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Daily Media Quotation

Just Follow The Monkey

July 30, 2006

by Michelle Grattan - The Age

Everyone knows Peter Costello as Essendon Football Club's No. 1 ticket-holder. But when a Melbourne boy wants to get to the top of the political tree, he has to court Sydney and that means showing an interest in rugby league. Costello is No. 2 supporter (behind Cathy Freeman) with the Cronulla Sharks.

He's sometimes criticised for not turning up often enough for Sharks' matches. But on Friday night, there he was, with his long-time loyal supporter Bruce Baird, on the spot to witness their defeat by the Newcastle Knights - the Sharks' fifth successive loss. Both Costello's teams, like their high-profile supporter, are having one of those years.

At least the match was close, unlike the political game that's dominating the Treasurer's mind. John Howard is so far ahead that Costello couldn't afford to push him to an on-the-field contest.

Costello's mood is frustrated and fatalistic, spiced with bravado, as he, Howard and the Government generally face a character-forming fortnight.

They're bracing themselves for an expected interest rate rise on Wednesday, after last week's shocker consumer price index, showing annual inflation of 4 per cent. Then Parliament resumes next week. Most Coalition MPs think that who will lead into next year's election should be spelt out when the spring session starts. They expect Howard to announce he's staying on, which will be a bitter moment for Costello.

Politically, an interest rate rise isn't the end of the world, but it's a bit of rough terrain for the Coalition, especially as there is already talk of maybe a second increase later. ANZ chief economist Saul Eslake says that after a rise on Wednesday, "another increase over the following 12 months is pretty certain - and that could be before Christmas". He says the Reserve Bank would probably not want to be raising rates too close to next year's election.

Howard is always canny with his words and he can't be accused of having lied in the 2004 campaign. He never said rates wouldn't rise under him. (There have been two since the election already.) Rather, he said they would always be lower under the Coalition than under Labor. This was a nonsense statement. How can we know? But it not an untruth.

Still, people feeling the pinch of a mortgage are thinking about their pockets, not semantics. Interest rate rises are never good for a government. They are an unpleasant reality that can't be disguised by slick talk, like the Government's attempts to distance itself by browbeating the Reserve Bank.

If there's a rise on Wednesday, it will add to the feelings of insecurity produced by the industrial relations changes. MPs who have been doing the rounds of their electorates are reporting back the continuing fears over the workplace measures; these are likely to feature in the special chew-the-fat Coalition parties meeting Howard has called for tomorrow week.

Liberal Sophie Mirabella says from her central Victorian seat of Indi: "The ACTU misinformation campaign has scared a lot of people." She adds pointedly, "The PM will be a key in dispelling this misinformation."

The Government is working hard to try to discredit the ACTU advertising, leaking material last week to cast doubt on the claims in individual cases used in the union advertisements.

Another difficult dimension is emerging in the IR debate. The issue seems to be translating to state level, where elections loom in NSW, Victoria and Queensland before the federal one. An ACNielsen poll in yesterday's Sydney Morning Herald had voters ranking IR as the second most important issue: 31 per cent nominated health, 19 per cent industrial relations and 17 per cent education. This came as Victorian Liberal leader Ted Baillieu was trying to reassure voters that a state Liberal government would not be gung-ho on industrial relations. His health spokeswoman stressed on Thursday that nurses in the public hospital system would not be pushed into Australian Workplace Agreements, and Baillieu later indicated this approach would apply to state workers generally. Bracks expects IR will be a plus for state Labor, and senior state Liberals fear this is certainly a danger for them.

Given the community concern, the WorkChoices issue is an easy one for the state Labor governments to exploit.

If the conservative oppositions felt their election campaigns were hampered by a backlash over the federal IR law, the blame game could become very awkward for the federal Coalition.

The other issue in what's a potent political cocktail for the Federal Government at present is high petrol prices. But Coalition MPs report that in contrast to a few years ago, when high fuel costs were mixed with the GST debate, the Government itself is copping less blame.

South Australian Liberal Andrew Southcott says: "People don't see it as a problem of the Government - they see it as a product of a high world price. It's very different from late 2000 and 2001, when it was associated with the introduction of the GST and there was a concerned campaign from the motoring organisations."

Mirabella agrees, while also noting: "There's a real desire (in the community) to accelerate the development of alternative fuel."

The Government is investigating whether more encouragement can be given to alternative fuel, but in price terms anything it does can only be tinkering at the edges. Meanwhile, Howard points out that at least people have those budget tax cuts to spend on their more expensive petrol.

Labor will come back for the spring session reinvigorated. Costello, with the Government under some pressure over interest rates, will need to be on top of his parliamentary game. Which is testing, when you're in pain from a kick in the guts.

Just as most Liberal MPs think Howard will declare his future soon and that he will say he will lead next year, so they also are confident Costello will opt to remain Treasurer - because it is in his own longer-term interest. They would be appalled at the disruption caused if he refused to do so. For the Howard Government to lose Costello's skills in that key portfolio just as it hits choppier economic water would be highly damaging.

One option for Costello would be to leave things open - stay in his job, but not give any promises (just as last week he wouldn't guarantee he would continue under Howard as Treasurer).

The Howard-Costello tensions have put the Government on pause over the winter, at the same time as its objective situation has got worse.

Federal director Brian Loughnane reminded the West Australian Liberal conference yesterday that the effect of the proposed redistribution in NSW and Queensland had been to reduce the uniform swing for the Government to lose its majority from 4.4 per cent to 2.8 per cent.

"In other words, the improvement in our position achieved at the last election has been more than eliminated simply by changes to the boundaries. All that is required for a change of government is for Labor to achieve a smaller swing than it received in 1998," he said.

What Howard is probably looking at is not the prospect of defeat but the likelihood of losing seats, weakening the party's position for the future.

Hanging on to the marginal is harder when entrenched MPs depart. Last week, Trish Draper, 47, who has held Makin since 1996, announced she would not run again, citing recent family illness. The Liberals are very worried about Makin, on 0.9 per cent and the fourth-most marginal Coalition seat; Draper has a strong following there (despite a scandal last term about taking a boyfriend on a study tour).

Also in the exit lane is Jackie Kelly, in the Sydney western suburbs electorate of Lindsay (2.9 per cent), who said yesterday her "plans are in place for a departure", although she has told the party she'll wait until after the state election before making a final decision.

"I'm a capitalist," she says. "I have a bunch of projects shelved. I want to go into business. I need to be reaping the benefits of this great economy." She doesn't rule out a later career in state politics, closer to home.

Kelly, incidentally, thinks Howard should talk Draper into staying for another election.

"She's at a different stage of her career, and hasn't expressed an interest in any concrete projects beyond the next election. We need to keep her in Makin. She is one of the legends of the class of '96."

The leadership kerfuffle has apparently ruled out the option of a winter reshuffle to freshen the team. Howard couldn't easily reshuffle until he has declared his position and seen Costello's reaction - and a ministerial shake-up needs to be done in enough time to give ministers an opportunity to get across new jobs before facing Parliament.

Ministerial changes would be desirable. The team could do with new energy. Parliamentary secretaries Malcolm Turnbull and Andrew Robb should be promoted, and some fresh backbench blood brought in, although that is complicated by having to drop people, and also by the fact that the Senate is short of ministers but the people crying out for promotion are in the House.

We come back to one central proposition that has been the case since the leadership flare-up: the Government is in gridlock until John Howard spells out his future.

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