May 31, 2004Labor promises fuel price move
Petrol prices have become the domestic political lightning rod for the Iraq war, with Labor leader Mark Latham yesterday outlining changes to the Trade Practices Act that he argued would help cut soaring petrol prices flowing from the war.His announcement came days after Prime Minister John Howard warned that a “cut and run” policy by the US-led coalition in Iraq would push oil prices to $US50 a barrel.Mr Latham yesterday argued that, with international oil prices high, “now is the time to increase competition in the Australian petrol industry to provide relief for consumers”.He announced a six-point plan to put downward pressure on petrol prices already above $1 a litre in many parts of Australia which included amending the Trade Practices Act to guarantee independent wholesalers and retailers access to fuel supplies from the terminals of the major oil companies on fair terms.Independent wholesalers and retailers would be allowed to bargain collectively when seek- ing fuel supplies from the terminals of the major oil companies.Labor says it would also outlaw predatory pricing under the Trade Practices Act, and strengthen section 46, concerning misuse of market power.The ACCC would be given the power to issue “cease and desist” orders to provide immediate relief against market abuse and anti-competitive behaviour.”Courts would be given new powers to order the divestiture of assets and impose jail terms to tackle cartels and the worst cases of market abuse,” a statement from Mr Latham said. “This is particularly important given the nature of the petrol industry.”Labor is also proposing establishing a “yellow card” system so that the ACCC would keep a register of bona fide complaints of misuse of market power to be used for assessing penalties for proven breaches of the Trade Practices Act.Announcing the policy at a suburban service station in Sydney yesterday Mr Latham said families were really struggling with their weekly petrol bill.”Particularly for those taxpayers who missed out on tax cuts people on less than $52,000 a year this really is a big impact on their budget.”Like the government, Labor is not proposing a change to the fuel tax regime to address the impact of rising oil prices.But Mr Latham yesterday accused the government of failing to act on its promise that independent fuel retailers would have the chance to shop around at oil terminals on fair terms, and had failed to act on a recommendation from the Dawson review of the Trade Practices Act that jail terms should be introduced for cartel-type behaviour.Industry Minister Ian Macfarlane countered by arguing that a Labor policy document about oil prices meant petrol prices would rise to as much as $3 a litre.

May 31, 2004Canberra wants copy of Red Cross report
The federal government will seek a copy of a controversial report on Iraqi prisoners, written by the International Committee of the Red Cross last October, as it continues to face questions over what it knew of prisoner abuses and when.Military chiefs issued comprehensive denials at the weekend of any knowledge of prisoner abuse or serious mistreatment before January, despite reports that an Australian officer had helped prepare a response to the Red Cross report.Prime Minister John Howard said yesterday the government was seeking a copy of the October Red Cross report which was made to British and US authorities to establish exactly what it said, amid disputes about whether it contained details of significant abuse.The Sydney Morning Herald reported on Saturday that the Red Cross account of an October visit to the now notorious Abu Ghraib prison in Baghdad, and another jail, said “punishment included being made to walk in the corridors handcuffed and naked, or
with women’s underwear on the head, or being handcuffed either dressed or naked to bed bars or the cell doors”.But a lengthy statement from the Chief of the Defence Force and the secretary of the Defence Department late on Friday said: “No defence personnel were aware of the allegations of abuse or serious mistreatment before the public report of the US investigation in January 2004.”Major [George] O’Kane’s recollection is that he heard about the seriousness of this issue about the same time as the CNN media reporting in late January.”Mr Howard continues to protest that the abuse allegations do not concern Australia since no Australians were involved and Australia is not an “occupying power” in Iraq with responsibilities to protect Iraqi citizens and prisoners. On the eve of his trip to Washington, Mr Howard denied suggestions Australia’s free-trade deal with the US was payback for continued Australian involvement in Iraq. “At no stage did we say or imply that if we get involved in Iraq, we expect something in return,” he said yesterday.

May 29, 2004Howard feels the heat about Iraq
Prime Minister John Howard has renewed his criticism of France and Germany for their failure to support the US-led operation in Iraq and vowed to push the need for broader international involvement when he meets US President George Bush in Washington
in a week. Mr Howard acknowledged his concern about the sharp increase in voters who believe the war was unjustified, as the government continued to be pressed about what it knew of Iraqi prisoner abuse from George O’Kane , an Australian army officer working in

May 29, 2004Braced for another bruising
John Howard is banking on Arnie to lighten a tough week ahead, writes Laura Tingle.The Howard government has finished a bruising week hoping the controversy about the Draper travel affair is behind it but braced for a week of interrogation over Iraq and the performance of its intelligence agencies.In the first parliamentary sitting week after the budget, Prime Minister John Howard warned his coalition party room that the government was facing “the fight of our political lives” as the deteriorating situation in Iraq batters its standing and
pushes the likely election date closer to the end of the year.For the first time Howard acknowledged to his party room that images from Iraq were negative for the government, a comment that came after a poll showed that 63 per cent of Australians now believed the war in Iraq was not justified, up 12 points since September.But a defiant Prime Minister said the government’s position on Iraq would not be affected by deteriorating polls.Despite this, he announced an addition to the trip to Washington and London that will start at the end of the week a visit to California governor Arnold Schwarzenegger. It is ostensibly to lobby on a potential LNG gas contract but the government hopes it will provide some much needed positive media.Labor refused to touch the Iraq issue in parliament until Thursday despite the damage the issue is doing to the government and despite the increasing number of questions about Australia’s involvement in the country and the need for Australian troops
to remain there.That will change during the week when the government faces detailed scrutiny of its Iraq policies in the Senate estimates process.Labor is also expected to pursue the controversy surrounding claims by a senior intelligence official about systemic problems in the Defence Intelligence Organisation.Lieutenant-Colonel Lance Collins a senior intelligence officer during the East Timor operation has written to the Prime Minister noting a range of Australian intelligence failures in recent times, including the Fiji coups, Sandline and Bougainville, the Asian financial crisis, the fall of Indonesian president Soeharto, East Timor, the Solomons and the Bali bombings.The colonel complained of widespread failings across an intelligence community “unable to identify reality in a timely manner”.The government finished the parliamentary week announcing superannuation changes which would benefit a range of groups, including same-sex couples.But it faced criticism from its own ranks over moves to amend the Marriage Act to explicitly limit marriage to heterosexual couples and ban gay couples from adopting children overseas.The move, even within the coalition, was seen as a blatantly political attempt to appeal to homophobic views in the community designed to provoke a reaction from Labor and the minor parties.But Labor chose instead to immediately announce it would support the government’s legislation, which was rushed into the House of Representatives within hours of its announcement, without gaining formal caucus approval.

May 29, 2004Howard goes on the warpath about Iraq
Prime Minister John Howard has renewed his criticism of France and Germany for their failure to support the US-led operation in Iraq and vowed to push the need for broader international involvement in Iraq when he meets US President George Bush in Washington in coming days.He acknowledged his concern about the sharp increase in voters who believe the war was unjustified, as the government continued to be pressured about what it knew of Iraqi prisoner abuse from George O’Kane, an Australian army officer working in coalition headquarters in Baghdad.People had turned against the war because of recent bad news from Iraq, Mr Howard said.”There’s been an upsurge in violence; there’s been revelations about prisoner abuse and although the Americans are responding very swiftly and are bringing people to justice and are determined to punish those responsible, it doesn’t alter the fact it paints a bad picture,” he told Sydney radio station 2GB.”If an intervention of this kind is regarded as having been successful, then people are more likely to support it. If it is for a period of time surrounded by bad images, such as these photographs present, or reports of an upsurge in violence, people start to think, `Gee, it’s perhaps not as successful as I thought and therefore I shouldn’t be supporting it’.”Mr Howard said he would be talking about the need for more international support for the coalition’s aims in Iraq when he met Mr Bush in a week.”Things in Iraq would have been a lot better if that broader international support had been given in the first place,” he said. “. . .The attitude taken by countries such as France and Germany earlier on, I think, was anything but helpful.”Mr Howard’s continued criticism of France contrasts with Mr Bush’s efforts to restore relations.Defence Minister Robert Hill said on Friday Major O’Kane had known “nothing of the abuse claims before January”, denying the officer had had prior knowledge of the abuse, despite comments by Mr Howard that Major O’Kane had helped draft a response to an International Committee of the Red Cross report in October.Senator Hill repeated that the response to the October report “didn’t relate at all to the sort of abuses that became apparent in May”.He also denied that Major O’Kane had been involved in the planning of interrogation procedures for prisoners, despite working in the office in which these had been developed.Major O’Kane had become aware of the abuse allegations only when they surfaced publicly in January, he said. The October report of the Red Cross had been “received by the coalition headquarters in Iraq”.”I don’t think the fact that the report existed was ever communicated back to Australia,” Senator Hill said. “I guess because it wasn’t seen to be our business.”

May 28, 2004Terror summit Terminated
Laura Tingle and Mark Davis
The Howard government has postponed a business summit on terrorism to allow the Prime Minister to travel to California next week to meet Arnold Schwarzenegger. And a lot of senior business figures are not happy about it.What has made them particularly unhappy is that after cancelling appointments and overseas marketing trips to get to the summit, the government didn’t bother telling them it had been cancelled until a day after Mr Howard announced his date with the Terminator in federal parliament.Some told The Australian Financial Review they were unhappy that they were being made part of a political sideshow that had in turn been sidelined by another sideshow.”They needn’t expect us to come,” one said.Up to 60 chief executives from companies in vulnerable sectors, including energy utilities, transport, communications and financial networks, were invited to the high-level ministerial forum next month.Chief executives including Geoff Dixon of Qantas, Sydney Airport’s Max Moore-Wilton, Woodside Petroleum’s Don Voelte and Patrick Corporation’s Chris Corrigan had been planning to attend the meeting.The heads of Telstra and the major banks were also invited to attend the meeting with Mr Howard, Attorney-General Philip Ruddock, Defence Minister Robert Hill and Foreign Affairs Minister Alexander Downer. Mr Ruddock said the government would use the forum to brief the business leaders on the terrorist threat, especially to facilities such as ports, airlines, electricity and gas utilities, “iconic” structures and the country’s communications and information technology networks.He said the meeting would also allow senior ministers to hear from CEOs about their experiences in responding to the new security environment since the September 11, 2001, terrorist attacks on the US.However, business invitees were told late on Wednesday that the meeting had been postponed until late in June.

May 28, 2004Same – sex bill creates gentle rebel
Trish Worth is a parliamentary secretary in the Howard government. She has always come across as a gentle, dignified person, and rarely finds herself at the centre of a political maelstrom.But yesterday, in a coalition party room that has increasingly found its voice, she was one of several unlikely protesters against the government’s proposed changes to the Marriage Act and measures to try to stop gay international adoptions.She’d been prepared to put up with and defend a lot of things, she said, but this decision could cost her her seat.There were many gay couples in her Adelaide electorate, which covers the Adelaide CBD and its immediate environs, she said. These measures sent out a message that the coalition was not favourably disposed to gay people. Why are they following George Bush, she asked?Why indeed.You’d think, at this moment in history in particular, Prime Minister John Howard would have every reason to think twice about following Bush anywhere.Yet even his own MPs, including Worth and her Queensland colleague Warren Entsch, an even more unlikely protester at the proposal, recognised the move for what it was: a bit of political theatre to win votes at the cost of a minority.There was something very late empire about this.Apart from not being an original wedge, you’d think the government might have tried to find a new political tactic after being so singularly unsuccessful at wedging Mark Latham on border protection, Catholics, education, national security, the American alliance and a range of other issues.Will it work?You have to assume this is not just about wedging Latham but also to stir up the minor party vote that has swung back to Labor, while also costing the minor parties in the Senate, who have been active advocates of gay rights, some more conservative support.But the wedge in this issue may not be as important as the dog whistle which is attached to it.It was the blue-collar vote that Howard won over in 1996, and which he’s terrified he’s losing. But it is hard to believe a bit of gay bashing will be enough to stem the tide that is now running so irreversibly against the government.

May 28, 2004Feelings of loss leave Libs in a void
Canberra observed
To hell with whether the pundits think the Howard government is going to lose the federal election or what the polls suggest; what has become clear this week is that the government doesn’t just fear it is going to lose the election, it knows it.The coalition has gone into the sort of panic-induced freefall you can only associate with a government that knows it is on its way out and has no idea how to stop it.Labor, of course, is standing back and letting it fall.The Trish Draper affair? Just one question from the opposition and not about Trish Draper but about whether the government will adopt Labor’s proposal for an independent regulator of parliamentary travel.Iraq? Not a question until yesterday, despite a car bomb near Australia’s mission in Baghdad, despite George Bush’s “five-point strategy” speech.It was left to the government to thrash around helplessly on both issues and try to turn the focus onto Labor over its own policy on Iraq and on the clear divisions among its senior spokesmen on the structure of its tax offerings.Instead of the Draper issue being a one- or two-day sensation in Adelaide, the tacticians let Draper’s decision to try to injunct a Today Tonight story make the issue of politicians’ travel a national story yet again.Instead of killing the story off quickly by appearing to do something about abuses of travel entitlements whether or not they were abused it was allowed to run a few more days, then dealt with half-heartedly.And on Iraq there was the rather sick effort to use a car bomb as a political crutch.While the Prime Minister and Foreign Minister Alexander Downer could not say absolutely that the bomb was aimed at the Iraqi mission, John Howard said on Tuesday night: “I make the immediate point how on earth are you meant to have a diplomatic representation in Iraq at the present time without troops protecting your men and women on the ground? This idea that you can have it both ways, you can pull the troops out and still have people there to protect Australia’s interests, including our commercial interests, is laughable and absurd.”Well, Prime Minister, regardless of Labor’s position, you could replace the 86 Australian troops in danger on the streets of Baghdad with private contractors as your Defence Minister has made clear has been a prospect since at least last May, and which is a path that has been followed by the British mission in Baghdad.Why wouldn’t you do that, and instead hide behind concocted bureaucratic advice on the subject?What else wasn’t being discussed in Canberra?Just two weeks after the budget there was barely a question about it in the House of Representatives. There were just two questions about the Mitsubishi closure in South Australia.Nobody was even very worried about allegations that two Australians now being held at Guantanamo Bay may have been tortured. Just one question.

Labor was more interested in the torture being meted out to Peter Costello by Howard’s refusal to stand down.

Mark Latham was asking about baby safety, youth unemployment and teenage pregnancies. All very virtuous but not the remotest bit connected to pursuing the government over its agenda and policies.

It is a sign of how much trouble the government is in that he can do this.

The Opposition Leader reiterated in a speech on Wednesday night that his approach to his job was “I don’t believe in opposition for opposition’s sake. I believe in setting the agenda, in forcing the government to adopt Labor’s approach to public policy.”

But the political dynamics are such that Labor does not feel compelled to be out there selling itself morning, noon and night.

Latham’s office has told reporters that he is not giving any more “profile”-type interviews.

According to Labor’s notoriously incomplete website of Latham utterances, he hasn’t done a media interview since May 19.

He did do a radio interview on May 20, which does not appear on the website. There are also no official Labor records of another 60 “phantom” interviews.

(An extract from the May 20 interview on Triple M radio with Fatcat , Marto and Mahatma Coat : “Hey Mahatma, if I get into government I’ll be looking for a new ambassador to India. Are you available?”Smilie: ;)

Latham is increasingly disappearing from sight and emerging only to give set-piece speeches on the issues of his choosing before vanishing again. It is driving the government to distraction.

But the coalition has lost the tactical advantage and the ability to set the policy agenda or to flush Latham out.

The fact that it did not have a “plan B” for post-budget politics, after its brilliant plan to wedge Labor on tax cuts died within minutes, is a stunning revelation of its loss of political vim.

Just as stunning is that it appears incapable of employing any political tactic other than “the wedge”, despite Latham’s repeated refusal to be trapped.

By week’s end, it was the gay community’s turn to be wheeled out to become political fodder.

Even the most unlikely members of the government found this a bit much. Parliamentary secretary Trish Worth and Queensland MP Warren Entsch , hardly Liberal radicals, felt compelled to rise in the party room and protest about the government’s proposal to ban same-sex marriages.

It was so unnecessary, they argued. It sent such a bad message to all the gay people who were their supporters and friends, and for what?

Indeed for what? Because the government simply can’t work out where to head next to stop Latham and redefine itself.

Labor’s interest at the moment is keeping away from Iraq and national security and focusing on domestic issues, where it thinks it has the advantage.

The government has started to insist the media must pursue Latham on when he will release his policies. And it must. But it is a fact that the coalition has created a situation that makes Latham a monster of its own creation.

Latham’s only commitment to releasing his tax policy before the election was that “Labor will have its plan out in advance of the election campaign once it’s finalised”.

The last time an Opposition Leader felt able to avoid such scrutiny of his policies until election eve was in 1995.

The resulting lack of scrutiny helped create the preconditions for a mediocre government that has never subsequently felt compelled to explain anything it has done.

It is a depressing prospect that history might repeat itself.

May 27, 2004Bomb stirs debate over troops
Federal government attempts to use the bombing near the Australian embassy in Baghdad to justify a troop presence in Iraq and attack Labor’s withdrawal policy have been undermined by the government’s own plans to use private security contractors to guard diplomats there.The government’s plans, along with British use of private security guards for its officials, raise questions about the need for 86 Australian troops to be exposed to risks such as Tuesday’s explosion.Foreign Minister Alexander Downer conceded in parliament yesterday that it was not clear the bomb had been targeted at the Australian mission.But he tabled a letter dated yesterday from the secretary of his department, Ashton Calvert , which says “in current circumstances in Iraq, the security protection provided by the Australian Defence Force for the Australian Representative Office (ARO) is essential for the safe and effective operation of the mission”.Dr Calvert’s letter says the quality of security provided by the ADF “derives from their high standards of professionalism, their full access to the intelligence available to the ARO and the Australian government, and the highly collaborative and mutually trusting way in which the ARO and ADF operate together”.Mr Downer argued Labor had to accept the departmental advice that the troops were needed to guard the mission. However, the government has had a longstanding contingency plan to replace the troops with private security contractors.Defence Minister Robert Hill signalled in May last year that “a time will come and hopefully it won’t be too far away when civilian security guards can replace the military component”.The UK Foreign Office is employing private bodyguards, armed escorts and security advisers to protect its civil servants in Iraq.And while the government has in the past justified the presence of the 86-strong security contingent as providing protection for business figures travelling to Iraq, business sources have told The Australian Financial Review they had been told by officials to arrange their own private security for visits to Iraq.On Friday, opposition defence spokesman Chris Evans observed the government had always had the contingency plan in place, and that the UK was using private contractors to protect their officials in Iraq.However, he said a Labor government would take advice from the defence forces and Foreign Affairs security officials on how best to protect the diplomats.Mr Downer argued yesterday the representative office was “vital to facilitating Australia’s humanitarian and reconstruction assistance in Iraq”.”They also, of course, advocate our commercial, political and security interests” and liaise with the Coalition Provisional Authority.
May 27, 2004Rhetoric at odds with plan
Federal government attempts to use the bombing near the Australian embassy in Iraq to justify a troop presence and attack Labor’s withdrawal policy have been undermined by the government’s own plans to use private security contractors to guard diplomats there.The government’s plans, along with British use of private security guards for its officials, raises questions about the need for 86 Australian troops to be exposed to risks such as Tuesday’s explosion 100 metres from the nation’s mission in Baghdad.Foreign Minister Alexander Downer conceded in parliament yesterday that it was not clear the bomb had been targeted at the Australian mission.But he tabled a letter dated yesterday from the secretary of his department, Ashton Calvert , which says “in current circumstances in Iraq, the security protection provided by the Australian Defence Force for the Australian Representative Office (ARO) is essential for the safe and effective operation of the mission”.Dr Calvert’s letter says the quality of security provided by the ADF “derives from their high standards of professionalism, their full access to the intelligence available to the ARO and the Australian government, and the highly collaborative and mutually trusting way in which the ARO and ADF operate together”.Mr Downer argued Labor had to accept the departmental advice that the troops were needed to guard the mission. However, the government has had a longstanding contingency plan to replace the troops with private security contractors.Defence Minister Robert Hill signalled in May last year that “a time will come and hopefully it won’t be too far away when civilian security guards can replace the military component”.The UK Foreign Office is employing private bodyguards, armed escorts and security advisers to protect its civil servants in Iraq.And while the government has in the past justified the presence of the 86-strong security contingent as providing protection for business figures travelling to Iraq, business sources have told The Australian Financial Review they had been told by officials to arrange their own private security for visits to Iraq.On Friday, opposition defence spokesman Chris Evans said a Labor government would take advice from the defence forces and Foreign Affairs security officials on how best to protect the diplomats.Mr Downer argued yesterday the representative office was “vital to facilitating Australia’s humanitarian and reconstruction assistance in Iraq”.”They also, of course, advocate our commercial, political and security interests for example, they have been very effective in helping us maintain our wheat exports to Iraq, and they need to liaise with the Coalition Provisional Authority and others,” he said.

May 26, 2004PM rallies Libs for ` biggest fight’
Prime Minister John Howard told his MPs to prepare for the fight of their lives yesterday as he conceded for the first time that the Iraq war was hurting the government’s standing, amid signs the election timing is being pushed back.Mr Howard acknowledged to a coalition party room meeting that images coming out of Iraq were “negative” for the government, after a new opinion poll showed 63 per cent of voters saying the war was not justified, a 12 percentage point increase since
September.”We are in the fight of our political lives all energy must be focused on that,” a spokesman quoted the Prime Minister as saying.But last night Mr Howard reiterated his determination to “finish the job” in Iraq, after a car bomb in Baghdad was reported by Iraqi police to have possibly been directed at the nearby Australian embassy.Foreign Minister Alexander Downer also seized on the bombing to argue that Australia needed its own troops in Iraq to defend its embassy at a time when other embassies had been the target of attacks.Earlier Mr Howard told parliament that the government would not change its policy on Iraq despite public opinion turning against Australia’s involvement. He also welcomed US President George Bush’s continued commitment of troops to the country.Mr Howard also defended his trip to Washington next week, which he
says is primarily aimed at lobbying Congress on the free-trade agreement and he announced he would be stopping in California to lobby the Governor, Arnold Schwarzenegger , on behalf of BHP Billiton for a major LNG supply contract.The AC Nielsen poll showed Labor leading the coalition on the primary vote by an improved margin of 43 per cent to 39 per cent, compared with an equal 42 per cent reading by the same poll in late April, and last week’s Newspoll which reported a 44 per cent to 41 per cent margin in Labor’s favour after the budget.The acknowledgement that the government is now in deep political trouble came as Labor MPs received their own lecture from Labor leader Mark Latham and shadow treasurer Simon Crean about the need for discipline in the run-up to a potential snap election after two weeks of conflicting statements about Labor’s tax and family payment plans.But Mr Howard, in comments in the party room and later in federal parliament, appeared to indicate that any talk of an election in August, or even September, was now unlikely.The party spokesman quoted Mr Howard as saying: “We face a very big fight at the end of the year, or whenever the election is held.”The odds are very much against us. Victory can only be achieved if we work together as a team.”Mr Howard again referred to the likely timing of the election when he sought to capitalise on Mr Latham’s decision to cancel his own trip to Washington in June. Mr Latham had argued he would not travel to Washington because of the threat of an imminent election, although the move was more widely seen as avoiding a trip that would have focused attention on his previous attacks on the American alliance.Mr Howard argued yesterday that it was important for the Australian prime minister to be able to travel overseas and promote the national interest. “I will be promoting the Australian national interest [on the Washington trip],” he said.”I would have thought that the purpose of prime ministers going overseas was to promote the national interest of the country.”I also would have thought that it would have been in the national interest of this country for the alternative prime minister to feel able to visit Washington. But apparently the alternative prime minister of this country felt unable to visit Washington because he would not receive much of a welcome. That is a matter that the alternative prime minister of Australia will have to deal with.

“But, as for the rather phoney excuse that we were about to have an election, as I have said on numerous occasions, I can promise the Leader of the Opposition that we are not going to have an election in June.”

Mr Howard had earlier acknowledged in the party room that “there has been very negative publicity coming out of Iraq, and that Iraq has been a negative to us”, according to the party spokesman. “But he went on to say that there will not be any change in the government’s position.”
Arguing the importance of travelling to Washington to pursue trade and business deals, Mr Howard said that “while I am on my feet I will just say that, inevitably, the issue of Iraq will come up during the time that I will be in Washington”.

“I take this opportunity to welcome the speech that was made by President Bush earlier today, setting out in greater detail the goals of the United States and the coalition in relation to Iraq.

“I take this opportunity to repeat particularly in the context of some opinion polls that reflect current Australian opinion in relation to our participation in Iraq that this government has absolutely no intention of altering its position in relation to being part of the coalition in Iraq.”

May 26, 2004Stricter spouse test for travelling MPs
The Howard government hopes that tougher policing of guidelines on MPs’ travel, rather than a proper legislative overhaul, will help end the controversy over South Australian MP Trish Draper’s $10,000 trip to Europe in 2000 with a boyfriend.At the weekend the Prime Minister’s office had suggested a major tightening of the rules governing overseas travel. Yesterday Finance Minister Nick Minchin and Special Minister of State Eric Abetz said that politicians would only have to clarify to Senator Abetz the status of any spouse travelling with them.They said recent “community debate has highlighted that there has been uncertainty as to the appropriate definition of `spouse’ “.In future, politicians “will be required to certify in writing prior to each overseas study trip that, if being accompanied by a spouse, the parliamentarian is either legally married to the spouse; or that the spouse meets the strict definition of de facto spouse contained in the Parliamentary Entitlements Act”.That act says the definition of a spouse “includes a person who is living with the member as a spouse of the member on a genuine domestic basis although not legally married to the member”.A spokesman for Senator Abetz said yesterday that, despite this long-standing definition of a spouse, Ms Draper whose boyfriend Derick Sands did not live with her at the time of the trip had “accessed” her overseas study allowance “legally and
correctly”.The administrative system in place at the time of her trip had used a different interpretation of spouse based both on the Parliamentary Entitlements Act and findings of the Remuneration Tribunal.The only extra public scrutiny of travel arrangements will be that politicians’ reports will be automatically made available for all to see.Ms Draper again claimed in federal parliament yesterday that newspaper reports and a story on the Today Tonight program on Monday about her travel arrangements were “false and defamatory”.The Liberal member for the marginal Adelaide seat of Makin said she had asked the Federal Police to investigate the theft of documents from her office and indicated she would be speaking on the issue during the adjournment debate.Prime Minister John Howard acknowledged in the coalition party room meeting yesterday that the travel entitlements issue was a problem for the government whatever it said in its defence.

May 25, 2004Ticket to ride: MPs’ travel faces scrutiny
The coalition party room is set to consider reforms to MPs’ overseas travel entitlements today as opposition parties increased pressure to have an independent regulator of politicians’ travel in the wake of MP Trish Draper’s decision to take a boyfriend on a taxpayer funded overseas trip.The controversy over future travel arrangements came amid signs the government is still facing trouble within its ranks about MPs’ super.After being blocked for a week by a court injunction, Channel Seven yesterday aired a program which broke the story of a $10,000 study trip in 2000, when Ms Draper took her then boyfriend Derick Sands with her as a spouse, despite the fact the two were not living together.The program raised questions about the seriousness and duration of the relationship, and claimed that the Liberal Party funded Ms Draper’s injunction against the Seven Network.It also said that Ms Draper missed an appointment to go and see a camp for illegal immigrants in Calais, on her partner’s birthday, and instead stayed in Paris.Many believed that, despite Ms Draper’s offer to repay the cost of the trip, and the attempt by Prime Minister John Howard to kill the issue by announcing a review of the rules covering spouse travel, the controversy in South Australia about the matter could cost Ms Draper her marginal seat of Makin , which she holds by a margin of 3.8 per cent.The party room is expected to have a general discussion about appropriate guidelines for the future, although the matter is ultimately one for the Remuneration Tribunal to determine.The government’s official position remains that it will look at a wide variety of options for dealing with travel in the future.Travel arrangements for politicians are exceptionally complicated with different rules applying to overseas travel on official delegations and committee work to those applying to study tours such as that undertaken by Ms Draper.Ms Draper yesterday made a personal explanation to parliament saying claims that the trip did not fall within the rules were “false and defamatory”.”These claims have further been used to make personal attacks on me and my family which are again false and defamatory.”She told ABC radio in Adelaide:”I did take the trip under my entitlement but clearly if that does upset my constituents, well, I am their representative so I am more than happy to do [repay the cost of the trip].”What I will be doing is offering to pay that back because what I don’t want my constituents of Makin to think is that I have done something peculiar or something untoward.”
Opposition Leader Mark Latham and Democrats leader Andrew Bartlett yesterday called on the government to back Labor’s plan for an independent body to police travel entitlements.They were joined by Liberal backbencher Alex Somlyay who argued the auditor-general should investigate the overseas travel practices of all federal MPs.

May 25, 2004Fight, then flight, now fright
John Howard has repeatedly begged coalition MPs not to travel overseas this year, mindful of the political hazards of images of junketing politicians. What a nightmare, then, that a four-year-old trip by one of his favourite MPs should come to haunt the government just when it could do without it.The complexities and niceties of what the rules might be when it comes to overseas travel hardly matter in this case. (For the record, overseas study tours essentially work on the basis of a fixed-dollar entitlement which MPs can use in whichever form of travel works for them, first-class or economy for example, and can include spouses.)But that hardly matters. Any hint of sanctimonious outrage by politicians that a trip was within the guidelines doesn’t really do any good if it is seen by voters as a junket.Coalition MPs, particularly from South Australia, were bracing themselves for the broadcast of the Today Tonight report that had started the controversy and which was kept off air by a court injunction for the past week, with general expectations it would be “horrendous” for Trish Draper.Labor which has its own problems getting its lines straight on spending can’t believe its luck.South Australia has gone from being a state where it could not expect to pick up any seats to looking like a bonanza.Drapers’ seat always marginal is seen as now in deep trouble.The seat of Hindmarsh held by retiring MP Chris Gallus is also considered vulnerable.Now there is the Mitsubishi crisis, which may not in any way be of the federal government’s making but certainly won’t help.Outside South Australia, the Draper affair plays to both voter prejudices about the Howard government’s sloppy standards and to anger over the different sets of rules that apply to welfare recipients’ private lives and those of politicians.
May 25, 2004Costello : tax cuts, family pay under threat
Tax cuts and family payments announced in this month’s budget were under threat from the Labor Party, Treasurer Peter Costello claimed yesterday as he moved to exploit conflicting statements by opposition frontbenchers about their tax and spending plans.Mr Costello told federal parliament that, though the legislation to enact the budget tax cut and family payments was being supported by Labor, the initiatives would be under threat if the opposition ever became government.This was because of statements indicating Labor would dump the $600 annual family payment after 2004-05 and replace it with a restructured family tax payment, and because of questions over Labor funding of its mooted tax cuts.Labor finance spokesman Bob McMullan last week told The Australian Financial Review that this was Labor’s plan for the family payment.Labor leader Mark Latham and other spokesmen have also claimed that Labor has found $8 billion of savings from waste and mismanagement that it can use to fund its tax cuts and spending promises.But at the weekend Mr McMullan was reported as saying the $8 billion had been revised down to $7 billion over four years and that none of the $7 billion would be available to pay for Labor’s yet-to-be-announced tax and family benefit changes.”We have to find other savings, essentially, to cover it,” Mr McMullan told The Sunday Age.”We have been working on a list to cover that contingency.”Mr Costello pounced on the comments, saying: “The interesting thing about this $7 billion of so-called savings is that every last dollar of it has already been spent, and more so.”The savings, for example, are opposing the government’s MedicarePlus program and redirecting the funding to Labor’s health policy. Labor is opposing the government’s higher-education package and redirecting the funds to what it says it will invest in higher education. It includes an increase in the diesel fuel rebate and a new payroll tax, but it does not include any net available savings which can fund tax cuts.”Mr Costello said Mr Latham’s claims “do not add up, and we saw this extraordinary statement from the Australian Labor Party on the weekend that it is not going to list its savings because the government might pinch them. Let me say why the Labor Party is not going to list its savings: they do not exist”.
May 22, 2004Howard’s new tack to woo voters
Prime Minister John Howard has nominated an overhaul of Australia’s federation and a renewed push on environmental issues as key issues for his future agenda after a week in which his government received confirmation that the federal budget had failed to improve its position in the opinion polls.The failure of the budget to make an impression on voters’ poll preferences saw the government’s hopes that a window of opportunity might open for an August election dashed, and Mr Howard seeking to shift attention from the budget’s big spending promises to Iraq.The government failed to get a bounce out of the budget despite conflicting statements by Labor about its intentions to present an alternative tax and family package.After early speculation about changes to tax thresholds and tax credits, the Labor package by week’s end seemed likely to be based on only small tax changes, but significant changes to family tax payments in future years, to produce a very different offer to voters to that put by the coalition.Despite Labor’s conflicting messages, by the week’s end the Prime Minister was once again shifting attention from the budget, telling a dinner on Thursday night in Sydney to mark his 30th year in federal parliament: “We may have a strong economy, we
may have high employment, we may have a great story to tell, but the attention of the electorate must be directed towards the future and not to the past.”It was an implicit admission that the government is struggling to find traction with the electorate on any issue, despite its budget promise to spend more than twice the amount it spent on political pork barrelling in the 2001 election campaign.Mr Howard told the dinner the government “must demonstrate the relevance of . . . [its] policies in relation to the great challenges of the future”.”We must not allow the Australian people to believe that economic growth and strength can be taken for granted.”It is the product of tough policies, it is the product of intelligent economic leadership, and it’s the product of the right people taking the decision at the right time.”
Mr Howard said Australia had to respond “like all other modern Western nations, to the challenge of demography, of an aging population, of the need to provide greater incentives for people to remain in the workforce, of the need to recognise that we
cannot put an intolerable burden on future generations”.The Prime Minister said the coalition also needed “in my view, to recognise that one of the modern governance challenges of Australia is the increasingly dysfunctional character of our federal system, where the states of Australia for the first time
in decades with access to a growth tax a tax that for years they prayed to have still find it within their capacity when they have an individual administrative failure to simply say it’s because the federal government doesn’t give us enough money.”The reality is that we do need to reassert the value of that system, but it has to be a system that asserts not only the rights of the individual units of the federation but also the responsibility of the individual units of the federation.”He said the growing water shortage was an example of the modern environmental challenge facing Australia.

May 21, 2004ALP in a muddle over family payment
The federal opposition has again split over policy, with Mark Latham contradicting claims by his economic spokesmen that Labor would fund wider tax cuts and new family payments by ditching the government’s planned $600 family lump sum after next year.Mr Latham suggested yesterday that all he had in mind was shifting the payments from an annual to a fortnightly basis, even though finance spokesman Bob McMullan pledged on Wednesday that Labor would radically overhaul the government’s family tax package outlined in the budget.”Bob McMullan . . . apparently on his way out of the National Press Club, was asked by journalists from The Australian Financial Review `Would Labor be making family assistance payments on a fortnightly basis?’ and he said yes,” Mr Latham said yesterday.In fact, that was not the substance of the discussion between Mr McMullan and three AFR journalists that followed answers given about Labor’s tax and family payments plans by shadow treasurer Simon Crean during his address to the Press Club.Mr McMullan was asked whether Mr Crean’s comments suggested that Labor was planning to honour the $600 family tax payments offered by the government in the current year and in 2004-05, but then use the funds provided for this initiative in the forward years to fund a completely different structure of benefits.Mr McMullan agreed that this was the case: that Labor would offer a completely alternative package of family tax payments and tax cuts to the electorate, funded by the family tax package in the years after 2004-05, before the next election.”We commit to the family tax benefit until 2004-05,” Mr McMullan said.”They will get the two $600 payments but after that they will have a choice of our alternative package.”Asked if it was a restructuring of the family tax payments, rather than tax cuts, that was at the heart of Labor plans to provide relief to lower income earners, he said yes although he left open room for some more minor adjustments to tax rates.The significance of Mr McMullan’s comments is that they give the first clear indication of how Labor might try to achieve the apparently fiscally impossible task of increasing the tax and family package on offer from the government without blowing the surplus.On this basis, Mr McMullan’s comments are in line with those made by opposition revenue spokesman David Cox on Adelaide ABC radio last Thursday.”There will be a complete alternative Labor package of income tax cuts and family tax benefits, and people will have the opportunity to choose,” he said.”The structure of our package will be quite different . . . I think with $52 billion of net new policy in this budget, there’s plenty of room for us to make those adjustments.”We will be presenting a much better, well-rounded set of tax cuts and family tax benefit changes”.

May 21, 2004Latham: Iraq is hurting us
Opposition Leader Mark Latham has rejected the Prime Minister’s argument that Australia must see it through in Iraq, saying that Mr Howard “needs to acknowledge that policy mistakes in Iraq have hurt Australia”.Formally restating the government’s commitment to Iraq on Wednesday, Mr Howard told a Melbourne gathering that staying on in Iraq was a “test of character and leadership” and “a critical confrontation in the war against terror”.But Mr Latham said yesterday the commitment to fighting in Iraq had put Australia at greater risk and “diverted resources away from the real war against terror.”Now these prison atrocity scandals undoubtedly will be used by al-Qaeda and others as a recruitment tool for the terrorists themselves enough is enough in my assessment,” the Labor leader said.”If you’re making policy mistake after policy mistake, you need an exit strategy.”Labor’s view is that the best solution in Iraq will come from the leadership of the United Nations, and the best role Australia can play is to provide humanitarian and economic aid rather than a long-term military involvement.”The Prime Minister on Wednesday rejected Mr Latham’s call for a UN force to replace coalition forces in the strife-torn country, saying Labor’s approach was isolationist.He linked the Iraq enterprise intimately with the ongoing value to Australia of the American alliance, of which Mr Latham has been a critic in the past.Mr Howard once again yesterday stressed that improvements had occurred in Iraq since the fall of Saddam Hussein, ranging from more mobile phones to better health services.It was not possible to say when Australia’s current involvement in Iraq would end, but he said that would depend on when each individual force element for example, the air traffic controllers had finished their explicit task.”When that task has been completed, then you are willing to contemplate withdrawing those forces,” Mr Howard told Channel Nine.”For example, we have air traffic controllers at Baghdad airport, and their job is to make sure that local Iraqis are being got ready to take over control of the airport.”That is one job. Another job we have is to help train the new Iraqi army and the new Iraqi police. Obviously when that task is completed, you can look at some possibility of those people coming out.”

May 21, 2004Lots of lollies, too little sustenance
Canberra observed
When in Canberra, Peter Costello keeps his loose change in a little lolly tin. On Wednesday of last week, the day after the budget, he had it with him when he took his young daughter Phoebe to Aussie’s, the Parliament House coffee shop, for a sausage roll.We know this because a cheery Treasurer was entertaining the queue with a performance on the lolly tin castanets.Asked what was in his lolly tin, he opened it to reveal a collection of gold and silver coins.”Oh look, it’s the surplus,” someone joked.”Quick, Peter, you haven’t spent all of it after all,” someone else urged.”Ah,” challenged the Treasurer, smugly. “Who is the only treasurer to have regularly produced surpluses?”Which brings us to the point of the story: what is the point of economic policy and budget politics these days? Being able to play the fiscal castanets? Rattling your surplus conspicuously at critics?After a week of budget debate, the average punter would be forgiven for being confused about what the framework might be these days for economic policy discussion.Yes, it is an election year. But have we also entered into a parallel universe where all statements made by politicians are non sequiturs?Consider.The government is out selling its economic credentials as a reason for re-electing it, instead of Labor, while embarking on the mother of all cynical, politically targeted election spends, which is justified economically on the most threadbare of arguments.The Treasurer, and for that matter Treasury, are out arguing that spending the surplus today, cutting taxes and growing the economy as quickly as possible are the best way of ensuring intergenerational equity and that people will be better equipped to finance their old age.Maybe we are old-fashioned, but there used to be an argument that fiscal policy should be at least partly aimed at boosting national savings, both public and private.Now, amongst other apparent policy contradictions, the $4.5 billion tax take from superannuation fund earnings is helping support the sustenance of consumption when Treasury is clearly concerned that the property market and drought are about to send
the domestic economy south.Then there is the arcane debate going on about the size of the stimulus in the budget (for example, it all depends where you start from, or where you would have started from if all other things were equal), which seems to ignore the simple eyeball test that the government is about to dump $6.5 billion into consumers’ purses, in large lumps, over the next three or four months in family tax lump sums and tax cuts.There is the government argument that its new “spend now” approach to intergenerational equity is justified because its tax and family package will encourage women back into the workforce.

This seems to ignore the fact the structure of its package actually best benefits households where one person only contributes 20 per cent of the income.

Labor is not much better, of course. Shadow Treasurer Simon Crean told the National Press Club this week that it was more than possible to have both more spending and tax cuts “if you’ve got the fiscal discipline”.

It’s all a bit post-modernist.

Which is perhaps what is most glorious about the opinion polls over the past week showing variously that voters thought the budget was a stinker, or very good for them, but either way weren’t going to reward the government for it.

Voters might have been tuned out of politics in recent years contemplating their new-found property wealth, but it seems they can still spot a story that doesn’t hang together.

The government may have stopped worrying about having any consistency or logic attached to short-term stabilisation policy in economics which is why you can have a stimulatory fiscal policy but at the same time might be concerned that the Reserve Bank will have to lift interest rates soon but voters would still like some, thanks very much.

The cost of failing to provide a story worth telling has been to definitively close an early election window just as the economy about which the government has become so complacent is becoming problematic: house prices are falling, oil prices are rising.

The broader problem, though, is that there is no reason to believe the lack of an economic strategy is simply something to be accepted as part of the furniture of an election year.

Dare one mention the agenda word?

This time around, the government seems to have run out of an agenda even before the election, let alone have one for the term ahead.

Labor at least is providing some interest in trying to fly the spending-rather-than-taxing argument.

Indeed, perhaps one beneficial side effect of the debate about spending money on government services versus returning big tax cuts might be to return some structure to the economic debate.

That will require some articulate engagement on both sides of politics.

This could be a problem.

Whatever the state of his thwarted ambitions, a conspicuous lack of passionate engagement would seem to be a good reason for Costello to be moving on from his current portfolio pretty soon.

This is a man who in this year’s budget lock-up gave every impression of someone only going through the motions, operating very much on a “this is budget day, must talk to journos” basis, but with little to say about the budget’s strategy and with even less conviction that it was worth listening to.

And Labor? It may have got its political tactics right post-budget about letting the government’s tax and spend measures straight through and sticking to its own agenda.

But the shambolic nature of its spokesman’s comments on what it is going to do instead has hardly helped its cause.

The confused Labor messages at the moment, in the long run, won’t count for much. It will be the cohesiveness and coherence of its own tax and economic policies that will count.

But if the last week has shown us anything, it is that Labor still lacks the political discipline to stay clearly on a tight political message. That will have to change, and quickly, before an election campaign proper which will, more than most years, determine its fate.

May 20, 2004PM commits to Iraq `contest’
Prime Minister John Howard has labelled staying in Iraq a “test of character and leadership”, rejecting Opposition Leader Mark Latham’s call for a United Nations force to replace coalition troops in the strife-torn country.In a speech designed to establish an even sharper divide on Iraq with Labor, Mr Howard last night restated his government’s commitment to the US-led Iraq operation despite the Iraqi prisoner abuse scandal.He argued the “contest” in Iraq had become “a critical confrontation in the war against terror”.Australia needed to be in that contest because “we understand, as do our other allies, that the United States is the only nation that actually has the power to change the world for the better”.”That is what they are trying to do in Iraq,” he said. “Surely even the most passionate opponents of our involvement in the Iraq War, even the greatest sceptics about the American alliance, can see that right at the moment, when the threat posed by terrorism is so potent, we should be aligning ourselves
strongly with countries like America and Britain, and other proven friends and allies.”In this context, the actuality of our presence in Iraq is very important.”He made no commitment to an expanded presence in Iraq but made clear there was no end in sight to Australia’s troop commitment.The Prime Minister’s recent trip to Baghdad had reinforced his view “that Australia should stay the distance and finish the tasks for which we have taken responsibility”.”If we lose heart, if we abandon our friends, if we choose to give the wrong signal to the terrorists, that will not only make the world a less safe place but also damage the reputation of this country around the world,” he said.Noting Mr Latham’s recent calls for the coalition to withdraw from Iraq and be replaced by “a UN force that has strong involvement of Arab states”, Mr Howard said the US-led force was “already fully sanctioned by the UN Security Council”.”It is quite unrealistic to suggest that this arrangement should now be replaced by a UN blue helmet operation,” Mr Howard said. “Such an operation would depend on voluntary contributions, but there is no sign of the required willingness on the part of a wider range of countries, including Arab states, to contribute peacekeepers to a UN force. Nor is it at all certain that the Iraqis would welcome the presence of armed forces from neighbouring countries.”There was still likely to be a pressing need for a continued coalition presence when the interim government was in place.While acknowledging that the “appalling abuse of Iraqi detainees in Abu Ghraib prison will have caused many in the region to question whether democracy will make a difference”, he said “they need to see that difference in action that the victims
of abuse are not only able, but encouraged to speak out, seek redress and find justice”.But he rejected the argument “that the moral basis of coalition action in Iraq has been destroyed”.

May 20, 2004Labor’s family benefits shake – up
Mark Davis and Laura Tingle
The Labor Party will take a significant overhaul of the family assistance system to the next election, giving voters an alternative to the government’s $600-a-child increase in tax benefit payments.The federal opposition’s tax and family assistance package will also include tax relief on top of the budget’s cuts for middle and higher-income earners. Opposition finance spokesman Bob McMullan told The Australian Financial Review families would still get the government’s $600 increase to Family Tax Benefit Part A this financial year and next because Labor had already voted for the legislation implementing the budget.But Mr McMullan made it clear Labor’s alternative plan would overhaul the government’s family assistance measures from 2005-06, replacing the $600 increases from then on.The centrepiece of the government’s budget was the $19.2 billion increase in family payments and $14.7 billion in tax cuts for people earning more than $52,000 a year.Labor criticised the budget for failing to deliver relief to four out of five Australian families and singles, but has yet to reveal the details of its alternative plan and has been sending conflicting messages in recent days about whether it would deliver tax cuts to all taxpayers and its plans for family assistance.With the government committing most of the budget’s surpluses towards its tax cuts and increases in family tax benefits, it had been unclear how Labor would finance its pledge to cut taxes, increase spending on services such as health and education and maintain the budget in surplus.But if Labor restructures the family assistance measures from 2005-06, it would have the $9.15 billion cost of those over the budget’s four-year forward estimates period available to spend on its alternative tax and families plan.Shadow treasurer Simon Crean used an address to the National Press Club in Canberra yesterday to spell out the opposition’s goal of extending the government’s tax cuts and doing more to reduce high effective marginal tax rates that occur through the interaction between the tax and welfare systems.”Our commitment is one that is fairly simple: we will make the tax package broader and fairer and we are going to target more effectively those problems that are disincentives for people to work harder,” Mr Crean said.The budget had started to tackle high effective marginal tax rates, which can see families losing a substantial proportion of any increases in the income they earn through reduced welfare payments and higher tax payments, but more needed to be done.”There is no point saying to people you are better off sitting at home [than working],” he said.Mr Crean hit back at government moves in recent days to play up his senior role on Labor’s front bench as a political liability and to portray the opposition as economically irresponsible.”Do I get the Prime Minister right? I’m unpopular therefore I’m a liability; Costello is also unpopular [but] he’s an asset?” Mr Crean said. “There are a lot of differences between me and Costello but there’s one important one: I’m not running for prime minister of Australia; he is.”Mr Crean also said a Labor government would improve national savings and investment, as well as consider creating a special fund to meet the fiscal pressures of the ageing population and the commonwealth’s unfunded superannuation liabilities. “If we are facing rising fiscal pressures tomorrow as a result of an ageing population, then shouldn’t we be acting to address it today?” he said.”Nations such as New Zealand, Norway and Ireland put aside funds today so that they can meet the costs they know they will face tomorrow. This is international best practice. Why shouldn’t Australia do the same?”

Mr Crean said budgets should reflect both the short-term and long-term needs of savings and investment. “It should put aside funds to deal with clearly defined future fiscal pressures.”

May 19, 2004Coalition loses ticket to early poll
So much for an August election. Even before public polls confirmed it yesterday, John Howard was making it clear on Monday that the coalition’s own post-budget polling had put paid to any fantasy that big election bribes could clear the decks for an early election.Don’t believe all the suggestions by the government now that it never intended to go to the polls early.But a combination of a cynical response to the budget, a deteriorating situation in Iraq, and rising oil prices have closed the window on the early opportunities and the government must now batten down for a slog to the death with Mark Latham.One rationale for the poor response to the budget around the government yesterday was that last week’s tax cuts and family tax payments may even have been a little too generous to produce a quick bounce: that the $1200 payments on offer to families in marginal electorates, on top of tax cuts, is just too big to be believed.Hence the Prime Minister’s argument that it may take a while for the government to pick up some positive response from the budget. That is: they’ll believe it when they actually get the money.There is still confidence that the budget measures will have a positive effect in the marginal seats in outer Brisbane and Sydney that were so tightly targeted in last week’s budget.But there is also now a resignation that, as was probably always the case, this year’s federal election will be decided in a few short weeks of tough campaigning.The problem for the government is that its expensive policies tax cuts and welfare assistance and the policies aimed at the two crucial political issues this year health and education are now “out there” and it can’t hope for big policy bangs anymore to change voters minds.The flexibility all lies with Mark Latham.

May 19, 2004Howard condemns Iraq killing
Laura Tingle, Chief political correspondent, with wires
The assassination of the head of the US-appointed Iraqi Governing Council made it all the more critical that the planned handover of sovereignty to Iraqis on June 30 should proceed on schedule, Prime Minister John Howard said yesterday.On the eve of a speech tonight in Melbourne in which he plans to spell out the government’s thinking on Iraq, Mr Howard also dismissed suggestions he was planning to announce a major increase in the number of Australian troops committed to the country.His comments came as there were more signs from Thailand that it would withdraw its troops once the June 30 handover was completed.Mr Howard said he had been horrified by the murder of Izzedin Salim in Iraq but it was important the handover date be met.”It’s difficult but there’s certainly a continuing commitment by the coalition to meet that deadline,” Mr Howard told Adelaide radio.”Those who want to prevent any democratic experiment in Iraq succeeding are the people who are responsible for this callous and brutal and absolutely terrible murder.”What these people are about is preventing Iraq having a democratic future,” he said. “Now, are we going to give in to that? Are we going to walk away from that?”Are we going to say, `If you murder and kill and bomb people enough we’ll turn our backs and walk away?'”This is what those who are saying we should leave are, in effect, advocating.”Opposition Leader Mark Latham repeated his call for more United Nations involvement in Iraq following Mr Salim’s death, which he said was another terrible act of violence in a country where the security situation was deteriorating.He said Australia risked becoming bogged down with no exit strategy if it sent more troops to Iraq.

May 18, 2004Howard to reassert Iraq stance
Prime Minister John Howard says he will reassert Australia’s commitment to “our responsibilities” in Iraq in a major speech tomorrow, shifting attention from the federal budget.He said his speech would deal with “the more absurd arguments that are being advanced at the present time suggesting that we should walk away from our responsibilities”.But Opposition Leader Mark Latham signalled yesterday the Iraqi prisoner scandal only confirmed his view that Australian troops should be home by Christmas and that Iraq should become a United Nations operation.The renewed debate about Iraq came as Treasurer Peter Costello predicted yesterday the federal election campaign would be dominated by foreign affairs rather than domestic issues.The government still believes it can use Iraq and the US alliance to damage Mr Latham, despite the deteriorating situation in the war-torn country and plummeting polls for coalition partners George Bush and Tony Blair .While there has been considerable speculation over the past two days that the US and UK were trying to find exit strategies from Iraq, Mr Howard said yesterday his speech would be “making the point that if the coalition were to retreat from Iraq, it
would deliver an enormous victory for international terrorism and Saddam Hussein”.”There’s no doubt that the terrorists are investing an enormous amount in success of the insurgency in Iraq at the present time and there’s no doubt that whenever there’s a backward move by the coalition, the terrorists put that in the victory column against the West,” he said.Mr Latham refused yesterday to use the prisoner abuse scandal to criticise the US, though he said the “debacle” stained the credibility of policy in relation to Iraq. “I’m a strong believer in the American alliance and the alliance is broader than this one episode in Iraq,” he told ABC radio. “I think what it stains is the whole credibility of policy in relation to Iraq.”

May 15, 2004How Costello’s missile missed its target
Comment BUDGET 2004
Just in case you missed the subtleties, the federal budget was supposed to be about FAMILIES.What it was really about, of course, was Mark Latham.And if that was the target, you’d have to say it may have failed rather miserably.It was clear in the lead-up to the budget that the government was hoping for a stoush with Labor in the Senate over its tax cuts and family payments plan, and that it was hoping its tax cuts aimed at higher-income earners would cause lots of grief for Labor.It was also clear the government was hoping that the spectre of large dollops of money being dropped on voters over the next couple of months would spook Labor into an early outing of its tax cut plans.So far you can score the Howard-Costello tactics a big zero.In fact, by the end of the week it appeared they had actually boosted Latham’s tactical position.With tax cuts for high-income earners already a matter of history, Latham can concentrate on trying to give money to the very low and medium-income earners whom Labor still claim as its heartland.Whether he can do it, of course, is yet to be determined. But while his speech in reply on Thursday night was all the things aficionados love to complain about thin on detail, flat in delivery it made the most of Latham’s first opportunity to have 30 minutes of free television to outline his agenda to voters.We Canberra cynics may have heard it all a million times, but here was an opportunity for Latham to spell it out to all those people just tuning in again to politics after a long break.The upshot is this: all the government could talk about was wads of cash and who most deserved it.Latham might hold out the lure of the cash but he stuck firmly to the agenda of discussing the role of government services.He still has the opportunity to talk about the two issues that are supposed to be at the top of the political agenda: health and education. The government has already done its dash on those.The announcement by Latham and Julia Gillard on Thursday of a $304-million pledge for pneumococcal inoculations made the point perfectly that a little bit of government spending is often better than big tax cuts.So while the government can be smug about the apparently wildly contradictory statements in Latham’s speech-in-reply that he’s going to increase spending, cut taxes and keep the surplus things haven’t exactly gone to plan for them.

