Hockey: Not Your Average Joe (10 page)

Something happened at the 1996 election and would only grow with the next election, and that was that the Liberal Party, which had been fairly Protestant in history, welcomed a big influx of Catholics to its core. That, in itself, didn’t necessarily play out in a policy sense, but was noticed in the ranks of the Party. Joe was one of them, but he was a Jesuit first and a Catholic second. Indeed, it would be unwise to underestimate the enormous influence the Jesuits continue to have on him. His first son was called Xavier Augustus Babbage Hockey. Xavier comes from the name of the Catholic St Francis Xavier. His second son bears the name of Ignatius Theodore Babbage Hockey. It was Ignatius of Loyola who founded the Society of Jesus, whose members are called Jesuits. He was helped by five other young men, including Francis Xavier.
The Jesuits, back at St Aloysius’, had taught Joe to keep a moral compass but to challenge tradition; that it was okay to be both part of the team and a critic within the team. Joe likes that; it sits perfectly with him to, in his words, ‘throw a bit of ginger into the cooking’.

Father Michael Ryan, SJ, the Jesuit priest who served as Joe’s school form master, also celebrated Joe and Melissa’s marriage and baptised all of his children. Ryan – whose counsel Joe never seeks on policy matters – remains part of the Hockey clan, spending Christmas Day in an avalanche of children’s gifts and all the noise that comes with a big celebration inside a family home. Father Ryan talks in terms of Joe being a pastoral Catholic, in the Jesuit tradition, where social conscience and social justice are paramount, but says Joe’s father’s journey has been just as important in influencing Joe as his Jesuit education.

Joe used his maiden speech, in September 1996, to preach modern liberalism: ‘Firstly, the recognition of the inalienable rights of the individual; secondly, a belief in parliamentary democracy; thirdly, a commitment to improve our society through reform; and, finally, equality of opportunity for all of our citizens.’

More than 100 of his supporters travelled three hours by bus, and paid $70, to hear his first speech, in which he urged people to acknowledge the barriers stopping women from reaching success. ‘For example, three times more women than men are setting up their own small businesses.’ Joe’s continued support for women, including increasing the number of women on boards and his strong support for a woman’s right to choose – heavily influenced by his wife, Melissa Babbage, whose career successes have matched those of her husband – still upsets some in his Party. This latter view stemmed from Joe’s days as SRC president at university, where a young woman came to him and told him she had to have an abortion that afternoon. On another occasion, a woman sought a student loan for abortion. It challenged his view, but he determined it was right. He was not going to consign those women to begging, or whatever else might be needed, to bring up an unplanned child.

On the home front, it was earlier in 1997 that Joe and Melissa bought a house in Forrest, just up the road from Manuka, in Canberra. Joe was driving past and saw a handwritten sign out the front, pointing anyone interested to a Sydney telephone number. The owners wanted nothing to do with real estate agents or lawyers. So Joe, the lawyer, called his father, the real estate agent, who took the owner out for a beer. At the end of the beer, a deal had been done. The Hockeys scored the home for land value. Joe’s father didn’t mention he was a real estate agent, buying the property on behalf of his lawyer son.

‘The house was a piece of Hockey mercantile genius,’ former MP Ross Cameron, who moved in a few months later, said. ‘Joe brings to the Treasury what I describe as an ancient Armenian sense of where the sweet spot in the deal is.’ The home also provided a sweet spot for Brendan Nelson, whose marriage went belly-up in June 1997. He had moved into the home a few months earlier, but was struggling. He had eight-year-old twins, and financial dramas, understood by many whose marriages end quickly. Brendan put his own deal to Joe. He asked whether he could move out and sleep in a small room next to the garage, in return for paying half rent. That would then allow Joe to rent out the other room.

Joe and Melissa cleaned up the garage, tried to decorate it, moved a bed in and even plastered a poster over a hole in the wall. In the Canberra winter Brendan Nelson used three doonas, but his room had a television, a radio, an old wardrobe and Liberal mates nearby. He remained living there until he left parliament in 2009. Nelson says Joe proved his friendship over and over. Unbeknown to him, at the time, Joe visited a close friend of Nelson’s, Dr Bruce Shepherd (also a former AMA president), telling him he was worried about him. Nelson only learnt of that conversation from Shepherd. On another occasion, Joe brought Nelson’s children shoes back from overseas, refusing to accept any payment.

