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Inside Canberra Online 2006

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December

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From the Gallery: The PM says new applicants for citizenship have to understand the concept of ‘mateship.’ He says it encompasses everybody pulling together in common adversity. It involves “treating people according to how you find them, and not according to the colour of their skin, and it’s very much part of our ethos.” No, mateship comes from 19th century Australia, in parts of the continent “where women were few, and men of religion were scanty.” It was a term used to describe friendship between men in the bush, and it was in many ways a foundation stone for the Labor Party, and based upon the maintenance of White Australia and mates sticking together to best the enemy, such as scab labour. Migrants, even with reasonable English, might find the term a ‘fair go’ difficult to comprehend. ‘Go’ is to leave (aka, depart), so it could suggest fairness is departing. There are other Aussie synonyms for a ‘fair go’. What about ‘fair suck of the sav’, or ‘don’t come the raw prawn’. If you come the ‘raw prawn’ and don’t give someone a ‘fair go’, that person might shoot through like a Bondi tram! How is it a citizenship applicant in Sydney might recognise a Bondi tram in order to mimic it in shooting through? [15.12.06]

Rudd’s honeymoon tops Latham’s effort: There is nothing surprising about the leap in the Newspoll result for Labor, except that perhaps that The Australian has gone out of its way to point out that Kevin Rudd achieved a much bigger swing than any newly elected Opposition leader for the last decade, including Mark Latham. Labor’s primary poll leapt to 46% (up 7% on the last poll when Beazley was Leader). The Coalition primary fell only 2%, to 39%. Yet the Liberal primary was at distress levels - 34% (down 3%). Labor’s primary gains came from the 2% the Coalition lost, 2% the Greens lost, and the drop of 3% in ‘Others’. The outcome was a two-party preferred lead of 55% Labor, to the Coalition’s 45%.[15.12.06]

Labor Leader a cool customer: If repeated in any near-term Federal election, this vote would produce a landslide to Labor. Clearly, there is not going to be a landslide to anybody at the next election, but the early shift in voter intentions does suggest Rudd is going to be competitive. The same thing could have been said about Latham when his first honeymoon polls were published. The difference is that Rudd is a much cooler and judicious character than the headstrong Latham. Rudd will not be emulating any Latham-isms, such as giving two Tasmanian seats to the Liberals on a plate, courtesy of wrongheaded policy on forests. [15.12.06]

Yet voters still cautious about Rudd: Rudd’s satisfaction rating is instructive: at 41%, he is up 13% on Beazley’s last effort. Only 10% are ‘dissatisfied’, up a whopping 48% on Beazley, yet an even more whopping 49% are ‘uncommitted’. Howard’s satisfaction rating is on 46% (unchanged), and his ‘dissatisfaction’ level is 43% (down only 1%) - still respectable for a 4th term PM. The big change is in the ‘better PM’ poll, where Howard - on 39% (down a whopping 16%) - while Rudd has closed to within 3% of the PM at 36% (up 11% on Beazley’s last effort). There are 25% ‘uncommitted’ on wh is better PM. All this suggests that up to half the electorate is unsure about Rudd, but not absolutely enamoured of Howard. The big jump in the party standings could partly be an expression of relief that Beazley is no longer there. The low Liberal vote could indicate people are tiring of Howard because of his perceived lack of action on climate change. [15.12.06]

Telling polls will come in February-March: On the question of which side is best able to handle key issues, Howard still has a big lead over Rudd on the ‘Economy’ and ‘National security’, while Rudd has a handy lead on ‘Education’ and ‘Health and Medicare’ - no change there. Yet all of these measures are somewhat meaningless, because in each instance there has been a doubling of ‘uncommitted’, to levels of 20% or more. So swing voters are still making up their minds. Howard has warned his troops that Rudd will hold a poll lead for at least three months, and he is probably spot on. The telling polls will be those in February and March 2007, when Parliament will be sitting, and the Government will be on the attack to diminish Rudd’s standing. Meanwhile, Labor can be satisfied the Government has not won a poll since mid-August, and since Australians went back to work in February 2006, Labor has won 15 polls, the Coalition 4, and there were 3 dead-heats. [15.12.06]

Swan rightfully keeps his job: Kevin Rudd has devised a Shadow Ministry list which looks interesting. Whether it will work is yet to be tested. His decision to leave Wayne Swan in his Shadow Treasurer role was wise. Swan has provided vigorous competition to Peter Costello. The Treasurer looks good in Question Time because, with the protection of the Speaker (let us hasten to add, who acts on precedents - stupid though they may be), is allowed to refuse to answer questions put to him, but instead do a little dance to celebrate his own wonderful achievements. Nevertheless, as Rudd’s question time performance has shown since he became Leader, the answer doesn’t matter, it is the quality of the question that counts. As Rudd said when replying to doubts about his political experience: it was he, Swan, and Wayne Goss that managed the political execution of the dreaded Joh in Queensland. Rudd and Swan will never again be mates, but will continue their satisfactory professional relationship. [15.12.06]

Big promotion for Fitzgibbon: An interesting promotion was Joel Fitzgibbon, who was shadow Assistant Treasurer (covering Revenue, Small Business and Competition), being moved into the high-powered Defence portfolio. There has been comment this was a reward for Fitzgibbon’ role as one of the leaders in the move to oust Beazley. True or not, Rudd is no fool, and would not put Fitzgibbon into such a sensitive portfolio unless he was convinced he can deliver. As the MP for Hunter in the Newcastle area, Fitzgibbon will have a lively interest in Naval shipbuilding policies. (see - Shipbuilding inquiry short on facts). Part of Fitzgibbon’s previous shadow role has gone to the energetic and capable Craig Emerson, who has the new portfolio of - Service Economy, Small Business & Independent Contractors. Rudd is concerned at the rate at which PAYE employees are either voluntarily or involuntarily being pushed into small business, as contractors. As non-unionists, their numbers are increasing, and if Labor wants to round them up, it will have to produce some specific policies for this sector. [15.12.06]

