16th March, 2015

"The Liberal Party has dealt with the spill motion and now this matter is behind us." - Tony Abbott

Prime Minister Tony Abbott says his Government has put its divisions behind it, and is now back on track, ready to deliver good government to Australians.

But is this really true? Have the divisions built up over the past year and the wounds inflicted as the result of the threat of a leadership spill last month really been healed, or is he on borrowed time as leader?

This week on Four Corners, reporter Marian Wilkinson reveals leaked communications, top secret decisions and interventions from outside the Liberal Party intended to shore up Tony Abbott's leadership, that suggest the party remains divided.

The program tracks key government policy decisions that saw its popularity sink from highs to major lows. It tells how for much of the past year and a half the Prime Minister has been cut off from his own backbench, making him incapable of understanding the impact budget measures were having on voters.

In the weeks since the party room spill, the Prime Minister has repeatedly insisted his party will not go down the road taken by Labor when it replaced Kevin Rudd with Julia Gillard. However others, even those that support him, offer this veiled warning:

"We want him to succeed and we want the Government to succeed... and I think that we will get there. But if it doesn't, the first person to know that it's not working will be Tony Abbott and I have every confidence that if that happens, and I don't think it will but if that happens, I think Tony would do the right thing by Australia." - Government backbencher

It becomes clear that while Tony Abbott may have come through one crisis, the margin for error in his leadership diminishes as each month passes and the next election gets closer.

As a former Liberal Cabinet Minister said:

"Understand this, as you get closer [to an election], every marginal seat member is thinking I could lose my seat... if things don't change, the party room will..."

Q: "...Will change the leader?"

"Yeah, if things don't change."

HOUSE OF CARDS, reported by Marian Wilkinson and presented by Kerry O'Brien, goes to air on Monday 16th March at 8.30pm. It is replayed on Tuesday 17th March at 10.00am and Wednesday 18th March at midnight. It can also be seen on ABC News 24 on Saturday at 8.00pm, ABC iview and at abc.net.au/4corners.

Transcript

PHILLIP RUDDOCK, FMR GOVT. WHIP (Feb. 9): The result is very clear: ah, noes, 61. Yes, 39.

DENNIS JENSEN, DR, LIBERAL MP, WA: The Prime Minister and his team expected that there were going to be considerably fewer votes than that.

KERRY O'BRIEN, PRESENTER: For Tony Abbott, it was a political near-death experience.

TONY ABBOTT, PRIME MINISTER (Feb. 9): We have decided that we are not going to go down the Labor Party path of, um, a damaged, divided and dysfunctional government.

KERRY O'BRIEN: But deeply divided is exactly how the Abbott Liberal Party now seems to be.

IAN MacDONALD, LNP SENATOR, QLD: If you're not in government to do the right thing, it's all to no avail.

AMANDA VANSTONE, FMR HOWARD GOVT. MINISTER: I can say this in answer t- to your question: that if things don't change, uh, the party room will.

KERRY O'BRIEN: A story of political survival in two parts: survival of the Prime Minister; survival of the Government. Can there be both?

Welcome to Four Corners.

Blind Freddy can see Tony Abbott's leadership is in trouble, which is pretty astounding for a man who led his party into Government just 18 months ago, routing Labor in the process.

It's particularly extraordinary that, having been the beneficiary of Australia's harsh judgement against Labor for replacing its prime minister twice in three years, the Liberal Party would seriously contemplate doing exactly the same thing not even halfway through its first term.

Yet that's exactly what they're still flirting with.

Mr Abbott has made all sorts of promises to placate his parliamentary colleagues after the shock party room vote on a leadership spill just a few weeks ago, a severe expression of displeasure and concern that signalled a haemorrhage of support.

While the party discord has gone back underground, Tony Abbott remains on shaky grounds in the public eye and there is no sign the unrest is over.

So how has it come to this?

In this report Marian Wilkinson reveals fresh evidence of what triggered such deep discontent within the ranks.

TONY ABBOTT (Feb. 9): This has been a very chastening experience, obviously; a very chastening experience. It's, ah, not often that something like this happens, um, 16 or 17 months into the life of a Government.

MARIAN WILKINSON, REPORTER: Just five weeks ago Tony Abbott survived what he called his "near-death political experience".

Today his prime ministership is on life support, despite his promise the Liberals would not repeat Labor's leadership turmoil.

TONY ABBOTT: We have looked over the precipice and we have decided that we are not going to go down the Labor Party path of, um, a damaged, divided and dysfunctional government, ah, which, er, votes no confidence in itself.

WYONG RESIDENT (Politics in the Pub, Feb. 5): What is your intentions of leadership? Let's get it out, kill it once and for all.

MALCOLM TURNBULL, COMMUNICATIONS MINISTER (Politics in the Pub, Feb. 5): OK, no, well, listen, listen: thank, thank you very much. Um, let me say this: Tony has had utter loyalty and consistency from his frontbench. He has had more loy- more consistency and loyalty from his frontbench than any other Liberal leader in our lifetimes.

(footage of Malcolm Turnbull meeting Wyong residents, Politics in the Pub, Feb. 5)

MALCOLM TURNBULL: Thanks very much, great to see you.

I'll, uh, I'll retweet you.

MARIAN WILKINSON: Communications Minister Malcolm Turnbull is viewed as an alternative prime minister just 18 months after Abbott swept the Coalition Government to power.

MALCOLM TURNBULL: Righto.

WYONG RESIDENT 2: You are the best man for it.

MALCOLM TURNBULL: Oh, you're very kind.

MARIAN WILKINSON: Turnbull's extraordinary resurgence is driven by Abbott's unpopularity in marginal seats, like this one on the Central Coast of New South Wales.

WYONG RESIDENT 3: You take one of me then I'll take a quick selfie.

MALCOLM TURNBULL: Yeah. OK.

