Peter Howard Costello (born 14 August 1957) is an Australian politician. He was Deputy Leader of the Liberal Party from 1994 to 2007, and served as Treasurer of Australia from 1996 to 2007, making him the longest serving treasurer in Australian history.
During the 1980s, Costello was a solicitor at law firm Mallesons Stephen Jaques, then became a barrister and represented employers in some of Australia's best known industrial relations disputes.
In 1983 and 1984, Costello represented the National Farmers' Federation in a case against the Australasian Meat Industry Employees Union (AMIEU). The AMIEU was seeking a unit tally system to be set up in abattoirs in the Northern Territory. The dispute focussed on one abattoir Mudginberri which chose to fight the AMIEU claim. Ultimately the AMIEU claim was unsuccessful.
Costello became counsel to organisations representing small business and rose to prominence in the 1985 Dollar Sweets case, as junior counsel assisting Alan Goldberg QC, successfully representing a confectionery company involved in a bitter industrial dispute.
During his student years, Costello was active in student politics as a socially radical Christian. For a time, he was an office-bearer of the Social Democratic Students Association of Victoria, an affiliate of the Balaclava Branch of Australian Young Labor. In 1977, Costello was punched by a rival student politician, receiving mainstream media attention for the first time in his career as a result.
After graduating, Costello became more conservative but retained liberal views on some social issues. In 1984 he was a founding member of the H. R. Nicholls Society, a think tank on industrial relations. In the late 1980s, he was identified as part of the New Right movement, which was organised to some extent in the H. R. Nicholls Society.
Hewson's shock defeat at the 1993 election brought Costello into consideration as a leadership contender. When Hewson was deposed as Liberal leader in May 1994, Costello supported Alexander Downer for the leadership, becoming his Deputy Leader and shadow Treasurer. However, in January 1995, Downer resigned. Costello did not seek the leadership, instead supporting John Howard. It was revealed in July 2006 that this was due to a December 1994 meeting between Howard, Costello and Ian McLachlan during which Howard allegedly agreed to stand aside after one and a half terms as Prime Minister in return for Costello's agreement not to challenge for the leadership. Howard denied that this was a formal arrangement.
The Liberal/National coalition headed by John Howard won the 1996 election, defeating Labor's Paul Keating, and Costello became Federal Treasurer at age 38. He oversaw the return to and maintenance of federal budget surpluses, which enabled significant reduction in government debt. Inflation, interest rates and unemployment all fell and remained generally low during Costello's term as Treasurer, although average household debt more than doubled. Inflation and interest rates crept up toward the end, with the International Monetary Fund describing his last budgets as "inflationary".
Tax reform became a major policy focus for Costello. Although John Howard had promised during the 1996 election campaign that he would "never, ever" introduce a GST, it returned as Liberal Party policy for the 1998 election. It was passed through the Senate with the help of the Australian Democrats. Until July 2005, Costello's own agenda of labour market deregulation remained blocked by the government's lack of a Senate majority.
After the 2001 election, he attracted criticism for not securing funding for a key election promise to extend the Medicare safety net.
In February 2006, Costello caused controversy during a lecture at the Sydney Institute when questioned about the government's refusal to legally recognise same-sex marriage. He stated, "I think we do recognise the rights of gay and lesbian people in Australia. We do not criminalise [their] conduct or behaviour." He also pointed out that the law was changed in 2004 to recognise same-sex couples with regards to superannuation. He stated that marriage should only be recognised between heterosexual couples. Also during the same speech, Costello criticised "mushy misguided multiculturalism," warning immigrants that the acceptance of Australian values was "not optional."
During the 2004 election campaign, Howard avoided saying whether he would serve a full term if re-elected, saying only he would remain as long as his party supported him. The government's subsequent success in winning control of the Senate raised further speculation that Howard would delay his retirement, and the prospect of a Costello leadership succession appeared to recede.
In July 2006, the alleged Costello/Howard succession deal of the 1994 deal was made public by Ian McLachlan. Costello confirmed the incident had occurred and that he shared McLachlan's interpretation of events. Howard denied the claims repeatedly, stating the continued public drama displayed "hubris and arrogance" and that the leadership was the party room's to decide, not a prize to be handed over by leaders to successors.
Press Gallery columnist Michelle Grattan described Costello's actions :
Despite tensions between the Prime Minister and the Treasurer, nothing further came of those events. Neither Howard nor Costello took any action to remove the other from office, or resign. However, on 12 September 2007, amid renewed leadership tensions and a series of unfavourable public polls, Howard confirmed he would step aside well into the next term, if re-elected, and that Costello would be his "logical successor".
A federal election was held on 24 November 2007. Exit polls of 2,787 voters by Auspoll, commissioned by Sky News, included a question on the statement "I don’t want Peter Costello to become Prime Minister". Fifty-nine per cent agreed, while 41 per cent disagreed.The Coalition lost the election.
However, as former opposition leader Brendan Nelson struggled speculation mounted that Costello would change his mind and seek the leadership. In August 2008, he ruled out challenging Nelson, but did not comment on the prospect of Nelson stepping aside in his favour.
Finally in September 2008, just before the release of his memoirs, The Costello Memoirs, Costello specifically re-confirmed that he would not be seeking leadership of the party and would leave politics at a time that suited him. Media attention immediately shifted to whether Costello's decision cleared the way for a leadership challenge by opposition leader Malcolm Turnbull (shadow treasurer at the time). Former fellow Minister Tony Abbott described the decision as a great loss to Australia and to Costello himself, who might continue to have regrets for the rest of his life at what might have been. Media outlets capitalised on Costello's failure to categorically rule out any future leadership challenge. An incumbent-announced leadership spill on the morning of Costello's book release saw Turnbull defeat Nelson. Costello under Turnbull remains unwilling to rule out ever leading the Liberal Party.