Laura Tingle

2003

February 28

 

Hawke and Keating: architects of a revolution

 

THE HAWKE-KEATING ERA: HOW IT CHANGED AUSTRALIA

 

Laura Tingle, Political correspondent
The election of the ALP government on March 5, 1983, marked the beginning of the end of ideas that had dominated Australia since Federation. In a five-part series beginning today, the AFR examines the key decisions in the 13-year Hawke-Keating reign that fundamentally changed the economic and political landscape.Twenty years ago, prime minister Malcolm Fraser made his move.

Seeking to exploit a Labor leadership crisis, he called an early election on February 3, 1983, campaigning on the issue of a wages pause.

The leadership trap proved fatally flawed within hours.

Labor opposition leader Bill Hayden had already decided to stand aside for Bob Hawke the very day Fraser tried to seize the moment.

But with the passage of time what have profoundly changed are perceptions of Fraser’s election issue – a wages pause. Conceived as a political response to growing unemployment as a result of recession, drought and a wages explosion, the wages pause is now but a potent symbol of all that was to be changed by the election of the Hawke government on March 5, 1983.

It was a creature of a centralised wage system, of high inflation, and an economy unable to withstand global economic fluctuations.

Fraser’s wage pause was politically inspired to create havoc within the labour movement and leave the Labor Party floundering for a clear post-Whitlam voice.

It emerged when Margaret Thatcher, Ronald Reagan and Milton Friedman ruled the western world. But its political masters were to be defeated by a government which would ultimately dismantle centralised wage-fixing, beat inflation, boost productivity and internationalise the Australian economy, using methods which were anathema to the monetarist fashion of the time.

Hawke’s March 5 victory spelt the beginning of the end of the political and economic institutions that had dominated Australia since Federation, and which were built on favourable terms of trade supporting both high tariff walls and centralised wage-fixing.

Labor recognised that the moment was ripe for a long-overdue reckoning brought on by a decline in the terms of trade that started in the mid-1960s, and hastened by the forces unleashed when the dollar was floated.

But perhaps nothing changed in the ensuing melee as much as politics itself.

In Hawke’s new reconciliation and consensus model, it was summits and key lobby groups that commanded centre stage.

Business was suddenly compelled to find an organised voice on broader public policy issues, not just issues of sectoral self-interest.

The same was true for unions and the welfare sector, whose top representative bodies suddenly assumed much greater importance.

Lobbyists didn’t leave home without an econometric model to push their case.

The figures who were to dominate this revolution, Bob Hawke and Paul Keating, were the products of very different schools.

Hawke was the industrial advocate and conciliator, Keating a political hater but also blooded from his time as Labor’s resources spokesman in the importance of competitive markets and international trade.

Both came to government convinced of the need for profound change.

These were not politicians offering to make people feel “comfortable and relaxed”. Both Hawke and Keating, in extensive interviews with The Australian Financial Review this week, take credit for changing the country’s ability to handle the forces of accelerating globalisation.

Looking back now, Hawke says that not only his experience as president of the ACTU, but also on two committees of inquiry into the Australian economy, gave him “a pretty clear view of how sclerotic things were, and the changes that had to be made”.

His response was to add reconciliation to the reconstruction and recovery package that deposed leader Bill Hayden had planned to take to an electorate suffering a recession and a savage drought.

“I genuinely believed that you had no possible basis of making the fundamental changes that I thought had to be made unless you could get people to understand the problems that we were facing, and to share my view that workers, employers and those dependent upon social welfare all had the best chance of achieving their genuine aspirations if they were more co-operative and worked together to get everything going,” Hawke says.

Keating is not as convinced about the ultimate benefits of the summits and consensus politics.

“Despite 13 years of the most fundamental reforms in the post-war years the movement from centralised wage-fixing to decentralised wage-fixing, the dramatic reduction in industrial disputation, the huge increase in the profit share, the dramatic reduction in corporate tax rates, full dividend imputation we could not get one good word from [business],” he says.

“So we never succeeded, despite the years of consensus, in bridging that gap with business. In the end, the Liberal Party tickets burning hotly in their little pockets were always too much for them.

“They would never acknowledge the restraint by the unions, they only with faint praise acknowledged the reforms which, had their party introduced them, they would have been crowing about for a century.

“So you’re asking me whether the summit bridged the gap to business? Well of course it didn’t, but it was just the beginning for us in shaping up the strategy of the government.”

Keating says his occupancy of the minerals portfolio in the late 1970s and early 1980s put him in “the one bit of the economy that could actually cut the mustard offshore”.

“I was always trying to construct within my own head a model for this economy where we could remove the fatal flaw. The fatal flaw was: whenever growth accelerated, wages accelerated,” he says.

“[The question was] how we might reach some sort of point of competitiveness, and do it while in the longer run removing protection.

“We knew that profit share was too low to get employment growing strongly again. Employment had to expand quickly and that meant aggregate wage restraint, but we did not want to achieve this simply by screwing down wages.

“The Accord with the trade unions was the device we used to see that the burden was shared. We got co-operative agreement on wage restraint and this is the key point but used rising employment and the social wage to maintain household income and to protect equity”.

Hawke’s summits, particularly the 1983 economic summit and the 1985 tax summit, represented the high point of centralised control over the Australian economy control that was used, ironically, to decentralise and deregulate that economy.

In 1983, federal governments set wages policy and monetary policy, as well as fiscal policy.

The most important vehicle for change was the Accord, at a time when the profit share in Australia was at record lows.

“The Accord … was important in both giving a degree of wage stability and predictability, and also in providing a basis of confidence for the sort of co-operation that you needed to have between the economic players,” Hawke says.

With time, consensus politics played a role in delivering a staggering list of economic reforms: floating the dollar; deregulating the banking system; reforming corporate regulation; cutting company tax; reducing inflationary pressures through wage/tax deals; budget transparency and discipline; a capital gains tax; dividend imputation; removal of tariffs; Medicare; a new focus on links with Asia; and reforms to welfare, superannuation, telecommunications and higher education.

It also blew open the business establishment, and the image almost a caricature of long-standing captains of industry having cosy relationships with the political establishment.

If this did not tally with Hawke’s commitment to consensus, it certainly tallied with Keating’s pitch to the Labor Party that competition could help tear down Australia’s institutions of power.

Keating says: “I remember we had this sort of amazing debate about foreign bank entry at the 1984 federal Labor conference, and I’m saying to people on the left of the party `we should put these local institutions to the fire, put their feet to the fire’.

“[The late NSW Labor figure] Jack Ferguson, God bless him, was out there arguing for the Left that we should protect our Australian institutions in other words, the old club arrangements were to stay.

“Of course it was the old club we wanted to put to death, and the reason that you’ve seen such a turnover of personnel, say at Westpac or AMP, or any of the banks or any of the major companies, BHP, is because of the fact [that] the economy is now internationalised and the old clubby arrangements and the mortgage the establishment held over all of this vanished.”

Keating says competition was what the old establishment hated most. He says the banks’ description of themselves as “free-enterprise banks” was almost a self-parody: “They’re not free enterprise at all. They were free meal banks, they wanted a free lunch.”

The problem for Labor was that a savage recession combined with reform fatigue in the electorate would ultimately undermine much of the respect for what the Hawke and Keating governments achieved between 1983 and 1996. And since leaving office, Labor has shrunk away from its legacy.

“More’s the pity that the Labor Party between 1996 and certainly 2000, vacated the field of competition and productivity,” Keating says. “The Coalition, without a blush, picked up the 2.8per cent a year productivity improvement, compared to the dismal 1.25 they left Labor, put it in their pocket, picked up the low inflation and the low interest rates that came with it, and called it their own.”

Hawke and Keating do not walk away from any of the changes they have made, and they utterly reject claims that those reforms have come at too high a price to the wider labour movement.

Many observers say the movement appeared to succumb to exhaustion and a lack of direction following the Accord, union rationalisation and the 1996 Keating defeat.

Hawke says: “I don’t think it exhausted the labour movement. One thing it did do, [was] it created problems within the industrial labour movement. You had union elections being fought with groups saying to their membership `you’ve got to vote for us because these buggers are giving away the union role and handing it over to the ACTU’.

“So it did create quite a strain within the industrial labour movement. But I think in the period that I was there, nearly nine years, the pluses so heavily outweighed the negatives.”

He agrees that the pressures were more on the side of labour than business, but returns to his balance sheet analogy.

“We were able to create so many jobs, transforming our education situation from what we had when we came in, with less than a third of the kids staying on to finish year 12, [which we] lifted up to 75per cent.”

He also points to Labor’s record on research and development.

“In the 10 years before we came in, there had been a 40per cent reduction in real terms in R&D expenditure. It was disastrous.”

Workers were a beneficiary of the turnaround in R & D spending, he says.

“I think most economists realise that the fact that our economy is doing reasonably well is because of what we did then in that respect: the investment and research that came out of what we did.

“We’d got a more competitive economy which has provided them jobs over a longer period.”
Hawke rejects the idea that Australia’s growing disparity in incomes, and the decline in its egalitarian ethic, is the result of Labor’s policies. In fact, “Labor has never been committed to egalitarianism in terms of outcomes it’s egalitarianism in terms of opportunities”.

“We were about ensuring that … there was a fairness in the wage system that was supplemented by the social wage,” he says.

His idea of egalitarianism was access to health care regardless of incomes, and funding for education that lifted school retention rates.

Keating also rejects the idea that the gains were at the cost of the trade union movement.

“I think without [the Accord] their constituency would have been cut to pieces,” he says. He describes Labor’s welfare policies such as tax cuts, the Family Allowance supplement and Medicare as dependent on the Accord framework.

“As it was, household disposal income rose in every year the government was in office, bar one.”

If the trade unions were not able to capitalise on this, well, that was their organisational problem, he says.

As to where Labor goes next, Hawke and Keating move more into their respective views of the world and politics.

Hawke says that while another accord is unlikely, there is a case for creating an environment where “we’ve got a greater degree of common purpose”.

“It has disappeared under this government. They’ve gone out of their way to demonise workers and their organisations. It’s crazy. Leaving aside the political differences that one has, it just is irrational.”

He is prepared to discuss Labor’s present problems, but does not engage when I offer him an opportunity to talk about Simon Crean.

As one of the authors of last year’s review of the party’s structures, he acknowledges the need for Labor to change the way it recruits its candidates.

“I think we’ve got something to learn from the Libs in this respect. If you look at some seats in NSW federally, they’ve picked candidates who are very acceptable to the electorate, to that particular electorate.”

He says he does not despair of Labor’s prospects, “but there’s an obligation upon the party as a whole, its leadership, its parliamentary representatives and the structure to realise that it is a tough time”.

“We’ve got to try and concentrate on the interests of the party as a whole and the getting to government rather than, as some of them tend to do, to be philosophising somewhat,” he says.

For his part, Keating believes the “third age” of Australian politics after protection all round and the internationalisation of the economy in the 1980s and 1990s will flow from the international strategic environment.

“What’s happening in China is an event of economic significance without precedence in world history,” he says.

“The Chinese economy will tug along the rest of the region for the next century. The next economic wave will be a Chinese wave, and we’ve got to be well placed to benefit from that. This, I think, determines the style of our economy, how we grow, what are our competitive strengths.”

But he equally believes the economy’s internationalisation has transformed the grist of the political mill for all time.

“The role for government is different from the role in the past of wage setting, interest rate setting, exchange rate setting,” he says.

“I think now there is a role for government in the divining of what is good and decent about Australia, and seeking to embed it in our national psyche and our national behaviour.”

March 1

Bob Hawke
Hawke and Keating enter the contemporary debate
Laura Tingle
It’s exactly 20 years since Bob Hawke and Paul Keating won government to eventually form a dream team of prime minister and treasurer that helped keep Labor in power for a record term, until 1996. On the anniversary of their 1983 win which led to major economic and financial reforms Laura Tingle spoke to both men. Still vitally interested in the big picture, they talked about some looming dangers and some potential opportunities.`What you should be about in government is to make a better society, a happier society.’

Bob Hawke says he does not dwell on the past, and when we meet in his Sydney office this week, his observations seem those of someone who sees his prime ministership as being a different life.

But that is not to say his observations of current events, or the profound impact his government had on Australia, are not still based on the same principles that guided him as prime minister.

These include a particular view of the US alliance, of the future of the region, the value of a free trade agreement with the US, and of contemporary politics.

It might say something of contemporary politics that you can be shocked to hear both Hawke and Keating talk of any of the issues that go to free markets and competition, and to remember how profoundly embedded their separately developed views on these issues were in their thinking.

Both have a truly laissez faire attitude to the costs associated with making Australia competitive, and a belief that what they have done outweighs the costs.

But ask Hawke about the looming threat of war against Iraq, and the broader issue of where John Howard is leading Australia through the US alliance, and he exhibits a much greater degree of passion.

“The truth is that we’re in a time of politics when incumbency is very valuable. But in one sense, that may be starting to fracture federally because, coming right up to this present issue [Iraq], I think the way in which this government, this Prime Minister, has gone so far in front on the issue of Iraq to be with Britain as the only other country apart from the United States that’s forward positioned its forces it’s been absolutely dangerous in terms of Australian interests,” Hawke says.

“Now if you have the situation, which is a possibility, of the United Nations not endorsing action and the United States going ahead and Australia (that is, Howard) going with the United States in that situation, I am not sure that an incumbency is going to be such a plus then. Because on all the evidence available to me which is published polling plus my own experience in moving around and people talking to me the clear majority of Australian people are against that position.”

Hawke says he is “disturbed” by the approach the US is now taking, not just in regard to the conflict with Iraq but in terms of the broader policy it spelt out last year of the pre-emptive strike.

“That is,” says Hawke, “that the United States will decide if a particular situation is acceptable or not to US interests. This concept of the unilateral pre-emptive strike is extraordinarily dangerous in the present situation.

“I can’t think of anything more likely to increase the fanatical determination of terrorist groups, particularly a US-led attack [on Iraq]. Those who say it is part of a war against terrorism are completely illogical.”

So if Bob Hawke who copped more than the odd piece of flak in his time for being too close to George Bush senior and a caning from caucus over the MX missile crisis were prime minister today, how would he have responded to this shift in the US position?

“That’s not hypothetical. I’d adopt exactly the same relationship as I did when I was prime minister,” he says.

Of course, the strategic situation was very different when he was prime minister, as he readily admits. The issue then was the Soviet threat, its arc of influence from Angola to Afghanistan.

But equally, the change in the strategic situation did not warrant a change in the view of the US alliance. “At that time I said that an alliance doesn’t mean subservience,” Hawke says, “and I showed that on a range of issues.”

He mentions the South Pacific Nuclear Free Zone, Cambodia, and, very topically, the Star Wars program. Hawke says that the then US president Ronald Reagan “pleaded at length for me to come on board” on Star Wars “but I just said `no’.”

He remembers with humour “sitting there in the Oval Office for hours” to the point where Reagan was saying (adopting Reagan voice) ” `are you going to New York, Bob? I can get a couple of my top generals to come and talk to you.’ But my answer was still `no’.”

One thing that Hawke and Keating still agree about is the importance of China, both for the region and the global strategic outlook for the region.

“The most significant thing occurring in the region is the growth of China. All the evidence is that that significant growth will continue. That growth was very important for the region when the rest of the world was in recession in the mid 1990s.

“Growth in East Asia was largely because China, after [the 1997 Asian currency crisis] didn’t devalue and was well regarded in the region.” With such rapid expansion, Hawke says, “there is both apprehension about China’s growth but also a realisation there are pluses”.

With lots of history behind it, Japan is ambivalent about China’s development, he says. There is an enormous Japanese investment in China because it works for the competitiveness of the Japanese industry. This change in the economic integration of the two countries has altered perceptions somewhat, but there are still considerable political concerns.

“The really critical issue is going to be if Japan were to go nuclear,” he says, a prospect that would throw over all the current assessments of the strategic outlook of the region.

“There’s no doubt the uncertainty being generated by the antics of North Korea is increasing the permanent element in Japan that has wanted a nuclear capacity for the country.”

Against this rather ominous scenario, Hawke says that one of the most fascinating elements of regional dynamics is that “what has always been a potential time bomb, the China-Taiwan relationship, is becoming less lethal because of economics”.

“You have an increasing enmeshment with the mainland,” he says, with 300,000 Taiwanese living around Shanghai alone, and maybe 500,000 Taiwanese now doing business in mainland China. Those strong economic ties mean that there is “greater pressure on the leadership not to do something crazy that’s a good sign”.

Hawke is also encouraged by the improving relationship between China and the US, one of the positive effects of September 11.

China had been very positive in its immediate response to those events, and a measure of the degree of co-operation was its acceptance of US armed forces in some of the central Asian republics.

As one of the fathers of APEC, Hawke believes there is still valuable work being done within the regional policy working groups, and dips his lid to Keating for his role in establishing the “very useful” leaders’ meetings as a regular annual event.

He despairs at the besieged state of multilateralism and is particularly underwhelmed by the proposed US-Australia free trade agreement.

“I’m against it,” he says. “The basic reality, of course, is they will never be able to get a free trade agreement, at any rate with the United States, which we politically accept and will make economic sense, because there’s one thing that’s evident from United States politics (and that) is the strength of the farm lobbies.

“They are not going to open up their markets to Australian agriculture and I don’t know how you politically sell a proposition here where you’d allow the Americans to come into our services sector, our film industry, and all these areas `yeah you come in, but our farmers can’t go into your market’. I mean, come on.”

Most of these assessments do not cast John Howard in a good light. “I think in fundamental ways he’s been an extremely unfortunate Prime Minister for Australia,” he says.

“I’m trying to be objective about it … I applaud what he did early on in respect of guns. I think that was right and, in respect of part of his own constituency, courageous. I give him a tick for that.

“But I said publicly, and I repeat, that the oxygen he gave to Hanson in 1996 was absolutely abhorrent. “What that called for at the level of national leadership was what, to their credit, was done by some state Liberals like [the former Victorian premier, Jeff] Kennett, who unequivocally condemned those attitudes as unAustralian and repugnant and we didn’t get that from the Prime Minister, and that gave her oxygen and that cost us dearly in the region.”

Then Hawke comes to the 2001 election and the now notorious “children overboard” affair. “I just am appalled by the events of 2001. The government knew that they were misleading the Australian people and they played on the worst elements of people’s worries and concerns there was a total misrepresentation about children overboard. I think that’s one of the most disgraceful episodes in Australian politics. The way he conducted that was profoundly against Australia’s best interests.”

Could Hawke ever see himself promising to make people relaxed and comfortable? “I did the opposite,” he says simply.

Is that what prime ministers are supposed to do? “I did the opposite. I said to them, in fact I think the phrase I used publicly was, that the pain would come before the gain and it usually does.

“If you’ve got a problem and you’ve got to reform things, you’ve got to bring some discomfort. Obviously the ultimate aim of government is to create happiness and opportunity for people. That’s in the end what government is about. But getting there is not always the easy part.

“It’s going to require some difficult decisions but I’ve always been of the view that ultimately, what you should be in government about, is to make a better society, a happier society. That’s not going to be without creating difficulties at times.”

Will Howard know when to go?

“I’ve taken the view that I never thought he was going to go in July of 2003. That’s a decision that’s not only obviously his to make but is not one that I am concerned about.

“I think that it’s no good just talking about the things we dislike in terms of saying `it’s Howard’. He’s taken his government with him and why should we assume that it will be fundamentally very much different if he were to go?

“[Treasurer Peter] Costello’s been thunderously quiet on some of these issues we’ve been talking about, hasn’t he?”

Pub: Australian Financial Review
Pubdate: Saturday 01st of March 2003
Edition: Late
Copyright:
Section: Perspective
Subsection:
Page: 25
Wordcount: 1650
Classification:
Politics/Political Parties Groups/Australian Labor Party/Alp
People/Name/Keating/Paul/Politician
People/Name/Hawke/Robert/Ex Prime Minister
Geographic area:
Australia
Keywords:
Anniversary
Paul Keating
Hawke and Keating enter the contemporary debate
Laura Tingle
It’s exactly 20 years since Bob Hawke and Paul Keating won government to eventually form a dream team of prime minister and treasurer that helped keep Labor in power for a record term, until 1996. On the anniversary of their 1983 win which led to major economic and financial reforms Laura Tingle spoke to both men. Still vitally interested in the big picture, they talked about some looming dangers and some potential opportunities.`We’ve got to dance with three legs one in Washington, one in Indonesia and the region, and one in North Asia.’

It’s not only John Howard who has been in Washington amid momentous events. In 1993, then prime minister Paul Keating went to Washington to meet Bill Clinton just as the Middle East Peace Treaty was being signed on the lawns of the White House. And just as the then US president was trying to persuade the Congress of the benefits of the North American Free Trade Agreement.

Clinton’s NAFTA speech was a pearler. George Bush senior whom Clinton had dislodged from the White House the previous year observed immediately afterwards: “Now I know why I’m on the outside looking in.” Keating backed Clinton, too, drawing “=” signs in the air: “NAFTA equals growth equals jobs. APEC equals growth equals jobs.”

It was the beginning of a close political alliance between the two men, culminating in Keating’s persuading Clinton of the importance of the Asia-Pacific Economic Co-operation forum.

But there are alliances and alliances, free trade agreements and free trade agreements and in Sydney in 2003, Paul Keating is contemplating the wisdom of a free trade agreement between Australia and the US, regional politics and opportunity, and the astringent of competition.

“In terms of strategic policy, Australia has to know what is in its own best interests, and fashion a policy accordingly,” he says.

“You can just see, in trade terms, the last really notable commercial event was the 25-year, $25 billion gas contract with China.

“A free trade agreement with the United States is probably going to open up for US investment [the] media, telecommunications, the whole digital economy, audiovisual; but when it comes down to a benefit to Australia in agriculture, there will be very little which leads one to conclude that our economic bread is buttered in this region as never before, that what’s happening in China is an event of economic significance without precedence in world history, and that the Chinese economy will
tug along the rest of the region for the next century.

“We’ve got to be well placed to benefit from that. This, I think, determines the style of our economy, how we grow, what are our competitive strengths.”

Keating, like Bob Hawke, spends considerable time travelling in the region, and of course as prime minister put much effort into Australia’s relationship with Indonesia. But the relative growth of North Asia and South-East Asia has changed profoundly since the 1997 Asian crisis.

“Well, there’s a very large break between North Asia and South-East Asia. Where before the crisis South-East Asia got a fair amount of foreign direct investment, now it gets only a trickle.

“The great body of it is going to North Asia, and mostly to China.

“South-East Asia’s got much poorer, and the unity that it had and not just the unity, the facilitation it had in ASEAN [the Association of South-East Asian Nations] has been substantially disrupted by what’s happened in Indonesia. And this has made the area probably less powerful than it was, more skittish than it was.