MARIAN WILKINSON: All across the country, Liberal backbenchers are grappling with the Government's roller-coaster ride in the opinion polls.

WYONG RESIDENT 3: Great. Good on ya.

MALCOLM TURNBULL: OK. Great.

(footage ends)

IAN MacDONALD: I think they set out to do the right thing by the country and by the economy, but without giving any thought about how this would impact on individuals, particularly on the less fortunate in society.

And also, I'm quite sure they gave no consideration to how this would play out politically. Because it doesn't matter: you can be the best government in the world but if you're not there, if you're not in government to do the right thing, it's all to no avail.

(footage of Tony Abbott at Clean Up Australia Day, Mar. 6)

CLEAN UP AUSTRALIA OFFICIAL: OK. Gloves?

TONY ABBOTT: OK, we've got gloves. All right, that's my bag. (To volunteers) Now, I hope you guys left me some rubbish to clean up, have you?

Bloody hell. Look at it. OK.

MARIAN WILKINSON: After weeks of upheaval, the Prime Minister is clawing back his party's support by dumping a swag of unpopular policies.

TONY ABBOTT: This is just recycled rubbish. And on a day like Clean Up Australia Day, let's put it in the bag and get rid of it.

(footage ends)

MARIAN WILKINSON: But he remains dogged by bad polls and many Liberals believe he could be toppled before the next election.

AMANDA VANSTONE: Understand this: as you get closer, every marginal seat member is thinking, "I could lose my seat." Every safe seat member is thinking, "We could lose Government and I won't have a chance of being a minister and I might be too old next time."

So they're gonna be looking at what the polling says and whether they can win. And they will stick with a Prime Minister who can win and they'll cut one off who can't.

(footage of Tony Abbott arriving at election campaign launch, Brisbane Exhibition Ground, Aug. 25 2013)

CROWD: Tony! Tony! Tony!

TERESA GAMBARO: Hello, Tony. Welcome to the Ekka.

TONY ABBOTT: How are you, Teresa? Lovely to be here.

TERESA GAMBARO: Lovely day.

MARIAN WILKINSON: Abbott's last-minute campaign promises sowed the seeds of this leadership crisis.

TONY ABBOTT: Good to see you. How's things?

LIBERAL SUPPORTER: I hope you win this year.

TONY ABBOTT: Fingers crossed. That's what we're trying to do.

MARIAN WILKINSON: Before the election, Abbott and his shadow treasurer emphatically promised they would not cut spending on health and education.

JOE HOCKEY, SHADOW TREASURER (Sep. 5 2013): Now what we're doing is we're saying emphatically: we're not going to cut, ah, in, in the Health budget, the Education budget and the Defence budget and Health and medical research. We've said that emphatically.

TONY ABBOTT: (SBS News, Sep. 6 2013) I-I-I trust everyone actually listened to what Joe Hockey has said last week and again this week: ah, no cuts to education. No cuts to health. No change to pensions. No change to the GST and no cuts to the ABC or SBS.

CASSANDRA GOLDIE, DR, CEO, AUST. COUNCIL OF SOCIAL SERVICE (ACOSS): It made it clear that, if this, um, leader got elected, it was going to be impossible for him to deliver on all the commitments that he'd made during that election period.

It just didn't stack up. This is a Government that has got itself into serious trouble because, um, the numbers speak for themselves.

(footage of 2013 election victory speech. Audience applauds)

TONY ABBOTT (Sep. 7 2013): The carbon tax will be gone. The bo...

(sound of cheers and applause)

TONY ABBOTT (Sep. 7 2013): The boats, the boats will be stopped.

(sound of cheers and applause)

TONY ABBOTT (Sep. 7 2013): The budget will be on track for a believable surplus.

(sound of cheers and applause)

MARIAN WILKINSON: On election night it was clear Abbott's big plans would be impossible without dumping election promises. That's the view of former Treasury official and economist Chris Richardson.

CHRIS RICHARDSON, PARTNER, DELOITTE ACCESS ECONOMICS: Because both sides promised the impossible - you know, lots of extra spending and, and yet repairing the budget - it meant that whoever won was faced with a choice: you could keep those promises or you could do the right thing.

In total, the Government had the courage - and, and credit to them - to attempt budget repair in Australia. It turned into, ah, major political difficulties very fast, but they did have a genuine go.

(footage of budget night, Federal Parliament, May 13 2014)

JOE HOCKEY, TREASURER (May 13 2014): Madam Speaker, I say to the Australian people:

MARIAN WILKINSON: On budget night the Government that promised no surprises surprised almost everyone.

JOE HOCKEY (May 13 2014): People under 30 will wait up to six months before getting unemployment benefits.

Health services have never been free to taxpayers.

Our changes to higher education will allow universities to set their own tuition fees from 2016.

We are a nation of lifters, not leaners.

COALITION MEMBERS: Hear, hear.

(Coalition Lower House members applaud)

(footage ends)

MARIAN WILKINSON: Remarkably, Four Corners has been told, neither Hockey nor senior ministers foresaw the political backlash that followed.

(footage of Joe Hockey and Matthias Cormann at post-budget press conference)

JOE HOCKEY: I don't know where to start. Hello.

(Joe Hockey signs a copy of his budget speech on the back of a reporter)

REPORTER (leans forward then straightens): Oh, hang on. That might look...

JOE HOCKEY (laughs): Yeah, that might look really bad.

MARIAN WILKINSON: Hockey's budget not only broke election promises: it was branded as deeply unfair on budget night by the Australian Council for Social Service.

CASSANDRA GOLDIE: We read the budget papers and we were horrified. We've really tried to avoid this language of "rich and poor", um, but th- on that night it was so stark: the way the Government had targeted its savings measures to whole groups of people who really do struggle.

BRIAN OWLER, ASSOC. PROF., PRES., AUST. MEDICAL ASSOC.: It was quite a shock on budget night when there was a $7 co-payment, um, the cut to the rebate.

