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  The tax plan began by cutting the company tax rate from 30 to 27.5 per cent for all companies with annual turnover of up to $10 million and then extending this to more companies over seven years, until the threshold reached $1 billion. The company tax rate would then be cut to 25 per cent for all companies over several years. The entire plan would take a decade and would add 1.1 per cent to the size of the economy, according to a Treasury analysis.3 Shorten would only support a lower tax rate for businesses with turnover of up to $2 million a year.

  Turnbull, meanwhile, had a policy he would rather not mention. He was asking Australians to vote for a superannuation policy that would supplement the retirement savings of every worker with an income of less than $37,000, about half the average wage. These workers would have up to $500 a year added to their retirement accounts to repay government taxes under the Low Income Superannuation Tax Offset. Turnbull and his cabinet did not invent the policy, given it was a continuation of a similar Labor scheme, but they found a way to pay for it: a tax increase on Australians with more comfortable superannuation balances. The policy was the consequence of years of dispute over the fairness of tax concessions on superannuation, a system that deprived the Commonwealth of billions of dollars in tax revenue in the name of encouraging private savings. Cuts to the concessions had been considered but rejected for years, including when Shorten had been Financial Services Minister, but now Turnbull and Morrison ventured down this dark and difficult path. They soon discovered why none had gone there before.

  The superannuation plan increased taxes by $6 billion over four years but only put half of this towards reducing the deficit. It put most of the rest into the low-income tax offset, making this an old-fashioned Robin Hood ploy. Only when the fine print was made public, and Australians could calculate the loss to their retirement nest eggs, did the full horror dawn.

  Liberal supporters were enraged. Some felt betrayed by a government that was supposed to prize thrift rather than raid private savings. It made no difference when observers — economists, commentators, think-tank policy wonks — declared this to be a fair way to change tax rules that delivered substantial benefits to those with the healthiest super accounts. What mattered was that a Liberal government was punishing its own electoral base. Some of the party’s donors had protested over an earlier tax hike, a deficit levy that applied an additional 2 per cent income tax on incomes over $180,000 a year, but the super changes were far worse. When the government claimed only 4 per cent of super account holders would be worse off under the overall changes, it was challenged by the Association of Superannuation Funds of Australia, which estimated 1.26 million people would suffer — or 9 per cent of all account holders. The association found that 4.3 million individuals would be better off — proof that Robin Hood was at work — but this did not help the government calm the complaints from its own Liberal heartland.

  What was meant to lift the government with ordinary workers became a source of dread in the daily campaign, a subject ministers would only talk about when asked. The Liberal Party’s most loyal members, donors and volunteers had been riven by the leadership spill nine months earlier. Now they were stung by a tax policy that felt like an act of betrayal. What did their party stand for? Who was this leader who released Labor policies in Liberal guise?

  James McGrath flew to his home state of Queensland to join the Liberal National Party campaign committee and found there was already anger at Turnbull over the way the election was unfolding. The LNP felt the message on jobs and growth was not resonating. It disliked being told to make Turnbull more prominent on its posters and flyers when it wanted the LNP brand to get top billing. It wanted to send letters to voters from their local candidate, not the Prime Minister. The Queenslanders put their own identity ahead of promoting Turnbull’s personal brand but at the same time needed the leader of the government to visit their electorates. McGrath also had a message for Turnbull that was never received well because it was always critical of the Prime Minister’s grand themes, like the acronyms for teaching children more science, technology, engineering and maths. ‘Stop saying STEM because nobody knows what it stands for. Stop saying innovation because people think someone with an iPad is going to take their job,’ McGrath would tell him.

  A test of Turnbull’s commitment to Queensland came in early June when he was asked to attend a ‘people’s forum’ leadership debate organised by the Courier-Mail and Sky News at the Broncos Leagues Club in Brisbane. This was a major event for Rupert Murdoch’s News Corp: it owned the newspaper, the television network and 69 per cent of the rugby league club. While Shorten was quick to sign up to face the chosen television audience, Turnbull held out.

