Inside Canberra Online 2006

From the Gallery: The sale of Qantas to Macquarie Bank and US equity asset stripper Texas Pacific Group won’t happen. The Sydney Daily Telegraph, John Howard’s favourite paper, has spoken. On page 1 on Wednesday in a big splash the Tele declared - “MacBank and US raider circling our airline”. It then proceeded to give Macquarie a decent whack, describing it as “the bank that ate Sydney.” Texas Pacific would not know much about industrial relations in Australia. If by some odd chance the bid succeeded, unions would quickly turn Qantas and Sydney Airport into loss-making operations. What is more, they would do it with the support of most Australians. Any strike would be illegal, but would the Government imprison strikers fighting for the Australian icon to remain in Aussie hands? Hardly. It is more than likely the ACCC would not allow the bid because of the conflict of interest: Macquarie would be both controller of Sydney Airport and part-owner of Australia’s virtual monopoly domestic carrier and biggest international carrier. What Australian aviation needs is a real competitor to Qantas on domestic routes. On many it is charging what it likes. Virgin is not doing the job, but Singapore Airlines could. [24.11.06]

Howard backing a nuclear loser?: For the 2001 election, John Howard put his hand in the magic hat and produced not a rabbit, but the MV Tampa. In 2004, out of the same hat came the promise on interest rates. This week he thrust his is hand into the hat, felt something hot, and pulled out nuclear power. Inside Canberra has reported before that close watchers of Howard’s genesis of political strategy just can’t work out what he is up to in promoting the cause of nuclear power. Polls consistently show a big majority opposed to nuclear power in Australia. Not only does the PM have the challenge of “bringing Australians with him” on nuclear power, he will also have the devil of a job bringing his own party with him. It would be surprising if a majority of backbenchers, particularly those in marginal seats, would be enthusiastic about going into an election promising to deliver nuclear power. [24.11.06]

Beazley being given a big election stick: Liberal State leaders, especially those facing elections, are opposed. Ted Baillieu says a nuclear power station in Victoria - “will not happen under a Liberal Government.” In NSW, Liberal Leader Peter Debnam has said he is against nuclear power, and in Queensland, Liberal Leader Bruce Flegg says it would not be economic in his state. Of course, Howard hasn’t promised to introduce nuclear power. If it remains unpopular he will quietly backdown, saying he wished no more than to generate public debate on greenhouse issues. This would not deprive Kim Beazley of a scare tactic at the next election along the lines - “A vote for Howard is a vote for nuclear power generation in your neighborhood”, or something like that. On the other hand, if Howard wants to continue supporting the nuclear option he will have to say, before the election, what he is going to do about encouraging its use and where the stations would be built. [24.11.06]

PM won’t move on dirty coal: Ziggy Switkowski makes it clear in his report to Howard that the various forms of low emission electricity generation, including nuclear and clean coal, can’t compete with dirty coal. Something like a carbon emission tax added to dirty coal is necessary to make other energy forms competitive. Yet Howard says he won’t do this unless all nations of the world do the same, otherwise Australia would lose its economic advantage in cheap energy. It will take decades to achieve global carbon trading, if it is achievable at all. Plainly, the electorate wants something done now about climate change, and will not buy the argument that whatever we do will only have a negligible impact on total global emissions. Australia is the highest emitter per capita of any country on the globe because it relies principally on fossel fuels, and has not taken the nuclear option. [24.11.06]

Carbon taxes versus emission trading: At the moment, Howard’s policy appears to be encouragement of renewables, clean coal and nuclear (perhaps), but with no carbon tax. Beazley is offering renewables, clean coal, a ban on nuclear and emissions trading, not a carbon tax. Clive Hamilton of the Australia Institute explains the difference to us this way: a carbon tax increases the price of burning fossil fuels, but you don’t quite know what the effect will be on the quantity of greenhouse emissions saved. Thus the price is fixed, and the quantity of emissions varies. With emission trading, you cap the level of emissions by issuing certificates (in effect, permits) and let the market work out the price. In that case, the quantity is fixed whilst the price varies. [24.11.06]

Energy efficiency ignored: One of the most immediate (and therefore appealing) methods to cut emissions is for some reason not mentioned in the debate on climate change - energy efficiency. Energy experts are generally in agreement on the need to cut current emissions by 60%, at least by 2050, and agree a very large chunk will come from energy efficiency programs. These can start right now, require no new technological breakthroughs, and in net terms have no cost, or actually are cost savers. Much can be done to achieve energy efficiency through Government regulation: building efficiency standards; more stringent rules governing electrical appliance energy use; more rapid introduction of fuel efficiency standards in vehicles and so on. As we have said before, why not tell Australian car manufacturers that they will still get their billions in R&D and production subsidies, but only if they concentrate on energy efficient smaller cars or hybrids. Only two years ago, the Government’s Energy White Paper 2004 - Securing Australia’s energy future - basically endorsed the proposition that energy efficiency could cut emissions by 30% at no cost to the economy, and in fact would be economically beneficial. [24.11.06]

Govt energy White Paper: Compare the zero cost of 30% greenhouse savings from energy efficiency with the Switkowski numbers: 25 nuclear power plants by 2050 (at vast cost) to reduce emissions by 8% to 18%. The 2004 White Paper (which said nothing about developing nuclear) stated energy users currently spend around $50 billion on energy. It added - “Government program experience, advice from energy auditors and independent analysis suggests that many businesses and households could save 10% to 30% on their energy costs without reducing productivity or comfort levels. In many cases, these savings have very short paybacks at current energy prices. Achieving such reductions could deliver $5 to $15 billion in potential energy savings. This would require significant investment in new equipment and changes to existing practices. Experience and analysis indicate these investments would have a positive net present value over the life of the investment, any many may have paybacks in as little as six months.” Such is the scale of savings that could be achieved, not just by a national energy efficiency program, but directly by every Australian household and individual enterprise, big or small. [24.11.06]

IM poll on climate change: TV news last weekend boiled down the latest Ipsos Mackay poll to say more people believed the Government would handle climate change better than Labor. True, but this was not its real meaning. The question was which federal political party would best handle climate change? The Libs/Nats scored 23%, Labor 19%, Green 24%, Democrats 2% and other/don’t know 28%. If there was an election - the outcome of which was entirely decided by this question - the Coalition would have received a drubbing. Given that in an election Labor would get about 80% of Green preferences and splitting the other votes 50-50, the outcome of the election two-party preferred would be Labor 55.2%, Coalition 44.8%. It’s a mad question anyway. Most of us in the Press Gallery who are supposed to be up with these issues don’t really know what the Coalition’s policy is to reverse global warming. As for how important climate change will be in the next election, 60% said it would be important in determining their vote. Maybe it will, but this probably depends on whether the drought breaks by polling day. Ipsos Mackay says 45% believe the drought is due to natural weather cycles, and 44% believe it is because of climate change. [24.11.06]

Beazley’s problems & Murdoch: Of all the comments sparked by the discovery of “unrest” in the Labor Caucus over the performance of Kim Beazley, none was more intriguing than that of Laura Tingle in The Financial Review on Monday with - “Claims that media proprietor Rupert Murdoch will back Labor to win government if the party installs a joint Kevin Rudd-Julia Gillard leadership ticket have emerged as part of increasing brawling within the party over the leadership of Kim Beazley.” Could it be? Yes it could. Inside Canberra suggested recently that Beazley might be able to do a deal with Murdoch to assist the mogul to get what he can’t get from John Howard - removal of the cosy policy of ensuring there is no competition for free-to-air TV. Maybe Murdoch doesn’t like Beazley, but does like Rudd. Other pointers to such a deal with Rudd and Gillard include: Murdoch was in Australia recently; and he had harsh words to say about such things as Peter Costello’s deficiencies in tax policy. Then note it was The Australian which first provoked the latest ‘get Beazley’ media frenzy of last week. [24.11.06]

Kim’s record not that bad: Ever since he got control of his first paper (the now defunct afternoon Adelaide News), Rupert has had an appetite for dabbling in politics, be it in the UK, the US, or Australia. Not that such a deal with Rudd and Gillard would be much appreciated by a majority in Caucus. Supping with the devil requires a long spoon in the view of many MPs, who wouldn’t trust Murdoch as far as they could kick him. Greg Baxter, of News Ltd, denies any Murdoch involvement (but he would, wouldn’t he). We have heard that some leading Right figures in NSW were talking to Rupert recently. There is no doubt that Beazley is having a rough time, as has every Opposition Leader since the war, and on more than one occasion. We have no particular brief for Beazley but believe his record should be remembered. He lost in 1996 when Paul Keating awarded Howard a massive majority. Beazley outpolled Howard in 1998 (two-party preferred ) - 51% to 49%. In 2001 he was unlucky - and Howard very lucky - to have the attack on the World Trade Centre so close to the election. Then Howard was masterly in the way he played the race card via the Tampa. Yet Beazley was far from disgraced, losing by 50.9% to the Coalition, and 49.1% to Labor. [24.11.06]

Too late now for Rudd to run: After that came the Latham disaster - 52.7% Coalition, 47.3% Labor. The number one objective in the minds of everyone in Caucus is having a Leader who will at least keep them in their seat. If he then wins Government, so much the better. Rudd would be risky. He is capable. Yet he is far from an instantly recognised national figure. A lot of voters who don’t follow foreign affairs or the doings of AWB would never have heard of him. To establish Rudd as alternative PM before an election would be difficult. As Inside Canberra has also reported, there would be the risk of Howard calling an early election before Rudd could find his feet. The Age this week published a series of “key criticisms” of Beazley within the NSW Right machine. The first was - “He has focused too much on the Government’s industrial relations changes at the expense of other issues, a repeat of his failed anti-GST strategy.” Good God, it’s only six months ago that John Robertson (who runs Unions NSW and is a key union power broker in the NSW Right), was publicly lambasting Beazley for his lack of concentration on the Work Choice legislation. Another claim of the NSW Right was that Beazley had been “left behind on broader issues including climate change, Iraq and education.” This is just plain silly. [24.11.06]

Conference bastardry: Governments have a bloody hide closing down large slabs of inner city CBDs for such conferences as the G-20, held in Melbourne last weekend. Tens of thousands of citizens and retailers were inconvenienced or disadvantaged. Inevitably, police had to deal with violent anarchists (suffering injury in the process), and costing taxpayers hundreds of thousand of dollars - just imagine the penalty rates involved in calling out Melbourne police for the weekend. All for 20 Finance Ministers who talk and do nothing. The shenanigans of G-20 will look like a picnic compared to next November when APEC meets at Sydney’s Darling Harbor, causing even greater upheavals than Melbourne suffered. The October 2002 Commonwealth Heads of Government meeting was held at the Coolum resort on Queensland’s Sunshine Coast. Security was no problem. Citizens were not inconvenienced and the whole thing went like clockwork. APEC and other such conferences should also be despatched to such venues. There are big resorts on the Gold coast which could handle such conferences. And Hamilton Island, in the beautiful Whitsunday’s, would likewise be an excellent venue. APEC’s cost in Sydney city is currently $300 million and rising. A lot of money for a conference which has yet to achieve anything of value. [24.11.06]

PM stands by Viet war: The Vietnam war (1962-73) was the longest conflict Australia had ever been engaged in. It was fought, said the Menzies Government, to prevent a Communist-takeover of the country and other Southeast Asian nations going red due to the domino effect. The Vietnamese won the war, and what Menzies had predicted didn’t happen. On the contrary, John Howard was in Hanoi this week at the APEC Summit with George Bush among others. The war was horrendous: Australia lost 508 lives; 58,000 Americans died; over 4 million Vietnamese civilians and Viet Cong died. John Howard said this week - “I supported our involvement at the time, and I don’t intend to recant.” Matt Price, in The Australian, pointed out how Howard’s reaction was in marked contrast to US Defence Secretary, Robert McNamara, who after the war said - “(We) acted according to what we thought were the principles and traditions of this nation. We were wrong, terribly wrong. We owe it to future generations to explain why.” Yet despite Howard’s refusal to say the war was wrong, the Vietnamese graciously acceded to his request to visit the Long Tan battlefield, where Australians won an epic encounter. When Paul Keating visited Vietnam as PM and sought the same access, it was refused. [24.11.06]

West Papua issue in Indon Treaty: Our associate publication, the weekly DIAR.com e-Newsletter has been studying the new ‘Framework for Security Cooperation’ signed in Lombok by Alexander Downer and his counterpart, Dr Hassan Wirajuda. The new Agreement embodies a mechanism for encouraging intensive dialogue, exchanges and the implementation of cooperative activities, while also providing a basis to conclude separate arrangements in specific areas not already covered in the Agreement, including: counter-terrorism; defence cooperation; and police cooperation. Downer says the new Agreement - “is practically focused and ... encourages both countries to cooperate with international organisations on security issues and to foster community understanding on security challenges and responses.” Adding his own twist to the ‘Framework for Security Cooperation’, Defence Minister Nelson denied it would make Australia complicit in the oppression of Indonesian separatists. DIAR.com comes to a different conclusion. It says the provisions in the Agreement indicate that under Article 2.3 - relating to support for separatists - Australia has willingly traded the rights of groups unsatisfied with Jakarta’s rule for an Indonesian pledge (Article 3.8), that it will really do - “everything possible individually ... to eradicate international terrorism and extremism and its roots and causes and to bring those who support or engage in violent criminal acts to justice in accordance with international law and ... respective national laws.” Perhaps it will be Australia who next tears up a security agreement with Indonesia (as Jakarta did over East Timor), when media in the future exposes to the Australian public continuing human rights abuses in West Papua. [24.11.06]