Leftie Carr back in industry role: Oh dear, The Financial Review is very upset about Kevin Rudd’s industry policy. The Fin sees it as a terrible thing that the new Opposition Leader has given the Victorian social left MP, Kim Carr, the Industry Shadow. Particularly objectionable, according to The Fin, is that Carr “wants to return to generous research and development tax concessions which are prone to rorting ...” Worse, Carr thinks he can “encourage” local firms to buy Australian without breaching free-trade obligations. The latter is particularly heinous - goodness that’s what Americans do! None of this will surprise those in manufacturing industry. This sort of stuff coming from the old enemy of manufacturing will not surprise those in industry at all, quite a few of whom (particularly those in small business) think it’s quite a good idea to give manufacturing some help. Rudd has stated several times he is looking at policies put forward by the Australian Industry Group (AiG). He certainly wouldn’t be looking at any policies put forward by the ACCI, a so-called peak business body which expends more energy on supporting Government initiatives than making any forthright policies on industry of its own. Without question, the AiG’s influence would be on the rise in a Rudd-led government in Canberra. [15.12.06]

Trouble ahead on wheat: In the aftermath of the Cole inquiry, the Coalition is running into a deadlock on the future of wheat exporting. Last week - at a joint press conference with Mark Vaile - the PM announced legislation which would, for six months, give the Minister for Agriculture (Peter McGauran) the power to issue wheat export licences. In short, it is the minister who would exercise the monopoly power, not AWB. The legislation has passed the Parliament, bringing on a rush of applications by grain traders, opposed to the AWB monopoly, for wheat export licences. McGauran is in a jam. If he starts issuing licences, wheatgrowers who have delivered to the AWB will claim subsequent ‘pool’ payments will be lowered. A clear majority of farmers want the single desk to continue. At his press conference, Howard said the Cole inquiry - with its damning findings against AWB - meant “the status quo” could not continue. This is not Vaile’s position. He emphasised the need to consult wheatgrowers. Howard said that whatever the views of wheatgrowers, the final decision will be made by the Government. [15.12.06]

Vaile and PM don’t agree: Vaile has made it clear to rural media that many options would be considered, and one would be maintenance of the status quo. He is in disagreement with Howard that all options, including the status quo, be considered. There is a view among wheatgrowers (and shared by Barnaby Joyce), that the Cole commission’s findings do not justify abandonment of the monopoly being operated by AWB. Their argument is that if executives have acted illegally, they should be charged. Their misbehaviour alone is not a reason to damage the company and the single desk system, at considerable cost to shareholders. At the Federal Council of the Nationals earlier this year, the Council carried a resolution from the Victorian Nationals that the single desk remain, and that AWB continue to enjoy the monopoly export power. One argument being put forward is that the status quo should remain at least until 2010, when legislation governing wheat exporting is to be reviewed. That review should then consider whether the single desk should remain (with the AWB controlling the monopoly) until 2013, when the EU has undertaken to remove all agricultural export subsidies. As against this, Liberals argue that requiring an individual wheatgrower to sell only to AWB is a denial of the private enterprise system, and is a form of socialism which the Liberal Party should not support in principle. [15.12.06]

Shipbuilding inquiry short of facts: A year-long inquiry into Naval Shipbuilding by a Senate committee has been hamstrung in coming to a comprehensive conclusion because of obstruction by the Defence Department. The central issue before the committee related to building ships for the Navy in Australia, as against sourcing them from overseas. The (Government majority) committee berated Russell Hill for failing to respond to numerous requests for quantitative data or analysis on the price premium attributed to local construction in recent Naval programs. The committee’s report also calls on the Government to better articulate its policy on local industry involvement, and provide a public statement on how it intends to match such policy against new ship projects. [15.12.06]

Questions on local v’s overseas purchases: Our associate publication, the weekly DIAR.com defence e-Newsletter, explains that having reached the point of encouraging the government, even at a cost premium, to support a local build for both the three new air warfare destroyers and two amphibious ships (set to be approved in mid-2007), the Committee noted it did “not necessarily believe that premiums should be paid for commercial-type ships - such as the oiler ‘Delos’ (since converted to HMAS ‘Sirius’) - a tanker specially equipped and rigged for replenishing other ships at sea. This project is currently the subject of a controversial Auditor-General’s report, to be released in January. Still, the committee endorsed the notion that modifications (to convert the ‘Delos’ to its military role as an auxiliary oiler), were best done in Australia. Against all this, the Committee cautioned - “costs must be quantified in order to provide a true measure of actual competitive design and construction costs, as well as the costs properly attributed to non-economic or political motives.” [15.12.06]

Uncooperative Defence sticks to its agenda: Keep in mind, it is the lack of cooperation from Russell Hill that prevented the committee from being able to quantify the costs of local, as against overseas, shipbuilding in the first place. The Senate Committee was forced to conclude - given the absence of any credible quantitative data to the contrary (which limited the value of the whole inquiry exercise) - it would “like to believe that a revitalised Australian ship building industry may well hold its own when compared with overseas Naval shipbuilders, particularly when the value of (each) ship’s through-life support is considered. No categorical assertion, however, could be made on the basis of current evidence available.” The Committee also called on the Government to make “a public commitment to maintain Australia’s Naval shipbuilding and repair industry,” given it was “imperative ... (to) develop longer term naval defence strategies from which economies of scale and continuity of demand can be derived.” [15.12.06]

Iraq: talking to the enemy: The hopelessness of the Iraq war has often been likened to the situation in Vietnam, particularly in its closing stages. The Baker-Hamilton committee in the US has suggested President Bush opens diplomatic discussions with two members of the ‘Axis of Evil’ - Iran and Syria. At least for now, Bush has rejected this (and as Inside Canberra said last week), the world might need to await for the next US President before this solution is taken seriously. Members of the Iraq Study Group have also made the point that, during the Cold War, the US was in constant diplomatic discussions with the Soviet Union, including when the world was on the brink of a nuclear war during the Cuban missile crisis. It should also be remembered that in 1965, at a speech at the John Hopkins University, President Johnson declared his readiness to engage in “unconditional discussions with North Vietnam”. [15.12.06]

Bishop bashing tradition: In his second volume of Robert Menzies -A Life, AW Martin notes that the Labor Opposition contrasted the Johnson offer with Menzies’ approach, a man whom Goff Whitlam described as “the most conservative and bellicose head of government elected in any free elections in the world today.” Menzies and Barwick cleverly (although not logically) explained that Johnson meant “unconditional, in the sense that the Americans would have to withdraw from Vietnam, as demanded by the North, before discussions took place.” In any case, the Johnson offer was not taken up. In another echo of contemporary times, thirteen Anglican Bishops wrote to Menzies urging him to “take positive steps towards an honourable and peaceful settlement” of the war. Menzies’ ferocious rejection of such advice would have put a rose into the cheeks of Alexander Downer. [15.12.06]

