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Peter Costello: beyond economics.

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Background Briefing

Sunday 4 March 2001


Peter Costello: Beyond Economics


Neil Mitchell: Jim Cairns had Junie Morosi, Paul Keating used to go to Europe every now and again to keep himself sane; Treasurer, we know your fantasy is football, and your real fantasy is to play for Essendon. So today you can have just the three of you, kick to kick, with Dustin Fletcher, and Dean Rioli from the Essendon Football Club.

Peter Costello: Oh fabulous, good on you fellas!


Gerald Tooth: Peter Costello is in fantasy land. As a reward for speaking at the Melbourne Press Club, host Neil Mitchell has given him every Victorian schoolboy's dream. And now the Treasurer is out in the middle of the massive Colonial Stadium. At 44, he's beyond his prime as a footballer and is beginning to thicken in the middle, but here he is, sniping goals and hustling his tall frame to jostle for marks with two of the best Australian Rules players in the land. And not coincidentally they're from the current AFL Premiers, Essendon, a club he's been devoted to all his life.

Football sounds

Peter Costello: It always helps to have the fullback on your side.

Fletcher: Yeah mate, ta.

Peter Costello: All you've got to do this year then is win 22 out of 22.

Fletcher: Yeah right

Peter Costello: Thanks very much. Good luck. Regards to Sheeds.

Gerald Tooth: Playing for Essendon is of course is the Treasurer's weekend fantasy. His real weekday fantasy is to be Prime Minister, which is why Peter Costello is the focus of this Background Briefing. You're listening to Radio National and I'm Gerald Tooth. As Treasurer in the reformist Howard Government, Peter Costello has come to be seen as the smirk on the hard face of economic rationalism. It's not on show now, though. Sitting in his 5th floor room in the Commonwealth Government Offices in Melbourne he's as relaxed and affable as any politician can be with a journalist that's come to interview him. Behind his desk is the usual swathe of leather-bound books, and when the interview's finished he leaps up and grabs a large dictionary to look up an unfamiliar word. Also behind him is a magazine cover photo of him celebrating with arms aloft. A red Sherrin football takes pride of place on top of a rack of shelves off to the side of his desk. In another part of the office hangs the reverently framed Number 5 jersey of Essendon Club Captain James Hird. But as warmly as he may present in person amongst his memorabilia, there's no escaping the fact that, like most Treasurers before him, Peter Costello has an image problem.

Peter Costello: It's hard I think if your business is doing serious economics, it's hard to move off that brief; you don't get that many opportunities in public to do more human interest things. If I get the chance I'm happy to do so. I think probably the biggest human interest I've had in my career is dancing the Macarena with Kerrie-Anne Kennerly - which I do every five years or so.

Gerald Tooth: You could have practised in between times.

Peter Costello: I think my skills are deteriorating. I thought she held up pretty well, but as for me, my skills are badly deteriorating. I didn't expect to be dancing in a radio studio you know, but she'd turned her radio studio into a TV event for the sake of the day.

Kerrie-Anne Kennerly: Well may I have this dance?

Peter Costello: Oh please.

Kerrie-Anne Kennerly: Here we go, ladies and gentlemen, as we play the Macarena I just want to have this last dance with my Treasurer. Go for it, friend.

Peter Costello: How do we do it? Kennerly: Don't you remember. You do this:

The Macarena, laughter...

Gerald Tooth: These public displays of relatively accurate goal kicking and relatively inaccurate dance interpretations don't give us much to go on in terms of building a broader picture of the man, as we set about filling in some of the outlines today. The foundation of his political persona is, and always will be, economic, or more accurately, economic rationalist. Peter Costello is a free marketeer, a privatiser, a deregulator, a tax reformer, a union basher, a surplus builder and fierce protector of the budget bottom line. He also has a reputation for arrogance and intolerance. Those are the public perceptions of him that come up in research into what people think of the government but what's missing is an understanding of the ideas that motivate him, and his views beyond economics, views that set him apart from John Howard. Peter Costello has in fact been exceedingly disciplined in not revealing himself. In the Canberra Bureau of The Australian newspaper, Foreign Editor, Paul Kelly, explains why.

Paul Kelly: Costello doesn't really think it's in his interest or part of his job to deliver his mind and heart to the media at breakfast. And the interesting thing here is, this is also tied into management of the, if you like, the leadership issue, the Howard/Costello leadership question, which I think has been managed fairly astutely over the course of the current parliamentary term. Costello's taken a decision that he will define himself on social issues when the need arises, and I think in one sense there's a similarity here with Keating. I mean Paul Keating had been Treasurer for five years in 1988 and if someone had said to you then that the Keating Prime Ministership would be defined by Aboriginal land rights, engagement with Asia and the Republic you would have thought they were slightly barmy.

