Captain Chaos and the workings of the inner circle

IS Kevin Rudd becoming Captain Chaos?

Kevin Rudd and David Epstein, the "invisible man", on a train in Japan in 2008.

ON the morning of June 4, the Prime Minister was sitting in his office in Parliament House transfixed by his television set.

The more he watched, the angrier he became: Kevin Rudd was in crisis mode, yet again.

The man described by someone who has known him for 30 years as having a glass jaw had yet another crisis: he was angry that in Senate estimates hearings, which he was watching on a monitor, the Labor Government was being accused of having broken its election promise to give every secondary school child a computer.

Rudd, being a micro-manager, wanted to hear every detail of what the Opposition was saying. What followed was a flurry of meetings and phone calls. Rudd picked up the phone to Julia Gillard, who sits in a nearby office, and asked her to come to his office.

He told the Deputy Prime Minister to get her staff to dig out transcripts of every reference he made during the election campaign about computers. Rudd, with Gillard in the room, sat analysing every comment he made on the subject. Whatever meetings Rudd had scheduled were cancelled, once again.

Some days Rudd will be sitting at his desk and suddenly begin text-messaging a journalist or editor.

One recipient of such texts says: "It's part of his private nature. He doesn't want anyone else to know who he's having conversations with and this way not even his staff know."

The Labor Government is six months in power, and chaos and indecision are impinging on normal decision-making processes. There's a lot of noise and announcements but insiders say nothing much is actually happening. The situation is certainly not terminal: this is a PM who still has a near-record high level of popularity against an Opposition that still has not worked out its longer-term leadership situation.

Rudd is a phenomenon in one sense: he has gone from being an Opposition frontbencher to Prime Minister in just less than 12 months. But if he keeps governing as he is doing now, he'll earn the nickname Captain Chaos.

Into that world of chaos last month walked two of the nation's most senior officials: the chief of the Australian Defence Force, Air Chief Marshal Angus Houston, and Department of Foreign Affairs and Trade secretary Michael L'Estrange. They were kept waiting several hours, resulting in L'Estrange missing the farewell lunch he was meant to be hosting for the French ambassador, Francois Descoueyte. In diplomatic terms, this was seen as a significant snub, although French officials, when told L'Estrange was with the Prime Minister, were understanding.

It would have been more accurate to tell the French that L'Estrange was outside the office of the Prime Minister. Every so often he would wander the corridors, having cups of coffee and making calls on his mobile phone as he waited hour after hour for Rudd to see him.

There are increasing warning signs being witnessed by those inside the Government. And the problems are beginning to percolate into the wider community: a recent question to Rudd about whether he was a bad boss clearly wrong-footed him. It was a disarmingly simple question put to him on ABC radio in Melbourne:

Jon Faine: Prime Minister, are you a bad boss?

PM: I beg your pardon? Define and quantify.

Faine: A boss who makes life unsustainable, to use the same language, for your staff?

PM: I would think that I am currently supported by a first-class staff here in the Prime Minister's office inCanberra.

The central problem looks like a chronic lack of experience: there seems to be no one in the PM's office of the stature or personality to say no to him. Most PMs have had at least one such person. Bob Hawke had several: Bob Hogg, Peter Barron, Graham Evans, Ross Garnaut, Geoff Walsh, Dennis Richardson and Barrie Cassidy. Paul Keating had Don Russell. John Howard had Arthur Sinodinos.

In Hawke's time, after question time, a wave of staff members and ministers would fan through the press gallery pumping the government's message of the day and the theme of the year. It was common to see Hogg, Barron and Walsh all working the offices at the same time. Keating, as treasurer, would go from office to office. He once came into The Australian's bureau and drew me a map of the superannuation system. His diagram looked like Barry Jones's noodle nation, with a Keatingesque touch of elan.

These days, there's nothing. One top aide, David Epstein, is the invisible man. One of the country's most influential journalists who works in Parliament House says he has not seen Epstein for two months.

Another, Alister Jordan, rarely leaves the PM's suite. Press secretary Lachlan Harris occasionally - and briefly - swings through the gallery to speak to chosen journalists. Harris is combative by nature and has alienated not just the journalists he is meant to be working with but senior members of his own side.

