Oz Politics Blog

The last time I blogged on this, Centrebet had closed its book on the leader of the Federal Liberal party at the next election after a run on Costello. Now that Costello has run away, Centrebet has reopened its book.

Today’s odds have a couple of surprises. First, with Costello’s baton safely back in his knapsack, I would have thought the probability of Howard leading the party would have been higher than 53.6 per cent. Perhaps, some think there is still a Kirribilli agreement in place (or at least a prime ministerial retirement plan). It is interesting to see that which was described in the media as Costello’s white flag a couple of days ago is now being described as a six month ceasefire.

The second surprise is the rise and rise of Malcolm Turnbull, who with a probability of 4.9 per cent now shares equal fourth place with Tony Abbott. Whatever you might think of him, I would give Abbott a better chance than Turnbull of being the leader at the time of the next election.

Elsewhere, as noted in comments, Centrebet has the Coalition and Labor on the same odds of winning the next election, paying a $1.85 each for a win.

The most colourful moment on yesterday’s Insiders program was Howard’s revelation that the recently resigned Robert Gerard was Costello’s recommendation. I have bolded the key phrase in the following except from the transcript.

BARRIE CASSIDY: The Robert Gerard matter and now his resignation from the Reserve Bank, Peter Costello is talking nonsense, isn’t he, when he says Mr Gerard has not avoided a dollar of tax?

JOHN HOWARD: He is not talking nonsense. Look, I think Peter Costello has been very unfairly attacked over this issue. The procedure that was followed for the appointment of Robert Gerard is the same procedure that has been followed for all of the appointments that this government has made to the Reserve Bank board. Peter Costello and I were both wanting to find somebody with a manufacturing background and also we wanted to find somebody from a state other than New South Wales or Victoria because the allegations was that the Reserve Bank was too Sydney-centric or at the very least big state-centric. Peter came to me and said, “What about Roberts Gerard?” He is the largest employer in the private sector of people in South Australia. He’s a highly successful…

Howard deftly went on to say that nothing turned on it being Costello’s choice and that Cabinet endorsed the recommendation unanimously. Still the damage had been done. The knife had been plunged. Today’s papers are unanimous in their assessment.

Steve Lewis said, ‘John Howard has left Peter Costello high and dry with his carefully calibrated statement that it was the Treasurer who volunteered Robert Gerard for the Reserve Bank board. The Treasurer is fighting to defend his reputation and political ambition, in the first real scandal to mar his stellar frontbench career.’

According to Glenn Milne, ‘Costello’s supporters were livid yesterday at the performance of John Howard on the ABC’s Insiders program, accusing the Prime Minister of deliberately sheeting home to the Treasurer the blame for the indefensible appointment of Gerard to the central bank board. “It was one of the slickest pieces of ‘I’ll drop you right in it’ I’ve ever seen,” said one of those close to Costello.’

See also: Tim Colebatch, John Garnaut, and John Stone.

Perhaps not surprisingly, yesterday’s panel on The Insiders agreed that Howard was here to stay. Their reasoning was simple: Howard is relaxed and comfortable in the top job and Costello does not have the numbers in the party room for a challenge.

Postscript: As I have posted a number of times on this issue, and as it looks destined to be around for another 6 months at least, I have made it a category: Costello for PM.

The possible transition from Howard to Costello has been an ongoing fascination this year. This morning on AM the Prime Minister used quite specific language when questioned about his future:

MATT BROWN: To finish on a domestic issue, on your leadership of the Liberal Party and currently the country, do you accept that you should decide on your future before the Treasurer delivers his next Budget?

JOHN HOWARD: I will do what I said I would do, in 2003 when I said I’d continue as leader of the party. I said that I’d remain leader of the party for as long as the party wanted me to, and it was in the best interests of the party that I should do so. And nothing has changed.

MATT BROWN: It remains in the best interests of the party?

JOHN HOWARD: Well, they are things that are assessed by the party and by me and I have a job to do, and I intend to go on doing it.

MATT BROWN: It can’t have escaped the attention of some of those in the party who would like to see a transition that you appear at the top of your game. You appear full of energy and you are still loving the job as much as ever?

JOHN HOWARD: Matt, the position on the leadership is as I’ve described it. Of course I’m fit and of course I’m committed. That’s what I owe the Australian people. They are entitled to have 200 per cent from me, while ever I’m in this job.

Just in case you missed it, Howard said, “I will do what I said I would do, in 2003 when I said I’d continue as leader of the party. I said that I’d remain leader of the party for as long as the party wanted me to, and it was in the best interests of the party that I should do so.”

I think there are (at least) two ways of interpreting the remark. The first is that Howard means what he says and says what he means. He is staying for the foreseeable future, and there is no transition plan in April, May or June 2006 (regardless of the rumours and speculations from team Costello).

This is bad news for the Costello push, as his supporters are in the minority in the party room. At some point Costello must decided whether he will (a) knuckle down and stay on as Treasurer for at least another three years, (b) mount a (probably unsuccessful) challenge and then move to the backbench to try and do a Keating, or (c) take the Paris option (ie. an ambassadorial positing, or the local alternatives such as being made a High Court Judge or the next Governor-General).