Gerald Tooth: Veteran journalist, Paul Kelly. Things are changing though. Today on Radio National's Background Briefing, Peter Costello outlines an emerging vision beyond economics as he cautiously begins to stamp out his own ground in some significant policy areas. And the reason? Well his boss, John Howard, began this election year talking of retirement.

Song: 'When I'm Sixty-Four' - The Beatles

When I get older, losing my hair, Many years from now, Will you still be sending me a Valentine, Birthday greetings, bottle of wine?

Kerry O'Brien: Well as to your own future, I think you're being somewhat honest and frank again today; you repeated in an interview that you will consider your future around the time you turn 64 which of course would be smack in the middle of your next term of government if you win the next election. That means that you will have to go to the next election not being able to guarantee voters that you will serve a full term.

John Howard: Yes well that's better than Bob Hawke and Paul Keating going to the 1990 election concealing the secret covenant to hand over the leadership of the party. In other words, concealing, representing a lie to the Australian people.

Song: Will you still need me, will you still feed me, When I'm sixty-four?

Gerald Tooth: Honest John's honest answer has thrown the spotlight directly onto Peter Costello who within the Liberal Party is unrivalled as the successor to Howard. If the Coalition wins the next election, Costello could expect to be Prime Minister shortly after the 26th July 2003. If they lose, he will immediately become Opposition leader. The recent State elections in Western Australia and Queensland were disastrous for the Coalition. As a result, some people within the Liberal Party are reassessing the worth of waiting to allow John Howard a dignified exit. Incidentally, if things do go to John Howard's timetable it would make him the Liberal Party's second longest serving Prime Minister behind Menzies. Off the record, some Liberal backbenchers see the Prime Minister as yesterday's man and think it's time to instal a leader with a future, as opposed to a past, someone with a more contemporary view of the world. A whispering campaign to install Peter Costello as leader before the next election is going on, though it's countered by others who see the Treasurer as part of the problem as well. Senior party figures dismiss the noises as the rustling of henhouse feathers after a frightening thunderstorm, and are adamant there's not about to be a change in the pecking order. John Howard certainly won't be going quietly before he wants to. Radio National's Background Briefing interviewed Costello in the week between the West Australian and Queensland elections and asked him if he wants to be leader anyway.

Peter Costello: I would look at that question if there were a vacancy, and there is no vacancy, so I don't even look at it.

Gerald Tooth: There is the possibility of a vacancy though, isn't there, and it is something that's been flagged and flagged again.

Peter Costello: You know what I've learned? I've learned that whatever you say on this issue, you're likely to get into trouble, so I try not to comment on the issue. Some people say even commenting at all is not helpful, and I've learned that the slightest whiff can be misunderstood. So I've got to be very disciplined about this, and if there were a vacancy I would think about it then, but since there's not, I'm not.

Gerald Tooth: Have you made any sort of arrangement, any sort of agreement with John Howard about the succession of the leadership?

Peter Costello: Oh we don't make arrangements like that. In our party the parliamentary party members decide these things, nobody else.

Gerald Tooth: You say you've got to be disciplined about expressing any opinion on this, but do you have a responsibility now to start outlining your broader vision for Australia, so that the voters can make a properly informed choice when they go to the next election with the idea in mind that there is a succession as a possibility?

Peter Costello: Well I just think you're putting it too high. The next election, the choice is going to be between Labor and the Coalition, and as alternative Prime Ministers, between Beazley and Howard, and I'm not a candidate in that ballot.

Gerald Tooth: Those close to him see it as his destiny to become Prime Minister one day. Tony Abbot, the new Minister for Employment, Workplace Relations and Small Business, is a close friend of Peter Costello's, has been since University days in the mid-1970s. They were more recently linked in the defamation case they and their wives brought against author Bob Ellis and his publisher, Random House. Most recently, Tony Abbott has emerged as a possible rival to Costello. He certainly enjoys the affections of the Prime Minister, who's prone to pat him on the back in Parliament with a familiarity he's never extended to his Treasurer. Tony Abbott does know his place though. Tony Abbott: My view is that Peter is entitled by virtue of his performance, by virtue of his accomplished role as Deputy Leader of the Party, to expect to be the front runner for the Party leadership next time that it becomes vacant. No-one really knows when that might be, but look, it's not really an issue at the present time, and my guess is that Peter is focused on winning the next election, as John Howard is, and as all of us are, and plainly the resuscitation of One Nation has made our job a lot more difficult than it might have seemed just a few months ago.