Bob Baldwin, the MP for Paterson, also called the house home-away-from-home, as did Phil Barresi, the MP for Deakin, and Ross Cameron. Jamie Briggs arrived after a by-election in 2008 to represent voters in the seat of Mayo in South Australia. Cameron stayed there until he left parliament in 2004. He says that, despite the house oozing with ambition, a cross word wasn’t spoken
– not even about
the republic, where Joe’s and Nelson’s views were totally at odds, even facing off against each other in a debate at Joe’s old school of St Aloysius’ College.

On other issues, such as the gun laws that had been passed in 1996, there was a lot of agreement. But rarely was debate brought home. They’d arrive home in dribs and drabs, late, sometimes offering each other an honest review of their day’s performance, and while friendly competition led to a bit of ribbing, it was without rancour. The late news and an episode of
Seinfeld
were regular antidotes to a day in parliament. No-one bothered to cook, meaning the oven was not even opened during one two-year period. Baldwin had the bedroom near the front door, and on a few occasions would have to get up to answer it in the dead of night. It would always be a message for the defence minister Brendan Nelson. ‘He’s in the garage,’ Baldwin would say, before stumbling back to bed. Ambition was strong, and a couple of those staying with Joe wondered whether he timed his early morning walks to cross paths with prime minister John Howard. But all of them liked him, and knew whether or not Joe supported them in the Party room, he had their back.

Ross Cameron is proof of that, having lost his seat in 2004 after revealing he had an extra-marital affair while his wife was pregnant with twins. ‘When I got booted out – when I got sacked – I lost my job and at the same time lost my marriage. So I had a massive reduction in income and hadn’t worked out what I was going to do next. I was really focused on trying to address the family situation,’ he says. Broke, and broken, few wanted to know Cameron, who was a regular at prayer meetings at Parliament House. But a couple of former colleagues continued to check on him, including Joe and Tony Abbott. Joe called him and asked how he was coping on one occasion, offering him a car. Melissa was upgrading her car, which meant they had a spare. ‘I was very, very touched,’ Cameron, who remains friends with Joe, says. ‘I just remember feeling there are a thousand people who say to you, let me know if I can help in some way. There is a much, much smaller number who will come to you and say, I’ve got a spare car in my garage. Do you want me to drop the keys off?’

If that is an example of Joe’s loyalty, his knack of courting controversy is best illustrated in the case involving staffer Roxanne Cameron. She had been working for Joe before the 1996 election, and then joined his staff once he was elected. Senator Bob Woods had a role in overseeing key seats in the lead-up to the poll, before becoming parliamentary secretary for health. Joe noticed Bob Woods sitting in reception a couple of times when he walked into his local electorate office. He asked him what he was doing. Woods said he was waiting to talk to Cameron. Joe didn’t think much more of it. But the visits continued, and it soon became obvious to everyone that there must be some form of relationship between the pair. Joe considered it none of his business – until one Friday afternoon when Cameron came into his office and told him she feared Woods. ‘I said, “What!” ’

She claimed Woods, whose wife, Jane, was the daughter of senior Liberal Sir John Carrick, had been stalking her, and she was worried an apprehended violence order (AVO) would end up becoming a headline in the media. ‘I said if you’re worried, I’m running protection here – I’ll stand by you; you do what you have to.’ Cameron took out an AVO (before later withdrawing it), and the story did blow up.

Pressure mounted on Joe, from peers in the Liberal Party, to axe Cameron from her role. He thought about that the day he inadvertently saw a fax discussing a $20,000 offer to tell her story. She was obviously engaged in the offer. It was a story the media loved: the young office worker and the senior politician. Was she the scorned woman, or the fragile young victim needing protection?

One Saturday morning, Joe opened the door of his Blues Point Tower unit, the home he shared with Melissa, to pick up the morning papers. He wasn’t dressed for company and was met with a lightning strike of camera flashes. He had become part of the story just by keeping Cameron on staff. He got dressed, met the journalists downstairs, and said he would continue to stand by her. Behind closed doors, that was getting harder. Indeed, it was becoming almost untenable, and Joe wasn’t the only one to breathe a sigh of relief when Cameron left the office of her own accord.

Joe’s first term in parliament had been busy and fun, but going into the 1998 election, he thought his time as an MP might soon end. The Party, which had pledged to never introduce a GST, was now banking on public support for it. It was an uphill battle. Joe strongly supported the GST but he was finding it almost impossible to sell. ‘Explaining the GST was a nightmare,’ he says. With viral conjunctivitis, he walked the streets of North Sydney trying to talk voters around to it, on one occasion clocking up an hour’s conversation with his local Cammeray butcher, trying to convince him the GST was good.

