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Howard-Costello: what the journalists hear -

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Howard-Costello: what the journalists hear

Reporter: Maxine McKew

MAXINE McKEW: Today is one of those days that journalists love and hate. A million calls are made
and returned. Everyone talks on background and very few are prepared to go on the record. But to
give you a sense of what both camps have been saying to the people on the other end of the phone
lines, I've been joined tonight here in Sydney by Peter Hartcher, the Political Editor for the
'Sydney Morning Herald'. And in Canberra, News Limited's Glenn Milne. He broke the story of the
McLachlan account of the 1994 meeting in yesterday's Sydney 'Telegraph'. And of course, our own
political correspondent Michael Brissenden. We're going to talk about the implications of the
Howard-Costello stand-off. Gentlemen, thanks for joining us. Glenn Milne, I'm going to go straight
to you, you started all of this. Where is it heading? I mean, what would you say is the status of
the Costello-Howard partnership tonight?

GLENN MILNE, POLITICAL EDITOR, THE 'AUSTRALIAN': Well, I think Maxine, it's dysfunctional. The
Government is now dysfunctional. We had a statement issued by the PM late today in response to
Peter Costello. As Michael Brissenden's package pointed out, basically Peter Costello accused John
Howard of lying. John Howard's now put out a statement saying that nothing in what Peter Costello
contradicts what he said, and this is clearly not true. I think what's happening here is that for
the first time in a prolonged leadership tussle between Peter Costello and John Howard, Peter
Costello has finally stood up and said, "I'm daring you to sack me." I think John Howard made a
fundamental misjudgment this morning in terms of his character assessment of Peter Costello. He'd
done him over twice before and he thought he could do him over a third time. Today I think Peter
Costello stood up and said, "No more" .

MAXINE McKEW: Peter Hartcher, what do you make of this? As Glenn Milne said there, you had Peter
Costello there virtually saying that John Howard has lied in his account. I mean, there's no second
act really after that, is there?

noticed that Peter Costello was actually pretty careful not to accuse Howard directly. He was
pretty careful not to portray himself as a wrecker.

MAXINE McKEW: No, but he did say when he was asked directly that question he said, "I'm telling you
what's happened," and the jaw jutted out, didn't it?

PETER HARTCHER: Well, that's true. There's no question that there's now a tense, awkward and
difficult relationship between the two men. But we saw leadership rivals Hawke and Keating continue
to function, even as they were at each other's throats. They maintained a working relationship if
not a personal, civil relationship. Tomorrow we're going to see these two guys in the same Cabinet
meeting in the Cabinet room. The way I characterise it to date is that Costello is not making a
decisive break with the Prime Minister. I think it's more like - you know, it's a marital dispute,
it's within the marriage. You can have a nasty spat, but at the end of the day, they're going home
together. They're in the same Cabinet room tomorrow morning.

MAXINE McKEW: Michael Brissenden, a nasty spat or something more serious? Is the partnership over,
to continue the metaphor?

MICHAEL BRISSENDEN, POLITICAL EDITOR, THE '7.30 REPORT': That obviously remains to be seen. I think
it's going to be a very difficult Cabinet meeting tomorrow. I think the Hawke-Keating analogy, we
can't escape that, the comparison there between the way this is unfolding and the way that
unfolded. Certainly the Keating template if you like of going to the backbench and carping from the
backbench is one that has been considered by the Costello camp over the last 12 months or so. That
was put off in the sort of detante that we've seen up until now. But I do think that now that is
being reconsidered again and that's certainly the message that's coming from some quarters.

MAXINE McKEW: Glenn Milne, to go back to what you said at the beginning there, you feel Costello is
almost daring the Prime Minister to sack him. That is one of John Howard's options tonight, isn't
it? Is it actively being considered?

GLENN MILNE: Well, I'm not sure whether it's actively being considered, but I think what Peter
Costello basically has said today is that, "You're my boss and you've lied," and let's look at
this, just take a step back and examine what's happened here. I mean, there was a meeting involving
three senior figures in the Opposition in December 1994. What we now know is that it was John
Howard's request for this meeting. He requested the meeting. He nominated Ian McLachlan as the
third man in the room and the notekeeper and we now know that he offered up the deal. It wasn't
Peter Costello. This was the received wisdom that Peter Costello had desperately pleaded with John
Howard saying, "Well if I let you have a free run in the ballot, then will you give a guarantee to
hand over the leadership?" Now we know it was actually John Howard that proposed this. I mean, I
think the Prime Minister is in the weaker position here. If you're sitting in the Liberal Party
room tonight with a vote and you'd looked at Peter Costello's performance over the last six years
since 2001 when this deal was meant to be prosecuted, you'd be saying to yourself, "Well, how loyal
has this bloke been?" I mean, this has been an extraordinary performance now. He was dudded and he
stuck for over six years.

MAXINE McKEW: Sorry, Michael?

MICHAEL BRISSENDEN: I accept that that's still not what they're saying. There is an overwhelming
support there for John Howard among the backbench. Most of them still believe that he should be
allowed to serve out his time and leave at a time of his choosing as Alexander Downer said. There
is a small group of people who are firmly behind Peter Costello, but some of them might even be
spooked by this and much of the support that Costello might have hoped to have built up over this
time, according to a few who might have been seen as wavering, it may cost them their vote.