The real danger for Labor and Latham remains their delivery on what has been sound tactics over the past week.

There have been too many silly mistakes.

Having made the outlandish fiscal claims, they can’t afford the slightest slip-up.

The pollsters are already out in the field assessing how big a bounce, and how sustained a bounce, the government can get from the budget. We’ll get the first answers to those questions on Tuesday when the first public polls are published.


The Pitsis family

* Terry and Cathy Pitsis, two children. Terry works full-time in factory of the family business and almost every Saturday. Cathy works part-time in the family business (not from home).

* I can’t see a lot of positive impact for the longer term. For the shorter term there are a few bonuses but they are once-off things to buy votes. It won’t help us in the longer term. I’d rather see money go towards medical [services] and education.

* Seat: Parramatta, NSW

* 1.2% swing
* Median weekly family income $1080.

* Outer suburban Sydney seat in the Oaspirational¹ voter belt held by Liberal frontbencher Ross Cameron.

The Edwards family
* Kim Edwards and her husband, two children. Kim is a full-time mother.

* If you are single or you don’t have children there really is nothing in there for people who don’t have $52,000.

She would consider supporting Mark Latham

* If he can show where he’s going to get the money from. If he’s got something better, let him show his hand.

* Seat: Petrie, Qld

* 3.5% swing

* Median weekly family income $912.

* Northern Brisbane seat held by the Liberals, which has changed parties often.

The Coucher family

* Bobbie and her husband, five children. Husband is a sheet metal worker, while Bobbie is a full-time mother.

* It (the budget) encourages people to have babies for the money. That’s ridiculous. I have five children. Three of them without any incentive. It wouldn’t influence me to think about having another but I can see where a lot of young girls would think about the bonus.

* I like the fact that Latham will space out the child incentive payments through the year ­ I thought that was better ­ and I also like what he had to say about Medicare bulk-billing and the dental plans. We need all that as a family.

* Seat: Deakin, Vic

* 1.6% swing

* Median weekly family income $1057.

* Victoria’s most marginal Liberal seat.

May 14, 2004Charities face confusion
The future tax regime of charities is in a state of confusion after Treasurer Peter Costello said he was dumping plans to introduce contentious new legislation to disqualify charities that attempted to change the law or government policy.Mr Costello quietly made the announcement in a flurry of press releases accompanying the budget on Tuesday night, saying the current common law meaning of a charity would continue to apply.But at the same time the government would proceed with a regime requiring charities to be “re-endorsed” for various tax exemptions by the commissioner of taxation.What makes the government’s plans particularly confusing, is that on Wednesday a Senate committee examining the proposed endorsement regime recommended that it not proceed until the charities definitions legislation was passed by parliament.Legislation containing the endorsement regime was due to be discussed in the Senate yesterday, but was not dealt with because debate in the upper house was dominated by the budget’s family tax payment legislation.Mr Costello said on Tuesday night the government had decided “not to proceed with the draft Charities Bill”.He said a report by the Board of Taxation on the draft of the bill had found that it did not achieve the level of clarity and certainty that was intended to be brought to the charitable sector.”Therefore, rather than introducing a legislative definition of a `charity’, the common law meaning will continue to apply,” he said.”The government will, however, introduce a statutory extension to the common law meaning of a charity to include non-profit child care available to the public; self-help groups with open and non-discriminatory membership; and closed or contemplative
religious orders that offer prayerful intervention to the public.”Legislation to give effect to this announcement will be introduced as soon as practicable and will apply from July 1, 2004.”Mr Costello said the government had decided to delay until July 1 next year the date by which charities, public benevolent institutions and health promotion charities needed endorsement by the commissioner of taxation to access tax concessions relating to fringe benefits tax and the GST.However, the Senate Economics Committee, which is chaired by close Costello supporter George Brandis, said in its report tabled on Wednesday it was concerned “that if the proposed Charities Bill is not passed in time to commence on July 1, 2004, the
provisions of the current bill would become operative based on the definitional status quo.”This does not appear to be the government’s intention.”As a result, the committee considers that the link between the commencement of the two bills should be made explicit”.The government was accused last year of seeking to silence its critics after Mr Costello circulated the draft bill that said “attempting to change the law or government policy” was a “disqualifying purpose” or an unlawful activity for a charity.The Institute of Public Affairs was commissioned to prepare a report for the government on the sector. The report is due to be delivered within weeks.

May 14, 2004Second thoughts about a loner’s position
Canberra observed
Cut and run. Cut the surplus and run to the polls. Cut and run out of Iraq. Cut and run from visiting Washington. It was a bit of a theme this week. In Canberra, most of the attention might have been on the budget. But scenes on television sets around the country were turning the Iraq issue, one which Australians had violently opposed but on which they had pretty set views, into some new sort of horror that could produce a very different political dynamic.One seasoned political observer told me last week that there were two issues tied up in the war in Iraq, and they had different consequences for the Opposition Leader, Mark Latham.One was the issue of the war itself and whether Australia should be involved. The other was the American alliance.The argument was that Latham’s position on Australia’s involvement in the war that the troops should be home by Christmas was seen by voters as perfectly reasonable, whether they agreed with it or not.Where he was in trouble was on the American alliance. The argument here was that John Howard was far to the right of the broader community on the alliance and that all Latham had to do was take a more moderate position.Instead, he had taken a position far to the left of the community on the alliance and had shown no interest in retreating from it.This had left voters nervous about him, the argument went.This week, Latham announced that the apparent imminence of a federal election campaign had led him to cancel his planned trip to the US next month.Not many people believed him, given that the trip was looking like a debacle and no one significant was prepared to meet him.But the benefit of the cancellation is that Latham’s position on the US goes to the bottom of the political agenda for the moment.Which leaves voters able to ponder whether the unfolding events in Iraq and the irreparable damage of reports about US abuse of prisoners might now be starting to pollute their views about the value of the US-Australia alliance itself.The idea of the alliance is based on the sense of security it gives people in a relatively small country that the world’s superpower is standing by like some large and benevolent big brother to watch our backs.Not only were we snuggling up against the world’s most powerful nation, but it was a country that since World War I has generally been perceived in the developed world as a trustworthy policeman.But what happens to that sense of security when the most profound perceptions about the US are now being challenged by revelations about what has been happening in Iraq, Afghanistan and Guantanamo Bay?The government plugs on regardless, insisting as recently as yesterday that everything that is happening including the beheading of American Michael Berg can only strengthen our resolve to stay the course.

Well, if that is the case, how come what is emerging about Australia’s role in Iraq suggests that the Prime Minister and his government have been doing everything in their power to cut and run from any responsibility for what is happening in Iraq?

On April 10 last year, the day that that big statue of Saddam Hussein was toppled for the television cameras in Baghdad, John Howard told Australians we would become a “partner” in the transitional authority and an “occupying power”.

But Australia was among a list of countries among the Coalition of the Willing that were not named as occupying powers in the Security Council resolution that formalised the transition arrangements in Iraq in May last year.

Just how that happened has not been explained.

But ever since, government ministers have used this fiction to argue that, since we are not an occupying power, we have no specific legal obligations in Iraq.

Cut and run.

The prisoner abuse scandal has produced even more legalistic nonsense about Australia’s responsibilities as part of a military force that invaded another country on highly contestable legal grounds and for completely discredited reasons.

Despite the fact that an agreement was signed in March last year between Australia’s commander in Iraq, Brigadier Maurie McNarn , with US and British authorities about the transfer of prisoners of war, which explicitly conferred the obligations of the Geneva Convention on all the parties, Australians are now being told we had no obligations for prisoners under the coalition’s control.

This is based on the spurious idea that, even in the case of 100 Iraqis known to have been captured by Australian SAS troops, the Australian troops were neither the “detaining power” nor the “accepting power” because the troops were “captured” by a US officer attached to the Australian contingent (of which there is no mention in the agreement).

Challenged on Tuesday about Australia’s responsibilities by Labor’s Senate leader, John Faulkner, Defence Minister Robert Hill argued: “Senator Faulkner talks about Australia’s responsibility under the Geneva Convention in relation to this matter, implying that in some way Australia is at fault.

“I made the point during question time that the prisons in Iraq are not run by Australians. The interrogation of prisoners in Iraq is not carried out by Australians. There is no suggestion here that any Australian has misbehaved in relation to these allegations, so why Senator Faulkner wants to drag Australia into this unfortunate circumstance is beyond me unless, of course, he sees some short-term political benefit in it.”

Wait a minute. It is Senator Faulkner who is “dragging Australia into this unfortunate circumstance”?

Good grief.

Cut and run, indeed.

To recap the government’s position: it is trying to make a political virtue of standing by its mates.

The government is “seeing it through” with its alliance partner in Iraq while setting land speed records to get away from not just the atrocities committed by the US military (which, according to the International Committee of the Red Cross included randomly killing prisoners by shooting at them from a guard tower while they ran naked around an exercise yard), but from the unleashing of a whole new level of terrorism against the West that will inevitably flow from them.

The truth is that at the highest level of the government’s military and bureaucratic advisers, at least, there is an understanding that the Iraqi prisoner issue has not only finished the Iraq campaign and consigned it to infamy but unleashed dangerous new forces in the world.

What value then, a photo opportunity with the American president? John Howard will find out in three weeks’ time.

May 14, 2004At your service: Latham sticks to his guns
BUDGET 2004 Comment
Mark Latham continues to evade the government’s attempts to set his political agenda or force him into going places he doesn’t want to go.Both he and John Howard might be talking about families. But in his budget speech in reply last night, the Opposition Leader’s focus was on service delivery rather than tax cuts, even if these were also promised.The “future for our nation” was “services, conservation, security”.The message had been clear earlier in the day when he and opposition health spokeswoman Julia Gillard announced that a Latham government would fund universal pneumococcal vaccines for newborn babies, embarrassing the government, which had knocked back an attempt by Health Minister Tony Abbott to get such funding in the budget.The message was clear: you might be getting a tax cut from these guys, but what services are they giving you?Gillard argued that the only way to guarantee a supply of the vaccine was to make it a universal scheme funded by the government rather than the private sector.Just how Labor will deliver better services and more tax relief remains unclear. Latham’s promising better budget management, reduced bureaucracy, budget surpluses, and lower spending and tax as a proportion of GDP.Before the election Labor would “overhaul and improve the tax and family assistance measures” in the budget and implement “a bigger program of tax relief” to spread it to those earning less than $52,000.But he’s not going to tell us how now, just because the government wants him to. He’ll make them sweat a bit and wear the risk and pressure of not trying to trump the budget and release his policy.Labor did not have a good start to its campaign against the budget. In parliament last night, the speech came across very flat. But it did show again that Latham will not be shaken from the agenda he plans to pursue.

May 13, 2004Good night for Bishop with funding success
BUDGET 2004: AGED CARE The package
Commercial financiers would be increasingly attracted into an aged care industry that would be more sustainable as a result of funding changes announced in the budget, Minister for Ageing Julie Bishop said yesterday.The government announced a range of changes to aged care funding totalling $2.2 billion, to address a chronic capital shortage in the sector and recurrent shortfalls in funding for the care of nursing home residents.The outcome is a victory for Ms Bishop’s advocacy. Despite the extra political incentives of an imminent election and booming Treasury coffers, she has achieved more significant and sustained upgrading of public funding for the aged care sector than did any of her predecessors.The package includes a one-off $513 million capital payment, payable on the basis of $3500 a resident before June 30 and is designed to assist nursing homes complete facility upgrades to meet safety and building standards that come into force in 2008.It has the political advantage of appeasing much of the sector up front, but also has the policy virtue of having the federal government provide funds to homes run by state governments. These homes, particularly in Victoria, are most in need of immediate upgrades.More significant are the long-term changes to capital funding and recurrent care subsidies.After the controversy of accommodation bonds, Ms Bishop has used the recommendations of the Hogan review of aged care to come up with a formula that provides a greater capital subsidy by lifting to $16.25 a day the maximum accommodation charge homes can levy on residents. As such, the government will be lifting the payment it makes to cover the charge levied on financially disadvantaged residents.Ms Bishop said her view was that the capital changes and concurrent changes to care subsidies that would lift financial accountability and care standards would create a much more mature and viable sector.The capital shortfall of the sector in the next few years could be met by the increased capital subsidy and the industry put in a position to be a more attractive investment option for commercial financiers than had been the case.Her expectation is that more calls for capital would be able to be met from commercial sources, instead of the public purse.Changes in care arrangements with emphasis on care in the home, where possible mean the low-level care provided in hostels is likely to diminish as part of the sector over the next couple of decades, with a growing emphasis on nursing-home-style high-level care for the final stages of life.Ms Bishop argued that over time aged care residents would be better able to finance their needs.”The fact is baby boomers are wealthier,” she said, “so people will be able to make more of a contribution to their cost than has been the case in the past.”

May 13, 2004Wary Latham cancels US trip
BUDGET 2004: THE POLITICS Poll agenda
Labor leader Mark Latham yesterday blamed his decision to cancel a June trip to the US on the possibility of the federal election being called “sooner rather than later”.His move came as Labor frontbenchers yesterday talked up the possibility of an early election following the $34 billion package of tax cuts and family tax payments announced in the budget.But Prime Minister John Howard questioned Mr Latham’s claim that an early election was the reason for the decision, pointing out that he was travelling to the US in June, about the same time as Mr Latham.”I don’t know when the election’s going to be but I do know this: that it won’t be before June 30,” he said.Mr Howard is due to travel to the US in the first week of June to lobby Congress on the free-trade agreement, and will go on to Europe for D-Day anniversary celebrations.”Mr Latham’s visit would have in a sense overlapped with mine or been very close to it,” he told Sky Television. “I guess he’s decided to use this as an excuse not to go because he feels somehow awkward in his relationship with the US.”There has been growing speculation that Mr Latham would cancel his US trip, despite the deteriorating situation in Iraq, because of the possibility that he would not be able to meet with Democratic presidential contender Senator John Kerry and because of perceptions that the Opposition Leader’s anti-Americanism, rather than his stance on Iraq, was electorally damaging.A spokesman for Mr Latham said yesterday that while considerable planning had been done on the trip, a definite itinerary had not been arranged for the people Mr Latham would have seen in the US.Mr Latham said in a statement it now appeared the election would be “sooner rather than later”.”For this reason I have decided to cancel any overseas travel plans prior to the election, including my trip to the US and the United Nations and a possible trip to China.”At this stage of the political cycle, it is more important to be in Australia talking to the Australian people about Labor’s policies and plans than travelling overseas.”With the budget delivered, and the family tax payments and tax cuts legislation likely to be passed through federal parliament as early as tomorrow, speculation about the timing of the election has intensified.August 7 remains the first Saturday regarded as a viable option for the government to go to the polls, a date which would require the Prime Minister to call the election in early July.This would allow the present winter sitting of parliament through May and June to take place, and the government to assess through the intensive qualitative polling that it has already commenced whether the budget will deliver enough of a bounce to give it a head start going into the election campaign.If Mr Howard does not to go to the polls on August 7, he would probably wait until October as the Olympics, football finals and school holidays litter the calendar from mid-August to the end of September. October 16 and 23 are two possible dates.


Early June

John Howard travels to Washington, the UK and France in the first week of June

August 7

The first date the government can hold an election with its budget measures passed by Parliament

August 13-29

Athens Olympics. The government is unlikely to go to the poll

September 4

Possible poll date

September 11

Anniversary of the terrorist attacks in New York and Washington

September 18

Possible poll date

September 25

AFL grand final. Government unlikely to go to the polls

October 2

NRL grand final. Government unlikely to go to the polls

October 16

Last possible poll date for a double dissolution election

November 2

US election

April 16, 2005

Last possible election date

May 13, 2004Crean puts his big footnote into debate
It is often the footnotes and buried details in budgets that provide the touch of excitement to the predictability of budget stories.It’s not often that footnotes in opposition press releases cause a problem.The debate about the proudly footnoted press release from opposition Treasury spokesman Simon Crean late on Tuesday night provided as much movement in Canberra yesterday as all those bucketloads of money being hawked around by Treasurer Peter Costello.The footnote, which contained a definition from the National Centre for Social and Economic Modelling that there are 10.7 million families in Australia, made the central Labor attack on the budget that most people were missing out on tax cuts look
confused, to say the least.This impression grew when Opposition Leader Mark Latham said he didn’t think his family would get any benefit from the budget which it clearly would because of his income level. He’ll get more than $40 a week.The Labor people might be right: the budget might have been an appeal to greed among one group of voters at the expense of lower income earners. But if they couldn’t even work out how many people might miss out, and why, it added to the impression they didn’t know what they were talking about.The Prime Minister and Treasurer, in the meantime, were banging away at the message that of course it was fine to give tax cuts only to higher income groups since they were the ones who’d missed out in previous tax cuts, and because the cuts on offer
would prevent people on middle income levels from being nudged up into the top tax brackets.OK, they said, this didn’t help lower income earners. But the family tax payments would help them.Labor’s initial assault on the budget has looked scratchy, even if the tactics seemed smart enough.The government was clearly hoping for a brawl in the Senate and division in Labor ranks about tax. It got neither, as Labor decided to accept the major measures.But Labor seemed to have trouble articulating that decision, or explaining how they could support the government’s package on the one hand, but offer an alternative which conceivably might involve taking back some of the largesse at the same time.

May 12, 2004Costello drives deep into Labor territory
Laura Tingle
This budget aims squarely at the young families of Labor’s heartland, chief political correspondent Laura Tingle writes.The Howard government will use $37 billion of tax cuts, family assistance and retirement savings incentives including payouts of $9.5 billion in the next four months as the centrepiece of a re-election strategy designed to put immediate pressure on
Opposition Leader Mark Latham and bring on a confrontation with the Senate.Treasurer Peter Costello last night unveiled a budget strategy that sets the scene for a mid-year election, if the government decides to go early, and challenges MrLatham in the contested electoral heartland young families in outer urban electorates.There is relatively little in the budget that is not focused on these massive payments to families, though small business has won an easier GST compliance burden and the resources sector has won greater rewards for exploration through changes to the petroleum resource rent tax.Low- to middle-income families will be showered with a series of generous bribes from the government over the crucial election window opening in the next four months a $600 family tax payment before June 30, tax cuts on July 1 and another $600 in family tax payments when tax returns are filed.However, last night’s budget reveals other reasons why the government may be feeling compelled to go to the polls earlier rather than later: forecasts of a rapid drop-off in domestic economic activity in coming months led by the housing downturn and a sharp drop in business investment.The unprecedented pre-election spending splurge will leave a budget surplus in cash terms of just $2.4billion in 2004-05 or 0.3 per cent of gross domestic product compared with $4.6billion in the year just ending.In fiscal balance terms, the surplus will fall to just $700 million, or 0.1 per cent of GDP.However, the budget papers reveal that the government has made new tax and spending decisions worth more than $58 billion since the last budget more than $1billion a week for the period covering the years 2003-04 to 2007-08, based on assumptions that record revenue collections will continue despite a slowing domestic economy.Despite the record spending, the government has even included in the budget provision for more spending on unspecified measures between now and the federal election worthmore than $150million.The political trap in the budget is that the government will insist that the Senate pass the family tax payment changes which help Labor’s low- to middle-income support base by June 30 or be accused of costing families more than $4 billion in immediate assistance. It introduced legislation for the measures into federal parliament last night, with the tax cut legislation to follow shortly.The government’s political tactic is to force Labor to back its family benefits policies to minimise policy difference and to pressure it to release its tax proposals as soon as possible in the hope that it will make a fatal policy error.Labor last night said it would pass the measures but would present an alternative package before the next election. Labor treasury spokesman Simon Crean said: “We think that the package could be designed a lotbetter.”The budget confirms that the government will match Labor’s maternity payment with the introduction of a non-means-tested payment of $3000 on the birth of a child to counter demands for paid maternity leave. The payment will rise over time to $5000 by July 2008.There is also a $2.2 billion package of spending on the capital base and care costs of the aged-care sector over five years, including a one-off payment of $513 million to provide an immediate capital injection to increase safety and standards in nursing homes.Government contributions to superannuation savings will also be boosted by a lift in the co-contribution to low-income earners’ superannuation savings from $1 per employee contribution to $1.50, at a cost of $2.7 billion over four years.

Mr Costello told federal parliament last night that changes to family tax payments and the tax scales under which the top tax rate will cut in at $70,000 from July1 instead of the current level of $62,501 were part of the government’s response to the problems of an ageing society and were designed to maximise workforce participation by women, who might be being kept out of the workforce by high effective marginal tax rates.

He argued that a woman with children working the average part-time hours of 17.4 hours a week would be $50 a week better off as a result of the budget changes, which include a relaxation of the income test for the Family Tax Benefit Part A. This is received by about 2million families.

Taxpayers in the top bracket which will rise again in July next year to $80,000 would be $42 a week better off as a result of last night’s tax cuts, he said.

Mr Costello said the tax cuts meant that more than 80 per cent of taxpayers would have a top tax rate of 30 per cent or less over the forward estimates period.

Last night’s budget papers show that policy decisions taken in the past six months will pump $8.2billion into the economy in 2004-05 equivalent to 1 per cent of GDP.

But despite this, gross national expenditure the measure of domestic economic activity is forecast to slow from 6 per cent to 3.75 per cent, while GDP is forecast to ease from 3.75per cent to 3.5 per cent.

“The key risk to the economic outlook relates to developments in the housing sector, particularly the future path of house prices and the associated wealth effects on consumption,” the budget papers say.

“Dwelling investment is forecast to moderate over 2004-05 and the rate of increase in nominal house prices is expected to flatten in aggregate, with some market segments seeing price falls.

“The assumed slowing in house price growth is forecast to lead to a slowing in household wealth accumulation and consumption growth. However, there is a risk of a more widespread fall in house prices that, if realised, would amplify the slowing in wealth and consumption growth, and have broader implications for aggregate economic activity.”

Key points

* The budget strategy sets the scene for a mid-year election.

* The pre-election splurge will leave a budget surplus of just $2.4bn.

* The rub is that the Senate must pass family tax changes by June 30.

May 12, 2004$58bn to defeat Latham
Budget 2004 Commentary
Large chunks of money are being thrown at the entire population in a budget which makes only the smallest pretence at being about structural reform or economic management.John Howard and Peter Costello think two things could finish their run in office: Mark Latham and a housing crash.This budget will have them donning the world’s biggest and most expensive underpants to counter both threats.How big a threat is Latham to the coalition? The budget allows you to put a price on it: $58 billion or around three times the price they put on beating Kim Beazley in 1998 and 2001.That’s right, $58 billion. That is how much this government has spent in tax and spending decisions since the last budget, and $51 billion of that has been since the mid-year budget review (about the time Latham took over the Labor leadership).That compares with the $20 billion they spent in 1998 and the $25 billion they spent in 2001 which, in their time, were seen as setting new standards of excessive pork- barrelling.The difference this year is that there hasn’t been the effort to throw individual wads of money at particular groups of disgruntled voters.This time it’s more brazen: exceptionally large wads of money are being thrown at the entire population in a budget which makes only the smallest pretence at being about structural reform or economic management.All that talk about necessary pain to address intergenerational inequities, cutting pharmaceutical costs and disability benefits, has been replaced by an alleged solution which argues giving everybody big handouts now will actually solve the problem of our ageing workforce in 40 years time.The politics of the budget are simple. It has been Latham who has largely dictated the political agenda since his ascendancy to the Labor leadership in December last year.The budget’s massive family payment and tax offerings throw the Opposition Leader’s agenda back in his face and test his skills and those of his team to compile a comprehensive and rapid response which is both politically and economically flaw-free.Labor has mounted a relentless attack on the flawed structure of the family tax payment system, under which hundreds of thousands of families have unwittingly incurred unmanageable debts.Belatedly, the government is buying off the widespread resentment about these problems with a one-off payment of $600 from the current year’s budget and daring Labor not to support the legislation through parliament by June 30.Peter Costello says Labor can’t “cherry pick” his budget because if it tries to fiddle with the family tax payments, the Labor constituency of low to middle income earners will lose out while higher income earners will be the biggest winners from tax cuts.The government is offering voters the lure of three separate lumps of money between now and around the end of September, the most likely window in which an election will be at least called, if not fought.

Labor is faced with the choice of supporting the measures and having no major policy alternative to offer; trying to modify the package and losing people in the detail; opposing it and trying to offer voters something completely different, possibly a
more-services, fewer-tax-cuts model.

Its problem is that the government’s strategy maximises the pressure for a quick alternative.

If the Senate does block what would be a popular package it sets the scene for a confrontation with the upper house which the coalition could use to try to boost its vote at either a normal half-Senate election, or, if the trend is heading in its direction, a double-dissolution poll.

After all, the government still has all of that stalled agenda from the privatisation of Telstra to disability pension and industrial relations dismissal reform which it would still love to ram through the parliament after eight years of frustration.

Whatever sort of election we face, the budget is designed to scare the tripe out of Labor that it will be an early election.

The economic forecasts suggest Howard has increasing reasons to go sooner rather than later.

The economic feel-good factor which has been the backbone of the coalition’s success, driven by booming housing prices and a consumption binge, is about to come to an end, possibly with a sickening shudder, according to the budget papers.

Events in Iraq are closing in on Howard, as is the economy.

The reasons to indulge his normal caution in holding on as long as possible are rapidly disappearing.

May 11, 2004ALP seeks Iraq prison answers
Laura Tingle, Chief political correspondent with AAP
The Howard government is under pressure to say what protocols it agreed to for the treatment of detainees and Iraqi citizens, as the allegations of mistreatment of prisoners spread from Iraq to Afghanistan and Guantanamo Bay.Opposition foreign affairs spokesman Kevin Rudd yesterday wrote to Foreign Minister Alexander Downer asking him what protocols for the protection of prisoners and detainees were in place at the time of Australia’s military participation in Iraq.He also wants to know whether the Australian Defence Force handed prisoners to the US armed forces in Afghanistan.The move came as The New Yorker magazine published more disturbing images of the mistreatment of Iraqi prisoners in Iraq.Mr Rudd made his request as the American military defence lawyer for Australian Guantanamo Bay detainee David Hicks, Major Michael Mori , said he believed Mr Hicks had been treated humanely while he had been representing him.But he said he was concerned about the techniques that might have been used on potential witnesses against Mr Hicks which could result in manipulation of statements.Prime Minister John Howard has publicly agreed that Australia had obligations in Iraq under the Geneva Convention as an occupying power.These included obligations to protect the civilian population and prisoners of war.But the government has so far not conceded it has responsibilities for the mistreatment of prisoners at the hands of British and US soldiers in Iraq.Labor is expected to pursue Australia’s culpability for the mistreatment as federal parliament returns for the budget session.* Yesterday, the ALP announced that it would support new anti-terrorism legislation. Under the legislation, state police would be allowed to question terrorism suspects for up to 24 hours without charge and terrorists banned from selling memoirs. Labor homeland security spokesman Robert McClelland said the legislation would be supported subject to any safeguards recommended by a Senate committee due to report today.

May 11, 2004Costello sets stage for budget battle
Federal Treasurer Peter Costello has warned Labor and the minor parties not to “cherry pick” measures from the coalition’s family and tax-cut package in tonight’s budget, setting the scene for a confrontation with the Senate in the run-up to the next election.The warning came as government sources said the budget had been designed to use the family tax breaks and spending to maximise divisions and inconsistencies within Labor ranks on policy.The government believes the package will reignite the splits in the Labor Party over tax that led to the final destruction of Simon Crean’s leadership last year and prompted conflicting signals from Opposition Leader Mark Latham about tax.The differences within Labor ranks last year came after Mr Latham suggested workers earning up to $80,000 a year deserved a tax break, sparking a brawl with party left-wingers who said the emphasis should always be on lower-income groups.Both Mr Costello and Prime Minister John Howard have argued strongly for the threshold for the present top tax rate to be lifted from $62,500 to $75,000, as they had envisaged in their 2000 tax reforms.Although the budget is designed to force Labor into a rapid response on tax cuts, Mr Latham indicated yesterday that his speech in reply on Thursday, while setting out Labor’s spending agenda, would not include a detailed response on tax policy.”I will be setting out all our directions in social policy and economic policy in the [speech in reply] on Thursday and the timetable for the detailed plans that we develop in a considered, methodical way,” he said.”But in terms of our tax plans, we want them to be as detailed as possible, to be thought through and well-considered.”Mr Costello said the budget “will be laying down a plan, a plan to help relieve some of the pressures that families feel today and a plan which will help families balance their obligations in relation to work, family and child-rearing obligations”.”It is a plan that we have put together and it has different elements, but it is a coherent whole and it is going to be very important that the Senate enacts it as a whole so that families can get the help that they deserve.”As a result, the opposition parties in the Senate expect that major spending initiatives such as the new maternity payment, expected to be more than $3000 per birth will be linked to the successful passage of tax cuts.After last year’s budget, the government faced strong Senate opposition to key long-term plans to reduce spending, including changes to pharmaceutical benefits and disability pensions, as Labor and the minor parties tried to cherry-pick what they liked and disliked.Federal cabinet met yesterday afternoon to consider the final shape of the budget,Reports emerged from the bureaucracy that the budget papers would nominate a range of spending decisions taken but not spell out their cost.Sources say the government has left itself room to announce a range of new spending initiatives in the lead-up to the election.

There are also suggestions that its coffers are so awash with money that the government, over the past week, has moved to nominate large slabs of funding for unspecified projects under universal programs in 2006-07 to keep the apparent size of its surplus restricted and, as a result, has funds available for new announcements in coming months.

Apart from the widely touted measures to boost family payments and child care, tonight’s budget will also clarify whether Centrelink has managed to resist proposed changes to its funding arrangements.

The agency believes the new funding model would leave the door open for its services to be outsourced to other providers, as the government’s employment business was under Job Network.

There is also speculation that the government may use the budget tonight to announce the merger of the Australian Broadcasting Authority and Australian Communications Authority paving the way for the removal of controversial ABA chairman David Flint.

Industry groups are hoping for taxation changes relating to flow-through arrangements for joint-venture losses in the resources sector, and reforms to the petroleum resource rent tax to assist with problems that have emerged in exploration concessions in the Timor Gap.

Mr Costello reaffirmed the federal government’s pledge to keep the budget in surplus, saying that since taking over from the previous Labor government, the Howard government had driven the budget into surplus and wanted to keep it that way. “We want to continue to make repayments on Labor’s debt, which will strengthen our economy,” he said

Mr Costello defended a plan to spend millions of dollars advertising the benefits that would be handed down in the budget.

A leaked cabinet submission detailed an advertising blitz to inform people about their rights and entitlements to Australian government payments and child-care services, allowing the government to capitalise on its expenditure in the area.

Mr Costello would not confirm the leak but said it was useless to offer support if people were unaware they could access it.

“The measures that help people are only of help if they know how to apply for them, and the government advertises benefits so that people can apply for it every day,” he said.

“I’m not confirming any figures, not in the slightest.

“But I’m just saying, if you’re going to pay pensions to people, you’ve got to advertise how to get a pension.” A who’s who of Australia’s former military chiefs, departmental heads and top diplomats is set to launch a scathing attack on John Howard’s foreign policy and call for “truth in government” from whichever party wins the election.
It is believed a statement from more than 40 former military and diplomatic officers will today condemn Australia’s commitment to the Iraq invasion as based on deception, and call for Australia to stop rubber-stamping US policies.
The gathering of names has been under way for weeks. Signatories are believed to include two former chiefs of the Australian Defence Force, Admiral Alan Beaumont and General Peter Gration, two former navy chiefs, Vice-Admiral Sir Richard Peek and Admiral Mike Hudson and a former air force chief, Air Marshal Ray Funnell.
On the list are also expected to be six former department heads: Paul Barratt (Defence), John Burton (External Affairs), Stuart Harris (Foreign Affairs), John Menadue (Prime Minister’s Department), Alan Renouf (Foreign Affairs), and Richard Woolcott (Foreign Affairs).
The former heads of mission have represented Australia in all the major posts, including the US, China, Japan and Indonesia, as well as in Middle Eastern countries. Three former heads of mission to Iraq are believed to be on the list.
Prominent names from the intelligence community are expected to be Robert Furlonger, former director-general of the Office of National Assessments, and head of the Joint Intelligence Organisation (who was also ambassador to Indonesia); Gordon Jockel, former chairman of the National Intelligence Committee (who also served as ambassador to Thailand and Indonesia); and Roger Holdich, former director-general of intelligence (and ambassador to Korea).
The statement will be a blow for the Prime Minister, especially as it comes at the start of what could be the last week of Parliament before the election and amid speculation that Mr Howard could announce, in the next week, a poll for September 18. But a source in the group said it was not designed to be partisan – rather a call for whoever won the election to learn from the lessons of Iraq.
The sheer number of signatories and their prominence in the nation’s diplomatic and military life of several decades give the declaration great weight.
The statement, although short, is certain to be blunt and comprehensive. It is expected to strongly condemn the misleading of the Australian people about the reasons for invading Iraq, and carry the message that if what the Australian Government says cannot be trusted by its own citizens, Australia cannot

May 10, 2004Budget boost for airport security
Marcus Priest, Laura Tingle and Mark Ludlow
New spending on airport security will head anti-terrorism initiatives worth more than $150 million in tomorrow’s budget, with the federal government under pressure to fix the gap caused by lack of screening at regional airports.The measures come as part of a government plan to use the budget to deal with issues over which it is vulnerable as a result of the rise in popularity of Opposition Leader Mark Latham.His ascendancy has helped put an intense focus on families in the budget, with the government opting to make early announcements on issues less directly targeted at families, such as research and development funding and more spending for intelligence
agencies.The political strategy of the budget will be to concentrate on measures to help families, including massive tax cuts and changes to
family payments, a new maternity payment of at least $3000 and 40,000 extra after-school child-care places.The budget will start the long-overdue process of addressing a major shortfall in aged-care funding, as well as providing more funds for carers.For regional Australia, aviation security and an outline of the government’s plans for major new transport funding will be just as important as any family measures, but even a major expansion of roads funding has been shunted out of the budget and into a separate announcement next month.The national security package is expected to focus on developing regional security plans to guard against hijacking or misuse of commercial flights that travel to major airports from low-security airports.Last week, Prime Minister John Howard announced $232 million of new funding for security agencies as part of $400 million for national security. Part of the remaining $168 million is expected be spent on increased security at regional airports.This will be on top of $93 million for aviation security announced last December by Deputy Prime Minister John Anderson.The initiative included hardened cockpit doors for regular passenger and charter aircraft with more than 30 seats, extended screening of air freight to cover domestic services and new aviation security cards for airport employees.The Transport Workers Union and Labor criticised the package for failing to provide better security at small regional airports. There was also criticism that not all baggage on domestic flights was screened.At the time, Mr Anderson said low threat levels in the bush meant screening was unwarranted. It was estimated that proper screening at rural airports would cost $1 million to install and about $200,000 a year to maintain per airport.But following the announcement, the government asked the Department of Transport to provide more detailed costings of baggage and passenger screening facilities for airports which handled more than 50,000 passengers a year.The spending will come on top of the announcement at the weekend that Australian air marshals will be placed on flights between Australia and America.The extension of the program to the US will not add to the cost of the $19 million-a-year program, which employs 110 sky marshals for domestic and Singapore flights. But it may lead to increased ticket prices, with Qantas agreeing to pay half the ticket prices for the air marshals.As a result of the massive restructuring of the national transport structure to be funded in the budget but fully unveiled as part of the Auslink White Paper next month the federal government will ask the states to contribute towards major roads in their states.

In tomorrow’s budget, Treasurer Peter Costello is expected to allocate an extra $1 billion a year to road and rail infrastructure. It will include new money for key projects, such as sections of the Pacific and Hume highways in NSW .

The major shake-up of the national transport system, with the commonwealth shifting funding responsibilities to the states, will cause the biggest headache for the states.


1. Strong economic growth, including booming company profits, is laying the foundations for a revenue surge into the government’s coffers from tax growth

2. As a result, the underlying budget surplus is expected to be much stronger than forecast by the government last year in its mid-year budget review, allowing for a big short-term increase in spending

3. The government has already announced a wide range of initiatives

in the budget for maximum political impact but

further measures are expected tomorrow

4. Substantial tax cuts are expected to be the centrepiece of the budget but even with strong revenue the government faces difficult decisions about where to make changes to reap the maximum political benefit


* Increase to family tax benefits

* Income tax cuts and threshold changes

* Up to 40,000 new after-school childcare places

* Incentives to keep older people in the workforce

* Reform of maternity and child support payments

* $400 million more funding for intelligence services

* $1.6 billion funding revamp for the aged-care sector

* Relief from wine equalisation tax for small wine growers

* $800 million extension of programs for assisting farmers

* New funding boost for road and rail transport infrastructure

* $5 billion science and innovation package (Backing Australia’s Ability Mark 2)

TAX CUT OPTIONSBracket Rate Cost of a 1% Cost of raisingcut in threshold bymarginal rate $1,000$0 – $6,000 0% $1,527m$6,001 – $21,600 17% $1,231m $874m$21,601 – $52,000 30% $1,313m $262m$52,001 – $62,500 42% $184m $46m$62,501 and above 47% $603mTotal personal income tax* $3,331m $2,709m* Including Medicare levySource: MYEFO, Access Economics, Neil Warren


May 10, 2004US jobs surge ignites rate rise fears
Sean Aylmer and Laura Tingle
A surge in employment growth in the United States has underlined that America’s economic revival is now widespread, but has raised concerns that interest rates might rise as soon as next month.Traders are pricing in a high likelihood of a rate rise in June, prompting Treasurer Peter Costello to warn yesterday that the rise, combined with record high oil prices and a domestic housing downturn, might produce “a very difficult year” for Australia.On the eve of the federal budget, he stepped up his concern about the economic outlook, noting that rates in the United Kingdom had risen and declaring that “the Americans will increase interest rates”.”We’ve got rising global interest rates. We’ve got a downturn in the housing market, we’ve got high oil prices,” he said.”This is going to take a lot of management to ensure that the Australian economy keeps growing and we keep our interest rates low.”About 288,000 jobs were created in the US in April, taking the total number of new positions in the past eight months to 1.1 million and pushing the unemployment rate slightly lower, to 5.6 per cent.But US stockmarkets fell after the release and are now close to their lows for 2004, while the US dollar jumped against the yen and the euro and the gold price fell, all in expectation of higher interest rates.Crude oil prices briefly rose above $US40 a barrel the highest level since 1990, although they mostly reflect the instability in the Middle East rather than potential increases in US interest rates.The politically sensitive manufacturing sector showed the biggest jobs gains in nearly four years, while the service sector, construction and professional services all reported gains.US market interest rates were sent sharply higher after the announcement and futures markets predict a 0.25 percentage point rise when the Fed Open Market Committee next meets, at the end of June, and a one percentage point rise by the end of the
year.Official interest rates have been at a 46-year low of 1 per cent for almost a year.Goldman Sachs chief economist Bill Dudley had expected the Federal Reserve to keep interest rates on hold until next year. However, after the run of strong economic data in recent weeks, he has upped his economic growth forecast for the second half of this year to 3.5 per cent (annualised) and lifted his forecast for inflation to 2 per cent by the end of the year.”Against this backdrop, we now expect the FOMC to raise its fed funds target by a cumulative 100 basis points to 2 per cent by year end, probably starting with a 25 basis-point hike at the June 29-30 session,” he said.While the Australian government is now clearly using the economic risks ahead as part of its campaign to get voters to question Labor’s economic management skills, Mr Costello’s remarks on the housing outlook when combined with those of the Reserve
Bank on Friday show clear nervousness among the economic authorities about the continuing risks of a housing crunch.”[Housing] prices are coming off,” he told the Nine Network yesterday. “They’ve been saying they would for 12 or 18 months, and it’s happening and you always have got the capacity in these areas for people that aren’t experienced just to crash into a dangerous situation and make it worse.”US President George Bush attributed the US jobs growth to last year’s tax cuts, while his chief economic adviser, Greg Mankiw , said the economy now appeared to be expanding at a faster pace than the official government forecast of 4 per cent through to the end of 2004. Mr Mankiw said he expected rates to start rising, but didn’t say when.

In the first 2 1/2 years of the Bush administration, 2.7 million jobs were lost, presenting a political problem for the President. But since the middle of last year, the US economy has grown rapidly and more than 1 million jobs have been created.

The worst-hit sector was manufacturing. But last month, employment on the factory floor started improving. Manufacturing added nearly 21,000 new jobs, the best result in four years. Jobs will play a key role in the presidential elections.

Last week, the FOMC said it would start lifting interest rates, but only gradually. That suggests it will move in increments of 0.25 percentage points.

The key issues for the Fed are employment and inflation. May employment figures will be released before the next FOMC meeting, and several inflation indicators are due out in coming weeks.

On Thursday, the April producer price index is expected to show pressures in upstream prices, and Friday’s April consumer price index will be scrutinised to see if these have flowed through to shop floors.

There has been little evidence of wage inflation so far, and the Labor Department data released on Friday (US time) showed only a small increase in average hourly earnings.

High oil prices will push up costs to consumers in the United States, particularly at the petrol pump and in energy costs.


Payroll growth
April: +288,000 jobs Jobs have been a sticking point of the recovery but now it seems payrolls are on an upswing. Job growth in April was widespread, with the manufacturing sector posting the biggest increase in nearly four years.

Real GDP Q/Q

Q1 Total: +4.2% Growth has tapered off from the sizzling pace seen last northern autumn but is expected to hold steady at between 4% and 4.5% through the rest of the year amid increases in personal consumption and business investment.

Business investment Q/Q

Q1 Total: +7.2%. Equipment/software: +11.5% Businesses were gun shy at the beginning of the recovery but they’ve since pried open their wallets. Investment in computers logged a third double-digit percentage increase in the first quarter.

Purchasing managers’ index
April: 62.4 The manufacturing sector is still expanding and factories are finally hiring. But prices are starting to worry some factory operators.

Retail sales
March: $US333bn Rising retail sales suggest the economy is on a self-sustaining path even as the favourable effect of tax cuts and low mortgage rates wear off.

Consumer confidence

April: 92.9 The war in Iraq has taken its toll on consumer confidence but the improving economy has kept the gauge moving steadily upward.

May 10, 2004Costello comment raises resignation speculation
The treasurer BUDGET 2004
Treasurer Peter Costello has left the door open to speculation about his political future after suggesting he may consider leaving politics at Christmas.In newspaper interviews during the weekend, Mr Costello said that he was completely focused on preparing tomorrow’s budget and now was not the right time to consider taking another job or a break from Treasury after the election.Asked what the right time would be, he said: “Well, maybe I’ll think about next year at Christmas.”Asked about his comments on the Nine Network yesterday, Mr Costello downplayed them, suggesting he was talking about Christmas 2005.”I wouldn’t read anything into it,” he said.”Somebody says to me will you do a 10th budget or 11th budget and I say I’ll tell you at Christmas next year”.A spokesman for Mr Costello last night dismissed suggestions he was considering leaving politics at the end of the year as “rubbish”. However his comments come as some of his prominent backers, the Queensland senators George Brandis and Brett Mason , said on the weekend they expected Prime Minister John Howard to stand aside for Mr Costello during the next term of office if the coalition won the election.Labor leapt on the remarks to revive its warning that a vote for John Howard would be a vote for Peter Costello.Opposition treasury spokesman Simon Crean said Mr Costello “gives every impression that he doesn’t want to bring this budget down”. “He effectively says, `I don’t want to deliver it, I want to be leader and I’m going to take my bat and ball and go home’.”Asked if he thought speculation of a leadership transition affected the coalition’s chances in the forthcoming election, Mr Costello said: “People write stories all the time and I have no control over them, and these things are discussed in newspapers.”But as far as I’m concerned, next Tuesday night is the key economic statement for the government and the nation.”

May 10, 2004Ad blitz for family measures
The hard sell BUDGET 2004
Laura Tingle Chief political correspondent with AAP
The Howard government is planning to use $26 million of taxpayer funds to advertise the family initiatives at the centre of tomorrow night’s federal budget which will be a key plank of its re-election campaign.The advertising campaign would be second in size only to that used to sell tax reform to the public in 2000.Labor drew attention to the government’s plans earlier this year, but this was when it was only thought to relate to changes in the family payments system.The government’s plans to produce a new maternity payment and to dramatically expand after-school child care places has put its plans in a new light.A leaked cabinet document says the planned spending most of it this year will “promote new family payment and child-care measures developed as part of the proposed Work and Family package”, as well as existing family payments.It says the communication strategies would “include provision for television, radio and press advertising”.There would be “an education and promotional campaign to accompany introduction of the new maternity payment and child-care initiatives”.The cabinet document warns the dangers of the campaign may be that “if the education campaign for family payments and child-care customers is not well received it may tarnish the reception of the new maternity payment”.The government is already under fire for delaying the introduction of new after-school care places until the eve of the federal election, when it actually considered the issue last August.Opposition community services spokesman Wayne Swan said leaked cabinet documents showed that Children and Youth Affairs Minister Larry Anthony last year identified a 28,000 shortfall in outside school-hours care and another 2500 places in family day care last August.But the government would only commit to an extra 10,000 after-school care places in time for the start of the 2004 school year, with an extra 30,000 to be announced in Tuesday’s budget.”If families didn’t vote, they wouldn’t get a child-care place out of this treasurer,” Mr Swan said.

May 8, 2004Labor offers a sneak peak
The Labor Party attempted on Friday to spoil the impact of central initiatives expected in Tuesday’s federal budget by leaking partial details of the Howard government’s plans for maternity support and aged care.Labor released part of what appeared to be media releases prepared for budget night on the government’s response to the Hogan report on funding for the aged-care sector.However, the leaked document dealt with only part of the expected response to the chronic underfunding of the aged-care sector, which has been hit by shortfalls in capital funding and recurrent care costs.The leaked document suggests the government will increase the maximum daily rate of concessional residential supplement from $13.50 to $16.25 a day, indexed annually, which is well short of industry estimates of actual capital costs of about $30 a day.However, industry lobbyists said on Friday the most significant feature of the leak was the apparent confirmation that the government has abandoned all attempts to introduce user-pays principles to addressing a massive capital shortfall in the country’s nursing homes.The leaked document said the changes in funding, costing $438.6 million, would “ensure the quality of nursing homes’ buildings, furniture, fittings and equipment”.Industry sources said this reflected the fact that the mooted increases would realistically only cover the cost of maintaining existing capital stock, not actually increasing it.This has left many observers believing the government may announce more measures to address the nursing home bed shortfall such as subsidised loans to build news beds on Tuesday night. The leaked document says that in addition to the $438.6 million of taxpayers’ funds, the government will aim to raise about $95 million from individuals by raising the accommodation charge for new non-concessional residents.The government frankly admits that the demand for residential aged-care beds will grow by almost 53,500 beds over the next decade, and almost 46,000 beds are in homes that need to be rebuilt or refurbished.It puts the investment required at about $8 billion, meaning that the leaked measures would fund just one eighth of the required building program.

May 8, 2004Election battle lines drawn
Labor knows the focus will be on government policies, writes Laura Tingle.In 1995, the coalition had “the debt truck” travelling the country documenting Australia’s growing foreign debt.Now the Labor Party has got billboards on trucks, but instead of voter concern about foreign debt it is seeking to exploit what it believes is voter cynicism about handouts in next Tuesday’s federal budget.”He’ll give, then he’ll take” is the message above photos of a smiling John Howard with his eyes closed. “Beware the Howard Budget”, it warns.While Labor is confident the effect of tax cuts on voter perceptions these days is short-lived, it knows that the budget provides the government with the best part of a week’s focus on its policies.More than most years and with the spectre of a tight election campaign later this year with the major parties on equal pegging on the primary vote the speculation has been intense going into the budget.But, despite this, reports this past week have not dramatically advanced what was already known about its contents.Prime Minister John Howard said in February the government would give “across-the-board tax relief”, and both he and Treasurer Peter Costello have also targeted the need to lift the threshold at which the top personal tax rate cuts in from the current $62,500.The government’s plan in its tax reforms of 2000 was to lift this threshold to $75,000, so this remains a focus of speculation, along with other adjustments to tax thresholds to give back at least some of the bracket creep that has occurred in the past four years.This would go part of the way towards addressing complaints about the high effective marginal tax rates experienced by low to medium-income earners who also receive family payments through the welfare system.These payments are also likely to be adjusted to reduce so-called poverty trap disincentives as income levels rise.The centrepiece of the government’s family-focused budget will be a restructuring of maternity allowance and baby-bonus payments into a single universal payment similar to Labor’s, which will be designed to fulfil at least part of the expectation that the government will meet the growing demand for universal paid maternity leave.Funding for more child-care places is also expected.The other dominant spending items in domestic political terms will be the government’s package of aged-care measures, which was partially leaked by the opposition on Friday.But Costello’s budget-night speech will also carry some references to more measures to boost national security and defence.

The property boom has shifted the focus away from the economic risks facing Australia, but warnings from Costello and the Reserve Bank of Australia about the outlook may provide a more sober economic assessment going into the election campaign than has been the case in the past couple of years.

Both the RBA and Treasurer have felt compelled to note Australia is heading into “choppy waters” as the engine of growth switches from domestic consumption to a lift in export performance.

There is still considerable nervousness about the path the property slowdown will take.

May 4, 2004Middle Australia in the bribe bracket
Laura Tingle and Allesandra Fabro
With the budget already mired in cynicism, Laura Tingle and Allesandra Fabro try to spend $7 billion.They are already being called among “the last great tax cuts in the lifetimes of Australia’s baby boomers” and that’s by people who don’t think they should happen.Yet a week out from the federal budget, the tax cuts that are supposed to be the centrepiece of Peter Costello’s ninth budget and the Howard government’s re-election campaign are mired in a particularly high level of ambivalence and cynicism.Nobody in the government, for example, has been out there arguing the comprehensive need for tax cuts for tax design or equity reasons.The only concession made on that front is that Prime Minister John Howard and the Treasurer have both argued the top tax rate of 47 ¢, which currently cuts in at $62,500, should really not cut in until $75,000 (as they always argued in their 2000 tax
reform package).Labor’s only interest is in how much of the surplus the coalition might spend, and what they will need to do neutralise the cuts politically.There’s also the complication of all those polls showing people would rather see the government spend money on services rather than give out tax cuts.When you think about it, that’s something like what it has been doing for the last eight years.Consider this: there have been only two tax cuts during the life of the Howard government (the ones that came with the GST in 2000 and the “milkshake and sandwich” cut last year) but billions of dollars of (generally badly designed) spending to buy
off key electorates.The problem is there just hasn’t been anywhere near enough spending on the crucial areas of health and education to solve the voter dissatisfaction.Yet the expectations of what political transformations can be achieved by a tax cut remains large.This is despite the fact that if you look at what Peter Costello has actually been saying in recent weeks, he has been putting the tax cuts in the context of last year’s cut.”If we could balance our budget then we ought to [make some] return to taxpayers in the form of tax relief.”We did it last year. If we can do it again that’s the principle we’ll be following this year.”In other words, the Treasurer is talking about a dividend rather than an extraordinary payment to Australia’s shareholders.But the general assumption is that the government will give everybody a tax cut next week as a political bribe, and nobody has done anything to dissuade anyone from that view.

But who are both sides of politics trying to bribe?

There is no cohesive group of voters sitting in marginal electorates who can all be satisfied by a couple of swipes of the pen across the tax brackets at the moment.

Both the government and Mark Latham, in his days as shadow treasurer have talked about the problems of middle-income earners moving in to the top tax bracket.

But for people in the 30 per cent tax bracket from $21,6000 to $52,000 the problem is as much with the welfare system, and the tapering arrangements for family payments, as the tax rates.

But if you did have billions to spend on tax cuts for individuals, how would you go about it?

Estimates released yesterday by Access Economics suggest the government will have approximately $7 billion of a projected $9 billion surplus to play around with, a lot more than last years’ $2.4 billion cut, but substantially less than the $12 billion that eased the introduction of the GST back in 2000.

Given that the value of the 2000 reforms have already been largely eroded by bracket creep and other changes, it is unlikely that any reforms on offer next Tuesday will have any long-term impact not that that necessarily matters in an election year but they will certainly be enough to grab headlines.

How should the $7 billion or so be spent?

Welfare groups and minor parties have spent the last few weeks protesting that any cuts to the top marginal rate would be thoroughly undeserved and, quite likely, opposed in the Senate.

What the Democrats, Acoss and other groups who have railed against cuts to the top rate forget is that the reason high-income earners take advantage of the so-called “loopholes” like family trusts, corporate vehicles and negative gearing is because
of the high marginal tax rate, not in spite of it.

If the top marginal rate was closer to the corporate rate, a significant level of incentive to avoid would be stripped out of the system.

Most tax experts agree any cuts at the higher end are likely to be concentrated instead at the point where the current 42 per cent rate cuts in, which is $52,000.