MARIAN WILKINSON: The biggest political bombshell in the budget was the proposal for a $7 co-payment for a visit to the GP.

(footage of Joe Hockey at post-budget press conference)

JOE HOCKEY: Well, I think it's a very honest budget and it's a fair budget.

MARIAN WILKINSON: It was tied to a $5 cut in the Medicare rebate to doctors and sprung on the AMA on budget night.

BRIAN OWLER: But the biggest shock of all was the fact that it covered all patients right across the spectrum. So it covered all of those vulnerable patients in our community: those people that are sick, ah, the elderly, children. And I think that was the most shocking part of all.

And to not have discussed that, to not have consulted with the medical profession, ah, I think was an enormous mistake.

MARIAN WILKINSON: The GP co-payment was also sprung on the Government's backbenchers, Senator Ian Macdonald told Four Corners.

IAN MacDONALD: It seemed to be a, an additional tax on doctors, ah, but it also didn't seem to, ah, er, be very fair for poorer people in the society. And so across a range of those sort of, er, concerns, I- I was opposed to it from day one.

But principally because it had never even been discussed in the party room. There'd been no indication of it. Ah, the opinion of backbenchers, who are in tune with their electorates, had not been sought. And, er, quite frankly it was just stupid policy. I said it at the time and I'm (chuckles) a little bit, er, gratified that now, some nine months later, ah, that's been accepted and we're going back to the drawing boards.

JOE HOCKEY (May 13 2014): With greater autonomy, universities will be free to compete...

MARIAN WILKINSON: The political misjudgements over the GP co-payment were echoed in the budget's higher education announcements.

CHRISTOPHER PYNE, EDUCATION MINISTER (7.30, ABC TV, May 14 2014): This is a great news story for people who want to have the opportunity to go to university. They will earn 75 per cent more than people who don't have university degrees.

(footage of student protest. An effigy of Christopher Pyne is burned)

MARIAN WILKINSON: Education Minister Christopher Pyne appeared unprepared for the reaction.

STUDENT PROTESTERS: Chris Pine, get out! We don't want you all about!

Burn, Pyne, burn! Burn, Pyne, burn!

MARIAN WILKINSON: Students were furious at the proposals to deregulate university fees and cut 20 per cent from university grants.

Four Corners has been told the deregulation reforms were rushed into the budget to compensate for the funding cuts.

(footage of Julie Bishop at MacLaurin Hall, University of Sydney, May 16 2015. She is jostled by student protesters)

STUDENT PROTESTER (May 16 2015): Shame! Shame on you! Shame!

STEPHEN PARKER, PROF., VICE-CHANCELLOR, UNI. OF CANBERRA: I think they did not anticipate the widespread public alarm at the consequences of this.

MARIAN WILKINSON: Canberra University's vice-chancellor supported students and parents opposing the deregulation. He argued it meant higher uni fees and, for students dependent on Government HECS loans to pay their fees, higher debts.

STEPHEN PARKER: So 20 percent is being cut from the Government grant and, in order to make up for that, er, student tuition fees would have to go up by about 30 per cent in order to compensate.

But now, of course, universities will be allowed - if these measures go through - they'll be allowed to charge on top of the 30 per cent.

MARIAN WILKINSON: Australia's more wealthy universities, like ANU, have strongly supported deregulation of fees to avoid a revenue crisis. But the Government's own advice warned the radical reforms would need widespread consultation.

STEPHEN PARKER: They didn't consult and they've reaped the consequences of not consulting.

DENNIS JENSEN: As far as the budget was concerned, there were two failures in my view. Ah, one: the lack of preparation of ground - and I guess, allied to that, the lack of discussion with the crossbenchers prior to - the crossbench senators - prior to the budget coming out. We needed to get those controversial issues squared away.

(footage of Joe Hockey leaving ABC Local Radio, Sydney)

JOE HOCKEY: Thanks. Thanks, guys. See you later.

REPORTER: Hi, Mr Hockey.

JOE HOCKEY: Hello.

REPORTER: How much do you...

MARIAN WILKINSON: Just how much political damage the 2014 budget inflicted on the Government can be simply judged. Neither the Treasurer nor the Prime Minister would agree to appear on this program to discuss its key measures, despite our repeated requests.

(to Joe Hockey) Will you come on the program to answer...

JOE HOCKEY: Ah, no.

MARIAN WILKINSON: ...some questions? And why?

(Joe Hockey enters lift filled with school visitors)

JOE HOCKEY: Hello.

STUDENT: G'day. We're going up.

JOE HOCKEY: Oh, well. That sounds good to me. See you later. See you later.

(footage ends)

CHRIS RICHARDSON: The politics of this are, are a disaster. And, and any political adviser would now be telling the politicians, "Don't annoy the punters, right? 'Cause you'll lose their votes." But at some stage this problem still has to be addressed.

MARIAN WILKINSON: The unpopular budget provoked a voter backlash against Abbott.

(footage of National Rugby League grand final, Oct. 5 2013)

KEN SUTCLIFFE (Ch. 9, Oct. 5 2014): The Prime Minister of Australia, the Honourable Tony Abbott.

(sound of booing from audience)

KEN SUTCLIFFE (Ch. 9, Oct. 5 2014): John Grant, ARLC chairman.

(footage ends)

MARIAN WILKINSON: Just a year into Government, key backbenchers began seriously questioning Abbott's political judgement and strategy.

DENNIS JENSEN: In my view, he was still too focussed on attacking the Labor Party and not enough focussed on coherent and consistent policy and strategic direction for the nation - and certainly articulating that strategic direction for the nation.

(footage of Tony Abbott and other heads of government assembling for group photograph, G20 summit, Brisbane)

MARIAN WILKINSON: By November's G20 summit in Brisbane, Abbott's Government had crashed in the opinion polls.

PHOTOGRAPHER: Good. And take your - and wave. Thank you.