  The rift between Turnbull and Sky News was obvious. The network was hiring and promoting the Prime Minister’s strongest critics: Andrew Bolt, the conservative commentator at the Herald Sun, joined Sky on 25 March to headline a show at seven o’clock every weeknight. Peta Credlin joined six days later as a commentator for the election campaign. Sky did not have enough audience reach to swing an election, but it had influence all the same: its new recruits spoke to Liberal supporters who were suspicious of Turnbull and incensed at policies like tax increases on superannuation. Credlin grew steadily sharper in her criticism of Turnbull and his campaign style, especially when he encountered an angry mother in the western Sydney suburb of Penrith who upbraided him for cutting a bonus payment for parents with children in school. On a bad day for the Coalition, the campaign team cancelled plans to talk to voters on a street-walk. That night on Sky, Credlin mocked Turnbull for not being ‘agile’ enough to deal with the criticism and continue the street-walk.

  ‘If it’s known that you’re going to do a street-walk in Penrith, the last thing you want to do, Mr Harbourside Mansion, is look like you don’t know and you’re not welcome in western Sydney,’ said Credlin. Mr Harbourside Mansion. It was a deadly new label, a gift for Labor, a source of frustration and fury for everyone around Turnbull. ‘It is the sort of insult of which Paul Keating would have been proud,’ wrote Michelle Grattan, who also observed the remark would raise questions about whether the former chief of staff to the former Prime Minister was a commentator or player. ‘Fairly or unfairly, some will believe she has another agenda — that she can and will say what the former prime minister can’t if he wants to keep his hands clean,’ Grattan wrote.4

  Now Turnbull was refusing to appear on Sky News in Brisbane. He had debated Shorten at the National Press Club earlier in the campaign and at a ‘people’s forum’ with Sky News and the Daily Telegraph in western Sydney on 13 May, one night after Credlin’s jibe. By the time the Broncos event was being planned for early June, however, he was losing interest, especially when the forum had averaged only 54,000 viewers. It did not help that Bolt was reporting that one of Turnbull’s advisers had told Sky News political editor David Speers that Turnbull would not appear on the network as long as Credlin was on its staff. Asked by a Sky News reporter why he would not agree to the Brisbane debate, Turnbull was curt: ‘Normally you would have approached us and sought to come to some arrangement. You chose not to do that and to issue what in effect is a decree, and we’ve said no.’ It was a risky snub to Brisbane.

  McGrath was driving from Brisbane to Toowoomba for the FarmFest rural show when he had to call Turnbull to try to get him to change his mind. LNP leaders including Gary Spence, the deeply conservative party president, wanted McGrath to intervene to persuade the Prime Minister to come to Queensland. ‘We needed him to be in Queensland,’ McGrath said later. Sky might only have a small reach in terms of audience but its debate would be widely reported and Turnbull’s absence would guarantee stories about his refusal to go to Queensland. McGrath prepared the ground for his phone call by telling Sally Cray and Brad Burke he would call, but this did not make the conversation any easier. Turnbull was livid.

  ‘He just exploded. He ripped into me and told me how shit I was. It was just a torrent — a very earthy analysis of my characte
r flaws,’ said McGrath. ‘What is frustrating is that I was trying to help. Trying to help us win an election.’ Turnbull calmed down after a few minutes, perhaps unaware he had even been abusive, but McGrath felt battered. It was always this way when Malcolm’s sudden fury subsided. You’re still bruised and he’s moved on.

  Turnbull was showing signs of weariness by the second week of the campaign. His MPs could see the tiredness as they drove with him between events in their electorates. His friends wondered whether he could keep up the pace. This became more of a concern when he caught a heavy cold half-way through the campaign.

  One MP asked Turnbull when the attack campaign would start against Labor over its record on asylum seeker boat arrivals, only to be told that it was coming in due course. When? Turnbull could not say, but he was confident it was in hand. To anxious MPs who wanted their party to launch a blitz that could throw Labor on the defensive, this sounded like the decision was being outsourced to headquarters. It only fuelled their anxieties. Liberals began to ask themselves whether they were placing too much weight on their positive economic message — ‘jobs and growth’ — without putting enough energy into a scare campaign. Are we being negative enough? The advice to Turnbull was to keep talking about his agenda and avoid fighting in the gutter.

