Hockey: Not Your Average Joe (26 page)

While the FIRB was still considering its recommendations, the Treasury alerted ADM that Joe was concerned about whether the company was the right fit for GrainCorp. The rationale for officials alerting ADM to Joe’s state of mind was to provide the company with the opportunity to reassess its application. The best result for the government would have been ADM deciding to withdraw, acknowledging that they had lost, for now. Not long after, a hand-written letter, penned by the CEO of ADM, Patricia Woertz, who had been in Australia, found its way to Joe. It offered an apology, and a recognition that its tactics might have been over the top.

Lovett picked up the phone and called Woertz. He told her that the treasurer had received her letter and would entertain a meeting with her and the head of Treasury, Martin Parkinson. The invitation was soon accepted and they met inside the Treasury building in mid-November 2013. Joe found her charming.

‘We had a forthright discussion down at Treasury on a sitting day. She was relieved she hadn’t been seen [by the media] and I was relieved, too,’ Joe says. Parkinson admits the private meeting included a ‘frank conversation about how to deal with democratically elected governments’.

When Woertz left the meeting, the company was still fully committed to the acquisition. It couldn’t pull out anyway, because by this stage under takeover laws it would have been deemed a self-defeating motion. That forced Joe to make a decision. At this stage, the FIRB was still pondering the proposal and liaising with Joe; they knew he had concerns about the bid. A side letter under our free-trade agreement with the United States dictated that if Australia was to reject the bid, the United States government needed to be consulted. That’s when former ALP leader and Australia’s Ambassador to the US, Kim Beazley, stepped in. ‘I love Kim Beazley,’ Joe says. ‘He had it resolved very quickly.’

In the public arena the FIRB was still battling internally with a decision; it was split. The treasurer’s view was clear to them because he kept asking them to consider specific information, or answer questions he had. But their job was to come to an independent recommendation – and in the end, they couldn’t reach a consensus. Any acceptance of the bid proposal would always have carried conditions; ADM was aware of that from the start. So did the FIRB want a company taking over a monopolistic business, with a truckload of conditions, in an industry that was facing deregulation? And did that sit contrary to the direction in which the industry was headed? Just before the FIRB’s decision was made public, Joe dropped by Lovett’s office and asked a question.

‘What’s the second-best decision here?’ Joe asked his chief-of-staff.

‘You approve it with a whole lot of conditions,’ Lovett answered.

Joe’s answer came quickly. ‘That’s not acceptable.’ In the end, Joe said he was inclined to increase ADM’s stake going forward, which means this story might still have a chapter or two to run.

It was the same thinking that drove Joe’s response to Qantas wanting more money. ‘You privatise it and then put all these handcuffs on it,’ he says. ‘And that’s okay when it’s an 800-pound gorilla, but basically the handcuffs are still there when it’s trying to swing in a far more competitive world and then you’ve got to revisit the handcuffs. It doesn’t work.’

The cigarette paper agreement between Joe and Abbott was pretty shaky at one stage on the Qantas issue, too: Abbott was dismissive of any handout, but Joe was continuing to engage with Qantas, who were seeking a government-backed debt guarantee. ‘My job, as tasked by Tony, was to look carefully at the numbers and Qantas kept coming back with more and more information and then after they made the announcement of 5000 jobs going … they came back with new information. Tony was taking a hard consistent line. My job was to engage with Qantas, so I sent another investment bank in after the results and before the Cabinet decision … to have a look at all the Qantas numbers and again the information came back that we didn’t need to move on this.’ It had been over this issue that Abbott sent a sunrise text to Joe, who was on the squash court, asking whether they were at odds. Within minutes, Joe was at the prime minister’s desk in his squash clothes, to tell him that the breakdown was in communication, not policy.

On the night before Joe made public his decision to hit the ADM proposal on the head, he called his prime minister. Of course, Abbott had been kept in the loop, but now Joe was informing him that, as treasurer, he had determined he would reject ADM’s takeover bid and inform the public the next morning. The FIRB’s split decision backed Joe’s stance, but he says that unless there had been a unanimous decision by the FIRB to accept the takeover, plus the ammunition to change his mind, he would have said no anyway. ‘I was very inclined to say no and the split decision just confirmed that,’ he says.