MARIAN WILKINSON: The internal tensions began to crack open. Foreign Minister Julie Bishop clashed with Abbott's powerful chief of staff, Peta Credlin, over her aggressive management style.

But Abbott repeatedly defended Credlin.

TONY ABBOTT (ABC News 24, Dec. 2014): Do you really think my chief of staff would be under this kind of criticism if her name was "P-E-T-E-R" as opposed to "P-E-T-A"?

I think people need to take a long hard look at themselves with some of these criticisms.

AMANDA VANSTONE: When I worked in the Howard ministry, if you were unhappy with something out of Howard's office you'd say, "Well, I want to see him. I'm gonna go to him." And it would be sorted out.

So what I mean by that is: the prime minister - any minister - has to take responsibility for how their staff conduct themselves. So I'm assuming from this that the Prime Minister is happy with the way Ms Credlin's doing her job.

MARIAN WILKINSON: By December last year, an increasing number of Liberal backbenchers were complaining that Credlin was blocking their access to the Prime Minister.

But her marriage to Liberal Party federal director, Brian Loughnane, and her unique role in Abbott's office made her a powerful opponent.

IAN MacDONALD: Well, look, I said something about Peta Credlin 15 months ago, again long before anyone else. I haven't had anything to do with Peta or the office since that time. I'm not really the best person to ask.

But the situation where the Prime Minister's principal adviser and the Liberal Party's principal adviser are husband and wife doesn't make for a good, er, interaction between the parliamentary wing and the, ah, organisational wing. I've always thought that was, er, ah, unfortunate and I, ah, would hope that, er, something might be, er, done about that.

MARIAN WILKINSON: Dangerously, the divisions over Credlin spread to the Liberal Party organisation. The party's honorary treasurer, Phil Higginson, had been a good friend of Tony Abbott's.

PHILIP HIGGINSON, HONORARY FED. TREASURER (File footage, 2006): This is a matter of good corporate governance...

MARIAN WILKINSON: But late last year Higginson clashed with Credlin's husband, Loughnane, demanding more transparency in the federal party accounts.

Four Corners has obtained an explosive text message Higginson sent to a senior Liberal Party figure at this time, urging Credlin's removal from Abbott's office.

PHILIP HIGGINSON TEXT MESSAGE (voiceover): I do hope you can negotiate the removal of Credlin. That would be a huge win in itself. She has "effed" the Parliamentary Wing thru her non-understanding of team harmony... and she has "effed" the Organisational Wing...

MARIAN WILKINSON: Higginson continued with a graphic attack on Credlin.

PHILIP HIGGINSON TEXT MESSAGE (voiceover): I'm refusing to sign the 2013/14 accounts... It has brought the Horsewoman of the Apocalypse out of her den as you could imagine. Black robes flowing. Stay tuned for the hatchet job on me... It's hurting me just mainly watching the party suicide...

MARIAN WILKINSON: In late December the Prime Minister and Higginson met and argued heatedly over the dispute. Liberal Party sources tell Four Corners Abbott asked Higginson to resign as federal party treasurer.

The Prime Minister declined to comment on this meeting.

Higginson did eventually sign the party accounts last month. But in a widely leaked report he argued the conflict of interest between Credlin and Loughnane's positions was "a serious problem".

Abbott and the Liberal Party executive brushed off his concerns.

TONY ABBOTT (Today program, Ch. 9, Feb. 24): Ah, Look I-I, I'm aware of, er, that particular storm in a tea cup but the treasurer signed off on the party accounts so I am not quite sure what the fuss is over.

MARIAN WILKINSON: Senior Liberal sources tell Four Corners Abbott believed the attacks on Credlin and Loughnane were aimed at his leadership.

As the Government's stocks plunged last year, one minister's star was rising: Julie Bishop.

The Foreign Minister and Deputy Leader was also in tune with the backbench.

LUKE HOWARTH, LNP MP, QLD: Well, I think she's fantastic. I think she's 10 out of 10. She... the feedback in my electorate, uh, over the last 12 months throughout 2014 is that she was the number one performing minister in the Government. So happy to say that I think Julie is a wonderful campaigner. I think she loves her role as Foreign Minister.

IAN MacDONALD: I think Julie Bishop, I often say is a class act. I think she's a wonderful, ah, operator, wonderful Minister, wonderful person.

(footage of Julie Bishop and David Johnston with US secretary of state John Kerry, Aug. 2014)

DAVID JOHNSTON, FMR DEFENCE MINISTER (Aug. 2014): We are absolutely delighted to have you both here. You've been before and you've even been to our home state of Western Australia.

MARIAN WILKINSON: Bishop's key Western Australian ally was then defence minister David Johnston.

But in December last year Johnston was under attack from Abbott's office. At issue was the $20 billion future submarine project, one of the most highly sensitive topics before the Government.

MARTIN HAMILTON-SMITH, SA MINISTER FOR DEFENCE INDUSTRIES: This is the biggest advanced manufacturing offering that we've seen in Australia in a generation, or that we will see for a generation to come.

MARIAN WILKINSON: Before the election, Johnston promised the new submarines would be built in job-starved South Australia.

DAVID JOHNSTON (May 8 2013): The Coalition today is committed to building 12 new submarines here in Adelaide. We will get that task done. It's a really important task, not just for Navy but for the nation.

MARTIN HAMILTON-SMITH: The promise could not have been clearer: 12 submarines built in Australia, based in Adelaide, of course including shipyards from other states. It was simple. It was plain speaking. It was clear.

MARIAN WILKINSON: The Australian Submarine Corporation - or ASC - expected to work with an experienced foreign partner to help design and build the future submarines.

South Australians had no doubt the bulk of the submarines' construction and jobs would at the ASC.

SERJEANT-AT-ARMS, PARLIAMENT HOUSE (Jun. 7 2014): The prime minister of Japan.

