Transcript

SARAH FERGUSON: Good evening and welcome to Four Corners.

Prime Minister Malcolm Turnbull is a man on a wire...confronted by a new parliament with a single seat majority, a fractious senate and rebels in his own ranks.

It's a combination that makes his leadership vulnerable.

The man he deposed to win power, former Prime Minister Tony Abbott remained quiet during the long election campaign. But tonight Abbott has rekindled the battle for control of the powerful NSW liberal party, alleging the NSW branch is controlled by factional warlords who are also lobbyists for commercial interests. It's a situation Abbott describes as potentially corrupt.

Abbott says he's just trying to restore democracy to the party but this is a power play with implications for Malcolm Turnbull, and may be the first salvo in a fight over his weakened leadership.

Marian Wilkinson reports.

BARRY CASIDY: "The issue is now whether Malcolm Turnbull can govern in a majority or a minority..."

MARIAN WILKINSON, REPORTER: Election night. Old wounds are re-opened in the Liberal Party as the news went from bad to worse.

ANDREW BOLT: "It's 9 months ago that Malcolm Turnbull assassinated Tony Abbott promising only one thing that he would do better than Tony Abbott at the polls."

MARIAN WILKINSON: As the Liberal seats fell, the Prime Minister stayed locked behind the gates of his harbour side mansion.

ALAN JONES: "Malcolm might be watching the Channel 7 broadcast and if you are Malcolm, come and face the people..."

MARIAN WILKINSON: In Sydney's elegant Sofitel Wentworth, the Liberal Party A-listers became increasingly anxious as they waited for their leader.

PETER COLLINS, FORMER NSW LIBERAL LEADER: "When I arrived...everybody was congregated in the bar where there was a television...I said to my wife like around the 9:30 mark, there is no way the Prime Minister can come out at the moment, he's watching these numbers too..."

BILL SHORTEN, LABOR LEADER: "Friends. We will not know the outcome of this election tonight. Indeed, we may not know it for some days to come. But there is one thing for sure - the Labor Party is back."

CROWD: "Bullshit, bullshit..."

MALCOLM TURNBULL, PRIME MINISTER: 'Very good good to see you...'

MARIAN WILKINSON: Shortly before midnight Malcolm Turnbull finally emerged. His Prime Ministership was on a knife-edge.

JOURNALIST: "Are you disappointed with how it's played out...obviously not result you were hoping for?"

JOURNALIST: "Prime Minister, do you feel as though you have lost the election? Have you lost the mandate to govern?"

CROWD "Turnbull, Turnbull..."

MALCOLM TURNBULL: "We can have every confidence that we will form a Coalition majority Government in the next Parliament."

MARIAN WILKINSON: Turnbull's political authority had been dealt a body blow. A week later, his government scraped home by one seat and proclaimed victory.

PETER COLLINS: This was not what he expected at all. There had been, as as I understand it, no early warning to him that it could be um this marginal and ah and that his Prime Ministership was on the line at that moment...

MARIAN WILKINSON: When parliament sits later this month, the government will face a fractious senate and a fragile one seat majority in the lower house. Turnbull will need all his political skills to hold onto office for his three year term. It will only take one or two rebels in his own ranks to derail his Prime Ministership.

PETER COSTELLO, FORMER FEDERAL TREASURER: Look, there are some people who ah are ambitious and ah and want to use their influence for promotion. Ah there are some people ah who have scores to settle ah and want to use their influence for that purpose. There are some that have legitimate policy issues and are entitled to use ah their influence for that. But the point is this, on a very slim majority you can't afford to have too many people in any of those camps! when you think of all of the things a government has to do, you have to manage, you have to manage interest groups, you have to manage media, you have to manage the senate, you have to manage the opposition, um in a situation like this your first preoccupation becomes the internal management. If you can't get that right, then ah none of these other things will ah, will be of relevance.

MARIAN WILKINSON: Tony Abbott, the man Turnbull usurped as Prime Minister, ignited a new round of internal party warfare on election night. Abbott celebrated his return to parliament by signalling he would lead the conservative charge to take on the Liberal powerbrokers in Turnbull's home state.