  Turnbull took risks in running a positive campaign. On Day 40, a point when any standard election would be over, he hosted Muslim leaders at an iftar one evening at Kirribilli House. The guests included Islamic Australians such as Grand Mufti Dr Ibrahim Abu Mohammed, AFL footballer Bachar Houli, SBS deputy chair Hass Dellal, mechanical engineer Yassmin Abdel-Magied, Network Ten host Waleed Aly and his wife Susan Carland, a lecturer at Monash University. The timing was difficult. While the dinner during Ramadan had been arranged for weeks, it came four days after Omar Mateen killed 49 people and wounded 53 others in a terror attack at a gay nightclub in Orlando, Florida. Mateen had phoned authorities from the nightclub to swear allegiance to Islamic State.

  Australian politicians and Muslim leaders eyed each other warily — one side urging greater cooperation to stop young people being radicalised, the other side feeling unfairly blamed for the radicalisation. This was doubly sensitive for Turnbull because of the inflammatory debate after the Paris attacks. Abbott had denounced the ‘massive problem within Islam’ and argued the religion needed a reformation, but Turnbull had been more measured. Heeding security advice against over-heated rhetoric left Turnbull exposed: he was subject to an obsessive study of his language by conservatives who felt sure they could prove he was soft on terror. Digging in this semantic mine produced nothing but fool’s gold. What gain could there be to Australia from another debate between Liberals, pitting Abbott against Turnbull, on whether Islam needed a reformation? The gulf between Liberals made it impossible for the government to speak with one voice.

  Shorten rarely wavered from a single theme — that he offered fairness, the value he said was lacking in every Coalition spending cut since the 2014 budget. He promised more spending on hospitals and schools using revenue to be raised from tax increases, but he took the calculated risk of allowing his spending to run ahead of tax measures like the changes to negative gearing. The result was an uncomfortable reckoning when Bowen and the Labor finance spokesman, Tony Burke, revealed the full cost of all their promises: budget deficits that were $16.4 billion deeper over the subsequent four years. Bowen made a pragmatic decision to accept the government’s tax increase on superannuation, thereby claiming a $3 billion gain to the bottom line in the Labor alternative budget, but he did so without committing to any specific part of the government policy.5 The costings were timed for the last few days of a frenetic campaign, hiding the details in a field full of haystacks, but the headline number stood out. Labor offered bigger deficits. It was a gift to a troubled government that claimed only it could be trusted to manage the budget.

  But Labor had a final and devastating tactic. Shorten walked onto the stage at the Joan Sutherland Performing Arts Centre with a message that sounded uplifting but soon turned savage. He wanted the Labor campaign launch in Penrith to jolt the election contest into a new phase after weeks of predictable argument. He switched from positive to negative and made the campaign launch all about health: ‘If you want to save Medicare — vote Labor.’ Save it from what? Labor had already warned against Coalition policies to introduce a Medicare co-payment of $7 to be paid by patients, one of the most divisive ideas in the May 2014 budget. Now it had a new claim: that a ‘payment system taskforce’ set up by the government would privatise Medicare by stealth. Shorten never explained the claim. He simply quoted a Labor campaign advertisement that was voiced by Bob Hawke: ‘You don’t set up a Medicare privatisation taskforce unless you intend to privatise Medicare.’ He did not ask why anyone would buy a government agency that paid $23 billion a year and made no profit.

  There was a snowflake of truth in the Medicare snowball that Shorten sent rolling down the mountain. The May 2014 budget set up a process to ‘market test’ the delivery of a ‘commercially integrated health payment system’ for Medicare and other agencies.6 A Digital Services Payments Taskforce was set up. Turnbull told Parliament that ‘any outsourcing’ as a result would only apply to back-office operations. From that one fact — a study into getting a services company to run the payments system — Labor created the horror scenario of a privatised Medicare.

