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Inside Canberra Online 2006

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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 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 Howards 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]


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 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. 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]


From the Gallery: It seems Labor is now mustering the courage to attack John Howard on Iraq as an election issue. Beazley has been reluctant to do much more until now than say the troops in Iraq should be bro- ught home, to concentrate the war against terrorism in Af- ghanistan. He has been careful not to allow Howard to accuse Labor of being soft on terror. This week, it emerged the US National Intelligence Estimate (NIE) had concluded the Iraq war is one of four factors fuelling increased terrorist activity. Now Beazley is calling on Howard to admit, in follow- ing George Bush into Iraq, he “has made his fellow Aust-ralians less safe.” The PM, of course, won’t do that. Howard simply says he disagrees with a report that had at its disposal the res-ources of 16 separate US agencies! The NIE’s conclusions will not have come as a surprise to those ‘in the know’. Before the war, both British intelli-gence and the CIA were warning that an invasion would lead to more, not less, terrorist activity. If Labor is going to make the Iraq war an issue, Beazley should be calling on Howard to explain to voters just why he dismisses the view of such a high powered intelligence report. What does Howard know that the Americans don’t? [29.09.06]

Labor retains big poll lead: Labor has retained its big lead in the latest Newspoll. The Coalition Primary vote is 41% (up 2%), and Labor at a healthy 42% (up 1%). The Liberal primary is only 36% (up 2%). Two-party preferred the vote is unchanged in a fortnight - 53% Labor, and 47% Coalition. Since Australia went back to work in February, the ALP has won 11 polls, the Coalition 4, and there were 2 dead heats. Of the eight polls since the end of July, the Coalition has won only one. Even more disturbing for the Government is the Newspoll finding (July-Sept) that in marginal seats, which will decide the election, Labor two-party preferred has a clear lead - 52% ALP - 48% Coalition. [29.09.06]

Howard feels heat on industrial relations: Labor’s big poll lead signals the failure of tactics by the Coalition in the IR debate - to attack Beazley for supporting the right of workers to collective bargaining. Quickly produced was a new Government initiative - the promulgation of regulations to ensure bosses can’t penalise sick workers, nor force workers to ‘cash out’ their leave entitlements. Howard will be prepared to move further on IR if he has to, but he has no room to move on the big issues: ending protection for most workers against unfair dismissals; skewing the IR system in favour of Australian Workplace Agreements and against collective bargaining; gutting the Arbitration Commission; and taking over State IR systems. For Howard to move on these issues would be seen as a capitulation. Newspoll records little change in the satisfaction ratings of Howard and Beazley (both with small increases), while Howard retains a commanding lead as preferred PM. [29.09.06]

Beazley’s strange migrant test a winner: Kim Beazley has confounded his critics (including Inside Canberra) on his proposal for a citizenship test that includes English language and Australian values and history. He is right by the only measure that counts in politics - public opinion. Despite its obvious racist overtones (it clearly favours English speaking migrants) - and its Orwellian flavour - a big majority (76% according to Newspoll) think the plan is a good idea. All of which shows how much xenophobia and racism has been fanned by continuing focus on the war on terrorism. (The Commonwealth in over a century, and with two World Wars, has managed to prosper without such a test). Another poll (run by IPSOS for the TEN network, and published on Sunday), asked people if they agreed with the Beazley proposal that “new arrivals” (which include tourists) should sign up to ‘Australian values’. (Beazley has since backed off requiring tourists to sign up). The vote had tremendous support with 70% agreeing, 25% against, and 4% don’t know. Among Coalition voters support was at 77%, while 70% of Labor supporters were in favour. [29.09.06]

Voters very dirty on pollies’ super: Yet among Greens and Democrats, voter support was only about one-third, providing some evidence that indeed minor party voters are more intelligent than supporters of the Coalition and Labor. Incidentally, the IPSOS poll showed how low is the esteem for pollies among voters. Only 14% supported the increase of government contributions for new MPs’ super from 9% of salaries (the community standard) to 15%. A whopping 58% said the contribution should stay at 9%, and amazingly, 22% said the contribution should be lower than 9%. Meanwhile, Commonwealth public servants in their new super scheme receive 15%, and of course, the great majority of pollies are on the wonderfully generous, old defined benefit scheme. [29.09.06]

Get Trade out of DFAT: Inside Canberra is pleased to note that Tim Colebatch, the influential economics editor of the Melbourne Age, like us, believes the Trade portfolio should be taken out of the Department of Foreign Affairs & Trade and attached to a department with direct responsibility for manufacturing industry - as it so successfully was in the McEwen years. We agree with Colebatch that Australia’s appalling trade performance (an average deficit of $20 billion a year for the last four years) is not the fault of Mark Vaile (who is moving to Transport). His job was to negotiate. The real problem is in the weakness and lack of balance of our export menu - an over-reliance on exports of resources - which is fine when a boom is on, but what happens when the boom comes to an end? [29.09.06]

New portfolio needed: We further said (11 August) what Australia needs is a Liberal from Sydney, Melbourne or Adelaide to be appointed Minister for Export Products & Services. This is the area of world trade which is most open, and where barriers - by and large - are much lower than for agriculture. A very good candidate would be Malcolm Turnbull. Turnbull knows more about business and commerce than anyone in the Parliament, and has the intellectual capacity and imagination to do a good job. The efforts of the Department of Industry Tourism & Resources have been unimpressive to say the least. Those elements of the Industry Department dealing with manufacturing, services and tourism would be hived off into the new Department of Export Products & Services. The existing Industry Tourism & Resources Department would be stripped back to just Resources. For many years the mining and resources industry had its own senior department, and it deserves its own department even more now. [29.09.06]

Labor should act next time round: Such an outcome could only happen under Labor. The Libs appear to be stuck on the Nationals having first entitlement to their “traditional” portfolios: Trade; Transport; Agriculture and Resources (see below). Yet these portfolios are far too important for a party which is manifestly lacking in MPs with the necessary qualifications to tackle them. Vaile did the best he could in Trade, which will be much better than the earnest but plodding Warren Truss is likely to achieve. There will be little work for Truss between now and the next election. As Inside Canberra predicted (also 11 August), there is no prospect of reviving the Doha Round this side of the next US Presidential election (November 2008). We also said Vaile’s claims at that time - that he might be able to revive Doha at the Cairns meeting of Trade Ministers, could be dismissed. (The meeting is over, and it was a failure). [29.09.06]

City transport problems: It is an open secret that Vaile’s job in Transport will be all about him, as Leader of the Nationals, reviving the party’s flagging electoral fortunes. He can now be expected to fling money around all four corners of the bush. Vaile says his priorities will be up-grading rail and the Pacific Highway, both worthy objectives. Yet, for the term a National is running Transport, there will be scarce recognition by the Federal Government of accumulating major transport problems in Sydney and Melbourne - particularly the former - where traffic congestion is now serious and costing the State economy billions. There is an urgent need for a major up-grade of public transport in Australia’s two biggest cities. It is not generally recognised that the transport task that has to be performed each year in the cities, is far bigger than the transport task of the inter-state trucking industry. [29.09.06]

Ditch fixed portfolios for Nats: If Howard wins the next election, he will still need to go into Coalition with the Nationals. Yet he should start thinking early about tough negotiations with the Nationals over what portfolios they will receive. Certainly Vaile (if he remains Nats Leader) would be able to have whatever portfolio he wished, but after that, Howard should insist other portfolios (apart from Agriculture) are not the natural right of Nats to claim. Why not offer them Communications, since the problems in this industry lay mainly outside the cities? Transport and Trade (if not claimed by Vaile), should go to a Liberal. On the same subject, Peter Costello this week - in his somewhat unique big noting style - dismissed the proposition that a National could ever become Treasurer. True, there is no Nat in the Parliament who would be up to the Treasury portfolio. Barnaby Joyce made the point that Arthur Fadden was the second longest serving Treasurer after Costello. “It could be part of that peculiar Peter Costello style, but there is no mortgage on economic street cred,” Joyce said. [29.09.06]

Costello so, so condescending: True, and in our view, Artie Fadden was a much better Treasurer than Costello. Fadden had plenty of spine, which Costello doesn’t. Fadden took on Frank Packer when the bullying media mogul ran a bitter campaign against the double tax on wool income, instituted by Fadden to ward off inflation when the Korean war sent wool prices through the roof. Costello also lauded the concept that the Nationals are automatically awarded the portfolios of Trade, Transport and Agriculture. By way of a rhetorical question, the Treasurer explained it would not be a fair swap if the Nats took Treasury, and gave up Agriculture to the Libs. “I think the Liberal Party would regard portfolios like Treasury and Health as more senior than Agriculture”, he opined. [29.09.06]

Nationals Federal Conference: The Nationals are holding a Federal Conference at the National Press Club (in Canberra) from Friday 13 to Sunday 15 October. This will be an important conference as organisers say it will provide the foundations for the policy platform the party will take to next year’s election. Highlights will be a “welcome” cocktail reception early evening Friday, Young Nationals International breakfast on Saturday, and the President’s gala dinner that evening. Vaile will address the conference on Saturday. Media registration is free. Registration inquiries from corporate and diplomatic observers should be directed to Kate Robertson on 0438 954 827, or email [29.09.06]

Turnbull climbs the ladder: Inside Canberra has been forecasting for some time that John Howard is in the process of advancing the career of Malcolm Turnbull as a possible leadership contender to Peter Costello when the PM finally retires, or is defeated at the next election. Another step in this direction was taken with the formation this week of the Office of Water Resources in the Department of Prime Minister & Cabinet - to be run by Turnbull, currently the PM’s parliamentary secretary. Turnbull will be responsible for coordinating water policy across the nation, suggesting he will surely be tapped for a ministry in the coming reshuffle to occur before the election. [29.09.06]

Labor wrong on Cousins issue: Labor has taken the wrong tack in its comments on the dispute between the Telstra board and the Government over the appointment to the board of Geoff Cousins. When the story first broke on Monday, Opposition Shadow Communications Minister, Stephen Conroy, said - “John Howard wants his political mate on the board to do his bidding, and this is just the worst act of political thuggery.” Conroy’s not very imaginative comment misses the point: Telstra is ‘the enemy’ as far as Labor and the unions are concerned. Telstra actually wants to be totally privatised and given a free hand to slash jobs, while objecting to the ACCC trying to keep the power of the gorilla in check in the communications market. What Labor should have said is that the defiance shown by Telstra, when the Government owns a controlling shareholding, would give no confidence that the Government could require a fully privatised Telstra to carry out its obligations to sustain unprofitable, high telecommunications standards in the bush. [29.09.06]

Conroy misses opportunity: Conroy was also beaten to the punch by Peter Costello, who on Tuesday called on the Telstra board to explain why Sol Trujillo had been given a $2.58 million performance bonus when the value of the shares in the company had plummeted. His package is now worth $8.71 million. This is the hot button issue which Conroy failed to push. Finally, is Labor seriously suggesting that, if it was in office with a controlling interest in Telstra, it would let the board do what it likes, including rejecting Government nominees to the board? Of course not. Labor’s policy of no sale of Telstra would be even more attractive to a majority of voters with this week’s developments. Conroy should now say, if the Government insists on going ahead with the sale, it should not do so until it has in place a new chairman and board prepared to accept the company’s obligations, and to obey the regulator. [29.09.06]

Brendan’s baloney on tank railway: Brendan Nelson is very ambitious, and really wants to be Prime Minister. He pursues this objective with great zest. This can be seen in his approach to handling the Defence portfolio. It is all about PR and using the broadness of the portfolio to advance his public image. Hence, he often says silly things (such as rushing in immediately after Jake Kovco’s death to say the soldier shot himself while cleaning his weapon). He was back to making silly statements again last week, when presiding over the arrival in Melbourne of the first batch (18 of 59) second-hand US Army Abrams tanks, costing $530 million. The tanks, he claimed, represented a significant step in protecting “our people, interests and values.” This is baloney, and is part of a deliberate campaign to link defence expenditure with the war against terrorism which has allowed Russell Hill to be given almost anything it demands, despite Defence’s appalling record of administration - as evidenced in Auditor-General’s reports and ongoing scandals of messed up equipment programs. The 60 tonne tanks can’t be railed north on their tank carriers because the bridges they would have to cross are only safety certified for loads of 50 tonnes. Nor is there any special railway rolling stock capable of carrying the tanks to the north. [29.09.06]

All the way with the US of A: Abrams tanks will add little value to any conceivable conflict in our region. Further, their deployment would not lessen the greatest terrorist danger: young Muslim Australian citizens, who have been radicalised by the war on terror, being attracted to the martyrdom of suicide bombers. The Abrams tanks are for training. They won’t leave Australian shores. They have been purchased so the Army can train tank crews who can then be sent abroad to take part in future joint operations with America and crew US Army tanks pre-positioned in a war zone. Voters are not aware Australia is, via several purchasing decisions, effectively lining itself up for integration into US forces for further conflicts in the Middle East (Iran, Syria) or the Straits of Taiwan. John Howard sees Australia as a permanent member of the Coalition of the Willing. Inside Canberra notes the higher capabilities of three $6 billion air warfare destroyers (to be built in Adelaide), are not really for use in our region. They are for joint operations abroad with our American allies. Why doesn’t Labor say something about this? Or does Kim Beazley, a devoted ANZUS supporter, believe all this is good policy? [29.09.06]

Throwing money at the well heeled: Peter Dutton, Assistant Treasurer, is in charge of superannuation policy. He proudly announced this week that the Government super co-contribution scheme cost taxpayers a whopping $934 million a year in 2004/05. Under the scheme, any individual earning up to $28,000 can contribute up to $1000 to his/her super and receive a co-contribution of $1500 a year from the Government. The co-contribution reduces by 5c in every dollar an individual earns above $28,000, phasing out at $58,000. There were 1,162,730 co-contributions made in the year. The average contribution by the Government of $803, suggests the average income of those receiving the co-contribution was $42,000. The scheme also tolerates highly paid executives tossing the missus $28,000 a year, thus reducing his own tax. If the wife then puts $1000 into her super account, she gets a taxpayer handout of $1500. This scheme is inequitable, and really, should be shut down. [29.09.06]

From the Gallery: The power of the media has been revealed in all its ghastliness with the mass bathos over Peter Brock the Steve Irwin. Apparently millions of people who had never met either, or had paid scant attent-ion to them, were overcome with grief. It was this grief the media felt was its duty to reflect. Like hell. The two dead ‘celebrities’ were used to provide a huge flush of new revenue for newspapers and commercial TV. The front page of the Sydney Tele on Wednesday was typical - Blaring headlines - “Farewell to our Brocky”. And at the top of the page a box - “Don’t miss tomorrow’s special Steve Irwin memorial edition.” The PM sent a junior Minister, Fran Bailey, to the Brock funeral, but he was not going to miss the Irwin memorial. The star turn was eight-years-old daughter Bindi reading a prepared script about her Daddy, no doubt written by the director of the TV spectacular. The amount of space and time devoted to the Irwin death far exceeded the death of Bradman. Australian values? Thankfully, a ‘taxi driver poll’ would suggest the mass of Australians were not taken in. The media proprietors should not be given more power by Howard. [22.09.06]

Labor ready for referendum on Medibank sale: Inside Canberra made the point last week that Oppositions can have more success running negative campaigns during an election campaign, than proposing an elaborate set of policy proposals. As former NSW Liberal Premier Nick Greiner said recently, it’s enough for an Opposition to come up with a couple of goods ideas - (We think Beazley should say a lot more about global warming and the environment rather than ‘Australian values’). Nevertheless, Labor can hardly believe its luck, being given the Medibank Private club with which to beat the Government. Following the Government’s decision to stall the Medibank privatisation until after the 2007 election, Labor has the opportunity to turn the election into a referendum on the privatisation. [22.09.06]

Poll says 63% against privatization: The Government has made a big mistake here. Ostensibly, its excuse in putting off privatisation until after the election is because the market could not digest the Medibank float (worth $2 billion if the health fund’s reserves accumulated from unspent premiums are indeed owned by the Government), and the Telstra float. As Joe Hockey said on the morning of the backdown, the market could easily handle both floats. The more likely reason for the change of heart is Howard has suddenly come to realise how dangerous it is. The members of Medibank private constitute 12% of all Australian households. According to ACNielsen’s recent poll, 63% of voters are against the privatisation. Yet resistance would no doubt be far higher amongst members of the fund, and for them, this could be a vote changer. [22.09.06]

Scare campaign on selling Australia Post: There are some other prime issues for a scare campaign. The Opposition could warn that a re-elected Howard Government would proceed again to privatise Snowy-Hydro. Howard, when he changed his mind on this sale, didn’t question the logic of selling the asset, but rather, said he was acting because “the people were against it.” They still are. The Opposition could also claim a returned Howard will move to nuclear power generation. After all, he wants to shift up a gear from uranium mining to uranium enrichment and Labor could say this opens the way to nuclear weapons production. Then there is the future of Australian Post. The Howard Government, particularly when Richard Alston was Communications Minister, whittled away many of Australia Post’s exclusive markets whose monopoly profits were use to cross subsidise unprofitable rural services. [22.09.06]

Howard losing his sure touch with voters: The Government also brought in more private sector competition on the high traffic (and profitable) Brisbane, Sydney, Melbourne triangle. 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. If so, then surely Australia Post will be next under the hammer. Such a Labor scare campaign would be potent in the bush. Howard will of course deny any intention of privatising Snowy-Hydro or Australia Post. Unfortunately for him, his record of broken promises is such as to render worthless any denials. And he can’t deny he intends to privatise Medibank. Howard appears to be losing his sure touch of knowing what the electorate wants, and now consistently lagging in the polls. Further, the backbench is no longer cowed by the power of the PM. He is snookered on legislation to appease Indonesia over the entry of West Papuan asylum seekers, which follows earlier concessions (on holding women and children in detention centres) to Petro Georgiou-led backbennch rebels. National and Liberal backbenchers in rural and regional electorates are opposing his media reforms. Then there is the horticulture code of conduct dispute. Liberal backbenchers are challenging the treatment of managed investment schemes, and Barnaby Joyce crossed the floor on petrol retailing “reform” plans. And the privatisation of not only Medibank Private, but Telstra, remains unpopular in both city and rural electorates. The same goes for the proposed free trade deal with China. With Chinese competition closing down large sections of Australian manufacturing, it is not a good time to be selling an FTA with China. [22.09.06]

PM shifts on IR: Then there is the consistent community opposition to the Work Choice legislation. Howard failed to make headway on Beazley’s promise to abolish Australian Workplace Agreements. Now he has adopted a different tack: linking Beazley’s support for collective bargaining, which the ACTU is pushing, with hackneyed claims that Labor’s leaders are in the thrall of “union bosses.” The contest is between Howard and Greg Combet, hero of the fight for justice for James Hardie’s asbestosis victims. The PM won’t win this one. Liberal polling has obviously pointed to IR being a disaster for the Government, hence Howard is shifting his ground. New regulations now ensure bosses can’t penalise sick workers. Further, employers will not be able to force workers to ‘cash out’ their leave entitlements. Employers will have an additional six months to prepare for the onerous new rules providing for fines of up to $2750. Howard is obviously worried about the impact of his new IR laws and will be prepared to go further nearer the election if necessary. But he can’t change the core of the legislation. [22.09.06]

PM seeks Muslim diversion: Against this background, it is not difficult to understand Howard’s need for a distraction, and that clearly is going to be terrorism and the level of integration of Australian citizens who are Muslims. As Inside Canberra has pointed out, Howard is the first Prime Minister (at least in peacetime) to criticise a particular ethnic group in the community. Yes, it is only “small minority” he is attacking, yet the majority of Muslims don’t see it that way. They believe it is an affront to all Muslims. Hence, Andrew Robb last Saturday morning must have choked on his corn flakes when he read The Australian. There on the front page was a warning by the Federal Police Commissioner, Mick Keelty, of the risk of alienating Muslims in the community. Islamic Australia is not to blame for terrorism, he said. Yet on that day, Robb was to deliver the Prime Minister’s view to leading Muslims. And the message from the Government was that the risk of inciting terrorism among young Muslim citizens was “their problem.” [22.09.06]

Mick Keelty doesn’t agree: Keelty, in his interview with George Megalogenis, did not name any politicians. But what he had to say was directly contrary to the message Robb was delivering. Keelty declared himself against racial profiling, arguing it risked alienating mainstream Muslims while ignoring the real danger of home grown non-Muslim terror. The Commissioner pointed out the first person convicted of terrorism in Australia had “the unlikely name of Jack Roche.” Keelty said he was an admirer of Muslim Australians, who had “a terrific positive story to be told about their long migrant history”. It will be recalled that after the Madrid bombing in March 2004, Keelty was rebuked by Howard for declaring Australia’s involvement in Iraq had increased the risk of a terrorist attack. Alexander Downer, in his usual quiet way, accused the Commissioner of “using the language of terrorists”. Beazley finds he is unable to make a run off the back of Keelty’s comments. The Commissioner’s utterances will make no difference to Howard’s tactics, which will be to run a terrorism scare campaign right up to the elections. Labor people say Beazley, at the minimum, has to appear to be seriously in the debate over terrorism threats, difficult as it is to come up with any sensible ideas. [22.09.06]

Kovco inquiry a worry: The Kovco military inquiry ended its hearings this week, and is expected to report in about six weeks. Defence Minister, Dr Brendan Nelson, will be awaiting the outcome with considerable trepidation and there will similarly be knitted brows on Russell Hill. The day after Jake Kovco died, Brendan Nelson said - “I’m advised that the soldier was handling his weapon and maintaining it as soldiers are required to do, and for some unexplained reason the firearm discharged and a bullet unfortunately entered the soldier’s head.” A day later he had a different story - “It now seems he might not have been actually handling the weapon, but it was very close to him with something else he wa actually doing.” In his written statement to the inquiry, Nelson said the Chief of the Defence Force, Angus Houston, gave him advice about his first statement. Houston (in his statement to the inquiry) denied this, saying he repeatedly told the minister it was unclear how Kovco died. [22.09.06]

Where will blame lie?: It is doubtful whether the military inquiry will make a finding about who is to be believed. Yet everyone in Parliament House and on Russell Hill would believe Houston, whose honesty and courage showed through when he blew the whistle on the “children overboard” lie. Nelson is only a politician. And in any case, why wouldn’t the head of the military warn against any hasty judgements as to how the incident happened? If the inquiry doesn’t make a finding on whether Nelson or Houston was telling the truth, Labor is certain to grill the Defence Minister on what motivated his misleading comments. Finally, whatever its findings on how Kovco died, is anyone going to be held responsible for the scandalous destruction of evidence in Kovco’s room immediately after the shooting and in the days that followed, including the washing of the body? There is general agreement this will prevent any specific finding, other than an open finding. Yet the public is entitled to know who was responsible for the destruction of evidence, and what will be their punishment. [22.09.06]

AWB monopoly a goner: Even before the delayed Cole Commission inquiry is delivered (now to be no later than 24 November), there is no prospect of AWB Ltd retaining its monopoly of wheat exports. Indeed, the single desk marketing system will be lucky to survive in any form. Judge Neil Young, in the Federal Court this week, made a preliminary finding that AWB executives “had deliberately and dishonestly” conspired to defraud the United Nations, thus pre-empting Cole. He ruled that Cole could have a mass of documents AWB had tried to withhold on grounds of legal professional privilege. The delay in getting these documents has led to the delay in Cole meeting the 29 September deadline for reporting. There is speculation some AWB executives will face criminal charges. [22.09.06]

Unrest in the West: There is also concern about a potentially large ‘services break fee’ that AWB threatens to rip from growers. The pile up of negative material has swung many growers - who once supported AWB - against the company, particularly those in WA. The Pastoralists & Graziers Association of WA (PGA) has long been an opponent of the AWB monopoly. It now says that because of a poor crop in the eastern states - and because 95% of WA wheat is exported - it would be left to these growers to pay the $65 million marketing fee to AWB. This would be around $20 per tonne [The legislation giving AWB the export monopoly in effect will require growers to lose $20 a tonne by forcing them to export through AWB]. This will provide ammunition to those wanting to end the monopoly, such as WA Liberal wild man, Wilson ‘Iron Bar’ Tuckey. [22.09.06]

Parliament loser on accountability: Thanks to the High Court and the Government majority in the Senate, it will now be harder than ever to require accountability to the Parliament from this most secretive of governments. The High Court this month said it was fine for Peter Costello to refuse to provide information under Freedom of Information (FoI). The FoI instrument is now effectively knackered. Any minister can block embarrassing information to an applicant simply by issuing a conclusive certificate. The purpose of FoI legislation was to require governments to make available information, even if it was embarrassing. This can only now be put right by a future government legislating for dramatic changes. For example, a separate statutory body could be set up to administer FoI. A minister would still have the power to withhold FoI information, even if it had been cleared by the statutory authority. The minister would be required to table a statement in Parliament as to reasons for refusing to provide information. Kim Beazley should now be required to promise to fix the failure of the FoI legislation, and be kept to the promise. [22.09.06]

Voting for unknown programs: The High Court’s gift to the Government comes on top of its earlier ruling that governments are not obliged to reveal in Appropriation Bills just what the money will be spent on at the time Parliament is asked to appropriate funds. The Government was able to use the vote for the Department of Employment and Workplace Relations to fund a $55 million fraudulent advertising campaign to sell its Work Choices legislation, even before the legislation was produced. The court said this was quite okay. Again, Kim Beazley should promise to fix this by changing Parliament’s standing orders or establish by legislation new rules to clarify the extent to which details of proposed expenditure is set out in Appropriation bills. [22.09.06]

Senate committees hobbled: On top of these outrages, the Government has used its majority to bring the Senate committee system under its control. Until this month, there were 16 key committees in the Senate: eight Legislation committees which studied legislation before the Senate; and eight Reference Committees which could examine any subject referred to it by the Senate, such as the ‘children overboard’ affair. The Government had a majority and chaired the Legislation committees, while non-government Senators had a majority on the References committee and also the chair. Now the Government has used its majority to merge the 16 committees into eight. The Government has a majority on all eight, as well as the chair, and it will its majority to prevent inquiries it doesn’t like going ahead. And Senator Nick Minchin has the nerve to call this “fair’. [22.09.06]

Mandatory horticulture code struggle: The political struggle over the regulation of business ethics in the horticulture industry has only just begun. It has certainly not been finalised by the Howard backflip this week on mandating a code of conduct. Despite John Anderson’s election promise to have a mandated code (see last week), Howard persisted with what was described as a voluntary legally enforceable code. This was never going to work, since those with questionable business ethics would not sign up to it. This week, Howard changed tack and a mandatory code was announced by Agriculture Minister, Peter McGauran. Yet it is only mandatory for wholesale markets. The supermarket chains, processors and exporters will not be subject to the code. Fruit and vegetable growers are determined to fight for a mandated code that includes everyone in the industry, with no exclusions. Growers were formerly at odds with the Central Markets Association of Australia (CMAA), who supported the voluntary enforceable code. Now the association and the growers are on the same side. [22.09.06]

‘Include supermarkets’ – growers: Andrew Young (spokesman for CMAA) says if the code is to be mandatory, it should apply to all including supermarkets, processors and exporters. He objects to central markets being singled out for penal regulation. He rejected the argument of McGauran that the supermarkets are not wholesalers, and therefore, should not be covered. Young points out that the supermarkets have a wholesale division which does direct deals with growers, and then sells on to the retail division at a margin of profit. Growers have complained to Inside Canberra that supermarkets can reject - on quality control grounds - a consignment without explanation. Growers then have no choice but to get rid of the consignment in a firesale at the central markets. These consignments can then be bought back at much lower rates by agents acting for the supermarkets. Growers plan to continue pressuring National MPs. [22.09.06]

From the Gallery: Inside Canberra has reported before on increasing sectarianism within the Liberal Party, a development which became obvious with the mounting bitterness engendered by the stem cell research debate. Proponents of stem cell research complain that Catholic doctrine is too well represented in Cabinet. They are in particular talking about Tony Abbott and Kevin Andrews. This week, Andrews (a Victorian) has weighed into the pre-selection fight for Epping, a blue ribbon Liberal Sydney seat. Andrews features in a brochure supporting the right wing candidate and prominent anti-abortionist, Greg Smith. The moderate faction in NSW is supporting the small “l” candidate, Pru Goward, who is regarded as an outstanding catch and one the Libs should not let go. As yet, no Liberal MP has publicly endorsed her. Both John Howard and NSW Opposition Leader, Peter Debnam, are believed to support her. It is most unusual for a Liberal MP to intervene, as has Andrews, in an internal dispute in another state branch. Upper House MP, David Clarke, an admirer of the Opus Dei Catholic sect, controls the dominant NSW Right faction of the Libs. Smith is Clarke’s candidate. Whatever the out-come there will be heightened and dangerous sectarianism. [15.09.06]

Bad polls, so PM goes for a diversion: It is obvious why John Howard has thrown the switch to terrorism - particularly the home grown variety, Muslims who are Australian citizens. The latest polling is bad for Howard, and the Libs own polling would have also picked this up. Newspoll (taken 8-10 September) reports an election winning two-party preferred lead for Labor of 53%, to the Coalition’s 47%. The Coalition has crashed to a primary vote of only 39%, and this is entirely due to the big fall, of 5%, in the Liberal’s primary to only 35%. Labor’s primary is down 1%, but is still on a handy 41%. There is a big ‘others’ vote of 14% (up 5% on a fortnight earlier). This suggests that some voters are disgusted with the major parties agreeing to the increase in superannuation benefits for newly elected MPs. As usual the popularity polls are of little assistance. Howard’s popularity rating has dropped to 45%, the lowest reading since late June, while Beazley - despite Labor’s big lead - rates only 31% (down 4%). [15.09.06]

ALP doing well in rural Australia: Other polls also have Labor well in front, although ACNielsen (taken 7-9 September) is not as good for Labor, with the two-party preferred being 52% Labor (down 1% on a month earlier), and 48% Coalition (up 1%). Labor’s primary vote is 39%, and the Coalition is on 42%. ACNielsen is the only poll which shows voting in cities and rural Australia. Labor is doing very well in the cities with two-party preferred 53%, to the Coalition’s 47%. Worrying for the Coalition is a Labor lead of 51% in rural Australia, compared to their own 49%. The latest Morgan poll (taken 19/20 & 26/27August) has Labor surging with two-party preferred at 54%, and the Coalition on 46% - a 2% increase in the Labor lead over the poll of a fortnight earlier. Averaging the two-party preferred vote of the three polls and the outcome is 53% Labor, 47% Coalition. [15.09.06]

Family First disappoints PM: John Howard will be disappointed that although Family First polled only 2.5%, Morgan says its preferences are almost split, Labor 49% and Coalition 51%. Newspoll is the poll that party strategists regard as the most accurate. Since Australia went back to work last February, Labor has won ten of the Newspoll two-party preferred outcomes, the Coalition four, and there were two deadheats. In the seven Newspolls from the end of June, Labor’s primary vote has only once been under 40%. The latest Liberal primary vote at 35%, is the worst since the end of June. Having said this, Kim Beazley this week demonstrated his ability to repeatedly put his foot in it, with his strange idea of asking arrivals to fill in forms requiring their adherence to Australian values (see below). [15.09.06]

PM criticises Muslims on terrorism: The PM seems determined to continue attacking Muslim citizens, or as he puts it “a small minority” of them. Small minority or not, he has upset a big majority of them - including the leading members of his Muslim advisory committee (see last week). These are the very people the Government needs to reach young male Muslims who could be attracted to terrorism. Howard is in fact increasing the risk of a home grown terrorist attack, not diminishing it. Asked on Four Corners what was concerning him, the PM said the reaction “of the small minority” to the London bombings, and subsequent arrests in Britain and Australia. He then said he worried that these people - those who did not react in the right way (ie: outright condemnation) to these events - could have an influence on some young men. Asked if he had any information to that effect, the PM said he did but could not disclose it “you understand.” [15.09.06]

Beazley’s silly idea on ‘values’: Instead of condemning Howard’s actions, Kim Beazley came out with a ratbag plan that all people entering Australia should sign up to respecting Australian “values” as a condition of getting a visa. How could they be expected to know about Australian values before they even get here? Caucus has rightly hammered Beazley for this stupid proposal, blurted out with no reference to Caucus. Many Caucus members see it as an exercise in ‘me-tooism’ after Howard’s Muslim attack. Shadow Defence Minister, Robert McClelland (coming into Parliament House on Wednesday morning), put his finger on the key point. He said we had to be “very careful” not to alienate Muslim youths who could be subject to pressure by extremeness in the Muslim community. McClelland said that Howard’s approach is “more likely to make a terrorism attack inevitable.” McClelland’s advice should be taken up by Beazley, who should drop his ratbag ideas on “Australian values.” It goes without saying that Australian values are far better than in many other countries, particularly Muslim countries. [15.09.06]

Hugh White’s perspective: Further, Beazley should stop nagging the Government about such trivialities as a rusty gate being found unlocked at the Dubbo airport (thereby creating a great opportunity for all those terrorists operating in the Dubbo region). Beazley and Howard should actually shut up about terrorism. If a calm view is taken of reality, terrorism is a minor problem to the western world, including Australia. Global warming, unrest to our immediate north, the biological threats of exotic diseases such as foot & mouth and Asian bird flu entering Australia, and our faltering ability to compete in world trade , all pose vastly more important dangers to the welfare of Australians. Hugh White is the respected Professor of Strategic Studies at the ANU. In an article in The Age this week, he recalled the free fridge magnets the Government handed out, and “designed to bring the war on terror into the homes of every Australian”. He wrote that future historians would be surprised and bewildered by the conviction of so many people that destruction of the west - the terrorists declared aim - was achievable. [15.09.06]

Lies on Iraq revealed: White believes we need to start scrutinising claims - such as those of George Bush - that if the US is defeated in Iraq, terrorists will have to be fought in America. Bush compared Osama bin Laden with Hitler. At the weekend came news from the US that the Republican-led US Senate Intelligence Committee had found there were no formal ties between Saddam Hussein and al-Qaeda. The report found Saddam was distrustful of al-Qaeda, viewed Islamic extremists as a threat to his own regime, refused all requests for support from al-Qaeda, and issued general orders that Iraq should not deal with al-Qaeda. The committee also dismissed claims Saddam sheltered al-Qaeda operative, Abu Musab al-Zarqawi. So the essential trio of lies to justify the Iraq war have now been destroyed: there were no weapons of mass destruction; Iraq was not working with al-Qaeda; and Iraq posed no threat to the United States or Britain, let alone Australia. The stage has now been reached where Saddam’s regime - which was a counter balance to the power of the Shi-ite regime in Iran - has been replaced by a theocratic shi-ite dominated Government which will be seen as a satellite of Iran. Further, the chances of a peaceful settlement between Israel and the Palestinians have been hugely degraded, and America’s standing in the world has never been lower. [15.09.06]

Labor backs big oil: In the same week the NRMA accused the oil companies of price gouging in the bush, where petrol was up to 20c a litre dearer than in the cities, Labor has sold out to big oil. In the Senate on Wednesday, Labor could have blocked legislation which will have the effect of handing over petrol retailing entirely to the oil companies. Independents will be driven from the market. Further, the oil companies will set about reducing the number of service stations. This will particularly impact the bush, where many drivers have to travel long distances just to fill up. Labor did this, unbelievably, on the basis of believing the Treasurer will act in a way Labor wants it to act. The deal Labor did, was to push back to 31 March next year the introduction of the petroleum legislation which, as it stands, will end any limit on what sections of the retail industry oil companies - together with Woolworths and Coles - can take over. Franchisees (the small business people running most service stations), will all be eventually kicked out by the oil companies. [15.09.06]

What! Trust the Treasurer?: The other part of the deal was that Labor agreed to the legislation on the basis that by 31 March, the Treasurer will agree to a set of amendments to the Trade Practices Act which will 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 to the Trade Practices Act are introduced by the Treasurer which will satisfy Labor. What baffling stupidity from Labor, in the same week the Government was exposed for breaking a firm election promise on a mandatory code of conduct for horticulture. The Democrats, Greens, Barnaby Joyce, and Family First’s Steve Fielding would not vote for the legislation because they argued, reasonably, that the amendments Labor required to the TP Act should have been part of the package of the petroleum retail legislation. Had Labor taken the same view, the legislation would have been defeated. Labor would then have been in the powerful position to get what it wanted by way of amendments to the TP Act. Now, having thrown in its hand before the game is ended, Labor has to rely on the Treasurer to deliver. The Government, on behalf of oil companies, has been trying to “reform” petrol retailing since the end of 1996. Now it has succeeded some ten years later, with the Labor Party delivering. [15.09.06]

Fruit and veg code a mess: The Financial Review on Wednesday had a headline - “Howard promises mandatory horticultural code”. No he didn’t. In the party room on Tuesday, Howard gave the same promise that Anderson gave in the 2004 election: campaign that within 100 days of the election - if there was no agreement among players in the horticultural industry - the government would mandate a code. Over 600 days later, Howard promises the same thing with no time limit. Spurred by industry anger about the broken promise, the Nationals in the party room insisted it had to be kept. So Howard gave his ‘promise’. It was known long before the election that there was no agreement among the key parties, hence Anderson gave his specific promise. Yesterday, Ian Macfarlane (Industry Minister) and Peter McGauran (Agriculture Minister) met the NFF and Growcom, the body representing fruit and vegetable growers. The meeting broke up with no agreement. The Nationals, Ron Boswell, made it clear later the growers had rejected the option offered by Macfarlane of “a voluntary enforceable code”, which seems a contradiction in terms. Boswell said “only a full mandatory code” would be accepted by the growers. Some groups with strong membership in horticulture, such as the NSW Farmers, were angry they weren’t invited to the meeting. There will be more meetings, but at the moment the issue seems deadlocked. Howard will be unhappy. [15.09.06]

Boswell’s approach rejected: Growers will be furious to learn that according to what Boswell told Inside Canberra before the party meeting, any code - mandatory or voluntary - does not need to include Woolies and Coles, since fruit and vegetable growers are protected by an ombudsman. Yet Anderson confirmed from the backbench earlier this year that indeed, his promise included a compulsory code being applied to supermarkets. If this promise is not delivered, Boswell’s pleadings for growers will be worthless. While Boswell is satisfied the ombudsman can handle the supermarkets behaviour, Growcom has revealed that the reports of the ombudsman point to the fact the system is not working. The reports for 2003/04 and 2004/05 criticised the voluntary code and revealed an increase in disputes in both of these financial years. [15.09.06]

Qld Nats suffer on failed promise: Scott Dixon, a leading figure of tableland horticulturalists in Queensland, points to the absurdity of leaving supermarkets out of a code when they account for over 70% of the market. Dixon also told us this week that the Queensland election showed the Nationals would be finished if they did not deliver on the promise to fruit and vegetable growers. He claims the Nationals candidate for the Tablelands seat in the Queensland election dropped 5.7% of the vote (and failed to be elected), largely because of the horticultural code issue. Dixon says the issue impacted adversely on Nationals in many other seats. The other area of dispute within the Coalition is the Nationals stiff resistance to Helen Coonan’s new media “reforms”. The Nats Paul Neville says they endanger media diversity in the bush. The PM said on Wednesday he was prepared to consider “fine tuning” the legislation. Neville said the very next day that fine tuning was not enough. It is now obvious that the Queensland election disaster has galvanised the Nats. They realise they simply have to take up policies which distinguish them from the Liberals. [15.09.06]

PM on winning state elections: John Howard in his brain storming session with Liberal State Opposition Leaders on Saturday gave his well-worn advice: develop appealing policies and sell them over time. He has been giving the same advice for some years, without success. In fact, it is a policy approach he has eschewed. His path to the 1996 election win was master-minded by Andrew Robb, then Federal Director of the Liberal Party. Howard took Robb’s advice to play down policy initiatives, and concentrate on a negative campaign against the unpopular Keating. Howard won this election by, among other things, by promising to “never ever” have a GST. Howard ran the usual anti-union stuff as Opposition Leader, but didn’t reveal the full horror of his intentions - including removal of unfair dismissal legislation and hijacking the IR system of the states. He won in a canter. Howard made the mistake of fighting the 1998 election on a policy issue - the GST - and should have lost that election with Beazley outpolling him two-party preferred 51% to 49%, courtesy of a 4.6% swing to Labor. [15.09.06]

Negative campaigns best: Howard didn’t make the same mistake again. The “children overboard” and the interest rate lie won him the next two elections. Negative attacks on incumbent governments are more important than policy presentations for Oppositions. The ills gripping state Liberals have much to do with factional wars, and in Queensland, the inability of the Nats and Libs to work together. Beattie deserved to be kicked out, but as it is, his massive majority almost ensures Labor will win the next state election. Wayne Swan is doing a good job running the negative material now in such abundance against Howard and Costello, and is getting the better of the Treasurer in Parliament. [15.09.06]

Howard on blame shifting: One of the amusing aspects of the brain storming session was Howard’s emphasis on the public demand that he and the Labor states work cooperatively together, the PM emphasising that voters are tired of blame shifting. He then proceeded to pedal the falsehood that the failure of the states to release more land was responsible for the distressing worsening of housing affordability. Yet another independent authority, Rory Robertson (Macquarie Bank economist) has demolished the Howard argument. Robertson said - “Any analysis of housing affordability that concentrates on supply-side issues like land release, while downplaying or ignoring demand issues - population growth and the halving of interest rates (since the early 90s) and the extraordinary role of investors in the latest home-price boom - simply is not credible.” Shadow Treasurer Wayne Swan says releasing cheap land on the outer edges of suburban sprawl (while developers are relieved of any responsibility for infrastructure) would lower prices of housing in existing outer suburban areas, where home owners are facing negative home values from price drops driven by interest rate rises. [15.09.06]

From the Gallery: MPs elected in 2004 will get a super contribution lift from 9% to the public service standard of 15.4%. Due to John Howard’s panicky reaction to Mark Latham’s call for pollies super to be based on the ‘community standard’, there will still be two classes of MP, with those elected before 2004 remaining on the old very generous ‘defined benefit’ taxpayer funded scheme. Parliament has always been happy to change super arrangements for the rest of us, sometimes to our detriment and sometimes to our advantage (such as Costello’s latest changes, which by the way will be a tremendous burden on those still in the work force). Why not rule off the old scheme, hold those entitlements until those on the old scheme retire and put all MPs on the 15.4%? Because backbenchers on either side would not pass the necessary legislation. As Jack Lang said, always back ‘self interest’ because you know it’s trying. Justifying the latest changes Howard relied on a version of the ‘pay them peanuts and you get monkeys’ argument. Remember we almost got John Elliott with peanuts. Stand by for a big unions push for workers to move from 9% employer contributions to 15.4%, the same level enjoyed by junior MPs. [08.09.06]

Nats in crisis over horticulture code: There is a crisis within the Coalition which threatens Mark Vaile’s leadership of the Nationals, and could even endanger the stability of the Coalition. Inside Canberra reported last week that John Howard has forced a backdown by the Nationals to carry through an explicit promise in the last election campaign for a mandatory code of conduct for the wholesale fruit and vegetable industry - which would apply to Woolworths and Coles. The PM has not only decided the code will not be mandatory, but has taken from the Nationals Peter McGauran the responsibility for working up a voluntary code, and given it to the Liberal Industry Minister, Ian Macfarlane. [08.09.06]

PM turns election promise into ‘non-core’: The PM took this action despite the fact John Anderson, when on the backbench earlier in the year, went public to deny a claim by Agriculture Minister, Peter McGauran that the code would not apply to supermarkets because they were not wholesalers. Anderson confirmed his election promise, given when he was Nationals Leader, was to include supermarkets in a mandatory code of conduct for horticulture. As Inside Canberra also reported last week, fruit and vegetable growers, particularly in Queensland, are furious over Anderson’s undertaking being turned into a ‘non-core promise’ by a Liberal PM who invented the phrase. The Nationals are convinced that Coles and Woolworths are behind Howard’s insistence on a voluntary code. [08.09.06]

Vaile under pressure to perform: On Tuesday in the Joint Government party room , 12 backbenchers - mostly Nationals but including some Liberals in electorates with fruit and vegetable growers - complained about the lack of action on the mandatory code. As a result, the PM has said he will talk to Vaile about the issue. If Howard persists with his objection to a mandatory code, Vaile and the Nationals will be pushed into an impossible position. Apart from anything else, it will mean Howard no longer believes agricultural matters are strictly in the province of the Nats. Recall that after the abortive effort by Lawrence Springborg to pull off an amalgamation of the Queensland Nats with the Liberals, Vaile declared he was going to differentiate Nationals policies from the senior partner in the Coalition. He said the same thing after the defection to the Liberals of Peter McGauran. Now is his chance to show he means it. [08.09.06]

Cease fire until Qld election Saturday: The issue is stalled until after Saturday’s Queensland election, but it cannot be indefinitely ignored. This week the National Farmers Federation and the Horticulture Council of Australia (HCA) issued a joint press release saying, the failure of the government to carry through on its election promise was “a slap in the face” to growers. The two organisations said they had both worked tirelessly with the Government to deliver its 2004 election promise to mandate a code within 100 days. NFF Vice President, Charles Burke, said the Government’s failure to act is fuelling speculation that it intends to renege on its promise. The fact that the NFF (now seen as a pussycat lobby) is prepared to attack the Government, illustrates how serious the issue has become. John Anderson was among those who, at the party meeting on Tuesday, complained about the lack of action on the mandatory code. On Wednesday in the House, the Government gagged Labor’s attempt to debate the issue. At a recent meeting in the Nationals party room, John Anderson admonished McGauran for turning up late to such meetings. There has been suggestions this week that McGauran’s fellow Nationals fear he may join his brother in the Liberal Party. McGauran this week insisted he was a loyal member of the Nationals. And why would he defect? While he remains in the House, and the Coalition is in power, he is guaranteed a portfolio because he is only one of two National MPs from Victoria in the Federal Parliament. [08.09.06]

Nats short of talent: Nevertheless, the fact that McGauran felt constrained to deny he would defect illustrates the degree of tensions within the Nationals. The outlook for the Nationals in next year’s election will be dim indeed if Vaile fails to convince Howard that, as Nationals Leader, he has to deliver on Anderson’s promise. Should Vaile fail, his leadership would be on the line. Yet if he was dumped, the Nationals would be unable to find another Leader who would be better. Deputy Leader, Warren Truss, would be no improvement, nor would McGauran. Barnaby Joyce would not have a chance because he is regarded as too much of a maverick. The brightest young talent the Nats have is Senator Fiona Nash. Yet she only came into the Parliament at the last election, and she is in the wrong house. When the Coalition next goes into Opposition, it might be the time to find her a seat in the House and groom her for the leadership. [08.09.06]

