He crushed Latham in 2004, but unlocked cabinet papers reveal the problems Howard could not fix

It remains one of federal politics’ most remarkable achievements. With more than eight years as prime minister under his belt, up against a feisty Labor leader and signs that the war in Iraq was not quite “mission accomplished”, John Howard claimed victory at the October 9, 2004 election.

It gave Howard a fourth consecutive election, a feat only Robert Menzies and Bob Hawke had accomplished. It was his second victory in a row at which the Coalition’s standing in the House of Representatives improved. He also claimed the first Senate majority since the 1970s.

“This nation, by reason of the circumstances of history and by reason of its great capacity and the great capacity and dedication of the Australian people, stands on the threshold of a new era of great achievement,” he declared on election night.

John Howard on one of his election campaign morning walks in 2004. The victory was perhaps the high point in his entire term.Credit: Andrew Taylor

But in victory, and the months leading up to it, the seeds of the Coalition disaster that would be the 2007 election were sown. And problems – from the cost of Australian housing to the situation in Afghanistan to the state of the budget – also took root as Howard’s cabinet watched on.

The cabinet papers of 2004, released on Wednesday by the National Archives, reveal the decision-making processes of Howard, his treasurer, Peter Costello, foreign minister Alexander Downer, and then-Nationals leader John Anderson. They include 242 documents with thousands of pages.

While the importance of some issues has been long forgotten – a 37-page submission on the future of Comcover’s reinsurance program was obscure even in 2004 – others resonate today, especially given what has transpired in Australian politics over the past two decades.

Howard had entered the year facing new Labor leader Mark Latham, who narrowly defeated Kim Beazley in a party room vote to replace Simon Crean in December 2003.

The moment Latham lost it

Latham, now an angry member of the NSW Upper House (having been elected as a representative of One Nation), was the youngest leader of the federal Labor Party since its first, Chris Watson, more than a century earlier.

Considered smart and, at more than 20 years Howard’s junior, more in touch with much of the voting public, he was buoyed by a surge in opinion polls that put Labor in an election-winning position.

Latham quickly targeted a perk enjoyed by federal politicians – their superannuation – proposing an end to the generous scheme. “This is all about rebuilding some trust and confidence in our democracy,” he would declare to the ABC in early February.

Howard, who had time and again proved his ability to gauge a change in the public’s attitude on an issue, negated Latham’s superannuation challenge in a single meeting with a new policy that exists today. It’s the system that left former MPs such as Scott Morrison – who would have left parliament with a pension worth about $200,000 a year – on a scheme much more like that enjoyed by ordinary Australians.

Latham’s electoral star would wane through the rest of the year and into the election campaign.

On the last day of the campaign, in the confines of a Sydney radio station, Latham would aggressively grip and shake Howard’s hand, sealing his loss and setting off a generation of memes.

Reaping what we sowed

Former US president George W. Bush declared the Iraq war over after six weeks. It continued for years.Credit: AP

What consumed so much more time was Iraq.

After then-United States president George W. Bush’s “mission accomplished” declaration in May of the previous year, it appeared that 2004 would be dominated by the rebuilding of Iraq. The cabinet papers show the government’s attention was on the economic opportunities.

In early March, as US-led coalition forces prepared to transfer power back to the Iraqis, cabinet was briefed on a range of issues including what would occur during a trial of former Iraqi leader Saddam Hussein.

The same document reveals the attention given to commercial issues. At one point, the cabinet submission noted that Australia would face “greater difficulty influencing key decision makers in Iraq on issues relevant to our commercial interests”.

Describing the wheat trade to Iraq as a “key Australian interest”, the submission noted “mounting US competition for our wheat markets, which is presenting a major challenge”.

The first elements of what would become the oil-for-wheat scandal had erupted in mid-2003 when America’s peak wheat lobby alleged that Australia’s monopoly wheat exporter, AWB, was inflating its prices by “millions of dollars per shipload”, with the excess profits propping up Hussein’s government and family.

The Howard government dismissed the allegations while AWB described them as an insult to Australian farmers. But they were later found to be correct, a point confirmed by a United Nations inquiry.

The inquiry, conducted by former Federal Reserve chairman Paul Volcker, started just a month after the cabinet submission. Volcker would find that AWB paid $290 million to an Iraqi front company that channelled the money back to the Hussein regime.