The Age polling: Some recent The Age on-line polling results: Should AWB be allowed to maintain its monopoly over Australian wheat exports? - Yes 21%, No 79% (507 respondents); Do you agree with the findings of the Cole report? - Yes 19%, No 81% (3079 respondents); Should Qantas be protected from foreign ownership? - Yes 73%, No 27% (1251 respondents); Do you have faith in John Howard’s ‘new Kyoto’? - Yes 13%, No 87% (241 respondents); Will you struggle to make ends meet after the latest rate rise? - Yes 48%, No 52%. [15.12.06]

Federal subsidy for ACT/NSW water: Signs of the centralist bent of the Howard Government pop up in various ways. For example, the ACT Labor Government is considering what appears to be a smart idea to bring more water to the southern tablelands, by raising the wall of the Cotter Dam (west of Canberra) or building a new wall. The existing dam has a capacity of 4.5 gigalitres, which could be boosted to 80gls to allow water to be piped to the parched towns of Goulburn, Yass and Bungendore. ACT Chief Minister, Jon Stanhope (according to The Canberra Times), has written to NSW Premier, Morris Iemma, suggesting a joint submission to contest a significant share of money from the $2 billion Federal Government Water Fund. So the Feds now have a big say in how much money the states get for capital works for water. Yet the cost of the project is estimated at a piddling $150 million. If the Cotter project misses out on money from the fund, NSW and the ACT should borrow the money. Forget the rubbish of economic dries about not borrowing for vital infrastructure investment. [15.12.06]

Short money favours hot economy: There have been four 0.25% interest rate rises since the Liberals in the last election campaign promised “a plan to keep interest rates at record low levels.” And with the labor market still strong, it would not be surprising if there was another rise in the new year. Meanwhile, Australia maintains its ‘bottom of the ladder’ position with the highest interest rates amongst developed economies, as per The Economist ( 9-15 December issue). What’s more, the gap between Australia and the rest of the world is worsening. Rates in the 180-day money market (which small business looks to) in Australia are: 6.39% - well above the 5.62% of a year ago, and more than a full point above the US, which has the second highest rate at 5.23%. The Euro area is on 3.65%. [15.12.06]

From the Gallery: In our edition on Labor’s leadership change we said deputy Leader, Julia Gillard - interesting, attractive and single - will feature in ‘the men in Julia’s life’ articles in women’s mags. Now this can be guaranteed. On Monday in Parliament House, Julia could be seen hand-in-hand with the bloke who is her new partner, Tim Mathiesons (50) - a manly looking type and a hair product salesman. The 45-year-old Gillard met him in a Melbourne hairdressing salon two years ago. They don’t live together. On family matters, Australia’s most popular Costello, Tim - brother of Treasurer Peter - has welcomed Kevin Rudd as the new Labor Leader. He says Rudd would provide the country with moral conviction and leadership, and ensure the election was “a close contest”. He added, while the PM has strong convictions on a number of issues, Rudd presented “a much broader faith in which private holiness is taken further to encompass social holiness.” Gosh, will this end Lib backbenchers’ sneering inter-jections of “Saint Kevin” when Rudd gets up to speak? Probably not. We doubt whether Peter will have a re-think on his question time roughhouse treatment of Rudd, despite Tim’s admiration of the Labor Leader. [08.12.06]

How can Rudd cut through Howard’s noise?: A problem Kim Beazley faced now confronts Rudd: how to be heard over the noise made by Howard. No Prime Minister before Howard realised the reach of the electronic media. He uses it to the full. It is no accident his principal media adviser, Tony O’Leary, is an ex-TEN Network Press Gallery journo. Howard realises that TV must have pictures and that he is at the apex of the political pyramid. The Sunday morning public affairs programs - ABC, 9, 7 and 10 - all would have Howard as their first target. [08.12.06]

PM master of electronic media: When Howard wants to say something he will always choose to say it on TV rather than in Parliament. If the Government has any good news, or an important announcement, he will make it on TV. He announced the decision to go to war at a TV press conference before he told the Parliament. When Howard was in Hanoi recently for the APEC meeting, he announced the decision to send troops to Tonga on TV. Acting PM, Mark Vaile, did not get a look in. When in Kuala Lumpur for a regional meeting, his comments on the ACTU day-of-action campaign against Work Choices were the ones used by TV news. Similarly, he is omnipotent on talkback shows, especially with Allan Jones, John Laws, and (every Friday) with Neil Mitchell. Rudd will have to do a lot more than Beazley, who could rarely get more than a quick grab aired on TV news. [08.12.06]

Opposition Leader needs new media strategy: Rudd should have regular, full-scale press conferences, in one of the committee rooms in Parliament House on days the Parliament is not sitting. If he is hammering a particular policy point, it should be backed up with documentation the media can take away and study. The specialist writers on the subject under discussion should be invited to attend, and so on. He should emulate Keating who would often come up to the Gallery (particularly in the old Parliament) without a minder and chat to journos. On Wednesday nights instead of dining with his mates, why not dine with the journos? Rudd will enjoy a honeymoon period when everyone will want to interview him, but this won’t last long. He needs a carefully constructed strategy of media relations. [08.12.06]

Rupert’s rags rage at Rudd: Rudd had a good run from the media in his first week, including a positive interview with Allan Jones. Rudd showed some deftness in the flattery department - “As you would know as a football coach Allan ....”, he said at one point. Allan liked that. We’ve already reported Laura Tingle’s intriguing recent report in The Financial Review: “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.” If this is true Murdoch hasn’t told the journos on the Sydney Daily Telegraph, or the Melbourne Herald Sun. The Tele, the day after Rudd’s victory, had a big page one splash with the a huge heading - “Where is the vision, Kevin”. The Tele wanted Rudd to fully unveil his policies for the next election at his news conference on Monday afternoon. On Wednesday, The Tele was still at it. Under a heading - “For fork’s sake Kevin tell us your vision”, the paper asserted that many people were divided about Kevin Rudd. Oh, what a surprise. Newtown hospitality worker, Theresa Crane, said she understood why Labor needed a new leader - “but didn’t know much about the new leader or what he stood for.” Fancy that. [08.12.06]

