If you drop by Centrebet
at the moment you could place an interesting bet. The betting agency
has been offering election and Liberal leadership odds over the past
few months and, for the first time, Peter Costello is now favourite to
lead the Libs to the next election. He was odds on at $1.90 versus
Howard at $2.00, Nelson at $8.00 and Abbott at $21.00. A month or two
ago, you could have got $3.50 on Costello.

With this development
as Costello likely leader, the ALP had shortened to win the next
election to an unbelievably short $2.20 versus the Coalition on $1.60.
In percentage terms, that was about 42 per cent chance for the ALP and
58 per cent chance for the Coalition. You can take the double: Costello
and the ALP at $4.18 – an amazing tax free 318 per cent return if
Costello leads the Libs to defeat.

Keep an eye on those odds for
the Treasurer. His trip to Aceh, after the horrors of Katrina in New
Orleans, looks a little irrelevant. It’s a little gratuitous and a
little paternalistic, too – great-white-bwana-comes-down-from-the-sky
and all that.

Peter Costello is under enormous pressure at the
moment. Backbenchers know the Prime Minister will have to retire some
day and want to hang onto their seats. Costello has to look like a
leader in the face of a skittish party getting more jittery by the day.

This
was supposed to be the period of untrammelled power for the Government,
of complete dominance of the agenda but things aren’t going according
to the script – as Telstra and industrial relations details amply
demonstrate. And we’re yet to begin to talk seriously about the impact
of petrol prices on the economy, although the Treasurer acknowledged them yesterday .

Is there a chance for Costello to move? Not yet. Gerard Henderson makes some excellent points in the Sydney Morning Herald:

Howard has developed a practice of not taking final
decisions until he has to make them – a tactic that has worked well. In
view of this, it is likely he has not made up his mind whether to
retire sometime in the first half of 2006 or to lead the Coalition to
the next election, due in late 2007. If this is the case, it is
understandable Costello is frustrated. And yet, from Howard’s
viewpoint, it makes sense not to decide to step down from the nation’s
top job when he is physically fit and mentally alert until he is really
sure that this is what he wants to do.

Costello has been
criticised for impatience in seeming to raise the leadership issue in
recent months. Yet, on both occasions, his interventions followed
statements by Howard. In Athens in late April, Howard’s reply to a
journalist’s questions was interpreted by some as implying that he
would lead the Coalition to the 2007 election. Then in the recent
Lateline interview, responding to a question, he gave an answer which
some regarded as putting him at odds with Costello on marginal tax
rates. Reports say Howard phoned Costello both times to say he had not
intended to be provocative.

Henderson concludes “any
controversial intervention by any influential Liberal parliamentarian
is likely to be assessed with reference to whether Howard will stay in
office or retire at his peak.”

It’s fair to ask this week if that peak has passed.