News from Yarralumla: Back in June last year, Inside Canberra reported that Yarralumla insiders believed the Governor-General, Michael Jeffery, was tiring of John Howard usurping the traditional G-G’s role, and was thus seeking a higher profile. It is the PM who has become the chief mourner at funerals of popular figures, and the principal fareweller of Australian military forces leaving to serve abroad. This comes on top of reports many in the government are irritated Jeffery takes very, very seriously his lofty role as the Queen’s representative, and is making clear he wants the appropriate deference to always be shown to him. In the Australian vernacular, the G-G is seen as being somewhat ‘up himself”. Glenn Milne reported at the weekend that Jeffery is irritated Howard has largely usurped his constitutional role as commander-in-chief of the armed forces. Milne further quotes a Yarralumla source saying the G-G (and his wife Marlena) are causing some tension within the staff. The source said - “He’s a stickler for protocol ... and she’s more pompous than he is.” Milne says Jeffery also complained that Veterans Affairs Minister, Danna Vale - at a War Memorial wreath-laying ceremony - was introduced to the audience before him. We would agree this was a slight to The Queen’s representative. [24.11.06]

From the Gallery: Having travelled to Tokyo seeking inspiration, Industry Minister Macfarlane says Mitsubishi has assured him the company “has no plans” to close its Australian manufact-uring operations. Let’s hope the company means it, if only for the sake of the 1700 ‘Ton-sley Park’ workers in Adelaide. Even if Mitsubishi was planning to close, Macfarlane would know that he would not be told. The company would want any closure to be orderly, and without damaging sales of the 380 model - designed to save the Australian operation. If sales don’t pick up, the plant could close. This could be a disaster for John Howard, and explains why Defence pro-jects are being pushed into South Australia, and most likely Victoria. Sackings at Ford and GMH have approached 1000 in recent months. In the US, President Bush has just met Ford, GM & Chrysler CEOs - all seeking help to combat Japan-ese and European imports, and subsidies for greener cars. If the President can’t help, the outlook for Ford and GMH in Australia would be a worry. The nation can ill afford to lose automotive technology and engineering skills, yet Aust-ralian taxpayer funds are being used to build the wrong types of cars. John Howard could improve his ‘green’ credentials by changing Federal subsidies paid to local car production. [17.11.06]

Howard - Australia’s most significant PM: John Howard is now the most significant political figure in Australia’s history. Historians will judge his worth. His comeback from the 1980s disasters - Lazarus with a by-pass, as he once put it - rivals the Menzies revival after his party rejected him in the early stages of World War II. Howard has been more divisive than Billy Hughes or Jack Lang, and has long since lost the ‘Honest John’ tag. But he is the most successful PM after Menzies. He is an elected dictator who runs the Government single-handedly. The House and the Senate are rubber stamps (apart from Barnaby Joyce in the Senate) and so is the Cabinet. This week, with the help of the High Court, Howard tore up the deal the States entered into to form the Commonwealth of Australia. [17.11.06]

Attack on sovereignty of states: The majority judgment of the High Court, ticking the use of the Corporations Power to impose a national industrial relations system run from Canberra, marks the beginning of the end for the sovereignty of the states. It will be all downhill from here. Howard therefore, Leader of the Liberal Party, is also the most successful centralist. And yet there has not been a whimper from the state branches of the Liberal or National Parties. Menzies would be spinning in his grave. The Financial Review summed up the new constitutional world with one sentence - “Senior lawyers and constitutional experts yesterday said the issue now was not what powers the federal government could exercise over matters traditionally regulated by states, but whether it wanted to do so.” The PM stepped forward with his spin - “It is not the intention of the government to interpret this decision as some kind of carte blanche for a massive expansion of Commonwealth powers.” Yes, Prime Minister, but what about other governments that follow yours? [17.11.06]

PM and Costello’s spin: Howard also said his government would only seek extra powers if it was “in the national interest” to do so. And we all know who would interpret what is and is not in the national interest. Costello was mealy-mouthed, saying the High Court had not cleared the way for a takeover of education and health, which were “traditionally state areas.” Yes, but so was industrial relations. ACCI is delighted with the High Court judgement, apparently uncaring about the ability of a future Labor Government to reverse all that Howard has done. Others are saying that Beazley, even if he won the next election, could not move reverse Work Choices, as he would be blocked by the Senate. This assumes a lot about the next election. [17.11.06]

Senate’s key role if Beazley wins election: The Government has a bare majority now, with 39 Senators. At the next election, 18 will retire. This means that it will have to win three of the six seats contested in each State to maintain its majority. This could be difficult if Beazley wins the election. If the Coalition misses out in one of the six states, the Senate will be divided 38 all between the Coalition and ALP/Greens. This would allow a Coalition Opposition to block any Labor legislation. If it failed to gain three seats in two of the States, then it would lose the blocking power. It should be recalled that the High Priest of labor market reform, Ray Evans (President of HR Nicholls Society), rejects centralising IR in Canberra. Instead, says Evans, the Government should abandon S.51:35 (the IR power) of the Constitution, and “let the states compete with each other in providing effective labor market regulation (or freedom) as opportunity or political fashion afforded.” Inside Canberra quoted Evans earlier this year saying - “Regrettably, we have a Prime Minister and Treasurer who are strong centralists and a Cabinet in which the number of federalists can be easily accommodated on the fingers of one hand.” How true. [17.11.06]

Smaller states should beware of big boys: Back in April, Inside Canberra reported Curtin University’s Professor, Greg Craven - in an article in The West Australian - forecast the shackling of the states if the Commonwealth was found to have the power to legislate Work Choices on the basis of the Commonwealth’s Corporations Power (S.51-XX of the Constitution). Craven said WA would lose its power to ban poker machines, uranium mining, extended shopping hours, and even daylight saving. Further, universities, private hospitals, private schools, ports, charities and sporting and cultural clubs - as well as government entities such as Western Power and the Water Corporation - were all incorporated and could be regulated by Canberra. The Senate was established as a States’ House by the founding fathers as part of the deal with the smaller states. They feared that without the Senate, the two big states of NSW and Victoria would be able to dominate the federal scene. The smaller states should remember this, and note the power of the two biggest states. For example, if Beazley becomes Prime Minister, he will be the first since Curtain to come from other than NSW and Victoria (Bob Hawke was ‘Victorian’ for all of his ACTU and political career. Frank Forde was never elected, and spent only a week as PM). Further, of the 150 seats in the House to be next contested, more than half (86) will be in NSW and Victoria. Include Queensland, and the three eastern states will have 115 seats (or 77%) of the House. [17.11.06]

Newspoll looks crook for ALP: This week’s Newspoll (taken 10-12 November) is a disaster for Labor - if it’s correct. In a fortnight, Labor’s primary vote slid a massive 4% (to 37%), while the Coalition fell only 1% (to 41%). Based on preference allocations at the October 2004 elections, the two-party preferred vote was 50% each - a drop of 2% for Labor, and a gain of 2% for the Coalition. How could this be so? Based on events of the last fortnight, Labor should have been gaining, not losing in the polls. Interest rates rose for the fourth time since the election, and the ALP spent a lot of money on its TV advertisement which pictured Howard with a Pinocchio nose - and accusing him of lying because of the Liberals’ promise “to keep interest rates at record lows.” Yet last week, Inside Canberra also pointed out that not all Australians are being adversely affected by interest rate rises. [17.11.06]

Yet PM vulnerable to US politics: In response to such criticisim, Howard resorted to contorted logic to explain how interest rates would still be worse under Labor, because of inflation driven by non-productivity related wage increases under a “centralised wage fixing system”. Having extolled how wages had risen far higher under his Government than under Labor, the PM argued wages under Labor would go “too high”due to its “more centralised” (amended emphasis) wage fixing system. Yet it was Labor which abandoned the centralised system in favour of enterprise bargaining. Nor did Howard rate well in his efforts to catch up on the climate change debate. Having for ten years been, if not sceptical, at least not interested, he is now rushing to recover lost ground. The rebuff by US voters to George Bush’s policies in Iraq (fully backed by Howard), certainly would not have improved the PM’s position. [17.11.06]

Poll could be wrong: Why then does Newspoll show this sudden downturn in the stocks of the ALP? A likely explanation is that the poll is simply wrong. Newspoll does this occasionally. For example, for the 10-12 March survey, Newspoll had the Coalition opening up a big two-party preferred lead with 53%, to 47% for Labor. Two weeks later, this was reversed with Labor 53%, and Coalition 47%. One of these polls must have been wrong. There is something odd about this week’s poll. For example, Howard has been very publicly hurling billions at farmers for drought assistance. The outcome was a decline in the Nationals’ primary vote by a third, to 4%. The Liberal primary rose by 1%, to 37%. Then the Greens vote jumped by 2% (to 9%), suggesting that Howard is not cutting through in the climate change debate. So why did the Liberals vote rise by 1%? And also, odd was the rise by 3% (to 10%), in ‘Others’ - which does not include the 5% uncommitted, or 2% who refused the poll. These are excluded. So which ‘Others’ accounted for the 3% rise? Surely not One Nation or the Democrats. Independents may have gained a little, but not enough to account for a 3% jump. [17.11.06]

State Govts may be hurting Beazley: Another oddity is that there was virtually no change in the satisfaction rating of either Howard or Beazley, or in Howard’s sustained lead as preferred PM. So it does not appear some terrible mistake that Beazley has made in the last fortnight has caused the slide in the Labor vote. One other explanation is that Labor state governments are so on the nose in NSW, Queensland & West Australia (particularly in NSW), this has rubbed off on Federal Labor. This might more credibly explain the latest Newspoll - it’s a combination of statistical error and the damage to the ALP’s standing in the states. If there is no improvement for Labor in the next poll, the Opposition will have to make serious efforts to find out why its support is faltering. [17.11.06]

Oz again finds ALP restive: Surprise, surprise: The Australian on Wednesday reported Kim Beazley was under pressure to dump frontbenchers amid growing concern in Caucus that Labor is failing to hold swinging voters. This, said The Australian, signalled “another period of possible destabilisation” for Beazley. There could be a call for “generational change”, or a handover to Kevin Rudd and Julia Gillard. Three sentences later the paper noted - “He (Beazley) retains the support of the majority of Labor MPs, and is still expected to lead the party to the election next time.” Exactly, so what is this yarn all about? Much is made of Beazley retaining on the front bench two Victorian MPs who lost pre-selection for next year - Bob Sercombe and Gavan O’Connor. One MP is quoted as saying there should be a wholesale reshuffle by Beazley. Voters couldn’t care a bugger about the makeup of Labor’s front bench. [17.11.06]

Front bench baloney: The only member of Caucus who counts when a party is out of office is the Leader of the Opposition. Most voters could barely name two other frontbenchers. Newspoll also this week gave its findings on several lead issues. It found the Coalition still had a big lead as being best able to handle the economy and national security. On Education, Labor and the Coalition are adead heat, but on Health and Medicare, Labor is well in front. What the poll didn’t reveal was the outcome on Industrial Relations, which Beazley says will be his central theme at next year’s election. Howard predictably beats Beazley on being seen as: Decisive and strong; Has a vision for Australia; and (narrowly) Understands the issues. Equally predictably, Beazley wins on: Cares for people; Likeable; and In touch with voters. On Trustworthy Beazley won easily with 62% (down 2%), to Howard’s 53% (up 3%). That Howard is closing the Trustworthy gap, is particularly odd, given interest rate rises. [17.11.06]

Election timing: Ignore reports that because John Howard “promised” (he didn’t) not to have the PM’s XI cricket match in November or December next year, the most likely month for the election will be October. Howard will have the election when it best suits him, not the cricket fans in Canberra. As Inside Canberra has said before, don’t rule out an early election, particularly if the voters give Labor a hammering in the March 2007 NSW state election. To be clear, we are not proposing that if the NSW Government is defeated, it is more likely that in the Federal election many will vote Labor, or vice versa if the Iemma Government just hangs on to power. The danger for Beazley is that hordes of NSW swinging voters who currently detest the NSW Labor government will likely take another opportunity to punish Labor, particularly if they get an opportunity so soon after the NSW election. If Howard goes before July, it will necessitate a separate Senate election in 2008. Yet if he believes an election before July would give him his best chance of retaining power, he will not hesitate. The fuss that would follow him forcing another expensive election would not be a significant factor for voters in deciding on who should govern in Canberra. [17.11.06]

Democrats hunting AWB bribes: Bad news for the Australian Wheat Board and the Government: whatever the findings of the Cole Commission into the oil-for-food inquiry, Wheat Associates (the US wheat lobby in Washington) now has a powerful ally. The result of the sweeping shift in political power in America means Democrat Senator, Tom Harkin (from the wheat state of Iowa), will become chairman of the Senate’s powerful Agriculture Committee. He has been a consistent and vocal critic of AWB’s bribes to Saddam. He has in the past claimed the White House didn’t want to investigate AWB because of John Howard’s willingness to send troops to Iraq. The Democrats are now in charge of committees of the House, and the new House agriculture committee chair will be Collin Peterson, also from Iowa. [17.11.06]

Thawley’s action to be probed: Peterson told the Congress Daily in Washington that officials of the Administration needed to explain matters “they have swept under the rug.” He will investigate why the US Agriculture Department was unwilling to investigate AWB kickbacks to Saddam. One matter certain to be investigated is the lobbying in 2004 by the then Australian Ambassador in Washington, Michael Thawley, of Republican Senator, Norm Coleman, the chair of the Senate committee inquiring into “illegal under-the-table” payments to Saddam Hussein. Acting on instructions from Alexander Downer, Thawley told the Senator there was nothing in the allegations against AWB regarding the bribing Saddam, and that the story had been dreamt up by a journalist. Thawley is no longer an employee of DFAT, and is living in Washington as a consultant. Without diplomatic cover, he could be called before a congressional committee and grilled on his misleading of Senator Coleman. [17.11.06]

Heat on single desk: Harkin and his committee will be applying maximum pressure on the State Department to push for abandonment by Australia and Canada of the single desk monopoly export system. Such bad news from Washington comes at a time when both John Howard and Mark Vaile find themselves in a quandary over the future of the single desk. Howard is under increasing pressure from his own backbench (and many wheat growers), to abandon the single desk altogether. Yet last week, Barnaby Joyce - himself a small wheat grower - said he had sold his wheat to AWB because to do otherwise would threaten the single desk. Most Nationals believe it would be electoral poison for them to abandon the single desk principle next year. [17.11.06]

