MALCOLM TURNBULL’S ARRIVAL in federal parliament in Canberra was met with extraordinary fanfare. On 29 November 2004, four busloads of Turnbull’s supporters came all the way from Sydney to pack into the public gallery to watch Malcolm deliver his maiden speech. Never before had a new MP made such a spectacular entrance.
Lucy and Daisy were there, of course, along with father-in-law Tom Hughes—Alex was watching online from overseas. Wentworth campaign veteran Michael Yabsley, Liberal NSW director Scott Morrison and hundreds of party volunteers were also there. Many of Turnbull’s rich mates, old and new, were there too, including OzEmail’s Sean Howard, former Packer lawyer-turned-developer Theo Onisforou, Macquarie Bank’s Robin Crawford and wife Judy Joye, and Transfield boss Marco Belgiorno-Nettis. Altogether there were four hundred people there just for Malcolm.
So many well-heeled types cut quite a spectacle—scribes mocked the abundance of tanned décolletage, blow-dried blonde hair, cutaway collars and silk ties.1 Opposition leader Mark Latham hammed it up, joking he’d never had such a big audience from Vaucluse: ‘I am reminded of the great words of John Lennon … perhaps, instead of applause, they could just jangle their jewellery.’2
Turnbull’s speech was a heartfelt but airy tribute to his electorate, emphasising egalitarianism over privilege: ‘The best things in Wentworth—the waves at Bondi, the ducks in Centennial Park or even the brisk nor’easter whipping down the harbour on a summer’s day—take no account of your bank balance.’ His party colleagues were underwhelmed. ‘There wasn’t really all that much to digest, was there?’ one told a journalist. It compared unfavourably with the substance-over-style of fellow debutant Andrew Robb, whose speech focused on Indigenous policy and managed to convey a liberal philosophy.3 Nevertheless, it was Turnbull who captured the media attention, as always, and he was whipped straight off to the ABC’s 7.30 Report to be interviewed by Kerry O’Brien.
After waiting patiently for Turnbull’s speech, and duly applauding, the crowd gathered for a $20 000 party in the parliament’s cavernous Mural Hall, which Turnbull had hired, putting on champagne and nibbles. Did they really all catch a bus, one jewelled dame was asked? ‘Oh yes, quite,’ she said. ‘Perhaps the first time any of us had caught public transport in our lives. Although I must say that the knowledge the person sitting next to me had most certainly had a shower in the last twenty-four hours made thoughts of the journey a whole lot easier!’4 The late columnist Matt Price, in a sharp sketch, wrote that ‘gawking Liberals were astonished by the scale of the glorification, which continued at a plush restaurant that night. Several guests relied on private jets for the return trip.’5 Notably absent were any of Turnbull’s new parliamentary colleagues—and certainly no Peter Costello, Brendan Nelson or Tony Abbott—who were largely over at Robb’s more humble drinks in his new backbencher’s office.
Turnbull’s seat in the House of Representatives was right up the very back, next to Wilson ‘Ironbar’ Tuckey and Russell Broadbent.6 His parliamentary office, R130, was miles from the chamber but strategically placed on the first-floor outer corridor on the reps side of the building—one of the inward-facing rooms with no view, given out by party whips to up-and-comers. Fellow newbie Peter Garrett was in similar digs nearby, but Robb, a twenty-year veteran of the Liberal machine, jagged one of the out-facing rooms, with a view to the hills beyond Queanbeyan.7 Turnbull redecorated, putting down a monster Persian rug that had to be folded over to fit into the office, and hanging a stunning picture of the Sydney Harbour foreshore, commissioned from John Olsen and brought down from Lucy’s lord mayoral chambers.8
There was also financial housekeeping to do. As he was the country’s richest politician, there was a bit of excitement about Turnbull’s statement of pecuniary interests worth some $125 million. It showed he had resigned from eleven of his seventeen board positions, remaining with non-profits like Clean Up Australia but leaving all the investment company posts to Lucy. ‘He still discusses those interests with her, but he has no direct influence,’ an associate explained. Such a simple handover to a spouse would not be an acceptable form of divestment under the prime minister’s guide to ministerial responsibility, but it was good enough for a backbencher. ‘This is my full-time job now,’ Turnbull said. ‘I’m devoting all my time to this.’9
Finally, on 8 January 2005, the Turnbulls let their hair down, hosting a double-celebration at their Point Piper home—his fiftieth birthday, three months gone, and their looming twenty-fifth wedding anniversary. The theme was Hawaiian, and everyone got a flower necklace. Many of the same friends from the maiden speech do turned up, plus near-neighbours like Bruce McWilliam, Westfield’s Frank Lowy and Murdoch nephew Matt Handbury. Instead of presents, the Turnbulls asked guests to donate to relief for the Boxing Day tsunami, raising $60 000.10
The Turnbulls bought an $800 000 apartment in the trendy inner-Canberra suburb of Kingston, a stone’s throw from Parliament House, to stay in during sitting weeks. The cosy arrangement turned into a minor sensation two years later, when The Sunday Telegraph exposed that most of the $190-a-night travel allowance Turnbull claimed when he was in Canberra went straight to Lucy as rent, at the rate of $175 a night. Not only that, when Lucy stayed in Canberra, Turnbull claimed an extra $10!11 This was perfectly within the rules, the allowances were never means-tested, and Turnbull complained with some justification that the whole story was an unfair beat-up. He was backed up by the PM, who said it was the politics of envy. Kevin Rudd, by then opposition leader, also said he could see nothing wrong with it—a few days later it turned out he did exactly the same thing, staying in a property owned by his wealthy wife Thérèse Rein. But it was not a great look for the country’s richest politician to be claiming such paltry allowances, as Melbourne broadcaster Neil Mitchell pointed out:
If [Turnbull] was to invest his reported personal wealth in the standard bank account he would earn about $120 000 each week in interest. … True, he is legally entitled to every dollar. But why bother? Why when he could be collecting $24 000 in interest for every working day would he hit the taxpayer for $10 for his wife to sleep in her own bed? It’s the culture, and he didn’t take long to wallow in it.12
When the new year got underway, Turnbull got busy, nominating for seats on six of the busiest parliamentary committees—economics, foreign affairs, health, environment, constitutional and treaties—which may have been a record.13 His first question was to old friend Alexander Downer, who lined him up with a few Dorothy Dixers in that first year: ‘Would the minister for foreign affairs advise the House what the government is doing about the decline of governance standards in Vanuatu?’14 Not a subject especially close to Turnbull’s heart, but at least he was off the mark.
