Costello Has To Challenge

by Stephen Loosley - Sunday Telegraph

Grass fires are burning in the national capital. No, not in the outskirts of Canberra, but rather on Capital Hill, centred on Parliament House. The ignition spark was struck by the Prime Minister in Athens.

Bob Hawke used to employ the "London Protocol", to avoid the kind of problem which John Howard's leadership musings have generated.

Having been burned early in his prime ministership while travelling abroad, Hawke then determined that he would not talk about the domestic agenda while overseas. This protocol worked, though it fell into disuse during Paul Keating's subsequent prime ministership and has never been observed by Howard, who could do worse than to embrace something of a variant of the London Protocol for the future.

All major political decisions in Canberra are now viewed through the prism of the Howard v Costello contest, whether such a battle is real or merely perceived. There is no doubt that the Treasurer is pushing hard for the Prime Minister to name a date for departure.

Equally, John Howard, not unreasonably, is resisting this push.

But this is an irreconcilable difference. Make no mistake, the issue is not going to recede until one or the other of the antagonists departs federal politics.

There is one potential scenario which actually brings the Liberal leadership closer to Peter Costello, unlike the forlorn coat-trailing in which he has been involved the last few days. This is to challenge.

The scenario runs along these lines. An issue arises, on any issue from defence to health policy, on which the Treasurer draws a leadership line in the sand. We saw this during the Hawke v Keating contest in 1991, where even a minor matter like the Medicare co-payment assumed critical significance as a point of difference between the respective camps.

Having drawn the line, the Treasurer challenges in the party room. He will be beaten by a margin of about five to two. Honourably, he then resigns the deputy leadership and the Treasury portfolio and retreats to the back bench. Room 101 at Parliament House beckons, given its Orwellian significance and the fact that Paul Keating occupied it for a few months while he was in exile.

This is where the scenario becomes interesting, for the PM then has to find a new Treasurer. Costello is a first-class parliamentarian and his skills will be sorely missed on the government front-bench.

At a point where the new Treasurer faces harder economic news, or a fumble in the Parliament, the knives will begin to be unsheathed. It doesn't matter whether the new Treasurer is Tony Abbott or Brendan Nelson or Alexander Downer, the contrast will be drawn with Costello's stewardship.

Should an incident of these proportions be accompanied by a substantive lift in the standing of the Opposition, then the Government back bench becomes jittery indeed. A second, successful challenge then looms as very real.

The Howard camp is counting on the fact that the Treasurer lacks the guts to do this. It appears now that Peter Costello really doesn't have a choice. The Government must resolve the succession or face an increased prospect of losing office in 2007 through division. There are no alternatives to this new reality.


Stephen Loosley is a former Labor senator.