Gerald Tooth: And there's a nasty rub. One Nation and its devastating electoral tactic of preferencing against sitting members could destroy the Howard/Costello Government and indefinitely, perhaps even permanently, delay Peter Costello's chance to take on the top job. Peter Costello was the first senior Liberal to take a stand against One Nation when it emerged. Having grown up in multicultural Melbourne and counted a number of Asian Australians amongst his friends, he reacted decisively to Pauline Hanson's views. In comparison, John Howard's initial response was to make noises of appeasement in a bid to win back conservative defectors. He welcomed the ensuing debate from Pauline Hanson's maiden speech as a new era of free speech and claimed such discussions had been suppressed by Labor's political correctness. Peter Costello was having none of it. He said he would be putting One Nation last on his how-to-vote card in his Melbourne-based seat of Higgins. So, to now have his shot at the Prime Ministership rendered impotent by Pauline Hanson would be more than galling. In the newsroom at The Melbourne Age, Costello biographer Sean Carney says if One Nation does stall the Treasurer's career, it would create a drama with Shakespearian overtones.

Sean Carney: It would be an incredible irony and it would give his career almost a sense of tragedy I think. In this way: few political figures in Australian political history have ever been as talked up as a potential Prime Minister as Peter Costello. Bob Hawke probably was, but very, very few people have ever been talked up in the way Peter Costello was before he entered Parliament in 1990, walked straight onto the front bench, admittedly Opposition front bench, but still walked on. He's never spent a day as a backbencher, and he became Deputy Leader after only four years in Parliament. Every step has been a winner for him, so for him to miss out on the ultimate prize when it's been tipped for him since he was 20 years old, in the national media and such publications as The Bulletin, would add a sort of tragic sense to the sort of rise and fall of Peter Costello.

Gerald Tooth: Costello biographer, and Associate Editor at The Age newspapers, Sean Carney. Before we get too far ahead of ourselves and arrive at the end, let's look at the things that have got Peter Costello to where he is now. Peter Costello was brought up in the Melbourne suburb of Blackburn by his teacher father and educational psychologist mother. He was one of three children: Tim, Peter and Janet, born in that order. It was a strictly Christian home. The Costellos were foundation members of the Blackburn Baptist Church in the mid-1950s. Oldest brother Tim is currently the President of the Baptist Union of Australia. He works in a small spartan room on the 6th floor of an old office block at the unfashionable end of Collins Street in Melbourne. His window overlooks a back alley, the paint around his doorway is chipped. The grey carpet on the floor is decidedly thin, though not threadbare. Tim Costello says the teachings of the Baptist Church gave his younger brother Peter his fundamental view of the world.

Tim Costello: Look I think Peter has a hermeneutical suspicion against organised powers, whether they be government, even whether they be corporate, including the big end of town that might be expected to be the big hitters and set the agenda for a Federal Treasurer, I think his suspicion leads him to really give priority to the individual, to people who are seeking to make their own choices about their lives without interference from union power, too much at times corporate power, and certainly government getting in the way.

Gerald Tooth: Where's that suspicion of big organisations come from?

Tim Costello: Oh look I think it's a legacy, probably residual, of a Baptist evangelical upbringing. The very notion of Baptists historically were those who were imprisoned, and sometimes even executed because they refused to worship according to the Church of England Prayer Book. They wanted to worship according to their conscience. They wanted freedom of conscience, freedom of religion, and that was a strong individual emphasis that translated in political terms into Church/State separation in the US, where Baptists really brought that insight into the First Amendment. It's also an evangelical concern that sees individual conversion as maybe the most important decision any human will make, affecting how they live now, affecting eternity, over and against collectivities that might capture the individual and sway and influence that person.

Gerald Tooth: The definition of 'hermeneutical', kindly supplied by Peter Costello who looked it up in the dictionary after he was interviewed, is 'an interpretation [learned] from Scripture.'

Peter Costello: Well I'm not sure what he means by 'hermeneutical' to be frank. But I'll take the second part of it. I do have a suspicion of power, I think that power can be abused, and it can be abused to over-ride individual choices and individual freedoms. I think governments' powers should be limited. I really do believe in that. I also think politics should be limited, because there are a lot of people who make the mistake of thinking every problem in our society can be fixed by government. I don't think that's right. I think if you gave governments the power to fix every problem in our society, you would have overpowering governments, which would tend towards the authoritarian impulse, and I think there are areas of our society which we just ought to get the governments out as far as possible, out of family lives, you ought to let the non-government institutions of society, like the family and the school and the community and the church to take a lot of the slack. I am very suspicious of governments that want to tell people how to think and what to do. I think that can be a real threat to individual freedom.

Gerald Tooth: So if have we got an anarchist as Treasurer? What are you doing there? Are you working from the inside to try and bring the place down?