During last year's election lead-up, he roundly abused Tony Burke, now the Minister for Agriculture, after Burke told him he could not do a media interview. Burke was sick in a hotel room in Darwin and had laryngitis. Word of Harris's abuse of Burke quickly went around Labor's strategists, some of whom could not believe that Harris would believe he was of a status toattack one of their best and hardest working frontbench performers.

Rudd, meantime, sits in the highest office in the land yet he is strangely, bizarrely, alone; a loner both by political history and personality.

Unlike Gough Whitlam, Hawke and Keating, Rudd is not a product of the Labor Party, he has not brought with him political allies sitting around the cabinet table. Who can he really trust? He's becoming more and more isolated. Even some of his ministers are asking: who does he speak to all day?

The answer is probably Jordan: at any given time the person likeliest to be in his office is Jordan, whom he trusts implicitly.

WHEN the Senate estimates issue about computers in schools angered the PM, he was recovering from a crisis the week before. Just after 4pm on May 28, Harris picked up his Parliament House phone and heard the familiar voice of the Nine Network political editor Laurie Oakes. Late afternoon is danger time with Oakes. If he's got a big one it's often the time he calls; enough time for a response but not enough to allow the story to be spoiled.

Oakes told Harris he had a cabinet document showing four departments criticising the Government's FuelWatch proposal. This was the most serious leak the new Government had suffered. Harris rushed from his office, took a lift to the second floor and headed straight to Oakes's office. He asked to see the document. Oakes refused to show him, concerned there might be some mark or notation on it that revealed the source. But he read a few key passages to Harris, who took notes.

Harris went straight to the PM's office: this was big enough to interrupt the PM. When Harris put his head in the door, Rudd was talking to Jordan. Harris told Rudd about the leak.

"Get the team together," Harris recalls Rudd saying. Harris knew instinctively who the team was: Gillard, chief-of-staff Epstein and Treasurer Wayne Swan. The inner circle - Rudd, Gillard, Swan, Epstein, Jordan and Harris - worked out a response for Oakes. Again, whatever meetings Rudd had planned for that afternoon were cancelled.

After six months in office, the Rudd machine is taking form, and the kitchen cabinet is finding it cannot deal with every crisis. In effect Rudd has established a command and control centre, which he runs.

Little happens without his approval and ministers are clearly reluctant to make decisions unless Rudd has signed off on them. And that's filtering through the system: many press secretaries for ministers are unwilling to say anything in case they upset Harris.

The two words most commonly used about Rudd's office are chaotic and dysfunctional. One only need drop by to have that confirmed.

Because of a trolley parked near the door, there's no waiting area. Visitors wait in the doorway near where the mail is dropped off. The day I went to see Harris I noticed in front of me a confidential letter to go to cabinet. Lying open for the world to see was a recommendation to cabinet of a certain individual to run a key government organisation. Most chief executives in Australia would not tolerate this sort of sloppiness. Why does the highest office in the land?

The most obvious example of indecision is the Government's inability to decide on a replacement for Richard Alston as high commissioner to London. A list has been in Rudd's in-tray since February. Rudd cannot decide between three Department of Foreign Affairs and Trade candidates - John McCarthy, David Ritchie and John Dauth - and two political candidates, Kim Beazley and former senator Stephen Loosley.

The logjam is reflected in the fact that six months into the Government, parliament's foreign affairs, defence and trade committee still has not been given a reference for what its main area of inquiry should be.

Meanwhile, it's said Rudd's cabinet meetings are often rambling. Sources say ministers often speak at length with little point.

Rudd's chairmanship is being contrasted with that of Hawke and Howard. Hawke knew how to run a meeting from his days at the ACTU and Howard was famous for allowing ministers to speak, but if he sensed an idea was going nowhere he'd cut them off.

The way the office is functioning is beginning to lead to questions about the sort of employer Rudd is.

Senate estimates teased out the example of Hae-kyong Holdaway, the mother of two who worked 36 hours straight after being asked to hurriedly draft legislation for FuelWatch.

