P 260708Z NOV 07
FM AMEMBASSY CANBERRA
TO SECSTATE WASHDC PRIORITY 8608
INFO AMCONSUL MELBOURNE PRIORITY 
AMCONSUL PERTH PRIORITY 
AMCONSUL SYDNEY PRIORITY 
NSC WASHINGTON DC PRIORITY

C O N F I D E N T I A L CANBERRA 001679 
 
SIPDIS 
 
 
NOFORN 
SIPDIS 
 
E.O. 12958: DECL: 11/25/2017 
TAGS: PGOV AS
SUBJECT: COSTELLO RULES OUT BECOMING LIBERAL PARTY LEADER 
 
 
Classified By: Political Counselor James F. Cole, for reasons 1.4 (b) a 
nd (d). 
 
¶1. (SBU) SUMMARY: Treasurer and Deputy Liberal Party Leader 
Peter Costello announced the day after his party lost the 
federal election on November 24 that he would not contest the 
Liberal leadership, throwing plans for a smooth  transition 
into chaos.  Mark Vaile also announced on November 26 that he 
would step down as National Party leader.  Generally 
considered John Howard's "heir apparent" and supported by 
Howard himself during his concession speech, Costello said he 
would move to the backbench for the next term of parliament. 
Shortly thereafter, former Environment Minister Malcolm 
Turnbull announced his intention to contest the leadership. 
Former Health Minister Tony Abbott said he too would be a 
candidate for Liberal Party Leader.  Foreign Minister 
Alexander Downer and Defense Minister Brendan Nelson are said 
to be discussing with their colleagues whether to run for 
party leader but the race for Liberal Party leader is wide 
open.  Ex-Education Minister Julie Bishop and former cabinet 
members Andrew Robb and Chris Pyne are thought to be 
considering a run as Deputy Leader. END SUMMARY. 
 
COLLEAGUES SHOCKED 
 
¶2. (C/NF) The morning after the election, Costello called a 
press conference.  He said that the time had come for him to 
open a new chapter in his life and build a career in the 
commercial world.  He added that he thought it was time for 
the young people of talent and ability in the Liberal Party 
to be given their chance. In his concession speech, Howard 
had said that he believed the future of the Liberal Party lay 
with Peter Costello.  Former Finance Minister Nick Minchin 
and Downer had also publicly supported Costello after the 
election.  Costello's announcement, which came soon after 
this endorsement by senior Liberals, indicates he must have 
been contemplating this move for a while -- without the 
knowledge of the senior Liberal Party leadership.  While this 
makes sense for Costello, who would have gone into opposition 
leading a party out of power federally and in every state and 
territory in Australia and who will never be more marketable 
in the private sector than he is right now, some of his 
Liberal Party colleagues reacted to the news by calling him 
"gutless." 
 
TURNBULL POUNCES; COLLEAGUES RUSH TO THE PHONES 
 
¶3. (C/NF) That afternoon, Turnbull called a press conference 
to announce he would be seeking the leadership: "I will 
deliver, if elected to the leadership of the Liberal Party, 
the energy and the drive and the determination to win," Mr. 
Turnbull said yesterday.  The socially-moderate Turnbull also 
appeared on several television morning talk shows to tout his 
vision for a more progressive Liberal Party.  According to 
his campaign manager, Turnbull had even quietly contributed 
money to the individual campaigns of Liberal MPs he believed 
would win their elections.  Following this announcement, 
Nelson, Abbott and Downer sounded out colleagues.  Former 
Vocational Education and Training Minister Andrew Robb has 
announced for Deputy Leader.  Ex-Minister for Aging 
Christopher Pyne, who just hung on to his seat in the 
election, and Education Minister Julie Bishop are consulting 
colleagues over whether they will also seek the Deputy 
Leadership. 
 
POTENTIAL FOR A NASTY FIGHT 
 
¶4. (C/NF) COMMENT: The race for Liberal Party leader is now 
wide open.  This could lead to a fierce factional battle 
Qwide open.  This could lead to a fierce factional battle 
between a more progressive Turnbull and the more conservative 
Abbott, and has the potential to divide an already-weakened 
Liberal Party.  While Turnbull has the ambition to lead and 
the star power and fund-raising ability to keep his party 
energized, he is thought to have benefited himself at the 
expense of the team by leaking information from a cabinet 
meeting in which he said the Government should sign Kyoto. 
This did not endear him to his colleagues.  Abbott, from the 
right-wing of the New South Wales Liberal Party, is a 
quick-witted, ideological warrior who had a very poor 
campaign.  His insult of an asbestosis campaigner who is now 
on his deathbed showed very poor judgment on his part.  The 
ambitious Nelson, a former Labor Party member who performed 
solidly as Defense Minister, has assiduously courted his 
colleagues since he was elected in 1996 and is subsequently 
more popular in the Liberal Party caucus than Turnbull and 
Abbott.  A moderate, Nelson is a doctor who was a former 
president of the Australian Medical Association.  (NOTE: his 
grasp of detail is so acute that his nickname among other 
politicians is "rain man.")  He may also be well-positioned 
 
as a compromise candidate.  Downer, a former Liberal Party 
leader, was foreign minister as long as Howard was Prime 
Minister.  Picking him would not signal a change in direction 
for the Party.  As Deputy Leader, Julie Bishop, intelligent, 
photogenic and a former successful barrister from Western 
Australia, would be a good match-up for incoming Labor Deputy 
Prime Minister Julia Gillard. 
 
MCCALLUM