‘And I couldn’t. He was in my electorate. He said he was still going to vote for us but he didn’t like it and he was going to tell everyone,’ Joe says. John Brogden came back as Joe’s campaign director for the 1998 poll, immediately seeing the hurdle the GST imposed. Once voters make up their mind, it’s hard to change them, and this was a case in point. No-one favoured a GST.

Pauline Hanson and her supporters were also looming large as a threat, and Brogden and his team set up a campaign office in an old Westpac bank office at Northbridge, working around the clock. The GST was presenting the government with a hurdle that seemed insurmountable out on the hustings. Brogden watched Joe struggle to sell it. He could sell most things, but this had him stumped. So how would other MPs fare?

To help, staffers busily photocopied hundreds of leaflets that showed what the GST would mean to the price of fruit and vegetables. John Brogden looked at it; it revealed the complex inner workings of a mathematician’s brain, and if people in Lane Cove couldn’t understand it, they should stop trying. It was not going to work. Both men went into polling day with their fingers crossed.

NINE

Brendan Nelson suggested
a deal. If John Howard phoned to offer him a ministry, he’d call Joe and let him know immediately. And vice versa. Joe had got across the line, quite comfortably in the end, but that poll in 1998 would remain his sweetest victory for a long time. Voters had stood by Joe in North Sydney, and the party across Australia, despite the GST. ‘Joseph Benedict Hockey,’ prime minister John Howard announced down the phone, ‘I’m pleased to offer you [the portfolio of] financial services and regulation.’

‘Fantastic,’ was Joe’s response, before letting Nelson know. A few hours passed, and Nelson didn’t call back with news of his own. Then Saturday afternoon disappeared into Saturday evening.

‘It got late in the day and it was obvious that nothing was happening, and Joe was genuinely disappointed for me,’ Nelson says now. So was Joe’s father. On the Monday morning, two days after his son was offered his first ministry, Richard Hockey arrived in Nelson’s office. ‘Richard was very emotional, in tears, and said, “Look, I love my son and I’m very proud of him but I can’t understand why you are not a minister,” ’ Nelson says. ‘He was very, very genuine.’

Howard’s call to Joe had been short, but he also wanted to address one other issue. Melissa Babbage, Joe’s wife, was now a rising star at Deutsche Bank and they would need to work out the conflict-of-interest issue, Howard said. Joe soon sold his only shares in AMP, and has since left all management decisions on investments to Melissa, who says she doesn’t consult him or tell him what they are. He set up office as minister for financial services and regulation – with oversight of the Australian Competition and Consumer Commission (ACCC), the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Mint, the Australian Bureau of Statistics and the National Competition Council. John Howard added another job; he wanted him to promote Sydney as the major regional financial centre, to ensure that by the time the Olympics arrived two years later it was the most important financial centre in the Asia–Pacific, after Tokyo. Peter Costello would be treasurer, his senior minister.

Joe was tailor-made for the job: he was a banking and finance lawyer who had been involved in two significant privatisations; his wife lived and breathed finance and it was often the talk at home; and he represented an electorate rich with bankers. But Joe was also a blue-chip salesman and he set about making his mark. Just as his time leading negotiations on the new airport path laid the groundwork for many of his future abilities, the next three years would also strongly influence Joe’s political trajectory. At 33, he was the government’s youngest minister, and he quickly learnt both the headiness of power, and the loneliness of a wrong decision. Indeed, it was on his first outing as a minister that he tripped up over the currencies of Malaysia and Indonesia, confusing the ringgit and the rupiah in a media interview. The small slip was not necessarily proportional to the coverage it received, but Joe felt it strongly. And while promoting Sydney as a financial centre opened doors and created new powerful friends around the world, it was two other issues that three years later would mark his performance down: one of those was the collapse of HIH Insurance; the other was the GST.

Joe lured Andrew Lumsden to resign as a partner at Corrs Chambers Westgarth, taking almost a $300,000 pay cut to set up as his new chief-of-staff. Gary Potts, a deputy secretary, was his chief contact in Treasury, and Matthew Abbott came aboard as his press secretary. But months after starting the job, Joe still felt he wasn’t getting anywhere. He suspected Peter Costello, his immediate boss, whose electorate was based in Melbourne, was lukewarm about the plan to make Sydney shine, and unless Joe could get in the door of the big decision-makers overseas, he was set for failure. He complained to John Howard, who agreed to a broader brief.

