget forward to April, a clear signal he wanted to go to the polls on 11 May or 18 May, which was the last possible date for a half-Senate election.14 Morrison and his inner circle knew they needed to wait as long as possible so the leadership crisis could drift into the past, but their plan was challenged within days. Turnbull ridiculed the election delay in private conversations with Liberal colleagues including New South Wales minister Matt Keane, a leader of the party’s moderate wing. ‘Scott Morrison is just trying to keep his arse in C1,’ Turnbull said to Kean, referring to the number plate of the Prime Minister’s car. Turnbull argued the ‘brand damage’ from the leadership spill would destroy the New South Wales government of Liberal Premier Gladys Berejiklian at the state election on 23 March, just as it had hurt the Victorian Liberals. This was a genuine concern within the New South Wales government. Morrison’s strategy was a departure from the plan discussed within the Turnbull government months earlier. Turnbull confirmed the original plan. ‘My intention, and Scott’s intention for that matter, prior to my being removed as prime minister, was to go to the polls on the second of March,’ he said.15 For Morrison to keep to this timetable would be to help Berejiklian but expose himself to political doom.

  ‘You do know that many of your colleagues see all of these moves as you trying to get the government into opposition?’ ABC Radio National host Fran Kelly asked Turnbull.

  ‘Well, it’s nonsense,’ said Turnbull. ‘That is what I’ve described as attribution bias — that is, blaming other people for the consequences of your own actions.’

  Turnbull was driven by what he called the ‘destructive, mad, pointless exercise’ of the August spill. Yet his interventions backfired. His private remarks to Liberal colleagues were leaked to the press and his call for a swift election was ignored. For his enemies in the party room, Turnbull was now the prime suspect for every leak that hurt Morrison or Dutton.

  Yet the government was easily knocked off course by its own members. Before the year was out, Nationals assistant minister Andrew Broad was the subject of a salacious New Idea magazine feature that said he had attempted to romance a ‘sugar baby’ in Hong Kong.16 The man who had quoted an evangelist to shame Barnaby Joyce ten months earlier now faced the exposure of his text messages to ‘Sweet Sophia Rose’. He resigned from the frontbench and announced he would leave Parliament at the election.

  The pressures on the government grew to such a scale in the final weeks of 2018 they broke its control of Parliament and its ability to legislate its own agenda. The final day of Parliament for the year became a snapshot of the dysfunction in Australian politics when the two major parties fought to a stalemate on the floor of the House of Representatives. Labor, the Greens and the crossbench had a rare opportunity to gain a majority in the lower house to pass a law that would force the medical transfer of asylum seekers from Nauru and Manus Island. The amendments to migration laws restricted the discretion of the Immigration Minister to reject the transfers, although the minister could refuse transfers on national security grounds.

  The conflicting arguments made border protection the defining test between Shorten and Morrison as the year ended. Labor, the Greens and the crossbench passed the medical transfer bill in the Senate after hours of filibustering by the government, but they ran out of time to send their bill to the House of Representatives and force a vote they believed they could win. The tactics forced the government to shelve a competition bill intended to put pressure on the big energy companies, while Labor gave in to pressure to pass a bill to give security agencies greater power to inte
rcept encrypted communications.

  Australians saw pandemonium in Parliament. Only the delaying tactics spared Morrison from losing a vote on a significant bill in the lower house, something no Prime Minister had suffered since 1941. While Morrison gained some breathing space, the Senate approval of the medical transfer bill guaranteed a vote in the House of Representatives as soon as Parliament resumed in February. Morrison would be tested again.

  Shorten displayed his total confidence and tactical superiority against this weakened government. Sure of his lead in the opinion polls, he risked a fight on asylum seeker policy rather than pursuing the safer course of matching the Coalition on border protection. His political success encouraged him to become a bigger target. Labor also proved its mastery of Parliament with the sort of skill, wit and surprise that had its own backbenchers roaring with delight at the government’s discomfort.