Muslims attacked by PM, Costello: John Howard and Peter Costello have irresponsibly attacked Muslims in Australia. Far from reducing the risk of terrorism, their public attacks are likely to make it easier for western-hating Muslims to radicalise young Muslims in the western suburbs of Sydney and Melbourne. The PM said on talkback radio, “a small section of the Islamic population should fully integrate by embracing Australian values, learn English and treat women as equals.” On NINE, Costello attacked “the Islamic leadership” for failing to take a stronger stand against terrorism. This followed previous comments by Howard that some people “felt confronted” by Muslim women wearing the traditional jilbab (head scarf). Costello has advised Muslims who won’t accept Australian values to leave. This is the first occasion, certainly since the war, that an Australian Prime Minister has deliberately sought to criticise a particular ethnic group. If they were genuinely worried about these matters, the PM and Treasurer should have passed their concerns on to the government’s Islamic advisory committee. Instead they decided to voice them anyway on radio and TV. [08.09.06]

Muslim leadership needs help, not criticism: We understand Costello has yet to meet a member of the advisory committee. Dr Ameer Ali, chairman of the committee, said the comments were divisive. He warned against another Cronulla race riot. The shock jocks were delighted to stir this along, as was the Sydney Daily Telegraph with a blaring front page headed ‘BLACKMAIL’, followed by - “Muslim leaders threaten free speech with riot warning”. Surely Howard and Costello realise they have to rely on the Muslim leadership to reach young Muslims at risk of being radicalised. The terror threat comes not from terrorists entering Australia from the Middle East bent on destruction, but from young Australians who are Muslims, have English as a first language, and in general seem perfectly integrated. Many in the ranks of Labor believe that the Prime Minister is preparing to play the race card to win the next election, as he so successfully did with “children overboard” in 2001. Howard is in trouble. He is persistently trailing in the polls - petrol, mortgage interest rate rises, and Work Choice are all hurting. On top of that, his Iraq policy has lost majority support. He could use a distraction. [08.09.06]

Conference on home grown terrorism: Labor people now cynically expect to see mass arrests, and heavily armed police breaking into Muslim homes shortly before the election. All of this would feature on TV news, as the networks would have been advised in advance exactly where to set their cameras up. Perhaps it is because of a fear of Howard again running the race issue that Labor is so spineless in denouncing the PM’s actions. If Howard expected the Islamic advisory committee to support his Iraq policy, let alone his bias towards Israel, he had no hope. This committee’s 12 month appointment is soon to expire, giving the PM another go at securing a more malleable advisory Muslim group. Meanwhile, our associate publication, the weekly e-Newsletter, reports the 5th Annual ‘Safeguarding Australia’ Summit - to be held in Canberra 19-21 September - will focus on ‘home grown’ terrorism. A star speaker will be Deputy Assistant Commissioner Peter Clarke, Head of the Anti-Terrorist Branch of the London Metropolitan Police. A number of leading Muslims and academics have been booked to speak and throw light on the views of the Australian Muslim community and its role in safeguarding Australia. How many will turn up to this privately organised event, and what they will say unrestricted from the shackles of Government control, will be of great interest. [08.09.06]

Abbott’s weird advice: Tony Abbott seems to be morphing from a hard headed, clever politician to an eccentric. He stated on the Today show that if men haven’t got symptoms of prostate cancer, they don’t need to be tested. Ministerial colleague, Jim Lloyd - a prostate cancer survivor - went public to say Abbott was “simply wrong”. Lloyd said, rightly, the sad thing was that prostate cancer was an insidious disease which often didn’t show symptoms. Lloyd quickly back pedalled after a phone call from Abbott’s office, and then said there was a “misunderstanding” by both he and Abbott as to what advice the Prostate Cancer Foundation of Australia had given on testing. The Foundation’s website urges men over 50 to have a PSA test every two years, and preferably - in addition - a Digital Rectal Examination (where a doctor puts his finger in the anus to feel the prostate). Your editor was diagnosed with prostate cancer after a suspicious PSA test. This led to a biopsy which proved cancer, and then led to successful treatment. Abbott’s spin doctors point out he made his comments in answer to a question. That is not good enough. He should not be giving any diagnostic advice at all. Howard should remove him from the Health portfolio. [08.09.06]

Medibank and Future Fund: Francis Sullivan, of Catholic Health Australia, believes the proceeds of Medibank Private should go to public health and help for the disadvantaged. The Government proposes to lock the proceeds away in the future Fund until 2020, when it will be used to fund public service pensions. Sullivan told Inside Canberra this week there should be a rethink about this. He is right, but Peter Costello will ignore such advice. The Treasurer has even absurdly described the Future Fund as “guaranteeing the future of Australia”. The average voter has not yet woken up to the fact that the Government intends to put future Budget surpluses into the FF, also to be locked away to 2020. Budget surpluses measure how much additional taxation is collected over and above that needed for the purpose of running government. Current taxpayers will not see any benefit from such surpluses. Labor’s policy is to raid the FF and use it for infrastructure funding. [08.09.06]

Macfarlane on surpluses: In an interview with the Financial Review this week, the retiring Governor of the Reserve Bank, Ian Macfarlane, said he saw little need to amass large budget surpluses just because the economy was growing rapidly. Macfarlane may not have remembered that the Treasurer has often portrayed surpluses as being savings the government has had to make because of the failure of citizens to save. Costello has been fond of saying that if it was not for such surpluses, there would be upward pressure on interest rates. This is manifestly ridiculous.With the government and the private sector able to borrow around the world, it is absurd to suggest an Australian Budget surplus would send up interest rates in Japan, or the US, or the Euro area. There is another factor: Australian borrowers pay a penalty rate because of persistent big current account deficits, but that is a different matter. [08.09.06]

Murdoch upset with Howard: Rupert Murdoch is not at all happy with John Howard, that is if you believe his editors and senior writers - who tend to reflect the great man’s views. For a start, Murdoch is not comfortable with Helen Coonan’s proposed ‘reform’ of the cross party media laws. For example, Matthew Stevens, writing in The Australian, commented Coonan’s proposed regime “continues to treat free-to-air television licence owners as a protected species.” Murdoch is furious that Coonan ditched the proposed fourth commercial TV licence. Then there was the savage editorial in The Australian on T3. “Fiasco is the only label to apply to T3, the Howard government’s fire sale of $8 billion worth of Telstra shares ... It also underscores John Howard’s increasing tendency to sacrifice genuine reform for political expediency, evident in the retreat on the sale of Snowy Hydro.” Terry McCrann, a senior business writer in The Australian, is one of the Prime Minister’s favourite commentators. He quotes McCrann freely when he pens material critical of Labor. It is unfortunate then, that McCrann this week took the long handle to Finance Minister, Nick Minchin’s comment that T2 shareholders - who have seen the value of their shares halved - did not suffer a loss until they sold their shares. [08.09.06]

Could there be a deal with Labor?: McCrann said of this - “In his own words yesterday, Minchin effectively ‘announced’ he was not competent to be finance minister.” It is assumed that come the next election, News Ltd publications will as usual attack Labor and do their best to see the Coalition re-elected. Yet there is an opportunity for Beazley to do a deal with Murdoch that would not only be in News Ltd’s interest, but also the national interest. Murdoch wants a fourth TV licence. Howard won’t give it, but Beazley could. Labor would be offering more choice to the viewing public. Of course, this will upset James Packer and Kerry Stokes, as well as TEN. But so what. They could not do much to hurt Labor, and anything they did would well and truly be outweighed by the benefit of Rupert merely not giving Labor a hard time in the election. Rupert is also upset with Telstra’s 50% ownership of Foxtel (News and PBL both have 25%). Labor believes Telstra should sell its interests in Foxtel and any other enterprise that is not devoted to the improvement of Australia’s telecommunications. Voters would be happy about that. So it’s not beyond the bounds of possibility that Murdoch will do what he always does - give number one priority to his own interests. [08.09.06]

Indon death penalties an affront to Australia: There is big trouble ahead for the Government following the extraordinary death penalties handed down to young Australian drug couriers. John Howard can kiss goodbye any chance of him being able to revive the legislation to ensure West Papua refugees were refused asylum in Australia from the brutality of the Indonesian Army. Such appeasement of Indonesia would now be totally unacceptable to Australians. In fact, in retrospect, the backbench Liberal rebels who successfully blocked the legislation have done Howard a favour. The revulsion expressed in Australia to the hanging in Singapore of a young Australian on drug charges will be magnified many times over if the Indonesian President does not speedily extend clemency to the six young Australians of the Bali nine. Polling suggests that Australians don’t particularly like Indonesians, despite Australia being the major aid donor in the wake of the devastating tsunami. Further, Indonesia affronted the Howard Government by not informing Canberra of the death penalties imposed last month by the Indonesian Supreme Court on the appeals of the Australians. On top of that, Schapelle Corby is to rot in an Indonesian jail for 20 years. It is said that years could elapse with the six on death row before they are either pardoned, win a judicial review, or are shot by firing squad. This is not good enough. Howard should seek to urgently persuade the Indonesia President of the need for clemency. [08.09.06]

People and Events: Graham Wolfe, currently Housing industry Association’s Victorian director, moves to the equivalent role in NSW. Glenn Evans will be the Victorian director. Wayne Gersbach is now the national office’s director of Residential Development Services. Brett Hackett, a career DFAT diplomat, has been appointed Ambassador to Afghanistan. [08.09.06]

From the Gallery: This PM is becoming very expensive. Howard’s way on Telstra has already cost the taxpayer and private shareholders billions and there is a every likelihood of more losses. No expense is to be spared when it comes to keeping the PM in office. The total cost for NSW, Victoria, and the Common-wealth in preparing for the sale of Snowy-Hydro was $20 million. This is down the drain because at the last moment Howard killed the sale, fearing it would cost him the seat of Eden-Monaro. Howard didn’t claim he was calling off the sale because it was against the national interest. He was quite up-front about the reason - the voters in Cooma, headquarters of the company, were totally against the sale. Then with his backbenchers in a panic about petrol prices when they returned for the Winter session of Parliament, the PM decided to give unknown millions to about 2% of taxpayers for converting their cars to LPG. This, of course, will make no difference to petrol prices for everyone else. And for ten years he has required taxpayers to provide him with two homes: The Lodge and Kirribilli House, the latter with a lavish wine cellar supervised by a paid wine expert. [01.09.06]

No-one wants blame for Telstra disaster: The halving of the value of Telstra shares since the T-2 float is the greatest public finance scandal since the collapse of the South Australian State Bank in 1991, which brought down the Bannon Government. Yet nobody is taking responsibility for the Telstra disaster: not Howard, not Communications Minister, Helen Coonan, not Telstra chairman, Don McGauchie, nor Sol Trujillo, nor Graeme Samuel. And certainly not former Communications Minister, Richard Alston, copping it sweet in far away London as High Commissioner on 50% of his parliamentary pension, plus a handsome tax free salary from grateful Australian taxpayers. Yet at the end of the day John Howard, and no-one else, is responsible. [01.09.06]

Keeping Nats on-side wrecks PM’s ambitions: Howard decided to sell Telstra and announced it in 1998 at the Liberal Conference in Brisbane. At that time, and for some time after, there was no mention of Telstra services in the bush not being “up to scratch.” It wasn’t until the voters started yelling at the Nationals that it dawned on Howard it was not going to be simply a matter of selling Telstra and pocketing the proceeds. From then on he had to balance his obsession with selling Telstra, with squaring off the Nats. This in turn necessitated Howard being tough on Telstra via the ACCC riding shotgun on the company to force some element of competition. And this, as Trujillo keeps reminding everyone, is why the value of the company slumped. [01.09.06]

Blaming the Senate won’t wash: Howard was responsible for the T1 and T2 floats, which then made it difficult to do the sensible thing and split Telstra into the infrastructure owner and a retail teleco. And it was Howard who approved McGauchie as chairman, which in turn led to the appearance of Trujillo and the amigos. Howard wants the Senate to take responsibility for the disaster, but that won’t wash. Most of the time Governments don’t have a Senate majority and have to find a way of getting legislation through. Now the PM has had a majority in the Senate since July 2005 and Telstra is in a worse mess than ever. [01.09.06]

Labor back in front with Newspoll: Inside Canberra reported on the Newspoll taken 11-30 August showing the Coalition back in front after losing four in a row. And this was in the face of the Prime Minister being effectively nailed for breaking the promise of “keeping interest rates at record lows”, and motorist anger over high petrol prices. We said at the time this meant Labor might as well give up on the next election and appoint a new Leader for the one after that. Alternatively, the poll was haywire. And haywire it has turned out to be. The latest Morgan poll taken last weekend has the Coalition primary unchanged on 44%, but with Labor leaping by a massive 5%, to 42%. The two-party preferred is now Labor 51% (up 2%) and Coalition 49% (down 2%). [01.09.06]

IR, petrol, and rates hurting Govt: The turnaround for Labor could not have been the announcement by Howard last Friday of the decision to immediately sell a chunk of the government’s Telstra shares. It would not have sunk in by then, nor would many voters (particularly Howard’s battlers) be in the slightest bit interested. No, it meant the Government is still carrying the burden of hostility towards Work Choice, higher interest rates, and high petrol prices. Since February Labor has won nine polls, the Coalition four, and two have been a dead heat. In short, Labor is still very much in contention. On the subject of interest rates, Australian small business still carries the heaviest burden in the OECD. [01.09.06]

Aust rates sky high: The current issue of The Economist gives rates in the three month money market (the type of loan market much resorted to by small business). Australia leads the field on 6.21% (5.62% a year ago). Second highest is the US on 5.28%. Britain is on 4.98%, Canada 4.11%, and the Euro area 3.23%. Japan hobbles along on a crippling 0.34% (up 0.32% in a year). That Australian business faces a penalty interest rate is undoubtedly due in part to the government’s chronic failure to lift the current account into deficit. Lenders in Australia buying on the world market have to pay a ‘danger money’ premium. Newspoll also had a poll on preferred Labor leader: Beazley 30%, Gillard 28%, Rudd 22%. The last poll at the end of April was Beazley 24%, Gillard 32%, and Rudd 28%. The poll is pointless anyway, because Beazley will undoubtedly lead Labor at the next election. But it does show that the public has certainly taken a fancy to Gillard. [01.09.06]

Bad week for Downer: This has been a very bad week for Alexander Downer, having been skewered on issues of oil-for-food and weapons of mass destruction. First there were nine pages of handwritten notes written by senior DFAT official, John Quinn, released by the Cole Commission. Quinn was head of the Iraq task force, put together at Howard’s instructions in DFAT so that every issue even vaguely relating to the Iraq war could be assessed and in particular, what would happen to Australian wheat sales to Iraq as a result of the oil-for-food program. Quinn interviewed Australian Army Colonel Mike Kelly specifically to discuss corruption of the oil-for-food program. Kelly had been based in Baghdad. [01.09.06]

Task force head’s notes: The notes Quinn typed for the Commission confirm Kelly told him: “AWB Ltd - problems”. The notes from 22 July 2004 say: “25,000 files - damning material” on the kickbacks. Also: “AWB Ltd - exposure-service fees across the board, 10-30 per cent”. The notes also say at one point: “Cabinet too early”, and “Letter Downer to PM”. Colonel Kelly also gave a briefing to the Task Force at DFAT on 29 July. Kelly also said he had “seen notes by a colleague, Chris Birrer, “which confirms that my concerns regarding AWB were being passed back to those involved in Iraq issues back in Canberra.” Birrer is employed by the Defence Department and Kelly is still in Defence. Both Downer and Howard try to dismiss the material as nothing new, since it was dealt with in March when the ministers gave evidence. [01.09.06]

Join the dots: While it is true the material from Quinn was with the Commission, back then it hadn’t been picked up. The Quinn notes can’t be dismissed on the grounds that they are “old”. Howard said “the material (Quinn’s notes) didn’t conclusively prove anything.” Yes, but what about if you join the dots? There is not only the notes by Quinn but the 21 sets of cabled warnings to Downer and Mark Vaile, many of which went to the PM. Downer says he was not aware of the Quinn notes. The task force was set up to follow every detail of Iraq policy, yet Downer didn’t inquire of its work on maintaining Australia’s wheat market in Iraq. Three months after the Kelly briefing of Quinn, and on the eve of the 2004 election, Downer instructed the Australian Ambassador in Washington, Michael Thawley, to kill off a Congressional inquiry into the kickbacks scandals by assuring Congressmen there was absolutely nothing in allegations against AWB stemming from Canadian and US wheat interests. This week Dr John Gee - one of the most senior scientists in the Iraq Survey Group - says he told the Foreign Minister, Alexander Downer, in March 2004 that there were no WMDs in Iraq and that he believed the reporting process was corrupted by the CIA. This is on top of similar warnings by WMD expert Rod Barton. Yet in July 2004 Howard repeated that the government had intelligence of the existence of WMDs. Downer was not able to directly answer the allegations by Gee, except for some vagueness about what Gee had told him. [01.09.06]

Beazley squibs orders on Thomas: Kim Beazley is showing no ticker at all on the issue of control orders on ‘Jihad’ Jack Thomas. In a blatantly political move, Ruddock signed the order to control Thomas’ movements, duly okayed by Federal magistrate, Graham Mowbray. This despite Thomas being acquitted by a jury in February of allegedly training for, and participation in, planning for terrorism. He was jailed for five years for allegedly receiving money from a terrorist organisation. This was overturned by the Victorian Court of Appeal on the grounds of improper questioning of Thomas by Federal Police in Pakistan. Beazley, cautiously says he won’t comment because the Thomas matter is before the courts, an inhibition which doesn’t concern Ruddock who called a news conference to announce the move on control orders. On Thursday, at a directions hearing, Mowbray blasted the Federal Police for listing in the order Osama bin Laden as someone Thomas should not contact. He described it as “farcical”, additionally Thomas was prohibited from contacting 13 people who are either dead or locked up in Guantanamo Bay. It seems the Thomas order is headed for the High Court. [01.09.06]

Phoning up bin Laden: In fact, given that all the military and intelligence resources of the US has not been able to track down bin Laden, one would have thought ASIO would be delighted if they could get the terrorist’s number through Thomas. No, this stinks of politics. Ruddock is trying to associate Thomas with bin Laden by, in effect, giving voters the idea he can ring bin Laden whenever he likes. Beazley, who says he can’t say anything because it is “before the courts”, would know that when the application for orders were heard by the magistrate, Thomas was not present to face his accuser. So much for the courts. In a new development, Rob Stary, Thomas’ lawyer claims a Melbourne man who trained in Afghanistan alongside Thomas, and who also met Osama bin Laden, is a free man in Australia. Stary says people living in Melbourne, Sydney, and the Gold Coast have trained in camps in Afghanistan and are free. If so, Ruddock should explain the differential treatment of Thomas. [01.09.06]

Paranoia on the boil: Ruddock and Howard would not have been disappointed with the latest poll in the PM’s favourite paper, The Sydney Daily Telegraph. It shows the extent of community paranoia about the terrorist threat and the rising hatred of Muslims in the community. For example, 296 Australians believed “Australian Muslims are moderate”, but 123 believed they were not, and 153 were not sure. Asked if Australia and the west were in a global war against Islamic terrorists “that threaten our way of life”, 381 (a big majority) agreed, 145 did not, and 46 were not sure. Further, 420 (again a big majority) believed “we” were not winning the war against terrorism, while 61 believed “we” were, and 91 were not sure. Yet another question suggested many believed Howard was playing politics with terrorism. Those polled were asked if Australian politicians exaggerated the threat of terrorism for political mileage and 210 agreed, while 70 said politicians did this because they were ill-informed. Yet, 292 believed politicians were not exaggerating the threat. [01.09.06]

Non-core promise to growers: John Howard has forced a backdown by the Nationals to carry through an explicit promise at the last election campaign for a mandatory code of conduct for the wholesale fruit and vegetable industry, which would apply to Woolworths and Coles. The code will not be mandatory. Thus John Anderson’s promise made at the last election as Nationals’ Leader has become a Howard non-core promise. This despite the fact Anderson, when on the backbench earlier in the year, went public to deny a claim by Agriculture Minister, Peter McGauran, that the code would not apply to supermarkets because they were not wholesalers. Anderson confirmed his promise was to include supermarkets. De-Anne Kelly, Parliamentary Secretary to Nationals Leader Mark Vaile, has broken ranks with her ministerial colleagues. She told The Australian this week that growers and farmers would mobilise at the election next year if the Government backed down on its promise. Former Nationals Whip, John Forrest, said “the big end of town” has got into the Cabinet room. [01.09.06]

McGauran gives “background”: This week McGauran’s office sent us some “background”. Far from denying the decision to dump the Anderson promise, the “background” implicitly confirmed it - “Whilst the Commonwealth Government is still working through the detail of a horticulture code it is committed to improving the day-to-day relationships between fruit and vegetable growers and wholesalers by providing greater certainty and clarity for transactions. It remains clear that there needs to be ‘minimum terms of trade’ that are transparent and enforceable in law. Growers have the right to know whether the wholesaler is acting as an agent or a merchant prior to the sale. Other aspects that are being worked on as part of this process include an effective dispute resolution mechanism and the provision of clear market signals on price.” [01.09.06]

Blistering attack on Nationals: The backdown forced on McGauran is based on what is said to be Liberal hostility to mandatory codes. What about the mandatory code on franchising which Peter Reith put into legislation, the mandatory code on tobacco advertising which outlaws TV tobacco ads, and the proposal (now in the Parliament) for a mandatory Oilcode to cover retail petrol? Scott Dixon, on behalf of tableland horticulturalists in Queensland has written a blistering letter to every National MP. Dixon wrote not to make the code mandatory would be “nothing short of an act of treachery.” Dixon told Nationals MPs - “If only you had the fortitude to pull on your Liberal Coalition partners and use this balance of power to vote in line with the wishes of your constituents you would see your support increase 10 fold. Unfortunately we can only assume this subservient attitude is portrayed in an effort to retain your positions.” The hostility of farmer suppliers towards Woolworths and Coles provides a pointer for the PM to think about political reaction to efforts to take over Coles. The view in Canberra is that the syndicate put together by US-based buyout specialists, Kohlberg Kravis Roberts & Co, will come up with an offer that can’t be refused. As Inside Canberra warned last week, this would be deeply unpopular with the staff and suppliers. But they are not the only ones to consider. Australians hate takeovers of big Australian companies. Ignorant of economics as they might be, it is their view that Coles would be a very big loss, bigger than losing Vegemite, or even BHP. Some market analysts say that if Coles goes, Woolworths will be next. Peter Costello has the authority to block the takeover on national interest grounds, and if Howard says so that’s what he will do. [01.09.06]

People and Events: Anne Trimmer has been appointed CEO of the Medical Industry Association. A Minter Ellison partner, she is a former president of the Law Council of Australia. Malcolm Turnbull has released a discussion paper on the role of the private sector in supplying water and wastewater services. He said there was a “mountain” of private finance for infrastructure, yet this finance had largely been directed to toll roads. Turnbull urged the public to respond to the discussion paper which asks various questions on water services. Comments by 3 October 2006. [01.09.06]


From the Gallery: John Howard will be hoping US research on how to create stem cells without destroying human embryos calms Liberal MPs. Sectarianism is worsening in the party room. Tony Abbott (who bears the appropriate nickname of the ‘Mad Monk’) is stoking it with his inflammatory comments. He hit the headlines with his accusation“evangelical” scientists were peddling false hope of medical break-throughs. Questioning the motives of scientists by a politician is desperate stuff. The PM should be concerned at the degree of bitterness the stem cell issue has engendered within the Government. Many in the Liberal Party room believe Abbott should keep his religion out of politics. Liberals believe Abbott is going to suffer a more embarrassing defeat on stem cells than he did when he lost on the abortion drug RU 486. Meanwhile John Howard - while defending Abbott’s public comments - says he is taking his own counsel on this issue (meaning he is not being influenced by his friend Cardinal George Pell). The PM says he is “sifting through material.” Why? Is there any more material he can sift other than that which enabled Cabinet to rule against stem cell cloning in the first place? If so, what is it? [25.08.06]

Telstra mess due to Beazley and Howard: Rupert Murdoch’s The Australian rightly believes Telstra should be split - one company would own the infrastructure, separate from the retail arm - which would be another company competing in the market on the same basis as all other operators. All would have equal access to the infrastructure. The current mess over Telstra is due to the mistakes of both Labor and the Coalition. Kim Beazley made the initial mistake as Transport and Communications Minister in the Hawke Government. Beazley turned Telecom into a company, Telstra, which was then automatically the possessor of Australia’s telecommunications infrastructure. [25.08.06]

Split Telstra into infrastructure and retail: Paul Keating had the right approach. He wanted to see the creation of two companies, but Beazley won out. Then the Howard Government made the colossal mistake of not first splitting Telstra before selling T-1 and T-2. Now that the sale of T-3 seems to be on the backburner, the Government can still act decisively. It should sack the chairman, Donald McGauchie, and Sol Trujillo and his amigos, and get a new management team in to split Telstra. The infrastructure company should be owned by the Commonwealth, and the retail arm would be sold to the private sector. This would obviate the need for strict regulation of the Telstra gorilla. And for good measure, Telstra should sell its 50% holding in Foxtel and any other businesses not strictly related to its role as a telco. [25.08.06]

PM blame shifting on housing affordability: John Howard said this week - “There is a real problem in Australia about the affordability of the first home, and it’s quite clear that the main cause of the high cost of housing in this country is the lack of supply of land.” With the affordability index for first home buyers as bad as it was in the worst years of Paul Keating’s sky high interest rates, the PM is engaging in blatant blame shifting. Not a word was heard from Howard or Peter Costello about the shortage of land until the latest interest rates put the heat on the Coalition. Nor was it mentioned in the last election campaign. Far from it. Then it was all about interest rates being the key determinant of house affordability. When the Opposition went after him for breaking the promise to “keep interest rates at their record lows,” Howard insisted the issue was that interest rates under the Coalition government were far lower than under Hawke/Keating. Howard realised this excuse was not cutting it in sensitive electorates, hence the shift to blaming the states. [25.08.06]

Land release not the answer: The worsening affordability of houses is due to Howard’s failure to carry out his promise on the level of interest rates, as well as the desperate measures he took in advance of the 2001 election - when he was trailing badly in the polls - and after Peter Beattie’s crushing win in Queensland. Howard moved to double the first home owners grant and halved capital gains tax. The Reserve Bank had managed at this stage to get interest rates down to more acceptable levels, and the Government left the negative gearing lurk untouched. NSW Premier Iemma says there are some 6000 housing blocks in the hands of developers in Sydney, but they will not sell them because they believe the market is too low. More regular releases of land could help, but not that much. Chris Caton, from BT Financial Group, told the ABC earlier in the week more greenfield site releases may help. He added - “But it won’t help very much at the margin. I mean the thing about the greenfields areas is that they’re a long, long way from the centre of the city. And people would rather live closer ... There’s nothing the states can do to significantly lower the price of available, desirable land close to the CBDs.” [25.08.06]

Labor silly on terrorism: In recent weeks, Labor has set out to show it is more hairy chested about terrorism than John Howard. Opposition spokesman on homeland security, Arch Bevis, asked Transport Minister, Warren Truss, in Parliament - “Why does the Government have just four teams of police to protect more than 140 regional airports?” Which raises the question: how many police does Labor want doing this? Three or four at every one of the 140 regional airports would be the minimum for seven day a week cover. Truss replied, the larger regional airports have full screening similar to that at capital city airports. And there are what Truss called “appropriate arrangements” to help with basic security at minor airports. Fair enough. Then we had Shadow Foreign Minister, Kevin Rudd, saying the Government had “bungled” the case of Jihad Jack Thomas, after the Victorian Court of Appeal quashed his terrorism conviction. The basis of the judgement was that Thomas had no access to a lawyer when he allegedly confessed after being questioned by Federal police in Pakistan. What does Rudd expect: the Attorney-General to take command of the investigation and prosecution of every terrorist case? [25.08.06]

Helping Howard: Labor should cease talking about terrorism unless it has something useful to say. Beazley should give Bevis something else to do. Howard will be well pleased if Labor keeps terrorism going as an issue in Australia. The fact is, rightly or wrongly, opinion polls show a big majority of voters believe good old John is best able to protect them. If there was a major terrorist event within three months of the next election, Howard would be over the line. As we approach the fifth anniversary of 9/11, no Australian has been yet been killed on Australian soil by a terrorist attack. More people have been killed by sharks and crocodiles than are likely to be killed by terrorists in the next five years. The fact is local terrorism problems concern frustrated young Muslim men, who are citizens of Australia. The more the politicians talk about terrorism, the more they believe their religion is under attack and the more likely it is they will turn to extremism. Politicians should shut up about terrorism and let the police and ASIO get on with their work. They showed they don’t need any help from politicians with the successful conviction of Faheem Lodhi, who plotted to blow up the electircity grid. [25.08.06]

Downer so brave: On the subject of terrorism, we are lucky to have in Alexander Downer a Foreign Minister who is so brave in the face of adversity. Last week in Parliament, he took to Shadow Defence Minister Robert McClelland - who in the wake of the rocket attack on Australian troops guarding the Embassy in Baghdad - suggested the Embassy should be closed. His point was that the Embassy could be situated outside Iraq, and diplomats could still do diplomatic work in Baghdad. Spurning the proposal Downer fulminated - “No, we are too strong for that.” Warming to his task, the Foreign Minister said Kim Beazley’s “constant companion was the white flag.” The DFAT brat, leading from the rear, sits in his comfortable and safe ministerial office in Parliament House and insists our diplomats, and Australian troops guarding them, remain in the most dangerous city on the face of the planet. Downer claimed in his answer that Australia had “a very good relationship with the people of Iraq.” Would that include the Sunni insurgents bent on overthrowing the Shia-dominated Iraqi Government? [25.08.06]

Cole doesn’t call Calvert: It is believed that the AWB Commissioner, Terence Cole, will try to meet his new 29 September deadline for reporting to the Government on the oil-for-food scandal. This means the former head of the Department of Foreign Affairs, Ashton Calvert, will not give evidence. Calvert ran DFAT in much of the period when Messrs Howard, Downer, and Vaile just could not get the slightest sniff of what the AWB was up to. In evidence before the Cole inquiry prior to Easter, Downer was asked about a March 2004 DFAT ministerial submission confirming 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.” A letter from AWB to Downer in June shed no light. 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.” [25.08.06]

What did DFAT head know?: Many people in the bureaucracy in Canberra wonder why a direct request from the Minister for Foreign Affairs was not properly acted on. Hence, the interest in why Calvert was not called. One former senior departmental head with wide experience told Inside Canberra this week 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 put on the submission was not drawn to Calvert’s attention. Something has gone badly wrong, and the Commission is not going to find out how and why. It will be intriguing if Cole makes any finding about Downer’s admitted failure to follow up on such a vital issue. [25.08.06]

Saddam not evil – AWB: Another bombshell which emerged this week was evidence to the Commission by AWB senior executive, Jill Gillingham (who resigned two days later). She said the view Saddam was “evil” was peculiar to America’s perspective, and was not shared by the AWB. This emerged as the prime reason why the AWB dispensed with the services of American consultant Peter Sandman, who had been asked to advise on a public apology by AWB for its actions. Sandman, in a letter to AWB, criticised the company for not being sincerely sorry that oil-for-food funds were siphoned to the Hussein regime. Why did the Government give an export wheat monopoly to a company which disagrees with Bush, Howard, and Downer about Saddam being “evil”, and was relaxed about bribing Saddam? That Saddam was “evil” (and possessed weapons of mass destruction) was put forward as the major reason for the invasion of Iraq. It will also be interesting to see what Cole makes of evidence from Downer. DFAT didn’t have the legal authority to go into AWB Ltd and access the company’s files for information. Professor Don Rothwell (International Law, Sydney University) on the ABC’s 7.30 Report said Downer did not lack powers to investigate AWB, since he issued licence permits for AWB to export wheat. [25.08.06]

Downer could be recalled: Downer may have to go back into the box following evidence this week before the commission. Recall that in his previous evidence Downer insisted he had no knowledge of a plan by AWB to inflate the price of wheat contracts under the oil-for-food program. Jessica Lyons, AWB’s in-house lawyer, said on Wednesday Downer was to have been kept informed. She said another AWB executive, Peter Geary, told her the inflation of contract prices was “sensitive/political”, and we will be informing Downer. The commission released a copy of a memo dated 10 January, which outlined the plan to inflate contract prices. Somebody has scribbled on the memo - “In light of managing director’s recent conversation with the Minister for Foreign Affairs regarding Iraq, managing director only conveys our intentions to the Australian Govt at the appropriate time.” [25.08.06]

Coles takeover feared: Unions have every reason for concern at the prospect of Coles being taken over through a bid from the US-based buyout specialists, Kohlberg Kravis Roberts & Co., or the giant Wal-Mart. Having paid a premium for Coles, the Coles staff could expect from the buyer the full treatment of American-style industrial relations, namely: mass sackings and lower wages. The most serious threat, however, is to the host of suppliers to Coles ranging from small businesses to big. The number of people likely to be hurt in supplying companies and the extent of economic damage to the country would be much greater than the damage to staff. Suppliers could expect immense pressure to provide Coles with product at lower prices, or face substitution by US imports under AUSFTA. Under the gun would be farmers, food manufacturers, horticulturalists, brewers, wine makers, liquor distillers, and so on. Market analysts say that a new owner of Coles, striving to lower costs, would also push out creditor settlement terms, paying in 60 or 90 days, rather than 45 as at present. [25.08.06]

Credit squeeze threat: Such a credit squeeze alone would be a serious blow, particularly to small business. Big to medium sized companies supplying to Coles, and who buy from small businesses, could also be expected to shift the cost of Coles slow paying onto small business. Woolworths might then want to match Coles’ behaviour in both cutting the cost of staff, as well as replicating Coles’ tougher treatment of suppliers. All this should alarm the Nationals, and Barnaby Joyce in particular. He is already deeply concerned about the power of the supermarkets in everything from their now dominant position in the petrol market, to their resistance to regulation. An example of Woolworths’ resistance to regulation is the mess the Nationals are getting themselves into with horticulturalists. As part of the Nationals 2004 election campaign, then Leader, John Anderson, promised that within 100 days of being re-elected the Howard government would legislate for a mandatory code of conduct governing all players in the industry. [25.08.06]

McGuaran dumps Anderson promise: Anderson’s promise arose from continued complaints by farmers and orchardists that the voluntary code of conduct was not working, and the committee appointed by the Department of Agriculture to run the code was dominated by supermarket interests. Now, some 600 days after the election, nothing has emerged other than a declaration by Agricultural Minister, Peter McGuaran, that the supermarkets will not be bound by the code since it was only designed to deal with the wholesale industry, and Woolies and Coles were not wholesalers. On the backbench, Anderson then went public to repeat he had promised that all players, including the supermarkets, would be covered by the mandatory code. Growers argue the supermarkets are ubiquitous in the industry. They have contracts with growers, and also have agents operating in the wholesale market. Peter Darley, chair of the NSW Farmers Horticultural Committee (as well as chair of the NSW Apple and Pear Growers), complains that whether supermarkets buy direct from growers or via an agent, their quality control regimes often reject consignments without explanation. [25.08.06]

Supermarkets ruthless: Having been rejected by the supermarket, the grower has no alternative but to put the consignment onto the wholesale market, essentially a fire sale. Often the consignment can then be purchased for a song by an agent acting for a supermarket. Scott Dixon, on behalf of the Mareeba District Fruit and Vegetable Growers Association, recently wrote a biting letter to McGuaran saying his members were sick and tired of excuses for inaction on the promised mandatory code. “It is time for the Nationals to get a bit of backbone and stand up for their constituents against the big end of town,” Dixon wrote. He warned McGuaran he had already told a local National candidate that the party will be punished at the ballot box if there is no action. Given the anger expressed by growers, it is not surprising they have become convinced that the Howard Government has been ‘got at’ by Woolworths. [25.08.06]

From the Gallery: The Howard Government has increased the taxpayer provided printing allowance for MPs in the House by 29%, to $150,000 a year. This is an absolute, bloody disgrace. Taxpayers should protest. Another dodge is that the MPs can hold back 45% of their entitlements (or $67,500) to the following year. This means that in the 2007 election year, sitting MPs will have a budget of $217,000 for print-based material to be sent to unsuspecting voters. Senators till now have only been entitled to 20 reams of paper. Now they can spend $20,000 on printing, an increase of about 1,600%. How come Senators suddenly have something to say to voters? Each pollies’ base salary is $118,950. On top of that, they get an electoral allowance ranging - depending on the size of their electorate - from $27,400 to $39,600, which should be used for printing. Outside of this, political parties should pay for electioneering printing and the postage allowance of $40,000. The present system gives incumbent MPs a big advant-age. But that’s the whole idea, given existing travel, cars and other perks. Independent Peter Andren (Calare NSW) says he prints three newsletters a year costing $45,000, plus $5000 for stationery. He wants to know what MPs will do with the extra $100,000. [18.08.06]

Newspoll a shocker for Labor: If Newspoll (taken 11-13 August) is correct, Labor might as well give up on the next election, select a new leader, and hope when John Howard finally departs, an election win is possible. Newspoll has Labor’s primary at 37% (down 4% on a week earlier), and the Coalition at 44% (up 2%). This gives the Coalition a two-party preferred lead of 51% (up 2%), to Labor’s 49% (down 2%). And this in the face of the Prime Minister being effectively nailed for breaking the promise before the last election of “keeping interest rates at record lows.” Also, it means that the high price of petrol is a plus for the Coalition. Further, and despite the slide to civil war in Iraq (whilst a majority of Australians wanting to bring the troops back), Howard continues to prosper. [18.08.06]

But is the maths correct or haywire?: One alternative view is that Newspoll has gone haywire. ACNielsen (taken 10-12 August) has the Labor primary at 42% (down 1% on a month earlier), and the Coalition unchanged at 41%. This gives a two-party preferred vote of Labor 53% (up 1%) to the Coalition’s 47% (down 1%). The latest Morgan Poll (taken over the weekends of 22-23 & 29-30 July) had a two-party preferred outcome of Labor 53.5%, and the Coalition 46.5%. Average the three polls, and the two-party preferred outcome is Labor 51.8%, Coalition 48.2%. According to ACNielsen, Labor’s two-party preferred lead in the cities (where most of the seats are), remains solid - ALP 54% (up 1%), to the Coalition’s 46% (down 1%). [18.08.06]

Government backbenchers say petrol hurting badly: In last month’s ACNielsen poll, Labor was surprisingly running 50-50 with the Coalition in rural Australia, the best it has done since the election. ACNielsen believed this could have been a statistical error. Yet in the latest poll, Labor has taken a lead in rural areas of 52% (to 48%), confirming the the previous poll’s finding. This suggests that petrol prices in the bush - where there is little access to public transport, and longer distances are driven than in the cities - is biting hard and hurting Howard. Such an outcome would not have surprised Coalition backbenchers, who at the government party meeting on Monday hammered Howard on the need to do something urgently to relief rapidly rising transport costs. Hence, John Howard reacted with the announcement of a $2000 subsidy for motorists converting to LPG. [18.08.06]

Will the LPG subsidy work?: ACNielsen has Labor still trailing, but not as badly, on the question of which party would best handle the economy - Coalition 54%, Labor 33% (don’t know 13%). Asked if fuel increases were due to “overseas forces beyond the government’s control” - 54% agreed, but 43% disagreed - not altogether good for the government. Worse, asked to comment on the government’s response to high petrol prices, only 21% were satisfied, 74% were dissatisfied, with don’t know 4%. This last question was put before Monday’s announcement by Howard of subsidies for motorists moving to LPG. Only time will tell if the Government gains ground from the LPG conversion strategy which, like taxis, will most benefit those travelling long distances, including those in the bush. [18.08.06]

Conscience voting: In the party room on Tuesday, John Howard said he would give his colleagues a “free vote” on the issue of stem cell research. They were most grateful. It would seem the party room has conceded that Emperor Howard alone has the power to instruct backbenchers how to vote. Only he can allow them a conscience (or free vote) - not the Cabinet, nor the party room. Yet he can’t. The reality is that any Liberal, not a member of the Ministry, can vote however they like. The evidence for this is that last week in the House - and for the first time in the life of the Howard Government - there was floor crossing by three Liberals on the Immigration Bill. Nothing has happened to them, though Judy Moylan’s pre-selection could now be difficult. Yet pre-selections can always be difficult for many reasons. In February, Inside Canberra told readers of how, in March 1963, The Sydney Daily Telegraph published a bombshell picture of the Opposition Leader, Arthur Calwell, and his deputy, Gough Whitlam, waiting in the dead of night outside the Kingston Hotel for the 36 members of the ALP National Conference to vote on the Menzies Government legislation for a US naval communications base. [18.08.06]

Menzies view clear: The founder of the Liberal Party, RG Menzies, leapt on this picture to deride Labor for voting according to the dictates of the “36 faceless men”. In contrast, he said, no Liberal MP could be directed by anyone as to how they should vote. Former Liberal Prime Minister, Malcolm Fraser, confirmed to us that under his administration, every Liberal could vote according to his conscience on any issue. “A conscience vote is a matter for the individual, nobody else. Nobody can examine and know your conscience,” Fraser said. Further, former Liberal Party Federal President, John Valder, chaired a committee reviewing the 1983 election defeat. That committee’s report stated - “The Liberal Party does not require of its Parliamentary candidates a pledge to always vote with the party in Parliament.” So, Howard cannot stop Liberals voting as to how their conscience directs them. The Parliamentary Library has found that 217 Coalition MPs crossed the floor between 1950 and 2004. It says something about the grip the PM has held over his party during the last ten years that, last week was the first time Liberals in the House were prepared to vote against him. [18.08.06]

DUB vote the answer: What the Liberal Party room is after is a vote which we would call the ‘Don’t Upset the Boss’ (or DUB) vote. In other words, a DUB vote would allow backbenchers to vote against a Government measure with the assurance that it would not ruin their political career - something that is entirely in the hands of the PM. It is worth noting (and without meaning to sneer at their genuine concern), that the three who voted against Howard on the immigration legislation knew they had no further advancement coming to them under Howard’s reign. The PM either badly read public opinion on his defeated immigration legislation, or he has been overcome by hubris. It is not as though opposition to the measures came from a far Left faction. A group of admired Australians outside of politics wrote to every Senator asking that the legislation be defeated. These included: eminent scientist, Gus Nossal; World Vision Chief (and brother of the Treasurer), Tim Costello; Orica Director, Peter Duncan; Brett McKeon, Macquarie Bank’s executive director; Don Mercer, chairman of the Australian Institute of Company Directors; and Hugh Evans, Australian of the Year at 20. [18.08.06]

Voters against Howard, for Papuans: It is interesting that business people have been prepared to go public and oppose a Howard measure not directly concerning business, which they believe is against the national interest. Not a word of comment of course from ACCI, the Business Council, or the Australian Industry Group. (Can’t upset the PM you know - it might make things difficult for our members). Howard was not helped by denying the immigration legislation was designed to appease Indonesia, when it patently was for this exact purpose. On top of that, the PM went back on an agreement last year with Petro Georgiou and others that families with children would not be locked up in detention centres while their application for refugee status was being processed. In July, Newspoll asked - “Recently the Indonesian Government expressed its concern at Australia’s decision to grant visas to 42 West Papuan asylum seekers and recalled its ambassador in protest. Do you think the Australian government should change its immigration policies in order to improve its relations with Indonesia or keep the policies as they are?” Of the 1200 polled, 74% said current laws should remain, and only 15% supported a change. The Age in June asked - “Should Australia welcome West Papuan refugees?” Yes 82%, No 18%. The Age also asked - “Are the Federal Government’s proposed new asylum laws too tough?” Yes scored 73%, and No 27%. [18.08.06]

Wheat exports hit: Australian wheatgrowers have lost most of what was one of their best markets, Iraq. Once dominant in the market, Australia is now only a minor player. The US Department of Agriculture has announced America now has 72% of the Iraq market. Obviously, when it comes to standing alongside our American ally, there are no rewards in trade. Will this disaster damage the Coalition in the bush in the coming election? Well before that election is held, Cole will have reported and will surely at least condemn AWB out of hand, if not DFAT and the Government. Then the Government will have to decide whether Australia should continue with the single desk export system - and if it does - who should operate it. In March, Inside Canberra reported on a survey conducted by The Land newspaper of 1002 wheat growers. It showed 73% support the single desk. Further, 69.3% believe AWB should maintain its wheat marketing monopoly, and 69.5% believe the company has been “unduly victimised” compared with other international companies named in the food-for-oil scandal. Given American influence in Baghdad, it is certain a decent share of the Iraqi market will not be won back whilst ever Australia operates a single desk, let alone if such a monopoly continues under AWB control. [18.08.06]

Dump AWB – expert: Yet the AWB has been back in Baghdad trying to drum up business. John Kerin, of the Melbourne Business School, is an advocate for abolition of the single desk. In a recent paper, he said AWB should not be allowed to export at all. “Given the trail of damage that AWB has left in its wake, I am amazed that no-one has asked the question: what on earth more does the AWB have to do before the Government actually takes its (export) license away?” He also estimates that by removing the single desk, growers would be better off by up to $360 million a year. Dow Jones reports that at a wheat industry conference last week, Ron Storey (a former general manager of AWB and now a consultant) warned the ‘industry’ focus on the Cole inquiry was bad for the industry. Storey said the very conference he was attending was another example of “ritualistic navel gazing about future structures” of the industry. This was stopping it from getting on with other important business, such as the uptake of genetically modified seed and other opportunities. Storey also said those wanting to perpetuate AWB’s monopoly appeared to be labouring under a “burden of guilt.” [18.08.06]

Wasting money on the Navy: Taxpayers will shortly be hit for up to $6 billion to build (in Adelaide) three air warfare destroyers (AWDs) for the Navy, the need for which is dubious at best. Unfortunately, Kim Beazley is not prepared to demand an explanation from the Government as to why they are needed. Defence Minister, Brendan Nelson, deigned to give a sketchy explanation of their use in answer to a pre-arranged question in the House last week. He said the ships were “essential for the defence and future protection of Australia.” Able to intercept missiles up to a range of 150 kilometres, Nelson said the new AWDs “would protect troops landing from two amphibious ships, yet to be built.” This is Rubbish. Australia won’t be invading Indonesia, and if (as is becoming increasingly likely) our troops are going to be required to restore law and order in an increasingly ungovernable PNG, or even Fiji, they will not be met by missiles launched by the locals. [18.08.06]

Paying to join US wars: The reason these ships (most likely of American design and with ‘top secret’ Lockheed Martin Aegis electronics) are being provided to the Navy, is so that Australia can more meaningfully support the United States in future conflicts such as the Middle East or the Straits of Taiwan. This is reflected in the Australian Defence Department’s stipulation that the three AWDs need to be ‘interoperable’ with a US Navy battle fleet. The American plan is to have close allies (including Australia and Japan) not only able to join it in future wars, but also have them pay upfront for the privilege by having to purchase US-sourced military technology and weapons. The most absurd proposition Nelson put forward was that Australia could be a target for North Korean Taepodong 2 missiles. The proposition - seriously advocated by Nelson, Howard and Downer - that poverty stricken North Korea (reliant entirely on aid from South Korea and China to stay afloat) could conceivably build a nuclear ballistic missile and accurately target it on an Australian city, is as unlikely as an invasion of the planet by extra terrestrials. [18.08.06]

