Gillard on the move for power

THE dominoes are falling Julia Gillard's way. This week she used incumbency brilliantly to create momentum to form government and discredit Tony Abbott over his alleged $11 billion "black hole" deception.

It is folly to call this election until the final announcements are made. But an Abbott government would occur against this week's trend. Gillard has formed a Labor-Green alliance, won the backing of Tasmanian independent Andrew Wilkie, seen Abbott's humiliation over the costings issue and watched as the public statements from the three rural independents lean Labor's way.

There have been two elections: the first contest determined by the people saw a Gillard-Abbott dead heat and the second contest for the support of the "balance of power" MPs sees Gillard thriving.

If Gillard forms a government it will testify to her skill as a negotiator and fixer, adroit at managing people, deft at judging the extent of concessions and likely to be comfortable in the new power-sharing politics.

Her pragmatism suggests that if Labor had the numbers, Gillard would be equally ruthless in marshalling them against many of the concessions she now offers.

The present numbers are 74-73 Gillard's way. Labor is still short. If Gillard secures two of Tony Windsor, Rob Oakeshott and Bob Katter she governs, and if she gets three of them she governs with a crack of daylight.

A Gillard success will see a strange new political beast, a Labor government in alliance with the Greens and independents. Such a government with guarantees on confidence and supply may be stable but only the foolhardy would expect it to be effective. This would be a highly vulnerable Labor government. Indeed, the risk for Gillard or Abbott is that victory is a poisoned chalice.

Have no doubt that Greens leader Bob Brown emerged this week as a big winner, securing an historic Labor-Green alliance. Brown gave nothing beyond his declared support for a Labor government. Consider the situation: the Greens, having been pivotal in killing Labor's proposed carbon price last year, having stolen votes from Labor this election and having crippled Labor's inner-city support, are now rewarded with the gift of a governing alliance by Labor. The Greens will pocket their alliance and continue to attack the Labor base.

From the independents the play of the week was delivered by Wilkie. His pro-Labor leanings were expected but not their extent or lethal impact. Wilkie pledged to Gillard. He wants a Labor government. In effect he offered her confidence for the entire three-year term, signalled that he was trying to kingmake a Labor government by getting the other independents to follow his lead, applauded Gillard's commitment to process and ethics, and offered the commentary that he felt Labor was now uniting behind her.

At the same time he attacked Abbott's costings "black hole" and criticised Abbott's $1bn offer to him on a new Hobart hospital as "almost a reckless offer". He was, however, only too happy with Gillard's offer of $100 million now for the hospital with a pledge to seek from October 1 a new round of hospital investment applications that will allow the $565m Hobart hospital to proceed, with the national government providing 60 per cent of funding.

On cue, Gillard appeared within minutes of Wilkie's announcement to praise him repeatedly as a man of "decency and diligence". His agreement to back Labor was because of "his views of the national interest". Could there be any doubt?

Welcome to the new age of ethical pork-barrelling. Old-fashioned revenue rorting, typified by Abbott's offer, is just plain offensive. But dressed-up, sanctified pork-barrelling within existing policy structures designed to save Gillard's political neck merely testify to political "decency" and sound process. How long the Australian public tolerates this nonsense will be awaited.

Abbott's offer was a political disaster, with Wilkie neatly knifing him. Presumably, the Coalition won't forget. Its spokesmen now say that in the talks with Abbott it was Wilkie who floated the $1bn figure into the discussion. Abbott should never have made the offer but he doesn't want to die wondering.

The moral is Gillard's adroit use of incumbency and grasp of the ethical pomposity of the independents (Katter excluded).

Under the Gillard-Wilkie agreement Wilkie meets Gillard weekly when the house is sitting. He gets regular briefings from the Treasurer and Treasury. He can get access to any department. He can submit his policy proposals to Gillard's office for forwarding to the relevant ministers and departments for analysis. Where costs are involved they will be done for him by Treasury and Finance within 10 days when possible. Above all, this is a Gillard-Wilkie agreement and they are the only signatures on the document.

Meanwhile the request from the three rural independents for Labor and Coalition policy costings rebounded on the Coalition this week with a sickening thud.

This request from the independents has delivered a propaganda coup for Gillard. In the end, the independents' request may become a material factor in delivering her government, a justified exploitation of the Coalition's costings vulnerability that was obvious during the campaign.

The Treasury finds over the four years of forward estimates a $10.6bn shortfall between the Coalition's estimate of improvement to the budget's bottom line and Treasury's own estimates. Some of this reflects the inevitable "different models and data", as Treasury concedes. But the Coalition has made mistakes that should have been avoided.

The lesson is that it looks unready for office. Given the opening, Gillard went for the political jugular. "Well now, of course, we know he [Abbott] has 11 billion reasons why he wanted to keep those costings secret," she said.

"The person who cannot find savings, who is carrying an $11bn black hole, who would cut budget surpluses having campaigned to Australians deceitfully on the basis that he would increase budget surpluses is Mr Abbott."

Gillard was so lethal she made it hard for any independent to back Abbott. And if Gillard wins she will lay this charge around Abbott's head for the next three years to ruin him.

The Charter of Budget Honesty started out as a way of keeping governments honest. It has been successful at that. Now it is being mobilised to keep them in power. The system, as its architect Peter Costello knows, is biased to the incumbent since oppositions cannot second-guess Treasury.

The reality, however, is that the budget policy of Labor and the Coalition, measured by Treasury estimates, is near identical. Treasury says that over the forward estimates the Coalition improves the bottom line by $863m compared with Labor's improvement of $106m, though in the final two years Labor's surplus is bigger.

Frankly, such details have little meaning given the inevitable changes in policy and parameters.

The independents need to be careful: any effort to tie costings to the issue of confidence when both sides have a similar bottom line would seem bizarre and Labor's first-term financial blunders have been so high profile.

In a sense the deepest insight from the week is Gillard's commitment to a Labor-Green alliance, precisely because it was so unnecessary.

This is Gillard putting her personal stamp on Labor identity, strategy and tactics. It is Gillard taking ownership of the Labor Party: a decision driven totally by politics, not any pro-Greens sentiment. Its motive is to show that Gillard is the arch interpreter of the new politics, prepared to compromise to secure the numbers.

In this deal Gillard surrenders little of substance. The parties agree on the principle of a carbon price. By creating a new climate change committee Gillard can ditch her citizens assembly. She has given the Greens nothing on foreign policy, economic policy, border protection or same-sex marriage.

On process, Gillard will meet Brown and new Greens MP Adam Bandt weekly when parliament sits. Bandt will have access to the economic ministers and departments and the Greens can get their policy proposals costed by the departments.

With the Greens holding the Senate's balance of power, Gillard knows she may need them to secure her legislation. Don't expect the new parliament to legislate a carbon price since that would require a Labor-Greens deal.

The gulf between the two sides is great and the Greens ride a voting escalator as long as Australia has no carbon price and they are the only party urging immediate action.

Gillard has invited the Australian public to see and judge Labor as the party in alliance with the Greens, a movement it cannot control, whose values are sharply different from Labor's. If Abbott is consigned to opposition he will crusade on this strategic blunder for the next three years.

In the interim the nation awaits the decision of Windsor, Oakeshott and Katter. Will there be yet another twist? Or will the key to this phase of politics lie in the common experience of these three and Wilkie?

That common experience is striking. In each case it is a past breach and alienation, whether personal, political or moral from the conservative side, whether the Nationals or the Liberal Party.