Delay on Cole report release: A decision on the single desk is not something Howard can put off until after the 2007 election, and he might be forced to accept demands that the single desk stays. National Party sources believe the single desk will stay, but the case for denying AWB veto powers over wheat exports by other traders simply is overwhelming. We hear the Cole report will not be released by the Government until Thursday, 14 December. This is not surprising. The Parliament will have risen by then for the Christmas break, so there will be no immediate opportunity for the report to be debated in Parliament, and questions directed to ministers as a result of the Cole findings. Further, with only 11 days to go to Christmas - and with the struggle for the Ashes well underway - there will be many matters on the public’s mind other than the threatre of the Cole commission. [17.11.06]

From the Gallery: It is clear why we have a Governor-General: to present the Melbourne Cup to the winning connections. That’s about all he is allowed to do. If it comes to presenting trophies to winning football teams, or cricket teams, or any other celebrity sportsman, the PM does that. It must be the Methodist in him, but John Howard seems to have a positive disdain for the race which everyone else believes is in the pantheon of ‘Australia values’ (which made the win by the Japanese even more galling). Not only that, it was once the practice of Governments not to sit the Parliament on Cup Day. Now it is usually sitting. Just why he had to have a water summit on Tuesday, rather than Monday or Wednesday or next week, has never been explained. But the press gallery was very dirty on him for holding a doorstop outside his office ten minutes before they jumped at Flemington. Howard was asked whether he would see U2 rocker Bono. It was pointed out to the PM that Bono would be at the Telstra Stadium on Saturday night. Howard responded “... will he? Is he a follower of which code of football?” Anyhow, he won’t be seeing Bono. [10.11.06]

Howard’s worst week: US elections, rates: This has been the worst week for John Howard since he came to power in 1996, with two major disasters - the rout of the Republicans by American voters, and the fourth rate rise after he promised to keep rates at “record lows”. The Democrats have control of both Houses in Congress, and the mid-term election was a referendum on Iraq. Bush was forced to dump Defence Secretary, Donald Rumsfeld. Howard is digging in on Iraq. Last night with Kerry O’Brien he dismissed the Rumsfeld dumping as “a gesture” and played down the significance of the election defeat saying Iraq was only one issue. Plainly Howard has no plan, nor apparently believes he needs one, to react to the new political reality in the US. He refused to admit any mistakes had been made or apologise for taking Australia into the war on false intelligence. The objective remains the same: democracy for the people of Iraq. There is no recognition by him of the savage civil war developing between Shi’ite and Sunni militia. [10.11.06]

Ties to US President bad for Australia: It has come to this: Howard has tied Australia to the worst American President certainly since the war, who has perpetrated perhaps the worst foreign relations blunder in US history. Having done so, we have followed the US in rejecting Kyoto, and on any important international issue ‘Australia takes the approach of Bush’. A stand-out example is Howard’s obvious bias favouring Israel over the Palestinians. And like Bush, he was reluctant to push for an immediate cease-fire in the Lebanon war, believing wrongly that Israel needed time to wipe out Hezbollah. Around the world, Australia is seen as a lackey of Bush. Howard is now faced with the reality of the war - the majority of voters in the nations of the Coalition of the Willing are now against the Iraq war, believe it never should have been fought, and consider it has produced a mess. [10.11.06]

Problem - no honourable Iraq exit strategy: Following the train crash for the Republicans in this week’s election, Tony Blair will be under intense pressure to resign so that Gordon Brown can become Prime Minister, possibly in the first half of 2007. Brown will set about withdrawing British troops because it is what his supporters in the Labour Party want. Howard is not under the same pressure - yet. Should the situation in Iraq further deteriorate, and (God forbid) we take significant casualties either in Iraq or Afghanistan, it will emerge as an election issue. Hugh White, the respected Professor of Strategic Studies at the ANU, recently wrote that Howard’s Iraq policy amounts to helping Bush with his domestic problems in the US. “The reality is no one has any idea how to stabilise Iraq to the point that the US can decently leave.” True, but it may indecently leave. [10.11.06]

Howard to follow US in 2007 pullout: There is nothing obvious Howard can do to avoid flak on Iraq. Allan Behm, former Defence Department head strategist, told the Financial Review on Thursday that he now believed, in the light of the mid-term election result, the US would reduce its deployment in Iraq from 140,000, to 30,000 - 40,000 in the next 12 months. That will be the end of staying the course to allow the Iraq people to emerge with a wonderful western-style democracy. Howard will then have to respond. One positive note for Howard is that Kim Beazley and shadow foreign minister, Kevin Rudd - both of whom are pro-American (and there is nothing wrong with that, it’s pro-Bush that has to be avoided) - will not go in boots and all to attack the Howard strategy of tying Australia to Bush. Beazley’s expression of support for the Australia/US free trade agreement (which was always going to be a dud) was one of the reasons Mark Latham decided to support the treaty. It should be noted that Simon Crean, not Beazley (who displaced him), can hold his head up about Iraq. Right from the start, Crean publicly opposed the war in Iraq and made no bones about it. [10.11.06]

Rate rise a killer…: In a domestic political sense, the worst event of the week for Howard was the 0.25% rate rise on Wednesday. It has obviously wrong-footed him. The PM was anything but impressive in his attempt to put the right spin on it. He adopted a quite strange argument about the danger to inflation if Labor is elected. Having been extolling the way in which wages had risen far higher under his Government than under Labor, Howard now says under a Labor government wages would go too high and cause inflation. He at first said that Labor was proposing a “centralised wage fixing system” (the same system which operated under Menzies, Gorton, Whitlam and Fraser, until changed by Keating). Howard amended this to a claim that under Labor it would be a “more centralised wage fixing”. Labor is not proposing any such thing. It wants a national IR system (as he proposes) and the right to collective enterprise bargaining if a majority of workers in an establishment vote for it. Howard opposes this, and says - in effect - that only Australian Workplace Agreements should decide wages, apart from the minimum wage. [10.11.06]

…but some good signs from Newspoll: Howard must have been pleased with this week’s ACNielsen poll, which is a worry for Beazley. It shows that Labor is still a long way behind on both handling the economy and interest rates. Asked - Which of the major parties do you think would keep interest rates lower? - 55% said Coalition, 32% Labor, and 14% don’t know. While a huge 80% of Coalition supporters plumped for the Coalition to keep rates low, a less than convincing 56% of Labor voters said the ALP would be best. The poll was taken before Labor launched its TV ad campaign calling John Howard a liar for his promise to “keep interest rates at record low levels”, the substance of Liberal TV ads the last election [The poll was taken before Wednesday’s interest rate hike of 0.25%]. The fact that rates had risen three times since the election, when the latest poll was taken, show voters have either forgotten what happened in the last election campaign, or rates are not as important as is supposed. For example, self-funded retirees are very happy to see rates rising, and their investment returns increasing. As for those in the workforce, by no means all have a mortgage, or a mortgage they no longer can handle. Others have converted home mortgages to investment accounts, where interest payments are tax deductable. [10.11.06]

Signs are that many are hurting: Still, the burden of repayments against mortgages on homes - even before Wednesday’s 0.25% rise - is said to be the highest ever, and says Labor - even higher than when rates were 17% under the Hawke Government. The proportion of household disposal income going to mortgage payments is around 50% higher than in the eighties. The real question is how many voters are being badly burned by the rate increase, and of them, how many voted for Howard at the last election and will now change their vote? This poll doesn’t answer this question. Yet empirical evidence suggests there are a growing number of families in trouble. The Melbourne Herald Sun reports debt-burdened families, with new homes and cars and the latest electrical goods, are seeking help from welfare agencies. The Salvation Army’s Major Brad Halse was quoted as saying - “This year the Salvation Army has helped an entirely new group of people at our emergency relief centres ... they are the working poor because they’re hard-working Australians trying to raise a family, but their weekly wage isn’t covering the bills for food, petrol, utilities, school fees, clothing and day-to-day living expenses.” [10.11.06]

Labor needs to pursue “the promise”: All Beazley can do is to keep reminding voters of what Howard promised in the last election. Howard insists he only promised rates would be lower under him than a Labor Government (which was unprovable anyway). But the fact is, he personally approved a Liberal Party ad which went much further, and promised “to keep interest rates at record lows”. No matter how he obfuscates, that is what the Liberal Party promised and he heads that party. Not surprisingly, the Coalition still has a big lead on which party is best able to handle the economy - Coalition 55% (although well down on the 63% it scored just in advance of the 2004 election), Labor 32%, and don’t know 14%. ACNielsen (taken 2-4 Nov) has Labor again winning the two-party preferred vote, as it has for the last eight months. The Coalition has narrowed the gap somewhat - Labor 52% (down 2% on last month), Coalition 48% (up 2%). Labor’s primary is 40% (down 2%), with the Coalition on 40% (up 1%). There was one bad result for the Coalition: Labor has extended its lead in the cities (where most of the electorates are), and two-party preferred it is now Labor 55% (up 2%), and Coalition 45% (down 2%). Labour, however, has slipped in rural areas, and after winning three polls it is now behind two-party preferred, Labor 48%, Coalition 52%. [10.11.06]

Petrol independents hurting: Hastening the demise of independents in the retail petrol market, Woolworths are currently offering 8c a litre discount - 4c a litre shopper docket for $30 spent in the supermarket or Big W, plus another 4c if $5 is spent on in-store items at a Caltex co-branded service station. Coles Liquorland was offering 20c a litre discount for the purchase of six bottles of wine. We are rapidly moving towards a two-oil company duopoly, similar to the two-airline policy when Ansett and TAA (later Australian) operated a Government-sponsored duopoly. Independents can’t compete against these discounts, nor can BP and Mobil. They will only survive in markets far from Caltex and Shell service stations dispensing shopper docket fuel. As yet the ACCC is quite unmoved. When Woolworths/Caltex and Coles/Shell totally dominate the market, how fair dinkum will be the discount? Will it in effect be no discount if the supermarkets can edge their grocery prices up to offset the cost of the petrol discount? Readers might recall Inside Canberra reported (15 Sept) how, in the same week the NRMA accused oil companies of price gouging in the bush, Labor sold out to big oil in the Senate. [10.11.06]

Will Costello be nice to ALP?: Labor could have blocked legislation which, in effect, handed over petrol retailing entirely to the oil companies. Inside Canberra forecast oil companies would set about reducing the number of service stations. Barnaby Joyce and Stephen Fielding voted against the legislation, and it only passed with the support of Labor on the basis that by 31 March (when the legislation has effect), Peter Costello would amend the Trade Practices Act to improve the position of independents and servos. There is no cast iron guarantee this will happen, only an undertaking by Finance Minister, Senator Minchin, to do his best to see amendments are introduced by the Treasurer which will satisfy Labor. Judging by a speech given last month in the House by Joel Fitzgibbon (Labor’s Shadow Minister for Small Business and Competition), the prospect of Costello delivering on what Labor wanted is not good. Fitzgibbon was highly critical of Costello’s legislation on amendments to the Trade Practices Act, designed to give belated legislative force to the recommendations of the Dawson inquiry into the TP Act. Fitzgibbon accused the Treasurer of cherry-picking the Dawson recommendations. [10.11.06]

The Australian confusing on greenhouse: If voters are confused by the climate change debate, it’s not surprising. Last Saturday’s The Australian wouldn’t have helped. The Page 1 lead story was headlined - “Green light for PM to go nuclear”. Then - “John Howard’s hand picked nuclear energy task force will find that a nuclear industry could be commercially viable within 15 years, giving the green light to the Prime Minister to radically shake up Australia’s energy policy.” And later it said the finding by the task force, headed by Ziggy Zwitkowski, “will bolster Mr Howard’s push to make nuclear power a central element of his election campaign.” Hang on. Howard will be 81 when nuclear power becomes “commercially viable”, and very few of the current parliamentarians will be around. Additionally, there will have been at least five federal elections. The UK Stern report, which ignited the furious debate on climate change last week, emphasised that action was required now, not in 15 years. [10.11.06]

Nuclear too late for Stern: The whole thrust of Stern is that the longer the world waits the more expensive will be the cost of reigning in emissions. The Australian’s story should have been headed - “Rebuff to PM - nuclear not a player in lowering Aussie emissions.” Certainly Beazley will be hoping that indeed Howard does make his nuclear push a central element of the election campaign. Advocating that the answer to Australia’s emissions problem is 15 years down the track is hardly an election winner, quite apart from the fact that nuclear power is not favoured by voters. We hardly needed the Zwitkowski report to tell us nuclear power was 15 years off. Industry Minister, Ian Macfarlane, has been saying this for months. Beazley also puts forward a dubious proposition; A Labor Government will establish a national target of 60% of greenhouse gas emissions cut by 2050. Sounds good, but no Parliament can bind the following Parliament, so it is a meaningless promise. [10.11.06]

Experts differ: Also on Page 1, The Australian’s leading in-house guru, Paul Kelly, told readers that the significance of the Stern report is that it takes the global warming debate to its economics, its price effects and what de-carbonisation means. “It is long overdue. This will transform the politics from fantasy to reality,” Kelly assured his readers. So that’s out of the way. But there’s more - The Australian’s environment writer, Matthew Warren, doesn’t agree (and he should be the expert). His extensive report leading the Weekend Inquirer section was headed - “Careful reading of the Stern report into global warming reveals flaws and errors.” Warren quoted economist Richard Tol as saying - “The Stern review can (therefore) be dismissed as alarmist and incompetent.” Warren was very rude to Howard, unlike the authors of the glowing page one article. Warren, reporting on the reaction of the PM to Stern, said - “The Howard Government, wheeling around on climate change policy with all the speed and grace of a bullock dray, flagged a new Kyoto international agreement.” [10.11.06]