Turnbull boosted his profile relentlessly, making pronouncements in and outside the parliament on everything from international events like the Boxing Day tsunami and the assassination of Lebanese PM Rafik Hariri, to sensitive topics like the unlawful ten-month detention by the Australian government of German schizophrenia sufferer Cornelia Rau, down to electoral matters like the NSW government’s reneging on an upgrade to the one public high school in Wentworth, Rose Bay Secondary College. He wanted to be in everything: one time Turnbull was so busy berating Labor’s Michael Danby for failing to invite him to an engagement with the visiting Israeli health minister, that he got caught on the wrong side of the chamber and voted with the opposition. Brendan Nelson shook his head at the hapless Turnbull, who later told one gallery journo, ‘I definitely prefer the view from the government benches.’15
Turnbull had no time to waste: he was entering parliament late in life, compared with the likes of John Howard (entered at thirty-four), Peter Costello (thirty-two) and Paul Keating (twenty-five). Although he fended off the inevitable questions about his ambitions, Turnbull was universally believed to be chasing the top job. A wise note of caution was sounded early on by broadcaster Alan Jones who, when asked what kind of leader Turnbull would make, made the sage prediction he would be ‘an old prime minister, because he’d have to get there ahead of Howard, Abbott, Costello and all those people’.16
Howard’s victory over Latham in 2004 had been emphatic, his best win, delivering control of both houses of parliament. As Tony Abbott would later observe, this turned out to be a mixed blessing as it led the government into hubris. But in early 2005, there was a sense that come 1 July, when the newly elected senators took their seats, the government would have an historic political opportunity. This prospect, combined with the influx of new talent, stirred up the Coalition backbench which, after nine years in power, wanted a say in policy.
From 2003 to 2005, the China-led commodities boom was a godsend for treasurer Peter Costello, who had to revise official forecasts sharply upwards two years running and proceeded to eliminate net government debt and set up the Future Fund.17 At the same time, Australia’s economy was entering its fourteenth straight year of expansion and hitting capacity constraints like skills shortages and infrastructure bottlenecks. The OECD urged Australia to continue economic reforms, particularly in tax and industrial relations, and business lobby groups took up the call. Costello had brought in surprise personal income tax cuts in the 2003 federal Budget, but at an average $5 a week they were so modest—barely worth ‘a sandwich and a milkshake’18—that they were laughed at. Costello decided he could afford to go further. In early 2004 The Australian ran a series of front-page articles that zeroed in on the problem of bracket creep: ordinary workers on low-to-middling incomes were being pushed into the higher tax brackets by inflation.19 Australia’s top tax rate of 47 per cent was among the highest in the OECD and kicked in lowest, at just 1.4 times weekly earnings. Costello’s answer, in the 2004 Budget, was to lift the threshold so that instead of cutting in at $62 501, it would do so at $80 000—the goal was to get back to the promise made before the 2001 election that 80 per cent of Australians would pay no more than 30 per cent tax.
For Turnbull, and even more for a loose ginger group of young turks on the Coalition backbench who wanted deep tax and welfare cuts, the government had not gone far enough. Turnbull wanted the top rates lowered—initially to 40 per cent, and eventually down to something like the corporate rate of 30 per cent—and the tax base broadened, for example by abolishing capital gains tax concessions or cracking down on mass-marketed tax-minimisation schemes and work expense deductions, all of which were overwhelmingly used by high-income earners. He commissioned modelling to show this could be done in a way that was revenue-neutral, particularly if lower top tax rates encouraged higher participation, or increased the workforce by luring more high-income earners back to Australia, generating extra tax revenue.
Politically, this put Turnbull in an interesting situation. Here was the richest man in parliament, only recently arrived, pushing tax cuts for the rich. Was this self-interest? Turnbull was unapologetic. His figures showed that the top 20 per cent of taxpayers contributed more than 60 per cent of tax revenue, while the bottom 60 per cent contributed less than 15 per cent—and the very top 3 per cent of income earners, no doubt including Turnbull himself, contributed 25 per cent of tax revenue! To buttress his position, Turnbull pointed to the impact of high-end tax cuts in the late 1970s and early 1980s by Ronald Reagan and Margaret Thatcher, and dredged up the famous Laffer curve, which postulated that lower tax rates could lead to an increase in tax revenue by stimulating activity. It was all about growing the pie, Turnbull argued.
Both Howard and Costello were extremely sensitive to any public perception that they would deliver tax cuts favouring multimillionaires. Costello argued it was far more equitable to lift thresholds than to cut the top rate, which would deliver a $1000 saving for someone on $100 000, for each percentage point cut, but $10 000 to someone on $1 million a year. In the 2005 Budget, he lifted the thresholds so that the 42 per cent rate kicked in at $70 001, and the top 47 per cent rate kicked in at $125 001. For low-income earners, the tax rate fell from 17 per cent to 15 per cent.20 The tax cuts were worth $22 billion.
