The Reluctant Statesman

by Dennis Shanahan - The Australian

A little more than 10 years ago, on January 25, 1995, one of the more successful political deals was done. Alexander Downer, John Howard and Peter Costello met to finalise the Liberal Party leadership. Downer, pummelled in the polls after becoming Opposition leader too early in his career, agreed to step aside for Howard and endorse Costello as the continuing deputy.

The deal was: Howard would be handed the leadership without opposition; Downer would be praised for the job he had done and be given his choice of portfolio - foreign affairs - and Costello would be rewarded for his loyalty (to Downer as well as Howard).

The exact nature and intent of the deal is still in dispute, but there is no doubt Downer and Howard got what they wanted. Whether Costello gets what he thinks is his due is another matter. Indeed, the recent revelations about the deal in The Bulletin have not sparked a political backlash, unlike the exposure of the Hawke-Keating Kirribilli pact in 1988.

If anything, there seems to be a reverse reaction, with more questions being asked about Costello, his intentions and future. He is being called upon to take more vigorous action on the slowing economy, amid Labor claims he's been sleeping on the job, and there is pressure from within the Coalition for tax reform. There is even speculation that Costello and Downer could switch portfolios.

Since that 1995 deal all three have had great success: Howard is the second longest serving prime minister; Costello will bring down a record 10th consecutive budget next month, having overtaken Arthur Fadden as the longest-serving continuous treasurer last month; and Downer is the longest-serving foreign minister. As the triumvirate heads towards even longer records on the 10th anniversary of the Coalition's election next March, questions are being asked about how much longer it can continue unchanged.

Everyone has been obsessed with Howard's mooted departure. Even among supporters of Costello -- unarguably still the heir apparent -- there is an assumption that Howard will not go until at least next year. Howard's offer of the US ambassadorship to his long-serving chief-of-staff Arthur Sinodinos was taken as a sign that he was preparing to leave. However, Howard loyalists still have trouble seeing the Prime Minister giving up next year, and the message from the offer to Sinodinos is that Howard is now prepared for life after Sinodinos.

There is a view emerging that it is Costello who needs to change, because an 11th or 12th budget is untenable. This is unfair, given his record as an economic manager, but it is also a political reality that people are now demanding more of Costello: he is being called upon to go beyond the grinding work of the expenditure review committee, renew the reform drive and live up to his promise to speak out on more diverse topics.

There is even an argument for Costello to move from the Treasury to "broaden his appeal". The only possible portfolio is foreign affairs. Costello is more than ably equipped for the job, which has assumed greater importance since 2001. Yet to many the idea of swapping Costello and Downer is absurd. For a start, Costello has always regarded Treasury as the top job after the leadership and promotes the view that the deputy leader gets the portfolio of his choice.

Costello was scathing of his immediate predecessor as deputy leader, Michael Wooldridge, for not demanding the post of shadow treasurer under John Hewson. Even Howard has told Liberal MPs that one of Labor's structural weaknesses is that deputy leader Jenny Macklin is not shadow treasurer.

So the immovable objection in this equation to freshen the face of the Howard Government by changing around the longest-serving ministers and giving Costello a more expansive canvas in foreign affairs is the Treasurer's opposition. It's not that the idea is out of the question or that Howard and Downer have not been prepared to entertain it. It's just that Costello won't budge.

This is not idle speculation. The idea has been discussed with Howard, been agreed to by Downer and been rejected by Costello. About 18 months ago, in the wash up to the 2003 budget and Howard's public declaration that he was staying on to contest the 2004 election, the option was put to Costello.

The arguments are that Costello, bitterly disappointed at Howard's intention to remain PM and facing the physically demanding task of being Treasurer, should be given a portfolio that would make him more popular with the public and more broadly experienced when the time came to take over.

Although it is not a strictly enforceable rule that the Liberal deputy leaders get the portfolio they want - recall that John Gorton made Billy McMahon foreign affairs minister, although he wanted to remain treasurer - Costello stood his ground. For Howard to force Costello against his will into another portfolio would be tantamount to forcing a leadership challenge.

For Downer, who has a better personal relationship with Howard, such a shift would be a boost for any future leadership ambitions. It would enhance Downer's image, placing him above the other leadership possibilities - Tony Abbott, who has been badly damaged by the broken promise on the Medicare safety net, and Brendan Nelson, who is showing broader interests.

But Howard didn't press the issue in 2003 and there is no sign he is about to do so now. For his part, Costello hasn't changed his attitude and sees control of the Senate on July 1 as a new vista for Treasurer-driven reform and an opportunity to provide any required broadening of character. No diplomatic champagne trail or McMahon-style split dresses at the White House for Peter and Tanya Costello.