PM out of the woods (how John Howard almost lost the Australian election)

THE departure of Ian Macdonald from the federal ministry marks the point at which one of the great untold stories of the 2004 election can be written: how John Howard almost handed Mark Latham the prime ministership of the country.

Howard, anxious to widen his ministerial reshuffle following Robert Hill's departure, rang Macdonald, his minister for forestry, two weeks ago to inform him there was no longer a frontbench place for him. Macdonald, loyal to the end, publicly walked the plank, pre-empting what would have been an inevitable sacking.

In a statement marking Macdonald's demise, the Prime Minister said in part: "He especially understood the complexity of forestry policy. His advice to me, a little over a year ago, in relation to the Tasmanian forests was both balanced and prescient."

Howard's generosity evidently has its limits. Because if you know the real story surrounding the release of the Coalition's Tasmanian forests policy during the 2004 election, it's arguable Macdonald can take a large measure of credit for Howard's re-election.

Remember the last week of that campaign? It was marked by intense speculation about the forests policies of the two leading parties and who would get vital Green preferences.

In the early stages, Latham and Howard shadow-boxed. Both sent out signals that their final policies would be weighted more towards forest preservation.

Latham had already staked out his territory. In March 2004, he made a highly publicised trip to the Styx Valley accompanied by Greens leader Bob Brown. He came away with stars in his eyes.

On September 4, shortly after the election campaign commenced, Howard indicated he would consider measures designed to phase out the logging of old-growth forests in Tasmania while still preserving the jobs of timber workers. "A shift is under way within Coalition ranks on forestry and Mr Howard is planning a policy statement towards the end of the campaign designed to outflank Labor on timber workers' jobs and draw back Liberal voters thinking of voting for the Greens," reported Dennis Shanahan in The Australian.

Twelve days later, Finance Minister Nick Minchin backed an end to logging in old-growth forests and stunned Tasmanian Greens by flagging a forest transition package worth "hundreds of millions of dollars" to compensate for lost jobs in the Tasmanian timber industry.

Macdonald read the reports with increasing unease. He did so in the private knowledge that Howard was on the verge of making a hugely damaging political mistake on the issue. For three years Macdonald had quietly courted the inner support base of Labor over forests. He had become close to (and counted as friends) Construction, Forestry, Mining and Energy Union officials Michael O'Connor and Scott McLean. What's even more remarkable is that McLean is also a member of the ALP national executive.

At one stage during Howard's third term, O'Connor was invited to the cabinet anteroom in Parliament House after he sought assurances that the Government remained committed to the so-called Regional Forests Agreements. It was that commitment to the RFAs that allowed Macdonald to build bridges to O'Connor, McLean and groups such as Timber Communities Tasmania.

Six months before the election, Macdonald warned McLean and O'Connor that Latham might "doublecross" them on forests policy. He asked if that happened -- and it made the difference between Latham becoming PM or not -- would they condemn the policy. McLean and O'Connor said they would.

Enter Bill Heffernan, a former NSW Liberal Party president and a confidant of the Prime Minister. Suddenly, in the rundown to the election, he began making very public noises that Howard should be taking a lead on the protection of old-growth forests.

Macdonald to this day does not know whether Heffernan was freelancing or sticking his toe in the water at Howard's bidding. But he became increasingly anxious as he prosecuted his case for continued support for the RFAs inside the PM's office. Howard's senior advisers were listening. But, in Macdonald's judgment, they weren't committing.

Howard announced the election on August 29. Within 24 hours Macdonald's worst fears were realised. The PM summoned Macdonald and handed him a very thick (and very secret) policy document prepared in his office, declaring words to the effect: "We may have to side with the people who want to protect more of the old-growth forests."

Howard asked Macdonald to read the dossier and return in two hours. He did and told his leader he was "devastated" because it fundamentally betrayed his commitment on RFAs to the likes of O'Connor and McLean. Macdonald personalised it, emphasising it was Howard's signature on those forest agreements. He argued the policy would shut towns and put people out of business and jobs. Howard responded that he knew that but the Government had to maximise its urban vote, particularly in Adelaide. But he said the decision to shift was "not quite final".

Then came the key moment: Macdonald begged Howard to at least not announce his new policy watering down the commitment to the RFAs until Latham had announced his. That way, Macdonald argued, he could at least go the CFMEU and say: "Well, we weren't going to dud you. But now Latham has, we have no choice."

He also pointed out that the Tasmanian forests policy would resonate beyond island seats such as Braddon and Bass, across the strait to Gippsland in Victoria and Eden-Monaro in NSW.

On October 5, in the last week of the campaign, Latham blinked. He announced that, as prime minister, he would protect "the overwhelming majority" of Tasmania's old-growth forests. The policy was a devastating mistake. The logging industry, the CFMEU and Tasmania's Labor Premier all condemned the plan.

Two days later, Howard struck. Dramatically undercutting Latham, he pledged to preserve a further large tract of old-growth forest in Tasmania but without endangering any jobs. He was greeted by roars of approval from 1000 timber workers at Launceston. As for Macdonald, he didn't know he'd been completely vindicated until the morning of the launch, when Howard rang him to tell him what was in the policy.

So now you know the true meaning of the phrase in Howard's statement last week after he'd booted Macdonald: "His advice to me, a little over a year ago, in relation to the Tasmanian forests was both balanced and prescient." The expression "faint praise" comes to mind.

Yes, without background, I'm sure it is hard to understand - so here is the background. It's actually pretty simple once you know.

Basically to win the last election, Labor needed to pick up Parliamentary seats in the smallest state of Tasmania. Seats that Labor could reasonably expect to win were fairly limited - so to take office they really needed every possible seat, and Tasmania was an area where they had a real chance.

It's importance was also exagerated in media terms by the fact that Tasmanian seats were almost certain to be the first ones called (Tasmania switches to Daylight Saving time earlier than other eastern states and so was an hour ahead at the time of the last election), so it was going to be very interesting to watch as the count started - but the seats were genuinely important as well as important to the media.

Tasmania is the smallest Australian state (less than half a million people) and it's isolated by being on its own island, it's politics tend to revolve around slightly different issues than the rest of the country. In particular, the Greens - environmentalists - are a very real political force in Tasmania, the environment is very important to a lot of Tasmanians. But there's also a very significant number of people who make their living out of logging - timber workers.

The Greenies want to save the forests. The loggers want to cut them down.

So for Tasmania at the last election, what a Federal government would do conserving forests or allowing them to be logged was important.

Labor chose to try and get the Greens to vote for them (or at least for Green voters to give Labor their second preferences - we have a preferential voting system here and second preferences can be very important). To do this, they announced they would protect the forests.

They would have put large numbers of timber workers out of work - unionised timber workers. Traditional Labor party supporters. Latham seemed to take the view that these people would probably vote fo him anyway.

And if John Howard had already announced that he was going to protect forests too - as he planned to until Senator MacDonald convinced him to wait - Latham probably would have been right.

As it was, because Howard had yet announced his policy, he was able to trump Latham with what was basically a compromise policy - he'd protect workers by allowing logging in some areas - and protect forests by protecting other areas.

If Howard had announced this earlier, the loggers wouldn't have liked it. But because he was able to present a better result for them than Labor, they went for it.

Labor got green votes. But lost union votes.

And not just in Tasmania - around the whole country, some (certainly not all, or even most) trade unionists who would have voted Labor were incensed enough at what they saw as Latham's political betrayal of unionists in Tasmania, that they changed their vote. It wasn't many people, but in close seats, it mattered.

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