Lovett says: ‘What I’ve noticed about him – particularly since his operation – is once he believes in something, he’s going to go for it. He’s not going to change his mind.’

Joe was in parliament, having the time of his life. His target was General Motors, who he believed was playing a game with the government over its decision to close down its Holden manufacturing plants in Australia. He believed the company was delaying an announcement that it was going to quit Australia so it could sheet home blame for its exit to the government’s ongoing Productivity Commission inquiry into the car industry. Joe goaded Holden executives, painting them as un-Australian and warning them to ‘come clean with the Australian people’ and ‘be honest’. ‘Either you are here, or you’re not,’ he bellowed.

It didn’t look good; the federal treasurer taking on a national icon, risking a war not only with the public but also with some of his own federal parliamentary colleagues. But Joe’s parliamentary attack was driven by a belief that General Motors had made the decision to pull out of Australia, and was toying with him. His evidence for that? He cites the moves that were afoot for GM Holden chair and managing director Mike Devereux to take up another post, and the fact that the company, which had previously committed to staying in Australia for years down the track, was now unable to make the same commitment. He says two people inside the company had also been providing him with information and he learned that the announcement to quit Australia was to have been made seven days earlier, but was canned at the last minute.

‘These are companies – they do what’s in the best interest of the company. They don’t care about countries,’ Joe says. The car industry had received $30 billion in handouts and tariff protection over the previous 15 years, and the Productivity Commission had been charged with looking at government assistance programs. That meant there was also a political game to win. If Holden used the commission’s findings – which were expected to curb or end constant government handouts – to justify its withdrawal, it could badly damage the Coalition in Victoria and South Australia, where the company’s manufacturing operations were located.

The story of General Motors can’t be told without the story of Joe’s relationship with his colleague, Industry Minister Ian Macfarlane. Macfarlane had been Joe’s senior minister when he’d held the tourism portfolio. Back then, he’d tell people that Macfarlane would try and keep him on a short rope, particularly when it came to fighting for funds. Now Joe was in the treasurer’s seat and observers couldn’t help thinking that he was enjoying the seniority switch. Joe’s supporters say Macfarlane played the government’s hand over General Motors badly. ‘We’d already laid down our plan for the car industry and the Productivity Commission inquiry, and then he [Macfarlane] went down to Holden, put on his Peter Brock hat, got emotional and promised to arm wrestle Joe for money,’ one senior Liberal says.

Joe, when offered the opportunity, doesn’t disagree with that analysis, and he dismisses suggestions that his attack on the company in parliament was un-statesmanlike. ‘It was a simple question – you’re here or you’re not. It’s not as though they were tourists. They had billions invested. Were they staying or were they going? I already knew the answer.’

General Motors announced on 10 December 2013 that it would discontinue vehicle and engine manufacturing and significantly reduce its engineering operations in Australia by the end of 2017. The decision, which would cost 2900 positions over the next four years, was the result of a ‘perfect storm of negative influences’, including the strong Australian dollar, high production costs, small market and the most competitive auto market in the world. The South Australian and Victorian governments, looking out for the jobs that would fall by the wayside in their states, didn’t share Joe’s enthusiasm for the row that clouded General Motors’ withdrawal. Neither did Industry Minister Ian Macfarlane.

In a similar situation, Joe ruled out taxpayer-funded assistance for Coca-Cola Amatil’s ailing fruit business SPC Ardmona, although the Victorian government soon stepped in to help. Many voters saw it as mirroring the Holden case: a good Aussie icon, providing jobs for Australians, hung out to dry by a government refusing to entertain calls for assistance. For Abbott, as well as Joe, the SPC decision showed how the federal government would operate. Abbott, who only last year was privately championing the need for an Australian car-manufacturing industry, even threw his hands up at one meeting declaring the spirit of Bob Santamaria, his conservative but economic nationalist Catholic mentor, was dead.

But the government’s message was clear, with a strong warning being sent to other companies thinking of putting their hands out. ‘The age of entitlement is over,’ Joe repeated, enveloping business in the same message he’d directed at government in his 2012 speech in London. ‘The age of personal responsibility has begun.’ It wasn’t only a pointer that the government’s relationship with business was on a different footing; it was a clue to Joe Hockey’s first Budget.