One of the problems, insiders say, is that the favourite way for members of the PM's staff to begin a phone call is "The Prime Minister wants ..." One public service source says often after such a phone call there is no follow-up and the work is often done in vain.

Rudd angered many in the public service when he publicly blamed them for a cabinet leak. But while an attack on the public service registers little with middle Australia, what is a danger for the PM is if the perception grows that he is a bad boss.

Rudd's office does have its defenders. Oakes says Harris and the media office always call him back quickly and do their best to get answers. "Not always the answers I want, of course, but I haven't had the feeling I've been misled or lied to."

Unlike some media operations he has encountered, he says, they don't seem to get resentful if he rejects their spin. "Of course there is spin, but that's hardly unique to this press office or this government."

THEY are the two most powerful 28-year-olds in Australia. The fate of the country and certainly the fate of the Prime Minister is to a large extent in their hands. Jordan and Harris are two of Rudd's closest advisers, spending more time with him and shaping Australia's future than almost any minister. But who are they? And is the country's highest office in good hands?

An investigation of how the PM's office is working at the six-month mark of government has found Jordan is by far Rudd's closest confidant: the first associate the PM speaks to most mornings and usually the last he speaks to at night.

Harris came to Rudd's staff from Swan's office soon after Rudd became leader as an attempt to improve relations between Rudd and Swan, who had been bitter enemies in their home state, Queensland.

Everybody seems to like Jordan. His title is deputy chief-of-staff but it could just as easily be constant companion of the PM. In parliament, Jordan sits closer to Rudd than any other adviser and it is Jordan who passes notes to the PM through question time.

One Labor MP, when asked why the Government appears to be having internal problems, grabs my pen and a piece of paper and draws a map of Parliament. In the advisers' box where Jordan sits, he writes "29", a reference to Jordan's age. (He is wrong; after several email requests to the Prime Minister's office, it eventually concedes Jordan is 28.) The Labor MP says given the youth of Jordan and Harris, the PM is badly missing experience.

Senator John Faulkner, brought in during the campaign to keep an eye on the new team, has quietly been excluded from the inner circle, some days not speaking to Rudd even though his office is around the corner from the PM's.

The 22-year age difference between Rudd and Jordan gives the relationship a certain father-son quality. One of the reasons Rudd trusts Jordan is that Jordan joined Rudd before he became a political phenomenon, when he was Opposition foreign affairs spokesman and his tireless work helped turn the Australian Wheat Board into a prime-time issue.

A growing problem for the Prime Minister is a strong view among many women in the Canberra press gallery that they are being poorly treated. The issue gained a head of steam on Rudd's recent trip to Europe and Asia. Indeed, it prompted one of the men on the trip - ABC TV's Chris Uhlmann - to raise with Harris the growing concern of the women. The conversation over lunch while in transit in Honolulu went along these lines.

Uhlmann: Some of the women think you're rude to them.

Harris: I'm rude to everybody.

After Jordan, the next person on the inner circle is Epstein, Rudd's chief-of-staff.

Keating's description of Epstein - that he wouldn't get out of bed in the morning without doing a poll to work out which side to go - sells him short. He's a political pro, having been in and around politics for 20 years. But Epstein's history is largely in spin; in the Hawke and Keating governments he ran the propaganda unit, known as the Animals: the National Media Liaison Service.

It was under Epstein as chief-of-staff that Beazley as Opposition leader became obsessed with - and disappeared under - a 24-hour news cycle. Everything was seen by how it would play on that night's TV news. The same thing is happening to Rudd now.

Part of Labor's problem is that even some of the true believers are becoming disenchanted.

"I think they're going disastrously," Labor historian Peter Botsman says. "You can't come from Opposition to government and keep everyone happy by saying: 'We will keep all our election promises', particularly when oil prices are going crazy and the economy is starting to turn down in a big way and people are starting to hurt."

Another Labor loyalist, pollster Rod Cameron, says: "Rudd's emerging problems lie with the more cerebral end of the voting public, with some disappointment evident about the extent to which intractable problems are being tackled and the distinctly Calvinistic nature of the PM's outlook." But Cameron adds: "In the suburbs and provincial towns Rudd is seen in very much a favourable light and admired, not condemned for his work ethic, his intelligence and his commitment to keeping his election promises."

