August 2010

Essays

Mark Aarons

The hollowmen

Parliament House, Canberra. © JJ Harrison

The destruction of Kevin Rudd’s prime ministership is unprecedented in the history of the Australian Labor Party. Never before had the parliamentary party treated a successful ALP leader with such disrespect and disloyalty, especially when it was only a few months out from an election battle to determine whether the party would be in office for a second term. That the key powerbroker from the NSW ALP Right played such an instrumental role in both securing the leadership for Rudd and then dragging him down is not, however, unprecedented. The former NSW ALP state secretary and federal government minister Graham Richardson helped engineer both the elevation of Bob Hawke to the leader’s job in 1983 and his subsequent defeat by Paul Keating in 1991.

Almost a quarter of a century separates the coup against Hawke from that of ‘Richo’s’ successor, NSW Right faction leader Mark Arbib. But the circumstances and substance of these two political dramas were very different, although Richo did play a small role in Rudd’s demise, advising Arbib that Rudd was “unelectable”. Arbib was secretary of the NSW ALP when, in 2006, he marshalled the numbers for Rudd to win the leadership ballot against Kim Beazley. Now a federal minister – and an influential Rudd adviser for most of the former PM’s time in office – Arbib lined up with Victorian right-wing powerbrokers Bill Shorten and Senator David Feeney to politically assassinate Rudd and install Julia Gillard in the prime minister’s office.

There the parallels end. Many unsavoury things can be sheeted home to Richardson, but never let it be said that he lost his political instincts and put a prime minister on the path to self-destruction. The same cannot be said for Arbib. There is more than a little tragic irony in the apparition of Arbib stabbing an emperor who had lost the confidence of the people, given that Arbib had been one of the principal architects of the disastrous policy backflip that caused the collapse in Rudd’s support among voters. Having built his political persona firmly on the foundation of fighting climate change as the greatest moral and economic challenge of the twenty-first century, Rudd discovered too late that he had recklessly thrown away his credibility in postponing the emissions trading scheme.

His reluctant volte-face on the ETS, under intense pressure from Arbib and his supporters, was the critical turning point in the precipitate plunge of his personal ratings and his party’s primary vote, and eventually caused his political demise. But it is also ironic that Julia Gillard, his replacement as prime minister, supported an even more hardline position than that eventually adopted by Rudd, advocating the total abandonment of the ETS.

As with Caesar, Rudd’s personal weaknesses and failings were instrumental in his fall, but he finally displayed passionate conviction at the press conference held the night before he was deposed, during which he heaped contempt on the unelected faction leaders of the ALP. Et tu, Arbib?

Little wonder that just before Rudd staggered from the caucus room, bleeding from his still-fresh wounds, he pointedly warned against allowing “this federal caucus to have embedded in it the same type of culture as in NSW where every time you make tough policy decisions and polls dip, you get up a campaign and cripple the leader. It’s not good to bring the NSW culture to Canberra.”

It was a lesson too late in the learning. Arbib had form, which Rudd well knew. In what could be seen as something of a dress rehearsal for Rudd’s own crippling, the NSW Right had done a job on one of their own, the then premier of NSW, Morris Iemma. In 2008 Karl Bitar was the NSW ALP general secretary; his polling was used to devastating effect against Iemma. When Bitar was promoted to the position of ALP national secretary in October 2008, senior NSW minister Frank Sartor sent him a colourful and prescient text message: “Congratulations on the new job. Now that you’ve fucked up NSW, you can go and fuck up the country.”

This bilious piece of political wit is reported in Simon Benson’s recent book, Betrayal, as is the scorn of former prime minister Paul Keating for the political force that spawned him, the once mighty NSW Labor Right. In typically withering fashion, Keating claimed that the men who now dominate his old faction lacked “an ideology other than the sheer pursuit of power”. Keating’s analysis surprised most keen observers of ALP politics; after all, the rallying cry of Keating’s faction has long been the bluntly honest credo “whatever it takes”, as coined by Graham Richardson. This motto is stamped on the modern era of Labor successes, both federally and in NSW.

Ever since the communists withdrew their considerable forces in 1940, the NSW ALP has been continuously and ruthlessly controlled by the right-wing machine. The men who have run that machine for 70 uninterrupted years both invented and sustained modern Labor’s “pursuit of power” motto. Under William McKell, NSW Labor devised the most successful formula for dominance of state politics in the nation’s history. From 1941 to 1965 the Right ruled in Macquarie Street, the nation’s oldest parliamentary citadel.

