Hockey: Not Your Average Joe (12 page)

Reserve Bank governor Ian Macfarlane, who was on the Board, spoke up first and Joe left relieved that at least one person understood the dire outlook.

Joe didn’t have a clue who HIH CEO Ray Williams was. Nor did most of the media. But the public’s anger continued to rise, with Joe in the spotlight. A media pack followed him everywhere. One word would turn into a headline. Each time he spoke to the media, he would begin to sweat. That made him look as though he wasn’t in control, and worried his advisors, until his press secretary, Matthew Abbott, discovered the wonders of theatrical make-up. ‘I remember saying to one of the make-up ladies, what do you use? And they said you need to get this sort of make-up, so I went and got some,’ Abbott says.

Joe, for the first time since he was elected, really felt lonely. The young minister who wanted to stand out with his own gig now had it, and it wasn’t all it was cracked up to be, with both Howard and Costello allowing him to take the public lead, at least on HIH. The media bushfire continued to rage, encircling Joe. ‘I didn’t know who the hell Ray Williams was, and I was just bleeding,’ he says. ‘It was lonely, a blowtorch to the belly.’ ‘Sloppy Joe’, while a term coined years earlier at university to describe Joe’s hapless dress sense, was reintroduced to the public.

Joe was stuck, and didn’t know which way to turn. With advice from his associates he approached Gabrielle Trainor, a local woman in his electorate, whose specialty was corporate issues management. ‘He was in enormous trouble; there’s no doubt about that,’ she says. ‘It was the single biggest issue running for the government at the time and it went on and on and on. It’s hard to imagine many bigger issues in terms of their footprint.’

Gabrielle worked with Joe; they both knew an issue like this could drown a new minister. She was impressed with his smarts. ‘It was a very early way for Joe to understand the pressures of being a minister but also the full dimension of issues as they can be unleashed,’ she says. ‘I think it was actually a terrific experience for him to undergo at that time of his career.’ Gabrielle ensured Joe understood all the stakeholders, and mapped out a strategy. It was flawless. Working behind the scenes, she directed a hungry media towards Ray Williams. Who was he? What was his role? Wasn’t he to blame? The media turned away from Joe and towards Ray Williams. Joe, who had not yet got Cabinet support for a package of measures to counter the collapse, only agreed to be photographed or filmed with charts. He said nothing. It worked a treat.

As each day passed, another chapter would play out in the collapse, providing valuable lessons that Joe would use as he climbed the political ladder. One of those came after McGrath advised that they had to get the business running again, or all staff would have to be sacked. Joe’s first call was to Frank O’Halloran, who ran QBE Insurance. ‘He said Minister, we’ve already had a board meeting. We know it’s going to cost us, but we’re prepared to step in and take over this class of insurance.’ Joe thanked him, before putting in a call to Terry Towell, who ran Allianz. Terry heard Joe out, but said he needed to check with headquarters in Munich. He didn’t call back, and Joe was later told that Munich’s advice was direct: Allianz was not set up to help the government.

Joe was incensed. ‘In my mind, I stored this idea of selling everything [Australian businesses] off to the world. There’s the lesson. That’s lesson number two.’ The first lesson in foreign ownership had come earlier, when Australia’s gold industry was being sold off. Joe’s wife, Melissa, had been poached from Bankers Trust to Deutsche Bank to run its gold business. Every big gold mine in Australia was being sold overseas, taking with it big chunks of trading. Joe saw how it worked and he didn’t like it. He never forgot it, believing one day he would influence which Australian companies and resources were sold off overseas, and which would be kept in domestic hands, but probably not conceiving, at least then, that his first big decision as treasurer would be to decide on a takeover bid for GrainCorp by US food processing giant Archer Daniels Midland.

But it wasn’t only Allianz where Joe couldn’t get players onside. Infighting had broken out inside NRMA Insurance, and Rowan Ross had been appointed interim chair after Nick Whitlam left the organisation. The chief executive, Eric Dodd, who was also an ally of Joe’s, left soon after. Supporters of Ross claim Joe was interfering in a way a minister should not, that he had called to ask whether any management changes were planned prior to Dodd leaving, and again after he left to deliver a tirade of abuse. This story has Joe calling more to support a mate, than to lasso help in dealing with HIH.