Missile baloney from Nelson: Professor Gavan McCormack, Professor of Asian history at the ANU, told us this week that the North Koreans have had only one successful middle distance missile test, in 1993, and have had nothing successful since then. Recent tests (in July) were for short distance missiles, which basically worked. A longer range missile, designed to fly a greater distance, dropped into the sea off the coast of Russia. The North Koreans had notified the Russians to get any fishing boats out of the nominated target area, where all the missiles fell. “It seemed to me they had no intention of firing a missile into the mid-Pacific, even if they had the capacity”, McCormack said. He added the world had now lost out on a peace-making deal - which North Korea had signed up to under Bill Clinton - to halt their graphite nuclear reactor development program. The US agreed, in turn, to provide light water reactors for power generation as part of a move towards the normalisation of political and economic relations. [18.08.06]

Bush policy a disaster: McCormack said the deal held from 1994 through to the end of 2002. Then the Americans suspended the supply of heavy oil, needed to keep North Korea’s power generation system going until the US-provided lightwater reactors kicked in. The North Koreans responded to this by resuming their nuclear weapons program. He pointed out US Vice-President Cheney’s view of the North Koreans via the comment - “You don’t negotiate with evil, you defeat it.” McCormack added South Korea was more committed to reunification, and is involved in multiple economic deals with the North as a means of opening up as many windows as possible to this traditionally ‘closed’ state. Seoul wants information, capital and technology to flow in - and in time - anticipates North Koreans at large will deal with the current political regime and nuclear issues. Against this background, as provided by McCormack, it’s obvious no progress will be made on resolving points of friction with North Korea question until President George W Bush is out of the White House. [18.08.06]

Checking on corruption: The ACCC has decided to impose unprecedented new conduct rules upon the drug industry. Drug companies will be required to disclose details of every free/gratis function or facilitation they provide to doctors. Roche recently lavished a $200 a head dinner on 200 cancer specialists in Sydney. It is most odd that such activities by the ACCC are happening under a Government which portrays itself as striving to cut red tape. If the ACCC persists with this approach, then what about the ACCC insisting that the private sector give details of all the money spent on attending fund raising dinners and other functions supportive of political parties, as well as their reasons for so doing. If there is now a certain bad odour about the motives of drug companies in their lavishing of entertainment upon doctors, what about the distinctive stink that hangs around the private sector’s lavishing money upon political parties. The public believes it all adds up to cash for favours, and denials by the political parties, apart from the stench, sound distinctively hollow. [18.08.06]

From the Gallery: The emergence of sect-arianism in the Liberal Party (see page one) coincides with the enthusiasm with which some Federal pollies have taken up the call by the Christian Heritage National Forum, to raise recognition levels within the broader community of the role Christianity has played in the Australian heritage. As some well founded research has shown, only 9% of Australians attend church each week, so the Forum may have a job in front of it. Voters might first identify with more urgent matters needing attention, and conclude the pollies could leave Christianity boosting to the churches. At a time when we are supposedly assuring Muslim citizens they are just as valued as Christian citizens, the the drive to elevate Christianity by politicians could have been better timed. A pleasing feature of Australian politics is that Australian Prime Ministers (including the present incum-bent), eschew calling on the Almighty for support on a range of earthly matters. Presidnet George W Bush, on the other hand, takes the opposite approach (not that it has done him or the US much good). Australians have elected two Prime Ministers who were known, proud atheists - Whit-lam and Hawke - and it hasn’t appeared to have hurt the nation one bit. [11.08.06]

Sectarianism on the boil in Liberal Party: Sectarianism is on the boil in the Liberal Party, both in Federal Parliament and in John Howard’s NSW division. To date, sectarian-based clashes have been mainly kept behind closed doors, but it is now increasingly difficult to prevent them coming to the attention of the general public. In the Liberal Party room, there is considerable bitterness about what is seen as disproportionate representation in Cabinet of Catholic ministers supporting conservative Catholic doctrines. Tony Abbott is widely regarded as the flag bearer within the Government for such doctrines. [11.08.06]

Anger of Cabinet arrogance on stem cells: Backbench concern about the activities of Abbott and other ministers is coming to a head on the issue of stem cell research. A number of Liberal backbenchers are angry at the arrogance which John Howard displayed in handling the Lockhart Review, which recommended extending stem cell research to the cloning of human stem cells. This was rejected by Cabinet, although it was by no means a unanimous view of ministers. Yet as John Howard always gets his way in Cabinet, the Lockhart recommendations were junked on ethical, not technical grounds. Backbenchers are furious that Cabinet made a decision of such far reaching importance to future Australian leadership in health research - on the basis of ethical concerns - without any reference to the party room. Dr Mal Washer, a GP (Moore, WA), has succeeded in getting an undertaking from Howard that the issue of the Lockhart Review will be debated in the party room. [11.08.06]

Abbott rejects claims of research benefits: Tony Abbott, at the National Press Club (2 August), opined there was “very little real evidence that embryonic stem cell research is the health nirvana that some of its more enthusiastic advocates portray.” He said that “so-called therapeutic cloning is basically translating ‘Dolly the sheep’ type situations to human beings.” He also said that if the issue was again debated in Parliament there would be a free vote. But as Washer points out, the problem is not so much getting a free vote, but getting a bill from the Government which can settle the issue. The decision by Cabinet against Lockhart did not require the approval of Parliament. There is a feeling among many backbench Liberals that Cardinal George Pell, a good friend of the PM, has had far too much influence. [11.08.06]

Goward - Catholic Right against, PM for: Howard’s views are also in line with those of George W. Bush, who recently used his veto (for the first time) to sink Congressional legislation allowing an extension of research into the cloning of human stem cells. In NSW, Upper House MP David Clarke (an admirer of the Opus Dei Catholic sect which preaches an extreme version of Catholic doctrine), controls the dominant Right faction of the Libs. Clarke’s candidate for pre-selection for the state seat of Epping is the NSW Deputy Director of Prosecutions, Greg Smith - a strong supporter of the anti-abortion lobby. Right faction supporters are said to be stacking the branch with Lebanese Maronite Christians. He is being opposed by a genuine small ‘l’ Liberal, Pru Goward. If she loses, it will be a slap in the face to both John Howard and Peter Debnam, who support Goward. It is a far cry from the Liberal Party of 1949, which was widely seen as anti-Catholic and (of course) anti-Jew. In 1949, Senator Neil O’Sullivan was Menzies’ ‘token’ Catholic minister. It wasn’t until 1956 that the NSW division of the Liberal Party got a Catholic into the Menzies Ministry, one Jack Cramer, a North Shore real estate agent. These were the years when ambitious Catholics joined the Labor Party. Now the Catholics have more influence in the Liberal Party, than have Catholics in the Labor Party. Of course, there is also very real concern about stem cell research among Catholics in Labor Caucus. [11.08.06]

Newspoll disappoints Labor: Labor is disappointed with the latest Newspoll (taken 4-6 August) - after the Reserve Bank announced a one quarter per cent interest rate rise. Labor has been deriding Howard at length for his failed promise to “keep interest rates at record lows.” It was believed by just about everyone in politics the Government would suffer a big hit. In the end, it was a mere adjustment on the dead heat 50-50 two-party preferred vote of the 28 -30 July poll. The Coalition primary vote (at 42%) was down only 1%, and the Labor primary of 41%, was up 1%. These primaries arose from somewhat curious results. The Nationals were up 1% (to 5%), and the Greens were up 2% (to 7%). It is difficult to understand why these two increases would have happened, and what did they have to do with the burning issues of the day - petrol prices and interest rates. The two-party preferred outcome was 51% ALP (up 1%), and 49% Coalition (down 1%). It was generally expected Labor would have been doing far better than this. Just why Labor’s gains have been so modest is difficult to pinpoint. Looking at the broader perspective, in two-party preferred terms, Labor has won eight of the polls since February, the Coalition three, and two were dead heats. [11.08.06]

Morgan better for ALP: The latest Morgan Poll is much better for Labor than Newspoll. Taken over the weekend of July 22-23 & 29-30, it was before the rate rise announcement, but after news of a rise in inflation which commentators were saying (correctly) would inevitably lead to an interest rate hike. Morgan says primary support for the Coalition was 40% (down 5%), and ALP 42% (up 5.5%). Two-party preferred, Morgan has Labor on 53.5%, and the Coalition on 46.5%. Politicians believe that Newspoll is generally more accurate. The real position could be somewhere between the two polls. Interestingly, Morgan has the Greens on 8% (up 0.5%), and Family First struggling on 2.5% (unchanged). Preferences from the Greens are flowing 81% to the ALP, and 19% to the Coalition. Family First goes 67% to the Coalition, and 33% to ALP. That Morgan might be nearer the mark than Newspoll would be a reasonable conclusion judging by the mood of Coalition backbenchers at Monday’s special party meeting, the first for six weeks. [11.08.06]

Govt’s IR pitch failing: A clear majority of backbenchers believed the Government was in trouble over the Work Choice legislation, and was not selling it well enough to quell community hostility. There is generally concern within the Liberal Party that the ACTU is winning hands down over the Government. The latest ACTU radio advertisements are regarded by Liberal strategists as very effective. The PM, who has looked rattled in Parliament this week, got the message. He has appointed Human Services Minister Joe Hockey to assist Workplace Relations Minister, Kevin Andrews - regarded by many of his colleagues as a failure. Howard has also appointed a task force of backbenchers, headed by backbencher Phil Barresi. Most of them have never been heard of by workers. It is extremely doubtful that this taskforce will do any better than Andrew Robb’s efforts to sell the legislation. Robb, a parliamentary secretary, is widely regarded as the brains behind Howard’s 1996 election victory and is no slouch, yet he failed to turn public opinion through his efforts. [11.08.06]

Combet too good for Andrews: There are two problems for Howard. Firstly, the legislation is not saleable. Howard has no mandate for any of the major principles of Work Choice. They were not mentioned by him in the last election campaign. The Government has failed to convince workers with sound argument and research that Work Choice will be good for the economy, and create more jobs. Howard and Andrews simply rely on bald assertions that this will be the outcome. The second major problem is that neither Howard, Andrews, Hockey or anyone else in government can match ACTU Secretary, Greg Combet. To workers, Combet comes across as calm, reasoned and sincere. The ministers arguing against him are seen as politicians. It is no contest. Incidentally, earlier in the year the Liberals believed they had nailed Kim Beazley because of his promise to totally abolish AWAs. We don’t hear these predictions anymore. The ACTU has got the focus back on what really scares workers: the prospect of losing benefits, particularly paid overtime and paid holidays. [11.08.06]

Complexity in petrol pricing: The Senate Economics Committee’s inquiry into petrol prices will be a major news event when it reports by 9 October. The inquiry has been derided by some, such as Family First Senator Steve Fielding, who says there have been almost 50 inquiries into petrol over the past 20 years. True, but there never has been an inquiry which coincided with petrol at record price levels and with experts predicting it could easily go to $2 a litre retail. The Government says there is nothing it can do, and current prices are entirely an outcome of international demand for crude. It’s not that simple. In its submission to the committee, the Motor Trades Association of Australia (MTAA) pointed out the wholesale price of petrol determines the retail price and the wholesale price is arrived at by a very complex procedure. It is not the price based on the actual cost of the crude oil refined in Australia or the actual cost of importing petrol into Australia. [11.08.06]

Import price parity: Rather, for some 18 years the wholesale price has been determined by a theoretical Import Parity Price calculation. This involves adjusting an international benchmark price for refined petrol (an average of the spot price of Singapore Mogas 95 unleaded), for Australian fuel standards, wharfage, insurance and shipping to Australia. The calculation is made in US dollars, and then converted to Australian dollars. This means, MTAA points out, that movements in the international benchmark and the Australian/US dollar exchange rate exert considerable influence over the wholesale price. Singapore (a high cost Asian nation) Mogas prices often vary considerably from the relevant Asian benchmark for crude oil, Malaysian Tapis. On 9 July, Singapore Mogas was at about 70c a litre, yet the average cost for a litre of petrol in Sydney on 11 July was 134.1c a litre, made up of the wholesale price of 79.5c, plus tax of 50.3c and retail and refiner margins of 4.3cpl. [11.08.06]

Check needed on price setting: This reliance on the international benchmark means motorists get no advantage from having Australia’s own crude refined locally, at what would be a much lower price. Successive governments have agreed to the present system, in acknowledgement of oil company arguments that there would be no capital for exploration if oil companies did not get the international price. The Singapore price is based on the cost of refining oil in Singapore by the same oil companies operating refineries in Australia. The MTAA evidence would suggest there is a good case for the ACCC to completely review the international benchmark rate for fairness, and also run a check on how and why its various constituents are arrived at and who has the authority to actually set Singapore Mogas prices. MTAA also pressed the point the wholesale price in Australia at the terminal gate should be transparent. This would be essential to ensure there is competition at the wholesale level and would reduce scope for anti-competitive behaviour. [11.08.06]

Discrimination in petrol discounting: MTAA says the Government purports, through its change to retail marketing, to achieve a transparent terminal gate price. Yet it would still allow oil companies to discount fuel. In short, Caltex could discount for Woolies shopper docket petrol and Shell for Coles shopper docket sales, while not discounting for competitors such as the independents. It is worth recalling that prior to August 1998, the Australian Government - through the Prices Surveillance Authority - regulated the maximum wholesale price of petrol. The Howard Government abandoned such regulation, and the wholesale price is now set by the oil companies. Maybe motorists might like to see a return to government regulation of the wholesale price. It is pointless for the Government to try to subsidise motorists by various means to ease the pain of high petrol prices. We have to learn to live with high petrol prices. But the Government should ensure that big oil is supplying product at a reasonable wholesale price, not a rip-off one. [11.08.06]

Vaile to stay in Trade: Despite the pressure from his own party, Mark Vaile is unlikely to leave the Trade portfolio and take up a domestic portfolio of more direct interest to Nationals’ constituents. The Nationals are desperate not to lose any more seats. Vaile’s argument is that from now until the election there, will be little to do in the Trade portfolio. There is no prospect of Doha Round being revived this side of the next Presidential election in November 2008. Claims by Vaile that he might be able to revive Doha at a meeting of Trade Ministers in Cairns next month, can be dismissed. The EU’s Chief Negotiator, Peter Mandelson, will not attend the meeting and has chided Australia for siding with the US on Doha negotiations. Mandelson blames the US for the Doha breakdown because it refused to give ground on agricultural subsidies. On Monday, Alexander Downer blamed the EU for the breakdown. Vaile showed the extent of his influence on US trade negotiations when he couldn’t even get an extra spoonful of Australian sugar included in the Australia/US FTA. Vaile also has in hand the free trade deal with China, although with sensitive areas being pulled off the table, a deal might never eventuate. [11.08.06]

Taxpayers will aid Nationals: Reports have emerged this week that ministers are less than enthusiastic about Vaile’s proposals to trade off what remains of tariff protection for local vehicle and clothing manufacture. Beazley is obviously against an FTA, and the unions would come out all guns blazing against such a deal given there are clear signs workers are already feeling less secure in their jobs because of Work Choice. To them, free trade equates with job losses. With an election due next year, pursuit of a China FTA is not a good idea. All this means Vaile will be able to use his considerable taxpayer-provided resources to devote himself almost entirely to party work. Taxpayers might not be too keen about this, but that’s too bad. Howard should take this opportunity to create a new portfolio devoted to the expansion high value manufactured products and services exports. This will get the focus off the endless striving by Nationals Trade Ministers to reach the Nirvana of world free trade in agriculture. It has been now well and truly established, after 50 years of effort, that this is not going to happen. [11.08.06]

Needed - an export minister: What Australia needs is a Liberal from Sydney, Melbourne or Adelaide to be appointed Minister for Export Products and Services. This is the area of world trade which is most open, and where barriers, by and large, are much lower than for agriculture. A very good candidate would be Malcolm Turnbull. Yes, his comment downplaying the pain of interest rate rises was a terrible blooper. He has yet to learn the political skills, such as not speaking your mind if it cost votes. Yet Turnbull knows more about business and commerce than anyone in the Parliament, and has the intellectual capacity and imagination to do a good job. The efforts of the Department of Industry, Tourism and Resources have been unimpressive to say the least. Those elements of the current Department dealing with manufacturing, services and tourism, would be hived off into the new Department of Export Products and Services. The existing Industry, Tourism and Resources Department would be stripped back to just Resources. For many years the mining and resources industry had its own senior department, and with the current bull commodities market, deserves its own department even more now. [11.08.06]

From the Gallery: Mal (Bulldozer) Brough, Minister for Indigenous Affairs, an ex-Army man, has earned a reputation in Government among Aborigines and in the mining industry as someone who will not listen. Hence he is proposing to proceed with legislation which will upset a lot of people, including the Minerals Council of Australia, the peak national body for miners. The Aboriginal Land Rights (Northern Territory) Amendment Bill will allow small aboriginal communities to break away from large land councils and form their own land councils. Land councils, in negotiating with developers on such projects as railways and pipelines, often make decisions that some small aboriginal communities don’t like. The fear of the NT Government and miners is that it will be impossibly difficult for progress to be made if every community can stand in the way of what a majority want. After a lamentably brief hearing, with only a one day sitting in Darwin, government Senators on a Senate committee examining the measure reluctantly agreed to the bill. Now it is to be rushed into the Senate next Tuesday. All the non-government submissions were against the bill. Does the PM understand that Brough is going against the mining industry on this vital issue? We doubt it. [04.08.06]

Howard’s 2004 rate tactic now hurting him: Undoubtedly the major factor in John Howard winning the 2004 election was his success in selling the initial more modest and unprovable argument that interest rates would always be higher under a Labor Government, which always spent more than Coalition Governments (No-one pointed out at the time that when John Howard was Treasurer and the Government - not the Reserve Bank - set interest rates, they hit 21.39% in April 1982). Inside Canberra said of the PM’s claim, if all voters read the Financial Review Howard would have failed. The Fin was replete with rebuttals of Howard’s claim by money market experts and academics. Now his promise of “keeping interest rates low” has come back to bite him with the third rise in rates since the election. [04.08.06]

Yes, the promise was no increase: Howard now says that he didn’t “promise” rates wouldn’t go up. No Government, he said in advance of this week’s rate hike, could guarantee rates would never go up. Yet with the recall magic of computers Labor has been able to give plenty of instances of where he and the Liberals did promise to prevent any rate rise. At his press conference on Wednesday Shadow Treasurer, Wayne Swan, was able to produce a copy of a Liberal Party TV ad. 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 he has broken his promise. Rates have gone up three times since the election and may go up again before the end of the year. [04.08.06]

When attacked, blame others: The PM is indeed a shrewd politician. In advance of the decision of Tuesday, Howard went public to say the Reserve should take account of one off factors such as banana prices before hiking rates. This was seen as a ‘message’ to the Reserve. It was no such thing. Treasurer head Ken Henry as a board member of the Reserve was there to tell the bank exactly what the Government thought about rates. No, Howard was emphasising to voters that they should not blame him, but rather blame should be directed to the ‘independent’ Reserve. In advance of the election he said nothing about the Reserve alone being able to move interest rates. After the rate rise on Wednesday the PM changed his tack to say it was the rate rise we had to have (Shades of Paul Keating.) Another diversion was to attack the NSW Labor Government for not releasing more land in Sydney to keep prices of houses down. [04.08.06]

Who inflated the housing bubble?: True, there should be more land released for homebuilding, but this was not the reason why the Reserve put up rates or why home prices have gone to insane, unaffordable levels. The Howard Government itself played a major role in the housing price bubble, by firstly doubling the first home owners grant in advance of the 2001 election, slashing the capital gains tax, and doing nothing to stop the rort of negative gearing on investment property. According to the experts, there is now going to be mayhem in business generally and housing in particular. The Melbourne Age reports that even before the latest rate rise, home loan defaults in Victoria had jumped 50% so far this year. Supreme Court of Victoria figures show that 1474 claims for repossession of a property were lodged in the first half of this year compared with 968 in the same six months of 2005. Most of the claims, approaching 95%, were private home owners defaulting on mortgage repayments. The Howard Government is in for a rough time. This is just what Labor needs following this week’s Newspoll (see below). [04.08.06]

Poll bad news for Beazley: The worst news for Beazley this week was not the decision by Howard to remain for the next election. It was the latest Newspoll which showed Labor’s lead a fortnight ago two-party preferred of 52%, to the Coalition’s 48%, had been cut back to 50% each. Labor’s primary vote dropped 2%, to 40%, and the Coalition’s primary rose 1%, to 43%. Labor went backwards despite surging petrol prices, concern over interest rates, and confusion about the Liberal leadership. And this poll was taken before Howard announced he would go to the next election. This should reflect favourably for the Coalition in the next poll. It is hard to explain the slide by Labor. True there were two days of very positive media coverage of Howard’s birthday. Additionally, the war in Lebanon would have assisted Howard who is seen as the best leader to handle Defence and national security. And of course the poll could be wrong. It looks somewhat strange. Howard’s satisfaction rating rose 3%, to 50%, while Beazley’s rating was up 1%, to 35%. Yet the Liberal primary vote was unchanged at 38%. The Nationals’ support rose 4%, to 5%, and this could be askew. If the next few polls don’t improve, Labor will be shaken. [04.08.06]

Minimum wage ammo for ALP: It’s not as though Beazley has nothing to work with. Industrial relations issues should have seen Labor well in front. Now new ammunition has been provided to Beazley and the ACTU. The Howard Government’s submission to the Australian Fair Pay Commission (AFPC) confirms the intent everyone in the industrial relations game took for granted: reduce minimum wage increases to below which would have occurred if they were set by the Australian Industrial Relations Commission (as they have for a century). The fact that AIRC-set minimum wages would be $50 a week less if the Commission had followed Government submissions gave a sure pointer as to why the AFPC was established. The Government submission says a minimum wage increase is justified, yet fails to say what it should be. The aim of the submission is, short of advocating no increase, to keep any increase as low as possible. [04.08.06]

Low paid responsible for unemployment: The submission presents modelling which says any wage increase would prevent, to some extent, job creation. Even a 10c an hour increase in the current hourly rate of $12.75 an hour would, it is claimed, cost 10,700 jobs. This flies in the face of the AIRC’s own assessment that there is no evidence to support such modelling. The OECD modelling of earlier this year concluded there was “no significant direct impact of the level of the minimum wage on unemployment.” Essentially the Government is arguing that the lowest paid workers in the community are responsible for unemployment being higher than it should be because they are getting too much pay. This must have adverse political implications for the Government, already struggling to turn the tide of public opinion against the Work Choice legislation. Obviously there have to be some heroic assumptions when attempting to model the connection between minimum wages unemployment. [04.08.06]

ACCI changes tack: The mathematics of how extensive are the ripples caused in the labour pool by a rise in the minimum wage takes some doing (The ACTU says it is not great). But then to assume in a booming economy employers will turn their backs on more profits because of a wage rise is a big leap. In May Inside Canberra reported on the St George/ACCI business survey of the five most important constraints on investment. Wage costs ranked third for medium sized businesses, and only in fourth spot for small businesses. For large businesses wages didn’t rank at all as a constraint. This might explain why ACCI is now prepared to support a wage rise close to the inflation rate. Last week Hendy said the peak business body had decided to move away from the “ideological” conflicts which had consumed it during wage cases in the AIRC. We understand this followed opposition from the state chambers (which fund the ACCI Canberra secretariat) to a proposal by Hendy for a very low wage increase. The state chambers have long been unhappy about ACCI’s fulsome support for Work Choice, particularly the centralisation of IR power in Canberra. Such centralisation is seen as greatly diminishing the role of state chambers in giving member companies advice on IR issues. [04.08.06]

Of course Howard is staying: Our readers would not be surprised by John Howard’s announcement on Monday that he would lead the Government to the next election. We have been saying this ever since Howard first mused on radio in 2002 about retiring. Inside Canberra said only two weeks ago - “Howard always intended going to the next election, as we have been saying for years. Janette likes Kirribilli House too much and Howard could not possibly give up playing the role of host when APEC meets in Australia next year. We have long maintained Howard will either be carried out of Parliament House in a box or he will be defeated.” There will be no Menzies-like gracious departure from the Prime Ministership. Peter Costello’s being “risk averse” as Tony Abbott once said, will just keep on and on in the Treasury portfolio. [04.08.06]

Outlook bleak for Costello: Costello just doesn’t seem to excite much interest among voters. He has yet to give the electorate any understanding of what he is about and what he would like to do as Prime Minister. He has come up with some gimmicks on the fertility rate and warnings about the risks associated with the ageing population. On the latter he has done nothing much. There is his superannuation plan which would be very generous to the retired. Some economists say the country will not be able to afford the plan long term. Then there is the Treasurer’s pointless Future Fund. Costello most wonder if it is really worthwhile staying in Parliament. There is no guarantee that if Howard wins the next election, he will not set his sights on yet another. If the Coalition is defeated next year, its hard to see Costello wanting to slog along in the most arduous of all jobs, as Leader of the Opposition. Meanwhile, although the overwhelming majority of backbenchers wanted Howard to stay, they are increasingly refusing to put their hands up for everything the PM wants. [04.08.06]

Backbenchers showing independence: The decision by the Refugee Review Tribunal in favour of David Wainggai, means he will get a protective visa to stay in Australia unless the Government appeals. He was the only one of the 43 Papuan boat people from West Papua not to be given a protective visa to stay in Australia. The backbench rebels against Howard’s new laws on refugees, specifically designed to appease Jakarta, will be stiffened in their resolve by the Tribunal’s decision. Howard is also facing resistance to his stance of refusing to allow expansion of stem cell research. Then we have Barnaby Joyce and Wilson Tuckey demanding action on alternative fuels such as by mandating ethanol. And the Queensland Nationals will not accept changes to cross media ownership rules proposed by Communications Minister, Helen Coonan. [04.08.06]

Cole report faces delay: The Commission of inquiry report into the oil for food inquiry could be greatly delayed beyond the present deadline of 29 September, following rulings by Judge Neil Young in the Federal Court. The effect of the ruling is that the Federal Court, not Commissioner Cole, will rule on the privilege of documents held by AWB which it is desperately trying to avoid becoming public and being part of the evidence of the commission. It would seem Cole either forgets about the documents he was after and meets the 29 September deadline for his report, or he seeks a further extension. The Government awaits the release of Cole’s report with considerable apprehension. There is a lot riding on the Cole findings, not only for John Howard, Alexander Downer and Mark Vaile, but also the Australian wheat industry, and last but not least, Cole himself. [04.08.06]

Will DFAT be scapegoat?: If Cole gives the Government and the Department of Foreign Affairs and Trade a complete clearance from any knowledge of the kick backs, or for failing to follow up repeated pointers to kickbacks, it will be widely seen as a whitewash. This will not help the Government. It is difficult to conceive how Cole could not be highly critical of the failure of DFAT to be beware of what AWB was up to and to have put an end to kickbacks. If the report is critical of DFAT then Downer and Vaile will have to accept political responsibility. It will look very bad if they simply leave it to their DFAT advisers to accept the role of scapegoats. Nor will the Commission’s report appear complete if the secret AWB documents are not included in evidence. A burning question is why AWB is so desperate to keep documents from Cole? A report, even if only critical of AWB, will see US Wheat Associates, the US wheat industry’s powerful lobbying arm in Washington, on the warpath. [04.08.06]

Tough talk on single desk: The US wheat lobby was demanding from the Administration that the Doha Round be used to pressure Australia to end the monopoly export power vested in AWB. With Doha a failure, US Wheat Associates could well advocate unilateral action by the US Administration if Canberra fails to end the single desk export system. This comes to the most difficult question for the Liberals and Nationals. In February a survey by The Land newspaper found 70% of wheatgrowers did not believe Howard’s assertion the Government knew nothing of the kickbacks. In March an extensive survey conducted by The Land found 73% supported the single desk. Further, 69.3% believe AWB should maintain the monopoly, and 69.5% believe the company has been “unduly victimised” compared with other international companies named in the food-for-oil scandal. Yet if the Government insists on the AWB or some other body operating the single desk, that monopoly body will not be able to sell any wheat direct into Iraq. Before the war, Australia was the dominant supplier to Iraq. This is no longer the case and this slippage can be directly sheeted home to the decision to join the US in the war. [04.08.06]

Huge ad spending by governments: Taxpayers are facing a huge bill for Government advertising in the run up to elections over the next 12 months. The Bracks Government has already been hurling money around in advertising in the lead up to the November election. The NSW Labor Government will no doubt outdo Bracks in advertising in advance of the March election. In turn, John Howard will top Iemma for the Federal election expected towards the end of next year. A recent Senate Estimates hearing squeezed out of the Department of Prime Minister and Cabinet that at least $150 million would be spent on Government advertising. You can bet most of this will be spent next year in the lead up to the election. Unfortunately, the High Court ruled last year that the $55 million advertising blitz the Howard Government spent in advance of its Work Choice legislation did not have to be specifically authorised. It turned down an ACTU argument that the money was not properly appropriated by the Parliament. The money was hidden in the Budget for the Department of Employment and Workplace Relations. Apart from advertising, The Sydney Morning Herald has reported the cost to taxpayers for the NSW Government’s spin doctors and policy advisers has reached a record of $62.8 million a year. [04.08.06]

People and Events: Paul Chamberlain, ex-press gallery and former media adviser to John Anderson has joined the office of Transport Minister, Warren Truss, as senior media adviser (Mob 0419 233 989). Jim Kennedy is in the minister’s electoral office at (07) 4121 2936. [04.08.06]


From the Gallery: Bill Shorten, Australian Workers Union National Secret-ary, will most likely be in Parliament after the next election, and he has in spades one essential ingredient for political success - belief in himself. Yet he should not count his chickens. And a little public modesty would not go astray. The Australian on Wednesday reported Shorten’s speech to the Australia-Israel Chamber of Commerce, as follows - “If we get it right, then I will be a minister after the next election”, adding quickly “or a back-bencher in a Labor Govern-ment.” It will be as a back-bencher, Bill, unless his Right faction can kick Simon Crean out. Bob Hawke brought Simon Crean, elected in the 1990 election, straight into the Ministry as Minister for Science and Technology. Hawke had the standing to do this, having won two elections. Beazley, even if he wanted to, couldn’t demand that Bill be put into the Ministry by Shorten’s Right faction. Paul Keating says Helen Coonan has caved in to the media barons. This is a bit rich coming from Keating who, as Treasurer, permitted Rupert Murdoch to take control over 70% of Australia’s daily metropolitan newspaper circ-ulation by taking over the Herald and Weekly Times. With a stroke of the pen, Keating vastly reduced media diversity. [28.07.06]

Howard lucky on rates - so far: John Howard’s run of good luck continues. Following the leap in the June quarter inflation rate, the Reserve Bank will be under pressure to increase interest rates again next Tuesday. If this was deferred to July next year, it would have grave implications for John Howard’s prospects of winning the 2007 election. Coming now, he will hope thatt early rate increases will ameliorate inflation, meaning there will be no need to increase rates next year. One problem is that the Reserve might require another increase before the year’s end. Rising interest rates are super sensitive to the PM, because the promise of limited increases (relative to Labor) were a key factor in his 2004 election win. [28.07.06]

Election campaign promise comes back to haunt PM: Every day of the election campaign, the PM hammered the claim that interest rates would be lower under a Coalition Government than a Labor government. He asserted Labor always spent more in office than the Coalition - this from the head of a Government regarded as the biggest spending/highest taxing Government since Federation. Labor is preparing for a fierce assault on Howard if rates go up next week. The line Beazley and Wayne Swan are planning to run is that the electorate believed by electing John Howard there would be no increase in interest rates. (Howard didn’t say this, but sometimes used words which went close to claiming just that). [28.07.06]

Housing affordability already terrible: Right now the Government is under pressure on interest rates, industrial relations and internal Liberal Party unrest over the leadership. The rates hike should be seen against the background of housing affordability being at its worst level for years - worse even than affordability measured during the bad months of high interest rates under Paul Keating. Far from petrol prices coming down long term, there are predictions they will hit two dollars a litre soon. And clearly, the Governnment is losing the debate about industrial relations. Another interest rate rise next year could put Beazley in The Lodge. The Government is largely to blame for inflation, although petrol prices have played a key supplementary role. [28.07.06]

Govt. role in hiking inflation: The government has unashamedly hurled money at the electorate. After the May Budget, Costello and Howard said massive tax cuts would not impact upon inflation. The shortage of skilled labor has pushed up inflation. The states and employers have to carry some of the blame for training program failures, but the Commonwealth is also guilty. Another piece of good luck for Howard is that Parliament has not been sitting since 22 June, and will not resume sittings until 8 August. In this period, the explosive McLachlan revelations on Howard’s leadership undertaking to Costello broke, inflation exceeded all expectations and now interest rates are set to rise next week. The Opposition will not be short of debating points when Parliament next sits. [28.07.06]

Voters not keen on nuclear industry: The Financial Review this week, commenting on Kim Beazley’s advocacy of expanding uranium mining, reported both the Opposition Leader and John Howard “sense a change in public attitudes on nuclear issues.” Unless Beazley and Howard are relying on their own private polling, they have no reason to feel confident there is majority acceptance, let alone enthusiasm, for the nuclear industry. On 2 June, Inside Canberra reported on Newspoll’s survey of nuclear issues. Asked if they agreed with current Labor policy that no new mines should be opened, only 26% disagreed. Perhaps surprisingly, 39% of respondents agreed with Labor policy, and 28% said there should be no uranium mining at all. On enriching uranium in Australia, 46% were against, 34% in favour, and a whopping 20% undecided. As for nuclear power stations, 51% were against, and 38% in favour, with 11% don’t know. In early June, Ipsos Mackay’s asked the following question on nuclear power (in terms of the argument being put by Howard) - “Are you in favour of nuclear power to reduce reliance on coal which produces greenhouse gases that contribute to global warming? The result - 45% against, 40% in favour, and 15% don’t know. [28.07.06]

Beazley had to take a position: Then there is on-line polling conducted by the Melbourne Age. On 4 June, 4198 readers responded to the question - “Do you believe it is environmentally responsible for Australia to adopt nuclear power?” The response was: Yes 49%; and No 51%. On 14 May, 840 responded to “Should Australia enter into nuclear fuel leasing deals? (which Howard is seen as promoting)? This yielded: Yes 33%; and No 67%. As far as we know, no poll has yet been put to Australians in blunt terms - would you be happy with a nuclear power station in your electorate? If it was, we believe the answer would be an overwhelming NO. Kim Beazley at first seemed prepared to leave the uranium mining issue to be solved by the National Conference of the ALP next April. He has decided, wisely, that with Howard having set up the Switkowski taskforce to report on various nuclear issues, including uranium mining, he could not continue with this approach. When the Switkowski report is released, Beazley has to have a position and he has now spelt it out - abandonment of the quite silly compromise of the 1982 Conference to allow only three uranium mines. [28.07.06]

ALP has to change on uranium: This was cobbled together by Bob Hogg (then Victorian Secretary of the ALP), when it was obvious Labor could not go to the 1983 election (which it won) with a policy banning the development of Olympic Dam in South Australia. It is a perfectly logical position for Beazley to argue that although we should not be involved in uranium enrichment or nuclear power production on Australian soil, it is in our national interest to take advantage of the trade opportunity of expanding uranium output. Nuclear power expansion will continue overseas whatever Australia does. The Greens position - that we should not offer our uranium at all to other countries - is indefensible. Beazley’s uranium platform change will sail through after debate at the National Conference. For a start, the Conference - with an election approaching - is not going to humiliate the Labor leader just to satisfy the Albanese Left. Another reason Beazley will win on uranium is that the NSW election in March will be over, and undoubtedly will be a win to the Iemma Government (which incidentally is not helpful to Beazley). [28.07.06]

Greens worry Labor in Sydney: The Iemma Government believes that if the three mines policy is abandoned before the NSW state election in March, it could lose two traditional seats - Marrickville and Balmain - to the Greens. There are heaps of basket weavers (as Paul Keating once described environmentalists in Balmain) in these two seats. Marrickville is held by Carmel Tebbutt, Minister for Education and wife of Beazley’s shadow environment minister, Anthony Albanese. She is in more danger from the Greens than any other sitting NSW MP. The ALP vote in Marrickville is in the mid-twenties, and falling. Tebbutt will be entirely reliant on Green preferences, and this is looking less likely every day. Tebbutt is seen as having ambitions to oust John Watkins and take over as deputy Premier should Iemma win the election. This will be up to the Left faction run by her husband. Albanese’s inner Sydney Federal seat of Grayndler also has a disproportionate representation of Greenies. Given this background ,Albanese’s Federal Caucus colleagues understand why he has to be seen at loggerheads with Beazley over uranium. Albanese might not be quite so resolute once the Iemma Government is back in power. Caucus members favouring the Martin Ferguson approach of opening up uranium mining derisively dismiss the no-new-mines policy as the ‘BHP uranium policy’. BHP Billiton operates Olympic Dam, the largest uranium deposit in the world and good for 60 years. Whatever happens to uranium policy, BHP shares look good for a long time into the future. [28.07.06]

Labor Premiers’ problems: At the moment, State Labor Premiers each face differing problems. Mike Rann is all for opening up more mines, Peter Beattie is being cautious so far, Iemma doesn’t want a decision before the state election, and the WA Labor Premier (Alan Carpenter) is in a difficult position. At the last election his predecessor, Geoff Gallop, promised there would be no new uranium mines in his state. Carpenter can’t just junk this because John Howard wants him to. As Inside Canberra reported on 21 April, Carpenter’s approach is old fashioned - he believes in keeping promises. If the April ALP National Conference adopts the Beazley approach of opening up uranium mining, the WA Premier believes he can’t abandon the no-new-mines policy until he takes the issue to the next election - in 2009. Beazley will be in a strong position after the Conference. Howard won’t be able to wedge him on the illogical policy of three mines, yet the PM will be vulnerable to a scare campaign along the lines of ‘a vote for Howard is a vote for a nuclear power station in your neighborhood’. [28.07.06]

Stem cell problems: Inside Canberra forecast (14 July) there could be trouble ahead on stem cell research for both political parties, and pointed out that Labor could be divided on whether or not to support John Howard’s position of refusing to lift the ban on using human embryos for stem cell research. Queensland, Victoria and the ACT have reserved the right to legislate to allow such research. It hasn’t taken long for divisions to emerge in the ALP. The Sydney Morning Herald reports a blow-up over NSW Premier Morris Iemma supporting Howard’s position, and he is being described as a “Calabrian choirboy” within the ALP. Iemma is believed to be concerned about the impact of a decision in favour of stem cell research from human embryos in the state elections in March next year. The SMH quoted an unnamed friend of Bob Carr saying - “He (Carr) and Neville Wran were educated humanists with Protestant backgrounds. This Government is now in the hands of Calabrian choirboys.” [28.07.06]

Sectarianism emerges in ALP: Carr was certainly angry enough to write an article in the SMH bitterly attacking the Iemma Government’s decision, and saying - “The objections (from the NSW Government) are derived from the same notions of medieval science - outdated since Galileo - that generated opposition to birth control.” Iemma answered with a lame article in the SMH’s on-line service. While admitting the Carr Government had decided in favour of stem cell research, he used Howard’s refusal to accept the Lockhart review recommendations for one form of stem cell research (on therapeutic cloning) as a reason for NSW not to legislate for such research. He says there must be agreement between the states and Commonwealth for research to proceed, which means it won’t while Howard is in office. The issue is stoking the fires of sectarianism within the Labor Party which were assumed to have long since subsided. Stem cell research could become the major issue (rather than uranium) at the April National Conference of the ALP. [28.07.06]

Big spending tourists missing: Macrossan Street, the main drag in Port Douglas, was busy in late June. Lots of people, but few Asian faces or foreign accents. Col McKenzie, Executive Director of the Cairns-based Association of Marine Park Tourism Operators says high yield visitors from Japan and the US (who are really good paying people) are down in numbers. He says - “We are being beaten hands down by government advertising.” Micronesia and Thailand are using Government money to target high yield customers. McKenzie adds the Australian product is expensive, because we are not a third world nation/pay western wage rates, and we have the taxes of a western nation. In his view, “We cannot win by trying to be price competitive. We can only do it with a quality product, and to do that you need high yield customers.” [28.07.06]

Air services problem: McKenzie says visitations into the Barrier Reef have been fairly static, while a low yield customer can get a flight out of Sydney for $79 to Hamilton Island. When he gets there, it can cost him $180 to go to the Barrier Reef, so he doesn’t go to the Barrier Reef. He sits in the bar and drinks, and goes to the fish and chip shop. In short, the five star restaurants on Hamilton have all lost customers. And all this since Qantas stopped flying into it. Hayman at $1000 a night is trying to get customers who have to fly Jet Star or Virgin. It’s crazy, he says. Yet its worse than that, according to McKenzie. For example, Jetstar and Virgin are not on the international booking system, so US tourists are booked to say, Sydney or Brisbane, by their booking agent in the US. Then on arrival in Australia, they have to work out how to get to Hamilton Island, something they know nothing about. [28.07.06]

McLachlan won’t go away: If there was any doubt about whether John Howard entered into a agreement with Peter Costello to hand over the leadership of the Liberals after one and a half terms of Parliament, it surely was removed last weekend. In an interview with the Financial Review published last Saturday, Ian McLachlan (witness to the deal) was emphatic about the “absolute arrangement”. Howard, of course, denies any deal and Costello states McLachlan was telling the truth. There were only three of them in the same room on that day. For our money, and for the many that know him, McLachlan’s word would be accepted without hesitation. One couldn’t say the same of the other two. Probably annoyance at the attempts by Howard and others to reject his account is why McLachlan decided to give the interview. [28.07.06]

PM reminded of his term ‘obligation’: Asked why he decided to reveal the arrangement between Howard and Costello, McLachlan said - “I may be old-fashioned, but I find it incredible that an absolute arrangement was made for John’s benefit, which I was part of, and later, later, it can all be denied by somebody like John Howard. I just find and have found, that incredible over the last five years.” He added - “I wish to hell this hadn’t happened. I wish to hell Howard had done something before this. All I hope is that at some future time he thinks about the ten-year transition point. He sure won’t discuss it with me.” McLachlan also revealed that when he retired in 1998, he reminded Howard of the obligation. “I said, ‘You know you have an obligation.’ I mentioned it to him (but) he wasn’t going to agree to that.” [28.07.06]

Liberal muck raking: There is much speculation in Parliament House as to who told Glenn Milne (who first broke the story) about the note of the deal McLachlan had kept, and still keeps, in his wallet. McLachlan was asked about reports that Liberal Senator Bill Heffernan was trying to damage him by peddling a story McLachlan was hypocritical for allegedly giving an undertaking - when he won the Barker pre-selection in 1989 - that he would only serve two terms of Parliament (see last week’s Inside Canberra). McLachlan said - “I have no idea whether Bill Heffernan is trying to damage me. In any case, you’d be flat out to be damaged by Bill. He rang me up the other day and asked me if I had any agistment for his cattle, and then told me I was a silly bastard or something equally cerebral. That was the end of the message.” McLachlan said that he knew where the efforts to damage him were coming from . “It’s from the usual high-profile South Australian supplier of political excrement.” All of which suggests McLachlan’s exposure of the deal has stirred up trouble in the Government which can’t be papered over. [28.07.06]

From the Gallery: A long line of famous ships in the Royal Navy proudly bore the name HMS Indefatigable. John Howard personifies the meaning of this word. Our Navy one day could well have the HMAS John Howard. The PM puts all the members of his Cabinet to shame (including Peter Costello) when it comes to get up and go. Just look at his recent peregrinations starting from Sunday 9 July with a dinner at the Marconi Club. Then Monday 10 July at a function at the Sydney Opera House; 11 July, Cabinet meeting in Sydney; 12 July, Blacktown Workers Club; 14 July, presided over COAG in Canberra; 17 July, Sydney Convention Centre for speech to CEDA; 18 July, visits East Timor before Darwin on the way home. But there’s more - the day after East Timor and Darwin Howard is in Cooma with the local member, Gary Nairn, just so this important town in Eden-Monaro remembers how Gary was instrumental in persuading the PM not to privatise Snowy Hydro. As far as physical ability to do the job as Prime Minister, Howard could well go on for another ten years. Only electoral defeat might stop him doing just that. No wonder Costello is frustrated. [21.07.06]

PM and Costello spate not hurting – yet: The flare up between John Howard and Peter Costello did little damage to the Coalition, according to latest polling. This is not surprising. Most voters are not interested in the machinations of rival groups within political parties. This explains the fact Labor did quite well earlier in the year even though Kim Beazley’s leadership was under attack within the party and was front page news. The Howard/Costello feud will matter in the longer term if it continues to dominate politics in the run up to the election, expected in the second half of next year. [21.07.06]

Labor winning polls this year: This week’s Newspoll shows the Coalition primary was 42% (up 2% on a fortnight earlier). The ALP primary at a healthy 42% (up 1%) was good news for Beazley. The Liberal primary jumped 3% to 38%, but it trails Labor by 4%. Two-party preferred the ALP was on 52% (down 1%), and the Coalition 48% (up 1%). The most likely explanation for the improvement in the Coalition’s position is that the poll a fortnight earlier over-stated Labor’s lead. Nevertheless, Labor would have won an election on the latest outcome. Since Australians got back to work in February the ALP has won seven Newspolls, the Coalition three, and one poll was a dead heat. [21.07.06]

Beazley makes ground in bush: It is a long way to the next election, but there is no question Labor is well in the contest. This week’s ACNielsen poll, published in the Fairfax press, agrees with Newspoll on the two-party outcome. According to ACNielsen the Labor lead is stronger than the bare figures reveal. Labor’s two-party lead in the cities, where most of the seats are, is solid - ALP 53%, to Coalition 47%. Also, surprisingly in rural areas Labor has pulled up and is now running 50-50 with the Coalition. One explanation for Labor’s improvement in the bush is that high petrol prices are hurting voters more than they are in the cities. Morgan, taken before Costello called Howard a liar, had Labor with a huge lead, 55.5%, to the Coalition’s 44.5%. Malcolm Mackerris having taken account of redistributions says the swing Labor needs at the next election is 3.3%, down from 4.4.%. [21.07.06]

How the voters perceive the Leaders: Newspoll’s survey of how the voters see the leaders was good for Beazley. This has been undoubtedly driven by the rising concern among workers about the Work Choice legislation. Beazley has cut back Howards lead as Decisive and Strong which is now 80% Howard, to Beazley’s 57%. Similarly, Beazley is closing in on Vision for Australia - 77 % Howard, 69% Beazley; and on Understands the Issues - 75% Howard, 69% Beazley; On personal issues Beazley wins hands down on - Cares for People; Likeable; In Touch with Voters and (this is important); Trustworthy. Similarly Beazley wins easily on the question of Who’s best to handle Education and Health and Medicare. These are the two top issues for voters. Labor’s lead on Education seems to suggest it has succeeded in overcoming the odium left to it by Mark Latham’s education policies of penalising wealthy schools. Yet Howard still has an enormous lead over Beazley on Who’s best to handle the Economy and National Security. Beazley can’t do much about National Security, but if interest rates rise, as experts are tipping, this opens up a golden opportunity for Labor to portray Howard as breaking the election promise which won him the last election. A problem with the polls on the Economy, National Security, Education and Health is that although they measure support in terms of Coalition or Labor voters, they don’t show the views of the all important swinging voter or Greens voter. [21.07.06]