“In North Asia, concomitantly, China’s growing at the end of a decade of structural recession in Japan. The Nikkei [stock index] is just almost a carbon copy of the Dow Jones between 1929 and 1934; and Japan, though a large economy … is only growing by half a per cent a year, and it’s ageing. China, on the other hand, is growing about 7 per cent a year, off a fairly large base, and it’s still young. Now, China will have its problems over time with the one child policy when people age, when the economy ages very quickly but not for the moment.

“Australia’s security is made in South-East Asia, and it’s made by what happens between the Japanese, the Koreans and the Chinese. And this was the reason why, as prime minister, I put so much effort into building the APEC leaders’ meeting, to provide a forum where the prime minister of Japan and the president of China and the president of South Korea could sit down with the United States and the rest of us with some sort of political architecture and think about the region.

“Now that is in place and a consequence of it was, for instance, that George Bush, not long after his election, found himself going to China. The result of that visit has been, coupled with September 11, that [the] US preoccupation with China has now very largely changed; and as well as that, because of the APEC partnership, China was able to negotiate its way into the WTO [World Trade Organisation] something I think that would not have happened without it.

“So I think we’ve got to be all the time on our guard to, if you like, dance with three legs one in Washington, one in Indonesia and the region, and one in North Asia and to have a good sense of balance and, may I say it, poise, which we now seem to lack.”

I mention Hawke’s observation that everything could change if Japan decides to go nuclear.

“Absolutely,” Keating says. “That headline a week or so ago was the most ominous one I’d seen in probably 25 years of public life: the President of South Korea saying that maybe South Korea and Japan should develop nuclear weapons.

“Of course, as any student of the area knows, the Chinese will never permit this to happen. That is, they won’t let the Japanese get the drop on them ever again, and that’s what’s involved here.

“It’s not whether the Japanese develop these weapons or that they might be used, but China’s attitude to the neighbours having them.

“This is why the United States was always important in keeping the strategic temperature of North Asia down.” This, Keating says, was the source of his dispute with Malaysian Prime Minister Mohamad Mahathir, “who wanted an East Asia body without the United States”.

“The unrealism of that was that the United States was a strategic guarantor of Japan and South Korea and the Philippines and Australia, and it was unreal to believe we could have a set of meaningful arrangements without them, particularly with strategic matters like these.”

Keating’s view is that these strategic decisions will drive domestic politics in an age of an internationalised economy.

As The Australian Financial Review reported on Friday, Keating believes that when government is no longer running wages policy, exchange rate policy and the like, politics is about defining why Australia is different in an increasingly homogenised world.

“There have been two fundamental ideas of Australian democracy. One [is] a sort of an enlightened strand which has social inclusion, participation and equity, fairness, a fair go that is, a small-l liberal notion of ourselves,” he says.

Then there is “a more tribal view a xenophobic, perhaps frightened one which asserted White Australia, the obliteration and disenfranchisement of the Aborigines, and the security guarantees in the past coming from first the British imperial navy and then the US Navy.

“What I think in the last six years Australia under John Howard has done is restoke the embers of the second notion of Australia … What Howard has done rather effectively is recalibrated Australia’s moral compass. It has played to notions of exclusion” and, he says, undermined Australia’s sense of belonging within the region.

“The other two ideas which have run parallel to those have been: do we find our security in Asia or from Asia? No doubt the Howard government view is `from Asia’. Despite the lip service and the words, the actions are [about going] back to great and powerful friends. [Howard is] going to war without a declaration. He’s obviously made undertakings to the Americans in secret …

“The second world war dragged us to Asia, and we had to find our security there by fighting in the mountains of Papua New Guinea and through the archipelagos of Indonesia.

“One would have thought this was a primary lesson in survival: that Australia, in the future, would always seek to guarantee its security in the region.”

That’s not to recommend abandoning the US alliance: “You’ve got to maintain the kind of relationship we’ve had historically with the United States. That is, it’s not a matter of some mutually exclusive branch of the policy, that the United States does not live and find its way in the East Asian hemisphere as we do and therefore it must know in fact does know that Australia has to make its way here; and in the event that its demands are such that it isolates Australia, it knows that it damages Australia in the region.”

Keating’s views on Asia probably did not endear him to a weary electorate tired of change, and might have been one of the factors that drove voters into the arms of John Howard in March 1996.

But amid growing alarm about Howard’s conduct of the US alliance, Keating’s views have a particular resonance.

Would the man who promised a “touch of excitement” and described his approach as “downhill, one ski, no poles” ever have gone to voters vowing to make them relaxed and comfortable?

“I think Bob [Hawke] and I shared a common view in this,” he says. “We owed the public a conscientious view of their best interests, and that was to change and get them out of the cold as quickly as possible.

“That didn’t mean trying to kid them that they could take some third-best option and be so-called relaxed and comfortable.

“I wonder how many of them feel relaxed and comfortable now?

“This divisive business of finding parochial and arbitrary distinctions as to why certain people must be separate and apart from us … these phoney distinctions between the civic and the human community [are] poison in a society like this one.”|

March 3

Treasurer’s taunt a bonding experience
Capital moves
Laura Tingle
Ted Evans is the physically diminutive, intellectually terrifying former head of the Treasury. Last Thursday he sat unobtrusively in a small lecture theatre at the Australian National University among a group of academic and market economists, bureaucrats, and even the odd politician, contemplating the future of the commonwealth bond market.As reported last week, the participants were attending a conference convened to consider what should happen to the market for government debt as budget surpluses diminish the stock of bonds.

Treasurer Peter Costello, in the months before the sale of the remainder of Telstra was put on the backburner, threw down the gauntlet to the market to justify its continued operation.

The prospect of a big buyback of government debt funded by the Telstra proceeds is now a more distant prospect. But the issue of what happens to the bond market remains a live one.

Federal cabinet is due to receive a submission from Costello before the May 13 budget on the issue. The submission will include a report on consultations that have taken place since the release of a Treasury discussion paper last year.

But back to last week and Ted Evans.

As a long day of discussion wound up with rambling speculations about how the politics of this issue may play out, he was invited to make some observations.

After grumbling about some of the “amateur politicians” at the conference, Evans observed rather tartly that those who were getting agitated about the bond market debate appeared to be missing a crucial point.

This was that there remained a great commitment to open policy debate in Australia, and that the Treasury discussion paper should be seen in that context: an opportunity, not a portent of doom.

It was sensible advice, and if the conference did anything it was to illuminate the different perceptions of how the debate was progressing and what its potential was among the different participants.

The clear consensus of those at the conference was that the market should not only continue but was a vital institution within Australia’s financial markets.

This is for a range of reasons some of which were conveyed in the these pages last week. They concern the flexibility and risk-management capacities of the Australian financial system.

What had alarmed many with an interest in the market was that the thrust of Costello’s remarks seemed to prejudge the issue. There was concern about the ramifications of the commonwealth becoming owner of a large investment portfolio, which would be necessary if the government bonds market were to be maintained in the absence of any need to fund budget deficits.

What emerged from the discussions last Friday should have been reassuring. The clear message from Treasury as it was from its former departmental head was that the department had an open mind on the issue and was willing to be persuaded.

One even got a more than sneaking suspicion that the inscrutable chaps at Treasury have a broader plan afoot within the bond-market debate.

That plan, it seems, is to use the discussion to try to resuscitate some intelligent debate about fiscal policy in Australia, which at a political level pushed, it is freely admitted, by the media has become stalled by a terror of deficits no matter what the prevailing economic circumstances.

The political messages are clear: deficits are bad; debt is bad; and debt is something that is always the fault of the previous government.

One lateral response to the “good debt/bad debt” routine was offered, only partly tongue in cheek, by Professor Warwick McKibbin, the convenor of the Division of Economics within ANU’s Research School of Pacific and Asian Studies and a Reserve Bank
board member.

Why didn’t Australia follow the Japanese lead, he asked. If the core concern was selling the idea that you had gotten rid of the opposing party’s debt, he said, then why not issue a new type of debt?

That is, pay off the bad Labor debt and instead issue good coalition debt.

Conference participants warmed to this theme. You could have nice, good Aussie bonds even some hypothecated debt: Aussie war bonds, Aussie environment bonds, Aussie road bonds.

There was plenty of discussion about whether such a portfolio could fund the very sort of infrastructure that a relatively “young” economy like Australia’s should be investing in, like higher education.

The issue now will be to persuade Peter Costello who clearly felt burnt by the political flak he copped over Treasury’s management of currency swaps that owning an asset portfolio doesn’t have to be such a bad thing.

The shelving of T3 makes the bond-market issue much less contentious than it was when the Treasurer kick-started the debate last year. There is probably also greater more openness to less dramatic change.

The negative side is that less contentious issues tend to go straight down the list of politicians’ priorities.

It seems clear Costello has been more than happy to wait for the consultation process to be completed and not give the bond market much thought in recent months.

So while Treasury may have its own thoughts on the issue, Costello has yet to turn his mind to it, and now has only a couple of months to consider the issues, and how to turn around the rhetoric of the strident view he took last year.

March 14

Howard primes nation for war
“If you wait for that kind of proof…it’s virtually Pearl Harbour”
Laura Tingle, Political correspondent
Prime Minister John Howard yesterday gave his strongest indication that Australia could commit to supporting the US in a war on Iraq with or without another United Nations resolution.In a nationally televised speech, Mr Howard said that while he continued to leave open the prospect of a second UN resolution on the issue, the likelihood of this was “not great”.

He again argued that “possession of chemical, biological or nuclear weapons by terrorists would constitute a direct, undeniable and lethal threat to Australia and its people”.

“That, more than any other reason, is why Iraq must be effectively and comprehensively disarmed,” Mr Howard said.

And he said Western troops could not viably remain on Iraq’s borders indefinitely.

In what is probably Mr Howard’s last substantive speech on his Iraq stance before a likely final UN Security Council vote this weekend, the Prime Minister was unable to provide any new information linking Iraq and its weapons of mass destruction with
terrorists.

“If you wait for that kind of proof, you know, it’s virtually Pearl Harbour,” he said.

His speech was criticised by Labor, the Greens and Democrats for failing to make a convincing case for war.

But it was welcomed by US ambassador Tom Schieffer “as a very powerful statement that enunciated in very clear terms why both Australia and the United States feel the issues in Iraq are so important to the future peace of the world”.

Mr Howard argued that the only reason Iraq was complying with UN weapons inspectors was the presence of US-led troops in the Gulf.

“A withdrawal of [American, British and Australian] forces would immediately destroy any prospect of any further co-operation by Iraq,” he said. “Crucially, also, the failure of the Security Council to adopt a further effective resolution, even if the forces were to remain, would create a completely new dynamic.

“Saddam Hussein would know that he had won, at the very least, a major reprieve.

“His incentive to co-operate in full with the demands of the world community for complete disarmament would disappear.”

Mr Howard said the pressure exerted by “an unutilised military presence inevitably diminishes over time, especially when a possible trigger point for the application of force has come and gone”.

“The unspoken implication of, say, the French position is that American, British and Australian forces should remain in the Gulf region indefinitely,” he said. “That is plainly unrealistic.”

Mr Howard also indicated that the possible withdrawal of Britain from the coalition of the willing would not necessarily influence Australia’s final decision.

Contrasting his current world view with that of the doctrine of mutual assured destruction (MAD) that held during the Soviet era, Mr Howard said the view underlying MAD was that “the potential cost of doing something was greater than the cost of doing nothing”.

“Now, in the case of Iraq, the potential cost of doing nothing is clearly much greater than the cost of doing something,” he said.

Mr Howard ratcheted up his arguments that those concerned with the humanitarian impact of a strike on Iraq should consider the track record of Mr Hussein’s regime.

He quoted the former United Nations rapporteur for humanitarian rights in Iraq, Max Van der Stoel, as saying there had been “very few examples of similar repression since the Second World War”.

“This is a regime that will gouge out the eyes of a child to force a confession from the parent,” he said.

However, in answer to questions later, Mr Howard conceded that he “couldn’t justify on its own a military invasion of Iraq to change the regime”.

He did, however, commit Australia to playing a “strong humanitarian, positive role in the process of reconstruction” in Iraq, if military action made that reconstruction necessary.

Mr Howard said there could be little doubt that “terrorist groups want weapons of mass destruction”.

“Australian intelligence agencies, including the Office of National Assessments, judge that al-Qaeda has demonstrated the intention to acquire or develop chemical and biological weapons, and an interest in radiological and nuclear weapons,” he said.

Mr Howard said that what he had tried to do in the speech was two things: “To establish clear evidence that terrorist groups wanted weapons of mass destruction and I think I did that and I think I did that quite convincingly.”

But Opposition Leader Simon Crean said it was “sad day of disgrace” for Australia because Mr Howard had failed to tell the truth to the nation about why it was being committed to war with Iraq.

The Prime Minister had also failed to link Saddam Hussein’s regime with terrorist network al-Qaeda, he said.

“There is no graver decision that a prime minister can make than to commit our young men and women in the fighting forces to war and that is what he has done, but he hasn’t told them,” Mr Crean said in Adelaide.

The PM and pre-emption politics
Canberra observed
Laura Tingle
Key `pre-emptive’ strike into the search function on the Prime Minister’s website and the first reference that comes up is industrial relations reform.John Howard has had surprisingly little that’s explicit to say about the so-called doctrine of pre-emption enunciated by the Bush administration in September 2002.

Despite the fact it is propelling the United States, John Howard, and as a result Australia, towards war in Iraq, there have been few public musings by the Prime Minister about the implications of this policy shift.

It is also despite the fact that the enunciation of this policy by the US has wrought profound change and tensions in the western alliances which have dominated world diplomacy since World War II.

Yet, in the Great Hall of Parliament House yesterday, given what is likely to be his last chance to argue the case for Australian involvement in a war in Iraq, a belief in the pre-emption doctrine not only for the US but also Australia was implicit.

“Possession of chemical, biological or nuclear weapons by terrorists would constitute a direct, undeniable and lethal threat to Australia and its people,” Howard told a National Press Club luncheon.

“That more than any other reason is why Iraq must be effectively and comprehensively disarmed.”

The ultimate failure of Howard’s speech yesterday to mount a convincing case for Australia to be involved in this war can be sheeted home to the complicated connections between that doctrine of pre-emption, terrorism and “rogue states”.

At its simplest, Howard has not found a way of convincing sceptics of links between the war on terrorism and war on Iraq.

At a broader level, the Prime Minister has a bigger problem: what that doctrine means for the way Australia behaves beyond Iraq. If we are to assume that the United Nations fails on Iraq that is, fails to do what the US tells it to do, which is tell Iraq what to do does that mean Australia is consigned to also go in hot pursuit of North Korea and Iran, the other points in George Bush’s axis of evil?

Is Australia now destined to find itself perpetually placed in the US camp of a divided West?

After all, according to the Prime Minister yesterday, other nations have been using this crisis “to seek international political advantage against the US”.

It is a shame that, despite all the thousands of words uttered over Iraq and terrorism in the past few months, the Prime Minister still keeps Australians in the dark about his wider strategic view, if there is one, and instead keeps himself on an exceptionally tight, and disconcertingly American line of rhetoric about where we are headed over this conflict.

But we pre-empt ourselves.

Recall the new pre-emption doctrine set out by the US in September 2002 in the National Security Strategy of the United States of America. “We must adapt the concept of imminent threat to the capabilities and objectives of today’s adversaries,” the
strategy said.

“Rogue states and terrorists do not seek to attack us using conventional means.

“They know such attacks would fail. Instead they rely on acts of terror and, potentially, the use of weapons of mass destruction weapons that can be easily concealed, delivered covertly, and used without warning …

“To forestall or prevent such hostile acts by our adversaries, the US will, if necessary, act pre-emptively.”

Howard bristled yesterday when it was suggested that his remarks outlined a case for the doctrine of pre-emption.

But compare his remarks yesterday with the definition set out earlier in this article by the US:

“[Terrorism attacks against the United States from 1993 onwards] transformed our world,” he said.

“They have, forever, changed the way in which Americans see the world and in particular their own security in the world.

“No longer could America’s security or indeed that of other liberal democracies be seen just in terms of responding to, or deterring, the aggression of nation states.

“A different enemy carrying a new menace had attacked. International terrorism is borderless.

“A key motivation is detestation of western values.

” … Australia is a western nation … As such we are a terrorist target.”

Here the confusion of the Howard doctrine kicks in.

This doctrine was born out of the new world of terrorism that applied when terrorists started blowing up Americans instead of poor sods in some third world country.

Yet it is only by the link of weapons of mass destruction that we get from pre-emptive action against terrorists used to justify war in Afghanistan to an argument for attacking Iraq.

Unless you can make the three-point link from Iraq to weapons of mass destruction to terrorists, the case is in trouble and likely to be no more persuasive than the case put up by the myriad of sceptics around the globe.

Their case, in rough terms, is that an attack on Saddam Hussein is a distraction from US failure to find Osama bin Laden, and/or is driven by US ambitions for a shift in the Middle East power balance.

According to the Prime Minister yesterday, going into Iraq simply to change Saddam Hussein’s regime could not be justified.

This is despite the truly awful examples he gave at length in arguing why there were good humanitarian reasons why the Iraqis would be better off without him.

Equally, he said Australia was “not necessarily saying the same thing about reshaping the Middle East” as the Americans.

Once again we are brought back to weapons of mass destruction as the rationale for `our’ actions.

John Howard now goes to war without having been able to substantiate his central claim to the Australian public that Saddam Hussein is a conduit for such weapons to terrorists.

The costs of this commitment, effectively if not formally made, will be not just in the loss of life, or in making this country a larger terrorist target, but in the foreign policy chaos that is likely to follow.

Simply consider the problems Howard brought on himself late last year when he suggested Australia might take action in a neighbouring country if it believed terrorists were planning an attack on Australia.

It would be reassuring to know that John Howard had thought through what will flow from here, rather than as he did yesterday, back fill to justify where he has already taken us.

March 17

PM warns war decision within days
Laura Tingle, Political correspondent
Prime Minister John Howard warned yesterday that Australia could be at war within days, as a historic split in support for the conflict developed between the major political parties.Labor signalled a change in its policy on Iraq yesterday, indicating that under no circumstances would it support a war that was not sanctioned by the United Nations.

And Opposition Leader Simon Crean called for Australia’s troops in the Middle East to be brought home immediately.

It is the first break in bipartisanship on an international conflict since Vietnam.

The move increases the domestic political pressure on Mr Howard, who portrayed Labor as divided on the issue of whether a war without the UN would be legal.

Mr Crean countered that ultimately the most important issue was the war’s morality, not its legality.

After talking to British Prime Minister Tony Blair on Saturday night, Mr Howard said yesterday there was little prospect of a breakthrough in the UN on Iraq.

“I think the next week will see matters coming to a head,” he said.

“I don’t think there’s much doubt about that, but I think it’s very important as we start the week off that people understand that there is adequate legal authority under existing Security Council resolutions for action to be taken without the need for a further resolution.”

Mr Howard said that, despite the crisis meeting in the Azores, the prospects of the US/British/Spanish resolution to the Security Council being passed in some form “now appears very remote indeed largely due to the intransigent attitude being taken by one of the other permanent members [France]”.

The British Prime Minister had indicated “his continued strong support for the position he’s previously taken” and that “he does not believe that a continuation of the long drawn-out and unproductive process of the last 12 years is going to lead to the successful disarmament of Iraq”.

But Mr Howard devoted most of his opening remarks at yesterday’s press conference to an attack on Labor’s position on the war.

Earlier in the day, Mr Crean indicated the Labor caucus would be asked to endorse a change in the party’s policy on Iraq tomorrow.

Labor has been criticised for having an overly complicated policy on Iraq in the past, which held out a caveat that it would support the war if there was a veto at the Security Council but a majority vote.

The Labor policy required two conditions to be met for support in those circumstances: a link being established between September 11 and Iraq; and evidence being produced showing Iraq posed an immediate threat to Australia or the United States.

Mr Crean told the Nine Network’s Sunday program yesterday that neither of those tests had been met.

“They haven’t been met by the US. They haven’t been met by the UN. They haven’t been met by Britain, and most importantly, they were not met by John Howard in his Press Club address on Thursday,” he said.

“The tests haven’t been met, and we therefore say that the only circumstances in which we would support action is if it had a decision of the United Nations. They would be the only circumstances in which we would support action,” he said.

But with so much now resting on the Prime Minister persuading Australians of the legality of non-UN sanctioned war, Mr Howard sought to portray Labor’s position on the war as splintered.

He argued that the opposition now had three positions on the war, with Mr Crean saying the position was unclear, foreign affairs spokesman Kevin Rudd saying it was illegal, and former Labor staffer Michael Costello saying it was legal.

“The government position all along has been that you don’t need another resolution for legal reasons, you don’t need the 18th resolution for legal reasons,” he said.

Labor’s position followed a meeting of the security committee of shadow cabinet on Friday.

Sources say the Prime Minister’s failure to produce any evidence of a link between Saddam Hussein and al-Qaeda, and an examination of a recently declassified appendix to the second Blix report, had led the Opposition to the conclusion that neither of
the two conditions set down by Labor had been met that would allow support for a UN-backed resolution that was subject to a veto.

On Saturday, Treasurer Peter Costello had taken a different tack on the issue of why Australia did not need UN approval for action.

“If you say that our foreign policy will be determined by a UN vote, you are essentially giving [the five permanent members of the Security Council] the right to veto our foreign policy, including France,” he told Foxtel.

“Australia’s defence commitments should be determined by the Australian government, obviously taking into account what the UN thinks but not be subject to a veto or to a UN majority.”

Mr Crean described the remarks as “a bit rich when our foreign policy has been determined by the US”.

The Opposition Leader said Mr Howard should bring home pre-deployed Australian troops but continued to argue that US and British troops should remain.

Mr Crean acknowledged the importance of those troops in keeping pressure on Iraq, but argued Australia’s troops “make no difference to that pressure”.

Mr Howard said there was an inherent contradiction in Mr Crean’s position .

“If it’s wrong for the Australian forces to be there then in advance of the 18th resolution of the United Nations, then presumably it is wrong for the American and British forces to be there,” he said.

March 18

PM claims legal mandate for war
* Bush: moment of truth * UN hopes fade * Global markets slump
Laura Tingle and Jason Koutsoukis
Prime Minister John Howard yesterday declared that a war against Iraq was legal, ahead of an expected formal request from the United States for military assistance as early as today.Federal cabinet was meeting late last night to consider its strategy, but Mr Howard made it clear that Australia would give the commitment, citing a moral case as well as a legal mandate.US President George Bush ended a summit with Britain and Spain yesterday with an ultimatum to the United Nations to authorise a war within 24 hours, signalling the end of six months of diplomacy over the issue.

US officials indicated they had little hope the UN Security Council would pass any resolution by early this morning, opening the way for a US declaration of war from today.

