Going, Going, Still Here

by Paul Kelly - The Australian

John Howard looks like a victim of his own success. The combination of a formidable budget, the symbolic high tide of the Howard-Bush relationship and a new composure in Peter Costello has shifted the political chemistry.

Howard remains master of his own destiny. The evidence is that he has not made up his mind about the future. Forget the talk this week about any Howard-Costello deal or Howard sending media signals about his departure. Howard doesn't operate like this on the most sensitive issue of his career.

He has no interest or inclination in becoming a political lame duck. In their May 2005 private talk, Costello asked Howard to set a timetable for his departure and Howard refused outright. He would never contemplate foreshadowing any such timetable and for Howard this is a golden rule.

There are two necessary conditions for Howard's retirement this term. First, the Coalition Government must be in good shape. Howard would not retire under pressure or in retreat. If the Coalition was under serious pressure from Labor then Howard would feel compelled to fight the next election. Second, Howard would only exit if he judges that a Costello-led government has a good prospect of winning the 2007 poll.

The context for the leadership issue arises from the Coalition's strength. After 11 budgets Howard's authority as Prime Minister and Costello's authority as Treasurer are more entrenched than ever. Newspoll this week showed Costello's 11th budget in 2006 was the best received since his third budget in 1998. There was a huge 51-20 per cent positive split on whether it was a good or bad budget.

When Kim Beazley returned to the Labor leadership in early 2005 there were two possible events that would transform politics this term - the eruption of Howard-Costello leadership tensions or an economic downturn.

With the parliament past its midpoint, neither has eventuated nor is likely to eventuate. Despite this week's market corrections, Australia's economic expansion is set to continue through the 2007 election period, allowing the Coalition to campaign, yet again, on superior economic competence and wealth generation.

Despite Howard's so-called Athens declaration last year and Costello's subsequent anger when he said the Liberal Party expected there would be "an orderly transition" (code for a Howard retirement) Costello chose to remain Treasurer, deny the challenge option and maintain the working partnership with Howard. Instead of autumn 2006 seeing the final collapse of the Howard-Costello team, as seemed likely at times last year, it saw instead the Howard-Costello partnership set up the Coalition for the 2007 election year.

There are changes occurring in the structure of politics but they are not the changes that were publicised by the media this week. Costello has consolidated his position as Howard's successor with his potential rivals, Alexander Downer, Brendan Nelson and Tony Abbott unable to lay any credible claim to the succession.

Costello has also consolidated his position as a potential election winner against Labor, a critical factor in the Coalition's future. There is now among Liberal tacticians the view that Costello, riding the economic expansion, would deliver the Coalition's re-election.

But Costello's position is not so transformed that he can mount a credible challenge against Howard. It is Costello's weakness against Howard, in fact, that underwrites the Coalition's stability in office. Howard's most detailed exposition this term on his future was in his May 2, 2005, interview with 2GB's Alan Jones when he said: "I do not disguise the fact that I enjoy the job. I do. I still have a lot of energy and ideas. But like everybody I know that nothing goes on forever and there will come a time when it's in the party's interests for me to move on. Now I accept that.

"I have not had any indication from the party that that time has arrived. I will know when it's arrived. I won't need, you know, I won't need some protracted leadership battle to tell me that. I will know when the time has arrived just as I knew two years ago that the time had not arrived.

"If that mood were to change over the time ahead, I would know that and I would not challenge it. I would accept it and that's always been my position."

Well, the mood has not changed. The theme in Howard's exposition is that he intends to be master of his departure. The Government's strength, however, does create a new dynamic: there will never be a better time for Howard's departure or for a managed transition to Costello or for Howard to establish himself as an influential elder statesman beyond executive office. This is the reason that next December-January looms as a decisive moment.

Costello's frustration is that his ultimate prize depends upon Howard. It lies in Howard's discretion. After 10 years as Treasurer, Costello can exert little leverage against Howard and this situation is unlikely to change over the next six months.

The transformation in Costello's tactics this term has been dramatic. He shifted from threat in the period before the May 2005 budget to collaboration before the May 2006 budget. His message a year ago was that the Liberal Party had to choose between Howard and Costello for the 2007 election, that the days of having both leaders were coming to an end. Costello calculated, correctly, this was the only way he could muster party support, yet that support was not forthcoming.

The pitch now is different. It is that Howard should depart on this political tide because such a high tide will never come again. The argument goes that it is a once-in-lifetime opportunity for Howard to enter political canonisation. The line is that Howard can be wiser than Bob Hawke, Margaret Thatcher, Tony Blair and George W. Bush by leaving office at his own discretion and without his leadership standing having collapsed.

This would have two consequences, according to Costello's supporters. It means generational change that pre-empts Labor's own campaign for change. It also means that Costello comes to power to continue in broad terms rather than discontinue the Howard policy philosophy. Costello is more open than before about what everyone knows - that his political philosophy is close to Howard's on the economy, national security and social issues. The logic, therefore, is that any transition will be more about renewing the Howard Liberal Party in the post-Howard era.

So what, exactly, will Howard think? He has displayed, at all times, a scepticism about arguments for his departure. The defect in such arguments is that if Howard's Government is such a success then why should the leader take a walk rather than stay? The argument against Howard's resignation is his own manifest belief that he remains on top of the job. This was evident on his regular 3AW radio spot yesterday when Howard put the issue of nuclear power on to the political agenda in a move designed to wedge Labor yet again. As for Costello, what does he do if Howard remains in place come the end of January 2007?