this other life

John McTernan, left, with his former boss Tony Blair, is now director of communications for Julia Gillard. Photo: Getty Images

After a rocky start, Labor’s prime ministerial office must form a narrative that the party – and the voters – can latch on to, writes Lenore Taylor.

ONE of the first things Ben Hubbard did when he took over as Julia Gillard’s chief of staff in February was declare what he calls a ”war on crap” day.

To start with, he ordered in a fleet of wheelie bins to clean out the tottering piles of redundant reports and papers littering the warren of prime ministerial staff offices on the ground floor of Parliament House.

He also set up regular meetings, strict procedures and reporting structures to streamline the organisation. He suggested a more formal dress code.

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Strategy unit director Nick Reece. Photo: Erin Jonasson

But for the former head of the Victorian bushfire authority, dealing with the ”crap” was much more complicated than just cleaning up the desks.

Hubbard was enticed by one old boss, former Victorian premier Steve Bracks, to return to work for another old boss – Gillard – at a time of Labor’s desperate need.

When Gillard knifed Kevin Rudd she said she was doing it because ”a good government had lost its way” but eight months later, it wasn’t so much lost as hopelessly mired, with seemingly intractable policy problems still hanging, a minority government to manage and an opposition that had smelt political blood.

Tom Bentley. Photo: Rodger Cummins

Gillard, with trusted adviser and Hubbard’s predecessor, Amanda Lampe, hadn’t had much time to think about the office’s ”look” or procedure until then, as they hastily grafted the few Rudd staffers who wanted to stay on to her deputy prime ministerial office to create a new team. They stumbled into a lacklustre, leak-ridden election campaign, clung to power in a desperate negotiation with the independents and the Greens and staggered through the ”summer of disasters”.

Now Gillard was facing what she had billed as her ”year of decision and delivery”. The plan was to work through the problems left hanging by the Rudd government – carbon pricing, the mining tax, asylum policy; endure the inevitable poor polling; keep the minority government functioning; and, hopefully, get some points for perseverance along the way.

Almost immediately the Prime Minister made what senior Labor figures and her closest advisers now concede was a terrible political mistake.

Julia Gillard and her chief-of-staff Ben Hubbard Photo: Alex Ellinghausen

She and her office were so focused on dominating the Greens in the cross-party policy committee designing the carbon price that they miscalculated the political danger in Gillard’s admission that an initial fixed price amounted to a breach of her promise not to introduce a carbon tax.

”There was no political strategy to deal with it, no communications strategy; they didn’t seem to realise it was going to be a big problem,” says one senior Labor MP.

Tony Abbott realised straight away. He labelled it a fundamental ”betrayal” the same day. Pretty soon her election pledge, ”There will be no carbon tax under a government I lead”, was featuring in Coalition attack ads and on almost every Abbott staffer’s mobile phone ringtone. The broken promise helped cement their message that Gillard was an untrustworthy and illegitimate leader.

Backed by radio shock jocks and a US Tea Party-style conservative grassroots organisation, the government was stunned by the effectiveness of the anti-tax campaign, which bogged it in defensive mode and overshadowed its positive messages for most of the year. Its goals became more desperate – not just to tolerate a tough year but to survive it.

It ground on and now, at year’s end, the carbon tax has passed, the mining tax has passed the lower house and the defection of Liberal Peter Slipper to be Speaker of the House of Representatives has taken off just a little of the constant pressure of a hung parliament.

But when Gillard’s 50 or more staff head to The Lodge this week for their annual Christmas party and a friendly game of backyard cricket (last year Gillard’s partner Tim Mathieson dominated the bowling), the relaxation will be brief.

Another serious miscalculation – on asylum policy – continues to cause political pain.

When she took over from Rudd, Gillard promised to do away with government by the kitchen cabinet – the so-called gang of four – and restore proper cabinet processes. She has done this.

But inside cabinet, a determined prime minister always wins. And when the High Court struck down Labor’s ”Malaysia solution” – a contingency for which the government had not in any way prepared – it was Gillard who was determined to press ahead with legislation to allow the plan to proceed.

She was certain she could win the public argument and force Abbott to capitulate and support her bill. Her cabinet had grave reservations. Abbott, they argued, was not the kind of bloke to back down. She prevailed but the cabinet has proven right. The asylum boats keep coming – 25 since the High Court decision, at last count. And the government keeps getting the political blame.

A leak to The Sydney Morning Herald of a second cabinet flare-up – a more desperate discussion the following month about how to manage Abbott’s refusal to give in and support the enabling laws – made headlines at the time.

But ministers blame the continuing debacle on Gillard’s original miscalculation.

And leadership tensions are ever present.

They were irritated at last weekend’s ALP conference when Rudd was wiped from the list of past Labor prime ministers in Gillard’s speech and are sure to surface again in the new year if the government’s dire primary vote of 30 per cent does not begin to improve.

The day-to-day relationship between the rivals functions through the Prime Minister’s international adviser, Richard Maude, liaising with Rudd’s senior adviser, Philip Green. Both men are experienced former Department of Foreign Affairs officers who get things done. Rudd and Gillard meet at least monthly to discuss Rudd’s portfolio issues.