“We concluded that tomorrow [overnight Australian time] is a moment of truth for the world,” Mr Bush said after the summit in the Azores.

Mr Howard said Mr Bush had phoned him around lunchtime yesterday to brief him on the outcome of the summit with British Prime Minister Tony Blair and Spanish Prime Minister Jose Maria Aznar.

He said Mr Bush had told him an outcome in the UN was not considered likely and that “as a result of the developments that have occurred, military participation by Australia in Iraq is even more likely than it appeared a few days ago”.

Financial markets were hit by another bout of war jitters. The price of oil and gold jumped while regional sharemarkets and the US dollar fell. European stockmarkets also opened down substantially last night.

Mr Howard said the government had received legal advice backing its view that authority existed in previous UN resolutions for action to be taken against Iraq.

But he argued the case for war rested not just on legal authorities, but also on moral grounds, citing a “compelling moral case on human rights grounds” to liberate Iraqis from the regime of Saddam Hussein.

He said that while the US would make one more attempt for UN backing, it was possible that the US, British and Spanish resolution that has been under negotiation would not even be put to a vote.

Mr Howard said Australia had not yet received a formal request from the US for its participation in military action, but he “expected it would be received”.

Opposition Leader Simon Crean responded by saying: “This is a black day for Australia and a black day for international relations.

“We’ve just heard the Prime Minister confirm that he’s committed us to war. It’s just that he’s waiting for a phone call from the US President to tell us when we’re going.”

Mr Howard’s actions in committing Australia, in effect, to war were also condemned by the Democrats and Greens.

While cabinet would hold a general discussion about Iraq last night before federal parliament met today, Mr Howard said, it would reconvene to formally consider a request for Australian participation in the war.

With Australia and the United States yesterday warning its citizens to leave Iraq immediately, that request could be made as early as today.

The Department of Foreign Affairs yesterday warned Australians to defer any travel to countries near Iraq, including Saudi Arabia, Bahrain, Kuwait, Qatar, Lebanon, Israel and the West Bank.

It also said Australians in Qatar should consider leaving unless their presence is essential, and it strongly urged all Australians in Kuwait to leave immediately since commercial air services were likely to cease.

Sources confirmed provisions were being made for cabinet to reconvene today to consider that request.

The Prime Minister said he would make a nationally televised address if cabinet decided to commit Australian troops to war, and that he would explain the decision to parliament as soon as possible and would allow a full debate.

Mr Howard said that if a decision was taken to “enforce disarmament” on Iraq, it would be “completely in accordance” with the legal authority contained in existing Security Council resolutions.

The government had received formal legal advice from both the Attorney-General’s Department and the Department of Foreign Affairs and Trade that military action was “wholly consistent with existing Security Council resolutions for military action to
be taken to enforce those resolutions without the need for a new resolution”.

However, he said he would not be releasing that advice.

Despite the snub to the authority of the United Nations implicit in unilateral action, Mr Howard said Australia would continue to support the organisation and particularly it was likely to play important role in the postwar reconstruction of Iraq.

He also upgraded warnings on North Korea, saying it was necessary to try a diplomatic approach “for a little while longer”.

Earlier in the day, Treasurer Peter Costello argued that disarming Saddam Hussein was “a way of protecting civilians, and for all of those people who have suffered it is a way of bringing the potential casualties [of weapons of mass destruction] to an end”.

He argued that there would not be stability in the Middle East “until you have dictators disarmed of their weapons of mass destruction”.

Mr Howard renewed his attack on Mr Crean’s position on the war, and apparent divisions between Mr Crean and his foreign affairs adviser, Kevin Rudd.

March 21

Power to the parliamentary swill
Canberra observed
Laura Tingle Political correspondent
Robin Cook and Laurie Brereton are two old war horses of labour politics who stomp in paddocks on opposite sides of the world.Cook, of course, is the British Labour MP and former foreign secretary who resigned this week as Leader of the House of Commons over the Blair government’s commitment to war in Iraq.He gave his reasons in a speech of such quality to leave politicians everywhere feeling diminished, whether they be for or against the war.Laurie Brereton is the Australian Labor MP who finds himself tagged frequently these days as an “elder statesman” of the party an irony, given his long history of factional and ministerial crash-through style.

Brereton’s credibility on foreign policy issues stems from his push as foreign affairs spokesman in 1998 to shift Labor’s policy on East Timor (clearing the way for the later change of policy by John Howard).

More recently, in January, he played a decisive role in forcing Simon Crean to make a clearer Labor stand on Iraq.

What links Cook and Brereton is a common view of the importance of the role of parliament in making a momentous decision like joining the war in Iraq.

Cook was instrumental in the push that prompted British Prime Minister Tony Blair to bind the commitment of British troops in Iraq to a vote in the House of Commons.

According to the House of Commons’ information office: “The government has liberty of action in this field, and there is no statutory requirement for parliament to give its approval.

“The decision to have a debate on Iraq was therefore a political decision by the government.

“If the government had lost the debate in the House of Commons they could still have commenced hostilities.”

It could have, but it wouldn’t have. Blair was compelled to give parliament a role by a feisty party room but with the knowledge the Tories would back the war.

It created a very different dynamic to the pathetic excuse for political discussion that Howard has overseen in recent weeks.

The Australian Prime Minister has worn the executive power to go war both as a badge of honour a tough decision to be made by tough men and a reason for his blatant disregard for public opinion on the issue.

Cook said in his resignation speech: “From the start of the present crisis, I have insisted as Leader of the House on the right of this place to vote on whether Britain should go to war.

“It has been a favourite theme of commentators that this House no longer occupies a central role in British politics. Nothing could better demonstrate that they are wrong than for this House to stop the commitment of troops in a war that has neither international agreement nor domestic support”.

Of course the Commons’s vote went Blair’s way, despite record Labour defections.

But Cook’s point had been made as far as the role of the House of Commons was concerned.

It is interesting to ponder why Howard who swept into office in 1996 as the great protector of parliament who would restore standards of accountability by executive government didn’t make a similar commitment.

The fawning supporters who dominate his own party room, and the risks of Labor splitting on the issue, would have made it a loaded political punt while appearing to bow to democratic principles.

But the bad feeling aroused in the community about the processes by which we have gone to war, as much as the war itself, could now spark a much more radical turn of events.

Brereton has now become an advocate for change about how such decisions are made in the future.

In the Iraq debate this week, he argued: “We must never again see what confronts us today; a Prime Minister who, without the support of the Australian people, and without the support of both houses of this parliament, has committed our armed forces to military aggression.

“It is my considered view that there should be a legislative requirement for the prior approval of both houses of parliament before Australia’s defence forces are committed to armed conflict overseas.

“Such a requirement for parliamentary approval should not inhibit the ability of our defence forces to take action in self-defence, but it would provide a real check on the ability of the executive government to commit our troops to aggression in defiance of the wishes of the Australian people.

“While this would represent a significant change to our constitutional practice, it is something we must consider.”

Brereton is not the only Australian politician to suggest such a change. The Democrats’ Andrew Murray argued this week for consideration of a “safeguard” giving parliament the power to approve a war action. The crucial difference, of course, between Brereton and Murray is the likelihood of their respective parties ever forming government.

Brereton indicated this week that this was an issue he would pursue in the Labor Party itself, as much as the parliamentary party.

It is likely that a push for a change in the platform to remove, or restrict, the war power of the executive would ring a lot of bells in a party rank and file that feels ignored by its parliamentary representatives. It is also a complicated enough debate to engender more discussion.

For Brereton is not just talking about a debate in the Lower House, as was Cook, but in both houses.

That, of course, would mean the possibility of Paul Keating’s “unrepresentative swill” in the Senate determining a decision on war.

It would also mean a shift by Australia (perhaps ironically in the circumstances) to a more American political model.

The President of the United States is not as free to take his country to war. The power to “declare war” rests with the Congress.

Our own constitution empowers only the parliament to pass laws about “naval and military defence” and makes the Governor-General commander of the defence forces.

Brereton this week cited two Australian constitutional authorities of a century ago, John Quick and Robert Garran, who argued that the commonwealth “could not enter upon naval and military enterprises solely with a view to foreign conquest and aggression; its power is to be used for the defence of the commonwealth”.

In an age when the Prime Minister has committed Australia to a defence doctrine of pre-emption though he won’t talk about it and when we have entered war as an aggressor for the first time, the question is likely to get plenty of airplay as the dust settles in Iraq.

 

April 11

 

Peering ahead through the pink mist
Canberra observed, Laura Tingle. · Laura Tingle is the political correspondent for the AFR.
For John Howard, April 10, 2003, will forever be pink mist day. For Simon Crean, it will be the day he hosted Idiot Box on Wollongong radio and was asked to sort out Muff’s canasta game.Nothing speaks more eloquently of the state of Australian politics as the world watched the symbolic toppling of Saddam Hussein’s regime yesterday than what occupied our two political leaders.Sydney Morning Herald correspondent Paul McGeough in Baghdad brought my attention to “pink mist”: “a chilling term”, he reported, that “some of the photographers picked up from the US military in Afghanistan to describe what might have happened to a dozen or more people thought to have died” in the missile attack designed to kill Saddam Hussein this week.

That is, that the force of the explosions vaporised people near the restaurant Hussein may have been in, leaving just a “pink mist”.

Similarly, there will be few moments in politics so redolent of a decisive victory for Howard as yesterday. There will certainly be no moments when the arguments of those who have utterly opposed, disputed or rejected his commitment to the war will seem to have been so effectively “vaporised” by the powerful images from Baghdad.

But equally the uncertainties created for determining whether Hussein might have died in a pink mist, are just as true for the uncertainties around Howard’s one, brief shining moment.

There is every reason to still believe the war will prove a folly in political terms for Howard and history’s view of him; and a disaster for Australia strategically.

Whatever surge he enjoys in the polls in the immediate future will have to be balanced against the knowledge that he has permanently alienated and politicised crucial voters particularly women and young people.

The Prime Minister, for one, knows that his political vindication is far from complete and highly transitory. Howard said yesterday he would not use either of the “V” words: victory or vindicated.

Any hubris was firmly under control.

But Howard now faces the double dilemma of managing continuing involvement in, and commitment to, making Iraq work and of “de-escalating” politics back to the more suburban realm of domestic issues.

Australia has not yet achieved the goal it established for getting involved in the conflict in the first place: ridding Saddam Hussein of weapons of mass destruction.

Weapons of mass destruction may well be found in time. But until they are, proof of their existence will remain an uncomfortable issue for the coalition of the willing.

In the meantime, the regime change being celebrated yesterday was something the Prime Minister never seemed to be sure he was trying to achieve.

Even yesterday Defence Minister Robert Hill accurately described what has occurred, in strategic terms, as “incidental benefits”.

The scenes of jubilation will quickly fade from memory if, as is highly likely, the path of transitional government is not smooth.

Equally, there is unlikely to be a really satisfying end to this war which will be consumed by, and seen through the prism of, the war on terrorism.

Yesterday, Howard told us Australia would become a “partner” in the transitional authority, and, yes, an “occupying power”.

That connotes a lot more than throwing a few bureaucrats into the Pentagon’s Office of Reconstruction and Humanitarian Affairs.

Howard confirmed being an occupying power obliges Australia, under terms of the Geneva conventions of war, to protect Iraqi citizens and enforce the law.

Additional protocols to which Australia and the UK are signatories, but which does not apply to the US, require Australia to meet more detailed obligations to clothe, bed and shelter the Iraqis.

But there was little detail available yesterday about what this meant in practical or financial terms for Australia. One of the most astonishing aspects of the past couple of weeks is that so little thought has been given to what would happen after a presumed military victory, either in Canberra or Washington.

Even the objectives of Australia’s policy on postwar Iraq remain vague.

All the issues affecting Iraq’s future will be sorted out on a world stage where the old ties that have bound Western powers are badly frayed, and Australia has repeatedly showed itself as falling into line with the US, at the expense of its respected voice as a medium sized power.

Then there is domestic politics.

Already, the government is engaged in the exercise of trying to shape a strategy to prove it has a raging domestic policy agenda at hand.

The political priorities of the budget now have to change significantly to become a vehicle for putting this message across, whereas a few months ago the assumption was that it would be a sober statement of funding “our brave boys” in the face of continuing conflict.

Will it be John Howard who sorts all this out?

It would still have to be considered highly unlikely.

Before the escalation of events in Baghdad this week, the Prime Minister spent two days in Brisbane talking at a small business function, to an unlikely sounding business women’s afternoon tea, at a charity launch and to Queensland journalists.

Howard was firmly back on domestic political ground, even if a growing sense of relief at developments in Iraq bubbled through.

But there was a strikingly sentimental tone to his remarks, many of which rather ambled on.

He talked of Australia going through a “period of great tranquility” economically, of enjoying the benefits of reform of the past 20 years, of the change in the lives of three generations of Australian women from his mother through to his daughter
and of Australian society’s capacity for adaptability and flexibility.

A great sense of satisfaction with how the Prime Minister saw his achievements, rather than the need to defend them, flowed through.

Simon Crean, meanwhile, instead of being regarded as a major player in the debate on the war was relegated to a humiliating performance on Wollongong radio.

In the NSW city to try to get Medicare back on the agenda, FM disc jockeys instead prevailed on him to act as “Tony Barber” in a listener quiz called Idiot Box, and challenged him to sort out the garbage arrangements in Crean’s electorate so that one of the announcer’s mothers, and her friend Muff, didn’t have their canasta night interrupted.

Being Opposition Leader from time to time requires people to do things above and beyond the call of duty.

But how Crean let himself get dragged down this particular hole, on such a day as yesterday, is beyond belief.

May 2

Water and health top Howard’s postwar agenda
Laura Tingle.
The Prime Minister is pushing on with his domestic priorities, central to which are Medicare reforms, writes Laura Tingle.Prime Minister John Howard has elevated Medicare to the top of his list of priorities for the government’s third term along with water rights as the war in Iraq winds down.He also sounded a cautious note about the international economic outlook, which he said had received a boost from the rapid conclusion of the war in Iraq but now faced the impact of severe acute respiratory syndrome on the Asia-Pacific region.In an interview about the progress of the government’s third-term agenda with The Australian Financial Review before he left yesterday to meet US President George Bush, Mr Howard said: “Our domestic priorities are very clear. They are to maintain a very strong economy, produce a good budget, [and] to push very strongly ahead with our Medicare reforms, which we’re very enthusiastic about and think are well targeted.

“Clearly, the war is something that came along . . . it’s had some impact but it’s not going to derail in any way our domestic agenda.”

In a speech to the Committee for Economic Development of Australia in November, Mr Howard nominated nine areas of reform being targeted by the government.

They were national defence, security and counter-terrorism; work and family policies; demographic change; science and innovation; education; sustainable environment; energy; rural and regional policies; and transport.

Within these headings were various issues, including the participation rates of older workers in the economy, water reform and energy taxation. Now Medicare has joined that list.

“The [priorities outlined last November] plus the Medicare changes really comprise a very active domestic agenda,” he said.

Intense political opposition to his Medicare reforms appears to be willing the Prime Minister on to a fight that he believes he will win in the court of public opinion.

The reforms, he says, will “prove in the final analysis to be popular in the community”.

Direct electronic billing to Medicare by doctors “is going to be a really attractive policy for a lot of people, a lot of middle families”, he said. “The private health insurance product is also going to be very attractive.”

Mr Howard singled out water reform proposals for mention and was also keen to emphasise the government had not abandoned plans to do more to help people achieve a better balance between work and family commitments.

“There is a broader agenda,” he said. “The water reform proposals: we certainly haven’t forgotten those, and John Anderson and I are working quite hard on that and we’ll be going back to the states later in the year.

“There’s a lot of to-ing and fro-ing among the officials on that, but we are slowly making progress.

“That’s a very big issue for this term. It’s not just the Murray [River]. That’s a big part of it, but there is an even broader issue of trying to develop a nationally enforceable system of title to water. That’s the basis of water reform.”

Mr Howard said these priorities had not changed markedly with the passage of time and the war.

“It hasn’t changed it fundamentally, no. [The CEDA speech is] still the benchmark. That’s still the basic text for the day.

“Contrary to some reports, we haven’t lost interest in policies relating to work and family balance, not at all.”

(In early April, Employment Minister Tony Abbott signalled the work and family package had been delayed until after this month’s budget.)
“As part of the work of our taskforce, we’ve done a lot of research on the impact of the reforms we’ve produced in that area over the past few years and the conclusion we came to from that was that the broad architecture of what we’ve done is pretty
good.

“There are obviously some areas where we could add things and there are some areas where further refinements and enhancements, as economic circumstances permit, can be made.

“But I have come to the view that we don’t need to start again in the architecture. We have achieved a lot of the basic objectives we set ourselves. We have given people more choice.”

Reforms to date had “removed the imbalance that used to work against single-income families”.

“That’s been effectively removed for average families and the cost of child care has been kept within very good limits,” Mr Howard said.

The most interesting thing about the research was the fact that the full-time female workforce participation rate had “not moved much” in the past 40 years, he said. The implication was that households receiving two full-time incomes represented only 17 per cent of the total, with households earning one full-time and part-time income were “the most typical pattern now”.

Mr Howard would not give the timing of any measures, but said he “wouldn’t want people to think it has gone off the agenda”.

On the economic outlook, he said the American economy was still sending mixed signals .

“It’s had some good numbers in the last week but there’s still a bit of an overhang from the tech-stock collapse.

“I think the big question mark about the region is probably SARS. SARS is a big worry . . . ” he said, particularly given the role China had played in recent years in restarting growth in the region after the Asian crisis.

“Its impact on tourism is huge,” he said. “It might perversely have an uplifting affect on domestic tourism in Australia but it’s going to certainly hit China, Hong Kong, Taiwan.

“I think the two things that are pluses now are the very speedy completion of the war in Iraq. That has provided a big confidence boost,” he said. “The other thing is we are beginning to see the end of the drought.”

May 10

WHY JOHN HOWARD WANTS TO TAX YOU MORE AND MAKE YOU WORK FOR LONGER

Laura Tingle, Political Correspondent
Although the Prime Minister hasn’t yet spelt it out, this is what he is asking us to do.There was a time when John Howard made a political virtue out of an economic hair shirt. When he first became Prime Minister he stood for tough political love budget cuts, small government, less welfare and asset sales. But all this may be no more than a vague memory for many Australians.Years of low interest rates, booming house prices and about $50 billion of government spending to appease almost every interest group in the land who may have been slightly chafed by those budget cuts way back in 1996 has left the electorate or at least Coalition voters with a benign view of their economic circumstances.Of course, how much of this is due to the government’s good economic management is highly debateable. Inflation was cut to low figures by the recession of the early 1990s, bringing down interest rates, in turn boosting disposable incomes, and in turn boosting property prices.

Still, the Howard government has been able to ride the wave, assisted by the boost to tax revenues that has flowed from such good times. Recently, however, the political rhetoric has taken a subtle but significant shift and Howard has just flagged some public policy that may make a fairly broad spectrum of people a little less comfortable. And not just those low-income earners who have been squeezed by declining public sector services for some years.

For in what may be Howard’s last term as Prime Minister, he has a vision and it is of a country that needs to work harder for a little less. He is turning his attention to how long and hard people work and how much tax they should pay. And then there are the health and education “reforms” being promised.

Polls this week show the mooted changes to Medicare have aroused the suspicions of the electorate, and it is still to be seen whether higher education reforms to be outlined next week can be turned into a political winner for the government.

In short, the Prime Minister thinks we should all work longer and we don’t need a tax cut, thank you very much. To date, this simple vision has not been communicated as such, nor shouted from the rooftops, but it is there, in the big and small print for everyone to see.

Just this week, Howard told The Financial Review that bracket creep in the taxation scales “is not as severe a problem” as it has been in the past. This translates as don’t bother waiting for a tax cut, it is just not on the agenda. He also says it is time for Australians’ attitude to early retirement to change, observing “the early retirement of people, partners in firms and partners in accounting and legal firms, in many businesses, I think is a wholly regrettable thing”.

The politics of how those messages play out in coming months will be fascinating. Perhaps Labor is so terminal Howard thinks he can wear a fair bit of flak from challenging the comfort levels of his own constituency. Or as one Labor cynic observed of the Medicare changes: “Howard can’t lose. If the changes prove unpopular, but help to prop up [Labor leader] Simon Crean, the government will be ahead. If the changes prove popular and opposition to them buckles, he gets his long-awaited decimation of Medicare.”

Bracket creep and the ability to leave the workforce early are issues that resonate out in the electorate. Howard argued this week that bracket creep is not as big an issue as it has been in the past “because of that very big band [of taxpayers earning] between $20,000 and $50,000”.

“It’s not as acute a problem as it was because there’s an enormous number of people who are parked in the $20,000 to $50,000 bracket and they don’t get penalised by bracket creep. Having said that I always acknowledge that it is an issue and I’m not denying that.”

But given that average weekly earnings are poised to jump through the $50,000 threshold in the not too distant future, it is an unusually blase political remark for this most political of prime ministers to make. Even more so Howard’s argument that if you want to be appreciated for tax cuts, timing can be everything.

“I remember in 1989 the Hawke government had a big tax reduction announcement and it was treated with enormous cynicism because interest rates were so high,” he said. “The spendable dollar is still the thing that determines a person’s sense of affluence and well-being. You can influence that by a lot of things as well as taxation. I’m not saying tax is unimportant, but you’ve got to look at the total contribution.”

A cynic might think you also have to look at the total contribution a tax cut might make to a government’s fortunes closer to an election. And it is likely that there will be more bad news in next week’s Budget now that the government has decided early retirement is unacceptable.

Australia’s relatively low rate of participation in the workforce by people in the 55 to 64 age group has been identified as a major reform issue for the current term. To date, the implications of that remain somewhat vague.

Certainly, the attempt to “reform” the disability support pension is on the list since an alarmingly large number of older workers are now receiving disability support pensions (DSP). Treasury secretary Ken Henry said in a speech in February: “When one in nine Australians aged between 50 and 64 is on the DSP, I think we can safely conclude that we have something other than a safety net. Indeed, we have to consider whether we haven’t created a set of opportunities and incentives to institutionalise voluntary early retirement; to institutionalise non-participation in the labour force.”

But the indications are that the issue may spread wider. Last November, Howard released a background paper on “demographic change” as a third-term agenda issue. It followed the intergenerational report released at the time of last year’s Budget.

“The government is focusing on the need to maximise labour force participation, especially amongst older Australians, whilst maintaining an adequate safety net for those who have retired,” it says. “This will aid economic growth and reduce pressures on the age pension.”

It says the government is committed to the current three layers of the retirement income system: the age pension; the compulsory employer-funded superannuation levy; and “incentives to encourage voluntary savings including generous tax concessions for superannuation”.

“Gearing retirement incomes policy to encourage greater self-reliance through higher voluntary savings will reduce pressures on the age pension, while helping people to achieve a level of retirement income which will provide them with an acceptable standard of living,” the paper says, listing measures already taken to boost super, such as super accounts for children.