TONY ABBOTT, FORMER PRIME MINSITER: "Wouldn't it be nice to see a bit of democracy inside our party? If Mike Baird wants it, if Malcolm Turnbull wants it, if John Howard wants it, if Barry O'Farrell wants it, if Tony Abbott wants it, it surely is good enough for the factional warlords to have it!"

MARIAN WILKINSON: The Liberals dismal loss of seats in NSW gave Abbott the opening and he seized it.

MARIAN WILKINSON: Can you just take us to that night and why you thought it was important to use that venue to make your call?

TONY ABBOTT: As a re-elected Member of Parliament, you've got the opportunity to say something, not just to your electorate, but to the nation, and in particular to the wider Liberal Party. Ah and this is a very important message.

MARIAN WILKINSON: Now relegated to the backbench, Abbott is declaring war on party powerbrokers who oppose his right wing faction. His targets are a small group of well-connected lobbyists who he says can wield influence over choosing MPs and Senators for both the federal and state parliaments.

TONY ABBOTT: I want to empower the membership, ah make every member count. And the best way for that to happen is to say you count when it comes to choosing the Liberal Party's representatives in the parliament. Now, the difficulty at the moment ah is that because there's a smaller, ah less representative party, ah it's easily controlled ah by factional warlords. Some of these factional warlords have a commercial interest ah in dealing with politicians, whose pre-selections they can influence. Now, this is a potentially corrupt position, ah and the best way to see off the factionalists ah is to open up the party. The more members we've got the harder it will be for the factional warlords to control.

MARIAN WILKINSON: In an interview with Four Corners, Abbott threw down a challenge to the Liberal Party.

TONY ABBOTT: The point, Marian, that I made as soon as I became Prime Minister was that you could be a lobbyist or you could be a powerbroker, but you couldn't be both. Now, a lobbyist is someone who makes money out of getting people in front of politicians. A powerbroker is someone who controls or influences the pre-selections of those politicians. Now, ah if you are making money out of the people whose pre-selections you control or influence, there is obviously a potential for corruption. And that's the last thing that we should have inside the Liberal Party.

MARIAN WILKINSON: The key factional warlord in Abbott's sights is Michael Photios.

MICHAEL PHOTIOS: "How are You, Any Questions?"

MARIAN WILKINSON: The former state MP is an influential lobbyist and powerbroker in the so-called moderate faction that dominates the NSW Liberal Party. He's also a member of its state council.

TONY ABBOTT "There is absolutely no doubt ah that there is a dominant faction, um there is a dominant individual inside that faction, ah and that individual is a lobbyist.

MARIAN WILKINSON: And is that Michael Photios?

TONY ABBOTT: Well, look, ah that's for you to say, ah not for me to confirm.

MARIAN WILKINSON: While Photios is with the moderate faction, his lobbyist partner, Nick Campbell, is a powerbroker in the NSW centre right faction. Both factions swung numbers behind Malcolm Turnbull when he took the leadership from Tony Abbott.

MARIAN WILKINSON; Can you explain to us how is it that even though these people don't have a formal position, they still wield power?

TONY ABBOTT: Because they spend half their life on the telephone ah ringing people up, um suggesting to them that ah if they do this ah certain benefits and rewards in terms of party advancement or preferment might come their way. Um there's no doubt that ah there are people not on state executive who caucus regularly on the phone and face to face with people who are on the state executive to try to get ah pre-cooked outcomes.

MARIAN WILKINSON: As Prime Minister, Abbott successfully moved to ban lobbyists like Photios and Campbell from holding official positions in the Liberal party. But Abbott's right wing faction remains on the outer. And the lobbyists kept their influence in the party as another senior Liberal told Four Corners.

MARIAN WILKINSON: I want you to frankly tell us do you think these two lobbyists have too much influence?

MICHAEL YABSLEY, FORMER FEDERAL LIBERAL PARTY HONORARY TREASURER: Look you know they are clearly um the key players in New South Wales. Um I would be less than frank if I didn't say that um you know I I think it's I think it's time for the for the serving faction leaders to vacate the field. Um that that is really a prerequisite for...