Voters want action: Maybe, but this comment shows why Warren is the environment writer, not the political correspondent. If you want to be confused, read The Australian. The sceptics have lost. The latest ACNielsen poll is decisive. Asked if global warming was a serious problem, 71% said very serious, 20% serious, and 7% not too serious or not a serious problem at all. How satisfied are you with the Government response to global warming? - 62% very dissatisfied or dissatisfied, 31% very satisfied or satisfied. Would you be prepared to pay more in taxes for dearer goods and services to reduce greenhouse emissions? - 63% Yes, 33% No. What’s the highest priority for policies to address global warming - 17% Nuclear power, 49% solar power, 19% to discourage fossil fuels, 9% discourage use of motor vehicles, 6% other/don’t know. All this is bad news for Howard, who is trying to look like he is doing something after 10 years of scepticism about global warming. And not only that - there is Rupert Murdoch’s apostasy. Once a sceptic, he now calls on business and government to confront climate change and for the Kyoto protocol to be rewritten. Even though still not entirely certain about global warming, he said “the planet deserves the benefit of the doubt.” [10.11.06]

From the Gallery: In 2003, comedian Wil Anderson (on Triple J) called Communications Minister, Richard Alston, “a right wing pig rooter”. As Alston was a fierce critic of alleged bias by the ABC, this was not a smart move. Anderson, together with Corinne Grant and Dave Hughes, star in the popular ABC TV’s The Glass House. Last year the show won the AFI Award for the Best Light Entertainment Series. But that’s not good enough it seems. The show has been axed, and will not be seen next year. John Howard protested he didn’t axe it. Of course he didn’t. It was axed by those who were critical of the ABC for “bias”, before they were appointed to the board - Janet Albrechtsen, Ron Brunton and Keith Windshuttle. Windshuttle advocated privatisation of the ABC to break its “Marxist culture”. Anderson says, of course his satirical show attacks the “government” and would have done so had Mark Latham won the 2004 election. Kerry O’Brien, who is a tough interviewer of Howard and other government ministers should lookout. ABC journalists consistently challenge govern-ments, federal and state, as they should. If Howard’s app-ointees on the board go too far, the staff will shut down the ABC, whether that’s illegal or not. [03.11.06]

Fair Pay decision no surprise: The decision of the Fair Pay Commission last week to grant a $27-36 a week increase to the lowest paid was not a complete surprise. The signs were there in advance. John Howard was delighted. It has allowed him to deride the ACTU and Labor for claiming the purpose of the FPC was to lower the rate of wage growth, which would have occurred had wage setting been left in the hands of the Australian Industrial Relations Commission (AIRC). This was also the expectation of employers and everyone else in the IR business. [03.11.06]

Common Cause between Howard and FPC: The unions have every reason to be suspicious of the apparent generosity of the Fair Pay Commission. (We say apparent, because taking into account the 18 months delay in the handing down of the decision - and the fact it will not apply till December - the annualised amount is slightly down on some recent rises awarded by the AIRC). The truth of the matter is that the FPC and Howard had a common interest in a decent increase. The PM is under pressure on his industrial relations policy, and he didn’t need the first wage adjustment by the FPC to be perceived as mean and in line with what the bosses wanted. Similarly, the continued existence of the FPC depends on Howard winning the next election. Kim Beazley has promised that, if elected, he will scrap the FPC and return wage fixing powers to the AIRC. [03.11.06]

Govt’s shrewd move on wage submission: This is why the next adjustment, which Harper says will be in June, will again be closer to the submission of the ACTU than the ACCI. Once again, the Howard Government will carefully refrain from making a submission to next year’s hearing as it did this year. This was the first time the Government has failed to make a submission, and the reason is obvious: if it made a submission it would have had to be leaning more towards the employers case than the ACTU. There would have been a terrible row if the Commonwealth had sought an increase anywhere near the $27-36 actually awarded. Having made no submission, Howard was free to hail the award as “genius”. Beazley and Labor’s IR spokesman, Stephen Smith, have been running the line that if the submissions of the Government had been accepted, since 1996 workers would be $50 a week worse off. [03.11.06]

Wage case and election timing: Inside Canberra forecasts that, like the Low Pay Commission in the UK, the first few generous decisions will be followed by a sharp decline if Howard wins the election. However, the FPC could have difficulties in the future in pitching increases below adjustments for the CPI. Last week’s decision followed research by Professor Phil Lewis for the FPC. He found that if increases simply kept pace with the CPI, it should not have any effect on jobs. Meanwhile, it should be noted not only does the Government lack a mandate from the last election for the FPC and the rest of the Work Choice legislation, it has also failed to give any coherent explanation of why it removed wage setting powers from the AIRC. The fact the FPC can be relied on next June to make a generous minimum wage adjustment, gives Howard considerable flexibility in deciding when to hold the election - generally believed to be around November. It is certainly what the Australian Electoral Commission is planning for. Yet Howard is facing problems with Iraq - as the war drags on, it is becoming increasingly clear the Bush policy in the Middle East, which Howard cleaves to, has been a disaster. [03.11.06]

Public opinion against war: Public opinion on Iraq is running strongly against Howard. This week’s Newspoll showed only 31% support for Australian troops staying in Iraq “as long as necessary”. Some 64% want an exit date to be set, or the troops being withdrawn immediately. Asked whether they think a Democratic Government will be established in Iraq “within a few years”, only 21% said it was likely, and 65% said unlikely. Asked if Australia’s involvement in the Iraq war increased the chance of a terrorist attack on Australia, 61% said it was more likely, 33% said it made no difference, and 3% said it was less likely. The Age’s on-line poll taken earlier in October agreed: “Should we set a firm date for our troops to leave Iraq?” Yes 81%, No 19% - 984 respondents. “Is it time to bring the troops home from Iraq?” Yes 87%, No 13% - 2464 respondents. In short, the issue is running strongly against Howard. If there is a terrorist attack in Australia many, perhaps a majority, would blame him. [03.11.06]

US-UK could soon move on troops: Following next week’s mid-term Congressional elections, a serious rebuff for the Republicans could see a hasty withdrawal of US troops, beginning sometime in 2007. Further, Gordon Brown could be Prime Minister of England before mid-2007. The more the Iraq situation deteriorates, the greater the pressure on Tony Blair to leave. Brown will have UK troops out quick smart. All this would be an embarrassment for Howard and Downer, who paint a false picture of what is really happening on the ground in Iraq. They portray the situation as “the terrorists” versus “the Iraqi people” and the Coalition of the Willing. In fact, reporters in Baghdad and US military leaders know there is a civil war underway in many parts of the country, and it is spreading. Patrick Cockburn, author of The Occupation: War and Resistance in Iraq, says the Iraqi Government is powerless. He explains it came into existence only after the various ministries were divided between the political parties after prolonged negotiations. Each Ministry is a bastion of the party controlling it, a source of jobs and money. In addition, each party has its own militia. [03.11.06]

Early election could appeal: Cockburn says that where civil war is raging or about to break out, the people look to these militias to defend their home - not the regular army. Against this background, Howard might want to run an early election before his Iraqi policy is exposed as a total failure. By so doing, he would lessen the chances of Australia being hurt by a big turn-down in the US economy, where housing activity has been slashed. Howard could pull on an election soon after delivering another round of big tax cuts in the May Budget. As the International Monetary Fund has warned, this would heighten the danger of inflation and yet higher interest rates. Yet the PM would not be deterred from the longer-term consequences, if his actions could assure him another term in Parliament. He would deal with the inflation and interest rate problem later. If Howard goes before 1 July, that would mean the Senate would be out of kilter with the House of Representatives and another separate Senate election needed in 2008. It is more likely he would want to wait till the end of July to allow the Budget goodies to be felt in the community. This would mean going before the hallowed APEC meeting in Australia, but if that is the price he has to pay for an election win, Howard would accept it. [03.11.06]

Another good poll for Labor: The latest Newspoll (taken 27-29 Oct) is unchanged. Labor has an election-winning lead despite much publicity given to the Government unveiling spending of more than $2 billion on drought, climate change and skills. Labor’s primary vote is unchanged at 41% (and is 40% or better for the fifth consecutive poll). The Coalition primary is at 42% (up 1%), and the Liberal primary is stuck on 36% for the third consecutive occasion. The two-party preferred is unchanged - 52% ALP, 48% Coalition. Since Australians went back to work in February, Labor has won 13 polls, the Coalition 4, and there were 2 dead heats. Labor has won 7 of the 8 polls since the end of July. Morgan (taken mid-Oct) had the two-party preferred as 53% - Labor, 47% - Coalition. Newspoll also recorded a slight improvement in the approval rating of the PM and Beazley, and no change in Howard’s big lead as preferred PM. [03.11.06]

ACCI and centralised IR power: ACCI CEO, Peter Hendy, has welcomed support by the ACTU Congress for the Government’s use of the corporations power to implement a national industrial relations system. This is also a policy endorsed by Beazley. Hendy says, for the first time since federation, “a strong conjunction of both industrial and political opinion” is in favour of a national industrial relations system. Employers should shudder. Does Hendy believe Labor will be out of power forever and will never come into government with Senate numbers which would allow it to reverse Work Choice? The unions could end up with more power than before Howard came to office. This could happen as early as next year’s election. If Labor wins, it would probably be able to pass legislation through the Senate to reverse Work Choice with support from the Greens, who would hold the balance of power. It is truly extraordinary that the Liberal Party, once the bulwark of federalism, is prepared to go down this road without a whimper from the State Liberal Parties. As Inside Canberra reported (11 April), one fully aware of the danger is Ray Evans, President of the HR Nicholls Society. He rejects centralising IR in Canberra, saying - “Let the states compete with each other in providing effective labor market regulation (or freedom) as opportunity or political fashion afforded.” Evans adds - “Regrettably, we have a Prime Minister and Treasurer who are strong centralists and a Cabinet in which the number of federalists can be easily accommodated on the fingers of one hand.” [03.11.06]

The Age’s random polls: Should drought-stricken farmers be paid to leave the land? Yes 56%, No 44% - 312 respondents Will democracy be the loser in the new media landscape? Yes 89%, No 11% - 605 respondents. Are you concerned about the concentration of media ownership? Yes 83%, No 17% - 300 respondents. Should Australia suspend food aid to North Korea? Yes 42%, No 58% - 1788 respondents. Should the World act to curtail the North Korean nuclear threat? Yes 65%, No 35% - 3863 respondents. (The large number of respondents here suggests both the Government and Labor are out of step with public opinion on the seriousness of the North Korean threat). Is the ABC’s new anti-bias regime democracy gone mad? Yes 84%, No 16% - 1039 respondents (see ‘From the Gallery’). Would you support introduction of a five-cent refund for cans, bottles and plastic containers? Yes 78%, No 22% - 623 respondents. Should another dam be built in response to Melbourne’s water shortage? Yes 45%, No 55% - 3463 respondents (Another big response). The Age says these polls are not “scientific” and only represent the view of those who respond. [03.11.06]

PM on global warming: Howard again appears to have dropped off the pace on global warming with his total rejection of the recommendations of the report warning of a global warming catastrophe unless urgent action is taken. The report’ by former World Bank chief economist, Sir Nicholas Stern, is the first report written by experts with impeccable backgrounds to quantify the economic cost of climate change. The PM told the House he will not sign an international agreement that doesn’t put the same limits on the fast-growing economies of China and India. Fran Kelly, on ABC Radio National on Tuesday, interviewed Michael Grubb, chief economist of Britain’s Carbon Trust and who contributed to the Stern report. Asked if Howard’s approach was fair enough, he replied - “No, I don’t think that’s fair enough. I think it is a very unrealistic position” [03.11.06]

Global solution search: Grubb added - “I think that it’s a position that is contrary to Australia’s ratification of the United Nations framework convention, which is the framework which states clearly that action has to be led by the industrialised world, and I think that countries which are emitting four or five times as much as developing countries at present do have an obvious responsibility to get their own emissions under control before they can expect too much of the developing countries.” What the Stern report says is that this is a global problem, and the key to a global solution - given all those kind of inequalities - is not only to see leadership by industrialised countries, but it is also to have international mechanisms which means there can be action everywhere but that the costs are initially born by the rich world, and that effectively means emissions trading and the kind of mechanisms one has under the Kyoto protocol. [03.11.06]

PM’s solution won’t work: Howard’s problem is that his model - India and China being treated right now in the same way as the far bigger polluters of the developed world - simply won’t work. The climate change problem began with the start of the industrial revolution in the second half of the 18th century. As a result, the developed world enjoys unprecedented prosperity, a standard of living and ever increasing longevity that could not be foreseen even 50 years ago. Now, John Howard would say that even though Australia and the rest of the industrialised world has a level of greenhouse gas emissions four or five times the level per head of China and India, those countries should now drastically slow their economic progress. [03.11.06]

Looking to Kyoto’s future: This obvious lack of fairness was recognised when the Kyoto protocol was constructed. China and India won’t immediately join an international treaty imposing the same limits on their low emissions (per head) as the limits placed on the high emissions of the industrialised countries. The way in which emissions of the third world will be dealt with was always supposed to be the feature of Kyoto part 2 in 2012. Rabbiting on about not giving up Australia’s God-given natural advantage in massive reserves of carbon energy is not a strategy at all to deal with global warming. The Sydney Daily Telegraph’s on-line poll this week asked: Should the government do more to tackle climate change? - Yes 86%, No 8%, Neither/don’t know 6%. Should the government sign Kyoto?: Yes 79%, No 9%, N/DN 6%. Should industries that produce emissions be made to pay emission levies?: Yes 91%, No 4%, N/DN 4%. Should Australians be prepared to pay a little more for energy to help investment in renewable energy?: Yes 75%, No 21%, N/DN 5%. This last question is the most interesting of all. [03.11.06]

