THE TWILIGHT OF EXCEPTIONALISM – PAUL KELLY

Having published The Twilight of Exceptionalism – the third volume of a trilogy on modern Australian politics – Paul Kelly spoke about his book at The Sydney Institute on Monday 17 August 2026. The book charts a turbulent era of Liberal and conservative politics tracing the crisis besetting the Coalition and how Tony Abbott, Malcolm Turnbull and Scott Morrison struggled to govern.

THE TWILIGHT OF EXCEPTIONALISM

PAUL KELLY

It’s great to be back at the Sydney Institute, courtesy of Anne and Gerard Henderson, and I want to congratulate them again for their leadership of the Institute and for the great diversity they have in terms of people speaking on this platform. It’s a particular pleasure for me to be here tonight to talk about my new book, The Twilight of Exceptionalism: The Liberal and Conservative Era 2013 to 22.

It’s a big book. It’s also quite heavy, but a lot happened during this period of time. It’s nearly a decade, and there aren’t all that many decades since federation. Reading the book might be considered to be a significant achievement. A friend of mine rang me up quite recently and said, “Paul, I finished the book. It’s my biggest achievement since I recently ran a marathon.” My point is that if you want to read the whole book, that is terrific. But there are 47 chapters, and each is self-contained, so that may help you to a certain extent.

Tonight, I’m going to do two things. I’m going to talk about the overarching arguments of the book, and then I’m going to, at random, deal with about eight or nine ideas and revelations in the book that haven’t received all that much attention so far. The first big idea is a narrative account of how Tony Abbott, Malcolm Turnbull and Scott Morrison ran Australia. A narrative account of this period with lots of analysis. I conclude in this period that the Liberal/National Coalition lost its long-standing psychological and political hold on Australia. This meant that the most successful governing party since World War II, the party of Menzies, Fraser, and Howard, essentially lost its way. I don’t think there’s any other conclusion but that from the defeat in 2022.

There were a lot of achievements during this period of government. I acknowledge them and I list them at great length in the introduction, and we shouldn’t overlook the fact that many of these achievements were hard won. The nine years, however, was split into three separate governments under prime ministers who were incredibly different in terms of temperament, character and belief.

Three different prime ministers meant a deeply divided parliamentary party and coalition. John Howard’s Liberal and conservative traditions often functioned as warring factions during this period. I describe Tony Abbott as the most conservative prime minister in the history of the Liberal Party. Malcolm Turnbull is the most progressive prime minister in the history of the Liberal Party and Scott Morrison was a transactional centrist. There are many critical political events. I highlight three.

First, the removal of Tony Abbott after two years as a first-term prime minister indicated that the parliamentary Liberal Party had lost confidence in Abbott as prime minister. This is a pretty extraordinary event, given his parliamentary majority and the fact that it was only two years in. One of the consequences was that the divisions in the Liberal Party were highlighted, and those divisions were baked in over the course of the next several years.

The second event is Malcolm Turnbull’s extremely narrow 2016 re-election. That, while it kept the government alive, meant there was a weaker government. Turnbull was a diminished prime minister in the party and in the country, given this extremely narrow majority that he now had to govern.

The third point in this first overall argument is Scott Morrison’s 2019 miracle election victory. I argue only Morrison could have won this election, not Turnbull, not Peter Dutton. Which means Morrison, if you accept my argument, secured a third term for this government when it was heading towards being reduced to a two-term government. Morrison, of course, was subsequently outsmarted by Anthony Albanese and proved to be inadequate at the 2022 election.

These changes, the instability and the division meant the Liberals lost their sense of core belief and policy conviction. By 2022, the public distrusted the party and voted accordingly. Morrison was deeply unpopular at the end, but I think the defeat of the government was based on more profound disillusionment with the Liberals. If Scott Morrison had been the only problem, then the solution would have been pretty easy.

