It’s the most closely guarded text in Australian political history, but publishing insider Walter Slurry has forwarded several extracts from the forthcoming Peter Costello memoir to Crikey. Today, part one: Costello’s account of the final Howard/Costello budget of 2007:

Howard turned to Vaile and said that he had a “war chest” of several hundred million dollars to deliver to marginal seats. The PM reasoned that the budget surplus was sufficiently large that it could withstand this type of “electioneering” as he put it. Vaile was certainly given the impression that he had a free hand in determining how the regional funding would be spent. This news was well received by the Nationals. Vaile himself appeared to drool slightly from one side of his mouth.

At the time, there was concern that this fiscal irresponsibility would be seen as cynical and manipulative by the press gallery. It could backfire. It could be seen as a desperate act by a desperate Government spooked by Rudd’s popularity. Somebody needed to stand up to Howard and rein in his 2007 budget plans. Somebody with guts needed to stop the PM from squandering a decade of financial conservatism. Someone had to be counted in the column of small “L” liberalism. Unfortunately, Nick Minchin said nothing.

“This is the worst type of pork barreling I’ve ever heard of — this is a f-cking stupid plan and will cost us seats like Herbert, Forde and Longman!,” I remember wanting to scream out.

Instead, I smirked quietly to myself and noted my views privately.

Recalling my notes from that fateful Cabinet meeting, in regards to Howard’s 2007 Budget strategy I noted: “bum, sh-t, poo, wee-wee”. Looking back with hindsight, I perhaps should have been more vociferous in my views to Howard and Vaile, and written “bugger it” in my diary.

Mal Brough continued to push his NT intervention plans. I had some reservations, but Mal said that policy had not worked well in the United States. Certainly, I was concerned about the budget implications of the operation, and told Minchin, Bishop and Downer that we needed to proceed cautiously. Our economic credentials lay at the centre of our re-election chances and the 07 budget would be seen as a defining document come election time.

Howard not only wanted to continue the intervention (and expand it to that other troublesome Territory — the ACT), he further proposed a $30 billion tax cut to be announced during election. I was appalled at the concept. Stunned. A shiver ran up someone else’s spine. I may have experienced a bladder spasm. I forcefully put my views vis-à-vis the financial costs of the intervention and the tax cuts to Howard when I met with him in his office later that day.

“Listen John, I’m the Treasurer. I will wear the blame for rising inflation. I will be the one the public distrust. If I am going to be the future leader, this inane half-baked economic voodooism has to be killed and buried. You have f-cked up my chances of being PM now — you’re not going to f-ck my chances in the future!” …is what I day-dreamed of telling Howard.

According to witnesses however, I apparently fainted on the PM’s floor and was carried out by Tony Nutt; reviving a short while later in the corridor near Aussie’s.

Tomorrow: Beazley was the best asset we had.

Peter Fray

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