A Time To Build On Strengths

by Dennis Shanahan - The Australian

The year 2006 will be about consolidation and Peter Costello. As the Howard Government racks up 10 years in power in March, everyone's thoughts will be on consolidation. The Coalition, under John Howard, will be intent on recovering from its polling slump after the Senate blitz in the last half of this year which included the sale of Telstra, new security laws and the most sweeping industrial relations changes in 100 years.

Traditionally the Coalition has suffered a slump at the beginning of a year. (Recall 2001 when it almost became a fatal spiral.) It cannot afford to continue the loss of support it has suffered in the past three months.

Thus, what the Coalition does will be directed at reinforcing its strengths - economic management - and revitalising an old Government: new faces in a cabinet shuffle and some fresh fields, including environment policy. The cabinet shuffle should be extensive and there will be new faces in the cabinet and outer ministry. Although he'll probably be appearing at next week's Sydney Cricket Ground Test against South Africa, Howard will be thinking about batting orders and field placings well beyond the SCG and make an announcement early.

Labor will also be trying to consolidate the gains it has made as the labour movement and the public have lined up against the new workplace laws, which come into effect on Sunday. Labor will continue to eschew the small-target policy and continue to produce policies and promote Kim Beazley. There is little else Labor can do given the mess into which it descended at this time last year.

Which brings me to the annual predictions I made before Christmas 2004. Because I had made a clean sweep in 2003 and 2004 about Mark Latham taking over from Simon Crean as Labor leader and then that he would lose the election, I stuck with the view expressed in 2004 that he would survive as leader of the Opposition. I was wrong.

My only defence is that the reasoning I put forward was perfectly sound; I just hadn't allowed for the Asian tsunami and Latham's personal implosion. Latham's end came at his own hand in a lonely western Sydney park and left Labor floundering to find a leader.

Of course, the uncertainty over the Labor leadership meant my prediction on Howard was even likelier to succeed. I said: "Howard, having won control of the Senate, is not about to bale out of the top job before the Coalition has that control and he has taken his opportunity to implement a set of long-standing Howard policies. Scenarios that see Howard resigning within a year are fanciful ... and even up to Christmas next year it won't be too difficult to say Howard will be Prime Minister."

My predictions on Costello's future were also correct: "The budget raises the issue of who will be the treasurer. Well, there's not really much of an issue here - it will be Peter Costello." I also said: "Towards the end of the year, speculation will increase that Costello will leave politics" but that "Costello is unlikely to mount a challenge to Howard's leadership now or later next year. Such an approach is cautious for Costello, but then he is cautious and the Liberal Party has become enraptured with Howard's fourth-term victory." The basis for this was that Howard would "be allowed to retire on his own terms at his own time and without the ignominy of a challenge." That's precisely what happened as far as the Liberal leadership was concerned: Howard didn't resign; Costello's supporters and media urgers, damagingly, pushed for a challenge or a retreat to the backbench but the Treasurer ruled out any challenge, any deadline, and has left the decision to Howard.

Costello intends to be deeply involved in the Coalition's consolidation. After all, that's what's best for his future prospects of becoming prime minister. Which brings us to Costello's role next year.

For a start, despite a reshuffle and a high regard for Alexander Downer who has been Foreign Minister as long as Costello has been Treasurer, Costello will remain Treasurer. Howard as PM, Costello as Treasurer and Downer as Foreign Minister gives a strong top-three batting order for the Coalition and all of them see any other job as a demotion.

Howard is also likely to promote people through the ministry and into the ministry and cabinet with a freer hand and without worrying who is seen as a Howard supporter and who is seen as a Costello supporter. This is because Costello's declaration not to challenge provides both a reassurance and a request for talent to be promoted so that the top team is on the frontbench.

This probably means former Liberal director and now Victorian backbencher, Andrew Robb, will be promoted, as should fellow Victorians Tony Smith and Christopher Pearce (although state balances may count against them); and South Australian Christopher Pyne, like Smith one of Costello's more sensible supporters, should be able to take advantage of any gaps in South Australia where the Coalition has lost support badly, according to Newspoll.

Within the ministry Peter Dutton and Julie Bishop should see higher posts and Health Minister Tony Abbott will probably find a new task after neutralising Medicare, which was his assigned task in 2003. It will be difficult to promote millionaire banker Malcolm Turnbull too far because backbenchers resent his headline-grabbing by attacking Coalition policy. Besides, he is seen as Costello's bete noir.

As Howard overhauls the ministry he will have in mind that he needs to revitalise the Government, have the best team it can, and not build in destabilisation of the man who is still his natural successor. Costello, for his part, will bounce back from what have been the worst couple of months he's experienced as Treasurer. Costello's too talented and determined a politician and policy-maker to be put off by a bit of media bruising, some disenchantment among his colleagues and a realisation that Howard's probably around for another year. (Which I think he is.)

Costello will demonstrate his ability to get over the hard knocks so many have felt he's had to face to demonstrate his durability. He'll have to energise himself on the policy front as he faces sniping from all quarters. As long as Costello does, he'll finish next year with an enhanced reputation as Treasurer, cemented in as the successor to Howard when he does go and refocus the year of consolidation on economic strength.