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INFO RUEHBN/AMCONSUL MELBOURNE PRIORITY 6046
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RUEHDN/AMCONSUL SYDNEY PRIORITY 4256
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UNCLAS SECTION 01 OF 02 CANBERRA 000157 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON AS
SUBJECT: HOCKEY REPLACE BISHOP AS SHADOW TREASURER 
 
¶1. (SBU) SUMMARY: Following months of public criticism in the 
media and private criticism by her colleagues, Deputy 
Opposition Leader Julie Bishop yesterday resigned as Shadow 
Treasurer, clearing the way for Liberal Leader Malcolm 
Turnbull to replace her with strong media performer Joe 
Hockey.  Bishop replaces Helen Coonan in the Foreign Affairs 
portfolio and Coonan assumes Hockey's previous portfolio of 
Finance.  The same day, former Liberal Party Leader Brendan 
Nelson announced he would not be re-contesting his seat. 
There are rumors former Treasurer Peter Costello declined an 
offer from Turnbull to replace Bishop as Shadow Treasurer. 
Speculation that Costello will pursue the Liberal leadership 
persists, with a new opinion poll indicating he is the 
preferred over Turnbull as Leader.  The replacement of Bishop 
is widely seen as an acknowledgment that the Coalition is 
losing the key political debate on the economy. 
END SUMMARY. 
 
KNIVES OUT FOR BISHOP 
 
¶2. (U) Bishop, who has been Deputy Opposition Leader since 
the Coalition entered Opposition, became Shadow Treasurer 
when Turnbull became Opposition Leader five months ago (by 
tradition, Deputy Leaders chose their portfolio).  However, 
in one of her first interviews, she appeared not to know the 
official interest rate.  Soon after, she faced allegations 
that she had plagiarized the "Wall Street Journal" in one of 
her speeches, and one of her staff apparently wrote an essay 
in her name for a book on the future of the Liberal Party. 
Bishop recently quoted a controversial economic theory - the 
Laffer curve - to argue that cutting taxes ultimately 
increases government revenue.  While the Government and the 
press reveled in her misfortune, unnamed Liberal MPs publicly 
bemoaned her performance. 
 
THE CHANGES 
 
¶3. (U) On February 16, Bishop, 52, announced her resignation 
as Shadow Treasurer.  She said "ongoing commentary on my role 
has been a distraction from the scrutiny that should have 
been applied to the government's reckless economic 
performance."  Subsequently, Turnbull announced that he had 
appointed Joe Hockey, 43, as Shadow Treasurer.  Bishop 
replaces Helen Coonan in the Foreign Affairs Portfolio, and 
Coonan replaces Hockey in Finance.  Due to Hockey's increased 
workload, Education Spokesman Christopher Pyne relives him of 
the position of Manager of Opposition Business in the 
Parliament - a role dealing with parliamentary tactics and 
procedures.  Stephen Parry takes over from Coonan as Manager 
of Opposition Business in the Senate.  Turnbull praised 
Hockey, one of the more popular figures in the Coalition and 
a media favorite, as "formidable."  Hockey was a Cabinet 
Minister during the Howard government, holding the positions 
of Minister for Human Services, and Minister for Employment 
and Workplace Relations. 
 
NELSON PULLS THE PLUG WHILE COSTELLO LINGERS 
 
¶4. (U) That evening, former Liberal Brendan Nelson told his 
Liberal electorate branch that he would not be recontesting 
his seat because it was time for "renewal."  He did not 
inform Turnbull, who deposed him as leader, prior to his 
announcement.  There are media reports that Turnbull offered 
former Treasurer Peter Costello the Shadow Treasury 
Portfolio.  Liberals are divided over whether an offer was 
actually made.  Meanwhile, a new poll released February 17 
indicates Costello is preferred over Turnbull as Liberal 
leader 37 to 26 percent, with Australian Labor Party (ALP) 
voters preferring Costello 37 to 22 percent.  Speculation 
Qvoters preferring Costello 37 to 22 percent.  Speculation 
about Costello's future has intensified. 
 
SHE HAD TO GO 
 
¶5. (SBU) COMMENT: Bishop acted in the best interests of the 
Coalition. It is likely Turnbull, a close friend, was 
reluctant to axe her.  The economy - the Coalition's 
traditional strong suit - is dominating political debate but 
the Government has closed the gap in the polls on economic 
management, and the majority of voters support Rudd's 
handling of the economic crisis.  Bishop, her credibility in 
tatters, was unable to score any political points against 
Treasurer Wayne Swan - widely regarded as the Government's 
weak link.  Hockey is jovial, popular, and has media "cut 
through."   He will apply a lot more pressure on Swan. 
Another Liberal moderate from Sydney, he should work well 
with Turnbull.  However, the speculation surrounding Costello 
is an unwanted distraction.  Although they dislike each 
other, it is entirely possible that Turnbull offered Costello 
the Treasury portfolio.  Costello has by far the most 
 
CANBERRA 00000157  002 OF 002 
 
 
economic credibility in the Coalition.  In April, Costello 
must decide if he will recontest his parliamentary seat at 
the next election.  If he decides to stay on, and if 
Turnbull's polling numbers do not improve as the economy 
continues to deteriorate, Costello could be seen as the 
savior of the Liberal Party by this December. 
 
CLUNE