Access Economics suggests you could cut out the 42 per cent bracket completely for a mere $2.4 billion. This would mean taxpayers would stay on 30 per cent until they reach $62,500 (on the current scales).

A move like this would be worth the government considering, given that adult ordinary time earnings are now at almost $49,000 per annum and in 2004 alone, another 200,000 workers are expected to creep over the $52,000 threshold.

According to costings by Neil Warren at the University of NSW, a $1 billion cut applied across the top margin could raise that bracket by a whopping $21,894, meaning it wouldn’t cut in until $84,394.

You could even push up the threshold for the top 47 cent rate to around $84,894 for just another billion, according to Warren, still leaving most of the funds to help low to middle-income earners in the 30 cent bracket.

Not to mention the fact that, as Warren points out, the government’s original tax reform promise that 80 per cent of Australians would pay 30 per cent or less has been long since broken.

May 4, 2004Lobby talks to be disclosed
Business lobbying will remain behind closed doors but talks between lobby groups and government departments will have to be disclosed under a new protocol developed for the federal government.The new protocol has been developed at a time when the government has been accused of trying to nobble critics by threatening the tax status of charitable institutions that publicly comment on government policy.It comes after last week’s storm about backroom influence following claims broadcaster Alan Jones threatened Prime Minister John Howard to ensure the reappointment of David Flint as chairman of the Australian Broadcasting Authority.Last year the government commissioned a right-wing think tank, the Institute of Public Affairs, to audit thousands of charities, welfare and aid groups that were gaining access as lobbyists and/or receiving public funds from government departments.The IPA has been a trenchant critic of such non-government organisations as a threat to democratic processes. The think tank says such groups can claim to be representative of broad interests but may actually represent only a few activists.The IPA’s interim report on the protocol, obtained by The Australian Financial Review, documents the extent of the relationship between NGOs and six government departments and outlines a disclosure protocol for NGOs.The IPA lists NGOs as including business, industry and professional associations, trade unions and think tanks as well as citizen and community organisations.But asked if individual business interests needed to be included in such a protocol, one of the authors of the report, former Keating government minister Gary Johns, said: “We only suggest the formal and enduring contacts by those who hold themselves to be representative and/or expert generates the need for disclosure.”The episodic contacts by individual businesses, where it is clear in whose interest they lobby, is not worth disclosing in a formal system,” he said.The IPA report documents thousands of departmental contacts with NGOs, but the area of interest to the IPA is the 20 to 60 NGOs granted “special status” by each department.That special status, it says, involves receiving privileged departmental information not available to the public, being members of advisory committees or delegations, or receiving departmental funding.Under the proposed protocol, departments would be required to list in their annual reports which NGOs were members of departmental advisory committees or delegations.They would also have to document what funding NGOs received for research and administrative expenses.NGOs would have to disclose their own funding, expenditure, membership and expertise.The IPA’s final recommendations are to be considered by the Prime Minister’s Community Business Partnership at its June meeting.

May 1, 2004New analysis backs benefits of trade deal
Laura Tingle, Chief political correspondent, with AAP
The Howard government has hailed an economic analysis which suggests that the free-trade agreement with the United States will boost Australia’s economic growth by $6.1 billion a year a decade from now.But the opposition has dismissed the new study as highly qualified and based on a number of heroic assumptions.In the report commissioned by the Department of Foreign Affairs and Trade, the Centre for International Economics upgraded its assessment of the economic benefits of the deal from one made before the deal was finalised.The CIE had argued in its 2001 paper that the removal of all barriers to trade between the two economies could result in an expansion of the Australian economy by as much as $4 billion a year. But it now puts the figure much higher, even though many sectors such as sugar were excluded from the final deal.”A decade from now the most probable effect of the agreement on Australia’s real gross domestic product is an increase of $6.1 billion per year, or nearly 0.7 per cent above what it might otherwise be,” the report found.The CIE argues the increased benefits result from adding the dynamic impact of foreign investment liberalisation. This refers to a reduction in the cases where US companies must secure Foreign Investment Review Board approval.The paper argues that this will reduce the equity risk premium of investing in Australia and lower the cost of capital.The report says there will be no material impact on the price of drugs from a clause in the pact which gives US drug companies the right to challenge decisions of the Pharmaceutical Benefits Advisory Committee.Trade Minister Mark Vaile on Friday lauded the report’s suggestion that 40,000 jobs could be created, and a rise in real wages.But opposition trade spokesman Stephen Conroy noted the report was heavily qualified, saying “there is a 95 per cent chance the benefit to Australia will lie between $1.1 billion and $7.4 billion in 20 years” and that even this was based on some heroic assumptions.”More than half the possible economic gains are derived from changes to Australia’s foreign investment laws that is the most heroic assumption,” he said.”Australia already has a very liberal foreign investment regime. According to the study, over the past five years the government has only rejected four out of 2285 proposals for investments from all countries.”
Two parliamentary committees are examining the FTA.Mr Vaile said on Friday the legislation enabling the agreement should go before both houses of the federal parliament in August.Meanwhile, former United States defence secretary William Cohen claimed on Friday that Australia’s participation in the coalition in Iraq had been helpful in securing a favourable deal.

May 1, 2004Too much talk on radio
Laura Tingle and Toni O’Loughlin
John Howard is expected to tough out any call for an inquiry into whether Alan Jones pressured him to reappoint David Flint as head of the ABA.John Howard returned from Baghdad late on Monday night. By early Tuesday morning he had already spoken at length to two of the figures who have made his political life a misery this week: Alan Jones and John Laws.Jones only asked him about the trip to Iraq (“The fact that you could make the trip and no one knew about it surely says something for both our intelligence and security”Smilie: ;), and the looming sugar deal allowing Jones a diatribe about his own uniquely agrarian socialist ideas.Laws only asked him about the Iraq trip.He also spoke to Perth radio, did a second radio interview in the afternoon in Sydney, then spoke to Ray Martin on A Current Affair.The fact that Howard talked to both radio talkback hosts is a good indication of their power. Politicians regularly strive to keep both men happy as both have managed to extend their influence beyond the raw numbers of their (mostly) older audience.We already know just how much effort the Prime Minister has put into these relationships, particularly with Jones.In 2000, after the “cash-for-comment” affair, journalist Anne Davies gained access to a range of letters between Jones and Howard, among other politicians, through a freedom of information request.She reported in The Sydney Morning Herald that the Prime Minister had established a special contact point for Jones within his office in 1999 after the broadcaster complained that the federal government was ignoring his correspondence.”To improve the handling of these sorts of issues in the future, I have asked Anthony Roberts in my Sydney office to act as a special point of contact for your people. I hope this helps the flow of information,” Howard said in a handwritten note.After this week’s claims by Laws that Jones had threatened to withdraw his support from the Prime Minister at the 2001 election unless he reappointed David Flint as chairman of the Australian Broadcasting Authority, some of that correspondence takes on a new glow.”Prime Minister, I can tell you that if the Minister for Health insists on allowing his bureaucrats to appeal against this wise decision, then I will view his action as tantamount to a declaration of war,” Jones wrote in one letter.Yet the Prime Minister said this week that he’d never had a conversation in threatening terms with Jones, on the Flint affair or any other matter. While Howard said this week he was taking “advice” on the grovelling letter of praise from Flint to Jones during the cash-for-comment controversy, he has not been adverse to writing the odd one himself.”Please be assured that I do appreciate your raising issues of importance as I regard your efforts as a valuable resource to ensure our policies deliver outcomes focused on the needs and aspirations of mainstream Australia,” he wrote to Jones.It’s not just a question of the supposed power of radio broadcasters’ audiences that attracts politicians to their microphones, but the unequalled opportunity their air-time gives them to put on permanent record a lengthy dissertation on their theme of the day in the face of what is usually fairly benign questioning.

Transcripts of their interviews appear in the Canberra press gallery and become the only source of direct quotes from the Prime Minister on the day.

Television and radio also get what they call “grabs” or “actuality” to run in their news bulletins from the cosy arrangement, which makes broadcasters feel powerful, and minimises politicians’ exposure to media scrutiny while giving them long slabs of unpaid-for time that they couldn’t possibly hope to get access to in newspapers or on television.

Occasionally the strategy falls to pieces, usually when the questioning is particularly tough or takes an unexpected twist or, for John Howard this week, when all that cosiness comes back to haunt him.

The danger in the bitter battle between Jones and Laws over the Prime Minister is that the stakes are much higher for the parties involved than the day-to-day reporting of the brawl might have you believe.

In the bitchy world of talkback radio, the rivalry between Laws and Jones is legendary. Jones once allegedly had his manager, Harry M. Miller, measure Laws’s office to make sure it wasn’t bigger than his when both were at 2UE.

But the jealousy is now much more serious after the so-called cash-for-comment affair II, which has left Laws feeling particularly bitter. In round one, the ABA found that both Jones and Laws had breached the broadcasting rules by failing to disclose they were sponsored by the very organisations they were spruiking to their audiences.

Round two produced a different result. Laws and his radio station, 2UE, were pinged again. Laws had failed to adequately disclose that Telstra and the NRMA were paying him personally to advertise their wares. But Jones got off, albeit in controversial circumstances. Jones and Macquarie Network’s 2GB were accused of failing to properly disclose Telstra’s sponsorship, one of several companies the broadcaster promotes.

Despite the commercial interconnections between Telstra and Macquarie Network Sam Chisholm is a director of both the ABA cleared Jones and 2GB of the allegations earlier this month.

Chisholm, a neighbour of Jones in the Quayside Bennelong apartment building, home to Sydney’s rich and famous, lured the radio star from Tony Bell’s 2UE to Macquarie Radio Network’s 2GB for a $4 million-plus, seven-year deal in February 2002.

By May, Chisholm had become the chair of Macquarie Radio.

By July, despite deep-seated concerns among some Telstra executives, following the first cash-for-comment inquiry in which Jones was investigated, the phone company signed a deal with 2GB to be promoted by the controversial broadcaster.

As Jones did not have a personal commercial agreement with the phone company, the ABA concluded, he did not breach the disclosure rules.

The ABA’s report noted that Jones’s attitude to Telstra had shifted, from critical to positive, after the sponsorship deal was signed. As incensed as Laws was at the favourable outcome for Jones, that might have been the end of the matter for the ABA except for two explosive documents revealed by the ABC’s Media Watch earlier this week.

A draft Telstra marketing plan showed the telco spent $1.2 million a year in a deal that allowed the company to write Telstra “messages” to be included in Jones’s radio scripts.

The second sensational document was the infamous letter of praise that Flint wrote to Jones on ABA letterhead.

Facing possible criminal charges and fines of more than $1 million, Laws now had the ammunition he needed to justify publicly attacking his regulatory tormentor and his arch radio rival.

On Wednesday morning Laws aired a dinner-party conversation he had had with Jones in 1999, in the company of a mutual friend, John Fordham, and his family in which his rival allegedly boasted that he had pressured Howard into reappointing Flint as ABA boss. On Thursday he escalated the scandal, revealing there were four letters between Flint and Jones, one in which the broadcaster wrote of “their allegiance”.

While Howard is a bystander to Laws’s assault, there is enough evidence to raise questions about his relationship with Flint and Jones that deserve answering.

Flint clearly feels no constraint in using the resources of the ABA to cultivate relationships with those he is meant to be regulating and to engage in all manner of controversial public issues, injecting his typically conservative views into the debate.

ABA board members and senior staff have begged him on numerous occasions to abandon his extra-curricula utterances which invariably back the Howard government for the sake of the regulator’s need to be impartial, but he simply switches off.

Flint was advised by ABA members not to air his arch-monarchist views again after he was forced to step down as the lead investigator in the first cash-for-comment inquiry following an interview he gave to Laws during the republic referendum.

But seeing no need to heed the advice, Flint went on air in Perth to repeat his arguments on why Australia should remain a constitutional monarchy.

It so happened that the ABA’s lawyer, John Corker, discovered this just before the interview and rang Flint’s mobile, pleading for him to stop. But Flint not only hung up but turned off his phone, ensuring he would not be bothered by concerned colleagues.

Flint’s time at the ABA ends in October but it’s unlikely he will be leaving early. It’s widely believed he’s there at the behest of the Prime Minister, who ignored the concerns of the then-communications minister, Richard Alston, about Flint.

Labor wants an inquiry but it won’t get one simply because Howard won’t agree to document his conversations with Jones.
On Friday Howard, while admitting speaking to Jones after the controversy erupted, declined to say who had rung whom or what was said.

That, the Prime Minister said, was a private matter.

Plenty would disagree.

April 30, 2004Drive to save Adelaide plant
Brendan Pearson TOKYO, and Laura Tingle with Chris Milne
There is a growing likelihood that Industry Minister Ian Macfarlane will lead a high-level delegation to Tokyo over the next week to lobby Mitsubishi group executives to maintain the Mitsubishi Motors plant in Adelaide.Mr Macfarlane’s office was unable to confirm the visit yesterday. However, sources said the government was awaiting an announcement on the new executive structure at Mitsubishi before finalising plans for Mr Macfarlane and South Australian Treasurer Kevin Foley to travel to Tokyo ahead of the finalisation in mid-May of a new bail-out plan for Japan’s fourth- largest carmaker.They would hold talks with Yoichiro Okazaki, a senior executive at Mitsubishi Heavy Industries, who is expected to be endorsed as the new chairman of the carmaker at an extraordinary general meeting of Mitsubishi Motors shareholders in Tokyo today .Following Daimler Chrysler’s withdrawal from a ¥700 billion ($8.8 billion) bail-out last week, Mitsubishi group companies are expected to pump up to ¥300 billion into the ailing carmaker.Mitsubishi group executives have privately described the ill-fated Daimler plan as very ambitious and said it involved the expansion of some operations in some areas.It is understood Mitsubishi executives believe a capital infusion of about ¥300 billion would be sufficient to get the carmaker profitable again.The implications of the scaled-back bail-out for the company’s Adelaide operations remain unclear, but some insiders believe it is not necessarily a death knell for the plant, which employs 3500 workers.”It is not dead yet,” one source said yesterday.The extraordinary meeting in Tokyo today will also elect two new directors and secure shareholder approval for the issue of preferred shares, which will be the vehicle for the capital infusion.The Australian Manufacturing Workers Union called yesterday for round-table talks with the federal and South Australian governments and Mitsubishi Motors Australia to discuss a survival strategy.After visiting the Adelaide plant, which is threatened with closure under a global restructure, AMWU national secretary Doug Cameron criticised Prime Minister John Howard.He said it was “outrageous” that Mr Howard was in Queensland, where marginal seats were an issue, pledging tens of millions of dollars to the sugar industry, while Mitsubishi was in crisis and “real jobs, real people, real communities” were at stake.

April 30,2004Mockery of government accountability
Canberra observed
In those societies where constitutional arrangements are weak, for example, where governments may be unaccountable to the people, corporations unaccountable to owners and customers, and corporate-government relations corrupt, non-governmental organisations (NGOs), consisting of active citizens, may be an important force for democracy, an opposition where none exists. Gary Johns, Institute of Public Affairs, November 2001
The role of non-government organisations, and the thoughts of Gary Johns, might not at first blush seem front and centre to a political week dominated by the splendid sight of bombs exploding regularly and uncomfortably around the heads of our Prime Minister, one of the country’s most powerful broadcasters and one of its most powerful regulators.But in a week when John Howard is accused of corrupt behaviour by the opposition, and in an environment where broadcasters portray themselves as an important force for democracy, the unbreakable links in the chain of democratic accountability are not that far removed from one another, as we shall see.The argument Johns put above does not reflect the entirety of his views, or those of the Institute of Public Affairs. Johns and the IPA are better known for mounting an aggressive public argument that some NGOs “seriously challenge the legitimacy of democratically-elected governments”.The argument, in a nutshell, is that “some NGOs are being given representative status by governments on the basis that they represent broad interests, such as consumers or environmentalists, when in reality they express the interest of a few activists”.The Howard government, which coincidentally has a history of trying to nobble organisations that may criticise its policies, and of coming to office on a promise of governing “for all of us”, was attracted by the IPA’s arguments and commissioned the think tank to prepare a paper on appropriate protocols for government departments dealing with NGOs.The group’s report has been delivered to the government and is due to be considered in June at a meeting of the Prime Minister’s Community Business Partnership.There are two sides to the argument. The IPA argues that their concern is not with silencing critics but with NGO accountability. The NGOs are sceptical.The debate is heated and intense, particularly combined with the government’s moves to try to cut lobbying out of the definition of charities’ work for tax purposes.But what makes such intensity seem ludicrous are the events of the past few days involving Howard, John Laws, Alan Jones and David Flint, which go to the heart of influence peddling.Just consider the allegations and the responses. The allegation is that Howard was told he would lose the support of one of his most powerful media allies, Jones, if he did not appoint Jones’s benign regulator of choice, Flint.Implicit in the allegation is that Jones’s interest is in a continuation of a farcical regulation regime which allows him, through his part- ownership of radio station 2GB, to pocket $1.2 million a year from Telstra, and other amounts from other sponsors, in order to broadcast their propaganda as fact, without disclosing either the payments or the source of the information he is peddling to his listeners.As opposition media spokesman Lindsay Tanner says, the allegation, if true, implies corrupt behaviour by the Prime Minister, who appoints Flint.You’d think that in the face of such a monstrous allegation, Howard would have been out of the blocks while Laws was still on air to reject it quickly, angrily and completely. Instead, on Wednesday, it took Howard all day, and three attempts, to find his voice.When he did, at a doorstop in Brisbane on Wednesday night, he dismissed “this suggestion that he tried to heavy me under threat” as “absurd and wrong”. But he and Jones were still saying that they couldn’t recall whether they ever discussed Flint. It was not until yesterday morning that Howard stated categorically that “there was never any conversation of that kind or anything remotely resembling that”.It is in the hazy recollections that the problem lies.What on earth would the Prime Minister be doing discussing the industry regulator with a person who has been the repeated focus of that regulator’s attentions? Wouldn’t you think you’d remember if there had been such a discussion?

The fact that it couldn’t be immediately ruled out says much about the nature of the close relationship between the two men and why it is more disturbing than the lobbying some NGO might do with a government department.

It was only as it became clear that the story was escalating, despite the earlier “non-denial denials”, that Howard felt compelled to actually seek to be more forthcoming.

And this brings us to the depressingly repetitious pattern of the Howard government and the Prime Minister: that despite all his unctuous pledges to bring greater accountability to the people and the parliament, his mindset and that of his coterie is, to use his language, we can all get lost.

It’s not just the government proper that thinks that way either, but its toadies. Consider the spectre of Flint on ABC radio this week saying that whether he had the full confidence of the Australian Broadcasting Authority board “was not a concern of mine, because my appointment is a statutory appointment”.

Equally, consider Telstra’s belief that it has no obligation to inform its shareholders why its chairman resigned, or to particularly outline its commercial relationships with Jones.

The government abuses its obligations to the parliament and to the public with such monotonous regularity that it is almost not a story any more. We will be told what the government chooses, when it chooses. When we are lied to, or misinformed, there is no obligation on the government to acknowledge its errors.

It was Howard who would so often lead the charge about Labor appointments of “mates”.

Now the Labor Party is as guilty of appointing mates as anyone, but at least there used to be an implicit expectation that, once appointed to a statutory authority, you would maintain at least some facade of political neutrality.

Flint’s behaviour, and the government’s tolerance of it, shows that standard no longer exists.

Equally, for all the government’s attacks on journalists for political bias, it is apparently acceptable for Jones to be a regular feature of Liberal Party functions.

The problem that has emerged with this week’s revelations is that they have shown once again what a mockery Howard personally makes of accountability. But, more significantly, they show how insidiously that contempt for accountability is spreading among the truly powerful in the community.

April 29, 2004Howard embroiled in broadcasting row
Laura Tingle and Toni O’Loughlin
Prime Minister John Howard has denied suggestions he was pressured into reappointing the country’s top media regulator after influential radio broadcaster Alan Jones allegedly threatened to campaign against him at the last election if he didn’t.The allegation raises new questions about the relationship between Mr Howard and Mr Jones and the impartiality of Australian Broadcasting Authority chairman David Flint.The claim was made yesterday by rival broadcaster John Laws, who said Mr Jones had told a dinner party in November 2000 he had pressed Mr Howard to reappoint Professor Flint, who was a sympathetic regulator. “I was so determined to have David Flint re-elected that I personally went to Kirribilli House and instructed John Howard to reappoint [him] or he would not have the support of Alan Jones in the forthcoming election,” Mr Laws quoted Mr Jones as saying.Professor Flint was reappointed in August 2000 until October this year but is now under pressure from other board members to leave early because of alleged conflicts of interest.Both Mr Howard and Mr Jones issued statements yesterday saying they couldn’t remember having such a conversation, but not explicitly denying it had taken place.However, Mr Laws’s claims were backed last night by his manager John Fordham, who hosted the dinner party, and were repeated by Mr Laws on the ABC’s 7.30 Report.Mr Howard initially said through a spokesman he had no knowledge of such a conversation between Mr Jones and Mr Laws and that he did not take instruction from the media when carrying out his duties.He later said he had “no recollection of Alan Jones ever having discussed Professor Flint’s position” with him and “therefore rejected suggestions that Mr Jones influenced in any way the government’s decision to reappoint Professor Flint”.And in a third denial late last night, Mr Howard said any suggestion he had been threatened by Mr Jones was “absurd and wrong”.A statement from Mr Jones’s radio station, 2GB , referred to Mr Howard’s denial that he had been “instructed” to reappoint Professor Flint, and Mr Jones said on air the claims were “fanciful and ludicrous”.But Mr Fordham said: “In my presence, my client John Laws had a conversation with Alan Jones dealing with Professor Flint and the Australian Broadcasting Authority at my home in November 2000.”Details of that conversation, as broadcast by John Laws this morning, were, in my opinion, an accurate account of what was said.”The claims come as Professor Flint’s credibility as the top media regulator has been under assault after revelations that he wrote admiring letters on ABA letterhead to Mr Jones during the “cash for comment” controversy in 1999.They also follow the revelation on the ABC’s Media Watch program that damning ABA findings on sponsorship ties worth $1.2 million a year between Telstra, 2GB and part owner Mr Jones were not included in the final report released by the authority which exonerated Mr Jones.ABA board members, former board members and executives close to the authority yesterday claimed the majority of the seven-member board want Professor Flint to resign.

“Flint’s behaviour over the years shows a lack of judgement in terms of the split between his public and private role,” said a senior executive who did not wish to be named.

In another blow to ABA credibility over the “cash for comment” controversy in which Mr Laws and Mr Jones were involved, Mr Laws said that when he had been “mildly critical” of Professor Flint, Mr Jones had responded: “I should be very careful if it weren’t for David Flint, God knows where we would be.”

Mr Jones denied the comment.


2UE’s John Laws says arch-rival Alan Jones threatened to withdraw support for the Prime Minister unless David Flint was reappointed ABA chairman.

2GB’s Alan Jones shares many of the Prime Minister’s political views and is an associate of fellow monarchist David Flint. He denies Laws’ allegations.

ABA chairman David Flint is closely aligned with the Prime Minister. Glowingly praised Alan Jones in one of two letters he wrote on ABA letterhead.

Prime Minister John Howard was reportedly instrumental in appointing his ally, David Flint, for a 2nd term as ABA boss and regularly appears on Alan Jones’ breakfast program.

April 29, 2004Flat denials nowhere to be heard
As the story about John Laws’s sensational allegations regarding John Howard, Alan Jones and David Flint developed yesterday, some other famous names leapt to mind.We seemed to be moving from David Beckham-style denials (the claims are “ludicrous”Smilie: ;) from Alan Jones, to the Carmen Lawrence denial (“I can’t recall”Smilie: ;) from the Prime Minister and the broadcaster.Nowhere was the flat denial you still hope for when claims are made that a powerful broadcaster used the threat of removing political support from the Prime Minister to push for the reappointment of the top media regulator.Instead, there were tight forms of words from a Howard spokesman, a polite refusal to answer other questions, and news that Howard wouldn’t be appearing other than for a “photo opportunity”.Laws may have been a little excessive with his language yesterday when he said Jones had claimed to have “instructed” the PM to reappoint Flint. He admits he has bones to pick with Flint and Jones over the “cash for comment” affair.Equally, Jones may have been big-noting himself at a dinner party with an arch rival in 2000.But the kindest take was that Howard could not say Jones had never been to see him at Kirribilli House, had never raised Flint’s position with him and had never threatened his support.Laws’s allegations combined with the relentless revelations on the ABC’s Media Watch program about Flint and the ABA’s investigations of Jones’s commercial relations are so damaging they should produce a serious response.They compromise the standing of Flint as ABA chairman and again raise questions about the regulatory regime governing the media.They raise serious questions about the influence a favoured broadcaster has over public policy. And they raise the underlying question about the extent of the influence commentators such as Jones and Laws have on the political process.

April 23, 2004Unoriginal sin or Libs spin?
The spectre of Mark Latham stealing lines from a US president in a key Labor speech about Australian national identity has provoked a new debate about plagiarism and highlighted the resources the coalition has employed trying to demolish the Opposition Leader’s reputation as his own man.With government policy not cutting through, and Labor refusing to be “wedged” on issues, the coalition has once again turned to what Treasurer Peter Costello calls Latham’s “Google” approach to ideas.In January, coalition staffers used computer technology to track the history of his speech to the ALP Conference and, based on this, the government claimed large parts of the speech had been written by former leader Simon Crean.Now the government claims that Latham stole ideas and words on targets for community education and learning from the 1997 State of the Union speech of former US president Bill Clinton.While the allegations have been hotly denied by the Labor leader, the irony is that, if anything, large parts of the Latham speech echo John Howard more than Clinton, with the focus on “mateship” and a shift away from multiculturalism.Latham and Howard are at a crucial part of the election cycle. The federal government knows that the next few weeks will determine whether they can break the back of Latham’s lead in the opinion polls.Suggestions of plagiarism are particularly embarrassing for Latham because he has been savage in his criticisms of politicians engaged in plagiarism in the past.In 1996, he launched a violent attack on a Liberal backbencher who had used large slabs of an article in The Atlantic Monthly in a speech in federal parliament: “In 95 years, this House of Representatives would never have heard of anything lower than a member plagiarising word for word, sentence for sentence and paragraph for paragraph some other person.”But Latham says he did not refer to Clinton’s speech “in any shape or form in the preparation of my speech” last week.”In fact, I’ve been declaring these targets and using this rhetoric for many years now. It’s the standard work of a politician who believes in the importance of the education system and setting ambitious targets,” he says.Labor countered that the Prime Minister quoted sections of a book, The Threatening Storm: the case for invading Iraq, in putting his case for war in March last year.`We want every adult to keep on learning for the rest of their lives.’Mark Latham, 2004`Every adult American must be able to keep on learning for a lifetime.’Bill Clinton, 1997

Deciphering Latham, page 82

April 23, 2004Latham talks – but what is he saying?
If the men had looked over their right shoulders, they could from this point have seen distinctly, beyond the nearer hills, a triangle of shining water which was the goal of all this campaign – the Narrows. But few of them noticed it. They were intent on the ridges ahead. C.E.W. Bean in Volume 1 of the Official History of Australia in the War of 1914-18.A handful of Australians penetrated deep across the Gallipoli peninsula on April 25, 1915, and for the only time in the campaign had gone far enough to see their goal.With neither the men nor support needed to secure their position, they were ultimately compelled to withdraw under heavy fire.They come to mind as we watch federal politics 89 years later at what is now a crucial turning point for this year’s federal election battle, and Mark Latham’s battle to win over voters.Latham has made his early scaling of the political heights and for the moment at least remains ensconced in an election-winning position, while John Howard plugs away doggedly but determinedly down on the beach.But it is in the next few weeks around the May 11 budget that Latham has to persuade people that they not only like him but would like him to lead the country.It is here that the Opposition Leader is showing some signs of being in trouble.Not because of his position on Iraq. Not because he might have been plagiarising Bill Clinton speeches.Simply because, while he can talk, it’s increasingly unclear whether he really has enough that is compelling to communicate.That’s not to suggest the Howard government has been galvanising us all with its vision for the future: witness how the otherwise invisible Peter Costello and Tony Abbott came out during the week to savage Latham over the plagiarism allegations but had nothing of interest to say about their own portfolios.Latham’s potential has always lain in his capacity to be different, to not just be another “white bread” politician thinking, as a former Labor official once put it, in 10-second grabs.It’s meant promising to break out of the usual political cliches and management techniques.But how much has he really broken out, or delivered on that potential? Equally how much has the media just been prepared to accept any old schlock he delivers?Consider his recent set-piece speeches. There was the “crisis of masculinity” speech; the foreign policy speech; and during the week, his speech on national identity.Latham has been good at getting headline ideas out into the ether: boys need help; Iraq is another Vietnam; multiculturalism is no good.

But he’s been shocking at being able to expand on them.

“I have always believed in Australia as a big country big in size, big in spirit, big in its egalitarian ways,” his latest speech began (cue theme music from The Magnificent Seven).

While it might be hard to believe it was possible, the rhetoric then got worse.

There was the now hotly contested section on education which the government claims was nicked from Bill Clinton. (The controversy perhaps misses the bigger point that schlock is schlock, even if it is borrowed schlock.)

There was more on the republic and independent foreign policy.

Even before Clinton’s contribution, the speech was travelling heavily under the burden of nods to Paul Keating and Gough Whitlam, among others.

The only sign of a verb was in Latham’s observations about multiculturalism.

Now thinking you need to rethink multiculturalism or, dare one say, get rid of it, as seemed to be Latham’s implicit message is a fine political idea.

Howard thinks so too, as do the radio talkback hosts, who welcomed Latham’s proposed policy conversion as if he were the last communist come in from the cold.

It also wouldn’t hurt your political chances in the racially tense south-west of Sydney, you’d suppose.

But what would the new Latham multiculturalism look like?

“A community of communities, bound together by our duty to respect the law, to recognise the indigenous inhabitants of our continent, to understand our national language [English] and to learn from each other,” he said.

Well, that’s clear then. This twaddle was as close as the Opposition Leader has got to talking in the same sort of code language so beloved of the Prime Minister.

Latham felt compelled to extend his thoughts on identity even further, into “mateship” another of Howard’s wildly overworked themes.

This was important, Latham said, because “since the early 1990s, the debate about what our nation stands for has been mainly about symbols, particularly the `three Rs reconciliation, the republic and refugees’.

“At a time when many Australians worry that our society has become too individualised and too commercialised, we need to preserve Australia’s egalitarian values,” Latham argued.

“We need to take the best of our past the social habits of mateship and ensure that all Australians, no matter their gender, race or creed , are cared for in the future.”

Labor wants to extend mateship, he said, from its traditionally exclusive preserve of white men only. He particularly wants to extend mateship to women, indigenous people, same-sex couples “and the type of modern, multicultural society I mentioned earlier”.

(Note at this point that one of the three R’s has quietly dropped off his agenda as far as egalitarianism goes.)

But it’s not just national identity where Latham is winging it.

For example, with Kevin Rudd overseas this week, it was not possible to get a detailed comment on Labor’s position on the rapidly developing debate in the United States, Europe and Baghdad about the role of the United Nations in Iraq.

The problem for Latham is that he is starting to look a bit like the Google nation caricature that the government has been attempting to draw since he became leader.

The media handling is no different and if anything even more controlled than every other white bread politician.

If you want an interview with the Opposition Leader, you have to get on one of his bus trips around the country and hope you will be called forward for 20 minutes.

Latham’s media adviser, Glen Byres , to whom all queries are bounced, usually doesn’t travel with Latham but stays in Canberra except on the bus trips.

Only some transcripts of Latham’s electronic interviews ever appear.

It’s all control and official message.

The issues that are supposed to be dominating the campaign, meanwhile, drift past largely unnoticed.

There was supposed to be a debate between Health Minister Tony Abbott and opposition health spokeswoman Julia Gillard in Canberra this week.

Abbott didn’t show and shows no signs of having any major health agenda to carry into the election now that he has stitched up the government’s Band-Aid job on Medicare.

Gillard talked gamely on, outlining some interesting initiatives, but not yet saying how Labor will address the politics of public hospitals, which have seeped across levels of government into the federal sphere.

It probably didn’t matter though. Among the handful of journalists present, half of them wanted to know about multiculturalism.

April 22, 2004ALP to prop up health
Labor is likely to promise an increase in direct funding for public hospitals before the federal election but health spokeswoman Julia Gillard would not commit Labor yesterday to meeting a $1 billion shortfall claimed by the states.Ms Gillard outlined more directions for Labor’s health policy after successfully launching its $1.9 billion boost to bulk billing last year.She conceded that problems in the public hospital system technically the preserve of the states still had to be tackled.Ms Gillard said a combination of funding reforms proposed by Labor at the last election (which would be offered again this time around) and some planned new direct assistance would help fill a $1 billion shortfall, which the states claimed they were left with when they were forced to sign the latest Health Care Agreements with the federal government.She would not say, however, if this would match the states’ claimed $1 billion shortfall.Ms Gillard said there was a broad consensus on the health reform agenda in the health sector but Labor would ease the process by holding a health summit within 12 months of getting into office.Beyond the public hospital system, Ms Gillard outlined plans to use a new generation Medicare card to try to establish better primary health-care links between GPs and a patient base that was losing its traditional links with a particular doctor.It would also allow the use of health services to be tracked and medical professionals to access patient records.However, she stressed that she was not proposing that full electronic health records be available on the card.A smart card memory could encode information including a patient’s primary health care provider, emergency information such as significant illnesses and whether the card holder was a registered organ donor.”Beyond the information on the Medicare card, consideration would need to be given to ways of accessing full electronic health records to ensure the patient gets the most appropriate care,” she said.Ms Gillard also said mental health services would be a higher priority.Labor would be targeting the issue in the election campaign, at a time when only 38 per cent of those with mental health problems could access care, and that care was provided largely by GPs.
April 22, 2004Finals word on poll date: not at footy time
Prime Minister John Howard appeared yesterday to encourage speculation about an election in October or November, ruling out a clash with football finals in late September or early October.But a poll as early as August remains a possibility after he said the timing would not be crucial to the result.Most strategists on both sides of politics are deeply sceptical that Mr Howard would risk holding a poll close to the US presidential election on November 2.Speculation in the past month or two, and the comments of coalition strategists, have increasingly pointed to an earlier timetable using the momentum of the budget and driven by an imperative to go to the polls well before the US election, particularly as the Iraq situation worsened.Key strategists had been arguing at the time of Opposition Leader Mark Latham’s rapid rise in opinion polls that there would no advantage in delaying an election, and that if the government remained in close touch with Labor on primary votes, it could proceed in the belief that Mr Latham was likely to falter.But with Mr Latham’s standing in opinion polls settling, the government has seemed less frenzied about an early election possibility in the past couple of weeks.The brutal truth remains that there is no clear decision within the government and that strategists continue to work to ensure the coalition is in a position to go to an election from the first potential date of August 7 on, if the Prime Minister believes there is an opportunity.During an interview on Melbourne radio yesterday, Mr Howard said he was giving “not a lot” of thought to election timing.”We are due to have an election around about October-November,” he said.”That’s the three-year period but I guess any time after the middle of the year wouldn’t be regarded as an early election.”Asked if the timing was crucial to who wins, he said: “I don’t think it’s crucial, no. I think it can have a marginal impact, it’s not crucial.”If a government is really on the skids, then the difference between having it, say and don’t put any significance on this say, the end of October or the middle of November . . . I certainly wouldn’t be having it at the end of September, that’s a pretty sacred weekend, certainly in large parts of Australia, or the first weekend in October.”However, beyond that there’s another two or three weeks.”Mr Latham said yesterday Labor had been “ready for an election for quite some time”.”Whenever Mr Howard wants to have the election Labor will be out there,” he said.

April 22, 2004Howard: $99m to help lift disability sector wages
Laura Tingle with AAP
New federal spending of $99 million will be made available to the sheltered workshop sector to assist it move to a fairer wages structure.But Labor has questioned the structure of the federal government’s package, which guarantees funding for the 17,000 existing places in what are now known as disability employment services. However, it does not address a pressing need to expand the number of places to meet growing demand from maturing disabled children.Prime Minister John Howard announced details of arrangements yesterday that follow the adoption of new quality assurance standards, which aim to lift workplace levels, training and wages.Mr Howard said the measures were designed to ensure that no person would be displaced from a service and no sole service in a town or region would close due to the changes to the sector; and assistance would address the effect of increased wages.A new pay formula will push average wages for people with disabilities working in sheltered workshops from $2.25 an hour to just over $4 within four years.Under quality assurance standards adopted in April 2002, business services have until the end of this year to provide quality workplaces, provide training and support for consumers and pay pro-rata wages based on the person’s assessed productivity.But some services will not be in a position to pay award wages for some time, leading to fears that jobs could be jeopardised.Opposition spokesman Wayne Swan said that the government’s announcement should have been delivered many years ago.”It’s too early to say whether the 17,000 profoundly disabled Australians working in these services will continue to work there,” he said.”We simply do not have enough detail. Labor is concerned that despite the government’s `guarantee’, ongoing employment may not be sustainable, and there is little provision to assist new entrants into services, meaning many younger people with disabilities may be shut out.”

April 21, 2004Labor sticks to guns on Iraq
Labor is sticking to its pledge to have Australian troops home by Christmas, despite the deteriorating situation in Iraq and unease within some sections of the party.Opposition Leader Mark Latham reaffirmed the commitment even as Prime Minister John Howard said Australia would keep troops in Iraq until their task was completed, despite explicit threats that Australians would be kidnap targets from cleric Moqtada Al-Sadr .Mr Latham’s comments came as Newspoll showed his approval ratings had recovered after a sharp drop in the wake of his initial declaration on his intention to withdraw troops, but a slight improvement occurred in the government’s primary vote.Newspoll showed the coalition’s primary vote up three points to 43 per cent while Labor’s was down two points to 42 per cent, giving the coalition its first lead in primary votes in some months.Despite the setback, Mr Latham is now enjoying a satisfaction rating of 59 per cent, compared with 52 per cent two weeks ago, while Mr Howard’s satisfaction rating has lifted two points to 53 per cent.Mr Howard leads Mr Latham on the better prime minister measure by 48 per cent to 37 per cent, which are both unchanged.Mr Latham said yesterday the drop in Labor’s primary vote would not make him rethink his position on withdrawing troops from Iraq.”I don’t think anyone’s surprised that Labor’s got this commitment, we didn’t want the troops there in the first place and we certainly don’t support Mr Howard’s plans that Australia will be there forever.”The government has been putting as much pressure on Mr Latham as possible over his position, and a member of the Iraqi Governing Council and even the US commander in Iraq have entered the domestic political debate about the Opposition Leader’s comments.Meanwhile, when asked if Australia should consider pulling out of Iraq after Moqtada al-Sadr had targeted Australians for kidnapping, Mr Howard said: “No we shouldn’t, and I don’t believe many Australians would expect their government and their armed forces to succumb to that kind of threat.”The threat from a spokesman for al-Sadr on ABC radio came as the cleric urged his followers to stop attacking Spaniards because of their government’s decision to withdraw troops. Honduras joined Spain in pulling out yesterday.Also, in an interview in The Bulletin, Major-General Michael G. Smith says Australia has “squandered opportunities” in Afghanistan by becoming involved in the “great folly” of Iraq.

April 21, 2004Matey Latham backs multicultural shift
Opposition Leader Mark Latham argued yesterday that Australia needed to move away from its multicultural strategy and re-establish mateship as a central part of the Australian identity.In a speech in Sydney on Australia’s national identity, he said he had a “big country” agenda built on four ideas: building a more creative Australia through education; “strengthening the foundations of our culturally diverse and pluralistic society”; expressing the values of Australian independence and self-reliance; and rebuilding the national reputation for egalitarianism.While he again stressed he would push for an early move to a republic as prime minister, Mr Latham’s comments on multiculturalism reflected the biggest shift on issues of national identity in a speech which otherwise contained many themes common to former Labor prime ministers from Whitlam to Keating.He emphasised the need for more focus on spreading English as our national language and said we must “give new meaning and depth to our multicultural identity”.”This is an area where the Australian people have moved on,” he said. “In the early stages of multiculturalism we spent a lot of time trying to prove our diversity and then celebrate it.”This is still reflected in government policies and programs: multiculturalism as a celebration of diversity for diversity’s sake”Government policies and definitions of multiculturalism needed to catch up with the reality of how second-generation migrants saw themselves. “They should not automatically treat nationality-of-origin as a marker of cultural identity,” he said.On sovereignty, he said he was “convinced the Australian people want a more self-assured debate about our foreign policy and our constitutional independence”.Mr Latham said that the identity debate since the early 1990s had been mainly about symbols: the “three Rs” of reconciliation, the republic and refugees.But instead of being symbols of national unity “lately these `three Rs’ have been used to divide us”.”We need to take the best of our past the social habits of mateship and ensure that all Australians, no matter their gender, race or creed, are cared for in the future,” he said.WHAT HE SAIDWe need to take the best of our past the social habits of mateship and ensure that all Australians, no matter their gender, race or creed, are cared for in the future.Government policies . . . should not automatically treat nationality-of-origin as a marker of cultural identity.If we treat multiculturalism as a static concept, as something frozen in time each of us pigeon-holed into past habits and past identities then inevitably, it will be a policy based more on difference than diversity.

This is how I think of multiculturalism a community of communities, bound together by our duty to respect the law, to recognise the Indigenous inhabitants of our continent, to understand our national language (English) and to learn from each other.

April 20, 2004Inquiry probes Collins’ claims
The Flood inquiry into pre-Iraq War intelligence will widen to examine claims by a senior intelligence official about systemic problems in the Defence Intelligence Organisation.Sources have confirmed to The Australian Financial Review that Philip Flood, former diplomat and head of the Office of National Assessments, will examine the allegations made by Lieutenant-Colonel Lance Collins as part of its report to the government on pre-war intelligence by June 30 this year.A letter written by Colonel Collins to Prime Minister John Howard, and a related report investigating his claims by naval officer Captain Martin Toohey, were leaked to The Bulletin magazine last week.The documents noted a range of Australian intelligence failures in recent times, including the Fiji coups, Sandline and Bougainville, the Asian financial crisis, the fall of Indonesian president Soeharto, East Timor and the Bali bombing.Colonel Collins complained of widespread failings across an intelligence community that was “unable to identify reality in a timely manner”.The Toohey report said the Defence Intelligence Organisation withheld intelligence from troops in the East Timor operation for 24 hours due to frustration at claims by Colonel Collins and others about Indonesian complicity in attacks on civilians.Mr Howard said last week he felt the Flood inquiry had “quite expansive terms of reference” but stopped short of saying he would formally ask Mr Flood to investigate the allegations.Mr Flood is believed to be confident that his current terms of reference cover the issues raised by Colonel Collins about systemic failures within DIO, although not the intelligence officer’s grievances about promotion and recognition.While Labor and the minor parties have called for a royal commission on the intelligence services, sources argue that Mr Flood already has access to all the officials and politicians and government players he needs.His report will be limited, however, by his resources, which comprise a staff of five, and the short time frame. Colonel Collins’s claims are expected to be investigated by the inspector-general of intelligence and security, Ian Carnell .In his first public comment on the week-long controversy, Colonel Collins released a statement saying he was more concerned than ever that there should be an impartial, open and wide-ranging royal commission on the intelligence services.He also expressed dismay that the Defence Department had chosen to release a negative report ahead of one which backed his position.The Chief of the Defence Force, General Peter Cosgrove, said yesterday Colonel Collins was a good officer. He said he had performed very well when they had worked together in East Timor

April 20, 2004PM fails to rule out more troops for Iraq
Laura Tingle, Chief political correspondent with AAP
Prime Minister John Howard yesterday left open the possibility that more Australian troops would be sent to Iraq when he launched a strong attack on Spain for saying that it would immediately begin to withdraw its forces from the strife-torn country.Mr Howard was asked three times yesterday whether Australia would consider bolstering its troop numbers in Iraq as a consequence of Spain’s decision.He would say only: “We have had no requests to do so, and tasks that we are fulfilling are very important tasks the training of the new Iraqi army, the training of the police, the training of the new air traffic controllers, and other tasks that we
are fulfilling.”His form of words echoed earlier occasions when the government has been less than forthright about its plans to commit troops in Iraq, and subsequently to withdraw them.Australia has 850 personnel in the Middle East with about 300 inside Iraq, providing security, air-traffic control at Baghdad airport and training Iraqi military personnel.The Prime Minister’s comments came as the US administrator in Baghdad, Paul Bremer, warned that Iraqi forces would not be ready to take over security after the June 30 power transfer and after Iraqi Governing Council member Ahmad Chalabi warned that
Australian troops would be needed in Iraq for the next 18 months.Defence force chief Peter Cosgrove said yesterday an assessment would have to be made about whether Spain’s proposed withdrawal would affect the security situation.After being sworn in, the Spanish Prime Minister, Jose Luis Rodriguez Zapatero , announced that his country’s 1400 troops in Iraq would come home “as soon as possible”.He had originally said that troops would be withdrawn unless there was a UN Security Council mandate for an international force in Iraq before June 30.US President George Bush and British Prime Minister Tony Blair pledged at a meeting in Washington over the weekend to give the United Nations a “central role” in the transfer of power to an Iraqi interim government.But Mr Zapatero expressed pessimism about any UN resolution matching Spanish demands, with the US, rather than the UN, expected to stay in charge of Iraq.Mr Howard attacked the Spanish decision, saying: “We will maintain our presence in Iraq for so long as the tasks we have need to be attended to.”I regret Spain’s decision. It will give heart to those people who are trying to delay the emergence of a free and democratic Iraq.”Every time a country appears to be retreating from a difficult situation, encouragement is given to those who have created the difficulty.”But Labor accused Mr Howard of being too shrill in his criticisms of Spain. Defence spokesman Chris Evans said the opposition believed the Spanish were entitled to take the decision with the best interests of their people in mind.Labor continues to stick to its timetable of troops leaving Iraq as soon as possible after a June 30 handover and on the assumption of a Labor win at the federal election.

Foreign Minister Alexander Downer spoke by phone yesterday afternoon to the Spanish ambassador, Jose Ramon Baranao.

The ambassador had earlier told ABC radio that Spain would remain committed to help rebuild postwar Iraq, but not as part of the coalition of the willing.

General Cosgrove said yesterday the duration of Australia’s commitment had to be a matter for the government.

Last night, the commander of US forces in Iraq, General Ricardo Sanchez, told the ABC he would be disappointed if Australian forces withdrew from Iraq.

Asked whether he was aware of the policy of Opposition Leader Mark Latham to withdraw Australian troops by Christmas, General Sanchez said it would be a “national” decision but any withdrawal of forces would send a “big signal” to Iraqi insurgents that “the coalition is not committed to accomplishing this task”

April 20, 2004Marginal Vic reaps $1.3m windfall
Laura Tingle, Chief political correspondent, with AAP
Another week on the campaign trail, and Prime Minister John Howard was hitting all his strongest points in the marginal Victorian seat of Gippsland yesterday.Defence and schools were on his itinerary.There was a visit to the RAAF base at Sale for morning tea, a visit to a timber mill, a fundraising lunch for the Gippsland Cancer Care Unit and a visit to a high school.In his travels around marginal seats over the past couple of months, the Prime Minister has been busily dispensing largesse.For example, during a visit to South Australia, he announced spending of more than $30 million.Yesterday, he announced $1.3 million in funding for the development of four initiatives in Gippsland under the Sustainable Regions Program, pointing out there had already been $11.8 million put into projects in Gippsland under the scheme. This was after visiting the RAAF base, which has been providing some of the personnel who have been training air-traffic controllers in Baghdad.Mr Howard and Science Minister Peter McGauran, the National Party member for Gippsland, presented cheques to local entrepreneurs and councils for the projects, including a feasibility study for a wood-pulping project in the Latrobe Valley.Mr McGauran faces a tough fight to retain the seat he has held since 1983 after an electoral redistribution brought several Labor-friendly towns into his electorate.
April 17, 2004Howard criticises Australian hostage
Australia’s first Iraqi hostage drama ended in low political farce with the government accusing aid worker Donna Mulhearn of going to Iraq for political reasons after she claimed she had told her captors she was a member of the Labor Party to encourage her release.The release of Ms Mulhearn and the subsequent politicking in Australia that followed was in grim contrast to the growing hostage-taking drama in Iraq where an Italian man was shot by his captors.Late on Friday, the government released a report vindicating claims by the Army’s top intelligence analyst, Lieutenant-Colonel Lance Collins, that he was sidelined after giving advice that ran counter to government policy.The third report into the Collins case also vindicates his claims that there was a powerful pro-Jakarta lobby within the Defence Intelligence Organisation that was skewing its assessments.It came after a week in which US President George Bush vowed to stay in Iraq and Prime Minister John Howard reaffirmed his determination to keep Australia in the country as long as necessary.Mr Howard told the US Fox News network on Friday that he believed Australians would still want “our job in Iraq finished” even if Australia was subjected to an attack similar to the Madrid bombings.”My strong feeling is that Australians are gutsy people who would want to see the thing through,” he said. The Prime Minister was quizzed about the case put by Democratic presidential contender John Kerry that the United Nations should have a greater role in Iraq and that the US and by extension Australia had been trapped in a difficult situation in Iraq because they had not worked closely enough with the UN in the first place.”I remain as convinced as I was a year ago that if we had continued to wait for a further Security Council resolution, that resolution would never have come,” Mr Howard replied.Ms Mulhearn who had stayed on in Iraq as an aid worker after travelling there before the war as a human shield was taken hostage in Fallujah by local mujahadeen fighters as she and three other foreign aid workers tried to leave on Wednesday.They had been distributing humanitarian aid to civilians.The ABC quoted her as saying: “I really felt I had to answer for my government’s actions and I felt really that put me in quite a bit of danger.”Ms Mulhearn’s actions, and comments, drew criticism from Mr Howard and Foreign Affairs Minister Alexander Downer, who also questioned the credibility of her story.Mr Downer suggested Ms Mulhearn had gone to Fallujah “for political reasons”.”People should not go to Iraq for political purposes,” he told Sydney radio. “That is a very dangerous and a very foolhardy thing to do.”

April 16, 2004Caught unawares in our own backyard
Canberra observed
Australia’s official mission to Baghdad the one being protected by the 85 troops consists of seven people . That’s right, seven.There are six Australian-based Foreign Affairs officials and one locally engaged staff member, according to the Department of Foreign Affairs and Trade, including the head of mission, Neil Mules, his deputy and consular, political and economic advisers.In a week of yet more angst and excessive language about Iraq and commitment, intelligence, and the grim horror of hostage taking, it’s worth pointing out just what is being protected in Australia’s own interest in Iraq, beyond the need to be seen to
be bolstering our American allies.And what are those interests that have so many Australians bunkered down in one of the most dangerous places on earth?In January, the Department of Foreign Affairs and Trade released a statement: “Australia’s Track Record of Achievement in Iraq.”
It wasn’t about the progress of the Australian military personnel who are training air traffic controllers or Iraqi policemen, or humanitarian aid. It was about trade.Trade Minister Mark Vaile listed the range of contracts won by Australian firms in Iraq “since the end of major hostilities last May”.These included AWB Ltd , the Worley Group , SAGRIC International and the CSIRO , SMEC , ANZ, Multiemedia , GRM International and Patrick Corp.While the total value of the contracts is not clear, it is well in excess of $500 million.The flow of press releases out of Foreign Affairs and Trade about Iraq late last year were predominantly about trade. They’ve now petered out, to be replaced by others about donor assistance and Iraqi administrative law.Maybe trade just seems a bit tacky at the minute. Maybe there has been a bit of a lull in reconstruction work being passed around.Prime Minister John Howard certainly has had less to say about trade than he has about the reasons for going to war, and more recently, the reasons why he thinks we are now stuck there, just as the Americans also are stuck there.The reasons for going to war were faulty intelligence and a politically-enhanced doggedness about our alliance with the United States.And the interesting thing about developments this week is that developments in Iraq have combined with The Bulletin magazine’s extensive report of the continuing tussle within the defence intelligence establishment to give us two examples of very similar policy failures playing out in different parts of the world.That is, the Australian/US alliance, and the relationship between Australia and Indonesia.In the case of Indonesia, a deeply entrenched, longstanding failure to criticise the Soeharto regime and the human rights records of its military forces, or enter a tussle over East Timor, dominated foreign policy and blighted our intelligence assessments of what was happening in both Jakarta and East Timor.It took a foreign affairs establishment outsider Labor’s then shadow foreign affairs spokesman Laurie Brereton to break the spell at the political level in 1996 after unrest in Jakarta prompted him to reconsider Labor’s Indonesian stance.

He gradually shifted his party’s position on East Timor, and its approach to relations with Jakarta, despite being fought a good deal of the way by prominent members of the predominant foreign policy club Gareth Evans and Kim Beazley.

It was Brereton’s shift which would eventually facilitate the Howard government’s own shift on East Timor, a position which it has unctuously been claiming ever since as a sign of its respectable foreign affairs credentials in the region.

The Bulletin’s coverage this week further documents the controversy within the Defence Intelligence Organisation over Jakarta and, particularly, over East Timor that was raging for much of the same time.

In the case of the US, there has been a similar determination certainly by this government to accept what we have been told, and where we are led.

In Iraq, that has had obvious consequences.

But it also played out at the level of how our intelligence systems worked, as the recent parliamentary report on pre-Iraq War intelligence showed.

Even on occasions when Australia’s own intelligence community expressed its reservations about the intelligence it was being fed from the US and Britain, the government simply chose to listen to the direct and seriously flawed intelligence from overseas instead.