Costello was also sensitive to how tax cuts for the rich would be paid for, emphasising that while lowering the top rate would be nice for the top 3 per cent of income earners, he also had to bear in mind the other 97 per cent of taxpayers.
Turnbull’s answer was that by cracking down on tax avoidance and deductions, the rich themselves would pay for much of the tax cuts, leaving Australia with a much simpler tax system. He pointed to falling inequality over the Howard years, with average wages rising in both absolute and relative terms, and argued a squarely liberal position: ‘Dollars are better off in the pockets of citizens than in the coffers of government’ and ‘We must have a tax system that encourages enterprising Australians to work hard and create wealth’.21 He was not advocating an all-out frontal assault on tax-and-spend policies, arguing in a paper, for instance, that ‘it would be rash to assume that overall the expenditures of the federal government can be materially reduced. As a consequence, tax reform proposals need to be at least revenue-neutral’.22 This was particularly the case given the ageing population problem Turnbull kept raising. It was a nuanced rather than a dogmatic position.
Costello and his backers were hardly thrilled at Turnbull’s repeated interventions on tax policy. Speaking anonymously, one of the treasurer’s supporters told The Sun-Herald Turnbull was ‘a nobody’ in the party room, while another griped: ‘Who does he think he is? Peter’s just managed the biggest jiggling of the rates to hand out squillions. Is Malcolm saying it hasn’t happened? I don’t mind if he wants to talk up tax reform, that’s fair enough. But he shouldn’t go around implying nothing’s been done.’23
Whether or not Turnbull had Howard’s imprimatur, throughout 2005 it became clearer why Howard had wanted him in parliament—as a useful foil to Costello, if not a downright irritant. Turnbull clearly was someone with economic credibility who could mount a case. By August, Howard had put Costello even more offside by backing Turnbull’s call for a lower top tax rate, and the apparent division at the top of the government fed into the never-ending leadership story. For within six months of Howard’s resounding 2004 election victory, a sharp drop in the polls had led to renewed speculation about the timing of an eventual handover to Costello, only fuelled by the PM’s casual declaration, while on a trip to Athens, that in 2007 he could again beat Kim Beazley, who had taken over from Mark Latham. Costello was disappointed but continued to shoulder the government’s economic fortunes, and in the 2006 Budget he lowered the top tax rates by 2 per cent each. Turnbull, for his part, had had a win of sorts.
Emboldened, Howard embarked upon the WorkChoices reforms that would ultimately contribute to the undoing of his government. Turnbull’s personal involvement was marginal, but it is worth noting he was an enthusiastic barracker for the reforms, goading Labor over declining rates of union membership, and championing the overhaul of unfair dismissal laws and removal of the no-disadvantage test, which were the two key measures that turned toxic for the government.24 Turnbull didn’t go so far as to laud the ability of employers to strip penalty rates from awards or enterprise agreements, but in parliament, he left no doubt as to where he stood:
This is the key weakness of Labor … it is focused on entrenching the position of people who have a job, with little or no interest in promoting the prospects of those who are unemployed to get a job. That is why Tony Blair’s 1997 homily to the British trade unions has been so often quoted in this House, and with very good cause. ‘Fairness in the workplace’, he said, ‘starts with a chance of a job’ …
‘We need to find a way of extending the coverage of agreements from being add-ons to awards … to being full substitutes for awards.’ Paul Keating said that. That way has been found—twelve years later. Awards remain simpler and with fewer conditions, as Mr Keating prefigured. The safety net remains—also simpler—and set by the Fair Pay Commission. The removal of the subjective and unworkable no-disadvantage test means that agreements can readily substitute for awards where workers and employers agree to it … The unfair dismissal laws have imposed an additional risk on hiring, an additional cost of hiring. Together with many other aspects of Labor’s highly regulated industrial world that we are now seeking to free up with this Work Choices Bill, they have worked against … the very people who, if you took the rhetoric of Labor seriously, would be the people they should be seeking to protect but who in fact are only protected today by the Liberal Party and its Coalition partners on this side of the House.25
That may have been the view from Canberra, or from Turnbull’s well-off seat of Wentworth, but the 2007 federal election would show that the Australian people didn’t see it that way. Nothing in Turnbull’s professional experience, or his rarefied social circle, had prepared him to understand the problems faced by millions of ordinary workers. Tony Abbott would later acknowledge WorkChoices as a ‘political mistake’ and, running as leader, declare it ‘dead, buried and cremated’.26 But if WorkChoices was Howard’s bridge too far, in 2005 at least, Turnbull was charging across it.
Whether he knew it or not, Turnbull was about to step into an even bigger fight, over climate change, which would have a defining impact on his political career.
The basic science of global warming—burning fossil fuels emit heat-trapping gases such as carbon dioxide—had been understood for decades, but the issue had barely made it onto the political agenda until 1989, when then environment minister Graham Richardson put up the first Cabinet submission on an ‘Australian response to the greenhouse effect and related climate change’, which spelt out major risks, including for agriculture and coal exports.27 Prime minister Hawke tinkered, but Paul Keating, late in his second term, announced a series of energy efficiency measures dubbed the Greenhouse Challenge. The UN Earth Summit in Rio de Janeiro in 1992, widely dismissed as a gabfest, did adopt the precautionary principle and set up a lumbering framework for continuing talks towards a global agreement on climate change. In 1995, the UN’s consensus-driven scientific advisory body, the Intergovernmental Panel on Climate Change, established seven years earlier, warned that the ‘balance of evidence suggests a discernible human influence on climate’ and greenhouse gas emissions had to be reduced.28 It was a clear signal for global action.