Fruit & veg trouble: The Government is in enough trouble with fruit and vegetable growers already and should not be seeking more. Inside Canberra reported last week on how the Government has rejected growers demands that supermarkets be required to adhere to a mandatory code of conduct for the wholesale trade. This was a firm election promise given by John Anderson. Now growers and food manufacturers are concerned about changes to dumping procedures flowing from a study commissioned by Industry Minister, Ian Macfarlane, and Customs Minister, Chris Ellison. Australia’s largest food processor, SPC Ardmona, is pursuing anti-dumping action against canned tomatoes from Italy. Nigel Garrard, MD of SPC Ardmona, was quoted by the Financial Review as saying the company was “waiting for another bloody review.” Of course, the nation’s biggest importers - Woolworths and Coles - are claimed to be pushing local canned fruit growers off their shelves. Backbenchers are being lobbied by the Australian industry, and if the review - which must be made public before the election - favours importers, the Nationals in particular will be in a lot of trouble. [03.11.06]

From the Gallery: Kim Beazley will be disapp-ointed, but it still seems fairly certain the Iemma Labor government will win the March state election. Premier Morris Iemma did the sensible thing when he cut adrift the mistake-prone Police Minister, Carl Scully, who had been telling fibs to the Parliament and comm-itted the ultimate sin: getting found out. Peter Debnam, the some-what wooden Opposition Leader, has the enormous job of winning 16 seats to defeat Labor. It is easy to count eight seats, but he will need an unprecedented swing in the region of 11% to get the next eight. Labor is on the nose and richly deserves to be kicked out. It would greatly help Beazley if Debnam came to power. The outlook now is that when the Federal election rolls around towards the end of next year, the highly unpopular State Labor Government will still be in office. Federal Labor has every reason to fear some voters will take the opportunity of voting against Labor again, even though it’s a Federal election. Beazley needs to win at least five NSW Federal seats and will have to campaign hard. In so doing he should keep well away from Iemma and his mob. [27.10.06]

Two rate rises now in prospect: The latest CPI rise is bad news for John Howard. The market is now in no doubt rates will rise by at least 0.25% on the day after the Melbourne Cup. Worse, the market is also inclined to believe there will be another rise fairly early in the 2007 election year. Labor will be rolling out its campaign again that the Government failed to keep its promise as spelt out in TV Liberal ads during the last campaign. This said the Howard Government’s “plan” was to “Keep inflation under control (and) keep interest rates at record lows.” Alright, the PM could not foresee the disaster of record petrol prices, but nevertheless many voters believe he has broken his promise. Howard insists he did not give such a promise and that he only went as far as saying interest rates would always be lower under a Coalition Government than under a Labor government. Nevertheless, the impression of voters was that rates would not rise under Howard. [27.10.06]

TV election ad comes back to haunt PM: And of course Howard would have personally viewed this particular ad and approved it. Party Leaders always insist on checking out ads in an election campaign. Indeed the ad agencies make quite a show of the viewing by the party leader. No, Howard knew all about the ad and what it promised. There was never any prospect of the Reserve Bank listening to the theatrical pleadings of Mark Vaile not to put up rates for the sake of the farmers battling drought. Vaile could not have it both ways - no rate increase while the taxpayer was asked to spend millions on interest payment subsidies to farmers. Not everyone is unhappy with the rate rise. The retirees are delighted they will get a little more for their investments. But a majority of them vote Coalition anyway. [27.10.06]

Back to the bad old Keating days: Those who will be hit hardest are middle to lower income groups who have gone in over their heads on a mortgage they could afford at the time they signed up, but can’t afford now. And for the prospective first home buyer the outlook will be even bleaker. The Housing Industry Association says first-home buyers entering the market would have to commit 29% of their income towards mortgage payments, and that is before the next rise. HIA says affordability is at its worst level for three years and not much better than the “bad old days of the late 1990s”, which of course was when Paul Keating was presiding over rate rises. Also a worry is the HIA prediction that an already very tight rental market will get even tighter. This means those who can’t enter the market, for the first time will have to put up with higher rentals. [27.10.06]

Jones and Ruddock: Will Labor have the guts to take on Philip Ruddock over the revelations in the unauthorised Chris Master’s biography of Alan Jones, Jonestown? Somehow we doubt it. Jones is a great hater. Yet, why is Labor so worried by Jones? He is totally opposed to Labor and an unashamed supporter of the Liberal Party, so why the hesitation? Masters claims Ruddock, as Immigration Minister, acted at Jones’ behest to allow a person who breached the “no work” provisions of a visa to extend his stay in Australia. Ruddock’s “denial” seemed somewhat incomplete. In a letter to the Sydney Morning Herald Ruddock said - “To suggest I ‘fixed’ a matter at the behest of one person is misleading, erroneous and reflects a misunderstanding of the duties of a Minister.” One would think Labor would pursue this just to show how grovelling Howard Ministers can be towards Jones. [27.10.06]

Pollies groveling: Masters says Tony Abbott told Jones that “any letter from you receives my immediate personal attention.” Abbott’s ‘denial’ was hardly that - “If Alan sends me a letter, I like to deal with it as quickly as I can.” Of course the problem for Labor is that the Carr Labor Government excelled in grovelling, even giving way to Jones’ demand for the head of Police Minister Paul Whelan, who Jones described as a “shot bird”. Then a backbencher, Michael Costa, was sent off cap in hand to get Jones’ approval for him to become the new Police Minister. To many of Jones’ blue rinse North Shore matrons the news that Jones is a homosexual might come as a bit of a shock. Yet he is not likely to suffer a ratings drop. After all, despite being caught red-handed in the cash-for-comments scandal, his ratings were not damaged. [27.10.06]

Problems pile up for Vaile: Ian Causley, who has held the NSW Northern Rivers seat of Page for the Nationals since 1996, has announced he will not contest the seat and will retire at the next election. This is a big problem for Mark Vaile. The seat is marginal, requiring a swing of only 5.5% to go to Labor. Causley’s personal vote in the seat would be worth at least 2%, so it comes right into calculations for the other parties. The Liberals believe there will be an attempt to persuade Larry Anthony (son of Doug) who held the adjoining seat of Richmond before losing it to Labor’s Justine Elliott in 2004. This is not a good idea from the point of view on the long term future of the Nationals. Larry was by no means the sharpest knife in the draw when he was a junior minister. The Nats badly need a quality candidate to be groomed for Leadership. It is believed the government IR changes are not playing well in the Northern Rivers and Labor could win the seat. (Harry Woods held it for Labor for six years). [27.10.06]

ALP preferences vital: If Labor doesn’t win, its preferences will decide the outcome. Page could well go to a popular local independent, if one exists, as Labor would give independent preferences. The Liberals will run, and could win if Labor preferences go to their candidate rather than the Nationals. If Page turns out to be yet another seat going to the Liberals after the retirement of the sitting National it will be a disaster for Vaile. With John Anderson’s seat of Gwydir disappearing in the NSW redistribution, the Nats are desperate to win the new Queensland seat of Wright (which on paper favours the Nats). The Nats now have only 13 seats in the House and any further net loss next year would badly damage Vaile’s leadership. Fortunately for him, there is no obvious alternative unless the Queensland Nats can somehow get Barnaby Joyce into the House and out of the Senate. He is a more popular figure with Queensland National voters than Vaile or any other Nats minister. If Fiona Nash can be moved out of the Senate into a House seat she would also be seen as leadership material. [27.10.06]

Scare campaign on selling Australia Post: The Opposition has an extensive suite of issues to run a red hot scare campaign from now to the election. The stand out would be a simple message - “a vote for Howard is a vote to have a nuclear power station in your neighborhood”. And then there is - “a vote for Howard is a vote to sell Medibank Private”. Howard has also provided material for a scare campaign on Snowy Hydro being privatised by a re-elected Coalition Government. Howard, when he changed his mind and said he wouldn’t sell, didn’t question the logic of selling Snowy Hydro, but rather he said he was acting because “the people were against it.” Inside Canberra forecast (22 Sept) a scare campaign on Australia Post. The Howard Government, particularly when Richard Alston was Communications Minister, whittled away many of Australia Post’s exclusive and profitable monopoly markets which cross subsidised the unprofitable rural markets. The Government introduced more competition from the private sector on the profitable Brisbane, Sydney, Melbourne triangle. [27.10.06]

Fin urges privatization: Ministers, (particularly Nick Minchin and Tony Abbott) when commenting on the Medibank privatisation, insisted it was to be privatised for one reason only - private enterprise always runs businesses better than the government. Then surely Australia Post will be next. Now the Financial Review has provided just the material Labor needs with an editorial (19 Oct) advocating the sale of the business and the end of its monopoly on letter deliveries. The Fin said the Coalition had no appetite for selling Australia Post, since to do so would require revealing and justifying the subsidy involved in the standard price letter service to rural customers. And the dire warnings which would follow about Post Office closures in the bush would be too much for the Nationals. Yes, but what about the sale of Australia Post soon after the election, say in the first 12 months? Watch for this issue to develop. [27.10.06]

Aust/US FTA not looking good: DFAT recently put out a nice little coloured booklet talking up the advantages of the Australia/US Free Trade Agreement. “Australia’s economic relationship with the United States is strong and continues to expand” under the agreement, Trade Minister Warren Truss claimed. Unfortunately this is not true. The booklet gave all sorts of bits and pieces of information, but not those that count. Here they are: Australia’s merchandise trade deficit with the US in the 12 months to last August was $13.3 billion, an increase of 18.6%, compared to the $11.1 billion deficit in the 12 months ended January 2005 when the Aust/US FTA came into operation. In the 12 months to December 2005 (the most recent date available), the deficit in services was $2.06 billion, an increase of two per cent on the 12 months to January 2005. [27.10.06]

Claims and facts: Recall the Government claimed much of this growth from the FTA would be “generated by the dynamic gains expected from the deeper links the Agreement establishes between Australia and the United States.” The study released by the Government said investment liberalisation would be the biggest contributor to the projected increase in Australia’s GDP. In fact US investment in Australia fell in 2005 by 8.9%, compared to 2004. The Government would say it is too early for the Aust/US FTA to show the benefits which will accrue to Australia. Maybe, but then when it comes to fancy claims, the Government doesn’t hold back. For example, it now claims the Work Choice legislation, which only came into operation in March, is responsible for the booming Australian economy. Come off it. [27.10.06]

Challenge to Future Fund: It’s worth noting there was a direct challenge at the Nationals’ Federal Conference, earlier in the month, to the Treasurer’s demand that the Future Fund be used only for meeting commitments for public service pensions from 2020. A motion said the Nationals should “urge the Federal Government to change the legislation establishing the Future Fund so that part of its proceeds can be made available to build necessary infrastructure at, if possible, a commercial return.” The motion was defeated, yet its importance was the identity of the mover, Bruce McIver, president of the Queensland Nationals. He told delegates - “The Treasurer in yesterday’s Financial Review talked about the Future Fund being something just for superannuation. Well Mr Treasurer I think it is something for all Australians and we need to benefit from it. Infrastructure will help Australia’s economy grow efficiently and therefore increase the tax take overall that can go back into the Future Fund to pay for future needs.” [27.10.06]

P.S. pensions not a problem: The motion failed after Deputy Nationals’ Leader, Warren Truss said the Government had spent more money on infrastructure than any other government. “The infrastructure spending was ‘on-Budget’ and that is the way we should fund infrastructure”, said Truss. Truss therefore champions the discredited policy that all infrastructure spending should be from current revenue and there should be no borrowing. That is part of the reason Australia’s infrastructure is increasingly failing the economy and why, under the NSW Carr Government (which adopted the same policy), public infrastructure in that state is in such a mess. Premier Iemma has dumped the Carr approach. In the House recently, Costello derided Beazley for wanting to spend the Future Fund on improving the Pacific Highway. Obviously McIver agrees with Beazley, as would most Australians. Costello says future public service pensions are not funded. But they will be. All newly recruited public servants are on a contributory fund. [27.10.06]

Vaile insults farmers: At the same conference, in his address as Leader, Mark Vaile singled out “a mandatory code of conduct for fruit and vegetable producers”, as one of the Nationals achievements in the last 12 months. Two weeks ago he insulted a delegation of these very same fruit and vegetable growers who came to Canberra to see him. They are most unhappy with the mandatory code because it fails to provide for the supermarkets to be subject to the code, as promised by John Anderson at the last election. Vaile refused to see the delegation as they had approached Bob Katter, the independent and former Nat, who has a firm hold on the Queensland seat of Leichhardt, to set up their meetings in Canberra. The fruit and vegetable delegation were told Vaile would not meet with them because of their association with Katter. The same message was given to them when they sought to meet Agriculture Minister, Peter McGauran. The delegation had to be content with a hearing from staffers of Vaile and McGauran. [27.10.06]

How not to win votes: Vaile and McGauran have confused their role as ministers with their membership of the Nationals. It has been fundamental in the federal political system that a Minister of the Crown stands ready to see any delegation or individual, no matter who they are introduced by, be it a member of their own party, or an MP from the opposite side of the Parliament. Ministers may of course be too busy to see a delegation, but they should not refuse to meet people on the basis of the political party of an MP seeking to introduce a delegation. Bob Katter told us the delegation had no trouble seeing Liberal ministers. As a result of the actions of Vaile and McGauran, Scott Dixon from the Mareeba District Fruit and Vegetable Growers Association; Joe Moro of the Australian Mango Industry Association; Jim Belbin of the First Mildura Irrigation Trust; and John Piccirillo of the Sunraysia branch of the Victorian Farmers Federation, left Canberra vowing to inform their members of the insult delivered by Vaile and McGauran. [27.10.06]

Domestic tourism: On the subject of exports, why do politicians get themselves into a lather about domestic tourism? For example, there is much concern that there were one million fewer tourists from interstate and Victoria who overnighted at Victorian tourist attractions in the 12 months to March. Victorian State Tourism Minister, John Pandazopoulos, claims personal debt and workplace uncertainty caused by Howard’s IR laws are responsible. (He would say that, wouldn’t he). Howard’s Tourism Minister, Fran Bailey, says the states are not spending enough on domestic tourism. Well, why the bloody hell should they? (Incidentally, swearing should be recognised as an Australian value). All that is accomplished by high levels of domestic tourism is churning of money among the population. It adds nothing to the national worth, other than (hopefully) persuading some not to go overseas and add to the trade deficit. Surely high petrol prices and cheap international flights are among factors reducing domestic tourism. There is no point in the states wasting taxpayers money trying to persuade tourists to stay at home. [27.10.06]

