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Howard’s Guarded Defence Of Costello Against Stone Attack

In a sign of the subterranean battle developing in the Liberal Party, the Prime Minister, John Howard, has defended his deputy leader, Federal Treasurer Peter Costello, against criticism from the former National Party senator and head of Treasury, John Stone.

CostelloThe Australian has published a letter from the holidaying Prime Minister in which he says that “in the time that Peter Costello has been Treasurer the Australian economy has enjoyed remarkable growth, low interest rates and more than 1 million new jobs have been created.”

In an article published the day before, Stone, who served as head of the Treasury between 1978-84, and as a National Party senator between 1987-90, said that Costello was a “malleable man” and that “on every cultural issue of the day during recent years, his views have been much more in keeping with the soft Left than with the culturally conservative body of electors that, just more than a year ago, gave Howard his electoral triumph.”

Stone argued that Costello had produced a “passable initial budget in 1996”, but that “all of his budgets since have been at best mediocre”. He said that under Costello “we have the highest taxing government in the history of the commonwealth – and one that, to make matters even worse, pretends that is not so by “fudging” the budget figures so as to exclude from both sides of the accounts the revenue it raises from the GST.”

Stone, who supported the Joh for PM push by the former Queensland Premier, Joh Bjelke-Petersen, in 1987, claimed that “Costello would be the problem” if Howard relinquished the leadership this year.

The Prime Minister has committed himself to “considering” his future when he turns 64 on July 26 this year. The Australian news media has engaged in a welter of speculation about whether Howard will retire shortly after his birthday, by which time he will have become the third longest-serving Prime Minister and the second longest-serving non-Labor leader, eclipsed only his his political hero, Sir Robert Menzies. It is generally believed that Menzies’ record 18 years as Prime Minister, including an unbroken stint of 16 years between 1949-66, will never be surpassed.

Since Howard’s potential political oblivion in early 2001, including the loss of the Ryan by-election, through to the government’s steady recovery, it’s success in the Aston by-election, and its ultimate victory in the 2001 Federal election, the Prime Minister’s political position has strengthened throughout 2002, assisted by the ‘war on terror’, the simmering hostility to refugees and the Bali atrocity.

With war against Iraq now regarded as a virtual certainty, probably in February-March, opinion is divided as to whether Howard will opt to leave whilst he is politically dominant, or use the mantra of ‘troubled and uncertain times’ to remain in the leadership.

In this context, his letter to The Australian is typically carefully worded. Whilst praising Costello, Howard refers to “the policies of the Government, in which the Treasurer has been heavily involved“.

This is the front-page lead story published in The Australian on January 2, 2003.

MPs beg Howard to stay on

By Steve Lewis, Chief political reporter

Pressure is growing on John Howard from within the Coalition partyroom to stay on as Prime Minister until the next election, with a significant and growing number of government MPs now publicly urging his continued leadership.

The Coalition MPs – several holding knife-edge marginal seats – are for the first time calling on Mr Howard to defer any retirement plans to steer the nation through its current difficulties.

This also reflects the widespread view among Liberals and Nationals that Mr Howard’s perceived leadership strength is their best chance of holding tight marginals at the next election.

Victorian Liberal MP Fran Bailey said voters in her McEwen electorate strongly backed the Prime Minister.

“My constituents are very, very pleased that the person at the helm of the country is the person to lead Australia in very difficult times ahead,” said Ms Bailey, who holds her regional seat with a margin of 1.2 per cent.

“I certainly think it would be a good idea for him to stay.” Asked if that meant until the election, Ms Bailey replied “absolutely”.

Queensland National Party MP Paul Neville says he doubts any other prime minister has been “so in harmony with the mood of the Australian electorate”. Mr Neville, holds Hinkler by a mere 0.04 per cent.

Mr Howard, who is approaching Malcolm Fraser’s mark as the second-longest serving Liberal prime minister, is expected to decide around the time of his 64th birthday on July 26 whether and when he will step aside.

While Peter Costello is frontrunner to replace Mr Howard, there is a growing clamour from Coalition MPs for the status quo – at least until the election due in late 2004. They cite the threat of terrorism and the sense of voter vulnerability post-Bali.