The UN talks accepted that the rich developed nations, historically responsible for the vast bulk of the emissions, should act first, before the poorer developing countries. It fell to arguably the most conservative prime minister in Australia’s history, John Howard, to send one of its better environment ministers, South Australian senator Robert Hill, to plead Australia’s case at the 1997 UN climate summit in Kyoto, where the first binding emissions-reduction targets would be agreed. Hill argued that Australia, as a major coal exporter, would suffer if it was forced to cut emissions and should be let off the hook for a while. Remarkably, he succeeded. While the EU committed to reduce emissions by 8 per cent between 1990 (the agreed baseline) and 2012, and the United States and Canada agreed to cut by 7 per cent and 6 per cent respectively, and Russia agreed to keep emissions stable, Australia’s emissions were allowed to go up by 8 per cent. Not only that, we would be allowed to count reduced land-clearing towards our target. Triumphant negotiators returned home to deal with the domestic politics of ratifying the Kyoto Protocol.
In the United States, these proved toxic: that nation never ratified, arguing the chosen 1990 baseline favoured Europe, which had an easy task cleaning up the former Soviet bloc countries, and agreement should also cover major emitters in the developing world, like China. Russia took years to ratify. Canada signed up in 2002, only to withdraw completely a decade later as its carbon-spewing oil sands industry boomed. Howard did take some action at home—he set up a dedicated greenhouse agency in 1998, which did some groundwork on an emissions trading scheme, and in 2001 established a mandatory renewable energy target of 2 per cent by 2010—but he steadfastly refused to ratify the Kyoto Protocol, largely out of sympathy for the US position. Behind the scenes, a fossil fuel–funded campaign to sow doubt about the science of climate change kicked into gear, spreading out from the United States.
None of this mattered very much in Australia until the worst drought in a century set in, particularly from 2002 onwards under a severe El Niño. It became known as the Millennium Drought, and scientists believed it was the first to have the ‘fingerprints’ of human-induced climate change.29 Howard, although sceptical on climate change, was highly attuned to the impact of the drought, particularly in the Murray–Darling Basin, which sustains more than two-thirds of Australia’s irrigators and half its agricultural production. In 2002, as the rivers ran dry, the Wentworth Group of Concerned Scientists—named after the Wentworth Hotel where they met in Sydney, and which included Tim Flannery and the late Peter Cullen—issued a landmark blueprint for a national water plan that would ensure the environment got first call on water resources, bring over-allocated rivers and groundwater back to balance, and establish a new national water trading scheme that defined entitlements as a permanent share of the resource—that is, a proportion of the available flow, rather than an absolute entitlement to take a given volume of water. In 2004, the Council of Australian Governments adopted most of the Wentworth Group principles in its National Water Initiative, which included creating the National Water Commission, recognising the need for environmental flows and introducing tradeable water entitlements, along with a $2 billion fund to invest in water efficiency and conservation. In Lazarus Rising, Howard credits the Nationals’ leader John Anderson for pushing the initiative through, a genuine cooperative federalism reform for which he has received ‘little praise’.30
Up to this stage in his career, publicly at least, Turnbull had barely said boo about climate change. Early in 2005, he had travelled to Israel, which is much drier than Australia, and realised that recycling sewage for irrigation purposes could deliver water at half the price of desalination. Turnbull came back and launched a series of attacks on the NSW government in parliament, led by his old Bulletin colleague and friend Bob Carr, over Sydney’s planned desalination plant—particularly, the failure to consider recycling:
Decades of neglect of our water infrastructure and decades of complacency have brought our greatest city to the point where it could literally and imminently run out of water. The state Labor government has delighted in talking about green issues and climate change—talking, talking, talking, but doing nothing except practise the art of spin and self-delusion … Sydney Water’s solutions seem to be limited to praying for rain, lowering the level of the pumps at Warragamba so the dams can be pumped completely dry, praying for rain again, plundering more water from the Shoalhaven where the locals are already up in arms, finally doing a rain dance and then talking—but just talking—about desalination. But the most obvious and compelling answer is the one which has been resolutely ignored: recycling. Right now, 450 billion litres, 75 per cent of Sydney’s annual water usage, is flushed out to sea after minimal if any treatment.31
It struck a chord, landing Turnbull an audience with Alan Jones, who told his listeners the backbencher had ‘done his homework’.32 Turnbull kept it up, moving a mock ‘grievance motion’ for the NSW economy later that year, after Carr had resigned, which attacked Labor’s ‘concierge’ style of administration, ‘just watching things go by, barely reacting to events’.33
In January 2006, Howard made Turnbull his parliamentary secretary for water—he preferred to describe himself as an ‘extremely junior minister’—and threw him in at the deep end, asking him to solve one of the most entrenched problems Australia has faced, since Federation (and before): the management of the Murray–Darling Basin between the competing demands of Queensland, NSW, Victoria and South Australia. In recognition that the river system was in crisis, a target had been set to return 500 gigalitres to the basin within the five years to 2009, purely for environmental flows. Half-a-billion dollars had been set aside to pay for works and measures to save water, with matching funds to be contributed by the states. But the states, without exception, had dragged the chain, and when Turnbull took control of the issue in 2006—Australia’s driest year on record—not one drop of water had been sent down the Murray and three-quarters of the funding remained unspent. Works and measures like lining and piping irrigation channels could not produce water out of thin air, and without rainfall, there was not enough water to go around, and powerful irrigators would not allow water to be sent out to sea. Irrigators’ water entitlements had been chronically over-allocated, especially in NSW, and there was no alternative but to buy them back, on a willing seller basis. Within Cabinet, National Party agriculture minister Peter McGauran opposed buybacks, arguing they would price out other farmers who could not compete with the Commonwealth.
