Of course when you are under heavy fire from within, and your ship of state has just sprung another spectacular leak, best to pretend it isn’t happening. Resplendent in one of his blue ties and beamed live from the comfort of the prime ministerial suite, Tony Abbott assured us the latest bombshell was a “storm in a teacup”. Some storm and some teacup.

The governing Liberal Party’s honorary treasurer, a man who’s raised $70 million for the cause, laid bare the malaise he sees at the heart of the government’s problems. Philip Higginson did it in two letters sent out to the 20 members of the federal executive – lashing out at unaccountable corporate governance and a “husband and wife team” conflict of interest that he said damaged the organisation and the parliamentary party. The letters were promptly forwarded to the media, despite Higginson pleading for confidentiality.

Make no mistake about it: no one believes that was accidental. “Dirty pool” is the way one of the executive describes its release into the full gaze of the public square. He has no doubt it is another chapter in the project of hacking down Tony Abbott. Neither does the prime minister, who told 2GB: “Plainly there is this desire on the part of some to damage and destroy this government.” Some members of parliament told staff at Menzies House, the Liberals’ national HQ in Canberra, that the honorary treasurer was texting them, urging them to support the spill.

The whole episode illustrates that for Abbott little has changed. He is more comfortable attacking and creating enemies than in reaching out and making friends.

The real targets were Tony Abbott, the party’s federal director Brian Loughnane and his wife, the prime ministerial chief of staff, Peta Credlin. They are being blamed for the dysfunction not only in the parliamentary party but also in the organisational wing. By implication, Abbott is blamed for allowing a conflict of interest to exist by keeping Credlin. This has led to a “wooden and unreliable communication and, dare I say it, retribution”. Unlike some of the other stories finding their way into the media on a disturbingly regular basis, no one could deny the authenticity of the document or the identity of the author.

What is documented is the disappointment of the party’s generous business backers with the hole their government finds itself in so early in its first term. The ostensible trigger for the outburst is Higginson’s claim that party president and former Howard government minister Richard Alston was moving to dump him. Alston denies this but the claim allows this stark assessment of how much harder it will be to conduct fundraising in the run-up to the next election: “This time at play are different dynamics, much diminished brand, much poorer economy, leadership travails, lack of trust within our own major-donor base (>$100,000), many observers predicting further challenges, and many commentators predicting ultimate defeat in 2016.”

The missive is arguing for reform of the party’s governance structures – greater transparency and accountability of where the money comes from and who really gets it. It refers to “malfeasance as we encountered in some other jurisdictions within the party”. This has angered long-time colleagues of Loughnane. Alston has rushed to his defence, emailing executive members to say he was totally unaware of any breach of fiduciary or any other duty on his part. The veteran party executive director has a hard-won reputation for integrity. Any suggestion of money laundering donations, as came out of the Independent Commission Against Corruption in New South Wales, is strenuously denied and certainly no proof has been proffered.

A malicious underground whispering campaign is doing the rounds, which adds weight to Higginson’s observation that he is overwhelmed by “the sheer vitriol, and pent-up animosities, and enmities that exist”. It’s not the image of a united party of happy campers. The rebellion that flared in the parliamentary party could well be matched when the party executive meets early next month. Higginson’s concerns are shared. Influential members of the Victorian division are particularly unhappy.

One of the Liberals’ biggest donors for years, mining magnate Clive Palmer, has bought into the row. He says he quit the Liberal organisation because he was unable to find out how his large donations were spent. Never mind that the claim opens him up to the perception he was trying to buy influence and Loughnane appropriately resisted. Now a federal MP, Palmer told parliament: “I didn’t know funds from the Liberal Party would be spent on various things other than re-election of Liberal members.”

