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Hockey’s inner cabinet strives to rein in Abbott on economy

Treasurer Joe Hockey checks the Mid Year Economic Forecast with Finance Minister Matthias Cormann at Parliament House.
Credit: AAPIMAGE

The single bed where Joe Hockey slept in opposition is gone. So is the yellow and blue Bart Simpson sheet set. Neither survived a renovation carried out by his wife. But Jamie Briggs is still there in the Manuka home, where he rents a room from the treasurer. The assistant minister for infrastructure and regional development is often the first person Hockey sees in the morning, and the two make a ritual of coffee before leaving for Parliament House.

Briggs and Hockey have long been friends. Both have young families. Both have lost significant weight in the past two years. And both share a common view of the role of government: smaller is better; it should be there to facilitate business, not to hold it back. Increasingly, Briggs is talked about as the unofficial captain of the Hockey Club, a group of Liberal MPs close to the treasurer.

The very notion that there is a club irritates some who might be included in its number. There is no formal bloc or membership rites. Members insist it’s just a group of like-minded friends who sometimes gather for a drink at the end of a long parliamentary day, who share a free-market philosophy and trade ideas about how to promote it.

Often these get-togethers are in the office of Finance Minister Mathias Cormann, who can sometimes be seen in the courtyard off the ministerial wing, sharing a cigar with the treasurer after question time. Sometimes it’s takeaway in Briggs’s digs. Those known to attend include frontbenchers Steve Ciobo, Peter Dutton, Scott Ryan, Michael Keenan and Simon Birmingham, as well as backbenchers Kelly O’Dwyer and Dan Tehan.

“Honestly,” says one of the group, “it’s more pastoral than political.”

That may be true. Everyone needs friends in politics. But the fact it is being talked about around Parliament House, and that the group includes some of the most active and talented Liberal MPs, is a sign of the jostling over the future of the party. The existence of the group has attracted attention as the treasurer prepares to deliver his first budget, amid suggestions of strain in his evolving political partnership with Tony Abbott. Not that members of the Hockey Club concede this. They insist it’s a close partnership. There is no leadership tension. Unlike with John Howard and Peter Costello, they say that Abbott and Hockey not only work well together, they actually like each other. The oft-repeated phrase used to describe the relationship is “there’s no daylight between them”.

The nickname “Hockey Club” was devised by critics. It began life as a group of opposition backbenchers who kept a keen eye on the Coalition’s economic policy to ensure Abbott did not drift from the Liberals’ free-market principles.

Their concerns were spelled out in the memoirs of former treasurer Peter Costello. “Never one to be held back by the financial consequences of his decisions, he had grandiose plans for public expenditure,” Costello wrote of Abbott’s performance as a minister in the Howard government. “He used to tell me proudly that he had learned all of his economics at the feet of Bob Santamaria. I was horrified.”

In those years in opposition, these Liberal dries saw themselves as the fiscal conscience of the Coalition. Abbott had ascended to the leadership with the support of the Nationals. At one stage, he even entrusted rural populist Barnaby Joyce with the crucial finance portfolio. Whenever the Nationals would raise concerns about foreign investment, the dries would nudge Hockey to respond and shoot them down. Not that he really needed the nudging.

 

The Hockey Club is frequently described collectively as “young and ambitious”. Most are in their 40s, though some – like Briggs – are in their late 30s. Those who are unconstrained by frontbench roles frequently contribute opinion pieces to the national newspapers, putting the case for free trade, foreign investment, a user-pays approach to health, and cuts to penalty rates.

After Health Minister Peter Dutton called for a debate on the future of health funding, O’Dwyer chimed in with an opinion piece in The Australian Financial Review arguing that increased co-payments for GP visits was not a tax.

Hockey backed Dutton’s call for a debate, saying that failing to make the health, welfare and education budgets sustainable amounted to “intergenerational theft”.

Abbott was more circumspect, restating election commitments not to cut health and education spending this term, while reflecting on the need for longer-term cuts.

One Liberal source, who is not part of the Hockey group, says when the posse formed some years ago, they were jokingly referred to as the “Big Swinging Dicks”. The punchline is that the same MPs were then the driving force behind a backbench ginger group of free-market thinkers that formed in 2011, called “the Society of Modest Members”. The latter is not an anatomical reference, but rather a nod to the famous “Modest Member” column penned by former Liberal MP Bert Kelly.

Within all parties there are social groups. What sets this one apart, though, is not only the ambition of its adherents but also the closeness to the treasurer and the willingness to protect his interests. In recent months, Hockey has emerged as the backbone of the government, giving it purpose and a narrative as he honed his message about the need for fiscal discipline and the end of “the age of entitlement”.