Joe insists this was not the case. He says HIH had taught him to ask questions early and that the internal machinations at NRMA Insurance were a serious matter given the insurance industry was reeling in the wake of the HIH collapse. He says Dodd had also been helping the government in its bail- out package.

While the stories behind Joe’s motivation for making the call to Rowan Ross differ, broad agreement exists on what Joe said. ‘I rang him [Ross] and said, what the hell is going on,’ Joe recalls. ‘I said Rowan, I am sending everyone down to NRMA tomorrow and they’re going to give you an enema like you’ve never had. And I rang ASIC and APRA and the ACCC – all the regulators – and said I want you to raid NRMA publicly and I want it to have the enema it’s never had. I rang the Tax Office, too, and said you go through the joint.’ The pair have not spoken since.

The story is illustrative for a couple of reasons: firstly, throughout Joe’s career there is evidence that he is not always the buddy-politician that he comes across as. It was Rowan Ross in this instance, but others like Family First Senator Steve Fielding would cop the same treatment down the track. His staff, too, could feel the full force of his fury when his fuse was lit. The other characteristic is his willingness to step over the line of what a minister should and shouldn’t do, and it is that idiosyncrasy that became a hallmark of his time as tourism minister. For a retail politician like Joe – and the punters who back him – that’s irrelevant. If he’s the minister, he’ll rule on those decisions where he has responsibility as he sees fit. But outbursts and fallings-out were the exception rather than the rule and Joe’s strength continues to be his ability to get people onside.

The political fallout prompted by the collapse of HIH continued to brew through the weeks that followed. Joe addressed another Cabinet meeting, held in Sydney. Howard agreed that something had to be done, and the only legitimate response was to provide relief to those who were hurting. An election was looming large. Howard and Joe sat on a phone in Sydney, talking to Costello who was in Canberra putting the finishing touches on the 2001 Budget. Howard told Costello they had no choice but to fund a rescue package. Costello asked for a dollar figure.

‘I said how much have you got?’ Joe says. ‘And he said, “No I’m not doing that. I’ll give you $300 million.” I said that’s a waste of time. It won’t even touch the sides.’

Eventually, more than double that was put aside, but with one stipulation. Costello wanted it spent by the end of the financial year; it had to be off the Commonwealth’s accounts in two months’ time. Joe called prominent businessman Dick Warburton. He needed a board to begin delivering HIH claims.

One of the criticisms of Joe during this period was that he was slow to act – both with APRA and in responding to the crisis. But Tony McGrath, the provisional liquidator, dismisses that opprobrium. ‘I’ve never seen in all my time of the work I’ve done such a quick response to what was such a large problem,’ he says. McGrath was at the centre of the crisis, and continues to hold Joe in high regard because of how he handled it. ‘He was over the detail. He understood the problem and he recognised the government had a role to play and he was the figurehead who brought all that to bear. I would imagine that that would not have been simple.’

Any bruises Joe copped had to be collateral, he says. And they were largely – but the HIH saga served to teach Joe to ask questions more than once, and that when you’re in the firing line, friends are scarce, particularly if they’re politicians. He knew, with HIH, he had been left holding the ball and that he would rise or fall on his own performance. He’d relied on advisors in his office – Peter Cullen, Andrew Lumsden, Matthew Abbott – and Treasury’s Gary Potts, but in the end it came down to the art of communication and the primacy of the message; Gabrielle Trainor had helped him see that.

Joe had always been a good salesman, but this time he’d left the selling a bit too late, allowing the issue to spiral out of control. He had been hammered morning after morning, and he could not answer the questions being asked. But he had managed to get the bail-out package up over cries within his own Party room that it set a precedent and amounted to an unwarranted intervention in the market. More importantly, Joe thought it had played out well in the electorate. He was sure the royal commission the government had announced into the whole sorry saga would show that the government wanted to get to the root of the problem.

Still, as the election loomed large and the commission’s terms of reference were released, he wondered whether he might soon find himself declared collateral damage. Howard, in an effort to be thorough, had included the role of the Commonwealth – something that Joe had not expected, and he was both annoyed and flummoxed. Joe found himself a lawyer.