From the Gallery: Unexpectedly in the last fortnight it has become apparent John Howard is in a bind on the Iraqi war. Whether from good luck or good management the Opposition has seized on a policy of withdrawing Austral-ian troops from Iraq at the right time. Polling supports this policy. The signals coming from Washington are telling: if the Republicans do badly at next month’s mid-term elections, Bush will be even more of a dead duck then he is now. Republicans who hope to be in Congress long after Bush has gone are not going to let him ruin their careers. Repulican presidential candidate, Senator Chuck Nagel says - “We clearly need a new strategy.” Chairman of the Senate Armed Services Committe, John Warner, says if Iraq continues “drifting sideways” policy will have to change in two or three months. Howard risks being left stranded by a Washington pull out. He will hastily have to adopt Beazley’s policy. If the US keeps going in Iraq with the PM still waiting “for the job to be done” the war will damage him badly by the time of the next election. [20.10.06]

Howard looking panicky and rushing to new policies: Suddenly Howard looks panicky. He is rushing into a policy selling the benefits of nuclear power for Australia and hurling money at farmers hit by the drought. He has not been going well in the polls. On top of this we understand the Liberal’s own private polling show strong community concern about global warming and the tardiness of the Government to be really interested in the subject. A month ago it still appeared some decent rain could save much of this year’s crop and provide relief for wool, beef and lamb producers. No rain fell, and suddenly the reality of a terrible drought, accompanied by dire predictions of desperate water shortages for urban dwellers has hit home. On top of that, only half way through Spring freakish heat waves have hit the cities. [20.10.06]

Climate change a hot issue: The argument, as far as the overwhelming majority of voters is concerned, is that all this is due to global warming. A diminishing band of sceptical scientists are wasting their breath: as far as voters (and therefore Howard) are concerned. Climate change is here right now and something better be done about it. The PM went over the top on the need to prop up farmers. He wouldn’t hear a word about why farms that were simply not viable should be propped up by taxpayers - “ . . . not only would we lose massively from an economic point of view, we would lose something of our character, we would lose something of our identification as Australians, if we ever allow the number of farmers in our nation to fall fellow a critical mass.” There was no chance of Kim Beazley expressing a contrary view for the protection of taxpayers. He was also enthusiastic about the need to help all farmers. [20.10.06]

PM uses same line on farmers as EU: Over at DFAT there may have been a shudder. The baloney Howard was spruiking was just the same as adopted by the EU when defending the need for farm subsidies. They too have farmers. So much for the argument of the National Farmers Federation that farm products should be treated just like any other product in world trade: no different to iron ore, textiles or widgets. The trade rules for agriculture should be as relaxed as for manufactured products and minerals. But agricultural products are “different”, as exemplified by Howard’s generosity with taxpayers money. Incidentally the businesses selling agricultural machinery and supplies to farmers are not to be given the same generous treatment as farmers, even though they are now in “exceptional circumstances” just like their clients. Howard says he will think about that. [20.10.06]

Howard’s nuclear love-in baffling: The most puzzling aspect of the rush to fix global warming is Howard’s dogmatism about the benefits of nuclear power. In June when he announced the appointment of a nuclear task force headed by Ziggy Switkowski, the PM said he didn’t know whether nuclear power was good or bad, but the community needed to examine and debate the issue. Now, before the task force report is released next month, Howard is an expert - “I believe very strongly nuclear power is part of the response to global warming; it is clean, green; it is something in relation to which many rabid environmentalists have changed their views over recent years.” Of course Howard doesn’t have to wait for the report. He knows what’s in it and knew the outcome when he set up the task force: it will be all for nuclear power. Nobody can work out what Howard is up to. Labor’s stance is the popular one: work on cleaning up coal and look to renewables such as solar and wind. The PM is giving Labor a free kick in the next election campaign: vote Liberal and get a nuclear power plant in your neighborhood. [20.10.06]

Did US sell PM on nuclear?: The enormous difficulty the Government has had in establishing a dump for low level radioactive waste is a pointer to the difficulties facing the nuclear industry.The fact is that in half a century the problem of disposal of radioactive waste has still not been solved. Another possibility is that the PM’s nuclear enthusiasm is not about votes, but that he was won over during extensive talks in the US in May. Among those Howard talked to about nuclear and uranium issues included not only George Bush but the Energy Secretary, Samuel Bodman. The Age has been refused freedom of information access to notes on the conversations he had on the grounds the US “could feel inhibited” in communicating with Australia about key issues in the future. The decision, said The Age, contrasts with DFAT’s release last year of dozens of pages of confidential discussions with China about nuclear and uranium issues, including China’s wish to buy its own uranium mines in Australia. [20.10.06]

Labor wins poll again: It is not surprising private polling by the Liberals shows hostility to the Government on climate change. The latest Newspoll (taken 13-15 Oct) confirms the substantial poll lead Labor had in the poll a fortnight earlier. The Coalition’s primary vote is unchanged at 41%, and Labor is at 41% (down 1%). The Liberal primary vote remains on a low 36% (well down from the 40.8% recorded at the 2004 election). The Two-party preferred outcome is Labor 52% (down 1%), Coalition 48% (up 1%). Since Australians returned to work in February, Labor has won 12 Newspolls, the Coalition 4, and there were two dead heats. Since the end of July Labor has won six out of seven. [20.10.06]

ALP improves on Economy, Security: Best poll news for Labor was Newspolls issues findings. The top seven issues for voters in order were - Health & Medicare; Education; Economy; Welfare and Social Issues; National Security; Leadership; & Industrial Relations. Labor led as the best party to handle four of the issues, but the Coalition importantly still led in National Security and Economy. (There was no “best to handle” finding on Leadership). Yet the Coalition’s lead on National Security was cut back from 35% last June to 31% in October, suggesting Iraq is costing the Government. On the Economy the Government’s lead was cut from 41% last June to 32% in October, which was probably largely due to the latest interest rates rise. Another rise would be bad news for Howard. Industrial Relations was good news for Labor where it led the Coalition 49% to 28%, the biggest lead since the Work Choice legislation passed the Parliament. Although only ranking seventh IR has risen in importance from 48% in February to 54% in June. IR, unlike higher ranking issues such as Education, is a real vote turner. [20.10.06]

Union power hurts Beazley: Kim Beazley was deeply embarrassed by the insistence of the South Australian Labor Party that its conference, which he addressed last Sunday, could not be covered by journalists unless they were members of the journalists union. There must have been a breakdown in communications between his office and that of SA Premier, Mike Rann. Surely this mess could have been foreseen by someone. If Beazley had been given sufficient notice he could have demanded that the rule be changed or overridden if he was to address the conference. As it was last Sunday was a slow news day and it made early evening TV news featuring Beazley’s humiliation in having to give a press conference in the car park outside the conference venue. Howard and Kevin Andrews milked this blunder for all it was worth on Monday with the well worn chant that Beazley was controlled by the “union bosses”. Belatedly, Beazley said this week he would get the National Conference of the ALP to quash the SA Labor rule demanding journos be unionists. This is not good enough for Andrews. He ranted in Parliament this week that Beazley himself should force the rule change. This was a case of Andrews trying to milk a good thing just a little bit too much. [20.10.06]

Stacked ABC board wins: The ABC board, heavily stacked after ten years of the Howard Government, has finally had a win. ABC managing director, Mark Scott, this week announced a bureaucratic set of editorial “guidelines” to ensure more balance and diversity of opinion. He said this was the result of a board decision. In the Senate last month in a prescient comment, Labor’s Senator John Faulkner (soon to be the National President) pointed to the elevation to the board of what he called “right wing warriors” - Janet Albrechtsen, Ron Brunton and Keith Windshuttle. They had, he said, all distinguished themselves before their appointment by anti-ABC campaigns which portrayed a dislike “bordering on contempt”. Windshuttle had advocated privatisation of the ABC, said Faulkner, to break its “Marxist culture”. Of course Labor has stacked the ABC board in its time. One notable appointment to the board was former SA Labor Premier, John Bannon. The Scott edict does raise concern about the impartiality, not of the ABC, but of the board that can be stacked by Governments. [20.10.06]

Faulkner’s reform suggestion: Faulkner quoted Professor Meredith Edwards, former deputy Secretary of the Department of Prime Minister and Cabinet, who studied appointments to statutory bodies in the UK, Canada, and New Zealand and found that Australia “clearly lags comparator countries”. Faulkner advocated Australia following the UK model outlined by Edwards. In the UK there is a Commissioner of Public Appointments which insists appointments be advertised and a short list compiled by a panel that includes, or is overseen, by an independent assessor. The final decision is still up to the minister, but Edwards says the system reduces the scope for cronyism, which would be exposed to the public gaze. Beazley should be pushed to make a promise to follow the Faulkner idea in Government. [20.10.06]

Cole whitewash looms: The Australian’s Caroline Overington has covered the Cole oil-for-food inquiry from its beginning and has done a first class job, despite being bad mouthed by the priggish DFAT Brat, Alexander Downer and his press secretary. She reported this week “the Howard Government will stride happily away from the Cole inquiry, with no formal adverse findings made against a single minister, bureaucrat or official.” The heading to her report said it all: “Whitewash equals black mark for all”. We agree with her that if Cole does not criticise the Government (even though the terms of reference prevent definitive findings) “he will provide ammunition to those critics who say the whole expensive, time-consuming inquiry was a whitewash, set up by the Government to protect the Government.” Nor will it save Australia’s reputation. Inside Canberra has reported before that, whatever Cole finds the rest of the world believes the Howard Government was complicit in AWB’s behaviour. This applies particularly to the US. [20.10.06]

Why no evidence from Calvert?: Recall the Congress was misled by the Australian Ambassador at the time, Michael Thawley. On orders from Downer, Thawley told Republican Senator Norm Coleman, chair of the Senate committee inquiring into “illegal under-the-table” payments to the Saddam Hussein regime, the AWB was absolutely clean. What is particularly puzzling about the Cole inquiry was its failure to call to the witness box the former head of DFAT, Ashton Calvert. He ran DFAT in much of the period when Messrs Howard, Downer and Vaile just could not get the slightest sniff of what AWB was up to. In evidence before the Cole inquiry prior to Easter, Downer was asked about a March 2004 DFAT ministerial submission that confirmed that the inquiry by UN special investigator Paul Volcker would make an adverse finding against AWB over kickbacks to Saddam. Downer jotted down his concern on the submission writing “this worries me, who sets AWB prices . . . I want to know about this.” [20.10.06]

Downer’s note ignored: When John Agius SC, assisting the Commission, said to Downer he didn’t seem to get an answer, Downer conceded - “I think you are right. I didn’t get a sufficient answer.” Many people in the bureaucracy in Canberra wonder why a direct request from the Minister for Foreign Affairs was not properly acted on. Back on 25 August Inside Canberra reported a former senior departmental head with wide experience told us that it would have been the responsibility of Calvert to see that Downer’s request was properly dealt with. What is more intriguing is that Calvert was punctilious, even obsessive, in playing strictly to the rules. He would certainly have approved any ministerial submission to Downer. It is hard to believe the note Downer wrote on the submission was not drawn to Calvert’s attention. [20.10.06]

Huge scandal unfolds: The oil-for-food affair is not just a hiccup. It is the most serious scandal at the federal level since federation. It involves a corrupt AWB providing illegal funds to Saddam Hussein, rightly portrayed as a monster by the Australian government and whose removal from power was put forward (after the failure to find WMD’s) as the sole reason Australia was joining the war in Iraq. In short, because the Australian government legislated to give AWB an export monopoly, it was able to top the list as the worst offender in the oil-for-food world scandal by providing $300 million to our sworn enemy. If the Government is not found, at the minimum, to have been grossly incompetent in not uncovering the scandal, voters will properly regard the Cole commission as a whitewash. It is difficult to believe Cole would allow this to happen, but Overington has good sources. [20.10.06]

Minchin’s Medibank baloney: Does Finance Minister Nick Minchin believe the Australian public are complete mugs? It sounds like it. This week Shadow Health Minister, Julia Gillard, said the sale of Medibank would lead to higher premiums. “Medibank Private has always been a not-for-profit fund. On sale it will be all about profit.” In reply Minchin said - “Labor’s sale of Qantas didn’t push air fares up and Labor’s sale of the Commonwealth Bank didn’t push interest rates up, so it is nonsensical and hypocritical for Labor to claim that the sale of Medibank Private will increase health premiums.” If Qantas and the Commonwealth Bank had been not-for-profit outfits before the sale there would be some comparison. And this is quite apart from the point the Reserve Bank, not the Commonwealth Bank, sets interest rates. [20.10.06]

Premiums must rise: This drivel will impress no-one. When Medibank Private becomes Medibank Profit, those who stump up the capital will have to set a premium that will not only provide for servicing borrowings but also provide at least a modest profit. Minchin could guarantee that premiums (approved by the Government) would not rise by more than the CPI. But he can’t do that because nobody would buy Medibank Private. His comments on premiums not rising are as worthless as Howard’s non-core job when announcing the 30% tax rebate for those well off enough to have private health insurance. The PM then said rates would not rise. In fact, after former Health Minister Michael Wooldridge vetoed the request for a premium increase by funds in 2001, successive Health Ministers have allowed funds, on average every year, to increase premiums by 35.58%. As Inside Canberra has previously reported, members of Medibank Private constitute 12% of all Australian households. According to ACNielsen’s recent poll, 63% of voters are against privatisation. Yet the resistance would be far higher among members of the fund and for them this would be a vote changer. [20.10.06]