MARIAN WILKINSON: And who are they?

MICHAEL YABSELEY: Well you mentioned Michael Photios and Nick Campbell both of whom I know well. Um I don't necessarily attribute ill intent to them. I think they are caught up in something that has been going on now for a long period of time. They have been leading the charge and I think any honest appraisal would point to the fact that um it is it it creates real problems as far as the Liberal Party is concerned.

MARIAN WILKINSON: Michael Photios and Nick Campbell are key players in two highly influential lobbying firms. PremierState Consulting in NSW; and CapitalHill Advisory in Canberra. Their long list of Canberra clients have interests in pharmaceuticals, sports betting and Australia's detention centres - all dealing with the federal government.

MARIAN WILKINSON: Both of them have a very big client list in Canberra of a lot of important companies dealing with the Federal government. Is that a problem?

MICHAEL YABSELEY: Er yes I I think it it creates a perception um of of insiders um being able to get access or being able to exert influence and I think that is um a very ah unfortunate and difficult situation for them and for the Liberal Party.

MARIAN WILKINSON: Abbott's campaign will destabilise the Liberal Party right in Turnbull's backyard. But he has support from unlikely quarters. The party's former federal treasurer, Michael Yabsley, is a supporter of Malcolm Turnbull. But he is also going public over the influence of big lobbyists in the NSW Liberal Party.

MICHAEL YABSELEY: Well it's run by factions and there is a very, very strong [sigh] um association between the factions and um at least a couple of lobbying firms. Now I have to be upfront. I I have been a a lobbyist um for a relatively short period of my career, um and [sigh] you know you really have to be, you you have to go to great lengths to make sure that the role that you play as a lobbyist as distinct from a a a ah an office bearer within the Party does not create a conflict and I think those lines have been hopelessly blurred ah over recent years and and that of course is an overlay of of real trouble as far as the Party is concerned.

MARIAN WILKINSON: Why?

MICHAEL YABSELEY: Because it gives rise to a perception of conflict of interest. You know er whether whether a perception is based on fact or or just appearances really becomes beside the point. It's how it looks and how it looks in New South Wales is not good and it should be fixed.

MARIAN WILKINSON: Neither Photios nor Campbell, would be interviewed by Four Corners about Abbott's attacks on the influence of lobbyists in the party. But the NSW Liberal Party President stepped up to strongly defend both men and deny they have excessive influence.

TRENT ZIMMERMAN, MP AND NSW LIBERAL PARTY PRESIDENT: I think people like to overstate those things. My experience of being involved in politics for a long period of time is that ah when you do have internal friction ah there is a tendency to try and demonise ah those people that you're disagreeing with. And I think that we have seen some of that happening in the case of ah people within the NSW division.

MARIAN WILKINSON: Tony Abbott says if you are making money out of people whose pre-selection you control or influence, there is obviously a potential for corruption. Do you agree?

TRENT ZIMMERMAN Well, I'm not sure that I accept the premise of that question that ah any one or two people have such extraordinary influence over the affairs of the Liberal Party.

MARIAN WILKINSON: And you don't think there's a potential conflict of interest between the role of Michael Photios in his lobbying company or Nick Campbell in his lobbying company, and being heavily involved in state Liberal Party affairs?

TRENT ZIMMERMAN: "I think people occasionally make claims like that to try and ah demonise th-those that they might have ah um see as on the other side of the internal fence in the Liberal Party. Um but I'm yet to see anyone actually demonstrate to me where that conflict has arisen ah or is likely to arise.

MARIAN WILKINSON: The loss of seven NSW seats to Labor in the election is stoking the anger towards the party powerbrokers. Turnbull and party officials blamed Labor's so-called Mediscare campaign on the alleged privatisation of Medicare for the election losses. But key Liberal figures are also blaming internal factional warfare for killing off the party's membership base and its community links.