Peter Costello: Look, there are certain things that a society has to be able to do. You've got to have a basic taxation system, in my view, to pay for education and health and defence and age pensions and those kind of things that individuals can't do for themselves, and so I believe in having a basic tax system and a basic social security system. But I'm not an anarchist, no, I just regard myself as really an old-fashioned Liberal, maybe a Burkeian type Liberal, you know. I'm a Liberal. People say 'What are you, are you an anarchist or are you a libertarian, or this, or that?' I just sort of regard myself as a Liberal actually.

Gerald Tooth: Sir Edmund Burke was the Irish-born English Parliamentarian elected in 1765 and who is now regarded as a forefather of Liberal thinking. As a Whig he spent most of his political life on the Opposition benches attacking the follies of the Tories. He also attacked the excesses of the monarchy and criticised the manner in which England colonised India. One of his most often repeated quotes is: 'The only thing necessary for the triumph of evil is for good men to do nothing.' Burke believed in the importance of acknowledging the lessons of history and cautioned that change should only be made after careful consideration and then conducted in 'cautious and delicate adjustments'. His critics accused him of being too morally and ethically flexible. But he was very much a free thinker, who railed against any sort of doctrinaire approach to politics and problem solving. Sean Carney.

Sean Carney: Well I think basically it's just to do with the fact that he can move, that you preserve what's good about the past, but you don't rule out developing new positions on various issues as they come along. The Republic was a good example; he was never a Republican, but he came to see, as he told the Constitutional Convention in 1998, 'I am for change'. That was a sort of signal moment in many respects, of Costello's public life, he was able to come out and signal that he was for saying, 'Look, I used to think a certain way, but now I don't, and I'm not ashamed to say so.'

Gerald Tooth: The Burkeian approach deliberately elevates pragmatism at the expense of ideology, and in practice Burkeian Liberalism is about joining debates about change in a considered way, after all the angles have been weighed up. It's not a lead from the front philosophy. For example, on the push for a Republic, Peter Costello came to the debate when it was at an advanced stage. He in no way instigated it. And as for the GST, well he was the architect who drew up the plans for John Howard's vision. Peter Costello does however have a guiding ideological framework which underpins his view of the world and informs his stance in policy debates. His core belief is in the primacy of the individual in society.

Peter Costello: What I believe is that everybody should be given the choice to do the best they can, and every individual should be able to maximise their opportunities. And I think individual freedom of thought and conscience is just so important to their self worth, to who they are, and to the kind of community that we want to build. And to me these are really important values, whether they're freedom of religious thought, freedom of conscience, freedom of political thought, I believe in maximising individuals' choices and respecting their choices.

Gerald Tooth: How does that work as a framework in making decisions?

Peter Costello: Well in taxation areas, it means that as far as possible I think we ought to keep income taxes low, so that people can decide where they want to spend their own money. I think in education it means maximising education opportunities so that kids have a chance to be the best kind of person that they can be in any particular area. I think it means as far as possible keeping government out of family business, letting families be independent and decide for themselves what they want to do. I just like maximising people's opportunities.

Gerald Tooth: Peter Costello, and you're listening to a profile of the Treasurer on Radio National's Background Briefing, and I'm Gerald Tooth. Alistair Mant is the UK-based author of a book called 'Intelligent Leadership'. He's a regular visitor to Australia and a keen observer of Australian politics. He also regards Tim Costello as a personal friend, but stresses he has never met his younger brother, Peter. Alistair Mant has carefully studied the characteristics and philosophies of heads of State in recent times. He says Peter Costello's focus on the individual and choice is something other conservative leaders have been talking about for some time.

Alistair Mant: I have to say that I think this rhetoric of choice, which we've had a bellyful over the last 20 years, is pretty bogus. I mean I think the choices offered to people are actually often illusory. I'm thinking of the ladies from Eastern Germany who first came to Western supermarkets and were horrified at the appalling range of options open to them. No way of knowing which is the best one. Scott Adams, who draws the 'Dilbert' strip calls this 'a confusopoly'. People are offered choices, but they're meaningless to them. I think that it's a fairly shallow political thesis.

Gerald Tooth: Alistair Mant also has a psychological explanation for this focus on the individual and choice, which he says arises from studies of Margaret Thatcher and her family relationships.

Alistair Mant: I have to say that it makes you think about Margaret Thatcher; people who go overboard on this question of choice and the individual, are very often people who in my opinion, and this has been backed up by some studies of Thatcher, people who have successfully used power to climb over other members of their family. I mean Thatcher famously, as it were, climbed over her elder sister and her Mum into the special affections of Alderman Roberts.

Gerald Tooth: Her father.