The commentators, for their part, are increasingly seeing a problem. "Everything's either for the next 24-hour news cycle or 2020. Nothing seems to be for the here and now," says a leading political commentator who asks not to be named.

Most of the journalists spoken to for this story requested anonymity forfear of being frozen out by the new Government.

One prepared to be named was the ABC's political editor, Uhlmann: "Petrol is a case study of how the Government's focus on the news cycle is working against its long-term agenda. We have been treated to a daily slanging match over meaningless price cuts when Labor's real task is to show the courage to make the hard argument for a carbon tax.

"It makes you question whether the Government actually appreciates just how fraught introducing an emissions-trading system (for dealing with climate change) will be: it will dwarf the GST as the most dramatic, wilful change ever imposed on the economy. The longer Labor plays short-term politics on petrol, the harder the long game will become."

Another prepared to be named is Oakes, who says he knows there is some dissatisfaction in the bureaucracy with the Prime Minister's office. "I have also heard the word dysfunctional used," Oakes says. "I have been told that Rudd's people insist there must be something positive for him to announce or do every day and that this creates strains. It is hard to determine how much truth there is in this.

But he says he has never had the feeling with Rudd's people that he has been misled or lied to. On the question of lack of experience, he says: "They don't come much more experienced than David Epstein."

Fairfax's Kerry-Anne Walsh says: "What I'm being told, anyway, is that Rudd staffers are under such pressure they are hitting out at other ministerial staffers, demanding the impossible and being nasty if the request isn't delivered on, yesterday.

"If Rudd's staff were more experienced and less exhausted, they'd realise that miserable political staff, many of whom are savvy strategists in their own right, can create merry mischief for a government."

A growing number of people who deal with the Government are saying something is going, they're not sure what. Some of Rudd's colleagues, for example, were astounded when he announced on the run his European Union-style plan for Asia.

The man he chose to oversee the assignment, 81-year-old Richard Woolcott, initially said he'd been telephoned at 5pm, but next day said it was closer to 3.30pm. In Rudd's plan for Asia for 2020, people are debating: was Woolcott given two hours' or three hours' notice?

Rudd himself was scrambling on the night: he was still writing the speech an hour before the function.

The PM has been announcing international committees and appointing mentors from his days as a junior foreign affairs officer to key positions: Woolcott, former foreign minister Gareth Evans and former ambassador to China Garnaut.

The job of ministers is being made more difficult by the Government's changing positions on many issues. Not long ago it was hardline on Japanese whaling - pledging to take the Japanese to the International Court of Justice - and now the issue will be left to diplomacy.

Recently parts of the Government wanted the price of petrol to drop after Brendan Nelson's announcement to cut 5c a litre from petrol excise but others wanted it to rise to cut carbon emissions.

The Government has said it wants a tough carbon trading regime but won't say whether it wants petrol included. Rudd has said people should have a better work-life balance yet he says he wants an already-stretched public service to work harder.

SO far, the apparent dysfunction of Rudd's office is affecting his colleagues, the public service and the Canberra press gallery. But when after only six months he's being asked whether he is a bad boss, the problem may begin seeping into middle Australia.

One Labor figure who worked with Rudd in Queensland says he believes the PM is repeating his mistakes, the main one being to alienate the public sector.

"Politics is like an umbrella, you need to build alliances," he says. "What Wayne (Goss) and Kevin did was systematically pull out the spokes of the umbrella until it wasn't an umbrella any more.

"We won Queensland in 1989 after the Coalition was battered by the Fitzgerald corruption stuff. We should have been in government for 10 years. Instead we won in '92, limped over the line in '95 and were out six months later."

One senior public service figure in Canberra - a strong supporter of the Labor Party - analysed it this way: Rudd is trying to play Beethoven's Ninth Symphony. Naturally, as Prime Minister, he's the conductor. But he also wants to play every instrument. He's technically proficient at many of them, but the audience is watching one man trying to do everything.

And as they listen they can tell something's not quite right. This is not quite what Beethoven intended.