But it remains unclear where the policy is headed. While Labor remains in terrible trouble because of its leadership woes, it doesn’t mean it is impossible for it to snare disaffection with any signs of government hubris on these issues. Labor frontbencher Wayne Swan argued this week that Labor’s political challenge is to link the concerns of battlers and the middle-class at a time when a growing income gap threatens the tradition of a “fair go”.

Swan claims the top 5 per cent of Australian taxpayers now earn $43,000 a week about the same as average income earners get in a year. The party’s political task is “to convince the middle that they have something in common with the battlers and that we have the answers to their concerns. We must also convince them that their aspirations will not be met by this Government.”

There is a “conspiracy of silence”, Swan argues, about poverty and inequality, driven by deliberate misrepresentation by the political Right, the “inability of the affluent to connect with the concerns of ordinary folk” and incoherence on the Left.

“The affluent no longer mix with the battlers”, he says. “Their kids attend elite schools, they don’t use public hospitals. And as they retreat from spaces once shared, they find it harder to identify with the concerns of a community going downhill.”

Labor’s political armoury has to include “a tax credit or targeted tax cut” to low- to middle-income earners that is properly integrated with the social security system. It is an interesting argument the political implications of the disconnect occurring in Australian society as incomes become more disparate.

If Swan is right, and if Labor is able to draw the middle to the case of the battlers, it would pose a significant threat to Howard whose 1996 victory was built on winning over the working poor, the disillusioned blue collar workers who had traditionally voted for Labor. But even more interesting is the risk Howard seems poised to take in his more comfortably heeled heartland on tax and retirement.

May 14

Costello’s tax cuts take the cake
Overview BUDGET 2003
Laura Tingle
Labor will rue this rabbit pulled from the Treasurer’s hat, reports Laura Tingle, political correspondent.Peter Costello will deliver $10.7 billion of personal tax cuts from July 1 to neutralise potential political damage from reforms to Medicare and higher education and maximise pressure on the Labor Party and the Senate.The tax cuts announced in the Treasurer’s eighth budget last night costing $2.4 billion in 2003-04 and $10.7 billion over four years have the government exploiting booming company tax, excise and dividend revenues to head off growing pressure for tax relief for low- to middle-income earners, while still delivering a forecast budget surplus of $2.2 billion.The cuts targeted at low- to middle-income “Howard battlers” also carry the political benefit of keeping the threat of an early double-dissolution election alive for an unstable Labor Party and an intransigent Senate, and rob Labor of spending options ahead of the next election.The modest tax cuts may also help smooth the transition by Mr Costello from Treasurer to prime minister, if John Howard decides to step down later this year.

Mr Costello argued last night that the tax cuts were simply because the government had few other responsible spending options for what would otherwise have been a big surplus, after reducing government debt to just 3.7 per cent of GDP.

However, despite reducing government debt to negligible levels, the government has decided not to proceed with its mooted proposal to close down the commonwealth government bond market and will instead keep it viable through the continuing issue of three- and 10-year bonds.

Any move to wipe out the bond market would now be contingent on the future sale of Telstra, which senior government sources confirmed last night was off the agenda until after the next federal election, meaning at least 2005.

Mr Costello said the tax changes “strike a balance between the government’s goals of maintaining a sound budget position, meeting the higher costs of defence, education, health and other priority programs, and the desire to provide lower taxes for individual taxpayers”.

Low-income earners will get a tax break of $6.30 a week, while those on average weekly earnings will get $4 a week. Taxpayers earning more than $65,000 a year will get $11 a week.

The surprise tax cuts overshadowed a budget containing new spending on defence and national security, sweeping reforms to higher education (which could mean students paying up to 30 per cent more for some courses), changes to the international tax regime and major changes to energy taxation, including LPG to be brought into the tax net for the first time.

Offsetting some of these new expenses will be a total of $414 million in anticipated savings over four years from the welfare budget because of increased scrutiny of pensioners, including 60,000 more disability pension audits and 25,000 more reviews to ensure aged pensioners are not in breach of assets tests.

The budget shows a tax base made robust by the government’s 2000 reforms delivering a gratifying dividend of higher than expected revenue to Treasury coffers, despite an economy weakened by the world slowdown and drought.

Treasury is forecasting an even weaker year for much of the Australian economy in 2003-04.

While gross domestic product is forecast to grow by 3.25 per cent, compared to 3 per cent in the current financial year, the components of growth will be dramatically different.

In 2002-03, the economy was split between a booming non-farm sector and a desperate farm sector facing the worst drought in a century.

The coming year will see non-farm growth slump to just 2.75 per cent from 4 per cent, while the farm sector will bounce back from a 27 per cent slump to 25 per cent growth.

Within the much weaker non-farm sector, total business investment is forecast to grow by just 7 per cent (down from 15 per cent), including growth in machinery and equipment of just 4 per cent, compared to 12 per cent in the year just ending.

The housing sector is forecast to slow, and the anticipated contraction of 5 per cent in activity is in stark contrast to this year’s growth of 18 per cent.

Mr Costello warned there was “a larger than usual element of risk surrounding the near-term outlook for Australia”.

“While our fundamentals are sound, the international outlook is difficult. There are looming problems in the major economies, as well as heightened international tensions, including the Korean Peninsula, and the risk of the further spread of severe acute respiratory syndrome.”

The tax cuts have been financed despite some considerable new spending commitments, notably another $1.1 billion next year for the defence forces to meet the high cost of military operations and the prices of advanced military hardware.

The defence spending commitment will represent a 4.7 per cent increase in real terms, even more than the 3 per cent annual growth promised in the 2000 Defence White Paper.

As foreshadowed in The Australian Financial Review, the budget contains a major overhaul of energy taxation the most dramatic decision being to deny liquefied petroleum gas its tax-free status from 2008.

The reforms will mean all forms of fuel, instead of just petrol and diesel, are subject to tax in five years’ time.

However, in the long-running war over ethanol, producers of the biofuel predominantly Dick Honan’s Manildra group received a major boost in a five-year extension of ethanol’s effective excise exemption, which was due to expire in September.

The final rates to apply to all fuels including petrol will be announced later this year, but it will be lower than the rate now of 38.1¢ a litre.

Also foreshadowed in the AFR were changes to the international tax regime costing $270 million a year.

While the government rejected “at this time” the most expensive changes aimed at ending the double taxation of profits of Australian companies earned offshore government sources argued last night that double-taxation problems could be ironed out through negotiations now under way on tax treaties.

The budget also contains a range of new domestic security measures, including $20.7 million spending in the coming year and enhanced protection for “diplomatic and Australian Office holders”, $4million for armoured limousines and almost $29 million
for new facilities at Canberra airport to protect visiting heads of state and other VIPs.

May 19

Gore’s going? No funds, then
Capital moves
Laura Tingle
The future of Australia’s greenhouse policy isn’t likely to have ranked up there with the corporate governance debate in the minds of chief executives in recent months.But there must have been plenty of business heads breathing a quiet sigh of relief on Friday when the federal and Queensland governments announced an immediate moratorium on land clearing in that state.For a pragmatic assessment of the confused state of Australia’s greenhouse future and of the business position on the issue consider that saving what remains of remnant vegetation in Queensland gets the rest of the business world out of a lot of greenhouse gas-fired hot water.As Australia has taken the position on the Kyoto Protocol on greenhouse gases that it will not sign the protocol but will set similar targets for gas reductions, most assessments are that a cessation of land clearing in Queensland will almost single-handedly account for meeting Australia’s reduction targets.That is certainly the view of the greenhouse pragmatists in the business community.

But it won’t make the greenhouse issue go away.

The federal government is reviewing its greenhouse policy and its energy policy for expected release later this year.

There are conflicting business assessments about whether these reviews might even lead to a change in government heart on Kyoto. Some argue that, with our dues to the US alliance paid in Iraq, the pressures to stay out of the protocol are less and there might be a change in policy.

Others are not so sure, saying soundings in recent months by business of the government’s position, amid suggestions of a change, had met a firm rebuttal.

At the same time, the business community is stuck in an agonising no-man’s land on the issue, perhaps once again grateful that the war in Iraq meant there has been very little coverage of the stalemate in a divided Business Council of Australia on the issue.

It’s not at all clear that it is a stalemate that can be resolved, either.

As one source put it: “It ultimately comes down to the fact that your view on greenhouse is built on economic models of the benefits and costs of Kyoto which are so vulnerable to assumptions which themselves are so hard to prove either way that it is ultimately a marginal call, at best, whether signing the Kyoto Protocol is a positive or negative thing for business”.

But the bottom line is that Australia is now in a situation where the federal government is against signing the Kyoto Protocol but the majority of states, led by NSW, are for it.

What is also clear is that the divisions within the business community on the issue have created a whole new set of business environmental warriors with passionate views about where not only Australia’s environmental interests lie but also its economic interests and the financial interests of their own companies.

A range of chief executives have emerged in the greenhouse debate, just as they have emerged in the debate about sustainable development and “triple bottom line” balance sheets (assessments of companies’ performance on financial, environmental and social criteria).

After several years of consolidating the nascent sustainable development push in Australia, its advocates led in the corporate sector by figures such as Visy’s Dick Pratt and BP’s Greg Bourne now want to get the message out among the non-converted.

One forum for doing so should be the latest meeting of the Business Leaders Forum on Sustainable Development , due to be held in Sydney on May 29 and 30.

The forum has high-power business support, notably the Business Council (perhaps looking for ways to retrieve its credibility in the public policy debate).

But most importantly, it has snared former US vice-president Al Gore .

Gore is the presidential candidate who lost the controversial 2000 campaign to George Bush, winning the majority of votes but losing his own state and that of Bill Clinton.

The mire of the race might have consigned Gore to history though some still believe he could re-emerge to fight another campaign but he has strong credentials on the environment, and his past profile offered a way of spreading the message more broadly.

But in an era when Australia is “all the way with George W. Bush”, it appears the government doesn’t want anything to do with a forum at which his former opponent is speaking.

There are conflicting versions of this story, but The Australian Financial Review has been told that it was made clear to the forum that it need not ask for any sponsorship from the government for its meeting if the former vice-president was attending.

This is despite regular government support for the function over the past four years.

It seems a particularly petty approach to take, and one that some of the business figures who are supporting the forum are not impressed with.

June 4

Howard keeps Costello waiting
PM says no retirement yet Treasurer vows a more active role
Laura Tingle, Political correspondent
Prime Minister John Howard ended speculation about his future yesterday by declaring he intends to stay on in the job for an indefinite period.But the announcement has come at the cost of a deterioration in the strong alliance between Mr Howard and Treasurer Peter Costello, which has been a hallmark of the government for the past seven years.Mr Costello put the Prime Minister on notice that he now felt free to disagree publicly with Mr Howard on a wide range of policy issues, ending his exceptionally cautious and loyal restraint of the past.Mr Howard revealed his plans to Liberal Party MPs yesterday morning, saying: “I have given a lot of thought to my future. The Liberal Party has been very loyal and generous to me. I’ll always put it first. While ever it remains in the party’s best interests and my colleagues want me to, I’d be honoured to continue as leader.”He made no other statement on the issue yesterday. Sources said he was keen to shift political focus back to the policy agenda and Labor’s leadership woes as quickly as possible.

Mr Howard’s move came as Labor leader Simon Crean was forced to carpet three of his frontbenchers over a meeting with leadership aspirant Kim Beazley in Sydney on Friday. The move has intensified the ALP infighting.

Supporters of Mr Costello said they were incredulous that Mr Howard could believe he could make such a decision and not expect there to be fallout: “Everything cannot be the same now he’s fumbled the baton change,” one source said.

Mr Howard’s decision, ahead of his 64th birthday next month, means he could lead the coalition to a fourth successive election campaign. And it comes as he enjoys an overwhelming political dominance over Labor and his own party, despite the recent debacle surrounding the governor-general.

The latest Newspoll shows Mr Howard continuing to lead Mr Crean by 65 per cent to 17 per cent as preferred prime minister, but with the coalition’s primary vote down four points since the budget.

It also came as an unhappy Mr Costello signalled he would live with Mr Howard’s decision for the foreseeable future without challenging him.

This seems to be based on the view among Costello supporters that the Prime Minister’s statement to the party room on his future still left open the possibility that he might leave office by year’s end.

But the possibility of a much more unstable government in the months ahead loomed in a series of barbed remarks from the Treasurer, notably his repetition of remarks by Mr Howard in 1985 before he embarked on a notorious period of destabilising Liberal leader Andrew Peacock when he refused to rule out a challenge, claiming his record as a loyal deputy spoke for itself.

The Prime Minister’s party-room announcement was met with applause “but no standing ovation”, some sources said.

Mr Costello responded, notably not praising Mr Howard’s leadership, but saying the government’s success had been built on strong economic performance and unity of purpose.

He pledged himself to continue to “serve the party as the deputy leader and the country as the Treasurer”.

He once again ruled out a shift to another portfolio. Government sources say the Prime Minister has not been contemplating any other ministerial changes.

“Naturally as the deputy leader you think about the long-term future of the party, where you think it can be improved. You think about the long-term future of the country, what can be done to improve things,” the Treasurer told a press conference yesterday.

“And you think about the opportunities that you may have to do that, and you would be surprised if I hadn’t thought about that quite a bit over recent years.”

Mr Costello had used almost identical language in the Liberal Party room in responding to Mr Howard’s statement.

Sources say that at this point Mr Howard intervened, saying that as a former deputy, he understood this.

But Mr Costello shot back: “Yes, but I don’t intend to model my deputy leadership on yours.”

The remark prompted laughter but was not lost on those MPs who remembered the Howard deputy leadership to Andrew Peacock as one marked by persistent destabilisation.

Mr Howard had told the Treasurer of his decision to stay on at an hour-long meeting in the PM’s office at Parliament House at 9.30 on Monday morning.

Asked if he was disappointed, Mr Costello said: “Well, it wasn’t my happiest day, put it that way.”

Asked if he believed that he and the Prime Minister could continue to work effectively as a team, the Treasurer said: “We have worked together competently and professionally. I think that it has been a very big part of the success of the government.”

He had worked extraordinarily hard to “put the party’s interests ahead of private ambition”, and brought “a lot of stability” to the Liberal Party as deputy leader.

Asked if he could rule out a leadership challenge to Mr Howard under any circumstances, Mr Costello said that “someone with the track record of loyalty to the party that I’ve shown, I think doesn’t have to answer questions like that” a direct lift
of Mr Howard’s 1985 remark.

The Treasurer would not elaborate on how he would the run the party and the country as leader, but said: “I intend to contribute to political debate, absolutely.

“As the deputy leader, I think my colleagues will expect me to contribute on a wide range of issues, which I intend to do. But that’s something for the months to come.”

Mr Costello said he wanted to see Australia “be everything it can possibly be”. “I want to see it prosperous and strong and secure and tolerant, and I want it to be able to fulfil all of those objectives and I want to make a contribution to that.”

Many MPs welcomed the resolution of uncertainty of the issue, but others said they had been expecting something more definitive on Mr Howard’s plans, specifically an indication of whether he would stay on until the next election.

Sources said the Prime Minister’s statement was framed in acknowledgement that his position was a gift of the party, and that his time in office was not something for him alone to decide.

June 14

Ruddock: a man of discretionLaura Tingle and Toni O’Loughlin  The issue that won’t go away is the Immigration Minister’s use of ministerial discretion to grant visas in more than 1000 cases.

`We decide who comes to this country and the circumstances in which they come,” John Howard thundered out of Liberal Party advertising at the last election. The electorate liked this clear, simple message, particularly in the face of whipped-up fears of uninvited and unstoppable hordes descending on the country. They bought this strong, unambiguous policy. In spades.

Immigration Minister Philip Ruddock was responsible for implementing it and, at Liberal Party election functions, he was hailed as a hero. Today, he is looking far less heroic and rather more unattractively political. For the past fortnight he has faced a full-scale parliamentary assault, and faces more of the same when parliament sits again on Monday.

Given the centrality of the issue to the last election campaign, the government has been exceptionally lucky that a few other stories the Prime Minister deciding to stay in his job, the Labor Party self-immolating have cut back coverage of Ruddock’s woes.

Nonetheless, there have been embarrassing revelations about big donations to the Liberal Party and ministerial interventions in the granting of visas.

It culminated with the awkward disclosure that a donor to Ruddock’s own election campaign, Dante Tan , turned out to be “the Philippines’ most wanted corporate fugitive” and, oh dear, had “shot through” to Singapore when discovered.

It’s not that all of the Labor allegations have stood to date: the controversy started with the suggestion in parliament that Ruddock had handed out permanent residency to a former motor mechanic from Lebanon, Bedweny Hbeiche , in return for a $3000 donation made on Hbeiche’s behalf. The man who is supposed to have made the donation, Parramatta travel agent and long-time Ruddock associate Karim Kisrwani , has denied the allegation.

But by the end of a fortnight of Labor questions, patterns seemed to be emerging: a $100,000 donation from a Buddhist monastery whose religious workers were having visa troubles; the $10,000 donation from Tan; the donation on behalf of Hbeiche.

The insight into the dollops of cash floating around for the Liberal Party has been illuminating. But any link which might exist between the money and the visas most probably will never be proved.

Ruddock has told parliament he has no knowledge of any donations by Tan.

The issue that won’t go away for the government and the minister, though, is Ruddock’s use of ministerial discretion to grant visas. The minister himself says that he has now intervened in “probably more than 1000” visa application cases including for 105 Lebanese between July 2000 and December 2002.

“Unlike the first [immigration] minister who had the opportunity to consider these matters, where no exceptional circumstances were ever considered and unlike his successor, who I think considered about 14 cases, and his successor, who I think considered in excess of 100 over the seven or eight years I have been more interventionist,” Ruddock told parliament on May 28.

This proud history of intervention stands in stark contrast to the inflexible face the government presented to the world and the electorate at the height of the Tampa crisis.

Remember the three little girls who drowned on SIEV-X and Ruddock’s steadfast refusal to facilitate their parents getting together to grieve? Remember the Pacific Solution: having asylum seekers processed offshore to make them subject to much tougher United Nations rules rather than Australia’s?

In the light of all the tough rhetoric about who comes to Australia, what has motivated Ruddock to intervene in these other cases? Consider Hbeiche’s case (see separate box). He had been knocked back by the Immigration Department, the Refugee Review Tribunal, the Federal Court and by the minister himself on previous occasions.

The Federal Court’s summary of his case does not exactly cast him in the light of the model citizen who “rescued” a girl that Ruddock suggested to parliament.

As the Opposition says, if Hbeiche had applied for residency on family reunion grounds, the presence of three sisters in Australia alone would not have got him into the country.

The one thing that can be said for Hbeiche’s case is that Ruddock has at least given some explanation of the grounds on which he intervened, however unsatisfactory that explanation may appear when judged against the government’s own migration criteria.

When a minister does use his ministerial discretion he must table a statement explaining himself to parliament. The only trouble is the statement doesn’t identify who it is about.

As Labor frontbencher Laurie Ferguson told parliament on May 29: “There is no ability to test whether there is a pattern of influence-peddling among particular ethnic communities . . . or [whether] these people who are supposedly refugees are really entering the country because there might be this person in a particular electorate who is close to the party and might be able to deliver an electoral vote.”

Left unanswered from the last parliamentary sitting were questions to Ruddock on: * Whether he asked his department to “refer to him personally” two visa applications that Labor linked to a donation of $19,450 to the Liberal Party.
* 17 visa applications Labor alleges were rejected by Ruddock but which he subsequently asked to have referred back to him after representations by Kisrwani.

Karim Kisrwani emerges as a regular player in much of the story told in parliament. He was one of the organisers of the Liberal fund-raiser in September 2001 at which the disputed $3000 on behalf of Hbeiche was alleged to have been made.

Also present that night, it seems, was Dante Tan, though believed to be travelling under the name of Shaoghi Chen , who subsequently became a business partner of Tan.

It subsequently emerged that the Liberals might not have done all the paperwork on the $22,000 raised that night. One week into the parliamentary scrutiny, a $10,130 donation from Kisrwani to the Liberal Party magically appeared in an amended return.

The Liberals have suggested the donation was made on the night, but as Kisrwani has not filed a personal return to the Australian Electoral Commission, the date of his donation is not yet publicly known.

(Weekend AFR asked NSW Liberal Party director Scott Morrison this week how it accounted for the $22,000 in its AEC declarations and what was the date of Kisrwani’s donation. Morrison replied: “Our returns comply with the requirements of the AEC that require donations of $1500 and above to the party to be disclosed in our annual and any amended returns. We are happy to co-operate with the AEC in relation to any matters relating to our return.”)

At the time of going to press, Ruddock had not answered questions from Weekend AFR about the 17 cases associated with Kisrwani, the two cases linked to the $19,450 donation, his relationship with Kisrwani and his department’s dealing with Tan.

Whose version do you believe?

What Philip Ruddock told the House about Bedweny Chawki Hbeiche:
“The issues that I considered relevant in this particular case were the claims that the young man had been the subject of a protection claim which had been rejected because it was not for a (refugee) convention reason. The claims that were made were quite significant in terms of the impact upon the young man and his family.

“They arose because he rescued a girl who had been sexually assaulted by two Syrian workers in Lebanon.

“He had been accused of causing civil unrest and conducting anti-Syrian activities. He claims that, following that incident, he was arrested, his house was damaged and his car was burnt by Syrian forces. He claims that he was held in captivity for 45 days without trial, interrogated and badly mistreated.

“The point I make is that the Refugee Review Tribunal accepted that the applicant had been detained and mistreated by the Syrians. In addition, the man had substantial Australian connections.

“He had a number of relatives who were permanent residents and citizens of Australia. I weighed those matters up and determined that an intervention was appropriate.”

What the Federal Court reported in finding against Mr Hbeiche’s appeal of a decision by the Refugee Review Tribunal:

“In respect of the 1993 incident, the Tribunal accepted that the applicant was detained by the Syrians and that he was mistreated in Tripoli. But the Tribunal found the motive for the Syrians was not for a Convention reason but was retaliation against the applicant because he took `the law into his own hands’ by detaining two Syrian youths that he suspected of abducting a female relative.

“Contrary to the evidence given by the applicant at the Tribunal hearing that he only smacked or slapped the youths, the Tribunal found it more plausible that the applicant treated the Syrians in the manner he described in his written application, that is, he and (a) friend beat them and threatened to kill them.

