All talk: Mr Abbott has emerged as an ideologue. Credit:Alex Ellinghausen His Treasurer read the authorised biography of Margaret Thatcher, Not for Turning, this year and told colleagues he found the Iron Lady "inspirational". One of Abbott's cabinet ministers this week likened the Prime Minister to Ronald Reagan, for the simplicity of his messages but also for the conservative cast of his ideology. Abbott has set out to resume the Thatcher-Reagan revolution where Howard left off. He intends to advance it to a new apogee. Howard never attempted to impose a co-payment on Medicare, for instance.

Illustration: Rocco Fazzari Nor did he attempt to deregulate universities. Howard promoted the idea of "work for the dole," but never proposed that young people be denied the dole for up to six months. Abbott and Hockey intend not just to end the "age of entitlement" but to intensify market forces in Australian life and to shrink the government. The Prime Minister intends to move Australia decisively to the right. The government promotes this project as pro-growth; it also carries the unspoken social cost of being pro-inequality. The federal budget, for instance, puts a new tax on high income earners and cuts welfare entitlements. But where the tax increase on the rich is temporary, the welfare cuts are permanent. Axiomatically, inequality rises.

And where Abbott was a domestic scrapper, suspicious of foreign affairs and scornful of Kevin 747's travel schedule, today he strikes a pose as serious commander-in-chief. In opposition he liked to say that Australia shouldn't get "ideas above its station". Last week he said "don't underestimate Australia. We count for more than Australians are often inclined to think." He ends the first year of his prime ministership in Malaysia, matching precisely the number of Rudd's overseas trips in his first year. He has committed Australia forcefully in support of friendly countries under pressure in the East, West and Middle East.

He has pledged Australian support for Japan in its strategic rivalry with China, for the US in pursuit of the so-called Islamic State, and for the Ukraine in confronting Russia. But in two essentials Abbott is still Abbott. First, he remains unpopular. Indeed, he is Australia's uniquely unpopular prime minister of the past 40 years. He does not enjoy this. "Who doesn't want to be the popular boy at school?" poses one of his cabinet ministers. "Of course he'd like to be loved. We all do." Recall that Abbott once told his staff that he wanted to portray himself in a speech as "a good bloke" when he was opposition leader. But, paradoxically, Abbott has found his unpopularity to be liberating. Whereas Rudd governed in fear of losing even a percentage point of his popularity, Abbott has cast the quest aside.

Where Rudd was constrained by his unprecedented popularity, Abbott has given up on the prospect. Instead, he seeks the country's respect, no matter how grudging. Second, he remains determined. He is as determined to deliver his newfound ideological agenda as he was to win power. It's not all lofty leadership and dignified statesmanship. There is the constant temptation to play politics even where it's better not to. For instance, the prime minister's office decided to leak to The Daily Telegraph details of a decision on counter-terrorism by the national security committee of cabinet last month before it had gone to the full cabinet. It was the decision on so-called metadata, to force telecommunications companies to keep records of customers' phone and internet activities for two years so they could be used to seek out terrorist threats.

Cabinet ministers were alarmed at the leak because it was premature. It was an in-principle decision. There was no detail. The government's unreadiness was quickly evident as it tripped over itself for a week trying to explain. But one minister was especially dismayed. The decision was in the portfolio of the Communications Minister, Malcolm Turnbull. He had not been consulted. He interpreted the leak as a deliberate act to humiliate him. Broadly, the government projects unity. Abbott's management of his cabinet is generally solid. But the Prime Minister's coterie seethes with resentment and suspicion regarding Turnbull, the most popular politician in the Federal Parliament from either side of politics. There is no leadership rivalry in the government. The government is consistently behind in the polls, but at this point in the electoral cycle that is irrelevant.

With two years before an election is due, there is no thought of any move against Abbott by Turnbull, or by any of the other ministers who see themselves as potential future leaders – Julie Bishop, Scott Morrison or Joe Hockey. But such gratuitous acts of personal bitterness as the metadata leak do nothing to promote good government or cabinet solidarity. Again, there seemed to be an excess of politics in the Prime Minister's decision to announce last week that the government had set up new counter-terrorism units at Sydney and Melbourne airports to seek out would-be jihadists. Another 80 officers soon would be deployed to establish similar units at other airports, he told the House. To anyone planning to leave to join the Islamic State fighters in Iraq and Syria, this would have been a helpful tip to direct them to Brisbane or Adelaide airport. Some things are more important than giving the prime minister something to announce, surely.

Four moments defined the Abbott government and set it on its current course of pro-market activism on the one hand and robustly defiant global engagement on the other. On the economy, the decision to allow the car industry to shut down and the ideological cast of the budget were fundamental. On foreign policy, Abbott's defiant stance over spying on Indonesia and the shooting down on MH-17 were defining. This is not the Abbott we were told to expect. We were long warned that he would bring Catholic conservatism to bear in social affairs, by changing abortion law, for instance. But there is no hint of that. Instead, he applies a neo-liberal conservatism in economic policy that has no basis in Catholicism. Peter Costello warned the Liberal Party three years ago that Abbott was not a true member of the party mainstream.

The former treasurer wrote that Abbott was a captive of the ideas of his early mentor, B.A. Santamaria and his Democratic Labor Party. The old DLP favoured "'protection and regulation", said Costello, while it was the duty of Coalition leaders to "'promote and implement Liberal policies like freedom in the workplace, open trade, lower tax and careful spending of taxpayers' money'". And for a while it seemed Costello would be vindicated. His warning seemed to be borne out by Abbott's friendship with the Nationals' deputy leader, Barnaby Joyce, a populist and protectionist. The first decision the government faced on economic policy was over a foreign takeover. The big US firm ADM had offered $3.4 billion to buy Australia's largest grain handler, GrainCorp. And Hockey blocked it. The business community was alarmed. So was Abbott's own party. It was protectionist and populist and Joyce loved it.

But that was the last we saw of Tony "Santamaria" Abbott and his protectionist partnership with Barnaby. The decision to allow the shutdown of the car industry was politically risky and in the best tradition of the Thatcher-Reagan project. Abbott has repudiated Santamaria in deed and also in word: "He had too much faith in the power of government and he was too ready to resort to subsidy and other forms of market distortion," he told The Australian Financial Review in 2012. "Santa's economics is of less relevance today than it might have been in the days before the discrediting of socialism." Bob Hawke, Paul Keating and John Howard all took Australia into the pro-market revolution of Thatcher and Reagan.

But Hawke tempered his economic reform program through a power-sharing deal with the union movement, the grand bargain called the Accord. Keating was a ferociously determined pro-market reformer as treasurer, but he abandoned the project to campaign from the left as prime minister. And Howard overreached by trying to deregulate the labour market with his Work Choices laws. Howard's defeat in 2007 appeared to so traumatise the Liberal Party that it was not clear whether it would return to the pro-market agenda. Abbott has said that Howard was tempted to overreach because he had control of the Senate; there was no check on his ambition. A Senate majority, Abbott has said, was a "poisoned chalice" for Howard.

Some of Abbott's most radical reforms are being blocked in the Senate, a source of frustration for the government but also a tempering influence on Abbott's rightward revolution. Loading Yet Abbott has marked clearly that path he wants to take. The government is working on landmark new proposals for tax, for Australia's federal structure, and for workplace relations. Each presents enormous opportunities for the Abbott revolution to the move Australia to the right. To date, he has failed to take the country with him. But he has only just begun.