Costello’s destiny call?

Australians have witnessed former Federal Treasurer Peter Costello’s gradual awakening from his self-imposed political comatose state in recent months and with it renewed and possibly false hope for the Liberal faithful across the nation.

The former Treasurer’s awakening will continue to ignite leadership speculation, and generate ongoing instability within the Liberal Party and broader Coalition ranks until such time as Costello takes upon himself to achieve what he failed to do when Howard was Prime Minister - have the courage to challenge for the leadership.

Behind closed doors, the Federal Labor Government will also be feeling some anxiety on Costello’s re-emergence into the political limelight. As the longest serving Australian Treasurer, private whispers will be echoing along the corridors of the Federal Labor offices that Costello has the economic credentials and political potency to threaten Rudd’s re-election to a second term in office.

Costello has unfinished personal business in his ultimate aspiration in becoming Prime Minister of Australia. Arguably, Costello selfishly expected the prime ministership to be handed on a silver platter by the Liberal Party without having to mount a challenge, and subsequently turned his back on his own Party when the Coalition government lost power on November 24, 2007.

But perhaps 17 months in the political asylum ward has enabled Costello to reflect and inwardly confront John Howard’s and the Liberal Party’s political betrayal, his own personal fragilities, and to rekindle his unfulfilled personal ambition.

With the next Federal election at most 18 months away, Costello will likely time his run within the next several months to capitalise on Malcolm Turnbull’s inability to cut through on policy issues not only against the Rudd Government but within his own party. This is clear to see on key policy areas, including on asylum seekers, industrial relations, climate change, Labor’s extravagant broadband network proposal, and Labor’s handling of the global financial crisis.

In contrast to current Opposition leader Malcolm Turnbull, Costello is deemed to offer greater policy credibility and strength in Australian voting minds and greater effectiveness in challenging the Rudd Government on key policy issues. This is evidenced by The Australian newspaper’s News Poll published on March 10 revealing Costello as the preferred Opposition leader as well as the preferred Prime Minister ahead of Malcolm Turnbull by 45 per cent to 38 per cent and 24 per cent to 13 per cent respectively.

Costello appears the singular Coalition member with the ability to extract political mileage from Labor’s management of the global financial crisis, differentiate the major political parties along economic philosophical battlelines between neo-liberalism and Rudd’s social capitalism, and diminish Rudd’s credibility as an “economic conservative”.

At a minimum, Costello has the political capital to reduce Labor’s parliamentary majority in the House of Representatives at the next election, and to position the Coalition to arrest power from the Federal Labor government by the 2013 election.

In Costello, Australians see a politician who presided over an economically prosperous and fiscally stable nation for more than 12 years, ensuring the Reserve Bank’s sound monetary policy of a relatively low interest rate environment, a low unemployment rate, job security, wages and stock market growth, increased home ownership, and increased personal financial wealth.

Under the Rudd Government, Australians have witnessed a ravaged economy, higher unemployment, increased job insecurity, a collapse in share market wealth, including significant declines in people’s retirement savings, increased home foreclosures and declines in house prices, and the disintegration of a $20 billion plus budget surplus into a significant budget deficit potentially in excess of $50 billion in less than 18 months in government.

In fairness to the Rudd Government, the global financial crisis has been the core contributing factor in the decline of the Australian economy, loss of employment and personal wealth, and family instability with it. However, it will be the response to the crisis by which the Rudd Government will be judged, and the ability of the Coalition to politically capitalise and cut through to the Australian voting public on the Rudd Government’s handling of the crisis.

With a track record of fiscal rectitude, as Opposition leader, Costello will be able to argue with greater impetus that as Prime Minister he would have managed the current crisis with greater prudency and rationality compared to Prime Minister Rudd’s multi-billion dollar “Whitlamesque” stimulus packages, by not continuously talking down the economy, and not playing Russian roulette with future generations of Australians’ financial security.

To date, Australian businesses and the public have generally been supportive of Rudd’s stimulatory $11 billion and $42 billion policy announcements, and a likely third stimulus package to be announced in the upcoming May Federal budget. This support has been pronounced with the likes of President Obama and the President of the World Bank Bob Zoellick publicly commending Prime Minister Rudd and the government in its decisiveness in dealing with the global crisis.

Nevertheless, there will be a law of diminishing returns in play in Australian voting minds. If there is little or no sign of traction in Australia’s economic recovery by year’s end, and the unemployment rate is not stabilised, then public confidence and patience in the Labor Government’s capability to navigate the Australian economy through this crisis will significantly diminish.

This is what Costello and the Coalition will be hoping!

While the next Federal election is not due until November 2010, the likelihood exists that Labor may well call an election before year’s end, and as early as within several months of the handing down of the May 2009 budget.

Federal Labor will endeavour to leverage the current surplus supply of public goodwill, as Anna Bligh so successfully did in the Queensland State March elections. However, this mood of public goodwill will rapidly dissipate by year end if there is no end in sight to the crisis.

In the lead up to the next election, a potentially politically explosive issue which may also be fundamental in influencing the outcome of the next election is the level of Chinese influence and control over Australian industry after the financial crisis.

The global financial crisis has enabled Chinese companies to increase their financial stakes in Australian companies, particularly in the mining domain. The government will need to utilise its political prowess in allaying voter concerns that Australia is not now viewed as a “colonial” economic extension of mainland China.

This perception will play into the hands of a Coalition, desperate to regain power, playing the fear card by antagonising the xenophobic fringe element of Australian society, and which may also witness the resurrection of “Hansonites” across the nation.

With Federal Labor on a majority of 16 seats in the House of Representatives, Labor need only lose nine seats to be ousted from government. The 2007 Federal election resulted in 20 marginal lower house seats in which elected candidates received less than 56 per cent of the vote. Of those 20 seats, Federal Labor holds nine of those marginal seats, so the margin of error is minute.

While voters generally tend to differentiate between State and Federal issues, with the New South Wales State election not due until March 2011, the potential also exists for a NSW voter backlash reflecting frustration in NSW Labor’s perceived inability to govern and manage the NSW economy.

With Costello as Opposition leader, and State parochialism at play, this may also support the Liberals in wrestling votes and possibly marginal based electorates from the grasp of Labor in Costello’s home State of Victoria.

This once in a lifetime global financial crisis may ironically resurrect the political fortunes of Peter Costello. Could destiny be at play, with Costello smelling a chance of Coalition victory and fulfillment of his ultimate ambition to be Australia’s 27th Prime Minister?

Conversely, the planets may no longer be aligned to Costello’s aspirations: he may have forgone his opportunity of destiny when he failed to challenge John Howard for the prime ministership. As Jack Welsh aptly put it, “Control your destiny or somebody else will”. Costello may have let slip his one and only chance by failing to challenge Howard.

The Australian public will likely deliver Prime Minister Rudd his second and final term in office, during which he will set the wheels in motion to fulfil his next career move to the United Nations, as Secretary General of the United Nations, and at which time Australia may possibly see the destiny of Julia Gillard - as Australia’s first elected female Prime Minister.