However, there is a second way to interpret Howard and Costello’s stick to the script remarks: they may have their own Kirribilli agreement. At some point between now and the next election, Howard will step down and Costello is the obvious heir apparent. With Howard and Costello sticking to the script and not answering the transition question, Howard is spared Tony Blair’s fate — being seen as a lame duck prime minister, serving his time before his retirement.

The problem with Kirribilli agreements is they have a history of being welched, largely because the prime minister of the day believes he is best placed to lead the party to victory at the next election.

I find this a hard one to judge. My inclination is that Howard intends to stay, and it is just stiff cheddar for Costello. If there really was a Kirribilli agreement, I suspect team Costello would not be speaking up dates in the second quarter of 2006. Still, Kirribilli agreements do not have a good history, and Costello may feel that subtle backgrounding is necessary to ensure prime ministerial compliance.

What do you think? Is there an agreement? Is Howard staying on to the next election or going?

For months, the conventional Canberra wisdom has been John Howard will retire in March — on a high, after ten years in the top job. By May next year, the expectation is that Peter Costello would be Prime Minister. The strongest evidence has been Howard’s desire to get the industrial relations and anti-terror legislation through the Parliament before Christmas.

Yesterday, on channel Nine’s Sunday Program, Howard made these remarks,

LAURIE OAKES: What about your Government? Can we expect in the budget next May that you will perhaps do what Kim Beazley says should be done?

JOHN HOWARD: Oh it’s a little early to be talking about the budget, but I’m sure in the weeks ahead Peter Costello and I will be discussing these matters.

LAURIE OAKES: Will Mr Costello be bringing down that budget?

JOHN HOWARD: Laurie, another one of your trick questions. The Treasurer will be bringing down the budget, and I think Peter Costello’s been the best Treasurer this country’s ever had.

LAURIE OAKES: There are rumours of course that a reshuffle is in the wind, and that Robert Hill will be stepping down to go overseas. Is that true?

JOHN HOWARD: Laurie, there are always rumours and I never respond, as you know, to those sorts of rumours. I’d spend a lot of time doing so, so I decided a long time ago not to respond to them.

The remarks have been interpreted by Mark Metherell and Michelle Grattan as implying the Prime Minister would stay on to May, at least.

More intriguing is the speculation of a Cabinet reshuffle. If Howard is planning a reshuffle, it is probably the best evidence yet he plans to stay on and fight the next election. If he were planning to retire, the decent thing would be to leave the make-up of the ministry to his successor.

Team Costello’s number one ticket holder, Glenn Milne, chose not to comment on yesterday’s developments in his regular Monday column at the Oz. Instead he concentrated on the Coalition’s troubles with IR reform and those folksy adverts. Milne’s piece included a long quote from the 15 July issue of Workers Online, at the heart of which was,

“Stripped of the fluff, the Prime Minister’s pitch appears to be ‘If we are going to compete with China and India, then you will have to give up rights and drop your wages’. All of a sudden he is on our turf and, as the polls are showing, it is not a place he wants to be.

“All of which means two things at this early stage of the campaign: Howard is taking a major political risk in pushing through these laws and, finally, Labor has an issue where they can play on their home ground.”

I am not so sure. Once the IR legislation is through the Parliament, I suspect it will have minimal impact on wages and conditions of most workers in the short to medium term. The crunch point will be the next recession. If the Australian economy continues as it has since 1991, campaigning in 2007 on IR laws passed in 2005 would be a lot like campaigning against the GST in 2001: not a winner for Labor.

Meanwhile, Beazley has kicked an own goal with the anti-terror laws and his proposal to gaol those responsible for “hate books and violent preaching”. Kim at the Purple Rodeo saw it in these terms,

Beazley is the prisoner of his past. Unwilling just to oppose the laws (for fear of being seen as a small target driven opportunist) on the defensible grounds of process, lack of proportion and illiberal implication, he’s tried to exorcise another ghost - he who has no ticker - by trying to thump his chest and look tough on terror. A terrible day for the ALP. Shaun Carney is dead right - if Labor wins the next election, it’ll have a lot more to do with union grassroots campaigning than the uninspirational and tactically clueless shambles of an Opposition we have to put up with.

And with an Opposition like that, why wouldn’t the PM want to stay on for another three years?

For the first time the betting market has Costello ahead of Howard as most likely to lead the Liberal Party at the time of the next Federal election.

Normally, I would not expect a betting market to move in such a counter-intuitive way unless there were punters betting with inside information.

The other interesting movers over recent months have been Turnbull (for whom the odds have improved) and Downer (going out backwards).

Update — 9 September 2005: The odds for the leader of the Liberal Party were not on the Centrebet site this morning. I have no idea why, and I wonder whether there was a run on Costello. In the past week I have changed my mind on a Howard to Costello transition before the next election. A week ago I was a sceptic. Now I think it is possible; it may even be probable.