The issue is not about political pressure on bureaucrats as such.

It’s about any prevailing orthodoxy taking over root and branch in any discipline.

The sniggering behind hands that Lieutenant-Colonel Lance Collins the intelligence officer who rubbed the so-called pro-Jakarta lobby in the defence establishment up the wrong way claims to have endured is no different from the ostracising of, say, a market economist with a forecast far from the safe huddle of middle-of-the-road predictions.

The problem for the intelligence establishment with Collins, though, is that he was right.

We now have the Prime Minister trying to engage in a similar exercise of isolating Mark Latham.

Howard called a press conference on Wednesday to point out that the Democratic Party’s presidential pretender, John Kerry, had committed to staying in Iraq.

He suggested this further isolated Latham’s position on Australian troops because the Opposition Leader had been “imputing” that Kerry would pull US troops out of Iraq immediately if he were to become president.

The fact that there is not a shred of evidence to support this imputation didn’t actually stop the Prime Minister.

But there was much stiff, sanctimonious stuff about Latham’s right to disagree.

“In defending his right, in my view, to be wrong about what is in Australia’s national interests,” the Prime Minister said, “let me point out that he is not only at odds with the Australian government, he’s also at odds with both sides of politics
in the United States and he’s at odds with both sides of politics in the United Kingdom, including his sometime, I think now erstwhile, political mentor, he has many, Tony Blair, whose position on this, of course, is very similar to my own and that of the United States President”.

So are you suggesting we should be sniggering behind our hands about Latham, Prime Minister?

The Opposition Leader must obviously be wrong with such a coterie of notables against him.

Just as Brereton was wrong, perhaps?
What links the failings of both episodes is an unwillingness to upset powerful neighbours at the political level and serious intelligence failures at the bureaucratic level.

The most devastating part of The Bulletin’s document this week was the listing by Collins of Australia’s intelligence failures in recent times: the Fiji coups , Sandline and Bougainville, the Asian financial crisis, the fall of Soeharto, East Timor,
the Solomons, and the Freeport mine. . .

You don’t have to be a spook, or even just a bit spooky, to know that Australia was caught unawares on all these issues in our own backyard, and it is time we found out why.

April 16, 2004Terrorism arrest a boost for government
Marcus Priest and Laura Tingle, with AAP
The Howard government has received a fillip for its security credentials with a Sydney man appearing in court accused of training with a Pakistani terrorist organisation.
While the government has played down any link between Australia’s role in Iraq and an increased terrorism threat here, Attorney-General Philip Ruddock last night foreshadowed further similar charges against the man and others.
The Australian Federal Police arrested a 21-year-old Sydney medical student, Ul Haque , at his western Sydney home yesterday on charges he trained in Pakistan with the terrorist group Lashkar-e-Toiba. If convicted, he faces a prison sentence of up to 25 years. It is the first time in Australia someone has been charged for training with a terrorist organisation under laws passed in 2001.
Mr Haque appeared in Sydney Central Local Court, denied the charges and was remanded to reappear on May 5. He arrived in Australia from Pakistan in 1998 and went to school in Mr Ruddock’s Sydney electorate.
Mr Ruddock refused to say whether Mr Haque had been involved in any terrorist activities in Australia as the matter was before the court. But he said further charges against Mr Haque and others could result from the AFP investigation.
While Lashkar-e-Toiba was listed as a terrorist organisation by the government six months ago, it was not when Mr Haque was alleged to have trained with it in January and February 2003.
As a result, prosecutors will have to show the organisation was in fact a terrorist organisation.
The AFP has been under pressure to be strong against terrorism, while not challenging the government’s view that Australia’s role in Iraq has not heightened the risk of attack here.
With security looming as a key election issue this year, the government is under mounting pressure to justify Australia’s role in Iraq. Labor demanded yesterday that the government comprehensively review Australia’s intelligence services.
But the coalition refused to release all reports relating to the treatment of the then senior intelligence officer in East Timor, Lieutenant-Colonel Lance Collins, who has alleged a series of Australian intelligence failures.
The opposition wants a full judicial inquiry into assertions by Lieutenant-Colonel Collins, who says he has fallen foul of senior defence intelligence establishment figures.
The intelligence officer subsequently sought redress from the army for his treatment over publicly released information suggesting he had leaked classified information about the Timor situation. Prime Minister John Howard argued on Wednesday the allegations could be dealt with by the Flood inquiry, established to examine failures in pre-Iraq war intelligence. But opposition defence spokesman Chris Evans said yesterday the Flood inquiry approach was not powerful enough. The Bulletin magazine published a report this week on Lieutenant-Colonel Collins’s grievances by a serving naval officer and barrister, Captain Martin Toohey, which was sympathetic to Lieutenant-Colonel Collins’s claims.
The government responded by producing a second report, by Colonel Richard Tracey QC , attacking Captain Toohey’s assertions. Mr Howard defended Colonel Tracey yesterday against any claim that he might be biased towards the government.
But the government has not released two additional reviews of the Toohey report by Colonel Brown and Lieutenant-Colonel Mathewson . Senator Evans says there now appear to be at least four high-level legal reviews of the Collins allegations.

April 15, 2004Howard takes aim at intelligence critic
Laura Tingle and Geoffrey Barker
The federal government hit back hard at former intelligence officer Lieutenant-Colonel Lance Collins last night, releasing a report by a senior lawyer declaring that an inquiry into his treatment was conducted without proper jurisdictional authority and lacked evidence for its findings.The move came after Prime Minister John Howard suggested that the inquiry established to investigate the pre-war intelligence failures in Iraq would now also deal with a devastating list of claims of systemic intelligence failures from within the military’s most senior ranks.The latest claims came from Colonel Collins, who called for a royal commission into the failures.But the government released a report from administrative lawyer Colonel Richard Tracey, QC , which said an inquiry that supported Colonel Collins’s claims had “miscarried” by dealing with matters that did not fall within its ambit.Colonel Tracey’s report also raised concerns that recommendations were being made for action that could not be taken by the Army Chief, General Peter Cosgrove.The Tracey report rejected virtually every finding made by Captain Martin Toohey in his report on Colonel Collins’s redress of grievance claim, including those that Colonel Collins had been treated with malice and that attempts had been made to “muzzle” him.Colonel Tracey said the Toohey report had “a number of unfortunate features”. “In no case,” he said, “is it possible . . . to link particular findings to a particular evidentiary source or sources.”He said the recommendations in the Toohey report were not based on particular findings. “In some instances it is difficult to appreciate how it might be thought the recommendations flow logically from any particular factual finding.”In some instances the recommendations encourage action which is not within the power of any member of the ADF to take.”Again resisting calls for a royal commission on Australia’s intelligence agencies, Mr Howard yesterday argued that the inquiry headed by former senior bureaucrat Philip Flood established after a parliamentary committee found flaws in the intelligence process in the lead-up to the war in Iraq had the powers to investigate claims made in the leaked Toohey report, and Colonel Collins’s letter to Mr Howard, in this week’s The Bulletin .Opposition Leader Mark Latham argued yesterday that the Flood inquiry needed broader powers and terms of reference to deal with the substantial allegations raised by the Toohey report, and required royal commission powers.Colonel Collins wrote to Mr Howard complaining of a “failure of institutional controls over the Australian intelligence system”, listing a series of intelligence failures, including Iraq’s WMD, delays in the Willie Brigitte case, warnings of the Bali bombings, the breakdown of order in the Solomons, East Timor, the Sandline affair, Indian nuclear testing and the fall of former Indonesian president Soeharto.In his report Colonel Tracey said he could find no objective basis for Captain Toohey’s finding that Colonel Collins’s criticisms of intelligence assessments were “constructive and accurate”. He could find no evidence that three senior defence intelligence officials had a strong dislike of Colonel Collins.There was no direct evidence to support the conclusion that the director of the Defence Intelligence Organisation so disliked Colonel Collins that he was inhibited from reacting in an objective manner to his criticisms of DIO.The finding that there was a pro-Jakarta lobby in DIO was “a very general and pejorative finding. It is non-specific”. Colonel Tracey found there was no direct evidence of malice towards Colonel Collins on the part of any Defence Security Branch officer.

April 15, 2004PM says Latham out of step with US, Britain on Iraq
Labor leader Mark Latham was holding an increasingly isolated position on Iraq, Prime Minister John Howard said yesterday, seizing on a commitment by US Democrat presidential contender John Kerry to keeping American troops in Iraq.In an article in The Washington Post, Senator Kerry said Americans “of all political persuasions are united in our determination to succeed [in Iraq]” and “no matter who is elected president in November, we will persevere”.Mr Howard said the significance of Senator Kerry’s comments in the domestic debate was “that the Leader of the Opposition has sought to insinuate the view in his comments, that somehow or other if there were a change of president in America at the end of this year, there would be a different policy towards Iraq”.”There won’t be,” Mr Howard said, “and you now have out of the words of the alternative president of the United States, a very clear statement of that.”
However, it is unclear how explicit Mr Latham has ever been in making this “insinuation”.Challenged on the point yesterday, Mr Howard’s office pointed to an answer to a question at his foreign policy address in Sydney, and to an interview on Lateline on ABC television the same day.However, Mr Latham’s only observations on those two occasions were to say: “There is no doubt that the events of the last week have fundamentally changed the nature of the engagement. Both sides of politics in the United States have had to take account of that. But I am not here to answer for what inevitably will be, in an election year, debates between Republicans and Democrats in the United States . . .”On Lateline, he said: “I’m sure this . . . is going to be a matter of very sharp political debate and difference in the United States in their election year as it is in our country.”However, the Howard government is clearly seeking to maximise the pressure on Mr Latham over the US alliance, particularly ahead of a planned trip to Washington by the Opposition Leader in June during which he says he hopes to meet Senator Kerry.The Prime Minister also said Mr Latham was at odds with Britain’s leader, Tony Blair.Mr Howard could not say how long troops guarding Australia’s mission might remain in Iraq. “Clearly the political situation in Iraq will have some bearing on how long you have to leave people in that position,” he said.
April 13, 2004Charity reform raises gag fears
Charities are alarmed that legislation before the Senate requiring them to be “re-endorsed” for various tax exemptions could be a backdoor move by the federal government to white-ant institutions that criticise government policy.The proposal that charities be reviewed and endorsed by the tax commissioner to continue accessing tax concessions is not, of itself, a surprise. It had been proposed in a 2002 review of charities.What is contentious is that the federal government has moved to bring the proposal into legislative force before the contentious issue of what constitutes a charity is decided.The most recent estimate of the worth of the not-for-profit sector values it at $14.6 billion, or about 3 per cent of gross domestic product.Treasurer Peter Costello has received, but not yet released, a report from the Taxation Board of Review on the definition of a charity, following a controversy last year over what political activities charities could undertake.A spokesman told The Australian Financial Review that a response to the report was being worked on and would be released at the earliest opportunity.The government was accused last year of seeking to silence its critics after Mr Costello circulated a draft bill that said “attempting to change the law or government policy” was a “disqualifying purpose” or an unlawful activity for a charity.The move was seen as part of a multi-pronged attack on the not-for-profit sector after the Institute of Public Affairs was commissioned to prepare a report for the government on the sector, a report now due to be delivered within weeks.The Senate Economics Committee is examining the proposals requiring charities to be endorsed by the tax commissioner in order to access all relevant tax concessions.These include the income tax exemption, refundable imputation credits, deductible gift recipient status, the fringe benefit tax rebate, the $30,000 capped FBT exemption and GST concessions for charities.It is due to report by May 12, the day after the budget. But it has already received submissions from charities expressing their concern.The Australian Council of Social Service has argued that the legislation should be deferred until the charities definitions issue is settled. The Australian Conservation Foundation pointed out that many charities qualified for multiple tax exemptions and could be seeking 10 to 20 tax endorsements. This “highlights the need for rationalisation and simplification of charitable tax exemption laws”, it said.

April 8, 2004PM proves Liberals can have very catholic tastes
It’s one of the givens of politics: the root and branch links between the NSW Right of the Labor Party and the Catholic Church. So events of recent months have looked increasingly strange.On the one hand, there has been the spectre of the Protestant, Liberal Prime Minister sucking up to the Catholics for all he is worth.On the other there is Mark Latham, the federal Labor leader, who is a son of the NSW Right but is not only not a Catholic, but perceived by many as anti-Catholic.The implications run a lot deeper than some interesting sociology or a re-run of the sectarian battles that have dominated Australian politics in the past.It’s very much about western Sydney and a swag of marginal seats.It’s about those thousands of only vaguely attached Catholics and even non-Catholics who’ve come back into the church’s orbit by opting to put their kids back in Catholic system schools as part of the shift away from the public school system.It’s about a prime minister with a keen sense of history sensing an opportunity in the form of a Sydney church hierarchy being run for the first time in years by an outsider George Pell.And there is the question of whether the federal Labor Party has got a bit rusty in its courting of the Catholic vote.After all, the former Liberal Party federal director, Andrew Robb , nominated Catholics as a key group to have shifted their alliance to the coalition when it won office in 1996.But is anyone winning the Catholics at the moment?Two issues on which John Howard has been making his pitch in recent times are funding for Catholic system schools and the issue of male teachers in Catholic schools.Howard and Education Minister Brendan Nelson made much of their deal with the Catholic school sector to bring it in from the cold and into the government’s school funding model.They sought kudos from the presence, at the announcement, of Sydney’s Archbishop George Pell .Clearly being targeted by the government were the parents of children in marginal outer Sydney electorates who have moved their kids into Catholic system schools.Pell noted in a statement that the deal would help schools in south-western seats. But the rest of the Catholic establishment has remained diplomatically silent about the deal.

Labor believes that the Catholic school system is at least as happy with its own funding package with its emphasis on redistributing funding away from richer schools and into poorer schools which would benefit many of the local systemic Catholic schools in lower income areas.

Local archdioceses are remaining notably neutral in their advice to parishioners.

For example, the ACT Catholic Education Office has been counselling locals as recently as the past week to “be informed” about the education debate, and has noted that its schools don’t get any new funding from the agreement with the coalition.

So it remains unclear at this stage whether Howard’s manoeuvres on education will achieve any sustained public support, pending details of the Labor policy.

Equally, the church remains unhappy about being dragged unwillingly into politically contentious issues.

To challenge Latham’s credibility on his “crisis of masculinity” stance, Howard recently sought to exploit a move by the Sydney Catholic Education Office (SCEO) to boost the number of male teachers in its schools.

Howard announced the government would amend the Sex Discrimination Act to allow Catholic schools to award male-only teaching scholarships, and challenged Latham to support the legislation. The Opposition Leader refused to do so, arguing an amendment was not necessary, and the matter was finally resolved by a negotiated outcome between the Catholic Education Office and the Human Rights and Equal Opportunity Commission .

Two interesting things emerge out of the incident, however.

One of them was the extent to which the Catholic establishment was peeved about being used for a political point-scoring exercise.

The executive director of schools for the SCEO, Kelvin Cannonade, released a statement “to the Catholic community” pointing out that “contrary to recent media reports, the Sydney Catholic Education Office did not request a change to the Sex Discrimination Act”.

The other was that Labor’s response was temporarily flat-footed because of the lack of strong links between the front bench and the Catholic establishment.

“When the brawl came up, we weren’t on top of it,” one source says.

“It fell to [NSW Right Labor veteran and close Latham adviser] Laurie Brereton to quietly find out what was actually going on.”

The Catholic Church may have an almost official wing in the Labor Party through the Copies Union and its welfare organisation may travel a very similar path to Labor on social policy, but the links to the parliamentary party have weakened in recent years.

And in embracing Pell, Howard has picked on a Latham weak point.

Before he abandoned crudity and outright aggression, one of Latham’s regular targets was the Sydney archbishop. And the church.

In particular, his observations during the stem cell debate in parliament in 2002 when the church was reeling from sexual abuse allegations have not been forgotten. Latham noted (now Health Minister) Tony Abbott’s reference to the “Catholicisation of the Liberal Party”.

“It is a very dangerous trend,” Latham said.

“Here we have someone boasting about the effective end of the separation of church and state one of the pillars of a free society, one of the pillars of an open democracy.

“. . . The member for Warringah claims to be worried about union influence in the ALP, yet apparently he has no such concern about the rise of National Civic Council influence within the Liberal Party.

“. . . We have the news overnight of the Archbishop of Sydney standing down because of serious child sexual abuse allegations made against him . . . [of which he was subsequently cleared].

“People are living in fear of what is happening to young, innocent children in the hands of the Catholic Church. Yet the hierarchy adopts a pious, sanctimonious status where they want to lecture others about family and moral issues.”

In a separate debate the same month, Latham was once again on about the “Catholicisation” of the Liberal Party, saying it meant “the Liberal Party’s social policies are being determined in Rome”.

“This is the ultimate hypocrisy,” he said. “The government may decide who comes into the country but, increasingly, its other policies are being decided in Washington, London and Rome.

“By contrast, Labor is anti-establishment. We aim to help the outsiders, those disenfranchised by the Tory network of businessmen, think tanks, media lackeys and coalition MPs. As far as I am concerned, if you want civility in Canberra, buy a parrot.”

Attacks on George Pell probably do the Labor leader little real damage in Sydney, where he remains largely an outsider.

His broader attacks on the church, as virulent as those on George Bush, have created caution in the Catholic establishment, the ramifications of which will be interesting to watch.

April 2, 2004Just how culpable is Mark Latham
Canberra observed
On November 11 last year the US administrator for Iraq , Paul Bremer, was abruptly summoned to Washington to discuss ways of speeding up the handover of power to an Iraqi government.It was only days after the most deadly single attack on American forces in Iraq, in which 16 soldiers were killed when a Chinook helicopter was downed near Fallujah .What does this have to do with whether Mark Latham is a dishonest flake the claim the Howard government put at the centre of the Australian political debate this week?Everything.A look at the timeline on how events have unfolded in Iraq, and what Labor has been saying about them, is central to making your own post-Iraq assessment of Mark Latham.November 11 and May 12, 2003 feature prominently on that timeline.The accusations against Latham are that: he has made policy on the run; that he has lied about Labor having had a policy position on this since last year; and that he has lied about the intelligence briefings he received on Iraq.May 12 was a big day in Australia. Governor-General Peter Hollingworth had just resigned, the trial of the Bali bombers was beginning, and it was the day before the federal budget.Labor’s Caucus met in Canberra under the clouds of a leadership challenge. And the shadow cabinet also met.Latham told federal parliament on Wednesday that Labor’s shadow cabinet “passed a lengthy resolution on the post-war Iraq situation, which included a commitment in relation to security operations in Iraq to return the ADF to Australia as soon as possible”.Latham’s office has declined to release the “lengthy resolution”.But this is what Labor’s foreign affairs spokesman, Kevin Rudd said that day:
“Over the weekend in the United States, Secretary of Defence [Donald] Rumsfeld made a statement that it is impossible to predict just how long the occupation of Iraq will be. This poses a fundamental question for John Howard . . . `just how long will Australia be an occupying power in Iraq?’.”The answer to the question ultimately is as soon as the Prime Minister gets the United Nations to convene an international conference which establishes an interim Iraqi administration. It is only at that point that Australia can exit from its responsibilities” [our italics].Flash forward six months to November and Paul Bremer.A nervous White House and Downing Street move to speed the transition to a sovereign Iraqi government.In Australia, Simon Crean’s leadership is reaching its terminal stages. On November 10, Rudd announces he is going to Baghdad.

“The key question for Iraq now [is] `Is there a reasonable timetable for a transfer of political authority from the interim government controlled by the Americans and [others] to an interim Iraqi administration?’ . ”

A day later Bremer is recalled to Washington and it emerges the US will now appoint an interim Iraqi government on July 1, 2004, a position finalised on November 15.

On November 14, Rudd issues a statement from Baghdad:

“The early establishment of an interim Iraqi government would . . . provide Australia with an appropriate exit strategy from its current formal responsibilities as an occupying power under the Fourth Geneva Convention. At present, we do not have such an exit strategy.”

Rudd writes to the Prime Minister advancing a set of “specific proposals” for “the period ahead”. That is, with the expectation that Australia will also be exercising its “appropriate exit strategy” after July 1.

These proposals include more training personnel to assist the Iraqi army and police force in the transition, and other non-military assistance.

One month passes and Mark Latham becomes Opposition Leader.

He has secret intelligence briefings on January 5 and February 11.

During March he discusses with Rudd and Labor’s defence spokesman, Senator Chris Evans, when Australia’s troops should leave Iraq.

It is not clear that “Christmas” is specifically mentioned.

Three months before the handover in Iraq, the Bush administration is in deep political trouble, and presidential elections are due in November.

Labor strategists, meanwhile, are planning the release of major policies and could do without the national security debate taking up space.

But the seeds of the Keelty crisis are sown with the Federal Police Commissioner’s interview on the Sunday program, and the opposition has an opportunity to challenge the Prime Minister on national security.

As the Keelty crisis subsides a week later, Latham is asked on Sydney’s Radio 2UE about Australia’s troops in Iraq. He says: “I am hoping that by the end of the year the Australian troops will be back here for the defence of Australia, having discharged their international responsibilities, and back on Australian soil for the good protection of our country.”

On Tuesday this week, he is asked about government claims that he has not sought briefings on the implications of pulling troops out of Iraq.

“I haven’t got exact dates on me but I’ve had discussions with officials from Foreign Affairs and Defence about the situation in Iraq and that’s a regular part of the work of our shadow ministry,” he says.

The Prime Minister tells parliament two hours later that the Department of Foreign Affairs and Trade has no record of having provided a “briefing on Iraq” to Latham.

Latham returns to the chamber with the dates of the meetings and says that at these meetings he “discussed Iraq”.

Howard in turn returns to the house and admits that in fact there have been two briefings, though he produces letters from officials saying they do not relate to “strategic policy relating to Iraq” or “the role of the ADF in Iraq”.

The Opposition Leader meets with some of his most senior colleagues who want to know exactly what happened at these briefings.

Latham is “absolutely clear” what was said about Iraq, a source says.

Latham tells parliament on Wednesday morning:

“[Myself and Defence official Ron Bonighton ] had lengthy discussions that dealt with a range of security and intelligence matters in Iraq and the failure to find weapons of mass destruction”.

So the difference between his account and the Prime Minister’s is that Latham claims he did discuss Iraq, particularly weapons of mass destruction, while the “officials’ ” version is that they did not discuss strategic policy or the role of the ADF
in Iraq.

In the house on Wednesday, Latham said:

“So, Prime Minister, if the question is, having gathered advice from Defence officials and Foreign Affairs officials in my case and in at least one of those meetings . . . a comprehensive briefing about the situation in Iraq having heard from my shadow minister for defence, having heard from my shadow minister for foreign affairs, having been through the Senate estimates process as the Labor Party, gathering all this information, if the Prime Minister wants an answer to the fundamental question, `Does Labor think its stance on Iraq is the right one in the Australian national interest?’, well, Prime Minister, absolutely: 100 per cent, 200 per cent, as confirmed in
those shadow ministry decisions and confirmed in all the information we have gathered”.

Now for whether the voters are 100 per cent behind him too.

April 1, 2004PM’s spin tried on wrong man
John Howard may have misused the public service, and the truth, just one time too many yesterday.Truth often exists at several levels. In the detail of the brawl about defence briefings and policy-making that has now engulfed parliament, the truth is that both sides of politics are sailing close to the wind in terms of what is true and what is within the bounds of the truth.But yesterday was ultimately about who was spinning the really Big Lie, what the lie was, what they were prepared to use to achieve it.The riveting personal nature of the contest was one of the most extraordinary scenes seen in the house for years.Here was a Prime Minister whose acquaintance with the truth is well known, trying to corner his opponent on the very issue.It was a huge political gamble and one you felt was based on too many experiences in which the Prime Minister has been able to spin a story without fear of contradiction from children bobbing around in the waters off northern Australia, or defence officials, or public servants.The difference yesterday was that Mark Latham was in a position to fight back, and he did, in devastating form, not only dealing with the accusations of policy flakiness sufficiently but turning the debate back to where it started: the wisdom of going to war in Iraq.The likelihood of the detail of the debate about what intelligence officials told Latham, or what the caucus and shadow cabinet voted on last year, permeating out into the electorate is very low.But the galvanising television grabs out of yesterday’s debate belonged to the Opposition Leader: “I give the government and I give the house this guarantee: I walked away from that briefing knowing and understanding the government’s policy in Iraq was a fiasco an absolute fiasco,” Latham said.”What is more, I concluded that the faster Australia could get out of Iraq, the better.”

April 1, 2004Labor serves up a baby bonus
Mark Latham yesterday grabbed the “work and family” agenda from the Howard government by announcing a $2.2 billion parenting payment which addresses the paid maternity leave issue but is funded at the expense of business.The Opposition Leader said Labor would introduce a means-tested “baby-care” payment worth $3000 from July 1 next year and $5380 in 2010 (equivalent to 14 weeks’ minimum wage ).Labor has clearly changed its strategy on spending announcements, moving to gazump a raft of expected government announcements before the budget on May 11 .The new scheme will be primarily funded by abolishing the coalition’s baby bonus and maternity allowance, which Labor says will save $1.7 billion between now and 2007-08, and reversing part of the MedicarePlus safety net.But Mr Latham signalled a raft of changes to business-related policies and institutions, and costed the savings from these changes.Treasurer Peter Costello said last night there was a $350 million error in costing the baby bonus’s abolition.Mr Latham said the Labor scheme would assist mothers after the birth of a child whether they were working or at home through fortnightly Centrelink payments that could be taken over 14 weeks or up to 12 months.Labor argues that because the payment will be equivalent to 14 weeks’ pay at the federal minimum wage after tax, it delivers on the party’s commitment to introduce 14 weeks’ paid maternity leave.There was a mixed reception for the proposal, with many maternity leave advocates disappointed at Labor’s failure to embed leave as a right.Federal Sex Discrimination commissioner Pru Goward welcomed the policy as a “good start”, but said it was not paid maternity leave, fell short of the federal minimum wage and was means tested on family income, meaning it was “effectively tied to the husband’s income”.”Let’s hope this proposal is the beginning of a policy bidding war, not the high point,” she said.The Australian Chamber of Commerce and Industry welcomed the government-funded nature of the policy but said it could not support it as it was being funded at the cost of business policies.ACTU president Sharan Burrow and other women union leaders hailed the policy as a “fabulous foundation stone” for more family-friendly workplaces.

March 31, 2004Labor plays indigenous trump card
Opposition Leader Mark Latham yesterday sought to trump the government in the difficult policy area of indigenous affairs by announcing that a Labor government would abolish the troubled main indigenous body, the Aboriginal and Torres Strait Islander
Commission, or Atsic.The move seals the fate of the body, which was established by Labor in the late 1980s to give some autonomy to indigenous communities. The Howard government is already expected to announce its demise in the near future. The move also clears the way for some progress in indigenous affairs.This had been paralysed by a breakdown of bipartisanship over Atsic, its use as a political “wedge” and the declining reputation of the commission’s board.Mr Latham and the opposition’s indigenous affairs spokesman, Kerry O’Brien, said both Atsic and the Aboriginal and Torres Strait Islander Services Agency would be abolished.But Mr Latham said Labor did not have a detailed plan in mind for how a new structure would work, leaving himself open to further criticisms of policy on the run after the Iraqi troops controversy.He and Senator O’Brien said it was important to develop this structure in consultation with indigenous people.Labor would replace Atsic with a directly elected national representative body to provide policy research, advise government and the private sector and monitor policy outcomes.Directly elected indigenous regional bodies would make decisions “with support from their communities, the nationally elected body and the national government” and have funding autonomy.But Labor is yet to say how the funding structure would work other than that responsibility for program development and delivery would be transferred to the regions “with support from a new national body that releases pooled funding from government”.With the coalition expected to abolish Atsic, there was a sense yesterday that Labor was determined to beat it to the punch.

March 31, 2004Troop debate a show of base politics
The parliamentary debate yesterday on Iraq had the same surreal quality as the poll published in broadsheet newspapers yesterday purporting to show the public wasn’t backing Mark Latham on Iraq.In one of the great straw man exercises of recent times, the poll by ACNielsen asked whether people agreed with the statement that “Australian troops should stay until the job is done” or the statement that troops “should be brought home immediately”.The result might have been interesting if these are the two choices now being offered by the two sides of politics. But they are not.Similarly, yesterday’s parliamentary proceedings reflected how the debate sparked by Latham’s musings last week about getting the troops home by Christmas has moved on to different agendas, and the poor old troops are hardly the issue anymore.For the government’s part it’s about portraying Latham as a policy flake: a unilateralist who doesn’t know what he’s doing, thus raising questions about his suitability for the prime ministership.Now, while Labor can argue that at the broadest level it never wanted troops in Iraq in the first place, and had always said it wanted them out as soon as possible, it’s also true that Latham has hardly “nailed down” a clear message about what he is talking about.Take, for example, the question of whether he’s talking purely about troops inside Iraq or not, on which he and his office gave conflicting answers yesterday.But that does not change the efficacy of the charge behind the position he put to the parliament yesterday about the government.Latham quoted Foreign Minister Alexander Downer in September 2003 saying “we made it clear to the Americans at the outset, early this year before the war began, that whilst we would make a contribution to the war . . . we weren’t intending to stay on there for any period of time”.Latham continued: “Then the foreign minister said the Americans `understood that’. So much for damaging the alliance by having a disagreement with the United States!”He argued that what had changed Prime Minister John Howard’s mind was base politics.”Did the Prime Minister have in mind a withdrawal from Iraq in months not years later this year and perhaps a welcome home parade?” he asked. “Perhaps even in the middle of a federal election campaign?”It is a bit rich for Latham to get on his high horse now about base politics since this is clearly where his reading of this whole issue started last week.But if he has made some terrible mistake on this issue, it is the one being exposed on his almost arrogant neglect of detail, not on the policy.Howard’s arguments on the actual issue of the troops yesterday were not compelling. They should be beatable if Labor holds its nerve and cleans up its act.

March 29, 2004
The government is considering bringing a series of spending announcements worth almost $5 billion forward from the May 11 federal budget as it tries to regain control of the political agenda.But the Labor Party yesterday released leaked “cabinet-in-confidence” documents outlining government budget plans to overhaul and cut disability, parenting and carers’ pensions.The leaked letter from Family Services Minister Kay Patterson to Prime Minister John Howard late last year says compliance measures will not save enough money in her portfolio, calling instead for “structural reform of payment arrangements for the 2.75 million working age Australians that receive income support payments”.She also says that excluding from the pension people assessed as able to work with the support of specialist disability services could save $28.5 million over four years without the need for legislative change.Sources confirmed yesterday that a package of early childhood measures would be announced before the budget, with a $1.2 billion aged care statement and research funding worth more than $3 billion being considered for early release as well.The early childhood package is expected to include measures aimed at improving parenting skills and “improving family connections to their communities”, as well as extra childcare places to further address the existing 20,000-place shortfall.Funding for the package, which is also confirmed in the cabinet-in-confidence document about pensions, would come from redirected funds from the “stronger families and communities strategy”.The government may also bring forward release of measures to appease the aged care sector. These include funding to address dissatisfaction with the sector’s indexation regime, as well as more money to upgrade facilities.The government’s plans for early release of budget spending measures come after announcements including billions of dollars in outlays on education, security and health during the past two months.The leaked letter of Senator Patterson’s argues: “Structural change is required to stem the growth in my portfolio’s programs. I consider this reform can only be productively addressed through a carefully managed process that will be the subject of my joint submission with the [Employment] Minister on a working age payment.”Releasing the leaked letter, opposition family and community services spokesman Wayne Swan said Senator Patterson’s comments confirmed the government was considering cutting “the level of future payments to hundreds of thousands of disability support pensioners, carers and sole parents”.Mr Howard said there was no advanced proposal on a working age payment.”I can assure [the public] that in the process of making decisions in areas generally covered by that, we’re not going to cut any pensions or benefits,” he told the Nine Network.

Government sources said later that while a working age payment was not under consideration in the form set out in the letter, payments might be structured into a more “modular” formula involving a base payment with “add ons” such as child care for sole parents and training.

Mr Swan argued that such reforms had to ultimately involve reduced payments if Senator Patterson was arguing this was the only way to achieve portfolio savings.

March 29, 2004Live trade under debate
Federal cabinet is this week expected to consider the future of Australia’s live animal trade with major ramifications for key electorates as the government faces a renewed bout of bad publicity over the $1 billion a year business.Cabinet is due to consider recommendations of the Keniry report, commissioned last year after the Cormo Express debacle in which 57,000 Australian sheep were left stranded in the Gulf after Saudi Arabia refused them entry, citing an outbreak of scabby mouth disease .The government was eventually forced to buy the sheep and pay Eritrea for taking them amid public outrage over the animals’ welfare.The trade was expected to face renewed scrutiny last night with the airing of a report on animal welfare on the Nine Network’s 60 Minutes program.The Keniry report recommended the industry comply with a national animal welfare code and pay for a Middle East quarantine facility to hold rejected animals and that independent vets travel on longer voyages.Perhaps its most contentious recommendations were that two live export ports with high mortality rates, Portland in Victoria and Adelaide, be closed during the Middle East summer to prevent animal deaths from heat stress.

March 29, 2004Energy policy dilemma
Laura Tingle and Ian Howarth with AAP
Federal cabinet’s energy committee is expected to consider the government’s climate change and renewable energy strategy, with a new CSIRO study showing greenhouse gases have grown at an alarming rate in the past two years due to the burning of fossil fuels.Government sources said yesterday that it was having considerable difficulty developing its strategy which involves reviewing its mandatory renewable energy target in the face of likely opposition to many of its proposals in the Senate.While the petroleum industry is calling for new exploration incentives, the government has been placed under increased pressure by CSIRO figures showing 18.7 billion tonnes of carbon dioxide were released into the atmosphere in 2002 and another 17.1 billion tonnes last year.The average during the past 10 years has been 13.3 billion tonnes. The increase has come despite efforts to cut greenhouse gas emissions.The chief research scientist of the CSIRO’s atmospheric division, Paul Fraser, said the growth in greenhouse emissions was disturbing “because carbon dioxide is the main driver of climate change”.”I am a little bit surprised that the level is so high without input from forest wildfires,” he said.He said the CSIRO’s results supported similar findings made by the National Oceanic and Atmospheric Administration in the United States which showed high carbon dioxide levels in Hawaii.With the government having decided not to ratify the Kyoto treaty on reducing greenhouse gas emissions, green groups are calling for new support for renewable, non-fossil energy forms.But the petroleum industry has warned the federal government that the slow approach to national reform of the energy industry and a “blinkered” definition of the national interest could be costing Australia billions of dollars in taxation revenue.The warning is part of the industry’s push for the government to include new tax incentives for exploration when it announces its long-awaited national energy policy, probably on budget night on May 11.When Energy Minister Ian Macfarlane addresses the annual Australian Petroleum Production and Exploration Association conference in Canberra today , he will be expected to discuss the possibility of a tax scheme that would encourage investment in petroleum exploration by small companies which typically have a hard time attracting capital.

March 29, 2004Howard: Some troops may be home early
A prime ministerial admission yesterday that some of Australia’s troops in Iraq could come home soon has further muddied the debate about troop deployments as the federal government seeks to regain control on national security with new anti-terrorism
laws.After a week of attacking Labor leader Mark Latham for arguing Australia’s troops in Iraq should return once sovereignty was returned to the Iraqi people, Prime Minister John Howard confirmed that about one-third of troops committed to Iraq-related work could be home by May or June.Mr Howard told the Nine Network’s Sunday program that Australian soldiers working as air traffic controllers could be home once the training of, and transfer to, local staff was completed.But he again argued that this was “conditional on the thing that I’ve said all along”.”You don’t go until you’ve done the job,” the Prime Minister said. “The mistake that Mr Latham’s made is to set an arbitrary time for the withdrawal of all of the forces, irrespective of whether they’ve done the job.”His comments came as he announced Asio would be funded to recruit another 150 agents and that he had told Asio director-general Dennis Richardson that “whatever Asio believes it needs, it can have”.”The strength of the intelligence services is really the greatest capacity you have in fighting terrorism,” Mr Howard said.He also foreshadowed that Attorney-General Philip Ruddock would seek party room endorsement tomorrow for a range of beefed-up anti-terrorism laws.A key proposal is to increase the time a person suspected of committing a terrorist offence can be held by police.This differs from the regime imposed last year, amid much controversy, for detention and interrogation powers under the Asio Act relating to people that are not suspected of having committed a crime but of being involved in Asio’s investigations.Under the proposal, a suspect could be detained for up to 24 hours under the Crimes Act, instead of the present four hours. After 24 hours, a court order would be needed for an extension.The proposal flows from recommendations put forward recently by the NSW and Victorian police commissioners.There would also be new laws and tougher penalties for consorting with a proven terrorist organisation, and the introduction of an offence of training with an organisation such as the Taliban into the foreign incursions legislation.It would also become unlawful for “people to make money out of selling their books and their memoirs on training with a terrorist organisations”, Mr Howard said.
March 27, 2004Labor on back foot over troops
Labor leader Mark Latham played down suggestions on Friday of divisions within his party over his call to bring Australia’s troops in Iraq home by Christmas.Mr Latham’s push earlier this week to pressure the government on a withdrawal from Iraq caused rumblings within the Labor caucus because the matter had not been discussed by the shadow cabinet.However, Labor sources said the issue had been discussed for a number of weeks between Mr Latham, foreign affairs spokesman Kevin Rudd and defence spokesman Chris Evans.The government maximised the apparent conflict between statements by Mr Rudd last year, urging more involvement in Iraq though not necessarily military involvement and Mr Latham’s stand as it sought to discredit the Opposition Leader’s decision-making style.Mr Latham argued that Mr Rudd had said in November last year that the establishment of an interim government in Iraq would allow an early exit strategy, and that he was merely echoing the same policy.He told the caucus on Tuesday that Labor needed to be defining a return time for troops and that should be when sovereignty was returned to the Iraqis.That “could” mean troops being home by Christmas to “defend Australia against terror”, a caucus spokeswoman quoted him as saying.The agreed official Labor position is to take advice about how best to secure the diplomatic mission in Iraq after the sovereignty handover in June.Foreign Minister Alexander Downer said Mr Latham had risked Australian lives by announcing his plans, while Mr Howard said he was concerned the divisions within politics on the issue could affect troop morale.Mr Downer also described US ambassador Tom Schieffer’s recent comments that Labor’s plans for troop withdrawal would have dire consequences for Australia’s safety from terrorism as “appropriate”.

March 27, 2004Who wins this dangerous war?
The Opposition Leader has embarked on a risky new political strategy over Iraq. There could be casualties.When Mark Latham attacked George Bush 13 months ago as “the most incompetent and dangerous president in living memory” and the Howard government as a “conga line of suckholes” he was still viewed by many in the electorate as Labor’s mad, bad boy.The comments helped his rise to the top by giving him profile, but contributed to the picture many voters had of him as being out of control and erratic.By the time he moved this week to increase the heat on John Howard over national security by declaring Australia’s troops in Iraq should return by Christmas, the judgement of voters was already in a position of violent flux.They’ve been lapping up “straight-talking Mark without the crudity” for the past four months as if the Messiah himself had landed on the Australian political scene.If Latham, buoyed by renewed voter concerns post-Madrid about Australia’s involvement in the war in Iraq, takes the punters with him now, it will mark the completion of his transformation into a credible alternative prime minister and lock him into the Lodge.The domestic political stakes of his decision this week are that high.Conversely, the implications for the United States alliance are poor and worsening: the descent of the Iraq debate into a domestic political debacle in America, and the repeated examples of how little the ANZUS alliance means to the Bush administration starkly demonstrated by the free trade agreement have given Latham some extraordinary lattitude for manoeuvre.It was striking that neither side of politics leapt on the intervention of US ambassador Tom Schieffer in the debate this week.Labor for the obvious reasons, but the government well, maybe because the ambassador’s repeated klutzy entrees into the Australian domestic debate only sealed the sense of what an encumbrance the Howard-Bush alliance has become for the coalition.That is not to say the issue at the heart of Latham’s push this week is not complex, or its outcome clear.Both sides of politics are now engaged in dangerously over-simplifying the policy issues at stake for Australia in Iraq.More of that later.More compelling in Canberra this week, though, has been the political play.On the one side was Latham deciding, without consultation with most of his front bench, to up the ante on Iraq; on the other, a government sensing an opportunity to discredit the decision-making processes of the Opposition Leader in the eyes of an increasingly adoring electorate.

The first that most of shadow cabinet knew of Latham’s move was when he addressed the Labor caucus on Tuesday morning.

By then he had already been on Sydney radio to declare it.

There had been no inkling of his plans at Monday’s shadow cabinet meeting, though the idea of making the move had been under discussion between Latham, foreign affairs spokesman Kevin Rudd and defence spokesman Chris Evans for two or three weeks.

The level of disquiet about the unilateralist nature of the decision is exceptionally restrained. There is some concern about the risks involved but it is also well short of alarm.

Former diplomat Kevin Rudd has expressed his full support for Latham’s position, despite his past apparent support for a continuing, and possibly larger Australian presence in Iraq.

But is any of that going to worry Latham?


The Opposition Leader’s whole strategy this week was to throw his rock then stand there without blinking while the government threw everything it could at him, from statesmanlike appeals for a change of mind, to warnings that his position could both play to terrorists and endanger the lives of Australian troops, and to the criticisms of a couple of ambassadors.

And who was left standing at the end of the week?

It was Latham who provided the coda to the parliamentary week with a powerful speech on national security, claiming the issue as Labor’s own.

“This is a government in disarray over national security,” Latham told the House of Representatives on Thursday afternoon.

“A government that has compromised the independence and role of the Australian Federal Police; a government that is always putting the Liberal Party’s political interests ahead of our national security interests; a government that is defying the obvious that, while Australia was a target at the time of September 11, the war in Iraq has made things worse; a government that sent young Australians to war in Iraq for a purpose that was not true.

“It is a government that has diverted effort and resources away from targeting the terrorists and put them into Iraq, and now it is a government that does not know how to get our troops out of Iraq.”

The strength of Latham’s position rests not in whether his proposal for an Australian withdrawal by Christmas makes any sense.

It rests with the very points he raises: the government’s strategy, its raison d’etre in Iraq, is now confused and compromised, leaving it very little room to counterattack.

Foreign Minister Alexander Downer told parliament on Tuesday the Australian detachment in Iraq includes a security detachment of 85 soldiers for Australian diplomats and officials, and a team of 53 trainers for the Iraqi army.

There are C130 transport aircrews outside Iraq, air traffic controllers at Baghdad Airport and “about 50 personnel assisting with coalition headquarters operations, again inside and outside of Iraq”.

HMAS Melbourne is in the Gulf.

When the huge statue of Saddam Hussein was toppled in central Baghdad in April last year, John Howard emerged not, he said, to claim victory, but to say how moved he had been to watch jubilant Iraqis celebrating the toppling of a brutal dictator.

He acknowledged Australia would have legal obligations as an occupying power.

“We won’t be making a significant peacekeeping contribution,” he said when asked whether the Australian military would have any role in the transitional arrangements in Iraq.

“I would think we may retain during that transitional phase I’m not talking about a period of 12 months or two years, but the immediate period of the transitional phase we could retain some niche contribution of military forces.”

So how to define Australia’s current involvement?

We are certainly not there as peacekeepers so will certainly not be missed by the Iraqi masses.

We certainly do have “niche capabilities”, but there is no time line on when those “niche capabilities” are to end.

And having troops involved in Iraqi operations runs counter to the implicit sales pitch Howard gave Australians at the time war commenced. Our involvement would be short and specific.

Australia would, to use a phrase now being hurled at Latham, be able to “cut and run”.

There is another complication to the government position.

Australia was left off the list of countries legally defined as occupying powers by the United Nations. Just why that is so has never been explained.

So while we may have moral obligations in Iraq, and contribute funds to rebuilding projects, we technically don’t have to stay there.

There is also the embarrassing contrast of the commitment in Afghanistan, where we have just one member of the defence force, despite the fact that the country remains the flashpoint for the war on terror.

The risk for Latham is that he ends up locked in as prime minister more than he might like.

The shorthand of what he is supposed to have said is that, if he wins the federal election, Australian troops in Iraq will be home by Christmas.

What he told the caucus on Tuesday was that Labor needed to be defining a return time for the troops and that should be when sovereignty was returned to the Iraqis.

That could mean troops being home by Christmas to “defend Australia against terror”, a caucus spokeswoman quoted him as saying.

“Labor’s position has always been to get the troops back as soon as possible once we’ve discharged international responsibilities after the war in Iraq,” he told the Nine Network on Thursday morning.

“And you’ve got to make a judgement at some point where have those responsibilities been discharged. The fact that Iraq is moving to a handover to a new sovereign government that is ready to govern is obviously a logical point and a judgement to make. So, our intentions have always been clear and we’ve got a reasonable proposal there to have the troops home by Christmas.”

The agreed official Labor position is to take advice about how best to secure the diplomatic mission in Iraq post-sovereignty handover in June.

That handover is not even certain yet.

So he does have wriggle room.

He also has the capacity to bring the majority of the 850 people nominated by Downer all but the 85 diplomat-protecting contingent home.

In the meantime, there is the lingering issue of a Latham government and the US alliance.

In Washington, the Bush administration’s credibility has been spiralling downwards in the face of testimony from former counterterrorism head Richard Clarke and the 9/11 hearings.

There were reports late in the week that the Prime Minister was planning to go to Washington in May to sign the free trade agreement, and get one last blast out of his relationship with George Bush before the, possibly early, federal election.

Equally there were reports out of Washington on Friday that the trip had been cancelled at Howard’s request that morning.

The official response of his office to both sets of reports was only that such a trip was a “possibility”.

In the current climate, you’d have to wonder whether there would be any mileage for the Prime Minister at all in jetting off to the United States.

March 26, 2004Trade deal’s fate may fall to Labor
Questions have emerged over whether the Australia-US free-trade agreement will be passed by federal parliament before Australians go to the polls.The issue emerges amid speculation that the Prime Minister, John Howard, may visit Washington in May to sign the FTA and hold talks on terrorism.The two parliamentary committees assigned to examine the treaty before it is passed the Joint Standing Committee on Treaties and the Senate Select Committee on the Free-Trade Agreement between Australia and the US are not due to report until June 24.This is the last day of sitting of the winter session of parliament, which begins with the budget on May 11.This means the first day in which parliament will be able to debate the matter is August 3.Current expectations in Canberra are that the government could hold an election as early as August 7, but no later than late October.On the best of scenarios, that leaves only a couple of weeks in early August for the House to return for the spring session, when it will also be under pressure to pass the budget and its expected tax cuts.With the Department of Foreign Affairs and Trade making the likely timeframe for legislative passage of the FTA explicit, lobbyists are advising clients who wish to see the agreement passed to shift their strategies to the Labor Party as it may be the party which would actually have to oversee the passage of the legislation as the government under Mark Latham.Labor’s support for the deal remains unclear, with its official position being that it is awaiting the outcomes of the Senate inquiry, after softening the earlier hardline stance against the deal by the Opposition Leader, Mr Latham.If Labor decides to support the deal, the FTA could rapidly pass through parliament in the first weeks of the spring session, depending on the timing for the election.But it is now equally likely that the FTA, despite Mr Howard’s visit to Washington, will be within the purview of Labor to implement.

March 26, 2004Family compensation under fire
The Howard government’s promise to deliver $2.4 billion in benefits to families to compensate for the GST is under fire from the opposition, which claims official figures show the arrangements fell $1 billion short.The claims are about to unleash a war of words about whether families are better off under the Howard administration as a result of its tax and welfare reforms.The government is preparing to fight back with a series of “cameos” showing families are better off since its election.But opposition family and community services spokesman Wayne Swan has produced figures from official departmental sources showing family benefits and entitlements increased by only $1.375 billion in 2000-01 the year after the tax changes rather than the $2.4 billion promised at the time of the reforms.Mr Swan claimed that after adjusting for the erosion of benefits by inflation, the real increase was reduced to just $783 million.”Across 2.2 million families, this is an average of just $6.84 a week,” he said.The contention in the estimates arises because the post-tax-reform entitlements system was split between the welfare and taxation systems.The amount of money spent through the tax system is unclear but Mr Swan claims answers to estimates committee questions, along with tax statistics, reveals the shortfall.Family Services Minister Kay Patterson argues Mr Swan’s numbers are flawed because they are calculated on a cash, rather than an accruals, basis. She has produced a range of “scenarios” incorporating wages and income support that suggest, for example, that a single-income family with two children earning $23,281 a year is $87.62 a week better off since 1996.Mr Swan argues in turn that the cameos are selective, and particularly fail to take into account the “significantly greater out-of-pocket costs for their children’s health and education, and [that] housing affordability has declined by more than 40 per cent since 1997″.”The government’s cameos are also at odds with the true picture told by ABS [Australian Bureau of Statistics] income distribution surveys,” he said.”The latest survey found almost 40 per cent of couple families with children were in household income groups which had disposable income gains of less than $26 a week between 1995 and 2001.”Mr Swan said the cameos failed to take into account tighter means-testing for mothers entering or leaving the workforce
March 26, 2004A living wage beats a poor excuse
Canberra observed
Surely the state, in stipulating for fair and reasonable remuneration for the employees, means that the wages shall be sufficient to provide [proper food and water and such shelter and rest as they need], and clothing, and a condition of frugal comfort estimated by current human standards.Harvester judgement 1907Henry Bournes Higgins , the man who the new right of the 1980s so loved to hate, brought down his historic decision on what constituted a “fair and reasonable” living wage in the Harvester case in the Commonwealth Court of Conciliation and Arbitration 97 years ago.In a week when the focus of politics in Canberra has moved back to national security and Iraq, you might wonder about Higgins’s particular relevance. His relevance is as a ghostly representative of the issues that dominate in Canberra and the electorate but, given their perpetual nature, don’t necessarily make the headlines.Be sure, however, that after almost two decades in which his most fervent detractors have dominated the industrial relations debate and, more recently, government policy, the pendulum is once again swinging back Higgins’s way.Two weeks ago, the Senate Community Affairs Committee tabled a report on poverty and financial hardship.In the most extraordinary of coincidences, Prime Minister John Howard brought forward an announcement on education funding for the next four years to the same day, which tended to knock the poverty inquiry’s findings to the media sidelines.And, as is often the case in these circumstances, the reaction to the report dominated the media coverage at the cost of what the report actually said.The Prime Minister, for example, disputed its central finding that there are now 3.5 million Australians living in poverty by arguing that, while indeed the rich were growing richer, “the poor have not got poorer”.”There is little doubt the low levels of unemployment that Australians enjoy mean more and more people have work,” he said.”That doesn’t mean there aren’t people who are in poverty who are missing out.”Of course there are. But it’s very important to get this income thing in perspective.”The government also dismissed the Senate report along with “this income thing” as a Labor “wish list” because the committee was dominated by the opposition.But to dismiss the report on those grounds completely misses the point.Indeed, the report should be compulsory reading for all those people confused about what a Latham government might mean for the direction of public policy because it was a Labor fix.

The Liberal committee members argued that the majority report of the committee was presented to them as a fait accompli by the Labor senators. The majority report was also endorsed by independent senator Meg Lees.

Obviously, she supports most of the recommendations, but also says she has no doubt that it would represent much of the Labor Party’s social and industrial relations blueprint in office.

And that brings us back to H.B. Higgins. The most important point of the Senate report is its stress on the working poor.

“This report has challenged traditional assumptions that joblessness is often a sufficient reason for the presence of poverty,” it says.

“The committee has heard that over 1 million Australians are living in poverty despite living in a household where one or more adults are in employment.

“The rise of the `working poor’, as this group has come to be known, demonstrates that they are the new face of poverty in post-industrial Australia.

“The prevalence of working poor households in poverty is due simply to low-wage employment. Driving this change has been a casualisation of the workforce in the last two decades and a more recent weakening of the industrial relations system.”

The committee found that between 1988 and 2002 the total employment of casual workers in Australia increased by 87.4 per cent, and that by August 2002 casual workers comprised almost 28 per cent of the workforce, a rise of seven percentage points in just over a decade.

The report argues that this development “entails a radical break with Australian tradition”.

“The main bulwark against poverty since the Harvester judgement has been secure employment opportunities and just or living wages. This report has now found that over 1 million Australians are finding that this certainty has been taken away from them through no fault of their own.

“The committee found that many members of the low-wage working poor are placed in similar situations. They are often employed casually or part-time in low-skill and service industries, resulting in little bargaining power with their employers.

“Most crucially, their low wages are unable to be increased due to the inaccessibility of full-time work or because of unpaid overtime.

“Moreover, because of the precariousness and uncertainty of their employment, career progression and training is often unavailable.

“The committee has also found that the rise in workforce casualisation is the result of attacks on Australia’s traditional industrial relations system, which emphasised full employment opportunities and provided protection against attempts to reduce
workers’ job security.

“Moreover, the working poor are increasingly finding a poverty of access to community services due to moves by the current federal government to `user pays’ models.

“A salient example of this has been the impacts on families arising from Medicare bulk-billing. Many working-poor families now not only struggle to afford visits to their family doctor, but are also more likely to compound their health problems by avoiding visiting the doctor due to the cost.

“Finally, the committee is extremely concerned about the intergenerational implications of this move away from what has often been termed the Australian way of ensuring the welfare and prosperity of all our people.

“The report has detailed the clear diminution of children’s opportunities and the limitations placed on upward mobility of disadvantaged families. However, if the processes that have given rise to a new class of poverty-stricken working people are allowed to continue, then Australia may never regain its egalitarian tradition.”