“In respect of the applicant’s claim that he was `continuously monitored by the Syrians’ since his release in 1993, the Tribunal found there was no credible evidence he was of any further interest to the authorities. The Tribunal did not accept the applicant’s evidence, presented for the first time at the Tribunal hearing, that the applicant was involved in LF (Lebanese Forces) activities after 1993; this evidence was not mentioned in his written application and the applicant’s participation in the LF . . . would not have attracted the attention of the Syrians to the extent that they should suddenly devote substantial resources to try to catch him.”June 17

Crean vows to go after Howard
Laura Tingle, Political correspondent, with AAP
Simon Crean has won clear air to attack the Howard government with a promised new Labor policy agenda, after winning yesterday’s leadership ballot against Kim Beazley.Mr Beazley, who lost the caucus ballot by 58 votes to 34, immediately pledged not to challenge the Labor leader again.His pledge was accepted by Mr Crean and believed by most MPs. However, party pragmatists said if Mr Crean failed to lift his standing in the polls over the next six months or so, his leadership would once again come under pressure.He could then face a call to stand down in favour of Mr Beazley, or even another contender.The Opposition Leader yesterday vowed to use his “renewed mandate” with his “sizeable majority” in the ballot to push forward with aggressive Labor policy initiatives.”No longer can the Labor Party be the small-target party,” he said.

“We have to be bold. We have to be different. But we must be Labor.”

After running his public campaign against Mr Beazley as a policy-driven leader, Mr Crean has announced he is bringing forward policy releases on higher education and paid maternity leave.

“I intend to use the opportunity now the opportunity that has been given today by the caucus to me in terms of my leadership to continue to promote these agendas, because they are the agendas that matter to the Australian people,” he said.

“They want to see their political leaders actually have conviction and believe in [their policies], not just throw them out like confetti every time they want to pretend they have a domestic agenda.”

Mr Beazley said: “I said that this was the one challenge I would make; I said it and I meant it. But let us not kid ourselves. My challenge to Simon has come and it has gone. But that challenge is as nothing to what confronts him, and what confronts us all.

“We all here become so obsessed with each other and with what goes on between us. We all constantly look at who supports whom, who is going up and who is going down, who is on the rise and whom the arms of time reach out to enfold in the warm embrace of history.”

After the vote, Labor health spokesman and Beazley backer Stephen Smith resigned from the front bench, saying he accepted the caucus vote “unreservedly” and that it was in the best interests of the parliamentary party “that I now serve the party from the back bench”.

Fellow Beazley backer Wayne Swan left the job of manager of government business but, after a conversation with Mr Crean, announced he would be staying on “as a senior frontbencher”.

The reshuffle that flows from Mr Smith’s departure is likely to be resolved over the next week with nominations for the vacancy to be filled by the Right faction called for at today’s regular caucus meeting and voted on next Tuesday.

Sources said last night that there was some expectation that deputy leader Jenny Macklin would resume the health portfolio and that Mark Latham might return to education, which he held when Mr Beazley was originally opposition leader.

Mr Latham Mr Crean’s most passionate public advocate last week has been rewarded with a promotion to manager of opposition business in the House of Representatives in an important test of tactical skills for an MP seen to have leadership aspirations.

After a week of lobbying, the Beazley forces appeared to have actually gone backwards in yesterday’s ballot. At the time the challenge was called Beazley was confident of having 35 votes.

Beazley backer Con Sciacca admitted on ABC Radio yesterday that one of their camp had defected.

The result of the ballot was broadly welcomed yesterday by Labor figures around the country.

NSW Premier Bob Carr called on his federal colleagues to take strong policies to the people now that the leadership fight had been settled.

Mr Carr said there was no need for despair within the party, which holds power in all states and territories and commanded 49 per cent of the two-party preferred vote at the last federal election.

“This is the base on which to build,” he told reporters. “With positive policies, a change of government is in Australia’s best interests.”
South Australian Premier Mike Rann also called on his federal Labor counterparts to get on with setting out an agenda to win the next federal election.

ACTU secretary Greg Combet called on all sections of the Labor Party to stand behind Mr Crean.

“The ACTU will continue its good working relationship with Simon Crean in developing Labor policies to improve the living standards of working people.”
Mr Crean said he and Mr Beazley went back a long time and would remain mates. He said that while it was a pity the challenge came about, they were both big enough and knew each other well enough to put it behind them.

Queensland Premier Peter Beattie urged the federal party to “take a deep breath and think of who they represent”.

“We can still win, provided we are focused on policy and we are united,” he said.

July 4

Choices unspeakably strange
Canberra observed
Laura Tingle. Tony Walker is on leave.
The irony of the subject under discussion, to some, was even greater than the debacle that wasn’t under discussion.When Labor’s shadow ministry met in Melbourne on Wednesday for the first time since Kim Beazley’s leadership challenge, what do you think was talked about?
Policy, you might think, given Simon Crean’s “policy, not poll-driven” pitch to the caucus.Some might even think the meeting discussed tactics for a new shadow ministry, due to be reshuffled that very day.No. What was discussed was polling. There was a briefing with slide show from the party’s national secretary, Geoff Walsh , and his assistant, Tim Gartrell .The rundown covered the strong and weak issues for the government and Labor: the economy is going well for the government; perceptions of economic management capabilities are a weakness for Labor; national security is still a dominant issue, but not as big as it was during the Iraq war, etc, etc.It wasn’t so much that the polling didn’t say anything surprising, just that it was surprising that it didn’t say anything about the issue one person called the “great big purple elephant in the room” the standing of the leader.There were, apparently, some polite references to “leadership” qualities, but no polling on the leader.

And, believe it or not, no one raised the matter.

Despite that, the gloves are once again off, and the biffo is even more vicious in the Labor Party after the lull that followed Crean’s caucus room victory over Beazley.

It’s not just Crean who is targeted now, but his deputy, Jenny Macklin, and frontbencher Julia Gillard.

Signs that Labor is hitting new lows of disunity are that complaints aren’t coming just from the usual suspects, but that Crean backers are attacking Crean backers and Beazley backers are backing some Crean backers but not others. Not a happy camp, Jan.

The only points of unity are that everyone was appalled at the way the Opposition Leader went about the reshuffle, and that everyone agrees Mark Latham’s elevation will be the make-or-break factor for the party, whatever it might mean for Crean.

The reshuffle had long been foreshadowed as occurring during the parliamentary break. Then, on Sunday, it was foreshadowed that it would be announced on Tuesday.

Wednesday dawned with no announcement forthcoming.

Shadow ministers spent hours travelling from all corners of Australia to discover that, just as nothing was said about leadership polling, nothing was said about the reshuffle.

(This was despite the media authoritatively reporting major elements of the front-bench changes all day.

Crean had still not announced his new line-up when Latham emerged to announce how pleased he was to be made shadow treasurer.)

As to the reshuffle itself, Crean’s problem was his deputy’s refusal to move to health. Macklin flatly refused, arguing that work on the party’s education policy was almost complete and she wanted to finish it.

This was despite a cross-factional view that Macklin had failed to make a mark in education and could better serve the party on her traditional turf of health.

But with Macklin refusing to move, Crean had to look elsewhere to fill the health portfolio, and it also meant plans to break up the education portfolio couldn’t proceed.

Enter Julia Gillard a Crean loyalist who lobbied hard for the health job.

There are serious concerns in the caucus about the wisdom of that move, too.

It’s not just resentment at Gillard moving from immigration after opening up her self-titled “cash for visas” scandal, which some fear will prove an own goal for Labor.

It’s concern that, having led an often unsubstantiated parliamentary dump on the Immigration Minister, Philip Ruddock, Gillard is riding for a similarly dirty campaign on her own reputation.

Even the most rusted-on Crean supporters believe the best candidates have not been put in the best jobs.

Labor, they believe, is not stripped down for action on crucial policy areas such as education or immigration (given to the highly regarded but inexperienced Nicola Roxon).

On national security, it remains vulnerable.

That’s not the fault of the party’s effective Senate leader, John Faulkner, who holds the brief.

He won crucial concessions out of the government on ASIO. But Labor is constrained by its complete terror of the terrorism issue .

And Latham? Well, less than 24 hours in, he’s felt the blowtorch of his new job on the negative-gearing issue.

Few media outlets drooling over the sight of Crean overruling his star recruit will say, even quietly, that the overheated property market suggests negative gearing has become something that should be reviewed, even if not abolished altogether.

While the comparison is usually made between Latham and one of his political mentors, Paul Keating, yesterday’s events are more reminiscent of John Hewson as shadow treasurer. He was frequently frustrated by the conflict between observing what he thought was economically obvious and the often bad politics of doing so.

But, hell, this is politics and Latham will have to cop it on the chin.

The challenge for Latham is that, while he is known for all the headkicker cliches, he sees himself (as Keating did) as a policy aesthete.

Keating’s greatest political strength as treasurer was bringing the politics and the policy together to create an engaging soap opera about the economy that worked in Labor’s favour, even when things were bad, right up until the “recession we had to
have”. At that point, like all soap operas, there needed to be a wedding or a funeral.

Trying to inject some drama into a soap opera in which your opponents are the stars of a happy story of rising disposable incomes is a trickier feat.

No one knows whether Latham has any chance of pulling it off.

They just know that his arrival in the job means the process of skipping generations in the Labor leadership has started.

July 11

Hooks and levers keep a leader aloft
Canberra observed
Laura Tingle – Tony Walker is on leave.
John Howard becomes Australia’s third-longest-serving prime minster tomorrow, trailing only Robert Menzies and Bob Hawke.He has just passed a gaggle of predecessors who served for just over seven years Malcolm Fraser (seven years and four months), Billy Hughes (seven years, three months and 14 days) and Joe Lyons (seven years, three months and two days) and whose reputations and legacies have been marked very differently by history.Howard has made it clear he has no intention of leaving office just yet, so he has the opportunity of breaking well away from that pack.Assuming a late-2004 election, the Prime Minister will instead be bumping towards Bob Hawke’s record as second-longest-serving prime minister: eight years, nine months and 10 days.Longevity of itself is a marvel in politics. But the common threads between those who achieve it are not always immediately apparent.If you draw a line between Bob Menzies and Bob Hawke, the most conspicuous point of similarity between two men from opposite sides of politics, with completely opposing political strategies, is their “special relationship with the people”.

If this is what joins the avuncular Menzies and the reformed larrikin Hawke, what is it about Howard that has produced some “special relationship with the people”?

Trust, presumably, is the glue that binds voters to a leader.

The Prime Minister himself acknowledged its importance in 1995. He told an audience in Brisbane in August that year that, “as a group, politicians are often regarded with cynicism and disdain, particularly amongst the young.

“And some of this is the product of our natural cynicism towards people in authority, and in some respect it’s one of the more endearing and gratifying features of the Australian character: an unwillingness to be beguiled or taken in or seduced by those in authority. And long may that remain part of our national character a healthy scepticism about those in authority.”

Howard argued that it was the dishonouring of election commitments that was at the root of this breakdown in trust.

So the most perplexing aspect of Howard’s political success remains his ascendancy, despite the fact that he has turned out, more often than not, not to be the person he sold to voters, or has not delivered what he promised.

The unkind might say he is the most successful liar in federal political history.

This is, after all, the man who promised to retain Medicare and bulk billing, to “never, ever” have a GST, to reform parliament, to protect the public service, and who coined the idea of “core” and “non-core” promises, as well as the hilariously titled “charter of budget honesty”, under which it is now impossible to find out how the federal government spends our money.

As to children overboard and weapons of mass destruction, let’s not even go there.

Howard has not even been called to account for the less politically sexy but more economically fundamental promises he made in 1995.

Most notably if unnoticed by voters Howard promised to fix the current account deficit, which in 2003 bounces around the same level of 6 per cent of GDP that he described as “dangerous” in 1995.

As a result, Australia’s foreign debt that dreadful evil condemned from the back of a truck in 1996 has quietly, but consistently, increased from about 40 per cent of GDP to 50 per cent of GDP.

Productivity growth, which he pledged would save us from the current account deficit and foreign debt, has actually slowed.

So, despite all the noise of slashing government spending (in the early years) and bonfires of taxpayers’ money squandered on pork barrelling (in the later years), we haven’t actually gone very far for all the effort.

It has often been Howard’s capacity to give radical policy shifts a bland and apparently harmless face that has been his greatest political skill and his greatest sleight of hand with the Australian public.

The split personality of the Howard regime was established in 1995 when he successfully jettisoned the luggage of Fightback and talked soothingly of instead wanting to head “a nation of caring achievers”.

The Australian Financial Review’s Geoffrey Barker wrote after the then opposition leader’s first “headland” speech in June 1995 that Howard “invited Australians to reject Labor’s compulsion to remake the economy, the constitution, national attitudes and national myths.

“He offered a period of down-time, a pause for personal reflection, for consolidating and refurbishing what the country has and is.”

It’s not that there haven’t been all sorts of crises and profound shocks to galvanise the public in Howard’s time in office from the Port Arthur massacre to September 11 to Bali and at least three military conflicts.

But they have occurred against a backdrop of economic circumstance that has left Australians feeling at least personally economically secure after the challenges of a recession and a decade under Hawke in which they were told how much Australia (and therefore they) had to change.

This Prime Minister, by comparison, has told voters that, no, they don’t have to change a thing, and anyone who suggests they do is positively un-Australian.

Yet having lulled them into such a sense of security, Howard has led them to places which when they wake up they may not recognise.

In foreign policy, we have become belligerent. At home, Australians’ cynicism of authority sits uncomfortably with the powers intelligence agencies have been given and our seeming tolerance for not being told the truth.

As Howard passes Malcolm Fraser’s prime ministerial benchmark, the contrasts between the Prime Minister and the man who groomed him could not be more conspicuous.

But while Howard has been dismissive of comparisons between his world view and that of Menzies, they grow stronger all the time.

Veteran commentator Peter Robinson observed rather prophetically in 1995: “Defence and various related issues were the great glory of the Menzies era the glue that helped bind the coalition with the right-wing rump of the Labor Party, the Democratic Labor Party, in an alliance that the ALP found impossible to break.

“. . . Mr Howard’s words last week suggest that we are to have a nostalgic rerun of this.

“. . . It is no longer red paint which is being splashed on Labor but the darker hues of xenophobia and anti-Asian prejudice.”

July 21

Ethanol wins in petrol tussle
Laura Tingle
Federal cabinet tomorrow is expected to concede a major package of industry assistance to the ethanol industry dominated by the Manildra Group after a bloody lobbying fight in which Manildra threatened its own extinction.While sections of the government are appalled at what is seen as the blackmailing, in effect, of the government by Manildra which accounts for about 90 per cent of Australia’s ethanol production cabinet is expected to offer a number of concessions to further subsidise the ethanol industry after it considers the issue.This is despite the fact cabinet has before it a paper commissioned by the Department of Industry, Tourism and Resources from consultants KPMG, which has found that ethanol producers are actually quite profitable.Assistance for the ethanol industry is expected to include the provision of $50 million of capital subsidies to build biofuel plants, including new ethanol plants, and the formalisation of considerable pressure on oil companies to increase their use of ethanol in petrol sold at the pump. It appears this pressure will fall short of a mandated requirement to include ethanol in petrol sold at the pump.But sources believe major oil companies have been reminded of a number of recent budget initiatives including cleaner fuel incentives that assist their industry, but which have yet to be passed into law.They will be expected to voluntarily agree to put about 2 per cent ethanol in their petrol over time.

The government went to the last election promising to pursue an increase in ethanol consumption to 350 million litres a year by 2010.

So while cabinet will not impose a mandatory requirement on the oil companies to include ethanol in their fuel, it will probably set benchmarks to assess progress in coming years towards the 350 million litre target.

However, the petrol companies are expected in turn to insist that the owner of the Manildra Group, Dick Honan, will have to lower his price.

And while some ministers have reservations about spending more money supporting this industry, proponents of the capital subsidies say it will encourage investment in new technology and more efficient plants.

The push for more support for the ethanol industry is being led, once again, by the National Party and particularly by its leader, deputy Prime Minister John Anderson.

There is a new ethanol plant on the drawing board for the northern NSW town of Gunnedah, in his electorate of Gwydir.

The campaign to gain the ethanol subsidies by Manildra has been long and sustained and last week shifted to lobbying local councils and groups with interests in vulnerable regional communities, urging them to put pressure on cabinet ministers.

In a letter written last week, Mr Honan tells people in NSW that the inability of Manildra to sell its ethanol means it “will be unable to meet NSW Environment Protection Agency regulations associated with the operation of its Nowra plant.

“This would force the closure of the site, with loss of jobs and economic activity in the Shoalhaven region, and cut off supply of major products to the paper, brewing, confectionary, and pharmaceutical industries in Australia.

“The operation of Manildra’s industrial operations in Manildra (near Orange), Gunnedah, Narrandera, Leeton and Altona would also be impacted.”

Mr Honan says a range of other proposed ethanol and biodiesel plants would also not proceed.

Manildra claims it has been subjected to a dirty campaign by the major oil companies on the ethanol issue which has led to a major consumer backlash.

When federal cabinet was last considering assistance to the local ethanol industry last year resulting in a production subsidy being introduced ethanol hit the headlines.

Among those arguing against its inclusion in petrol were the motoring organisations, specifically because some retail outlets were including ethanol levels of up to 20 per cent in their fuel.

The motoring bodies argued that this could damage car engines and void warranties.

Most groups agree levels of ethanol of less than 10 per cent are not harmful to engines.

But the publicity about the 20 per cent levels spooked motorists and service stations, particularly the independent discounters, who often sold fuel with higher levels of ethanol.

They started to put up signs promising no ethanol at all in their fuel, and the movement spread.

It was a disaster for Manildra and the ethanol cause.

As always, the exact shape of the assistance package will depend on the Prime Minister.

The indications are that he is sympathetic to Mr Anderson’s push to support an industry that the National Party argues could be a major growth driver for rural Australia.

After all, the government promised at the 2001 election to support a local biofuels industry. Mr Howard is said to regard the debate as being about how to honour these election commitments rather than whether to honour them.

August 4

Honan’s way – how the deal was done
Capital moves
Laura Tingle
`Dear Prime Minister,” Manildra Group chairman Dick Honan wrote to John Howard on August 28 last year.”This is just a short note to let you know how much we appreciate your support for ethanol, and biofuels generally.”Earlier this week I spoke to Max Moore-Wilton , and mentioned to him our concern, and CSR Distilleries’ concerns, over the scheduled arrival of 13.9 million litres of cheap Brazilian ethanol in Australia in early October.”. . . cheap imported ethanol would destroy any prospect of an Australian renewable fuels industry, and with it the benefits it may bring to the environment, future energy security, and economic and jobs growth in rural Australian communities.”We have proposed urgent consideration of moving ethanol and biodiesel from the existing fuel excise structure to a producer credit scheme.”Fifteen days later, federal cabinet decided to change the protection arrangements already in place for the ethanol industry from an excise exemption to a domestic production subsidy just what Manildra had proposed.

The Brazilian ethanol never made it to Australia.

This was the start of the very public brawl about taxpayer support for ethanol and for Honan’s company, which dominates the Australian market, one that was still raging two weeks ago when federal cabinet made more concessions to the industry.

According to answers to Senate estimates committees, Manildra received $20,857,998 in taxpayer-funded production subsidies between October 14 last year and June 30 this year.

Two weeks ago, cabinet agreed to another $10 million of short-term assistance to ethanol producers the lion’s share of which will go to Manildra.

It also agreed to appoint a public servant to act as sales manager or “facilitator” for Manildra.

It then agreed to offer $37 million of capital subsidies for new ethanol plants though the conditions are strict enough to make the entry of new players into the market almost impossible.

And it also agreed to assist in getting the big oil companies to buy 80 million litres of ethanol a year by June next year which just happens to be about the current output of Manildra and CSR.

What has fascinated those who have watched the policy debate is the extraordinary access and influence that Honan seems to have enjoyed with the Prime Minister and the government generally on ethanol.

Now, documents released to opposition primary industry spokesman Kerry O’Brien under the Freedom of Information Act give some flavour of the extent of that influence.

They have also revealed that Howard appears to have repeatedly misled federal parliament on his contact with Honan at the time of federal cabinet’s production subsidy decision last September.

The documents show that on August 1 last year, Howard held a private meeting with Honan. A departmental note taker was the only other person present.

Departmental records state the meeting focused on two issues. One has been blanked out (though Honan did talk at one stage of “the need to harness water resources, including piping water from northern Australia”).

The other issue discussed that day was “the Australian ethanol industry”.

“The Manildra group has engaged Ernst & Young to develop a model for the introduction of a renewable fuel policy in Australia based on ethanol,” the notes of the discussion say.

“It includes a mandated maximum ethanol limit of possibly up to 10 per cent, retention of the excise exemption for ethanol, and the payment of a producer credit to ethanol producers to enable Australian ethanol producers to compete with the cheaper Brazilian product.

“Mr Honan provided a copy of a preliminary report into the Australian fuel ethanol industry to the Prime Minister.”

So Honan had an ambitious, and hard to forget, shopping list for government assistance: he wanted a government-guaranteed market for his product, continued tax-free status for his product to make it competitive and he wanted protection from import competition.

Just six weeks after this meeting, the Prime Minister faced questioning in the House of Representatives over three days about what contact he, his office and the government had had with ethanol producers (such as Manildra) in the lead-up to its cabinet decision.

But he did not remember the meeting with Honan.

Asked by Labor backbencher Anna Burke on September 17 whether the government had been contacted by the “major Australian producer of ethanol” or its representatives before its cabinet decision, the Prime Minister said:

“Speaking for myself, I did not personally have any discussions, from recollection, with any of them.”

Two days later Howard told Opposition Leader Simon Crean that in the light of all the questions, he had checked his records of contacts with Manildra and Honan.

He still didn’t remember the meeting.

“The member asked me what communication my office had with Manildra relating to the decision to change excise arrangements for the ethanol industry,” he told the House.

“As I stated earlier, I had not spoken to Dick Honan on this issue.”

The Prime Minister went on to say that, yes, there had been a number of letters received on ethanol, including the one quoted in this article from Mr Honan on August 28, “but that letter was not passed to me”.

After this apparently flat denial of any direct contact between himself and Honan on the issue, the opposition abandoned the question of links between the Prime Minister and Manildra.

Yet the FOI documents reveal that Honan managed a personal meeting with the Prime Minister at a time when support for the sugar industry of which ethanol was considered a key component was weighing heavily on cabinet’s mind.

(The cabinet even went as far as to meet in Cairns on August 13 to show its solidarity with sugar growers who, facing slumping world markets, wanted a bail-out, and who saw ethanol production as a possible new market for their crops.)

But in addition to the personal meeting, Honan was able to get direct access to the country’s most powerful public servant, the then head of the Department of Prime Minister and Cabinet, Max Moore-Wilton, in late August, the very week cabinet was due
to consider a National Party push to have ethanol content in petrol mandated.

Having failed to win this argument, Honan was at it again a couple of days later on August 28, once again looking for protection, this time from imported ethanol one of three forms of protection he had put to Howard at their meeting on August 1.