Kevin’s family too wealthy: The Tele’s Melbourne sister publication, the Herald Sun on Wednesday had a bold heading - “Rudd’s blue-chip family”. This story revealed Rudd’s wife, Therese Rein, and the Rudd’s two adult children, Jessica and Nicholas, had shares in scores of Australian blue chip companies. The story also went on about Mrs Rudd owning a job placement business with a staff of 800, and more than 61 offices. So what’s the point of all this? Easy, the Herald Sun pointed out the Victorian Labor Party attacked Liberal Leader Ted Baillieu over his family’s massive share portfolio in the recent state election. This, Labor said, hopelessly compromised him if he became Premier and made decisions about the Victorian economy. Now it’s clear. The Herald Sun believes Labor Leaders and their families should not have shares in companies because it would be inconsistent with what Labor said in the Victorian election. It seems there is to be no change in Rupert’s political strategy - keep Labor out of office. [08.12.06]

Rudd runs industry plan: The decision by Rudd to have a separate Shadow Minister for Industry is sensible and will be welcomed by industry. Beazley gave Stephen Smith the mega shadow portfolio of Industry, Infrastructure and Industrial Relations, which was a mistake. We have been advocating a separate Department of Industry Development, which would not only have industry policy, but also export development and trade negotiations which would be removed from DFAT. Rudd is not going that far, but he is clearly preparing to take a far more interventionist line than the Government, which is a surprise. Rudd is a free trader, yet this is what he had to say on Monday - “The question is being asked: will Australia in the future be a manufacturing country? Will we still make things, or is that all gone? . . We have a future with new knowledge-intensive industries, but it is one where government must be engaged, not just sitting idly by, watching from the sidelines. I come from a long background in state government and I know what it takes to get key industry projects going, and let me tell you that it doesn’t happen with the government sitting over there waiting for some magic to occur.” [08.12.06]

China free trade issue: Rudd also said any policy on the future of manufacturing had to be “much wider than any possible future FTA with China.” Doug Cameron, National Secretary of the Australian Manufacturing Workers’ Union (AMWU), told us this week he has had three meetings with Rudd on the proposed China free trade agreement. “He certainly understood the issues facing manufacturing,” Cameron said. Rudd will be criticised for backtracking on free trade, although he has made it clear he is not talking about a return to protection. He told ABC radio - “An industry policy is not about whacking up a tariff wall. That debate’s been had.” The Rudd initiative will work a treat in South Australia and Victoria, where thousands of families are worried about the future of the car industry and other industries being hit by Chinese competition. The issue of IT jobs going to India has already caused considerable alarm among workers. Don’t be surprised if next year Howard unveils a new industry initiative - “Boosting Industry’s Future”, or some such. [08.12.06]

Govt. stumped on wheat: Last week the PM was said to be preparing a “blueprint” to be unveiled this week on what would happen to the single desk wheat marketing system. It emerged on Tuesday at the joint press conference of Howard and Vaile that the Government doesn’t know what to do about the single desk and the AWB veto on exports. Vaile made it clear to Howard last week the Nationals could not agree to any scheme unless there was full consultation with wheat growers. Hardly surprising since, as we reported last week, earlier in the year when addressing a rally of growers at Warracknabeal, Victoria, Vaile promised they would have a vote on any changes. At the press conference, Howard was asked if growers would get a vote. He answered that the consultations with growers would be extensive, but in the end the Government would make the decision. So the answer is that growers won’t get a vote, they will only be listened to. The Government, not knowing what to do, is stalling for at least three months. [08.12.06]

Nats Libs divided: In this period the Wheat Export Authority (WEA) will still consider applications for licences to export wheat. Instead of WEA informing AWB International, so that it can exercise its embargo on exports if it so choses, the WEA will now report on applications to the Minister for Agriculture, Peter McGauran, who will have the power to exercise the veto. The Nationals and Liberals are divided on the issue. Options range from Barnaby Joyce, who advocates no change at all, with AWB retaining the export veto, to the position of a number of Liberal backbenchers, and Peter Costello, who favours total deregulation and abandonment of the single desk system. The Joyce option is supported by many growers, perhaps a majority. Fran Kelly, on ABC Breakfast on Monday, interviewed Riverina wheatgrower, Jock Munro. He says 90% of growers want no change; are furious that Australia has been pushed out of the Iraq market by “the Americans”; blames them for the scare over iron filings allegedly being found in an Australian wheat shipment to Iraq; believes that DFAT turned a blind eye to what AWB was doing (while knowing that sales could not be made without a bribe to Saddam); and claims that the Cole inquiry was only set up to ensure the Government was in the clear. At this stage the future of the single desk is unknown. [08.12.06]

Poll and Cole: In our special edition of Inside Canberra last Monday on the Labor leadership, we referred to ACNielsen’s latest poll (taken 30 Nov - 2 Dec), which found Labor had opened up a big lead over the Coalition. Two-party preferred Labor was on 56% (up 4%), and the Coalition on 44% (down 4%). Many, including ANOP’s Rod Cameron, believe this is too generous. Michelle Grattan, in The Age, attributed the big Labor lead to reaction by the Government to the Cole commission. She may well be right. ACNielsen asked - “Have you heard anything about the Cole inquiry into AWB’s sales of wheat to Iraq? Yes was 83%, No 17%. Then - “Do you think the Federal Government was aware of payments of kickbacks by AWB to Iraq at the time or Not? Yes (was aware) 69%, No (was not aware) 19%, Don’t Know 11%. In short, over two-thirds of Australians believe that Howard, Alexander Downer and Mark Vaile are liars. Not only that, 46% of Coalition voters believe the ministers were telling lies. [08.12.06]

ALP goes well in bush: It is not surprising that the community has reacted to the approach of the Government to the Cole commission. Not only did all three ministers rejoice in the Cole report, which made no adverse findings against them (as we explained last week, Cole said it was not relevant whether or not the Government had failed in not picking up the AWB outrage), but they demanded an apology. Worse, the awful Downer even rejected any suggestion that his department should conduct a review to see that similar outrages do not occur again. ACNielsen polling in the bush lends weight to the belief this bad poll was a reaction to Cole. Labor leads in rural Australia two-party preferred by 53% (up 5% on a month earlier), to the Coalition’s 47% (down 5%). [08.12.06]