The report made a mammoth 95 recommendations. A lot of them concern industrial relations, but they cover the gamut of housing, income support, schooling and early childhood education.

And recommendation six, in the best Harvester tradition, is that “the Australian Industrial Relations Commission establish a new minimum wage benchmark based on a wage level that enables a single full-time worker to achieve an adequate standard of living relative to contemporary community standards”.

It might be hard to get poverty on the public agenda. But the Senate poverty report suggests the ascendancy of Labor and Mark Latham means we are once again going to have a debate about adequate standards of living in Australia and there will have to be a reassessment of where the deregulatory swing in labour markets of the last couple of decades has left us.

As part of that, the business community will have to consider whether it needs to accept a new covenant of government service levels and income support if it wishes to hold on to the industrial relations changes for which it has fought so hard since the 1980s. A new, “New Protection” deal perhaps?

March 25, 2004Latham toughens troops pledge
Laura Tingle, Chief political correspondent, with AAP
Opposition Leader Mark Latham has toughened his stance on Iraq despite government criticisms of his call for Australian troops to return home by Christmas.Mr Latham said last night that under Labor the troops would leave as early as mid-year even if the new Iraqi government asked them to stay.He said he believed Australia’s obligations would end with the June 30 handover of power to the new government, and that defending Australia was Labor’s top priority.Asked if under Labor Australian troops would remain if the Iraqi government made a request, Mr Latham said: “We’ve got bigger priorities for the defence of Australia [than] having them have international obligations in that country.”
Mr Latham said it was up to Australia to decide where its troops were positioned.”Labor’s committed to the fact that we’ve met our international responsibilities at that point [June 30],” he told reporters.Mr Latham’s call on Tuesday for Australia’s troops to come home has produced one of the first serious divisions between the coalition and Labor.The Labor leader is capitalising on post-Madrid bombing sentiment about the war in Iraq and pressuring the government over its prospective policy in the war-torn country.The government said yesterday that Mr Latham’s Christmas deadline would put officials at risk.It sought to portray Mr Latham’s decisions as ill-advised policy on the run, offering him a briefing from Foreign Affairs officials on the situation in Iraq which Foreign Minister Alexander Downer argued was aimed at changing Mr Latham’s mind.Ross Cameron, parliamentary secretary to the Treasurer, said Osama bin Laden would be celebrating Mr Latham’s pledge.Under Labor questioning in parliament, Prime Minister John Howard was unable to say when Australia’s troops would come home but would not repeat an answer he had given to a question in May last year of whether the troop commitment would be for months
or years. “Well I certainly don’t see it as years,” he said at the time.Yesterday Mr Howard told parliament that “Australian forces will remain in Iraq for as long as necessary to complete their task of helping the Iraqi people to build a better and brighter future”.Last night he described as disappointing Mr Latham’s comment that troops would be pulled out even if Iraq asked for them to stay.”We are certainly going to be required to remain there after the handover and it’s just too early to be setting these arbitrary deadlines,” he said.

March 25, 2004Howard slams withdrawal talk
The Howard government has stepped up its criticism of Labor leader Mark Latham’s call for Australian troops to return from Iraq by Christmas, saying it would put officials at risk and send the wrong message to terrorists and allies.Mr Latham’s call on Tuesday for Australia’s troops to come home once sovereignty had been returned to the Iraqi people in June has produced one of the first serious divisions between the coalition and Labor.The Labor leader is capitalising on post-Madrid bombing sentiment about the war in Iraq and pressuring the government over its prospective policy in the war-torn country.In turn, the government yesterday sought to portray Mr Latham’s decisions as ill-advised policy on the run, offering him a briefing from Foreign Affairs officials on the situation in Iraq which Foreign Minister Alexander Downer argued was aimed at changing Mr Latham’s mind.Ross Cameron, Parliamentary Secretary to the Treasurer, said Osama bin Laden would be celebrating Mr Latham’s pledge.Under Labor questioning in parliament, Prime Minister John Howard was unable to say when Australia’s troops would come home but would not repeat an answer he had given to a question in May last year of whether the troop commitment would be for months
or years. “Well, I certainly don’t see it as years,” he said at the time.Yesterday Mr Howard told the House that “Australian forces will remain in Iraq for as long as necessary to complete their task of helping the Iraqi people to build a better and brighter future”.But he emphasised the non-combatant nature of their work “for example, training of the new Iraqi army and the new Iraqi police force and also making Baghdad International Airport operational.”You can be the most passionate opponent in the world of our involvement in Iraq and still acknowledge we will be required to be in Iraq beyond June 30.”OK, oppose what we did in Iraq, but if you are serious about the rebuilding process, do not set an arbitrary deadline for withdrawal.”Not only is that unhelpful to the people of Iraq but it does send a very bad signal to the terrorists in Iraq and it sends a very bad signal to our allies.”Mr Howard said whatever people might think of the US alliance, “it is important at this present stage in world events and world history that we work as closely as possible in partnership with the United States”.


March 24, 2004Bring troops home, says Latham
The return of Australia’s troops from Iraq became an election issue yesterday when Opposition Leader Mark Latham urged the government to bring them home by Christmas.The government responded by rejecting any calls for “artificial deadlines on these deployments”, arguing most Australian soldiers in Iraq were engaged in protecting Australian diplomats and officials.Giving Mr Latham’s push political potency was the release of a Newspoll that showed two in three voters believe Australia’s involvement in the Iraq war has increased the chances of a terrorist attack.The Newspoll also showed Mr Latham gaining ground on Prime Minister John Howard. The Labor leader trails Mr Howard by just one point as better prime minister, while the ALP leads the coalition 46 per cent to 41 per cent on the primary vote.Mr Howard told the coalition party room he expected the government to stay where it was behind in the polls for some time.However, he argued that it had been in a far worse position three years ago and reassured his backbench that there would be other events, such as the budget, before the election to give the government a lift.He did not detect any generic hostility to the government, he said.But Mr Latham argued it was time to establish a timetable for Australian troops to come home, and that this should be when there was a handover to a sovereign power in Iraq.This is due to happen in June.”I am hoping that by the end of the year the Australian troops will be back here for the defence of Australia, having discharged their international responsibilities, and back on Australian soil for the good protection of our country,” he told Radio 2UE.But Foreign Minister Alexander Downer told parliament that he “would like the Leader of the Opposition to reconsider that position and I would hope that he would find it possible to embrace a bipartisan position on Australian troops in Iraq and to support the government’s view that we do not want artificial deadlines associated with these deployments, particularly bearing in mind that quite a number of these troops are protecting our officials there, and obviously we have no intention of with
drawing our officials”.The opposition also pursued the government yesterday over its handling of the Keelty affair, exploiting Defence Minister Robert Hill’s clarification of comments that had suggested there were no weapons of mass destruction in Iraq.Mr Latham quizzed Mr Howard over whether he had been aware Australian Federal Police Commissioner Mick Keelty was considering resigning last week.The Prime Minister declined to answer the question but countered by questioning Mr Latham’s concern for Mr Keelty, pointing out that Labor senators John Faulkner and Robert Ray had criticised Mr Keelty in parliament over the children overboard affair.

March 23, 2004Latham takes the fight to Howard on security
Opposition Leader Mark Latham moved to put national security firmly on the election agenda yesterday with an assault on Prime Minister John Howard over his pressuring the country’s top police officer to fall into line with the government over the recent Madrid bombings.Mr Howard made it clear for the first time that the government had drafted a statement issued by Australian Federal Police commissioner Mick Keelty last week after he appeared to be at odds with senior ministers over the terrorist attack.The Prime Minister’s comments came as the opposition switched its political focus from domestic issues to national security. It is potentially an important strategic shift because it indicates Labor believes the government no longer dominates security issues in the wake of the Keelty affair.In his first parliamentary censure of Mr Howard since becoming leader, Mr Latham accused the government of compromising “the right of the Australian people to know the truth during these troubled times and to know about the threat to Australia and the foreign policy failings of the Howard government”.”What happened to Mick Keelty last week was a disgrace, an absolute national disgrace that compromised the role and independence of Australia’s chief law enforcement officer,” Mr Latham said.In a fiery opening to a new fortnight of federal parliament, Mr Howard also conceded that Australia could face an incident similar to the Madrid bombings because it had long been a recognised target of al-Qaeda, but insisted that the country’s threat
assessment had not changed as a result of involvement in Iraq.The parliament confrontation came as Mr Keelty warned of an escalation of emerging crimes, such as identity theft, and as security authorities embarked on the biggest test of Australia’s terrorism-response capability.In the face of persistent and determined questioning, Mr Howard confirmed there had been “discussions” about the Keelty statement that Mr Keelty had “issued”, “stood by” and “subsequently fully supported”.At no time did he directly deny newspaper reports that ministerial offices, including his own, had been involved in drafting the statement.The statement came after a number of government ministers had come out and attacked Mr Keelty’s remarks, which the statement subsequently said the commissioner believed had been taken out of context.But the Prime Minister maintained there had been nothing improper in the government’s dealings with Mr Keelty last week after the commissioner suggested in a television interview that the involvement of Spain and other allies in the war in Iraq made them greater terrorist targets. He also refused to reveal the contents of a telephone conversation made by his chief of staff, Arthur Sinodinos, to Mr Keelty immediately after he had made his comments in the interview, or what involvement he, his office or department had in the drafting of the subsequent “clarifying” statement.Mr Latham repeatedly asked Mr Howard what instructions Mr Sinodinos had given Mr Keelty on the Prime Minister’s behalf and what involvement the Prime Minister, his office and department had in drafting the Keelty clarifying statement.In a long pre-prepared answer, the Prime Minister said communications with the commissioner, “particularly at a time of greater focus on security issues”, were of necessity “confidential” but said there had been nothing improper in the call to Mr
Keelty by Mr Sinodinos.In censuring Mr Howard, Mr Latham charged that the Prime Minister had been playing politics with national security.”This is a desperate government led by a desperate Prime Minister who will say and do anything to get himself out of trouble, even muzzling and trying to humiliate the head of the Australian Federal Police.”He was forced to withdraw after he called Foreign Minister Alexander Downer a “rotten, lousy disgrace” for suggesting Australian Federal Police Commissioner Mick Keelty was peddling al-Qaeda propaganda.

But he was not forced to withdraw a suggestion that Mr Howard had been attempting to “avoid the truth”.

Addressing a national security conference in Sydney yesterday, Mr Keelty backed recent calls to make it a national priority to develop protocols for combating identity theft in the wake of a terrorist strike or natural disaster.

He also warned that terrorism would continue to dominate the regional agenda and militant groups would continue to evolve and would adopt new methodologies.

“The war on terrorism is a marathon, not a sprint,” he said.

March 23, 2004Howard’s opponent won’t blink
Prime-ministerial censures have become too common a feature of parliamentary theatre in recent years. But what a difference it made when Mark Latham moved his first censure of the Prime Minister yesterday.Why? Because the issues were national security and political honesty and both have become the most definite of negatives for John Howard.You needed no better confirmation of this than the fact that in his counter-attack Howard leapt on Latham’s one moment of excessive verbal enthusiasm when he called Alexander Downer a “rotten, lousy disgrace” for suggesting Australian Federal Police Commissioner Mick Keelty was peddling al-Qaeda propaganda.But it did him little good. Howard is now confronted by an Opposition Leader who doesn’t blink and isn’t afraid to chase him into areas that are supposed to be the government’s own.The ham-fisted handling of the Keelty affair by the Prime Minister and senior ministers has given Latham a golden opportunity, and exposed a government in political panic.Yesterday’s confrontation was riveting because it was as much about their claims to office as national security and honesty.On the one side, there was Howard seizing on the slightest sign of Latham losing his cool; on the other, a devastating blow when the Opposition Leader observed that Howard’s “gut instinct” was to “cover up the truth”. “It’s the reflex action of someone who’s been in politics too long”, he said.Yesterday was the first time Howard and Latham had gone absolutely head to head in a contentious parliamentary debate.Latham confirmed his reputation as a compelling speaker who can hold a room. Howard’s back bench talked among themselves as their leader responded to the censure.Yesterday marked a turning point in parliament. Latham put all the opposition’s questions to Howard, he kept them short and repeatedly insisted on an answer.That is in stark contrast to his two predecessors, who would spread the questions around, reduce their impact by turning them into dissertations, and often appear to surrender after a few questions.

March 20, 2004Detention may be `indefinite’
Prime Minister John Howard left open the prospect of indefinite detention for terrorist suspects on Friday in a move that would appease police commissioners after a week of controversy about the relationship between the government and its top policeman.Mr Howard’s comments came after he met with the police commissioners in Sydney and had a face-to-face conversation with Australian Federal Police Commissioner Mick Keelty .The chairman of the commissioners’ conference, NSW Commissioner Ken Moroney, indicated police felt that overseas models allowing detention for between 48 hours and a week was too long.As a result, the conference appeared to be heading for a proposal for 24 hours detention, up from the current four.But Mr Howard left further options open when he subsequently told a press conference he would give serious consideration to a proposal to remove the precise time limit on detaining terrorist suspects.Instead, he said, they could be held for a “reasonable” period.The police commissioners had urged Mr Howard to follow Victoria’s lead in leaving it up to the courts to determine what a “reasonable” detention is.In Victoria, that means 24 hours.”I am sympathetic to what the police commissioners put to me and I will take that matter up with the Attorney-General and my colleagues next week,” Mr Howard said. The Opposition Leader, Mark Latham, gave in-principle support for greater police powers to detain suspected terrorists, but made the proviso that Labor would have to look at the detail of what was proposed.The new focus on detention powers came at the end of a disastrous political week for the government on national security following the Madrid bombings.The government was under pressure from the political fallout in Spain over the bombings.There the Opposition Socialist Party won the election in what was interpreted as a rejection of the former government’s support for the so-called Coalition of the Willing in Iraq and its possible role in making Spain a terrorist target.At home, Mr Howard was forced to confront revelations his chief of staff had chastised Mr Keelty for linking the Madrid bombings to Spain’s support for the war in Iraq in a television interview.The problem was compounded when Foreign Minister Alexander Downer suggested Mr Keelty’s observations meant that he was peddling al-Qaeda propaganda.Mr Keelty later issued a statement saying his comments had been taken out of context but he did not resile from them.

But there were subsequent suggestions Mr Keelty had been pressured to make the statement.

Mr Howard said on Friday Mr Keelty can “express his views as he sees fit”. He said the police chief had his full confidence.

March 19, 2004Madrid bombs rock Howard’s security
Canberra observed
Foreign Minister Alexander Downer was busy telling reporters yesterday that Australia would not be dictated to by terrorists.”If I am any judge of the Australian people, I don’t think they’d want terrorists to determine our foreign policy,” he said. “They don’t want terrorists to determine who our friends and allies are, and even more than that, I don’t think Australians want to be blackmailed or threatened by terrorist organisations.”In Spain, meanwhile, a group who purports to have al-Qaeda links claimed that it had won a victory with the change in government in Madrid, and with that new government’s decision to pull out of Iraq.In a statement sent to the Arabic- language daily al-Hayat , the Abu Hafs al-Masri Brigades , who have claimed responsibility for the Madrid bombings, urged their European units to stop all operations.”Because of this decision, the leadership has decided to stop all operations within the Spanish territories . . . until we know the intentions of the new government that has promised to withdraw Spanish troops from Iraq and we repeat this to all the brigades present in European lands: Stop all operations.”Now, your columnist claims no knowledge of who this mob are, whether they carried out the bombings, and whether they have any capacity to call a truce. But neither can Downer or Prime Minister John Howard.The powerful point is that a terrorist organisation can claim to have overturned a Western government, and have the considerable credibility for its claim of the Spanish election results.This will now play the most profound havoc with world politics, including our own, a havoc which requires the most impeccable behaviour from our politicians in dealing with an even greater sense of uncertainty about the future, and not playing for political points.Which of course is the antithesis of what we have been subjected to this week by the Howard government.The extraordinary saga of Australian Federal Police commissioner Mick Keelty and the government’s extraordinarily bad treatment of him is but one aspect of the fallout from Madrid.Most conspicuously, the bombings in Madrid have changed the balance in the politics of national security in Australia. The issue that was always Howard’s strong point has suddenly become a negative.That’s not because people don’t trust him as much as Mark Latham on national security, it’s just that he is now paying the price of loading so much political baggage onto the national security agenda.The government’s ministers are among the minority of people around the world who don’t believe that Spain’s involvement in Iraq made it more of a target for terrorists.In Britain, a poll showed three-quarters of Britons feel “more vulnerable” to terrorist attack because of the Blair government’s decision to join military action in Iraq.In Australia, the suspicion, at least, is the same: that the preparedness to cosy up to the US, the commitment to go to war in Iraq, made Australia a bigger target than it needed to be.

The Prime Minister tried to have it both ways on this issue early in the week, what you could call the “wedge with pike” manoeuvre, in which he tried to argue the Madrid bombings reinforced everything the government had been saying about national security, but at the same time disowned any suggestion that its actions may have any implications for our individual security.

This was never going to wash, so Howard moved to the simpler argument that Australia had been a terrorist target before the war, so going to Iraq had not increased the threat.

Well, not quite, Prime Minister.

For a start, talk of an Australian involvement in Iraq went back to Howard’s visit to Washington in May 2002 .

Howard has also said that nobody had argued an involvement in the war in Afghanistan had made us more of a terrorist target.

But as Robert Ray , the Labor senator who is deputy chair of the parliamentary committee which produced the report on prewar intelligence on Iraq’s weapons of mass destruction, observed yesterday, the war in Afghanistan was part of the war against terrorism.

The justification for going to war in Iraq was supposed to be because of Iraq’s terrorist links, an assertion he observes has not been repeated since the war began 12 months ago.

“The whole point about Iraq is that it wasn’t about terrorism.”

Nonetheless, Ray argues, Iraq gave terrorists an excuse to move us up the target list.

Madrid has opened the tap on real fear in the community. This time it’s not clearly fear that Howard can use against his political opponents.

The Spanish bombings raise the whole gamut of issues connected with national security: the US alliance, the continuing presence of Australian troops in Iraq, the sway such fear might have at the federal election, and the credibility of Australia’s intelligence agencies.

On almost all of these issues, the Prime Minister is tarnished at worst, or locked in at the least.

And Labor? It has not really had to move anywhere and has also been notably disciplined in how it has dealt with the issue. Labor’s position on Iraq has been in place since the war. It was opposed to the war, though supportive of the troops there. Once we had become part of the Coalition of the Willing, it argued Australia had an obligation to help rebuild Iraq post-hostilities.

Latham played this all with a straight bat this week, saying while Labor doesn’t want our troops being in Iraq any longer than necessary, they did need to complete their reconstruction obligations.

As to the credibility of Australia’s intelligence agencies, contrast some remarks made just over two weeks ago with those of this week.

Two weeks ago, Downer told the House of Representatives that the parliamentary report on WMD “confirms there is `no evidence that political pressure was applied to the [intelligence] agencies’ that is a quote from the report and there was `no overt
pressure from the government to change assessments’ “.

“There would be no point in the government applying overt or covert pressure to get intelligence agencies to change assessments”, Downer piously told the House. “The government just would not do that”.

This is the same man of course who, during this week, accused Mick Keelty of peddling al-Qaeda propaganda by daring to suggest that Spain’s involvement in Iraq may have made it more of a target for terrorists.

Oh, and the same one who then tried to undo the damage by saying Keelty was “an outstanding Australian. He will go down in history as one of the great police commissioners”.

The government’s long-recorded intolerance of alternative views is now coming back to haunt it.

It didn’t need a parliamentary inquiry to betray its preparedness to lean on people who publicly disagree with it, or at least don’t toe the line.

But at the very time when a government needs all the credibility it can muster, it has done little more than show why you should be sceptical of both what it says and does. That must play into the hands of terrorists more than anything else.


March 17, 2004Investors flee property as rate rises bite
Joyce Moullakis and Laura Tingle with Kathy Mac Dermott and Jason Clout
Federal Treasurer Peter Costello yesterday welcomed further evidence of a slowing housing market after new figures showed the biggest one-month decline in investment property loans since 1991.The unexpectedly large slump has dented expectations of further interest rate increases, and economists are now predicting a continuing downward trend in demand for investor housing.Finance for investment properties tumbled 15.5 per cent, seasonally adjusted, in January to $4.7 billion the third straight monthly fall.Mr Costello said the property market had been growing very fast and he was pleased with the way it was now appearing to plateau.”This is backed up by other data coming out the housing market in relation to [building] approvals; anecdotal material in relation to auction clearances which indicates there is some slowing,” he said.A number of economists believe the total decline in investor finance over the past three months of 27 per cent means the Reserve Bank of Australia may have achieved in three months most of the market correction it had forecast would take a year.Several major lenders said demand for investor housing finance had continued to decline in the six weeks since the end of January. However, they denied there were plans to again tighten their lending criteria.The January slump brought the level of finance for investment properties for rent or resale down to those seen last April, following record highs of $5.95 billion in October.Finance for owner-occupied housing also fell in January, dipping 7 per cent .Economists question the need for another rate rise this year after those in November and December, which took the cash rate to 5.25 per cent.
If the property market does now slow, but not slump, the government will be able to set its budget forecasts for a benign period in the lead-up to the federal election.Massive pre-election spending will keep feeding economic activity, but Mr Costello yesterday pledged to keep the budget in surplus, despite comments by the Prime Minister, John Howard, last week that a big budget surplus was not necessary.Housing Industry Association senior economist Harley Dale said the late 2003 rate rises had immediately cooled activity within both the investor and owner-occupier markets but he remained confident of a soft landing.”There have been some chunky falls [in property investment finance] but then again there was such a ramp-up of activity before, so I don’t think alarm bells should be ringing yet,” he said.”However, if there were a few more falls of the same size, then the viability of some developers would come into question.”Most economists said investors were dismayed by concerns about rising rates, lower rental yields, an oversupply of inner-city apartments, and stabilising property prices.”All of this adds up to a housing market that should be seeing large numbers of investors heading for the exits,” senior economist at JP Morgan Stephen Walters said.

“There probably is one more rate hike in the policy pipeline, but this hike is unlikely to be delivered if home lending keeps falling at the current pace.”

But some other economists are beginning to question whether the central bank will move at all this year if the housing market has run out of steam.

While short-dated bank bills still point to a 50 per cent chance for a rate rise in the next three months, three-year bond yields are hovering below 5 per cent, suggesting that markets are pricing in the prospect of rate cuts in the longer term.

The debate comes amid renewed global terrorism fears, a slight ratcheting up of the unemployment rate, and declining consumer confidence.

The managing director of Australand , Brendan Crotty , said he was not overly concerned by a large slump in lending for investment properties, branding current market activity as a “sensible pause” rather than a downturn.

LandMark White director of residential development John McEvoy said the critical pressures within the current cycle were affordability and the escalating construction costs.

A Westpac spokesman said the bank had experienced a “slight easing” in lending this year, including investment properties. “That’s in line with our expectations. However, we don’t expect the real trend to be apparent until April,” he said.

The Commonwealth Bank said housing loan volumes dipped in January for what it described as “seasonal” reasons. But the demand for loans increased in February.

A NAB spokesman said January and February tended to be quiet months for the bank.

But the bank had predicted 15 per cent housing loan growth for this year and that figure had not been revised.

March 17, 2004Remember Ryan: Howard is down, but far from out
Three years ago today, John Howard hit a low point when the coalition lost what should have been an unlosable seat in an unnecessary by-election. It was a jolt not unlike the arrival of Mark Latham .The defeat encapsulated the complacency of Howard’s second-term government and escalated an election-year spending spree.Three years on, the events surrounding the by-election loss of the blue-ribbon Brisbane seat of Ryan provide an interesting history lesson on how politics have changed.Once again, the government is seen to be trying to spend its way out of trouble but this trouble is very different.The day after the Ryan loss, Howard conceded the result had many lessons for the government. Reading his words now, they sound remarkably like a man who did not seem to connect the cause and effect of what he was dealing with.He said then that in the prior months the government had “been subjected to political carpet-bombing” over issues ranging from petrol prices to the value of the dollar, with election losses in WA and Queensland sandwiched in between.But what actually fuelled the political controversy about many of these issues was the fallout from Howard’s goods and services tax.Howard said one of the lessons from the Ryan result was certainly “that reform, which is so necessary and unavoidable in a fast-changing world environment in which we live, is always difficult”.Three years later, reform is hardly the cause of political weariness, let alone discussion.Howard is now fighting for his political life against an electorate weary of a three-term government and against an opposition with an engaging leader and an opportunity to dominate the domestic agenda. Even the national security agenda, after the Madrid bombings, is playing against Howard now.But Ryan is a reminder of how the coalition fought back from a position regarded as unwinnable at the time. It hit a low point in the polls in the week before the by-election with a primary vote of just 35 per cent to 48 per cent.The Labor hero of Ryan was Leonie Short , the Brisbane dental therapist who won the seat after defence minister John Moore decided he could not be bothered staying around until the next federal poll.Leonie Short , who sat as the Labor MP for the Brisbane seat of Ryan for just seven months in 2001, bumped into Michael Johnson, the Liberal MP who defeated her that year and now holds the seat, during the recent Queensland state election.It was the first time they’d seen each other for some time and they stopped to catch up.Johnson wanted to know what she was up to these days.

Short, who is not recontesting Ryan this year, but who remains active in Labor politics, said she told him she was doing a lot of community work.

“Ah, yes, Leonie,” she quotes him as saying, “community was always your little thing, wasn’t it?”.

Short tells the story because she says it reflects what the Howard government’s problem will be in this year’s federal election against Mark Latham.

“They just don’t get the importance of the idea of community to people,” she says.

Johnson’s take, not surprisingly, is different. The nature of the electorate, he says, is that people are interested in business-friendly policies.

The presence of the University of Queensland in the electorate, he says, is good, because “people are very supportive of the government’s position on education that students should make a contribution”.

The feedback on the government’s recent superannuation proposals, which have been dubbed unkindly the “work till you drop” scheme, has also gone down well because “people who have two or three degrees regard it intellectually rather than politically”.

Either way, it’s a long way from the issues that Short fought on, and won with, in 2001 when she caused a huge upset in federal politics by winning the blue-ribbon Liberal seat of Ryan on St Patrick’s Day of that year.

But as the Prime Minister rolls out his pork barrel, the inevitable comparisons with 2001 have started.

Yet the circumstances were very different. And those facing Leonie Short in the lead-up to March 17, 2001, highlight that.

Ryan is an exceptionally prosperous western Brisbane seat. The University of Queensland and a large slab of professional people and small businessmen are in the electorate, including a significant number of South African expatriates.

Since 2001, redistributions have changed its nature to one that is even higher up the socio-economic tree.

The Australian Electoral Commission classifies it as a “fairly safe Liberal” seat. But that was not the case in 2001, when Ryan became the archetypical vent for voter rage at political arrogance.

The by-election had been forced on the government by Moore’s decision to leave politics and not wait until the general election.

It was one thing for voters to have suffered Moore’s very infrequent visits to his electorate in the 26 years he held the seat, it was another altogether for him to force them to waste a Saturday morning to go out and vote just because he couldn’t keep his commitment to them to serve for three years.

But beyond that, Short remembers the issues that were dominating the campaign and the political mood of the time. At the top of that list was the goods and services tax and the business activity statements.

She remembers the anger of small business people about the time it would take them to fill out the GST paperwork; the anger about perceived new taxes on beer.

Her memories point to some of the differences with 2004.

The 2001 election year dawned with a lot of really grumpy voters beer drinkers, petrol buyers, caravan-park dwellers among them who had to be appeased in the wake of the GST and with RARA-land (rural and regional Australia) demanding every last cent from the government for various perceived wrongs.

In 2004, there are not a lot of small groups that have to be, or even can be, appeased.

There’s the cost of trying to patch up issues that have been neglected for too long while the government has concentrated on pushing Australia into Middle East affairs and the US alliance, scaring voters on national security and terrorism, and playing to xenophobia over boat people.

It’s about addressing the education and health issues that Labor has so successfully exploited over the past eight months.

It’s different in 2004 because the issues are so much about longevity and the potential for change.

Short acknowledges: “They were happy to elect me in the by-election. But by the time of the general election, it was definitely a vote for Howard.”

She says she has still not got over the shock “of the racism in the electorate in the lead-up to the federal election”.

“I will never get over it,” she says. “Every day, people were phoning, there were emails saying `bomb them, shoot them, kill them, drown them’ about the boat people.

“I just had this terrible disappointment that they’d talk about it like that.”

While the changing electoral boundaries make a Labor win in Ryan highly unlikely, Short believes that now the voters around Ryan do believe it its time for a change.

“I ran into an old gentleman the other day who said, `I like the new young bloke’,” and she says that sums up much of the attitude.

She disputes, hardly surprisingly, Johnson’s take on the view of the University of Queensland on the higher-eduction issue, but says it is unlikely that health will bite as hard in Ryan, with its exceptionally low bulk-billing rates, as in other places.

Some things, ultimately, don’t change all that much.

Johnson did not have much time to reflect on the events of 2001 because he was due to fight a major preselection battle for his seat over the weekend.

The divisions within the Queensland Liberal Party remain bitter, and remain one of the reasons that some in the Labor Party hope the state machine will be ineffective at fighting this year’s federal election campaign.

March 16, 2004Big – spending budget could lead to early election
The federal government is loading an unprecedented spending and tax-cut agenda into its May 11 budget in a move key ministers believe leaves it with maximum flexibility to go to the polls as early as August 7 .The budget is now expected to find funding not only for major personal tax cuts but also for work and family measures, aged care and defence, as well as renewed spending on the rural sector and research and development.The budget surplus has already faced an assault from new spending measures announced in the past few weeks, covering everything from the MedicarePlus package to income support for the sugar industry.Senior sources say relatively few major spending measures are likely to be held back until a later election campaign, partly to maximise the government’s election timing options.This is despite the fact the opinion polls are running against the coalition and political wisdom would point to later election-day options such as October 16 or 23 as being far more realistic.However, with the government in serious trouble in the electorate, the feeling within coalition ranks is that it will have to keep spending to address public perceptions that it has run out of policy steam.The government’s political challenge this year is different from 2001, when it also went on a pre-election spending spree.The problem then was to appease a huge range of particular groups who had been alienated by particular policies, particularly the fallout from the introduction of the goods and services tax and its related tax reforms.That means that in 2004 it must move as quickly as possible to address the fact that Opposition Leader Mark Latham appears to have set the political agenda and neutralise the issues he has so successfully exploited to date.Scope for spending announcements would remain, however, with individual announcements being made for spending out of one of the many overarching funding vehicles the government has set up since coming to office.It used this tactic repeatedly during the 2001 campaign, for example, announcing a range of road funding decisions out of the overall roads funding envelope.It also repeatedly used the tactic of announcing funding for projects that would not start until after the forward estimates period, meaning the spending did not actually show up in the budget figures at the time.After its initial shock at Mr Latham’s ascendancy, government strategists are now arguing that its political task is simply to keep within fighting range of the opposition on the primary vote and hope that he flounders and falls during the election campaign proper.The expenditure review committee of cabinet is due to meet again later this week when one of its major tasks will be to resolve a continuing tussle between portfolio ministers about the shape of the government’s innovation funding package known as Backing Australia’s Ability 2.Science and research meaning funding for universities and CSRIO at this stage appear to be winning more of the funding pie than business research and development and research commercialisation.

If this is the final outcome, Industry Minister Ian Macfarlane may seek further benefits for venture-capital projects to appease the business community.

The government is also expected to finalise plans to restructure the $833 maternity allowance and the $500 baby bonus for first children into a new payment to assist all mothers of new babies whether in paid work or at home to settle its long-running struggle over the paid maternity-leave issue. The new payment would form the centrepiece of any changes to be flagged as work and family initiatives.

There will be more funding for aged care though the government has sent the recommendations of the Warren inquiry into the industry to an interdepartmental committee.

The government is likely to provide new funding to the agriculture sector by renewing the $800 million Advancing Australian Agriculture initiative, which included funding for farmers’ business education.

March 16, 2004Everything except the policy detail
Mark Latham has the right lines on superannuation. He even has the right idea. He just doesn’t have all that much policy to go with it. And he certainly doesn’t have the money to pay for it.The Labor leader’s speech yesterday contained a political whack for Treasurer Peter Costello and his super proposals, which have come to be known, so unkindly, as “work till you drop”.Labor wouldn’t be neglecting quality-of-life issues like spending time with the grandchildren, Latham said. An ageing society was not just an economic question but a lifestyle issue.”It’s more than just money, it’s the right kind of values: seeing our ageing population as an asset, rather than an economic burden,” he said.Quality of life, in turn, means having enough money to live comfortably. In the superannuation debate, that means the “adequacy” question is front and central for Labor. As it should be. And as it should have been for the coalition.But this is where Latham starts to run into trouble.Labor’s answer is to cut superannuation contributions tax by 2 percentage points and to promise to try to get rid of it altogether one of these days.But this just doesn’t seem to have that “quality of life” sweep and differentiation to match the rhetoric.And for the first time, Labor has announced a major spending decision without explaining, at this point, how it will be funded.Latham yesterday described the contributions tax as a “tax on savings” which is “among the worst of many bad taxes in Canberra”. But he conveniently forgot to mention that it was introduced 16 years ago as part of Bob Hawke and Paul Keating’s superannuation “magic pudding”.Labor reduced the hated 30 per cent tax on lump sum super and “brought forward” tax revenue from superannuation by introducing the 15 per cent contributions tax and a 15 per cent earnings tax to finance other tax cuts.Latham lauded Labor’s history of superannuation changes yesterday. But in moving to undo one of its major changes he has both admitted its flaws and failed to say how he will address medium-term super adequacy.

March 15, 2004Growers turn back on ethanol handout
Jason Koutsoukis and Laura Tingle
Federal government money to expand Australia’s ethanol industry has failed to excite Queensland sugar growers.Despite claims from growers and Queensland sugar belt politicians that ethanol could save the struggling industry, only two of 38 grant applications were for sugar-based ethanol projects.Last July the government set aside $37.6 million for one-off subsidies of 16 ¢ a litre to new or expanded biofuels projects producing a minimum of 5 million litres a year, up to $10 million per project.Total applications received indicated a potential investment in new projects of about $1.1 billion. Twenty-one of the 38 applications were for biodiesel (vegetable oils-based) projects, and 17 for ethanol projects, of which only the two were sugar-based.Successful applicants will be announced by midyear.Federal Industry Minister Ian Macfarlane welcomed the interest in expanding the biofuels industry.”There is solid industry support for the government’s objective that biofuels, produced in Australia from renewable sources, contribute at least 350 million litres to Australia’s fuel supply by 2010,” he said.But the lack of industry interest in developing ethanol from sugar appears to confirm Sugar Research and Development Corporation chair Bob Grange in saying recently that ethanol was a “false hope” for the 7000 sugar growers.Several senior government sources stressed to The Australian Financial Review that the ethanol lobby had worn out its welcome and there was no sympathy for even more grants to producers.They also said the largest ethanol producer, Manildra, and its principal, Dick Honan, had fallen out with Prime Minister John Howard.


March 12, 2004Treasurer toes the line. . . for now
In the always long-winded saga of leadership challenges, Peter Costello moved yesterday to kill off the latest round of speculation with the shortest
possible answer on the subject.”Would the Treasurer confirm that he will acquit his statutory responsibility [to table the final budget outcome] in this matter by remaining as Treasurer and rule out challenging for the leadership?” opposition finance spokesman Bob McMullan asked in parliament.While the draft Hansard released last night did not record the answer, Costello replied simply: “Yes.”The question was sufficiently convoluted to make his monosyllabic answer ambiguous should you choose to be that obscure.But there was no doubt in the minds of all the MPs who heard him of the importance of the message.Costello had fuelled the leadership speculation last week by “refusing to rule out” a challenge. Yesterday he was dousing it.On the other hand, anyone who thinks this means future leadership speculation surrounding Costello will go away is kidding themselves.And don’t expect that, in other forums, the Treasurer will do anything other than stick to his usual formula on the leadership issue, which is that his loyalty to the party is beyond question.From Costello’s perspective, he has never called on a leadership challenge, so he doesn’t have to call one off either.But from a purely pragmatic perspective, there was sense in killing the issue off.The government has had a good week in parliament. It has regained control of the political agenda. And it’s been a double act.Howard has claimed ground from Labor leader Mark Latham particular over the “crisis of masculinity”.At the same time, Costello has been absolutely devastating in his shredding of Labor’s credibility on tax.The only real niggle factor left was the constant prodding from Labor on leadership.The Treasurer had clearly decided on Wednesday to answer the question if the opposition once again asked him about it. But he was thwarted by House of Representatives Speaker Neil Andrew.The factors driving Costello’s future career path are simple: he hasn’t got the numbers in the coalition party room to challenge Howard; he’s shown no interest in challenging the Prime Minister at this stage; and, whatever his considerable charms, the public does not clamour for his leadership.

If the government’s fortunes continue to deteriorate sharply, all of that could change very quickly.

If, for example, by budget time, the government’s poll ratings have gone from being a few percentage points away from Labor to a huge gap, the panic that we saw signs of in the party room last week would be back with a vengeance.

But this seems highly unlikely.

Realistically, the window for a change in the coalition now is down to the next couple of months.

Things will have to go very badly from here for such a change to become a possibility.

March 12, 2004Latham given liberal dose of reality
Canberra observed
Down in the Prime Minister’s media office, press secretary Tony O’Leary and his team have been keeping score of how many times journalists comment on John Howard’s lack of policies, and how many times they comment on Mark Latham’s lack of policies.Since Canberra these days is the policy-watcher’s equivalent of a nudist colony, this is quite an active pursuit.It is not that O’Leary and his staff are just looking for menacing signs of journalistic bias. Political operators always also want to know who is winning the battle of spin, who is getting the air time, who is getting the positive and negative mentions.And this week, the government has been stepping up its attack on Latham as a policy-free zone.The strange thing about federal politics this week, though, was how, despite all the accusations being traded about policy or lack of it, it demonstrated that politics is so often more a captive of sentiment and perception than reality or policy.It also has demonstrated once again the disconnection that can occur between the hothouse of Canberra and what is playing out in the electorate at a completely different speed.This week we saw extraordinary figures for Labor in the Newspoll and an acknowledgement of the problem in the government. Labor’s primary vote (44 per cent to 41 per cent ) is now ahead of the coalition’s for the first time since August 2001 .Latham trails Howard as preferred prime minister by just five points and is now regarded as more caring, more likeable, more in touch and more trustworthy.After telling his party room only a week earlier that politics was now “back to normal”, Howard was forced to try to rally the troops this week, while others made twee comments about the need to work together, and nobody mentioned leadership.So, a new high water mark for Labor, you might think?Not quite.This week has actually ended up being perhaps the worst, but certainly the most concerning, for Labor since Latham’s promotion to the job in December.Just think about the nature of the headlines as the week closes.For the first time in months, it is the government that has been setting the agenda.There has been Medicare, there has been schools funding, male teachers and tax.

Sure, you can argue that governments always have the capacity to dominate the news with big announcements. You can argue equally validly that this agenda has ultimately been thrust upon the government by Latham.

But the crucial difference this week has been that the government has been able to wrest control over the issues and turn them back on Latham.

The most conspicuous example of this has been the government’s proposal to change the sex discrimination legislation to facilitate the hiring of more male teachers in schools.

Whatever the details of this issue, there was the Prime Minister turning the male role models issue into the government’s own and getting the extra political advantage of being able to accuse Latham of not backing his own beliefs because Labor will not support the move.

“It is one thing to run around the country for three months and profess your concern for the fatherless boys of Australia,” Howard told parliament on Wednesday, “but it is another thing, when you have got an opportunity to put your hand up and do something for them, to not do so.”

Now given Latham’s momentum at present and the profundity of the love affair the polling suggests the electorate appears to be having with him, and the disaffection they are feeling towards Howard as Prime Minister, this is hardly the beginning of the end for Labor and its chances of gaining office.

But the shift has exposed what you might call the structural flaws in the Labor Party which will make it difficult for Latham in coming months when the government does find the messages, or the wedges, to cause him discomfort.

These flaws relate to Latham’s own history as a solo flyer, the scrappiness of his front bench, and the lack of a completely coherent strategy that seems to reside just under the surface of his polling success.

Despite the signs the government has started to find ways to neutralise, or adopt Latham’s agenda, the Opposition Leader has ploughed on this week in parliament with his strategy of trying to ignore the government’s agenda and just concentrate on his

He’s tried child-care wages, paid maternity leave, national dental funding, MPs’ super, budget savings, Telstra’s service standards and an independent parliamentary speaker.

None of them have really flown, with the exception of Telstra.

The extent to which the approach didn’t work was perhaps highlighted by Latham’s attempt to claim that the government’s decision to close the National Office of the Information Economy an issue on which the electorate is known to have intensely passionate views was another sign of it adopting his policies.

Labor had claimed closing the office as a $140 million saving among its initial list of $5 billion of claimed savings in “waste and mismanagement” that it says will fund its spending and tax cuts.

But when Latham opened Labor’s question time attack by challenging Howard on the decision on Wednesday, the Prime Minister neatly cut off both Latham’s claim to stolen ideas and Labor’s $140 million of claimed savings.

Following Latham’s plans to scrap NOIE, Howard said, would cost 160 jobs . The government might be scrapping the office, but the jobs would not be lost, he said.

Labor had to turn its attention to the government’s agenda and its just-announced Medicare deal with four independent senators.

The government, meantime, was able to go on the front foot and savage Labor over its own tax plans.

Now, since Labor’s discussions with Access Economics over tax policy were first reported in the AFR a few weeks ago, Latham’s approach has been to play the whole issue with a dead bat.

The Opposition Leader clearly believes it is worth the cost of just sitting still and copping the flak about tax policy until after the budget, and has the ticker to do that.

But this week has shown the shortcomings of expecting an entire front bench to also sit still without blinking, and find a disciplined line on what the parameters of Labor’s policy actually are.

For the record, here is Labor’s position on tax:

“We’re going to cut personal tax. We’re not going to be the biggest taxing government in Australia’s history, which the Howard government is. We’re not going to increase company tax. We have no plans to change the capital gains tax.”

It would be an understatement, though, to say this message was not getting across clearly at the moment.

When Laurie Ferguson fronted up at the door of Parliament House to talk about the need to be honest about the possibility of future tax rises, people were prepared to believe it was just an unfortunate turn of phrase.

But by Tuesday Labor’s finance spokesman, Bob McMullan , was making honesty a negative and only adding to the perception that Labor has no idea what it is doing on tax.

Parliament is rising. Mark Latham is going bush with Bob Brown. That may be an opportunity, in the stillness of the forest, to consider the downside of travelling on your own.

March 12, 2004Business urges easing of CGT burden
Business has signalled it will step up pressure for reform of the capital gains tax in the lead-up to the next election.Only weeks after leaked documents suggested the Labor Party was examining an expansion of the capital gains tax, the Australian Chamber of Commerce and Industry says the taxation of capital gains has to be dramatically cut to boost research and development.”ACCI considers that the constant need to reinvigorate the Australian economy through innovation and research and development demands lower taxation on investment,” the business lobby group says in its monthly review, to be released today .”For this reason, political parties in an election year must seriously examine the current CGT regime and its impact on R&D and investment.”ACCI is advocating a re-examination of capital gains tax reforms considered during the 1999 Ralph review of business taxation. In particular, it argues the merits of adopting the approach adopted by Britain’s Blair government.”That is a stepped-rate CGT that significantly reduces the taxation burden on capital income the longer an asset is held.”ACCI says implementing a stepped rate would encourage longer periods of investment.

March 11, 2004Agency axed but budget redeployed
The federal government is to restructure its information technology bureaucracy in a move that has the added political benefit of depriving Labor of $140 million of claimed budgetary savings.Communications Minister Daryl Williams confirmed long-standing speculation yesterday that the National Office for the Information Economy would be scrapped.The office had been created in 1997 to advise the government on electronic commerce, online services and the internet.But while Labor has claimed it could save $140 million from scrapping the office, the government says it will restructure NOIE’s functions within the Communications Department and continue to fund them from NOIE’s budget.PM John Howard told federal parliament yesterday that scrapping the office would cost 160 jobs and leave a range of issues undealt with.Mr Williams said the government’s decision was a result of “refocusing its efforts to maximise the benefits of information and communications technology to the community, business and to the delivery of government services”.Parts of the policy-making division of NOIE had already been moved back into the department last year, and the agency had not been expected to survive long in its current form after the contract of its chief executive, John Rimmer , expired last month.Australia’s leading IT industry groups, the Australian Information Industry Association and the Australian Computer Society, welcomed the changes.”We certainly see it as a positive development that there is going to be more focus in the federal government on the strategic issues around its use of technology,” AIIA chief Rob Durie said.Mr Williams said a new agency, the Australian Government Information Management Office, would look at the use of new information and communications technology in government programs and services.Opposition Leader Mark Latham claimed during question time that the government’s announcement meant the coalition was once again following Labor policy.

March 10, 2004No go on MedicarePlus
Jason Koutsoukis and Laura Tingle
A deal with independent senators to pass the federal government’s $2.4 billion MedicarePlus legislation eluded Health Minister Tony Abbott yesterday amid speculation the government was proposing to add dental services to the package.Prime Minister John Howard ruled out adopting Labor’s plan to spend $300 million over four years on a dental health-care plan, but a spokeswoman for Mr Abbott refused to rule out whether the government was considering including extra funding for dental care as part of the MedicarePlus package.Democrats leader Senator Andrew Bartlett said he welcomed suggestions of federal funding for dental health care, but said the Democrats remained strongly opposed to the government’s Medicare package as it stood.Under Mr Abbott’s proposed safety net, concession card holders and family tax benefit recipients would receive an 80 per cent rebate for all Medicare health expenses once they reach a $500 threshold. For everyone else, the threshold would be $1,000.”It would introduce much more of a welfare mentality into a key part of Medicare. That’s why we won’t support anything other than a single threshold safety net,” Senator Bartlett said.Meanwhile, Mr Howard appeared to leave open the possibility of a federal takeover of the states’ historic control over public hospitals.Coalition party room sources said yesterday Mr Howard appeared happy to entertain the idea of a takeover after a number of government backbenchers expressed their anger about state government blame-shifting on public hospitals.Led by parliamentary secretaries Warren Entsch and Trish Worth , the MPs noted the federal government funded 50 per cent of public hospitals but had no control over them.A number of sources said Mr Howard did not rule out this suggestion, floated in recent weeks by Mr Abbott.One source said Mr Howard a long-time states’ rights advocate observed that Australians were much more nationalistic than they used to be and this might have a bearing on future decision making.But the push was met by equal opposition in the party room, led by Queensland MP Steven Ciobo , who argued for centralised government.

March 8, 2004Pensioners’ $10k bonus for working
The federal government is considering extending a cash bonus worth $10,000 a year tax-free to more pensioner retirees who stay in the workforce as another step in encouraging baby boomers to fund their own retirements.Family and Community Services Minister Kay Patterson is examining ways to ease the eligibility requirements for a cash bonus now available to retirees who defer claiming the age pension and continue to work.Sixty thousand people have registered with the pension bonus scheme since it was introduced in 1999 and in 2003 the average bonus was more than $10,000, a rise of almost 40 per cent over the average amount paid the previous year.A change in the eligibility criteria for the scheme would add to the incentives the government is developing to expand the labour force and relieve the pressure on the budget from funding an ageing population. The proportion of people over 65 is projected to double to about 25 per cent during the next 40 years.It follows Treasurer Peter Costello’s recent announcement of moves to make superannuation arrangements more flexible to allow people to continue working part time into older age, while accessing some of their superannuation income.The changes form part of a push by the government to reassert its economic reform credentials against a resurgent Labor opposition in the lead-up to the election.”Almost one-fifth of people over the age-pension age who are working are registered in the scheme,” Senator Patterson said.The minister is now interested in trying to persuade the other four-fifths of the pensionable age workforce to register for the scheme.To do this, the government is examining ways of easing the eligibility and registration requirements so that people have more ability to register after they have reached pensionable age.The problem with the scheme is informing people of their right, and interest, in registering for it while they are still working at pensionable age.To benefit from the scheme, people must register when they come to pensionable age even if they have no plans to retire.This group has proved hard to contact because they are often outside the normal communication networks of the social security system and that of self-funded retirees.At present, a person must register for the scheme and pass a flexible work test for at least 12 months from registration. A single person or at least one member of a couple must work a minimum of 960 hours a year about 20 hours a week over 48 weeks.There are also rules about the type and amount of work that must be done to qualify for a bonus.Senator Patterson says the value of the tax-free bonus can be up to $27,666 over and above the age pension.

The results of the scheme since its introduction are only now becoming clear, because of the time lags involved.

The amount of the pension bonus is based on the rate of age pension payable at the time the pension is granted and the number of years a person is registered in the scheme.

The maximum period over which a bonus can be accrued is five years.

After five years in the scheme, a registered member who is eligible to receive the maximum age pension would, on current age-pension rates, receive a tax-free bonus over and above the age pension of $27.666.10 for a single person or $23,095.80 for a partnered person.

Moves to increase access to the scheme follow the government’s announcement a fortnight ago of changes to allow retirees to access a new form of pension, the growth pension, which will give them the opportunity to make their savings last longer.

Mr Costello also announced plans to tighten the assets test for age pensions and the use of super funds for termination payments.

March 5, 2004Costello keeps options open
A week of growing tensions within the government has ended with Treasurer Peter Costello refusing four times in one day to rule out a challenge for the Liberal leadership.The return of parliament this week has seen a growing sense of disquiet in the coalition amid bad opinion polls, poor parliamentary performances and a continuing brawl over the shape of reforms to MPs’ super.While the prospects of a Costello challenge to Prime Minister John Howard remain remote, his refusal to rule out such a challenge on repeated occasions yesterday is seen by some as a sign of his growing anger that events are running against his chances of ever becoming prime minister and annoyance at Mr Howard’s decision last year to stay on.Some of his supporters are more defiant, asking why Mr Costello should rule out a challenge since Mr Howard, when he was not leader, refused to do so on many occasions.Mr Costello was asked on the Nine Network’s Today program yesterday, then on Melbourne radio three times, whether he would rule out a challenge.Asked if he would rule out a challenge before the next election on ABC radio, Mr Costello said:”I am working to win the next election. At the moment I am working to do another budget and keep Australia’s economy strong . . .”Asked if he would rule out a challenge, he said he had no plans to discuss the leadership issue.”I don’t go into these sorts of discussions, ruling things in, ruling things out,” he said.Sensing a chance for some political sport, opposition frontbencher Bob McMullan asked Mr Costello during question time why he had refused to rule out a leadership challenge, given a “meeting with the Prime Minister last year in which he told the Prime Minister that he believed it would be in the best interests of the Liberal Party and the country if the Prime Minister resigned”.A parliamentary stoush ensued in which no less than four government backbenchers jumped to their feet to ask the Speaker to rule the question out of order.The Speaker, Neil Andrew, eventually did rule the question out of order, after accepting backbencher Chris Pyne’s argument that it did not relate to Mr Costello’s ministerial responsibilities.Watching the fracas from the gallery, with conspicuous enjoyment, was a former coalition leader, Andrew Peacock.

March 5, 2004Latham’s tactics keep Howard rattled
Canberra observed
Frontal assaults are not the vehicle of choice of most military strategists, and are rarely successful. When they do work, it is because they seem so completely unlikely that the element of surprise works in the attackers’ favour, as it did for Australia’s Light Horse in the Charge at Beersheeba in 1917. So it was in federal politics this week.When the national accounts showed on Wednesday that the economy was growing at its strongest rate in four years, Mark Latham’s Labor opposition didn’t do what the Kim Beazley and Simon Crean teams had done so many times in the past, and try to ignore the economic agenda.The opposition used the background of the national accounts to launch its most organised and successful parliamentary attack in years on the government’s strongest long-term position economic credibility.The weakness of the government’s response was a shock, even to its own back bench.But what was perhaps more significant was the growing confidence it portrayed, and the shifting tactical focus of Labor, reinforcing the point that Latham is continuing to set the terms of battle against the government, despite all Prime Minister John Howard’s reassuring words to his party room this week.The government has confidently argued until now that Latham will be undone on economic policy.”The test for Mark Latham is going to come when he has to put down a policy. That is where, let me tell you, Mark Latham is policy weak,” the Treasurer, Peter Costello, said on Wednesday, when asked about Latham’s extraordinary showing in the polls that day.”As I said the other day, you know, it has got all the depth of somebody who gets on the internet, gets on to Google and types in economic policy,” Costello said. “Google Nation,” Costello called it.Yet for all that, here was Labor attacking the government this week on the point that is supposed to be both strongest for the coalition and weakest for Labor.It is true that the time is coming when Latham will have to start talking details rather than fatherhood.But there has also been a strange reluctance from the government to attack Latham on skerricks of economic policy that have leaked out like his plan to cut the top personal tax rate to 30 per cent and pay for it with changes in the capital gains tax, outlined in correspondence with Access Economics that was revealed in The Australian Financial Review last week.Costello has instead been dismissive. “Do you think Mr Latham is going to announce that as a policy, do you?” he said on Wednesday.”That was a letter that was written five months ago. You can’t hold him to a policy that was five hours ago.”They are clever lines to lob across the battlements, but probably more effective if you have a solid policy armoury of your own at hand.Costello, rather than Howard, may have gained some kudos for producing some sort of policy last week. But he has taken a political drubbing for his suggestion there will be no such thing as full-time retirement in the future.

