It’s much too late in the day for yesterday’s Coalition event to really be regarded as a campaign “launch”. But it was a launch nonetheless: the launch of the battle for the post-election soul of the Liberal Party.

One of the leading themes of the Liberal Party’s wilderness years in the 1980s was the contest over needs-based welfare. The Hawke and Keating governments presided over a revolution in Australia’s welfare system, targetting welfare to those who most needed it rather than just reshuffling the same pot of money around the middle class. John Howard would now describe that as the transition from an opportunity society to a welfare society, where “opportunity” has his own special meaning of “opportunity to pillage the taxpayers.”

At the time, the battle played havoc with the factional balance in the Liberal Party. It was a classic wet-dry issue, which completely cut across the traditional left-right division (despite the bad habit some commentators have of equating the two things). Some economic reforms – floating the dollar, privatisation, enterprise bargaining – the Liberal Party simply had to support, but welfare reform clashed directly with the interests of its constituents.

Most of the time, political opportunism prevailed, and the party fought doggedly against things like the introduction of an assets test for pensions. There was a brief interval of economic rationality under the leadership of John Hewson, but in government the Coalition has worked hard to turn the clock back, with such measures as the baby bonus, private health insurance rebates, and changes to schools funding.

Yesterday, by putting the focus on middle-class welfare, the prime minister signalled his pride in that process, and his determination that it should continue.

Whatever you think of him, Howard is no fool. He knows that next week’s election is lost, and nothing he said yesterday will change that. His eyes are on the future, which means they are also on the past: on the vindication of his record. He does not want to see the party repudiate his legacy as they did to Malcolm Fraser in the 1980s.

Despite Kevin Rudd’s promises, a Labor government will have to unwind at least some of Howard’s middle-class welfare boondoggle. How it responds will be one of the biggest tests for the Liberal Party in opposition.