MARIAN WILKINSON: But after coming to office, Abbott struck up a close relationship with Japanese prime minister ShinzAbe. Very quickly, Abbott wanted to explore the possibility of Japan building the new submarines.

SEAN EDWARDS, LIB. SENATOR, SA: It was my fear at the time and it drove me to have the discussion, to write to the Prime Minister on a number of occasions.

MARIAN WILKINSON: By October, South Australian Liberal Senator Sean Edwards began hearing leaks that the $1 billion submarine project would not go to his state but would go offshore to Japan. If true, it would be a huge blow.

SEAN EDWARDS: I certainly formed a view that, ah, there was a developing propensity, ah, to move away from Australian shipbuilders.

MARIAN WILKINSON: And how worried were you about that?

SEAN EDWARDS: This singly is one of the biggest issues, er, in manufacturing in this country and, therefore, in, in South Australia i-is a v-very big political issue. Ah, and it's something that I felt quite strongly about and was being... ah, a lot of people were beating a path to my door about the importance of simply being involved in the process.

MARIAN WILKINSON: Edwards was right to be worried. Four Corners has been told by sources intimately involved with the project that the Government's top secret National Security Committee, which included key ministers led by the PM, debated the future submarines in October last year.

No final decisions were made in favour of Japan. But sources close to the discussions told Four Corners the meeting did support options for the bulk of the submarines' construction to go overseas and for only limited work to go to the Australian Submarine Corporation.

MARIAN WILKINSON: The decision was justified for cost and time constraints. But it broke the election promise to South Australia. It was political dynamite and it was kept secret - even from the South Australian Government.

MARTIN HAMILTON-SMITH: The Premier and I tried to get answers from the Prime Minister and the Minister for Defence respectively about the Japan option. We were told no firm decision had been made. Er, and, ah, we took that at face value. But we kept receiving feedback throughout the country, but particularly from Canberra, that the Japan option was very much the option. In fact I was told we may as well give up.

DAVID JOHNSTON (Federal Senate, Nov. 25 2014): ASC was delivering no submarines for Australia in 2009 for $1 billion.

MARIAN WILKINSON: Johnston, under instructions from Abbott's office, never released the sensitive outcome of the October NSC meeting, despite drawing up a press release.

But the South Australian Government suspected the ASC had been sidelined. It got Labor Senators to hammer the minister with questions.

ALEX GALLACHER, LABOR SENATOR, SA (Federal Senate, Nov. 25 2014): Why is the Minister so intent on breaking his promise to build 12 new submarines in Adelaide?

MARTIN HAMILTON-SMITH: Basically we started to demand answers. And that led, that led ultimately to the questions in Parliament that resulted in the, ah, "canoe" comments from Minister Johnston.

DAVID JOHNSTON (Federal Senate, Nov. 25 2014): You wonder why I am worried about ASC and what they're delivering to the Australian taxpayer? You wonder why I wouldn't trust them to build a canoe? Right? Because...

MARIAN WILKINSON: Johnston's attack on the Australian Submarine Corporation almost exposed the secret NSC decision. It sent Liberals stocks plummeting in South Australia.

Abbott sacked Johnston. But the submarine project would soon become critical to Abbott's hold on the Prime Ministership.

SEAN EDWARDS: I brought everybody back early from Christmas holidays and we went to work on trying to establish a position which would put this front and centre on, onto the agenda in South Australia and, indeed, Australia.

MARIAN WILKINSON: Two days before Christmas, Abbott's reshuffled Cabinet was sworn in at Government House.

PHOTOGRAPHER: Everyone say, "Christmas!"

CABINET MEMBERS: Christmas!

MARIAN WILKINSON: Behind the smiles, Abbott had now lost the confidence of key backbenchers, especially in Western Australia.

One MP was prepared to tell him to his face.

DENNIS JENSEN: I don't believe in going behind people's backs. I don't believe in operating in shadows. Um, I'll be... I-I will be and I have been criticised for that. I mean, it would've been an awful lot easier just to hide in shadows.

But for me: I got into this job in the best interests of Australia and the Liberal Party and, ah, I don't resile from that. It was awfully difficult and, believe me, it wa- it was a real struggle. It's not one of those things that you do lightly. It's very painful.

MARIAN WILKINSON: On Australia Day Abbott himself lit the fuse on the leadership crisis with a costly captain's call.

JOHN LOGAN, NEWSREADER (ABC Radio news, Jan. 26): Former defence chief Angus Houston and his Royal Highness, Prince Philip, have been named as the next Knights in the Order of Australia.

TONY ABBOTT (Jan. 26): I particularly acknowledge Prince Philip for his long life of duty and service.

MARIAN WILKINSON: Up in Queensland, the LNP Premier was blindsided in the final days of a bruising state election campaign.

CAMPBELL NEWMAN, FMR PREMIER (Jan. 27) I guess my thoughts are that it was, ah, a real bolt from the blue.

MARIAN WILKINSON: Queensland Liberals were rocked by the knighthood and its timing.

IAN MacDONALD: Er, the Queensland election was, er, very, very toxic on, on polling day: something I'd never experienced before.

I think a lot of the anger within the party was not so much the Duke of Edinburgh announcement but the timing of the Duke of Edinburgh announcement. I mean, the announcement was poorly received but if it had been done at any other time it may not have had the impact that I think it and federal issues did have on the, er, Queensland election.

(footage of Queensland election victory speech, Jan. 31)

MARIAN WILKINSON: The night of the Queensland election, federal Liberals watched in shock as Labor's unknown state leader, Annastacia Palaszczuk, swept away Premier Newman and his massive LNP majority.

AUDIENCE (Jan. 31): Labor! Labor! Labor!

MARIAN WILKINSON: As the seats fell, Liberal backbencher Jane Prentice openly questioned Abbott's leadership.