GLENN MILNE: Michael, I agree with you. I think John Howard still overwhelmingly has the numbers in
the Party room but Maxine, I think what's happened here today is that the weight of sort of ethical
responsibility has shifted in a way. Because Ian McLachlan is universally regarded as a really
honourable and decent person who held the weight of this secret for 12 years, never meant to leak
it to the media. When I spoke to him he had no intention of letting it go, but confronted by it and
wrestling with his own conscience he rang me back the next day and said, "How could I not say no
comment to this?" he said. "I know it to be true and it ought to be out there." So I think MPs will
be looking at this saying, "What did John Howard mean when he did this?"

MAXINE McKEW: Peter Hartcher, how do you respond to that? This is a deal argued about, whether in
fact it was a deal, but two years before, in fact, John Howard's election win and, of course, we've
had four subsequent triumphs since then?

PETER HARTCHER: And that, of course, is, if you're a backbencher that's how you look at this. You
don't look at this as a morality play. If you had looked at this as a morality play you would have
had a queue of backbenchers at other junctures in this Government's life getting up on their hind
legs. You didn't see that. It's not a morality play. For a backbencher it's about keeping his or
her seat and which leader is going to be best-placed to help you win at the next election. So, you
know, that's ultimately what this is about. In the short run I agree with Glenn - he used the word
'ethics'. I would suggest it's about Costello establishing the legitimacy of his claim, the
legitimacy of his right to succession and portraying himself as the man wearing the white hat in
this morality play with Howard. But as I say, a morality play is not the decisive issue for
backbenchers in the Party room.

MAXINE McKEW: Glenn Milne, to come back to you, what of that point? This is what the Howard backers
were saying today, looking at today's reality, saying if you ask the dozen members in the dozen top
marginal seats they'll all say, "Let's stick with John Howard," versus what Peter Costello is
saying, "I'm owed," what is this gigantic sense of entitlement?

GLENN MILNE: I would refer back to the Hawke-Keating paradigm there, Maxine. What ultimately
happens in any great partnership where you have ambitious characters involved is that ultimately
they say you have to choose between us and that's what happened with Hawke and Keating and I think
that's what's happening today with Peter Costello and John Howard. I mean, the backbench has to
understand that this magic marriage is not going to go on forever and they ultimately are going to
have to choose between the two of them. Now when they make that choice I guess what Peter Costello
is saying is that Howard's had a dream run. He's done brilliantly, by the country in his own
judgment, but he can't go on forever. Somewhere at some time a decision has to be made about who is
going to lead the Liberal Party into the future and that's the question I think that Peter Costello
is now posing.

MAXINE McKEW: But, of course, there's still the question of the resolution the Prime Minister can
choose to stare Peter Costello down and as Michael Brissenden said before there was the
consideration in 2005 of, if you like, the Keating backbench option. He passed on that, he may pass
on it again?

GLENN MILNE: Well, he may do.

MAXINE McKEW: Which I suggest, I put it to you, political weakness?

GLENN MILNE: I agree with you. I think Peter Costello today had no choice but to stand the Prime
Minister up. He's not done it before. It suggests a stronger resolve than we've seen from the
Treasurer in these past encounters. Now, how far he's prepared to take that I'm not sure. But
you're right, the backbench option looms. My instinct is that he'd rather the Prime Minister sack
him to pick up on Peter Hartcher's analogy so that he rides the white hat back onto the backbench
rather than is seen to go in a fit of peak.

MAXINE McKEW: Michael Brissenden, can you see any sort of other third player who might be able to
enter the fray to provide some sort of detente, or are we beyond that point? It was interesting we
saw Alexander Downer put his head up on behalf of the Prime Minister. He is the one who should be
saying, "I was the one who was dudded in 1994." He was the leader when these conversations were

MICHAEL BRISSENDEN: He's the one who said he wanted John Howard to take over at that time because
he thought it was in the best interests of the Liberal Party at that time that he did so. He still
thinks it's in the best interests of the Liberal Party for John Howard to be there at the moment. I
think we've all been waiting for the third party to come along and tap John Howard on the shoulder
and say, OK, John, time's up. Nick Minchin is often mentioned in this role. There are others as
well who would be influential in the Prime Minister making any decisions. We've seen no move of
that sort.

MAXINE McKEW: Peter Hartcher, to come back to you for a final comment, how do you see this dynamic
playing out in the short-term?

PETER HARTCHER: Well, Costello is doing these sorts of things because he is in a weak position.
He's trying to establish a legitimacy because he's not in a position to make an actual challenge.
And if we take a step back and have a calm look at this, we're talking about a Prime Minister with
enormous stature in the Party room who's won four consecutive elections, is the most enduringly
popular prime ministers in the history of the opinion poll in this country. For a backbencher to
vote to abandon him in favour of an untested commodity in terms of Peter Costello as leader is a
big leap. The Party is nowhere near coming to that choice. There's no reason to force the Party to
make that choice. So sure, Costello's increasingly impatient, he's keen to establish his claim to
the job. That's fine. But there is no looming crisis point which forces the Party to choose at the

MAXINE McKEW: Gentlemen, we're out of time, but for coming on tonight, thank you very much.