Costello's Gaffes Make The Keys To The Lodge Appear Even More Elusive

by Louise Dodson - Sydney Morning Herald

Something that may give Peter Costello comfort in his quest to become prime minister is that he has history on his side. But that may be little solace after the three very public setbacks of recent weeks - first, the debate with fellow Liberal parliamentarian Malcolm Turnbull over tax, then the forced resignation of businessman Robert Gerard from the Reserve Bank board, and now criticism that Costello misled Parliament over the impact on wages of the industrial relations legislation.

With the Prime Minister, John Howard, showing few signs of handing over the reins soon, Costello was forced recently to concede the inevitable: his leadership ambitions were on hold until after the budget.

But the stumbles are prompting some to ask much broader questions about Costello's leadership ability.

As Treasurer the opportunities to display leadership and tough decision-making skills and to usher in far-reaching economic reforms to secure future prosperity are clear. That's how Paul Keating laid his claim to succeed Bob Hawke. Which is why many prime ministers were previously treasurers. The list includes Earle Page, Arthur Fadden, Ben Chifley, Harold Holt, Billy McMahon, Howard and Keating.

Costello should have an even easier platform to launch a leadership push since he has been one of the nation's most successful treasurers, presiding over a long run of economic growth and falling unemployment. But his performance as Treasurer has often been overshadowed by Howard's long-held zeal for economic reform and his political skills.

Howard was frustrated as treasurer in Malcolm Fraser's government from 1977 to 1983 because he was not able to introduce many policy changes the economy needed. So when he became Prime Minister in 1996, he was a man with a mission.

Howard used his political skills to sell the economic policy changes the Government introduced, robbing Costello of the chance to appear as its economic policy guru. He largely gave up the opportunity to differentiate himself from Howard on social policies, and his main point of policy difference has been the relatively minor issue of supporting Australia becoming a republic.

While Costello is acknowledged widely as the Parliament's best performer on the floor of the House, Howard's political skills in the wider community are well known. This is the main reason that Costello's supporters, though loyal, remain a small group within the Government.

And Costello has seldom been placed under pressure in his job, which is why Coalition MPs and senators have been more than a little intrigued by the Treasurer's reaction to prominent backbencher Turnbull's recent crusade for tax reform and to the controversy which blew up over Gerard's membership of the Reserve Bank board, after the revelation his companies had been involved in an offshore tax scam.

Some of Costello's colleagues judged he did not handle either issue very well. Many took the same view as Costello on the substance of the issues, but were surprised at his defensiveness and how easily he was needled by Labor.

In particular, he lost sympathy among many backbenchers over his reaction to Turnbull's ideas. Instead of welcoming a debate, he seemed irritated by them and by the audacity of a backbencher raising tax reform. It didn't go down well with them.

Costello was concerned that Turnbull's initiatives would raise expectations for tax cuts, reducing their political impact. Now Howard has got on the bandwagon by foreshadowing new cuts in the next budget, further stealing Costello's thunder.

Turnbull's support within the Government should not be underestimated. He is seen as a future leader by some, and Costello supporters even believe he is seen by Howard as a means of wrong-footing the Treasurer.

On the Gerard issue, Costello seemed intent on spraying blame for not checking the appointment sufficiently on everyone else including the Taxation Office and his South Australian cabinet colleagues who he claimed were "swinging from the rafters" at the time of the decision to appoint Gerard.

Costello has now been led into a slanging match with Kim Beazley - the type Howard rarely gets involved in - over whether he misled Parliament over the existence of a Treasury minute advising on the effect of the industrial relations changes on people on wages and economic productivity.

Instead of acting like a statesman and broadening his image to convince his colleagues that he is ready to be prime minister, Costello has been forced once again on to the backfoot.

If he is to achieve his ambition to succeed Howard next year, he will have to seriously rethink his strategy and act more like a leader and reformer, who is also the Treasurer.

At year end, and after his performance of the past few weeks, his prospects of becoming leader do not appear closer than at the start of the year, with more of his colleagues now believing Howard will stay on.

Costello has some thinking to do over Christmas.