Voters prefer Howard: The strong voter preference for Howard over Costello, in the wake of the upheaval over the Howard and Costello blue, is unsurprising. Newspoll has it as Howard 66%, to Costello 25%, with uncommitted on 14%. Beazley is preferred as PM by 48% when compared to Costello, who scored 40%, with Others/Don’t know at 12%. This is all meaningless because nobody knows how Costello would be seen if Howard did retire and hand over to him in adequate time for the Treasurer to assert his leadership. That is not going to happen, and while Beazley is claiming he wants to fight Howard to punish him for the Work Choice legislation, everyone in Labor would much rather Beazley face Costello. Dennis Shanahan of The Australian is regarded as the journalist “closest” to Howard in the press gallery, and this week he declared Prime Minister Howard will stay to fight the election. [21.07.06]

What will Costello do?: Shanahan bases this on Howard’s big lead over Costello. This has nothing to do with the PM’s future. Howard always intended going to the next election, as we have been saying for years. Janette likes Kirribilli House too much and Howard could not possibly give up playing the role of host when APEC meets in Australia next year. We have long maintained Howard will either be carried out of Parliament House in a box, or he will be defeated. There will be no gracious departure from the Prime Ministership as did Menzies (see From the Gallery). What is Costello going to do? We think he will simply stay in his Treasury portfolio and stew. He could mount a challenge (although not expecting to win) and go to the backbench. He could then assess his position after the election. Whatever the Treasurer does, if Howard loses, Costello will most likely retire rather than seek the Opposition Leader’s role. If Howard wins, Costello may make it up with Howard and return to the Ministry in a role other than Treasurer. He will be anything but a certainty to make the Leadership. [21.07.06]

Heffernan accused of dirt pedaling: On the subject of which journalists are closest to Howard, it once was Glenn Milne, particularly when he ran the SEVEN bureau in the press gallery. He has frequently had dinner with Howard, and earlier this year the PM wrote him a letter of congratulations on the birth of his baby boy. Milne is no longer “close” to the PM and is perceived as a supporter of Costello. Milne this week reported on dirt digging against Costello by one of Howard’s principal spear carriers, Senator Bill Heffernan. Milne claims Heffernan last week rang media outlets to pass on allegations of hypocrisy against Ian McLachlan, in whose wallet was kept the details of Howard’s 1994 “deal” with Costello on the leadership. Milne, in Monday’s The Australian, said Heffernan was pedalling a story that when McLachlan ran for pre-selection in the seat of Barker in 1989 he gave preselectors “an indication” that he would only serve for two terms. He later changed that to mean two terms in government. [21.07.06]

Gerard appointment raised: Milne wrote he can name at least one of the media outlets Heffernan contacted and to whom he spoke. Milne also reported that Piers Akerman (who he referred to as “the Prime Minister’s columnist of choice”) used the material pedalled by Heffernan to smear McLachlan. Further, Akerman also alleged there were South Australian Liberals who might be prepared to reveal further damaging allegations against Peter Costello over his controversial appointment of SA businessman Rob Gerard to the Reserve Bank board. The point about the Milne claims is that the anti-Costello forces are prepared to go after the Treasurer despite Howard asserting all was now sweetness and light. Akerman denied he had obtained smear material from Heffernan and then got very personal. [21.07.06]

What was Howard’s role?: Akerman relied on material from Rampaging Roy Slaven to suggest Milne had ambitions to be Costello’s press secretary when he became PM. He also quoted the Latham Diaries referring to Milne as “the dwarf” who was just a frustrated politician. Latham claimed Milne told him Circa 97 how he backed Keating over Hawke and would do the same thing for Costello over Howard. Milne believes this material came to Akerman from Howard’s office. Further, Akerman claims Milne called him a “fat c-” which Milne denies, saying he wouldd not have used that word because his children were in his office at the time. On what Milne has reported we have not heard the end of tension and bitterness in the Parliamentary Liberal Party and long term this will impact on the polls. The big question is did Howard know of the Heffernan campaign? If he did, was he in favour of this pursuit of Costello? [21.07.06]

Concern about Reef authority: There is alarm in North Queensland at what is perceived as a threat by the Howard Government to close down the Great Barrier Reef Marine Park Authority (GBRMPA) and hand over its work to a branch of the Department of Environment and Heritage in Canberra. Since its formation GBRMPA has been headquartered in Townsville where the senior executives and technical directors live. Col McKenzie, Executive Director Association of Marine Park Tourism Operators, told Inside Canberra - “We are concerned the decision making will revert to Canberra where people will not have any kind of affinity or empathy with the people who have to work in that region. We are worried that it will just become part of a department in Canberra so that when a tourist operator comes up with a good idea and he wants to discuss it with someone he will have to get on a plane and go to Canberra. He will be talking to someone who doesn’t understand what the operator is talking about.” [21.07.06]

Lavish payments to fishing: McKenzie believes the move comes from the Queensland commercial fishing industry, which is furious that the GBRMPA closed down 33% of the reef for fishing in July 2004. He says in practical terms it is a lot less than that, since much of the 33% designated area covers waters where nobody fishes or visits. McKenzie believes the fishing industry is being lavishly compensated for the reef closure. He says the original quote for compensation sought by the GBRMPA was for $10 million and this came from recommendations from the Department of Agriculture, Fisheries and Forestry, and the Productivity Commission. The Qld Seafood Industry Association on behalf of commercial fishermen, claimed $23 million was required. According to McKenzie the Commonwealth has already signed cheques for $87 million and officials believe the bill will reach $120 million. McKenzie believes it could reach $200 million. His Association of Marine Park Tourism Operators represents, according to Access Economics, an industry worth $5.8 billion and employs 63,000. In employment terms it is the biggest industry in Queensland. [21.07.06]

Stem cell problems: There could be trouble ahead on stem cell research for both political parties. John Howard told Premiers at COAG last week the Commonwealth will not allow lifting of the ban on using human embryos for stem cell research. Queensland and Victoria have reserved the right to legislate to allow such research in Australia. (Unlike legislation of the NT and ACT, the Commonwealth has no power to overturn such state legislation). A number of Liberal backbenchers, including Dr Mal Washer (WA), want the ban on stem cell research lifted. They are supported by the AMA, which says Australia should be involved in such research, and in any case other countries will do so. President Bush has used his veto to block a Senate bill to increase government funding of human embryonic stem cell research, so once again Howard is in lockstep with Bush and like Bush, out of step with public support for such research. [21.07.06]

Stern Vatican warning: In The Vatican late last month Cardinal Alfonso Lopez Trujillo, head of the Pontifical Council for the Family, said - “Excommunication will be applied to the women, doctors, and researchers who eliminate embryos, (and to the) politicians that approve the law.” Mal Washer wants the PM to agree to a conscience vote (Here we go again). As Inside Canberra has explained on several occasions, the PM does not have it within his power to give or not give Liberal backbenchers a conscience vote. They are entitled to vote however they choose. In the ALP it is different. There will be considerable support in caucus for the Government position not to allow lifting of the ban. There could be a conscience vote on the issue and only Caucus can decide whether or not to declare a conscience vote. In the absence of such a vote all Caucus members must support in Parliament any decision made by the Caucus majority. [21.07.06]

Head in sand on trade: At the end of May Trade Minister Mark Vaile issued one of his cheery press releases, this one headed “Record Exports for April”. A fortnight later came reality - the trade deficit in May doubled to $2.3 billion, marking 50 consecutive monthly deficits. Exports in May fell 6%, while imports rose 3%, mostly because of skyrocketing costs of importing oil. Once again the shaky nature of Australia’s trade position was revealed: with the terms of trade at the most favourable in 30 years we continue to trade in the red. No matter, say some economists, the floating dollar will always save the day. Yet will it as our own oil reserves run down, the world price of crude continues to climb and China resources boom eventually comes of the boil? As recently as the May Budget Treasury forecast a growth (in money terms) of exports in 2006/07 of 7%. Yet in the past five years Treasury has been hopelessly optimistic about export growth. In the five years since 2000, on average Treasury has forecast exports to grow by 5.5%. It was wrong by an average of 5.5 percentage points. [21.07.06]

Bluescope boss warns on China: Bluescope CEO, Kirby Adams, has broken the comparative silence of the business community on the prospect of a free trade deal with China to warn against it. Addressing the American Chamber of commerce last week he said the government had to do something to halt the decline in manufacturing. This is a theme Inside Canberra has been hammering for some time. Adams said the manufacturing sector had shrunk to 13% of GDP, as against 19% in New Zealand, 17% UK, 14% US, and 39% China. Warning that the slide should not continue he said it was “virtually unprecedented for an advanced OECD economy” to have manufacturing at less than 10% of GDP. He said the Australian Government had been naïve to cut all trade tariffs and had left Australian manufacturing at the mercy of countries which protected their manufacturers. “We are caught up in an ideology in the fantasy we can lead the world to a free-trade nirvana by unilaterally dropping our tariffs.” [21.07.06]

Ideology and tariffs: How true. The Hawke and Keating Governments accepted the view of the free traders that, firstly, it was in our own interests to lower tariffs and secondly, this would encourage world free trade. The latter is patently wrong. The former is looking less convincing every day. Since the Howard Government came to power the economy has been largely driven by the property market and consumer spending based on (comparatively) low interest rates. Meanwhile, with the Nationals driving trade policy, the concentration has been on expansion of agricultural exports and more lately mining exports, both sectors dwarfed in importance when measured by employment compared to manufacturing and the services sector. As for the FTA with China, Adams is correct. There is no net gains to be made by Australia. It would further lower what limited protection manufacturing has against Chinese imports. Concessions on agriculture by Beijing are likely to be of little value, and whatever concessions are made on services will not be significant to employment in Australia. [21.07.06]

From the Gallery: This week we have witnessed a prodigious quantity of spin emerging from the Howard and Costello camps. One of the best examples was from Howard. “I like Peter Costello,” the PM said on Tuesday. But he doesn’t like him enough to invite him to dinner. Over the ten years of the Howard Government John and Janette have not on a single occasion invited Costello and Tanya to a private ‘family’ dinner at The Lodge or Kirribilli House. Yet the Howards are keen on entertaining friends and prominent people at home. In the Sydney social set Howard is seen as being very much in the swing of things. And why not. The taxpayers pay for all the food and grog consumed at the Howard’s two taxpayer provided homes. The little bloke from the western suburbs is undoubtedly the most ‘social’ Prime Minister since the war, which is one of the reasons he lives at Kirribilli House. Actually Howard hates Costello and no doubt it is reciprocated. PM, can we please have no more of the baloney from you about what a great Treasurer Costello is? This doesn’t mean enemies can’t work together in Cabinet. Normally they can, but not when one calls the PM a liar in public. [14.07.06]

Howard to remain PM - Costello badly damaged: The outcome of this week’s upheaval in the Liberal Party is that John Howard will take his Government to the next election, which he now has every chance of losing. Peter Costello may well have irreparably damaged his political career and has probably lost the chance of ever becoming Prime Minister, or even Leader of the Liberal Party. Costello has damaged his standing in the party room and backbenchers are furious. They cannot work out why Costello abandoned the ‘loyal deputy in the wings’ stance and took Howard on publicly. [14.07.06]

Howard tries to apply the band-aid: Costello was not required last Monday to respond to Glen Milne’s scoop in the Sunday Telegraph. Milne reported Ian McLachlan’s notes on a 5 December, 1994 meeting at which Howard gave an undertaking to serve one and a half terms and then hand over to Costello. Instead the Treasurer chose to hold a press conference endorsing everything that McLachlan said and in effect call Howard a liar. Then came the tense Cabinet meeting in Sydney on Tuesday which ended with Howard applying the band-aid and asserting that all was well and he and Costello would continue on in government in the normal professional way. [14.07.06]

Costello keeps up argument on Wednesday: Nobody believed this, of course, and it simply can’t continue until the next election. Yet backbenchers were grateful Howard at least had stemmed the flow of blood and there was some breathing space for the Government. Provocatively, Costello on Wednesday decided to call another press conference, at which he continued his argument with Howard. Costello may have been stung by the widespread media coverage which portrayed him as a powder puff, and his gutless approach was compared to Paul Keating’s gutsy challenge to Bob Hawke. Whatever the reason, Costello on Wednesday again put pressure on Howard to declare whether he is going to stay or go. Howard is now expected to announce fairly soon that he will be staying for the next election. The PM will probably do this in the Spring session of Parliament, beginning 8 August, unless he feels he must do it sooner to end mounting public pressure for him to come clean. On Wednesday the Treasurer also denied Howard’s criticism that he did not appreciate the top job was ‘in the gift’ of the Liberal Party room and Costello was displaying “arrogance and hubris”. (Howard was quite happy to forget about the gift of the party room back in December 1994. As McLachlan said this week - “It was agreed no spill should take place [in the party room] and it was better if Alexander Downer resigned”). [14.07.06]

PM must move if Costello keeps stirring: If Costello is to continue to carry on the argument publicly, Howard will have to act. He doesn’t want to sack Costello because he apparently believes this is what Costello is after. Yet if Costello continues his petulant behaviour the PM may have no other course but to sack him out of hand as Treasurer without consulting the party room. It would be in breach of the convention that the Deputy Leader of the Liberal Party had the right to select whatever portfolio he chose, but Howard has shown plenty of form in ignoring conventions. In sacking Costello he would be following Whitlam’s example. Whitlam sacked Jim Cairns, then Deputy Labor Leader, and Rex Connor, without any reference to Caucus. It could have been argued Whitlam was not just in breach of a convention but that the rules of the party provided that only Caucus could appoint or sack the Deputy Leader and ministers. [14.07.06]

Downer next Treasurer?: Costello, unlike Howard, has had it all too easy in politics. He won Liberal pre-selection for the blue ribbon Liberal seat of Higgins, which put him into Parliament in 1990. In 1993, in the wake of the Hewson loss of the 2003 ‘unloseable election’, the party was bereft of talent. When Hewson resigned, Costello in May 1994 was elected Deputy Leader and agreed to be deputy to the leadership of Alexander Downer. Downer was a disaster and lasted only until January of 1995. Having again declined to have a shot at the leadership, Costello did the deal with Howard and when Paul Keating handed Howard the 1996 election on a plate, Costello found himself as Treasurer. All so easy. Now he regards himself as entitled to be Prime Minister and wants Howard to hand it over. No way. If Costello is no longer Treasurer in the life of the present Parliament, Alexander Downer would be hot favourite for his replacement. He was shadow Treasurer for over a year up until 1994 and could competently handle the job. (Remember the Treasurer has to be in the House, so Senator Minchin is ruled out as Treasurer). Downer as Treasurer would not be much different to Costello, who basically accepts the Treasury line without argument. Downer would be much the same. Coming from South Australia Downer may be somewhat more solicitous of small business than Costello when it comes to regulatory matters. Small business is angry with Costello that on various amendments to the Trade Practices act they are seeking, the Treasurer appears to take the big business line. [14.07.06]

Turnbull climbing the ladder: If Howard wins the next election, Costello would be no certainty to be elected Deputy Leader. Others in the field could include Downer, Brendan Nelson, Julie Bishop, Tony Abbott, and Malcolm Turnbull (the latter particularly if Howard promotes Turnbull to the Ministry in the inevitable reshuffle later this year). As Inside Canberra has said before, Turnbull is immensely capable and unlike the great majority of politicians, he has been a substantial achiever before he entered Parliament. Julie Bishop would be an attractive choice, not only because she is a woman but because she is bright, personable and a natural politician. If Howard loses the next election, it is difficult to see Costello as Opposition Leader. He simply hasn’t the energy for this most arduous of all jobs. Poll after poll has shown voters don’t believe Howard’s protestations of innocence on a variety of issues - children overboard, and the AWB bribery scandal are notable. Yet he keeps winning, no doubt because the public believes all pollies are lying bastards anyway. [14.07.06]

PM not credible on IR: The next election will be different. The Government has looked tired all this year and now is in disarray. Howard with Work Choice has delivered Beazley a potent weapon for the next election campaign. Beazley needs only one policy - the promise to tear up Howard’s IR legislation. Concentration on single issues can win elections as Howard did in 1996 (get rid of the arrogant Keating); in 2001 (children overboard and the Tampa); and 2004 (the interest rate scare). With his reputation for honesty badly tarnished, Howard will have trouble convincing wage and salary earners that Work Choice is for their own good, and that it will do wonders for the economy. All the evidence suggests voters are paying much more attention to what they are being told by the calm and impressive Greg Combet and the message being punched out by ACTU ads. This week was yet another bad one for the government on IR. One of Australia’s biggest and most affluent companies, Coles Myer, is to sack more than 1000 workers at its distribution centres at Somersby on the NSW central coast and at Hampton Park in Melbourne. [14.07.06]

Coles NAB trash workers: Coles says it will pay out all staff entitlements and provide severance pay. Big deal. It also says it plans to employ 1600 people over the next 18 months at new distribution centres in Goulburn and Western Creek in Sydney’s west. How is that going to help families at Somersby and Hampton Park? To add to the bad news, the National Australia Bank is looking to sack 100 backoffice workers in its cards division and send their jobs overseas. Work Choice gives these big companies the ability to fire at will on the grounds of “operational” needs. This news must unsettle workers all over Australia. Malcolm Mackerras is yet to do his final electoral pendulum which will take account of redistributions. But as of now Labor needs to win eight seats, and the four most vulnerable Coalition seats are held with a margin of 2.1% or less. Of course such a swing cannot be expected to apply evenly across all electorates. Yet a win is well within range. Howard won the last election with a two-party preferred outcome of 52.7% Coalition, to 47.3% ALP. In 1998 Beazley won the two-party preferred vote 51%, to the Coalition’s 49%, and achieved a swing against the Government of 4.6%. Howard survived only because of the massive majority Keating had bequeathed to him. [14.07.06]

Whitlam beats Howard: Gough Whitlam’s 90th birthday was celebrated last weekend with a lunch including most of his living ministers This coincided with our discovery that some swine in Treasury has slipped a table into the May Budget papers which should embarrass John Howard. The PM never misses an opportunity to deride the Whitlam Government as the worst ever. On the very last page of the Budget Overview document, circulated to journalists in the Budget lock-up, was a table showing Whitlam’s Treasurer, Frank Crean, in 1973/74 (the only year the Whitlam Government had full command for the whole financial year) did a far better job than all of Howard’s Budgets. And he was better than all of Costello’s Budgets. Below are the key stats of Howard’s 1981/82 Budget (the last in which he had full command for the whole of the financial year) and Costello’s 2005/2006 Budget (which is still subject to estimates). [14.07.06]

Frank Crean’s excellent performance: First, take Government Receipts as a percentage of GDP: Crean 20.1%, Howard 23.6%, Costello 23.3%. Government Payments as a percentage of GDP: Crean 18.3%, Howard 23.3%, Costello 21.7%. Underlying cash balance as a percentage of GDP: Crean 1.8%, Howard 0.3%, Costello 1.5%. Net Government debt as a percentage of GDP: Crean minus 3.1%, Howard plus 3.4%, Costello minus 0.5%. It might be argued Howard had the 1982/83 ‘fist full of dollars’ vote-buying Budget imposed on him by Malcolm Fraser. The fact remains this last Howard Budget left a bigger deficit to the Hawke Government than the last Budget of the Keating Government in 1995/96 left Howard. Yet Howard and Costello still make political capital out of ‘Beazley’s black hole’. [14.07.06]

Gough’s election stats: When looking at the Crean performance, it shows Howard could not credibly claim, as he did in the lead up to the last election, that interest rates would go higher under Labor because Labor “always” taxed more and spent more. In the Hawke-Keating years the Budgets were somewhat exuberant, but that was partly due to the obligations John Howard’s ‘fist full of dollars’ Budget had left Labor. Spending and debt properly rose in the recession years (a recession the Coalition could claim was partly engineered by Keating) and spending was still high in Labor’s last three Budgets. Latham’s failure to counter Howard’s claims on interest rates was the key reason for the Coalition win in 2004. [14.07.06]

Dumping Australian shipping: The Maritime Union of Australia (MUA) is naturally upset when an Australian flagged vessel, The MV Stolt is to be re-flagged with a Cayman Islands flag (known as a flag of convenience, a Caribbean tax haven), its Australian crew sacked and replaced with Filipinos. It will then be able to work the Australian coast, as it has been doing up till now as the only Australian flagged and operated tanker carrying chemicals. The Government will give it single or multi voyage permits to do so. The Government is well on the way to killing the Australian commercial fleet by stealth and tricky administration of the legislation covering coastal shipping. This got underway in earnest when John Anderson was Transport Minister. Foreign-flagged vessels are only supposed to be given permits to carry coastal cargo if no Australian vessel is available. This has been got around by the Transport Department in various ways, such as not providing sufficient notice to an Australian ship to bid for a cargo. [14.07.06]

Foreign ships advantaged: The Australian Shipowners’ Association (ASA) have complained about this preference for foreign-flagged vessels, pointing out that owners of these ships (and their third world crews) pay no Australian taxes, nor provide their crews with Australian wages and conditions, workers compensation cover and a myriad of regulations that Australian shipowners are obliged to observe. On the Government’s reasoning it would be logical to allow companies residing in foreign tax havens to own trucking companies in Australia, staffed by third world drivers and pay no tax. Anderson was unmoved by ASA, as have been successive Transport Ministers. Nor has the Government been prepared to help Australian flagged vessels in the international trade. Inside Canberra reported (3 October 2003) a review commissioned by the ASA called for a radical approach to Australian owned ships in the international trade: allow Australian shipowners access to competitive registries abroad; and permit such foreign registered Australian ships to be crewed by a combination of Australian and foreign seafarers. [14.07.06]

Call for overseas rego: The report was prepared by John Sharp, John Howard’s first Transport Minister, and Peter Morris, Bob Hawke’s first Transport Minister. Legislation would be necessary to allow the proposal to become a reality. The Shipping Registration Act says that if an Australian entity owns a ship then the ship must be registered in Australia. The Government reviewed the Act in 1997 and one of the recommendations was that the provision requiring a ship owned by an Australian entity to be registered in Australia be removed. Unaccountably this was never acted on. The proposal could have increased international shipping jobs for MUA members. The Australian Government provides no assistance to Australian flagged vessels, while virtually every other country does, mainly through financing and taxation treatment. While the US portrays itself as a champion of free trade, the notorious Jones Act insists domestic shipping in the US has to be undertaken by ships that are American owned, American flagged, American crewed and American built. The ASA argued if the Government proposed to not only deny any assistance to Australian ships while insisting they be on the Australian register, it would be at odds with the concept that industry must become globalised. [14.07.06]

People and Events: Tony Eggleton, former National Director of the Liberal Party, has been appointed by Alexander Downer as chair of the Consultative Council of Australia’s Centre for Democratic Institutions. The Centre is funded by AusAid and Downer says it is a key part of Australia’s continuing efforts to build democracy in the Asia-Pacific Region. Food Standards Australia and New Zealand has invited public comment on a number of proposed changes to FSANZ Food Standards Code. Todd Ritchie has been appointed Canberra manager for URS Asia Pacific. He is a former chief economist for the Master Builders and economic policy director at the NFF. Dr Chris Jessup QC, John Middleton QC and Richard Tracey QC have been appointed judges of the Federal Court in Melbourne. The House Science committee is to report on geo-sequestration as a tool against greenhouse emissions. Contact the committee on (02) 6277 4150. [14.07.06]

From the Gallery: Alan Jones must be wishing the ABC board didn’t dump Chris Masters’ book Jonestown. The ensuing uproar and scandal will turn the book into the top seller of the year. Mike Carlton, a broadcaster with the Sydney 2UE network and a rival of Jones, outed him this week. Carlton told his listeners the ABC had dumped the book because it accused Jones of being gay. “I believe it details a number of gay sexual encounters Jones was allegedly involved in,” he said. Jones is in an awkward position. If he doesn’t sue Carlton and 2UE it would be seen as an admission of ‘guilt’. If he does, his personal life will be examined in the courts and will be closely followed in Sydney. Most of Jones’ listeners will be surprised by the allegation, but not those Sydney smarties in politics, journalism and the top end of town. Which raises the question: is it defamatory these days to accuse anyone of being a homosexual? Anyone critical of homosexuality is immediately accused of being homophobic. Be that as it may, life is going to become very uncomfortable for Jones in the coming weeks and months. Whatever happ-ens it is unlikely Jones’ ratings will suffer. [07.07.06]

Labor takes a big lead in polls: When Labor slid three points in the Newspoll, taken 16-18 June, the pundits rushed to say Labor had been hurt by the Government’s campaign against Kim Beazley’s promise to abolish Australian Workplace Agreements. This was in the face of the Newspoll figures showing 38% supported Beazley on AWAs, 27% opposed him, and 35% didn’t know. We said then that the Labor slide was not due to AWAs. We were proved right. The latest poll (taken 30 June - 2 July) show that Labor has opened a big two-party preferred lead over the Coalition by 53% to 47%. [07.07.06]

Govt. in serious hole over Work Choice: This is a dramatic reversal of the previous poll showing the Coalition on 51% and Labor on 49%. The most likely explanation is that the last poll was plain wrong. (Morgan, taken before the latest Newspoll, has the Coalition doing much better with two-party preferred ALP on 51% and Coalition on 49%. Average this result with Newspoll and the outcome is ALP 52% to the Coalition’s 48%). The Newspoll finding means the Government now finds itself in a serious hole over Work Choice. Having spent a whole two weeks in Parliament attacking Beazley over AWAs and then with Howard going right over the top on the issue in comments he made in China, the result has been a serious rebuff for the government. [07.07.06]

Andrews a failure in selling Work Choice: What does it now say about IR? The Howard tactic was to stick to AWAs as the issue, even though a mere 5% of Australians are on such agreements. He didn’t want to get into the broad issues of Work Choice being designed to slow wage growth and greatly enhance the power of employers over their workers. The fact that any worker can be now sacked out of hand, either because unfair dismissals have been abolished for workplaces of less than 100, or because of “operational reasons” for all workplaces, is not something the Government wants to fight on. Howard may well have a reshuffle to try to regain the political initiative on IR, or at least stop the bleeding. The first minister who should be moved is Kevin Andrews who has been a failure in selling Work Choice and rebutting the powerful ACTU campaign against it. [07.07.06]

Liberals primary polling poor: Most heartening for Beazley is the increase in the Labor primary vote to 41%, one point above the Coalition primary. A particular worry for the Liberals is the substantial drop in their primary vote to 35%. This is the worst primary vote the Liberals have had this year and way below the 40.8% recorded in the 2004 election. The Liberal primary vote is significant as in the great majority of electorates the contest is between Liberal and Labor. Since Australians got back to work in February the ALP has won six Newspolls, the Coalition three, and one poll was a dead heat. We don’t put great store in satisfaction ratings, but point out John Howard’s 43% (down 7% in the latest Newspoll) is his worst this year. Beazley is unchanged at 32%. As preferred PM, Howard is on 49% (down 6%) and Beazley on 29% (up 4%). Then there is a big 22% uncommitted. There are now an awful lot of polls to show how badly the Coalition is being beaten on the Work Choice issue, quite apart from the one mentioned above on AWAs. [07.07.06]

Deep hostility to Work Choice: ACNielsen’s latest poll said 38% support Beazley’s scrapping of AWAs, 27% oppose him, and a huge 35% don’t know. Last month Newspoll reported respondents, when asked which of the major parties best handled IR, 50% said Labor, and 30% Coalition, with 20% ‘don’t know’. In answer to ‘Do you support the governments change to IR”, 57% opposed, 26% supported, and 14% don’t know. Asked whether they would be worse off or better off from the changes, 27% said worse off, 6% better off, and 64% no difference. (Obviously if 27% feel they would be worse off this is a big worry. Even if only 10% of those changed their vote to Labor, it would make a major difference to the next election). The Ipsos Mackay poll, released last Sunday, found 50% of Australians believe Work Choice will not impact on their pay and conditions, a big drop from November when it was 64%. Some 39% of workers believed their pay and conditions were less secure, compared with 29% last November. This suggests the union campaign is being heard. [07.07.06]

Workers feeling less secure: Also of interest in the Ipsos Mackay poll was the finding 24% of Coalition voters felt less secure. Fears about pay and conditions was highest among unskilled workers at 63%. On-line polling by the Melbourne Age is not good for the Government. On 28 June, 1918 respondents replied to the question - “Are union members protesting over IR reform ‘patriots’?” Yes recorded 70%, and No 20%. On 25 June, 1151 responded to the question “Should workers face disciplinary action for protesting against the Government’s workplace reforms?” No recorded 85%, and Yes 15%.There have been polls on other issues which the Government should pay attention to. For example, Ipsos Mackay finds 60% of Australians say our troops should now be withdrawn from Iraq, and 28% favour redeployments (as the Government intends). What is most interesting is that 47% of Coalition voters favour withdrawing troops, as against 42% favouring redeployment. [07.07.06]

Voters wary of Indonesia: Inside Canberrra has already reported on the Newspoll commissioned by Ian Melrose, a wealthy businessman, which asked the following question - “Recently the Indonesian Government expressed its concern at Australia’s decision to grant visas to 42 West Papuan asylum seekers and recalled its ambassador in protest. Do you think the Australian government should change its immigration policies in order to improve its relations with Indonesia or keep the policies as they are?” Of the 1200 polled, 74% said current laws should remain, and only 15% supported a change. The Age poll of 26 June (only 145 respondents) asked “Should Australia welcome West Papuan refugees?” Yes 82%, No 18%. On a similar theme The Age asked 1674 respondents on 12 June “Are the Federal Government’s proposed new asylum laws too tough?” Yes scored 73%, and No 27%. Some 300 respondents on 8 June were asked “Should Australia sign a security treaty with Indonesia?” Yes 49%, and No 51%. [07.07.06]

Other issues of concern: On 15 June, 1607 respondents were asked “Should the US allow David Hicks to be sworn in as a British citizen?” Yes 76%, and No 24%.(This question is no longer relevant but at the time it was a pro-David Hicks question since it was assumed, wrongly, with British citizenship he could be returned to England as were other British nationals). Other interesting questions in The Age poll included 1607 respondents to a 15 June question - “Should the ban on therapeutic cloning be lifted?” Yes 76%, No 24% (Howard is against lifting the ban). On 7 June, 1172 respondents were asked “Do you support gay marriage?” Yes 76%, No 24%. (Howard has intervened to prevent even a civil union of gay couples in the ACT). On 4 June, 4198 respondents were asked “Do you believe it is environmentally responsible for Australia to adopt nuclear power?” (which Howard appears to be promoting) Yes 49%, and No 51%. On 14 May, 840 respondents were asked “Should Australia enter into nuclear fuel leasing deals? (again, which Howard is seen as promoting). Yes 33%, and No 67%. [07.07.06]

Elections still tough for ALP: Perhaps the most important two questions were on Howard. On 15 May, 636 respondents were asked “Is it time for John Howard to step aside?” Yes 73%, and No 27%. On 14 June, 2589 respondents were asked “Has John Howard lost his touch?” Yes 80%, and No 20%. It should be born in mind that The Age warns the polls are “not scientific” and reflect only the opinion of those who have chosen to participate. It should also be said that The Age readership would include a sizeable group which would be identified as “leftish”, or “doctors wives” on many issues. Nevertheless, overall there is a clear pattern of a majority in the community being against Howard on a wide range of issues (from IR, to relations with Indonesia, to the full sale of Telstra). It is no wonder the Coalition is trailing in the polls. Nevertheless, winning the next election is going to be very hard for Beazley. Howard is a cunning and determined campaigner. He will shift his ground on any issue if he feels he must as he demonstrated in the run up to the 2001 election when he hurled billions at taxpayers. If he has to, he will do the same in election year 2007. [07.07.06]

Costello’s easy publicity: Peter Costello has had a wonderful run with his demands that the federal system at the heart of the Commonwealth of Australia be dumped. It is a nice diversion. The scales fell from Costello’s eyes after 16 years in Parliament and ten years as Treasurer. It would not have escaped the notice of our readers that blame for failure of federalism is sheeted home by the Treasurer to the States, all of which happen to be ruled by Labor governments. If there were six state Coalition governments it might be a different matter. The beauty of the little skirmish by Costello is that he has been noticed. The old political adage that any publicity is good publicity has worked yet again. And this little exercise was so easy. It required no work, which is very much to the Treasurer’s liking. Nor will there be any follow-up, such as Costello formerly putting to Cabinet a proposal for a referendum to strip the states of the various powers that the Treasurer believes should belong solely to the Commonwealth. Any such referendum would comprehensively fail. [07.07.06]

More not less state taxes needed: The reality is that the Howard Government will keep chipping away at state power through the backdoor - using its control of the purse to get its way on things such as industrial relations. Costello says, in effect, the GST has been a failure because the states have not used their money in ways the Commonwealth wanted. At least this might revive an old but worthwhile argument: how can the federal system work effectively when the states have no responsibility for raising most of the money they spend? The answer is, not very well. It is not too late for the situation to be remedied. For example, the Commonwealth could close down the red tape entangled GST which is driving small business people up the wall. The States could then introduce their own consumer tax, collected at the till in the same way as it operates in most American states. And if the states want more money they should raise the consumer tax, or raise other taxes such as payroll and land tax. [07.07.06]

Beazley stale on defence: In 1990 Kim Beazley’s stint as Defence Minister ended. He apparently believes nothing much has changed. Beazley is giving the Governnment bad advice on defence. Responding to reports of possible delays in the Joint Strike Fighter project, he said Australia should consider acquiring the more expensive US F-22 Raptor. “It’s a very serious situation (the delay on the JSF). A big capability gap is building up now - Australia versus the region. We have always enjoyed technological superiority. We are about to lose it.” This is code for the RAAF being less capable than the Indonesian Air Force. Australian strategic planners have long recognised the only possible concern to Australia might be Indonesia. The chance of Indonesia launching an invasion of Australia is zilch. The Indonesian economy would collapse in a few months if it ever attempted this. [07.07.06]

PNG the problem: The big problem is PNG. If it falls to pieces, as did the Solomons, it is conceivable Indonesia could send forces in from West Papua to “restore order.” In which case Australia and New Zealand would be required to kick them out. For this we need an expanded Army, lots of helicopters and the highspeed, shallow draft vessels being considered by the US, which are designed in Australia. The JSF and the three air warfare destroyers would be useless in PNG. They would only ever be likely to see combat as part of an alliance with the United States in the Middle East, or worse, the Straits of Taiwan. The F-18 Hornets life could be extended to 2020, by which time manned attack jets could be obsolete and their work more efficiently done by cheaper unmanned aircraft. And if we did need some JSFs they would be much cheaper by 2020. [07.07.06]

NARGA changes course: Ken Henrick, the new CEO of the National Association of Retail Grocers of Australia (NARGA), has made it clear the organisation has not given up the struggle over Section 46 of the Trade Practices Act. NARGA is obviously taking a new direction following the departure of the former CEO, Alan McKenzie. Henrick told Inside Canberra this week the Treasurer’s office offered to brief NARGA on the amendments to Section 46. “We are very conscious of the risks that what we are briefed on might not be what comes out of the Senate,” he says. The Dawson recommendations did nothing for indepndent grocers, Henrick says, but nor did it harm them. “We were conscious that other sectors of small business such as the Fair Trading Coalition had been saying they wanted collective bargaining and we were encouraging people to block that legislation. When we had another look at it there was nothing in Dawson requiring us to keep blocking it. We have no objection to it being passed. We undertstand we are giving up some leverage and that was at the expense of other small business sectors and we didn’t feel we were entitled to do that.” [07.07.06]

Market power the key: On Section 46 and other amendments to the Trade Practises Act he says NARGA’s position originally was it wanted all 17 recommendations put forward by the Senate Economics committee (when the Government Senators lacked a majority). NARGA’s would be pressing for all 17 to be adopted, but as a minimum would be happy with the eight unanimous recommendations of the committee (Essentially the majority report made it easier for small business to prove misuse of market power by big business than did the eight unanimous recommendations). The departure of McKenzie has opened the way for cooperation between the NARGA and the Fair Trading Coalition (FTC). McKenzie appeared to regard the FTC as a competitor rather than an ally. Henrick (who was NARGA’s policy adviser since 2000) told Inside Canberra - “We were not in the Fair Trading Coalition for historical reasons when he (McKenzie) was here and I am not sure what they were to be honest. I don’t see any reason not to be part of Fair Trading Coalition.” [07.07.06]

Communicating with Government: The FTC, with 31 member organisations, is easily the most influential small business organisation operating at the national level. It includes such lobbying heavyweights as the Motor Trades Association of Australia, Australian Newsagents’ Federation, Australian Hotels Association, Australian Private Hospitals Association, Pharmacy Guild of Australia, Independent Liquor Stores Association, and The Horticulture Council. Henrick says NARGA had opened up lines of communications with the Government which were not there previously. “NARGA’s position until now has been a bit negative and I am not sure where NARGA could have gone if we kept going down that track.” He added, “NARGA was in no way trying to influence Barnaby Joyce in what he might do in the Senate. We respect his position.” [07.07.06]


From the Gallery: Jobs for the boys (or girls) have always been part and parcel of political life for both Labor and Liberal Parties and when this great tradition is exercised the voters don’t like it. But the pollies from both sides know such behaviour will not change votes, since both sides do it. The odd citizen may switch to voting for one of the minor parties, or voting informal, but not many would. Hence when Peter Beattie awarded former Labor Federal MP Mary Easson a $210,000 contract he knew it was not going to hurt him. Opposition Leader, Lawrence Springborg, rightly complained there had never been an explanation of what Easson actually did. Yet it will soon be forgotten. The Financial Review describes her job as “spruiking” for business for Queensland in southern states. Ironically, Easson’s consultancy firm glories in the name Probity International. Just what probity has do to with whatever she does is not clear. The practice of jobs for the boys/girls and particularly governments appointing their mates to important boards such as the board of the ABC, stinks. In the US many appointments, including judges, require Sen-ate endorsement. If only we could copy, while stopping short of endorsing judges. [30.06.06]

Lib rebels have the right to resist: Liberal backbenchers, such as Don Randall who has been ranting against the party room rebels on John Howard’s immigration legislation, have forgotten the history of their party and why it was established. Nor was John Howard accurate when he said last week, after failing to convince the rebels to accept his compromise on immigration, that “the way we have always operated in our party is the majority view, clearly expressed, prevails.” This has never been correct under any Liberal Prime Minister, until Howard took total control of everything that moved. The rebels have every right to not support Government legislation and that is why they are going to be so hard to shift, not only on immigration, but also on dissent from the PM’s insistence on a continuing ban on therapeutic cloning - the creation of embryonic stem cells for scientific purposes. [30.06.06]

Pressure by Howard fails: The rebels failed to buckle when Howard put the heat on by calling a special party room meeting on Wednesday evening last week. Pressure on them was intense, not only from Howard who wanted to go to Indonesia with the legislation in his pocket, but also from hostile backbenchers such as Randall. Now that the Howard visit to Indonesia is over, there is less pressure on the rebels to agree to the contentious immigration changes. When Menzies wrote the Constitution of the Liberal Party he specifically denied the Liberal (or Coalition) party room the right to reject a Cabinet decision or impose a view on the Cabinet. Because of this he believed it was quite acceptable for a Liberal backbencher to cross the floor of the Parliament on a government measure if the backbencher did so on the basis of his/her conscience. The backbencher is the sole judge of his/her conscience. [30.06.06]

Menzies and the rights of Lib backbenchers: Menzies leapt on the ‘36 faceless men’ issue to highlight the difference between the Liberals and Labor. In March 1963, the Sydney Daily Telegraph published a bombshell picture of the Opposition Leader, Arthur Calwell, and his deputy, Gough Whitlam, waiting in dead of night outside the Kingston Hotel, Canberra, for the 36 members of the ALP National Conference to vote on the Menzies Government legislation for a US naval communications base. Menzies derided Labor for voting according to the dictates of the ‘36 faceless men’. In contrast, he said, Liberal MPs could not be directed by anyone as to how they should vote. [30.06.06]

Political puzzles in Newspoll’s ‘issues’ findings: Newspoll’s latest poll on issues (taken 17-18 June) provides political puzzles for both sides of the Parliament. Labor is doing fine on industrial relations, but trails badly on the economy. The poll shows that IR has made it to the top ten issues for the first time. The issues are listed in order of importance, and those polled were asked to declare which party best handled each issue, as follows: Health & Medicare - Coalition 34%, ALP 41%; Education - Coal 35%, ALP 39%; Economy - Coal 61%, ALP 20%; Environment - Coal 28%, ALP 28%; National security - Coal 56%, ALP 21%; Welfare & social issues - Coal 34%, ALP 45%; Family issues - Coal 34%, ALP 41%; Taxation - Coal 46%, ALP 31%; Industrial relations - Coal 29%, ALP 48%; Interest rates - Coal 56%, ALP 23%. (In the list of issues Leadership ranked eighth, but those polled were not asked to say which party best dealt with this issue). It can be seen that of the top ten issues Labor wins five, the Coalition 4, and on Environment they are equal. [30.06.06]

Labor hopeless on Economy : Labor is obviously happy with the IR outcome and the fact they lead in Health & Medicare and Education, the top two issues. The Government’s huge lead on the Economy is confusing. Surely IR, Taxation and Interest rates are all involved in the issue of who best handles ‘THE ECONOMY’. Also puzzling is the Government’s huge 56% to 23% lead on Interest rates. The electorate, or at least those paying mortgages, were under the impression Howard had promised at the last election there would be no interest rate rises. Yet there have been two since the election, the last one causing much anger. Perhaps it is forgotten that one big chunk of the population, ie retirees, are delighted with interest rate rises as they earn more on their investments and savings. Similarly, another big group - those not paying off a mortgage, are not so concerned by rate rises. The Coalition seem to be badly done by with Labor leading on Family issues. Yet the Coalition easily wins on Taxation, and a feature of tax policy under Howard is the marked bias towards families via very generous allowances and rebates for children. Why then should the Coalition not be doing better than Labor on Family issues? [30.06.06]

1996 IR “reforms” rejected: Unemployment, having fallen to 4.9%, IR Minister, Kevin Andrews, now says Kim Beazley should assist to get the rate even lower by supporting the Work Choice package. The fall in unemployment had nothing to do with IR systems and certainly Work Choice, which did not operate until March, had no impact on the economy. One of John Howard’s favourite observations in answering union and ALP critics of Work Choice is to claim they said “the sky would fall in” with the reforms of 1996, and it didn’t. The reason the sky did not fall in is that there were no ‘reforms’ of any fundamental importance until Work Choice. The Senate defeated all significant ‘reforms’ put up by the then IR Minister, Peter Reith. He did get Australian Workplace Agreements with the consent of Democrats Leader Cheryl Kernot, and this was conditional on the ‘no disadvantage’ test - no AWA could leave workers worse off than if they were on an award. (The ‘no disadvantage’ test has now been dumped by Work Choice). [30.06.06]

Unfair dismissal history: The most important victory Howard won in the Senate, again courtesy of the Democrats, was for Section 43 D & E of the Trade Practices Act (the so-called secondary boycotts) to be restored to the IR legislation, having been removed by Keating. As a result the Government and employers were able to largely prevent stop work/strikes in sympathy with industrial action by other unions, as well as for political purposes, such as protests against the Iraq war. Unions engaged in secondary boycotts faced stiff fines. The Coalition put great store in removing unfair dismissal protection for workers in an establishment of, at first, 12 employees, later extended to 20 employees, but until Howard gained his Senate majority, all attempts failed. In short, for ten years Howard has been working with basically the same IR set-up left to him by Keating. [30.06.06]

Old IR system worked fine: Without this legislation unemployment throughout last year and the early months of this year was approaching 5%, aided by the resources boom. Far from Work Choice having a role in lowering the unemployment rate, the major contributor to breaking the 5% barrier was the Howard Government’s failures in the labor market, leading to the most serious labor shortage (particularly skilled labor) for decades. It is also worth noting the fall in unemployment was assisted by the increase in people receiving either the disability support pension, the dole, or the single parenting payment. Their numbers have gone from 1.69 million in March 1996, to the current 1.75 million’, a rise of 60,000. Voters expected the Coalition to get people off welfare, yet after ten years it has been a conspicuous failure. The penny may have dropped however with indications the Government is considering dumping its work-for-the-dole program for long term unemployed. Workforce Participation Minister, Sharman Stone, says she is not interested in “time-serving” programs and is looking to programs to help the long-term unemployed develop skills in short supply. [30.06.06]

Policing fraud & tax dodging: Taxpayers get four times as much back by spending money chasing tax cheats than going after welfare fraudsters. This is the conclusion Kelvin Thompson, Labor’s spokesman on Human Services, draws from the May Budget papers. The Budget provides $81.6 million for the attack on tax avoidance for a gross saving of $615 million or $7.53 return for $1.00. The Department of Human Services has budgeted for $282.3 million for a gross saving in welfare fraud of $548.3 million - $1.94 return for $1.00. Thomson says this lines up with information provided by the Attorney-General in response to Opposition questions during February Senate Estimates hearings. In 2003/04 and 2004/05 the ATO referred for investigation to the Australian Federal Police 376 cases involving a total of $42,552,008. In the same two years Centrelink referred to the AFP a staggering 26,188 cases of fraud involving a total of $41,910,587. No wonder the AFP are busy. [30.06.06]

Blackmail tactics: The left wing of the Labor Party can always be relied upon to come up with some daft proposal which deeply embarrasses the parliamentary wing of the party. The NSW and WA ALP State Conferences propose any company which adheres to the Work Choice legislation be blackballed by the respective state governments. Apart from being in breach of the Work Choice laws it would probably be unconstitutional (freedom of trade between the states). And in any case such blackmail is abhorrent. NSW Premier Iemma has announced he will not be taking up the proposition. Of course the Howard Government has given the mad left a precedent. Peter Costello insisted the Bracks Government would be denied federal funding to renovate the MCG for the Commonwealth Games unless it applied the Federal building and construction code (which the unions hate). The tendering process for construction companies had already been completed when this demand was made. Yet because the contracts were not actually signed the Howard Government insisted the process start all over again. The Bracks Government refused and the Commonwealth withheld the $90 million it had offered for the MCG project. Similarly the Commonwealth is insisting states will not get funding for AusLink roads unless the federal code applies to these projects. And it is making funding to universities conditional on adherence to Work Choice’s AWAs. Despite this blackmail the states should not follow suit at the behest of unions. [30.06.06]