Alistair Mant: Her father, that's right. And once you've successfully used naked power to get what you want, you have to justify it in some way. So at a subconscious level, you then create some sort of ethic which says that the individual operating as an individual is really very important morally. Whether that would be true of Peter Costello I have no idea, but I can imagine that Tim would be an awkward kind of older brother to have. I mean Peter's a typical younger brother in the sense that he's anti big power, you know, he's anti the monarchy and that's all younger sibling stuff.

Gerald Tooth: Alistair Mant, author of 'Intelligent Leadership'. Big brother Tim does have a very different perspective to his younger sibling.

Tim Costello: Well you know, as I might sometimes remind him, and other would also, that individuals are rarely just in a level playing field. That the suburbs they're born in, and we know that health and employment are dramatically affected by postcode, that you actually have to see collectivities, if they are social determined realities; how high you are on the misery index in terms of your neighbourhood actually affects your chances in life, and without thinking I guess a bit more collectively, the individual is a bit of an illusion. But I guess my difference of perspective might be that he weights too much and maybe too naively, responsibility in the individual over against the community the collectivity in which they might grow up in.

Gerald Tooth: Tim Costello. The Treasurer's ALP opponents say the only individual that matters to Peter Costello is Peter Costello, and accuse him of being entirely absorbed by his ambition to be Prime Minister. The Sydney Morning Herald's Margo Kingston started covering politics in Canberra from the press gallery around the same time that Peter Costello was first elected to Parliament in 1990. She has closely watched him for the last decade.

Margo Kingston: Peter Costello is a very arrogant person, extremely arrogant. He will want to be a strong Prime Minister. He will be a strong Prime Minister. He'll brook no dissent. Howard is in a sense more massage-y than Costello would be. Costello will be an exciting, if he gets there, he'll be an exciting Prime Minister. He'll want to take bold actions I think. He won't be averse to giving people a couple of surprises. But more than anything else, in my view, Peter Costello is a man who really wants to go down in history, and you must always remember in making your calculations about Peter, that John Howard does not support his succession. John Howard, very happy to back Peter Reith when it was a two Peter race, now that it's a one Peter race, he's very interested in promoting Tony Abbott as a possible deputy. Peter Costello is not getting an easy run into the job.

Gerald Tooth: Margo Kingston says the Treasurer does have a driving ambition to get to the Lodge, and it's an ambition that is long-held.

Margo Kingston: Peter's told me this. We had lunch years and years ago when he was Shadow Attorney-General I think. We had a really long, boozy lunch, and he said to me, 'I was a lawyer, I was a good lawyer, I didn't think I was good enough to be a High Court Judge. I've gone into politics, I want to be the best.' Now you go into politics with a drive, you can have a drive to get to the top, which means that you've got your place in history. You invariably also have a drive to do what you believe is right. Now the trick about politics is balancing those things. Getting to the top first, more and more compromises are made, and what happens when you get to the top? Are you a lame duck because you haven't got any principles any more? So you just govern to get re-elected? Or do you make a difference? Now I am convinced that Peter Costello wants to make a difference. I'm completely convinced. How he makes that difference is an open question.

Gerald Tooth: Peter Costello has certainly been highly politically motivated since early adulthood, and has undoubtedly made an impact at every stage of his career since then. He became involved in student politics from virtually his first days at Monash University, and was elected Chairman of the Monash Association of Students on a Christian-backed ticket in 1976. It was only his second year on campus. After winning office it's claimed he moved away from his Christian support base, making new friends amongst Young Labor members in the Association. One of them was Michael Danby, who's now the ALP member for the Federal seat of Melbourne Ports. We meet him in his Opposition backbench office in Parliament House. Michael Danby says there was an expectation that his then friend Peter Costello, who at the time described his politics as 'moderate ALP' would in fact join the Labor Party. Michael Danby says his eventual decision to join the Liberal Party in 1980 was made for the most pragmatic of reasons.

Michael Danby: I mean for a person who was ambitious and was on the right of the Labour Party where we both were, and I suppose I still am, there was very little opportunity for such a person in politics in Victoria in the late '70s and '80s when the left of the Labour Party was dominant. And there was much more obviously room to manoeuvre in the Liberal Party than there was spending 15 years trying to get preselected in the Labor Party in Victoria. I think the Liberal Party route was the shortest route to Canberra.