Liberal MP Peter Lindsay, who holds the Queensland seat of Herbert with a margin of 1.62 per cent, said: “All of my colleagues would like to see that happen. None of us would want to see (Mr Howard) retire.”

The MP, whose private remarks endorsing Mr Howard in September were leaked to the chagrin of Costello supporters, says he doesn’t think “there is any doubt that Howard would stay”.

Queensland National Party MP De-Anne Kelly is also urging Mr Howard – and Deputy Prime Minister John Anderson – to remain at the helm.

“There is no doubt that the Treasurer has done an absolutely brilliant job as Treasurer,” Mrs Kelly told The Australian.

“But on the broader issue of regional and international security, there is no doubt that John Howard and John Anderson as his deputy do give people reassurance at present.

“And it’s very important that that continues until the regional and international terrorist concerns are resolved.”

Newspoll shows Mr Howard’s popularity has soared in the wake of the Bali bombings, with voters looking for leadership stability during a time of vulnerability.

This view is reflected in feedback from Coalition MPs, contacted by The Australian.

South Australian Liberal MP Barry Wakelin, whose sprawling regional electorate of Grey takes in a number of Labor strongholds, claims Mr Howard has never been as popular.

Gary Nairn, whose NSW electorate, Eden-Monaro, is considered a bellwether seat, said Mr Howard was seen as “doing a fantastic job and I get very positive comments”.

This is the article by the former Treasury Secretary and National Party Senator, John Stone, published in The Australian on January 3, 2003.

Costello as PM just won’t do

According to the front page of this newspaper yesterday, Coalition MPs are begging Prime Minister John Howard to stay on “at least until the next election”.

My only advice to them would be to drop the final qualification. The wonder is that there should still be any debate about this topic. There are essentially two reasons it is being kept alive.

The first is that there are people among the Coalition’s parliamentary ranks who are now, as always, ambitious for some place in the sun and who see little prospect of attaining that place until Howard is replaced by their own champion, Peter Costello.

These are people who are so consumed by their ambitions that the damage that a Costello prime ministership would do to Australia’s future and to the future of the Liberal Party weighs little in the balance against the prospect (brief though it might be) of ministerial office.

The second reason the matter is being kept alive is, quite simply, the hatred (and there is no other word for it) that so many of our journalists – particularly in the parliamentary press gallery in Canberra – harbour for Howard.

For one thing, the man has the effrontery to ignore their advice on so many of the elitist issues so dear to their hearts. Patriotism, multicultural ideology, belief in the view that the parliament (not the media) runs the country, support for our US allies (the list goes on) – all these are issues on which Howard stubbornly refuses to bow his head to his media mentors.

Costello, by contrast, is a malleable man. When Peter Reith was confronting the Maritime Union of Australia on our waterfront in 1998, Costello (despite having been, along with myself, one of the four founders of the H. R. Nicholls Society) was nowhere to be seen. At one stage a declared constitutional monarchist, he subsequently found it politic to become some kind of a republican. And during the heyday of all that mythical stuff about the “stolen generations”, he felt it similarly politic to “march” in Melbourne in support of that most meaningless of slogans, “reconciliation”.

In short, on every cultural issue of the day during recent years, his views have been much more in keeping with the soft Left than with the culturally conservative body of electors that, just more than a year ago, gave Howard his electoral triumph.

There is, of course, one other person whose future also may depend upon the answer Howard eventually gives to those who are demanding that he remain. I refer to Simon Crean, whose future as Opposition Leader seems at present to be rather bleak – but whose prospects would, clearly, improve enormously were Howard to announce that he was stepping down.

Why on earth the Prime Minister would want to hand his opponent such a gift is entirely beyond me. But, as always where the future of the Labor Party is concerned, hope springs eternal in the press gallery’s collective breast.

It is not, incidentally, as if Costello has proved to be a great Treasurer. On the contrary, after producing a more than passable initial budget in 1996, all of his budgets since have been at best mediocre.

True, as he never ceases to point out, the Australian economy has done extremely well on the whole during his tenure. But that is akin to the claim made at the time on behalf of another treasurer, William McMahon, who also happened to have the good fortune to preside over a period when, for reasons that had little to do with his performance as treasurer, the Australian economy performed quite splendidly.

Having worked for no fewer than 11 successive treasurers during my 30 years in the Treasury, I must say that I would be ashamed to do so these days under Costello’s “leadership”.

