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As Scott Morrison prepares for the election, the Liberal Party in Victoria is broken and contemplating the risk of a split, while the NSW government revolts. By Martin McKenzie-Murray.

Senior Liberals fear election chaos

Prime Minister Scott Morrison and Kelly O’Dwyer in Melbourne last week.
Credit: AAP Image / Ellen Smith

“I’ll tell you how bad things are,” a senior Victorian Liberal says of the party’s national standing. “We’ll soon deliver the first budget surplus in over a decade, and it’s not resonating. I can’t tell you the number of people who have pulled me aside and said that the Liberal Party has lost its way. These are business people, eminent people. They’re worried.

“If there’s anything that unites the party, it’s that we hate losing elections. And we keep losing them … We don’t regenerate. We haven’t brought in fresh talent. You can argue that we don’t have enough women – I’d say we don’t have enough new talent, generally. If you don’t rejuvenate yourself, the electorate will do it for you.”

All is not well in the state of Menzies and Deakin, even if the occasionally despairing Liberal cautions that things in politics are neither as good nor as bad as they seem. But it has been a rough few years – decades, some say – for the party in Victoria. “If you were to write a history of the party,” they say, “the last few years would provide a juicy chapter.”

November’s demoralising, near-historic defeat in the state election has cost the party both its parliamentary and administrative leaders and a good number of “unloseable” seats, while offering a possible forecast for this year’s federal election. And there is still no definitive answer to the question: To what should the Liberal Party aspire in the state of its birth? “No one has control,” a senior Liberal source says of the party’s Victorian apparatus. “It’s more Balkanised than ever before. But I’ll say this, regarding our future: Victoria is growing quickly. How to speak to them, it needs to engage in a welcoming narrative. You can’t bring 200,000 people to the country each year and turn your nose up at them.”

Existential questions appear in stark relief in Victoria, but the state doesn’t have a monopoly on them – nor on bitterness. In New South Wales, the Coalition government is campaigning against its federal counterpart. Some in the party had demanded a federal election before the state poll – so Prime Minister Scott Morrison could get on with it and lose, giving Premier Gladys Berejiklian
a better chance of retaining power.

Adding to the rancour, the pre-selection contest for the NSW federal seat of Gilmore, once acrimoniously resolved in favour of local real estate agent Grant Schultz, was dramatically usurped by Morrison this week, who appointed Indigenous leader and former Labor national president Warren Mundine as the Liberal candidate. Polling in the seat is dire, and many believe the move a Hail Mary. Regardless, Schultz bitterly condemned the party and vowed to run as an independent. Morrison called him a bully.

Mundine’s anointment came just days after the federal minister for women and industrial relations, Kelly O’Dwyer, announced that she would not be recontesting the seat of Higgins, in Melbourne’s inner south. O’Dwyer spoke candidly about her desire for a third child, and the fatiguing demands of politics on family. She also said she had suffered a miscarriage while in parliament – away from her family – and that she never wanted to repeat that.

For a party whose federal representatives comprise just 25 per cent women, and who lost a female member to the crossbench late last year when Julia Banks condemned the Liberals’ toxic machismo, O’Dwyer’s announcement reignited questions about its culture. Malcolm Turnbull, meanwhile, pointedly referred to her as a “true liberal” while acknowledging her near decade of service as the member for Higgins.

And so, in the state of its birth, and elsewhere, the party is beginning the long process of reimagining itself – and trying to salvage some appearance of cohesion before the federal election.

 

In 2015, curious about a campaign overspend, Victorian Liberal Party officials employed a forensic accountant. They revealed that the party’s state director, Damien Mantach, had been fraudulently siphoning funds for half a decade. Over five years, 53 fraudulent invoices – totalling $1.5 million – were confected by Mantach. Initially, he conceived of his ploy to repay debts, but he later told police that, struggling with feelings of inadequacy as a husband and father, the money came to have an “anaesthetic” quality.

For five years, Mantach kept one eye over his shoulder. He felt exposure was inevitable. He was sentenced to five years’ prison, and was released on parole last year. The fraud alarmed the Cormack Foundation, a private fund and the Liberal Party’s largest donor, which questioned the financial propriety of its benefactor. “Internal controls were lax,” the senior Liberal source says. “Governance reform and financial arrangement haven’t been refreshed for decades. But there was also a huge sense of betrayal. What it exposed is that we had honourable practices that worked until they didn’t.”

The party’s Victorian president, Michael Kroger, had his own concerns about the foundation – namely that it had donated to other parties and was unfairly controlling of its disbursement of funds. A protracted legal saga commenced, which was ultimately settled last year with both parties agreeing to a set of reforms. Conversations this week revealed lingering anger about Kroger’s litigiousness which, critics say, was costly, publicly unedifying and – given the ultimate arrangement – unnecessary. It was yet another quixotic battle from the imperious Kroger.