Iraq looms as PM’s problem: It may be too hard, yet somehow Howard has to defuse his failed policy on Iraq before the 2007 election. The White House is in turmoil on Iraq. It is now more than likely at some point the United States (if not under the Bush administration, under the Administration of the next President) will have to deal with members of the ‘axis of evil’ - Iran and Syria. This is one of the options put forward by the Iraq Study Group Report, headed by James Baker. In the House yesterday, Howard refused on three occasions to say, when asked by Kevin Rudd, if he agreed with the Baker group that US policy in Iraq was “not working”. Instead, he made the silly claim that one of the reports conclusions was that “the policy of (Rudd) would lead to a bloodbath in Iraq.” In fact, Baker was talking about withdrawal of US and UK troops. Labor’s policy of bringing our token commitment of troops home would make no difference whatsoever. Australia was not mentioned in the Baker report. The Australian’s scoop that Cabinet has refused American requests for our troops to be “imbedded” in units of the Iraqi Army (as are US troops), is no surprise. It is consistent with Howard keeping our token commitment well out of harms way in Iraq - membership of the Coalition of the Willing on the cheap. [08.12.06]

Howard against change: Howard is wedded to the stay-the-course approach, providing we don’t have to do any more. He says that if the US pulled out prematurely it would be seen as a defeat of the US, and this would have a disastrous impact on the standing of the US around the world. He doesn’t understand, or won’t concede, that because of the Coalition of the Willing, US standing around the world has never been lower. Nor will Howard accept the view of many observers on the ground that the US military in Iraq is the cause of much of the killing, and the US forces and the Iraq Government are powerless to alter the chain of events. In testimony to the Senate Armed Services Committee this week, Robert Gates, now Defence Secretary, said it was “too soon to tell” whether the US made the right decision to invade Iraq and topple Saddam Hussein. He directly contradicted Bush, who only last week said “absolutely we are winning” in Iraq. If Howard waits until the normally expected period for an election - October until early December - the US withdrawal could be underway in earnest. Even he - master spinner that he is - will have difficulty explaining away his disastrous foreign policy. [08.12.06]

Darwin rail struggling: Before the Commonwealth, South Australian and NT governments decided to put $480 million into the building of the Alice Springs to Darwin railway, all previous reports on the project declared it was not commercial. The Commonwealth backing of the scheme was an exercise in pork barrelling to assist the SA Coalition Government to win the then looming election. It didn’t. FreightLink, the lines operator, is trying to restructure spiralling debt which hit $137 million in the 2005/06 financial year, prompting auditor KPMG to say it was creating “uncertainty as to whether the company will be able to continue as a going concern.” John Howard enthused about the project calling it a “Steel Snowy”. [08.12.06]

Landbridge didn’t work: One view is that when the new owner finally buys, at what may be a bargain basement price, the line will become a commercial success. Yet it won’t be because of the concept of the line from South Australia to Darwin acting as a landbridge. The idea was that ships carrying the Asian trade north and south would need only go as far as Darwin. Here they would pick up or unload at the Darwin railhead. After three years of operation, international trade accounted for only 1% to 2% of tonnage on the line. The line, with double handling, simply could not compete with fast container ships unloading or loading in the south, at wharves where the crane efficiency has greatly improved after the waterfront dispute. [08.12.06]

People and Events: Dr Allan Hawke has been appointed chair of MTAA Superannuation Fund’s Trustee Board. Dr Hawke has had a distinguished career in the public service and is currently Chancellor of the Australian National University. New media contacts in the office of Ian Macfarlane, Minister for Industry Tourism and Resources: Claire Wilkinson (Senior Media Adviser) 0419 840 452; Lisa Chalk (Assistant Media Adviser) 0409 476 619. Trevor Carroll, MD of Electrolux Aust & NZ, has been elected President of the Australian Industry Group at the AGM last week. He succeeds John Ingram. Canberra-based civil engineer, Rolfe Hartley has been elected National President of Engineers Australia. Two important new DFAT appointments - Chris Moraitis, High Commissioner to Papua New Guinea; and Dr Geoff Raby, Ambassador to China. [08.12.06]

From the Gallery: Julia Gillard (45) is a distinct improvement as deputy Leader of the ALP. Jenny Macklin (53 on the 29th of this month) has been deputy Leader for five years to Crean, Latham and Beazley. She is Shadow Education Minister and although a hard worker, has long been the target of criticism within Caucus. Gillard , a law-arts graduate, practiced industrial law and was a partner in Slater and Gordon, which represents Left unions in Victoria. In the Left faction she got her political grounding as an adviser to Cain Government Health Minister in the eighties, David White, and then adviser to Labor deputy PM and Health Minister, Brian Howe, during the nineties. Above all she is interesting. She is an attractive single women and a red head. Inside Canberra has forecast before she had no chance of getting the top job when Crean departed. Now she is in an ideal role. She seems to have overcome the odium she attracted as a devoted follower of Mark Latham. The women’s magazines will regard her as a circulation booster and she can expect lots of - ‘the men in Julia’s life’ - features. This is no bad thing. She will at least be a lot more recognisable than Macklin. [04.12.06]

Rudd’s win best for Labor: Kevin Rudd this morning won the leadership of the Australian Labor Party by 49 votes to Kim Beazley’s 39. Julia Gillard was unopposed as deputy Leader. Senator Chris Evans remains as Senate Leader unopposed, as was Stephen Conroy as deputy Leader. The rest of the Labor front bench will be decided by ballot at a Caucus meeting next Thursday, which means it will now be decided by the factions. To a majority of Caucus the attraction of Rudd was that he was someone other than Beazley. Yet the defeat of Beazley comes on the very day the Fairfax press published an extraordinary ACNielsen poll. Taken 30 Nov-2 Dec, when most respondents knew Rudd would challenge today, but before the outcome of the leadership contest was known, it had Labor in a position for a landslide win against the Howard Government. According to ACNielsen, Labor has two-party preferred support of 56% (up 4% on a month earlier), while the Coalition languishes on 44% (down 4%). ACNielsen has Beazley’s ‘approval’ rating at 36%, which is a lot better than the 28% Beazley recorded in the latest Newspoll. If this poll is right the Caucus is mad to dump Beazley, but it made no difference to today’s outcome. Beazley will go to the backbench. The Rudd victory is the best outcome. Inside Canberra believed before the Rudd challenge that Labor should stick to Beazley and fully support him. Now it is obvious the only way to give Labor the degree of unity needed to win an election is to oust Beazley. His enemies, in what can be loosely called the Crean/Latham group, are numerous and bitter. [04.12.06]