TWENTY-THREE

Joe was giving
his speech writers his best lines: ‘Our quality of life is not a gift. It has to be earned’; ‘This is the first word, not the last word.’ ‘I love that line,’ he added. Those around the small table nodded in agreement, and jotted it down. As one of the nation’s best political communicators and accountant-in-chief, Joe was on a roll. ‘This is a Budget we were elected to deliver,’ he continued, ‘we can’t pay people who choose to stay at home.’

Only 13 days out from delivering his first Budget speech, Joe was inside the federal Treasury building, where public servants were adding and subtracting numbers based on decisions made down the road at Parliament House. It was here, from a creaky corner office, which boasted a bigger bathroom than it did a conference room, that Joe and his senior staff would call home in the lead-up to the big day.

‘Have you got everything you need?’ he was asked by one staffer. ‘I want a whiteboard,’ Joe said, and was promised one immediately. ‘And where’s my little table?’ A laugh went up from the coterie of senior Treasury officials who knew he was referring to the small, rusted table that resides on the patio outside his Parliament House office. He wanted it brought over to the Treasury so he could have somewhere to join the dwindling few in the public service who approach a big deadline with a cigarette. In just a few days’ time he would be caught having an afternoon cigar with friend and Finance Minister Senator Mathias Cormann at that very table. But on this afternoon, as public emotion was running high on the back of leaks that suggested pensions might be cut and a deficit levy would envelop taxpayers, he wanted to know that he and his staff would have the facilities they needed.

Joe had met most of the team he would be working with to finalise his first Budget, during an earlier walkthrough, where he was treated like a small-screen finance pop star. That view was only boosted when his mobile phone sounded out with the Benny Hill theme song. ‘We’re going to get to know each other very well over the next ten days,’ he boomed to the group, and they all seemed to like that idea.

March and April follow a familiar routine for Canberra’s financial bureaucracy. Budgets take shape as the trees lining the city’s avenues inevitably turn from green to yellow. Joe knows the drill well. He observed it first on the fringes as an MP, was in the centre of it as a minister, and was frustrated as an outsider on the shadow frontbench. But the autumn of 2014 put Joe Hockey centre stage on the nation’s major political platform, the federal Budget. For Joe, it offered the chance to bring together the themes of his political career, and to continue his lifelong ambition to lead the nation his father chose as home to his hopes.

Joe first understood the allure of politics as a 14-year-old when he appealed to his local council to repair the faulty cricket nets in Northbridge. Now, 35 years later, he was dealing with the challenge of how to fix the holes in the nation’s economy. Joe knew that this Budget would define the Abbott government. It would also draw on all his expertise to help deliver the Party’s overarching promise and usher in an era of responsibility and opportunity, the outline he had sketched two years earlier by declaring an end to the age of entitlement, and more recently coloured by an audit commission that had uncovered layers of waste in the nation’s government.

Walking past a computer, where the announcement of the $20 billion Health and Medical Investment Fund was onscreen, Joe paused. ‘It should be the Medical Research Future Fund,’ he said. ‘Let’s change that.’ He kept moving, despite the author’s argument that Peter Dutton, the health minister, was adamant the name included the word ‘health’. It was already late in the afternoon, but many of these public servants would stay back for hours into the night; the young ones trying to impress the older ones, and the older ones keen to impress their new tenant. The team working on this Budget knew they might not be immune from the decisions that would be announced in two weeks’ time. On one wall sat a huge list of grammatical rules, testament to the fact that the Budget wasn’t just about numbers. A countdown to 13 May 2014 was displayed on another wall. On a nearby table sat a 1000-piece jigsaw that staff were encouraged to add to, at any time, to alleviate stress.

Back in his new office, which his predecessors also used in the days leading up to the Budget, the one-liners continued: ‘We will make tomorrow better today because we must.’ A chorus of agreement went up around the table, a group comprising of two senior speech writers, Treasury head Martin Parkinson, Fiscal Group executive director Nigel Ray and his senior staff, and Joe’s senior advisors, including Grant Lovett and Creina Chapman. ‘Governments have a responsibility to help everyone get to the starters’ line. We are about equality of opportunity, not equality of outcome.’

