In what could be one of his last policy decisions, Prime Minister Malcolm Turnbull has given up on big business tax cuts.
Mr Turnbull’s move came as his challenger, Peter Dutton, launched a media blitz saying he was building the numbers for a second challenge, after narrowly losing the first, 35 votes to Mr Turnbull’s 48.
The response to the company tax cuts’ defeat prompted a show of strength by Mr Turnbull – flanked at the press conference by Treasurer Scott Morrison and Finance Minister Mathias Cormann, two powerful figures in the Liberal Party.
“We have to recognise, in this and all contexts, the iron laws of arithmetic,” Mr Turnbull said.
“And we have not been able to secure the support of the Senate.”
It followed the final defeat of the legislation, to reduce the corporate tax rate from 30 to 25 per cent for businesses with annual turnover above $50 million, in the Senate hours earlier.
There were hints of the leadership tension throughout. The Treasurer was at pains to praise Mr Turnbull, by adding: “Thank you, Prime Minister, for your role which was significant in leading us in the last election where we took that policy to the election and we were successful.”
In a last ditch effort, the government had tried to secure crossbench support by offering to carve out the big banks. It failed.
Mr Cormann, who had led the negotiation effort, said he was “disappointed” by the outcome.
“I’m personally disappointed that we failed to secure the necessary support, but it is, now, important to pragmatically make judgements about the best direction into the future.”
The Prime Minister and Treasurer used the press conference to attack Mr Dutton’s suggestion of exempting power bills from the 10 per cent GST tax. Mr Cormann remained quiet.
“Very expensive” was how Mr Turnbull put it. “Absolute budget blower” was Mr Morrison’s less tactful response.
As leadership speculation continues, Mr Morrison hosed down suggestions he might run as a compromise candidate.
“Me! This is my leader and I’m ambitious for him!” Mr Morrison said, in mock horror, when asked if he was trying for the top job.
“Good on you, thank you,” a smiling Mr Turnbull replied.
Mr Cormann was less emotive, but also pledged his support.
“I was very grateful when Malcolm invited me to serve in his Cabinet in September 2015. I’ve served Malcolm loyally ever since, and I will continue to serve him loyally into the future.”
Mr Dutton’s media tour on Wednesday morning included a pitch for a royal commission into energy and fuel prices if he becomes leader, plus the GST idea.
“There’s something that’s not right, there’s something that stinks about some of these electricity companies and fuel companies,” he said.
Mr Dutton said immigration needs to be pushed towards Western Australia, South Australia and regional areas to reduce congestion in major cities.
Backers of the 47-year-old believe his support is quickly building and another spill could take place this week – perhaps as soon as Wednesday afternoon.
“Now that the genie is out of the bottle, I’m not sure we can put it back,” Liberal MP Craig Kelly, who backed Mr Dutton, told the ABC on Wednesday morning.
After his narrow win on Tuesday, the Prime Minister urged his party to unify.
“We know that disunity undermines the ability of any government to get its job done,” Mr Turnbull said.
“We’ve got to put 25 million Australians first. They hate it when we are talking about each other.”
Up to 10 ministers, including four from cabinet offered to stand down after voting against Mr Turnbull, but so far he has only accepted two of their resignations.
As well as that of Mr Dutton, the Prime Minister also accepted the resignation of International Development Minister Concetta Fierravanti-Wells after she wrote a scathing letter criticising the Liberal party for “drifting too far to the left”.
“I have concerns about the party … we always spoke about the broad church and the importance of balance, this is a concern,” she said after tendering her resignation.
Senator Fierravanti-Wells suggested the Prime Minister’s support for same-sex marriage had eroded the party’s base and forced angry voters to turn their backs on the Liberals.
James McGrath, Michael Sukkar, Ms Fierravanti-Wells, Angus Taylor and Zed Seselja – all among the 35 who backed Mr Dutton in the leadership spill – offered their resignations Tuesday night.
Trade Minister Steve Ciobo, Human Services Minister Michael Keenan and Health Minister Greg Hunt also reportedly tendered their resignation, while the ABC on Wednesday morning reported Citizenship Minister Alan Tudge offered to step aside.
All have reportedly since agreed to stay on in the Turnbull ministry.
Liberal Tasmanian senator Eric Abetz suggested support for Mr Dutton was growing.
“I think there was a shift after the partyroom meeting with the offers of resignation by a considerable number of ministers,” he said.
Meanwhile, at least three Nationals MPs, including Veterans Affairs Minister Darren Chester, have threatening to quit the coalition and move to the crossbench if Mr Dutton, from the Queensland right, becomes prime minister.
“All options are on the table in a volatile environment,” Mr Chester told the ABC.
There’s no reason why any potential challenger, whoever that may be, should assume that they can command numbers on the floor of the House of Representatives, given we have a one-seat majority.”
Former Nationals leader Barnaby Joyce counselled Mr Chester to remember: “We don’t have a dog in this fight, it’s for the Liberal Party.”
Liberal deputy leader Julie Bishop denied she threatened to quit parliament if Mr Dutton seized the top job, stripping the government of its majority and forcing a by-election.
Ms Bishop also said a number of people who voted against Mr Turnbull had since reconsidered their position.
The contender, Mr Dutton, has been trying to soften his hard man image as he works on the numbers.
On Tuesday he welcomed going to the backbench as it would give him a chance to “smile” a bit more.
But Mr Dutton failed Triple M’s AC/DC test by not being able to name his favourite of the great Australian band’s songs.
“Ah, I’ve had about an hour and a half hours sleep last night. I haven’t sorry. That’ll be the gotcha of the day,” he conceded.
Triple M played Dirty Deeds Done Dirt Cheap for him later.
Labor demands caretaker mode
Labor leader Bill Shorten says the government should effectively move into caretaker mode, given the leadership uncertainty.
Mr Shorten wrote to the Prime Minister asking that the Coalition “cease taking any actions that may bind the decisions of an incoming government, in line with caretaker conventions”.
“Out of respect for the Australian people, such a pause should continue until the leadership of the coalition government is satisfactorily resolved or a general election is called, at which point normal caretaker conventions would commence,” he wrote on Wednesday.
Major policies, significant appointments, major contracts and international negotiations should all be paused, he said.
If a major decision needed to be made in the national interest, Labor should be consulted, Mr Shorten said.
Shadow Treasurer Chris Bowen clarified that the opposition was not calling for the government to go into caretaker mode per se.
Rather, Labor was chiefly concerned about the government appointment of senior officials, particularly in Mr Bowen’s own portfolio.
“We have grave concern with the politicisation the government has embarked upon in senior appointments,” he told reporters.