There was a steep learning curve as Turnbull toured the country throughout 2006, inspecting rivers, meeting with farmers and boning up on water and climate. He approached the task intelligently, reading deeply and seeking out the best scientists. Turnbull showed his small-government and free-market instincts, resisting calls to ban certain water-intensive crops like cotton or rice:
The idea that you’d have some central crop selection committee sitting in Canberra telling people what to grow is just too ludicrous for words … You’ve got to let farmers make their decisions, let water trade, let the market sort it out, and have a mix of crops that reflects the variability of our weather.34
Turnbull also showed a preference for local solutions, supported by government, which encouraged ingenuity rather than dictated solutions. He declared his bona fides by pointing to the five water tanks and dual-flush loos installed at his Point Piper mansion.35
The National Water Commission’s first report card in 2006 gave the states Cs and Ds for their efforts in identifying water savings. Queensland premier Peter Beattie described Turnbull’s handling of the report, which became front-page news after it was leaked, as ‘political bastardry’.36 Lateline host Kerry O’Brien took it up with Turnbull:
O’Brien: ‘Last Friday’s newspaper carried a front-page headline, “States fail on water crisis”. It was based on a leaked copy of the first national water audit that you talk about. Did you have a hand in or any knowledge of that leak? You don’t have to be Einstein to work out that the leak came from somewhere within the Commonwealth.’
Turnbull: ‘You’re clearly equal [to] or approaching Einstein in your deduction.’37
Turnbull, who had contracted a limited $100 million buyback tender, was preparing to outgun the states completely. With forecasters predicting storage in the Murray–Darling could be empty by early 2007—and in a worst-case scenario, Adelaide might run out of water—Howard convened an emergency meeting of state leaders on Melbourne Cup day 2006. The premiers agreed that interstate water trading could start from 2007, and they commissioned the CSIRO to study water availability across the basin, catchment by catchment, to help identify how much water should be bought back to ensure a sustainable river system. It was a watershed moment: political journalist Paul Kelly wrote that ‘the Howard government has been slow on global warming but prescient on the water crisis’ and gave kudos to Turnbull, adding ‘it is untenable to talk about the worst drought in 100 years and pretend climate change is not serious’.38
Howard took climate change seriously, all right: he understood very well the direct threat it posed to the coal industry, and any other sector that depended heavily on cheap coal-fired power, which he regarded as a competitive advantage. Just to make sure, Australia’s climate policy was effectively outsourced to the fossil fuel industry. This became clear in early 2006 when Guy Pearse, a former staffer to Robert Hill, blew the whistle, revealing that a group of lobbyists calling themselves the ‘greenhouse mafia’, whom he had interviewed for his doctoral thesis, had boasted of their access to confidential Cabinet submissions over a decade—stretching back to the Labor years: ‘A number of interviewees confirmed that this went on, and a few of them even went on record claiming particular instances of where they helped to write briefs, costings, Cabinet submissions.’39 The story was extremely damaging to Howard’s credentials on climate, and to environment minister Ian Campbell, who had to defend the government. Needless to say, it did not rate a mention in Howard’s autobiography, Lazarus Rising.
As an election year loomed, Howard was forced to ‘do something’ on climate: his memoir described a ‘perfect storm’ over the issue in late 2006 with the worsening drought, the Al Gore documentary An Inconvenient Truth and the UK’s ‘Stern Review’—which argued the costs of inaction were higher than the costs of action—all piling on top of each other. Howard would not budge on ratifying Kyoto, believing it purely symbolic, but he did announce that Australia would sign up for a ‘new Kyoto’ protocol, which included major developing countries, and set up a taskforce chaired by Peter Shergold, secretary of Prime Minister and Cabinet, to work up an emissions trading scheme. At a Cabinet meeting in December, which was told Australia was likely to exceed its 108 per cent target by 1 per cent, Howard approved a submission from Campbell to ban traditional incandescent light bulbs over three years, from 2009/10. Howard described it as a ‘practical step which could have a measureable impact’.40 The ‘Ban the Bulb’ idea, with a three-year phase out, had been put to Campbell by environmentalist Jon Dee a month earlier.41
In January 2007, Howard vaulted Turnbull into the Cabinet, making him minister for water resources and giving him the environment portfolio as well. Promoting Turnbull gave Howard the ability to overcome the Nationals’ resistance to water buybacks, and strengthened his arm heading towards an election in which climate would feature strongly.42 It had been a spectacular rise for the young politician, from a standing start to the inner ministry in fourteen months. Turnbull made an early mark in February by announcing the previously approved light bulb ban—it was billed as a first (although Cuba had already done it) and grabbed headlines right around the world, being all the more remarkable because Australia had been so recalcitrant on Kyoto. But Jon Dee was livid: he hadn’t realised his proposal had been approved by Cabinet and had been preparing to announce a voluntary phase-out, supported by globe manufacturer Phillips, on a Channel Ten climate special called Cool Aid. Turnbull, who was also going to appear on the show, got an advance copy of the script, which included Dee’s ‘ban the bulb’ announcement. Turnbull got in first, and put out his own press release. Dee rang his office, furious, asking why there couldn’t have been some kind of joint announcement, recognising Dee’s original idea and Phillips’ support. Theatrics aside, the cumulative impact of the ban was enormous—almost 3 per cent of the country’s greenhouse gas emissions, year-in, year-out. Much later, after the 2007 election, Dee was told by a senior adviser to the Coalition that the light bulb ban was the only good thing the Howard government had done on climate, ‘and we nicked that from you’.43
The day after he promoted Turnbull, on Australia Day eve, Howard announced a new $10 billion National Plan for Water Security to address the over-allocation of water in rural Australia, and particularly the Murray–Darling Basin, ‘once and for all’.44 The Commonwealth would take over water-management powers within the basin, and fully $3 billion would be set aside to fund water buybacks. It may have been a genuine attempt to fix a century-old problem, but the dollar figure appeared to have been plucked from thin air, and the plan was developed without reference to Cabinet, Treasury or the joint Murray–Darling Basin Commission.45 Labor certainly suspected Howard’s water plan was election-year grandstanding, a view reinforced by a leaked speech to staff by Treasury head Ken Henry that noted ‘water has got away from us a bit in recent times, but it will come back for some quality Treasury input at some stage—it will have to’.46 Howard, conversely, believed Labor states had gamed the Commonwealth on behalf of their federal colleagues, who did not want the Coalition to have an historic pre-election win on water. He fingered Victorian premier Steve Bracks, who refused to sign up to the plan: ‘In the end Labor tribalism took precedence over the national interest, even on such a life-and-death issue for Australia as water.’47 Victoria was less responsible for historic over-allocations than either NSW or Queensland, but Turnbull was put in an unacceptable position, being told Victoria would not be defined as a basin state for the purpose of the Commonwealth law. It would eventually fall to Labor to implement the Murray–Darling Basin plan, though only after Victoria was bribed with more billions, and even then only 2750 gigalitres was bought back for environmental flows, well short of the 4000 gigalitres that scientists had recommended as the minimum amount to restore the whole river system to moderate condition.