  Turnbull was on the defensive. Every time he insisted he would not privatise Medicare, he was met by a Labor advertising campaign that highlighted Abbott’s broken promise at the 2013 election that there would be ‘no cuts to health’ and John Howard’s promise in 1995 that there would ‘never ever’ be a GST. Voters had been conditioned to expect that a pledge meant there was a problem. The head of the Australian Medical Association, Michael Gannon, said the privatisation claim went too far. ‘The idea that you might outsource the payment system to the private sector is in no way the privatisation of Medicare,’ he said. ‘The current system is old and many elements of it date well back to the early 1980s. They’re antiquated, they’re rusty and the system needs substantial investment.’7

  These details did not trouble the Labor campaigners who were pinning ‘Save Medicare’ placards outside early polling stations. Liberals saw the signs but thought they could not work. Surely people can’t believe this? Still, there was a nagging doubt about the memories of the co-payment proposal two years earlier. One Liberal Prime Minister, John Howard, had worked hard to convince Australians he could be trusted with Medicare when he took power after thirteen years of Labor rule. Another Liberal Prime Minister, Abbott, took a huge risk by proposing changes to Medicare in his first budget. Liberals admitted they were now paying the price: ‘Because we’d played around with the Medicare co-payment, we weren’t quite the best friends of Medicare we’d used to be.’

  A revealing moment came four days later, when the host of the ABC’s 7.30 program, Leigh Sales, asked Shorten to put his ‘hand on his heart’ and tell Australian voters that Turnbull was privatising Medicare. Shorten would not do it. He changed the subject to health funding. Even so, the Labor claims were powerful and the tactics were devastating, especially when Australians received text messages to their mobile phones with Medicare named as the sender. ‘Mr Turnbull’s plans to privatise Medicare will take us down the road of no return,’ said the message. ‘Time is running out to Save Medicare.’ This was a new frontier in Australian political campaigns: a mobile phone message to voters that was sent by a political party but seemed to come from a government agency.8

  Those in Liberal Party campaign headquarters were flying blind. They lacked the money to do comprehensive polling on Turnbull’s performance, which meant the government did not have as much research as in previous campaigns to adjust its themes in response to feedback from voters. The big policy ideas on GST and state income tax, launched and withdrawn with a damaging impact on Turnbull in the opinion polls, were aired without any research on how voters would react to these
‘kite-flying proposals’. The difference in the 2016 election campaign was the very low numbers of phone calls that were made each night — thousands fewer than in John Howard’s 1996 victory and about one third the number made in more recent campaigns. How could the headquarters, let alone Turnbull, know if his daily message to voters was working?

  Two long-standing Liberals, former federal cabinet minister Andrew Robb and former New South Wales Premier Barry O’Farrell, noted this flaw in the Liberal campaign:

  It was completely insufficient to know nightly or even weekly approximate voting intent in individual marginal seats. This led to the campaign flying blind as to turning points, or the identification of softening or hardening trends in individual marginal seats. This proved particularly damaging over the last two weeks as the sheer scale of Labor’s human resource and activity saw our vote fall away, yet the impact of the ‘Mediscare’ campaign on individual seats was not able to be identified quickly or adequately in our research. The decision to cut the spending in such a way was apparently predicated on the shortage of money available in the run down to the campaign.9

  Funding became a chronic problem. Nobody would admit the full scale of this financial pressure, but it was evidence of the pressure on the Liberal Party, an institution weakened by a shortage of members, volunteers and cash.

  The less money a campaign has the more reason to protect the campaign’s research budget, even at the expense of other campaign spending. We suspect that the concerns about access to actual marginal seat polling numbers by state directors and possibly others within state divisions, such as party presidents, would have been much less of an issue if campaign headquarters had been able to reliably advise the relative position of our candidates and polling trends and issues in individual seats. As advised, such numbers and outcomes were simply not available during this campaign, and that was a major campaign flaw.