Postscript: Crikey has now been advised this morning’s joint party room briefing created a misunderstanding about the Coalition’s position regarding the stimulus package. Malcolm Turnbull’s office has issued the following clarification:

“There has been no change in position. The Coalition will oppose this package in the House of Representatives and the Senate. If Mr Rudd fails to get the $42 billion package through the Senate he should sit down with the Opposition and negotiate a new package, which we believe should be between $15-20 billion.”

The Coalition is willing to negotiate with the Government over the stimulus package and its primary concern is the Government’s $12.7b tax bonus handout, Malcolm Turnbull has said.

Turnbull this morning told the Coalition joint party room that while he was happy to take a short-term political hit, he was willing to negotiate with the Government to pass the package. Turnbull initially declared last Wednesday that the Coalition would not support the package at all. On the weekend, Turnbull called on the Prime Minister to negotiate with him.

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The Coalition has consistently argued that tax cuts rather than handouts should be used to provide a short-term stimulus. Coalition MPs today debated what would yield the best multiplier effect in terms of stimulus.

However, Turnbull’s position today leaves the Coalition open to supporting the majority of the package — the $28b infrastructure component providing funding for school and housing projects. It comes a day after Newspoll revealed a slump in support for both the Coalition and Turnbull.

A number of Coalition MPs told the party room they had found support for the Coalition’s refusal to support the package in their electorates, but that would appear to be at odds with both polling and Turnbull’s own concerns about political damage.

MPs were also concerned about the appearance of resuming political hostilities so soon after the Victorian tragedy, with one MP telling their colleagues to be careful of the “tone and timing” of fresh political combat. There was also some thinly-veiled criticism of Wilson Tuckey, with several MPs, including Turnbull himself, saying that now was not the time to be apportioning blame for the fires.

Turnbull’s move will give the Government more options as it negotiates with the Greens and minor parties, with the potential to split the relevant appropriation bills to enable it to take advantage of any Coalition agreement on infrastructure, while angling for minor party support on tax bonuses.