Turnbull’s enduring legacy may be in the governance arrangements in the Water Act, negotiated with the states over five months and finally passed in August 2007, even without Victoria’s support, relying largely on the external affairs power in the Constitution. The Act set up the Murray–Darling Basin Authority to control water management, and required it to set an enforceable, sustainable cap on diversions from surface and groundwater, based on the best available science (including a huge investment in monitoring) and the precautionary principle. As chairman Michael Taylor told journalists in 2010:
To plan a basin in the way that is being proposed is really a world first … So it is very much an extraordinary thing, not only in an Australian context, but in an international context. I think it is clearly the forerunner of how nations around the world are going to need to deal with water resources.48
Rural journalist Asa Wahlquist agreed the framework laid down in 2007 led the world in reallocating water for the environment, and said Turnbull’s contribution was ‘hugely unrecognised … it was/is an amazing achievement’.49 Environment academic Daniel Connell also acknowledged the final Murray–Darling Basin Plan as a ‘great achievement in the international history of water management’, though he questioned whether it should be regarded as a ‘mature and comprehensive framework or an early milestone on what will be a long journey’.50 Friends say Turnbull regards it as his proudest achievement in politics. Whether it will prove a lasting achievement remains to be seen: the National Water Commission has since been abolished by Tony Abbott, the Murray–Darling Basin plan is now the responsibility of the Nationals’ Barnaby Joyce, and climate change is running out of control. The basin, says former Greens leader Bob Brown, ‘is going to hell in a hand-basket’.51
The effort was paying off for Turnbull. A Morgan poll in mid-2007 showed voters would rather see him as heir and successor to John Howard than Peter Costello. Turnbull admitted he had had support from all over the place, including ‘calls from senior figures … in the Labor Party saying, “This is the first time that I’ve felt I can ring up and say the Howard government is really striking a great blow in the national interest”.’52 (Which is a funny way for a Liberal to gauge policy success.)
While Turnbull was trying to save the Murray in 2007, he also spent a lot of time fighting a rearguard action on climate change, hamstrung by Howard’s contorted position on Kyoto. He went head-to-head with fellow star recruit Peter Garrett, who had been appointed shadow environment spokesman and was his near-neighbour both in the corridors of Parliament House and in Sydney, where the seat of Kingsford-Smith shares a boundary with Wentworth, around Coogee. But in the environment portfolio, for all his rhetorical flare, Turnbull could not get the better of Garrett in parliament because his position was inherently flimsy. Taking over from Ian Campbell after a decade of the government stalling on climate, Turnbull was trying to sell old wine in new bottles. Howard’s Asia Pacific Partnership on Clean Development and Climate (known as AP6), set up in 2006 by the United States and Australia, and roping in China, Japan, India and South Korea, attempted to circumvent the UN’s binding climate negotiations by developing a voluntary framework with no targets or timetables. But AP6 was barely funded, not taken seriously, and disbanded five years later. A $200 million reforestation initiative trumpeted by Turnbull was actually a rebranded policy to stop illegal timber imports, worked up by a former forestry minister, Tasmanian senator Eric Abetz.53
Turnbull’s own view at this time was that clean coal—particularly carbon capture and storage, which aims to liquefy and bury carbon dioxide emissions—was the greatest contribution Australia could make to tackling climate change. In one speech, Turnbull told the House of Representatives that, of all the clean-energy technologies,
there is none more critical than clean coal … Why is that? Coal is a widespread, cheap fuel. Countries like China and India have massive resources of their own. They will be using it for a very long time. We are the world leader in developing clean coal technology. And, above all, we are working closely and creatively with the Chinese Government. The CSIRO is establishing … a post-combustion capture and storage plant outside Beijing. This is the key to the puzzle. If we are able to retrofit every coal-fired power station in China with post-combustion capture and storage, we will have made an enormous contribution to a cleaner world.54
Would have, could have, should have. But the coal industry did not have the courage of its convictions on clean coal, and despite trumpeting a $1 billion fund to invest in it, the industry never raised the money, even as coal prices soared. On the ground, clean coal projects never eventuated.
Turnbull kept trying to turn the tables on Garrett, as though it was he who didn’t understand the global nature of the climate challenge, as though it was the Howard government that was taking practical action … in short, as though he was a fool:
Turnbull: ‘Of course, the problem with Kyoto, and it is typical of the member for Kingsford-Smith, who is so obsessed with spin and sloganising, that he regards Kyoto as a sacrament, not an international treaty …’
Garrett: ‘Just ratify it!’