Gerald Tooth: Michael Danby. Michael Kroger was also at Monash University at the same time, and also a friend of Peter Costello's. If Tim Costello is regarded as the moral conscience sitting on Peter Costello's left shoulder, Michael Kroger is regarded as his political conscience, sitting on his right shoulder. His office is at the opposite end of Collins Street to Tim Costello's, 35 storeys up at what's called the Paris end of Melbourne's main thoroughfare. The décor is more Italian than French though, and stylishly ornate. Frescoes and gold inland wallpaper adorn the walls. Dark wooded antiques are reflected in cut glass mirrors and in the waiting room, time is marked by a nude golden figurine holding up a small clockface. Immaculately dressed in regulation dark suit, pinstriped shirt and rich silk tie, Michael Kroger is the man credited with getting Peter Costello to join the Liberal Party. Kroger himself rose to be President of the Victorian branch of the Liberal Party, before putting his political career on hold to concentrate on a career in merchant banking. Incidentally, he now sits on the ABC Board. He has a different view of University days to Michael Danby, and dismisses the suggestion Peter Costello ever had ALP leanings.

Michael Kroger: He was never a Labor Party member and never a supporter of the Labor Party although Michael Danby and some others are still trying to find membership records alleging he joined somewhere. Well good luck to them. They've been doing that for the last 20 years.

Gerald Tooth: Michael Kroger also rejects the idea that his friend was motivated by the prospect of a short road to the top in politics. He says Peter Costello is a man guided by his beliefs, not overweening ambition.

Michael Kroger: When we joined the Liberal Party, the issues were different. I meanin those days, the air was just clearing from the Vietnam War generation, but the main issue in politics globally was still Communism, and anti-Communism. We fundamentally joined the Liberal Party because we were anti-Communists. We were very supportive of Israel's right to exist. You know, these were two of the biggest issues on campuses in the mid to late '70s. So when you look today at what the burning issues are, you know. Communism's effectively dead. Israel's right to exist is acknowledged although still under threat in some quarters, but they're not the burning issues that they were a generation or two generations ago. So there are more local issues, you know. They say politics is local, and it certainly is in Australia, though there are more local issues which now come to the fore. But he's still ideological, but within parameters, and a lot of those ideological issues, as I've said, have changed.

Gerald Tooth: Back then though, Peter Costello made his name in the world of student politics by leading a charge that eventually destroyed the domination of the radically left wing Australian Union of Students. Interestingly, that campaign was waged with the wholehearted support of his Labor comrades on the Monash students' association, who saw the far left as dangerous Communists. It wasn't until later, as a solicitor in 1985, that Peter Costello came to be seen as a Labor enemy and earned the label of a warrior in a movement known as the New Right. Together with Michael Kroger, Peter Costello grabbed national headlines as union breakers as a result of the Dollar Sweets industrial dispute. They ran a Supreme Court case for the owner of a small confectionary factory in Victoria who successfully sued the union for common law damages after a protracted and bitter strike. The case was seen as puncturing a significant hole in the arbitration system. It was also seen as the launching pad for Costello's political career. One of the immediate consequences was that Peter Costello became a midwife at the birth of the H.R. Nicholls Society. Its stated aim was to dismantle the Industrial Relations Arbitration system as a means of crushing union power. Peter Costello was one of four people on the steering committee who sent out the original invitations to the society's first meeting. The others were Ray Evans from the Western Mining Corporation; John Stone, former Treasury Secretary; and Barrie Purvis, from the wool industry. The H.R. Nicholls Society came to be reviled by the ALP and the union movement and was portrayed as an ultra-right secret organisation with Masonic overtones. Fifteen years later, much of its agenda has been achieved. Peter Costello is no longer involved with the society. And now with John Howard signalling he wants a smooth leadership transition, Peter Costello is remaking himself in a socially sensitive image. Cautiously, very cautiously, he's beginning to outline some of his own policy positions that differ substantially from the current Prime Minister.

ABC-TV news Sydney bridge walk story:

Marcher: Peace man …

Cathy Bell, reporter: … and unity. They were the twin themes of the Walk for Reconciliation as Elders led black and white across the harbour and the colour divide. It was a moving journey.

Aboriginal Woman: Very emotional.

Gerald Tooth: John Howard banned Peter Costello and other Cabinet Ministers from walking across the Harbour Bridge in the Sydney Reconciliation March. Costello toed the line, despite hinting that he wanted to take part. Later the Treasurer did march in Melbourne when the Prime Minister reversed his decision. It was a symbolically powerful gesture but just that, a gesture. Peter Costello has spoken little of his vision for reconciliation, until now.

Peter Costello: I think it's coming from two angles actually. I think there is a very large part of non-Aboriginal Australia that wants to make a statement to the Aboriginal people of Australia, to say 'We want you to feel part of us, and we want to feel part of you.' I think they want to make that statement. I think on the other hand too, there is also a lot of Aboriginal Australia that wants to reconcile with non-Aboriginal Australia. This is going to come from two angles. I think this is an important issue. I was, as you know, wanted to demonstrate my support of it, which I did. I think it is going to go on for a long period of time, but there is a lot of goodwill. I actually think there is a lot of goodwill in the community on this issue, and it's building the positive people on both sides that will take that forward.