ELEVEN

Joe Hockey wanted
to know what he’d done wrong. John Howard had just offered the MP for North Sydney the tourism and small business portfolio, explaining that this was a significant job and he wanted Joe to do it. ‘But you’re demoting me,’ Joe fired.

‘I’m not,’ Howard said.

‘It is clearly a demotion,’ Joe returned.

Howard, who had just won his third victory as prime minister was losing his patience. ‘If you don’t like it you can go and cool your heels on the backbench,’ the prime minister told him.

‘Well maybe I should,’ Joe said, before Howard gave him 30 minutes to think about it.

Joe sat on the couch of his Blues Point Tower unit. He was devastated. He felt slighted, too, believing he’d taken the fall for the government on GST and on HIH and was being rewarded with a non-portfolio. He understood tourism and small business was important, but it was trivial sitting next to the big finance portfolio that he thought should be his. Perhaps it was over HIH? The royal commission was now underway and he sat, squarely, in the terms of reference. Or perhaps the prime minister just didn’t like him. Certainly it wasn’t the first time he’d thought so. They were different in many ways, and he’d butted up against him, as a junior MP, repeatedly. Joe was the young loud-mouthed moderate; Howard sided strongly with the conservatives. Joe had disagreed with his prime minister on issues such as the republic and on a woman’s right to choose and had been part of the small ginger group behind the John Stuart Mill Society. But he’d also taken a lot of bark for the prime minister, too. John Fahey, who had been diagnosed with lung cancer, was vacating the finance minister’s office and Joe thought he should be moving in. ‘I thought I’d taken the bullets on GST. I’d taken the bullets on HIH and I’d been the most prominent non-member of Cabinet and I deserved a go,’ he says.

He called Melissa at work and told her he’d just been shafted by the prime minister. She was calm; Joe wasn’t. He saw it as a humiliating step backwards and confirmation that Howard had marked him down as minister for financial services. Would Melissa like to take up one of the many job offers she had received from overseas? ‘I could get a job with [Citibank boss] Sandy [Weill] in New York,’ he told her. Melissa was more cautious and advised him to have a think about it.

Peter Costello was trying to contact him, Joe knew, but he didn’t want to talk to him yet either. Joe called Warwick Smith, a former Liberal MP who he respected, whose advice was unequivocal – take it.

Joe tried to call Sandy Weill in New York, to make sure an earlier offer to quit politics and join the world of business in the US remained, but his call went unanswered. Weill, as the CEO and then Chair of Citibank, was a global leader in banking. He’d met Joe a few years earlier when he was promoting Sydney as a prospective finance centre and Weill was planning a headquarters in Sydney. Over tea at Kirribilli with the prime minister and a group of others, Joe and Weill had hit it off. Joe maintained contact, which grew into a friendship of sorts. Later, as tourism minister, Joe would regularly send him wine from a different area of Australia, and a didgeridoo that still holds pride of place in his US office. Would he have given Joe a job?

‘Absolutely,’ Weill says now.

Thirty minutes had passed since Howard’s offer to take up the post as tourism minister. It soon became 45 minutes. ‘I was going to go,’ Joe says. Arthur Sinodinos, Howard’s chief-of-staff, had been on the phone to Joe’s chief-of-staff, Andrew Lumsden, telling him the prime minister was expecting a call back. An hour passed. Howard, at this point, was losing his patience.

Joe took Costello’s call. ‘You’ve got to do it,’ Costello said. ‘You don’t want to look petulant. If you become small business minister and you do something for small business, the heartland of the Liberal Party will love you forever.’

To Joe, even more than being offered a portfolio he didn’t aspire to, was the fact that he believed he was being punished over his performance, which he had considered robust. The controversy over rounding up the GST would have happened anyway; it was just that he was asked the question while others were on holiday. Both Howard’s and Costello’s offices had signed off on it months earlier. On HIH, APRA had not been doing its job properly, and he’d queried HIH each time it was brought to his attention. He had talked Cabinet around on the bail-out package, negotiated it through the insurance industry and muted the damage the corporate collapse could have delivered at the electoral box. He had supported Costello over Howard, but not in the way the media was making out. He knew the baton would be changed from one to the other at some stage, and it had to be orderly and at a time that would maximise the Liberals’ chances. His view was that, for the sake of all their re-election chances, they needed to work out a plan together.