Turnbull: ‘He says, “Just ratify it”. He has never read it …’55
It was schoolboy tosh. Turnbull could say what he liked, but the government was losing the climate debate to Labor, which hammered away at Kyoto as a symbol of the need for new leadership and new thinking. Turnbull’s good work on climate—the national greenhouse gas reporting framework, in preparation for an emissions trading scheme by 2011; setting a 15 per cent renewable energy target for 2020—got lost in the larger debate. Inside Cabinet there were plenty who wished Howard would fold on Kyoto so the government could move on. Peter Costello, for one, agreed that Kyoto was flawed, but reasoned that ‘since we were pledged to meet the target, we should ratify the protocol even though it would not make any difference in the global scheme of things’.56 At the same time, Costello thought it was too late for Howard to change his spots—only a new Liberal leader could take the party in a new direction.
Howard’s memoir records somewhat bitterly that in August 2007, Turnbull told him he had been
kept awake the previous night worrying that I might lose my seat at the election. He said that it would be a terrible end to such a wonderful career … Turnbull suggested that I consider resigning the leadership. This was different from the Malcolm Turnbull of a year earlier, who had been passionate that I should stay.57
At least Turnbull had the guts to speak plainly to Howard.
By September, the federal government was coming apart at the seams. A disastrous Newspoll at the start of the Asia-Pacific Economic Cooperation summit in Sydney showed the Coalition trailing Labor in the polls by an astonishing 18 points. The next day, Wednesday the 5th, conservative stalwart Janet Albrechtsen warned Tony Abbott that her Friday column in The Australian would say Howard must go. It triggered a mini-meltdown. Howard and his ministers presented a picture of unity for world leaders by day, but on the Thursday night after dinner, foreign minister Alexander Downer rounded up the available Cabinet members, at Howard’s request, for an emergency meeting at the Quay Grand Apartments. The group included Joe Hockey, Brendan Nelson, Ian Macfarlane, Philip Ruddock, Julie Bishop, Kevin Andrews, Chris Ellison and Turnbull—but not, of course, Costello. They agreed the election was unwinnable with Howard as leader and he should step down for Costello. Told this by Downer, Howard dug in his heels, insisting that Cabinet must ask him to go—publicly. Cabinet would not do it. It was all too late and the rest is history.
The 2007 election was called in October, and a six-week campaign set down. Turnbull professed to be worried about Howard’s seat of Bennelong but, as the PM warned him, Wentworth was looking even more precarious. With the polls predicting a big swing against the government, and Turnbull on a margin of 2.5 per cent after a redistribution that brought more inner-city Labor-leaning areas into the electorate, he was in dire straits. Reports suggested Turnbull would throw $1 million of his own money at his re-election bid, another step along the road to American-style political campaigns.
On the day the election was called, and just two days before the government went into caretaker mode, Turnbull wrote to Howard and got a reply back the same day approving a $10 million Australian Water Fund grant to a company called Australian Rain Corporation. ARC was pushing Russian ‘rain enhancement technology’ using high-voltage electricity to create a cloud of negative ions at ground level, which would hopefully then float into the sky and produce rain. ARC was part-owned by Turnbull’s neighbour and friend Matt Handbury, nephew of Rupert Murdoch. Water commissioner Peter Cullen admitted he was ‘a bit surprised’ by the grant.58 It had been made even though scientific experts appointed by the National Water Commission had found there was ‘no convincing evidence that the technology operates as believed by its proponents’ and recommended a trial of no more than $2 million. Turnbull claimed that University of Queensland scientists had been more positive, recommending full-scale trials that would have cost up to $50 million, and he was opting for something between the two recommendations.59 Within weeks of the grant, the ABC revealed Handbury was also a donor to the Wentworth Forum, the Liberal party fundraising vehicle for Turnbull’s seat, which cost a minimum $5000 to join. Turnbull said he did not know Handbury was a donor at the time of making the grant and there was ‘absolutely no connection’ between the two. ‘That is an outrageous suggestion,’ he said in a statement.60 After the election, Labor had a field day in parliament, taunting Turnbull mercilessly over ‘deals for mates’, then cancelling the program, leaving taxpayers $5 million out of pocket.61
Turnbull was again facing the fight of his life in Wentworth. Just as in 2004, the contest for the seat was turning into a well-funded circus. This time, however, there was a real policy issue at stake. Tasmanian woodchipper Gunns had been embroiled in controversy for years over its destructive logging practices—clear-felling old-growth forest, torching the remnant waste and dropping 1080 bait to poison animals that were a threat to its plantation seedlings—and had become the focus of an unprecedented campaign by conservationists, targeting its shareholders, lenders and overseas customers. In late 2004, when the company proposed to build a $2 billion pulp mill at Bell Bay in the Tamar Valley—which threatened to double the rate of native forest logging in Tasmania—the campaign went global. A powerful anti-Gunns essay by novelist Richard Flanagan, published in May 2007,62 galvanised opposition to the project and caught the attention of Geoff Cousins, a former adviser to John Howard, director of Telstra and resident of Wentworth, who happened to own land in Tasmania and a small share in a bakery near the site of the proposed mill. Cousins decided to campaign against the mill in Turnbull’s seat of Wentworth, putting ads in local rag The Wentworth Courier and spending $8000 to print 50 000 copies of Flanagan’s essay and drop them in letterboxes all over the seat.