MICHAEL YABSLEY: This is something of an internal issue for the Liberal Party, but it impacts on the ability of the Party to deliver um the kind of campaign that is required and that is...

MARIAN WILKINSON: Why?

MICHAEL YABSLEY: Because it it limits the number of people who are ultimately involved in the Party. Ah look in in New South Wales, the total membership of the Liberal Party is about 8,000. I would say half of those people are involved mainly for factional reasons. In other words they're there to beat the drum, to you know to make sure that their faction is is protected or looked after or gets what it wants in pre-selections and in in other contests in the in the Liberal Party. Who in their right mind would want to belong to an organisation where if you go along to a meeting you are just as likely to sit, have to sit through three hours of what um you know you you could best describe as civil war..."

MARIAN WILKINSON: Soon after Turnbull unseated Abbott, he addressed the NSW Liberal Council and was ridiculed when he tried to smooth over the bitter factional warfare.

MALCOLM TURNBULL: We are not run by factions. We are not run by... [audience laughs]. Well you may, you may ah, you may ah dispute that, but I have to tell you, from experience, we are not run by factions, nor are we run by big business, or by deals in back rooms. [audience scoffing] We rely on the ideas and the energy and enterprise of our membership.

MARIAN WILKINSON: Back then, a humiliated Abbott was forced to accept a deal on party reform that did little to help his faction or curb the powerbrokers. Abbott now wants to reopen the fight.

TRENT ZIMMERMAN: Well, I haven't spoken to Tony about ah what his intentions are. But we did consider ah our pre-selection system at the end of a very long process, and we adopted a package which ah gave everyone something, ah didn't give everyone everything, but it was a good, solid compromise."

MARIAN WILKINSON: After Turnbull's near death political experience in the election, Yabsley is also calling on the Prime Minister to intervene in the NSW party and open it up. Yabsley too wants more MPs and senators to be selected by a democratic vote of Liberal members.

MICHAEL YABBSLEY: I think prime ministerial intervention and leadership is crucial. On questions such as adopting a a plebiscite model within the Liberal Party, um even extending to um something that more resembles a system of primaries where the community becomes involved, rather than having this Party which really is something of a of a closed shop, um the Liberal Party has to democratise. Ah it has to overcome the the problem of the um ludicrously small membership base that it's got. Um it has to fix up its fundraising, um and of course the person who can play um the key leadership role in relation to those things um is the leader of the Parliamentary Party who is the Prime Minister.

MARIAN WILKINSON: Tony Abbott is increasing the pressure, saying Turnbull privately supports more democracy in the party, but is being blocked by powerbrokers.

TONY ABBOTT: Ah as I understand it, um the Prime Minister does support the democratisation of our party. Ah what's happening is that ah at a level below that these people are saying, sure, we want democratisation, but not yet, ah because as soon as we have democratisation their influence, their control is diluted, um their ability to prosper financially and politically ah obviously is substantially reduced. So the principle here of democratisation must be made to trump the self-interest of these people, because their self-interest is bad for our democracy, ah it's bad for our government at state and federal levels, and it's certainly bad for our party.

MARIAN WILKINSON: The challenge for Turnbull is to ensure the divisions in the NSW Liberals fuelled by Abbott do not destabilise the federal parliamentary party.

MALCOLM TURNBULL: "Welcome Back, welcome back to government. Welcome back to three years of servicing the Australian People..."

MARIAN WILKINSON: When government MPs met after the election their fragile one seat majority meant Turnbull needed the support of everyone in the room.

MALCOLM TURNBULL: "this is a term of delivery. This is three years of strong, stable economic leadership delivering on the promises we made."

MARIAN WILKINSON: Despite this, Turnbull risked the anger of key Abbott supporters including Senator Eric Abetz and Kevin Andrews by refusing to put Abbott back into cabinet.

MARIAN WILKINSON: Are you disappointed that you're not in- back in cabinet? Would you have liked to have served back in cabinet?

TONY ABBOTT: The point I made throughout this campaign, Marian, is that ah I was looking forward, with the support of the people of Warringah, to continue to represent them for another three years. So I'm going to keep very busy as a local member; that's the best service that I can give to ah the people of Warringah, the party and the country.