Corruption in Defence: Our authoritative associated newsletter on defence procurement reports UK’s leading defence companies and defence sector Trade Associations have joined forces to set up a UK Defence Industry Anti-Corruption Forum, as part of a shared determination by key industrial partners to promote the prevention of bribery and corruption in the international defence market. Representatives from 11 companies and two Trade Associations that attended the inaugural Forum meeting claim to have ‘established policies in place’ that meet high ethical values, backed up with compliance procedures to ensure that their employees observe laws in all the countries in which they operate. Their aspiration is that the Forum will help build upon those policies and practices to ensure universally high standards in the global market. [30.06.06]

Politics of uranium v’s coal: If John Howard’s dream is achieved of nuclear power in Australia, and the outcome is the closing down or damage to the Australian coal industry, this would not matter politically since coal is dominant in only Labor electorates - right. No, wrong. If a coal electorate is defined as one in which there are coal mines, coal miners, coal ports or services for the coal industry, or a combination of some or all, the Coalition has more seats than the ALP. There are 22 such seats, all but two in NSW and Queensland. The Nationals hold seven seats, Liberals 4, Labor 9 and Independents two. There are three marginals (Labor has one, Capricornia Qld; Liberals one, McMillan Vic; and Nats one, Gippsland Vic). There are six described as “fairly safe” (Labor has four - Oxley Qld, Charlton NSW, Newcastle NSW, Shortland NSW; Liberals one, Paterson NSW; and Nats one, Gippsland Vic). Of course if there was such an upheaval no seat could be regarded as “safe” for the Coalition if it was seen as bringing down the coal industry. There are 100,000 jobs involved in the three biggest states, a lot more than ever will be involved in the uranium industry. [30.06.06]

Understanding Barnaby: The Howard Government has several important pieces of legislation coming into the Senate which may not survive because of Opposition from Queensland National Senator, Barnaby Joyce, and Victorian Family First Senator, Steve Fielding. Joyce is no economic rationalist, believes fervently in the Senate as a States House and is convinced only by acting independently in the Senate can the Nationals differentiate themselves from the Liberals to have any relevance for voters. Joyce’s Sir Earle Page Memorial address (3 March in Sydney to the Page Research Centre) should be read to understand where Joyce is coming from. For example, he believes the dairy industry rationalisation scheme has proved to be “an unmitigated disaster, bringing lower farm gate prices and the loss of income and industry to many hinterland towns and high prices in the shops.” In his address he warned the Nationals they could not be the party of both big and small business, as they compete against each other and are “mutually exclusive.” [30.06.06]

Object an independent Senate: Joyce says - “The market place is a pro-forma of big business and, as such, without policy restriction there is a latent bias to the growth of market leaders over the top of all new or small established players.” This explains his hostility to the dominance in retailing of Woolworths and Coles. Joyce said he had crossed the floor on amending Section 46 of the Trade Practics Act to “protect smaller business from the absolute domination and centralisation of market power.” Hence his dig at the Liberals - “You cannot ignore your bigger political benefactors and the major political parties enjoy the ample largess of the major retailers.” On the Senate’s independence from the House and the Government Joyce is passionate. “The only thing that should be truly remarkable about crossing the floor is when it does not happen.” And, “The Nationals have the chance to show to the Australian public that, in the Senate, they are prepared to take their sworn office seriously and in so doing give back to Australia their Senate. This is resonating with the public and it is currently attached to me, but I would love it to be held by my party.” [30.06.06]

Super co-contribution: Revenue Minister, Peter Dutton, says in the first quarter of this year 84,000 women received a total of $77 million into their superannuation accounts courtesy of the Government’s co-contribution scheme. It is an open ended scheme which is costing an awful lot of taxpayers money, and is a boon to high income earners because of the income splitting benefits it opens up. The scheme provides for a maximum Government co-payments of $1500 annually for $1000 contributed by an employee on an income of $28,000. It phases out at $58,000. In 2004/05, some 974,000 employees on less than $58,000 received a total of $772 million in Government co-contributions. It is a great dodge for income splitting. Some 20% of recipients of the co-contribution had partners whose income was above $58,000. No surprise that 12,500 recipients had a partner earning more than $100,000. It means a millionaire could give his spouse $28,000 as a ‘salary’ and she would get the $1500 tax free. The Government intends to remove the exit fee on super payments. Yet this will benefit only higher income earners. At the moment there is no exit tax up to a super payout of $130,000. The average super account currently is around $60,000. [30.06.06]

From the Gallery: The Government is to use its Senate majority to further impinge on the Senate comm-ittee system, with the existing 16 committees now to be com- pressed into 10. Instead of the chair being shared between both sides of the Senate, the Government will have not only a majority on all committees, but will also have the chair. A chair mindful of protecting the Government can do a lot to get in the way of probing by the non-government members of a committee. And this only 12 months after John Howard said he would be “responsible” in his use of the “unexpected” Senate majority. Last year, Jeannie Ferris (the Government Whip), headed a task force recommending changes to the committee system, and aimed at stymieing the Opposition as much as possible. It appears her report was given to the then Government Senate Leader, Robert Hill. Never one to rush a decision, Hill put it in his bottom draw. When he departed, his successor, Nick Minchin, got the report moving. John Howard will decide which Senators will take committee chairs. There is much spec-ulation whether Senator Marise Payne (Lib, NSW) will retain the chair of her committee, which unanimously recommended the Immigration changes be dump-ed, thus strengthening the hand of the Liberal rebels. [23.06.06]

Iraq misadventure rebounds on wheat: Details are sketchy of the true nature of events coming out of Baghdad in regard to the fatal engagement by an Australian Security Detachment (SECDET) of personal bodyguards of the Iraqi trade Minister. What is clear, is that in an already highly charged environment following the AWB scandal, underlying sensitivities within the Iraqi Government continue to threaten the sustainability of Australia’s wheat trade, irrespective of the vagaries of translations as to what exactly Howard Government ministers will now have to offer up in terms of apologies and compensation to ensure the $90 million grain shipment contract just secured by the Wheat Australia consortium is not threatened. [23.06.06]

Lib rebels ensure Howard will stay: Reflective of his determination to see things through, Howard went on to issue a statement outlining new and more hazardous duties for Australian troops in Iraq, irrespective of his knowledge of the events unfolding in Baghdad. This came on the back of an unsettling week in Canberra in terms of internal divisions within the Liberal Party. So if there was any doubt about John Howard going to the next election as Prime Minister, it was more than settled on Tuesday. On that day, Howard suffered the most serious setback - courtesy of his own party room - of any Liberal Prime Minister going back to when John Gorton was kicked out as PM in 1971. Still, Howard is not a quitter, and is not going to be seen to be scuttling away as things again get tough in managing his party. [23.06.06]

Dissenters standing firm: Contrary to all expectations, the PM in the party room was unable to stare down dissenters to his tough new immigration laws, designed to appease Indonesia. The aim of the legislation is to ensure that no asylum seeker from West Papua will ever again have access to Australian law, other than the 42 who made it to our shores by canoe to find favour via the Immigration Department. We repeat what we said last week - the Liberals in the Federal Coalition are sensing the end of the Howard era is approaching - and hence, there is unrest in the backbench. This doesn’t mean they expect him to retire before the next election. Rather, if the PM wins the next election, he will hand over to Peter Costello within 12 months. If he doesn’t, he will be asked to go. [23.06.06]

Unhappy trip for PM to Indonesia: In saying this, we are not suggesting the rebels are motivated by anything other than a sense of outrage that as a supposed defender of the average bloke, Howard is proposing to introduce grossly unfair legislation. It is aimed squarely at West Papuans, and without a word of recognition from Howard (or Amanda Vanstone) about the human rights outrages being visited on them by the Indonesian army. Yet during the last Parliament, it would have been inconceivable for such a revolt to occur in the party room. This weekend, Howard has to head off to Indonesia to explain to its President he is unable to get his legislation through the Parliament, despite the fact he has by far the greater numbers of Liberals supporting him. Perhaps the most disturbing aspect of all this for Howard, is that there is no empirical evidence that voters are particularly concerned about the stance the rebels are taking in terms of undermining his authority. [23.06.06]

AWAs not answer to ALP poll slide: The press gallery pundits are convinced the latest minor poll drop for Labor is due to Kim Beazley promising to end Australian Workplace Agreements. If the ACNielsen poll published this week is correct, then how could it be about voter anger over Beazley’s approach to AWAs? ACNielsen says 38% support Beazley’s scrapping of AWAs, 27% oppose him, and a huge 35% don’t know. The ‘don’t know’ vote is understandable. Only 5% of Australian workers operate under AWAs. Most of them would not yet have full understanding of how they work. Until ‘Work Choice’, a ‘no disadvantage’ test had to be met by AWAs, meaning they could not offer worse conditions than awards? We doubt that even 50% of those on AWAs would be aware that the ‘no disadvantage’ test has been scrapped. [23.06.06]

Labor leads on all IR issues: The poll also asked which of the major parties best handled IR, and Labor won easily with 50% to the Coalition’s 30%, and 20% don’t know. In answer to: ‘Do you support the Government’s change to IR?’ - 57% opposed, 26% supported, and 14% don’t know. Asked whether they would be worse (or better off) from the changes, 27% said worse off, 6% better off, and 64% no difference. So on every question related to AWAs and IR, Labor wins. It is nonsense (if ACNielsen polling is correct) to contend the Labor slide is due to Beazley promising to scrap AWAs? Other issues must have impinged - perhaps even the outpouring of jingoism over the Socceroos, producing a warm feeling in voters. This could have helped Howard. Similarly, a lot of retirees or those approaching retirement have begun to understand how generously they were treated in the May Budget, and this could have had an impact. Most important of all, the slide in the Labor vote may have resulted fome the considerable media coverage of splits within Labor, and some obvious undermining of Beazley by people like Unions NSW boss, John Robertson. [23.06.06]

Labor’s theory on polls: Labor says privately the poll slide was due to Howard’s backflip on selling Snowy Hydro, and his intervention to spike legislation by the ACT Labor Government for civil unions for gays. According to ACNielsen, the two party preferred vote in the middle of May has gone from 54% ALP, 46% Coalition, to 51% and 49% in the middle of June. The Coalition primary vote is unchanged at 41%, yet Labor’s primary had dropped 4%, to 36%. If Labor’s lost 4% didn’t go to the Coalition, where did it go? It didn’t go to the Greens, or One Nation, or the Democrats. According to ACNielsen, the Independent vote doubled from 3%, to 6%, and an extra 1% went to ‘Other’. This is not at all convincing. Newspoll puts the two-party preferred as 51% Coalition, and 49% Labor. Unlike ACNielsen, Newspoll has the Labor primary vote down only 1% from two weeks earlier, to 38%, with the Coalition primary up 4%, to 44%. Finally, the Morgan poll (taken mid-June), has the ALP two party preferred well in front on 53%, and the Coalition on 47%. Average the three polls, and you get 51% ALP, to 49% Coalition. This looks about right. [23.06.06]

Petrol retailing legislation: Industry Minister, Ian Macfarlane, will not be rushing to put his retail petroleum “reform” legislation into the Senate following events of last week. Senator Barnaby Joyce failed in a motion to disallow regulations relating to the Petroleum Retail Marketing Sites Act (which restricts the four oil majors to controlling 5% of service stations). Macfarlane, at the behest of the four oil majors, proposes to repeal the Sites Act and its associated Petroleum Franchising Act (which protects the interests of their franchisees - servos - operating service stations). This will give big oil total vertical integration of the retail business, and put the independents out of business. Parliament’s intentions have largely been circumvented by the oil companies sliding around the Act’s provisions. The growing domination of the market by Coles/Shell & Woolworths/Caltex discount shopper dockets means life is going to be difficult for BP and Mobil. (Some in the industry believe Mobil will exit Australia within five years). [23.06.06]

Senate voting dead heat: Joyce was angered by Macfarlane sneaking in regulations while a Senate committee was inquiring into the repeal legislation. The regulations have the same effect as would repealing the legislation. Yet Macfarlane effected the regulations before the Senate committee had decided whether or not to recommend the legislation (In the end, it did).The Senate voted 30-all on Joyce’s motion to disallow the regulations, and as a tied vote does not carry a motion, Joyce was defeated. Yet, when the actual repeal legislation comes before the Senate, a 30-all tied vote would defeat the first, second or third reading motions, and the legislation would fail. Joyce would then be a winner. NSW Nats Senator, Fiona Nash, was absent when the vote was taken last week. So she could yet frustrate Macfarlane by supporting Joyce when the repeal legislation comes into the Senate. She said in a press release (8 June) - “Australian motorists are being forced to pay about an extra 4c per litre for petrol because major oil companies won’t get out of the way of their own balance sheets and embrace bio-fuels, particularly ethanol blended fuels.” Nash is therefore in total agreement with Joyce, who said in his speech last week, independents are far more aggressive in retailing bio-renewables than the oil companies. On Thursday, the Government agreed to a Senate Committee investigation into the high level of petrol prices, so this will keep the issue alive for an extended period as the committee takes evidence. [23.06.06]

Opposition the key: At the end of the day, it might all depend on Labor, which has yet to make up its mind. Labor will try to amend the legislation so that the interests of independents and servos are protected by a revamped Section 46 of the Trade Practices Act. The Treasurer, Peter Costello, will not agree to this (and appears to have gone cold on doing anything with Section 46). If the amendments fail, will Labor then vote against the legislation? It is yet to decide. When pondering what to do, Labor might bear in mind who is for the Macfarlane legislation, and who against it. Of course big oil and the ASX would favour the Macfarlane “reform”. According to Joyce, the following groups have visited his office “to lobby vehemently” against the Macfarlane legislation: the NRMA; Victorian Automobile Chamber of Commerce; Motor Trades Association of Australia; the Service Station Association; and Renewable Fuels of Australia. [23.06.06]

Ruddock out of order: The Attorney-General, Philip Ruddock, doesn’t appear to be aware of the role he plays as chief law officer of the Commonwealth. He is a politician, but unlike anyone else in the Parliament, he is expected to keep politics as removed as is practical when it comes to exercising his duties. For instance, he should not be a barracker on the sidelines for his controversial and extreme legislation relating to terrorism. On Monday in the NSW Supreme Court, Faheem Khalid Lodhui (after a jury had deliberated for five days), became the first person to be convicted of plotting a terrorist attack on Australian soil. Ruddock had a little victory dance by immediately calling a press conference to declare “he welcomed” the conviction (the subtext of which was to remind voters of what a clever fellow he is to have devised laws which led to the conviction). Ruddock said in relation to the penalty - “that’s not a matter that it would be appropriate for me to comment on.” Yet he has already commented on the case in advance of a penalty being imposed, and before it was known whether Lodhi would appeal. Justice Minister, Chris Ellison, also got in on the act and also “welcomed” the conviction. [23.06.06]

Terrorism politics: A prominent lawyer told Inside Canberra this week that Ruddock had acted inappropriately. Another authority said it was an outrage for Ruddock, as chief law officer, to call a press conference to discuss the Lodhi case. Former Attorneys-General on the conservative side of politics - R.G. Menzies, Garfield Barwick, Tom Hughes, Ivor Greenwood, Nigel Bowen and Bob Ellicott - certainly would not have acted in this way. To give the impression of always acting in a quasi-judicial manner, Ruddock effects an agonising type of legalese pidgin English. Last week, he received a report commissioned by his own good self on how Australia’s new national security laws are operating. The A-G was asked why he instantly dismissed the recommendations, saying - “Well I don’t think it’s appropriate to leave out there an issue like that. It seemed to me and my colleagues, that it was best to put beyond doubt immediately that those matters would not be the subject of an acceptance by the Government.” It is about time politicians shut up about terrorism, stopped trying to lever votes out of the subject, and leave it to the police and ASIO to do their work. The more pollies rabbit on about terrorism in Australia, the more likely it is that misguided Muslim kids will be interested in trying it.” [23.06.06]

Coonan & those world-beating Socceroos: Dear, dear - Communications Minister, Senator Helen Coonan was wrong-footed by a question on our perfectly wonderful Socceroos - now into the final sixteen after last night’s draw with Croatia. Shadow Communications Minister, Senator Stephen Conroy, asked her in the Senate last week whether she was aware of the “outpouring of jubilation (about Socceroo successes) by Australians”, and would she care to revise her comments to Senate Estimates that - “Australia does not have very much participation (or) has very small participation in the Cup”, and that World Cup Football - “probably attracts the same level of audience interest as the Tour de France?” Further, Conroy asked whether she would reverse a decision not to include Socceroos World Cup qualifying matches in the anti-siphoning list. [The anti-siphoning list is designed to ensure popular sports are not denied to viewers of free-to-air television.] Conroy then asked her did she know the TV rights to Socceroo World Cup qualifying matches had been sold exclusively to pay TV? Coonan couldn’t, or wouldn’t answer any of this. [23.06.06]

SBS dumped: The Football Federation has done SBS in the eye by selling, for $120 million, rights for seven years to World Cup qualifying matches and Australian A-League domestic Soccer matches. The home and away matches Australia had to win last November against Uruguay to qualify for the Cup attracted an audience of eight million to SBS. To get the Government out of a hole because of the failure of NINE to take up last year’s UK Ashes tour, SBS recreived some $5 million from the Government to cover the tour. In this year’s Budget submission, SBS asked for $15 million over five years to cover sport which misses out on TV coverage on free-to-air or pay TV. This was rejected. No wonder, having lost big time Soccer, poor old SBS has to run ads during programs, rather than at the end - as it has done in the past. [23.06.06]

Rupert not happy John: Septuagenarian American, Rupert Murdoch, has spoken and the Howard Government is expected to jump. It won’t. Rupert is demanding free-to-air TV channels be subjected to more competition by allocating a fourth (at least) commercial TV licence. There is some confusion over whether Murdoch would want the licence for News, or whether his game is to pressurise the PM into scrapping the anti-siphoning concept altogether, to the advantage of Foxtel, (25% owned by News Ltd, 25% by Packer, and 50% by Telstra). Packer of course, does not want any new TV stations, nor changes to the anti-siphoning regime. In the past, Packer and Murdoch were happy enough to make money from supplying content to Foxtel, but the aged media mogul seems to have had a change of mind. With 25% of Foxtel, and 70% of the metropolitan dailies newspaper circulation, News Ltd is whingeing that TV is being favoured over print. [23.06.06]

Media “reform” dead: Howard can’t give Murdoch what he wants, and this puts out of court any reform of the cross media rules in the current Parliament. Murdoch is expected to speak to Howard, perhaps today, but Howard can’t give way without getting off-side with James Packer and Kerry Stokes. Some observers believe nothing worthwhile will happen until Murdoch joins Kerry Packer in the big media network in the sky. There is also a view that the best thing to happen to the media legislation would be to end the prohibition on foreign ownership. Foreign owners would be less interested in standing over the Australian Government, and would focus solely on the bottom line. [23.06.06]

From the Gallery: Bad news for the government on IR - Alan Jones is going off his face with indignation about the treatment being meted out to workers since the legislation became law. He gave the Treasurer a terrible time in an interview on Thursday. Jones was partic-ularly incensed about Spotlight offering an employee, Annette Harris, 2c extra an hour for removing conditions such as overtime worth $90 a week. Jones, although a card-carrying member of the Liberal Party, knows what his listeners are thinking because of his frequent correspondence with them. The PM should be worried. Jones also lambasted Peter Costello over the government’s failures to develop an ethanol industry. This is one of his hobby horses. Again, it no doubt echoes support for ethanol from listeners worried by petrol prices. When Costello asked to be allowed to finish making a point, saying Jones had been making plenty of points of his own the request set off an out-burst from Jones who let Costello have it, both barrels. “Don’t be facetious Treasurer”, said Jones. Adding, “Don’t be a smart Alec.” And after that rant Jones told Costello he was “pig headed” and would not listen to the electorate. Off air, Costello made it clear he wished he hadn’t agreed to doing the interview. [16.06.06]

Libs anticipate end of the Howard era: The Liberals in the Federal Coalition are sensing the end of the Howard era is approaching, hence the unrest in the backbench. This doesn’t mean they expect him to retire before the next election. Rather, if the PM wins the next election, he will hand over to Peter Costello within 12 months. If he doesn’t, he will be asked to go. Howard faces an unprecedented challenge on the new immigration laws. While only one Liberal, the ACT Senator Gary Humphries, voted against the measures to defeat same-sex unions in Canberra, many Liberals believe Howard’s approach shows he is out of touch with the broad community. We think it is simply a straight forward Howard wedge against Labor, yet many Liberals say Howard doesn’t understand there is now widespread community acceptance of homosexuals, particularly among younger voters. [16.06.06]

PM resorts to lies on border protection: Howard is in a desperate position over backbench hostility to his measures to appease Indonesia. He has resorted to the outright lie in telling Parliament on Wednesday - “These policies have nothing to do with listening to Indonesian politicians.” Later, during a 7.30 Report interview, Amanda Vanstone told Kerry O’Brien - “Well, I think, as you say, it is indisputable we’ve taken into account the concerns of Indonesia.” And on Thursday she was saying how vital it was to have good relations with Indonesia because of their cooperation on border security. Inside Canberra (17 Feb) warned a delicate problem coming for Australia was the future of the 43 West Papuan asylum seekers then incarcerated on Christmas Island. Eventually all but one were recognised as genuine refugees and granted visas to stay in Australia. [16.06.06]

Papuans different proposition to Tampa episode: Inside Canberra observed it would be far harder for the Government to engender hostility from Australians towards the Papuans, compared to the Tampa boat people. After all, the latter were “people of Mediterranean appearance” and the slippery Peter Reith assured voters there would be terrorists among them. Further, the PM said he wouldn’t want to see people come to Australia who threw their children overboard. It is unfortunate, but true (and no doubt there is an element of racism in this), that Australians don’t particularly like Indonesians. On the other hand, a natural sympathy exists for all Papuans emanating from World War II. And so it has turned out. The Government has rushed to appease Indonesia with new laws clearly aimed at stopping the flow of canoe people from West Papua by excising the whole of Australia from Australian law, thus providing that all future asylum seekers will be processed off-shore. If subsequently granted refugees status, they will go to any country which will take them, but not Australia. [16.06.06]

Polls against Government appeasing Indonesia: Ian Melrose, a wealthy businessman who has poured a lot of his own money into seeking justice for East Timor over oil and gas rights, commissioned a Newspoll which asked the following question - “Recently the Indonesian government expressed its concern at Australia’s decision to grant visas to 42 West Papuan asylum seekers and recalled its ambassador in protest. Do you think the Australian government should change its immigration policies in order to improve its relations with Indonesia, or keep the policies as they are?” Of the 1200 polled, 74% said current laws should remain, and only 15% supported a change. Justice John Dowd, of the International Commission of Jurists (and a former NSW Attorney-General in a Coalition government), said this week- “While good relations with Indonesia are important, the Australian people know that it is immoral to change our laws in this way.” Howard’s difficulties flowed from a Senate committee, with Government Senators in a majority, unanimously recommending the legislation to appease Indonesia should be scrapped. The Government Senators on the committee were Marise Payne (chair), Brett Mason and Nigel Scullion. [16.06.06]

Bad timing for Howard: The committee made the point that a diplomatic problem with Indonesia should not be addressed by changing Australian law. John Howard must have been cursing the arrival in Canberra of the Indonesian Parliamentary delegation. Their mission was to persuade the Howard government to return the 43 asylum seekers to West Papua. This is what they stated, in Canberra, to the Australian media. Worse was to come for Howard with militant Islamic cleric, Abu Bakar Bashir, released from jail after 25 months, having been found guilty of giving his blessing to the 2002 Bali bombing. As the father of one of the victims said, young Australians get 20 years for carrying drugs into Bali, yet 25 months is enough for the cleric. Just to underline his hatred for Australians, Bashir told the ABC on Thursday that if John Howard wanted to go to Heaven, he should become a Muslim. The point about the diplomatic difficulty with Jakarta is that it is not Australia who is in the wrong, but Indonesia. If Jakarta reined in the Indonesian army, which is guilty of grave human rights violations against Papuans, there would be no problem. Further appeasement of the Indonesians will not encourage them to force changes upon on the Indonesian army’s conduct in West Papua. [16.06.06]

Govt. changes tack on IR: In an important strategic move, John Howard has decided his target in the contest between the Coalition and Labor on the Work Choice legislation is not the unions, but Kim Beazley. The PM does not want to get into debates about the detail of Work Choice. He is confining himself to the general observation it is good for jobs, and the economy, but declines to explain how. Instead, he has seized on Beazley’s ‘flip flop’ in embracing the union campaign against Australian Workplace Agreements (AWAs). He is correct - Beazley has gone from a public position of saying fairer AWAs would be part of a Beazley Government’s IR plan, to absolute opposition to AWAs in any form. Howard can say with some truth that Beazley did this under pressure from such union leaders as John Robertson, who runs Unions NSW. So ‘flip flop’ Beazley is the target (Please don’t mention flip flop Howard backtracking on the sale of Snowy Hydro without any reference to his Cabinet). [16.06.06]

Beazley the target: The attack on Beazley was launched in Question Time (Tuesday), although the story was buried by the continuing media babble about the Socceroos, plus the backbench revolt against the new immigrant off-shore processing schem. The punters paper, the Sydney Daily Telegraph, had the Question Time attack back on Page 12, and Melbourne’s Herald Sun didn’t mention it at all. In fact, Labor won the media battle, as both TEN and SEVEN ran evening news footage of Beazley meeting sixty year-old Melbourne grandmother, Karen Palmer. She worked for 14 years as a machine operator during which time, Beazley said , - management had made no adverse comment about her perform- ance. Yet on returning to work after a workplace injury, she was allegedly sacked for being “a liability”. Asked about the Palmer case in Question Time, Howard said he did not know the details of her case, but could instead tell the Australian people that unemployment was at a 30-year low. [16.06.06]

Unions strong campaign: The Government’s major problem is that the contest over Work Choice does not fit into the format of the normal political stoush, with the Coalition on one side of Parliament and Labor on the other. In the IR debate, Beazley and Shadow IR Minister, Stephen Smith, may have lifted their game. But it is Greg Combet, Secretary of the ACTU, who is making all the running - and directing an innovative union campaign against Work Choice. In the Queen’s Birthday Honors, Gregory Ivan Combet was awarded a Member (AM) of the General Division in the Order of Australia, “for services to industrial relations and advocacy for the improved health and safety of workers, including those people affected by asbestos-related diseases and to the community.” This is the same “union boss” regularly portrayed as a blackguard by IR Minister, Kevin Andrews, and labelled a liar. [At least Combet’s award proves the process is not biased.] The unions have more troops on the ground than the Government. In every reasonably sized town across Australia, there are union officials out in the community hammering the horrors of Work Choice. In manufacturing, any establishment of a reasonable size have union reps. John Robertson, of Unions NSW, has been running a campaign by bus into towns throughout NSW, and claims great interest is being shown when the roadshow turns up. [16.06.06]

Skeletons in PM’s family cupboard: The Sydney Morning Herald (10 June) had an extraordinary story by David Marr of skeletons in John Howard’s family cupboard. In no way could Howard be blamed for his family’s conduct, and there is no sign of the emergence of the story even causing the slightest embarrassment to the PM. The Herald revealed that his father, Lyall (and Lyall’s father, Walter), had profited by acting as ‘dummies’ for W.R. Carpenter & Co Ltd in securing coconut plantations in New Guinea. Australia took over the German colony of New Guinea after WWI, and PM Billy Hughes promised “New Guinea for the returned servicemen.” Gassed at Passchendaele, Lyall returned to Australia and worked as a mechanic for CSR. As an ex-serviceman, he was entitled to bid for plantations, requiring a deposit of only 15%, and paying off the purchase over 20 years. The Carpenter company could have bid, but faced having to provide twice the deposit and pay off the balance in half the time. Hence the attraction of using ex-diggers as dummies. [16.06.06]

Top level Govt. inquiries: Lyall successfully bid for two plantations, as a dummy. The total value of the two plantations in today’s dollars was about $4 million. Commonwealth Archive records show WR Carpenter paid the full deposit to Lyall, plus 540 pounds. He successfully dummied for a third, while Walter succeeded in a bid for another plantation. In 1929, the Commonwealth Attorney-General, John Latham (later Sir John, Chief Justice), wrote an opinion for the Treasury. He said, unless Lyall and Walter could show they had other property of substantial value (which they didn’t) and they proposed to take “a real interest” in the plantations, it would be “very difficult for the Custodian (of New Guinea) to satisfy himself that their intention is to acquire the property in order to hold and use it for their own exclusive benefit.” The Auditor-General in a report on the Howards, said he had “no doubt that dummying exists.” Marr reports that at this stage, the Scullin Government came to office and Attorney-General Frank Brennan decided to introduce new regulations “for the future control of dummying”, rather than pursue the Howards. [16.06.06]

Media ignores story: John Howard declined to be interviewed by Marr. As far as we can ascertain, no media outlet took up the story, which is surprising. Perhaps the News Ltd newspapers didn’t take it up because it was a Fairfax scoop (yet it didn’t appear in The Age). Nor was the story mentioned on commercial TV news, even though they are notorious for lifting newspaper stories without giving an attribution. Nor did the story get a mention on the ABC’s hairy chested, ‘publish and be damned’ Media Watch. Marr’s investigations were conducted legitimately in the public interest - although, of course, the sins of his father could not be visited on son, John. The Marr story was also an important addition to the history of relations between Australia and PNG. No doubt PNG Prime Minister Sir Michael Somare would have noted that as far as Billy Hughes was concerned, Australia could do what it liked with the former German colony, and without even a thought for the indigenous owners of the country. As Marr observed, the dummying of plantation bids did not fit the established Howard family ethos which inspired him as a child, namely: a hard working ex-digger slogging it out in a family-run service station in Sydney’s Dulwich Hill. On Monday, The Herald carried six letters from readers commenting on the Marr article. Three were critical of Marr - the other three had a dig at Howard. Sensibly, the Labor Party kept right out of it. [16.06.06]

Pacific air route confusion: The management of Singapore Airlines Ltd’s (SAL) continuing push for access to the Australia-US passenger route by Nationals Ministers is confusing. In February, the Howard Government rejected indefinitely Singapore Airline’s request to fly the Pacific route. As an alternative, it encouraged another Australian Airlines (Virgin Blue), to enter the North American market. At DFAT briefings in advance of the Free Trade Agreement (FTA) negotiations with Singapore, Qantas urged the Government to follow what had always been Australian policy: keep international aviation agreements separate from trade negotiations and agreements. At these briefings, the Department of Transport gave the same advice to DFAT. Both the Qantas’ and the Department’s advice was rejected, and Trade Minister, Mark Vaile, signed up to an agreement which said “both parties agree to work towards an open skies air services agreement, and to review that work in accordance with the provisions of Article 22.4”. Article 22.4 commits Singapore and Australia to review developments in civil aviation at the first FTA review, or at any other time agreed between the parties, with a view to including these developments in the substantive SAFTA. [16.06.06]

Qantas position weakened: Yet in response to questions from the Financial Review, Vaile stated he had made it clear to the Singaporeans that open skies was a separate matter from the FTA review. “I keep saying to Yeo Cheow Tong (Singapore’s Transport Minister) and others, that it was deliberately left out of the FTA because it’s a separate negotiation conducted by transport departments.” To add to the confusion, the Fin (under Freedom of Information pertents), published a letter to SAL from John Anderson when he was Transport Minister in 1992 (ie: in advance of the original FTA negotiations). His letter, by implication, compared the Australian national carrier, Qantas, unfavourably to SAL, saying - “Your service levels have set the standard for other airlines in the market”. Anderson went on to inform SAL he had instructed the Transport Department “to resume consultations with the aviation authorities of Singapore on open skies. I hope these consultations will lead to a state-of-the-art open-skies agreement which might serve as a model for other countries in the region.” [16.06.06]

SAL claims dubious: Vaile and DFAT have put Australia and Qantas in a weakened position. SAL won’t let up on its access bid. In fact, during an official visit to Canberra this week Singapore’s Prime Minister, Lee Hsien Loong, told a press conference that Australia should reconsider negotiating an open-skies treaty in the context of the FTA. More specifically, Lee said - “Our view is that we would like an open-skies agreement with Australia, and we can do it within the SAFTA too.” Warren Truss responded in a confusing way, saying the Australian government “had not completely closed off” the possibility of SAL entering the Pacific route, although there was little prospect in the foreseeable future. There is no hard evidence that the entry of SAL into the Pacific route would significantly increase in-bound tourism. SAL is not a cut-price airline. If Virgin found it economic to operate the Pacific route as a discount airline, this would no doubt increase tourism. There is no particular reason why an Australian company, Qantas, should share part of its profits with the Singapore Government-owned SAL. After the hanging of a young Australian last year, Singapore is not in particularly good odour in Australia. [16.06.06]

From the Gallery: John Howard has been spending taxpayers ‘hard earned’ in some odd ways. John Murphy (ALP, NSW) was indelicate enough to inquire of the cost of the state funeral for billionaire (and noted tax minimiser) Kerry Packer. Howard’s answer: $73,223. Biggest items were $28,643 for Sydney Opera House, $18,479 for advertising and $9,254 in airfares (no details of who benefited from the latter). The AWU’s Bill Shorten says Howard’s Parliament House reception for miners cost one million. Whether he bases this on anything is unknown, but even if it is halved, it was a lot for something which seemed quite unnecessary, although Howard did make the evening TV news pictured with the miners. The money would have been much better spent in the hands of the family of the dead miner, Larry Knight. The pollies have their own Fair Pay Commission - the Remun-eration Tribunal, and it has given them an 8.6% rise in their Canberra travel allowance to $190 per day. Had it applied through this year, with 65 scheduled sitting days of Parliament, it would be worth $12,350 tax free. Some MPs shrewdly use the money to pay the mortgage on a town house, which means free rent and a nice capital gain when they sell. [09.06.06]

What’s Howard up to on nuclear issue?: The most frequently asked question in Canberra this week is proving difficult to answer - what is John Howard up to with his new found enthusiasm for the nuclear industry? Given that nearly all the present members of the Federal Parliament will have long since departed when, and if, nuclear power arrives, it is hard to see why Howard has, out of the blue, decided a debate on the topic was absolutely necessary this year. He hadn’t said a word about it before he arrived in the United States on his last trip. There was no mention of nuclear power during the last election campaign, and only two years ago the Government’s White Paper on energy policy had clean coal as the major source of power. Nuclear didn’t get a look in. [09.06.06]

Wedge wouldn’t work on Labor: It is said the PM is trying to wedge Labor, which has to decide in April next year at its National Conference whether to dump its current policy of three mines only for uranium, and it is certain to do just that. The Howard approach is not popular. The latest Newspoll has a decisive majority against more than three mines, uranium enrichment, or nuclear power. Ipsos Mackay’s poll last weekend was interesting as it asked the question in the terms being put by Howard: are you in favour of nuclear power to reduce reliance on coal which produces greenhouse gases that contribute to global warning? The result- 45% against, 40% in favour and 15% don’t know. [09.06.06]

Taskforce dogged by claims of bias: Inside Canberra (26 May) argued for a royal commission if the Government wanted a thorough and patently impartial inquiry. However, we warned, “the Howard way” was to appoint a task force of the right people to get the right outcome. That is exactly what has happened. The PM has appointed “a Prime Ministers Task Force” (the very name points to a fix) with the majority clearly pro-nuclear. Howard has made a mess of this. No sooner had he announced the inquiry than its independence was being questioned, mainly because the Chair, Ziggy Switkowski, a trained nuclear physicist, was a member of the board of the Australian Nuclear Science and Technology Organisation (ANSTO). Only last week the Science Minister, Julie Bishop, hawked to the media what appeared to be a highly partial report commissioned by ANSTO to argue the case for nuclear power. [09.06.06]

PM fails to foresee Switkowski a problem: Now, in an obvious effort to stem the tide of allegations of bias within the PM’s task force, Switkowski has resigned from the ANSTO board. He also says he will take no part in the production of any submission it makes to his inquiry (Surely that would have been taken for granted). Howard now faces the prospect that any findings by his task force in favour of the nuclear industry will be under a cloud, with critics saying the outcome was engineered from the start by Howard. The PM should have realised the Switkowski appointment would be challenged. What is all important about such inquiries is how they are perceived. If they are perceived as biased they are useless. One popular press gallery theory, to explain the Howard nuclear ploy, is that he is merely engaging in some diversionary politics. The PM, so the theory goes, wants to put behind him the nasty fight in Queensland over the attempted takeover by the Liberals of the Queensland Nationals, and his announcement of the dumping of the sale of Snowy Hydro Ltd (see below). Howard has already got a diversionary poofter bashing campaign underway with the stern message the ACT law allowing civil union of same sex couples has to be stamped on. The absurd claim by Attorney-General, Philip Ruddock, is that the toy town ACT Government is threatening the social bedrock of marriage. [09.06.06]

Uranium enrichment main game: The terms of reference for the inquiry suggest Howard is not all that serious about nuclear power generation in Australia. The main target is uranium enrichment. He talks of Australia avoiding the failures of the wool industry: Australia growing the best wool but the value adding processing being done overseas. Howard says we should not repeat this failure by refusing to enrich uranium in Australia. This fits in with the ambitions of George Bush (which he put to Howard in Washington) for establishment of ‘friendly’ nuclear fuel supply centres around the world, which would supply enriched uranium for power production. The enriched uranium would be leased and then returned to the source country as spent fuel rods. The hard politics of this is where to put the waste dumps. Such was the vehemence of opposition to siting of a Federal Government repository in South Australia for low level radioactive waste, the proposal was abandoned. Resistance to larger dumps for high radio active waste would be even fiercer. [09.06.06]

Snowy shows PM’s dominance: The Prime Minister’s press conference at Parliament House last Friday drove home the salient fact of political life in Australia: John Howard is an elected dictator with complete control of the Commonwealth Government and Parliament. His announcement of the back down on sale of the privatisation of Snowy Hydro Ltd was his own decision. It was made without any reference to Cabinet. He did not seek in advance of the announcement approval by the Treasurer, Peter Costello, nor the man responsible for the sale, Finance Minister, Nick Minchin. Indeed four days earlier a letter from Minchin appeared in The Canberra Times defending the sale. Minchin stated - “Given the decisions of NSW and Victoria to sell their combined 87% majority shareholding in the company, it makes little sense for the Federal Government to remain as a minority shareholder.” [09.06.06]

Egged faces for Minchin, Hockey: On Friday morning Minchin was instructed by Howard to phone the NSW and Victorian Governments to tell them the Federal Government would not sell.(Fortunately as it was a phone call, the egg on his face was not visible. For poor Joe Hockey the egg on his face was visible, or will be the next time he appears on SEVEN’S Sunrise. On Friday morning he knew nothing of Howard’s decision and was on Sunrise extolling the virtue of the sale of Snowy Hydro). Howard’s insistence he alone makes all the big decisions (and a lot of the little ones) is not regarded by the media to be at all strange. This is partly because many of them have had little experience of how previous PMs handled their job. Following his 9.30am Friday press conference, TV and radio and newspapers were specific: PM (not Government) scuttles sale; PM’s (not Government’s) back flip; and so on. Howard made no secret that he alone made the decision on the Snowy. That morning he told John Laws - “I decided . . . there was no long term public policy benefit in going ahead with the sale of our 13%.”[09.06.06]

Outdoing Menzies: After Howard’s announcement, his principal spear carrier in the party room, Bill Heffernan, an opponent of the Snowy sales, advocated a takeover of water by the Commonwealth from the states. He added - “And I’m sure that we can convince the Prime Minister that we’ve got to do something more sensible about how we manage the future of Australia’s water resources.” Heffernan rightly believed it was enough to persuade Howard of his argument, not the Cabinet. Howard’s dominance of the Government far exceeds that of Menzies, who in the main, acted as chair of the Cabinet and let his ministers do their thing. He only intervened in a minister’s portfolio if he believed there was a major political issue the Government had to deal with. Howard on the other hand keeps his eye on everything. The PM even decides who will chair parliamentary committees where the Government has a majority of members (which they now have on all committees). [09.06.06]

Handing out the perks: Until the Howard Government the members of a committee decided among themselves who would chair a committee. The chair to a backbencher represents an 11% pay rise of $11,744 a year, and it is a rise of 16% ($17,083) for the chair of four committees - Public Accounts; Public Works; Foreign Affairs, Defence and Trade; and Treaties. Except for new MPs who came in at the last election, this additional perk increases the retirement super. The chair of a committee is keenly sought after by those who haven’t made it as a minister or parliamentary secretary, or other positions which command extra salary such as the Speaker, President, Whips and deputy Whips. With this perk in the PM’s gift, his power over the backbench is greatly enhanced. Surely when Howard does depart, his successor, be it Costello or someone else, would not be able to demand and get the untrammelled power Howard now exercises. [09.06.06]

Words come back to haunt: One of the difficulties the present generation of politicians face is that the magic of the computer can easily recall their words of past decades. It leads to exposure of much double speak, as it did for Howard following his Snowy press conference. Howard told the media he had decided to halt the Snowy deal bearing in mind it was not part of his platform at the last election and was not something on which he had a strong public position. Well he did in 1987. Laura Tingle, in The Financial Review, points out that in that year he made a strong speech in the Parliament saying - “There is no ambiguity; there is no squeamishness; there is no going to water; there is no backflipping or double standards from the Liberal and National parties on the issue of privatisation.” Howard went on to list those government instrumentalities the Coalition would privatise and (yes, you guessed it) one was none other than the Snowy Mountains Engineering Corporation. The Government insists its backdown on the Snowy sale should not be seen as opening up the prospect of a backflip on the full sale of Telstra. Public pressure, such as that which led to a change of heart on the Snowy, would not work. Yet maybe it will. [09.06.06]

Telstra still upsets bush: Labor says there is a huge groundswell of public opinion in the bush against the Telstra sale. The obvious retort is that Labor would say that, wouldn’t it. Nonetheless, the Government would be foolish not to recognise the Telstra sale is unpopular. Just how unpopular would need some detailed research to uncover. Poll after poll has shown a substantial majority of Australians across the nation, but particularly in the bush, are against privatisation. Like industrial relations ‘reform’, downsizing, and competition policy, privatisation, lower tariffs, free trade and all the rest of the economic rationalist agenda, is seen by most Australians as equating to loss of jobs and lower incomes. Yet, both sides of Parliament basically accept the agenda (with exceptions such as Telstra, when one side can see an advantage in opposing it by taking a populist stand). [09.06.06]

Service obligations problem: Bob Officer, Emeritus Professor at the Melbourne Uni, in the Financial Review (Monday) says that continued involvement of governments in the pricing and distribution of water meant the purchaser of the Snowy would lack a clear property right or an unambiguous contract to operate the scheme. He says Telstra has the same problem because of its service obligations to rural and remote communities. Officer says the problem “is best addressed by holding the responsibility for such services in a separate government-owned entity that would contract Telstra for the provision of services. The likelihood of changing community standards of service means that, while such services are a condition of the proposed T3 sale, Telstra does not have an unambiguous contract or a clear property right to selling its services in a most efficient manner.” [09.06.06]

Officer’s report: Officer’s views shold be highly regarded. Soon after the Howard Government came to power he chaired an audit of the machinery of government. One of its recommendations was that the Budget should contain a separate capital account which would give details of spending on capital items and cost of borrowings for capital purposes. The Government ignored this and of course now has the unique view that there should be no government borrowing at all for capital purposes such as infrastructure. Also ignored was the recommendation the Parliamentary defined benefit super scheme should become a accumulation scheme which is most common in the private sector. It had no chance. [09.06.06]

NSW-Vic into borrowing: Both the Bracks and Iemma Governments have been forced to accept the logic that borrowing capital for long term and productive infrastructure (schools, hospitals, roads, rail, water, power) is perfectly acceptable. It is pleasing indeed to see that Premier Iemma is continuing to cast aside the failed policies of the Carr years and the disastrous stewardship of the Treasury by Michael Egan. The Carr Government even passed legislation prohibiting government borrowing. Apparently there is sufficient wiggle room to get around this. The best course would be to repeal it. NSW Treasurer, Michael Costa, still doesn’t get it. Bemoaning the decision not to proceed with the sale of the Snowy, he said this left the question open of how the capital needs of the Snowy would be met. The answer is easy - it will borrow in the same way as any other company would for capital funds, and (as a government body) it will get a discounted borrowing rate. [09.06.06]

Unworthy NSW Govt safe: Incidentally, Iemma and Costa leave the impression they suffered a grave loss with the Howard switch on the Snowy. It should be noted in the 18 months since September 2004 Snowy Hydro dividends totalled $250 million: $145 million for NSW; $72.5 million for Victoria; and $322.5 million for the Commonwealth. The taxpayers of the other states should be crying foul over this. NSW and Victoria supplied none of the capital for the Snowy. It was all provided by the Commonwealth, or in other words by all taxpayers. Menzies gifted NSW and Victoria with their shareholdings and the taxpayers of these states are the beneficiaries of the Snowy scheme. The efforts of Carr and Michael Egan should have spelt doom for Iemma at the next election, yet this is unlikely. The Morgan poll reports the NSW Government is leading the Opposition two-party preferred by a whopping 54%, to 46%. With Labor holding a big majority it would take a super effort by a first-class Opposition to down Iemma, and he is not facing that. [09.06.06]

Will Beazley change on debt?: In Victoria the new Opposition Leader, Ted Baillieu, is enjoying his political honeymoon, having displaced the hopeless Robert Doyle. The Libs primary vote has jumped 4.5%, to 39%, while Labor’s primary has nose-dived 6%, to 48%. Despite the slump in primary voting, the Bracks Government enjoys a big two-party preferred lead with 53.5%, to the Libs 46.5%. The fact the Iemma and Bracks Governments have faced up to the need for government borrowing may just persuade Kim Beazley to re-think his own timidity on borrowing. The ‘D’ word frightens the horses in the Federal Caucus. Debt is anathema. As we have already explained, this all goes back to the shellacking Labor has copped from Howard and Costello over ‘Beazley’s $10 billion black hole’ (the deficit the Keating Government left the Howard Government). For some reason Labor has never tried to counter this by pointing out that in real money terms the deficit Treasurer John Howard left the Hawke Government in 1993 was much greater. [09.06.06]

From the Gallery: The Queensland Nats embr-aced a Trojan Horse when they elected David Russell as State President in 1996, before he became Federal President. Even as a lad of 20, David believed the (then) Country Party (CP) should be subsumed into the Liberal Party. His Dad, Charlie, was CP MP for the Queensland seat of Maranoa. In 1976 he published a book, ‘Country Crisis’. He attributed most of Chapter 29 to a speech delivered in June 1971 by David, then a member of the Young Liberal Executive, to the Liberal Party Branch at Warwick. Young David said the CP was formed by “a few people” as a party of sectional interest, acting in a “balance of power” role. It was a failure. He continued - “The Liberal Party therefore, to be true to itself, has no alternative but to expand into rural areas and ultimately to contest all State and Federal seats.” And, though the Liberal Party had many faults: “once cleaned of its faults, can . . . be the vehicle of salvation in the rural community.” David was behind the ‘Joh for Canberra’ push. In retrospect, he must have believed Joh could take over the Libs across Australia. Had Mark Vaile read the book he might not have been caught napping by David. [02.06.06]

