VZCZCXRO7365
PP RUEHPT
DE RUEHBY #1792/01 3550624
ZNR UUUUU ZZH
P 210624Z DEC 07
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC PRIORITY 8769
INFO RUEHBN/AMCONSUL MELBOURNE PRIORITY 4831
RUEHPT/AMCONSUL PERTH PRIORITY 3119
RUEHDN/AMCONSUL SYDNEY PRIORITY 3011
RHEHNSC/NSC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 CANBERRA 001792 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV AS
SUBJECT: LIBERAL PARTY AT ITS LOWEST EBB 
 
REF: A) CANBERRA 1698 B) SYDNEY 131 
 
¶1. (SBU) SUMMARY: The Liberal Party is in its weakest 
position since its formation in 1944.  Out of office in every 
state and territory, its local branches are in disarray, and 
it is divided on the extent to which it should abandon the 
Howard Government's policies. The Liberal Party's 
post-election analysis showed the main factors for its loss 
were the desertion of conservative blue-collar voters 
("Howard Battlers") due to former Prime Minister John 
Howard's industrial relations reforms ("WorkChoices") and a 
perception that the Coalition was not focused on everyday 
pocket book issues that mattered to the average Australian. 
The Liberal Party has established reviews on its November 24 
election loss, the adequacy of the party's constitution and 
its financial needs.  For the Liberals to become competitive 
a major overhaul of the organizational wing of the party is 
required.  There is even discussion among Coalition MPs over 
whether the Liberals and National should merge. END SUMMARY. 
 
A TURN LEFT? 
 
¶2. (SBU) Some moderate Liberal MPs believe the party shifted 
too far to the right under John Howard.  ACT Liberal Senator 
Gary Humphries believes his party is "conspicuously out of 
touch" with present feeling on climate change, Aboriginal 
affairs and industrial relations.  However, some observers 
maintain Malcolm Turnbull cost himself the leadership of the 
Liberal Party (ref A) by publicly supporting a national 
apology to Aborigines and the ratification of the Kyoto 
protocol.  Liberals skeptical about a shift to the Left point 
out that Rudd adopted many of the Coalition's policies during 
the campaign.  After former Health Minister Tony Abbott 
pulled out of the leadership contest, the majority of 
right-wing MPs threw their support behind Brendan Nelson, 
effectively delivering him the leadership.  Therefore, he is 
likely to be attuned to their concerns.  Abbott, in 
particular, is eager to defend the Howard legacy. 
 
LIBS ASSESS THE DAMAGE 
 
¶3. (SBU) On December 12, the Federal Executive of the Liberal 
Party met in Canberra to discuss the election.  Federal 
Director Brian Loughnane said post-election polling indicated 
"Howard's Battlers" had deserted the Coalition largely due to 
WorkChoices and a perception that it was not focused on the 
day-to-day issues that concerned them.  At the meeting, the 
Federal President, Ms Chris McDiven, announced she would 
retire in February -- after intense pressure from senior 
Party members.  The Federal Executive will review the 2007 
election loss, the adequacy of the Party's constitution, and 
its financial needs.   Some Liberals believe it is quite 
possible that without reform and strong leadership, the party 
could collapse due to its internal dissension. 
 
NEW SOUTH WALES SYMPTOMATIC OF THE STATE BRANCHES 
 
¶4. (SBU) The Liberal Party's state branches have been plagued 
by factional warfare, and a lack of talent and money. It has 
not won a state or territory election in almost 10 years. 
That the New South Wales (NSW) Labor Government, generally 
regarded as incompetent, won the state election in March this 
year (ref B) is an indicator of the extent of the division of 
the Liberal Party in that state.  It is still reeling from 
revelations that members distributed a racist flyer during 
the federal election campaign. 
 
THE NEED FOR REFORM 
 
¶5. (SBU) Despite the Liberal Party's constitution, which 
provides more autonomy to state branches than the Australian 
Labor Party (ALP), Howard and the Liberal federal secretariat 
QLabor Party (ALP), Howard and the Liberal federal secretariat 
were able to use their influence to calm dissension at the 
local level.  However, with Howard gone and the Federal 
Liberals in opposition, there is potential for greater 
problems in the absence of structural and constitutional 
reform of the Liberal Party.  Loughnane concedes such reform 
is necessary.  Some Coalition MPs even believe the Liberals 
and the National Party should merge, arguing that this would 
lead to better allocation of resources and an end to "three 
cornered" contests featuring Liberal and National candidates 
competing in the same seats.  In the Queensland seat of Forde 
during the recent election, there was a "leakage" of 
preferences from both the Nationals and Liberals to Labor (in 
stead of to each other) which played a big part in the ALP 
winning the seat. 
 
COMMENT: NELSON NEEDS TO STAND UP 
 
 
CANBERRA 00001792  002 OF 002 
 
 
¶6. (SBU) Without organizational change, the Liberals will 
likely not pose a threat to the ALP at any level.  Presently, 
it is Nelson who is the biggest factor in whether the 
Coalition can be competitive at the next election.  As the 
switch by Labor to Rudd demonstrated, leadership is a key 
vote changer.  Although he has a tenuous hold on the 
leadership currently, Brendan Nelson could come across as a 
strong leader if he pursues reform.  A big danger for the 
Liberals is that its liberal and conservative wings, while 
generally agreeing on economic issues, are bitterly divided 
on social issues.  The Liberals are also in the paradoxical 
position of needing to differentiate themselves from the ALP 
- a party which has adopted many of the Liberal's key 
policies.  In a recent Press Club address, Loughnane said 
that throughout the campaign the Coalition maintained its 
strong lead on the issue of economic management.  With the 
unions, who had stayed quiet during the campaign, beginning 
to assert themselves and push Labor to the left, any economic 
turbulence could give the Coalition a glimmer of hope, if it 
can get its house in order. 
 
CLUNE