MARIAN WILKINSON: Why do you think he was not included?

ERIC ABETZ, LIBERAL SENATOR FOR TASMANIA: That is a question that the Prime Minister needs to answer. I can't answer that. I have my own suspicions but I'll keep that to myself. Suffice to say I think it would have been gracious of the Prime Minister to reach out to his predecessor and say of course somebody that led us out of opposition into government has something to offer the Liberal Party and the nation. Somebody with that sort of experience clearly ah is worthy of inclusion in the Cabinet. The fact that the Prime Minister did not think that that was the case is for him to explain but ah much as I would like to see a rapprochement I have seen no signs of it.

MARIAN WILKINSON: The day of the first party room meeting, senior cabinet minister Christopher Pyne, dismissed suggestions that excluding Abbott would cause discontent.

CHRISTOPHER PYNE, GOVERNMENT LEADER OF THE HOUSE: Well I've just come from a very harmonious party room meeting, ah, and, ah, there was a- a great feeling of positivity about the government's agenda and what we will deliver in this 45th parliament. Ah, Malcolm Turnbull's made it very clear that the front bench he went to the election with is the front bench that will form, ah, the cabinet and the ministry apart from those people obviously who weren't re-elected and because the Nationals will have increased representation so there'll be some changes around the edges. Ah, but I fully support the prime minister's decisions.

MARIAN WILKINSON: But Senator Abetz says Turnbull has made a mistake by shunning the senior conservatives.

MARIAN WILKINSON: Do you think that that will cause discontent in the party room?

ERIC ABETZ: I think it was a strategic error by the Prime Minister not to restore one of us to the Cabinet to run a good ship and Prime Minister Howard showed that you reach out to all elements within the party you don't shun any.. Not including one of us I think is a strategic mistake but having said that Tony Abbott, Kevin Andrews and myself never got into politics to see a Labor Government installed. So we will do whatever we possibly can albeit from the back bench to ensure that good Liberal Party principles are upheld, good Liberal Party policy is implemented and to ensure that Labor does not win the next election."

MARIAN WILKINSON: The former treasurer, Peter Costello, says the fragile government majority has serious economic implications for Turnbull. After the cliff hanger election result, global credit agency Standard and Poors put Australia's triple-A rating on negative watch.

PETER COSTELLO: The agencies are saying um Australia's debt has climbed alarmingly, it's not the triple A ah lending proposition that it used to be, take a premium. And they're looking at the political situation and they're saying this: The political situation is so wafer thin that the chances of government doing much about this have declined. Now, they'll wait to see what happens. Ah will we make any progress on our budget deficit? Will we be able to reduce debt? Um if we're not able to do that, if the political situation stops us from doing that, that's the time we'll get a downgrade.

MARIAN WILKINSON: The day he announced his new cabinet, Turnbull was focused on the threat to Australia's triple-A rating.

MALCOLM TURNBULL: "Budget repair will be a front of mind issue for this entire Parliament. This has been reinforced by the three ratings agencies following the campaign."

MARIAN WILKINSON: Senior government ministers are hammering the need for budget cuts.

BARNABY JOYCE, DEPUTY PRIME MINISTER: it should be clearly seen by the Senate, by the Lower House, that we have to try and get the books of our nation under control and we we intend to do that. Because that is the ultimate, as dry as it is, as boring as it is, it's the ultimate statement of healthcare, it's the ultimate statement of education, it's ultimate station statement of people's pensions and their social security, that we have to balance the books otherwise there is no money there for it. We must do it.

MARIAN WILKINSON: Turnbull and Joyce will need every government backbencher's support for any contested budget cuts.