Nats and Libs hand Beattie victory: Peter Beattie is well on his way to winning the next Queensland election, which the Liberals and Nationals believe might be called quite soon. He has been given great assistance by none other than Nats Queensland parliamentary leader, Lawrence Springborg, and the Liberal parliamentary leader, Bob Quinn, who were sold a ludicrous and unworkable plan to close down the Queensland Nationals. Even though the Nationals are the dominant party in Opposition in the Qld Parliament, their MPs would be required to join the Liberal Party to provide a single conservative party. The scheme collapsed on Wednesday night in the face of absolute opposition from Howard and Mark Vaile. [02.06.06]

Springborg assails his Canberra colleagues: In announcing the capitulation, Springborg had the temerity to attack his federal parliamentary colleagues for selfishly rejecting the merger plans for their own political gain. Just to emphasise his lack of political nouse, Springborg conceded the outcome of the next Queensland election by declaring his federal colleagues “had consigned the Queensland conservative parties to Opposition.” Then there was the baffling Springborg comment - “We keep getting thwarted by federal realities. One day when they (Federal Nat MPs) are not in government and they don’t feel quite so afraid of it (the merger) the dynamic will change. That is fine, that will happen and we will wait for that to happen.” What sort of a fool is this? Springborg declares to the Federal Coalition Government that he and the Queensland Nats and Liberals just can’t wait for Labor to come to power in Canberra. [02.06.06]

The plotters should be swept away: The conservatives cannot afford to leave him and the totally unimpressive Bob Quinn in charge of the conservatives in the Queensland Parliament. The only mitigating circumstance is that Springborg and Quinn were kept in the dark until very late in the piece by the principal plotters - Federal Nats President, David Russell (see From the Gallery), the Queensland Nats President, Bruce Scott, and the Libs Queensland President, Warwick Parer. Russell has gone from his post and so should Parer and Scott. It will be recalled that John Howard stuck to Parer, who was his Minister for Resources and Energy from 1996 to 1998, and as such was responsible for coal policy. It emerged Parer had a long connection with the coal industry, and his family held sufficient investment in the industry as to justify his removal for breaching the ministerial code of conduct on conflict of interest. The case against him was compelling, yet Howard would not let him go. [02.06.06]

Qld Conservatives can’t do without Nats: Of all the weird comments made this week about the events in Queensland, nothing could top Bruce Scott’s effort. Interviewed on the ABC by Fran Kelly who wanted to know why Vaile had not been kept informed, Scott replied - “Fran, we must keep politics out of this.” There was a self-interested logic in Springborg’s advocacy of the Russell plan. He saw it as an opportunity to become the Premier in the third biggest state of the union, and command a Government with a lot of power. On the Federal level, all the Queensland Nats now have is one Minister (Transport Minister, Warren Truss) and a Parliamentary Secretary (De-Anne Kelly). As far as Springborg was concerned, bugger the Federal Coalition. Springborg’s capitulation on Wednesday night fully justified the Opposition to the Russell plan by Queensland Federal MPs such as Senator George Brandis and Senator Santo Santoro (the latter runs the right wing faction of the Libs in Queensland). They, like Howard, believe the conservative side of politics simply cannot do without the Queensland Nationals. The Nationals have 12,000 party members in Queensland, the Liberals only 5000. [02.06.06]

Country Party hard to kill: A senior Queensland Liberal said to us this week, the Nationals rank and file are far more serious about politics than the Liberal rank and file. Voters who support the Nationals look to governments (state and federal) for help and assistance. If the current Queensland Nationals is ever closed down as a party, another will arise in its place. Former National (now independent) Bob Katter (Kennedy) has already said he was looking to do just that, with the assistance of others such as Family First. The Country Party was formed in the twenties, mainly because people in the bush and in regional centres were suspicious of the precursors of the Liberal Party, seeing them as too close to the big money men and banks of Sydney and Melbourne. They also feared the Labor Party, regarding it as a tool of big city unions. Much the same fears survive today among Nationals supporters (and it was a factor in Pauline Hanson getting one million votes). Interviewed on Radio Nationals breakfast program (easily the highest rating program with a reach into every nook and cranny in the nation), Barnaby Joyce this week described the Liberals as a “tops down party, dominated by Sydney and Melbourne.” Barnaby Joyce and Ron Boswell don’t agree on a lot, but they were united in their determination to resist the Springborg mob. [02.06.06]

Barnaby a Nats star: Barnaby Joyce has breathed new life into the Queensland Nats. He and Bob Brown are the two best known Senators across Australia. Most people couldn’t tell you who Senator Nick Minchin is, or Senator Helen Coonan, let alone Senator Eric Abetz. But they know Bob and Barnaby. If the Nationals disappear in Queensland, Joyce believes many of the Federal and state seats they now hold would be won by the Labor Party. On this point, he would have the private agreement of Howard, Santoro and Brandis. The Nationals are in a weak position federally. They lack firepower in Canberra. If Mark Vaile leaves his Trade portfolio for a domestic department to allow him to work more on his party, there is no suitable National to take on Trade. Howard would probably give it to Truss or Peter McGauran, but they are not up to it. Howard should instead take the opportunity of having a reshuffle in which he could elevate Malcolm Turnbull to Trade. Turnbull would not be fixated on the question of agricultural access to world markets as are National Trade Ministers. Nobody in the Parliament understands Australian business better than the talented Turnbull. [02.06.06]

Vaile not impressing: The end of the crisis arising from the Russell plan is not the end of problems for the Nationals in the Federal Coalition. The performance of the Nationals under the leadership of Vaile points to a poor election outcome next year, no matter whether Howard or Kim Beazley win. The Nationals are continuing to flounder in the wake of the earthquake caused by Julian McGauran’s decision to rat on his party and join the Liberals. Vaile’s major failure, like John Anderson his predecessor, is an inability to clearly differentiate Nationals policy from the Liberals. His performance on his feet is third rate, as was demonstrated with his ‘I can’t remember’ performance in giving evidence to the Cole commission. His sense of politics is poor and his antennae doesn’t seem to pick up what his electoral base in the bush want. [02.06.06]

ALP leads poll yet again: This week’s Newspoll (taken 26-28 May) has Labor with a substantial lead over the Coalition in two-party preferred terms 52%, to 48%. Since Australia got seriously back to work at the beginning of February, the ALP has won five polls, the Coalition two, and one was a dead heat. It is a long way to go to the next election, but these polls certainly put Labor in the game and underline Beazley’s leadership is not in danger. Labor’s primary poll was unchanged at 39% from two weeks earlier, while the Coalition slid 3%. Particularly bad for John Howard was the Liberal primary vote at only 36%, down 1%. The general rule of thumb is Labor needs to be on 40% to win an election. Yet former chief adviser to Beazley, Michael Costello, in an interesting article in The Australian (26 May), makes a good point that the primary vote is not the be all and end all. For example, in 1951, the ALP nationally got 50.1% of the primary vote, the only time in post-war history that a political party achieved a majority primary vote. Yet it lost the election because the vote across marginal electorates was not there when preferences were distributed. [02.06.06]

Satisfaction ratings dubious: If a primary vote lead decided elections, the Coalition would not have won office in 1959, 1961, 1969 or 1998 (Beazley was unlucky to lose the latter). In the latest Newspoll, Howard’s satisfaction rating fell 1%, to 48% and, Beazley lost 2%, to be at 32%. Howard was way ahead as preferred Prime Minister. Yet, as we have frequently warned, satisfaction and popularity ratings don’t win elections. Paul Keating was preferred PM within weeks of his crushing defeat in 1996. And Michael Costello agrees, pointing out that within weeks of his 1975 election win, Malcolm Fraser had an approval rating of a mere 32.8%, and a disapproval rating of 53.8%. The latest Newspoll has the same message about the current direction of politics with the last ACNielsen poll. Taken immediately after the Budget, ACNielsen had Labor with a two-party preferred vote of 54%, with the Coalition on 46%. [02.06.06]

Voters not keen on nuclear: Newspoll also had three different polls about uranium and nuclear power. Asked if they agreed with current Labor policy that no new mines should be opened, only 26% disagreed. Perhaps surprisingly, 39% of respondents agreed with Labor policy, and 28% said there should be no uranium mining at all. On enriching uranium in Australia, 46% were against, 34% in favour, and a whopping 20% undecided. As for nuclear power stations, 51% were against, and 38% in favour, with 11% uncommitted. These polls should give Kim Beazley, and new nuclear enthusiast John Howard, food for thought. The Opposition Leader has made it plain he wants to amend the three mines uranium policy at next year’s ALP National Conference to open up exports to all mines. Voters are against this. [02.06.06]

Uranium problems in WA: There is an internal ALP political problem as well. New WA Labor Premier, Alan Carpenter, is in a difficult position. At the last election his predecessor, Geoff Gallop, promised there would be no new uranium mines in his state. Carpenter can’t just junk this because John Howard wants him to. Those close to the Premier say he would have to put opening up new uranium mines to voters at the next state election. Newspoll says a majority are against uranium enrichment in Australia, which Martin Ferguson publicly advocates, and Beazley appears likely to support him. Howard is in favour of the all the way approach: unfettered mining, enrichment and nuclear power. These polls should be viewed with some caution, however, because those polled would have little grasp of the issues, which are complex. Yet their very complexity will not encourage voters to change their minds. [02.06.06]

Govt. spin exposed: The Government put out some pro-nuclear power spin towards the end of last week, with the spin doctors peddling a ‘news’ line to the press gallery that a report from the Australian Nuclear Science and Technology Organisation (ANSTO) had reported nuclear power would be economic and safe. Yet the Government declined to release the report. We can now see why. ANSTO commissioned the report from British nuclear power specialist, Professor John Gittus, to check how the abundant supply of gas and coal in Australia would effect the economics of nuclear power. Gittus says nuclear power would be much more competitive than coal if Australia were to join the Kyoto protocol (dear me, we can’t have that). Gittus explains Kyoto places a penalty price on greenhouse gases emitted from coal-fired power stations, creating an incentive for investment in more expensive, cleaner energy options. The British report also says if Kyoto is not signed, the Government would have to subsidise 21.4% of electricity bills from nuclear for the first 12 years. [02.06.06]

IR getting worse for govt.: The Government is being mauled in its war with the ACTU on the Work Choice legislation. Incident after incident keeps the focus on industrial relations. First there was the Cowra abattoir dismissals. When the abattoir used Work Choice to attempt to sack 29 men and then rehire them with pay cuts of up to $180 a week plus loss of bonuses, the Office of Workplace Services rushed to “explain” the laws to the Cowra management and the men were re-hired. This led IR Minister, Kevin Andrews, to say this showed “that the law works, there are protections for workers.” The ACTU’s Greg Combet contested this and said the abbatoir was allowed to take the action it did by the new laws. Now a leaked draft report of the Office of Workplace Services, which investigated the case, agrees with Combet. After Cowra there was the dust up over work safety against the background of the Beaconsfield mine disaster, and then the Spotlight wage offer was in the headlines - 2c an hour extra if workers give up such benefits as rest breaks, annual leave loadings, public holidays loadings for overtime, and shift work and penalty rates, including for work on public holidays. [02.06.06]

PM says jobs come first: Patrick McKendry, CEO of the National Retailers Association, was forthright - “Far from being defensive about it, the National Retail Association applauds it because we think a lot of other retailers will follow Spotlight’s lead.” John Howard did not take a backward step saying the government deliberately designed the legislation to allow employers to do what Spotlight has on the grounds that for those moving into their first job they are better off than being on the dole. This is a respectable argument, yet the fact is Spotlight tried to get existing workers to sign up to the new deal. One was Annette Harris from Coffs Harbor who, although previously an admirer of the PM, said she would never vote Liberal again. Nor can it be taken for granted that parents would accept their children could only get a job by accepting inferior conditions to those in work. With unemployment at the lowest level for decades, community concern about the jobless is not high and the Government is being careful about the number of visas it will issue for temporary foreign workers. [02.06.06]

Letting in Chinese workers?: The business community says the skills shortage is so serious the number of work visas should be greatly increased. Immigration Minister, Amanda Vanstone, doesn’t agree. This is an issue hanging over the negotiations with China on a free trade agreement. The Financial Review’s well informed Beijing correspondent, Colleen Ryan, reporting 27 May on the recent discussions in Beijing - “China has made it clear that it expects a free-trade agreement with Australia to cover the temporary entry of skilled and unskilled labour.” She adds - “The natural movement of people, as it is referred to in trade agreement parlance, was always expected to be a contentious issue in any FTA with China.” In view of the delicacy of the issue of importing workers, and an election now expected at the end of 2007, surely the Government would be reluctant to give anything more than a token commitment to the import of Chinese labour - skilled or unskilled. Given the ingrained xenophobia in the Australia psyche, the ACTU could generate considerable resistance by Australia workers to a Chinese FTA. John Howard would surely wonder if it is worth a candle. [02.06.06]


From the Gallery: Now we know why the PM rushed home a day early from Dublin. Australian troops are off to Timor. The Commander-in-Chief John Winston Howard is in charge. He must have had info that (what amounts to) a civil war in Timor was getting out of hand and Australia would soon be asked to fix it. He had no intention of leaving it to acting PM Peter Costello to announce this to a hushed House of Representatives as Howard did on Thursday. Howard thus reinforces the perception that when it comes to national security, the war on terror or dealing with regional conflicts, he is the man. Polls consistently show he is miles ahead of Kim Beazley as the preferred leader to handle these issues. Sending troops to Timor inevitably raises the issue of why we have troops in Iraq when our own region is so unstable. Polls also consistently show a big majority of voters believe Australian troops should be withdrawn from Iraq. Howard and the troops in Iraq have been lucky there have been no deaths. God forbid should there be heavy casualties in Timor. It would heighten the argument to get our troops out of harms way in Iraq. [26.05.06]

President Howard girdles the globe: John Howard’s performance in the last fortnight has been breathtaking, and unprecedented. He has demonstrated the total power he holds over the Government and the Parliament. In presidential style, Howard has girdled the globe in an astonishing display of personal glorification with a team of press gallery journos on hand to record the ‘golden moments’ in Washington, Chicago, Ottawa, and Dublin. All this while Parliament is sitting in Canberra. If Menzies was alive today, he would be astounded. And to top it all, without any consultation with his Cabinet - and while away from Australia - Howard announces a complete reversal of energy policy via his new advocacy for nuclear power. (He says he is only kick-starting debate, but in true Howard style, the landscape is being shaped to ensure the debate pans out just the way he wants it to). [26.05.06]

PM’s uranium motives unclear: Just why Howard is going down this path is unclear. The popular view is that he is merely wedging Labor on its fixture to a ‘three mines’ policy on uranium. Yet if it is a wedge, the tactic would only work if everyone on the Government side were singing the same song. But they are not. Peter Costello, Nick Minchin and the responsible minister in the area, Industry Tourism & Resources Minister, Ian Macfarlane, all say nuclear power is not viable in Australia. (Minchin goes so far as to say it won’t be a goer for a hundred years). Howard, on Wednesday, did not dispute that the ministers were in disagreement with him, but added ( AM program) - “What I am saying and what I don’t think anybody is dissenting from, is that we ought to discuss the issue fully.” [26.05.06]

Coal industry down-graded in a year: Howard’s talking-up of nuclear power has astonished the coal industry, as it should. As recently as June last year, the PM released a white paper on long-term energy policy. The centrepiece of that policy was - for the long-term - our vast reserves of coal would provide the basic energy needs of Australians. The immediate task, said Howard, was to push for clean coal technology. Howard was lambasted by the Greens for this. He also announced a $500 million fund for technology development, some of which will go to renewable energy, but the bulk is to go to coal. Not a word was said about developing nuclear technology. Following the white paper, the coal industry announced its Coal 21 program, which is aimed at working on various technologies such as geosequestration. This was welcomed by the Government. Now Howard says - “There’s no doubt that fossil fuels are very bad in relation to greenhouse gas emissions.” [26.05.06]

What Yank blew in Howard’s ear?: What we don’t know is who blew in the PM’s ear in the US to generate his excitement about nuclear energy. One candidate would be the Vice-President, Dick Chaney, who no doubt has good contacts with US companies which would be very happy to build nuclear power stations in Australia. Howard has now presented Beazley with a priceless election slogan - “If you want a nuclear power station in your neighborhood, vote Liberal.” Howard accuses Beazley of hypocrisy in wanting to expand exports of uranium to other countries to fuel their nuclear power stations, yet he opposes nuclear power in Australia. There is no logic in this. If we don’t export uranium to other countries, other suppliers will continue to do so. This in no way suggests a moral obligation to have nuclear power in Australia. The politics for Howard are lousy. For nuclear power to replace coal-fired stations would require 30 to be built, each producing a thousand megawatts. [26.05.06]

Royal Commission required for nuclear future: Because of their need for water, such plants would be built on the coast, and close to where the demand for power is greatest, namely, where all the people live - the east coast of Australia. In question time this week, Acting PM, Peter Costello, would not (and of course could not) say in what electorates nuclear power stations would be built. If Howard is serious about examining the nuclear alternative, he should appoint a royal commission. If a royal commission is good enough for the oil-for-food probe, it would certainly be justified on such a portentous issue as a nuclear future. The royal commission should be followed by the white paper on government intentions, followed by the draft legislation. This would allow total community involvement in the debate. Instead, the Howard way is to appoint a task force comprising a couple of his mates to get the right outcome. Remember the quickie task force on inadequate infrastructure (particularly at ports), which came out with the desired result - it’s all the fault of the Labor states. One outcome of Australia turning to nuclear power can be predicted with certainty: as we would be able to produce the fuel for nuclear weapons, there would be demands by patriots for Australia to arm itself with the ultimate weapon (with the un-stated objective of preventing Indonesia from getting too bolshie). [26.05.06]

Labor’s big poll lead: The lavish reception given John Howard by George Bush has done his satisfaction rating no harm at all, according to the latest ACNielsen poll (taken 18-20 May). His personal approval rating is up in a month by 4%, to 53%. That is as good as it gets for the PM and Coalition from this poll. Kim Beazley’s approval rating is up 9% (to 39%), confirming last week’s Newspoll the Budget did not impress voters. ACNielsen has Labor’s primary vote reaching the magic 40% (up 2%), the level needed for the ALP to win an election. The Coalition primary vote was 41% (down 2%). ACNielsen doesn’t record the separate support of the Liberals and Nationals, but it means the Liberal primary vote would be well below that of Labor. This is so important in the great majority of electorates where the contest is between ALP and Liberal. The two-party preferred was Labor 54% (up 3%), and Coalition 46% (down 3%). This vote at an election would give Labor a big majority, but we are still a long way from the poll that counts. John Howard is preaching the virtues of nuclear power, so it is worth noting the Greens have reached 11%. Greens preferences overwhelmingly favour Labor. [26.05.06]

Budget not a hit with punters: The judgement of respondents on the Budget will disappoint Costello. Only 43% felt they would be better off. Most telling, 68% said the priority should be spending on services and infrastructure. Only 29% regarded reducing taxes as more important than more being spent on services. Asked what were the most important taxes to cut, 45% said petrol taxes (which are now running at around 50c a litre), and 30% said income tax. The proposed elimination of taxes on super benefits was the centrepiece of the Budget, yet only 23% considered this the most important tax cut. ACNielsen provided another silly poll on who should lead the ALP. The outcome: Julia Gillard 28%, Kevin Rudd 26%, Kim Beazley 21% and Bill Shorten 9%. (So much for Shorten coming into Parliament before the next election to lead Labor). When the poll is confined to Labor voters, Beazley tops everyone else, with 35%. Yet once again, we don’t know the opinion of the voters who count - swingers, supporters and other parties and ‘don’t knows’. [26.05.06]

Health a budget loser: It is not surprising voters believed more should have been done in services, such as health. The Budget did nothing. An analysis of the Budget by Access Economics, and commissioned by the AMA, is damning. In the Budget, health outlays grow by 5.9%, to be 18.1% of total outlays. This is slower than growth in total outlays. In the forward estimates, health is projected to grow by only 4.5% on average. Access says this is a tough call given the ageing of the population and high expectations of access to costly new health technology. This growth will be barely enough to cope with current health cost inflation trends. In turn, it boils down to a reduction in real spending per capita. Access also comments - “At the same time, the government has passed up opportunities to improve (both) health outcomes and the functioning of the health system by ducking areas like obesity, nutrition, the health effects of climate change, pressures on public hospitals and reform of the GP consultation item structure.” [26.05.06]

Petrol discounting tricky: Weekend and holiday petrol price hikes are set to become permanent, seven days a week. Australia is heading for this outcome if the Howard Government succeeds in passing legislation to allow the big four oil companies (and particularly, the Shell/Coles & Caltex/Woolworths shopper docket discount scheme) to take over petrol retailing. This is the dire warning Ron Bowden, CEO of the Service Stations Association, gave Inside Canberra this week. The evidence pointing to this, he said, could be found in the NSW country towns of Tamworth, Wagga Wagga, Orange and Bathurst. In both Tamworth and Wagga Wagga, there are two Coles and two Woolies outlets. Hence, shopper docket sales dominate the towns. Bowden says the few remaining independents have lost so much volume, they can’t compete. The supermarkets drop their retail price below the independents, and top it off with a 4c a litre discount. [26.05.06]

Independents can’t survive: Bowden added - “The independents are now trying to survive on less volume, and they also know it doesn’t matter what they drop their price to, they will never be able to pull that volume back. So they just don’t bother anymore.” He points out petrol in Orange is always more expensive than neighbouring Bathurst, because there aren’t any independents in Orange. Because of supermarket pricing tactics and shopper dockets, there has been a 40% shift in volume away from traditional service stations to supermarket outlets. “If independents are pushed out or cannot match it, what is the price a 4c discount is off? We already have an indication of what the market would be like without independents. Whenever we have this weekly discount cycle, the oil companies set the price at the top end of the scale, and then the independents drive it down. If the independents are not there, then the price will stay at the top of the market because the oil companies signal to us every week where they would like the price to be. And that is about 12c a litre above terminal gate (wholesale) price”, he said. [26.05.06]

Joyce determined to block bill: In Sydney this week, Bowden noted terminal prices were about $1.32 - so if the oil companies had their way, the retail price would be a $1.44. Queensland’s rebel Nationals Senator, Barnaby Joyce, is opposed to the pro-oil company legislation. Putting pressure on Joyce, Industry Minister, Ian Macfarlane, says the Senator appears to be wanting to end the shopper docket scheme. Joyce retorted this was “a load of rubbish”, adding - “There’s got to be room for people to operate in the retail (petrol) market in Australia other than Coles and Woolworths.” [26.05.06]

Macfarlane’s meeting of parties: On Wednesday, Macfarlane called a meeting of all parties, which Joyce attended. He told Inside Canberra after the meeting that he had not changed his mind. “The Government put nothing on the table,” he said. Joyce then talked of a “a philosophical divide” between himself and Macfarlane. The Queensland Senator, unlike Macfarlane, insisted it was the right of anyone to participate in the business of retailing petrol. Joyce says he has the support of the NRMA, the Victorian Automobile Chamber of Commerce, and the Motor Trades Association of Queensland. Given Joyce’s stand, the legislation should fail in the Senate - yet there is a question mark over Labor’s position. The party seems divided on the issue of opposing the repeal of the legislation. One argument is that the issue should be handled through the Trade Practices legislation, yet Peter Costello would hardly oblige with new provisions which would meet the requirements of the servos. [26.05.06]

Future of Sydney to Tassie ferry: Domestic tourism is doing it tough in Australia, as petrol prices discourage car trips and fierce airline competition is enticing Australians abroad with the lowest, and most affordable fares ever. This financial year, Australian tourists going abroad will be up 36% while domestic tourism will be down 6%. There has been no growth in domestic tourism for four years. This is unsurprising, as 80 per cent of domestic tourism is by car. Tasmania has been hit hard. The TT Line’s Spirit of Tasmania III runs between Sydney and Devonport. CEO of TT Line, Peter Simmons, says petrol prices are hurting Tasmania’s tourist market in Sydney. Yet Spirit III saves a tourist a lot in petrol, since putting a car on the service means no petrol is spent getting to or from Tasmania. Increased petrol prices do not add significantly to the $2700 each mainland tourist spends in Tasmania. Nothing is very far in Tassie and much less petrol would be required than touring mainland states. Despite the concern about petrol, the Sydney to Devonport service is doing well. Passenger numbers this financial year are expected to be up 35% on 2004/05. Yet the service will lose $20 million this year. The TT Line board has told the Tasmanian government that without an immediate injection of funds the ship will be sold. It is currently subsidised by $115 million over three years. Infrastructure Minister, Jim Cox, is urgently considering the plea. [26.05.06]

Skills shortage biggest worry: As we reported last week, the PM says any shortage of skilled labor is the fault of the states, and Peter Costello doesn’t believe there is a problem. The news from WA is that its big shipbuilder, Austal - whilst also taking skill training subsidies from the Department of Defence - has had to recruit 80 staff from the Philippines, and provide additional incentives to its existing 1300 work force to keep them from being enticed away by mining companies. The March quarter St George-ACCI survey (covering small business), has the skills shortage leaping out of its pages. The survey lists five top constraints on investment. Number one for small business is the availability of suitably qualified employees (up from fifth position last survey). Staff shortages are also number one for medium sized businesses (unchanged from last survey). They are also number one for large businesses (up from number 2). Recruiting qualified staff is the biggest problem for all businesses. [26.05.06]

Wages not a big problem: The states can be blamed to some degree, as should employers. Ten years in office, the Howard Government should bear the major share of blame, having accorded national skills development a low priority. The PM is focused on elevating nuclear power production 20 years hence as his number one issue. For his part, the Treasurer is twisting the tax system to deliver tax free benefits to encourage people to retire after 60 - which will further reduce the size of the workforce. Neither the Howard Government nor the states should be sanguine about business taxes and government charges on business. The St George-ACCI survey puts it in number two spot as a constraint on investment. Wage costs rank third for medium sized businesses, and fourth spot for small business. For large businesses, wages don’t rank at all as a constraint. [26.05.06]

People and Events: Graeme Watson has been appointed as a Vice President of the Australian Industrial Relations Commission. He is a specialist in workplace relations and has been a Freehills partner since 1987.The Australian Energy Regulator has issued its Strategic Plan for 2006/08. Chairman, Steve Edwell, says with the introduction of new rules for gas and electricity, a key focus for the regulator will be providing the energy markets with guidance on the operation of the new regime. Contact 1300302502. [26.05.06]

From the Gallery: Many political writers appear capable of swallowing anything on the Labor leadership debate - witness the Sydney Daily Telegraph’s fanciful front page yarn about Bill Shorten’s early arrival in Parliament. “Bill for PM” said a headline on page one. Shorten already has pre-selection for the safe seat of Maribyrnong, having won a nasty fight with the sitting member, Bob Sercombe. The theory is that Sercombe would resign soon and Shorten would enter Parliament in the by-election. Of course, Ser-combe is not going to oblige. The idea is absurd. Taxpayers would be rightly outraged at an unnecessary and expensive by-election just to suit the con-venience of the ALP. Howard would have a field day bashing Beazley for gutlessness. Shorten, by good luck, has had positive and extensive public exposure as a result of the Beaconsfield mine disaster, and so has the union movement. Shorten will certainly be in the next Parliament, but if Beazley loses and stands down (as he would most certainly do), Shorten would not win the leadership. He has a dazzling image at the moment, but he has nowhere near the public stature and recognition Bob Hawke had when he left the ACTU and entered Parliament. [19.05.06]

Murdoch’s retirement advice rocks Howard: John Howard would have been rocked to his back teeth by the advice - proffered by Rupert Murdoch as he entered this week’s banquet for the PM - that Howard should resign while he is in front. The Yankee controls some 70% of Australia’s daily newspaper circulation, and of most interest, he has the two with the largest circulation - the Sydney Daily Telegraph and the Melbourne Herald Sun. Murdoch has a long history of using his newspapers and electronic media as vehicles for his own political purposes. He has done this in Australia, England and the US. Murdoch claims that his minions - editors and news directors - don’t take directions from him. Journos rightly reply that they don’t have to, as they always know what the boss thinks. [19.05.06]

Costello obviously pleased: Now Murdoch’s editors in Australia know from the News Ltd chief’s own public utterances what he wants - Howard out. The corollary to such signals is he wants Peter Costello as PM. Murdoch definitely doesn’t want Kim Beazley. Costello greeted the excitement in Washington with some enthusiasm, saying he thought Murdoch was very intelligent and he always paid a lot of attention to his views. And indeed, why not? Howard has not been able, in his ten years in office (and almost a year with Senate control), to make any changes to cross-media ownership laws which would please Murdoch. No doubt many mum and dad shareholders in News Ltd (and even big institutions) would like Murdoch (75) to retire, not Howard (66). [19.05.06]

No poll bounce from Budget for Government: Tuesday’s Newspoll, taken last weekend, was strange. The headline was the Coalition - which had led Labor two-party preferred before the Budget - slipped back and Labor moved up last weekend for a 50-50 outcome. This could mean people were not enthusiastic about the Budget, or if they were, they believed this was what governments are supposed to do anyway, and deserve no extra praise. This latter conclusion could be drawn from the fact that 51% said the Budget was good for the economy (which is not quite the same thing as saying it is good for me), while 20% said it was no good. [19.05.06]

Swing voters views not known: In political terms, this doesn’t mean much. The poll showed 70% of Coalition voters thought the Budget was good, and only 39% of Labor voters considered it to be so. What is not known is the support given the Budget by swing voters and supporters of other parties, whose preferences are vital. Uncommitted was high at 21%. Newspoll asked a silly question - would Labor have delivered a better Budget? 61% said ‘No’, and 26% said ‘Yes’. Yet predictably, 81% of Coalition voters said ‘No’, and 55% of Labor voters said ‘Yes’. Once again we don’t know the views of swing voters and supporters of other parties. Uncommitted was 23%.[19.05.06]

ACTU clever on petrol compensation: Those who want Bill Shorten in Parliament early (see From the Gallery) argue the Labor IR spokesman, Stephen Smith, is not cutting it. Yet nor is Howard’s IR Minister, Kevin Andrews. The ACTU doesn’t need the help of pollies, including Beazley. Shorten and Greg Combet are doing an outstanding job for the union movement outside of Parliament, and are winning the support of workers in their fight against Work Choice. For example, the ACTU has cleverly opened up the issue of protecting workers from high petrol prices. It will go before state IR Commissions in all states except Victoria, and seek a minimum wage rise for those under state jurisdiction of almost $20 - to $503.80 a week. This has forced Andrews into the position of opposing such a rise. He says that in the past, state tribunals have passed on wage rises awarded by the Federal Commission. [19.05.06]

Andrews reply doesn’t excite: By pursuing separate cases in the states, Andrews argues - instead of waiting for the Fair Pay Commission’s determination - the ACTU is “jeopardising the long standing practice of national consistency in minimum wage adjustments.” Maybe, but this is hardly an argument which will persuade workers they don’t deserve an offset to high petrol prices. It is a bit rich Andrews talking about “long standing practices”. It was the long-standing practice (over a century) for the Federal Com- mission to deal with wage rises, up until the practice was wrenched from it by John Howard. The ACTU wins both ways. If the state bodies accept Andrews’ argument he will be seen as working against compensation for the petrol price rise (There shouldn’t be any compensation for high petrol prices, we have to learn to live with them, but here we are talking about politics). If a wage rise is granted, then later in the year, the Fair Pay Commission would surely have to at least match it. [19.05.06]

Skills - blame the states: Businesses big and small have probably paid little attention to question time in Parliament last week. Apart from trying to work out what the Budget meant, many of them would have been engaged in trying to recruit suitable staff, especially skilled trades people, as well as engineers. If they had listened to question time they would have been disappointed. Asked about training opportunities for young Australians, John Howard said things were not good and blamed the states (NSW and WA in particular). The Treasurer appears to think the government is doing wonderfully well in the field of technical training. Kim Beazley asked Costello if he agreed with ACCI chief, Peter Hendy, that skills shortages are “the number one complaint of investors in this country?” [19.05.06]

Costello - everything’s right: Beazley said - according to the Budget - funding for vocational education and training as a proportion of total expenditure would fall from 0.75% now, to 0.67% in 2009/10. Costello decided defence was the best form of attack, saying - “This government has put in place a system of training and apprenticeships which is better than anything Australia has had for a decade.” He then recited a list of meaningless Budget initiatives in the training area. The Treasurer also had an entirely new take on the shortage of labour. He said that when he was in Opposition, he never heard anyone talk about a shortage of workers for jobs because unemployment was at 10.6%. “If I had the choice between an economy in which there were more jobs going than workers, and an economy in which there were more workers going than jobs, I know which one I would choose. I know what the Australian public would think the better problem was: a shortage of labour rather than excess labour.” Well there you go. Bosses should stop whingeing about labour shortages, because the Treasurer of the nation believes things are quite okay where we are now. [19.05.06]

Don’t blame Nelson for Defence mess: The deep embarrassment suffered by new Defence Minister, Brendan Nelson, over the latest Kovco case mess up has produced wry grins among some in Government, especially those who see Nelson as far too pushy in pursuing his ambitions. Nevertheless, he can hardly be blamed for the latest blunder - the loss of the file relating to the circumstances surrounding the return of Private Kovco’s body. Yet Nelson has made his own errors. He rushed to give three different explanations for the death of Kovco, and then told the media not to speculate. A thorough review of Russell Hill might yet result. Defence administration is in a mess: helicopter purchases have flopped, there have been equipment failures in the Army, billions in Defence assets are unaccounted for, project schedules are being manipulated to hide budget over-runs, and Defence can’t meet the standards required by the Auditor-General. None of this is Nelson’s fault - Defence Ministers back to Kim Beazley all have degrees of responsibility. But most of the blame should be carried by the former Minister, Robert Hill, who now sits in a cushy job as Ambassador to the UN in New York. [19.05.06]

Kovco and helicopter purchases: Hill got rid of Allan Hawke, who was Secretary of the Department when he came to the portfolio. He replaced Hawke - widely acknowledged as an excellent manager - with Ric Smith, a diplomat with no background in managing major departments. The mess-up over the return of the body of Jake Kovco may yet have far reaching consequences for other billion dollar military purchases. Russell Hill has decided to replace the ageing American Black Hawk helicopters with the Eurocopter MRH90, and already has 12 troop lift versions on order to operate from the Navy’s amphibious ships. The sharp pencil brigade in Defence believes a further 28-34 should be ordered - sufficient to replace all the Black Hawks (and Sea Kings). The Americans are still smarting from their Apache helicopter losing out to the Eurocopter Tiger for the armed reconnaissance project (Air 87), which is now late and has performance deficiencies and cost blow-outs which the Auditor-General says might have made the Apache a better choice. Because of the Kovco body return mess-up, Nelson cancelled a visit to Washington where he could have told Defence Secretary Rumsfeld and Vice-President Cheney the MRH90 purchase was a done deal, whilst rebuffing any hard sell on the Black Hawks. [19.05.06]

US pushes for new Black Hawks: Howard has now conducted the same meetings which Nelson missed out on, capped off by the all important head-to-head with Bush. The PM would have a different agenda, and a different perspective than Nelson, especially given the lavish reception Bush turned on for him. As such, Howard would be much more amenable to a re-think on the Black Hawks. Time will tell. Howard would also have been in a position to put a deal to the Americans relating to the 11 failed US-sourced Super Seasprite helicopters, which cannot be used for military purposes. One suggestion was for Australia to asks the US to tale back the Super Seasprites as a trade-in to reduce the cost of a new Black Hawk fleet. America should regard Australia as a valued customer, quite apart from Howard’s support for the Iraq war. Nelson only recently announced the purchase of up to four Boeing Globemaster C-17 cargo planes, costing $2.2 billion. [19.05.06]

PM’s odd take on uranium: What was John Howard up to in Washington with his raising the issue of Australia leasing its uranium to nations which have not signed the Nuclear Non-Proliferation Treaty, and then re-processing the spent fuel back in Australia? It seems he might be preparing some sort of a wedge politics attack on Labor over uranium. Peter Costello this week said the leasing concept was decades away, and he is in agreement with Ian Hore-Lacy (GM of the Uranium Information Centre). Hore-Lacy points out that leasing involves processing the uranium here, not simply shipping off the raw uranium to the country involved in the lease deal. When it was used, it would be shipped back to Australia for disposal in a geological repository or reprocessed to recover the unused uranium. All this, says Hore-Lacy would take a lot of capital, and would be 20 years off - by which time everyone now in Parliament would have long since retired.Then of course there would be domestic resistance to such a deal. The Government has had to go to the Northern Territory, where it can do what it likes, to find a site for disposing low level radioactive material produced in Australia, and break an election promise in the process. [19.05.06]

Petrol discounting damaging: It is increasingly obvious that the decision by the ACCC to approve the Caltex/Woolworths and Shell/Coles shopper docket discount schemes has led to serious problems for the nation. At the time, the scheme may have appeared to be well inside ACCC competition guidelines. Yet now the two retail giants and their big oil partners are rapidly moving towards domination of the urban market. The response of Industry Minister, Ian Macfarlane, has been a legislative and regulatory fix which will hand over retailing entirely to the four oil majors - adding to their already vertical dominance of the market. David Purchase, CEO of the Victorian Automobile Chamber of Commerce, put it this way (7 May) - “Surely the government can see that in combination with the removal of the cap on the number of retail outlets the oil majors can own and operate, allowing them to discount vertically to their own network - while at the same time denying equitable access to discounted product to the independent sector - hands the oil majors the petrol market on a plate.” [19.05.06]

Govt aids big oil: Macfarlane has legislation in the Parliament to repeal the Petroleum Retail Sites Act - which restricts oil companies to owning and operating about five per cent of retail sites. Yet the industry believes BP and Mobil will not be able to compete with shopper docket sites in urban Australia, or indeed anywhere else where shopper docket discounting is available. The scheme has greatly added to the profitability of the supermarket giants, and this raises the inevitable question: if they become in effect a petrol duopoly, what will be the reality of a 4c a litre discount - 4c off what? Obviously the supermarkets are subsidising the discount price, and it is not known to what extent this would have raised grocery prices. If petrol competitors BP, Mobil and the independents are no longer present, or have far fewer sites, there is less need for a fair dinkum discount. There is no transparency as to how Woolies and Coles structure the shopper docket schemes, and cover the cost of the discounting. [19.05.06]

Joyce jacks up over petrol: The Senate Finance Committee has recommended that the repeal legislation be passed, despite anger among committee members at the actions by Macfarlane. It was not until we contacted the secretariat of the committee that it came to learn Macfarlane had made regulations under the Sites Act which had the effect of rendering the Act null and void - even before the Senate voted on whether the Sites Act should be repealed. The regulations removed from the Act the names of the four oil companies and the number of sites they are allowed to own and operate. This removed restrictions on the number of sites the oil companies could own and operate even before the repeal legislation passed. Last week, Nationals Queensland Senator, Barnaby Joyce, gave notice of a motion to disallow the regulations. On Monday, Joyce said he was not backing down from opposition to the changes. Joyce also knows that the aim of the legislation is to ‘reform’ petrol retailing - which means less service stations and bigger profits for the major oil companies. [19.05.06]

It all depends on Labor: The reduction in service stations will be particularly felt in rural Australia, where many will have to drive further to fill up. Nationals Leader, Mark Vaile, did not comment directly on Joyce’s position. His office said, rather lamely, that Macfarlane was making information available to Joyce. This in itself is somewhat of a sleight to Joyce, since he was on the Senate committee which took voluminous evidence on the legislation. All sides agree that the Sites Act has become redundant because oil companies have managed to slide around its provisions, and the market is changing rapidly because of shopper dockets. Macfarlane is rewarding the oil companies for circumventing the intention of Parliament when it passed the legislation in 1980. Macfarlane’s strongest argument is that the legislation was necessary to keep BP and Mobil in Australia. He also says Joyce appears to be wanting to end the shopper docket scheme. Joyce retorted this was “a load of rubbish”, adding - “There’s got to be room for people to operate in the retail (petrol) market in Australia other than Coles and Woolworths.” Obviously Joyce intends to vote against the legislation, but will Labor support him? [19.05.06]

From the Gallery: Neither Tuesday’s Budget nor Kim Beazley’s reply last night will decide the outcome of next year’s election. Both deserve a reasonable tick. The press gallery greatly exaggerated the importance of Beazley’s speech as if a poor effort would have seen him ejected from the leadership. It wouldn’t. In the event Beazley made a good job of it, difficult though it was to attack a Budget which hurled buckets of money at taxpayers. He sensibly did not spend much time on tax, except to support the cuts and add that $10 a week was not enough for middle Australia. Beazley avoided Costello’s new superannuation plan, suggesting Labor has not made up its mind on it yet. His ‘pact’ with middle Australia was a gimmick which could work because, despite his low standing (according to the polls), he is still trusted. His attack was mainly on the obvious weaknesses of the Budget: skills creation and nation building beyond the much overdue money for inter-state highways. Beazley’s surprise $2.8 billion subsidy for a new national broadband network will need a lot more selling. Our low standing internationally in broadband take-up is evidence Australians don’t appear much interested in the technology. [12.05.06]

PM leaves Budget selling to Costello: John Howard believes the 2006/07 Budget is so good he doesn’t need to stick around next week (when the Parliament is not sitting) to engage in the usual media blitzkrieg that is undertaken to sell the document. He can leave it to the Treasurer. The PM has departed for Washington, where he will be feted at a black-tie White House dinner hosted by George Bush. It is only the seventh such dinner Bush has hosted in his presidency. While in Washington, Howard will also receive from the international Jewish organisation, B’nai B’rith, its presidential gold medal for friendship to the people of Israel. (If people of Middle Eastern appearance had any doubts about where the PM stands, this should settle it). Howard will also visit Chicago, Ottawa and Dublin (his first visit to Ireland as PM), accompanied by his wife Janette. [12.05.06]

Howard enjoys the international stage: The Prime Minister enjoys these trips which, as usual, will be covered by a big contingent of reporters from the Canberra press gallery. He doesn’t behave like someone about to retire, and as every day passes, Howard gets closer to Menzies’ 15-year record. Howard will go to the next election, with a big majority of those in Government cheering him on. When he does leave politics, Howard is not going to set himself up as a consultant to the rich, as did Hawke and Keating. As a Cabinet colleague said, why would Howard join the board of the Red Cross and write a book when he can be Prime Minister? Costello gets high marks from most in Government for this year’s Budget, particularly the new superannuation initiative. Yet this does not improve his leadership prospects. [12.05.06]

No boost to Costello’s leadership ambitions: After his 10th Budget in 2005, Costello’s supporters said it was his last. Eventually he had to face up to doing his 11th, and there is every prospect he will be delivering his 12th this time next year. He won’t challenge, since he would fail. He could retire, but this seems unlikely. If Howard wins the next election (which is probable), Costello faces going into another term of Parliament again waiting for the PM to go. Still, this Budget is risky. Nobody can say with certainty whether it will induce another inerest rate rise, nor whether the China boom might bust - sending the economy into a Budget deficit inducing slide. The odds put this a little way off, yet oddly, it’s Peter Costello who keeps insisting the boom in commodity prices will end quite soon. [12.05.06]

The enduring China boom: In the Budget lock-up press conference, Costello said - “There are some people that say this boom (in the terms of trade) will last three years. I’m the one that has been the voice of caution here. I’m the one that’s saying that we are not going to factor in increased prices beyond that, and our bottom line is predicated upon a return to more normal levels in about two years.” Treasury, however, sings a different tune in Budget paper No. 1 - “Looking to the future, there are powerful economic influences tending to keep resource and energy prices high and other powerful influences tending to reduce them. The most important influence tending to keep them high is the likelihood that a continuation of strong catch-up growth in the large developing economies will generate further increases in their energy and mineral needs over an extended period of time.” (Our emphasis). This assessment would have been penned well before the Budget speech was printed. [12.05.06]

Opinion divided on another rates rise: Access Economics’, Chris Richardson, is concerned that a sudden slump in revenue from the commodity boom could upset future Budget numbers. He is also concerned about another interest rate rise. Economists are divided on whether the Budget is expansionary enough to prompt the Reserve Bank to notch rates up another 0.25% in the near future. In Canberra, there has been much speculation on whether Reserve board member, Ken Henry (Secretary of the Treasury) briefed the board on what the government’s Budget intentions were before the decision was taken to up rates. It seems reasonable that he would have. Yet Costello, asked the question directly by Wayne Swan in the House on Wednesday, refused to answer - saying it was a matter for the bank. [12.05.06]

Incredible revenue bonanza spent: Meanwhile, both the PM and Treasurer are using megaphone propaganda on the independently thinking Reserve, saying there is no need for another interest rate rise. Further, Costello has made it clear he didn’t believe the last should have happened. Reserve Governor Macfarlane is to retire soon and, if he believed another rate rise was needed, would be unmoved by government pleadings. In the Financial Review last week, ANZ chief economist, Saul Eslake, had a penetrating take on the Government’s present economic management. He made the astonishing calculation that since the 2002/03 Budget, Treasury has had an additional $97.5 billion laid at its feet - over and above that normally calculated. As well, Eslake said the government - over those 4 years - not only spent every available dollar, but an additional $1.4 billion. He added - “I genuinely struggle to think of anything of lasting value that has been done with revenue windfalls” (which have arisen from the boom in resource prices). Eslake believes there will be “an inevitable downturn in commodity prices.” [12.05.06]

Roads the winner, Rail the loser: The Budget has again shown how attached the Howard Government is to the road transport industry, and how comparatively badly it treats rail services. AusLink - which was billed as the answer to key highway and rail needs - provided $12.7 billion over five years from 2004/05. Costello has tipped in another $2.3 billion. The largest allocation - $800 million - is to go to completing the duplication of the Hume Highway from Sydney to Melbourne by 2009, three years earlier than planned. There is plenty of money for upgrading other major highways. John Anderson’s pork barrelling Roads to Recovery program, for local bush roads, has cost around $300 million and will get another $307 million before 30 June. Yet all that Rail gets in additional money from this Budget is a miserly $270 million. Costello confirmed the Road User Charge for heavy vehicles will be unchanged at 19.7 cents a litre. He said the government would not proceed with the increase in the charge which was to apply from 1 July. He didn’t spell this out, but it was the National Transport Commission (the advisory body to Federal and State transport ministers) which recommended the increase. [12.05.06]

St Clair - the master lobbyist: Costello said the decision to reject the recommendation of the advisory body was worth $1.2 billion to heavy vehicle operators. In short, the Government is spending more on highways for the road transport industry (and motorists), having refused a reasonable recommendation to make truckies pay more. This is yet again a tribute to the persuasive powers of Stuart St Clair, the truck industry’s lobbyist. He is a former National MP (for New England), and an ex-staffer to Nationals ministers. Heavy truck operators don’t pay nearly enough for the damage they cause to roads, the subsequent congestion, the cost of crashes, and pollution - both from noise and emissions. Compared to cars, they pay a lot less because of the tax rebates. The excise is 38c a litre, of which the rebate is 18c a litre. The 19.7c left over is what is called the non-hypothecated road user charge. This does not go anywhere near paying for roads. According to the Australian Automobile Association, heavy trucks should be paying around 47c a litre, and cars, 26c a litre in road user charges. [12.05.06]