Everyone in this room was aware of what Joe stood for and his plans to end the age of entitlement, a phrase that he would massage on Budget night into a ‘new age of opportunity’. It was just like what George Brandis had told Joe when he had called him on New Year’s Eve: ‘At the end of next year, we will be an unpopular government. And we can be unpopular for all the right reasons, or the wrong reasons.’ Pre-Budget polls indicated Brandis was on the money, with voters warning that a decision to go ahead with a general deficit levy would be judged as a broken promise. Indeed, that public reaction forced the razor gang back to the table, in a move that eventually lessened its impact by targeting a reduced number of high-income earners. But around government, Brandis’ one-liner was gaining traction.

All governments struggle in their first year, and the early Budget feedback had highlighted the challenges facing the first Abbott government. Senior colleagues were quick to offer an opinion after media coverage alerted them to a deficit levy on the drawing board. But inside the decision-making room, where the expenditure review committee met, there was remarkably little table-thumping. Each meeting was chaired by Abbott, and everyone else – Joe, Deputy Prime Minister Warren Truss, Senator Mathias Cormann (minister for finance), and Peter Dutton (minister for health and minister for sport) – had an equal say. In fact, staff and Treasury officials had as much voice as they liked. There were disagreements, particularly in how far the deficit levy should go and when pension changes should kick in, but discussions were marked by a lack of acrimony. That was driven by a few factors: an economic conservatism shared by those making decisions, and strong friendships that extended beyond the room and Parliament House.

Cormann and Joe, despite sitting at different ends of the Liberal party in many views, share a close friendship. Cormann and Dutton, both 43, are conservatives, and good friends. But so are Joe and Dutton, who ran on the failed leadership ticket in 2009. That meant much of the horse-trading over cuts was done outside meetings, and by staff, before being brought to the expenditure review committee for public airing. ‘My father spends more money walking the dog than he does getting home help,’ Joe thundered in one meeting, explaining why he thought his elderly father should have to pay more. Abbott listened to everyone – for far too long according to some in the room – and when everyone’s view was exhausted, he tried to establish a consensus decision. ‘Joe understands what Abbott wants to achieve but Tony appreciates that Joe is really driven to fix the Budget, too,’ one of those inside the room says. ‘At the end of the day it’s the prime minister’s Budget. But it’s very credible for Joe’s rhetoric over the past couple of years. It wasn’t as tough as Joe would have liked but a good compromise. Maybe it’s tougher than the prime minister would do if Joe wasn’t there to drive it.’

The big piece of good news in the Budget – the establishment of a Medical Research Future Fund – had come from Joe, after a walk around Woolwich Dock in Sydney. One thought led to another as he reflected on the old seawalls, which had been built in the 1800s as a long-term investment. Joe liked the idea of paying it forward. Maybe we could facilitate structural change, he thought, if the government could prove to the public that it was paying the savings forward for something that would improve their lives in the future, such as medical research. Soon after, around the decision-making table, it would become the 5-cent coin in the Christmas cake that refused to rise; the sunshine that could wrap the Budget coverage in the warmth its authors believed it deserved.

The test with Joe’s first Budget, former prime minister John Howard observes, doesn’t start and end in 2014. To be successful, it needs to offer strong economic policy from a determined reformist treasurer and a supportive prime minister. ‘He’s very bright. He knows quite well that if he’s seen to promote good policy to handle Australia’s economic challenges, he will be judged kindly. He also knows if he doesn’t, he’ll be judged poorly.’

Tony Windsor, an Independent MP until his retirement in 2013, says that Joe’s challenge as treasurer is especially difficult because he has never lived on Struggle Street. ‘I get worried when someone becomes an expert on how a guy on $40,000 can raise three kids,’ Windsor says. ‘It’s not a criticism of him. It’s where he comes from. We’re all products of our past.’

Martin Parkinson, who ends his time as secretary of the Department of Treasury at the close of 2014, says Joe’s success as treasurer will come down to three factors: the vision he creates; how he manages to articulate it; and how ‘brave’ he is in determining policy. He also acknowledges it’s a long-term gig. Parkinson nominates Australia’s top two treasurers as Paul Keating and Peter Costello. ‘Keating would have been successful irrespective of who the prime minister was,’ Parkinson says. ‘I don’t know about Costello.’ Joe’s attempt to push into a new ‘age of responsibility’ shows the beginnings of a plan that neither Keating nor Costello boasted in their first year. ‘It was something they built over time. Hockey’s got as much in year one as they had. The question will be, over time, how much does he become the intellectual leader of the government? Because if he’s the intellectual leader of the government and he’s brave, he will begin to shape the DNA of it.’