The post-World War II evolution of this faction was founded precisely on the rejection of ideology. When Bert Evatt decided to take on his erstwhile friends in Bob Santamaria’s “Movement” – culminating in the great ALP split of 1955 – pragmatism and the pursuit of power won the day hands down in NSW. While Santamaria’s supporters in Victoria and Queensland rallied to his anti-communist banner, supported his vision of a largely rural society based on somewhat medieval Catholic principles and flocked to his Democratic Labor Party, the ‘hard men’ of the NSW Catholic Right decided to “stay in and fight” for their party, a badge they wore with obvious pride as the ALP crumbled elsewhere.

Nothing could distract them from the main game: preserving Labor’s power in NSW. While the party lost government in Victoria and Queensland for the next generation, the Right machine in NSW clung on tenaciously for another decade. It has again dominated since 1976, governing for all but seven years. Indeed, in the seven decades since 1940, the Liberals have held the reins of power in NSW barely a quarter of the time.

As Keating told Benson: “Where goes NSW, so goes federal Labor.” Over the same period, the federal ALP ruled in Canberra in almost inverse proportion to its governance in NSW. But during its most dominant period, the Hawke–Keating era of 1983–96, the NSW Right held sway through Richardson and his allies, who directed the national ALP Right with a steely discipline. That is, until Keating foolishly and temperamentally threw it all away. Perhaps he has mistaken hubris for “ideology”.


For more than 11 years I had an eagle’s eye view of the growing dysfunction of the NSW Right machine. As a senior staffer in the governments of Bob Carr and Morris Iemma, I saw the gradual but relentless hollowing-out of the machine’s political skills and the emergence of a generation of ever younger ‘leaders’ with no life experience outside branch-stacking, corporate fundraising and narrow machine-politics, and possessing no independent political instincts or understanding of how the general populous interacts with modern politics. Where deal-making, fundraising and polling were once important accoutrements to the central plank of practical politics – a means of connecting with the lives of real people – they have become almost the raison d’être of today’s NSW ALP machine men.

This is illustrated by what happened less than a week after Iemma won the March 2007 NSW election, securing 16 unbroken years of Labor rule and putting himself in a dominant political position within both the government and the party. Instead of capitalising on his triumph, Iemma stupidly squandered his reputation by capitulating to Arbib’s blandishments to promote ace party-fundraiser Paul Gibson into his cabinet. It was a classic base manoeuvre, designed to stitch up an impossible deal to keep Gibson quiescent about his archenemy, the then-recently elected member for Blue Mountains and fire-fighting hero Phil Koperberg.

The two men had been foes for years, especially since Koperberg’s ex-wife had an affair with Gibson, whose connections with NSW crime figure Louis Bayeh had prompted a corruption hearing in the late 1990s. Everyone in and around NSW politics was aware of the domestic violence allegations relating to Gibson and another Labor member of parliament. The combination of these matters had made Gibson a toxic political quantity, someone never to be promoted during the decade-long Carr era.

It was also widely known that Gibson held explosive material over Koperberg’s head, alleging that he, too, had been involved in domestic violence. Despite that, and against the wisdom of several superior political intellects, Arbib recruited Koperberg to stand in the 2007 election and Iemma put him straight into his cabinet. In a typical example of how the modern NSW Right machine views the art of deal-making, Arbib believed that if Gibson were also promoted into cabinet both sets of domestic violence claims would be negated by the delicate balance of ‘mutually assured destruction’.

It was a dreadful political blunder. Six months earlier, I had reminded Arbib of Gibson’s history and extracted an undertaking that he would not pursue this crazy deal. It was clear to any politically literate person that Gibson’s elevation to cabinet would result in a media frenzy in which the whole sordid mess would tumble out within days, as indeed it did. The counterattack on Koperberg followed a few months later, soon after Rudd won the 2007 election, when documents about Koperberg’s alleged involvement in domestic violence towards his ex-wife were leaked to a newspaper.

In March 2007, I found myself in the middle of Arbib’s scheme, because a Labor member of parliament approached me with evidence of Gibson’s alleged involvement in domestic violence. I was duty-bound to pass this on to Iemma, for whom I worked as a senior policy adviser. As a consequence, Gibson was hurriedly dumped and a police inquiry was launched, halting Iemma’s political momentum before he had even had time to bask in the glow of his improbable fourth-term victory.