But while the polling continues to show Labor facing a landslide defeat, leadership tensions will always lurk in the shadows, stoked by a growing perception in the left wing of the party that Gillard, their former factional comrade, has surrounded herself with a right-wing ”praetorian guard” comprising the factional bosses who installed her. Rudd supporters believe he is likely to move some time next year.

Despite all of this, at year’s end, senior Labor figures see a glimmer of hope where, even midyear, they saw none. And they believe the government’s strategic decision-making is finally improving.

In the Prime Minister’s office this is overseen by Hubbard, along with the director of the strategy unit, former Victorian Labor state secretary Nick Reece, and the new director of the communications unit and former Tony Blair adviser John McTernan. Medium and longer-term strategy is the job of deputy chief of staff Tom Bentley, a long-time Gillard staffer.

In crises, either Hubbard or Bentley take charge, with the other continuing to manage regular business, to make sure the office keeps running smoothly rather than lurching from one issue to another.

In sitting weeks the Treasurer, Wayne Swan, the manager of government business in the House of Representatives, Anthony Albanese, and the manager of government business in the Senate, Joe Ludwig, join in the daily strategy sessions.

Gillard has finally begun using incumbency to her advantage, setting the agenda and managing big international events and conferences so she dominates the news and at least some of Abbott’s daily factory tours wind up on the television edit-suite’s floor.

The work by her dozen or so policy advisers has always been strong. Director of policy Ian Davidoff worked for Rudd and Swan previously. He is direct, works long hours and pays attention to every detail. His team contains the largest number of staff continuing from the Rudd government days, including carbon and water adviser Clare Penrose, housing adviser Trish Woolley, schools adviser Myra Geddes, transport adviser Damian Kassabgi and industrial relations adviser Amit Singh.

The biggest question mark now hovers over how the government is communicating what it is doing and why it is doing it. Former prime minister Paul Keating has said the Gillard government needs a ”compelling overarching story” and that it should be educating the community about its program. Labor MPs say they would settle for something coherent that they could say like they mean.

”It would really help if we could hit on a strategy and stick to it; there’s no direction, no purpose, no story, no strategy,” says one frontbencher, a Gillard supporter.

Gillard’s closest advisers concede this problem. Fixing it falls largely to the newly appointed McTernan, along with senior press secretary Sean Kelly and speechwriters Michael Cooney and Carl Green.

They have a bit to work with. The carbon and mining taxes and the health reforms are moving into what insiders call the ”retail” phase, which means they are about to be implemented, in the case of the taxes along with all their associated family payments and handouts.

And implementation, as opposed to passing legislation, allows the government to sideline the Greens and independents, control the agenda, explain what it is doing and look as if it is governing.

But Labor politicians and organisers were dismayed last weekend when Gillard had an opportunity and a captive audience to set out her agenda at the Labor national conference and instead delivered a montage of platitudes.

”It was a free kick and she dropped the ball,” one Labor MP says. Another is angry about the management of the whole conference: ”Why make gay marriage and uranium sales to India the issues? Why not tell our economic story?”

Steve Bracks believes the strategy employed by Hubbard, the man he persuaded back to the Prime Minister’s office, is starting to work.

”He knew he had to get the office functioning for the long-term and I think we are beginning to see the fruits of that,” he says.

”The agenda is becoming clear; it’s all about using today’s prosperity for tomorrow’s jobs. That’s what the carbon tax is about, the mining tax, the national broadband network; that’s what Labor is doing.”

If that’s the case, it’s not even clear to some Labor MPs, let alone the voting public.

Next year’s job, especially for McTernan, is to fix that.

Government insiders insist that, while he is a Scotsman who worked for Tony Blair, McTernan is nothing like the foul-mouthed spin doctor Malcolm Tucker portrayed in the BBC political comedy The Thick of It. But the new staff member does come from a tough political training ground.

In an article he penned for London’s Telegraph in July, McTernan said the British coalition government was flailing during the phone-hacking scandal because it didn’t have enough ”leg-breakers” and ”head-kickers”.

”All governments need head-kickers – in their Cabinets, on their backbenches and in their offices,” he wrote.

The British Prime Minister, David Cameron, was suffering because he had ”no one [who] can do the necessary low politics”.

McTernan recounted: ”Halfway through my time as his political secretary, Tony Blair offered me some excellent advice. ‘You only have to break one of their legs, John.’ In vain did I protest that I had never broken a single leg, let alone both. The point Blair was making was that political operatives need to be either feared or respected.”

McTernan clearly thought Blair was giving him good advice.

The passage of crucial pieces of legislation and the extra vote on the floor of the Parliament could allow Labor to overcome this year’s atmosphere of crisis and incompetence and set out a plan.

Having played the ”long game”, dragged itself through a year replete with even more ”crap” than it had expected and bought some space for governing, Labor has to prove it knows what it wants to do with it. And then it has to explain it to the voters.

“Under review” … the big four banks are yet to pass on Tuesday’s rate cut.