Understanding the PM on tax: The Budget has confirmed the total failure of the big end of town to convince the Howard Government to embark on root and branch “tax reform” as a means of cutting tax rates. Courtesy of the China-induced revenue boom, the government has cut the top tax rate anyway. The Business Council and ACCI (as well as Malcolm Turnbull) have argued that the myriad of tax concessions should be cut to make room for major cuts in tax rates. They should take careful note of the interview John Howard gave to George Megalogenis for his book, The Longest Decade. What comes through is that Howard views all issues through the prism of politics. An example of this was his frank statement the upwardly mobile - such as the blue collar worker turned small businessman - rejected Paul Keating’s social policies for a republic and reconciliation. “They’re a natural fit for me,” said Howard, adding - “The thing is, a lot of those people are socially conservative and they don’t like all this trendy stuff.” How true. [12.05.06]

Tax reform ho-hum: This is why Howard (apart from his own conservative views on the subject) was never going to offer an apology to the nation’s original inhabitants for the terrible treatment they received at the hands of white Australians. And the same goes for tax. Howard unsurprisingly regards tax policy as a political instrument with which to gain votes and retain power. He knows that the punters are not the slightest bit interested in airy fairy discussions about tax reform. Further, he is not really attracted to the idea of reform to further cut tax rates and reduce complexity of the tax system. The outcome of tax reform would inevitably be a whine of complaint that the resulting tax cuts did not sufficiently compensate for the disappearance of the vast array of tax concessions to various sectional groups. It is never a good idea to take benefits or concessions from voters, no matter what the compensation. [12.05.06]

Ways to simplify the system: The business leaders have not produced a strong case which would induce any government, not only the Howard Government, to embark on the uncharted waters of tax reform. Obviously the system is far too complex, and could be greatly improved, without withdrawing most concessions. For example, dump the GST and make it a direct retail tax payable at the cash register, thus dispensing with the absurd churning involved in the present system. Similarly, the Government could abandon company tax altogether and replace it with a flat 30% withholding tax on company dividends (as advocated by Brian Toohey, and supported by a number of tax authorities including Associate Professor Neil Warren of the Uni of NSW). The huge industry involved in sorting out what expenses are deductible, and what are not, would disappear overnight. It wouldn’t matter if dividends were held back and reinvested in a firm. This in itself would produce more jobs, and increase the size of future dividends paid. [12.05.06]

CEOs already rolling in it: Inside Canberra reported earlier in the year on the call by Michael Chaney, President of the Business Council of Australia (among others), for a reduction in the maximum marginal tax rate so that Australian tax rates could be “internationally competitive”. What does this mean? It could hardly be claimed someone on $200,000 gross would take themselves off to Singapore to save a few thousand dollars in tax, even if they could earn the same gross. Up and coming business executives go abroad, but not in search of an ideal tax regime, but rather experience and high salaries. China is not super competitive in many fields of manufacturing just because of its tax rates. While the BCA argues that CEO’s are overtaxed by international standards, its own member CEOs are doing very well as against the rest of taxpayers. Research by John Shields (of Sydney University) shows in the past 15 years the average yearly income of BCA CEOs has risen 564%, to $3.4 million. The average CEO is now earnings $65,700 a week. [12.05.06]

Mine drama aids unions: The Beaconsfield mine drama has been a gift to the union movement in its fight with the Howard Government over Work Choice legislation. AMWU head, Bill Shorten, has been seen on TV every day, on the job looking after his members. Shorten’s enemies might say it is all a stunt to burnish his image for his parliamentary career. Yet he was at Beaconsfield before the two survivors were discovered to be alive. When packing his bags, Shorten thought he was going to a funeral. the drama was also a reminder (maybe subliminally) to viewers that it is the workers like the trapped miners who produce wealth for Australia, not executives sitting in air-conditioned offices rabbiting on about more “labor market flexibility”. The unions are winning the debate in the workforce over IR, mainly because of the advocacy of Greg Combet. The ACTU has shrewdly handled the media. An example was how it turned the treatment of meat workers in Cowra into a major national issue earlier in the year. The States and the unions may well lose the case in the High Court over Work Choice, but media focus on the hearings is keeping IR high up as a political issue. [12.05.06]

Attending the Beaconsfield funeral: During question time on Tuesday - the first meeting of the House for five weeks - the PM announced the non-attendance of Ian Macfarlane, the Minister for Industry, Tourism and Resources. Instead of Parliament, Macfarlane was attending the sad occasion of the funeral of Beaconsfield miner, Larry Knight. He was there, apparently, on the tenuous ground that as Resources minister, Macfarlane is in charge of mining. These days, televised public mourning plays an important part in political life. Old fashioned as it may sound, Macfarlane should have been in Parliament reporting to the body to which he is accountable. The local Federal MP, Dick Adams, was properly at the funeral. The PM must have thought that, as Adams is Labor, someone from the Government should have been in attendance. Howard could hardly go, so instead he sent Macfarlane. It is the Governor-General that should properly have been there, not a minister. This is the sort of work G-Gs are supposed to do, yet these days he is shouldered aside from such traditional work by Howard and other ministers. [12.05.06]

Woolies, Coles lose on veggies: Agricultural Minister, Peter McGauran, has been forced into an embarrassing backdown on the proposed mandatory code governing the fruit and vegetable industry. In the last election campaign, Nationals Leader, John Anderson, promised to devise a mandatory code to replace the existing voluntary code - all within 100 days of the 2004 election. Now, somewhat belatedly, McGauran is to produce it. The intent of the mandatory code, from the point of view of the fruit and vegetable growers, was to control the behaviour of Woolworths and Coles. Growers were concerned the supermarkets were by-passing the wholesale market in various ways. They were angered by news that McGauran proposed to exclude the supermarkets from the code on the basis that what Anderson had originally promised was a code for the wholesale industry. He claimed supermarkets were retailers, not wholesalers. [12.05.06]

Cabinet rebuffs McGauran: Growers rejected this. They in turn argued supermarkets are omnipotent in the industry, having their agents in the wholesale markets as well as dealing directly with growers and by-passing the wholesale market. The problem for McGauran was the following quote from Anderson on 1 October, 2004 - “The code will give producers a fairer deal on their terms of trade and on resolving disputes with produce buyers, which are in many instances, supermarket chains.” When McGauran took his code to Cabinet recently, it was rejected, and he was told to go away and try again. On Tuesday, in the House, Peter Andren (Independent, Calare, NSW) asked McGauran whether the code was to be redrafted to include supermarkets - as Anderson had promised. McGauran replied - “The member will be glad to know that the Government’s election commitment will be honoured.” The industry awaits the details with interest. [12.05.06]

From the Gallery: Many in government, including on Russell Hill, are saying privately that John Howard went right over the top with the theatre surr-ounding the death of Private Jake Kovco. His accidental death in Iraq was sad indeed, and was rightly mourned by the nation. Yet he was not killed in combat. Because of the stuff-up over the return of his body, a full bells and whistles reception was organised for the delayed arrival, with a guard of honour on the tarmac, Brendan Nelson and all the top brass in attendance, and TV cameras of course. To attend Kovco’s ceremony, Nelson cancelled a visit to Washington to see Rumsfeld, Rice and Cheney, as well as follow-on talks with UK Defence Minister, John Reid. All this has to be rescheduled. The Americans - having lost over 2000 in the Middle East - must have been puzzled by Australia’s Defence hierarchy of being brought to a standstill in order to deal with the fallout from the accidental death of a Private. The funeral was a major media event, with John Howard - who sent Kovco to Iraq - as principal mourner. All of which shows how sensitive the PM is on Iraq policy, now opposed by a majority of voters. Howard once derided Keating’s political correctness. Now he has dev- eloped his own brand. [05.05.06]

Daily Tele king-hits PM on rates: Forget what the economists or Kim Beazley say about the 0.25% rate rise - John Howard has nothing to fear there. It was instead Murdoch’s Sydney Daily Telegraph that king-hit him the day after the Reserve acted to raise intereste rates. A blaring page one headline shouted - PM’S RATES TIME BOMB. Heading the page was a not very flattering picture of Howard alongside a telling quote - “Who do you trust to manage interest rates? - John Howard, day one of the 2004 election campaign.” Bear in mind, the Tele is the PM’s favourite paper, and by far the highest circulating paper in Sydney. It is read by exactly the type of voter who decides elections - lower to middle income workers. [05.05.06]

Howard’s promise thrown back in his teeth: The report by Chief Political Reporter, Malcolm Farr, boldly stated - “Voters are questioning Prime Minister John Howard’s claim to superior economic management after yesterday’s controversial interest rate rise added $40 a month to average mortgage repayments .... And it will anger voters convinced the Government told them at the 2004 election that it could prevent mortgage increases - especially as economists tip a further 0.25% increase later this year.” Howard will contest the Farr assertion. He will point out, correctly, his promise was that interest rates would not rise as much under a Coalition government as under a Labor government - renowned for its 17% rates during the Keating era. This of course could not be proven, but it undoubtedly was the key to the Coalition’s big win. [05.05.06]

PM running out of election winning tricks: Howard is right, but so is Farr. Voters really do believe the Government told them there would be no more rate increases. Further, Howard will simply not be believed. Voters have long ago realised the sobriquet “Honest John” was no longer apt. This latest assault on Howard follows the startling Page one effort of the Tele last February. Under a screaming headline - DEBT SENTENCE - the Tele reported on Housing Industry Association research carried out “exclusively” for the paper. Among its findings - “The Sydney property market has become so expensive that most young couples will never pay off their mortgages within their lifetime. And housing affordability has plunged to the same dire level as during the recession, with crippling prices now matching the punishing 17% interest rates of the late-1980s as an obstacle to ownership.” Howard wins elections on negatives. He did it in 1996 (get rid of the arrogant Keating ). He almost lost in 1998 because he went positive with the GST. Then he reverted to negatives in 2001 (Tampa, children overboard) and 2004 (Labor would hike mortgage rates). What’s his next trick? He can’t win again on the 2001 and 2004 gimmicks. [05.05.06]

Hard to follow Newspoll: Its hard to make any sense of this week’s Newspoll. If the poll is accepted, the Coalition is back in front despite its problems on IR, the wheat scandal and the bungled return of the body of Private Kovco. Yet Kim Beazley registered his highest satisfaction rating and standing against Howard as PM in two months. On the other hand, Beazley is seen as less desirable than Peter Costello (for the first time), or Julia Gillard and Kevin Rudd. The relevance of performance ratings and preferred PM findings are questionable. The focus should be on the standing of the parties, since this is what decides elections. At the end of the first weekend in April, Newspoll marked Labor (two-party preferred) leading by 52%, to the Coalition’s 48%. Yet last weekend, the Coalition took bacl the lead (51%) against the ALP on 49%. Make of that what you will. Looking at the trend since Australia got back to work after the holidays in February, Labor has led the Coalition in four polls, while the Coalition has won only two - a good trend line for Beazley, although many would say, not good enough. [05.05.06]

Gillard, Rudd top Beazley - so what?: Despite doing better in his approval rating and as preferred PM, Beazley scored only 24% as the preferred leader of the ALP. Julia Gillard was on top with 32%, and Kevin Rudd was on 28%. Yet when the political support is looked at from the point of view of party allegiance, these figures can be seen as meaningless. Coalition voters put Beazley at only 24%, while Labor voters put him at 31% - ahead of Gillard and Rudd (No surprise in that). What this shows is the vote that counts is the swinging voter, or the ‘don’t know’ voter, not what Coalition or Labor voters believe. The same goes for the Costello versus Beazley poll as the preferred PM, which saw Costello on 44% and Beazley on 37%. Costello overwhelmingly gets the vote of Coalition supporters as Beazley did from Labor supporters. We don’t know the views of ‘don’t knows’ or of those who support other parties. In the case of the latter, it is their preferences which count. [05.05.06]

PM has early election option: The fact that Gillard and Rudd topped Beazley in this silly poll will make no difference whatsoever to the Beazley leadership. Barring a catastrophic failure by Beazley, he will go to the next election as Opposition Leader because most in Caucus know he is the safer bet. As we have said before, if Labor did dump Beazley, whoever replaced him would have less chance of winning the next election. It could almost be guaranteed that Howard would pull on an early election to prevent a new Labor Leader becoming well established. This of course assumes Howard will be taking the Coalition to the next election, which is the nearest thing to a political certainty that exists. [05.05.06]

Petrol legislation in danger: Government legislation designed to give the four major oil companies complete control of the petroleum industry is in danger of being knocked over in the Senate. Government Senators are hostile to the legislation, and the manner in which the Senate has been treated by Industry Minister Macfarlane and his department. The legislation aims to repeal the Petroleum Sites Act - which sets out how many retail sites each oil company can own and operate - and the Petroleum Retail Marketing Franchise Act which governs the business relationship between the oil companies and their franchisees (servos). Macfarlane says the Acts will be replaced by a mandatory Oilcode - to be established by regulation via the Trade Practices Act. With Senate Economics Legislation Committee taking evidence on the repeal legislation, a number of Government Senators have expressed various concerns. [05.05.06]

Sneaky regulations: It was not until we contacted the committee secretariat this week that it came to learn Macfarlane had made regulations under the Sites Act on 30 March (and registered 3 April), which had the effect of rendering the Act null and void even before the Senate votes on whether the Sites Act should be repealed. The regulations removed the names of the four oil companies (and the number of sites they are allowed to own and operate) - negating restrictions on the number of sites the oil companies could own and operate. At the committee’s recent Sydney hearing, veteran Tasmanian Liberal Senator, John Watson, was angry about the failure of Macfarlane and his department to provide the committee with a copy of the Oilcode regulations. He said - “How can we discuss this bill that tries to protect various components of this industry without looking at the central feature of that protective element, which seems to be the only feature that is going to help small businessmen and the rights of individuals - that is, this Oilcode.” [05.05.06]

Lib Senator hostile: Watson added, it was a “travesty” the committee was being asked to look at the legislation without looking at the central feature, Oilcode. Watson is also chairman of the Senate Regulations and Ordinances Committee, and presumably the Macfarlane regulations will come before his committee for examination. As they are a disallowable instrument, it also means they can be knocked over in the Senate. Presumably Labor will give notice of disallowance of the regulations - it will have 15 sitting days to do so. The Government cannot be certain the regulations will survive the Senate. Both the chairman of the committee, Queensland Liberal Senator, George Brandis, and the Queensland National, Barnaby Joyce, expressed concern about what would happen to the retail market in south-east Queensland if the legislation passed. Brandis referred to an ACCC report which found that in some markets, including south-east Queensland, independent service stations provided the principal source of price competition. [05.05.06]

Supermarkets worry Barnaby: At one stage Senator Brandis appeared somewhat exasperated with his efforts to get a straight answer from John Tilley (of the Australian Institute of Petroleum) on the impact of the legislation on independent operators. Brandis said to Tilley - “Let’s not get into these sorts of vague relativities”. Finally, Tilley conceded the number of independents would be reduced. Barnaby Joyce even made an appearance last week on SEVEN’s Today Tonight on the legislation. He said - “I think Coles and Woolworths should be part of the Code (Oilcode) and restricted in some way as to the portion of the market they control.” Later he said - “They’ll (the independents) go out of business because there won’t be the legislative requirement to restrict the hold that the oil market, the oil companies, have on the market and furthermore Coles and Woolworths will slowly be taking them out of business bit by bit by bit around the countryside.” The oil companies could lose this one. [05.05.06]

Costello’s debt failure: Last weekend, with the Budget just around the corner, Peter Costello appeared on TEN’s Meet the Press, where he demonstrated that despite being the Treasurer with the most Budget’s under his belt, his economics are not too hot. He commented on a clip of Kim Beazley, wherein the Opposition Leader stated - “All this Government has done (by selling off government assets) is transfer the debt from Government to ordinary Australians.” Costello described this as a “howler”. Kim Beazley may not be a master economist, but he appears to know more than Costello. In the broad Beazley is right - if government assets are sold off, this transfers government debt to the private sector - where Australian taxpayers reside. Costello dismissed Australia’s massive overseas private debt with the remark that 80% of that debt is owned by domestic banks. Quite correct, but then the banks loan the money out to citizens, and thereby increase their debt. Respected economist, Fred Argy, in a letter to the Fin this week, gave credit to Peter Costello for running a series of budget surpluses at a time of low unemployment and record high commodity prices. Yet he criticised Costello’s aversion to borrowing. According to Argy, the Government could aim to borrow 1% or 2% of GDP net each year on average over the long term and invest the proceeds in urgently needed long-life social, economic and environmental infrastructure. [05.05.06]

ABARE dumps on Biz Roundtable: The Government has chosen to rebuff the Australian Business Roundtable on Climate Change’s recent paper - Business Case for Early Action - via the opinion page of the Financial Review. Monday’s Fin, under the headline “Greenhouse quick fixes sure to backfire”, ran an article by Brian Fisher, head of the Australian Bureau of Agricultural and Resource Economics and Anna Matysek, manager of ABARE’s climate and modeling section. Fischer and Matysek completely rejected the Business Roundtable analysis of the consequences of a single country such as Australia making major emission reductions, declaring it would be no help in solving the difficult political problem of encouraging all major emitters to act. The article said that engaging all major emitters in actions to transform energy and transport systems in radical ways would happen only with the aid of complementary agreements such as the Asia-Pacific Partnership on Clean Development and Climate - whose members generate more than half the world’s GDP. [05.05.06]

Labor struggling on climate: Fischer and Matysek also reject early action by such means as a carbon penalty on fossil fuel use. Such early action, they declare, flies in the face of the Wigely, Richels and Edmonds study published in Nature a decade ago. The article points to the difficulty Labor has in getting traction on the greenhouse issue. Labor condemns the Government for not signing the Kyoto agreement, while deriding the Asia-Pacific Partnership (as many other authorities have). Labor doesn’t have the resources to mount an effective reply to the material ABARE is providing to the Government. Climate change is looming as a big political issue. Yet, voters are baffled by the complexity of argument about the issue. It is clear that sceptics in the scientific world - who say there is no evidence of climate change and if there is, it is not man-made - are in an ever shrinking minority. Both the Coalition and the Opposition agree on the basics - greenhouse gases present a big climate change problem, but they can’t agree on the means to deal with it. [05.05.06]

ANZAC Day not quite a holiday: Two days before ANZAC Day, the Office of Workplace Services (OWS) issued a statement that “the ANZAC Day holiday is protected by law”. Clear enough. Everyone is entitled to a paid day off. Well no, it turns out the special day isn’t “protected”, although there is a law about the holiday. OWS Director, Nicholas Wilson, explained - “While employers may request employees to work on the day, employees may refuse to work if they have reasonable grounds for doing so”. What Wilson’s press release didn’t explain was that it is up to the employer to decide what is a “reasonable ground” for an employee to refuse to work on the holiday. Here the Government’s Work Choice legislation tries to help the poor employer decide what is a reasonable ground by referring to the Act which sets out no less than 12 matters which the boss has to think about when requiring a worker to work on the holiday. [05.05.06]

Keeping it simple – hardly: These include: the nature of the work performed by the employee; the employee’s personal circumstances (including family responsibilities); the amount of notice given in advance of the holiday given by the boss to a worker’; and (an easy one) any other relevant factors. Wilson encourages workers to dob the boss in to the OWS if they believe the boss has done the wrong thing. One of the great advantages of Work Choice touted by the Government was greater simplicity. This hardly applies here. But there is one simple solution for a boss with less than 100 workers - if he doesn’t particularly like the worker for refusing to work or dobbing him in to the AWO - he can wait for a little while and then sack the malcontent outright without having to fear unfair dismissal action. What’s more, bosses have received encouragement for behaving in this way by none other than John Howard. The Prime Minister has lauded the abolition of unfair dismissal laws as a way of ridding “pains in the neck” from a workplace. Clearly, any worker who refuses to work on ANZAC Day is a pain in the neck. [05.05.06]

People and Events: John Conomos will retire as managing officer and executive chairman of Toyota Australia, 23 June. He will take up a new position of Chairman Emeritus and Principal Policy Advisor, which is good news for Australian industry. Conomos has been at the forefront of speaking up for the Australian car industry. He remains President of the Federal Chamber of Automotive Industries. [05.05.06]


From the Gallery: The bungled return of the body of Jake Kovco is the worst development for the Government since John Howard took the nation to war in Iraq. Screaming headlines in today’s paper - Army Accused, Cover Up, Family angry - will hurt the Government and give impetus to demands to get out of Iraq. Polls show up to 79% of voters believe now is the time for the troops to come home. There are concerns the Solomons crisis showed the Army is clearly over-stretched. (see Troops to Sudan! - come off it). Yet John Howard continues with the line we must finish the job. He cannot articulate what the job is with any precision nor can he say when it will be accomplished. If Kim Beazley was not so sensitive about the ANZUS alliance he could make a good case that our troops are only in Iraq because George Bush wants them. Caucus could soon begin pushing him to take a far more aggressive policy stance on bringing the troops home. Yet Beazley can’t demand the token force in Afghanistan be returned because he has stated they should be in this troubled country as it is “terrorism central”, whatever that means. [28.04.06]

ALP back in front of the Coalition: According to this week’s AC Nielsen poll (taken mid-April), Labor is now back in front in the two-party preferred result - 51% ALP, 49% Coalition. A month earlier, the outcome was 50% each. Yet, AC Nielsen finds Labor’s primary vote at 38% (which is not satisfactory, and only up 1%), with the Coalition on 43%. The latest Morgan poll has a much better result for Labor than AC Nielsen, with two-party preferred - 54% ALP, and 46% Coalition. Averaging both Morgan and AC Nielsen, the outcome is - 52.5% ALP, 47.5% Coalition. No Newspoll was taken last weekend, so its latest results - based on polling this coming weekend - will be in next Tuesday’s The Australian. [28.04.06]

‘Work Choice’ shifting votes against Coalition: The AC Nielsen dissection of voter attitudes is interesting. Labor has reclaimed the young and the middle aged in a big way. Two-party preferred, the 18-24 and 40-54 groups both registered 58% ALP, compared to 42% Coalition. Support amongst the 25-39 group was 51% ALP, 49% Coalition. The oldies, 56-plus, are most hostile to Labor, and this showed with 56% Coalition, to 44% ALP. In the cities, the two-party preferred result saw Labor streets ahead - 55% ALP, 45% Coalition. Yet rural Australia remains bad for Labor - 46% ALP, 54% Coalition. Such figures suggest the slide in current support for the Government is predominantly due to concern over the ‘Work Choice’ legislation, not unhappiness over its handling of the oil-for-food scandal. [28.04.06]

72% of voters believe PM lying on AWB: AC Nielsen found that 85% of respondents “have heard or read” about the Cole Commission. Of these, 72% believe the Government knew about the kickbacks to Saddam. Yet the poor support for Labor in the bush would suggest that although a big majority of voters believe John Howard is telling lies about what he knew of AWB’s activities, such lies (as were perhaps the kickbacks) are in the ‘national interest’. The vote turning issue that will flow from Cole is more seriously the future of the single desk export wheat monopoly. There is substantial support within the Liberal Party for it to be dumped. This might be possible if Cole finds that the monopoly contributed to the corruption which led to the payment of bribes. However, it is generally thought Cole would regard such a finding as being beyond his terms of reference. [28.04.06]

Howard’s Wall Street Journal letter unconvincing: For the Nationals, it doesn’t matter what Cole says - it cannot dump the single desk and Howard knows this. Labor is yet to declare itself, although Kevin Rudd has been discussing Cole and its aftermath at numerous ‘bush meeting’ venues. He is reported to have come close to saying at a meeting in WA that Labor would retain the single desk. Howard’s letter to The Wall Street Journal this week was all about covering his backside, and those of Alexander Downer and Mark Vaile. His protestations of innocence, and his obvious attempt to put the blame squarely on AWB, won’t impress the Americans. Yet at least Howard can tell wheatgrowers it was an attempt to persuade Washington that our farmers should not be hurt because of the AWB actions. The Americans are not going to believe the Howard assurances that he and his ministers did not know about the bribing of Saddam. If 72% of Australians believe he is lying, why would Congress believe he is telling the truth? Nor will Washington believe his protestations that Cole has full power to “make findings on the government’s knowledge of the kickbacks”. The Americans would be fully appraised of the fact that in addition to the Opposition, 21 academic legal specialists had signed a letter to The Australian saying Cole did not have sufficient powers, and his terms of reference needed to be extended. [28.04.06]

Howard’s case weak on wheat: The correctness of this was shown by the quite cursory examination of the three ministers in the witness box. If Cole had been truly attempting to discover what they knew, they would have been in the witness box for days, as were most AWB key players. Howard’s problem is the weakness of his case. His letter says - “Unfortunately, there have been attempts both from my political opponents in Australia (read Rudd, Beazley) and our competitors abroad (read US wheat growers) to blacken the country’s (Australia’s) reputation, perhaps in the hope of winning some advantage from this sorry saga.” Rudd and Beazley are not trying to blacken Australia’s name, but they certainly are having considerable success in blackening the Howard Government’s reputation. The consequent damage to our trade reputation has come from broader visibility of AWB’s activities, as well as the failure of the government to follow up all the cables (28 with another revealed yesterday), warning of trouble ahead. Howard’s defence is that the cables were not brought to his attention (or Downer and Vaile). The Government simply believed AWB denials of kick-back allegations. This won’t wash, and in the end wheat growers will come to know who to blame. [28.04.06]

Costello dopey on debt: Last week, Peter Costello proudly announced to the Committee for the Economic Development of Australia (CEDA) that the Commonwealth was debt free (unlike its citizens). Costello said the $96 billion debt inherited from Labor had been wiped out. He said among other things, this was the result of his policy of improving “the Government’s net worth position”. It is puzzling how this was achieved. Costello showed no economic wizardry in abolishing the Government debt. He achieved this mainly by reducing the Government’s net worth via the sale of taxpayers’ assets, while establishing himself as the highest taxing, biggest spending Treasurer since Federation. Inside Canberra was not in attendance to hear the Treasurer, but we doubt if CEDA members would have been on their feet cheering at the abolition of government debt. On the contrary, most of its members would oppose such a policy - as do nearly all economists and the Housing Industry Association, the Property Council, the Australian industry Group, and the Australian Automobile Association (representing motorists at the national level), to name just some of those who believe the policy is wrong headed. [28.04.06]

Official report ignored: Another sceptic would be Professor Bob Officer, who compiled a report for the Howard government soon after it came to office. In that document, he recommended establishing in the Budget a capital account which would set out Government borrowing costs for productive long term infrastructure projects. Officer’s advice was studiously ignored. Yet one business group has come out and welcomed it - the good old ACCI. The Government can always rely on ACCI and Peter Hendy. Hendy even referred to an “historic end to government debt”. One wonders whether his members are as enthusiastic for Costello’s policy of infrastructure being provided out of current revenue, meaning such spending needs to compete with all the other demands: tax cuts, more spending on education, health, defence, farmers, the environment, etc etc. CEDA members would have been bored to tears by his castigation of Kim Beazley for leaving the Howard Government the $10 billion Beazley black hole. (Of course he did not mention the far larger deficit left by Treasurer, John Howard, to the incoming Hawke Government). [28.04.06]

Demonising the ‘D’ word: Costello has to keep harking back to Beazley’s black hole because he relies on this to demonise the very word debt. This is also holding Labor back from coming out and scotching the Costello doctrine. Unfortunately, for the national interest it might require Howard, Costello and Beazley to depart the Parliament before a future government (of whatever persuasion) can return to the sensible and time honoured tradition of paying for long time capital projects by borrowing - thus preserving inter-generational equity. All of which is a reminder of Costello’s poor record as he comes up to delivery of his 11th Budget. His sole economic “reform” was to introduce (with Howard’s assistance) the worst possible form of a consumption tax. As forecast, when the decision was made to turn more than one million citizens into GST collectors for the tax department, no account was had for the cost of compliance - still a major bugbear for small business people. [28.04.06]

Treasurer into pork barreling: Costello uttered a cautionary note after the great news about zero debt: this was no time for the nation to “let its hair down”. It’s a pity he didn’t follow his own advice and give more protection to taxpayers. Instead, after his lecture to CEDA, he announced the Government was giving (not loaning) $9.6 million in pork barreling to upgrade the Cronulla ‘Sharks ‘stadium in the Sutherland Shire. It also happens to be in the electorate of Bruce Baird, one of his staunchest supporters in the anti-Howard faction. For God’s sake, why does the Treasurer think it’s a good thing to engage in such pork barreling. If Toyota Park needed up-grading, why not ask the Japanese car company giant to find the money? Or it could have been funded by Packer and/or Murdoch, who for all intents and purposes own the game of Rugby League. Alternatively, the football club could have financed the improvements out of pokie profits. Instead, the club is only kicking in $800,000. Costello thought this was such a good idea that his press release also reminded taxpayers of other recipients of the Howard Government’s pork barreling, namely: $8 million to Kogarah Oval; $10 million to Penrith Stadium; $8 million to Whitten Oval; and $2 million to the Geelong Legends Sporting boulevard. All were in 2004 of course, in advance of the Federal election. Has Costello no shame? [28.04.06]

Troops to Sudan! - come off it: Taxpayers were entitled to be somewhat astonished to read in The Australian on Wednesday that Robert Hill, former Defence Minister (and now our UN Ambassador) is to advise the government on whether it should supply peacekeeping troops to the world’s ugliest civil war - in Sudan. Osama bin Laden last week called for Jihad against the proposed UN Sudan force. That Australia is even contemplating such a contribution is astonishing. A majority of Australians believe we should be pulling our troops out of Iraq (see below - Ticklish questions). They would hardly be in the mood to see troops going off to Sudan. Let the Europeans and the Africans sort that one out. It’s their region, not ours. From the security point of view, there is no reason why Australia’s token force - other than those soldiers guarding the embassy - should remain in Iraq. Their removal would not even be noticed. Yet, it would be noted in political terms. The Baghdad Government wouldn’t be too upset, but George Bush would. [28.04.06]

James warns Army stretched: We now face the reality of the troops being a pawn in domestic politics in Australia and the US. The troops are staying because it would embarrass John Howard for them to be removed now. The sudden need to react to the Solomons crisis has starkly highlighted where Australia’s total military effort should be - in our region. Neil James, Executive Director of the Australian Defence Association, says Australia neglected all the South Pacific trouble spots in the 1980s and 1990s. He told ABC radio, “the problems have come back to bite us in a bigger way in the late 1990s and 2000s.” He is not saying we should take the troops out of Iraq. But he does say the Solomons experience points to a pattern of trouble developing in Melanesia more broadly. Australia, James said, had to hope it didn’t have a crisis in more than one country at a time. He added, the other nightmare for Australian contingency planners was dealing with some form of serious law and order or political breakdown in Papua New Guinea, “because the Australian Army just isn’t big enough to assist PNG authorities to restore order in such a situation.” [28.04.06]

Aussie expeditionary force: The latest edition of our associate publication, Australian Defence Business Review, reports the arrival of Brendan Nelson in the defence portfolio will mean a new direction is to be taken in the debate over the primacy of ‘Defence of Australia’ versus ‘Expeditionary Warfare’. Nelson considers that elements of both will be required to ensure a balanced ADF into the future. If he is talking about ‘Expeditionary Warfare’ in the sense of maintaining Australia’s ability to be at America’s side in the Middle East (or the Straits of Taiwan), he should forget it. Our expeditionary forces should be ready for action to our immediate north, not on the other side of the world. If there was a major problem with Indonesian militia (backed by the Indonesian army) moving into PNG, it would be Australia’s job to push them back as the PNG Defence Force has been cruelled in the name of improving internal security. There would be no help coming from the US - it is unlikely to take our side against Indonesia, just as they were notably absent on the ground during the crisis in East Timor. [28.04.06]

Paying for troop movements: Inside Canberra reported (24 March) the Air Force’s proposed acquisition of four huge Boeing C-17 transports at around $500 million a copy as being partly related to the American’s telling Australia that much and all as Washington is grateful for our troops in Iraq and Afghanistan, they are not prepared to continue to fly them to these destinations by American transports. In effect, Defence Minister Nelson confirmed this in Parliament last month. Replying to a pre-arranged question, he went on about how wonderful the C-17s will be, saying - “We are determined to see that Australia is independent, that we will not have to rely on leasing ageing Antonov (Russian aircraft) for heavy lift, nor wait in queues for American airlift.” Taxpayers might have preferred that Australian troops do wait in queues (in their not uncomfortable barracks) for airlifts to Iraq and Afghanistan courtesy of the Americans. The C-17 purchase also fits in with Nelson’s doctrine (assumed from the Chief of Army) of a combat hardened expeditionary force going abroad to shoulder the burden of American wars for a long time into the future. We also hear from Russell Hill, the ever ambitious Nelson has told the media people in Defence he would like to see them generating a press statement a day. [28.04.06]

Ticklish questions: Some recent polling on the web of current issues, as conducted by The Melbourne Age -• Are you happy for Australia to accept West Papuan refugees? Yes 76% - No 24% (from 1990 votes). John Howard and Amanda Vanstone take note. • Should the Government sell Medibank private? Yes 20% - No 80% (from 1176 votes). The Government has decided to sell it anyway. • Have you, or would you, consider paying “cash in hand”? Yes 87% - No 13% (from 1922 votes). So much for the Government’s promise the GST would reduce the black economy. It’s become worse than ever. • Is the Federal Government abusing its Senate majority? Yes 85% - No 15% (from 337 votes). Howard won’t change his ways because his use of the Senate majority won’t be an election issue. • Should the Government help farmers insure their crops against natural disasters? Yes 58% - No 42% (from 1101 votes). A surprisingly close vote for such a motherhood issue. Are the cities - faced with their own infrastructure problems - now revolting against cross-subsidies paid to the country? • Is it time for Australian troops to leave Iraq? Yes 79% - No 21% (from 1340 votes). Beazley should keep up pressure for the return of troops. • Will proposed changes to Australia’s media ownership threaten press diversity? Yes 83% - No 17% (from 1567 votes). Howard will ignore such views. So the readers, viewers and listeners have spoken. Yet how many of these issues are vote turners? [28.04.06]

From the Gallery: John Howard says because Kim Beazley wants an income ceiling on Family Tax Benefit Part B, it means he wants to dump the benefit entirely. This is as silly as Beazley saying if Howard is elected again as PM, he will begin nuclear power production in Australia. Apart from the formidable political barriers, nuclear power will not be produced in Australia until it is economic. It is nowhere near as competitive with coal-fired power, even after expensive measures required to bring down coal emissions to acceptable levels. Howard believes it is quite okay for the stay-at-home wife of millionaires to cop $3000 a year per child. Yet Beazley’s ceiling on the benefit is also silly - $250,000. Labor should dump FTB Part B with the savings going to all mothers, whether working or not, thro- ugh FTB Part A. Then the ben- efit could be tapered according to a child’s age, with greater benefits when children are very young, say up to eight. Howard opposes a means test on FTB Part B, yet puts a $140,000 ceiling on FTB Part A. This week Professor Patricia Apps (Sydney Uni) and the OECD both came to the same conclusion - the present system discriminates against women. [21.04.06]

Coalition fraying at the edges: Suddenly the Coalition Government is fraying at the edges. The performance of the three senior ministers before the Cole Commission only served to underline the Government’s smugness and incompetence. The cost to Australia is significant. And Howard is reaping the harvest of his 2001 election win, when he played the race card to convince Australians there was a serious threat from boat people. Now he is desperately appeasing the Indonesian Government by treating future Papuan asylum seekers as ruthlessly as he treated the Muslim boat people - a policy which is definitely not popular. Additionally, the future of the Coalition itself is in question on the issue of the single desk wheat monopoly. Mark Vaile is under extreme pressure not to take a step backward on the single desk marketing approach. [21.04.06]

Oil-for-food an administrative scandal: The reality of AWB kick-backs to Saddam is the worst example of scandalous administrative incompetence by a federal government in living memory. It is far worse than the Khemlani loans affair of the Whitlam years. For a start, the Whitlam Government’s naïve blundering did not hurt Australia, nor was anyone ever charged. The principal miscreant was Rex Connor - who misled the House - and was properly sacked by Whitlam - an extreme measure which John Howard has long since turned his back on, no matter how richly deserved by some ministers. No matter what Cole finds, the rest of the world (and particularly Baghdad and Washington), have made up their minds: whether or not the Australian Government knew of AWB’s deliberate breaching of Australian law and the UN-sanctioned ‘oil-for-food’ code, it indisputably should have investigated all the cables pointing to what was actually going on. [21.04.06]

Australia’s world trade standing in tatters: Australia’s prized reputation as a squeaky clean free trader is in tatters, and will remain so while the Howard Government is in office. Mark Vaile has said he would consider offering abolition of the single desk if, in the WTO Doha round, Australia was offered adequate compensation in terms of access to the markets of the US and EU. Forget that. Even before the revelations uncovered by Cole, this was most improbable. Now it is impossible. Rather, Australia will be under pressure to give up the single desk and stop whingeing, permanently, about the evils of the agricultural policies of the US and EU. Barnaby Joyce says the Cole Commission doesn’t matter, and nobody is talking about the AWB affair. The accountant from the country has a long way to go in understanding the way world trade works if he judges events by the importance placed on them by most voters. [21.04.06]

Downer’s arrogance in witness box: An apology for the disaster is yet to be forthcoming from Howard. No doubt he believes, as he should, Cole is going to be soft in his report on the Government, and that was quite evident during the 42 minutes Howard spent in the witness box last week. Far from apologising, Downer did one of his DFAT Brat turns in the witness box. He had the gall to claim to John Agius (counsel assisting Cole) that he and DFAT had done “a good job” in handling the AWB issue. The Minister went further, saying (for the first time) he couldn’t investigate AWB. This followed a question from Agius - “But it does appear that nobody up to this point in time did any more than accept denials from AWB?” Downer replied - “Well with the greatest of respect (code for ‘listen you dumb bastard’), the department doesn’t have any legal authority to - and it is important to make this point - the department doesn’t have the legal authority to go into AWB Ltd and access all their files for information.” Absolute rubbish. [21.04.06]

DFAT had power to probe: Professor Don Rothwell (International Law Sydney University) was asked on the ABC’s 7.30 Report that night what he though of Downer’s claim he lacked powers to investigate AWB as a private company. He said - “Well, I think it’s fairly clear that Mr Downer, as the relevant minister, had considerable discretion in terms of these matters in issuing the licence permits. And to that end, it’s more than appropriate that he makes a range of inquiries as to whether or not AWB and the contracts that he has before him are consistent with Australia’s international obligations, and Australia’s domestic legal regime that seeks to give effect to those international obligations.” [21.04.06]

Single desk desperate problem: Howard has got a dreadful problem in front of him which will need to be addressed as soon as the Cole report is out of the way - what to do about the demands from the Nationals that the single desk wheat monopoly remain. In his column in The Australian this week, Glenn Milne had some riveting quotes from Barnaby Joyce - “The worst thing Mark (Vaile) could do is back down on the single desk. If he did that he could put his head between his legs and kiss his arse goodbye. Howard’s picked a royal commission to get rid of the single desk. He didn’t seem to think he needed a royal commission into Siev X, or children overboard.” (Joyce’s anus allusion is even more descriptive than Bill Heffernan’s effort when he shouted across an air terminal to Nats’ Senator, Fiona Nash, that she was “blowing it out of the back of her arse”). Howard will note that in Joyce he now has a critic on more sensitive topics (ie: Siev X, children overboard), that up till now have failed to draw any substantive criticism from the Nationals. [21.04.06]

Wheatgrowers cannot be ignored: Milne’s column was all about Vaile’s leadership in the light of his appearance in the witness box. Joyce believes Howard set up Cole solely to get rid of the single desk, and use the AWB’s corruption as a stalking horse. This is highly improbable. Howard set up the commission because he had no alternative in the light of the damning report of Vockler. Yet it shows how angry Joyce is about the single desk. If Howard attempts to dump the single desk it would be the end of the current Coalition, and there would be a mass defection of wheatfarmers away from supporting it. Recall that The Land newspaper early last month published the results of an extensive survey of 1002 wheat growers (a sample of 3.5% of total wheat growers giving a statistical error range of plus or minus 3%). It showed 73% support the single desk. Further, 69.3% believe AWB should maintain the monopoly, and 69.5% believe the company has been “unduly victimised”, compared with other international companies named in the food-for-oil scandal. Whatever the Cole royal commission’s finding, a big majority of growers would be against ending the monopoly, or even handing over operation of the single desk to the Wheat Export Authority. [21.04.06]

Nats lack of talent showing: The Nationals cannot afford to ignore what the wheatgrowers want. If they fail, it will greatly increase the risk that with the retirement of John Anderson, his prized seat of Gwydir will be lost to an independent. The party’s long term problem is a lack of talent as it struggles - following the defection of Julian McGauran to the Liberals - to rebut the constant criticism it is just another branch of the Liberals. This is what is driving Joyce. Compared to the Nationals when it was dominated by Doug Anthony, Ian Sinclair and Peter Nixon (let alone the McEwen area), the party is a weak reed indeed. The Nationals lack of firepower became more apparent with the departure of Tim Fischer. Now it is led by Mark Vaile, who was the object of widespread media scorn and derision after his appalling performance in the witness box of the Cole commission. His memory problems were laughable, but it is no matter of mirth for voters to realise they have such a second-rater as deputy PM, and in charge of the key Trade portfolio. [21.04.06]

Peter McGauran snubs own party: Vaile is backed in Cabinet by lightweights, Peter McGauran - Agriculture Minister, and Warren Truss - Transport Minister, both vital portfolios to the Nationals. There are reports of mounting criticism within the party of Vaile as he attempts to put behind him the damage inflicted by Julian McGauran’s traitorous ratting on the Nationals. Peter McGauran, the only Minister the Nationals have outside NSW and Queensland, refused to attend the recent Victorian Nationals state conference. This was an appalling mistake. The state Nationals in Victoria are struggling to make an impression, and didn’t need such insouciant treatment from McGauran. His brother’s ratting should have made it imperative for Peter McGauran to turn up at the Victorian conference. Peter McGauran’s failure to attend was an insult to his party. [21.04.06]

Siding with Woolies against growers: Speaking from the US (where he was when the above conference was on), McGauran told The Australian - “I will be exploring new and emerging marketing opportunities and increased market access to North Asia, on behalf of Australia’s embattled citrus, wine-grape and stone-fruit producers.” Come off it. He could have done this just as well after the Victorian conference. In any case, such work is in Vaile’ portfolio, not the Agriculture Minister. McGauran’s solicitude for fruit growers is in marked contrast to his actions in rejecting their view of how the proposed Horticultural Business Code, a mandatory code covering the domestic trade in fruit and vegetables, should work. One of the objectives of the growers in pushing for the code was to reduce the market power of Woolworths and Coles in dealing with individual growers. McGauran has decided to do what Woolworths and Coles want, and exclude them from the reach of the code. McGauran justifies this on the basis that the supermarkets are retailers, not wholesalers. Growers reject this, saying Woolworths and Coles are omnipotent in the market and are far more than just retailers. Their agents operate in the wholesale market, and the supermarkets also cut out the wholesale middlemen altogether by dealing directly with growers. [21.04.06]

PM’s Papuan problem: On Thursday of last week, after giving evidence to the Cole Commission, Howard went on to announce at a press conferenence new and tougher measures to keep refugees from our shores. It says something for Howard’s honesty when he told those present the new policy had nothing to do with the 42 West Papuans granted shelter in Australia. Really, it had everything to do with the Papuans. At one stroke Howard was trying to ease criticism of the decision coming from Indonesia, and at the same time, he was throwing another issue into the ring to divert the media focus on events at the Cole commission. The PM is certain to have problems with backbenchers over the move to ship Papuan asylum seekers off to ‘Pacific solution’ camps for processing. Those assessed as genuine refugees will go to unnamed third countries, as well as Australia. How often is Howard going to go to the well by asking Helen Clark if New Zealand will take Papuan asylum seekers? It is not clear what would happen to those not assessed as refugees. Would they be forced back to West Papua into the welcoming arms of the Indonesian army? [21.04.06]

Backbench restive: Philip Ruddock is telling government backbenchers not to go public about their concerns. Yet these MPs would have surely picked up the vibes from their electorates that what Howard is proposing is most unpopular. He was able to demonise the Muslim boat people before the 2001 election (after all Peter Reith said there would be terrorists among them). Yet he can’t demonise Christian Papuan refugees fleeing Indonesian oppression. Newspoll this week reported that 76.7% of respondents favoured “self determination for the people of West Papua”, including the option of independence. A mere 5.2% were against. Indonesia is still demanding the return of the 42 refugees. Howard simply can’t do this, nor should he. No doubt the Liberal Party has been doing its own polling on the issue, which is probably why this week Howard was taking a less appeasing line saying Australia had nothing to apologise for, and indeed it hasn’t. Australia is not at fault here. The problem is all with Indonesia, and Howard will get nowhere by appeasing Jakarta. [21.04.06]

Kelly’s weird outburst: Meanwhile, there has been a maladroit and strange outburst by De-Anne Kelly, parliamentary secretary to Mark Vaile. She has warned “soft-shell” Liberal MPs calling for a more compassionate approach, that northern Australia wants the West Papuan refugees sent home. How’s that for a bit of Jakarta appeasement? In an overtly racist comment she said of the Papuans - “We don’t want them here, they are trouble makers.” Howard should ask her to resign and go to the backbench if she wants to criticise the Government decision to allow the 42 Papuans asylum. It is also time Kim Beazley made clear where he stands. Last week he was talking about using a Coastguard to head off Papuans before they reached Australia. The truth is, Australia has no refugee problem, and the expensive and inhuman Pacific solution should be abandoned. The boat people reaching our shores should be processed in Australia, just as asylum seekers arriving at international airports are processed. [21.04.06]

ALP must stall on uranium: It seems Rio Tinto will just have to be patient: it will not be able to open up its Kintyre uranium deposit in WA for some years. As Inside Canberra reported last week, there is every reason Kim Beazley should forget about Labor’s uranium policy until next year when the National Conference meets at the end of April. Press gallery hacks may chide him for not showing ‘leadership’ on the issue, but they don’t understand the problem. One is new WA Labor Premier, Alan Carpenter, who is in a difficult position. At the last election his predecessor, Geoff Gallop, promised there would be no new uranium mines in his state. Carpenter can’t just junk this because John Howard wants him to. The news from inside the Carpenter Government is that the Premier believes he can’t go back on the Gallop promise, even if the National Conference abandons the clearly anachronistic policy of no more than three uranium mines. Carpenter has a commendable approach to pollies promises, believing he can’t abandon the no-new-mines policy until he takes the issue to the next election in 2009. [21.04.06]