Melissa called Joe back. ‘Joe, you’ve got to do it,’ she said. Like her father-in-law, she’s apt to wrap her advice in dictums with a favourite to Joe being, ‘It is what it is.’ Now, with her husband planning to pull the plug on politics, she spoke carefully and deliberately, reminding Joe of how much hard work he’d put in, for years, and how far he’d travelled. She talked him into taking the job.

‘Prime Minister,’ Joe said down the phone a few minutes later, ‘I am happy to serve as your minister for small business and tourism.’

‘I know you’re disappointed,’ Howard responded, ‘but we all have to go through occasional setbacks.’

But Joe didn’t let it go. Even now, he wonders why Howard made that decision at that time. A day later, Costello was given Treasury. Nick Minchin was given the finance portfolio.

Howard was slightly taken back at Joe’s initial reaction to his offer. ‘The operating rule in politics about promotion is if the boss offers you a job, unless it is totally humiliating, you take all of five seconds to say yes,’ he says now. And by the time Joe called Howard back, he was contemplating withdrawing the offer. Joe made his call in the nick of time. But placing Joe in finance had never been a part of Howard’s plan. He had given it to John Fahey previously, believing he was the second most qualified person of the first Howard government, having served as a premier. Following his departure, Nick Minchin stood out as the best candidate. Howard knows the leg-up a leader provides a young MP can shape their career; that’s what Malcolm Fraser did by offering him a ministry once he could, and making him treasurer only a few years later. In short, Howard saw Joe as a talented young minister, among many. ‘He was conscientious and personable in a good field,’ Howard says.

Australia’s tourism was suffering, and the landscape was bleak as Joe took up his new portfolio. Ansett had collapsed a couple of months earlier, in September 2001, the same month that terror struck at the heart of the US with the attack on the World Trade Center towers. Eight out of ten of Australia’s trading partners were either in recession or heading in that direction and the tourism industry was on its knees. Joe didn’t know much about tourism, as a sector, apart from being a happy-snap tourist. But business came naturally to him, and he decided to apply business acumen to the sector.

Having accepted the portfolio, he now had to get serious about it. That wasn’t easy. To the public, he had to pretend this was the job he had coveted for life. Warren Entsch, who came to Canberra in the class of 1996, was parliamentary secretary for the portfolio and recalls Joe being devastated when assigned tourism. ‘I took him aside and said, mate, get a life.’

The September 11 attacks had provided a mini surge in domestic tourism, with people fearful of travelling long distances on planes. It seemed everyone remembered what they were doing at the exact moment the two planes slammed into the towers, snuffing out thousands of lives. Joe had been in Fiji, having just farewelled Melissa who was on a plane destined for New York. He sat in the airport terminal, ready to return to Australia, wondering what information she was being told inflight. The Deutsche Bank had offices close to the New York towers. Joe wanted to talk to Melissa; he wanted her home.

It was that same feeling, across Australia, that meant in the wake of the attacks, fewer people were travelling by air. To countries in the northern hemisphere, Australia seemed even further away than it had previously. At home, despite the mini-surge in domestic tourism, Joe found an industry stymied by a series of different pillars. One part of the industry didn’t communicate with the next, no real structure existed, and the principles that underpinned its performance were alien in the business world. The industry ran on passion, not margins. Joe began talking about targeted returns, research and development, and profited outcomes. He could see the potential, and soon started to relish the challenge.

He put in a call to Matt Hingerty, who had introduced him to the Killara Young Liberals years earlier. Hingerty, who had previously worked for Chris Brown at the Tourism and Transport Forum, took on the job as Joe’s chief-of-staff. Both of them spent wads of time talking to business. Public servants, often working for remote and disinterested ministers, were enthused and bemused, in equal measure, by how Joe tackled the tourism industry, which hadn’t had a champion like this since John Brown, a tourism minister in Bob Hawke’s government; it felt neglected.