Kim fails to connect with voters: Had Beazley won this morning the forces opposed to him would have launched another challenge next year and Rudd would have won. Apart from what the polls were saying, there was a widespread view in the Caucus that Beazley was simply not connecting with the electorate. Yet the party’s polling has been solid. Since Australians’ returned to work last February Labor has won 14 Newspolls, the Coalition 4, and there were 3 dead heats. However Beazley satisfaction rating has been poor. Too much significance is given to the popularity ratings of the Opposition Leader and the ‘Better PM’ polls, the latter nearly always favouring the incumbent PM, no matter who he is. [04.12.06]

Rudd is brilliant: Yet Caucus could hardly be blamed for being shocked at last week’s poll. This showed the ALP recovering from a dead-heat with the Coalition two-party preferred to a lead of 51%, to 49%. Beazley’s ‘satisfaction’ rating plummeted 6 points to 28%. Howard lost 3%, yet was on a respectable 46%. On top of that, Beazley’s extraordinary mixing up of two separate identities - Karl Rove and Rove McManus - not only astonished the Press Gallery but infuriated Caucus. While Beazley is unmatched in Caucus for experience (he held several top Cabinet posts in the Hawke-Keating Governments) it was not enough to save him. Rudd is 49, married with three children and an avowed Christian. He could fairly be described as brilliant. He is immensely capable and was an achiever before he came into Parliament. [04.12.06]

New Leader’s impressive record: Coming from a deprived childhood, Rudd nevertheless won an ANU scholarship (and as a student earned money cleaning Laurie Oakes’ home), and had a diplomatic career in DFAT during which he learned Mandarin. Later he ran the Cabinet Office when Wayne Goss was Labor Premier of Queensland. By the normal time of next year’s election Rudd will have been in Parliament for nine years, during which he has changed his seat of Griffith from a dicey marginal to safe Labor. Peter Beattie claims Rudd is popular in Queensland and this is a big plus. Labor badly needs to do well in that state to win an election. [04.12.06]

But can he do better than Beazley?: The big test for Rudd is whether he can not only keep Labor’s poll standing, but greatly improve on Beazley’s popularity rating. If he can, then Caucus can congratulate itself. If he can’t it will probably mean, but not certainly, that Labor can’t win the next election. Yet if Labor is to win an election it will be not because the electorate want to make Rudd PM, but because they have had enough of Howard. Many will find Rudd somewhat didactic, but surely no more than Whitlam. He comes across as a ‘suit’ and doesn’t appear to be an engaging character. Yet even the colourless Howard achieved this. One to one Rudd can charm. [04.12.06]

AWB and Iraq issues for Rudd: Rudd will be effective in pursuing Howard on hijacking the Cole commission inquiry with terms of reference which were designed to ensure the Government’s competence and failing to pick-up all the pointers to the AWB disaster were not explored. (see Inside Canberra of Friday, 1 Dec). The insufferable Alexander Downer not only has the nerve to demand an apology because he was not nailed for his incompetence, he also declares nothing needs to change within his department. Surely this level of arrogance must proceed a fall. There is a long way to go before the AWB scandal is put to rest. Rudd will also be effective in pursuing Howard over the now obvious failure of the Iraq war. [04.12.06]

Early election threat: Inside Canberra has previously made the point that the danger in turning to Rudd, a relative unknown to the broad electorate, is that Howard could call a snap election before the new Opposition Leader can find his feet and start to connect with voters. Of all the advantages of incumbency, the most valuable is the sole right of the Prime Minister to decide on the date of the election. Howard will call it when he judges it best for the government, and worst for the Opposition. Howard could call the election as early as February. It would mean putting the taxpayers to the cost and inconvenience of a separate Senate election in 2008. This would not bother Howard in the slightest. The all important election win would far outweigh the criticism which would follow getting the two houses out of kilter. Nor would it make the slightest difference to the outcome of the House election held in February. [04.12.06]

February could be poll month: A February election would probably be in advance of another interest rate rise in 2007. Further, Howard could promise tax cuts in the May Budget as part of his election campaign. If he finds, on winning the election, further tax cuts would threaten interest rate rises, they could be ditched on the grounds of changed circumstances. Howard would need an excuse for an early election. He could hardly say he needs a mandate to carry on his policy of remaining in Iraq. Nor could he dust off the low interest rate claims of the 2004 election. Asking for a mandate for his climate change strategy (with nuclear power as one of its key elements) would also be risky. A February election would be difficult if the vexed question of what to do about the single desk wheat export policy is not put to bed by then. Yet, would a Rudd Opposition have a policy on the issue which could hurt Howard? Alternatively he could wait until July. By then he would have had a generous Budget of some sort and would not be getting out of kilter with the Senate election. [04.12.06]

From the Gallery: Political pundits are generally too busy to see the major TV news bulletins in the late afternoon/early evening. If they had, on Thursday they would not have been writing that the national day of protest organised by the ACTU against the Work Choice legislation was a failure. It was from a publicity point of view (and that’s all that counts) a roaring success. The rally led, or was the second item, on all four news bulletins of the major networks. The low-brow TEN network, which many workers rely on for news, had the ACTU protest as the lead item on its news bulletin. All four bulletins emphasised worker anger at the new IR laws. It was easily the best anti-Work Choices TV coverage since the legislation became law. None of the many parliamentary attacks by the Opposition on the legislation has had anything like the coverage of the day of protest on Thursday evening. Newspapers such as The Financial Review and the broadsheets reported it was a flop, but who reads them? Dismissing a crowd which half fills the MCG on a mid-week, with thousands likely to miss a days pay, is to misjudge the impact the ACTU is having. [01.12.06]

Labor doesn’t deserve to be in Government: What a hopeless bunch the Labor Caucus is proving to be. Labor doesn’t deserve to win office on its showing this week. At the very time John Howard should have been under serious pressure over the Cole Royal Commission’s inadequate report on the ‘oil-for-food’ scandal, Caucus is in disarray with a move by the Crean faction to destabilise Kim Beazley (Howard must be delighted).The Crean-Beazley fault line remains a disruptive influence in Caucus, and the party is paying for Crean’s continuing bitterness over Beazley’s failure to support him publicly in the pre-selection stoush last March. [01.12.06]