JANE PRENTICE, FEDERAL LNP BACKBENCHER (ABC TV, Jan. 31): Um, and, ah, I think they're lessons that we will be discussing. I think all, ah, members of Parliament, not just in Queensland but other states as well, will look at the results tonight and, ah, there's some serious questions coming out of it.

PRESENTER, QLD ELECTION COVERAGE (ABC TV, Jan. 31): Is Tony Abbott the man to lead the, ah, Liberals to the next federal election?

JANE PRENTICE: "Well, that's, ah, that's a discussion, isn't it. We need to look at where we're going.

MARIAN WILKINSON: Two days after the Queensland wipe-out, Abbott failed to calm backbench nerves in a speech to National Press Club.

TONY ABBOTT (Feb. 2): 2014 was a tumultuous year that's reminded us to expect the unexpected.

MARIAN WILKINSON: The question mark over Abbott's leadership was now out in the open, less than 18 months since his election.

Provocatively, Abbott warned his colleagues not to move against him.

TONY ABBOTT (Feb. 2): Let's also remember what I said time and again, ah, at the time of the Rudd political assassination, at the time of the Gillard political assassination: sure, ah, party rooms or caucuses choose leaders, but once they've gone to an election things have changed. It's the people that hire and, frankly, it's the people that should fire.

MARIAN WILKINSON: The next day, the first backbencher publicly came out against their Leader.

LEIGH SALES, PRESENTER (7.30, Feb. 3): Does Tony Abbott have your support to remain as Prime Minister?

DENNIS JENSEN (7.30, Feb. 3): Ah, no. I regret to say, Leigh, that he does not.

DENNIS JENSEN: Believe me, it was painful. Ah, I mean, I fought very hard for, um, Tony to become Leader in the first place. I did an awful lot of stuff, both in the background and directly in terms of co-signing the spill motion. So it was very, very troubling for me. It wasn't easy.

And I mean, if you have a look at a photograph of me from December and a photograph of me now, you see there's an awful lot more grey hair. So (sighs) it was, it was very hard but I just felt that, um, the leadership were not listening to the concerns that we had in terms of style and substance, strategic direction and so on.

MARIAN WILKINSON: The next day, another high profile backbencher turned up the heat.

PRESENTER (Sky News, Feb. 4): And will Tony Abbott be there this time next week?

ARTHUR SINODINOS, LIBERAL BACKBENCHER (Sky News, Feb. 4): Comrade, come and ask me next week.

MARIAN WILKINSON: The following evening, a backbench motion to spill Liberal Party leadership was being drawn up as Malcolm Turnbull arrived for a function on the NSW Central Coast.

REPORTER, 2GB (Feb. 5): And does Tony Abbott have the unconditional support of you both?

MALCOLM TURNBULL (Feb. 5): Tony Abbott has the support of the entire party. The entire party and I...

MARIAN WILKINSON: But by now numerous backbenchers were deserting Abbott.

Two days before the vote to spill the leadership, South Australian Senator Sean Edwards made a big call. He tied his vote in the spill to the $20 billion future submarine project.

SEAN EDWARDS: I just said to my people that are important to me, I said, "I'm going to make a, a very big decision. I'm going to let the Prime Minister know that my support for him will rely on him, er, assuring me that Australian shipbuilders will have the right to participate.

MARIAN WILKINSON: The Australian Submarine Corporation had been sidelined in the project since the secret National Security Committee meeting in October.

Now, 48 hours before the leadership spill, Senator Edwards got a phone call from the Prime Minister changing that.

(to Sean Edwards): From the time that you told him that was what your vote was about, how long did it take for him to get back to you?

SEAN EDWARDS: He rang me at 6.30 on Saturday night, ah, and I heard from him at ten past three the following Sunday: the next day.

MARIAN WILKINSON: Up to four votes were at stake from South Australian backbenchers.

Overnight Abbott talked to his new Defence Minister, Kevin Andrews, about revisiting the submarine policy.

SEAN EDWARDS: He indicated, I can tell you, that, er, he said he'd had a discussion with the Defence Minister and they'd come to a position on this, which, er, obviously was what I was seeking.

SEAN EDWARDS (Feb. 8): I have only, er, an hour and a few minutes ago hung up from the Prime Minister and I am absolutely delighted to be able to announce that shipbuilding and the Australian Submarine Corporation and South Australia will now be able to include themselves in a tender process.

MARIAN WILKINSON: The Government would later narrow that process. But Edwards believes he did re-open the opportunity for the submarines to be built in Australia.

SEAN EDWARDS: The issues of a conversation that I have with a Prime Minister are, ah, are, are ones which I'll keep to myself. But obviously that was the outcome that I sought and it was the outcome that, ah, he delivered.

MARIAN WILKINSON: Do you think that he was trying to get your vote in exchange for that decision?

SEAN EDWARDS: Oh, I-I- He was listening to me. Um, the timing of it - oh, look, I was opportunistic in my timing; ah, I can't blame him for, for ringing me when he did.

MARIAN WILKINSON: Julie Bishop told Four Corners Abbott did not discuss the submarine project with her that weekend before the spill.

This is despite Bishop being a key member of Cabinet's National Security Committee.

REPORTER (Feb. 9): How do you think the vote's going to go?

LIBERAL BACKBENCHER (Feb. 9): Well.

CRAIG KELLY, LIBERAL BACKBENCHER (Feb. 9): I have full confidence in Tony Abbott. Absolutely he's made a few mistakes along the way but they've been very minor mistakes. This is like throwing someone off My Kitchen Rules if they burn the toast.

MARIAN WILKINSON: Liberal party MPs arrived in Canberra for the spill vote after a week-end of intense lobbying.

Many had been deluged with emails, purportedly from Liberal voters, warning them not to dump Abbott - a point stressed by Employment Minister Eric Abetz.

ERIC ABETZ, EMPLOYMENT MINISTER (Feb. 5): Can I say to you that in the last few days the emails have been overwhelmingly flooding into the office saying, "All this nonsense about leadership change is, has gone far too far." And the emails are now overwhelmingly saying, "Stick with the team you've got."