There was also a genius in Howard coupling tourism with small business. More than 90 per cent of the nation’s tourism operators were small businesses. That appealed to Joe, as did the parallels between politics and tourism – both were nationalistic, both revolved around selling the benefits of Australia. Joe’s first ministerial role had been as an advocate for Sydney becoming a regional financial centre and just as that had sent him around the world, this job meant life on the road. ‘Wisdom isn’t pumped through the air conditioning at Parliament House,’ he’d tell his media advisor, Sasha Grebe, and others. ‘We need to get on the road and listen to people.’ And that’s what he did – borrowing a bus from Ron Murray from Murray Coaches fame, using the bus licence he got in 1995 and taking to the road. ‘It wasn’t just about being minister; he was the bus driver, too,’ Murray says. ‘He brought a rugby team spirit to it, where no-one was bigger than the team.’

Day after day, when parliament wasn’t sitting, they’d turn up in a country town somewhere in Australia with a standard itinerary – meetings with local councils and tourism bodies. Often, in smaller places, that would involve the same people. And the issues would be similar to the town they visited previously: each area believing they were God’s own garden and dismissing the need to market themselves outside their area, limited funds and public liability constraints putting a brake on fun.

Joe would always draw a crowd, on the back of his appearance on the Seven Network’s
Sunrise
program where Kevin Rudd was his sparring partner. Rudd had originally suggested the idea to the Seven Network, with the view to engaging Ross Cameron. On the few occasions Cameron couldn’t make it, Joe stepped in. Soon after David Koch joined the Seven Network, and his friendship off-screen made for good on-screen empathy. It wasn’t too long before Joe replaced Cameron. ‘It introduced me to an audience that has no interest in politics,’ Joe says.

That is a big boon for any politician trying to get a message across. Behind the scenes at
Sunrise
, like similar news shows, producers have a target viewer. In this case it was ‘Isabelle Ipswich’, a moniker for the person
Sunrise
was trying to attract: female, a Queenslander, likely to reside outside Brisbane in the south-east corner. Rudd and Hockey hit it off, and their easy chats were genuine. Sometimes, they’d spill over to breakfast after their appearance. They liked each other too, and it showed in the ratings. Koch says between 20,000 and 30,000 extra viewers would tune in to hear the ‘Big Guns of Politics’ segment.

‘We’d go for a drink at the pub,’ his friend Lewis Macken says, ‘and we’d lose him. We’d look over and see him at the bar with a group. They would never have voted Liberal in their life, but they were interested in him.’

During his time in the tourism portfolio, a fit of honesty on the back of exhaustion prompted a public relations disaster that could have cost Joe dearly. It was in the Victorian seat of Gippsland, a seat held by Peter McGauran with a tiny margin. The day had got off to a bad start. McGauran, the science minister, picked Joe and Hingerty up from the airport. McGauran was looking forward to Joe spreading a bit of celebrity fairy-dust across his electorate. He packed the day so that Joe could meet all the area’s key players, ending with a meeting of senior businesspeople that night. But after arriving late, they played catch-up all day, ending in the small city of Bairnsdale for the meeting billed as a tourism forum, and heavily promoted by the East Gippsland group of newspapers.

Bob Yeates, the newspaper group’s proprietor and editor and a fiercely parochial East Gippsland supporter was in Bairnsdale for the evening’s forum. Minor variations of what followed come from those in the audience, but it played out along these lines. Joe gave a solid stump speech about regionalisation, focused on Victoria, as well as a lavender farm in one area that had fought through all the public and professional liability insurance issues and still succeeded. He peppered the speech with anecdotes, admitting that small businesses would fall but that was important because people needed to try and live their dreams. It was received well, but that changed quickly once question time began.

‘I could see him, as the night wore on, visibly wilt,’ McGauran says. ‘The exhaustion was kicking in.’

The first question, from a local tourism operator, related to the local area and its potential. Joe thought for a minute before asking, ‘Where the hell am I?’ Others in the room remember his response as being slightly less direct – along the lines of ‘not much’ in answer to the area’s potential – but the effect was the same.

‘There was a moment of silence,’ Hingerty says now, ‘except one jaw hitting the table, which was mine.’