THE standoff between the big banks and the Gillard government has intensified, with the government repeating its demands they pass on Tuesday’s interest rate cuts and the banks maintaining their deafening silence.

With homebuyers anxiously awaiting a rate cut before Christmas, government sources said yesterday the longer the banks said nothing the more likely they were to either not pass on the full cut or only part of it.

Despite mounting political pressure, each of the big banks said their interest rates remained under review after Tuesday’s cut in official rates, as the Australian Bankers’ Association conceded borrowers may not receive the full cut.

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The Treasurer, Wayne Swan, warned the ”extremely profitable” big four lenders against denying customers the reduction in rates, saying customers had a right to be ”very angry” if they were denied the cut.

After this year introducing a series of changes to boost competition in the banking system, he said customers could leave the big four banks if they felt they were getting a raw deal.

”These arrangements do empower consumers if they’re unhappy with their lending institution to walk down the road and to get a better deal. You can get a better deal these days because our banking system is much more competitive than it was before.”

The political outcry came as the Bankers’ Association chief executive, Steven Munchenberg, said the Reserve would not be surprised if the banks only passed on part of the cut. “The RBA would have factored that into their decision,” he said.

Amid the standoff, the big four used Twitter to tell customers rates were ”under review”.

”Our rates remain under review, we know this has big implications for your home loan & savings, we’ll let you know as soon as we do,” Westpac tweeted, sparking angry responses.

The 0.25 percentage point cut is worth about $49 a month for a $300,000 mortgage if it is passed on in full.

The standoff follows an escalation in Europe’s debt crisis, which has sent the cost of raising money on global markets to levels near the peaks seen during the global financial crisis.

The head of Australian credit research at Deutsche Bank, Gus Medeiros, said banks were not raising long-term funds, as the cost of raising money on global markets had jumped sharply.

”New issuance in the bond market by major Australian banks has virtually stopped since October, because stress related to Europe has affected term funding conditions,” he said.

A key gauge of the cost of long-term bank funding has surged to 1.75 percentage points above the cost of short-term credit, up from 1.37 percentage points in late October.

The executive director of the Australia Institute, Dr Richard Denniss, said the banks were profiting from a game of chicken over interest rates, as the Reserve’s cut had delivered them a saving they had not passed on to customers.

”A game of chicken normally results in someone having a car crash, this game of chicken results in them all making a lot of money,” he said.

Mr Munchenberg denied the big four were profiteering, saying banks were weighing up the unpopularity of not passing on a cut with the challenge of higher funding costs.

“Under review” … the big four banks are yet to pass on Tuesday’s rate cut.

THE standoff between the big banks and the Gillard government has intensified, with the government repeating its demands they pass on Tuesday’s interest rate cuts and the banks maintaining their deafening silence.

With homebuyers anxiously awaiting a rate cut before Christmas, government sources said yesterday the longer the banks said nothing the more likely they were to either not pass on the full cut or only part of it.

Despite mounting political pressure, each of the big banks said their interest rates remained under review after Tuesday’s cut in official rates, as the Australian Bankers’ Association conceded borrowers may not receive the full cut.

Advertisement: Story continues below

The Treasurer, Wayne Swan, warned the ”extremely profitable” big four lenders against denying customers the reduction in rates, saying customers had a right to be ”very angry” if they were denied the cut.

After this year introducing a series of changes to boost competition in the banking system, he said customers could leave the big four banks if they felt they were getting a raw deal.

”These arrangements do empower consumers if they’re unhappy with their lending institution to walk down the road and to get a better deal. You can get a better deal these days because our banking system is much more competitive than it was before.”

The political outcry came as the Bankers’ Association chief executive, Steven Munchenberg, said the Reserve would not be surprised if the banks only passed on part of the cut. “The RBA would have factored that into their decision,” he said.

Amid the standoff, the big four used Twitter to tell customers rates were ”under review”.

”Our rates remain under review, we know this has big implications for your home loan & savings, we’ll let you know as soon as we do,” Westpac tweeted, sparking angry responses.

The 0.25 percentage point cut is worth about $49 a month for a $300,000 mortgage if it is passed on in full.

The standoff follows an escalation in Europe’s debt crisis, which has sent the cost of raising money on global markets to levels near the peaks seen during the global financial crisis.

The head of Australian credit research at Deutsche Bank, Gus Medeiros, said banks were not raising long-term funds, as the cost of raising money on global markets had jumped sharply.

”New issuance in the bond market by major Australian banks has virtually stopped since October, because stress related to Europe has affected term funding conditions,” he said.

A key gauge of the cost of long-term bank funding has surged to 1.75 percentage points above the cost of short-term credit, up from 1.37 percentage points in late October.

The executive director of the Australia Institute, Dr Richard Denniss, said the banks were profiting from a game of chicken over interest rates, as the Reserve’s cut had delivered them a saving they had not passed on to customers.

”A game of chicken normally results in someone having a car crash, this game of chicken results in them all making a lot of money,” he said.

Mr Munchenberg denied the big four were profiteering, saying banks were weighing up the unpopularity of not passing on a cut with the challenge of higher funding costs.

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