MARIAN WILKINSON: But Four Corners has uncovered evidence this email campaign was orchestrated by the conservative Christian lobby group, the NCC (the National Civic Council).

ROBERT COLQUHOUN, BARRISTER: What was provided was just a tick box for all of the Liberal members of Parliament to send them a note.

MARIAN WILKINSON: Sydney barrister Robert Colquhoun was inadvertently sent the instruction email from a senior NCC figure who organised the campaign to influence the internal Liberal Party vote.

ROBERT COLQUHOUN: When I got it, I was astounded because I was being told that I should write to all the politicians, all the Liberal Party, say- telling them that, um, if Tony Abbott was disposed I would not vote for the Liberal Party at the next election.

MARIAN WILKINSON: The email was designed to activate thousands of NCC supporters and states bluntly:

NCC EMAIL (voiceover): Please email Federal Liberal MPs and senators to support Tony Abbott.

Abbott has held the line on marriage, repealed the carbon tax and other things. Whatever his failings, the alternatives are Malcolm Turnbull, who failed as leader, and Julie Bishop, who was forced to resign as shadow treasurer.

MARIAN WILKINSON: Four Corners showed the email to its author, NCC vice-president Pat Byrne, who agreed it was his.

PAT BYRNE, VICE-PRESIDENT, NCC: I know the one you're talking about. Ah, we sent several emails.

Um, ah, preser- preserving the definition of marriage is quite an important issue to the supporters of the National Civil Council, and, and Tony Abbott's a social conservative so we support him. But the emails also asked them, o-on a number of points, to take up with Tony Abbott the key things that are causing unrest in the electorate: and that is instability in the Government, ah, the failure to deliver on, properly on his infrastructure development, and thirdly the cut- cutting of family benefits.

ROBERT COLQUHOUN: The letter just referred to two points. It referred to the carbon tax, but more importantly for them I... is that, um, Tony Abbott is holding the line on, ah, same-sex marriage and that's what it's all about: to deny members of Parliament a conscience vote.

MARIAN WILKINSON: On February 9, when Abbott entered the Liberal Party room, he was confident of the numbers. His Cabinet colleagues were committed to opposing the motion to spill the leadership.

MALCOLM TURNBULL (Feb. 9): Good morning. Good to see you

JOURNALIST (Feb. 9): Will you run for the leadership if it's, if it's open?

MALCOLM TURNBULL (Feb. 9): Thanks for your interest. Thank you.

MARIAN WILKINSON: The two mooted candidates for his job, Malcolm Turnbull and Julie Bishop, never came forward to stand against him.

PHILLIP RUDDOCK: (Feb. 9): The result is very clear: ah, noes, 61. Yes, 39. Ah, that seems to me to resolve the matter and thank you very much.

MARIAN WILKINSON: But while Abbott won the vote that day, the leadership matter was not resolved. Almost 40 percent of his party colleagues had voted to put his leadership in play even without a candidate.

(to Dennis Jensen) Was he indeed shocked, in your opinion?

DENNIS JENSEN: Ah, yes. I think he was and, ah, from what I've seen he- they expected, uh, the Prime Minister and his team expected that there were going to be considerably fewer votes than that. So I guess some people indicated that they were going to vote a certain way and they didn't. I don't know.

MARIAN WILKINSON: Just two weeks ago, the Liberal Party again erupted in leadership speculation.

Malcolm Turnbull and Julie Bishop were again touted as contenders. Newly invented Social Security Minister, Scott Morrison, was slated as Treasurer.

BRONWYN BISHOP, SPEAKER, LOWER HOUSE: I call the Honourable the Prime Minister.

MARIAN WILKINSON: That threat to Abbott dissipated overnight.

TONY ABBOTT (Mar. 3): Any co-payment is dead, buried and cremated, Madam Speaker. I can't make it clearer than that. It's dead, buried and cremated.

MARIAN WILKINSON: The Prime Minister is reasserting his authority. He is ditching unpopular policies. He is paying more attention to his backbenchers. Most insist he can rebuild his leadership.

But he is on borrowed time.

IAN MacDONALD: We want him to succeed and we want the Government to succeed for Australia's benefit. And, ah, I think that, ah, I think that we will get there. But if it doesn't, the first person that will know that it's not working will be Tony Abbott and I have every confidence that if that happens - and I don't think it will - but if that does happen I think, ah, Tony would do the right thing by Australia and by the party.

MARIAN WILKINSON: And resign?

IAN MacDONALD: Well, see if, ah, someone else could, ah, take us to an election-winning, ah, time next year. Important not for the party and for us but for Australia. And so, ah, I'm confident, er, Tony would be the first to work that out. I think, ah, given the circumstances, he will turn it around.

AMANDA VANSTONE: I can say this in answer t- to your question: that if things don't change, uh, the party room will.

MARIAN WILKINSON: Will change the leader?

AMANDA VANSTONE: Yeah. If things don't change, there's one absolute certainty about a party room vote on leadership and that is: as you get closer to election, they focus on whether they can win or not.

MARIAN WILKINSON: After so many self-inflicted political wounds, the Prime Minister cannot expect an easy ride from his party.

KERRY O'BRIEN: The next hurdle for Tony Abbott is the New South Wales election on Saturday week. Will there be an Abbott factor?

Then there's the second Abbott-Hockey budget, just eight weeks away, with the first budget already a chronicle of political failure. And, of course, there's the ongoing set of hurdles in the Senate.

So after 19 consecutive Newspolls showing the Government trailing the Opposition, what are the odds?

Next week, a very different story of survival when walking away from a plane crash is not the good news story you might expect it to be.

Until then, good night.

