Abbott march checked by a dose of realism

THIS week saw the return to realism in politics with Tony Abbott's acceptance that his political attack on the Rudd government must be buttressed by presenting the Coalition as a credible alternative government.

The magnitude of the challenge Abbott faces was in stark relief: his removal of Barnaby Joyce as shadow finance minister conceded that populism is not enough; his refusal to reinstate Malcolm Turnbull to the front bench reveals the still fragile state of Liberal Party unity; his loss of the leaders' debate to Kevin Rudd highlights the imperative for viable Coalition policies, notably on health and hospitals; and the victory of the Rann government in South Australia reminds of incumbent Labor's ability to hold marginal seats against the swing.

This is the realism that underpins the end of Abbott's initial phase as Opposition Leader. In this period he has restored the Coalition's competitive position, a feat that surprised Labor, Liberals and the media. For the past four months Labor has looked confused and inept, with Rudd partly destabilised by Abbott's aggression, unpredictability and Australian distinctiveness.

But Abbott now confronts a larger challenge: whether his style and character can be packaged as a credible prime minister. The test is whether Abbott supplements his populist firebrand image with the assurance and reliability the public expects from a prime minister. He needs to reflect deeply on this multidimensional issue in its personality and policy aspects.

For example, many people admire Abbott's exceptional fitness regime, which sees him competing this weekend in a triathlon (a 3.8km swim, 180km bike ride and a 42km marathon run), but this is not necessarily seen as a recommendation for high office.

Many leaders make sacrifices for the Lodge. Bob Hawke won kudos by publicising his giving up grog. Might Abbott win kudos by publicising a retreat in his fitness regime for more time in a suit?

This is not about Abbott abandoning his authenticity, an improbable task anyway, but about an experienced minister, debater and thinker projecting other sides of his character and accentuating his leader's credentials.

Abbott's proposed "headland" speeches during the autumn break will slot into such a game plan. His reply to Wayne Swan's May budget will be pivotal since Abbott must be convincing at this point, when the economy comes into strong focus.

Removing Joyce shows Abbott's ability to concede past mistakes and rectify them. It testifies to his underestimated pragmatism. This was a tough and correct decision made quickly once Nick Minchin's pending retirement created the vacancy.

By putting Andrew Robb into the finance job and Joyce into the regions, water and infrastructure, Abbott hopes to solidify his economic credentials yet retain Joyce's grassroots skills. But Labor still sees Joyce as the weak link. It will put him under immense pressure over water, hoping to fracture Coalition unity. Abbott has pledged to hold a referendum, if necessary, to assume national government responsibility for the Murray-Darling, a stance in conflict with the Nationals. Joyce, obviously upset at his demotion, faces a fresh test of his character and skill in denying Labor another opening on water policy.

Labor assumes the other Coalition weak link is Eric Abetz, shadow industrial relations minister, now about to replace Minchin as Senate leader. Labor will run another Work Choices scare; it will be distorted and slick. Abetz will be under huge pressure and any false step will be exploited to revive the Work Choices bogy, with the media likely to give credence to Labor's claims.

The reshuffle has rekindled Abbott-Turnbull tensions. By signalling his willingness to return to the front bench in the finance post, Turnbull was ready to recommit to politics, provide fresh momentum to the economic team and, by returning to the shadow cabinet, keep his leadership credentials alive. Abbott felt the risks outweighed the gains and that the danger of Turnbull-centred tensions was too great.

He gave the job to Robb, not Turnbull. It was an important statement. It reminds that the whole foundation of Abbott's progress so far depends on his restoration of internal unity, and if this is breached then Labor will ride the breach to victory.

Rudd won the first round of the health contest this week, but his victory last Tuesday in the leaders' debate raises core strategic and tactical questions for Abbott. While embarrassed without a health policy Abbott was right not to speed deliver a policy merely for the event.

But Abbott's dilemma is apparent: does he run big and bold on hospitals to outmuscle Rudd?

This is Abbott's instinct. But instinct is not necessarily the best path to wisdom. Abbott has passionate views on hospital policy. His book Battlelines is rich with reflections about his time as health minister and convictions about future policy. Abbott believes he can beat Rudd on health and this week's debate fuels his competitive instincts.

He scoffs at Rudd's new 60-40 federal-state funding model as a "mere percentage shift" that cannot solve the blame game because "the problem of who's really in charge will remain".

Abbott is attracted to the national government accepting full policy and funding responsibility for public hospitals. He brands Rudd's failure to end the hospital blame game as "his biggest single broken promise".

The decision for Abbott is whether to outgun Rudd by offering a bigger structural change, including a path towards a 100 per cent national funding model. It would be bold, populist and easily grasped by the public. But it would elevate health as the election issue, which is Rudd's plan. For Abbott, it would be a strategic decision to fight on Labor's terrain.

Arthur Sinodinos, John Howard's former chief aide, cautioned Abbott in The Australian that "when one party (Labor) has a lock on an issue, the traditional advice to the other party is to close it down quickly and move back to your issues".

Why should Abbott enshrine hospitals as the issue when the Coalition's strength is the economy, the emissions trading scheme, boatpeople and Labor's failed programs?

A more cautious strategy for Abbott is to neutralise health the way Rudd neutralised Howard's strengths in 2007 by moving closer to his policies.

Abbott, significantly, wants local hospital boards for NSW and Queensland, the states where public hospital pressures are greatest. Abbott has never forgotten how Rudd in 2007 blamed Howard for the hospital policy failures of Labor governments in Sydney and Brisbane.

He is bent on deploying the same tactic against Rudd. .

In the interim Abbott can enjoy Labor's discomfort as it becomes obvious that Rudd must pay a high price to win the premiers' support for his GST-health agenda at his meeting with them next month.

While Rudd has been astute in moving the agenda to hospitals, this betrays his mounting difficulty: the ETS has turned against him; the fiscal stimulus is undermined by program defects; the Henry tax review is coming.

In this situation Rudd must sustain hospitals as his winning issue. This initiative has Rudd's fingerprints all over it. He cannot afford a rebuff by the premiers or the derailing of his grand idea resulting in perceptions of his mismanagement. That would finish Rudd's claims of co-operative federalism and drive him to a confrontation with the states via his pledge of a fallback referendum.

The election positions are apparent: Abbott's claim is that Rudd runs a government of all talk and no competence; Rudd's slogan is that Abbott does not constitute a viable alternative.

The lesson this week is that Abbott has begun to address his credentials as an alternative government and this project will determine his fate.