So Long, Farewell, Auf Wiedersehen, Goodbyeee!


Considering how much the media seemed to enjoy writing about him, the orgy of memorialisation that has greeted Peter Costello’s decision to retire is passing strange.

This was the man who provided a guaranteed story on a thousand slow news days. "Will he or won’t he?" asked members of the fourth estate whenever they had nothing much else to write about. The speculation about Costello’s future became something of a career for some, like News Limited’s Glenn Milne, who spilled countless litres of ink championing the leadership and electoral prospects of the former treasurer and soon-to-be former backbencher.

Now that the Member for Higgins’ plans are finally known, the retrospectively prescient among the press corps are telling us they knew it all along. Paul Kelly, for instance, apparently always knew Costello was going to quit, a view he apparently never communicated to his colleagues at The Australian.

Then there’s the prevalent view that, to quote Mischa Schubert from The Age, Costello was "forced to suffer more than his share of agonies awaiting an ascension that never came". While there can be no doubt that Costello found John Howard’s intransigent refusal to simply hand him the prime ministership difficult, it’s not entirely accurate to say any such "agonies" were inflicted upon him.

Put simply, Costello never had the numbers. No-one can become prime minister in the Australian system without the support of their party room; Costello never came close. This may indeed have been agonising. But counting the numbers is also the most basic rule of electoral politics. Costello’s failure to mount a challenge demonstrates nothing more than the brutal reality of party politics.

This reality also puts paid to Tony Abbott’s theory that Costello was some kind of selfless giant of the Liberal Party because "he was not prepared to wreck the Coalition government to lead it." In fact, Costello was never in a position to lead it in government, which is almost certainly why he never tried. Of course, he could have led the Liberal Party without challenge after the 2007 election; no party wrecking would have been necessary. But, either out of spite for his former leader or a disinclination to shoulder the thankless hard work required to lead a party in opposition, he abandoned his claim.

The unseemly display of faux regret in federal Parliament showed an equal hypocrisy. For a start, Costello was hardly correct in saying that "both sides of the dispatch box" would be happy to see him go; Labor will surely miss Costello’s destabilising presence on the Coalition backbench and the implicit leadership tension he so expertly encouraged, even when doing nothing more than spruiking his fairly dull memoirs.

And what about the speculation that Kevin Rudd might find a cushy diplomatic or trade post for the former treasurer? This was even less believable, despite Costello himself expertly stoking the media spin.

"Obviously I have to earn an income," he said yesterday, "but if in addition to that I can do things on the international stage that would help our country, I would be very interested."

Hang on a minute. Costello doesn’t "obviously" have to earn an income at all. As a long-serving former treasurer and member of federal Parliament who was elected under the old parliamentary superannuation scheme, Costello is set for life. Thanks to the Australian taxpayer, he will earn a healthy cut of his former salary until the end of his days, not to mention various generous travel, health care and other perks. Whatever’s motivating his desire to strut the world stage, it’s not financial hardship.

Then there were the teary moments in Costello’s farewell speech in Parliament. "Family is everything to me", he intoned in choked tones of high emotion. For anyone familiar with the profoundly anti-family work practices of federal politics, this would have been more than a little surprising. Running and attaining political office is a relentless grind of 16-hour days that leaves little time for family; being treasurer for 12 years must have absented Costello from his family for long periods. It’s a hard and indeed tragic fact that male politicians who talk about the importance of family often speak from a position of little knowledge of their own. Tony Abbott admitted as much yesterday.

Finally, a word must be said about Costello’s economic legacy. Senior Liberals are fond of calling Costello Australia’s "greatest" treasurer. There is no doubt that we owe the GST in good measure to his many months of hard work in the lead-up to the tax’s introduction. As a growth tax on consumption, the GST was a fundamental tax reform that has helped sustain the solvency of the entire Australian federation. How much worse would the budget positions of the states be right now without the Commonwealth revenue they derive from the GST?

But Costello’s long years of surpluses and tax cuts were also highly complacent in a structural sense. He used the windfall gains of the mining and terms-of-trade boom of the 2000s to fund tax cuts, leaving infrastructure investment and essential human services like health and education to wither on the vine. When the economy turned, so did the federal budget, and those surpluses melted away. As Treasury research eventually showed, Costello in fact ran structural deficits for the last few years of his reign.

Costello’s business and income tax reforms also left an inequitable legacy. Under his watch, capital was taxed far more lightly than labour, and the rich gained disproportionate benefits in comparison with the poor. To take just one example, his decision to give a 50 per cent discount on capital gains tax of investments is an illuminating contrast to the punitive marginal tax rates faced by low-income earners trying to combine government benefits with part-time jobs.

Ultimately, it is difficult to separate Costello’s legacy from that of John Howard. Costello shared his leader’s hard-line pursuit of industrial relations deregulation, the ultimate result of which was WorkChoices and electoral defeat for his party in 2007. The conservative side of politics would do well to remember this particular aspect of the Howard-Costello legacy when eulogising his contribution. But it is unlikely they will.

Meanwhile, as Peter van Onselen rightly pointed out this morning, for the Liberals it is now "Turnbull or bust".

Ben Eltham is New Matilda's National Affairs Correspondent.