PETER COSTELLO: Yeah. Your biggest problem frankly, ah when you're in a situation like this, any, any one or any two of your own side um can either make or break a particular legislative issue. So um you put some legislation and any one or any two can threaten to walk and that's the end of it in the House of Representatives, before you've even got to the senate. And the biggest danger I think here is that you'll get um member of the Liberal Party or the LNP or the National Party will, will threaten to go independent. You know, i-i-it's a very alluring prospect. Um I'll threaten to go independent, I'll get a whole lot of lolly for my electorate, right, and I can still preserve the government if I need it. Ah and this is the risk o-on any particular issue at any particular time, not that these people will cross the floor, but they'll threaten to go independent ah on you. Um a-and you are beholden to them.

ERIC ABETZ: Clearly a wafer thin majority requires the Prime Minister and the leadership not only to reach out to the cross benchers but also all elements within the Liberal National Party coalition because I'm sure they must realise it will only take one person or two in the House of Representatives to cross the floor to defeat Government legislation.

MARIAN WILKINSON: Just one day after the government's swearing in, backbencher George Christensen threatened to cross the floor to vote against Turnbull's controversial superannuation reforms designed to save two billion dollars.

GEORGE CHRISTENSEN: "If the policy is not changed by the time legislation hits the desks in parliament, I'll be voting against it."

MARIAN WILKINSON: you know you had a lot of flack over the super changes in the campaign...

BARNABY JOYCE: Sure.

MARIAN WILKINSON:: ... as has the other Ministers.

BARNABY JOYCE: I acknowledge that.

MARIAN WILKINSON: And do you think they do some aspects do need to reviewed?

BARNABY JOYCE: Well no I I think that you go to an election and you win an election and that's the policy.

MARIAN WILKINSON: So you're sticking with it?

BARNABY JOYCE: Ah yes once you've been to an election that's the policy.

PETER COSTELLO: I think there are genuine concerns in the policy as it was presented and I think the government ah has acknowledged that it will have to look at it, um and it will. Ah and of course it will have to legislate it.

MARIAN WILKINSON: The internal revolt over the super policy began on day one of the new government.

MARIAN WILKINSON: Are you expecting a lively discussion Senator?

ERIC ABETZ: We're looking forward to a very good one. a lot of us held our noses sold it during the election campaign but then tried to tell the Government there was a problem here it needs to be re-addressed. And regrettably there was lot of stone walling at first which then led to the inevitable reaction which was well if you're not gonna listen to me I'm gonna cross the floor. I would like to think that common sense will prevail. I'm still hopeful that it will and therefore we can come to a resolution that says to our base we have heard you, we've listened to you and here are the changes and yes we get the message from the election. If we keep going full steam ahead and pretend that nothing happened on the Second of July other than a huge mandate for us we will be going to an electoral disaster in 2019.

MARIAN WILKINSON: Treasurer Scott Morrison is trying to hold government MPs in line by promising consultation but sticking to the message that the super reforms are crucial to repair the budget. But the former treasurer says much more is needed to rein in the deficit.

PETER COSTELLO: Superannuation changes aren't going to balance the budget; that's obvious. The only way you'll balance this budget is if you get spending below 25 percent of GDP, right? We're at about 25.8 percent now. Um you cannot balance a budget on that. Until such time as you get your expenditures below 25, and preferably well below 25, you won't balance a budget. Super won't do it.

MARIAN WILKINSON: Following the cliff hanger result, Labor Leader Bill Shorten is well positioned to destabilise the Turnbull government. Labor is already planning to work with Independent MPs and the Greens to exploit the divisions in government ranks.

ANTHONY ALBANESE, LABOR SHADOW MINISTER: It will be a very different Parliament and Malcolm Turnbull and the Liberals ah before him, Tony Abbott, had difficulty dealing with a Parliament when they had a majority of 20, let's see that, how they go when they have a bare majority.

CHRISTOPHER PYNE, GOVERNMENT LEADER OF THE HOUSE: Well look Labor say a lot of things, ah, and they are good at beating their chest and pretending that they have, ah, ah, more power than they obviously have. They lost the election, ah, they have less than seventy seats, ah, they can't form a majority in the House of Representatives, um, the government does have a majority, we have seventy six, as a consequence, ah, we have a workable majority.