Early one morning, not long before the Budget, Joe, Lovett and Peta Credlin were out cycling. Joe was leading the way when a kangaroo, carrying a joey, jumped onto the path. Joe slammed on the brakes and turned sharply. Voters will have to make the same sharp turn to embrace the Budget. Joe says it will take time, but he’s happy to be judged on whether his plan ‘sets a new direction and helps change the culture from one of entitlement to one of enterprise’. That should be obvious by the next election. ‘But I’d rather have had a go at changing the nation, and for the nation to decide it’s not going with me, than be in a position where I’m just occupying the space,’ he says.

Credlin says: ‘Everyone comes to government and they assume the office. Whether or not they perform in the office is the secondary question. Joe’s come to the treasurer’s role and particularly this year he’s owning the treasurer’s role. His colleagues are seeing that.’

Each year, the Federal Budget is cloaked by theatre. Early on this night in 2014, Joe and Cormann were getting their make-up done ahead of a string of media appearances, where they would try and sell their wares to a media pack whose cynicism derives from years of hearing broken promises. Over the following two hours, Joe’s nerves would show – a bead of sweat on the upper lip, a curt reply to a reasonable question, a moment of anger when he heard of how a misunderstanding within the prime minister’s office had meant details of the Medical Research Future Fund were inadvertently given to the media. His eight-year-old son, Xavier, defused it with a hug, not really understanding the import of the moment, when his dad continued to hold the embrace. Joe would love to replicate with his children the relationship he has with his father. Xavier, who had escaped NAPLAN testing at school to hear his dad’s first Budget is more like his father than his siblings are. He hates it when Joe leaves for Canberra, and Joe knows it. He’s away more than he’s at home. Joe had already spoken to his mother and father, who had been unable to make the trip to Canberra. But his father’s words, over the phone, rang in his ears. ‘I love you son,’ Richard told him. ‘But I’ll say a prayer, too.’

As Joe’s moment in history approached he thought about wearing the light blue tie Abbott had given him as a Budget gift, but his wife Melissa had other ideas. Tonight’s tie, a darker blue, would be the one owned by media advisor Michael Willesee. Outfits sorted, attention turned to Joe’s Budget theme song. Every treasurer has one – the tradition represents a bit of light-hearted fun, and serves to relieve tension as staff work around the clock. Joe only learned this late, and was torn between selecting songs by Canadian rock band Nickelback or US band Foo Fighters. Both options were a long way off Keating’s preference for Mahler, Costello’s classic choice of Marvin Gaye hit ‘I Heard It Through the Grapevine’, and Swan’s fondness for anything by Springsteen. Joe dismisses suggestions for Imagine Dragons’ ‘On Top of the World’. Instead, he humours Xavier with a rendition of American Authors hit ‘Best Day of my Life’; a Dad–son moment that Joe will regret two hours later when the song’s lyrics are repeated back to him by senior journalist Laurie Oakes.

It won’t be the first time he’s caught out on this night. Following his speech, questions of broken promises and Budget emergencies are raised. Will corporate Australia feel everyone else’s pain? Swan, the last person to deliver such a Budget speech, takes notes, not once looking across the chamber to his successor. Clive Palmer, who along with the other minor parties will determine how much of the Budget gets through the Senate, leaves halfway through Joe’s speech. Joe is undeterred. ‘Prosperity is not a gift,’ he says to cheers from his own side and jeers from those opposite. ‘It needs to be earned … We must always remember that when one person receives an entitlement from the government it comes out of the pocket of another Australian.’ The speech is peppered with the one-liners he offered two weeks earlier, but now they’ve been woven into a narrative that attempts to justify a broken tax pledge, while pacifying those who thought the declared Budget emergency would demand stiffer action. ‘Unless we fix the Budget together, we will leave the next generation a legacy of debt, not opportunity,’ he says in his speech. ‘We are a nation of lifters, not leaners.’