Then there was Kroger’s patronage of Marcus Bastiaan, a young factional warlord of cyclonic force. An energetic, vituperative social conservative in his 20s, Bastiaan paid fealty to few and began a campaign of aggressive recruitment among the Mormon churches and Rotary Clubs of Victoria’s sandbelt. Gone were the Wet issues of free trade and low tax; Bastiaan’s was a new constituency formed around a love of God and Queen, and a loathing for euthanasia, Safe Schools and the moral laxness of liberalism.

Bastiaan wanted nothing less than control of the party and its shift to the right, but his approach generated scores of enemies. He was described to me as “repulsively smug”, and one former conservative ally believed they had been used by him. Bastiaan-aligned federal MP Michael Sukkar referred to more moderate colleagues as “termites” and predicted the right’s commandeering of the party within months – “premature gloating” was how one senior Liberal put it to me this week.

Moderates weren’t just ideologically appalled – they thought a hard-right insurrectionist putsch was electoral suicide. In November, they were sadly vindicated when a fractured party suffered an extraordinary rejection at the polls. Seats that had been considered blue-ribbon monopolies were shed, and the awful result portends badly for the federal election.

“The campaign showed [the party] was out of touch with community,” a senior Liberal said. “We innovated in our focus on swing voters, but there was concern with older voters that we’d abandoned them. Core supporters weren’t happy. Matthew Guy was [focused on] injecting rooms [and] crime gangs, which were an issue but not in the seats that mattered. And general problems with the party – basically that we were seen to be to the right of Genghis Khan. Instability in Canberra didn’t help. But the ideas and campaigning won’t fly in Victoria. Might be beneficial in Queensland, but not here. Victoria doesn’t like this angry conservatism. My anecdotal feedback is that energy policy absence is embarrassing. That’s unsustainable. To not have a position on a defining issue of our times.”

 

Two months before the election, Marcus Bastiaan left the administrative centre of power, citing family health reasons. One colleague wondered if he was simply burnt out. But his patron, Michael Kroger, was still there among the flaming debris. An incensed former Victorian president Jeff Kennett called for his resignation on live television as the polls were counted, but Kroger resisted calls to leave his position early.

Until he could resist no longer. He told members: “Upon reading various newspaper articles today I think that when your own supporters are basically telling you it is time to go, then it is probably time to go.”

In an email, he wrote: “Please remember the President is a volunteer. The President cannot control everything in the Party even if they wish to. Many things have happened during my Presidency about which I am unhappy, but this is the nature of politics. Ultimately, however, the buck stops at the top.”

That “however” is doing a lot of work – it’s the hinge between Kroger’s excuse-making and his admission of responsibility. After political scandal or failure, we’re familiar with semi-apologies and qualified accountability. In the email, Kroger qualifies his by professing to limitations on his influence, and only then invokes his cliché of accountability. It’s called having your cake and eating it – declaring accountability while simultaneously drawing borders around it.

But Liberals were learning some lessons about cohesion. Enemies of Kroger – those baffled by his skirmishes and those scornful of his patronage of Bastiaan – didn’t persist in their criticism after his resignation. In conversations this week, a forced cordiality was extended to him. Kroger was replaced by “consensus” candidate Robert Clark, a former attorney-general who lost his seat of 20 years in the November poll.

Then last month, the spectre of Bastiaan returned. A series of leaked text and Facebook messages purported to show Bastiaan and Paul Mitchell, a Bastiaan ally and member of the administrative committee, engaging in homophobic and racially derogatory discussion. Both men have denied sending the messages, and hinted at some malicious hoax. Jeff Kennett was displeased – again. “These comments are inappropriate and are not in keeping with the foundations of the Liberal Party,” he said. “These comments are intolerant, and they should follow Michael Kroger out the door.”

“Take your pick who leaked it,” a Liberal source said. “There were enough that wanted to see him gone.”

Another source says that the ultra-right faction, forged largely by Bastiaan, is now hopelessly splintered. “They’re not the team that they were,” they said. “We’ve seen a split amongst that group. They’ve fractured. I think they’ve been chastened. All new state council delegates are being appointed now, and that process is showing a swing back to the centre-right. The election results proved that if you don’t have your house in order, you’ll be rejected.

“If the pendulum doesn’t swing back to sensible centre, then there’s a massive risk of the party splitting. I don’t think anyone was saying that five years ago. But there’s just no appetite for hard-right in Victoria. Note that the seats with the biggest swings were some of our most established seats. The urgent issue now is the federal election. Depending on what happens – and the polls say we won’t win… So a new party emerges which will be stronger for the future. But the results are the results, and you ignore them at your peril.”

While Victorian moderates wait for the pendulum’s arc to correct, their NSW colleagues are bracing for a March election in which they expect some de facto punishment for their federal party’s dysfunction. Kroger wasn’t spurious when he said some things were out of his control – contempt for the federal government was one. It could get messy in May – the presumptive month of the federal election – but at least one senior Victorian Liberal wonders if loss and wilderness might be the place to rebirth the party’s soul.

This article was first published in the print edition of The Saturday Paper on Jan 26, 2019 as "Senior Liberals fear election chaos". Subscribe here.

Martin McKenzie-Murray
is The Saturday Paper’s chief correspondent.