The opening of the pork barrel in the past week has only reinforced the point that it is not really the Treasurer who controls the purse strings, and that election year spending has had little to do with good policy.

Which is just where Latham and his front bench hit the government during question time on Wednesday.

And in the attack, all the strands of Labor’s political strategy over the last few months came together.

Labor’s tactic is that you don’t have to directly attack particular spending announcements that have been made.

You instead taint them as pork-barrelling, point to the past pattern, question how they are funded, and contrast them with your own more modest, but funded, policy initiatives.

Underlying this attack has been the work of shadow assistant treasurer David Cox who, as a backbencher, started work some years ago compiling figures on government spending by the coalition since it came to office.

These numbers have long shown how the government has recorded no significant net savings since the year it was elected.

They also show conspicuous spikes in the 1998 and 2001 election years, putting the lie to its record as a parsimonious good manager.

But what Latham has added is some political mongrel to Cox’s underlying analysis.

On the one hand, he has established a number of populist, but cheap, policies that challenge or expose the government at its weakest points health and education and go to the government’s reputation for meanness, its occasional vindictiveness, its inclination to small government, and its age.

The parliamentary attack on Wednesday was unrelenting: a comparison of 500,000 Australians with bad teeth with $700 million spent on government advertising campaigns; $140 million on the National Office for the Information Economy against the small cost of the Latham Read Aloud program; and Howard’s intervention to stop 22 Defence Department golf courses being sold in the budget.

Then it shifted to the enjoyment of government perks, in which Costello himself was implicated, with questions about the practice of Melbourne-based government MPs using VIP aircraft to fly to Canberra for parliamentary sittings.

This last question was too much for Howard, who foolishly threatened that the question might have “consequences”, pointedly noting he had allowed Latham to take a VIP flight to Papua New Guinea last week.

It wasn’t a good look. And with the Prime Minister getting rattled, it was time to drag out Tony Abbott, once again to attack Labor about Centenary House and the now notorious lease by the Audit Office in Labor headquarters at what can only be described as very rewarding

The problem for the government is how to make a controversy stick when it is more than a decade old.

And in turn, this points to the coalition’s biggest problem in attacking Labor on economic policy.

“People remember what Labor is like in government,” Costello told the Nine Network yesterday. “When we had 17 per cent interest rates, and we had budget deficits as long as the eye could see, and they built up $96 billion worth of debt.”

But that’s just the problem. The Sydney fringe seats of Lindsay and Macarthur (held by Liberals Jackie Kelly and Pat Farmer) have the equal lowest median age of voters in Australia, just 30.

Interest rates in Australia hit 17 per cent in 1989, when most of them were at high school.

It might be a distant memory, but not a direct personal experience for many of those voters who are representative of many in the seats the government must hold next polling day.

And all the polling suggests voters are as tired of hearing about deficits and fiscal responsibility as they are about the political exploitation of national tragedies and national security.


March 4, 2004ALP handed a win with Job Network inquiries
The Audit Office is to launch two separate investigations into the Job Network, examining both the quality of the services it provides to the unemployed and the structure of a troubled $2.5 billion contract between the federal government and job agencies.The decision is a win for opposition employment spokesman Anthony Albanese, who requested an Audit Office investigation into the network and contract last year.The decision follows the damaging release of documents obtained by Mr Albanese under the Freedom of Information Act.The documents suggest that bureaucrats may have made major miscalculations about the volume of business job agencies were likely to enjoy.They also showed big problems in the computer systems on which the Job Network functions.And they raised serious questions about the level of service being provided to Job Network customers, particularly in the bush.Mr Albanese last night welcomed news of the audits, which he said reflected the concerns that had been expressed about the network by Labor, job agencies and “most importantly, the unemployed”.The Audit Office is now to audit the Department of Employment and Workplace Relations (DEWR) and Centrelink. It has told Job Network agencies the audit will determine “whether DEWR’s management of the Job Network ensures that job seekers are provided with high quality services”.”At the same time, it is also doing an audit to see if DEWR has designed and implemented Job Network Employment Services Contract 3 and its computer application, EA3000, efficiently and effectively”.It is unlikely the report will be available before the federal election, with the auditor-general saying his office is expected to report towards the end of 2004 or early 2005.The audit of the most recent three-year Job Network contract, which began in July last year, will look at whether the modelling associated with the contract was “performed effectively” and “whether the IT supporting [the system under the current contract] was implemented efficiently and effectively”.”The focus will be on [computer application] EA3000, whether it reflects business needs; whether it was well planned, developed and implemented (including appropriate controls) .”The Audit Office is also looking at whether the transition to the new contract was managed efficiently and effectively.

March 4, 2004All – in brawl over spending
The opposition yesterday launched a major assault on the government’s economic credibility, claiming it had been on an $8.5 billion spending spree since the last budget.The attack came on the day the national accounts showed the economy recording the strongest growth in four years and as Treasurer Peter Costello questioned the economic credibility of Opposition Leader Mark Latham.But the confidence shown by the opposition in its parliamentary assault on the government’s greatest strength its economic credentials stemmed from the extraordinary polling figures for Mr Latham.An ACNielsen poll showed Latham recording a 20-year high for an opposition leader’s approval rating of 62 per cent and that he lagged Prime Minister John Howard as preferred prime minister by just four percentage points (47 to 43 per cent).Labor’s primary vote, according to the poll, is now outstripping the government (43 per cent to 39 per cent), putting it in a position to win a bigger majority than that now enjoyed by the coalition.Mr Latham led the attack on the government’s spending record, contrasting $700 million spent on advertising campaigns with the fact that more than 500,000 Australians were waiting to get their teeth fixed.He contrasted the $140 million spent on the National Office for the Information Economy with money that could be spent on Labor’s Read Aloud program to give books to young children.The attack on the government became personal when Labor frontbencher Craig Emerson forced Mr Howard to say he would investigate the use of VIP aircraft by Mr Costello and other government MPs to fly to Canberra at the start of parliamentary sitting weeks.Shadow treasurer Simon Crean also pursued the issue, claiming the government had spent $5 billion between the budget last May and December plus $3.5 billion in the past three months.Mr Howard responded by attacking Labor for not passing a range of cost-saving measures in the 2002 budget.Labor also queried the spending of more than $2 billion in seven years on government consultancies and asked Mr Howard about his personal intervention to remove the sale of 22 golf courses owned by the Department of Defence from a list of proposed savings put to cabinet’s expenditure review committee during preparations for this year’s budget.

March 3, 2004Presidential Howard loses blind faithful
Treasurer Peter Costello was lavishly praised for getting the government back “on the front foot”.And there was a well-directed poke at Prime Minister John Howard for allowing the biggest branch-stacking exercise in recent memory to occur in his own state party organisation.These are interesting times in the coalition party room.It’s not so much that the members are permanently revolting against the Prime Minister, or even planning a revolution. It’s just that they are not going to be led blindly onwards by Howard any more.The presidency is dead. Long live the republic, perhaps.Howard told his MPs yesterday that politics was now “back to normal”. But it was probably not the sort of normality any of them would be enjoying.On Monday, coalition MPs had signed off on a report saying the government had not given the Australian people an accurate picture of the state of Iraq’s weapons of mass destruction and the justification for war was legally questionable.Yesterday, Trade Minister Mark Vaile was forced to cancel the release of the detail of the much-vaunted free-trade agreement with the US, apparently because of a serious conflict with the US on one section, and tell parliament that “nothing is agreed until everything is agreed”.(This prompted opposition interjections questioning what it was the government had been talking about for the past three weeks.)The dumped MP for the Sydney seat of Wentworth, Peter King , who lost his fierce preselection battle to Malcolm Turnbull , floated the possibility that he might leave parliament before the next election, forcing an unwelcome by-election.The Prime Minister was back in full election-year mode, dispensing more money to the veterans and sugar growers, two groups that could make a big difference in the forthcoming poll.All the factors that betray the government’s continuing sense of loss of control, of the game turning against it, were on display in the party-room meeting, and later in federal parliament.There was the spectre of Howard personally briefing the party room on the revised package of veterans’ entitlements while his Veterans Affairs Minister, Danna Vale , sat mute. He had already spent Monday night briefing MPs who had stood up to him on an earlier cabinet proposal.And there were two other sentiments at work.There has been a growing sense of anger within coalition ranks in recent days about the unseemly battle for preselection in Wentworth between the incumbent King and the (ultimately successful) Turnbull.

The Prime Minister, it is argued, has never been shy of complaining about factionalism in the Liberal Party in such states as Queensland and South Australia.

“Yet we get the biggest branch-stacking in history and it’s just happened in the NSW division,” one MP observed after the meeting, noting that Howard had had a proudly long and intense relationship with the NSW branch.

The sentiment about the preselection battle was put fairly bluntly yesterday by the usually mild-mannered Victorian MP David Hawker .

He rose in the party room to say he had been in politics for 20 years, and the profession had always had its difficulties. It was tough and competitive but he had always believed the Liberal Party was a strictly democratic organisation.

The events in Wentworth appear to have shaken his faith in this view.

He never thought he would see the day, for example, when people would pay for advertising on radio stations seeking help with preselections.

Another MP’s take on his remarks was that, whatever the valuable qualities of the candidates, it was a sad day for the Liberal Party when someone could, essentially, buy their way into a seat by being able to devote considerable financial resources to harnessing new members and campaign support .

The Prime Minister is believed to have expressed his sorrow at the cutting short of King’s political career, but said that such were the breaks. The Liberal Party was a democracy where people could all have a go, he said.

There was a perhaps unfortunate conjunction of events at this point, when another Victorian MP, Sophie Panopolous, appeared to have a coughing fit.

“Pardon?” said the Prime Minister, somewhat distracted.

Now there is certainly some considerable republican/monarchist sentiment running through the background of feeling in the party-room about the Wentworth by-election, Turnbull being the prominent republican that he is.

But the perception that the Prime Minister’s representative on the preselection panel, senator Bill Heffernan, had been campaigning aggressively against King in the week leading up to the preselection battle has not helped the run of feelings.

(Heffernan has strenuously denied such a campaign to colleagues).

By contrast with the delicate feelings aroused by the Wentworth spectacular, there was a striking note of warmth around the Treasurer yesterday and his retirement incomes statement last week.

“A lot of people got up and said what a good job Costello had done, putting us on the front foot,” one MP said. “And it wasn’t just the usual Costello groupies,” added another.

The warmth of the deeply conservative Tasmanian senator Guy Barnett’s approval for Costello taking the initiative on a forward agenda was noted among the more than 10 speakers who commended the Treasurer.

There is no coup in sight but several MPs said there was a belief that now was the time for Costello, Tony Abbott and Brendan Nelson to be given more central roles in selling the government’s message

March 2, 2004Spies face another Iraq inquiry
The federal government’s ability to deflect criticism over its Iraq war intelligence has been undermined by a parliamentary committee’s finding that it did not present an accurate picture of the weapons threat and that the conflict was legally questionable.The committee yesterday delivered a tougher than expected report on intelligence about Iraq’s weapons in the lead-up to the war that criticises both the government and the Office of National Assessments .The report says government ministers’ public statements were “more strongly worded than most of the Australian intelligence community’s judgements” and were incomplete in documenting intelligence unfavourable to the case for war.The report, by the joint parliamentary committee on the intelligence agencies, says the Defence Intelligence Organisation maintained a sceptical and cautious approach to overseas intelligence on Iraq’s weapons of mass destruction, but says ONA is not
sufficiently resourced to give effective advice on such issues in the future.”The case made by the government was that Iraq possessed WMD in large quantities and posed a grave and unacceptable threat to the region and the world, particularly as there was a danger that Iraq’s WMD might be passed to terrorist organisations,” the report says.”This is not the picture that emerges from an examination of all the assessments provided to the committee by Australia’s two analytical agencies.”The assessment of Australian agencies was that any weapons stockpile was small, and the chance of Iraq being able to reactivate a weapons program was remote.The government to date has largely escaped the criticism faced by the US and British governments over their presentation of intelligence material, but the report is likely to revive the debate in Australia.Prime Minister John Howard said he would agree to the recommendation of an independent assessment of the performance of the intelligence agencies by “an experienced former intelligence expert” to report in about three months.However, the report recommends that the new inquiry reports only to the national security committee of federal cabinet, meaning the public is unlikely to ever see the results of the inquiry.Mr Howard and Foreign Minister Alexander Downer asserted that the report, despite its damning findings, vindicated the government’s use of intelligence in the lead-up to the war in Iraq because it had found “no evidence that political pressure was applied to the agencies” and “no overt pressure from the government to change assessments”.However, the committee pointedly said it was “aware that a fine distinction might often be made between `being relevant to the policy issues of concern to the government’ and catering to the policy concerns of the government”. “Changes did occur in the nature and tone of some assessments,” it says.Labor committee member and former opposition leader Kim Beazley put it more bluntly when he told parliament: “The exaggerations, the sense of immediacy, was the work of politicians outside the intelligence advice they were being presented.”Labor foreign affairs spokesman Kevin Rudd said the report was “a catalogue of intelligence failure and it is a catalogue of a government cherry-picking the intelligence advice it received to suit its own political objective”.Mr Rudd said Australia’s adoption of a global policy of military pre-emption had to rest on accurate intelligence.Mr Howard’s real failure had been to create a new strategic environment in being part of a coalition of the willing, but to leave Australia’s intelligence agencies without the resources to cover the field.

The report finds that, in making its case for the war, government ministers relied heavily on more aggressive overseas assessments, rather than the more moderate ones made by Australian agencies.

Mr Howard’s frequent assertion that his speeches were vetted by intelligence agencies is repudiated with evidence that the intelligence agencies did not vet the speeches in their totality for accuracy.

March 1, 2004Alms for poor church schools
Laura Tingle and Annabel Hepworth
The Howard government has increased funding for Catholic schools by $362 million in an attempt to stem damaging perceptions that its philosophy of choice in education has favoured elite private institutions over public and poorer private ones.Sources within the Catholic establishment also believe the government’s increase in funding for the four -school-year period 2005-08 aims to catch more “Catholic sentiment” even if the concept of the “Catholic vote” is no longer valid.While some Catholic schools are run by orders, most are small, systemic institutions run by the local diocese, often in new or reasonably hard-pressed economic areas.But they have been excluded from the government’s so-called SES (socio-economic status) funding model for non-government schools introduced in 2001 and have had to strike separate funding deals.The exclusion of the systemic Catholic schools from the system undermined the credibility of the government’s funding model and allowed Labor to court them.In announcing their inclusion in the SES model yesterday, Prime Minister John Howard said there was “nothing elite in a financial sense” about schools within the Catholic system.”They contain some of the most under-resourced schools in Australia,” he said at Casimir Catholic College in Sydney’s inner-west.Asked whether his move to help the neediest Catholic schools was similar to federal Opposition Leader Mark Latham’s plan for a “needs-based” schools funding model, Mr Howard said he wanted to “leave him out of it”.University of Melbourne dean of education Brian Caldwell said the Prime Minister’s announcement represented a major step forward in the achievement of a single needs-based framework for the funding of government and non-government schools that treated the contributions of commonwealth and states as a total package.Opposition education spokeswoman Jenny Macklin welcomed the additional funding but said the announcement “really shows that this is policy-making on the run because John Howard has not addressed the needs of so many other schools around this country”.The Australian Education Union slammed the funding announcement, which would deliver the nation’s 1610 Catholic systemic schools $12.5 billion in the next funding quadrennium .AEU federal president Pat Byrne said the Howard government had no regard for public education, which educates about 70 per cent of students.But NSW Parents Council executive officer Duncan McInnes said the move was significant in bringing consistency to school funding.

March 1, 2004Ambitious, talented – but is it enough?
John Howard, Peter Costello and Tony Abbott were all backing his opponent. Welcome to the parliamentary Liberal Party, Malcolm Turnbull.His win in the bitterly fought Wentworth preselection at the weekend appears to have ultimately come down to some bad strategic moves by his opponent, sitting member Peter King, rather than anything dodgy on Turnbull’s part.But the record recruitment drive and aggressive campaigning that Turnbull engaged in has left an unpleasant taste in the mouths of many Liberals, which suggests the merchant banker will have an interesting time making friends in the parliamentary party if, as expected, he wins the bluer-than-blue-ribbon seat at the next federal election.Senior ministers were yesterday not even going through the niceties they engaged in last year about his tactics.So what does the spectre of his arrival in Canberra really mean?Obviously, his ambition and profile and powerful business connections will keep him in the spotlight as a future leadership contender.Mark Latham has shown it is possible to storm through the crowd of established contenders and claim the main prize.He’s also shown what was required to do that: being right “out there” on policy all the time, and having enough rat cunning and powerful party supporters advising him to be in a position to seize the moment when it came.Turnbull brings undoubted intellectual firepower to the party, the capacity to pursue a brief with extraordinary aggression, and charm when he chooses to turn it on.Politics is different, though. Just consider the clanging noises that followed his response to the question of whether he was concerned about the prospect of being in opposition.”In some respects, opposition would suit my temperament,” Turnbull said.Costello observed through gritted teeth that he would recommend to Turnbull that if opposition suited his temperament, he might wish to wait a while before he experienced it.John Howard is right in saying it is the “kiss of death” for anybody to say they are prime ministerial material before they have even entered parliament.And the Prime Minister certainly wasn’t going to start talking about putting Turnbull on the front bench. But much of Turnbull’s future will depend on what the post-Howard Liberal Party looks like, at both the party machine and parliamentary level.Turnbull has lots of conspicuous support from some very powerful people.

But not all of them are long-time Liberal Party warriors.

And it is not clear how successful the Prime Minister would be in manipulating events in the NSW party machine if he were to lose the next federal election.

Given both those factors, and Howard’s clear manoeuvring to ensure Abbott remains in contention for the leadership, Turnbull is likely to face considerable resistance to his rise from within the parliamentary party and unclear sources of support from
the lay party.

Politics keeps getting more interesting.

March 1, 2004Iraq inquiry findings to be delayed
Australians are unlikely to get the findings of an independent inquiry on Iraq war intelligence until after the federal election, with Foreign Minister Alexander Downer suggesting an inquiry report before the campaign would be “politicised”.Mr Downer’s comments came on the eve of the release today of the parliamentary inquiry into Australia’s intelligence on Iraq’s weapons of mass destruction. The release of the report will mark the return of a frenzied week in federal parliament, with the government keen to get its Medicare Safety Net legislation through the Senate , facing a National Party revolt over quarantine changes on bananas from the Philippines, and releasing the details of its free-trade agreement with the United States.A Senate inquiry into poverty will also be released later this week, when parliament is expected to be dominated by controversy about the Iraq war and the government’s retirement income plans announced last week .It has been widely speculated that the bipartisan but government-dominated committee on Australian Security Intelligence Organisation (ASIO), Australian Secret Intelligence Service (ASIS) and Defence Signals Directorate (DSD), headed by former government minister David Jull , will recommend an independent inquiry into the intelligence available when the government committed Australia to the war in Iraq.Mr Downer appeared to confirm yesterday that the committee’s report would say that in the period up to September 2002, Australia’s intelligence agencies were sceptical about Iraq’s capacity to produce large quantities of chemical and biological weapons.It was put to Mr Downer on the Nine Network’s Sunday program that the intelligence agencies’ assessment at that time was that, if WMD programs did exist at all in Iraq, there was a capacity for Iraq to restart chemical and biological weapons programs, but that they would only be able to produce small quantities of the deadly agents.The Foreign Minister denied that such a finding would be at variance with what the government had said in the lead-up to the war in Iraq. He said that if people were “serious about wanting inquiries, the point is that you need the inquiry to be able to do its job properly, and I don’t think if there are to be inquiries, they should be politicised inquiries”.He argued an inquiry should allow the Iraq Survey Group (ISG) to finish its work in Iraq.Opposition foreign affairs spokesman Kevin Rudd accused Mr Downer of starting a “weasel out” campaign on an independent commission of inquiry.Mr Rudd dismissed Mr Downer’s argument that an inquiry would need to wait until the ISG had finished its work. “The problem is, much of the ISG’s staff complement has already been reduced and redirected to other tasks concerning the identification and location of terrorists,” he said.It was now clear that the Howard government’s strategy was to postpone the reporting date for an independent commission of inquiry “to a politically less inconvenient time”.

March 1, 2004Job agencies ask PM for another lifeline
Agencies in the Howard government’s troubled Job Network want another cash injection to keep them afloat, as well as the possible renegotiation of a controversial $2.5 billion contract.The agencies, which were set up in 1997 to replace the Commonwealth Employment Service, are alarmed that the number of customers predicted by the government when they entered the latest Job Network contract last year have not materialised.They say the fee structure for many of the services is not viable and have raised the possibility of seeking compensation for the cost of massive computer problems in the system in its early months.The agencies’ views are contained in a January board discussion paper of their peak body, the National Employment Services Association, a copy of which has been obtained by The Australian Financial Review.They come after revelations, contained in Freedom of Information documents obtained by opposition employment services spokesman Anthony Albanese, that disabled people, parents and older workers were unwittingly being used to prop up the Job Network contract, even after it had received a $670 million-a-year bail-out.The internal departmental documents showed the Job Network employment agency system had been in serious trouble since a new contract between the government and the companies in the network began last July.Bureaucrats were put to work finding ways to get people who receive income support, but who are not required by law to seek a job in return, to register with Job Network agencies.Within weeks of the contract starting last July, the government was forced to change its conditions to provide additional payments to agencies, regardless of whether job seekers turned up, and to compensate them for extra work in chasing job seekers who had been promised to them but who had not turned up for interviews.Employment Services Minister Mal Brough confirmed at the time that the government was “increasing payments for the Job Network members”.But he said this was not a bail-out as the additional payments to job services providers were not outside the Job Network’s budget of $2.5 billion over three years.Despite the changes, the January NESA board paper says the agencies have found that the fee structure for the most basic service, job placement (registering a job seeker on the national computer system), is “insufficient to deliver the service” and
is not independently viable. Furthermore, cuts to fees for other services mean they can no longer cross-subsidise job-placement work, where fees have been cut from $375 to $165.They say the fees paid for helping the long-term unemployed are also inadequate.Confirming reports in the AFR in recent weeks about discrepancies in the number of job seekers in the market, compared with what agencies were promised, the board paper says that the total number of active job seekers “is substantially less than the indicative number [the Department of Employment and Workplace Relations] presented during the tender process”.The NESA board says it is seeking a review of the fee structure under the contract and wants the department to compensate the industry for lost productivity and increased costs because of major computer problems through an “industry development package”.The board’s assessment is that the agencies are likely to experience negative cash flow over the first three months of the year and that “an immediate cash injection will be required to sustain providers”.NESA is also seeking to overturn the government’s move two years ago to take funds for job seekers out of their general revenue pool and put them in special job seeker accounts.

Mr Albanese said yesterday that the NESA document made it clear that the government “has been alerted to the crisis but not alarmed enough to take action”.

“It isn’t surprising that the providers have confirmed what the Freedom of Information documents show, which is massive problems in the system,” he said.

February 28, 2004Labor says tax cuts are a super way
Laura Tingle and Morgan Mellish with AAP
The Labor Party is expected to address the issue of the adequacy of present superannuation savings through tax cuts, rather than increasing contributions, when it outlines its policies next month.This week, the Howard government proposed reforms allowing people to receive an income stream from super savings to top up part-time work, making it easier for older people to continue to stay in the workforce.But former prime minister Paul Keating argued that such measures were only necessary because the level of contributions had not increased from the 9 per cent they stood at when he left office. Labor sources argue that a push to 15 per cent now is not necessary, and that the group of middle-income earners who need assistance can have their super adequacy addressed by tax changes.Mr Latham is scheduled to address the Investment and Financial Services Association in Sydney on March 15, and may outline more details of his super policy plans then.Council of Small Business Organisations of Australia spokesman Tony Steven yesterday praised the added flexibility available through the proposed superannuation changes but said the government “should continue to look at the proposal in terms of asset-rich, cash-poor small business owners and the extent of effective succession planning that takes place in the small and micro business sector”.Meanwhile, Prime Minister John Howard launched his election-year pitch to big business on Friday with a warning that Labor’s industrial relations policies threatened the nation’s prosperity.”Can you imagine what the union movement will do to small business? Can you imagine what will happen to the industrial relations laws of Australia?” he told a function organised by the Liberal Party’s premier fund-raising arm, the Millennium Forum.Smart Money, pages 44, 45

February 28, 2004Government tinkers at the edges of an old problem
Encouraging older people to work for longer was billed as the government’s super solution, but minor policy changes don’t tackle the real issue.If this year’s federal election campaign is to be the first battle in years between notions of small and big government and individual responsibility versus community obligations, this week’s first serious policy salvos have exposed some glaring gaps
in both side’s battle lines.The Howard government made a range of announcements about superannuation reform that may have appealed to older Australians, but probably left everyone else feeling fairly gloomy about the prospect of having to work longer and harder.When it released its updated intergenerational report, which reinforced the message that not only would we all need to work longer, but more of those who don’t work would need to, its implicit message was that the path to continuing economic prosperity lies in a maximised, deregulated labour market and a social obligation to work, particularly for those receiving income support from the government.It was tough political medicine, designed to establish the policy divide with Labor, which it characterises as being about big spending, big government.But as leading health and ageing lobbyist Francis Sullivan of Catholic Health and Welfare observed this week, the government’s pitch lacked any reference to what will really be the problem issue facing Australia in 40 years: paying for expensive health services for our population.”Why wouldn’t the Treasurer just flag that individuals will have to pay more?” Sullivan says. “This will be the election debate, won’t it? It will be about the trade off between individual and community on health and education.”Sullivan’s argument is that if you’re going to deliver a tough message, and try to make a political virtue of it, you might as well address the central issue rather than skirt around it.And he has a point.For even as the government warns of the increasing costs of an ageing population in 40 years’ time, and uses it to try to reinvigorate its push to force more income support recipients into work, it has run away from a policy central to this very issue.Just over a week ago Prime Minister John Howard stunned the aged-care industry by appearing to rule out nursing home accommodation bonds, even before the recommendations of a $7 million inquiry into aged care funding had been made public.Whatever the social issues involved in the bonds, and their political dangers, they go to the very heart of the issue the government was appearing to be so virtuous about this week.The inconsistency only adds to the view that the retirement incomes policy announcements this week were rolled out and pumped up in a slightly desperate attempt to regain the political initiative.The superannuation changes alone are not radical enough to really transform the political stage or entrench the coalition’s political position as a party still familiar with “doing” words.And when quizzed about the renewed focus on disability pensioners, it emerged that the government has no new plans there, other than the pension reforms already stalled in the Senate.But the question is whether the government can provoke an attackable response from the Labor camp.

Labor Leader Mark Latham has been busy since his ascension to the top job remaking himself in the public mind and saying as little as possible except on very carefully targeted, and relatively cost-free issues about policy.

It has worked to date. Even with this week’s revelations in The Australian Financial Review of Latham’s radical tax plans to offer $10 billion of tax cuts paid for largely by changes in the capital tax regimes the response has been to play the issue with a dead bat to minimise its coverage in the rest of the media.

Latham’s response to questions about the story has been to dismiss the reports that he had commissioned Access Economics to work on the tax strategy as just one of many consultants’ reports, rather than feed a speculative frenzy by denying or confirming it.

But the government knows he can’t stay quiet for ever on policy.

Latham welcomed the government’s superannuation proposals this week and quickly said he would back them.

He foreshadowed that Labor would release the next stage of its own superannuation policy next month .

But what isn’t clear yet is whether Latham would have been grateful for Paul Keating’s re-emergence this week in the domestic political debate.

For here was the former prime minister, one of Latham’s most significant backroom backers and advisers in the lead-up to his leadership bid, jumping into the pool on superannuation policy talking about an issue that has not been central to Labor’s superannuation strategy.

Until now, what Labor has wanted to talk about was fixing fees and taxes, which most polling shows people believe to be too high.

But by week’s end Keating had nailed the issue that goes to the heart of the ageing population debate the inadequacy of current superannuation contributions and had a shot at Labor as well as the coalition for not pursuing it.

His argument is simple: if superannuation contributions now were 15 per cent instead of 9 per cent, the need for the current debate about working longer would not be there.

Keating suffered a huge political backlash when he delayed the second round of tax cuts he had promised in the 1993 election the “LAW tax cuts” and replaced them with a commitment to pay their equivalent in superannuation contributions to lift what John Howard now calls “the community standard” to 12 per cent contributions.

It would have been boosted by a further 3 per cent coming from the workforce under a deal brokered with the ACTU. But the incoming Howard government in turn broke a promise to pay the former government’s tax cuts as a savings initiative.

Labor scared of offending the business community has shied away from the subject ever since.

The only comment has been a suggestion from Simon Crean in 1991 that he would like to see the contributions rate above 9 per cent.

The return to Labor’s honourable record on installing a national compulsory superannuation system as inadequate as it may be should not fall outside the scope of where Latham seems to have been pushing Labor. But nobody in the Labor camp was going to go there this week.

Monday brings a return to parliamentary hostilities after a break that promised a policy fightback, but which delivered some policy incrementalism. It might have got people talking about the government again, but it hasn’t been enough to force Latham out into the open.

February 27, 2004Blame Howard’s way: Keating
Australians will be condemned to work into old age because of the government’s refusal to lift superannuation contributions beyond the 9 per cent level set by Labor, according to former prime minister Paul Keating.Mr Keating who oversaw the introduction of compulsory superannuation in the 1980s argues in today’s The Australian Financial Review that if the Howard government had delivered on the previous government’s promise to lift super contributions from 9 per cent to 15 per cent, Australia would not face the problems of an ageing population highlighted this week.But he also criticises the Labor Party for failing to champion higher super contributions since 1996.Mr Keating suffered a political backlash when he delayed the second round of tax cuts he had promised in the 1993 election and replaced them with a commitment to pay their equivalent in superannuation contributions.But the incoming Howard government in turn broke a promise to pay the former government’s tax cuts as a savings initiative.”Had the government not broken John Howard’s 1996 election promise to pay as savings the second round of the LAW tax cuts, equivalent of 3 per cent of wages and salaries, into individual super accounts, or something commensurate, compulsory super would now stand at 15 per cent,” Mr Keating says.He says there is nothing wrong with Treasurer Peter Costello’s proposed super changes, “but there is nothing brave about them either”.”They are, very much, the outcome of a very typical exercise in Treasury tinkering. The burden of the government’s announcement goes only to the question of access to savings. It does nothing whatsoever in respect of adequacy. Compulsory superannuation saving at 9 per cent of wages and salaries is simply not enough.”Even someone joining a super scheme at 20 and retiring at 60 on contribution levels could expect payments equivalent to half average weekly earnings in retirement.Of Mr Costello’s proposals, Mr Keating says there can be no reasonable objection to workers being able to secure a weekly income from superannuation while working past 55, and such a concession may encourage some to stay in the workforce longer.But this will only work if they can find a job, he says.A spokesman for the shadow Treasurer, Simon Crean, said yesterday that super adequacy was an issue for Labor.

February 27, 2004Pick on pensioners ? Pull the other leg
Canberra observed
Paul Keating used to borrow from Manning Clark, and others, to describe the divide between Australia’s major political parties as one between the “punishers and straighteners” and the “enlargers and lovers”.Such lofty caricatures came to mind this week as John Howard and Peter Costello told us all to work longer and save more.This week’s attempt by the government to regain the airwaves from Mark Latham has produced a complex mix of political messages.And abstracting from the worthy detail of the Treasurer’s retirement incomes policy announcement, one can only wonder whether it has actually produced a victory for Latham.For while the government was reinforcing the message of “your sensible government is at work”, it risked unwittingly tripping over into the Keating-esque caricature of the coalition as Australia’s political punishers and straighteners.Costello may have a very good policy point about us all having to keep working into our dotage to keep our ageing population afloat in 40 years.It is not clear, however, that “work makes you free” is a message any of us want to hear.The whole push also becomes a bit more murky because of the government’s sudden need to look like it is doing something, and because of the renewed assault on people surviving on disability and other pensions who are with us in the here and now, not in 40 years’ time.The only possible political win from all this “hard yakka” message, it would seem, would be if you intend to run the mother of all scare campaigns against Latham over economic management.Given The Australian Financial Review’s revelations this week about Latham’s contemplations over the capital gains tax and the successful history of the coalition’s use of the mere suggestion of wealth taxes against Labor in 1980 that can’t be entirely out of the question.The government has clearly decided to respond to his general embrace of spending on enlarged government services by brushing off its small-government, deregulatory suits and appears to be heading off en masse to a meeting of the H R Nicholls Society .So the “ageing population” issue is being wrapped in the clothing of a deregulationist/re-regulationist battle for Australia’s future.We are also left with the slightly uncomfortable feeling that disability pensioners may become the next group to be vilified if the government needs a distraction from its lack of an agenda for another term in office.The statistics Costello quoted on Wednesday do seem extraordinary:About 2.7 million working-age Australians are on income support more than one in five of all adults of working age.

Over 3 per cent of the population now receives the disability support pension, compared to just under 1 per cent who received the invalid pension 40 years ago. This includes more than 225,000 men or one in every eight aged between 50 and 64.

The numbers in the Treasurer’s case might seem compelling. The implicit message that we can’t possibly have 225,000 men aged between 50 and 64 in the community who are disabled is clear.

But if the government is going to win this argument, it is going to have to tell us a bit more about how this group of people materialised and address the complexities of dealing with the broader problems of disabled pensioners, and, for that matter,
other recipients of income support.

Why, for example, under a government that has made mutual obligation and tough social security tests part of the political furniture, has there been an increase of 400,000 in the number of working-age Australians on income support since it came to office in 1996?

And is the government implying that there are 225,000 men aged between 50 and 64 with dodgy bad backs who (wink, wink) can really go back to work and are on a bludge?

The disability pension has become something of a dumping ground for all the too-hard problems in Australian society and the Australian economy.

Whether it is people who have been shunted out of state workers’ compensation schemes, older women who can no longer access the age pension until 65, older men “restructured” out of blue-collar work, people who are long-term unemployed and who have
ultimately been assessed, brutally but pragmatically, as unemployable: they all seem to end up on the DSP partly because they won’t continually have to be required to seek work.

And, of course, there are the mildly to severely disabled who have been increasing in number because of advances in medical technology.

For the past few weeks the AFR has been reporting at length on problems in the government’s Job Network, where a well-intentioned but flawed financial model has left the public and private-sector agencies that now provide employment services to the unemployed on behalf of the government in deep financial trouble.

Documents obtained under freedom of information rules by opposition employment services spokesman Anthony Albanese have recorded bureaucrats’ desperate attempts to prop up the agencies by forcing as many potential job seekers through the door as possible.

People receiving the disability support pension have been a key target of this campaign, and the experience of trying to transform this group into job seekers should be an important one for this debate.

A few things have emerged from the documents.

One is that there are a lot of people who really are just unemployable, and trying to force them into work does nothing more than increase their trauma and anxiety.

Another is that there are simply not enough people or resources in Australia’s system to help them.

One document from the Department of Family and Community Services, or FACS, outlines its anxiety that DSP recipients who are pointed at a Job Network agency will quickly be assessed as beyond the capacity of that agency’s help and will be referred back to FACs’s personal support program in huge numbers. (There are 30,000 funded places in the program, and a waiting list of more than 5000. FACS projections were that another 30,000 might land on it as a result of the change).

A third reflects the general stinginess or, more politely, false economies of this government’s outsourcing initiatives.

One Job Network agency which dealt specifically with disabled workers, Options Community Enterprises , folded last year because it simply wasn’t receiving enough money to function.

Before it closed, though, its Bill Gye provided figures to an industry conference which demonstrated the point.

Under the new Job Network contract, he said, his agency was receiving payments of $56,287 to assist 47 disabled workers, whereas it had received $98,679 to assist 50 under the previous three-year contract, which ran until July last year.

Which all suggests that if the government reckons it’s going to save some money on disability pensions, it might cost it a bit more to do so up front.

February 26, 2004Costello : you can retire and work
· New super rules · Tougher asset tests · Welfare crackdown
Older people will stay in the workforce longer under the federal government’s bid to regain its political ascendancy with a long-awaited shake-up in superannuation and retirement rules.Treasurer Peter Costello has also moved to refashion economic policy towards preparing Australia for the growing costs of an ageing population with the pension changes and a push for more welfare and workplace reform.The key changes will allow people to work part time and draw on their superannuation savings, including through a new form of pension that will give them the opportunity to make their savings last longer.But rules will be tightened for the assets test for age pensions and the use of super funds for termination payments.The superannuation industry, which welcomed proposals that will broaden the range of products they can offer their customers, is predicting a boom in the newly approved growth pensions.”Super was set up decades ago as a benefit of being in employment. The government has understood now it’s much more than that,” said BT Financial Group’s Kevin Smith .Opposition Leader Mark Latham and the Democrats both backed the changes, giving the government’s initiative a boost after previous opposition in the Senate to other reforms dealing with demographic change.Mr Costello declared “demography is destiny” as he warned that taxes would have to rise by up to 40 per cent unless the economy grew more quickly to generate the income needed to fund an ageing population.The proportion of the population over 65 is projected to double to about 25 per cent over the next 40 years, while the growth in the working-age population will decline to almost zero, confronting governments with increasing welfare and health costs but a declining tax base.The long-term challenge was underlined in the government’s Intergenerational Report, which projected that growth in health, aged-care and pension costs meant spending would exceed tax revenue in 40 years by about 5 per cent of GDP.While yesterday’s reforms focus on retirement and superannuation, Mr Costello said Australia’s future depended on better health and education; better incentives for work through a new welfare system; and more workplace flexibility to keep people in the workforce longer.The reforms are part of a push by the government to reassert its economic-reform credentials as the basis for its re-election, and Prime Minister John Howard yesterday reinforced that message in a speech in Melbourne where he warned of the risks of a
Latham Labor government.”I believe Australia to be on the threshold of a new era of national achievement,” Mr Howard said. “One that will see Australia strong and secure well into the 21st century and that will give individuals and families the capacity to plan, confident that Australia can offer them both material wellbeing and social cohesion.”My note of caution is that our continued economic strength and prosperity cannot be taken for granted. It will only be maintained by disciplined and consistent policy. Too much current debate in Australia takes it as a given that economic prosperity will continue irrespective of the policies that might be applied to governments.”As foreshadowed in yesterday’s Financial Review, Mr Costello said Australians would be able to access an income stream from their superannuation savings to top up part-time work earnings as they age.He said that at the moment someone aged between 55 and 65 must retire or leave employment before they can access their superannuation benefits.

But he also announced that the government would remove the work test for superannuation contributions before age 65 to allow people not in the workforce to make super contributions, and to simplify the work test for those aged over 65 from the current system of hours worked per week to an annual work test.

It also plans to increase the choice and competition in the income-streams market by extending income-stream products such as annuities to market-linked products that did not provide a guaranteed income each year.

But the law will be amended to force super funds to start paying benefits to people once they reach 75 to ensure the massive tax concessions that support super are in fact used to support retirement incomes.

It will also force eligible termination payments to be preserved in the future and force employers to base superannuation contributions on ordinary time earnings.

Mr Costello rejected the argument from some economists that it was not necessary to make major changes now, saying that to achieve change in 30 or 40 years meant steps had to be taken today.

Speaking in Darwin yesterday, Opposition Leader Mark Latham said: “I think this is a good reform.

“It’s something that the Labor Party will be supporting when the legislation goes through the parliament.

“We established Australia’s national superannuation scheme and we are always happy to see initiatives that make it even stronger for the future.

“This is a good piece of policy and it’s something that the opposition welcomes.”
He urged the government to make further reforms including a reduction in the super contributions tax.

“I think the primary concern in superannuation remains the level of adequacy to ensure that Australians putting their money in get a guarantee the super is working for them, it’s not working for fees, charges and excessive levels of taxation,” he said.

Mr Latham also welcomed the government’s move on the workforce participation of people with mild disabilities, but he called on the government to abandon its past legislation on the disability support pension.

“This is a goal that the Labor Party also supports, but we again urge the government to recognise that we really won’t get people with a mild disability into good and lasting jobs unless you invest in them,” Mr Latham said.

February 26, 2004Howard desperately needs an agenda
Peter Costello has an agenda. John Howard does not.If ever there was a damning case for why the Prime Minister should have resigned last year, or why this government deserves to be thrashed at the coming federal election, it was the vast quantities of open space in Howard’s speech yesterday.If you think that is a tough judgement, let us go back to the Prime Minister’s own words to the Committee for Economic Development of Australia in late 2002.”A strong conviction that I brought to office was that Australians needed and wanted a government prepared to carry out vital reforms,” he said, while outlining the government’s reform agenda amidst criticisms it didn’t have one.”That suited me and it suited my senior colleagues. I’ve never seen any point in being in government unless you use the opportunity to change things for the better when change is needed.”He was to report back to CEDA last year but cancelled his speech on the “government’s strategic policy priorities and framework”.Yesterday’s speech was the replacement. But the subject had become “Australia’s long-term challenges”. And, apart from the measures that had been announced earlier by the Treasurer on retirement incomes policy, there was a distinct absence of any strategic policy priorities.There was absolutely nothing in the speech that suggested the government had any substantive agenda for the rest of this term, let alone another one.Instead, in 10 pages of speech and 45 pages of mind-numbing background notes, Howard laid out why the government had been so good to date and why people should not let that nasty Mark Latham take hold of the country.On work and family issues, for example, the Prime Minister outlined at great length how a government taskforce had examined the issue and found that, gee, the government already had done heaps to help ease the burdens.On national security, we have the world’s greatest defence forces, upon which the government spent fabulous amounts of our money.Lest there be any suggestion the Prime Minister didn’t want to overshadow the Treasurer on his big day, let’s not forget that this was supposed to be the week when the government let rip its big economic guns on the Opposition Leader to re-establish
its credentials as the better economic manager.According to Howard, the government’s first building block to “deliver Australia’s prosperity and security” was restoring “Australia’s public finances”.Oh, please. After an early commitment to slashing and burning particularly slashing and burning programs aimed at those who can least afford it this government has been a fiscal floozy, its profligacy only camouflaged by record tax hauls and good economic luck.Costello’s reforms will play out well in the important coalition constituency where income security in old age is important. It has taken a while, but he has delivered some good policy on superannuation.One wonders what he would do if he had his head in other areas.

The brutal truth is that we will now probably never know.

Pub: Australian Financial Review
Pubdate: 25-Feb-2004
Edition: Late
Section: News
Page: 5
Wordcount: 197
Pensioner shift queried
Laura Tingle, Chief political correspondent
As the Howard government argues that disabled pensioners should be required to seek work, new documents show bureaucrats have serious doubts about how many could be moved into the workforce.Freedom of Information documents obtained by opposition employment spokesman Anthony Albanese show that the government was already in deep trouble with such attempts last year because of the unsuitability of many disabled pensioners for employment, or because government services were not in place to help them.An August 26, 2003, memo from a senior Family and Community Services official noted that the Department of Employment and Workplace Relations believed changes in the pipeline, including requiring disability support pensioners to have their support reviewed annually, would increase the number of job seekers.”[The changes] have the potential to bring into the market almost 150,000 extra job seekers , including 60,000 on parenting payments , 66,000 on disability support , 9000 non-allowee youth and 13,000 on other pensions or allowances (for example partner, mature age, carer) ,” the memo said.The official said though 66,000 disability pensioners might be signed up as job seekers, most were “unlikely to be candidates for full job network services”.

February 25, 2004Plan for older workers to access super
Laura Tingle and Mark Davis with AAP
Australians would be able to access an income stream from their superannuation savings to top up earnings from part-time work as they age, under proposals to be released today by Treasurer Peter Costello .Under existing rules, someone aged between 55 and 65 must retire or leave employment before they can access their superannuation benefits.The government thinks this rule may lead to people retiring early so they can access their super, and possibly access the pension later.As part of a policy aimed at keeping older workers in the workforce longer, Mr Costello will propose that, from July 1, 2005 , people who have not retired will be able to access their superannuation as a non-commutable income stream once they reach their superannuation preservation age .That would allow people to choose to continue to work part-time and use part of their superannuation to supplement their income instead of leaving the workforce altogether.Meanwhile, in a speech to be delivered to the Committee for Economic Development of Australia today , Prime Minister John Howard will report back on a reform agenda covering nine policy areas he outlined to the business community in late 2002 . They covered issues ranging from work and family to science and innovation, and energy reform.He will also flag that the government wants to do more to ensure that the states and territories achieve satisfactory outcomes in their spending of billions of dollars in federal grants in areas like health and education.Today’s speeches by Mr Howard and Mr Costello are part of a push by the government to persuade the electorate that it has concrete plans for the future and that the strong economic performance in recent years cannot be taken for granted if there is a
change of government.As part of the blitz, Industry Minister Ian Macfarlane yesterday listed continued reform of the national energy market, development of a new innovation and research assistance package and further reductions of costs for resource developers as the government’s main industry policy goals for the year.Labor’s standing in the electorate has improved significantly since Mr Latham took over as Opposition Leader last December.The latest Newspoll, published yesterday, showed 58 per cent of respondents were satisfied with Mr Latham’s performance, one of the highest approval ratings for an Opposition Leader on record.But the poll also showed a slight increase in the number of respondents saying they would give the coalition their first preference vote. The government’s primary vote was up three points to 44 per cent, compared with Labor’s 40 per cent share .The Prime Minister and Opposition Leader were both on the campaign trail again yesterday. Mr Howard visited marginal electorates in Melbourne and Mr Latham was in the Northern Territory.Mr Howard said on ABC Radio that one of the big challenges, as the average age of the population increased in coming years was to keep more people in the workforce.

February 24, 2004Costello’s workplace revolution
Laura Tingle, Chief political correspondent with Mark Davis
More people would be forced into the workforce to support an ageing population and individual contracts would be used to foster family-friendly workplaces under an aggressive renewal of the federal government’s deregulation agenda.A Treasury discussion paper , to be released by federal Treasurer Peter Costello tomorrow, will outline the government’s new push, suggesting that people on disability handouts and parenting payments should be required to look for work in exchange for their income support.It will also argue that more industrial relations deregulation rather than the pro-regulatory approach advocated by Labor is necessary to help support the growth of part-time work sought by people juggling work and family commitments.The agenda will foreshadow a bid to allow individuals to tailor wages and conditions to the specific skills and needs of particular jobs.The overlap in minimum award standards between state and federal jurisdictions is identified as a problem area in achieving workplace flexibility, and Mr Costello’s paper is expected particularly to nominate the federal minimum wage and award conditions as harming rather than protecting lower-paid workers.The discussion paper is part of a concerted government response to the recent political ascendancy of Opposition Leader Mark Latham.It focuses on economic policy, which is an area where the government believes Mr Latham is most vulnerable.Prime Minister John Howard yesterday warned there was a “dangerous complacency” developing over economic prosperity as he embarked on a shadow election campaign in Victoria while Mr Latham campaigned in the Northern Territory.Mr Costello is also expected to outline a range of retirement incomes initiatives at tomorrow’s AFR Outlook Congress in Sydney, against the backdrop of a discussion paper that questions whether the current superannuation preservation age, and continuing capacity to take super payments as a lump sum, encourages people to retire early.Assistant Treasurer Helen Coonan said yesterday the speech would contain “a suite of measures that will provide much more flexibility in the superannuation system, [and] some innovative new products to look at the ageing of the population to meet those demands”.Australia’s prosperity and how to maintain it is emerging as a key issue in polling by both sides of politics rather than the more mechanistic issues of budget deficits and national debt and “prosperity” is the now dominant theme in Mr Howard’s political rhetoric. Mr Latham last week referred to the “prosperity of our relationships”.Mr Howard said yesterday a complacent attitude had developed that suggested that “no matter what we do, the economic prosperity we now have will continue”.”Well, that’s not the case, because if the wrong policies were applied, if we started heavy handedly reregulating the labour market and handing power back to trade unions, if we started to spend beyond our means and we went back into debt, then the prosperity we now have would pretty quickly be dissipated.”He said he would be using a speech to the Committee for Economic Development of Australia in Melbourne tomorrow which coincides with Mr Costello’s discussions paper to deliver a message that Australia could not take its continued economic strength
for granted.”We are where we are now because of hard work and good policy. We are not there through some kind of divine intervention that has given Australia good economic conditions,” Mr Howard said.His message follows last week’s speech on work and family by Mr Latham, who proposed legislating to give workers the right to return to part-time work to meet family commitments.

Reflecting Mr Howard’s comments, the discussion paper is likely to call for a renewed push to free up economic activity, deregulate labour markets, and strengthen competition to boost economic growth and labour-force participation to fund the cost of
a rapidly ageing population and rapidly shrinking workforce.

The paper will acknowledge the need for better skills through education and a healthier population as ways of boosting workforce numbers.

But it will also pointedly note that few people of working age who receive income support are required to look for work.

While Mr Latham and the Labor Party have been emphasising the need for more child-care options for working parents, the coalition seems likely to argue that workplaces in the future will be increasingly dominated by older workers who will need other forms of support in order to keep working.

Mr Latham was campaigning in the marginal seat of the Northern Territory. In Alice Springs he visited the joint Australian-US defence communications facility at Pine Gap.

Mr Latham said Labor supported joint defence training and intelligence arrangements with the US “to keep the relationship strong”.

Last week he said Australians were concerned that economic prosperity was coinciding with social problems such as a breakdown in community relationships, pressure on families, loneliness and depression.

“As we become more prosperous as a nation, people are demanding that our prosperity has a purpose beyond the accumulation of more possessions. Increased wealth in a society does not necessarily make us happier,” Mr Latham said.

February 23, 2004Pressure to revamp Job Network in bush
The Howard government is under pressure to restructure Job Network in rural and remote Australia, with agencies pushing for funds earmarked to assist job-seekers to be made available earlier.Rural and remote agencies in Job Network are facing particularly hard times under the latest network contract, which began last July.This is because the payments structure of the contract is based on outcomes often difficult to achieve in remote labour markets which means there is no upfront cash flow for agencies to keep their operations running.The push to restructure the rural network comes as documents throw up more questions about the strategy for job services employed by the government in the bush.The number of Job Network offices in rural and remote Australia was dramatically cut in the most recent Job Network contract, though the government argued there was actually an increase in the number of sites where the network’s services were available.Federal Employment Minister Mal Brough argued that while official numbers showed 691 fewer Job Network offices in regional and remote areas, there was actually an increase in the total spread of the network through new job placement licences given to companies, such as labour-hire firms.The job placement licences enable access to the department’s job information computer and do not represent any government-funded employment assistance services.Documents obtained under the Freedom of Information Act by the opposition spokesman for employment services, Anthony Albanese, undermine Mr Brough’s claims.A ministerial briefing from April last year by the Department of Family and Community Services to its then minister, Amanda Vanstone, notes that “[the Department of Employment and Workplace Relations] has not articulated a service strategy for remote-rural job-seekers”.It also noted: “Job Network membership coverage is not available in some remote and rural areas (and appears to have reduced with the third Job Network contract) and DEWR has not yet provided a service strategy for these job- seekers.”

February 21, 2004Vaile tries to restart stalled trade talks
Laura Tingle and Mark Davis
Australia will meet its Cairns group allies in the World Trade Organisation to try to revive stalled negotiations to free up global trade in farm products.Trade Minister Mark Vaile will fly to Costa Rica this weekend where he will chair a meeting of trade ministers from the 17 countries of the Cairns group bloc of agricultural free traders in the WTO.Mr Vaile is trying to win more gains for the farm lobby after the modest outcome of the United States free-trade agreement. The sugar industry has complained bitterly about its exclusion and farmers were dealt another blow this week when the quarantine authority dropped import bans on apples, pork meat and bananas, opening the way to cheap competition.Mr Vaile said the meeting came at a crucial time in the WTO’s Doha round of negotiations, which have been bogged down since the collapse of a top-level meeting in Cancun last September.”Achieving outcomes for Australian farmers and industry remains the government’s highest priority, and agriculture is the key to unblocking the entire Doha agenda,” Mr Vaile said.The Australian-led Cairns group is the main bloc in the WTO, which has been pushing for the dismantling of tariffs and subsidies on farm goods.Queensland National Party Senator Ron Boswell conceded on Friday that the Howard government was under intense political pressure in his home state after the quarantine decision allowing the import of Philippine bananas.The banana decision is political dynamite for the coalition as, according to Senator Boswell, between 60 and 70 per cent of banana growers also grow sugar.The senior Queensland National in federal parliament, Senator Boswell has told banana growers he will investigate the basis of the decision by Biosecurity Australia to reverse a previous quarantine decision.”They’re putting a fair amount of pressure on us,” Senator Boswell said, saying his office had been inundated with phone calls and had been lobbied by leaders of the banana industry who claim the science behind the decision is wrong.This follows a commitment from Prime Minister John Howard to take “very close interest in developments” during the 60-day consultation period following the release of the decision. But he warned that “we have absolutely no intention of replacing science with ideology.”

February 21, 2004MP slams research report on viability of biofuels
A Queensland MP has accused research organisations of producing a “biased” report on the viability of biofuels, as the issue of government support for the renewable energy sector comes back to centre stage as part of the sugar debate.The federal member for the seat of Dawson, De-Anne Kelly , told the House of Representatives on Wednesday that the CSIRO, Australian Bureau of Agricultural and Resource Economics and the Bureau of Transport and Regional Economics had “a great deal to explain” about their report.Released last week, the report discusses the “appropriateness” of the government’s aim that biofuels contribute at least 350 million litres to the total fuel supply by 2010.
But it leaves little room for doubt that the government’s top scientific and applied economic advisers doubt the value of the target. It says the biofuels industry would require “substantial and ongoing assistance”, would be negative overall for the economy and would only produce jobs in the regions at a cost of about $500,000 each.”The costs of implementing a policy of assisting the Australian biofuels industry to meet a 350-million-litre biofuels target are estimated to exceed the benefits,” the report says.The biofuels issue is set to reignite because canegrowers see biofuels and particularly ethanol as an option as they begin talks with the government about restructuring assistance.The tripartite report says ethanol produced from the sources used by the monopoly producer, the Manildra Group, “appear to be [or are close to being] economically viable without government assistance”.But Mrs Kelly said the three bodies “made errors a mathematics student in high school would not be allowed to get away with”.

