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As the Liberal Party dirt unit that helped win the NSW election opens up about tactics, key players are moving to the federal campaign. By Paddy Manning.

Inside the Liberal Party’s dirt unit

Liberal Party operative Peter Phelps.
Credit: Sky News Facebook

Peter Phelps first saw the clip in a South Park meme, posted in a closed Young Liberals Facebook group. A former Howard government staffer, once employed by hard-right senator Eric Abetz, Phelps understood the import immediately: here was Labor’s New South Wales leader, Michael Daley, saying on camera that “young people from typically Asia with PhDs” were taking Australian jobs and forcing people out of Sydney.

Phelps’s next move was simple. He went looking for the original tape. Were it not for the fact it changed the course of the NSW election campaign, it would scarcely be worth reporting.

“I go into YouTube, hit the search engine for ‘Michael Daley Labor’,” Phelps explains to The Saturday Paper. “That’s all … it was literally the sixth video down. It was there for months for all to see, but no one had seen it. It’d had about 120 to 130 views … When I saw what’s in it, I thought, ‘Holy shit, this is great, I’ve got to get this out.’ ”

Initially Phelps shared the video, shot by blogger Daniel Pizarro, on his own Facebook page. As soon as he did, colleagues told him to take it down. There was a bigger opportunity here. They would save it for the final moments of the campaign.

Eight days out, the massacre in Christchurch reopened debate about the violent outcomes of racist political rhetoric. The Liberals saw an opening.

Almost as soon as the video aired, the Daley campaign collapsed. Bruce Hawker, a strategist for the Labor Party campaign and a former adviser to Kevin Rudd and Bob Carr, said feeding the video through to The Daily Telegraph was an “entirely legitimate” tactic for the Liberals. Lobbed just as voters were making up their minds about the recently appointed opposition leader, the video was, he says, “very effective … well timed and well placed”.

 

Peter Phelps has worked in the Liberal Party’s dirt unit since 1998, when the Liberals identified a handful of potential future Labor leaders whose backgrounds needed researching. He learnt the craft of “opposition research” from party legend Darcy Tronson, an adviser to former Tasmanian premier Robin Gray, who pioneered “oppo” for the conservatives. He has been a staffer for the Howard government, an adviser to Senator Abetz and, most recently, an MP in the NSW upper house.

During the 2004 election campaign, Phelps says, he spent days “getting motion sickness” going through microfilm of the Liverpool City Champion to unearth dirt on Mark Latham, research that helped sink Labor’s chances.

“All that Liverpool stuff, ‘L-plate Latham’, that was our work at the time,” Phelps says. For the 2019 NSW election the Liberal Party assembled a three-person dirt unit comprising Phelps, John Macgowan and Tom Green, who were tasked with trying to define Daley in the public’s mind.

The unit’s priority was to try to connect the Labor leader with corrupt former Labor powerbrokers such as Eddie Obeid – whom Daley had thanked in his first speech to parliament – and Joe Tripodi.

Phelps concedes the unit spent a lot of time on it. He even called Tripodi himself, only to find Daley was not close enough.

“In the end we had to abandon it,” he says. “… I spent so much time trying to find a photo, a newspaper article, or anything with him and Obeid, there’s literally nothing which we could find.”

The dirt unit also tried to link Daley with murdered property developer Michael McGurk, but came up empty-handed.

On the Labor side, Hawker says they did not have a specialist dirt unit comparable with the Liberals’.

“Obviously you’d get people ringing in, and you’d pick up bits and pieces of information, but there was nothing in a co-ordinated way, there was no unit as such,” he says. “That was the big difference between our campaign and theirs. For starters, we just didn’t have the resources to do that.”

Phelps says the negative campaign efforts from Labor were hopeless.

“We beat them hands down,” he says.

For instance, Phelps says, a Network Ten story about Treasurer Dominic Perrottet’s apparent failure to disclose hospitality from his old law firm misunderstood the electoral laws and got no traction: the donation was duly disclosed by the party and there was no illegality.

Phelps says sitting MPs are less likely to be fruitful targets for opposition research – “everything’s been cauterised” – but new candidates have proved much more likely to yield stories.

That was borne out by the experience of one Labor candidate, who spoke to The Saturday Paper on the condition of anonymity.

“I had people I went to school with, like decades ago, contact me to say there was an investigator or somebody who called them up and wanted to talk to them and asked questions about how I was in high school, and all of this sort of stuff,” she said. “They’d looked into where I worked, and where I said I’d worked, and contacted people to verify all that.”

The candidate’s bio stated she had worked at a university, but the researcher couldn’t find any evidence online and started to call journalists suggesting she had lied about her work history. At one point, the candidate had to send a journalist her staff ID and the head of the school’s email address to stop a story running.

“There was no story, because there is no story, but they did try very hard,” the candidate says. “This is how they are. This is what they do. Young Libs just egged on by sitting members to be really awful bullies and harassers to candidates and supporters.”

 

After eight years in the upper house, Phelps is relaxing and will not be part of the federal campaign. His colleague Macgowan, however, who worked alongside him for a decade, will be involved. Macgowan is a hard-right operative, with experience of negative campaigning in Ukraine. He is a fan of black metal and smoking. When the Liberals won in NSW, he wrote on social media: “This is another Bruce Hawker masterstroke what you don’t realise is he always intended for the Liberals to win, it’s all part of the plan.” And then: “Did we just ninja an election”.

Phelps worked on the 2016 federal campaign and says there was dirt the Liberal Party could have used against Opposition Leader Bill Shorten back then but didn’t. Malcolm Turnbull wanted to run a positive campaign, Phelps says. “I’ll run a positive campaign when you can show me one that works,” he says, quoting former Liberal Party director Lynton Crosby.

Liberal sources argue the Canberra press gallery is more conservative than Sydney’s media and less inclined to run dirt. Hawker says that is little comfort for Labor, though, when you consider the coverage from the Murdoch press. A veteran of the 2013 campaign, when the Murdoch empire turned entirely against Rudd, Hawker says “you’ve got to ask yourself how effective the Liberal Party, either in NSW or Canberra, would be if it didn’t have the willing collaboration of a large sector of News Corporation, every time they go into an election campaign”.

Still, Phelps believes the Coalition is headed for defeat in May. He is unsure whether there is any new information that could shift voters.

“Everything hasn’t been thrown at Shorten,” the Liberal operative says. “There’s more than enough on him already to run a savage attack campaign. The real problem is, is it going to move a single vote? My view is, there’s nothing you can do now which will move a single vote. I don’t know what [the federal party] can do to win the election. Shorten can lose the election by doing something completely off script or stupid, but he’s a machine and it’s unlikely. People have made up their minds about Shorten.”

The Liberal Party dirt will not be directed exclusively at Shorten, however. One source indicates that, just as Michael Daley’s record on Randwick council came up during the NSW election, shadow treasurer Chris Bowen’s record on Fairfield council as councillor from 1995 to 2004, while Joe Tripodi was state member, will be scoured.

Labor will be in a position to retaliate, though: there is fertile ground in Prime Minister Scott Morrison’s own CV, including his controversial stint at Tourism Australia, as this newspaper has reported.

Federal Labor campaign sources did not return calls for comment, but Hawker says the party will be well prepared going in to a must-win election.

“They’re a very professional operation,” he says, “and they will be war-gaming on any number of issues that may have to be dealt with in the campaign.”

This article was first published in the print edition of The Saturday Paper on Apr 6, 2019 as "Inside the Liberal Party’s dirt unit". Subscribe here.

Paddy Manning
is contributing editor (politics) at The Monthly.