BOB KATTER, INDEPENDENT PM: If you think you can govern Australia with 76 members of parliament I wish you well! No-one can go to the bathroom! Don't have your grandmother die, because you won't be able to go to the funeral!

MARIAN WILKINSON: Turnbull is relying on two Independent MPs, including Bob Katter, for re-enforcements. Katter has agreed to fend off a Labor vote of no confidence and to support money bills. But the maverick Katter also wants to support Labor on new bills that will create havoc for Turnbull.

BOB KATTER: Ha! The banking Royal Commission is a subject very near and dear to our heart! I mean if there is anyone that has been at war with the banks that has been us. Of course we need an enquiry. I will be the most enthusiastic supporter. I'll be moving it in the house if nobody else does.

ANTHONY ALBANESE: Backbenchers will have enormous power, ah let alone crossbenchers, who'll also have significant power, they'll have to deal with the Parliament ah in which ah individual members ah will be putting up private members' bills, putting up ah plans for support for particular funding or particular programmes and they'll have to deal with them, as opposed to just getting their own way and not just in the House but in the Senate which is a diabolical outcome for the- for the Government.

CROWD: "Hey Hey, Hey Ho Pauline Hanson has to go, Hey Hey etc..."

MARIAN WILKINSON: The turbulent new Senate, which now includes Pauline Hanson, will be arguably the biggest challenge for Malcolm Turnbull. Hanson has four seats in the new senate. She will be one of twenty crossbench and Green senators. To pass any contentious legislation the government will have to negotiate with them.

GEORGE BRANDIS, GOVERNMENT LEADER IN THE SENATE: Well it will be difficult but I wouldn't, um, e- a- exaggerate the level of difficulty, it is always difficult...So this is a- welcome to my world this is what I have been dealing with as senate leader since I've been in the position, that is the nature of the senate and it's the nature of the task of a senate leader.

NICK XENOPHON, INDEPENDENT SENATOR FOR SOUTH AUSTRALIA: I think it's important that the government understands that there are millions of Australians who are disillusioned with the two party system, that actually want an alternative approach to how our government works for us.

MARIAN WILKINSON: The political clout of the cross benchers is at an all time high after 23% of Australians spurned the major parties in the election.

NICK XENOPHON: "You have to do something about sports betting on TV. All the cross benchers with agree with you on that, Pauline will agree with you on that."

MARIAN WILKINSON: Senator Nick Xenophon's team will hold at least three seats in the senate and one in the lower house. He will be pressing his agenda on Turnbull in any negotiations.

NICK XENOPHON: I think the government ought to be sympathetic to issues of government accountability, Australian made and Australian jobs, but also the issues of predatory gambling. Ah most Australians feel that the major parties have let them down in tackling serious issues in relation to both poker machines and online gambling so we want to progress those in a meaningful way ...clearly this senate ah will require negotiation skills on the part of the government, the opposition and the crossbenchers, the likes of we've never seen before.

SCOTT MORRISON: "Mr Speaker, I move this bill be read a second time..."

MARIAN WILKINSON: The key make or break test of the Turnbull Government's negotiating skills will be getting its current budget through the Senate.

GEORGE BRANDIS: We'll be putting the budget and the budget measures that we introduced in May to the new senate with a fresh mandate and we are confident that the cross benchers mindful of the nation's needs and the national interest will give us a good hearing.

PETER COSTELLO: The crossbenchers don't have any responsibility for the overall outcome. All they're concerned about is cherry-picking advantages for themselves and their constituencies. And so you have to woo them, um you have to dine with them, you have to talk to them, you have to be attentive to them, you have to flatter them, you have to stroke their egos. Now, you'll have different ones on different issues. But when a big vote is coming up they are your greatest friend. There is no-one else in the world except that senate crossbencher!

MARIAN WILKINSON: Can Malcolm Turnbull do that?

PETER COSTELLO: Well, I hope he can do it. I mean it, ah this is the, this is the point that ah we'll have to see.

MARIAN WILKINSON: For Turnbull, projecting the stability of his government will be paramount. But emotions are still raw in his own party, after last year's leadership battle. And Abbott's decision to stay in the parliament as a right wing figurehead is raising questions about his future ambitions.