So, with the shackles off, Joe travelled to the UK, Ireland, continental Europe, the US and Asia. The young Australian salesman did everything he could to ensure a chunk of the world’s wealth was traded down-under and, while he couldn’t deliver the tax rates offered in Asia as a lure to business, he was certainly welcomed in the big money centres of London and New York. He took advice from Maurice Newman and Dick Humphry at the ASX and Les Hosking at the Sydney Futures Exchange. In London he saw Sir John Bond, the chair of the HSBC Bank. ‘How are my old friends Mr Bond and Mr Skase?’ he asked Joe. ‘Because I lost a huge amount of money on those people.’

Singapore and Hong Kong were fighting aggressively for business in the same space, with more runs on the board, but the Australian team notched up a couple of successes. Joe and his team were able to link up international conglomerates with state treasurers and twice stopped companies from reducing their Australian presence. Sometimes Joe headed the overseas mission; other times he tagged along with the prime minister, treasurer or trade minister.
But he networked just as well as they did.

Once, in New York, he joined John Howard for dinner with Sandy Weill, the then chief executive and chairman of Citigroup. That relationship, which continues today, grew quickly, and later Joe would pick up the phone to try and cement a job offer and move to New York. On another occasion Robert Rubin, who had been Treasury secretary in the US before becoming part of an advisory committee at Citibank, was in a meeting in a room next to Sandy Weill. Joe asked Weill whether he would introduce him. And next, Joe was sitting back chatting with the 70th US secretary of the Treasury. On free weekends, Joe would fly from New York to Washington, to catch up with a couple of congressmen he might have met earlier. On one trip, one of Joe’s staff quipped that it was difficult to differentiate between Joe’s ambition for Sydney and the zeal he showed for his own advancement.

The strategy to make Sydney the Wall Street of Asia was always going to be a big call. Location was vital and most big companies were home in London and New York. If Asia was where their customer base was, Sydney was still a distance away despite being in the same time zone. The 1999 Budget provided $7 million to set up a Sydney-based international financial centre task force, with the aim of jumping some of those hurdles that prevented Australia from being a global finance base, but its strategy ended up being more defensive than offensive. Les Hosking, who headed that unit, says the Australian contingent used our strong workforce and good regulatory environment to try and entice companies to headquarter in Australia. Hosking had taken on the job despite being a touch sceptical about moving from the Sydney Futures Exchange, and many of his colleagues expressed curiosity, too.

‘They used to say to me, Hockey is only pretty new in this area and he’s already got this name of “Sloppy Joe” and he’s not a patch on Minchin and Costello,’ Hosking says. ‘I found that not true. I thought Joe worked hard. He was ambitious. He wanted to be the next treasurer.’

With few exceptions, Joe was able to win people over and paint a picture of his vision. Hosking was also impressed at how he thought outside the square. For example, on their first mission to New York he took his shadow ministerial colleague Stephen Conroy. Each day, Joe and Conroy would catch the same car down to Wall Street; Conroy would be looking up what was happening in Australia in his Party, and Joe was checking on his own. To Les, it seemed surreal, but it worked wonders in meetings, with the bipartisan approach forcing open a few closed doors. Australia’s economy, which boasted 4.8 per cent annual growth, was a big selling point, along with its time-zone advantage over Europe, its skilled workforce, its political stability and its liquid markets. Its massive superannuation pool was also used as a lure. But despite going into every meeting bragging about having the fourth-largest foreign exchange, the seventh-largest stock exchange and the biggest futures exchange, they were still up against the big boys, the true global money centres of Hong Kong, Tokyo, New York and London. Apart from its remoteness, Australia’s tax system, in terms of corporate tax and personal income tax, was not as competitive as those offered by Singapore and Hong Kong either, and in the end, positive small steps were made, but that’s all.

The Sydney sell-job was only one issue in Joe’s inbox. He was also charged with corporate law reform, played a role in reforms to the financial system that stemmed from an inquiry headed by Stan Wallis, and was involved in the government’s business tax review. Under Joe’s ministry, a new takeovers panel was born. But all his good work was soon pushed aside by a mistake on the GST that coloured his performance in 2000, just as he should have been hitting his strides.

January each year is deserted in Parliament House. Senior journalists are often away on vacations, as are the big players in politics. And that’s how Joe Hockey found himself in hot water. Treasurer Peter Costello was taking an annual break. Senator Robert Hill was the acting treasurer, while Joe, having been assigned several portfolios as well as his own, was enjoying a Friday afternoon at the cricket with his press secretary, Matthew Abbott, who had also just started his annual holiday.