Arbib’s advice was disastrous but, as with so much of what marked his term as premier, Iemma only had himself to blame for acceding to it in the face of what he knew about Gibson. His premiership never recovered. This incident was, in fact, the first of several defining moments in the collapse of Iemma’s leadership.

My role in the affair makes a cameo appearance in Betrayal. In a six-line entry, Benson makes two basic factual errors about me, which he has now acknowledged on his publisher’s website. When challenged, he blamed his “source”, Iemma, for his journalistic mistakes. This illustrates the dangers of placing too much reliance on self-interested informants. But the affair also resulted in the termination of my previously close professional and personal relationship with Iemma.

There were other insidious developments in this period. The most pervasive involved the NSW Right’s dealings with the corporate world. Over the previous decade a culture had grown up involving cosy deals between the party machine and the ‘big end of town’, in which political favours became the quid pro quo for donations to “head office” (or “Sussex Street”, as the NSW machine is affectionately known). During my time working as an adviser, rumours about the pressures exerted by head office on various ministerial offices to assist big donors circulated regularly. I only experienced this directly once, when a senior NSW party official rang to ask me to fix some problems for a large north-coast developer who was also a major donor to the ALP. Like other staffers in such a difficult situation, I had to devise a way of balancing this demand with my professional responsibilities – an unfair position, by any reckoning, in which to be placed.

This, too, was a poison infecting the party’s standing, as what had begun as a legitimate party–business connection cascaded out of control into crude shakedown, infecting the government itself. By the time Iemma moved to fix the problem towards the end of his premiership it was too late: public confidence in the system’s integrity was, and remains, at rock bottom.

But Iemma’s real failing was in letting the party machine into his government’s policy-making processes. Under Carr, the machine advised on polling, political strategy and even tactics, but there was an ironclad separation when it came to the actual business of running the government. His successor opened the door from day one, and this laid the foundation stone for Iemma’s self-inflicted disaster.

Arbib and Bitar had developed focus-group polling into a modern political ‘art form’. The trouble was that a tool meant to guide political strategy by assembling qualitative research to complement polling about voting intentions was being substituted for political judgement.

This was the case from the very beginning of Iemma’s premiership. In August 2005, when Iemma succeeded Carr with the assistance of Arbib’s polling, the government was under considerable pressure over Sydney’s then rapidly dwindling water supply. The city’s catchment had suffered from prolonged drought for several years. Building a new dam was environmentally impossible, as it would have required the flooding of pristine wilderness areas in World Heritage-listed national parks. But Carr had also been vehemently opposed to a desalination plant, arguing it would produce the equivalent of “bottled electricity”.

Enter Arbib and Bitar and their focus groups. Their technique involves targeting the least politically committed voters in key marginal seats. Swing voters of this kind care most of all about themselves and are not loyal to any particular political party or leader. The Arbib–Bitar theory is that these people determine who wins government, and that their views should therefore predominate in policy-setting. In a bizarre reversal of conventional political wisdom, leadership is redefined as following such people by pandering to them.

The process of developing a policy on Sydney’s water supply set a precedent for Arbib and Bitar’s role in providing Rudd with their disastrous advice to backflip on the ETS four-and-a-half years later.

Carr had resisted the focus-group research results that said swinging voters would accept a desalination plant in the absence of any other new source of water supply. As soon as Arbib had helped to engineer Iemma into the leadership, he persuaded him that such voters wanted decisive action. Iemma agreed and announced that he would immediately start the process of tendering to build a desalination plant as the main plank of his water plan for Sydney. Environmentalists and Greens party members were instantly hostile. These groups had been critical to Labor’s electoral strategy for the previous decade, with many environmentalists attracted by Carr’s leadership on forest policy and climate change, and the Greens providing crucial preferences that ensured handsome victories for ALP candidates in several marginal seats.

By the time I joined Iemma’s staff four weeks after this announcement, to advise on environment, climate change and water policy, the desalination decision was already starting to turn pear-shaped. From early 2006, polling demonstrated that the focus-group research had led the government into a blind alley. The self-interested voters who had shaped the desalination plant policy did not represent mainstream voters, who hated the idea. The issue coloured many voters’ sense of the man who had introduced the policy; Iemma’s standing as premier was badly eroded because of the machine’s advice. Suddenly Arbib and Bitar were at my door pleading for me to find a way for Iemma to do a backflip with a triple twist and a whole lot of media spin. Both the media and voters were cynical about this manoeuvre, but Iemma was ultimately saved by a hopeless Opposition leader.


