Chris Wallace
Joe Hockey’s a dead treasurer walking

Federal Treasurer Joe Hockey’s fast-weakening position, as well as that of the economy he presides over, was camouflaged this week by overwhelming attention on the Syrian refugee crisis. It was palpable in Parliament House, however, and the conviction is widespread, that Hockey will be the fall guy in the event of a big swing against the government in next Saturday’s Canning byelection.

As one sympathetic Liberal said of Hockey this week: “He’s a dead man walking for sure – it’s just a matter of where they’re going to bury the corpse.”

The week began with destabilising reports that Liberal deputy leader and foreign minister Julie Bishop had told Prime Minister Tony Abbott he ought to move the underperforming Hockey to lift the government’s performance. The pernicious revival of an old story, it simultaneously damaged Hockey and Bishop who, as deputy leader, cannot afford to have backroom political conversations with her boss circulating in public. Needless to say, Bishop, busy trying to save Canning in the byelection on her home patch of Perth, was the subsidiary target of the story, not its source. The prime target was unmistakably Hockey.

Then, just as the government hosed down the story, Abbott fuelled it with an equivocal response, on the second anniversary of the government’s election, to a question about whether Hockey would still be treasurer on its third. Abbott massaged this into the apparently banal proposition that all governments have reshuffles, but too late for Hockey and all and sundry not to have had an unmissable glimpse into his near future.

This crippled treasurership staggers on against the backdrop of emerging economic data that would be disturbing if there were a capable minister in the job, and is positively alarming with Hockey there. The June quarter national accounts released by the Australian Bureau of Statistics last week tell a stark story: Australia is on the brink of recession and several indictors point to things getting worse in the near term, not better.

The economy grew at just 0.2 per cent in the June quarter after seasonal factors were taken into account – in other words, effectively flatlining. The terms of trade – that is, the value of our exports compared with our imports – worsened, and our net national disposable income fell. After trending down, unemployment is running at 6.2 per cent.

This is all happening on Hockey’s watch. He doesn’t get it and seems clueless about this economic turn. And this is before the wave of job shedding from the car industry, consequential upon the government’s cancellation of the Automotive Transformation Scheme, begins to come through. Prime age males will be prominent among the victims – a group Abbott likes to call his own.

If not for saturation news footage of distraught Syrian refugees traversing Europe, the fragility of both the nation’s principal economic minister and the economy itself would have been painfully exposed. Instead, Hockey entered a kind of suspended animation pending the outcome of the Canning byelection.

With the government now entrenched in a six- to eight-percentage point deficit compared with Labor in the national polls, something has to give. There has to be a reset. That reset is going to be a new treasurer. The reason is ineluctable. If Hockey doesn’t go, Abbott will end up losing the leadership. And as much as Abbott doesn’t want to take the public hit of losing a treasurer, personal political survival will finally drive him to it.

One has to go back to the Whitlam government’s Jim Cairns to find a treasurer so completely dismissed in terms of their professional and political capabilities as Hockey. It is a serious and unusual thing for a federal treasurer to visibly fail.

Government frontbenchers attended to paperwork when he was on his feet during question time this week, or exchanged small talk, as though averting their eyes from the embarrassing obviousness that the treasurer is the political walking dead. Opposition MPs treated Hockey’s answers with something worse than derision: they actually laughed at him. Hockey is without authority. A treasurer who is an expired franchise is a terrible burden for any government to carry but particularly for one led by a prime minister whose performance has been not much better, and who is surviving day to day on the basis of one national security gambit to the next.

Old friends are becoming subtly more distant as the pecking order recalibrates around Hockey’s political distress. Scott Morrison did the honours at the Sydney launch of cabinet colleague Christopher Pyne’s new book, A Letter to My Children, where once Hockey would have been the certain choice. Hockey’s 50th birthday bash last month was a largely non-political event, with only a few fellow MPs present. An emotional man, Big Joe, friends say, feels misunderstood, victimised by the media and fed up to the point where he is contemplating not running for parliament next time around.

More seriously for the nation, his two years in the job have delivered no structural reform, rising unemployment, an alienated business community that has gone on capital strike, and now apparently an impending recession as well. It will be the recession Australia didn’t have to have, with Hockey’s lack of strategic policy nous and tactical political skill a major contributing factor. Joe still presents as a likeable lug in casual interactions but the conclusion has become inescapable to colleagues that he is either too thick for the job or too arrogant to get any perspective on his poor performance and fix it.

Topping it off, the normal political stabilisers that might have helped him improve – namely a prime minister and prime ministerial office knocking Hockey and his staff into shape when the underperformance first became clear – did not kick in. This is because the two men and their two offices share the same problem, both too thick to actually fulfil rather than just fill their positions, or too arrogant to perceive their underperformance and fix it.

And the top-level stabiliser who might have kicked in and led them both to lift their game, federal Liberal Party director Brian Loughnane, delivering the necessary home truths? He’s still married to prime ministerial chief of staff Peta Credlin, who is herself a friend and fan of Hockey chief of staff and former UBS banker Grant Lovett. If Liberal MPs poised to lose their seats and Australians poised to lose their jobs are looking for guilty parties, the Abbott, Credlin, Hockey, Lovett quartet is it. Coming into office with a big majority and few headwinds, there is still disbelief in Liberal ranks that it all should have come to this.

Scott Morrison is publicly positioned as Hockey’s likely successor but Abbott has a much more delectable option if he has the wit to embrace it: Malcolm Turnbull.

Business community alienation with the government should weigh heavily in Abbott’s calculations. While Morrison is perceived as competent, he is a largely unknown quantity for business. “No one knows anything about Morrison’s views on anything,” says one Liberal. “He’s a complete black box.”

Turnbull, on the other hand, is a wheeler-dealer of the kind the business community understands. His handling of the NBN, where he at best is considered to have done a mediocre to poor job by technology sector analysts, does not stand close scrutiny from a business standpoint. Business people nevertheless regard him as one of them in a sea of Liberals who have not the faintest clue about how business actually works and what policies might make a difference to them.

Abbott needs the business community back on side – and he needs their donations as the next federal election draws near. Turnbull as treasurer would be a better sop than Morrison.

But there is a deeper reason why Turnbull could be a more attractive successor to Hockey than Morrison. The next treasurer is likely to preside over an economy in recession. Abbott, totally paranoid about Turnbull, might be smart enough to lumber his principal rival with that burden: the opprobrium of being in charge of a sinking economy and having to turn it around. If Turnbull fails, Abbott will have seen off his main, and increasingly threatening, rival. If Turnbull succeeds, the government’s electoral stocks will improve and Abbott’s prime ministership will be more secure. For political aficionados it would be delicious, too: a re-creation of mesmerising political tension between a prime minister and treasurer hinted at by Howard and Costello but not properly seen since the old Hawke–Keating days.

The Hockey–Abbott–Turnbull triangle may finally play itself out in this way. Abbott became the accidental opposition leader, then prime minister, because Hockey did not believe Turnbull would throw his hat into the ring and split the moderate vote back in the December 2009 Liberal leadership contest. Hockey was warned but he would not listen. His boneheadedness then had huge consequences for him and the nation. Everyone, government MPs and voters alike, has had enough of Joe’s learning costs being externalised painfully onto them. Barring a miracle, it will be over soon.

This article was first published in the print edition of The Saturday Paper on September 12, 2015 as "Bye Joe, I think he’s lost it".

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Chris Wallace is a professor at the 50/50 by 2030 Foundation, University of Canberra, and the author of How to Win an Election.

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