The March submission noted the role played by the government’s special adviser on Australia’s wheat trade to Iraq – Trevor Flugge, a former AWB chairman.

Flugge would become a central player in the royal commission, headed by Terence Cole, that Howard would eventually create in late 2005.

Cole would castigate Flugge, finding he may have been “either reckless or intentionally dishonest” over the issue, while rejecting Flugge’s denials that he did not know about the true arrangements between AWB and the Iraqi government.

A month after the submission went to cabinet, the first battle of Fallujah would occur in an early sign of the quagmire Iraq would become. By year’s end, the second battle of Fallujah would confirm the Iraq mission of the US and its “coalition of the willing” was far from over.

John Howard visits Australian soldiers in Iraq in 2007. Credit: Fairfax

Largely absent throughout the cabinet papers is mention of the war that Iraq had supplanted – Afghanistan.

Australia officially ended its six-year military presence in Iraq in mid-2009. Forces would go back into Afghanistan in 2005 and not leave until 2021, with the Taliban taking back control of the country that same year.

In his election victory speech, Howard had noted that on that very day, the men and women of Afghanistan were going to the polls. “We should be proud of the role that we have played in their liberating Afghanistan,” he declared.

Afghan women no longer have the right to vote. In 2024, they were barred from speaking in public.

Spies like us

Among the documents released by the National Archives every year, a handful have sections blanked out on security grounds. But few are completely excluded from release.

One from 2004 not made public relates to negotiations with Timor-Leste over the maritime boundary between the two nations.

Eight years after that submission was created, it was revealed that Australian spies – under the guise of a foreign aid project – had bugged the Timor-Leste cabinet room in Dili as the two countries discussed the sea border. At stake were tens of billions of dollars of oil and gas reserves that promised a chance to build an economic foundation for the small nation.

The revelations would colour relations between the two nations, and play out in the international and domestic judicial systems, for years. The year after the spying allegations were aired, Jose Ramos-Horta, who was then the former Timor-Leste president, argued Australia would never have gained a place on the United Nations Security Council had the claims been known.

The person alleged to have blown the whistle on the spy mission, known only as “Witness K”, would be sentenced to a three-month suspended jail term in 2021. Legal actions against his lawyer, Bernard Collaery, were discontinued by current Attorney-General Mark Dreyfus the following year.

Before the release of the documents, Howard was asked about the Timor-Leste issue.

“I had such confidence in our external intelligence services that I think they would have always behaved in a way that promoted the Australian national interest,” he said.

But critics, including those in Timor-Leste, saw the whole episode as Australia seeking to secure a commercial interest on behalf of the nation’s private oil and gas industry.

Pressed on Australia eavesdropping on the small nation, Howard expressed ignorance.

“I can’t remember the detail of the discussions … I would have to have a look at the papers again. I have a good memory but not that good,” he said.

Marriage’s defining moment

It was in 2004 that the Howard government formalised the definition of marriage as between a man and a woman.

The official documents show cabinet discussed the issue alongside laws passed by the West Australian, Tasmanian and ACT parliaments to allow same-sex couples to adopt children.

Admitting that defining marriage as between a man and a woman would be “controversial”, ministers were told three countries – Belgium, the Netherlands and parts of Canada – had already made same-sex marriage legal.

The Department of Prime Minister and Cabinet backed a change to the Marriage Act to “forestall” being forced to recognise same-sex marriages registered overseas.

The department also noted that when it came to the ACT, the federal government could override its same-sex adoption laws just as it had blocked the Northern Territory’s euthanasia laws in the late 1990s. However, the department conceded ACT Liberal leaders were opposed to such an intervention, and it was ditched.

Howard, in 2024, said the idea was to ensure elected representatives determined marriage in Australia, rather than leaving it to the courts.

“I hold the strongest possible view that those sorts of decisions should be made by the people of Australia or their elected representatives. I completely oppose the American situation where you leave such issues to the courts,” he said.

The government of Tony Abbott – a member of the 2004 cabinet – would later successfully launch High Court action to end the ACT’s same-sex marriage laws, which had allowed 31 couples to tie the knot.