Benson’s book created a stir because of its central ‘revelation’: that Kevin Rudd dudded Morris Iemma after promising to support his plan to privatise the state’s electricity industry. Actually, this had already been reported by Paul Kelly in the Australian but, upon the book’s release in early June, its focus on Rudd fed into the dramatic collapse in public confidence that finally brought the former prime minister undone.

Benson’s version is far-fetched, largely relying on Iemma’s self-serving account, as breathlessly told to the author. The truth is far more prosaic. Like Rudd, Iemma mostly has himself to blame for the catastrophic end of his leadership. His premiership collapsed in ignominy when he forgot all the basic rules of ALP culture that he had learned at Richardson’s feet: he tried to defy the will of the party membership without the support of either the machine or the right-wing trade unions, where real power has always resided. Unions retain 50% of the votes at ALP conferences, where supreme policy-making powers reside. The majority of union secretaries come from the Right, giving them the ability to dictate policy to elected governments, a power rarely used but potent for its ubiquitousness.

The defeat of Iemma’s electricity plan at the 2008 NSW party conference would never have happened in the ‘good old days’ of the 1980s. Back then, Richo and the NSW Right backed Hawke and Keating whenever the federal government demanded unpopular changes to party policy in defiance of the rank and file’s will. At successive party conferences iconic policies were junked, resulting in, for example, the betrayal of the East Timorese and privatisation of the Commonwealth Bank. Unlike what happened in the Iemma case, the Right’s mates in the unions always fell into line to provide the numbers to support the leadership and steamroll any opposition.

But in 2008, when Iemma tried to push through an unpopular policy that he had calculatedly hidden from the electorate during the 2007 election campaign, the machine ultimately sided with the right-wing unions and the wider party membership to oppose electricity privatisation. This was largely down to the ineptitude of the ex-premier and his principal supporter, former NSW treasurer Michael Costa. Rudd’s alleged “betrayal” of his deal with Iemma was actually inconsequential in the former premier’s self-destruction.

Iemma’s failure to deal effectively with the structural corruption of factional power inside the ALP led to his demise. These same shortcomings of the party have been evident in Rudd’s fall and Gillard’s rise. She may well face similar problems to these two former leaders if the power relations remain unchanged.


The early signs for Gillard’s prime ministership were positive. The first polls restored her government’s position almost to the stratospheric heights that Rudd enjoyed before his fall from grace. This has tightened considerably and the election on 21 August looks likely to be a close-fought encounter. But it is hard to see Australians voting out their first female prime minister unless there is a major catastrophe or blunder during the election campaign. Scepticism about Tony Abbott, especially among female voters, will undoubtedly play a significant part in the final result.

Gillard has said that she will rise above the factional warlords, but behind them stand the union secretaries, who still have the clout to either deliver the numbers at ALP conferences in support of prime ministers and premiers, or to undermine their standing and assist the political factional chiefs with their destructive strategies. The television appearance of right-wing union secretary Paul Howes on the night the coup was launched against Rudd underlined just how corrosive this power really is.

This dynamic is terribly dangerous for Prime Minister Gillard. If she wins the looming election she would be wise to learn from Rudd’s inaction in addressing the urgent need for internal party reform. The previous prime minister naively thought all he had to do was to unilaterally declare himself independent of the factions and the all-powerful union secretaries, and to win the right to appoint his own ministry, in order to change the internal party landscape. For the long-term health of the ALP and for good government in Australia (to say nothing of her own prospects), Gillard would be well advised to advocate reform of the insidious factional system and the trade-union power base within the party, upon which its rotten core depends.

Under the redrawn political rule book of the post-Rudd era, the ALP Right factional heavyweights have emerged more powerful, and even less scrupulous and principled, than ever. If Gillard’s standing in the polls should fall as Rudd’s did, she can expect no mercy from the “lean and hungry” men who surround her. The ambitious and ruthless men who now run the NSW ALP Right are truly the models for The Hollowmen. Keating is surely correct when he says they believe in little more than the “pursuit of power”. It is also certain they will use Richardson’s “whatever it takes” credo to achieve it. Far more is at stake than Julia Gillard’s future as a successful Labor prime minister; only fundamental and permanent reform of the party will alter that awful truth and ensure Labor’s political future as Australia’s natural party of government.

Mark Aarons
Mark Aarons is the author of The Family File and War Criminals Welcome: Australia, a Sanctuary for War Criminals Since 1945. From 1996 to 2006 he was a senior adviser to the NSW Labor government.

Cover: August 2010

August 2010

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