Lawrence warns against another Latham experiment: The Crean faction believes that Beazley has failed to “change”, as he allegedly promised to do after Crean won the Hotham pre-selection. Apparently this is interpreted to mean they have to be consulted on everything of importance, something Beazley naturally won’t agree to. Next Tuesday’s Caucus meeting will be the last opportunity this year for Kevin Rudd to challenge Beazley. Yet the destabilisers are saying that efforts to get rid of Beazley will go into next year. Carmen Lawrence’s comments on Wednesday may help Beazley. She is a former Labor Premier of WA, and a former National President of the ALP. She said it would be a mistake to change now, thus inviting another Latham disaster. Although she hastened to say she was not likening Rudd to Latham. Lawrence says the party should get behind Beazley. [01.12.06]

Faulty poll sparks Caucus unrest: Lawrence has no particular brief for the Opposition Leader. Indeed, in the wash-up of the 2001 election she was critical of Beazley’s meek line towards the Howard Tampa outrage. ACTU Secretary, Greg Combet’s support for Beazley is well timed for the Opposition Leader. The Newspoll (taken 10 -12 Nov ) that triggered the latest move against Beazley, turned out to be wrong - as Inside Canberra forecast. This poll had Labor’s primary vote slumping a massive 4% (to 37%), while the Coalition fell only 1% (to 41%). The two-party preferred vote was 50% each, a drop of 2% for Labor and a gain of 2% for the Coalition. Led by The Australian, this produced a welter of speculation of a possible challenge to Beazley. This week’s poll (taken 24-26 Nov, and while the anti-Beazley line was still getting a big play in the media), has Labor back in front. Its primary vote jumped 2% (to 39%), while the Coalition remains unchanged on 41%. The two-party preferred outcome was Labor 51%, Coalition 49%. [01.12.06]

Government behind in the polls: The Coalition has not won a poll since mid-August. Since Australian’s returned to work last February, Labor has won 14 polls, the Coalition 4, and there were 3 dead heats. Yet people are seriously talking about dumping Beazley? True, his satisfaction rating slumped 6 points to 28%, which was hardly surprising given the bad media he copped in the past fortnight. Yet Howard’s own satisfaction rating dropped 3 points to 46%. Make of that what you will. Not surprisingly, The Australian certainly didn’t play up the recovery in the Labor vote. Newspoll, by combining Liberal and Nationals support to produce a Coalition primary of 41%, over-states the strength of the Coalition. The battle at the next election will be fought, in the great majority of electorates, between Liberal and Labor. [01.12.06]

Liberal primary vote a worry: The Liberal primary vote should be a worry at only 37%, 3.8% below what it was at the 2004 election. The Labor primary vote of 39% is 1.4% better than its election effort. Having been largely responsible for the turmoil around Beazley’s leadership, Newspoll decided to produce a poll on best choice for Labor leader and came up with the Rudd-Gillard team at 52%, easily defeating Beazley and his current deputy, Jenny Macklin, on 27%. This is silly. If only 20% of Australians could readily name Rudd and Gillard and their shadow portfolios, that would be surprising. The poll is certainly hurtful to Beazley. Presented with two names they don’t know in Rudd and Gillard, respondents simply voted for them rather than Kim Beazley. None of this is to suggest that Beazley shouldn’t lift his game. Silly mistakes, such as that made when confusing Karl Rove with Rove McManus, should not be repeated. [01.12.06]

Will charges be brought?: There is a suggestion around Parliament House at the end of this week that no charges will be laid against any of the 12 people the Cole Commission cited for possible criminal charges. Howard, Downer, Vaile and the Department of Foreign Affairs & Trade have been cleared of any breeches of the law. So if the 12 get off, it will mean that, having uncovered the greatest scandal since Federation, the Cole Commission has been a waste of time. The Government is setting up a task force of officials which will include representatives of the Australian Federal Police and the Australian Securities and Investment Commission to decide whether the 12 cited by Cole should be charged. This suggests there is no open and shut case against the 12. If there was, the job would be given straight to the Director of Public Prosecutions. One of the defences those charged would turn to was their lack of personal gain from the $290 million in bribes that went to the Saddam regime. [01.12.06]

Need for a scapegoat: One would imagine that even Howard would be embarrassed if no scapegoat could be found to take the blame. Surely there would be public outrage. Or would there ? The Australian electorate has for some time demonstrated an absolute lack of interest in what the government is doing. Lies by politicians are just treated as a natural thing, like flowers blooming in Spring. While Howard might be disappointed if no scapegoat can be found, he and the other ministers might personally be quite happy if there were no trials. Apart from the defence of no personal gain, counsel for the defendants would also surely claim that despite what Cole found, the Government knew what AWB was up to. Counsel for the accused have already gone public citing Cole’s intimidation and aggressive treatment of AWB executives, whilst adopting the opposite behaviour for government ministers and officials. [01.12.06]

Counsel dumps on Cole: During the Cole commission hearings, this contrast in behaviour was obvious. For example, Terry Forrest QC - acting for several AWB executives - was refused permission to cross examine Downer. “There ought to be no protective shield around the Government,” Forrest said. Howard’s refusal to include in the Terms of Reference anything empowering Cole to look into the failure of the ministers and DFAT to discover the scandal, has meant the commission’s findings are incomplete. [01.12.06]

Key quote from Cole: The following quote (Vol 4 from the commission’s report 30.7) explains why Cole so comprehensively absolved the Government and DFAT from blame - “It is the actual knowledge of the Commonwealth that the information (AWB’s denial of wrong-doing) was false or misleading that is material in considering whether a benefit or advantage (to AWB) was conferred by the Commonwealth by reason of the provision of misleading information. It is immaterial that the Commonwealth may have had the means or ability to find out that the information was misleading, or that it ought reasonably to have known that the information was misleading. It is also immaterial that the Commonwealth, at the time it conferred the benefit or advantage, suspected but did not know that the information was misleading ... Accordingly, the question of whether the Commonwealth may have had constructive knowledge (in the sense that it ought reasonably to have known the truth or that it had the means and ability to find out the truth), is immaterial.” [01.12.06]