While their marriages were voided, the nation’s voters gave the couples a chance to renew their vows at the 2017 marriage equality postal survey, at which 62 per cent of participants supported ending the 2004 definition.

The cabinet documents confirm other decisions that, over time, would have to be revisited by future governments.

Childcare was an increasingly potent political issue. Howard would go to the 2004 election promising a 30 per cent childcare rebate at an estimated cost of more than $1 billion over three years.

While the aim was admirable, the for-profit part of the industry – such as ABC Learning (which, before it went bankrupt, became the world’s largest childcare provider) – would capitalise on the growing amount of public money channelled into the sector.

It is an issue with which the Rudd, Gillard, Abbott, Turnbull, Morrison and Albanese governments have all wrangled.

Then-minister for ageing, Julie Bishop, went to cabinet in March foreshadowing a costly overhaul of aged care.

Then-minister for ageing, Julie Bishop, signalled users of the system would need to cough up more money and regulations would need to be eased.Credit: Penny Bradfield

A review of the industry had found it “relatively immature, inefficient … and unnecessarily constrained by regulation”. Providers were suffering from low rates of return while the industry feared that wages were “growing faster than the Australian average”.

Bishop signalled users of the system would need to cough up more money and regulations would need to be eased so providers could compete more easily on price.

This use of market forces, however, would come under criticism from the 2021 aged care royal commission, which argued that greater control of providers was needed to protect the elderly and provide them with better standards of care.

It found aged care funding was “insufficient and insecure” due in part to governments over decades trying to restrain spending “irrespective of the level of need for care, and without sufficient regard to whether the
funding is adequate to deliver high quality and safe care”.

It rejected the argument that wages were too high, saying workers suffered from low wages and poor conditions.

“All too often, and despite best intentions, aged care workers simply do not have the requisite time, knowledge, skill and support to deliver high-quality care,” it found.

Tax cuts for all

In the retail sector, then-small business minister Joe Hockey had recommended the government reject a proposal from an inquiry it had set up to make the retail grocery code of conduct mandatory.

Twenty years on, and with the Coalition itself pressing for action, the Albanese government will make the code mandatory from next year, with fines of up to $10 million.

Money, for the Howard government, was not an issue as it recorded a $13.6 billion budget surplus. Until the following year, it was the largest surplus ever recorded.

The pre-global financial crisis mining boom would ship boatloads of cash to the government. Between late 2003 and early 2005, the economy alone delivered an extra $104.5 billion in revenues.

In his 2004 budget, Costello estimated that by 2007-08 the government would collect $47.3 billion in company tax. It turned out a third more at $64.8 billion.

Some of the cash was banked as surpluses. Some went into extra welfare payments. But the majority was channelled to taxpayers via a succession of personal income tax cuts, including almost $15 billion worth in the 2004 budget.

But the tax cuts would eventually feed their way into inflation.

Howard would open his press conference to announce the 2004 election by posing the question: “Who do you trust to keep interest rates low?” At the time, the official cash rate was at 5.25 per cent.

By 2007, it would be increased during that year’s election campaign to 6.75 per cent.

Howard’s regret

Howard’s tremendous victory delivered the Senate majority that enabled him to pass his contentious WorkChoices industrial relations agenda.

A key part of these changes was the removal of the so-called “no disadvantage test” on collective agreements. As long as employers met five minimum entitlements covering working hours, annual leave, parental leave, carer’s leave and minimum pay, working conditions were left largely between workers and their bosses.

Evidence rapidly emerged of workers left tens or hundreds of dollars a week worse off. The government would, in 2007, introduce a “fairness test”, a concession to unions amid claims that WorkChoices was reducing take-home pay.

WorkChoices would become a key issue at the 2007 election that ended the Howard government.Credit: Jason South

But it was too late. WorkChoices would become a key issue at that year’s election that ended the government and Howard’s hold on his own Sydney electorate.

Howard, 20 years on, said people were entitled to say that the Senate majority had gone to his head.

“The truth is that we won in 2004 and we lost in 2007. Some of that was undoubtedly due to people being cranky with what we started to do, but a lot of it was due to the fact they got a bit tired of us,” he said.

“They’d become bored with us.”

Voters of 2004 may have been bored. But the issues confronted by the Howard government of that year are still arousing excitement among voters today.

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