My second overarching theme is what I brand in terms of the title of the book. I brand this period in historical terms, calling the 2013 to 2022 era as the twilight of exceptionalism. I use this title because I identify our period earlier of exceptionalism as being the Hawke-Keating, Howard-Costello era, and I argue that the trend since then has been to Australian underperformance. Underperformance is how I characterise not just this Coalition period, but also the earlier Rudd/Julia Gillard period. Australia didn’t deliver on its potential. That’s the message from the economic and social statistics. I don’t think there’s any other conclusion to draw.

In the book, I quote Peter Costello saying, “What we have lost is the idea that Australia can be exceptional.” The idea that Australia can lead the world has disappeared. It is the end of an era when Australia was exceptional, but does not see itself as exceptional anymore. In the second term of the Albanese government, moving on from the period I’ve covered, I believe that the retreat from exceptionalism, which I’ve identified, is even more pronounced than ever. Indeed, I think the current omens in 2026 are dire.

My third overarching view is what I have been calling for a number of years the crisis of Australia’s political system. Our political system too rarely delivers effective national interest outcomes. The political culture is in obvious decline. We have a loss of trust in both the major governing parties and even in the political system itself. We have a technological revolution that turns each individual into their own media centre. The conflict between short-term media fixes and long-term policy is manifest, and it’s a profound contradiction. There is a decline in political talent, but the problem lies deeper.

Australia, like other Western democracies, suffers from cultural fragmentation. I quote the late UK Rabbi Jonathan Sacks saying, “When there is no shared morality, there is no society.” We increasingly disagree in Australia and in other Western countries, on what constitutes virtue. What this means is political consensus is much harder to achieve. Cultural fragmentation means the decline of trust in politics is guaranteed. It’s not just the failure of politicians, though that failure is also persuasive. I argue two historical events could not occur today in order to highlight our fractured politics.

The two events are, first, the economic reforms after Paul Keating declared a Banana Republic as treasurer, when we subsequently saw really significant changes in government spending, in terms of productivity and in taxation. Then, in 1998, John Howard took to his first re-election a policy for a goods and services tax, a very ambitious tax reform package. Having covered the politics of both these periods in great detail, I argue if these events were to occur today, Keating would have little chance of implementing his ambitious economic reforms and Howard would not have been re-elected with his GST package.

Yet these two events are fundamental to the economic reforms of the Hawke, Keating, Howard, Costello period. If my argument is accepted, and they could not be reproduced today, that is certainly evidence of a decline in the capacity of our political system. This book, overall, is filled with many facts, assessments, judgments, assertions, interpretations. Nobody could possibly agree with them all. I welcome corrections of fact, and I welcome disputes and debates over interpretation.

I now want to go through and list a number of conclusions and revelations in the book, and I would anticipate that many of these will be quite contentious. I see Prime Minister Tony Abbott as a warrior, not a persuader, and argue that was his core problem. In 2013, the public voted in the Abbott government, but they didn’t necessarily vote for Abbott’s conservative ideology. I believe that Abbott did the right thing, rejecting advice from people such as John Howard to sack Joe Hockey as treasurer and make Malcolm Turnbull treasurer. Such action would have been tantamount to signing Abbott’s death warrant as prime minister.

The notion that Abbott and Turnbull could have cooperated as Prime Minister and Treasurer, I find to be ludicrous. The personal relationship between Abbott and Hockey was closer than the personal relationship between Howard and Costello. The first budget was the turning point. Abbott and Hockey were too ambitious; they tried to do too much. Their economic vision was brave, but their political judgement was deeply astray. The public at that time had no interest in a tough budget. Abbott and Hockey misread the mood of the country. Not only that, they really failed to sell the need for a harsh budget in the run-up to the presentation of that budget and they never recovered.

One of the mistakes Abbott and Hockey made was to underestimate how much Australia had changed as a country since the Howard era. They were very influenced by the initial Howard Costello budget from 1996, when Howard and Costello introduced a tough budget and got away with it. Indeed, that particular first Howard/Costello budget was very well received in political terms. Abbott and Hockey felt they were going to replicate the Howard/Costello period, and they came grievously undone.

