The Killing Season Uncut (10 page)

In the darkest days of the GFC, key decisions in the government were made by the Strategic Priorities and Budget Committee, a sub-committee of Cabinet. Known as the Gang of Four, its members were Rudd, Gillard, Swan and Tanner. Terry Moran, secretary of the Department of Prime Minister and Cabinet at the time, saw the process up close.

It drew the Prime Minister into unconventional means of getting decisions taken in government, often cutting around the normal way in which the Cabinet process works. And it was this committee more than anything which was a source of chaotic behaviour at the Cabinet level, and which irritated lots of Ministers … The essence of how a good Cabinet government works is that a prime minister takes his or her colleagues along on a journey on the big issues, and that's what was sacrificed by the way this special committee operated.

I put the question to Rudd: did too much power devolve to the SPBC?

Look, I think it's an open question.

Julia Gillard said that in the second half of 2009, she urged the Prime Minister to move away from his reliance on the subcommittee.

Julia Gillard (JG): It wasn't disbanded because I think in Kevin's view in particular, he preferred to do business that way. There wasn't a ‘GFC over' moment but there were moments to move to more normalised decision-making. I advocated to Kevin in those moments that we should go back to full Cabinet consideration.

SF: So you argued to disband the Gang of Four as the central decision-making body?

JG: Yes … I consistently put the view that we needed to move to a more regular decision-making style, and increasingly I discussed that with Wayne Swan because we both knew what it was like to be in the middle of this decision-making chaos.

Rudd flatly rejected Gillard's account.

That is the most creative reconstruction of a political memory I've heard. I remember Julia in particular enjoyed and liked the relative secrecy of that small gathering.

Leader of the House Anthony Albanese agreed that the use of the subcommittee went on for too long.

I think that continued beyond its usefulness. In part that occurred because very early on, over FuelWatch, was the first time that there was a leak of the Cabinet discussions and that was obviously not constructive. And when you have people leaking from any process, then there's a tendency to try to diminish the discussion in that forum.

Kevin Rudd said the impetus to form the subcommittee was the leaking from Cabinet.

There had been leaks from Cabinet discussions about a range of matters, and the rational response to it, based on the advice of the Prime Minister's department, was to establish a Cabinet subcommittee. This was supported by Julia, supported by Treasurer Wayne Swan, supported by Finance Minister Lindsay Tanner as being the right way to go, and the public servants were particularly anxious this be the case.

Leaks troubled Rudd. Greg Combet said they were a detestable feature of federal Labor politics.

There was a culture of leaking against your own colleagues and against your own political party … A disgusting, disgraceful practice. We're in there for a purpose and here's some arseholes running around undermining our own purpose for their own personal advancement or the advancement of some cause. It still makes me sick.

 

In the second half of 2009 the government's political problems were accumulating. The opposition continued their campaign against stimulus spending, while one of Labor's key election commitments was coming unstuck. The emissions trading scheme (ETS), promised as an answer to the great moral challenge of climate change, couldn't get through the Parliament. At the same time, boats carrying asylum seekers had started arriving in greater numbers.

The politics around those issues fed into a broader narrative that Kevin Rudd wasn't the economic conservative he'd promised, and Labor couldn't be trusted to manage the economy—or increasingly, anything else.

Inside the government, key relationships were shifting, critically the relationship between Julia Gillard and Wayne Swan.

JG: Wayne and I had not had a good relationship. Well, we hadn't had a bad relationship. We just really hadn't had a relationship across the period of opposition. When I came into Parliament I didn't know Wayne. There was nothing that naturally brought him into connection with me: different states, different factions. I probably had a sense that I was a policy person and he was a machine person, which is probably unfair to Wayne but I would have gone in with that sort of sense. I mean Wayne Swan would [have] had a big reputation as a Queensland organisational person.

SF: A bit of [a] hard man?

JG: Yeah, bit of a hard man, he had that reputation.

Gillard gave a nervous laugh as she described herself as a policy person. Notwithstanding her credentials as a policymaker, there was an echo of Rudd's desire to depict himself as an innocent when it came to factional politics. Gillard had admitted in a profile on the ABC's
Australian Story
that earlier in her career, to get preselected she had played a hard factional game. It seemed an unremarkable claim for a woman who had succeeded in Victorian Labor politics. But like Rudd, it suited her new narrative to present herself more as policy wonk than warrior.

Swan said he had not made an effort to get to know Gillard when he came to Canberra.

I had little to do with Julia Gillard. In fact, one of my great regrets is that I didn't actually spend more time talking to Julia Gillard during that period as Kevin Rudd did. And I guess that in some way is a compliment about his networking capacity.

Gillard said as the government's position worsened, she and Swan turned to each other.

JG: Increasingly Wayne and I did something that we hadn't done across all of our lives in Parliament together, which is actually seek each other out. We started having direct policy and political discussions.

SF: And the political ones, how much were they about what are we going to do about Kevin?

JG: They were discussions about how we work with Kevin to get him to make the big decisions that we need to make. So a lot of them were about that, about managing Kevin. None of them were leadership discussions about replacing Kevin.

Within months of their election, the government had closed offshore detention centres on Papua New Guinea's Manus Island and on Nauru. After the change in policy, people smugglers resumed the traffic of asylum seekers between Indonesia and Australia: the trickle of boats in Labor's first year in office reached sixty by the end of 2009.

Under pressure over the increase, Rudd made a unilateral decision to stop the boats at sea. In October, a group of Sri Lankan asylum seekers was intercepted and transferred to the Australian Customs ship
Oceanic Viking
. In an arrangement with the Indonesian Government, they were taken to the island of Bintan for refugee processing.