The GST had been the focus of a radio interview Joe had done with the John Laws program earlier in the day, but it had all seemed straight up and down. ‘What the ACCC has said, is if there is an odd number, within a dollar range, then a company can round it up to a dollar or down to zero but they’re not allowed to make any money out of it,’ Joe told listeners. He was right. That was the ruling of the ACCC under the chairmanship of Allan Fels.

That advice had lobbed into Joe’s in-tray months earlier, as it had done with Howard and Costello, and other ministerial colleagues with any oversight of the GST. Indeed, it was hardly surprising: with no 1- or 2-cent coins in circulation, some things would need to be rounded up. It was also perfectly legal.

‘The guidelines were drawn up as a technical thing without much feeling for how the politics might play or the opportunities for
The Daily Telegraph
and others,’ Allan Fels says now. Fels had always liked Joe, but was wary of him, too. Earlier, as a backbencher, Joe had used the media to question the ACCC publicly. They raised an issue about whether the ACCC had made inappropriate use of lawyers in a particular case. ‘He had me on the back foot,’ Fels says. ‘He was at least right, if not fully right.’

Media subsequently had a shot at Fels and his team, and the ACCC chair decided then and there not to underestimate the young minister. But he found him easy to work with, too. The ACCC had a big role, and Joe liked Fels’s strategy where it was not just seen as cops who went touting examples of overcharging. Fels also knew that Joe’s bosses, Howard and Costello, were keeping a close eye on Joe. ‘They broadly thought he was promising new minister material but also a little junior and new to the game, so to keep an eye on him.’

Joe’s comments on rounding up might have been technically legal, but they proved politically explosive. The next morning, Joe picked up Sydney’s
The Daily Telegraph
and almost choked on his breakfast. Splashed across the newspaper, and picked up quickly elsewhere, was the news that voters would be slugged more than 10 per cent when the GST was introduced later that year. And it sheeted confirmation of that back to Joe himself. Howard was on the phone early, followed quickly by Costello. Neither was happy with their young financial services minister. Joe stood his ground; that’s what the advice was, he told them. Howard told Joe to fix it.

‘He said, “I know you’ll lose some bark on this, but you’ve got to,” ’ Joe says.

A few hours later, Joe was backtracking fast on his earlier comments. ‘I have today told [the ACCC] that rounding beyond the 10 per cent GST will create confusion and uncertainty for consumers and is not in line with our policy that no price will increase more than 10 per cent,’ he told the media.

That didn’t help matters: one moment the government, through its junior minister Joe Hockey, was saying that some prices would rise by more than 10 per cent; and 24 hours later, he was vowing it would not be tolerated. Voters were confused, but so were businesses charged with carrying the GST. ‘His answer was loose,’ Costello says now, ‘and the press went after it just like they went after every loose answer that Howard gave or loose answer that I gave.’

The stakes were high with the GST because it applied to every business in Australia, on every transaction made every day. Indeed, a few months later, when the GST began, the nation would wake up to a billion price changes. That didn’t help Joe at the time though, and things went from bad to worse. Everywhere he turned, he was asked the price of something else once GST became law. A couple of days after his radio interview, he stumbled again on the Nine Network’s
A Current Affair
by trying to explain the impact of the GST on a bottle of soft drink. It was a John Hewson moment, reminiscent of the former Opposition leader who was left flummoxed trying to explain the effect of the GST on a birthday cake.

Costello says it was always going to happen. ‘For two years we’d been taking questions on the GST, the most minute detail of the GST, day in, day out. It was extremely complicated and whenever I got on talkback the Labor Party would have people ring in with tricky questions. How does the GST apply to horse race winnings? How does it apply to an insurance payout? How does it apply to a time share? Unless you were living and breathing this stuff and studying it day in, day out, there were bound to be a lot of questions that you couldn’t answer,’ he says.

Senior journalists began returning to work and picked up on the mishap, which gave it new oxygen. Howard was breaking his holiday daily, telling Joe he was doing well and to keep fighting the public perception that prices were going up. Costello was calling, too, telling him to get out of the media. ‘I was being smashed,’ Joe says. Newspapers were having a field day, at his expense, and so were cartoonists. Every time Joe tried to clarify something it got worse.

‘I was saying to him, just stop talking,’ Costello says. ‘The more you say the more trouble you’ll get into. And the more he did talk the more trouble he did get into. And in the end I broke my holidays and came back.’ But before that, torn between Howard’s advice to keep fighting the perception that prices would rise and Costello’s advice to bunker down, Joe decided to take the latter. And that’s when, as acting immigration minister also, he received a delegation of bureaucrats to his office, announcing that a boat carrying asylum seekers had just arrived on Christmas Island.