  Only later would Labor discover that being brilliant in Parliament was no use if it was bad at elections.

  15

  MIRACLE MAN

  THE MAY 2019 ELECTION

  THE ROAD TO AN unlikely election victory began in the early days of 2019 when Scott Morrison left Kirribilli House and headed south on the Princes Highway to Shoalhaven Heads with his wife, Jenny, and their daughters, Abbey and Lily. The family’s Ford Titanium had two kayaks on its roof and towed a rust-coloured trailer with a bike each for the kids. The Prime Minister’s security officers reluctantly agreed he would drive his car to the beach, but they followed in their own vehicle and tracked his every move. Even when he kayaked on the Shoalhaven River, they paddled behind.

  This was a holiday as well as an experiment — a test run for Morrison in a part of the world with no pretensions and few luxuries. The small beach town on the New South Wales South Coast was in the electorate of Gilmore, a seat Morrison was desperate to retain. He joined the locals at the Heads Hotel, met the Rural Fire Service volunteers and played beach cricket with his family. The routine echoed John Howard, who had taken a summer holiday at Hawks Nest on the New South Wales Mid North Coast for two decades. The test results seemed positive. Morrison posted a dozen holiday photos on Facebook and the thousands of responses were generally friendly. It was a hint, perhaps, that Australian voters might warm to this new Prime Minister, who presented himself as a middle-class suburban dad.

  A bigger test came three weeks later when Morrison ventured to the suburbs around Brisbane. This was a dry run for an election campaign in the seats he had to hold to stay in power. Again, voters seemed welcoming.1 Morrison worked on two central messages. First, that Australians could trust the Coalition to manage the economy. Second, that Labor’s tax agenda was too big a risk. One message offered reassurance, the other delivered a scare. This gave the government the twin engines for a relentless assault on Shorten and his policies — his changes to negative gearing, capital gains tax, family trusts, superannuation and the tax refunds investors could receive for the imputation credits on their share dividends. This would be a powerful negative campaign.

  A third element emerged by necessity. Morrison was weakened by any reminder of the divisions among his own ministers in August. The cabinet team was a liability. The Liberal brand was a problem. Morrison made the election a choice between himself and Shorten. This campaign would have to be even more presidential than the last, when Liberals had complained about the way Turnbull hid the party logo. The experience in Shoalhaven Heads and Brisbane suggested this might work.

  Frydenberg attacked Labor on the scale of its tax changes as soon as the year began, grabbing every weapon, no matter how small, to taunt Shorten and Bowen over the impact of higher taxes on the economy. The Labor proposals for dividend imputation became a ‘retiree tax’ because so many older Australians relied on share dividends, while the negative gearing changes became a ‘housing tax’ and the stricter rules on discretionary trusts became a tax on family business. Starting on the second day of the new year, Frydenberg cited economic modelling to warn of a ‘negative impact on confidence’ from the changes to negative gearing.2 The economic claims were contested, but Frydenberg moved on within days to attack the changes to superannuation and tax refunds on dividend imputation.

  Shorten mocked the claims about his tax program and tried to turn them into a joke. ‘I wouldn’t put it past this government this year, because they are so desperate, that they say that Labor wants to introduce death taxes,’ he quipped on 24 January. ‘That’s crazy.’ Frydenberg issued a press release within hours to amplify the idea, even though he noted it was a ‘flippant’ remark. ‘Death taxes — you don’t say, Bill!’ said the statement, which began to spread on social media. Labor was in more danger on tax than it realised.

  Arguments raged about the difference between the removal of a tax concession and an increase in a tax rate, but Labor did not hide the fact that it wanted to raise tax revenue, and it magnified its ambitions by setting out every plan over a decade. The dividend imputation changes, announced in March 2018, were meant to raise $56 billion over ten years by stopping the payment of cash refunds from the Australian Taxation Office to people who claimed franking credits on their share dividends, under rules in place for two decades to prevent investors paying additional tax on dividends that were funded by company profits that had already been taxed. While Labor tried to limit the blowback by pledging exemptions for pensioners and part-pensioners, it antagonised many others. When Liberal backbencher Tim Wilson launched a campaign against the dividend changes as chair of a parliamentary economics committee, Labor created a furore over the way he used the committee for political ends. The result was even greater attention on tax.