Gillard said the episode was a low point in the government's decision-making processes. Rudd's failure to properly consult with ministers and to use the Cabinet began to have political implications.

More than anything else, the
Oceanic Viking
told me where our decision-making processes had degenerated to. This was a decision taken by Kevin without the benefit of talking to his
Minister for Immigration or his Minister for Defence. I remember [Minister for Immigration and Citizenship] Chris Evans telling me Andrew Metcalfe, his departmental secretary, spoke to him and uttered the famous words, ‘Minister, they won't get off the boat'.

Andrew Metcalfe was right. The asylum seekers refused to disembark from the Australian vessel. The stand-off lasted a month. Chris Evans saw it as a turning point in Labor's handling of the asylum-seeker issue.

Up until then we'd managed to deal with the arrivals without having a huge public outcry … But the
Oceanic Viking
really said this government can't manage its borders. We had that four-week nightly news coverage of the stand-off, there's an Australian ship being held to ransom, and it was a disaster.

The incident damaged the government's popularity. They dropped 7 points in the polls, 59 to 52 in the two-party-preferred vote. Mark Arbib was warning about the electoral consequences of not addressing the issue; Gillard was listening.

He continued to have his politically savvy campaigning skills, which is why he would look at something like the
Oceanic Viking
and be very, very clear and knowing about the amount of damage that it was doing the government.

Rudd said he rejected the advice coming from Arbib and Karl Bitar about asylum seekers.

I think from that time, and I'm talking about later in 2009 their advice to me after political problems emerged in relation to asylum seekers for God's sake was to tow boats back to Sri Lanka in the middle of a civil war. When I started to say, ‘Chaps, I actually don't think that's terribly wise', I think
they got the impression that I wasn't just a piece of putty in their hands.

According to Kevin Rudd, the critique of the
Oceanic Viking
was overblown. The political consequences weren't as dire as claimed.

Can I just put this into context? The Australian Government had been ahead in the opinion polls from the day it was elected through until a month or two before they changed the leader, including throughout this period. That did not occur under the Keating government. That did not occur under the Hawke government. That did not occur in the first term of the Howard government.

It wasn't just asylum seekers causing political pain for the government. The most controversial of the stimulus measures was the roof insulation or pink batts program. Rudd was happy to take the credit for the BER but was reticent about his role in the home insulation scheme.

KR: The home insulation program came out of the bureaucracy. It was a proposal, I think, put together by Prime Minister and Cabinet …

SF: So you're saying the home insulation program came out of the bureaucracy but you were in favour of it?

KR: We supported it. I own full responsibility for the school modernisation program idea. The home insulation program I did not bring to the table; others did.

Treasury secretary Ken Henry's recollection was different.

SF: Who was driving the inclusion of the roof insulation scheme?

KH: The Prime Minister, yeah.

Over four months, four young men were killed installing insulation and a number of house fires were alleged to be linked to the program. Rudd acknowledged responsibility for the deaths, but not with the same obvious pain expressed by Greg Combet, who was brought in to clean up and eventually shut down the failed scheme.

It was an absolute fucking nightmare. For people whose homes had been insulated and who were fearful of a fire, can you imagine how terrifying that was for them? But most of all, the profound tragedy of young men being killed during the process of installing insulation, and others being injured, in some cases very severely. The tragedy for those families, I felt that really was bad.

In focus groups, ALP market researcher Tony Mitchelmore noticed a new narrative emerging about Kevin Rudd and government.

So you had BER, you had batts, you had debt escalating, and then you had boats and this
Oceanic Viking
. It was just another dot that started to create a picture of Labor as not able to run things, as not able to control things, as Kevin Rudd a little bit out of control, and everything he's touching isn't seeming to go quite right.

Focus groups, shmokus groups. I mean they come, they go.

Kevin Rudd

T
OWARDS THE END
of 2009, Kevin Rudd was engaged in an international effort that he hoped would lead to a successful outcome at the United Nations' Climate Change Conference in Copenhagen.

There'd be midnight teleconferences with the Secretary-General of the United Nations, with the chairman of the conference, with the Danish Prime Minister, with [British PM] Gordon Brown and with others … trying to work out where we could land this thing. Remember in March of that year we'd managed to do this on the global financial crisis. This is about November, December of the same year and what we were trying to do is to harness the same enthusiasm within the G20 group to actually bring about a deal.

I asked Julia Gillard what she thought about Rudd's ambitions for the conference.

Let's think about the best way of putting that …

Gillard paused.

I think Kevin dreamt big dreams for his role at Copenhagen …

No-one would dispute that. Gillard continued.

I think he would've liked to have been seen internationally to play a pivotal role. Now would you call that vanity or would you call that focused on the task of getting a global climate agreement? Well, in the way of political leadership I think it's a bit of a mix of both.

I listened closely to Gillard's account of Kevin Rudd in the lead-up to Copenhagen. Her assessment of him after the international climate change conference was where she went furthest in her critique, alleging he lacked the capacity to perform his role as Prime Minister. An early clue was her description of Rudd's attachment to the conference as ‘emotional'.

SF: Why emotional, not intellectual?

JG: I think it's both. I think that there's a sense of connection that's an emotional bond as well as an intellectual bond. I mean here is a man who could've chosen from dozens of other potential professions. He chose to be a diplomat because it's meaningful to him.

I thought there was an artfulness to Gillard's narrative. I observed her laying the groundwork to justify later conclusions. In this case, if Rudd's connection to Copenhagen was emotional, it explained an emotional collapse afterwards.

 

The government's response to the GFC kept people in jobs and the economy out of recession, but they had expended considerable time and money doing it. The Rudd government was left carrying the burden of promises they had made coming into office.