From the Gallery: Monarchists tremble - the next Prime Minister will be a republican. Think about it. If Howard wins the election and stands down half way through the term (surely he won’t stay on?), he will be replaced by one of two republicans - Peter Costello or Malcolm Turnbull. In the Howard Government, Turnbull has moved on from the Australian Republican Move-ment. But a leopard can’t change its spots, and PM Turnbull would want an Aust-ralian Head of State. If Labor wins, republican Beazley is PM. The Canberra Times had a scoop last month revealing some traitorous swine in the bureaucracy had changed the wording of the credentials new ambassadors to Australia present. Until January, they were presented to the “Queen of Australia”. Now they are pres- ented to the “Governor-General of the Commonwealth”. These republicans are insidious. Turnbull showed considerable courage joining a fight to end discrimination against same sex couples, and force a review of their entitlements to Medicare, superannuation and welfare. For example, de facto couples can combine their medical bills for Medicare safety net purposes. Yet same sex couples can’t. Turnbull says the issue has nothing to do with sex, but justice to all couples who are supporting each other. We doubt Howard sees it that way. [13.10.06]

Military now involved in defending Australian values: John Howard has set out a fundamental change in Australian defence policy, which is based on having a force ever ready to depart to distant battlefields to join our American allies. The new national security aim is to preserve Australia’s “our way of life”. Rather than unveil such a substantial change to our security posture by way of a ministerial statement in Parliament, Howard chose to flag the change at the Hyatt Hotel, Canberra (26 Sept). The occasion was the ‘Global Forces 2006’ conference, organised by the Australian Strategic Policy Institute (ASPI). As this is a government-funded organisation, it is not difficult to work out why the PM was placed to head the speaking list. Our associate publication, Australian Defence Business Review (ADBR), this month explains how the defence ‘baseline’ is now on the way to being changed. [13.10.06]

PM explains addition to baseline defence mission: The role of the Australian Defence Force (ADF) has traditionally been expressed as the ‘Defence of Australia’, yet under former Defence Minister Robert Hill, the baseline mission was extended to ‘the Defence of Australia and its interests’. At the ASPI conference, Howard expanded this to the “defence of Australia and our interests and ‘our way of life’, (our emphasis). Howard further said the ADF “has two equally important responsibilities: the capacity to act regionally in the interests of peace and stability; (and) the ongoing need to join in coalition operations in different parts of the world when Australia’s national interests are at stake.” Howard stressed the growing link between global and regional security challenges in combating terrorism and transnational crime (as well as countering weapons proliferation), supporting fragile states or responding to economic, environmental and energy security challenges. [13.10.06]

Howard’s agenda for the next election: The PM continued - “Demands for Australia to engage in clear-sighted, highly-integrated and well-resourced strategy of global and regional activism will only intensify.” Note that the addition of defending “our way of life” as part of the defence baseline task is also code for “Australian values” - and the Government says there are some Muslims in Australia not at all impressed with Australian values. Howard is setting out to rewrite the agenda for next year’s election. The PM has to shake off issues such as industrial relations, and interest rates in particular, and get the focus back on to his role as the most effective leader to preserve our security in an increasingly dangerous world. Importantly, the PM has to portray Iraq (where Australian troops will still be serving) not as a failure, but as a necessary part of defending “Australian values”. Of course, this could be undone by an unexpected capitulation by George Bush to the reality that his Iraq mission is hopeless, or because of serious Australian casualties in Iraq or Afghanistan. [13.10.06]

Beazley has public opinion with him: If Howard’s luck holds, he will attack anyone who is against the purchase of air warfare destroyers - useless for operations in our regions - but handy when we fight side by side with America around the world in the ongoing camapign against terrorism. Opponents of such purchases would be portrayed as against the American alliance and careless about the need to protect Australian values. Howard is clever at mounting these indefinable issues. The PM’s tried and true tactic is to keep hammering away at such issues day in and day out. Beazley should be able to counter this. He has already declared that if he wins the next election, he will bring the troops home from Iraq (except those guarding our diplomats). [13.10.06]

Kim only has eyes for America: The latest polling (see below) shows a big majority of Australians agree with Labor’s policy. Beazley should now (despite the North Korean nuclear scare) launch an all out attack on the waste of taxpayer funds on high-end warfighting capabilities, such as the air warfare destroyers, the Joint Strike Fighter and Abrams tanks, all being purchased from America to help Australia fight expeditionary operations with the US abroad. Such an endeavour will be difficult for Beazley, but there is a need to refocus Australian defence efforts on its regional interests. Beazley is a fervent defender of the ANZUS alliance, and far from objecting to the lavish purchases being pushed by Howard, has sought to trump him by saying Australia should dump the JSF for the even far more expensive American F-22 ‘Raptor’, which Congress has just banned from being exported. Another interest rate rise would make it very difficult indeed for Howard to fight an election on security issues. [13.10.06]

PM eyes global warming: The PM may well be opening another front in the election battle - global warming. It is now obvious that despite differing opinions among scientists as to the cause of global warming and its impact on humanity, voters have made up their mind: they’re worried. Recent polling by The Lowy Institute found 87% said improving the global environment should be the priority in foreign policy. At the same time, a substantial 74% had combating terrorism as the main issue. The PM could have two-bob each way - maintain focus on terrorism as explained above, and also take new initiatives on global warming. The Government is widely seen as lacking a sense of urgency about global warming. Whatever the economics of the argument, there is constant community complaint that Howard is not doing enough to encourage alternative forms of energy: solar, wind power, thermal. There is every chance he will shortly produce a policy on global warming which is designed to trump anything Labor promises. [13.10.06]

Security threat of rising seas: On Monday, World Vision chief executive, Tim Costello said - “Climate change is emerging as a significant threat to political stability and security in the (Asia Pacific) region.” The same day, Geoffrey Barker (in the Financial Review) reported Howard had asked the Office of National Assessments (ONA) to prepare a detailed report for Cabinet on global warming and its security implications. According to a CSIRO report, more than 150 million people in the Asia-Pacific region will be displaced by rising sea levels by 2050. Back in March, Kim Beazley unveiled quite an impressive Climate Change Blueprint, but little has been heard of it since then. This is understandable. Beazley, having been criticised by the unions for not being active enough in damning Howard’s IR policy, naturally made Work Choices his main focus. He can’t do everything. It is hard enough for an Opposition Leader to get a run in the media as it is, and even harder for the Shadow Environment Minister, Anthony Albanese. But they better be ready for a Howard initiative on climate change. [13.10.06]

Polls getting worse for PM: The PM should be concerned this week’s ACNielsen poll (taken 5-7 Oct) confirms Newspoll and Morgan’s observations that Labor is in a very strong position. ACNielsen finds Labor’s primary support is 42% (up 3% on last months poll, and 4% on its 2004 election result). The Coalition’s primary vote is 39% (down 3% on last month, and 8% on its election result). The Coalition primary vote was, for the first time this year, below the Labor primary vote. The two-party preferred vote was 54% Labor, and 46% Coalition - the best vote for Labor this year. A particular worry for the Coalition is that outside the capitals the two-party preferred vote was 53% Labor, to 47% Coalition. Nielsen warns the sample for rural areas is not large. Nevertheless, this is the third consecutive month Labor has outpolled the Coalition in the bush. Voters aged 18-24 two-party preferred supported Labor by an astonishing 65%, to 35%. Labor also had a big lead in ages 25-39 and 40- 54, but is behind in 55 and over by 46%, to 54%.[13.10.06]

Downer wrong on Iraq: The Age this week was indelicate enough to point out that when The Lowy Institute poll reported a big majority of Australians were negative to Iraq, Alexander Downer retorted the right question hadn’t been asked. The real question, said Downer, was should Australians and Americans surrender to the terrorists in Iraq, or “should we stay the course?” He went on to state that “most Australians” think Beazley’s policy of hauling up the white flag is a policy of defeatism. ACNielsen put this question - “Do you think Australian troops should stay in Iraq or be withdrawn?” The result: Stay 36%; Be withdrawn 59%; and Don’t know 5%. [13.10.06]

Nth Korea’s ‘threat’: Downer’s musings about the “potential” danger of North Korea (The Democratic People’s Republic of Korea) lobbing a nuclear-tipped missile on Australia is about as realistic as the potential of an invasion of the earth by aliens from another planet. The nuclear weapon tested by North Korea was a firecracker compared to the bomb dropped on Hiroshima, which in turn was diminutive compared to the eight warheads atop each of the 24 missiles in just one US Trident submarine. This gives some perspective to the DPRK threat. Even assuming North Korea could instantly master the awesome technology to miniaturize a powerful bomb, and then put it on an inter-continental missile which could be accurately guided, why would they waste it on Australia? In fact, the North Koreans are most unlikely to possess such technology and, in any case, they are not going to attack anybody. The instant and crushing military response would immediately put the Communist regime out of business. Experts agree the apparent American policy of awaiting the collapse of the North Korean economy and administration is no longer an answer. A nuclear state (even as diminutive as North Korea), cannot be allowed to collapse because nobody could be sure in whose hands its nuclear material would end up. [13.10.06]

Bush and ‘axis of evil’: The Clinton Administration had a deal with the North Koreans, put together by former President Jimmy Carter and Clinton’s Secretary of State (Madeline Albright) in their visits to P’yongyang. Essentially, the DPRK agreed to halt its nuclear program in return for the US supplying light water nuclear reactors for power production and, pending their delivery, large quantities of oil. The legislation for the deal foundered in the US Senate because of a campaign by Republican, Jesse Helms. When George W Bush came to power, his vice-President (Dick Cheney) declared that “you don’t negotiate with enemies.” In the 2003 State of the Nation address, Bush declared the members of the “axis of evil’ were Iraq, Iran, and North Korea. He has notably failed in dealing with all three. Iraq is a disaster, and the emerging Shi’ite theocratic government in Iraq will have close links to Iran. No progress is likely until the arrival of the next US President. [13.10.06]

Exporting jobs to India: Howard on Tuesday would not have welcomed the three page expose in the Sydney Daily Telegraph, examining the loss of Australian jobs to India. Under the screaming headline -WHERE OUR JOBS WENT - most of page one was occupied with this story, with the North Korea nuclear test relegated to a side-bar. The paper said the ANZ Bank has 1300 workers employed on jobs in Bangalore, which could be done in Australia. It added the St George bank will send 80 jobs from Australia to Bangalore, and Westpac is planning to shift 500 jobs. The Tele made somewhat a mess of the story, wrongly claiming the ANZ’s workers in Bangalore were doing call centre work, as well as handling customers’ bank accounts, when in fact they were working on IT. (On Thursday the Tele apologised to ANZ, but it’s all too late, and the damage had been done). Whatever the error about ANZ, there are a lot of call centre jobs in India which could have been done in Australia. The Tele has the biggest circulation in NSW and is Howard’s ‘favourite paper’. It is read by voters who were once called ‘Howard’s battlers’. [13.10.06]

PM explains: The PM is not responsible for the loss of these jobs to India, but that point may be missed by workers who are (according to all the polls) strongly against the Work Choices legislation. In the House on Tuesday, Beazley asked Howard to ensure “Australians have a right to know when the bank details, credit card files, health records and other sensitive information is sent overseas?” This was before the ANZ denied any such material was going to India, so Beazley’s question was not well based. Still, Howard was right when he said “in a globalised world lots of tasks flow across borders from one country to another.” The problem is, workers (not only in Australia but across the world) don’t like globalisation, free trade and all the rest of the free market economy stuff. The tide can’t be turned back of course, but that doesn’t mean workers are happy to see jobs going abroad. [13.10.06]

Random on-line Age opinion polls: Asked - Was Margaret Whitlam out of line for her attack on Janette Howard? 59% said No, 41% Yes, from 5037 respondents (very large for such polls). Is Sol Trujillo worth $8.7m? No 85%, Yes 15% - 2793 respondents. Should full fee university places be abolished? No 23%, Yes 77% - 1352 respondents. Should euthanasia be legal? No 10% ,Yes 90% - 706 respondents. Should there be a formal citizenship test? No 55%, Yes 45% - 4467 respondents. (This is a big turn around from the 76% in favour, according to Newspoll). Is Kim Beazley (who supported such a test) flirting with xenophobia? No 52%, Yes 48% - 1954 respondents (who presumably knew what the word meant). Should smokers and over-eaters pay more for health insurance? No 26%, Yes 74% - 507 respondents. Do you believe global warming is the most significant threat facing humankind? No 18%, Yes 82% - 529 respondents. Should the four members of the Bali nine on death row be given clemency? No 42%, Yes 58% - 1922 respondents. [13.10.06]

Go easy on Jack Thomas: Do you support control orders against accused terrorist Jack Thomas? No 73%, Yes 27% - 3195 respondents (This will disappoint John Howard). Should $10b be spent expanding the Army? No 67%, Yes 33% - 3195 respondents (attention Defence Minister, Brendan Nelson). Who’s doing most harm to the Victorian Liberal Party? Kennett 23%, Costello 56%, Baillieu 20% - 1017 respondents. Do you support privatising Telstra? No 67%, Yes 33% - 1283 respondents. Should religious jewellery be allowed at schools? No 48%, Yes 52% - 817 respondents. Should junk food be banned for sale at schools and hospitals? No 20%, Yes 80% - 1295 respondents. Would a foreign-owned owned Coles put you off shopping? No 40%, Yes 60% - 2905 respondents. Should ethanol be compulsorily added to petrol? No 56%, Yes 44% - 392 respondents. Should there be ads on the ABC? No 95%, Yes 5% - 811 respondents. (This is the most decisive vote of all the polls - note Communications Minister Helen Coonan). The Age says these polls are not “scientific” and only represent the view of those who respond. [13.10.06]

Target the right exports: The Fin reported on Monday how education as an export had been revalued upwards to almost $10 billion, making it the fifth largest exporter and closing on tourism (worth $10.8 billion), the third biggest export. (Coal is the leader at around $24 billion, and iron ore second on $12.5 billion). The 2005/06 export figures underline our point that the Trade portfolio needs a Liberal who is not fixated about opening up agricultural markets for Australian farmers. The combined value of beef, (our 10th biggest export) and wheat (in 13th place) is not worth as much as eduction. Yet substantial gains can be made from expanding tourism and education (where there are no trade barriers) and manufacturing (where trade barriers are far less significant than for wheat and beef). As Inside Canberra reported last week, climate change has radically altered the economics of monoculture. [13.10.06]