February 21, 2004Latham ignites `terrorist’ debate
Laura Tingle, and Mark Davis
Labor leader Mark Latham sparked a legal debate on Friday when he appeared to suggest the ALP would support retrospective laws to allow two Australians held by the US in Guantanamo Bay to be tried on terrorism charges in Australia.His comments came after it was announced that five Britons being held by the US at its military base in Cuba would be sent home within the next few weeks.Mr Latham said the British deal proved it was possible to charge terror suspects held in Guantanamo Bay on their home soil.”Our view is that the two Australians should be brought back to Australia and tried under Australian law and under Australian standards of combating terrorism,” Mr Latham said during a visit to Victoria’s south-east.The problem with trying the two men under Australian law is that the existing terrorism legislation was not in place at the time it is alleged they trained with al-Qaeda in Pakistan.This would mean the government would need to make the legislation retrospective.But in comments likely to trouble civil libertarians in his own party, Mr Latham said the ALP would support any government moves to introduce laws to allow the pair to be tried in Australia.”If the Howard government hasn’t got laws in place to do that, the onus is on them to put forward the laws into parliament and I am saying the opposition is there to assist in that task,” he said.Legal sources say there would be little chance such legislation could be brought into effect, even if it were supported by Labor, as it would be rejected by the High Court, which has previously ruled against retrospective legislation aimed at particular people held in custody.The Attorney-General, Philip Ruddock, refused on Friday to consider bringing the two Australians home.Meanwhile, Prime Minister John Howard visited the Lindsay electorate in western Sydney, which has been put back into political contention by the ascendancy of Mark Latham, who is himself from the city’s western suburbs.Mr Latham was in Gippsland, where the boundaries of two electorates have been changed, making them more marginal.Both leaders were campaigning after a brutal fortnight in federal parliament involving superannuation for MPs and changes to veterans’ entitlements.
February 20, 2004Prop up Job Network with disabled, says note
Senior Howard government ministers were told in a note in August last year of plans to push parents, the disabled and older workers into the Job Network as a way of helping prop up job network agencies.The note contradicts statements by Employment Minister Mal Brough who has denied reports in The Australian Financial Review this week that the government was attempting to encourage these groups into its troubled employment services system because of the financial difficulties of its agents.In the note, prepared jointly by Mr Brough’s Department of Employment and Workplace Relations, Centrelink and the Department of Family and Community Services, senior ministers were told on August 18 of problems with expected attendance rates under the new Job Network contract that began on July 1.”Low attendance rates have impact on some Job Network members, particularly where they have recruited their full complement of employment consultants on the expectation of job seeker attendance,” it says.Addressed to Mr Brough, his senior minister, Tony Abbott, and Family Services Minister Senator Amanda Vanstone, the note says “activity tested job seekers are much more likely to attend . . . appointments than non-activity tested job seekers such as those on parenting payment, disability support payment or partner allowance 61 per cent attendance at scheduled interviews compared with 18 per cent”. The note advises that action be taken to improve attendance rates.It says the three agencies have agreed on “job seekers in receipt of parenting payment, disability support payment and grandfathered mature age and partner allowances being actively encouraged into Job Network as quickly as possible using streamlined referral this would include a pilot where Job Network registration is encouraged at the point of initial claim for parenting payment”.An earlier internal memo in FACS also notes the need for “strategies to expand the Job Network customer base”.It says that for non-activity tested customers there is “no legislative power to compel registration at Job Network, attendance at interview (other than Centrelink) or to undertake any particular type of activity to meet participation requirements”.An August 26 memo records that Mr Brough’s department believes actively encouraging people not required to attend has “the potential to bring into the market almost 150,000 extra job seekers, including 60,000 on parenting payments, 66,000 on disability support, 9000 non allowee youth and 13,000 on other pensions or allowances”.However, in a letter to the AFR, Mr Brough takes issue with articles earlier this week which suggest “that the government is attempting to encourage parenting payment, disability support pension and other non-activity tested allowance recipients to use Job Network to `prop it up’.””In fact, these job seekers have always been able to use Job Network. However to deal with the demographic challenges Australia faces . . . it is essential that we increase the participation of people from these groups to maintain Australia’s high standard of living,” he writes.

February 20, 2004Think cane and capital punishment
Canberra observed
When John Howard began the parliamentary year using question time to sell the benefits of his free-trade agreement with the United States, he chose his first government questioner carefully.Paul Neville , the member for the Queensland seat of Hinkler , rose a tad sheepishly to ask the first Dorothy Dix question: “Would the Prime Minister advise the House of the negotiations for an Australia-US FTA?”
There was much hooting from the opposition benches: here was the coalition MP with the most marginal sugar seat in Queensland having to ask a question about a deal that was supposed to deliver so much to sugar producers but that ultimately delivered nothing.”He’s looking for a sweetener,” yelled one Labor MP.That, of course, is exactly what the Howard government now needs to find for the sugar industry.It is often said that six seats swing on the sugar industry in Queensland and northern NSW. Howard likes to tell his party room that it is “only eight seats away from political oblivion”.So sugar does have a particular resonance, even if it is highly debatable that six seats would swing on that issue alone at this point of political history.Back in Hinkler, Neville is too reasonable a man to have expected that a break into the US market alone would have solved the sugar industry’s problems and those of the coalition.But, like all politicians dealing with this industry, he will know that failure to get a deal has upped the political and economic stakes in the sugar debate at both the federal and the state level.This week the next act of the play has started in earnest.The sugar industry trekked to Canberra to start talking to the Prime Minister.But, at the same time in Brisbane, there were signs of an outbreak of peace after a long stand-off between canegrowers and the newly re-elected Labor government over the future path of industry restructuring.Premier Peter Beattie announced that he wanted to “sit down with industry leaders” and “discuss the industry’s future and particularly the potential of value-adding and diversification”.”The federal government’s FTA with the US is a fiasco for sugar and leaves the industry no choice but to step up value-adding and diversification,” Beattie said on Sunday .The FTA has given Beattie a way to shift some of the sugar heat back onto the federal government, after 12 months of being the politician canegrowers most loved to hate because of his tough proposals for restructuring the industry.He has now offered canegrowers 12 months of compulsory arbitration to force sugar millers to the bargaining table.The problem for Beattie and Howard is that things in the sugar industry have moved well beyond the “large bucket of money” stage or, for that matter, the prospects of any decent public policy.

You need no other proof of that than the fact that a large chunk of a $150 million restructuring package jointly announced by the federal and state governments in September 2002 remains unspent .

The money included $120 million from the federal government in emergency income support payments for farmers, interest rate subsidies for replanting and “regional initiatives to support industry changes and adjustment”.

The Queensland government offered another $30 million , split between a Sugar Innovation Fund , a regional change management program and $10 million in concessional loans for sugar farm consolidation.

Needless to say, the income support payments have largely been spent, but the regional initiatives and restructuring haven’t gone far.

So for all the money spent to date, all taxpayers have done is prop up an industry that is economically and environmentally unsustainable in the modern world. Despite years of talk and negotiation about restructuring, nothing much has happened. And now we face the spectre of governments trying to solve the problem months out from a federal election.

The sceptical would wonder why anything about the pattern of the past few years is likely to change, and would rate the likelihood of the income support mechanisms being replenished until at least next year as high.

Canegrowers say the deadlock with the state government has been their argument that they need an arbitration power with the sugar millers during the restructuring process.

Beattie has now offered them a short window of time to do that, which will change the dynamics of how the politics of this issue play out federally.

But there are still divisions within the industry itself.

Many are still focused on propping up the industry until some better times (unspecified) come along, a hope that had been teased out by the spectre of the FTA.

Others have concentrated on restructuring to achieve greater economies of scale and help smaller operators out of the industry. Others still essentially want to maintain the industry by abandoning the raw sugar industry for value-added products.

Most lobby groups acknowledge the need for all three to happen to varying extents, but they do have different positions.

The biggest group is Canegrowers, which along with the Australian Sugar Millers Council put forward the proposal to the Prime Minister on Wednesday night for a $590 million package over four years to rationalise and restructure.

Its proposal included “direct payments to growers and millers to provide for and prepare for restructuring and rationalisation and to assist with the immediate cash needs of growers and millers in 2004 and 2005” .

There would also be payments to producers who “subscribed to regional program and regional milestones” (unspecified), while those “who did not wish to continue would be able to capitalise payments and receive an additional re-establishment grant to assist them to leave the industry”, as well as regional restructuring plans the locals cook up.

Howard separately met two other groups that day.

The Australian Cane Farmers Association is focused on new industries, particularly ethanol.

Geoff Cox , one of Australia’s biggest sugar producers, and his group Sugar 20/20 are also pushing the case for new industries and mandatory renewable energy targets rather than industry bail-outs.

So it’s a bit unfortunate that last week a report from Australia’s premier government science advisers, led by CSIRO , put a torch to the current 350 million megalitre renewable energy target.

One gets a bad feeling that, along with big buckets of money, we are about to see the entire biofuels debate ignite once more.

Second time around, with all the players having been through their paces on these issues two years ago, the fight over money or over biofuels won’t be attractive.

February 19, 2004Rubbery figures baffle job agents
The reliability of figures given to job agencies bidding on a $2.5 billion federal government employment services contract is under question, with documents revealing bureaucrats were in deep conflict about the size of the job-seeker market.Agencies bidding for the third Job Network contract were given an estimate by the Department of Employment and Workplace Relations that their potential market was 720,000 job-seekers.But Freedom of Information documents obtained by the federal opposition show other agencies had concerns about the department’s estimates through most of last year.The documents could have major ramifications if agencies that have suffered financially from incorrect estimates of the market’s size decide to take legal action.An email on September 9 last year records departments agreeing to find “a joint view on what the real number of job-seekers is”, and suggests this joint view “might be best described as a `band’, for example 680,000 to 750,000”.A crucial issue in the debate is the number of people within the 720,000 estimate who receive benefits that do not have an attached obligation to seek work and register with the Job Network called non-activity tested job-seekers compared with those who were required to register, called activity-tested job-seekers.It appears DEWR made an incorrect assessment that a very high proportion of non-activity tested job-seekers would register with the Job Network.The Department of Prime Minister and Cabinet directed on September 9 that the joint departmental report “should include a comment that recognises that DEWR were a bit off the mark and didn’t clearly split activity-tested from non-activity tested job-seekers . . .”
The meeting was held two weeks after Employment Services Minister Mal Brough announced a $670 million bail-out for the industry on August 22 to overcome a cash flow crisis provoked by a failure of job-seekers to register as expected.Mr Brough yesterday denied Labor suggestions that there were only 500,000 people in Job Network’s case load, instead of the 720,000 mentioned in the contract.But the FOI documents reveal extraordinary confusion.”DEWR had some difficult providing a clear answer to this,” a FACS note of August 26 says.”Eventually they said that they had estimated that 80 per cent of non-activity tested job-seekers would attend . . . interviews, but weren’t clear among themselves if this related only to the group of 150,000 who were [moving from one job network contract to the next] or also applied to the people flowing into the system after [the new contract began on July 1] .”Mr Brough had constantly blamed the Job Network’s problems on a group of 60,000 unemployed people who he said had simply failed to turn up for a job interview as required.An August 27 note from Centrelink says: “DEWR are still saying that 60,000 jobs-seekers have not turned up for an interview in the Job Network and have not been suspended etc. Last week this figure was 100,000. They have no idea why this is the case but still make the assertion that these people `do not have a reasonable excuse’, which clearly they do not know.”

February 19, 2004Leader hijacked on way to the forum
Laura Tingle
We have seen the new politics. The good news is it’s not full of motherhood statements. The bad news is they’ve been replaced with fatherhood statements.Mark Latham’s run of great political speeches came to an end yesterday with a shocker. It might have reinforced his attempts to shift the agenda from the old politics to “quality of society issues”, but it also reinforced the view that he, like many before him, isn’t going to be telling us too much about what he is actually planning to do until closer to the election.The new leader, who can get his message through to the electorate, seemed to be left at home yesterday morning by the author of Civilising Global Capital. His former persona wanted to shift the public debate, which “tends to be argued from a bipolar perspective” to a “civic conversation” dealing with issues like a “crisis of masculinity”.Like Mr Latham, many husbands and wives have a “non-stop dialogue about work and family”, but they are not trying to persuade voters they have an answer to the dilemmas these conflicting parts of our lives throw up.Having an answer requires an internally consistent position.Latham’s speech argued for a “new role for government” as “facilitator and enabler” rather than top-down imposer.Yet his answer to much of the work and family dilemma was to bring the relationship between employees and their families into industrial relations law.Much of Latham’s outline of his view of government’s role in the workplace and family could have come straight out of a John Howard speech: “One of the traps in the work and family debate is for policymakers to think that they can engineer certain outcomes, based on certain family types.”Latham might not have got his own language right, but it is clearly driven by the polling on both sides that shows people aren’t interested in hearing about good economic policy any more they want to know about what the prosperity it creates can deliver.

February 19, 2004Howard highlights a problem of his own making
If there was one issue the Howard government really didn’t need to pop up right now, it was Telstra.We don’t know how Bob Mansfield and Ziggy Switkowski vote, but you can be sure the Labor Party couldn’t believe its luck on Tuesday night when suddenly the corporation everyone loves to hate particularly in the bush turned out to be spending its time thinking about diversifying into newspapers.Not only that, but it’d come down to Canberra to brief the Prime Minister about it, thus dragging him and the government’s continuing, if confused in the public mind, role into the limelight, too.The struggle within Telstra over a bid for Fairfax would leave most voters wondering what an organisation that can’t run a telephone exchange in its own area of expertise is doing wanting to run a newspaper. But this would only reinforce the hostility to any further privatisation of Telstra.John Howard was trying yesterday to put the best spin on it he could, saying the proposed deal showed why Telstra needed to be privatised, because the government had no right being involved in such takeover issues.But, oh dear, what an unfortunate choice of words.”Let me take this opportunity to say,” he told the House of Representatives, “that this issue again highlights the idiocy of the present ownership arrangements for Telstra.”Which of course prompted much hilarity and interjections from the opposition benches, where it was pointed out that he, Howard, had created those very ownership arrangements.There are, of course, many other levels of politics at play in this, inspired by the spectre of the government becoming a majority owner of one of Australia’s major newspaper groups.While the politicians salivate at the thought, it remains, at this point, a fantasy for them.Telstra’s plans seem to have been regarded more with wry amusement by the government than anything else.More fascinating to the politicians is the idea that a newspaper company might be complicit in a deal that could be seen as giving the government control of its mastheads.

February 18, 2004Job Network fiasco exposed
Disabled people, parents and older workers are unwittingly being used to prop up a flawed $2.5 billion federal government jobs program that has already received a $670 million- a-year bail-out.Internal departmental documents show the Job Network employment agency system has been in serious trouble since a new contract between the government and the companies in the network started last July .The Job Network, which replaced the old Commonwealth Employment Service in 1997, was supposed to provide cheaper and more effective employment agency services.The most recent of the contracts for services cut spending on the network by about $500 million over three years.But the government boasted it could save up to $1 billion a year by “shaking out of the tree” people who were not entitled to benefits.However, freedom of information documents obtained by the federal opposition appear to show the new contract has been a false economy, has not produced any huge “shake-out” of unworthy recipients of benefits, and that the need to sustain the Job Network agencies is now distorting other parts of social policy.The revelations came as the Labor opposition yesterday continued its attack on the Howard government over its failure to implement work and family policies, and Prime Minister John Howard bowed to party-room pressure by agreeing to reconsider proposed reforms to veterans entitlements already approved by cabinet.The documents show:
* The estimates of jobless people used by the companies’ bid for the business were flawed (leaving open the possibility of legal action against the government).
* Employment Minister Mal Brough blamed the unemployed for the network’s problems even though bureaucrats repeatedly questioned his assertion that unemployed people were simply refusing to turn up to find a job.
* Opposition claims that computer problems were causing major problems for the network were correct, despite Mr Brough’s dismissal of them at the time as “absolute rubbish”.
* Even after a $670 million bail-out, bureaucrats were trying to find a new “stock” of job seekers for the agencies to keep them afloat.The result has been a government move to “encourage” people who get benefits not related to work, such as the parenting payment, disability support payment and mature-age and partner allowances to register with the Job Network to generate payments to the agencies.The documents released to Labor’s employment services spokesman, Anthony Albanese , come from Centrelink and the Department of Family and Community Services (FACS) , which have the responsibility of running much of the infrastructure that supports the Job Network, despite the fact the system is actually the responsibility of Mr Brough’s Department of Employment and Workplace Relations (DEWR).DEWR has indicated it will not release similar documents because their release would not be of benefit to the public.Mr Albanese said last night: “It’s clear . . . that the government knew prior to the beginning of Job Network 3 that it was established under false pretences and has since engaged in a disgraceful campaign to cover up this maladministration by blaming the unemployed.”This is the latest step in government policy being driven by covering up its own mistakes rather than the needs of the most disadvantaged people in our community.”The documents paint a picture of confusion behind the scenes through much of 2003.The new contract required 940,000 people to re-register with the Job Network. It was the huge number of people who did not attend registration, or profiling, interviews that was to cause the Job Network considerable trouble as these interviews were the trigger for payments to be made to agencies.The documents show that as early as April last year the then minister for family and community services, Amanda Vanstone, was warned agencies might not have the capacity to meet the demand for interviews, and that technology problems could worsen the
problem of people not attending interviews.

By mid-June, Centrelink was telling Senator Vanstone that there had been “only two or three days where there has not been a system outage” in the 11 weeks since the new systems had been introduced.

On the eve of the start of the third Job Network contract on July 1, an internal FACS email shows the department was sceptical of the DEWR figures used to structure the Job Network contract.

An officer writes: “It is hard to determine how they developed their original listing that identified the `stock’ of customers . . .”

Despite this, Mr Brough told the AFR on June 26 the “IT system is working well at times, but is not perfect”.

February 18, 2004Brough’s $1bn hard line
Employment Minister Mal Brough claimed on June 29 last year that there were 84,000 unemployed who had not reported for interviews and that cutting their benefits would save the government about $1 billion a year.”This will shake the tree like it has never been shaken before,” he said.But there had been scepticism within the bureaucracy about the numbers on which Mr Brough’s department was basing its estimates for the Job Network, and particularly about the impact of computer problems on the number of people turning up for required interviews.A Family and Community Services officer wrote late on June 30 the day before the new contract commenced: “It is hard to determine how they developed their original listing that identified the `stock’ of customers that needed to be written to.”Mr Brough stuck to his guns. When it was reported that the government was going to bail out the network, he blamed the unemployed.
February 17, 2004Howard firm on his own super
Laura Tingle and Marcus Priest
Prime Minister John Howard yesterday refused to take a cut in his own parliamentary superannuation entitlement worth more than $200,000 a year as the government sought to stem the damage from last week’s backflip over MPs’ super.Buoyed by the success of Opposition Leader Mark Latham’s wedging of the Prime Minister on the issue, Labor focused heavily on the issue in question time yesterday.It pushed Mr Howard for more concessions and contrasted his rapid response on the issue with his failure to act on work and family reforms.But while the minor parties called for further reforms to political remuneration, Mr Howard stood his ground in parliament, with MPs who had attacked him in the party over the super decision last week conspicuously backing him in the chamber.Mr Latham asked Mr Howard whether he would support the opposition proposal to cap superannuation entitlements for senior office-bearers including the Prime Minister and the Opposition Leader.Mr Latham had said he and his fellow senior officers in the parliamentary Labor Party would impose a cap which would cost a Prime Minister Latham between $500,000 and $1.9 million.However, Mr Latham’s office confirmed yesterday that the $1.9 million sacrifice was based on him holding office for more than nine years and living to more than 90.Mr Howard rejected the cap and confirmed that the changes he announced to the general parliamentary super scheme would not be retrospective.”I think it is a fair, reasonable and entirely defensible and, indeed, well-arguable proposition that people who enter into an arrangement . . . on a certain basis are entitled to enjoy the entitlements of that arrangement as they entered into it,” he said.The opposition also sought to compare the two-day turnaround in Mr Howard’s position on MPs’ super to a lack of action on work and family initiatives, after a leaked cabinet document showed the government had made but did not proceed with a range of decisions more than 12 months ago.The decision by cabinet followed a report by the Prime Minister’s taskforce which recommended the introduction of 14-week paid maternity leave and improved access to part-time work for mothers returning to work.Mr Howard said the initiatives were not included in last year’s budget because it was decided that priority should be given to across-the-board tax relief.

Laura Tingle and Jason Koutsoukis
It was a stunning victory for the Leader of the Opposition as the Prime Minister followed his lead without catching breath. But was Latham’s vivid promise of handing politicians’ superannuation back a brilliant move, or is there more to this story than meets the eye?In the desperate dying days of the 2001 federal election campaign, Kim Beazley and his strategists tossed around an idea they hoped might deliver some chance of an election win. Mark Latham, Beazley’s second successor as Labor leader, remembers it clearly. The idea, he says was to announce the scrapping of federal politicians’ lucrative superannuation scheme. Others have less clear memories of this strategy but, in any case, it didn’t go anywhere and neither, subsequently, did the Labor Party.This week, the same idea has propelled Mark Latham into a stunning political position as the next federal election year takes shape. When Latham announced on Tuesday that not only would he scrap the existing scheme and replace it with one better reflecting community standards, but he would also take a cut in prime ministerial super of up to $2 million, he set in chain a series of political events in which Prime Minister John Howard was pilloried in the media all week particularly in the talkback world to which he listens so assiduously and then forced into a humiliating backflip on super.But there was more.Not only had Latham forced Howard to adopt Labor policy, but in the process created untold problems within coalition ranks, undermining Howard’s iron grip on the party room and reopening the wounds of Peter Costello’s supporters.This was because Howard, in his canny fashion, had not said anything publicly about the merits or otherwise of Latham’s plan.Asked on the ABC’s Country Hour whether he would also commit himself to reduce the prime ministerial superannuation loading from 160 per cent of salary to 72.5 per cent, he said: “I’ve seen a statement that he’s made and I’m not making any comment until I’ve analysed everything that’s in that statement.”When Latham subsequently asked Howard, during the first question time of the year, whether he would support his proposal the Prime Minister once again avoided the question. But he scored a brief political win by alluding to the Labor Party’s notorious leasing of space in its Centenary House headquarters building to the Auditor General, which was “ripping off the Australian public to the tune of $36 million over the next 15 years”.The tactic of crafty non-commitment was not followed by others who stepped into the breach to defend current arrangements, particularly Howard’s thwarted deputy Peter Costello.”I think for people that are running the country, overall the package compared to the private sector is quite restrained,” he told the ABC’s AM the following morning when he went on air to defend Howard’s free-trade deal with the United States.”I would ask this question. By changing the super scheme do you think you will get better MPs?” he said. “I think we ought to do things that will get us better MPs. But I don’t think this is one of the things that will do it.”Costello’s leadership competitor, Tony Abbott, was also out there, defending the status quo.Those two and other coalition MPs taking their side did so confident in the complete lack of any suggestion that the Prime Minister was contemplating a change of mind.The change only became clear on Thursday when first cabinet, then the coalition party room, were asked to back his decision.What followed was an extraordinary, passionate, angry, unprecedented scene in which the Prime Minister had to endure being yelled at by MPs angered both by the implications of the move for politicians’ pay and by what they saw as Howard rolling over to Latham. This was, after all, the Prime Minister who had lampooned the Opposition Leader as “Mr Flip-Flop”.

His response was simple. He said he had no political choice but to shift ground. And of course, in political terms, the hardheads on both sides of politics know that he is completely right.

Latham’s offer to give up the particularly generous superannuation rights of a prime minister the idea of a politician making a huge personal sacrifice was altogether too potent to withstand.

On Friday, Howard went on to confront the fury, acknowledging he’d had to change, saying he didn’t think it was an important issue and that he wanted to talk about more important things.

The only perplexing aspect of all this is his argument that he does not think it is an important issue which is conspicuously out of touch with both the expensive concession he has made, and with the public view.

This, of course, is where Latham seems to have consistently outplayed Howard in recent months. He has refused to be wedged on any of the issues the coalition has always made sport with Labor on. Moreover, he has turned the tables around by coming at the government from unexpected directions.

And by hitting the bullseye with his superannuation arrow, Latham has managed not only to throw Howard on the defensive but has exposed his characteristic political expediency. Just as he recanted on his own repeated opposition to a hugely expensive cut in fuel excise in 2001, Howard followed the political winds on superannuation this week. The only difference was timing. This week he acted immediately; in 2001, his backflip took months.

But the week’s extraordinary events in politics have, nonetheless, been a result of considerable good luck on Latham’s part.

The unravelling of the weapons of mass destruction debate in the United States and Britain has undermined the credibility of the Prime Minister’s national security base.

Equally, his failure to achieve in his beloved free-trade deal what many of the coalition’s constituency thought they were going to get left him vulnerable as the parliamentary year commenced.

What is true though, is that Latham’s push to reform the way politicians are paid is not a glib piece of politicking adopted in haste and thrown in as a bone for the feast. He has been on the record for some time on the largesse enjoyed by the political establishment.

In August last year, on talkback radio in Brisbane, he referred to the huge superannuation payouts to politicians underwritten by the taxpayer.

“People have every right to be angry and, I can assure you, a lot of federal MPs feel uncomfortable about it,” he said.

As it transpired, he wasn’t the only one in the Labor Party who was thinking about it. The then opposition leader Simon Crean and his retirement incomes policy spokesman, Nick Sherry, also had MPs’ super in their sights as part of a comprehensive review of retirement incomes policy.

Last Monday, when Latham introduced Sherry’s proposal to a shadow cabinet meeting, he acknowledged this, observing that the proposal would have gone ahead before Christmas if other things hadn’t intervened a clear reference to Labor’s leadership tensions.

Which brings in Labor’s own potential problems with the issue of political lurks and perks. The clear impression left by Labor’s announcement was that the outcome would be a scheme for politicians in line with community standards, which Latham himself conceded meant 9 per cent of salary the superannuation guarantee rate.

But in fact Labor’s proposal was that the current scheme which pays 68 per cent of salary be closed and the Remuneration Tribunal be asked to make a determination on an appropriate package.

Latham was evasive on what, as prime minister, he would seek to introduce saying this was a matter for the tribunal to examine.

There was good reason for him to be evasive. The shadow cabinet had not agreed to his explicit 9 per cent proposal, only on the closing of the current scheme to new MPs and senators.

The shadow cabinet also considered dumping a range of other perks, most notably the MPs’ gold travel pass, and the right of politicians who have served in both state and federal parliaments to double dip.

These proposals as well as that on super were sent to factional meetings for discussion.

The Left and Right split on crucial issues. The Left agreed that a caucus committee should examine all the perks of serving MPs as well as future MPs. The Right wanted to limit any talk about cutting current perks.

When Latham went to caucus to move debate on the issue, the shadow cabinet was seeking endorsement for a review of all current perks as a way of improving community views of politicians.

Nick Sherry went on to second Latham’s proposal.

While he was talking, Laurie Brereton Latham’s most important numbers man and a warhorse of the right was seen to approach the leader and whisper animatedly in his ear. He was followed by Crean.

Latham subsequently rose and corrected himself, saying that what he had meant to say was that the caucus review would only cover entitlements of future MPs. Left faction leader Martin Ferguson then said he accepted Latham’s correction but made it clear that it was not the end of the matter.

So while the new Labor leader might be enjoying an even more euphoric public honeymoon, the realpolitik of the party room is already playing its part, just as it does for John Howard.

There are deeply held divisions within the caucus room about the need to clean up the political rorts. Latham’s problem is that his heart lies with the left who really do want to clean things up. The test he faces is to stare down his numbers men on the right.

The crucial difference between the Prime Minister and the Opposition Leader is that Latham has inherited a party room that knows it must stay disciplined and support him if he pushes it further. John Howard’s party room risks falling apart as the possibility of defeat suddenly looms large.


February 14, 2004Labor divided over the perks of office
While the Labor Party bathes in euphoria over Mark Latham’s success in forcing a policy backflip on MPs’ superannuation, it faces its own continuing tensions about the the perks of political office.A struggle is now under way over whether a Latham government would review and possibly cut a range of generous benefits available to federal politicians, particularly the gold travel pass and the capacity of politicians who have served in both state and federal parliaments to “double dip” into both superannuation schemes.Mr Latham announced on Tuesday that perks other than super would be referred to the review of a caucus committee.But what was not clear at the time was that there had been a significant Left-Right factional split when the proposal was put to caucus.The Left had agreed to a review of all benefits for current as well as future MPs. The Right, however, had decided that all changes should be prospective.Labor sources say the Opposition Leader was approached during a subsequent caucus debate on the issue by key party numbers man Laurie Brereton and former leader Simon Crean.Mr Latham subsequently corrected himself, saying the changes would be only prospective.Left factional leader Martin Ferguson rose to say he would accept the amended recommendation but added: “This isn’t the end of it.”Sources also dispute claims that Mr Latham overstepped his party on superannuation changes by locking Labor into a 9 per cent contributions level.The party agreed only to closure of the current scheme and a referral to the Remuneration Tribunal to establish a new scheme.Mr Latham acknowledged at a press conference on Tuesday that the 9 per cent figure was a correct assumption of what community standards were and said he hoped those standards would be reflected in the tribunal recommendation.But he declined to lock himself into a 9 per cent contribution level.However, after the Prime Minister, John Howard, nominated the 9 per cent number, Mr Latham agreed that it was an appropriate figure.

February 13, 2004PM caves in to Latham on super
Laura Tingle and Jason Koutsoukis with AAP
Prime Minister John Howard was yesterday forced to cave in to Opposition Leader Mark Latham’s campaign against politicians’ generous superannuation in a backflip that has sparked an angry confrontation with his government backbenchers.Mr Howard admitted he moved to “get it off the agenda”, in a concession that Mr Latham has dominated the first week of parliament with his push to overhaul the pension scheme.Labor premiers Bob Carr, Steve Bracks and Peter Beattie all indicated last night they would also rein in the super schemes for state MPs.Their move was in sharp contrast to the defence of the generous super schemes by ministers this week.The government will introduce legislation slashing super benefits for all new MPs so they will receive a contribution from the government in line with the 9 per cent super levy paid by employers for all workers.”I’ve always said that if a good idea is raised it will be dealt with immediately. I will do so,” Mr Howard said. “The reality is there is a community perception that this is too generous.”But in an unusual challenge to Mr Howard’s authority, several coalition backbenchers criticised the cave-in when it was announced to a hastily assembled party meeting.One senator accused Mr Howard of being “craven” and another said he was “blinking” in the face of Mr Latham’s sudden political ascendancy.NSW Liberal MP Bronwyn Bishop told the meeting: “We will never satisfy the public, they will never thank us for this . . . . the public are insatiable when it comes to politicians, they’ll take everything away from us if we give in.”The move capped a series of setbacks for the government, with Trade Minister Mark Vaile conceding the government may have “oversold” the benefits of the FTA and Mr Howard refusing to rule out the possibility of an independent inquiry into intelligence on Iraq.The opposition also mounted a sustained parliamentary attack over a leaked cabinet report that showed the government had been told 14 months ago that the tax and welfare systems were imposing effective marginal rates of more than 60 per cent on some some lower-income families.Mr Latham announced his plan to overhaul the parliamentary superannuation scheme on Tuesday after it was revealed in The Australian Financial Review last week and despite some misgivings among Labor MPs during a party meeting on Monday.While Labor planned to ask the Remuneration Tribunal to resolve the full details of a new scheme after the election, Mr Howard has moved to close down the scheme virtually immediately.Mr Howard said he would match proposals put forward by Mr Latham although he did not support a similar crackdown by Mr Latham on superannuation for federal judges.Mr Howard is also refusing to match Mr Latham’s offer to voluntarily relinquish a senior officer’s loading on his own personal superannuation, which the opposition has said will see the Prime Minister leave office with superannuation entitlements of $200,000 a year.

Last night, Mr Latham said the opposition would support the government’s legislation and upped the pressure on Mr Howard by saying he would move amendments to cut even further his own superannuation as Leader of the Opposition.

Earlier in the day, in response to a question from the Opposition Leader in the House of Representatives, Mr Howard had said he was continuing to analyse the Latham proposal. But federal cabinet had already held a meeting to legislate immediately to close down the existing scheme.

Mr Howard told Coalition MPs the decision was a political necessity. “We simply have no choice, we have to do this, it’s an absolute political necessity,” Mr Howard said.

But Queensland senator George Brandis told Mr Howard: “You’re facing Mr Latham and you’re blinking.”

Parliamentary Secretary to the Treasurer Ross Cameron said: “Consensus has broken down between Labor and the coalition on this issue and we don’t have any option.”

Many MPs who spoke against the decision said they felt aggrieved at the lack of public recognition for the hard work politicians did.

“Some of us were angry with the PM, some of us at Mark Latham, but I think most of us were just angry at the lack of respect the public has for the work politicians do,” one MP said.

“John Howard was very brave when he took us off to war, but in the face of a bit of politics in an election year, he was craven as they come,” the MP said.

The backflip was particularly humiliating for the government because so many of its members had gone to the defence of the existing scheme led by senior ministers including Treasurer Peter Costello and Health Minister Tony Abbott.



After 30 years as MP and 8 years as PM

Annual pension: $200,000


After 10 years as MP and 1 future term as PM

Annual pension: $101,000



After 8 years

Annual pension: $51,000


After 8 years

Total payout: $74,000

February 13, 2004Big changes are on the way with Latham
Canberra observed
When Mark Latham delivered his opening address to the Labor Party conference two weeks ago, the Howard government went into overdrive to find a way of “spoiling” the media coverage of the speech.Within hours, it released drafting notes of the speech to embarrass Labor and show Latham had a “secret” agenda because a sentence saying “I will solve problems without forcing up taxes, deficits or interest rates” had been removed from the speech.It was a one-day wonder. Particularly in an election year, both sides of politics will do anything to ruin good pictures on television, leave a question mark in the minds of voters, or spread so much grapeshot about that there are too many stories around on a day to allow any proper media focus.It was a portent of things to come, if this first parliamentary week is any guide. Blam! Duck! It’s the Prime Minister with an incoming free-trade agreement on which we have no details! Bang! Over there! Latham is taking away politicians’ super and nobly forgoing $2 million of his own benefits!Traditionally, governments have the best capacity to play distraction and spoiler politics: they have the resources of vast taxpayer-funded staff pools to scrutinise everything the much more scantily staffed opposition can muster.The interesting thing about Mark Latham’s opposition style as it is emerging is that he seems to have developed a deft hand at outspoiling the government, not with more resources, just a dab hand at what will catch the media’s attention.Given a choice between a parliamentary brawl over whether opposition to a free-trade agreement showed Labor was “anti-American” and a politician promising to give up $2 million in perks, you can be pretty sure where the popular media will go.The Labor leader has also not been afraid to doggedly pursue his own agenda whatever the government might be up to or where public debate is raging or what expectations may be about what the opposition “should” be doing. Consider his first parliamentary question of the year. The free-trade deal? Iraq? No. Reading aloud to your kids.The flow of political tactics this week offered an interesting example of Latham’s emerging political and policy style.With the Labor leadership transition last December, the government was smugly anticipating the fun it could have in exploiting the multitude of positions Latham has held on any particular issue.But a more detached observer argued that Latham’s very barrage of words could actually prove to be his best defensive weapon.The reason? The government wouldn’t be sure where Latham would be coming from, and their new opponent wasn’t going to help them by immediately recanting or clarifying his position.And so it has proved.To questions of inconsistencies and backflips, the Opposition Leader has just shrugged his shoulders and claimed his right as a thinking person to change his mind.Meantime, he has snuck up on the government repeatedly from an unexpected side, making it difficult for it to play its usual game of wedge politics.

So far, so good.

If ever there was a politician who seemed to think outside the square, it is Latham. Observe to him that the three options that might be open are A, B or C, and it seems he is as likely as not to answer F.

It has worked as a political tactic.

The question is whether it will also work as a policy approach.

Latham has busily been remaking himself as a traditional Labor leader interested in better government services. Instead of waffle about “better health and education”, he has creatively picked off parts of those political and policy problems and made them interesting and relevant to average people. This applies to everything from reading aloud to kids to dental services.

What has been glaringly lacking has been any of the language that to many voters has become tune-out polliespeak. That appears to include any talk about Labor’s overall fiscal position. In fact, if you go back to that coalition document two weeks ago about how Latham’s speech had been edited, and ignore all the silliness about who changed it, it provides a fascinating insight into Latham’s mind.

For whatever else it shows, it is a sensational piece of editing that leaves the sparest of political messages.

And what you notice keeps getting cut out are a lot of dominant words of the political debate of the past 20 years, including deficits, taxes, savings and spending.

Now, the government argues this is all about a hidden agenda. But the reason the hidden agenda story never really had legs was because Latham had found his own form of words:

“In government, delegates, we will invest more in basic services and invest more in the Australian community. But for every dollar we invest, we have to cut a dollar from the existing budget.”

Nonetheless, at some point, people are going to want to understand the economic framework underlying Latham’s new politics. To date, the only guidelines Labor has set out are these:
* On tax, Latham hasn’t ruled anything out including possibly some higher tax rates and only ruled in that Labor believes PAYE taxpayers deserve some relief from “the highest-taxing government” in Australia’s history, particularly relief for low-
to middle-income earners.
* On overall fiscal policy, there will be balance over the economic cycle.

Last weekend on Meet the Press, the Opposition Leader said he didn’t “aim to better or worsen Mr Costello’s record of being the highest-taxing treasurer and Mr Howard’s record [as] head of the highest-taxing government in Australia’s history”.

Just to be clear. Labor consistently attacks the government for being the “highest taxing in Australia’s history” yet is more than happy to inherit the coffers, while promising only to provide some personal tax relief that may be paid for by increasing other taxes.

It has made clear that it wants more government services in the economy, not less, but says it will be able to pay for these by cutting waste and mismanagement under the current government.

At play behind all this is a major transformation in Australian politics. For the first time in decades, there is a major political party heading towards a position where it will sell the vision of a high-taxing government that offers expanded services as a positive.

Latham has yet to declare his hand quite so bluntly.

There are still plenty of scars within Labor’s collective mind about anything to do with economics: whether it be a bitterness that it has not been able to reap the political benefits of its own politically difficult economic reforms or a nervousness
about its economic credibility after the recession of the early 1990s.

It has paralysed the party’s capacity to reposition itself amid terror that it may be seen to be economically irresponsible.

All of that may be about to change.

February 13, 2004Howard suffers a triple blow
Mark Latham has delivered a devastating triple blow to John Howard, which confirms a dramatic shift in the balance of federal politics.This week the prime minister lost his assured control over the national political agenda; he’s been seen to blink in the face of the Opposition Leader’s political assault; and as a result has faced one of the most direct confrontations to his authority in the party room.That it should happen over an issue as far off his own political radar as could be and so linked in the public mind with politicians enjoying the trappings of office is a sign of how badly he is being wrong-footed by Latham, and suggests his judgement has been blurred by the complacency of incumbency.It was never going to be an easy week for the government.Not only had Latham been on a soaring political ascendancy over the past two months, but the week before parliament began sitting, Howard’s close allies, US President George Bush and British Prime Minister Tony Blair, were forced into humiliating admissions about intelligence on Iraq.Bush is in deep political trouble at home and we’ve seen unprecedented images of a US President having folksy question and answer sessions with voters and even doing a walkabout in a sports store.Similarly, it has been Latham who has been making the running in politics and setting the agenda, with Howard forced to dump pictures with military personnel in favour of mixing it with school kids.But the Prime Minister has not been able to either reclaim control of the agenda with his US free-trade agreement or slow the Latham momentum by his actions this week.Howard must be feeling just ever so slightly sick at his attempt to portray Latham as “Mr Flip-Flop”.
February 12, 2004Costello mum on dollar value
The Howard government continued to sell its free-trade deal with the United States yesterday but refused to put a dollar figure on its benefits, emphasising instead its non-economic benefits.Its opening salvo in question time focused on the benefits to be gained from linking with “the innovation engine of the international community”, and portrayed Labor’s opposition to the deal as negative, anti-American and obstructionist.But for the second day in a row Treasurer Peter Costello failed to produce any estimate of what the benefit might be to the economy, despite the government’s confident predictions before the deal was signed that it would be worth up to $4 billion.Critics say the study that produced this figure was largely based on an assumption that sugar and beef markets would be opened up. But sugar has been excluded and it will be 18 years before beef restrictions are phased out.On ABC radio yesterday morning, Mr Costello appeared to talk down the $4 billion forecast suggesting it was highly vulnerable to movements in the exchange rate.”Nobody can tell you what the exchange rate will be in five years’ time,” he said “You can’t even tell what it will be in five months’ time, let alone five years’ time.”But I would make this point. We are gaining enhanced access to a market of 300 million people. That market is gaining enhanced access to our market of 20 million people.”The bigger benefits are going to go to the people who are getting the access to the larger market. This is why it is in Australia’s interests.”Repeatedly quizzed on the value of the benefits after government Senate Leader Robert Hill had once again endorsed the $4 billion figure in parliament on Tuesday Mr Costello said: “I’m not putting specific or US dollar benefits on it.”Shadow Treasurer Simon Crean said yesterday that all the Treasurer had done was produce a new assertion of the benefits of the deal but no substance.”After claiming $4 billion in benefits, Peter Costello should now be honest and immediately release Treasury’s analysis of the economic benefits of the deal,” he said.Labor finance spokesman Bob McMullan said the government must have assessed whether the deal was in the national interest before it signed it.”I call on them to release the assessment they made so we can all judge it before we’re called on to vote on it in the parliament,” he said.

February 12, 2004Doubt cast on biofuels project
The Howard government’s commitment to producing 350 million litres of biofuels by 2010 has been thrown into doubt by a report that challenges the need to subsidise the ethanol industry.The CSIRO and the Australian Bureau of Agricultural and Research Economics were asked by the government last year to report on the “appropriateness” of an objective that biofuels, produced in Australia from renewable resources, contribute at least 350 megalitres to the total fuel supply by 2010.That objective has formed the basis of arguments in favour of government assistance to various arms of the biofuels industry, including ethanol, designed to help them until they were of a size to be economically viable.But the report leaves little room for doubt that the government’s top scientific and applied economic advisers doubt the value of the target. The report says the biofuels industry would require “substantial and ongoing assistance”, would be negative overall for the economy and would only produce direct jobs in the regions at a cost of about $500,000 each.”The costs of implementing a policy of assisting the Australian biofuels industry to meet a 350 ML biofuels target are estimated to exceed the benefits,” the report says.The report says ethanol produced from the sources used by the monopoly producer, the Manildra group, “appear to be (or are close to being) economically viable without government assistance and should be able to compete effectively in an environment where they are taxed on a comparable basis with other fuels”.The report was handed over to the government in December last year but was not released until Monday this week, when it was quietly posted on the Industry Department’s website.The report comes as a behind-the-scenes tussle is going on within the energy sector ahead of a deadline for compulsory labelling of petrol blended with ethanol.A labelling regime on petrol bowsers, which specifies ethanol levels in fuel and explains potential risk to engines from its use, is due to begin on March 1.But it is believed there is considerable lobbying going on in Canberra by fuel companies, who want the proposals for labelling to proceed and biofuels producers, who want the proposed labelling to be modified.

February 12, 2004One in three fails to secure uni spot
Chelsey Martin and Laura Tingle
One in three students, or almost 80,000 people, who applied to university has missed out on a spot this year as institutions rein in over-enrolled places before next year’s higher education funding changes.Analysis by the Australian Vice-Chancellors’ Committee, to be released today, confirms a worsening shortage of HECS places.Almost 32 per cent of students applying to university missed out in the first and second round offers.This breakdown between supply and demand comes on top of a similar shortage last year, when 79,500 students missed out.There was actually a slight increase in offers to students compared with last year in all states except NSW, where offers dropped by 2.5 per cent.However, with most institutions speeding up the phase-out of over-enrolments to ensure they can comply with the new funding system from next year, nationally around the same number missed out on a spot.The expected surge in demand from students seeking to get into the system before next year’s changes to HECS fees allowing institutions to charge up to 25 per cent more does not, however, appear to have eventuated. Applications grew by just 1 per cent to 251,226.The data provides a preview of more detailed analysis of unmet demand for tertiary education which the AVCC is due to release in early May.The unmet demand survey will show how many students missed out on a spot whose marks should have been high enough to be offered a place in at least one university. But the preliminary data has already added fuel to the sector’s call for urgent government action.”The government has already committed to additional places from 2007 and we’re urging that they bring those forward in 2005 to meet some of this demand,” AVCC chief executive John Mullarvey said.The government has played down the number of students missing out on places, pointing to the number of students who drop out after the first year and suggesting students should also consider taking up full-fee-paying spots.A spokesman for the Minister for Education Brendan Nelson yesterday said there would be no change to the government’s policy which last year received overwhelming support from the vice-chancellors’ committee.”The AVCC knows that the government’s $2.6 billion higher education package will deliver 34,000 full-funded places at a cost to the taxpayer of more than $500 million ,” he said.

February 11, 2004PM, Latham trade insults over US deal
* Disagreement on benefits * Japan wants same terms
The federal government yesterday stepped up its attempts to portray Labor’s opposition to the US free-trade agreement as anti-American, as it came under increased pressure to quantify the benefits of the deal.The government will push for swift parliamentary approval of the FTA, even though the full details will not be released for weeks and two competing committees will first examine the terms.Prime Minister John Howard and Opposition Leader Mark Latham traded blows over whether the deal was in the national interest, as federal parliament resumed for an election year with Mr Howard under pressure from Mr Latham’s new ascendancy in the opinion polls.Mr Howard told parliament the pact was a once-in-a-generation opportunity “to link the Australian economy with the greatest economy the world has ever seen”.But Mr Latham said the government had undermined Australia’s global free-trade credentials by accepting limited access to the US for farm exporters, and Labor taunted the government as being “un-Australian” for excluding sugar.In other reactions to the deal, Japan said it wanted the same investment rules given to the US, economic modellers questioned whether the FTA had net benefits for Australia, and farm sector divisions widened over the benefits.Trade Minister Mark Vaile told parliament the FTA could come into effect on January 1 next year, despite the opposition in parliament and in sections of the US Congress.Mr Howard faced a revolt in his party room on the failure to have sugar included in the FTA, with some Queensland MPs warning they could lose their seats.But if Mr Latham falters, the scene has been set for the government potentially to use the issue as a reason for an early poll on the basis that a “once in a generation” opportunity could be lost if the deal is not signed this year.Labor stepped up its attack on the FTA, bolstered by opinion polls showing that Mr Latham has closed the primary vote gap on the government and now has the approval of a majority of Australians.It now appears there will be a race between two separate parliamentary inquiries one dominated by the government and one by the opposition parties to bring down their findings first. A Senate inquiry is set to begin as early as today, while the government-dominated treaties committee must await the tabling of the treaty in parliament.With Deputy Prime Minister John Anderson embarrassed by his statement last month that a deal without sugar would be “un-Australian”, the government tried to deflect the Labor attack by portraying it as hostile to the broader alliance with the United States.Foreign Minister Alexander Downer questioned why Labor had challenged the US deal when it had endorsed two earlier agreements, with Singapore and Thailand.”I think the answer to that lies at the very heart of the Labor Party. It lies there with its opposition to a very logical defensive mechanism called missile defence.”It lies in opposition to President Bush’s policies. It lies in the Labor Party’s antipathy towards the United States . . . Its anti-Americanism stands for all to see,” Mr Downer said.

However, the government’s attack on Labor and its selling of the FTA remains vulnerable to the lack of detail about the agreement and its failure to quantify its benefits.

Treasurer Peter Costello failed to quantify the benefits when answering a question about its impact on Australia’s economic prosperity. His office was unable to say later whether the government had made an estimate.

Government forecasts that the deal could be worth as much as $4 billion to Australia were heavily based on assumptions that both sugar and beef would be included.

Agriculture Minister Warren Truss was also quizzed about contradictions in the Australian and US statements. US briefing notes suggest Australia’s single marketing desk for wheat and quarantine rules would be open to further negotiation.

A spokesman for Mr Truss said the agreement did not canvass the single desk but spoke of “certain elements of trading arrangements of state trading enterprises”, as well as the use of export credits and food aid. These were all issues that Australia and the US would pursue in multilateral forums and involved trade strategies that Australia did not practise.

Mr Latham challenged the government over the extent to which the FTA damaged Australia’s credibility in multilateral negotiations.

“Now that the government has agreed to the exclusion of major agricultural products such as sugar from the trade deal with the United States, how can it argue that any global trade deal must include the comprehensive opening of markets to Australia’s agricultural exporters?” he asked the Prime Minister during question time.

“Hasn’t the government undermined Australia’s credibility in multilateral trade negotiations, our free-trade credentials, by signing a bilateral agreement with limited agricultural access to American markets? ”
Mr Howard dismissed the question, saying “we have not agreed to the exclusion of major agricultural areas”.

February 11, 2004Long year looms as turf wars open
Was Mark Latham or John Howard going to determine the agenda when federal parliament resumed yesterday?Three days ago, that would not have been much of a question. Politics was dominated by Latham’s ascendancy, and the growing murk of weapons of mass destruction.But as Tuesday dawned in a hot, uncomfortable Canberra, the political debate had been thrown new distractions. On the one hand there was the government’s free-trade agreement with the United States, and Latham’s pegging back of the Prime Minister in the polls.On the other, the Opposition Leader’s googly into the ring yesterday: his proposal to end the current generous parliamentary superannuation scheme and bring it back to community standards.What was more, Latham said, he’d give up some of his own entitlement to superannuation if he became prime minister possibly worth $1.9 million, he told a press conference.The Opposition Leader seems determined not to fight John Howard on the Prime Minister’s own turf and so opened up the first question time of the year asking about his own pet subjects.Would the Prime Minister endorse Latham’s policy proposals on improving the amount of reading parents do to their kids? John Howard replied he didn’t need any convincing about the importance of reading to children, noting he had been reminded that one book “that was quite a favourite of one of my children was called `Mr Flip Flop’ “. (Theatrical hilarity from government backbenchers).It was the government who opened up the questions about the free-trade agreement, with Latham following up with a question about whether John Howard would follow his lead on reforming parliamentary super.The Prime Minister wasn’t buying into that one, thank you, adding: “If the Leader of the Opposition is concerned about cynicism (about political processes) he can instruct the federal secretary of the Australian Labor Party to renegotiate the Centenary House Lease.”The Centenary House deal in which the Auditor-General rather embarrassingly signed a spectacularly bad deal to rent space in Labor’s headquarters is a perennial favourite of the coalition to throw at its opponents when stuck on matters pecuniary.With the exception of one question about terror suspect Willie Brigitte, the rest of question time involved the two sides trading blows on the free-trade agreement with no clear outcome. It is going to be a long year and we are going to hear more about trade negotiations than even the most ardent trade junky could ever desire.
February 10, 2004FTA puts smile on face of the Tigger
The bounce in John Howard’s step as he came out to brief the press on his free-trade agreement with US President George Bush was positively Tigger-like yesterday.Here was a man, it seemed,who was convinced he had found an issue to give him some desperately needed political traction. In the short term, the announcement offered the prospect of the political debate being distracted from one set of initials WMD to another, FTA.Longer term, here was an issue he might be able to use to suggest he had something to talk about other than security, to paint himself as a man of the future, to move his selling of the US alliance (and his special relationship with George Bush) into
its Woodstock phase make love not war.There was even the prospect of attacking Mark Latham for reacting to the deal “in such a negative, carping, old politics fashion”. Certainly there were those in the government who believed Latham had made a serious mistake yesterday in appearing to be opposed to the deal.How ironic then that the FTA, which Howard characterised as representing a “once in a generation opportunity”, has all the apparent substance of a puff of smoke.With all the pragmatism of Mandy Rice-Davies, the Prime Minister yesterday shrugged off US Trade Representative Bob Zoellick’s rather disconcerting version of the agreement saying: “I can only tell you what’s in the agreement and what it means to Australia. Mr Zoellick has a constituency he has to talk to.”You can never underestimate Howard’s capacity to make a silk purse out of a sow’s ear.He has a slick message. He “feels the pain” of the sugar growers but is promising a bucket-load of money for “restructuring” . He has protected Australia’s interests, at least as far as issues that might interest the Howard battlers are concerned pharmaceuticals and local content.With the weight of his long experience in office, the implicit message went, he decided to abandon the sugar growers in the broader “national interest”.Maybe he’ll be able to make this stick. That will largely depend on the extent to which the credible theory that the deal was delayed until after the Queensland election lodges in the minds of voters in the five or six sugar seats and the extent to which the Labor Party can run ads showing Howard saying on January 19, “unless we can get substantial progress in the agriculture area, it’s really not worth signing”.And we don’t actually know what exactly has been agreed to in toto. We do know that the FTA was, in the public mind at least, about gains in agricultural markets. The gains are marginal at best and long in gestation.Criticism from farm groups has been surprisingly muted. NFF president Peter Corish said two years ago: “Unless any FTA is complete and comprehensive including agriculture, then NFF will simply not support [it].”Whether the Prime Minister can make this deal work for him politically remains to be seen.51st STATE: AUSTRALIA’S ECONOMIC LINKS WITH THE USTRADE* The US is Australia’s second biggest export market, taking about $10.3 billion or 9 per cent of goods exports.