As Quentin Beresford’s The Rise and Fall of Gunns Ltd details, approval of the pulp mill had been rammed through with flagrant disregard for due process in Tasmania, where the state government and Gunns were joined at the hip. Final responsibility for federal approval landed in Turnbull’s lap as environment minister in early 2007. After a meeting of Tamar Valley winegrowers opposing the project, Turnbull let slip that he’d had his riding instructions from the prime minister’s office in a one-line memo: ‘We support the mill. Get it done.’63 Turnbull was caught in a vice: Howard wanted to hold seats in northern Tasmania at the risk of losing Wentworth. Turnbull took the narrowest possible interpretation of the scope of his decision-making power as federal environment minister, and prepared to approve the mill in August, outsourcing most of the assessment to the Chief Scientist. Labor was determinedly saying nothing whatsoever about it after their disastrous experience under Mark Latham in 2004, when a pro-conservation Tassie forest policy cost the party Braddon and Bass, and the enduring image of the campaign was forestry workers in a Launceston pub, cheering Howard as ‘the best fucking prime minister we’ve ever had’.64 So when Cousins went public, Turnbull was furious, and rang him up to say so. With no apparent irony, Turnbull accused Cousins of being a ‘rich bully’ who was unfit to be on the Telstra board—a position he’d been appointed to by the Howard government.65 The next day he retracted the accusation: ‘I can’t un-say it, but I don’t propose to repeat it,’ he told one journalist.66 Cousins kept his cool, saying, ‘Malcolm’s just getting rattled and trying to connect things that aren’t connected.’67 Howard refused to take sides, telling one reporter: ‘My view is Mr Turnbull is an excellent minister and Mr Cousins is an excellent bloke.’68 Behind the scenes, the arm-twisting continued. Cousins kept the pressure on Turnbull over the mill, and at one point he confessed, ‘I suspect I don’t like it any more than you do.’69 Cousins thought Turnbull was ‘completely self-obsessed’.70
Turnbull’s clumsy intervention suited Cousins perfectly, helping to generate acres of press coverage for his cause and helping to rally big-name stars like Cate Blanchett, Bryan Brown, Rachel Ward and David Williamson—all outraged at the pulp mill, and probably registering a protest against Howard’s position on climate as well. Turnbull’s situation got even tougher as the deadline loomed for a decision on the mill: when it could be delayed no longer, Turnbull announced he would approve the project on the advice of scientists, subject to extra conditions. Garrett, who had kept a determinedly low profile on Gunns all year—Cousins called him the ‘shadow environment minister who doesn’t cast a shadow’71—came out the same day and said Labor supported the decision. Some of Garrett’s former allies in the environment movement, including Greens leader Bob Brown, were appalled. But Turnbull’s conditional approval was almost immediately challenged in court, by green group Lawyers for Forests, and the decision would land in Garrett’s lap when he became environment minister. Deliberately or otherwise, Turnbull had set a booby trap for whoever came after him.
Turnbull’s decision caused him no end of grief locally, where a Wentworth Courier poll showed 98 per cent opposition to the pulp mill.72 Adding to Turnbull’s woes, a host of anti-Gunns candidates came out of the woodwork: besides the Greens, who had received more than 11 per cent of the primary vote last time round, there was the media savvy Dani Ecuyer, the former lover of Labor candidate George Newhouse. Ecuyer actually told one reporter she was ‘the only candidate in this election who comes from an investment banking background’.73 Dixie Coulton, formerly Lucy’s deputy at Sydney’s Town Hall, stood for the Climate Change Coalition. It turned into a total soap opera when emails came out from The Australian’s Caroline Overington to Ecuyer, urging her to direct her preferences to Turnbull: ‘Please preference Malcolm. It would be such a good front-page story. Also, he’d be a loss to the parliament and George—forgive me—would be no gain.’ In another email sent to Newhouse, Overington wrote ‘now that you are single I might even make a pass at you’. On polling day, Overington was seen to give Newhouse a slap in the face. The whole electorate had jumped the shark. Clearly, Wentworth was different: while the rest of the country was voting on WorkChoices or the economy or an ‘It’s time’ factor over leadership, Sydney’s east was in meltdown over a pulp mill 2000 kilometres away. It was a new form of celebrity politics, the pundits noted, ‘a reverse peasants’ revolt by Sydney’s most affluent’, all centred on the environment.74 And Malcolm was bearing the brunt of it.
In the heat of the battle, a highly damaging story leaked that claimed Turnbull had argued in Cabinet six weeks earlier for the ratification of the Kyoto Protocol. Howard wrote in his memoir that the timing was ‘atrocious’, coming just after Garrett had reportedly admitted to 2UE’s Steve Price, when pinned on the difference between his pro-environment rhetoric and Labor policies, that ‘once we get in, we’ll just change it all’. Howard thought it was dynamite and wanted to launch a full-scale attack on Garrett, but after the Turnbull story came out, ‘in one fell swoop, public attention was back on the Coalition’s refusal to ratify Kyoto, with the added bonus for Rudd that he could argue that even the environment minister in the government disagreed with the prime minister’.75 Costello did not go so far as to attribute the leak, which was from ‘government sources’, but he did speculate on the potential advantage to Turnbull in his seat of Wentworth.76
On 11 November, two weeks out from the election, a Galaxy poll showed Wentworth was on a knife edge, with the two-party preferred vote running at 50:50 for Turnbull and Newhouse. The Green vote was sitting at 14 per cent.77 Turnbull was helped by a glitch in Newhouse’s nomination: it appeared he had failed to resign in time from a position on the NSW Consumer, Trader and Tenancy Tribunal before nominating for his seat. On polling day, Turnbull placed full-page newspaper ads citing legal advice that Newhouse was an invalid candidate, and threatened that if the Labor candidate won there would be a by-election. Undoubtedly, the issue hurt Newhouse.78 When the votes were counted, Turnbull took the seat without going to preferences, winning a primary vote of 50.4 per cent and a healthy personal swing of 9.4 per cent.79
At the Bondi Junction RSL, Turnbull’s supporters in Wentworth cheered ‘MAL-COLM, MAL-COLM’. ‘This is the best part of the best country in the world,’ he said, in a voice hoarse from an exhausting campaign.80
Turnbull was elated and rang Howard to tell him the good news. The call did not go down well. Howard had lost his own seat that night, and the Coalition was out of office.