The relentless nature of Honan’s lobbying is revealed in other FOI documents, this time from Treasury, which include a briefing note for Treasurer Peter Costello in anticipation of him meeting Honan at a post-budget breakfast on May 22 last year.

Most of the executive minute which simply prepared Costello for what Honan was likely to raise with him and reminded him of government policy has been blanked out.

Significantly, large slabs of a biography of Honan prepared by the department have also been blanked out, though his profile in the BRW Top 200 richest Australians of 2000 has been left in.

August 12

PM’s office in ethanol paper trail

Laura Tingle, Political correspondent
Prime Minister John Howard insisted to parliament yesterday that he had spoken truthfully when he said Liberal Party donor Dick Honan did not ask him to stop a Brazilian shipment of ethanol at a face-to-face meeting on August 1 last year.But new documents show that a few weeks later, when government officials received a formal letter asking him to stop the cut-price shipment, Mr Howard’s office acted as though the request came straight from the boss himself.A letter from the lobby group for Mr Honan’s company, Manildra Group, and the ethanol industry landed in Mr Howard’s office and the offices of other senior ministers and bureaucrats on August 21.Documents obtained under freedom of information show that within a few days, the head of the Prime Minister’s department, Max Moore-Wilton spoke to Mr Honan.Although Mr Howard insists the request was unknown to him, his powerful top aide took up the issue and chaired an inter-departmental committee to oversee implementation of the change in policy.Mr Moore-Wilton’s intervention was already under way on August 28 when Mr Honan wrote to Mr Howard seeking the same policy change a letter the Prime Minister told parliament last year he had not seen.Thanks in part to that energetic activity, the cabinet decision was taken without being supported by a submission on September 12 despite bureaucratic reservations about its impact on Australia’s World Trade Organisation obligations.

Facing questions about why he had misled parliament, as well as an unsuccessful censure motion, Mr Howard argued yesterday that, rather than do what Manildra had advocated, the government had not delivered for the company and its chairman, Dick Honan.

“Honan thought ethanol production would be important to the Australian sugar industry. I responded that this would be looked at when we considered the impending sugar package,” he recently wrote in a letter to the AFR.

But the documents received under freedom of information show the government’s decision to exchange an excise exemption for a domestic production subsidy which made Brazilian ethanol imports uncompetitive fulfilled requests put to it in August last year when news of the Brazilian ethanol shipment emerged.

The executive director of Manildra’s lobby group in Canberra, Bob Gordon, wrote to a number of government figures including a member of Mr Howard’s staff, on August 21, according to the documents received by Labor senator Kerry O’Brien .

This was three weeks after Mr Howard had held a one-on-one meeting with Mr Honan to discuss protection from Brazilian ethanol imports the meeting he did not disclose to parliament and which is now at the centre of claims that he had misled parliament.

“To the best of our ability, our industry has been monitoring, through contracts in Brazil, the possibility of fuel ethanol imports into Australia,” Mr Gordon wrote.

“Our association has, for some time, been advocating moving biofuels such as ethanol and biodiesels from the existing excise scheme to a producer credit scheme funded by fuel excise revenues.

“We have reliable advice from Brazil that a significant shipment of fuel ethanol from Brazil is scheduled to be delivered to Australia in September.

“We would be grateful for an early opportunity to discuss the issues and options associated with imports of biofuels preferably this week.”

Question Time was dominated by questions to Mr Howard about why he told parliament on three separate occasions in September last year that he had not discussed the ethanol industry with Mr Honan and his company, when records now revealed the one-on-one meeting in August.

August 18

New revelations add fuel to ethanol ire
Capital moves
Laura Tingle
Australian trade officials were examining placing import controls on ethanol as early as May last year, according to documents, raising new questions about why importers were not warned of a pending change in government policy.The revelation also raises new questions about how the bureaucracy and the government came to make a decision about stopping ethanol imports, as the decision taken last September has so far been seen as a quick decision made after it had been confirmed a shipment was on its way.In particular, the hands-on role of the then head of the Prime Minister’s Department, Max Moore-Wilton, in the policy process last September is likely to come under more scrutiny.Sources have told the AFR that bureaucrats were “told to go into `policy implementation mode’ before the policy question had even been considered by the government”.In parliament last week, Labor raised the connection between Moore-Wilton and Dick Honan, the chairman of Manildra Group, which holds a near monopoly on ethanol production in Australia.Labor last week claimed a close relationship between the two men, who served together on the Australian Wheat Board, as part of its attack on “crony capitalism” in the growing ethanol controversy.In September last year, the government changed its support for the ethanol industry from an excise exemption to a domestic production subsidy, which made imports of ethanol uncompetitive.

The change in policy was at the behest of Manildra and at the cost of $1 million for two companies importing ethanol for the first time because Manildra could not supply them: Trafigura Fuels and Neumann Petroleum .

The new documents have been revealed as the federal opposition prepares to pursue the ethanol issue again in parliament this week , after last week switching its attention from the absent Prime Minister to Trade Minister Mark Vaile.

Vaile was under fire for failing to warn Neumann chief executive Paul Moreton of the looming change in policy, despite being on an overseas trade mission with him in the lead-up to the cabinet meeting that made the decision on September 10.

This was despite Vaile being aware instructions had been given to his department, Foreign Affairs and Trade, around August 23 to find out details of the shipment through Australia’s embassy in Brazil.

Documents released by DFAT under Freedom of Information laws to Labor primary industry spokesman Kerry O’Brien show Honan met a senior official in the department’s Office of Trade Negotiations on May 30 last year.

Honan subsequently wrote to the official, DFAT first assistant secretary Bruce Gosper , with information on overseas ethanol programs. Honan also informed Gosper that an Ernst & Young executive would be contacting him to discuss the issue.

The letter was copied to a staff member of Vaile.

It was a report by Ernst & Young on the ethanol industry that Honan handed to Prime Minister John Howard at the controversial August 1 meeting, which Howard failed to mention when asked in parliament about contact with Manildra and which has led to charges that he misled parliament.

The report’s proposals included “a mandated maximum ethanol limit of possibly up to 10 per cent, retention of the excise exemption for ethanol, and the payment of a producer credit to ethanol producers to enable Australian ethanol producers to compete with the cheaper Brazilian product”.

On June 7 last year, DFAT records show, an official in the subsidies and trade remedies unit of the department’s World Trade Organisation legal division received “the ethanol papers which Manildra have sent to Bruce Gosper”. The official said the papers would be examined and advice provided.

The DFAT deputy secretary responsible for the office of trade negotiations, Peter Grey , gave evidence to a Senate estimates committee hearing in November last year about a now notorious meeting of departmental heads and senior bureaucrats held on August 29.

According to Grey, the meeting, chaired by Moore-Wilton, was attended by Treasury, the departments of Finance, Industry and Agriculture, “maybe” the Attorney-General’s department and Environment Australia.

Grey confirmed the “robust” meeting failed to agree on advice to the Prime Minister on assistance for the sugar industry and the promotion of biofuels.

The AFR reported last year that lobbyists had claimed Treasury had refused to sign off on a submission on the issue prepared by the Prime Minister’s department.

Rumours of a heated exchange between Moore-Wilton and Treasury secretary Ken Henry at the meeting have circulated in Canberra since last year.

Labor has subsequently got hold of a dissenting report by the Department of Finance and plans to release its damning criticisms of the change in ethanol policy slowly.

At the November estimates hearing, Grey confirmed DFAT provided information on the then looming shipment of ethanol from Brazil and agreed he was unable to think of a previous case where his department had been asked to get such information in the past.

Before Howard left for New Zealand last week, he got himself into more of a knot on the ethanol issue, agreeing it could be attacked on competition grounds and admitting it favoured one company and damaged others, but staunchly defending the propriety of the decision and the decision-making process.

Iraq leak further blow for PM
Capital moves
Laura Tingle
A government backbencher was given details of a highly classified intelligence report, which were then used to try to discredit a high profile critic of the Howard government’s decision to go to war in Iraq.Confirmation that National Party Senator Sandy Macdonald was provided with details of a classified Office of National Assessments paper on Iraq before he quizzed former ONA official Andrew Wilkie at a Senate inquiry last month comes as the government’s honesty and credibility is under sustained attack as federal parliament resumes sitting today .Over the past month, Prime Minister John Howard’s credibility has been damaged by his misleading of parliament over the Manildra affair, his failure to sack Minister for Regional Services, Territories and Local Government Wilson Tuckey for improperly
using ministerial letterhead, and the government’s apparent double standards in failing to publicly attack Pauline Hanson’s policies in 1998 while Workplace Relations Minister Tony Abbott was moving through the legal system to try to deregister her One Nation party.Last week’s Newspoll showed those credibility issues have begun to hit Howard’s standing even if Opposition Leader Simon Crean has been unable to capitalise on it.As a result, weekend speculation about a move to Canberra by NSW Premier Bob Carr marks the first shot in a new period of leadership instability for Labor.The leaking to Macdonald of the details of the report Wilkie wrote on Iraq and its possible use of weapons of mass destruction in December 2002 before resigning in protest at what he says has been manipulation of intelligence material by politicians
has caused considerable disquiet within the intelligence community.The disquiet follows the controversy in the UK over the treatment by the Blair government of the late David Kelly. Kelly apparently committed suicide after appearing before a parliamentary inquiry on intelligence on Iraq. He was named as a key source in a controversy about the “sexing up” of assessments of the risk posed by Iraq.At the only public hearing of Australia’s inquiry into Intelligence on Iraq’s Weapons of Mass Destruction on August 22, Macdonald asked Wilkie three questions that directly referred to the ONA report Wilkie wrote.Macdonald began by noting Wilkie’s “very strong words about the government’s credibility” and noted that “your own professional credibility is on the line here too”.”So I want to take you back to the role that you had in ONA and . . . [whether] your one report concluded that Iraq had a WMD capability?”He also asked whether Wilkie’s report had suggested that Iraq could use chemical and biological weapons on its own people, and that there would be “a mass panic of refugees” fleeing Saddam Hussein’s biological weapons.

He challenged Wilkie over whether that last conclusion had been correct.

Wilkie responded: “You are obviously quoting from the report.

“Yes, I make the point again that I said, and I still believe, that Iraq had a limited and disjointed WMD program and that one of the things that could go wrong was the use of those weapons against not only coalition forces but also Iraqis as part of some sort of retribution or scorched earth policy or to overwhelm the coalition or aid agencies for any number of reasons.

“My job when writing that report was to talk about the things that could go wrong.”

But Wilkie went on to say that while he had always believed that Iraq had a “disjointed and contained WMD program”, his objection had been to the fact “the government exaggerated that threat and supported the exaggeration in Washington and London to give the impression that it was not just a regional threat but a global threat”.

The Australian Financial Review rang Macdonald two weeks ago to ask him whether, as his questions suggest, Wilkie’s report had been made available to him and/or the committee, or made public.

He said his questions had been based on information given to the British parliament’s foreign affairs select committee by ONA before Wilkie appeared before that committee.

The Acting Director-General of ONA John Eyers wrote to the chairman of the British committee in June distancing the ONA from its former employee. “Prior to his resignation on 11 March 2003 he produced only one written report about Iraq, an assessment in December 2002 of the possible humanitarian consequences of military intervention.”
The letter says Wilkie has not been given access to “some important relevant material on Iraq’s WMD programs”.

However, an examination of transcripts of the British inquiry reveal no reference to the contents of Mr Wilkie’s report.

The AFR once again contacted Macdonald last week.

He then acknowledged that information about the contents of Wilkie’s still-classified report “had been provided to me”.

However, he said, he had not spoken to ONA and had not been given a copy of the report but would not reveal his source.

A Labor member of the Senate committee conducting the inquiry, Senator Robert Ray , said the committee wasn’t given access to either the report or a summary of it.

A spokesman for Howard said on Friday that “nobody from this office is responsible” for Macdonald having the highly classified information.

He went on to suggest that maybe the Senator had picked up details of the report from media stories.

But the question of who briefed Macdonald is likely to become the subject of a new political controversy in parliament.

Last week, the Canberra Times’s public service correspondent Verona Burgess reported that the government’s apparent use of ONA reports was “upsetting to people in the intelligence community who are not allowed to speak publicly themselves, yet may find bits of their assessments hung out to dry by ministers”.

Three days after Wilkie appeared before the Senate inquiry, Howard issued a statement noting that Wilkie had “accused the government, and me in particular, of dishonesty, fabrication and distortion”.

He said his major speeches on Iraq’s WMD capability had been checked for accuracy by ONA.

“If Mr Wilkie has evidence that the government misrepresented intelligence he should submit it,” Howard said.

“It is open to him to do so without breaching his legal obligations not to reveal classified information obtained in the course of his previous employment.”

Yet, despite Macdonald being given information on Wilkie’s report, other senators on the committee have not been able to access it.

Nor has the government agreed to provide any other classified information to the committee.

And unlike Tony Blair, Howard and his senior advisers will not be appearing before Australia’s inquiry into what we knew about Iraq before we committed to war.

September 26

he loyalist
Profile
By Laura Tingle
He’s the power behind the throne – committed, workaholic, dependable, modest. yet arthur sinodinos is no ivy league liberal or CARD-CARRYING apparatchik. howard’s right-hand man is a family guy from A labor heartland. He’s even said to be downright nice.Geoffrey Carrington is a competitor who has haunted John Howard’s chief of staff, Arthur Sinodinos, since the late 1980s. The two are wildly unalike. Carrington represents the heart of the Liberal/conservative establishment: educated at Scotch College, a product of the Melbourne University Liberal Club and Oxford University; a rower; a rugger player. When he applied for a job with John Howard in opposition in the late 1980s from Hong Kong and Shanghai Bank in Hong Kong, he boasted Sir Roderick Carnegie and John Elliott as referees.Sinodinos, by contrast, shouldn’t be working for a Liberal Prime Minister at all. A Greek boy from Newcastle – it just doesn’t fit the stereotype. Yet Sinodinos has risen to be perhaps the second most powerful man in the land – if largely unknown by the public.In the Howard Government, all power rests with the Prime Minister’s Office. And that means with John Howard and Arthur – as he is universally known around Parliament House. If you are trying to persuade John Howard of anything, you have to persuade Arthur too. Carrington, by comparison, remains elusive, a name last spotted among the cards at Sinodinos’s wedding to his wife Elizabeth in February 2000. This shouldn’t be surprising, as Mr Carrington was only ever the brainchild of two of Arthur’s friends, Anna Cronin and Stephen Brady.Cronin tells the story today as an example of Sinodinos’s modest view of himself. Until he was let in on the joke, he was becoming increasingly concerned about having to compete with such an impeccably credentialed establishment man. Despite holding his current job since 1997, Sinodinos remains outside the mould of senior political advisers to prime ministers. He follows Howard’s long-time political adviser Grahame Morris in the job. But he has risen through the policy, rather than political, ranks.This is not unprecedented. For long periods during his time as both treasurer and Prime Minister, Paul Keating also had a Treasury man as chief of staff, or principal private secretary: Dr Don Russell. But perhaps as much because of the nature of the man he works for, and a different policy agenda, Sinodinos has not developed Russell’s machiavellian demeanour or love of the political game. Nor, it has to be said, the dread, fear or resentment that Russell provoked.Sinodinos is more in the style of some of the mandarins from Prime Minister and Cabinet (PM&C) who served Bob Hawke as chiefs of staff and then made successful transitions back into the public service. The most prominent of these survivors today is Dennis Richardson – now head of the Australian Security Intelligence Organisation. During their time as prime ministerial staffers, they remained in the background; impeccable public servants rather than political operatives.Search the records for Arthur Sinodinos and he is almost invisible. His name virtually never occurs in the parliamentary Hansard. When it does, it is as part of the annual valedictory speeches party leaders give to thank parliamentary personal and party staff for their work during the year.There is one controversial reference: a question about whether his name had been deleted from a document about the 1998 waterfront dispute. But, even in the highly disputed children overboard affair in which the Prime Minister’s office was deeply involved, Sinodinos’s name rarely featured.He appears in the major books on the Howard Government only as an attendee at various strategy meetings. Yet Grahame Morris calls Arthur “the rudder on the good ship Howard”. Sinodinos, by all accounts, tries to establish the framework for the Prime Minister’s plans, and leaves the politics to “the boss”. Any political `enforcement’ that needs to be done is the province of Howard’s political adviser, Tony Nutt. It is his job to sort out any problems with the party organisation, and problems that emerge with the political management of particular party issues.

Sinodinos arrived in Canberra in 1979 from New-castle as a 22-year-old university graduate employed by the Department of Finance. When he came, he brought his widowed mother, California, with him, a sign of his extremely strong family ties. He moved to the Treasury in 1980 to work in its macroeconomic division. And it is as a macroeconomist that he is primarily remembered in the department, particularly for his work on balance of payments forecasting – at the time the BOP was at the centre of the political debate of the 1980s – and on structural policy (microeconomic reform). He was well respected by his colleagues.

“He was sharp, a really good operator,” one Treasury official says, “and a decent bloke. Even when you disagreed with him, you were confident he had listened to your opinion and respected it. You never worried that you might get shafted by Sinno.”
Sinodinos first went to work for John Howard in 1987 and stayed until 1989, when Howard was toppled by the Peacock coup. Morris remembers him as “this young bloke with wild, curly hair which was receding even in those days. He was probably more economically pure than reality would like then, but now he’s an extraordinary mixture of economic, political and policy adviser.”

Anna Cronin started around the same time as Andrew Peacock’s economic adviser and the two became friends. “Even while World War III was going on between Peacock and Howard, Arthur and I would be locked in a room developing economic policy,” she says. The politics of their respective bosses never affected their friendship, even if, according to Cronin, the brutal politics that saw Howard removed in the 1989 coup seemed to hurt Sinodinos. “He was quite hurt by what happened in 1989,” she says. “He hadn’t developed his tough political skin.”

Sinodinos returned to the Treasury and was promoted at the time of the Hawke government, despite his time working with the Coalition. “There was certainly a view in those days that Treasury officers benefited from some exposure to the processes of ministerial offices,” one source says. “The signals we wanted to send out, as a result, were that working in a political office certainly would not harm your departmental career, if you were not seen to be a political apparatchik first and bureaucrat second.” There was certainly never any cloud hanging over Sinodinos. He was not perceived as a political person.

But his time in the former opposition leader’s office had forged a strong bond between the two men, and Sinodinos returned as economic adviser to Parliament House in 1995 when Howard regained the Opposition leadership. He was involved in all the strategy meetings leading up to Howard’s eventual 1996 electoral victory, and formed part of the huge entourage the future PM took with him during the 1996 election campaign. With the departure of Nicole Feely – Howard’s first chief of staff as Prime Minister – and then Morris, it was Sinodinos who stepped into the job in late 1997 in the traumatic days after the `travelgate’ scandal which cost three ministers, as well as
Morris, their jobs.

Despite the immense power the job has brought him, Sinodinos remains unchanged, according to those closest to him. He is not a hobnobber or a power luncher, but a workaholic. Outside work, he is heavily involved in the Canberra Greek community and the Greek Orthodox Church. The guest list at his February 2000 wedding in Sydney was dominated by his many friends in the Greek community. There were some people from the Prime Minister’s office, Max Moore-Wilton, a handful of public servants, Cronin, and a couple of journalists.

His style is inclusive with the staff in the PM’s office, and with staff across the ministerial wing. Howard’s office, as a result, has not developed a reputation for aloofness or exclusion that both Keating and Hawke’s did at various times, despite the PM’s iron grip on the government. “Arthur involves people more than I probably should have,” Morris notes. “He listens to people, gives them an opportunity to have a say, but ultimately will have the penultimate say.”

Of course, the most crucial relationship is the one you have with the Prime Minister. Morris says the relationship is one where “you save your best fights for your boss. Behind closed doors, you have to be able to shout at each other, then know how you got to a decision. Even if you think it’s wrong. You are not the elected person.”

Yet another former staffer emphasises Sinodinos’s use of humour as an important vehicle for dealing with the PM. “Arty has a great sense of humour,” he says. “He’s very dry, very droll. He takes the mickey out of the boss, and doesn’t take himself too seriously.” In strategy meetings with the Prime Minister and staff, Sinodinos will come in to steer the discussion to keep it focused. “He doesn’t throw his weight around,” another says. “He maintains his manners and his humour.”

“There is something quite gentle about Arthur,” Anna Cronin says, while despairing sometimes of his loyalty to the Prime Minister. “I sometimes say to him, `you can’t do these jobs forever, what are you going to do next?'” Cronin thinks Sinodinos should, when he sees an opportunity, make a pitch for a job as a department head. “The point is, even the ALP holds him in high regard, so he would not necessarily suffer in any purge of the public service that might follow a change of government,” she says. For the time being, however, Sinodinos remains focused on delivering the policy outcomes John Howard wants, and on his family, which now includes a small daughter.

October 10

Full of promise but short on substance
Canberra observed
Laura Tingle
As political aficionados around the world were tut-tutting the rise to gubernatorial glory of Arnold Schwarzenegger this week, Canberra was delivering its own periodic lesson in the delicate balance in politics between form, substance, hype, promise
and cliche.Out of the Sydney harbourside enclave of Point Piper came the latest promise of a political Messiah, this time in the form of Malcolm Turnbull.In all the breathless reporting of the big “names” supporting Turnbull’s bid to win pre-selection for the blue-ribbon seat of Wentworth, one rather pertinent, if ironic, point has generally been lost.This is the prevalence of other over-hyped Messiahs, and people of promise on the list of Turnbull’s supporters, who, if one is brutal, ultimately didn’t make it or haven’t yet, sometimes despite every advantage.Former opposition leader Andrew Peacock, former attorney-general (and Turnbull’s father-in-law) Tom Hughes and state minister Michael Yabsley who all reached substantial heights in politics but ultimately didn’t cut it the way they may have expected
to come to mind.This is not to be unkind, just to point out that politics plays cruelly with the bright and ambitious.In the 1980s, Paul Keating used to torture the then member for Berowra, Harry Edwards a former economics professor who was elected as a Liberal into parliament and rose exactly nowhere with a cheerio every time his own economic credentials were challenged.John Hewson another member for Wentworth fizzed and shone spectacularly on the Canberra stage for a time but couldn’t cut it in the end.There have been other Messiahs of course. John Elliott and Joh Bjelke-Petersen come to mind in the coalition ranks.None of this means people of promise can’t make it: Peter Costello and Brendan Nelson were other over-hyped parliamentary entrants.Some of us think it took the Treasurer a while before his substance matched the hype, but he has grown into a formidable parliamentary performer.

Nelson has gained a lot of respect for the way he consulted over his education reforms, even if he has been making heavy weather of them since they were announced.

The point is: you can’t ultimately pick it with political success.

The New York Times columnist Frank Rich wrote last month:
“Only in America could a guy who struts in an action hero’s Hollywood costume and barks macho lines from a script pass for a plausible political leader.

