PETER COSTELLO declared yesterday he would not be challenging for the Liberal Party leadership as Brendan Nelson managed to offend his Coalition colleagues in the National Party by opposing Labor's migrant guest worker scheme.

In a rare public appearance in Melbourne, the former federal treasurer told reporters "everybody" knew he was not challenging for the Coalition leadership.

He was not asked, however, whether he would move in should Dr Nelson step aside willingly.

Mr Costello denied that he was putting his book ahead of the party by reserving a final announcement until around September 15, when his memoirs will be published.

He will miss a few days of Parliament the week after next to deliver a lecture in the United States on the global economy.

Earlier yesterday he gave a speech on the economy while opening the office of the new Victorian Liberal senator Helen Kroger. Mr Costello spruiked his economic legacy and attacked his successor, Wayne Swan, for the rise in bank margins and the decline in household net wealth under Labor.

He also gave the small crowd a pep talk. Despite this, Dr Nelson hinted that he knew Mr Costello would retire around the same time his book is released.

"We had a chat about his future and what we're doing and he'll announce that when he's ready to do so, [it] won't be long." He was happy with what Mr Costello had told him.

Dr Nelson brushed off criticism from the Nationals and the National Farmers Federation for his decision to oppose Labor's trial program in which 2500 seasonal workers from the Pacific Islands would be flown in to help pick fruit.

The rural sector has been advocating the scheme for years because nobody in Australia wants to do the work.

But Dr Nelson opposes "bringing dirt poor people from Pacific Island nations to do work Australians are unable or unwilling to do", and says incentives should be provided to encourage locals.

The National Farmer Federation and Nationals MPs Kay Hull, John Forrest and Ron Boswell all took issue with Dr Nelson.

Ms Hull, who holds the NSW seat of Riverina, suggested he see the problem first-hand. "I honestly can't understand where the direction is coming from," she said of advice being given to Dr Nelson.