Under that “leadership” we have the highest taxing government in the history of the commonwealth – and one that, to make matters even worse, pretends that is not so by “fudging” the budget figures so as to exclude from both sides of the accounts the revenue it raises from the GST. The budget papers say that this is a state tax collected by the commonwealth on their behalf “on an agency basis”.

Funny, that; not only is the GST a tax imposed under commonwealth legislation and one that cannot be varied by any of the states, or even all of them, but it is also quite categorically defined as a commonwealth tax by the Commonwealth Statistician in his statistical publications.

To sum up: those Coalition MPs are right. If and when Howard does decide to relinquish the prime ministership – and they are right to beg him to remain – then, so far from being the solution, Costello would be the problem.

This is the text of the letter from John Howard, published in The Australian on January 4, 2003.

Costello’s been a treasure at the Treasury

John Stone’s criticisms of Peter Costello’s performance as Treasurer (Opinion, 3/1) are unfair and mistaken.

In the time that Peter Costello has been Treasurer the Australian economy has enjoyed remarkable growth, low interest rates and more than 1 million new jobs have been created.

This has not happened by accident. The policies of the Government, in which the Treasurer has been heavily involved, have been the major contributing factors. The economy has not been on automatic pilot for the past seven years.

The claim that the current Government is the highest taxing in Australia’s history is wrong. Even if one were, hypothetically, to accept John Stone’s allegation that the GST is a Commonwealth tax, then as the Treasurer has shown when adjustments are made for other taxes replaced by the GST, the “highest taxing” claim is still wrong.

John Howard
Prime Minister

This is the text of a letter from John Stone, published in The Australian on January 6, 2003.

The Prime Minister (Letters, 4-5/1) has described my criticism of Peter Costello’s performance as Treasurer (Opinion, 3/1) as “unfair and mistaken”. Unfairness, like beauty, is in the eye of the beholder, and I make no further comment on that.

As to “mistaken”, Mr Howard notes that “in the time that Peter Costello has been Treasurer”, our economy has performed very well. Yes, indeed; my article said that it “has done extremely well on the whole during his [Mr Costello’s] tenure”.

I distinguished, however, between our economy’s performance and that of the Treasurer. To attribute our recent good economic performance to Costello is as mistaken as it would be to attribute our woeful economic performance during 1978-83 to Mr Howard.

Nor, contrary to the Prime Minister’s implication, is my reference to the GST as a Commonwealth tax merely an “allegation”. It is a fact. Not only are the legalities referred to in my article incontrovertible, but I also refer Mr Howard to the Australian Bureau of Statistics Information Paper “ABS Statistics and the New Tax System”, which states “the ABS will classify the GST as a Commonwealth tax”. The statistician gave detailed reasons for that in the ABS information paper “Accruals-based Government Financial Statistics 2000”. In December, 2001 the Auditor-General went so far as to qualify the Commonwealth’s Consolidated Financial Statements for 2000-01 on the same grounds, saying that the policy of not recognising the GST as a Commonwealth tax “does not accord with” the relevant accounting standard and that the accounts are distorted as a result.

Perhaps the PM should ask his Treasurer why, for some years now, he has presented to the parliament financial accounts which are, to use no harsher word, duplicitous.

Mr Howard also questions my statement that this is the highest taxing federal government in our history – a fact which that budgetary presentation is designed to conceal. As to that, GDP at current prices in 2001-02 was $712,874 million. The 2002-03 Budget Paper No 1 shows (in an obscure table) then estimated 2001-02 tax receipts (cash, Australian Accounting Standard 31 basis) of $177,045 million, including $27,430 million GST. The resulting tax to GDP ratio of 24.8 per cent is higher than any such ratio shown for the past 30 years in Table 2 of Statement 13 (Historical Commonwealth Data) of that budget paper. Labor came close, at 24.4 per cent, in 1986-87, and by adding Mr Beazley’s $10 billion “black hole” to his tax receipts in 1995-96, you can obtain a ratio of 25.0 per cent; but that is another story.

During the five years I served Mr Howard as the Secretary to his then Treasury, I believe I can claim (and I hope he might agree) that, whatever my other failings, I never misled him. I am not doing so now.

John Stone
Lane Cove, NSW

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Malcolm Farnsworth
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