Gerald Tooth: What's your level of goodwill? Would you say, 'Sorry'?

Peter Costello: Well I've tried to demonstrate my goodwill in a number of ways. I've tried to do it by engaging with some of the Aboriginal leaders. I was out in Walgett, not just in the big cities, a place called Walgett, late last year. I sat down with the Aboriginal leaders and listened to them, and actually I've had some pretty good correspondence with them afterwards. And one of the things they said is, you know, 'We're just pleased you didn't come out here and tell us what to do, that you're prepared to come out here and listen to what we want.' I think actually it's going to be relational in the future, this reconciliation thing, it's going to be a relational process.

Gerald Tooth: But a large part of the Aboriginal community, many sections of the community, say 'Sorry' is the first step.

Peter Costello: Well you see, that's how it's all developed politically now. And this is now politically charged. I think it's a mistake if we all get hung up on the political issue and forget what I think is the bigger issue which is developing the relationships which is what I'm intending to do.

Gerald Tooth: This is a vastly different approach to John Howard's 'practical reconciliation'. Peter Costello, in talking about 'relational reconciliation', is talking about taking personal responsibility for building relationships between black and white Australia and, presumably playing a positive role in ensuring there is an outcome. And there's another policy area where he has a significantly different approach. Under John Howard, the immigration quota has been cut significantly. In the last year of the Keating government just over 70,000 immigrants were admitted to Australia. Last year it was 49,000, a reduction of around 30%. Peter Costello's vision is to use immigration to literally fill Australia with people.

Peter Costello: I think in the longer term we in Australia are probably going to build our population. I mean there's a couple of issues in here, there's the issue of environment, there's the issue of water, but as I look around the world and I see North American Free Trade area of 300-million people, I see European Union Free Trade area of 300-million people, and you see Australia, which is I think about 19-million people, it's very small compared to some of these other areas. And I think, subject to all those environmental-type issues, if we can build a bigger population in Australia, I think it will help us in economic terms, in national sovereignty terms.

Gerald Tooth: It's an economically driven, populate-or-perish policy based on building market strength in the global marketplace. He won't supply a population figure that he'd like to arrive at in order to complete his vision. But the mere fact that he's talking about investigating what's environmentally sustainable suggests he's talking very big numbers indeed. Again, his views on immigration are a significant departure from the current orthodoxy within his own party. Another orthodoxy he challenges is the Liberal Party as advocate for the big end of town. Despite perceptions to the contrary, and having presided over the introduction of a tax system that's pleased big business a lot more than the average Australian, Peter Costello sees himself as an advocate for the consumer as opposed to the producer. For instance, he supports competition policy because he sees it as a mechanism to deliver lower prices on goods and services. It's not a widely recognised position but every so often he does explicitly express his viewpoint. For example, this is his response to recent complaints from Qantas that competition policy was damaging its business and forcing it to lay off workers.

Peter Costello: We can't sit around and say we're going to try and run things for the benefit of Qantas and Ansett, we've got to sit round and say we're going to run things for the benefit of consumers.

Gerald Tooth: One can imagine it's the sort of message that has big business shifting a little uncomfortably in its seat. There's another area of Australia where Peter Costello also makes people uncomfortable. He's far from popular in regional Australia. The Treasurer is on the wrong side of too many hot button issues. He supports the privatisation of Telstra, competition policy, deregulation of industry and is an anti-tariff free marketeer. So his friends are eager to boost his image beyond the capital cities as someone who cares about and understands the bush. But it's a big ask because there's one comment that people in the regions will not forgive Peter Costello for making: that is, that they should take a pay cut.

Presenter: First to the great city/country divide, and the Federal Treasurer, Peter Costello today continued to fuel the row over his suggestion at the weekend that workers in the bush should accept lower wages than their counterparts in the city.

Gerald Tooth: Little wonder then that National Party leader, John Anderson, declined to appear in this program. He told Radio National's Background Briefing that he'd like to talk about his positive working relationship with Peter Costello but because this would be broadcast in the regions it would be better for him not to comment at all. Peter Costello has a lot of work to do to overcome the perception that he's a cold, distant, hard-hearted, city-centric economist. And there's more: There's also the criticism that he's too good at his job. Costello is seen as a consummate professional, the very model of the modern politician. He's polished and hard, like stainless steel. He knows his lines and sticks to them as he works the media. In parliament he's a formidable performer. In fact he's often compared to Paul Keating in that arena, and accused of fashioning himself on the former Labor Prime Minister. In terms of political evolution he's the latest model from the lawyer-as-politician factory to hit the showroom floor. Costello 2001 is jam-packed with state-of-the-art party machinery, but unfortunately for him, tastes are changing and people are looking for something less hard-edged, something they feel they can drive instead of being driven by, and something that runs on a more sustainable fuel than the high octane gas of power politics. Social researcher, Hugh Mackay says this is a problem for Peter Costello.