Background Information

KEY DOCUMENTS, MEDIA RELEASES AND REPORTS

Minister for Defence - Strategic direction of the Future Submarine Program | 20 February, 2015

Minster for Defence - Strategic Future Submarine Programme | 20 February, 2015

Senator Edwards' support for Prime Minister Tony Abbott in any leadership ballot will require him to declare his support for South Australians | Senator Sean Edwards press release | 7 February, 2015

Time for Prime Minister to Abandon Rebate Cut | Australian Medical Association Limited | 15 January, 2015

Letter from A/Prof Brian Owler to The Hon Tony Abbott | 8 January, 2015

Mid-Year Economic and Fiscal Outlook | Australian Government | 15 December, 2014

Future of Australia's naval shipbuilding industry Future submarines | Economics References Committee | November, 2014

South Australian Liberal backs building submarines in Adelaide, where are the rest? | 1 October, 2015

Budget 2014 - 15: Higher Education | 13 May, 2014

Commission of Audit recommends health system run by bean counters | Australian Medican Association | 1 May, 2014

SPEECHES AND STATEMENTS

Tony Abbott and Matt Williams' joint doorstop interview | 20 February, 2015

Doorstop: Canberra - Liberal Party chaos and division; Abbott Government's unfair Budget | 11 February, 2015

Questions without Notice: Tony Burke and Malcolm Turnbull | Commonwealth of Australia, Parliamentary Debates | 10 February, 2015

Tony Abbott's statement at the Prime Minister's Office, Parliament House | 9 February, 2015

Tony Abbott's press conference at Parliament House | 9 February, 2015

AMA Speech - AMA President A/Prof Brian Owler - Doctor Forum | 8 February, 2015

Tony Abbott's address to the Press Club | 2 February, 2015

The Hon. Joe Hockey: Budget Speech | 13 May, 2014

MEDIA

Tony Abbott changed submarine tender policy overnight when faced with leadership spill | ABC News | March 17, 2015

Cabinet committee favoured foreign construction of subs: Four Corners | The Conversation | 16 March, 2015

Survival instinct could see Tony Abbott axed, claims Amanda Vanstone | The Sydney Morning Herald | 16 March, 2015

Prime Minister Tony Abbott still on notice from Liberal colleagues | Financial Review | 16 March, 2015

Conservatives rallied to Abbott rescue | News.com.au | 16 March, 2015

Liberal Party treasurer Philip Higginson pushed for Tony Abbott's chief of staff Peta Credlin's removal in text messages | ABC News | 16 March, 2015

'Horsewoman of the Apocalypse': Liberals defend Peta Credlin against text attack | The Sydney Morning Herald | 16 March, 2015

Liberal treasurer pushed for removal of Peta Credlin | The Australian | 16 March, 2015

Federal Liberal Party spat deepens | Sky News | 16 March, 2015

Arthur Sinodinos on ICAC and the Liberal spill that wasn't | Lateline | 10 March, 2015

Tony Abbott faces 'cavalcade of complaints' in Liberal party room | They Sydney Morning Herald | 24 February, 2015

Essential: voters split on Abbott ouster, but don't think he'll last | Crikey | 17 February, 2015

'Impertinent' Credlin question angers PM | SBS News | 12 February, 2015

Summer of '69: lessons from a Liberal spill | Crikey | 11 February, 2015

Andrew Laming: Behind the scenes on the Liberal spill | Lateline | 11 February, 2015

Liberal spill move forces submarine plans to surface | The Australian | 10 February, 2015

Spill motion defeated - Tony Abbott still leader of Liberal Party | ABC AM | 9 February, 2015

Tony Abbott keeps leadership of Liberal Party but some supporters fear he is doomed | ABC News | 9 February, 2015

Liberal leadership spill: One confused MP casts informal vote | The Sydney Morning Herald | 9 February, 2015

Tony Abbott pledges open tender for submarines to win over SA Liberals | The Guardian | 8 February, 2015

Liberal leadership spill: as it happened | ABC News | 8 February, 2015

Explained: How the Liberal leadership spill will work | ABC News | 6 February, 2015

Two WA Liberals pull leadership spill trigger against Abbott | ABC PM | 6 February, 2015

Warren Entsch will seek resolution to leadership drama surrounding Tony Abbott; Dennis Jensen withdraws support for PM | ABC News | 3 February, 2015

Tony Abbott: Leadership drama heightened as Dennis Jensen, Warren Entsch, Mal Brough break ranks against Prime Minister | ABC News | 3 February, 2015

Liberal MP Dennis Jensen calls on Tony Abbott to resign | The Sydney Morning Herald | 3 February, 2015

Senate censures David Johnston for canoe slur against submarine builder | The Guardian | 26 November, 2014

David Johnston backtracks on 'canoe' remarks towards Australian Submarine Corporation | ABC News | 25 November, 2014

Liberal senators urge Government against buying Australia's new generation of submarines from overseas | ABC News | 16 October, 2014

SA Liberals push for submarines to be built in Australia | They Sydney Morning Herald | 15 October, 2015

Germany fights for Australian submarine defence contract after Japan makes a bid for it | News.com.au | 14 October, 2014

Germans submarines now appear the safer replacement bet | Australian Financial Review | 19 June, 2014

Commission of Audit who, what, why and where | The Sydney Morning Herald | 1 May, 2014

Pensioners, health, family payments face cuts under Abbott government's Commission of Audit report | The Sydney Morning Herald | 1 May, 2014

RELATED WEBSITES

The Liberal Party of Australia

Newspoll

National Civic Council

Queensland Government: G20 Leaders' Summit

Australian Medical Association

Health Direct Australia

RELATED FOUR CORNERS

The Comeback Kid? | 10 February, 2012

The Real Julia? | 7 February, 2011

The Deal | 4 October, 2010

Whatever it Takes | 16 August, 2010

The Authentic Mr Abbott | 15 March, 2010

Malcolm and the Malcontents | 9 November, 2009

Howard's End | 18 February, 2008

My Brilliant Career | 25 August, 2008