Acrimony set to continue during Parliament recess

Prime Minister Kevin Rudd. Photo / AP

CANBERRA: The two warring sides of federal politics have packed their bags and left Canberra for the winter break, both coated in the dust of an engrossing but unedifying battle over the misuse of power and influence.

The week started with Prime Minister Kevin Rudd on the back foot. It ended with Opposition Leader Malcolm Turnbull battered in the corner, holding his head and wondering how things could have gone so horribly wrong.

Neither side has emerged creditably, and even with Parliament in recess there are signs that dirty fighting will continue: Rudd is preparing a new case of influence-peddling against Turnbull, while Turnbull is pursuing Rudd over further allegations connected to Brisbane car dealer John Grant.

It was Grant's application for federal aid under the OzCar scheme that unleashed the hounds in the first place.

Grant is a friend and supporter of Rudd's who lent him a second-hand ute for electioneering. He later applied for help under the OzCar scheme, established to find alternatives to overseas financiers who had abandoned the sector as the economic crisis bit.

On Friday last week Godwin Grech, the Treasury official in charge of OzCar, dropped a bombshell during a Senate inquiry by strongly suggesting that he had been placed under pressure by Rudd's office to ensure Grant received special attention.

The text of an email apparently sent from Rudd's office subsequently appeared to support this suggestion, backed by a series of communications between Grech and Treasurer Wayne Swan's staff. Rudd and Swan had previously denied that Grant had been given preferential treatment.

Turnbull leapt in with fists flying, alleging that Rudd and Swan had improperly used their political influence, had misled Parliament, and should resign forthwith.

But Turnbull shot too high, and too fast. The email could not be found in searches of Treasury and Government computers, and was later found by federal police, who confirmed that it was a fake, sent from Treasury to Grech's home.

That let Rudd entirely off the hook, and the resulting storm successfully cloaked Turnbull's attempts to refocus his attack on Swan - whose position was far less certain because of a chain of emails that could be construed as supporting the Opposition's allegations. From there it was all downhill for Turnbull.

During the course of the week it emerged that Grech had once worked for Shadow Treasurer Joe Hockey, was well known to Turnbull and other senior Liberals, and that he was apparently sympathetic to the party.

More, he was alleged to have fed Treasury information to the Opposition. The federal police have been interviewing Grech, and have been for some time conducting a wider investigation into a series of leaks about Government policy from the same department.

Reports also allege that Turnbull and Senate Opposition Leader Eric Abetz met Grech ahead of his appearance in the Senate and were shown a copy of the email, which they believed to be genuine but were not permitted to keep.

Turnbull is not suspected of complicity in faking the email, and initially promised full co-operation with the police investigation.

He has since limited the extent of his co-operation to the email, has refused access to any wider inquiries, and has rejected calls to disclose the extent of his contacts with Grech or his sources of information.

This has opened the gates for Rudd, who has successfully shoved the case against Swan into the abyss and gone for Turnbull's throat with a vengeance.

Turnbull has already faced dissent within his own ranks. He was a necessary - not popular - choice as leader, and has only recently overcome dissent to cement his position.

He is now again facing internal fury over his handling of the OzCar debacle, particularly his attempt to take Rudd out, not least because he was warned in advance against trying to use the email as a cudgel against the Prime Minister.

Unless some new and unexpected disaster breaks Turnbull will survive, if only because there is at present no real alternative.

But Rudd is painting Turnbull as a knee-jerk incompetent who has stalled vital parliamentary business in the midst of an economic crisis purely for his own political ends, to the detriment of the nation.

Rudd further supports his contention that Turnbull is fit to lead neither the Opposition nor the country with his lack of control over Coalition MPs who opposed his stance on three key bills.

But Turnbull is not giving up, targeting a A$32,000 legal bill owed by Rudd for a campaign against aircraft noise and paid for by a funding-raising dinner organised by Grant.

He has also been cheered by a new report in the Age, alleging that Rudd lobbied on behalf of a whitegoods company formerly owned by Grant and a Queensland property dealer.

Rudd, meanwhile, has been handed his own retaliatory weapon. The Sydney Morning Herald reported the Government was considering a payback campaign centred on a A$10 million grant Turnbull, then Water and Environment Minister, gave to a friend's rain-making project shortly before the last election.

The newspaper said the grant was five times that recommended by the department.Such is politics in the land of the boomerang.