Palmer’s intervention has fed the paranoia in the Abbott camp that Malcolm Turnbull, or at least people working on his behalf, is behind the destabilisation. The Turnbull office denies any involvement. But the alternative leader fed the perception when he backed Higginson’s call for better corporate governance of the party. There’s no doubt Palmer has a good relationship with the communications minister, but it is more likely the Queensland MP’s motivation was to opportunistically grab the limelight. He says he will try again to air more of the Liberals’ dirty linen in parliament.

None of this is calming the nerves of the restive backbench. The party-room meeting this week was described by one veteran MP as tense and febrile. Don Randall, the West Australian who recently seconded the spill motion against Abbott, riled the prime minister over the sacking of chief whip Philip Ruddock. He came back at the prime minister four times, only to be slapped down. One version is that Randall was told he could like it or lump it: “The closest thing to a flashpoint I’ve seen.”

Abbott’s completely over-the-top attack on Human Rights Commission president Gillian Triggs had Andrew Laming from Brisbane and Craig Laundy from Sydney chiding the prime minister. Laundy’s marginal seat of Reid has many Muslim voters. He urged his leader to concentrate more on getting the remaining children out of detention rather than attacking Professor Triggs.

Those pleas went unheeded and as a result the government continued painting itself into a very ugly corner. Triggs is accused of a “political stitch-up” for doing no more than her legislated job of holding a government to its human rights obligations. The prime minister and the attorney-general accuse Triggs of deliberately delaying her inquiry into children in detention until after the election, the implication being that she somehow let Labor off the hook. Never mind that she is also critical of the Rudd and Gillard governments and that her statutory obligations didn’t stop at the time of the last election.

The prime minister was forced into a mode we have seen too often, where reality and his characterisation of it are at odds. Labor’s Bill Shorten confronted him with the Hansard record of the senate estimates committee’s cross-examination of Triggs. What is crystal clear is the attorney-general and the head of his department admitted they told Triggs a new role could be found for her because she had lost the government’s confidence. For Abbott, that was not wanting to sack her nor was it offering her an “inducement” to go. The word games cannot mask the brutality of the situation. Her integrity was being sacrificed on the altar of political expediency.

George Brandis told the committee after a bruising day for all concerned that he didn’t know “where we go from here”. The whole episode undermines the government’s human rights reputation, but for Abbott it illustrates that little has changed. He is more comfortable attacking and creating enemies than in reaching out and making friends.

It’s in stark contrast to the new style we are seeing from Social Services Minister Scott Morrison. Gone is the flint-hearted immigration minister, demonising boat people and flogging Labor mercilessly. Inclusion is now the name of his game. He’s reaching out to the opposition to try to forge a consensus on childcare reform. He’s even thrown in a bit of Mary Poppins: “a spoonful of sugar helps the medicine go down”. Morrison wants incremental change over a decade and for a generation to radically reshape the social welfare system. He says without gradual change beginning now, the nation will be forced “over the reform cliff down the track”. Labor and welfare agencies are wary. Some saw his impressive Press Club performance this week as an audition for the treasurer’s job, if not the leadership.

Those questions are far from resolved. Seven ministers were prepared to tell Fairfax Media they would not vote for Abbott again in a spill. And that was despite a lift for the government in the Newspoll. The boosters were claiming an Abbott comeback, but one Labor strategist noted the 53-47 figures would see the Coalition flogged by the same margin with which it won the last election.

In the poll, the prime minister’s deep unpopularity was still a feature, although that doesn’t hearten everyone in Labor. One hardhead says Abbott was never popular and he still won the last election. It was the budget that shattered his government’s standing.

This prompts the obvious question: can this year’s budget restore it? Not without a dramatic circuit-breaker, is the view even of those closest to Abbott. They are at a loss to know what such a break might be. The party’s unhappy honorary treasurer seems to have an answer: abandon the triumvirate responsible for the mess they are all in. For that to happen, the prime minister would have to move out Credlin or replace her husband, Loughnane, in head office. Of course, Abbott could resign himself – although the party room would have to force that choice on him.