* It is the biggest source of imports, providing $22.4 billion or 16.7 per cent of goods imports.

* Australia exports services valued at about $5.1 billion or 16 per cent of the total to the US.

* Australia imports services valued at about $6 billion or 18 per cent of the total from the US.


* The US is the leading investor in Australia, holding $242.1 billion or 29 per cent of total foreign investments at June 30, 2002.

* The US was also the major destination for Australian investment abroad, with 42 per cent or $194.2 billion of investment.

* $26.1 billion or 36 per cent of total foreign investment in 2002 came from the US.

* $34.2 billion or 64 per cent of Australian investment abroad in 2002 went to the US.

TWO GRAPHS: 51st STATE: AUSTRALIA’S ECONOMIC LINKS WITH THE US Australia’s goods trade with the US 98-03; Australia’s goods exports to the US FY98, FY03

Feburary 10, 2004PM declares new trade era
Tony Walker WASHINGTON and Laura Tingle
Australia has won increased access to the $US11 trillion US market for manufacturers and service businesses, but key farm exporters are disappointed at the historic integration of the two economies.Under the wide-ranging deal, the US has secured a relaxation of foreign investment controls, more transparency in the pharmaceutical benefits scheme, better intellectual property protection and less restrictions for its media products.The free-trade agreement was widely welcomed in the business community for its breakthroughs in removing manufacturing tariffs and opening up opportunities for services, from education to engineering, to compete in the US.The farm sector reaction ranged from angry to lukewarm, although the National Farmers Federation chose to lay the blame for the failure to win big breakthroughs for beef, dairy and sugar mostly on the US, rather than the federal government.Prime Minister John Howard said his decision to proceed with the FTA, despite sugar’s exclusion from the deal, was based on his assessment of the national interest.”This was a once-in-a-generation opportunity to conclude such an agreement,” he said. “I feel sorry for [sugar growers, but] I couldn’t have helped them by denying others.”The planets were not going to be aligned like this in the future, or certainly not in the near future, and that was why it was necessary to grab hold of this opportunity”.US Trade Representative Robert Zoellick said the deal would provide immediate benefits to US manufacturers, estimating the removal of tariffs would result in $US2 billion ($2.57 billion) a year in increased US exports of manufactured goods to Australia.The agreement, which must now go to the US Congress for approval, continues the Howard government’s embrace of bilateral trade deals as the global approach to trade liberalisation traditionally backed by Australia has faltered.Trade Minister Mark Vaile, who initialled the agreement in Washington, described the FTA as a “historic deal” that would offer Australian companies enormous opportunities in the US market.But differences in the presentation of the FTA by both governments mean there are significant uncertainties about how it will work. These will not be resolved until a legal document is released and, in other cases, until further detailed sectoral negotiations are finished.Mr Vaile conveyed Australia’s acceptance of the terms offered by the US in a late-night phone call on Saturday (Sunday afternoon Australian time) to Mr Zoellick after Prime Minister John Howard had spoken to President George Bush.Details of Mr Howard’s discussions with Mr Bush have not been released, but it appears that by the time they talked Australia had accepted that the US would not agree to sugar being included in a deal.Mr Howard signalled a restructuring package would be offered to the sugar industry, to head off a potential backlash against the failure of the FTA to win a breakthrough for the sector after government promises it would not be excluded.He denied claims that the government had delayed the deal until yesterday morning because of the Queensland election last Saturday, where the Beattie Labor government faced a backlash over its own approach to sugar.

He said the wins and losses in the deal were a feature of Australia’s past and future priorities.

“Without in any way down-playing the importance of traditional patterns of trade and investment, [the future] is very much bound up with the expansion of our service industries and our manufacturing industries,” Mr Howard said.

But Opposition Leader Mark Latham said the FTA did not appear to be in Australia’s national interests and that “our farmers have been dudded”. He suggested Labor, along with the minor parties, was likely to block legislation implementing the deal.

One important breakthrough welcomed by Australian business was access to the US federal government procurement market, worth about $270 billion annually.

The Australian Chamber of Commerce and Industry said the FTA would provide Australian business with substantial new market-access opportunities “in one of the world’s most dynamic and innovative economies”.

Mr Vaile said the FTA would benefit particularly Australian car manufacturers with the US removal of a 25 per cent tariff on light commercial vehicles.

The automotive parts industry would get a boost from the elimination of all tariffs.

Farmers and food processors would benefit from the removal of about 66 per cent of agricultural tariffs immediately, with a further 9 per cent going to zero in four years. Wool, lamb and sheep meat producers are expected to win particularly, along with exporters of processed foods and horticultural products.

Two-way trade is running at about $US28 billion ($36.5 billion) annually, including a US $US9 billion trade surplus. The US is Australia’s biggest trading partner. Australia is America’s ninth if the European Union is considered a single export destination.

Australia’s beef quota, now 378,000 tonnes, will grow by about 18.5 per cent over the next 18 years with a phase-out of a quota and tariff restrictions over that period.

Increased quota for dairy products would add $55 million in the first year to exports on top of trade running now at about $40 million annually, Mr Vaile said.

Among controversial concessions, Australia has been obliged to open the door to greater American scrutiny of and possibly interference in its system of selecting and pricing pharmaceuticals under the Pharmaceutical Benefits Scheme.

According to a US summary, Australia will make a number of improvements in PBS procedures “including the establishment of an independent process to review determinations of product listing”.

Australia has yielded on other sovereignty issues, such as its agreement to raise the threshold to $800 million from $50 million on investments screened by the Foreign Investment Review Board.

The president of the National Farmers Federation, Peter Corish, who was in Washington monitoring the negotiations, blamed the US farm lobby for curtailing benefits to Australian farmers.

February 9, 2004Labor looks at what it can win
Mark Latham and Labor need to gain 10 seats to win victory at the next federal election. Five of those are in Queensland. Saturday’s state election result has confirmed the ALP’s reading of the electoral mood in the sunshine state.But after being all but wiped out in the last federal poll with Queensland representation cut to just seven seats the mood is now less grim for Labor federally.Latham’s ascension has stopped the “every man for himself” sense of desperation that drove much of the Queensland involvement in manoeuvrings last year to remove Simon Crean. It is a sign of the times that focus is instead shifting to what coalition seats the opposition thinks it can win.Peter Beattie’s expected win of 63 seats is better than most in the Labor Party were hoping for last week. Three of the five seats in Labor’s sights at the next federal poll are in Queensland’s urban south-east corner: Moreton, Petrie and Dickson.Some long-time Labor observers in Queensland believe the Liberals’ poor showing at the state poll will make the conservative party very nervous about these three.Bitter in-fighting has reduced the party in Queensland to a rump and could cripple it in the federal poll.The two other seats in Labor’s sights are the northern coastal seats of Herbert and Hinkler.Hinkler held by National stalwart Paul Neville by just 2.3 per cent is the only so-called “sugar seat” in Labor’s gaze.Loud independent (and former National) MP Bob Katter tried to foment a backlash against both Labor and the Nationals from the sugar belt during the campaign. Katter’s teams were hoping to trade on disillusion over sugar reforms at both state and federal levels.But the failure of Katter’s team to make a dent and the relatively mild swing Beattie has suffered raises questions about the sugar industry’s capacity to swing votes at any federal poll.(The politics of sugar could still change with the outcome of the Australian/US Free Trade Agreement which the federal coalition had dearly wanted to wrap up on Friday which if successful would have given it a huge boost in the sugar seats at the state level).Hinkler, based on Saturday’s result, must look like a prospect for the party but still a distant one.Another prospect in the north, the seat of Herbert on a 1.5 per cent margin, is based on the city of Townsville.Assessments within the Labor camp are that voters in Petrie, Dickson and Moreton have moved from not listening to Crean’s Labor to suspending judgement on Latham.”Latham has punched through and they are listening,” one source says.

If he can maintain momentum, pundits believe Labor can make significant gains on the domestic issues of health and, particularly, education.

One other factor, however, has shrunk to a sideshow.

Remember all the predictions of a One Nation comeback after Pauline Hanson was released from jail? Well, One Nation was reduced to just one member in the Queensland parliament and the party’s best claim is that its one MP achieved the historic task of being re-elected in her own right.

The Queensland poll has finally confirmed that the threat that Hanson and her party once posed to the right of politics has gone.

February 6, 2004Spooky . . . it’s the lack of intelligence
Canberra observed
Jonathan Gaul is one of Canberra’s lobbying fixtures, and one who has had a unique relationship with the coalition government over decades.In addition to his lobbying work, Gaul has worked on Liberal Party election campaigns and has even been involved in government decisions on advertising strategies.So he knows better than most people how the Howard government works.Two years ago he addressed a group of junior lobbyists and observed how their task had changed between the Hawke/Keating government and the Howard government.The change was simple, he said: you didn’t bother walking in the door of the old Labor government unless you had an econometric model supporting your case under your arm, but what you needed when you were going to see this government was polling.Gaul’s observation surfaced in the memory banks this week as the concession that, “gee, the reason we went to war in Iraq was fallacious” ricocheted around the world.For Gaul’s observation dealt with the things that governments rely on in their daily rush to make decisions and seem credible.In the 1980s, it was economists: the economist as saviour; the economists who could tell people, as well as governments, what had to be done, and how, and could forecast what would happen as a result.Economists as political touchstones met a rather unfortunate fate in the recession of the early 1990s.Until September 11, 2001, they had never quite been replaced, except perhaps by the less conspicuous purveyors to politicians of “spin”.But in the wake of September 11, voters and politicians have looked to another quarter for salvation and reassurance: spooks.”Intelligence agencies” have become the new know-alls of Western democratic politics.As a result, the most devastating implication of this week’s rollover by George Bush, Tony Blair and John Howard on intelligence about weapons of mass destruction is the confirmation that all those mysterious bodies which are supposed to have such an
iron grip on world affairs like MI5, the CIA, and Mossad know zip worth listening to about large slabs of it.Put aside thoughts of who might have lied, dishonestly led us into war, embellished information or deliberately overlooked the heavy qualifications and provisos.Just contemplate the extent to which post-September 11 politics is built on confident assertions about intelligence. The Bush pre-emption doctrine and the renewed emphasis by our Prime Minister on the US alliance because of the access it gives us to high-quality intelligence are just two points that come to mind.More broadly, there has been the insistence by Howard, Bush and Blair that their citizens place even more trust in government.

In Australia, curtailment of civil rights and even less transparency in government decision making have been posited, and accepted.

This is perhaps the most lethal aspect of the WMD debacle and even more than Mark Latham it could bring down John Howard.

The WMD issue is apparently not just about humdrum political embellishment, or lying, that might have led us into a war.

It is that the very machinery of government on which the decision was based appears to be so profoundly flawed and that, in turn, this flawed structure has supported the edifice on which Howard’s prime ministership has rested for the last three years: national security.

No wonder he is suddenly being seen, with a rather desperate look on his face, with as many school children as soldiers.

It is hard to see how we will not be mired in the fall-out for months.

Don’t be fooled by all the statesmanlike statements of either major party about whether there should be an independent inquiry on WMD intelligence. With one nervous eye on the return of federal parliament next week, both parties have a vested interest in playing out the timing of this issue as long as possible.

The Prime Minister has been all over the place this week on whether Australia did have its own intelligence on Iraq, on whether we need an independent inquiry, or, indeed, on whether we have already had one.

Latham has been able to build up his scratchy national security respectability by talking in very measured terms and not taking the cheap political shot.

But don’t imagine for one moment that it won’t get down and dirty in parliament, or that the Prime Minister will be able to run the issue as he has so many others.

There will be no quarantining no ability to control the information coming into the political cycle every day from the US and Britain.

Since June last year, parliament’s joint committee on the Australian Security and Intelligence Organisation, the Australian Secret Intelligence Service and Defence Signals Directorate has indeed been looking at “the nature and accuracy of intelligence information received by Australia’s intelligence services in relation to the existence of, the capacity and willingness to use, and the immediacy of the threat posed by, WMD”.

It is also looking at the independence of the agencies’ assessments and “whether the commonwealth government as a whole presented accurate and complete information to parliament and the Australian public”.

The committee’s report has gone to the government and on to the intelligence agencies to vet for any potential security risks before it is released on March 1.

This has already sparked concern among some, including the Greens, that the report might be doctored. They are also suspicious about the dominant government numbers on the committee and the hawkish nature of Labor’s two most senior representatives, Kim Beazley and Robert Ray.

But we already know at least one of the report’s glaring shortcomings: it will be based on scrutiny of the intelligence agencies but not of government ministers and staffers.

That is not to say there are no attractions for the Prime Minister in holding another inquiry if matters continue to deteriorate.

Like so many things he has done in the past 12 months, this issue could be shunted off to a review one remarkably likely to appear after the next election, which would limit public and parliamentary scrutiny he might face in the meantime.

Labor also has an interest in another inquiry, but probably not until it’s made the most of the issue in the next two weeks of parliament.

Of course, whether the inquiry will tell us anything that we don’t expect is something else altogether.

What we do know is that the Prime Minister is engaged in an extraordinary rewriting of history about just why Australia went to war and the cracks in the national security edifice mean Mark Latham will not be the only factor forcing him to recast his own political persona in coming months.

February 5, 2004PM rules out new Iraq inquiry
Prime Minister John Howard has resisted a call for an independent inquiry into intelligence on Iraq’s alleged weapons of mass destruction, despite his concession the intelligence may have been wrong and more damaging revelations from Britain.Campaigning in Perth yesterday, Mr Howard faced more questions over his government’s decision to go to war in Iraq and the quality of intelligence on Iraq’s weapons program.With the Greens indicating they would call for a judicial inquiry into intelligence and government failings on the weapons assessment, Mr Howard suggested that Australia had already had an inquiry into the intelligence issue – the present parliamentary inquiry – and refused to commit to further proceedings.The minor parties have suggested the present parliamentary inquiry is compromised by the fact the government and intelligence agencies are now vetting the inquiry’s report on security grounds before it is released on March 1.Mr Howard was asked by a talkback radio caller yesterday why the government had by-passed public opinion and a bilateral sanctioning of the commitment to the Iraq conflict when he often claimed the Australian public “rarely gets it wrong”.A rattled Prime Minister replied: “The reference I made to the public rarely getting it wrong was a reference to the judgements in election time.”Adding to the political pressure on Mr Howard on the issue, a former senior intelligence official in Britain has said intelligence chiefs ignored warnings that Iraq may not have had chemical and biological weapons before the US-led invasion.The former head of the DIS scientific and technical directorate, Brian Jones, told The Independent newspaper that he and other experts had formally complained about the drafting of a September 2002 Iraq dossier because they feared being made “scapegoats” if no weapons of mass destruction were discovered.UK experts on Iraqi weapons `ignored’, page 11

February 5, 2004Latham opens door to company tax rises
Rises in company taxes and other charges may be within Labor’s sights after Opposition Leader Mark Latham declined yesterday to rule out the possibility of increases in non-PAYE taxes.Instead, Mr Latham committed a Labor government just to lowering the burden on pay-as-you-earn taxpayers.While Mr Latham has in the past given a general commitment that Labor will not increase taxes, interest rates or the budget deficit, his comments yesterday gave the first hint that Labor’s tax-reform sights seem set narrowly on the income-tax scales.Mr Latham was asked on Melbourne radio 3AW if he promised not to raise taxes if elected.”Yes, we’ll lower the tax burden on PAYE taxpayers, we’ve said that consistently,” he said.”We believe in tax relief and every year people go into a higher bracket and the government collects more and more tax for PAYE and our commitment there is to give them some much-needed relief.”Asked what would happen to other taxes, Mr Latham said the opposition would “have a tax policy after the budget in May”.”We’ve got to look at the finances and see how the budget is stacking up, but a very strong commitment is PAYE relief and, importantly, to bring down what are known as the effective marginal tax rates the tax traps where people lose a lot of money not only in taxes but also their social security payments as they earn more,” he said.Asked if he could promise that there would be no increase in other forms of taxation, Mr Latham declined to do so, repeating that he would be “releasing a tax policy in the fullness of time”.”We can only make judgements about the full tax system once we see the budget in May,” he said.Asked again why he couldn’t foreshadow other tax changes, he said Labor’s “commitment was to give PAYE taxpayers relief because they’re the ones being heavily slugged”.Treasurer Peter Costello said yesterday Mr Latham had repeatedly refused to rule out tax rises “to pay for his $8 billion of new promises”.”Last Thursday, Mark Latham deleted the words from his speech ruling out tax rises,” Mr Costello said.”Twice in a week is no accident.”At last week’s Labor Party conference, Mr Latham repeatedly spoke of the need to reduce effective marginal tax rates tax rates that reflect the interaction of the tax and social security systems rather than simply the marginal tax rates.
February 3, 2004Inquiry timing is right for Bush
Tony Walker WASHINGTON with Laura TIngle
The Bush administration is set to announce the establishment of a Warren-type commission to investigate massive intelligence failure in Iraq as part of efforts to deflect embarrassing questions about the White House role.President Bush and senior advisers bowed to a clamour for an independent inquiry after it became clear that the debate about misleading intelligence regarding Iraq’s weapons capabilities would not subside.Earlier, the administration had resisted an independent inquiry into revelations of false intelligence claims that Iraq possessed a stockpile of weapons of mass destruction.These claims were used as the pretext for the rush to war by the United States, supported by Australia and Britain.Bush administration officials have let it be known that the inquiring body would be modelled on the Warren Commission, under Chief Justice Earl Warren, established by president Lyndon Johnson in 1964 to inquire into whether Lee Harvey Oswald acted alone in the assassination of president John F. Kennedy.Extensive terms of reference would ensure that the commission would not complete its work before the presidential election on November 2 and thus save the administration from political embarrassment that might arise from negative findings.Among issues that are certain to be studied is whether Mr Bush and his advisers were hell-bent on regime change in Iraq and used claims about WMD as an excuse.An Australian parliamentary committee is already conducting an inquiry into quality of intelligence on weapons of mass destruction.Asked yesterday whether Australia would hold its own independent inquiry, Prime Minister John Howard said he would “analyse” what Mr Bush had said. “You’ve got to bear in mind, of course, that almost all of the intelligence that came our way in relation to the war against Iraq pertained from British and American sources,” he said.”It didn’t come from our own independent sources; obviously it was independently assessed but it was primarily British and American intelligence.”In the US demands for an inquiry were prompted by statements last week by US weapons inspector David Kay, head of the Iraqi Survey Group, which spent $300 million trying fruitlessly, as it turned out, to uncover weapons caches in Iraq.Dr Kay, in testimony to the Senate Armed Services Committee, said he had concluded that intelligence claims that Iraq possessed significant quantities of WMD were wrong. The revelations have seriously embarrassed the administration.Bush administration officials had argued that Iraq under Saddam Hussein presented an imminent threat to the US. Mr Bush avoided use of the word “imminent”, but he claimed that Iraq represented a “grave and gathering danger”.Mr Howard and Foreign Minister Alexander Downer said repeatedly that Iraq was a direct threat to the international community, including Australia. They supported the Bush doctrine of pre-emption.But the intelligence failures have called into question the Bush policy. As Dr Kay said: “If you cannot rely on good, accurate intelligence that is credible to the American people and to others abroad, you certainly can’t have a policy of pre-emption. Pristine intelligence good, accurate intelligence is a fundamental touchstone of any sort of policy of pre-emption.”

The administration’s establishment of a commission of inquiry will mean the intelligence services are the subject of seven inquiries, including two congressional investigations and a slew of internal probes.

The administration is also bracing itself for the findings of an inquiry into why intelligence failed to prevent the September 11 terrorist attacks. Another potentially awkward inquiry is an investigation into who in the administration leaked the identity of Valerie Plame, a Central Intelligence Agency operative.

This was widely seen as an attempt to settle scores with Ms Plame’s husband, Joseph Wilson, a former head of mission in Baghdad, who had criticised the administration’s assertion that Iraq had sought nuclear materials in Africa.


February 2, 2004Labor’s tone out of tune with business
The Labor Party has indicated that it will raise no new net government debt during its first term in office as its national conference closed after producing its most anti-business platform in years.Despite assurances that Labor would run a fiscally responsible budget, business observers interpreted the distinctly unfriendly tone of the conference as a straight political pitch to a Labor heartland heartily disillusioned with business standards.It was also seen as a reflection of Mr Latham’s own anti-“big end of town” rhetoric and some concessions made to the Left to appease it for losses in other policy areas such as asylum seekers.Pragmatists believe much of it is more about political pitch than policies that will actually damage business, but one observer noted that the clear swipes at the “top end of town” would be giving big companies such as those in the Business Council of Australia cause for concern.The worries stretch from Labor’s corporate governance proposals to industrial relations and government contracting policy changes.These are in addition to a more interventionist industry policy (which, of course, some business interests don’t object to, no matter how pure they expect the government to be in other areas of the economy).The platform includes proposals for a legislative crackdown on “obscene” payments to company directors and executives, the abolition of Australian workplace agreements, restoration of the “role and power of the Industrial Relations Commission” and government preferment in contracting and purchasing so that “it only does business with companies which conduct themselves in a way which is consistent with Labor’s industrial relations policy”.The Howard government is already claiming Labor would be bad for business, preparing a briefing sheet on its website containing all the Labor policies that the coalition says will be “bad for business”.These include outcomes from the conference, including its industrial relations plans and the abolition of AWAs, the allowing of unlimited strike action without secret ballots and the party’s plan to formalise arrangements for casual work by attaching
holiday and sick pay to such work.But it will have to be careful how it sells these ideas, let alone its criticism of the opposition for wanting “to give workers on maternity leave the right to come back to work part-time for up to five years after the birth of a child”.The document also claims Labor will put up taxes (though its first claim concerns a 0.1 per cent levy on payrolls to fund a national workers’ entitlements insurance scheme), and “hurt” Australian businesses by ratifying the Kyoto Protocol and refusing to support a free-trade agreement with the United States.The fiscally responsive pitch at the conference was made on Saturday by finance spokesman Bob McMullan, who told the attendees that it was important that Labor finance government policies “prudently and fairly”.”The forward estimates suggest that for the next four years the federal budget should see record high revenue flows and substantial and accumulating budget surpluses,” Mr McMullan told delegates.”In these circumstances, I can see no reason an incoming Labor government would need to borrow $1 of extra debt over the whole of our first term.”After all, Gough Whitlam was able to fund the whole of his ambitious programs with spending which took 4 per cent less of Australia’s GDP than Peter Costello takes now.”Combined with last week’s commitment by Labor leader Mark Latham that “for every dollar we invest, we have to cut a dollar from the existing budget”, Mr McMullan said there was no doubt Labor would be able to fund “its ambitious social and infrastructure programs from within existing resources”.

Mr McMullan said yesterday that bonds might be issued during the first term of a Labor government but this would be only to replace existing bonds.

February 2, 2004Lacking in the art of persuasion
Mark Latham’s dream ride to date as Opposition Leader has been based firmly on his ability to communicate with people, unlike his predecessors.But his success will depend not only on his capacity to endlessly repeat stories about where he grew up or why he stands for what he stands for, but to persuade people on occasions of controversy that he is right.In all the misleading reporting of the outcome of last Friday’s debate on asylum seekers at the ALP’s national conference (which characterised the rigged factional vote supporting Latham’s policy as a significant win), little attention was paid to Latham’s failure to even attempt to persuade his critics on this most contentious of issues.Let’s be clear: the debate’s most overwhelming feature was how bad many of the speeches were, or, at the least, how disappointing they were, particularly among those seeking the complete end to the temporary protection visa system that Mr Latham is seeking only to modify.The refugee debate was one where a factional fix before the conference might have ensured Latham’s policy would ultimately be supported. But did this explain why chief proponent and party president Carmen Lawrence spent most of her speech attacking John Howard’s asylum seeker policy rather than Latham’s?NSW Premier Bob Carr’s crass provocation that Lawrence and her supporters might cost the party four to six seats didn’t help.Immigration spokesman Stephen Smith and his two predecessors, Nicola Roxon and Julia Gillard , were the best supporters of the policy on the day.The veteran Barry Jones was the outstanding speaker against the policy, attacking it on historical, legal, moral and political grounds.But Latham’s contribution made you wonder. He did not bother addressing the criticisms raised during the debate on the floor. The message was clear: I know you’ll have to vote for this, so I won’t bother persuading you I am right.There were belly laughs all round after the Prime Minister accused Mr Latham of “being sloppy with the truth”. But Latham’s performance in the refugee debate suggested John Howard’s other accusation that Latham was too prone to “glib generalisations” was not that wide of the mark.
January 31, 2004Howard provoked by high – profile Latham
Prime Minister John Howard launched a full-scale assault on politically ascendant Opposition Leader Mark Latham on Friday, accusing him of being “very sloppy” with the truth, speaking in “glib generalisations”, being weak on border protection and
being run by former leader Simon Crean.The new Labor leader also faced friendly fire at his party’s national conference, where strict factional discipline was imposed to ensure his policy on border protection and asylum seekers was endorsed by delegates, amidst major public splits during the debate on the issue within the shadow cabinet.Mr Howard’s attack came after Mr Latham launched his bid for the prime ministership in a keynote speech to the ALP national conference in Sydney on Thursday in which he indicated he would take a tough but different political line on national security
issues and social values, which go to the heart of Mr Howard’s political supremacy.Mr Latham’s speech immediately became mired in controversy after the government released earlier drafts of the speech that showed key phrases deleted.The Opposition Leader claimed the notes released by the government were the work of staffers and that he had worked on his own handwritten version, so had not deleted phrases, particularly one promising that Labor policies would not result in higher taxes, budget deficits or interest rates.But Mr Howard went on the offensive over Mr Latham’s claims on Friday saying that earlier drafts showed references to the insertion of a “draft with Mark’s corrections” in the leaked version.He also argued that Mr Latham was “sloppy with the truth”, because he misrepresented the number of long-term unemployed in Australia (Mr Latham claimed 370,000, Mr Howard 117,200) and the cost of the government’s Medicare safety net (Mr Latham saying it would cost billions, the PM saying it would cost $250 million over four years).”This man, when you go below the glib generalisations, hasn’t got a grip on some of the basic facts,” Mr Howard said.Mr Howard’s comments underline the government’s growing alarm over Mr Latham’s rise in the polls, with an all-out assault on his credibility this week by ministers after some earlier indecision on how to deal with him. But Mr Latham dismissed the Prime Minister’s attack on his truthfulness.”Goodness gracious, what next,” he replied, saying Mr Howard’s own record on the truth left him in no position to comment.The Prime Minister was taken to task by talkback callers over his own record on the truth on Friday, and faced his own image problems with damaging footage of an apparently rattled Mr Howard bitterly complaining about sound problems during a radio interview.He conceded Mr Latham posed a more significant political risk than the former leader, Simon Crean, but argued that “we’ve essentially returned to normalcy; when Mr Crean was there I don’t think the Labor Party had any hope at all”.

January 30, 2004Latham’s New Labor pitch
* PM taunted on security * Tax battleground * Trade policy row
Laura Tingle and Mark Davis
Federal Opposition Leader Mark Latham yesterday moved to challenge Prime Minister John Howard’s grip on sensitive national security issues in the run-up to the coming election, but suffered a setback in his push to fashion a new competitive economic agenda.The smooth selling of Mr Latham as Labor’s next prime minister was undermined by left-wing wins on the ALP conference floor, which will create a more interventionist party platform on industry policy.The presentation was also unsettled by the leaking of drafting notes for Mr Latham’s speech that the Howard government argued showed Labor would be unable to deliver its platform without increased taxes, deficits or interest rates.However, a reinvigorated Labor Party enthusiastically welcomed Mr Latham’s vision of the government he would lead, and signalled it would sell Mr Latham’s personal appeal more strongly than any leader since Bob Hawke.Mr Latham built his platform around his own life experience, once again using his “ladder of opportunity” metaphor to stress the importance of Labor policies already announced on education, paid maternity leave and health, and to emphasise support for public housing and aged care.He claimed the modern Australian economy as a Labor achievement, saying competition and productivity “are Labor words”, but also said he wanted “a new Labor agenda” that sought to rebuild communities.Mr Latham has appointed frontbencher Lindsay Tanner to a new portfolio of community relationships to find “solutions to the problems of loneliness, work stress and community breakdown”.And he promised that every dollar Labor would spend would come from cuts in the existing budget.But the fact that a pledge to achieve the program without higher taxes, budget deficits or interest rates had been cut out of the speech a fact revealed by the unwitting release of earlier drafts of the speech was seized on by the government to suggest Mr Latham had a hidden agenda.Mr Latham later dismissed the claims, saying he had handwritten every word of the speech he delivered and the phrase had never been in his draft, let alone removed from it, but was among suggestions put forward by staffers.He once again pledged that Labor policies would not create a budget deficit and would involve lowering effective marginal tax rates.Despite Mr Latham’s commitment to competition and open markets, the conference adopted a left-wing industry policy by calling for significant government intervention in the market to promote local industry.The industry policy would require a Latham government to impose a freeze on looming tariff cuts for the textile, clothing and footwear sector and the re-establishment of tripartite industry councils to develop plans for such sectors as manufacturing.It will also strongly favour locally made goods over imports in government buying decisions.Labor industry spokesman Kim Carr said it was “an abrogation of national responsibility for a government to leave industry development to market forces” .

Mr Latham’s speech emphasised inequities in a tax system in which “nearly 1 million Australian families face effective marginal tax rates of at least 60 per cent”, and pledged to remove such disincentives.

This could mean income tax credits or a lift in the tax-free threshold, among other options, though Labor sources said there had not yet been any serious discussions about how the effective marginal tax rate issue would be addressed.

On national security, Mr Latham said Labor’s foreign policy was built on the “three pillars” of United Nations membership, the alliance with the United States and comprehensive engagement with Asia. But he said Australia’s defence policy would be based on “defence of Australia first and foremost”, and made clear a Latham government would be unlikely to engage in military commitments like those in Afghanistan or Iraq.

“We need to make our country more self-reliant in the war against terror because the Howard government has been neglecting the home front,” he said.

“I don’t want Son of Star Wars. I want screening devices at Australian airports for the safety of Australian people,” he said.

Labor’s support has been rising in the opinion polls since Mr Latham’s election last November. Next week he will embark on an election-campaign-style bus trip through NSW, while Mr Howard visits marginal sets in Perth in the first taste of the electoral battle laster in the year.

Mr Howard yesterday shrugged off Mr Latham’s performance at the conference, rejecting suggestions he was rattled by the new Labor leader. “It was meant to be about future, but the very first policy promise on industrial relations would take us back into the past,” he said.

Mr Howard conceded the real test of Mr Latham’s effectiveness would come on election night, but said that while he treated every opposition leader with respect, he was not concerned about his new opponent: “I wouldn’t have thought that anybody has ever had me rattled in politics.”

Mr Latham used his speech to challenge delegates to support his recently released policy on asylum seekers to be debated today which Mr Latham has characterised as being based on stronger border protection, tougher treatment of people smugglers but
fairer treatment of refugees.

He said that “if Mr Howard was fair dinkum about protecting our migration system, he would do something about the 30,000 illegal migrants . . . taking jobs off Australians and undermining our working conditions.

“He’d adopt our photo ID card and tough new penalties for employers who knowingly hire illegal migrants.”

January 30, 2004Labor’s new sensation talks the talk
Canberra observed
So, it seems, the outcome of this year’s great political battle may be determined by a simple choice of weapons: direct language versus code language.Mark Latham made it clear yesterday he was going after the Prime Minister on national security, on refugees and on “values”.But the real potency of his opening address to the ALP national conference yesterday lay in the fact that it put on show for all to see his mastery of political communication. He can talk. He can talk to an audience powerfully and simply, not at it.John Howard, master of coded language and the dog whistle, as a result, is in serious trouble. Never mind the kerfuffle about what was cut out of Latham’s speech.Some years ago, a wag speculated on how the White House press corps might have reported the Gettysburg address. Needless to say, all the reports were long on phrases such as “in what key White House officials described as”, and short of anything approaching even a grab of Lincoln’s admonition that the Civil War must ultimately ensure that “government of the
people, by the people, for the people, shall not perish from the earth”.In Australia, we similarly seem too often embarrassed to report much direct political language these days. Shrinking newspapers and shorter and shorter TV grabs don’t support the fostering of political rhetoric.But we also haven’t had a wildly quotable politician on the federal stage since Paul Keating.Yet phrases such as “relaxed and comfortable” become such a crucial part of political life because politics is ultimately an animal of language.Consider the battles that go into the wording of Labor’s party platform: there was a huge brawl this week over whether to include the word “sensible” before a reference to competition policy.Latham has always had the gift of words and imagery that doesn’t sound manufactured by party polling and machines.But yesterday had to be different because it really marked his arrival on the national stage as the alternative prime minister: he has to persuade his party on his platform as a whole, as he will have to persuade the rest of us through the year. And his party is less than enraptured with some of the platform.Latham used the obligation on his party to support him yesterday even before the contentious debates on refugees, infrastructure and trade took place to limit the amount of dissent that will eventually flow in these debates.And he used language to conjure, persuade and convert.Consider how often the phrase “Medicare safety net” has been tossed about the ether over recent months but only as one of those dead phrases, pieces of policy jargon that Don Watson so laments in his recent book Death Sentence .Then listen to Latham yesterday: “Mr Howard talks about a safety net. But you don’t need a safety net unless you’re turning Medicare into a highwire act and families are in danger of falling off.”On national security: “. . . I don’t want the Son of Star Wars. I want screening devices at Australian airports for the safety of the Australian people.”

And, in a moment, the Labor leader had transformed the shape of the national security debate.

Implicit in the language, of course, is the sense of someone who is not afraid to say what he thinks, whether people like it or not.

The brutal truth is that 80 per cent of Latham’s speech yesterday concerned policy developed and announced by his unfortunate predecessor, Simon Crean.

The crucial policy contribution from the new leader was on national security and asylum seekers.

Even here, much of the policy was not new, like the coast guard, but Latham was able to make it sound reasonable and politically attractive. He was able to bring the national security issue “home” to Australia and away from the White House.

On refugees, he is punting on a “kind to refugees, tough on people smugglers” policy to both lift Labor’s embarrassed heads, and lift it out of the political mire.

A lot of people in the party won’t like some of what Latham stands for, but most feel immense relief for the fact that a Labor leader no longer strangles the language in trying to not say what he thinks.

The sense of excitement at the convention was genuine, even if many of the old warriors had no idea that the music that brought Latham to the podium was INXS’s New Sensation, not understanding that this might sound a bit exciting to a younger generation.

Maybe it is the impact of a long break, but the Prime Minister’s rhetorical juggling this week, by comparison, seemed aged. He went on radio to talk to Alan Jones. And he couldn’t help but leap into the latest public communal sorrow over a death. This time David Hookes.

Hookes may well have been a great bloke. He may have been a great cricketer. But we seem to have reached a point where the fact that the circumstances of his death are now a matter for the courts doesn’t seem to give the Prime Minister cause to pause before cautioning: “We have to, of course, keep our heads about it in the sense that the murder rate in this country has not altered appreciably over the last 20 or 30 years.” Sorry? Murder? Who has been murdered?

The interview then moved on to public schools. Having attacked public schools for being too values-neutral earlier in the month, what did he say this week?
“I wasn’t attacking all government schools, I wasn’t attacking parents, I wasn’t attacking all teachers. I was merely reflecting what people tell me.”

He complained that teacher unions “a year ago were encouraging teachers to discuss the war in Iraq in the classroom” as a “code for attacking the government’s position” before dropping some of his own “code”.

“There’s a mistaken belief that you demonstrate tolerance to minorities in the community by abandoning majority practices. That couldn’t be further from the truth.”

It all just seems a bit too tricky, a bit too clever.

Now we wait to see if the electorate will respond to a more straightforward message

January 29, 2004Latham woos business before big day out
It has been a long time since a Labor Party fund-raiser was so richly oversubscribed. But then again it has been a long time since so many business figures were interested in hobnobbing with the party of their workers.Opposition Leader Mark Latham wooed the corporate community last night on the eve of the ALP’s national conference, but left the party’s NSW branch with an embarrassing problem.It was turning people away from a dinner at Sydney’s Westin Hotel, even after taking $275 a head or $11,000 a VIP table from 900 guests.The reason is simple, according to veteran pollster Rod Cameron, who says Latham has been interesting everybody since his arrival, including business.”It’s hard to piece together what the business world thinks of him when you talk around but what you can say is that 20 out of 20 business people are interested in what he has to say, and of those 20, 19 have come away with a favourable impression.”Cameron who made it clear at the time of the Beazley/Latham leadership contest in November that he thought Beazley was a better electoral prospect is unapologetic about that assessment. “I still wouldn’t have voted for him, but there is no doubt he is doing very well. I’m not on his truck but a very interested observer and am the first to acknowledge that.”In fact, Cameron says, Latham has had a “better beginning than just about any other leader I can think of”.Public opinion polls confirm this. Even over the summer, when Australians are supposed to be at the beach, not thinking politics, the rise of Latham’s approval ratings has been something out of the box.Newspoll shows him pulling in the uncommitted voters at an astonishing rate. On December 5, 32 per cent of voters were satisfied with the way he was doing his job but 51 per cent were uncommitted. By January 16, the number of uncommitted voters had dropped 18 percentage points, and all but one percentage point of those had declared themselves for Latham.Labor’s primary vote has steadily risen to between 39 per cent and 41 per cent over the Christmas-new year period. Most importantly, it has begun rising at the expense of the coalition, instead of minor parties.John Howard’s coalition is now registering just 41 per cent of the primary vote, down from highs of 45 to 46 per cent in November and December. Its primary vote now is 2 percentage points lower than it was when it won the last federal election.How has Latham achieved this?There was the early clean-up on the ragged political edges that were a problem for him: his language, his position on the US alliance, his relationship with taxi drivers.But since then he has played to the strength that makes him interesting: what Cameron calls not being a “white bread”, or homogenised, politician.He has also left the Prime Minister politically perplexed by hitting him right in the values debate: Howard, for the first time in eight years, has not been able to “wedge” a Labor leader using his brand of social conservatism.

He tried it with the public schools “value neutral” debate and got burnt. Latham has even outflanked him with his suggestions about parental contracts and social responsibility.

Much of this political strategy is Latham’s own work. Shadow cabinet might have discussed the early childhood initiatives the Labor leader announced recently, but this week’s parental responsibility announcements were pure Latham.

His chains of advice have gradually been pared down over the past two months. There are Mike Richards, his chief of staff, and Simon Banks, his political adviser. But without a doubt, his most significant adviser is the wiley Labor warhorse Laurie Brereton one of the architects of his ascension to the leadership.

The shadow cabinet is working with a new purpose, primarily through a priority review committee Latham’s kitchen cabinet and the expenditure review committee.

The PRC involves the four parliamentary leaders: Latham, Jenny Macklin, John Faulkner, and Stephen Conroy plus Wayne Swan and Martin Ferguson. The ERC involves shadow treasurer Simon Crean, finance spokesman Bob McMullan and shadow assistant treasurer David Cox.

McMullan has emerged as a significant player as the parliamentary party has started to get serious about “cutting the cloth” on the budget the job of the ERC as one source put it. It is the PRC’s job to determine how it will be spent.

Latham will be on show for all to see when he addresses the Labor Party’s national conference this morning.

January 28, 2004Latham’s business agenda under fire
Laura Tingle and Mark Skulley with Marcus Priest
Labor leader Mark Latham ‘s push to shift the emphasis of his party’s economic objectives towards business and the open market will be watered down in order to head off a confrontation with the party’s Left before the ALP national conference begins tomorrow.The move comes as a brawl about private financing of public-sector projects has emerged as one of the two main potential flashpoints of the party conference, along with the debate over refugees.The divisions over the issue of private-public partnerships will leave the ACTU deeply opposed to an approach that several state Labor governments have embraced for projects worth about $6 billion.Mr Latham was expected to discuss the issue with senior union figures, including ACTU secretary Greg Combet , along with a number of other contentious policy matters on which the broader labour movement has been seeking to reach consensus before the conference begins at Sydney’s Convention Centre.Meanwhile, former leader and now shadow treasurer Simon Crean has been working behind the scenes with the factions to develop an economic platform that the Labor Left believes will have a much more interventionist tone.In November, Mr Latham, as shadow treasurer, ignited the party with his draft economic platform, which puts an “open and competitive Australian economy, supported by high levels of public investment in education, training and research” at the top of the Labor agenda, instead of its long-standing emphasis on equity.The draft was in sharp rhetorical contrast to one developed by AMWU national secretary Doug Cameron with heavy Left faction support that states that the “fundamental principle of economic policy under a Labor government is to develop a nation-building agenda which provides a new deal to Australians”.The platform came hot on the heels of Mr Latham’s suggestion that any future tax cuts should extend to people in the top marginal tax bracket, prompting a huge brawl within the party about the shape of any tax cuts that might be offered at the next election.Mr Latham has already signalled he will back away from this position.But the battle over the shape of the economic platform reflects the continuing tensions over spending priorities, with many in the party still determined that spending should be only on programs like health and education, and not on tax cuts.There are also significant differences over competition policy and infrastructure spending, including PPPs, although factional leaders were yesterday organising a compromise over the PPP issue.The problem for the ALP is that Labor state governments have a pipeline of PPP projects worth about $6 billion, despite opposition to such deals from unions and at the party grassroots.The list of projects is dominated by major freeways in NSW and Victoria, but there is an increasing amount of social infrastructure such as schools, hospitals and housing.The ACTU triennial congress last year came out against PPPs, calling for governments to issue development bonds to finance projects.But a union-supported investment trustee and manager, the Development Australia Fund, teamed up last month with ABN Amro to create a $250 million specialist fund to invest in PPPs.

Under the likely compromise, the conference will call for an inquiry into PPPs and assessments of their financial worthiness, with left-wing opponents of the schemes arguing it is cheaper to finance public infrastructure directly by government borrowing than through private-sector involvement.

Some sources were dismissive yesterday of how significant changes to the economic platform would be. But they are significant enough to involve key party figures in extensive discussions in order to avoid a spillover on the conference floor.

January 28, 2004Peace talks focus on national executive make – up
Peace is breaking out in the Labor Party with the sometimes bitterly divided Left and Right factions meeting to strike arrangements aimed at getting a better working relationship.Intense negotiations during the past week have tried to stop damaging debates at this week’s national conference over proposed changes to Labor Party rules. One result has been an attempt to establish informal structures in which the Left and Right can meet to identify and discuss potentially explosive issues that might emerge at the level of its governing body, the national executive.While “finessing” debates and striking deals is a common feature of the conference build-up, what gives the current peace outbreak a particular resonance is the make-up of the national executive.The likely composition of the national executive after conference would be such that Labor leader Mark Latham or his proxy, Laurie Brereton could be left holding the casting vote on the executive.There is a keen interest in keeping the new leader out of internal party brawls. This is partly because, while Mr Latham is from the NSW Right, his ascendancy was built on the support of the Left. The party is also desperate to avoid doing any damage to a leader who offers it the best prospect in years of winning office.But as one pragmatist observed yesterday: “Neither side wants Mark Latham adjudicating on machine issues which he has no experience on.”The Left had proposed that conference accept a change of rules governing the system for electing the party’s 21-member national executive 20 members elected by the conference plus the Labor Party’s federal parliamentary leader to ensure the body is
factionally balanced.The proposal had been prompted by the fact that the Labor Right had secured enough of the 400 delegates to win control of the national executive.At the moment, the Right holds 10 positions, the Left has nine and the centre has two positions.But when the conference elects a new executive, under the current rules the Right would emerge with 10 of the 20 elected members plus the federal leader, Mark Latham, giving it control.Negotiations were continuing yesterday.

January 5, 2004Whitlam team turned deaf ear to warnings
Laura Tingle.
Treasurer Frank Crean took a lot of the blame for the Whitlam government’s economic woes, but the cabinet papers paint a different picture, writes chief political correspondent Laura Tingle.Imagine the government announcing in next year’s budget that it was increasing its annual spending by $33 billion or that all government assistance to industry was to be cut by 25 per cent overnight and you get some idea of the extraordinary ride economic policy took under the Whitlam government in 1973.The mammoth increases in spending by the first Labor government in 23 years 19 per cent in the 1973 budget and 30 per cent in the 1974 budget have long been targeted by public policy makers as one of the great debacles in Australian economic policy
making, and the role all the players in the drama of the time took in that debacle have long been hotly debated.But with the release of the 1973 cabinet papers on New Year’s Day, Australians get their first documented inside look at the struggles that went on within the Whitlam government and with the bureaucracy over economic policy.Ironically, one of the government’s bravest decisions, the 25 per cent cut in tariffs in July 1973, is recorded only in a three-page cabinet minute, after the decision was taken without submissions.The first full year of the Whitlam government was the last Australia was to begin before the economic shocks of the 1970s, including the OPEC oil crisis, which hit the international economy later that year, and the 1974 credit squeeze, provided a dramatic end to an unprecedented period of postwar growth.Riding through the centre of the storm were treasurer Frank Crean, and in the later stages of the year, acting treasurer Bill Hayden.Crean was to later be blamed for the government’s economic woes by both his prime minister and others, who argued he had not been tough enough on his colleagues.The cabinet papers at least document that Crean repeatedly warned the cabinet of the dangers of its actions, and strongly suggest the blame should be much more broadly spread.They suggest his advice was treated with disdain by a group of people with no experience in government and who appeared to defer to anyone aggressively showing their expertise, as the late Jim Cairns is exposed as doing, with some exceptionally flaky
economic analysis of Crean and Treasury’s submissions. But they also show Treasury stubbornly refused to enter crucial debates about policy design, arguing that “equity” was a political issue, not one for “technicians” such as those in the Treasury.The cabinet documents show an increasingly concerned treasurer briefing his colleagues through the course of 1973. He started by expressing confidence “that the recovery now under way will strengthen”. But by budget time his alarm about an overheating economy, inflationary pressures and the rate at which the new government was spending money was palpable.As early as February 1973 just three months after winning government Crean was warning that the difficult position facing the government meant “decisions on all but the most urgent expenditure proposals be henceforth deferred for consideration in the budget context in four or five months’ time; and action be set in train to apply a close scrutiny to continuing policies of the previous government so that room may be found for our own higher priority programs”.An official in prime minister Gough Whitlam’s department endorsed Crean’s submission and told Whitlam that if the treasurer’s recommendations were not followed “there is a strong prospect of conflict between spending programs and responsible economic management”.Whitlam was told by former Reserve Bank governor and later economic adviser H.C. “Nugget” Coombs that he agreed generally with Crean’s submission and suggested migration, support for industry and defence spending as “areas of possible savings”.Then in perhaps the most extraordinary documents released on the economic debate of the time, Cairns, the then minister for overseas trade and secondary industry, proceeded to shred Crean’s submission, opening his critique by saying: “The treasurer’s submissions create an impression of an economy in danger of developing too much forward momentum . . . My own feeling is that before we even think about treatment we must be sure of the diagnosis. Is it really true that inflation is our main danger? Does the treasurer’s description of the state of the economy provide us with a sufficiently complete picture and can its analysis be sustained in the face of a searching criticism . . . I am, as you know, more than sceptical of macro-economics of the kind presented in the submissions . . .”Cairns proceeded to provide his own economic assessment which, as an official observes in annotations in the released copy of the document, was generally based on statistics that were at least six months old.

Cairns concluded by observing: ” I believe we should be seeking to promote the highest attainable rate of economic growth and so generate the extra resources we need to implement our social and economic policies.

“Short-term considerations should not lead us to lose sight of this objective.”

An official in the Prime Minister’s Department told Whitlam that Cairns’ critique “has some serious shortcomings”, including that “the most recent 2 1/2 years are omitted from the projections in the graphs attached to the submission”.

A document war then broke out between Crean and Cairns. In one Cairns accuses Crean of ignoring his earlier commentary and asserting that “it is quite wrong to attach any great significance to the `record budget deficit’ for the current financial year; indeed such a concept can be positively misleading for purposes of determining what our future budget policy should be”.

By the time of the June 1973 Premiers Conference, Crean was warning that the government was “facing an alarming conjunction of circumstances [in which] 1973-74 promises to be a real boom year”.

“As our prospective budget is already shaping up,” he told them, it “would contribute to price increases of a quite unacceptable magnitude.

“Those are warning words. I have put my views on the economic prospect to cabinet on earlier occasions and events have so far reasonably confirmed those overall assessments. I am now exceedingly concerned that unless we deliberately take stock of the situation inflation will undoubtedly erode the real worth of our social program.”

Crean argued that the “total `bids’ for expenditure on the basis of already authorised ongoing activities (including those initiated by the previous government) could increase budget outlays by the order of about $1.6 billion to $1.7 billion, or 15 to 16 per cent in 1973-74 that is, before we begin to consider the many policy initiatives we want to implement”.

Combined with expected new spending by the Whitlam government, Crean said, the government was faced with increases in spending of 21 to 22 per cent.

A synopsis of budget submissions for 1973 notes that Crean “suggests that a responsible and appropriate budget in 1973-74 requires that outlays be kept to 15 per cent about $1.5 billion on the basis of no changes in rates of taxation. That would be a greater increase than took place in 1972-73 (about 13 per cent) when the economy was much less buoyant than it is now. Even so, such an increase in outlays would do nothing to reduce inflationary pressures”.

Treasury prepared talking points for Crean to take into cabinet, saying the main points to emphasise were that “15 per cent is a large increase . . . would merely hold the line on inflation . . . and a rate of increase significantly greater than 15 per cent which was not offset by compensating tax increases would exacerbate inflationary pressures and undermine the government’s economic and social policies in the process”.

The budget eventually included an increase in spending of 19 per cent, and documents now released record prime ministerial adviser Peter Wilenski contacting Treasury secretary Frederick Wheeler expressing his concern about a new deluge of spending proposals coming forward immediately after the budget was handed down.

In September 1973 Hayden was acting treasurer and immediately argued “the desirability of presenting to cabinet a hard-hitting paper on inflation and had found the prime minister very favourable to the idea”.

In that paper, Hayden warned: “As the national government it is our responsibility to regulate the economy successfully. The longer we let the present situation drift the worse it will get. The worse it gets the more intractable it will become to control.

“If we allow this drift then we are increasingly reducing the options open to us and increasing the severity of the methods of control left to us. We cannot allow ourselves to drift into a position where severe demand management methods, involving recessionary economic policies with attendant unemployment and a grind-down in production, are all that are left to us.”

Hayden also impressed on the cabinet the need to rein in its spending. “The 1974-75 budget is some time off. But if we cannot exercise discipline over our own spending we simply cannot hope to command respect from those on whom we call for restraint in theirs.”

Cabinet decided its economic committee should consider Hayden’s paper at a meeting on October 12, 1973 at which officials from the Treasury could be quizzed on the outlook. The committee included Whitlam, Cairns, Hayden, Crean and nine others. The Treasury officers were Wheeler, John Stone and Bill Cole.

The extraordinary record of the venomous discussion between old Labor stalwarts with no economic policy training and the bureaucrats whom they had long regarded with deep suspicion is riveting reading.

The discussion began with a recent decision to raise interest rates. Cairns wanted Treasury to tell cabinet “the kinds of measures which would ensure that borrowers on low incomes are not disadvantaged”. Other ministers, including Whitlam, wanted to know what options were open to the government to curb inflation which would minimise social disadvantage.

Wheeler told cabinet that the government had taken steps to reduce the “extensive pressures on the economy of an upward kind” and that “as far as he could judge from a non-political level, it has for the moment done the maximum possible”.

“For the rest, it would be necessary to look at fiscal and monetary policies, where there has already been some action, as, for instance, with interest rate increases and a raising of the [statutory reserve deposits the banks were required to hold with the Reserve Bank].”

Wheeler refused to directly criticise the 1973 budget, but said he could “note in an analytical way, the substantial increases in expenditure, offset to some degree by increased taxation”.

He argued against any immediate increase in taxes to reduce inflationary pressures, saying “the proper course for the Treasury is to take pause to watch the developments from those measures already taken”.

The discussion became particularly nasty when Clyde Cameron asked what advice had been given to the treasurer concerning “equity problems in relation to inflation”.

Replying, Wheeler said he personally believed the “little man” suffered the most, despite the best efforts of the government to offset the inflationary effects.

“A lot of little people were left forgotten.”

Cameron then asked, by whom? He said he wished to find to what extent Treasury was guilty. The treasurer intervened to say that Cameron was not entitled to ask about this. Hayden expressed the view that Treasury was entitled to look for direction in these matters. The prime minister said the initiatives did not lie with Treasury.

Reverting to Wheeler’s point that economic management and equity considerations were not to be confused, Cairns said he was worried by this approach.

Elaborating on the Treasury position, Wheeler said he did not withdraw from his statement that economic management measures must be broadly based. But this did not mean that questions of equity were disregarded.

He pointed to the design of the income tax scale and sales tax exemptions as an example.

However, Wheeler is recorded as telling the cabinet: “Treasury officers were not equity experts although they do attempt to discuss all aspects of policy proposals.”

Cameron questioned Wheeler on his remark that Treasury officials were not equity experts. Wheeler replied that the matter of equity was one for consideration by the elected representatives of the people.

Stone added that the injection of equity considerations emphasised the point that economic management was not concerned with economics but with political economy. The injection of equity considerations made it difficult to make judgements.

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