MARIAN WILKINSON: do you think that Tony Abbott should retire?

PETER COSTELLO: Look, ah I I- Everybody got to make their own decision; I'm not going to advise him on that. Um everyone's got to make their own decision. You see, ah he would think to himself, well others have stayed on and come back. Um but that's a matter for him.

MARIAN WILKINSON: Do you think that's in the back of his mind?

PETER COSTELLO: Well, ah I don't think Tony's, you know, plans to be a backbencher for the rest of his life.

MARIAN WILKINSON: would you ever think of putting yourself forward as a Prime Minister again?

TONY ABBOTT: Marian the point I've made again and again and let me repeat it here, is that the Abbott era is over ah and the Liberal Party rightly wants to look forward, not back. Now, I certainly want to be a constructive contributor ah to that process. I certainly do want to be a constructive contributor to that process, and I think there's a lot that I can do over the next three years ah to try to crystallise and clarify where centre right politics ah in this country goes from here. Um but in terms of the top job, the Abbott era, as I've said before, ah is well and truly over.

MARIAN WILKINSON: The Turnbull era has begun.

MALCOLM TURNBULL: "It's a great day to thank the Australian people."

MARIAN WILKINSON: Claiming victory was sweet. But Malcolm Turnbull is on a political high wire. And his opponents are hoping his balancing act cannot last for a full three year term.

ANTHONY ALBANESE: Malcolm Turnbull given the internals ah is likely to face pressure from within ah his own Party, the only way that he resolves that is by going to the polls and trying to get a stronger result.

MARIAN WILKINSON: If you had to put your cards on the table, when would you predict the next election?

ANTHONY ALBANESE: Ah within a year.

CHRISTOPHER PYNE: Bravado and bavura from the Labor party is not something I care very much about. The parliament will serve its three years, the government will serve another three years and then I hope that we'll be re-elected again, ah, with the confidence of the people in 2019.

PETER COSTELLO: Th-this government can last um three years, um I have no doubt about that. Th-the question is, what will be the quality of its legislation? Um you can last just by being there. Um the question is, what will it be able to do? Ah will it be able to do the big things, um like repair the budget, secure the financial position, ah o-or will it just have to go along with events? Ah now, I hope it can find a working majority first of all in its own party and secondly in the senate. Um b-but without that th-the quality of the government will be ah at risk.

MALCOLM TURNBULL: "I Malcolm Turnbull will well and truly serve the people of Australia in the office of Prime Minister."

MARIAN WILKINSON: Turnbull's ability to handle the risks ahead depends first and foremost, on the loyalty of every colleague on his own side.

BARNABY JOYCE: Our demise if it if there's such a thing can only be brought about by ourselves. Ah are we saying to people that you prefer to put the the nation at risk than to continue on with the process of keeping of building it to a stronger position. You know I don't think I can't think of any of my colleagues who'd say no I'd prefer to put the nation at risk.

MICHEAL YABSLEY: It's the government's job to you know to point to stability. But there are a couple of inevitabilities ah or almost inevitabilities, including death and defection. I mean no one can say with a major as slender as that, that someone isn't going to die and on the law of [laughs] averages, um you know that that happens.... the other think to take into account is that members of Parliament are most likely to be most bolshie where there is such a slender majority. I mean that's how they throw their weight around and in fact in fact increases the possibility of defection.

GEORGE BRANDIS: The narrowness of its majority in the House of Representatives will impose a discipline upon all of my colleagues. And I can tell you regardless of what their views might be on particular issues every single member of the coalition party room, every last man and woman in the coalition party room, is united by a desire to win the 2019 election and they have all been in politics or around politics for long enough to know that disunity is death.

SARAH FERGUSON: It's true that disunity is death ...just ask Tony Abbott. But can the dead rise again like John Howard, 'Lazarus with a triple by- pass'? Watch this space...

Next week, the dairy farmers walking off their farms, the awful cost of mismanagement in Australia's milk industry.