In foreign policy terms, Tony Abbott functioned as a moralist who was keen to use military power to achieve what he saw as moral outcomes. In this sense, he was a highly unorthodox prime minister whose approach to foreign policy and morality was very different from that of John Howard. Abbott used military power in Operation Sovereign Borders, creating a military structure in order to ensure that asylum seeker boats did not continue to come to Australia. That was a highly successful operation.

Abbott was very exercised after MH17 – the flight that was shot down by pro-Russian and Russian rebels over Ukraine. His initial response was very sound. He recognised the nature of the atrocity, and he was a realist and a moralist in terms of his response. But he wanted to put Australian troops on the ground where the plane had been brought down in order to secure the bodies and have them evacuated. There was a very turbulent debate inside the National Security Committee of Cabinet before Abbott was persuaded not to do this, in particular by Angus Houston and Dennis Richardson who offered prudent advice.

I see Malcolm Turnbull as a rational economic technocrat. Certainly, these are impressive qualities. However, these qualities, in their own right, were inadequate for a successful prime ministership at that time. Turnbull arrived, as prime minister, very confident of his abilities and his capacity, given his success in many previous jobs. But he arrived as prime minister without a coherent plan. I quote his chosen secretary of prime minister and cabinet, Martin Parkinson, who said, “What went wrong, I think, was a lack of preparation. Turnbull hadn’t had the scope in opposition to develop his policies and build consensus about what he wanted to do.” Michael Thawley, the previous head of Prime Minister and Cabinet (PM&C) who served under Tony Abbott and was head of PM&C when Turnbull came in, was astonished by the situation and told me, “Malcolm did not come to the prime ministership with a policy agenda or vision.”

The Turnbull Government was significantly undermined early on by a damaging and protracted brawl over taxation policy, and over a proposed GST reform, between Scott Morrison as treasurer and Turnbull as prime minister. This was debilitating and damaging for the government. Economic and taxation policy is the area where a Liberal government is supposed to have political ascendancy. One of Turnbull’s most important decisions was not to have a late 2015 election, when the polls indicated a major victory if he had done that. In this situation, the then National Secretary of the Labor Party, George Wright, told me that if Turnbull had called a late 2015 election, Labor would have lost emphatically. The leadership change to Turnbull would have been seen as a master stroke. Wright said he was convinced that Turnbull missed a golden opportunity.

Turnbull makes a substantial argument in his memoirs about why he didn’t call the 2015 election. The party wasn’t ready. He’d just got there. It would have been seen as too opportunistic. There’s a lot in that. At the time, I didn’t criticise Turnbull for not going to a 2015 election, so to the extent that Turnbull made a mistake, I made a mistake as well. Nonetheless, I think it’s important to highlight this. In retrospect, it does look like a pretty substantial lost opportunity.

I deal with the Voice, which subsequently went down in a referendum. The Turnbull government considered the proposal for the Voice, the cabinet considered the issue at the time. We need to bear in mind that this was considered by Malcolm Turnbull, a moderate as prime minister, and George Brandis at the time, a moderate as attorney general. Brandis told me, “The cabinet rejected the Voice because nobody dissented from the view that it was a terrible idea.” This is in 2017, many years before the referendum was put. I argue that the real defeat of the Indigenous Voice came at that cabinet meeting under Turnbull, and I’ve got Noel Pearson on the record essentially agreeing with that judgement in retrospect.

Malcolm Turnbull was instrumental in his own demise. His decision to call for a leadership vote on that vital Tuesday morning of the fateful week, and winning against Peter Dutton’s 48-35 triggered a much broader showdown later that week. Without that decision by Turnbull on the Tuesday morning to call on the leadership vote, Turnbull would have survived that week. It’s likely he would have survived the next month. Whether he would have survived all the way through to the next election is hard to tell.

Greg Hunt thinks that Turnbull would have survived to the next election if it had not been for the early contest that Turnbull initiated. One of the effects of that, of course, was that it decoupled Scott Morrison from Turnbull, a pretty significant consequence. This brings me to Scott Morrison, a very astute political operator who became prime minister after just 11 years. Morrison was an ambitious operative with a deep commitment to his country, to family and to his faith.