  These were ambitious changes, only some of them tested previously in the full force of an election campaign. The curbs on negative gearing had been part of Shorten’s plan for three years, and Labor felt it had done well at the 2016 election to defend this scheme to stop investors using the tax concession if they bought existing properties but allowing them to use it for new construction in order to encourage new homes to be built. The new restrictions would only apply to future property investments. A concession on capital gains tax would be scaled back, too. But this was the first election campaign for the franking credit changes and the superannuation policy, which had been finalised at the end of 2016, as well as the higher tax rate for family trusts, from July 2017.

  All these policies came from a different era – a time when Turnbull led a fractious party room that would draw attention to its disputes rather than trouble Labor with any political pressure. No sooner had Shorten announced a complicated policy than his opponents would resume fighting among themselves. This lulled Labor into a false sense of confidence about the sheer scale and complexity of its policies when it only had to contend with a divided enemy. In a sense, what became a weakness for Labor during the campaign was only possible because of the weakness of the Coalition in the years before.

  There was no retreat by Labor in the face of Frydenberg’s attack. Labor treasury spokesman Chris Bowen and finance spokesman Jim Chalmers stood by their policies and locked in the revenue they needed to pay for the spending increases on health and education agreed by Shorten and the shadow cabinet. Bowen and Chalmers estimated that 96 per cent of Australians would not be affected by the abolition of franking credit refunds from share dividends, 95 per cent of people with super would not feel the impact of the tax changes in this area, and 98 per cent of taxpayers would not be affected by the changes to trusts.3 They believed they could manage the objections from the small percentage of losers from each policy. Yet those small percentages added up.

  Morrison and Frydenberg prepared to widen the gulf with Labor on tax and the economy in the federal budget on 2 April, but they first needed to calm a storm that had damaged the government for years. The royal commission into banking and finance was due to be released in early February, a reminder of Shorten’s campaign for a full investigation into the banks despite stubborn refusals from Turnbull and Morrison. This
was a powerful advantage for Labor in its long effort to blame the government for protecting the ‘big end of town’ and meant the government would be in deeper trouble if it mismanaged the response to the final report by Commissioner Ken Hayne.

  Cabinet met to consider the options before seeing the final report. Frydenberg spoke on the likely findings and the need for a more generous compensation scheme for victims of years of misconduct by the banks. Morrison and the cabinet approved a plan to respond within days of the report when it was handed to the government that Friday, 1 February. After working through the weekend, Frydenberg was able to announce the government response, including more compensation and more powers for banking regulators, when the Hayne report was released to the public on Monday, 4 February.

  It was too late for the government to present itself as a tribune of the people, given it had shielded the banks from this inquiry for so long, but Frydenberg tried to shift perceptions by promising action, with a catch: the changes to the law would come after the election. He had to be taken on trust. Two days later, Turnbull conceded the government should have launched the royal commission one year or eighteen months sooner than it had begun.4 The Liberals had paid heavily for their decision to side with the banks against Shorten.

  Morrison faced Parliament on 12 February looking more exposed than any Prime Minister in decades. As the leader of a minority government, he was powerless to prevent the House of Representatives voting on a bill that would amend one of his flagship policies, offshore detention for asylum seekers who came by boat. Shorten had chosen over the summer to continue with a temporary alliance with the Greens and independent MPs to pass an amendment to provide medical transfers for asylum seekers on Manus Island and Nauru. Yet Morrison made a new calculation: rather than try every tactic to try to stop the vote, as he had done in December, he would have to accept the outcome. The bigger fight would come outside Parliament when he accused Shorten of being soft on border protection.