One MP who admires him says it’s a wise strategy for Hockey to prove he is an economic hardhead.

“Joe has social capital in spades. He’s very likeable. But he needs to build respect and show he can take tough decisions. He can afford to spend some of his social capital doing that.”

At the G20 finance ministers’ meeting, Hockey took his domestic message global, convincing world finance ministers to set a global growth target of two percentage points. In short, his star has been rising, and the man formerly derided as “Sloppy Joe” is emerging as the most authoritative voice of the government.

 

Qantas changed this, or at least questioned it. In mid-February Hockey gave the impression the airline’s request for support would find favour. A few weeks later, Abbott unceremoniously knocked this on the head. It was a surprise role reversal: the treasurer who has preached fiscal discipline was outflanked by the prime minister who many had assumed would prefer populism over economic rationalism. Hockey seemed to have led Qantas on. Suddenly, there was daylight between them.

Early in this government, Hockey seemed to be setting the tone. Now, with the Qantas decision reinforcing his hard line on corporate welfare, Abbott is showing he can make the tough calls.

As one MP who is close to Hockey puts it: “At one point in time, we dries were in a niche and were trying to drag the party in that direction. We’re now mainstream and Tony Abbott is pushing us to the extreme.”

As a former tourism minister in the Howard government, Hockey has close connections to the airline and an understanding of the challenges it faces. One of his former staff, Olivia Wirth, is a senior executive with the company.  He kickstarted the debate about the airline’s future last November, empathising with the difficulty it faced in competing with Virgin.

When Hockey made his February statements he appeared to give the airline hope it would secure the debt guarantee it sought, mounting an argument that it could be seen as a special case – a different category to other businesses, like SPC Ardmona, that had asked in vain for funds.

He even outlined four criteria, which Qantas satisfied, for government involvement in a business.

“Number one is existing restrictions on the business imposed by the parliament. Number two is if it’s an essential national service, and number three is if it is in an environment where other sovereigns are engaging in direct competition to the massive disadvantage of an Australian business, then you need to take that into account,’’ he said.

“And the fourth thing is the business has to do its own heavy lifting on its own reform. We are not going to run the business or tell them how to reform.”

The government was being dragged “kicking and screaming” to supporting Qantas, he said. He was aware it would seem inconsistent with other decisions to refuse funds to SPC Ardmona and the car industry. A special deal for Qantas threatened to disrupt the narrative Hockey had created of an end to the “age of entitlement”, coming as it would close on the heels of another special case in the form of a drought package for farmers.

Just a few weeks later, on the day Qantas announced it would shed 5000 jobs, Abbott took a different line.

“This government will do what we can for Qantas, consistent with responsible economic management. That essentially means we should ensure Qantas can compete on a level playing field,” he told question time.

“The difficulty is this: what we do for one business, in fairness, we have to make available for all business.”

Four days later, cabinet met for two hours to debate the future of the airline. Both Qantas and Virgin were engaging in last-minute lobbying. Virgin board member and former Nationals leader and deputy prime minister Mark Vaile was in Canberra and saw the prime minister in the morning.

That evening, Nationals leader and transport minister Warren Truss took a proposal to cabinet that the government should seek to revise the Qantas Sale Act, removing foreign ownership restrictions but not offer other support.

At least one cabinet minister made the case that Qantas should receive taxpayer support, but not Hockey. Two hours later, Abbott announced the government would pursue the legislative changes within a week, despite a hostile senate.

Cormann says the role Hockey played was appropriate and that he had guided the public debate, rather than signalled the government’s intentions.

“On Qantas, Joe Hockey did exactly what he needed to do as treasurer, and that was to get the public conversation going about an important issue that we were dealing with,” he says.

“He made sure people across Australia understood the challenge and what was on our mind, and appropriately put a framework around that conversation we needed to have.”

The way the government reached its decision on Qantas can be viewed as the appropriate consideration of options and eventual progression to a decision. Or it can be viewed as the prime minister overruling his treasurer, ahead of cabinet debate. Hockey maintains that removing the restrictions on foreign ownership would remove one of the conditions that would have qualified the airline for support.

But the decision is an interesting one for those who sometimes gather for a drink in Cormann’s office. If their unstated objective is to ensure Abbott does not stray from free-market principles, they seem to have the prime minister right where they want him. If they want to shore up the treasurer’s claim to be next in line, they still have some way to go.

This article was first published in the print edition of The Saturday Paper on Mar 8, 2014 as "Captaining the Hockey Club". Subscribe here.

Sophie Morris
is The Saturday Paper’s chief political correspondent.