Cabinet papers recall era of stability, unity, purpose

It is probably too late for the ­Coalition to heed the lessons of its last successful period in office, when John Howard was prime minister and Peter Costello was treasurer, but the release of the 1996-97 cabinet papers is nevertheless instructive for those who might have forgotten what effective government looks like.

They did not get everything right, as Howard and Costello ­acknowledge, and there were mistakes and misjudgments that all governments accumulate. Yet, they won four elections.

Moreover, the running of a proper cabinet process, having clear direction and purpose, and shrewd management of the party’s liberal and conservative wings remains contemporarily relevant.

In an interview for this column, Howard explained his approach to managing government was informed by his experiences as a minister in the Fraser government as well as by closely observing the Whitlam, Hawke and Keating governments as an opposition MP. He placed a premium on process, consultation and consensus.

Howard says: “I was determined that I would run an ­orthodox cabinet system of government.

“I wouldn’t pre-empt cabinet unless it were absolutely unavoidable, and I would give everybody a say and I would respect the partyroom.” He made sure meetings started on time and had a clear agenda. And he was always available to talk to MPs.

These things mattered.

“Members of parliament, on the whole, are very committed. Most of them have strong ideals and certainly great ambition, and they are pretty egotistical,” he says. “Most think they are actually better than the people who occupy positions of authority, so you’ve got to respect that. Making the system work and respecting the Westminster process is, in my view, fundamental to being a successful prime minister.”

One of the hallmarks was stability: the prime minister, treasurer and foreign minister (Alexander Downer) remained in their positions for the entire 11-plus years. “I would be surprised if you have another government where you have that again,” Howard says. “It provided an extra­ordinary amount of solidarity, and both Costello and Downer were outstandingly competent.”

When Treasury informed Costello after the March 1996 election that the underlying budget deficit had blown out from $600 million to $7.6 billion, he urged cabinet to commit to a “substantial fiscal adjustment”. Spending would be reduced by 1.5 per cent of GDP over two years and the cuts had to be “credible”.

There was resistance from several ministers, but Howard and Costello, and finance minister John Fahey, held firm. In contrast to recent governments, they would rely largely on spending reductions rather than increased revenue to repair the budget.

Voters accepted the cuts because the government made a compelling case for them. “It is always desirable to repair the budget with a much greater emphasis on spending restraint than anything else, and that is what we set out to do,” Howard says. “We were absolutely determined that the heavy lifting would be done by expenditure reductions.”

Ministers were disciplined and advocacy was essential in convincing voters and persuading the Senate to support fiscal consolidation. Costello is the only treasurer, after Keating, to have delivered a surplus since the 1950s.

“It was done in 1996-97 and there was a comparable effort by (Paul) Keating before 1990, and there has been nothing since,” Costello tells this column.

“I think there was talk about it in 2014, but it never eventuated.”

Howard says the commitment to fiscal repair in the early years of government paid a political dividend later when they tackled other difficult reforms such as the sale of Telstra, the waterfront ­confronta­tion and introducing a GST.

“What we did in the first year gave us unchallengeable economic credentials,” he argues. “Nobody could say we had squib­bed the economic challenges.”

An early test for the government came when Martin Bryant killed 35 people at Port Arthur in Tasmania in April 1996. Cabinet pushed for uniform national gun laws, including a ban on automatic and semiautomatic weapons, with support from the states. Some within government urged a more cautious response, but Howard was prepared to lose seats over it.

Yet Howard understood that managing the relationship with the National Party was critical. He respected their views and they ­always worked through difficult ­issues to a satisfactory resolution. Howard paid tribute to Nationals leader Tim Fischer and his deputy, John Anderson, who supported the gun laws, which was difficult for their rural constituency.

Another relevant lesson is that Howard and Costello, as leader and deputy, were astute mangers of the Liberal Party. They both lament how the party has become more factionalised, especially in NSW, and divided over its ideological direction. In interviews, they emphasise that the party must remain a broad church if it is to continue to win mainstream voter support.

“I was always very conscious that there were two traditions, classical liberal and conservative, and we gave everybody a go and we made decisions that were based on consensus which imposed discipline in government,” Howard says.

Costello says he would not know if he was on the Left or Right of the party today. He always believed in smaller government, lower taxation and the principle of reward for effort. He says the Liberal Party is today often distracted by phony “tests” of ideological “purity” that matter little to voters. “If you could unite the party around an economic program, I think a lot of those divisions would fall away, and that’s what we did.”

It would be erroneous to look back on the Howard, or indeed the Hawke or Keating, governments as always being smooth sailing. There were sharp dis­agreements in cabinet, big issues that divided the public, and each of them won election victories against the odds. Yet, for the most part they ran ­effective governments and the voters rewarded them with renewed mandates.

There is no chance of Howard, Keating or Bob Hawke returning to politics. But Costello is often asked about a comeback. He is, after all, only 61. Costello jokes that he doubts he would win Liberal preselection: “I don’t know if I’ve got the right views any more.” More to the point, he says he has moved on from politics and is happy with his life.

“People say to me: ‘You went too early and if you had stayed around you would have become prime minister.’ I’d been there for 19 years. I’d been deputy leader of the Liberal Party for nearly 14 years. They had plenty of time to make me leader if they wanted to. And now I’ve got other stuff to do.”

If only the Liberal Party could turn back the clock.