Hugh Mackay: Being a polished politician, which sounds like a great asset, can of course be a great liability; because in the same way as the smirk, can imply insincerity, the evidence of polish can imply insincerity, can make it look as though this is a person so orchestrated, so programmed, so plausible, so fluent in every situation, that you really have to wonder whether the substance is there. And that of course is a problem for politicians in general, that they have to become accomplished speakers, they have to be to some extent, smooth performers in public and in the media. Where the smoothness becomes the message, where the central impression is of plausibility, then it actually does become a liability.

Gerald Tooth: It's not just the broad image of Costello as a politician's politician that's a problem for him. He has a much more specific characteristic that is a blight in the public eye. Hugh Mackay says his research reveals that perceptions of Costello are dominated by his facial expression.

Hugh Mackay: People do read what is undoubtedly just the shape of his face, something that he presumably can't help, but they do read that as a bit of a smirk, and they interpret the smirk as meaning either that he's rather patronising, that he's sneering at people, or (and in some ways this is worse) that he's not fully sincere, not really engaged, that it's all a bit of a game to him. Not fully earnest, not fully engaged with what he's talking about.

Gerald Tooth: So that would seriously damage the message that he's trying to get across?

Hugh Mackay: I think it's true, that the look on Costello's face does get in the way of the words coming out of his mouth, and I emphasise that this is very unfair, but it's just one of those things that we have to acknowledge in the modern political process.

Gerald Tooth: Peter Costello's smirk made headlines recently with press claims a $45,000 a year image consultant had been brought in to help the Treasurer. His office utterly rejected the unsubstantiated accusation. Previously, Peter Costello has said nothing about the issue. His response to Background Briefing's question about the smirk is that he's not going to change a thing.

Peter Costello: I like to have fun, I like to smile, and I'm going to continue to do so, and political opponents, they'll always try and get a line on you for some reason or another. You know, maybe your ears are too big, which mine probably are, maybe your teeth are too bad and need straightening, mine probably do; maybe your nose has been broken and it's crooked, mine probably is; and maybe your smile shows that you haven't had expensive enough dental work done early in life. Well, I'm afraid these are just the trials of life that I'll have to live with.

Gerald Tooth: Do you have concerns though that it is seen to sometimes undermine the debate that you're having about a particularly serious subject?

Peter Costello: Actually I like to have fun, and I'm going to continue to have fun. And somebody said on TV the other day, 'Oh there he was, dancing with Kerrie-Anne Kennerly, how can he do such a thing?' Well I'll tell you, it's free easy, it's a lot of fun. And you only go round once. So if I can have a bit of fun on the way, I'm going to do it.

Football training sounds

Gerald Tooth: We're back where we began, in fantasy land, at training with the Essendon Football Club, as coach Kevin Sheedy puts the side through its paces. Sheedy is a legend in the game. He's known as a coach who thinks outside the box. He often appears as a motivational speaker in the business world and has even gone to Canberra to speak to a group of MPs from both sides of the House. When we catch up with him in the middle of team drills, he is imagining what sort of footballer the club's number one ticket holder would be.

Kevin Sheedy: We think that probably Costello's about centre halfback, and he's in between Fletcher and Dean Wallace.

Gerald Tooth: How's he going to go this season?

Kevin Sheedy: He'll play that same way as they do, every year, if that's the sort of bloke he probably is, he'll have a go, he'll try to get it right, and we think that defence is basically the banker in football.

Peter Costello: Well he might have been saying something else too. He's got me halfway between a player of skill and a player of brute force. Fletcher with skill, and Dean Wallace with brute force, so perhaps he thinks I'm halfway between an enforcer and a skilled player. Whether it's true or not I don't know.

Gerald Tooth: Essendon are the current AFL Premiers, so in some ways are in a similar position to the Howard/Costello Government. Everyone is out to knock them off this year, while they struggle to stay focused and motivated. And as for the election that could make or break the political career of Costello, well the master coach has the right words of encouragement for any occasion.

Kevin Sheedy: I tell you it's going to be very, very close, and I mean if you're a Liberal person you'd probably want to learn from what happened to Jeff Kennett, and make sure if you're going to get it right, then make sure that the capital 'A' in arrogance can actually be eradicated and try and find out what the people are honestly about.