PM rorted Terms of Reference: This clinches the Labor argument that Howard shielded the Government from the commission by confining the Terms of Reference to an inquiry into any criminal activity by AWB. Cole says, as clearly as possible, that it was not his job to find out whether or not the Government did know, or should have known, of the AWB rort. Howard makes much of the fact that Cole said, during the inquiry, that if he wanted extra Terms of Reference, he would ask for it. But as Kevin Rudd points out, the commissioner could have only asked for inquiry powers relating to criminal behaviour by ministers. It has never been suggested by anybody that ministers were guilty of criminal behaviour. But they have been accused of a cover-up, and turning a blind eye to the obvious. Rudd wrote to Cole during the inquiry and asked him to seek some additional inquiry powers. One related to whether ministers (and Downer in particular) “did all that was fair and reasonable” to uphold Australia’s obligations under UN sanctions against Iraq. Cole wrote back and said -”Mr Rudd, those additional powers represent such a huge expansion of my existing powers that I could not possibly ask for that. The only way I could be given those powers is if the government gave them to me of its own accord.” In short, Howard is telling a half truth. Indeed, Cole could have asked for additional Terms of Reference, but only to inquire into something no-one suggested needed investigation, namely: criminal behaviour by ministers. He could not ask for references to examine their competence. [01.12.06]

Coalition near fisticuffs: It must have been a party meeting worth going to when the joint government parties on Tuesday discussed what was to be done with the AWB’s monopoly power over wheat exports. A phalanx of Liberals want the single desk to be abandoned, while others want it to be retained - but not exercised by AWB. Some Nationals, such as Barnaby Joyce, are against any change and retention of wheat export powers by AWB. Other Nationals want the single desk to be operated by the Wheat Export Authority. The Australian reported the acrimonious flare up between Joyce and the feisty NSW Liberal backbencher, Alby Schultz, who represents the southern NSW seat of Hume. They almost came to blows with Schultz launching into an expletive-laden attack during which he told Joyce he had - “slit the throats of better animals than you.” Whereupon, Joyce invited Schultz “outside”. Bill Heffernan, no stranger himself to a punch up, finally persuaded them to calm down. [01.12.06]

What about shareholders?: Barnaby Joyce, in the party room, made a good point: when the government privatised AWB, it told those it encouraged to buy shares that the company would have a veto over exports by others. Said Joyce - “You can’t storm in, in the middle of the night, and change that at the drop of a hat - you’ve got to do the right thing by shareholders. It would be like turning up and saying to Telstra you no longer have a telecommunications licence.” AWB’s chairman, Brendan Stewart, will take to a meeting of shareholders a proposal to split the company with AWB International (a subsidiary) becoming a grower-owned manager of the wheat monopoly. Howard has already rejected the scheme. Joyce is not sure about it either, and asks whether there would be protection for the $607 million farmers invested in AWB in 1998. [01.12.06]

Govt’s gross incompetence: Yet surely the AWB is going to lose the veto. The Government’s handling of wheat exports since it came to power, including: the privatisation of AWB (while allowing it to retain the export monopoly) - and culminating in the oil-for-food scandal - shows an incompetence not matched in the history of Commonwealth’s exercise of its Constitutional powers. As things now stand, Howard is planning a blueprint for various options on the single desk issue to be presented to the party room next week. That will not be the end of it. Vaile is obliged to consult wheatgrowers before agreeing to any change to the existing arrangement. Earlier in the year, and when addressing a rally of growers at Warracknabeal (Victoria), he promised they would have a vote on any changes. Whether Vaile still stands by that promise remains to be seen. [01.12.06]

Nelson’s ballistic missile fantasy: The Sydney Morning Herald, after an interview with Defence Minister Brendan Nelson, believes he will run for leadership of the Liberals when Howard departs. According to Nelson - “If and when the Prime Minister eventually chooses to retire, the people can talk about the leadership then.” No surprise there. Nelson is assiduously cultivating the back bench in pursuit of his ambition to become PM. God help Australia if he does, judging by the inane comments he is noted for uttering. A choice example was his warning last week that North Korea could attack Australia with a nuclear-tipped intercontinental ballistic missile (ICBM). The Minister was talking up the prospect of the Navy’s three air warfare destroyers (AWDs) being armed with US anti-ballistic missiles. Nelson recalled the testing in July of North Korea’s Taepodong - 2 missile. True, but the test was a total failure, crashing into the sea after 40 seconds. Nevermind that, Nelson added the missile - “could have travelled” 3000km, and with a third stage would have a range of 12,000km. Rubbish! Nelson misleadingly credits this poverty stricken nation of 24 million, which depends on foreign aid to keep afloat - particularly from China and South Korea - as one now imminently capable of mastering complex technology to build an ICBM that can accurately reach a distant target. Not only that, it would also have to miniaturise an atomic weapon for placement on the missile. Even if by some miracle it could, why waste it on Australia rather than enemy number one - the United States? [01.12.06]

AWDs for Coalition of the Willing: What all this underlines is that the three AWDs are not now being acquired at a cost of $6-8 billion (adding in the cost for theatre ballistic missile defence) for use in our region. They will be of no practical use in the ‘arc of instability’ to our north. No, they are being purchased so that we can join the Americans in distant future wars: such as in the Taiwan Straits; or in the Gulf and Mediterranean against Iran. Dr Nelson is an enthusiast for the war in Iraq, and literally foamed at the mouth when talking of the need to ‘stay the course’ at a recent select-audience Kokoda Foundation event at Old Parliament House. When Howard has gone, the Liberals will want to distance themselves from the inevitable humiliation of cutting and running from Iraq. Nelson and Downer will be seen as champions of this failed policy. On the other hand, Costello says as little as he can about the war. And another lead contender for the Liberal leadership, Malcolm Turnbull, will truly be able to say - “don’t blame me, I wasn’t even in Parliament when the decision to join the Coalition of the Willing was made”. [01.12.06]

Wages no problem: The St George-ACCI business survey for the September quarter shows that wage costs are no big deal for business generally. The top five constraints - as listed for small, medium and large businesses - saw wage costs only getting a mention as the third ranking constraint for medium business. The cost of wages is not mentioned as a concern for small and big businesses. Yet ACCI has forecast a disaster when the $27.36 minimum wage rise comes into effect next week. Business taxes and government charges are the top restraint for small and large businesses, and ranks second for medium businesses. The availability of suitably qualified employees ranks as the second most important constraint for small business, first for medium business, and third for large business. If ACCI devoted half as much time to lobbying against the number one current restraint on investment by business - taxes and government charges - as it does in union bashing and howling about excessive minimum wages, its members would no doubt be much more pleased. [01.12.06]