The paradox of Morrison, a very ambitious and competent politician, is that he was out of touch with the times. We saw when Morrison was prime minister an emphasis on the feminisation of politics. One of the problems for Morrison was that he was weak on empathy, and was very much more comfortable with the boys’ club than relating effectively to women. He was weak on emotional IQ. One of his closest advisers, Yaron Finkelstein, told me, “We’ve moved into a time and period where a lot of people want to know how you feel about their feelings. I think that was difficult for him. Some might say it’s a male versus a female thing. It certainly created a clash of expectations. In the past, people would judge you on what you were doing, on what you’d achieved, rather than on what you felt or expressed.”

Morrison tells me that his worst mistake during COVID was to support Clive Palmer’s High Court challenge to Mark McGowan’s closed borders in Western Australia. Another Western Australian who was very close to Morrison, Ben Morton, said, “The impression left was that the Prime Minister was saying that Western Australia had got it wrong. The people were never going to accept that. I worked to get the decision reversed. But it was too late. The issue was being presented as Palmer versus the entire state, with Morrison on Palmer’s side.”

When I spoke to Morrison about this, he was particularly interesting. In a substantial reassessment, he said: “It was a massive mistake. But Matthias (Cormann) and Christian [Porter] advised me to do it. Greg Hunt said to exercise caution. I can’t blame the Labor Party for using this against me. I mean, why wouldn’t they? And I don’t hold it against Mark (McGowan) either. So yes, it was a disaster. I don’t think we would have lost as many seats in WA as we did.” The upshot is that Anthony Albanese became prime minister at the 2022 election, essentially in WA, winning critical seats in that state.

Morrison told me, in relation to net zero at 2050, with him forcing this decision through the government, that he was prepared to break the Coalition in order to get up his net zero policy. He made this very clear to Barnaby Joyce as leader of the National Party. Josh Frydenberg has confirmed this situation. So did Barnaby Joyce when I spoke to him, who said that in this situation the Nationals would have retaliated in spades. Why are we not surprised?

Morrison’s achievement in getting up the AUKUS nuclear-powered submarine deal with the UK and the US was an extraordinary achievement – a top-down Morrison project, breaking every rule in the book of conventional decision making. Morrison the bulldozer in action. The initial key to success was Morrison’s personal relationship with Boris Johnson. He got the British Prime Minister on board, and then Morrison and Johnson worked to get President Biden on board, and they did.

I am completely on Morrison’s side in terms of his dispute with French President Emmanuel Macron. Morrison had no option but to deceive Macron, seeing we already had a submarine contract with the French, and Morrison was attempting to replace this with a new, more ambitious arrangement with the UK and the US. If Morrison had informed Macron what he was planning to do, then it’s pretty obvious the French would have gone straight to the White House in order to try and scuttle the AUKUS agreement, and they would have had good prospects of doing that.

I believe Morrison lost the 2022 election in cultural terms before he lost it in political terms. I’ve argued that fundamental to the long decline of the Liberal Party is its loss of cultural power. This is partly the blunders of the Liberal Party and partly a changing Australia. But we now have many corporates, tertiary-educated professionals, universities, the public sector, the arts and cultural sector, professional women, the broader progressive movement, and the environmental lobby – all of whom seemed to gain cultural power during this period at the expense of the Liberals who lost cultural power.

The problem was initially apparent under John Howard but Howard’s political success as prime minister only concealed the extent of Liberal cultural alienation that was growing and has grown a lot over the last 15 years. After their defeat at the 2022 election, the Liberals failed to address the fundamental problems. Peter Dutton, as leader of the party, did not want to engage in a thorough review. A thorough review is always a very dangerous thing to do, and Dutton’s priority was to try and hold the party together, which he did. The problem, of course, was that the election result in 2025 was even worse, and we now have a situation where the Liberals and the Nationals face an existential crisis.