From the Gallery: Leading small “L” Liberal, Petro Georgiou has demolished the Government’s discussion paper, Australian Citizenship: much more than just a cere-mony. In Adelaide on Wednes-day, he made a convincing case that the proposed citizenship tests, including proficiency in English, was part of an attack by the Howard government on the traditional liberal values of the Liberal Party. Georgiou saw the discussion paper as undermining “one of the most successful migration processes in modern history”. He was against too strict an English test, and pointed out applicants for citizenship were already assessed on their knowledge of basic English and an adequate understanding of the responsibilities and priv-ileges of Australian citizenship. In any case, English speaking immigrants from the UK, US and New Zealand are often least likely to take up citizenship. Georgiou didn’t say it, but let’s face it - the fuss about citizen-ship for non-English speakers is about putting some air down the dog whistle of xenophobia - something the Howard Govern-ment is increasingly encour-aging as part of its political campaign to maintain a high level of community concern about Islamic terrorists. Kim Beazley can’t gain from all of this because he is basically supportive of the Government’s citizenship tests approach. [06.10.06]

Howard will win the next election – maybe: The general view in the Canberra press gallery is that although John Howard is behind in the polls, he is the most likely to prevail as winner of the 2007 election. Yet the polls are beginning to look really bad for the Government. Of the eight Newspolls published since the end of July, the Coalition has won only one two-party preferred contest. Even more ominous is Newspoll’s survey of marginal seats, with Labor (52%) leading the Coalition on 48%. Now we have Newspoll’s state-by-state analysis for July-September. The most striking feature is the improvement of Labor in Queensland, where it is generally conceded the party will have to do well to win an election. [06.10.06]

Labor now competitive in Queensland: In the 2004 election, the Coalition primary vote in Queensland was 49.2%. Now it is down to 42%, a whopping 5% fall on the previous three months. A major worry for the Libs is that the party was polling only 33% in the latest survey, with the Nationals on a disappointing 9%. The Nats will do better than that in those seats they contest, however, in South East Queensland the outlook is very bad for the Libs. Labor in the 2004 election in Queensland scored a primary of 34.8%, and now it is at 40% (up 3% in three months). Two-party preferred in the 2004 election, the Coalition in Qld walloped Labor by 57.1%, to 42.9%. Now the situation is Coalition 51%, to the ALP’s 49%. Labor has a big lead two-party preferred in the five capitals (where most of the seats are), with 53% to the Coalition’s 47%. [06.10.06]

Coalition losing ground in bush: Nation wide (ie: outside the capitals), there has been a dramatic change from the 2004 election, when the Coalition scored 56.2% to Labor’s miserable 43.8%. Now it is Coalition 51%, to Labor 49%. This result confirms the last ACNielsen finding which had Labor leading 51%, to the Coalition’s 49% - outside the capitals. The loss of ground in the bush by Howard is no doubt due to a number of factors, some of which he has control over (ie: privatisation of Telstra, Work Choice legislation), and others he hasn’t (ie: the drought and petrol prices - given that he cannot/should not act to cut excise on the latter). Labor is leading in the two big states: NSW has Labor - 52% to Coalition - 48%; Victoria has Labor - 53%, to Coalition - 47%. In SA and WA both sides are running at 50%, which is a big improvement on the thrashing Labor took in these two states at the 2004 election. The latest Morgan poll (taken late September) has a two-party preferred outcome of ALP 53%, to Coalition 47%.[06.10.06]

Can PM repeat the 2001 Houdini act?: Having said all this, political strategists and the press gallery remember the 2001 election when Howard early in that year looked headed for certain defeat. He produced the cheque book and hurled billions at the electorate (including ending automatic CPI indexation of petrol excise). Then came the Tampa in August of that year, followed by 9/11, and the “children overboard” lie in the last week of the election. The state of the Budget surplus assures Howard can still produce the cheque book close to the election. Large scale vote buying will push inflation and interest rates, but this won’t stop a PM looking for short-term political gain. Howard might not be as lucky as he was in 2001, and in 2004 (with Mark Latham). Yet, a major terrorist attack on Australian soil close to the election would assure victory. [06.10.06]

Interest rates starting to bite: It is the fear of an election winning push by Howard on terrorism that is driving Kim Beazley to try to out-muscle the PM on the issue, as reflected with outbursts about newcomers signing up to “Australian values”. (See - From the Gallery). Howard might yet suffer another interest rate rise (private Labor polling says interest rates are starting to hurt), yet for investors, these are tax deductible. The Sydney Morning Herald is reporting unemployment in the Fairfield-Liverpool region of Sydney has shot up to 10% (from 5%), in the last year. Macquarie Bank economist, Brian Redican, says regional data has some areas beginning to exhibit financial distress. He predicted a further interest rate rise could see rising unemployment in south-western Sydney spreading to other parts of the city. [06.10.06]

IR difficult for Govt: Industrial relations is obviously hurting Howard, and he is already softening some aspects of Work Choice (see last week). Very bad news for the Government is something that is again out of its control: the move by big companies to dump Australian jobs and move work to places such as India. Last Monday (on the TEN network’s major evening news bulletin), there was a strong story reporting on plans by Qantas, NAB, Westpac, and others to shift jobs overseas. This terribly negative item for Howard was viewed by 984,000 in the five capitals alone. The audience profile would feature a very large chunk of what used to be called “Howard’s battlers”. Against this background, we note Sol Lobovic’s (chairman of Newspoll) view - expressed in The Australian (Wednesday) - that, this far out from the election, certain voters might be signalling a protest to the Government by giving their poll vote to Labor. If so, it is up to Labor to hang on to these, he says. Further, Newspoll found after the 2004 election, 49% of voters did not make up their minds until a month from the election, and 30% decided in the final week. [06.10.06]

Boundary changes cost Howard: Psephologist, Malcolm Mackerras, has done the arithmetic on the boundary changes in electorates and has come up with his pendulum (The Australian 30 September - 1 October). The outcome is that, in applying the changes to the election result of 2004, it is now easier for Labor to win the election. Before the changes, the median seat of the pendulum (the PM’s own seat of Bennelong) was the point where each side of Parliament had 50% of the 150 seats (this includes independents, but more later). To reach this median point before the redistribution, Labor required a swing of 4.4%. After the boundary changes, the median seat is Eden-Monaro, and to win that seat Labor requires a lower swing, of only 3.3%. Yet it still needs one more seat to win Government, and that is Bennelong. A swing of 4% is required to unseat Howard, and there is no chance of that. [06.10.06]

But seat target difficult: The next easiest seat for Labor to win is Dobell (requiring a swing of 4.8%). Mackerras, in making his calculations, puts Peter Andren (independent, Calare) on the Labor side. He puts the other two independents (Katter in Leichhardt, and Windsor in New England - both former Nats) on the Government side. Andren may or may not support Labor to allow it to form a Government if his vote is needed after the election. To achieve a majority in its own right, Labor needs to win 16 seats. This would require a swing of 5%, to win either McMillan and Deakin (as well as Dobell), and is not out of the question. For Labour to win 14 seats with a swing of 3.3%, it needs to concentrate efforts on winning McMillan, Deakin and Dobell. Yet this is not going to be easy, as there never is an even swing. A number of seats will survive general swings, so in the end Labor will have to win some seats with margins above 5%. And all the above assumes Labor doesn’t lose one of its own seats. [06.10.06]

Gillard slow on Medibank attack: Shadow Health Minister, Julia Gillard, has been missing in action in the political struggle now underway involving the promise by the Howard government to sell Medibank Private after next year’s election. She should have been first in with the bombshell news that legal issues surrounding the mutual health fund could stymie the sale. Instead, it was left to the BRW magazine to run the story on information given to it by a top legal source. Inside Canberra understands the same information went to Gillard’s office. The key point is article 65 of Medibank Private’s Constitution, which says that if the company is wound up, and after payment of debts and liabilities, any remaining “property should not be paid to shareholders” - but must be paid to one or more registered health benefit organisations nominated by the minister. It further says that “a registered health benefits organisation means an organisation that is not carried on for profit”. BRW goes on to quote instances where buying a not-for-profit business is fraught with legal complexities. For example, AMP bought the GIO Building Society’s assets in 1999 for $26 million, and then had to compensate $26 million to building society members for their loss of membership. [06.10.06]

ACCC against trade sale: A trade sale to one or more not-for-profit health funds is not on. ACCC chairman, Graeme Samuel, will not countenance a trade sale because of competition ramifications. In Medibank Private’s staff newsletter, CEO George Savvides said the fund would have to be converted to a “for profit” company, and would pay company tax. Finance Minister, Nick Minchin, says “the Government has long made it clear” that the fund would have to change to a “for profit” outfit. Really. It’s the first your editor has heard the Government say anything of it. Minchin airily brushes aside the problem of the Constitution as being easy to fix. We will see. Meanwhile, the Government can find no further reason for the sale, other than the bald assertion private companies always are run better than government-owned organisations. (Savvides has turned an operating loss of $175.5 million four years ago, into a profit last year of $220 million. Not bad for a Government outfit). [06.10.06]

Sale politics bad for Govt: Labor has a wealth of politically potent material to deploy against the Medibank sale. Firstly, it could argue that, if the 2.8 million Australian resident members of Medibank Private mutual are not legally entitled to own the fund’s reserve, they morally should be. Further, should not the members vote on the sale, just as NRMA members did when its insurance arm was privatised and listed on the ASX? (NRMA members were actually compensated with shares for the insurance arm privatisation). And finally, how can it be said that premiums will not rise, when Australia’s biggest fund - as a privatised entity - eventually has to pay company tax and cover servicing charges on the capital cost of purchasing the fund, AND provide a dividend attractive enough to bring in investors for the sale? Finally, if the Government is to continue approving premium increases, why would any investor buy into a company that may at some time need to go to a Labor minister to beg for premium increases? The on-line poll in The Age on 3 September asked 1782 respondents - Should Medibank Private be floated on the stock exchange? The answer was: 79% - No 79%; 21% - Yes. [06.10.06]

Wages no worry: No-one is quicker off the mark to warn about the perils of possible wage rises than the ACCI’s Peter Hendy. He is an enthusiastic supporter of the Fair Pay Commission, no doubt confident it will slow wages growth. The latest SAI Global-ACCI survey of business confidence (covering July to Sept) said - “Wages continued to grow reflecting tight labour markets in some areas, but employment growth should continue to expand well over the next six months.” Next it said - “Profit growth, after also declining for some time, has stabilised over the three months to October, and to date shows that profit growth should remain steady over the near term”. The survey shows most employers are unconcerned about wages. The top ten constraints on investment, according to the survey, has Wage Costs way down in seventh position (after being in fourth position in the previous survey). The top three constraints are: Business Taxes and Government charges; Availability of Suitably Qualified Employees; and State Government Regulations. Meanwhile, ABS stats show profit growth has been higher than wage growth over an extended period from 1989/90 to 2004/05. Wages (at current prices) at the beginning and end of the period were around 54% of Total Factor Income (GDP minus tax paid and collected), with some ups and down in between. On the other hand, profits trended upwards in the period starting at 23% of GDP, and rising to 26%.[06.10.06]

Limits of agriculture ignored: Warren Truss, like all National Trade Ministers before him, continues to whinge about Australian farmers being denied a cornucopia of wealth because other nations in the WTO Doha trade round insist on being nice to their own farmers. Australian trade negotiators and ethanol enthusiasts assume there is no limit to the output of Australian agriculture. Salination, degradation of the soil through acidity and the impact of climate change are ignored. The Bureau of Meteorology says that 2005 was the hottest year on record for Australia, and further, it is predicting a stinking hot, dry Summer with the El Nino turning against us. The Murray River system has never been shorter of water. Yet is seems to be assumed in DFAT that should the Doha round magically produce the elimination of all barriers to world trade in agriculture, Australian agriculture production would suddenly burgeon to unheard of levels. [06.10.06]

Scientist calls for new approach: Similarly, massive amounts of crops providing food would be diverted to ethanol if only the Australian Government would give it a leg up. The ethics and utility of using food in such a manner is not questioned. In an interview, one of Australia’s leading agricultural scientists said revolutionary change was necessary to produce sustainable agriculture that suited the nation’s variable climate, sluggish rivers and ancient soil. Dr John Williams, former head of CSIRO Land and Water, was last year awarded the William Farrer medal for his outstanding contribution to scientific research. Williams says climate change means that farmers should not be locked into high volume production of crops such as cereals or sugar. Monoculture meant that, in a tough season, farmers are sent broke. He told Inside Canberra that trade authorities assume agriculture would continue the way we are going. “In time, we are going to run up against the need for a very different way of trading in agricultural commodities. Certainly the signs are there. The movement in Europe of actually purchasing from farmers the management of the landscape is a way of moving away from the subsidy on the price”, he said. Williams added - “In our trading, we really do need to recognise that the ball game is going to change and there are some good options for us. It’s not all bad news at all.” [06.10.06]

Seeing the wood for the trees: Williams has talked to Bega/Bombala Valley (NSW) farmers, who are thinking about farms of the future in that particular area and are looking at a mix of traditional activities (animals), and forestry options in the long term. “They recognise that in Scandinavia and Europe, forestry is a way of managing farmers’ superannuation,” Williams says. “There is a culture in various arms of government, such as Australian Bureau of Agriculture and Resource Economics, that everything will continue pretty much the same. But if you look at changing land use in Australia, it is quite remarkable in its diversity. The diversity in what we produce in our grain industry now is so much greater than it ever was, due to the creation of new seeds to handle climate and other factors”. Williams says the trade system should look at future opportunities in emerging industries, that currently receive very little attention. For example, farmers in South Australia and Victoria are producing wattle seed for the European market, which needs a non-gluten product which is good for wholemeal flour. [06.10.06]