“But if George Bush can get away with it, why should Arnold Schwarzenegger be pilloried for the same antics?”

Malcolm Turnbull might prove to be a brilliant politician. But allowing the perception to develop that he is bringing an overkill of money and influence to bear on the Wentworth preselection suggests Turnbull has a casual disdain for the significance of the perception this creates as he focuses instead on the short-term outcome it might produce.

Emphasising the fickleness of politics this week is the fact there were no fewer than seven former ministers sitting on the government back benches .

This is even after the “jobs for the boys” appointments which have resulted in many other former ministers being eased out of parliament since 1996.

At least two who are now backbenchers Judi Moylan and Bronwyn Bishop were chewed up by the aged-care portfolio.

Now Julie Bishop has become John Howard’s fifth minister responsible for aged care since 1996, after being appointed the Minister for Ageing in last week’s reshuffle.

Bishop has always been one of those MPs touted as having ministerial potential and a “rising star”. But she has had little general public profile until this week, when she made perhaps the most assured debut at the dispatch box we’ve seen for some years, particularly by a woman.

From the press gallery in the House of Representatives chamber, situated above the Speaker’s chair, you are exposed to a lot of trivial but instructive detail.

For example: how hard ministers’ hands are shaking when they rise to answer a question; which ministers get their staff to stamp “confidential” on all their papers even newspaper clippings to avoid being forced to table them; how organised a minister is in having briefs to hand at the dispatch box.

So it was as interesting to see what those observations told us about Julie Bishop this week as her assured answers to an opposition attempt to spring a green minister.

Not only were her hands not shaking, she managed to paper-clip her (notably few) notes together very neatly as she concluded her answer without missing a beat.

But once again, while Bishop might be “off the mark” in the ministerial parliamentary test series, the importance of both form AND substance were highlighted when the new minister thought she’d put a neat coda on a good opening performance by taking a “dorothy dixer” at the end of question time on Wednesday.

She delivered her answer and her attack on Labor’s aged-care performance with aplomb.

The only problem is, Julie, those of us who have covered the aged- care debate in the past recognised the script as bearing a compellingly familiar resemblance to the one delivered ad nauseum by one of your predecessors, Bronwyn Bishop.

The department might have updated the figures, but there is no reason to believe that the flaws in the story have gone away in the meantime.

If the opposition actually targets the aged-care issue, as it did so savagely when Senator Chris Evans was the shadow, sticking to the departmental script will not be good enough.

Which brings us to Tony Abbott.

The thing you notice about Abbott at the dispatch box is his notes when he uses them.

They are mostly handwritten. Prepared departmental answers to parliamentary questions feature little in his repertoire.

Much has been made of Abbott’s reputation as the government’s headkicker in the last week in relation to his move to the health portfolio: the industrial relations heavyweight taking on the toughest union in the country.

But this caricature misses some important points.

With health now a major debacle on several fronts for the government, and complicated at the best of times, it will not be Abbott’s boxing blue that guarantees his success.

It will be his policy agility and administrative aptitude. The complexity of his brief means he will have to harness his mammoth department rather than be its captive.

Abbott, in former portfolios, has demonstrated an often overlooked ministerial intellectual independence, as well as good relationships with his bureaucrats, which augur well for his new career.

This government has never been long on ministers who you would immediately nominate as good administrators. Abbott is probably one of them, though.

And ultimately, his success along with that of Bishop, Turnbull, and Arnie will lie in the ultimate political skill: persuasion.

November 21

Drifting into trouble without a rudder
Canberra observed
Laura Tingle. Laura Tingle is the AFR’s chief political correspondent.
Until yesterday Simon Crean had given just two interviews to the electronic media since he returned from London last week.In neither was he asked about the brawl over tax cuts in his ranks in the past week.Crean’s shadow treasurer Mark Latham may be under sniper fire from the party’s Left for supporting a tax cut for high-income earners but Simon Crean is rarely seen.Maybe this is a sign that no one out there really cares about the brawl or no one is interested in what the Opposition Leader has to say about it.You never know, maybe they are only interested in what Crean has to say about the government’s revised Medicare package.Maybe the interviewers had read Crean’s comment about tax seven days ago in London and wanted to spare their audiences: “Labor’s position is that the Australian people are being taxed the highest they’ve ever been . . . blah, blah . . . My commitment is to ease the pressure on Australian families, and that can be done either through tax cuts or improved services. My priority to date has been to do it through improved services . . .”This is the man re-elected as party leader five months ago who vowed to push forward with aggressive Labor policy initiatives.”No longer can the Labor Party be the small-target party,” he had said. “We have to be bold. We have to be different. But we must be Labor.”Asked if he was suspicious of the way “the troops are lining up in your party on this debate” with Anthony Albanese, Wayne Swan, and Kim Beazley on one side, versus Mark Latham on the other Crean said: “I encourage healthy debate within the party. We’re coming up to a conference. I think that people read too much into these things.”What they’ve got to understand is that this is the Labor Party debating options to ease the pressure on Australian families . . . blah, blah, blah . . .”

Even when he was asked about the brawl yesterday there was more of the same on tax and almost a refusal to acknowledge the disagreement now consuming the front bench.

Voter apathy and party despair make it hard to take seriously an issue that, at other times, has consumed the party and been seen as an important indicator of its direction.

Yet the current tax debate is as important a barometer of the health of the party as it possibly can be. It reflects a party where all discipline and authority is breaking down in the face of its (self-perceived) lack of any credible poll prospects, and a complete lack of faith or goodwill towards its leader.

The gloom about the party’s prospects has never been more intense within its parliamentary ranks. Not even some of Crean’s most passionate supporters in the past bother trying to defend him.

There is just despair and increasing bitterness over the decline in collective intereston the front bench.

Everyone, it seems, now thinks something will provoke the party into action over its leadership woes, though they are not sure what it will be, or when.

As a result, Labor’s own version of Flanders’ Fields is under way: a long, rather ominous and sullen silence about the leadership awaiting the major “breakthrough”, punctuated by fierce local skirmishes on policy; be it tax, employment, free trade
or refugees.

There has perhaps not been so much policy dissent within the ranks for years. Yet it is generally seen as driven as much by personal animosities as policy passion.

All of this bodes badly for January’s first national conference of the party under the newly expanded, rank and file-friendly structure.

The numbers boys don’t really know yet whether there will be any semblance of order in the restructured conference.

Not all the delegates have been elected, factional discipline is breaking down and, besides, the expectation is that the conference will be dominated by a lot of get-evens that have little to do with past factional or personal loyalties.

For example, the party platform looks like being a unions versus the parliamentary party affair, rather than one determined by the factions.

The bravest prediction this week was that the Left probably had nine to 9 1/2 quotas , the Right 10 and the Centre two , giving the Left and Centre combined a slight edge over the Right, with some delegates’ ballots still to be held.

Most others will not hazard a guess but they don’t believe that the new conference will give anyone overwhelming dominance. The lead-up to all conferences predicts bloodshed, mayhem and conflict, and this one will be no different.

It is certainly safe to say this conference will be the most colourful for many a year.

For a start, the newly, directly elected president, Carmen Lawrence, says she’ll be leading the push to overturn the policy on asylum seekers.

That may well see the Left fracture. Julia Gillard, who will be a delegate to the conference, wrote the policy.

Then you have the spectre of an unseemly brawl over economic policy.

For all the sound and fury so far, the two drafts of the economic platform delivered to the party’s national secretariat this week by Latham and the national Left are not so violently different in content. Both were modified to accommodate the other.

Early Left calls to include wealth taxes and the like never made it past meetings of the national Left.

Even the diehards know that no leader can be seen to be a captive of the Left on economic issues.

But it is ultimately about tone and there is a genuine view among unions that “they won’t have bar of all this neo-classical economic rhetoric”.

The days when incumbency and tight factional organisation meant there was a belief that conferences had to be tightly controlled are well and truly gone.

More importantly, the resentful view that prevailed at last year’s special rules conference that the party had to ultimately get behind the reforms being proposed by its parliamentary leader isn’t relevant this time around.

One source observed this week: “I think it’s actually in the party’s interest to have some full-blooded debates at conference. This idea that they damage us in the electorate is just bullshit.”

Whether this is also true about the brawling on the front bench is another question entirely.

Only yesterday Anthony Albanese opened a new front against Latham on full employment.

This is not just about policy. This is about resentment that Latham is propping Crean up for his own ends: to maximise his chances of leadership after another election defeat, instead of thinking about the party’s interests in fielding a leadership candidate who has some chance of
winning.

November 21

From backroom into the limelightCentre stage
Laura Tingle  Seven years ago, Anthony Albanese didn’t appear in the cult political documentary Rats in the Ranks and became a legend.

In the extraordinary 1996 fly-on-the-wall film about the bastardry behind the election of a mayor for Sydney’s Leichhardt, Albanese was the eminence grise for whom Labor council members kept waiting for to turn up from head office to sort things out.

While Albanese certainly turned up, he was smart enough to do it off-camera, unlike everybody else in the film, thus building a mystique of power that might have been lost if moviegoers had been confronted by his altar-boy-innocent visage.

The filmmakers exploited his non-appearance mercilessly, to much humorous effect.

The mayor of South Sydney subsequently gave him an award for “best non-appearance in a documentary” and Albanese became the star turn at many a fund-raiser, telling the “off-camera” story of Rats in the Ranks.

But different strategies for different times . . .

For the past two weeks, Albanese, 40, Labor’s employment services spokesman, has been doing everything possible to turn up and “sort things out” for the Labor Party, and not many people are laughing.

Ignoring his leader’s demand for “discipline” in a discussion earlier this week, Albanese coolly went out yesterday to front shadow treasurer Mark Latham on economic policy.

His call to “re-elevate” full employment to equal status with inflation fighting at the top of the Reserve Bank’s charter was a direct poke in the eye to both Latham and Simon Crean .

It followed his swipe at Latham’s call for the top personal tax rate to be cut, and his observation a couple of weeks ago that Australia was the only one of the developed nations not to have a wealth tax.

This occurred against the backdrop not just of a brawl within Labor ranks about the party’s economic platform but a discussion only a few days earlier on the state of the party’s budget policy process in shadow ministry.

It was the most deliberate of provocations.

Albanese’s move to centre stage perhaps finishes his transformation from one of the party’s key backroom players, and also shows where the power is going to lie as Labor makes a full generational transition in the next couple of years.

Innocent he may look but brawl and manoeuvre he can.

He is one of the small band of Labor Left figures blooded by representing the faction as assistant secretary in the NSW Right-dominated party headquarters in Sussex Street.

The often puerile nature of the Right’s attacks on this position from installing glass walls in the Left official’s office, to moving the office altogether one weekend when Albanese wasn’t there is only the start of the story.

He told federal parliament with considerable understatement back in 1996 that his time at Sussex Street “confirmed my belief in the importance of fightingfor genuine participatory democracy”.

But like the best brawlers, Albanese apparently doesn’t mix up hate with outcome.

In his maiden speech after he won the inner Sydney seat of Grayndler in 1996, Albanese quoted Martin Luther King: “There is no progress in hate . . . like an unchecked cancer, hate corrodes the personality and eats away its vital unity. Hate destroys a man’s sense of values and his objectivity.”
Some may note the similarity with the pragmatic advice given by Michael Corleone to a nephew in one of the The Godfather movies: “Don’t hate your enemies, it clouds your judgement.”

Albanese has built a powerful role for himself in the party as one of the organisers of the so-called “hard Left” faction, whose support made the Kim Beazley tilt against Crean in June a chunky one, even if not successful.

The significant change in his profile in the past couple of years is his role at the front of the most passionate debates to engulf the Labor Party and the community.

Behind the scenes, he was a crucial mediator last year between Crean and those in the Labor Party who wanted to have a debate about asylum-seeker policy at the special rules conference.

But he has increasingly become publicly embroiled in these controversies: from the stem-cell debate and asylum-seeker policy to opposition to the war in Iraq, and President Bush’s recent visit.

He was at the forefront of the attack on former governor-general Peter Hollingworth, and angrily fronted Crean about the Opposition Leader’s acceptance of a government decision to abandon Badgery’s Creek as the site for a second Sydney airport.

Now it is his role as a power figure that marks him out again.

His failure to make an expected appearance in June to endorse Beazley ahead of the leadership challenge as Wayne Swan and Stephen Smith had done marked the beginning of the end for the West Australian.

This time around, it seems Albanese will not be going away.

November 26

The Downfall of Simon Crean

Deadman talking: Crean’s voice lost in Labor rabble

http://lauratingle.com/wp-content/uploads/2012/07/dead-man-talking-p1.pdf

 

November 28

Labor struggles to regain the passion
Canberra observed
Laura Tingle. Laura Tingle is the AFR’s chief political correspondent.
It began with no one in the Labor caucus able to raise enough interest to ask a question of Simon Crean. It ended with Crean confirming the terminal nature of his position by failing to ask the Prime Minister a question all week, and then Labor’s powerbrokers asking him the big question.As the Labor leadership story ignited and escalated to truly Hunter S. Thompson proportions in Canberra this week, the usual theatre of parliament faded into the background: no more than a backdrop to the increasingly ashen faces on the Labor front bench.Yet what happened in parliament was a confirmation of why Labor has had to act on its leadership.Usually a dominant presence in Question Time, John Howard received no questions from the opposition who instead directed their bullets at Tony Abbott on Medicare and Brendan Nelson on higher education.No questions about government plans to give tax cuts only to the top income bracket at next year’s election. No questions about how the government is once again spending like a drunken sailor. No questions about the conflict with the National Party about spending on infrastructure.Labor couldn’t ask Howard about any of them because it has got itself into such a tangle on such a wide range of fronts that it would just be inviting a bollocking.It’s not that Labor were not trying. Julia Gillard kept plugging away on health. Jenny Macklin kept plugging away on higher education.Maybe it’s just that, at the end of the day, Labor approaches health and education as political targets, soft spots for the government.It doesn’t convince people that it’s raison d’etre is built on conviction, or that it has remembered what it has best delivered to Australians in the past, and what must be the central message of whoever now takes on the leadership mantle: equity.One could grimly joke that it’s campaign slogan should be “For all of us”.

As caucus went through the angst of trying to determine what to do about its leadership, there was time to pause to wonder whether modern party politics has made many of them forget what Labor once represented, and can represent, to voters.

Labor politicians talk about equality of opportunity, but it is all strangely passionless.

They talk of growing inequities in Australian society under the Howard government, but few of them, to put it bluntly, sound really pissed off.

Yet as the week ended, outside the Labor tent the government was signalling it was going into the next election campaign with tax cuts aimed only at those earning more than $62,500. Sure there might be some sops to lower-income groups under contemplation: maybe some more generous family tax benefits or the like.

But such an approach should be such a no-brainer for the Labor Party, whoever leads it from here on in.

Part of the problem is that Labor has choked so badly on its own economic record: scattering terrified before memories of the recession, and as a result, failing to stand proudly by the reforms that have underpinned the good times many of us have enjoyed under Howard.

Surely after almost eight years in opposition, it must be time to do better on this.

One frontbencher who has had both some genuine passion on Australia’s growing inequalities, and some success in getting it on the agenda in punterland, is Wayne Swan.

Swan is usually seen through the prism of leadership challenges and slick politics, but he has managed to make some headway in his attacks on the government over the disability support pension and family tax benefit.

His speeches reveal a growing rage, not just about the inequalities, but about the failure of the community and the media to be really all that interested.

They also show that coming to terms with Labor’s economic record isn’t really that hard.

“Australians put their votes and their shoulders behind the reforms of the 1980s and 1990s, which ushered in the low-inflation growth economy Australia is today,” Swan said two weeks ago.

“But Labor provided the crucial quid pro quo of investments in the social wage in health, education, family payments and training to compensate and help people adjust.

“In this context, it is important to acknowledge that during this recent period of reform, in some areas Labor failed to meet its own aspirations.

“Personally, there was no greater tragedy than the mistiming of our efforts to address the situation of those workers who were displaced by economic reform. Working Nation was the right response, but it came too late to rescue many men and women.

“But all this is a world away from the welfare reform debate today, where we hear diatribes about how the real reform obstacles are a few thousand disadvantaged Australians in receipt of the disability support pension.

“This is not to say that the disability pension is not in need of renovation, just that the motivation for change should be loftier than a naked attack on the living standards of our most vulnerable.

“There has been and this is indisputable and undisputed a dramatic widening in the distribution of wealth in Australia in recent years. But we have come to the wrong place when the argument ends up being that the poor such as disability-support pensioners are doing too well.”

A month ago, Swan told a welfare group in Brisbane: “As we enter Anti-Poverty Week, as a nation we remain transfixed by 50,000 sheep on board a cargo ship in the Persian Gulf.

“I bear these creatures no ill-will, but I despair that as a nation we are not similarly outraged that today there are 50,000 working families trapped in poverty who weren’t there four years ago.

“In our long post-war expansion, security and prosperity were always synonymous with fairness,” he said.

“And when the economy hit the speed bumps, as a society we believed we had a responsibility to look after those who were left behind.

“In the last decade we’ve seen unprecedented economic expansion. Our wealth has increased by 100 per cent. Yet this unprecedented wealth creation has not been fairly shared.

“The poor are no longer just the desperately dispossessed. A million households have some work, but not enough to lift them out of poverty, and many more on modest incomes are also struggling to keep their heads above water.”

Swan argues that an increasingly divided Australia is split between those benefiting from the strong economy, who he says include “the people who debate, analyse and write about our nation”, and a second group, “those who are living with the consequences of our failure to fairly share the dividends of economic growth”.

“They have no voice and few advocates.”

Money, Swan argues, is a powerful tranquilliser.

This week there was lots of tut-tutting about all the “mum and dad” investors who have lost their money thanks to property spruiker Henry Kaye.

Perhaps in our property-obsessed society we can identify with the nakedly greedy easier than the dispossessed.

The political success of Labor’s new leader will have to be about changing this view of ourselves.

December 3

Labor gambles on Latham
Laura Tingle, Chief political correspondent
The Labor Party has ended the grasp of the Hawke-Keating generation by gambling on Mark Latham as parliamentary leader to regain credibility with voters before next year’s federal election.Mr Latham, 42, won yesterday’s leadership ballot by 47 votes to 45, supported overwhelmingly by the younger members of the caucus and despite the majority of factional leaders supporting the safer option of returning to Kim Beazley .The new Opposition Leader swiftly described himself as offering a new generation of Labor leadership tuned in to the aspirations of ordinary Australians to climb “the ladder of opportunity”.Facing a race to the polls in which he must establish himself as a credible alternative to Prime Minister John Howard, Mr Latham called for an end to internal party divisions and pledged he would lead a positive rather than negative opposition.”We need to win the war against terror internationally. We’ve also got to win the domestic war against inequality,” he said.”I want a society based on opportunity for all, where all Australians can advance themselves through hard work and having a go.”Mr Latham is a risky choice because of his lack of government experience, his history of innovative but sometimes erratic policies and an aggressive image that contrasts with the more established Mr Howard.But amid deep bitterness on both sides of the caucus leadership struggle, Mr Latham’s first challenge will be to manage the deep personal divisions as he considers reshuffling his front bench.While former prime minister Paul Keating welcomed the change as “a defeat for the bankrupt factional system and its operatives”, Mr Howard quickly attacked his new opponent, arguing a Labor Party divided on policy and leadership was unfit to govern.Opinion about Mr Latham’s prospects was divided on both sides of politics. Many senior figures in the government predicted his quick self-destruction, while some Beazley supporters in the Labor Party were aghast at the outcome of the ballot.

But others were more cautious, believing the maverick figure could “cut through” with the electorate, and that voters could put pressure on a prime minister who has been in office for almost eight years and is more than 20 years older than Mr Latham.

The elevation means that two New South Welshmen will fight out an election campaign that will be decided in that state, with Labor hoping up to four seats in the south-west of Sydney Mr Latham’s home turf will be up for grabs.

The new Opposition Leader was last night trying to determine how much he will reshape the front bench after yesterday installing health spokeswoman Julia Gillard as opposition business manager and Bob McMullan who voted for Kim Beazley as acting shadow treasurer.

He indicated he would like to see Simon Crean back on the front bench in some capacity although there are no current vacancies but said there would be no retribution against Beazley supporters.

Mr Beazley in turn urged his supporters “to set aside any differences and stand behind Mark Latham in the task that is ahead of him now to the next election”.

Mr Beazley said he would continue in parliament as a back bencher beyond the next election, stressing the importance of a “parliamentarian committed to the process of parliament, committed to the issues of the day, committed to public life”.

Mr Latham said: “I see this as a line in the sand for the Australian Labor Party a chance to move forward together, together for the benefit of the Australian people.

“You’ve got to get stuck in and I believe passionately in climbing the rungs of opportunity. And I want that for all Australians. I believe in upward mobility. I believe in climbing that ladder, and the problem in Australia that we’ve got at the moment is the Howard government has taken out too many of the rungs.

“I want to put them back in. The rungs of opportunity that come from good quality health care in our society, the opportunity that comes from a decent, affordable education, the basic services that all our community rely on.”

He said that “while he loved the larrikin Australian style”, he would abandon “crudity” because he recognised “that in this role I want 100 per cent of the Australian community to relate to me”.

Mr Latham stressed that, despite referring to US President George Bush as “flaky, dangerous and incompetent”, he believed in the American alliance and “I’ve always believed in the United States”.

“You’ll never have a democracy where there’s no criticism of a policy maker and, in the context of that debate, that’s water under the bridge.

“Obviously I’ve got to be mindful of these things and want to ensure that the Australian Labor Party has the right structure in a policy sense.”

Mr Latham said he would lead Labor to the next election building on the policy platform already created by former leader Simon Crean, centred on health and education.

The new leader won the enthusiastic backing of ALP elder statesman Gough Whitlam, who has long seen Mr Latham who worked for Mr Whitlam and now holds his former seat of Werriwa as a protege.

“Mark Latham has the skills and determination to lead a united Labor Party in exposing the damage done by and the weakness within the Howard government,” Mr Whitlam said in a statement.

“Latham has the policy width and advocacy breadth to make a positive and lasting impact for the good of all Australians as leader of the Federal Parliamentary Labor Party.”
Beazley numbers men conceded yesterday they had been certain of only 44 votes on Monday, but felt they had to maximise the chances of waverers swinging their way, by claiming 47.

Latham supporters said that by 9.30 on Monday night, they believed they held between 47 and 48 votes, enough to win.

