VICTORIAN LIBERAL PARTY IN DISARRAY

UNCLAS SECTION 01 OF 02 MELBOURNE 000045

SENSITIVE
SIPDIS

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TAGS: PGOV PINR AS
SUBJECT: VICTORIAN LIBERAL PARTY IN DISARRAY

SUMMARY
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1. (SBU) A divided Victorian Liberal Party is in turmoil following
the May 10 sacking of two senior Liberal staffers for their
involvement in a web-site critical of Victorian Liberal Leader Ted
Baillieu. In retaliation for the firing one of the staffers, who
are from a different faction within the state Liberal Party than the
leader, leaked an anti-Semitic e-mail from an aide aligned with the
Baillieu faction that caused her to be fired. Some Victorian
Liberal MPs are concerned that their leader is more interested in
purging his enemies than protecting the Liberal brand. It is
becoming less likely that Baillieu, who trailed Premier John Brumby
49 to 23 percent in recent polls on the question of who would be the
better premier, will lead the Liberals to the next election in the
state of Victoria in November 2010. Out of government everywhere in
Australia, the Liberal Party seems more intent on destroying itself,
rather than its opponents in the Australian Labor Party (ALP). END
SUMMARY.

FACTIONAL INFIGHTING
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2. (SBU) Two factions dominate the Victorian Liberal Party: the
Costello Faction (named for Peter Costello, former Treasurer and
Deputy Liberal leader under John Howard) and the Kennett Faction
(named for Jeff Kennett, former Premier of Victoria). By some
accounts, this factional dispute dates to 1989 when Costello and
Victorian Liberal Party President David Kemp, from the New Right or
"dry" faction, rolled moderates in pre-selections. The
philosophical differences live on with the moderate leader of the
Opposition in the Victorian Parliament, and arguably the most
prominent member of the Kennett Faction, Ted Baillieu, at odds with
the Costello faction, which believes Baillieu is too left-wing.
Recently discovered blog entries from a web site operated out of
Liberal Party headquarters attacked Baillieu for positions he has
taken and questioned his leadership acumen.

HEWHOSTANDSFORNOTHING.BLOGSPOT.COM
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3. (SBU) The web site, which can only be accessed by invitation, had
a main page that shouted "Ted Baillieu must GO" and a picture of the
Liberal opposition leader in a red clown nose. On 10 May 2008, Kemp
and the Liberal Party State Director, Julian Sheezel, announced they
had fired two employees who confessed that they had started and
maintained the blog. Since the sackings a series of e-mails between
the staffers have been leaked to the press, including one authored
by Susan Chandler, the state campaign manager during the 2007
federal election campaign In that e-mail chain, Chandler, a
supporter of Baillieu, refers to a Liberal candidate as a "greedy
f---ing jew." Observers here speculate the e-mail was released by
one of the blog's managers to implicate members of the opposing
faction in the political fallout. It seems to have worked, since
Chandler was the third person to lose her job as she was forced to
quit. The fourth victim of this fallout was Luke Dixon, a former
advisor to a Liberal MP, who wrote e-mails disparaging of Baillieu.

MORE HEADS TO ROLL?
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4. (SBU) Baillieu, Kemp and Sheezel have each stated they believe
more people have been involved in this blog and Baillieu has made it
clear he wants to purge the party of "traitors." Incidentally,
Sheezel stepped down from his position as State Director as of 9
May, replaced by Tony Nutt, Chief of Staff to former PM John Howard.
Although Sheezel told us he has not agreed to Peter Costello's
request that he run for the latter's blue-ribbon seat of Higgins,
many here believe Sheezel will do so. Baillieu has publicly
declared that Nutt is charged with finding anyone else who has had
involvement in the blog. Observers here have commented that
Baillieu, who trailed Victorian Premier John Brumby 49 to 23 percent
in recent polls on the question of who would be the better premier,
will survive the current turbulence in the party, but is unlikely to
lead the Liberals to the next state election in November 2010.

COMMENT
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5. (SBU) In a country where the ranking elected representative of
the Liberal Party is the Mayor of Brisbane, ructions within the
Victorian branch have not advanced the party's cause. The problems
in Victoria highlight the malaise of a party still reeling from
defeat in the November 2007 national election, and the state's lack
of strong leadership and unity while trying to deal with scandal and
bad press. Once known as the "Crown Jewel" and the political home
of its founder, former Prime Minister Sir Robert Menzies, the
Victorian Liberal Party used to be the center of the party's
strength. Today it is rife with factionalism, confused about what
it stands for, unable to recruit the best and the brightest to the

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ranks of its up-and-coming politicians and unlikely to be in
government in the near term. Against this backdrop, a commentator
from the Kennett/Baillieu faction reported to us that the Victorian
Liberals have hit the "market low," that the rift is not as much
philosophical as it is personality-driven, and that there are
friendships among the younger members of the factions. Our
interlocutor's voice is one of the few to suggest there is cause for
hope of conciliation in the near future. End Comment.


6. (U) This message was cleared by Embassy Canberra.

IRVING