VZCZCXRO8502
PP RUEHPT
DE RUEHBY #0560 1660714
ZNR UUUUU ZZH
P 150714Z JUN 09
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC PRIORITY 1632
INFO RUEHBN/AMCONSUL MELBOURNE 6424
RUEHPT/AMCONSUL PERTH 4688
RUEHDN/AMCONSUL SYDNEY 4655

UNCLAS CANBERRA 000560 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AS PGOV
SUBJECT: COSTELLO TO QUIT POLITICS 
 
 ¶1. (U) Summary: Former Treasurer Peter Costello has 
announced that he will not contest the next general election, 
bringing to an end speculation he will seek the Opposition 
Leadership. It strengthens Malcolm Turnbull's hold on the 
Opposition leadership, and means his attack on the government 
will no longer be undermined by "leadership speculation". 
Subsequently, it is almost certain Turnbull will lead the 
Coalition to the next election. End Summary. 
 
COSTELLO'S ANNOUNCEMENT 
 
¶2. (U) On June 15, Peter Costello - Treasurer 1996-2007 and 
Deputy Liberal Leader 1994-2007 - released a statement 
announcing he would not seek re-election for his Melbourne 
parliamentary seat of Higgins. The deadline for nominations 
was June 30. Costello reiterated what he said in November 
2007 - that it was time to pursue other interests, and that 
it was in the party's long-term interests for others to step 
forward. Costello will continue his work on the International 
Advisory Board of the World Bank.  Think-tank head and former 
Howard staffer John Roskam has said that he will nominate for 
Higgins. 
 
FAREWELL PETER 
 
¶3. (U) In parliament, Prime Minister Rudd acknowledged 
Costello's intellectual ability.  Opposition Leader Malcolm 
Turnbull praised Costello's record as Treasurer, particularly 
the removal of $A96 billion of government debt. Costello - 
humorous and a little emotional - defended his economic 
record, acknowledged the economic reforms of the 
Hawke/Keating ALP governments, and declared "Australia's best 
years are in front of it," if properly governed.  Prior to 
Costello's announcement, there was a growing view that 
Costello would remain in politics and challenge for the 
Liberal leadership.  This was diverting attention from 
Turnbull's determined attack on the government's economic 
policies.  Some right-wing MPs, whom dislike Turnbull, were 
hoping Costello would take the leadership. Last month, one of 
them told us that Costello had the numbers to defeat Turnbull. 
 
RUDD VERSUS TURNBULL 
 
¶4. (SBU) COMMENT: Before the 2007 election, the ALP formed a 
"Costello contingency unit" in case Howard resigned as Prime 
Minister.  Similarly, the ALP has believed there was a strong 
likelihood Rudd would be facing Costello at the next 
election.  ALP National Secretary Karl Bitar told us earlier 
in the year he was certain Costello would take the leadership 
- it was just a question of when.  Other ALP figures 
expressed similar views. Costello's announcement is good news 
for the ALP, as well as for Turnbull. With the economy 
dominating political debate, some ALP MPs told us Costello 
would have posed much more formidable opposition than 
Turnbull. 
 
¶5. (SBU) COMMENT (CONT):  Some Liberal MPs may feel betrayed. 
Apart from his post-election November 2007 announcement, in 
which he declared he would not accept the party leadership, 
Costello has never unequivocally ruled out seeking the 
leadership.  And since the beginning of the year, Costello 
has noticeably lifted his media profile on the economic 
debate, spurring many to believe that he was preparing a 
leadership challenge.  Again, Costello will be accused of 
lacking courage and deserting the Liberal party when it 
desperately needed him. Never having the numbers to challenge 
Howard, Costello probably rejoiced in the irony of becoming 
the preferred alternative of the party's Right.  He probably 
seriously contemplated remaining in parliament, but likely 
bowed to the unlikelihood of defeating Rudd (only one 
first-term government has been defeated since World War One). 
 It is a disappointing day for Costello.  Even before he 
Q It is a disappointing day for Costello.  Even before he 
entered politics in 1990, he was touted as a future Prime 
Minister.  Similar to former ALP leader Kim Beazley, some 
will label him "the best Prime Minister Australia never had". 
END COMMENT.