The Coalition leadership continues to exercise Liberal MPs, with half a dozen using this morning’s Coalition Joint Party Room meeting to demand that the leadership group stay focussed on the Government rather than on internal divisions, and complain about MPs failing to keep leadership speculation to themselves.

The discussion dominated the meeting, in which Brendan Nelson also warned of the possibility of a 2009 election and flagged opposition to the Government’s Fuelwatch scheme, which he claimed would “screw” the most price-sensitive of motorists. This echoes criticisms made by Resources and Energy Minister Martin Ferguson in internal Government correspondence leaked to The Australian. However, the Coalition is yet to decide whether to block the legislation implementing Fuelwatch.

Significantly, the Coalition has also decided to oppose John Faulkner’s reforms to the Commonwealth Electoral Act which will reduce disclosure thresholds for political donations, ban foreign donations and prevent candidates from harvesting taxpayer funding for election campaigns.

In Labor Caucus, Kevin Rudd indicated the Government would be continuing its ongoing attack on the Coalition’s economic credibility, which he claimed was being trashed “page-by-page” by the Opposition. Rather hopefully, he also declared that the community “understood” inflationary pressures and appreciated that he had delivered on Labor’s election promises. He was also keen to switch focus to the long-term, boasting of the “huge program” Labor had ahead in the remaining two and a half years of government.

Martin Ferguson has since fallen into line on the Fuelwatch scheme, today declaring his support for it, but the issue will provide fodder for an emboldened Opposition in question time. The leak of the Ferguson letter also explains the curious sight yesterday of Rudd declaring in question time that he understood evidence for the benefits of Fuelwatch was mixed, but that the Government had decided to give it a go anyway. Presumably the Government was already aware of the leak and ensuring it had its story straight.

One issue the Coalition won’t go near, however, is the growing divide between the States and the Commonwealth over the possibility of removing GST from fuel, with Anna Bligh now being joined by Michael Costa in demanding compensation. Brendan Nelson has already stumbled into difficulty on the issue when his team forgot that reducing fuel excise would have an indirect effect on GST revenue as well. However, Nelson today confirmed the policy would be “fully costed” when – more likely if – the Coalition takes it to the next election.