LABOR SHOWDOWNS

· Apr 1966: Calwell v Whitlam 49-24

· Apr 1968: Whitlam v Cairns 38-32

December 5

Dog – whistler Howard has no shame
Canberra Observed, Laura Tingle
Some loyal Labor Party staffers were loitering in the Parliament House corridors outside the caucus room on Tuesday as their bosses cast their votes on the new leadership of the party.While the result had not yet emerged, they were confident that Mark Latham would win the ballot and were joking about what the contents of US Ambassador Tom Schieffer’s overnight cable to George Bush might be.”Mr President,” one observed, “I’ve got some good news, and some bad news.””Remember that CIA taskforce we were talking about?” suggested another. “Now might be the time.”It was a funny moment in a tumultuous day.While the ensuing government attack on Latham over his assessment of Bush was hardly a surprise, the people standing outside the caucus room did not know just quite what a frenzy would be involved.Perhaps that is because, like many voters, they would have doubted that ministers who had acted like a bunch of gauche yahoos in the world of international relations, and particularly in the region, would have the gall to accuse others of a failure of diplomatic sensitivities.This is politics, after all, so nothing should surprise. But even hardened observers may have choked on their cocoa if they then watched John Howard on the ABC’s Lateline on Wednesday night.”It’s going to be hard for us [at the next election] because it’s the fourth time, but I’ll be facing somebody who I think is very tribal in his politics,” the Prime Minister told Tony Jones.”I think one of the things that has come through to me about Mr Latham is that he thinks in tribal terms. I mean, look at his attacks, his personal attacks, on George Bush, yet he never criticises Tony Blair.”Tony Blair’s views on Iraq, and I know better than anybody in Australia, are the same as George Bush’s yet he gets off scot-free.”Why? Because he’s Labour and George Bush is centre right and therefore a dreaded right-winger to be attacked.”Until this point this was all perfectly reasonable, and sure, it’s true that the electorate no longer has the tribal, from-birth loyalties to one or other of the major political parties that once existed.

But the Prime Minister couldn’t help himself. He had to go that extra step:
“Now I think this dated, divisive tribal approach to politics is a turn-off for younger voters,” he said.

“My reading of younger voters in Australia is that they are the most detribalised political generation that this country has had.

“And they’re interested in what you offer them and how you respond to their hopes and aspirations, not whether you’re a dyed-in-the-wool Liberal bloke or a dyed-in-the-wool Labor man.

“I mean, I’m proud of my Liberal background, but I recognise that I must govern for all Australians.”
Oh, please! The man who Laurie Oakes accused of bringing dog- whistle politics to Australia? Give us a break. (Dog-whistle politics is the art of pitching a message to a targeted group of voters that other voters do not hear.)

Bash the blacks. Bash the unemployed. Bash the “elites” who don’t agree with you. Bash the United Nations. But have “For all of us” as your election slogan.

Ignite the region by failing to condemn Pauline Hanson, then wear it as a badge of honour at home. Offend the Chinese by cosying up to the Americans.

There is no shame in politics.

Just four hours after Latham’s leadership was announced, the attack on Latham’s stance on the US alliance started and continued unabated for three days.

Howard told the House of Representatives on Wednesday:

“I take the view, and I believe that most Australians take the view, that it is not in Australia’s interest, it is not in the national interest of our country, that the alternative prime minister of this country should describe the current American President no matter what that American President’s politics may be as being `the most incompetent and dangerous’ in the history of the United States.

“That is what the Leader of the Opposition sought to do this morning, and by doing that he has demonstrated that in his new position he is dangerous so far as the American alliance is concerned.”

It’s the sort of statement you usually don’t see until the full fury of an election campaign. Malcolm Fraser’s 1983 warning that people’s money would be safer under their beds if a Labor government were elected comes to mind.

Whatever Latham’s remarks might mean for the alliance, it is not clear how potent they are in political terms. A lot of Australians might like to think that, in an uncertain world, if you are going to be aligned with anybody, it might as well be the world’s greatest superpower.

Even if they don’t think that, the government is clearly hoping it can use the comments to reinforce the idea that Latham’s rough mouth isn’t just a bit of colour but a danger to their home comforts.

But a lot of people also thought the war in Iraq was a really bad idea, as has been the Howard government’s unquestioning preparedness to follow George Bush wherever he might go.

It’s instructive that the government has not felt compelled to raise one of Latham’s other more colourful phrases.

In the same speech in which he attacked Bush, Latham observed:

“Mr Howard and his government are just yes-men to the United States. There they are, a conga line of suckholes on the conservative side of Australian politics. The backbench sucks up to the Prime Minister, and the Prime Minister sucks up to George W.”

It’s always easier to defend your friends than yourself, but maybe the polling is more ambiguous about this particular remark.

At the end of the day, you have to wonder whether positions on the American alliance are a vote-changer.

The end result of this week is that Labor and the coalition are now locked in to almost accidental and violently different political strategies.

Labor has punted all on a brash, noisy young politician whose views on a wide range of subjects are unclear even to many in his party.

The coalition is countering by offering experienced, older, predictable John Howard, whose views we all know all too well.

It has made politics interesting again: will Latham crash-land and burn up? Will the electorate come out of its economic comfort-induced coma and take an interest in politics again? Or, as one government MP pondered this week, will Latham’s arrival at centre stage make voters realise that the government is led “by a short, bald man who is really very boring”?

December 8

Wild ride: how the currency float changed AustraliaLaura Tingle, Chief political correspondent  When the Bush administration was putting intense pressure on the Chinese to float the renmimbi earlier this year, there was a conspicuous break in the US/Australian hegemony of views that seems to have dominated every other aspect of our lives in recent times.

In September, Treasurer Peter Costello took China’s side against a US push to revalue the renmimbi and protect US manufacturers.

Only economies with a “certain level of sophistication” benefited from a floating exchange rate, Mr Costello said, implying that China and other countries hadn’t reached that level. “We learnt in the Asian financial crisis that you cannot do that overnight . . . we learnt that in our own country.”

Similarly, when Malaysia slapped on exchange controls to prevent capital flight during the Asian financial crisis in 1997, there was no criticism from Australia.

Australia’s attitude to both the Chinese currency and Malaysia’s move in 1997 are pertinent on this 20th anniversary of the Hawke government’s decision to float the Australian dollar. It’s not that anybody thinks floating our dollar was the wrong thing to do.

But with 20 years hindsight, it is possible to look back and not only celebrate the profound effect the removal of one price control has had on our economy, our self-perception and our political culture, but also marvel that we survived the wild ride that followed it.

There is not one policymaker in Australia today who would believe Bob Hawke and Paul Keating did anything other than the right thing that hot Canberra Friday in December 1983 as the first parliamentary year of the Hawke government came to a close. There is also a view that it came at just the right time in the development of the Australian economy.

“By 1983 the country had more or less been opened up to a reasonable flow of goods,” Keating observes now. “The traded goods sector was reasonably buoyant in both imports and exports, yet the exchange rate, the price of traded goods was determined by the bureaucracy.”

The idea of a group of bureaucrats meeting once a week to put a price on the local dollar as happened under the floating peg that prevailed before the float now seems almost bizarre.

But those who had to keep Australia’s economy moving forward through the tumultuous years that followed also frankly acknowledge that they underestimated the readiness of Australia’s financial system to cope with the change.

In Australia’s case, the float was not the only thing happening to the financial system at the time. The Hawke government also removed exchange controls the day it decided to float the currency, and the financial community was already making its way through a deregulatory transition which would make credit available to almost anyone who was prepared
to pay enough for it.

Twenty years later, most regulators think that they got the macro-economic decisions right the exchange rate’s float and the removal of exchange controls but say they could have handled the micro-economic decisions on deregulating the financial system better.

“Underestimating how the banks would react to the threat of foreign competition: that was the bit where we sort of screwed up,” says one senior figure.

In 1983, Australian business was galvanised by the spectre of financial deregulation as the quantum leap that had to occur before the economy could become truly competitive.

For three or four years the issue of financial deregulation had been dominating the financial press, as the Campbell Inquiry into the Financial System gave the first really comprehensive picture of how that system worked, then took evidence over months from all the stakeholders who wanted it to change. And those who didn’t.

Former treasurer John Howard had allowed the merger of some of Australia’s banks into the big four to get them ready for foreign bank competition, and introduced a system of commonwealth bond tenders, which led to the explicit financing of the budget
deficit for the first time at market interest rates.

But the expectations established by the Campbell report, when it was finally handed down in late 1981, centred on the relative market power of Australia’s various financial institutions and the future of regulatory controls on the system.

Campbell certainly recommended the floating of the currency but this was seen at the time as something for down the track, not, as eventually occurred, just two years later.

What was to change all that was the election of a Labor government in March 1983.

The election period had witnessed extraordinary scenes in the financial markets.

On the election hustings, then prime minister Malcolm Fraser was desperately warning Australians that their money would be safer under the bed than in the bank under Labor.

In the financial markets, traders were punting on the possibility of a one-off devaluation of the Australian dollar by an incoming Labor government.

There were some hairy days for regulators, politicians, traders and businesses. Before the float, it wasn’t the price of the dollar that changed with capital flows, but the amount of money available in the financial system, so interest rates changed.

The whole financial system came under intense pressure during the election campaign short-term rates on some days hit 200 per cent as institutions tried to balance their books.

There were rumours at the time that some banks had had to access the central bank’s lender-of-last resort facility.

The man who was running the Reserve Bank’s market operations at that time was John Phillips, who rose to be the bank’s deputy governor before becoming a respected fixture in many of Australia’s boardrooms.

The drama of those days, according to Phillips, was the real trigger for what followed and what prompted the early dialogue between Hawke and Keating and the central bank about how future crises should be handled. Keating was also a strong advocate of bank deregulation and in May 1983 had moved to give the banks more freedom to become creators of credit by removing many controls over them.

The central bank had long had what it called its “war book”: all the work that had been done during the 1970s on moving towards a more market-oriented exchange rate. Constructing the war book had been “about looking at what would happen [if we floated]”, Phillips says now. “Whether we had the underpinnings, whether the domestic financial system could handle it, whether the banks could handle it.”

Without the wisdom of this hindsight, though, when the foreign exchange market started flooding the Australian economy with money in late 1983, half speculating, half pushing the authorities into a devaluation, the government and the bank were pretty
sure what they would do.

“The decision on the exchange rate flowed from a monetary crisis,” Keating said late last week. “That crisis was of continuing monetary inflow chasing speculation.”

Australia had installed a system of market-based bond tenders, but Keating says these tended to exacerbate the capital inflows and the speculation. The authorities would try to mop up surplus liquidity flowing in from offshore with a bond tender at rates that were attracting more funds into the system. But the more bonds you had to sell, the more the price went down, and interest rates went up.

“Remember we had a real wage overhang at this stage,” Keating says.

“We were talking about real wage reductions but at the same time you had kerosene being poured on the flame of inflation in the shape of all this money. And, of course, bond tenders crowding out the private sector to fund this enormous liquidity.”

The float allowed Australia to run an effective, and more autonomous, macro-economic policy that had some bite.

In the early 1980s, Australia was bitten with the money supply bug that Milton Friedman had brought to the rest of the world. Yet money supply before the float had been completely at the mercy of foreign exchange transactions.

This lack of autonomy made it almost impossible to have any signal of what the monetary authorities were trying to achieve that could have any credibility.

There were knock-on effects to fiscal policy as well, as policymakers tried to run some sort of macro policy aimed at stable growth. The budget was affected by the wild income flows in and out of the economy, and fiscal policy’s capacity to influence activity was always uncertain in such circumstances.

The fact Australia had floated protected us from suffering a similar economic disaster at that time. But for anybody who lived through it, the spectre of the Australian currency in free-fall to levels of US57 ¢ was unknown territory.

“Though heralded by some as the dollar falling out of control, the fall of the dollar in 1985-86 when I did the Banana Republic remarks and the terms of trade got to the lowest level we’d had since the Depression was the dollar simply adjusting, and doing for us in 1986 and 1987 what it later did for us in 1997,” Keating says.

The floating currency has cushioned us against two shocks: the terms of trade collapse in 1986 and the Asian financial crisis in 1997.

Phillips says: “I’ve been asked a few times, `How come we got through the Asian meltdown so well?’.

“I say, well, at very high cost we did get the inflation rate down and steady. But, importantly, if we’d faced the Asian crisis under the old system we’d have had real problems. It would have hit through foreign exchange volumes and therefore interest rates instead of being absorbed in the dollar’s price and elsewhere.”

(And, of course, there is a question about whether Australia would have had any chance of developing into an economy perceived internationally as developed and stable, and therefore which way the speculative flows might have been moving).

The full impact of a transition to a floating exchange rate regime was not an easy one. There were five or six very tough years of currency crisis; of politics coming to terms with a slumping currency and a new focus on the current account deficit and foreign debt (which had long been with us but generally ignored in an era of pegged rates); a switch in policy power from the bureaucrats to the market and its commentators; and a switch in policy power from Treasury to the Reserve Bank.

There were scandals and debacles in the foreign exchange market and futures trading. But they were not systemically threatening.

Companies like AWA showed their vulnerability to a lack of financial markets expertise at senior management levels. Banks had to clean up practices such as allowing traders to trade their own accounts as part of lucrative salary packages. Thousands of Australians lost everything when they suddenly thought they could access Swiss francs which carried an interest rate of only 4 per cent instead of double-digit rate Australian dollars without capital risk.

But by the time of the early 1990s recession, despite a borrowing and corporate takeover frenzy, the financial system was able to withstand massive losses in the banking sector which led to the collapse of a major building society in Victoria and the
forced rescue of state banks in South Australia and Victoria.

THE WORD

The dollar floated to general acclaim and with none of the dire consequences predicted by [John] Stone. Far from going through the roof, it floated down. Although it fluctuated, only once, briefly, did it attain the heights of the pre-float days.

Bob Hawke, The Hawke Memoirs

Remember we had a real wage overhang at this stage. We were talking about real wage reductions but at the same time you had kerosene being poured on the flame of inflation in the shape of all this money.

Paul Keating

December 19

 

What class, what style, what a year
Canberra observed
Laura Tingle. Laura Tingle is the AFR’s chief political correspondent.
It started with an exhortation to “dob in a terrorist” and a $15 million fridge magnet, and ended with the government still scrambling to hold the health system together with a few bits of sticky tape.In between, engagement in a war conducted outside the international legal framework and our subsequent apparent release from international legal conventions requiring us to care for the people of the country we had invaded.Then of course, there was the humiliating spectacle of a governor-general forced to resign after admitting he had failed to deal properly with child abuse allegations, and an opposition leader forced to resign because not even his party was interested in what he had to say.What an edifying reflection on Australia’s national character politics has provided this year.Everywhere, it seems, craven political opportunism has dominated over national interest or good policy.In legislative terms so little has been achieved, with or without the Senate.Striding through it all has been John Howard, enjoying until the last fortnight one bread and circuses-based glory ride in the polls after another.And the federal opposition has been absent without leave until, in the dying days of the year, they suddenly seem to have remembered what they are here for.When federal parliament rose earlier this month, it had passed just 168 pieces of legislation.And what heroic contributions they have been. There was the ASIO legislation giving unprecedented detention power to our spooks, a plethora of migration changes, and legislation to allow the government’s higher education reforms through.The government didn’t get its proposed changes to Australia’s media ownership laws, or the further sale of Telstra, or the excision of thousands of Australia’s northern islands from the migration zone through the Senate.Nor its reforms to the disability pension.But parliament spent a lot of time on legislation to prop up the medical indemnity system, stopping spam emails and copyright infringements.

On a clearly positive note, the only standouts were legislation to authorise the national handgun buyback and the Timor Sea Treaty which, belatedly, will provide East Timor with a revenue base.

But maybe it’s hardly surprising.

John Howard has been a very busy man. No wonder he has had to selflessly declare his intention to stay in office indefinitely.

The Prime Minister gave seven speeches commemorating Bali (outside parliament) and 12 farewell and welcome back speeches to troops.

He spoke to Alan Jones, John Laws and Neil Mitchell on the radio at least once a month, but often three times a month.

There were only four months in the year when the Prime Minister didn’t travel overseas.

No wonder there was hardly time for a domestic political agenda.

Well, there was Medicare. Two health ministers later, we have a patch-up job on a public health system that the coalition has treated with unbenign neglect for years. Even Tony Abbott knows that his efforts to deliver the Prime Minister a politically adequate outcome will not, particularly when combined with the medical indemnity debacle, do anything to address our medical system wallowing at developing-world levels.

The importance the government attached to appeasing voters domestically was best summed up by its “sandwich and milkshake” tax cuts.

And why should it have worried when Australia was striding the international stage like a colossus?

First, as all respectable middle-ranking powers should, we turned our back on the United Nations and adopted the American pre-emption doctrine to justify going into Iraq with the Prime Minister telling the National Press Club that Iraq’s “possession
of chemical, biological or nuclear weapons by terrorists would constitute a direct, undeniable and lethal threat to Australia and its people”.

Only the petty would point out eight months on in the search for WMD in Iraq that the Prime Minister also asserted in the same speech that going into Iraq simply to change Saddam Hussein’s regime could not be justified.

Having gone into the war, the Prime Minister then confirmed on April 10 that Australia would be in Iraq, after the fall of Saddam’s regime, as an occupying power “in terms of the conditions of the Geneva Convention, I think, of 1907”.

Being an occupying power obliges Australia to protect Iraqi citizens and enforce the law, as well as meet more detailed obligations to clothe, bed and shelter the Iraqis.

Yet by some miracle, when a UN resolution was passed on the issue of governing arrangements in Iraq, our name had disappeared from amongst the occupying powers along with our obligations a mystery that officials from the Department of Foreign Affairs and Trade could not explain to a Senate committee in late October.

While we may have disappeared from that list, we stay on the list for restructuring contracts, unlike those recalcitrant French and Germans.

Similarly, we might build unattractive camps for unwanted asylum seekers on Nauru, and take them there on our naval vessels, but it seems we aren’t responsible for them. Nice one Amanda.

Then again, we do little to protect the rights of our citizens held without charge in Guantanamo Bay (after all, they are being held by our closest ally), and think capital punishment is okay for foreigners like Saddam Hussein and the Bali bombers, though, of course, strongly pronounce against it at home.

As a country we couldn’t even be stylish about a peace prize we were handing out.

Even the Prime Minister and Foreign Minister couldn’t bear to be out of the controversy over Hanan Ashrawi receiving the Sydney Peace Prize.

What class. What style.

Now a new year beckons with a new opposition leader and an election looming.

To date, there is not a new war in sight, nor any new boatloads of asylum seekers, suggesting 2004 may be very different to 2003, 2002 and 2001.

The coalition began the year leading Labor 44 per cent to 36 per cent on the primary vote and was still in the same position at the end of November.

Mark Latham’s ascendancy to the leadership of the parliamentary Labor Party has narrowed that lead back 44 per cent to 41.

But you notice the coalition has yet to suffer any slip in its primary vote.

Latham has brought the disaffected back from the minor parties, particularly the Greens and removed Howard’s inflated lead as preferred Prime Minister.

Now his real challenge begins.

December 31

Labor leader Mark Latham is about to enter the dense and dangerous jungle that is green politics, writes chief political correspondent Laura Tingle.The new year will deliver Mark Latham perhaps his toughest test since his ascension to Opposition Leader put an exclamation mark back into the federal political lexicon.And it is not the ALP national conference.Rather, Latham is off to Tasmania to schmooze with Greens leader Bob Brown on forests as Labor tries to win back its credentials on environmental issues.Why is this such a tough test? There are plenty who will tell you what a tough ask it is to ever get Bob Brown on side.”No matter what you promise or deliver, he’ll always raise the bar on you,” one observer says cynically.Someone who could tell Latham about the risks of going down to the woods with Brown is Labor’s Senate leader John Faulkner, who just short of 10 years ago also went to Tasmania to try to mend Labor’s fences with the Greens.At that time, Brown was one of the most significant leaders of the green movement and he was considering running for federal parliament. Today, Brown is an established Australian Greens senator whose personal standing helped the Greens push their share of the vote in opinion polls in 2003 to between 7 per cent and 8 per cent.After some initial enthusiasm for Faulkner, the Hawke government’s first left-wing environment minister, it all ended in tears for Faulkner and Brown in 1995 after the minister failed to push through the quarantining of 1300 forest areas from woodchipping. “His religion is the Labor Party; it’s the Labor Party before the planet,” Brown said.The main change in the dynamics between then and now is that Faulkner was a government minister and the Greens felt he hadn’t delivered what they thought he’d promised.Ten years later, the Greens have been having a lot more trouble getting their message about trees on the airwaves, despite their success on other issues such as their stance against the war in Iraq. And this time they will be dealing with an opposition leader, not a government minister.Latham and Brown also now have conflicting political interests: Brown has his own party’s primary vote to think of, while Latham will want some of that back with the Labor Party, thank you very much, as well as Greens preferences.The improvement in Labor’s primary vote with the installation of Latham as leader has been at the expense of the Greens and other minor parties, not the coalition.

One Labor MP says that shift would have been as a result of Latham’s (now repudiated) attacks on George Bush, but keeping those votes back with Labor throughout 2004 as the opposition goes out in search of the real gold swinging coalition voters will be tricky.

But the real problem for Latham might not even be the Greens. Some in the party point to the fact there are three Labor seats in Tasmania, and the politics of the forests there are now very tricky.

If Latham doesn’t watch himself, they argue, they could lose three seats and still not win any ground with Brown and the Greens.

The ALP conference, by comparison, should be a doddle. What had loomed as an ugly showdown over policy and power with Simon Crean at the helm is likely to be a much tamer affair.

The earlier risk of a riot flowed from both the breakdown of Crean’s authority and an absence of belief that Labor had any chance of winning the next federal election, removing the need for discipline. With the gap in the polls closing, minds are focusing on presenting a more acceptable face to the public.

Equally, final voting for delegates has revealed the right faction has an iron grip on the conference numbers (putting paid to all that stuff about how Labor was going to confront the mindless power of the factions through party reform).

There will be disputes in areas such as economics and trade policy. But already, for example, the damaging tax brawl that precipitated Crean’s downfall has subsided ironically with Latham adopting the rhetorical line on tax that got his fellow frontbencher, Anthony Albanese, into trouble with the former leader that
is, that Labor’s priority should be to introduce tax cuts for its traditional heartland, not high-income earners.

The coalition began 2003 leading Labor 44 per cent to 36 per cent on the primary vote and was still in that position at the end of November.

Latham’s ascendancy to the leadership reduced the gap to 44 per cent to 41, which means he starts 2004 within striking distance of a clearly nervous coalition.

Labor is still vulnerable on refugees and border protection but Latham has improved the message at least to an articulate level.

Some people with no vested interest in Labor but whose interest has kept them in regular contact with Latham believe he will surprise everyone with the comprehensiveness and consistency of his economic policy base when we eventually see it.

They argue that Latham’s random ideas to date have had the upside of providing some strafing cover, leaving his opponents confused and taking pot shots without really knowing his plan of attack.

But the year ahead is likely to be marked ultimately by the electorate deciding whether it has had enough of feeling relaxed and comfortable, or even alert but not alarmed, and is ready once again for “a touch of excitement” and a move to a young, interesting prime minister.

 

 

 

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