Tebbutt’s seat an issue: There is another compelling reason for Beazley to keep quiet, the forthcoming NSW election. The Iemma Government believes that if the three mines policy is abandoned before the NSW state election in March, it could lose two traditional seats - Marrickville and Balmain - to the Greens. There are heaps of basket weavers (as Paul Keating once described environmentalists in Balmain) in these two seats. Marrickville is held by Carmel Tebbutt, Minister for Education and wife of Beazley’s shadow environment minister, Anthony Albanese. He of course is a staunch supporter of the present policy which Martin Ferguson (head of the Ferguson left faction) is not. Some of those favouring the Ferguson approach derisively dismiss the no-new-mines policy as the ‘BHP uranium policy’. BHP operates Olympic Dam, the largest uranium deposit in the world, and good for 60 years. Whatever happens to uranium policy, BHP shares look good for a long time into the future. [21.04.06]

People and Events: DFAT is to review the operations of the Export Finance and Insurance Corporation (EFIC) - a self funding statutory Corporation providing finance and insurance services supporting Australian exporters and overseas investors where the private sector won’t help. Submissions by 21 April. Contact Chelsey Martin (02) 6261 1111. [21.04.06]

From the Gallery: Journalists at yesterday’s appearance of Alexander Downer at the AWB inquiry were surprised how both Commissioner Cole and counsel assisting, John Agius, were prepared to shield the Foreign Minister from robust questioning by counsel for AWB executives. When Downer was pressed on whether he had carried out his duties to ensure no bribes were paid, Cole ruled a question out of order. Agius also interrupted to object to the questioning. It appeared to journalists that Cole was making it clear he did not have the power, through the terms of reference, to inquire into the manner in which ministers carried out their duties. Cole can make findings of fact that Downer’s department did not pursue AWB and accepted its word it was innocent, but he can’t criticise Downer’s actions as a minister. This of course is what Labor has been saying all along. Kevin Rudd made the point that former AWB CEO, Andrew Lindberg, spent four days in the witness box, compared to a few hours by Downer and Mark Vaile. Exactly what sort of treatment John Howard will get if he goes into the witness box will be watched with the closest of interest. [12.04.06]

Iraq wheat market threat: An outcome of the war in Iraq is likely to be a partial or complete loss of Australia’s wheat market in that country. Once the dominant supplier, the outlook for Australia is now bleak. The most serious development yet in the oil-for-food scandal came from Washington. Five Democrats who sit on the Senate Agriculture Committee have asked US trade chief, Rob Portman, to investigate whether AWB had broken any American or international trade rules. In this mid-term election year for Congress, the Republicans in Congress can be expected to support the Democrats in pursuing the clear breach by AWB of UN rules in the oil-for-food trade. It doesn’t matter what Commissioner Cole in his report makes of the evidence given by Howard, Downer and Vaile. If 70% of wheatgrowers and Australians generally believe (as polls have shown) the Howard Government knew all about the bribes to Saddam, why wouldn’t Washington have the same opinion? [12.04.06]

Chalabi no help to Australia: US Wheat Associates (the wheat lobby) will be pushing Congressmen to play hard ball with Australia if the Howard Government refuses to dump the AWB wheat export monopoly. Such pressure could lead to the Iraqi Government being reluctant to buy wheat from any Australian grain trader, let alone the AWB. In Iraq’s deputy Prime Minister, Ahmed Chalabi, the American’s have a powerful ally. Once out of favour with Washington, he is now back in favour. The Melbourne Age reports it has seen documents which show Australian officials in 2004 believed Chalabi was the source of information that implicated AWB in the oil-for-food scandal. Last month, in an interview with The Age, Chalabi said - “I am sorry to say that AWB has not played a positive role in Iraq. They were complicit in Saddam’s thefts, they helped to keep corrupt Baathist officials in place after the liberation ...” The deputy Iraq PM is closely following the Cole Commission, and you can be certain so is US Wheat Associates. [12.04.06]

Growers new monopoly scheme: The Grains Council of Australia has proposed a variation on the monopoly. Chairman, Murray Jones, said change was “inevitable” and the industry should help drive the process rather than have change imposed. The scheme is to remove the monopoly power from AWB. The power over veto of exports would be in the hands of a new body called Australian Wheat Associates (AWA). Yet, this would be owned and totally controlled by growers. Obviously this would be unacceptable to the Americans, and no doubt, Dr Chalabi. [12.04.06]

Shadow of Tampa looms over relations with Indon: Had it not been for John Howard playing the race card in the lead up to the 2001 children overboard election, relations with Indonesia, now so fraught in the aftermath of granting Papuans asylum in Australia, would have been better. Out of the blue in 2001 Howard persuaded a majority of voters that Australia had a major problem controlling the flow of those seeking refugee status in Australia. Australia didn’t then and doesn’t now have a refugee problem. Most of the rest of the world would happily swap their refugee problem for ours. Howard used the Tampa incident to play up the threat of boat people. The slippery Peter Reith averred there were terrorists among them. The Pacific solution was devised with Howard swearing none of the illegals would set foot in Australia (in the end most did). Then Howard made a big deal of getting Indonesia (the world’s largest Muslim country) to assist Australia in stopping Muslim refugees coming to Australia. [12.04.06]

Jakarta angry and confused: With much prodding from Australia, the Indonesians did cooperate in exchanging information on the operations of people smugglers in Indonesia. The Indonesians would have been forgiven for believing Howard had a very tough policy on boat people engaging in so-called queue jumping: getting refugee status ahead of those seeking entry to Australia now in refugee camps abroad. It is not surprising then, that the President of Indonesia (now dubbed SBY by the English media) felt aggrieved when the 42 Papuans fleeing Indonesian oppression in Irian Jaya were granted asylum after they reached Cape York by canoe. If Howard had been a lot less relaxed about the boat people (as was Malcolm Fraser and Labor when they began to arrive as refugees from the Vietnam war and Communism) Indonesia would still have been unhappy about the Papuans, but would not have felt Australia had pulled a double cross. [12.04.06]

Future awful for Papuans: Now, the relations between Australia and our biggest neighbour are certain to be tense for a long time to come, since SBY is most unlikely to rein in the Indonesian military who are so cruelly oppressing Papuans. Howard asserts a majority of Australians support Jakarta’s sovereignty over the Papuans. Maybe, but that won’t last if the oppression continues. Beazley (who supported Howard on Tampa, and also supports Indonesians sovereignty) is stupidly trying to score political points. He is going on about the Government failing to have a coast guard to cut off the Papuans from sanctuary in Australia. A big majority of Australians are happy that they arrived and were allowed to stay. [12.04.06]

ALP wants High Court win for Govt: Kim Beazley would not admit it but Federal Labor would be advantaged if the High Court challenge by the Labor states to the Work Choice legislation failed. Firstly, it would have the immediate political advantage of Work Choice creating uproar around Australia right up to the election. The Cowra abattoir case is only the beginning. Secondly, it would allow a future Labor Government to reverse all of the Howard legislation. Thirdly, it will greatly add to the dominance of Canberra over the States, a concept always welcome by a Labor Federal Government. 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 Choice on the basis of the Commonwealth’s Corporations Power (S. 51 - xx of the Constitution). [12.04.06]

Threat to powers of states: 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, and corporate government entities such as Western Power and the Water Corporation were all incorporated and could be regulated by Canberra. Craven said the Corporations power was never meant to apply so universally to activities involving Corporations. The States, he added, had only a one in three chance of winning the case. Would the cheer leaders for the Work Choice legislation - ACCI and the Business Council and their members - welcome such outcomes as outlined by Craven? Its worth recalling Inside Canberra (5 August 2005) reported on the hostility of the HR Nicholls Society to the Work Choice legislation. [12.04.06]

Even HR Nicholls cranky: Ray Evans, President of HR Nicholls, said he rejected centralising IR in Canberra. Instead, said 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.” Evans continued - “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.” The Cowra meat works affair has been a disaster for the Howard Government. Kevin Andrews at first appeared to be leaning towards justifying the abattoirs sackings and re-hirings at $200 a week less. Our take on it is that John Howard stepped in and inspectors from the Office of Workplace Services were despatched to Cowra to ‘explain’ to the employer exactly how the provisions of dismissal for ‘operational reasons’ worked. Yet, neither Howard nor Andrews can say whether or not the employer was acting unlawfully. [12.04.06]

‘Operational’ sackings for court: Andrews claim that the Cowra outcome showed how well employees were protected by Work Choice is patent nonsense. If it had not been for the Cowra sackings getting a big run in the media, nothing would have happened. All of which shows the dangers of throwing together complex legislation on the run. Work Choice should have been the subject of a Green Paper and then the follow-up White Paper, setting out the intentions of the legislation, followed by an intensive Senate Committee inquiry. This didn’t happen with Work Choice because John Howard wanted it his way and only his way. The settlement of the Cowra dispute only puts off the day when the courts will rule on dismissals based on operational grounds. If this happens before the election (highly likely) and the courts rule in favour of the employer in a test case, it will be bad news indeed for the Government. [12.04.06]

Polls bad on IR: The latest Newspoll is bad news for Howard. Labor is still in front two-party preferred with 52%, to the Coalition’s 48%. (Two weeks earlier it was Labor 53%, Coalition 47%, but that looked to over-state the Labor lead). Newspoll also shows that 30% of respondents believe they will be worse off because of the IR legislation, and only 14% believe they will be better off. The really bad news is that 14% of Coalition voters believe they will be worse off, and 5% believe they will be a lot worse off. If even 3% of Coalition voters switch their support to Labor in an election it would be all over for John Howard. Also bad news for the Coalition was the finding that 22% of Coalition voters believe Work Choice will be bad for job creation. [12.04.06]

Press Gallery hounds Beazley: Kim Beazley is receiving a hammering from the Canberra press gallery, again not on an issue of direct importance to ordinary voters. He was given a hard time over his “lack of leadership” only recently because of his failure to ensure Simon Crean did not face a challenge for pre-selection. All this caused uproar in Caucus between the Lathamites and the Beazley supporters, which has still not faded away. Now journalists want Beazley to show “leadership” in getting rid of Labor’s now anachronistic policy of only allowing three uranium mines to operate in Australia. Beazley, when asked what his view was, replied correctly that it was a matter for the National Conference of the party next year. This led to a journalist asking wasn’t there “a clear and present danger” that your refusal to state your own position will cause your leadership ability to be questioned. (The answer is ‘yes’, if press gallery journalists keep telling their readers this is the situation). Beazley preferred to talk about proliferation. [12.04.06]

Beazley’s uranium view irrelevant: It should be remembered the internal debate in the Labor Party in the seventies and eighties on uranium was a cause of great heat within the party and endangered Labor’s prospects of defeating the Fraser Government. The three mines compromise at the 1982 National Conference put the issue to bed and cleared the way for Bob Hawke’s victory in 1983. That Beazley is not keen to open this up again at the moment when he has two good issues running for him - oil-for-food and IR - is understandable enough. And whatever Beazley or anyone else in the Labor Party says right now is irrelevant to the future of uranium mining. Should Beazley come out now and say he will be doing his level best to dump the three mines policy at the conference, it will immediately cause uproar in Caucus and be bitterly resisted by the Albanese Left faction. [12.04.06]

WA Govt bound by promise: Although Martin Ferguson is speaking in favour of a review of the policy, there will be some in his Left faction that disagree. In any case, the issue of opening more mines involves the Labor Premiers of Queensland, South Australia and WA. Peter Beattie is all for it, as is Michael Rann. But the new WA Premier, Alan Carpenter, is in a difficult position. At the last election his predecessor, Geoff Gallop, promised there would be no new uranium mines in his state. Carpenter can’t just junk this because John Howard wants him to. Maybe Beazley is more timid and given to prevarication than other Leader’s of the Opposition (such as Whitlam). But he is not unique - remember Howard in the eighties. Leaders of the Opposition always have trouble keeping good order in the party room. [12.04.06]

Abbott muddled on Medibank Private: Just why the Government wants to sell Medibank Private is not at all clear. Nor do we know how it will be sold. Here is Tony Abbott’s effort to explain on AM last week - “It’s easy to whip up people’s fears (about higher premiums) but I don’t see any justification for them. Any change will presumably make Medibank Private responsive to a wider range of people. We know that the average private business is pretty responsive to its customers, pretty responsive for the people that it deals with and I’d just ask people to consider - do they get the best service from the private sector, or do they get the best service from the government sector? And I think it’s by no means clear that people always get the best service from the public sector or from government-run business.” He appears confused and is hardly convincing in view of Medibank Private being the dominate player in the market with three million contributors and 29% of the market. [12.04.06]

What will the sale rules be?: The major concern is that if Medibank Private is sold, it should be as it stands and an existing player (HCF, MBF) be barred from purchasing. Only in this way can the existing level of competition remain. Should it be broken up into, say, separate state identities, competition would be severely diminished. Jack Waterford, in The Canberra Times, suggests existing members of Medibank Private could be entitled to reserves of the insurer. “If British legal experience is anything to go by there has not been a demutualisation, or sale of a profit-making insurance company where those mounting class actions have not secured a very healthy settlement from the supposed owner of the reserves of shareholders funds.” At this stage the Government has produced no argument for the sale, let alone what will happen to the funds. They are not needed to pay off Government debt. Surely they would not go into the Future Fund to pay public servants’ pensions. [12.04.06]

Open up health insurance market: If the Government proceeds with the sale, it should tip all the money (some $1 billion) into public hospitals. Victorian Premier, Steve Bracks, has urged Howard to use the money to create a national “health infrastructure fund” to modernise hospital equipment and infrastructure. And while it is at it the Government should completely open up the private health insurance business to market competition. The first step would be to dump the 30% tax rebate on insurance premiums (40% for the over 65s). Should the Government want to keep the rebate as a welfare measure, it should be subject to a strict means test up to say $60,000 of gross family income. Commonwealth control over premiums would be abandoned and any insurer could offer cover providing they met the prudential standards required by the regulator, the Private Health Insurance Administration Council. The billions saved every year should be put into public hospitals. [12.04.06]


From the Gallery: If Kim Beazley is looking for policies to differentiate him from the Coalition, what about advocating termination of the Life Gold Pass lurk. The qualifying rules for a Life Gold Pass when MPs retire is six years as a minister, or 20 years as other than a minister, or service in the life of six parliaments. Former Howard Government ministers, Peter Reith and Michael Wooldridge, qualified because of another rule allow-ing them to multiply their ministerial years by a factor of three to add to their non-ministerial service. So off they went to work in the private sector, with a gold pass and a generous pension. A gold pass entitles a retired pollie and his married spouse (no de factos, let alone same sex partners, are allowed by John Howard), to 25 first class return flights a year anywhere in Australia. No other occupat-ion provides for free retirement travel, except some private sector air or rail corporations. This is an unwarranted bludge. It is one of the perks responsible for the low standing of politicians, and as such should be abolished for all future retiring pollies except former PMs. If the pollies pension scheme can be chang-ed, so can the gold pass. [31.03.06]

Polls all over the place: The polls are all over the place and hard to interpret, yet this week’s Newspoll is probably as whacky as its last poll a fortnight ago. It then had Labor crashing to a terrible position in the polls. The two-party preferred outcome was 53% Coalition, to 47% ALP. This looked to be an over-statement of the damage done by the pre-selection controversies in Victoria. Inside Canberra commented - “Labor should be able to rise again in the next few polls. If it doesn’t - and the internal sniping continues - the party is headed for defeat, possibly worse than in 2004, and will be facing another ten years in the wilderness, with Peter Costello as the next PM.” [31.03.06]

Newspoll results hard to follow: Sure enough, according to Newspoll, Labor has come roaring back in the latest poll, where the two-party preferred situation is 53% Labor, to Coalition 47% - a direct reversal of a fortnight earlier. This also looks an over-statement, this time of how well Labor is doing. With the Commonwealth Games swamping all other issues, there is no reason to believe in two weeks Labor could get its primary vote to where it now is of 42%, with the Coalition on 41% (and the Liberals only 37%). Oddly enough, both Howard and Beazley slightly increased their satisfaction rating, and as usual Howard is miles ahead as preferred PM. ACNielsen had Labor slipping, but still it was 50% each, compared to the February poll of 52% ALP, to 48% Coalition. Morgan has the two-party preferred as 51% Coalition, to 49% ALP. [31.03.06]

Average of polls suggest parties close: Average the three polls and it works out two-party preferred as 50.7% ALP, to 49.3% Coalition, which means they are virtually level pegging, and is probably the right call. Most interestingly, ACNielsen reported very little change in the community attitude to the Government’s “Work Choice” legislation, with 58% opposed, only 22% in favour, and undecided/don’t know at 19%. None of the three polls reflected the media concentration on the issue when the legislation became operative last Monday. Nor had the ACTU TV ad campaign, which started last Sunday, had time to bite. It is increasingly looking like IR is the biggest danger to Howard, particularly if the economy should slip before the next election. [31.03.06]

ACTU has resources to out-gun Government: The ACTU will be pouncing on every instance of workers being disadvantaged by the legislation between now and the election. The Government can be outgunned in the propaganda war. Unions can run mini-campaigns against the legislation in every town, city and suburb throughout the nation organised by union officials. As Inside Canberra forecast, Kim Beazley does not propose to follow the advice of Simon Crean and remove Stephen Conroy from his role as deputy Labor Leader in the Senate. Nor does he propose to turn the faction system on its head. And rightly so. The Lathamites should give up attacking Beazley either overtly or covertly. The Victorian pre-selections are over and the party should move on. Beazley told Caucus on Tuesday - “We all bear responsibility . . . I bear responsibility”, for what he termed “the recent difficulties.” Beazley wants everyone in Caucus to behave decently to one another, which is a big ask. The core problem for Labor is that most in Caucus don’t appear to believe the next election can be won. If they believed in a victory, the leading lights would be looking forward to becoming ministers rather than brawling among themselves. [31.03.06]

Oil cos. win over servos: The Government has sold out the interests of small business people running the retail petrol industry in favour of the big four oil companies. After almost ten years of struggle the oil companies have been handed everything they want in so-called “market reform”. Industry Minister, Ian Macfarlane, announced on Thursday legislation which has protected petrol station franchisees from the depredations of big oil, will be repealed. Up till now the Government has been foiled in introducing its pro-oil company scheme because of opposition by the Nationals, and Ron Boswell in particular. It appears Boswell has given up. The Macfarlane move was well timed as far as Barnaby Joyce is concerned. He has been in Antarctica for a month and won’t be back until the middle of April. Maybe he will stand up for the interests of servos and independents in the bush. [31.03.06]

Howard’s role is puzzling: Michael Delaney of the Motor Trades said - “Service station operators wonder where the benefits to motorists and the Government are in these proposed reforms. The only winners would seem to be the oil majors and the two supermarket chains.” Most puzzling, as Delaney suggests, is why the Government is doing this, particularly recalling John Howard’s background - his father was a service station operator in Sydney’s western suburbs. The PM has no reason to be grateful to oil companies. The Government is picking a fight with some 7000 servos and their families for no good reason. Certainly the motorist will get nothing out of the deal, and in fact handing the retail industry to big oil is no recipe for lower bowser prices. Caltex/Woolworths and Shell/Coles, through the shopper docket schemes, already control some 60% of the retail petrol market. [31.03.06]

PM under gun in Parliament: Howard had some trouble with Opposition questions on IR this week. For example, Labor’s IR spokesman, Stephen Smith, drew his attention to a statement by the President of the Australian Industrial Relations Commission, Justice Geoffrey Giudice (appointed by the Howard government), that the creation of the Fair Pay Commission would “be accompanied by a slowdown in the rate of growth of minimum wages; that is what the Fair Pay Commission is for.” Howard could only reply - “ . . . I don’t share his view and we shall see”. Smith also spoke of the 1252 pages of legislation and explanatory material for the changes and 5492 pages of regulations. Asked whether he agreed with Finance Minister, Nick Minchin, that the unintended consequences of this would be “mind boggling”, the PM simply said “No”. But this does point to the new batch of red tape being heaped on business - the demand from the government that employers keep, for seven years, detailed employment records of far greater complexity than is now required. So much for cutting red tape. [31.03.06]

No mandate for IR earthquake: The toughest question came from Kim Beazley, when he referred to Howard’s statement launching of the Coalition’s IR policy in the last election campaign. When asked by a journalist if he would reduce the number of allowable matters in awards and agreements the PM replied - “ . . . we don’t at this stage . . . have proposals to do so because they’ve worked out pretty well . . . ” In fact, the then 20 allowable matters, said Beazley, had now been reduced to five. Howard was careful - “The answer I gave that the honorable gentlemen has quoted was a perfectly factual response and no promise has been broken.” Howard is in fact saying he didn’t mean to reduce the number of allowable matters before the election, but he now does. Beazley very effectively got over the point that there was no mandate of any description flowing from the last election campaign which could be applied to the massive changes of Work Choice. [31.03.06]

The Oz bashes Howard: John Howard must be wondering what Rupert Murdoch has been smoking. The Murdoch “quality” flagship in the nation, The Australian, has been as tough as any newspaper on the Government throughout the Cole inquiry. It surpassed itself on Wednesday, with the paper being led by the headline - “Howard has known wheat inquiry’s Cole for 50 years.” It then proceeded to retail how, five days before Howard announced Terence Cole would head the inquiry into the oil for food scandal, they both attended a university law school reunion for the 1961 class of graduates from Sydney University. The Australian went on about the dinner at Darcy’s restaurant (in Paddington) and how, because of Howard’s presence, there was a full security sweep, including sniffer dogs checking under tables. [31.03.06]

Top silk questions Cole’s powers: Also quoted in The Australian was one “ well placed source” who said - “If you’re suggesting that Howard wanted a tame commissioner (which is what the story was all about), then you picked the wrong bloke. Cole will always play it as it comes.” Also on page one was another hurtful item for Howard: a legal opinion obtained by the ALP from Bret Walker SC to say that Cole lacked the power to investigate the role played by ministers. Howard cleverly says that if Cole wants to examine whether Commonwealth officers (including ministers) “acted illegally”, he will expand the terms of reference. He won’t expand the terms of reference to include ministerial incompetence or a breach of duty (which are not unlawful). In a letter to Kevin Rudd, Cole (through the solicitor assisting the inquiry Glenn Owbridge) says - “However, it would not be appropriate for a commissioner to seek amendment of the terms of reference to address a matter significantly different to that in the existing terms of reference.” However, Cole goes on to say - “It is of course, open to the executive government to change the terms of reference.” [31.03.06]

Heat on Downer, Vaile: Whatever the hair splitting by Howard, the fact is that the terms of reference have been made deliberately narrow to preclude findings against ministers. If Cole produces a report soft on the Government, it will look even more like a whitewash in the light of The Australian’s revelation that Cole and Howard were at a university reunion five days before Cole was appointed. The Australian in a withering editorial said of the Foreign Minister “The wheat-for-weapons scandal has claimed its first scalp - Mr. Downer’s credibility is crippled.” Downer might now regret sooling his press secretary, Chris Kenny onto The Australian and describing its reporting of the Cole hearings as “laughable.” The fact Downer and Mark Vaile have been asked to make statutory declarations in reply to questions from John Agius SC (counsel assisting Cole), and will most likely be called to give evidence, helps Howard argue that this proves Cole has adequate powers. If they emerge unscathed it will be a win for the Government. Yet it is risky. Counsel for the AWB will grill the ministers in attempting to prove the Government knew about the AWB bribes and therefore their clients could not be found guilty of defrauding the Commonwealth. Events have moved beyond the control of Howard, and that is always dangerous. [31.03.06]

Blair causes press swooning: It is so long since the Press Gallery has heard a good speech in the Parliament that there was mass swooning with the performance of the eloquent Tony Blair this week in the House. Oratory has disappeared in Australian public life, due to the pervasive demands of the electronic media for ten second grabs. Paul Kelly and others were gushing over the Blair effort. Blair produced the expected on Iraq - a statement of the need to hang on, and not abandon the Iraqi people. His own deceptions in persuading a fairly thin majority of British Labor MPs to accept the reasons for the war were swept under the carpet. There was no mention of Blair’s dramatic claim that Saddam could deploy weapons of mass destruction against invading troops within 40 minutes. This falsehood came fourth hand from a dubious source, and was not checked. It was Blair who also peddled the totally false assertion Saddam was seeking uranium in Niger (a falsehood Howard also repeated). [31.03.06]

When do we leave Iraq?: Blair repeated the line favoured by Howard: even if you disagreed with the need for the war, you must now agree to accept the outcome and support the continuing stationing of troops in Iraq. Neither Blair nor Howard can say when the invasion forces can be withdrawn, and what conditions would have to be met for such a withdrawal. Would it be when Iraq has a secure and secular Government capable of uniting the nation and sworn to the pursuit of Jeffersonian democracy? If so, it could be a long wait. The country is on the edge of civil war. The Americans and British cannot contain the insurgents. Before the war, Iraq was a sworn enemy of Iran, and a buffer against its power. Now there is the prospect of a Shi’ite dominated Iraqi Government being manipulated by the sworn enemy of the west, the Shi’ite theocratic government in Tehran. And a settlement of the Israeli/Palestinian dispute, which has been undermining the West in the Arab street for decades, is more remote than ever. [31.03.06]

Indon relations rocky: The general view in Canberra is Australia’s relations with Indonesia will be rocky for some time and could further deteriorate, particularly if more people make it to Australia from Irian Jaya. The Government had no choice but to grant temporary asylum to the Papuans, who fled Indonesian oppression earlier this year. As Inside Canberra said last month, unlike the boat people of the Tampa affair, there is a natural sympathy towards Papuans in Australia since the Second World War. And opinion polls say that (rightly or wrongly), a majority of Australians don’t particularly like Indonesians and this would be magnified by the dreadful sentences being handed out to stupid young Australians in Bali for drug running. The Papuans are manifestly supporters of the Free Papua Movement, and fear for their lives if they are returned. They did not come to Australia courtesy of people smugglers, but by their own courage and determination in canoes. [31.03.06]

Future of Irian Jaya: Fortunately, this is one area of policy where there is bipartisanship between all the political parties in Australia. This will be necessary in the future to sustain the decision to give haven to Papuans who make it here. Jakarta could settle things down if the Indonesian Army was prevented from engaging in brutal treatment of the local people, but that is not likely in the near or medium future. A campaign of abuse by Jakarta newspapers, aimed at belittling Australia and John Howard, does not auger well for Indonesian restraint in Irian Jaya. The Howard Government says it doesn’t contest that Irian Jaya is a sovereign territory of Indonesia (Menzies did), and Labor is supporting this line. Yet there is a strong independence movement in the country, and there is no telling what the long term developments may be. The Indonesians fear public opinion in Australia will turn against it, and demand independence for Irian Jaya as it did for East Timor. There are good grounds for such fears. The Menzies Government strongly supported the Netherlands in its resistance to claims by Indonesia for sovereignty over what was once Dutch New Guinea. Presidents Eisenhower and Kennedy sided with the Indonesians, and told Australia and the Netherlands to back off. Since the Indonesians lost control of West Timor, they have taken a hard-line with the Papua separatists, some of whom want to join a federation with Papua New Guinea - whilst others want full independence. In 1969, the Indonesians instituted a mock Act of Free Choice. A small number of hand-picked Papuans were taught a few simple pro-Indonesian phrases, and then told to repeat these in front of an audience. [31.03.06]

From the Gallery: For months Kevin Andrews has been issuing press releases on Labor’s pre-selection problems in Victoria. And he has kept it up even after Simon Crean was victorious. Andrews’ latest effort was a general rant against Kim Beazley. He accused him of failing to support any of the ‘reforms’ introduced by the government - hardly news. One assumes Andrews is putting out this drivel (at taxpayers expense), which is never reported in the media, as a means of displaying to the Liberal backbench what a feisty, front foot pollie he is. We have yet to note any press release of Andrews calling on Howard to intervene to stop the dastardly plot of Liberal factions to kick out Petro Georgiou from Kooyong. He could plead this is not allowed, as Victorian Lib rules say there shall be no public comment on pre-selection issues. Labor should adopt this. Easily the silliest press release for some time came from Andrew Robb, normally a sensible fellow. His release welcomed St Patrick’s Day. Apparently, as Parliamentary Secretary to the Minister for Immigration and Multicultural Affairs (Amanda Vanstone), he deems it his job to issue such trivia. Why would anyone be interested in his welcoming St Patrick’s Day? [24.03.06]

Cole report looms as threat to Howard: The report of the Cole Royal Commission into the AWB is shaping up as a political drama, the likes of which hasn’t been seen since the report of the Petrov Royal Commission in the fifties - which blew away any chance Bert Evatt had of winning an election. This time, the damage will descend on the Government. Whatever the finding of Terence Cole, it will be bad news for John Howard. From the moment of Cole’s appointment, the inquiry looked like a typical Howard fix. Obviously, the PM would select someone he thought was least likely to bring in a disagreeable report. After all, Terence Cole had given the Government just what it wanted with his report on the building industry. It was damning of the unions, and provided the Government with an argument to tightly constrain union powers in its Work Choice legislation last year. [24.03.06]

Volcker denied vital facts by Government: On top of that, Howard let Cole know that his Government was not guilty, and had been found so by the Volcker report. This is highly dubious now. The terms of reference given to Cole did not ask him to deliver any findings on the Government’s role in the scandal. True, Cole says he can investigate what the Government did, but he hasn’t the power to make findings, only to find facts. Yesterday at the hearing it was revealed Volcker was very unhappy with the lack of cooperation by Australia for over 9 months. The Prime Minister deliberately misled the UN and the Parliament when he said all relevant documents had been provided to Volcker. If Downer and Vaile, let alone Howard, don’t give evidence, the Cole report will be seen as less than searching. [24.03.06]

AWB lawyers demand Cole gets tough on Govt: The latest development is that AWB executives have made it clear they are not going to cop all the blame. Lawyers Terry Forrest and Lachlan Carter (acting for four AWB executives), told Cole last week the reputations of their clients had been damaged by media coverage of “inflammatory questioning.” They added - “By contrast, the government witnesses have been the subject of a far more superficial process. They have been treated very gently indeed.” Further, Forrest and Carter said Government witnesses had been “shielded” because, “it doesn’t suit the Commission and it doesn’t suit the case concept, the guilty hypothesis, that has underpinned the Commission’s approach.” On Wednesday, Lachlan Carter urged Cole to call “those ministers bearing ultimate responsibility for contract approval.” [24.03.06]

Will Cole be accused of a whitewash?: The tactic here is obvious: if Cole finds the Government knew of the AWB kickbacks and did nothing to stop them, then AWB executives and directors could hardly be charged with criminal offences of defrauding the Commonwealth. Experienced journalists who have covered the Cole inquiry from the beginning privately agree with the criticism of Cole. They don’t expect Cole’s report will be tough on the Howard Government. Yet this is Howard’s difficulty. Polls show 70% of voters agree with Kevin Rudd that Howard is a liar when he says the Government knew nothing of the AWB kickbacks. There is an ever increasing mountain of evidence to point to the high probability some in the Howard Cabinet knew long before the Volcker report what was going on. At the very least, a powerful case exists of Government ineptitude and impropriety in not properly investigating the known allegations - which provided clear signposts to AWB bribery. If Cole totally clears the Government of any wrong doing, his report will be widely viewed as a whitewash. It would be better than a guilty finding for Howard, but would nevertheless be very damaging. [24.03.06]

PM clever with IR concealment: John Howard is an excellent learner, as he has shown since the close call in the 1998 election. He went into the campaign promising the GST, and was lucky to survive. Beazley out-pointed him with 51% of the two-party preferred vote, to the Coalition’s 49%. Howard survived because of the massive majority bequeathed to him by Paul Keating in 1996. He was therefore most careful to keep well hidden his intentions on industrial relations reform in advance of the 2004 election. IR didn’t rate a mention. For example, the policy of freeing all employers with 20 or less workers from unfair dismissal obligations was not mentioned, because Howard’s plan - revealed after the election - was to extend this to 100 employees. If voters knew in advance of the election what they now know about Work Choice legislation, Howard would have been lucky to win, even up against Mark Latham. [24.03.06]

Andrews smart on media control: Last Sunday, Workplace Relations Minister, Kevin Andrews, released hundreds of pages of long-awaited regulations which tell the real story of how Work Choice will work. As journalists had no time to digest this mass of material, Andrews strode confidently to a stand up press conference in Melbourne - well away from the Canberra press gallery where there is considerable knowledge about IR. Yet even in Melbourne, some cheeky journo asked him - “Why have you decided to announce this today, in the middle of the Commonwealth Games? (and after two state elections) Is this the original timetable?” Andrews replied - “Yes, this is our timetable,” which no doubt it certainly was. Andrews like nearly all of Howard’s ministers, are adept at media control. [24.03.06]

Minister is IR dictator: Employers and workers must be somewhat puzzled as they start to come to grips with what Work Choice is all about. It was sold by Howard and Andrews as a system which would get the Government out of the way, and allow workers and employers - freely - to work out workplace relations which best suited their mutual interests. It has turned out that the very reverse is true. The regulations give Andrews extraordinary new powers to intervene in negotiations between workers and the boss. For example, he can in some cases terminate enterprise bargaining disputes. He can also intervene in just about any industrial issue that comes before the Australian Industrial Relations Commission, even where parties to a dispute ask the Commission to help them resolve their differences. And the Commission is obliged to send daily, weekly and quarterly reports to Andrews to tell him what it is doing. Workers and employers cannot come to an agreement by which the employer will extend unfair dismissal protection to workers. This is banned. [24.03.06]

Tele warns workers on sack: John Howard would have hated the splash given by the Sydney Daily Telegraph (his favourite paper) on Thursday to a story with a blaring headline - “No one safe from the sack”. The Tele said - “Major firms including Coles Myer, Sony and NRMA have been told they can sack employees under the Government’s new work place laws without worrying about unfair dismissal.” Despite unfair dismissals remaining for employees of firms with a staff exceeding 100, big business can still sack anyone out of hand for any business reason. The Tele quoted workplace consultants, Ben Gee, who said dismissal for “operational reasons” was a catch all which had “slipped under the radar.” It might have slipped under the Tele’s radar, but the ACTU knew all about it, and it was reported in the broadsheets - and by Inside Canberra. Kevin Andrews, when confirming that indeed big business could sack workers out of hand, said if a worker believed he or she was not genuinely fired for an operational reason, the worker could still take an unfair dismissal case to the IR Commission. Well that’s reassuring. All you have to do is hire a QC to match the legal guns that Coles Myer or Sony would have on hand. There was no attempt by Andrews to justify this attack on workers’ rights in favour of large companies. [24.03.06]

ALP triumph in SA - Tas elections: What does Simon Crean, Julia Gillard, and the other Lathamites in Federal Caucus, have to say about the terrible beating taken by the Liberal Party in last weekend’s Tasmanian and South Australia election? According to them, the ALP is in terrible shape - mortally weakened by Kim Beazley’s failure to stand up to the factional warlords. Yet, when it comes to election results in the States, the party seems to do okay. In fact, its the Liberal Party around Australia that is in terrible shape. It is struggling for funds, and cannot match Labor in this department. Hence, there is every prospect that the hopeless Ieema Government will be returned next year, when it faces an even more hopeless NSW Liberal Party. The Millennium Forum, the Libs fund raiser, has been too timid to put on a fund raising lunch or dinner for Opposition Leader Peter Debnam, until now. Next week, some 700 executives will be asked to pay only $150 a head (way below the asking rate for a Labor lunch) for lunch with Debnam. [24.03.06]

Democracy not needed for success: It is also worth noting the level of democracy in a political party does not equate with electoral success. The Liberals are less democratic than Labor: they don’t have a platform devised by those elected to the Labor conference which (at least nominally) is binding on the parliamentary party. Nor can the Liberal Party room overturn a decision by a Liberal Cabinet, as can the Labor Caucus. Yet with one man rule from John Howard, Labor has lost four successive elections. The party with the most democratic constitution of all, and which gives undoubted power to the membership, is the Australian Democrats. Yet it is finished. The Democrats are supposed to be most powerful in South Australia, yet in Saturday’s election, this most democratic of parties garnered a mere 12,000 first-preference votes. Compare this to the 160,000 collected for the independent, Nick Xenophon, of the ‘No Pokies’ Party. All of which points to the reality of federal politics. If John Howard were suddenly to fall under the proverbial bus, the Liberals would be in deep trouble. Peter Costello would be anything but a certainty against any Labor Leader at the next election. [24.03.06]

Playing politics with Defence: Dr Brendan Nelson shows every sign of doing a ‘Reith’ as new Defence Minister. The slippery Peter Reith when he occupied the portfolio, saw it as he did all others - as a political tool to advance his ambitions. Nelson has already shown a liking for a similar approach. An example was his performance recently at RAAF Base ‘Richmond’ when announcing the purchase of up to four new Boeing C-17 Globemaster III transports. Addressing top RAAF brass and senior executives in defence industry, he prefaced his substantive remarks as would have a Sgt Major - “As you were. Relax. That sort of thing”. Then came the political spiel in welcoming “my friend Kerry Bartlett, who is the (Liberal) member for Macquarie, and I say to all the RAAF service men and women here that you couldn’t have a better representative for your interests and that of your community than Kerry Bartlett.” [24.03.06]

Dr Nelson’s self praise: The electioneering for Kerry Bartlett was next followed by some grovelling to John Howard. All of which was totally off-key for the event at hand. The Australian Defence Force should be above the game of politics. It is there to serve the Government of whatever political colour. Reith and Howard did their best to turn it into an arm of the Liberal Party in the lead up to the ‘children overboard’ election, admittedly with some success. Finally (and well after the 2001 election), the truth about the children overboard affair came out from the then Air Vice Marshal Angus Houston (now Chief of the Defence Force). Dr Nelson seldom misses the opportunity to tell anyone listening what a great fellow he is. Thus, in his first major speech on defence policy last week, Nelson sailed in - “My colleagues describe me as being different, and I don’t mean that in a complimentary sense (ha, ha). One of the reasons for that is that I have always believed that at the heart of everything that we do is a sense of why. And too much of what I’ve seen in life, and indeed in Government, is the what.” What meaningless blather. [24.03.06]

An instant expert - after six weeks?: The Nelson touch in his new portfolio is no surprise. Recall that when he was Education Minister, he instituted a scheme of free flagpoles and Australian flags. In return for such generosity, schools had to provide a bronze plaque recording that the flagpole was the gift of the Commonwealth Government. Further, schools had to organise a flag raising ceremony, and the local Liberal MP had to be invited as guest of honor. If the electorate was held by Labor, then a Liberal Senator had to be invited. Having been Defence Minister for five minutes, Nelson is suddenly a noted authority on world politics, the US alliance, and has instantly mastered the strategic intricacies of the war on terrorism. Thus, although latest polling says a big majority of Australians favour bringing the troops home, Dr Nelson says it is our duty to remain in Iraq until the democratic process has been completed. [24.03.06]

Buying US compatible equipment: The purchase of the C-17s (at US$220 million a copy) is partly related to the Americans telling Howard that as much as Washington is grateful for the presence of Australian troops in Iraq and Afghanistan, they are not prepared to continue to fly them to such destinations in US transports. The giant Boeing aircraft carry heavy stuff - like the ‘Abrams’ tanks we are also buying from the US. Of course, these tanks will never be used in our region. They are, like the C-17s, the three air warfare destroyers and the F-35 Joint Strike Fighters, designed for use far from our shores in joint military actions with the US. These acquisitions declare to the world Australia has a new defence doctrine - not just for mainland Australia and the region, but expeditionary actions around the world. [24.03.06]

What does Beazley think?: Should the United States ever get involved in a war with China, the pressure will come from Washington for Australia to join in. And why not? - Howard is building up the ADF with equipment compatible with US Marine Corps, and to expressly facilitate joint (Coalition) operations. None of this is of course mentioned to the taxpayer. It’s about time Beazley, a former Defence Minister himself, started taking an interest in the direction defence policy has taken under the PM. What does he think about the value of the enormously costly equipment being purchased from the US? [24.03.06]

Luxury cars double taxed: Car dealers are pressing the Government to abolish the luxury car tax (LCT), a curious anomaly in the GST regime. When the 10% GST was introduced in July 2000, it replaced the 45% wholesale sales tax on cars. The Government then introduced a penal tax on luxury cars, which currently cuts in at $57,009. So in addition to the GST, luxury cars are slugged an additional 25%. Michael Delaney (of the Australian Automobile Dealers Association), says this is double dipping - a tax on a tax - and comes before state stamp duty is collected. He says the LCT is distorting the market, as shown by revenue collections from its application last financial year: they were $32 million below the Budget forecast of $330 million, and this in a year when record car sales far exceeded expectations. Delaney makes another point: this is the only “luxury” tax. No such tax is imposed on jewellery or on watercraft, no matter what their value. There is another issue - the tax falls particularly heavily on European cars. In short, it is a form of protection for local car manufacturers, so hardly lends weight to Australia’s arguments about how dreadful the Europeans are for subsidising their farmers. [24.03.06]

From the Gallery: Because John Howard talks so much to the media, he sometimes makes mistakes, such as his musing about his retirement. But his statement that he did not know whether Australia would continue as a monarchy after The Queen dep- arts, was not a mistake - he said it twice in separate inter- views with both the BBC & ITV. This on the very day Her Majesty opened the Games. Fervent monarchist, Tony Abbott, was upset - yet repub- licans were delighted. Abbott rushed to stem the tide. He commented many republicans were at this week’s Parliament House dinner for The Queen. So what - did he expect core republicans such as Peter Costello to boycott the dinner? On Wednesday’s ABC Lateline, Abbott was all mixed up. “It’s the institution (of the Monarchy) not the individual which really counts,” he said. In the next breath, the role of the indiv-idual came back into focus: “I am quite confident that were The Queen to pass on, and her successor occupy the throne, that there would be the same magic and same personal affection between - even Australians and our Monarch.” Magic - King Charles? Come off it Tony, Charles’ last visit was a flop. A republic is inevit- able. In part, that explains why the role of singing the part-birthday wish, part UK national anthem at the Games was given to a New Zealander. [17.03.06]

Crean’s gain is Labor’s pain: Simon Crean has not lost the knack of shifting the polls - downward. After two weeks of relentless criticism of the factions and Beazley by the Latham faction in Caucus - headed by Julia Gillard and Simon Crean - the outcome has been a big setback to Labor, which had achieved a lead over the Coalition in the two previous polls. Newspoll (taken last weekend) recorded a big turnaround. From a two party preferred lead of 51% ALP, to 49% Coalition, the assault on Beazley has produced Coalition 53%, to ALP 47%. The Coalition’s primary vote has gone to 41% (up 4%), while Labor has slumped to 35% (down 4%). [17.03.06]

Polls on “trustworthiness” look shonky: Beazley’s preferred Prime Minister rating also crashed to a hopeless 18% (down 9%), with Howard on 61% (up 8%). This might explain why Howard’s introduction at the Games was greeted with resounding applause. Howard hit the same low point as Beazley in 1988, prompting a notable Bulletin headline - “Why on earth does this man bother”. Newspoll could be over-stating the extent of the Labor slide. The Morgan poll (taken 25/26 Feb and 4/5 March) has Labor in a somewhat better position with a primary vote of 39.5% (down 1%), compared to the Coalition’s 43% (up 3.4%). Crean, after two weeks of attacks on Beazley’s honesty, has been rewarded with a significant slide in Beazley’s “Trustworthy” rating, as reported in Newspoll on Wednesday. Only 59% of voters believe he is trustworthy - a fall of 4% since the last such poll (November). But how valid is this? Howard’s trustworthy rating has risen by 3% to 53%. Given that 70% of voters don’t believe Howard knew nothing of AWB paying bribes to Saddam, Newspoll can’t be believed in saying Howard has gained in his trustworthy standing. [17.03.06]

Crean convinced of his own talents: Labor should be able to rise again in the next few polls. If it doesn’t, and the internal sniping continues, the party is headed for defeat - possibly worse than in 2004 and facing yet another ten years in the wilderness with Peter Costello as next PM. And all this because of Simon Crean’s determination to hang on. It was apparent from Crean’s appearance with his wife Carol on TEN’s morning talk show on Monday, that Crean believes he is still leadership material. Without the slightest sign of embarrassment, he proceeded to tell viewers that he was an outstanding political figure. This explains why the best result for Beazley would have been a Crean defeat in pre-selection. While there would have been much blood spilled, at least the party would have ultimately got over the loss of Crean. Now he remains in Caucus as a constant problem. [17.03.06]

Beazley faces big test on Budget tactics: If Beazley doesn’t make a better fist of responding to the May Budget than he did last year, the party will be aghast. But what can they do? As Inside Canberra reported last week, if Labor dumps Beazley and puts in a new leader, Howard would call an early election to prevent the newcomer cementing himself/herself as the alternative Prime Minister. In a gesture to Crean, Beazley says he will ensure a “fair dinkum” ballot in Caucus when the vote is next taken on election of shadow ministers (or hopefully) ministers. At the moment, the outcome is decided by agreement among the factions. One way a pre-arranged outcome could be avoided would be a ‘show and tell’ vote - each Caucus member showing his/her ballot paper to a Caucus colleague to show it was not a vote for the factional ticket. An alternative would be voting by a show of hands. As for getting rid of factions, forget it. Factionalism is inevitable in groups as diverse as the local tennis club, the boards of major corporations, or political parties. [17.03.06]

Aust-US free trade review: The first meeting of the Australia/US Free Trade Agreement Joint Committee - in Washington last week - to review the operation of the free trade deal, was a nil all draw. Yet it was a win for Australia in as much as we gave nothing away, particularly on earlier US demands relating to the Pharmaceutical Benefits Scheme. The US Trade Representative, Rob Portman, wanted Mark Vaile to agree to repealing the amendments to the Free Trade Agreement, which John Howard agreed to at the insistence of Mark Latham. The amendments were designed to prevent US drug companies ‘evergreening’ drug patents by drawn out legal processes. At the time, John Howard said they were “unnecessary”. [17.03.06]

Nothing doing on sugar: Nevertheless, they were necessary enough for BigPharm, the US drug lobby, to demand their removal. The Washington meeting was not a negotiating occasion. Vaile told the US side that Australia would not be repealing the Latham amendments. Portman agreed to consider giving Australia greater access to the US market. He won’t agree, and there is no likelihood of getting greater access through the FTA. The only hope is the WTO Doha round, as it is for other Australian ambitions in agricultural market access. But even there, the prospects are dim. The US & Japan are too pre-occupied with China to give any more time to agricultural trade and the EU plainly is not going to give any more. [17.03.06]

Foreign investment puzzle: It has taken a while, but the National Farmers Federation is catching up. As part of any free trade deal with Japan, it wants the Howard Government to extend the same treatment to Japanese investment in Australia as it does now to investment from the US. The NFF is keen for Japan to invest in Australia’s rural food industries. In February 2004, Inside Canberra advocated precisely that. As a result of the free trade deal with the US, the Foreign Investment Review Board threshold for reporting on US investment proposals was lifted from $50 million to $800 million. We said at the time, it was not tenable to treat investment from the largest source, the EU - and third largest, Japan - differently to US investment. (The 1976 Treaty of Nara provides that the Australian and Japanese Governments should treat each other’s investment no less favourably than investment from third countries). Because of the need to support massive trade deficits, Australia needs investment from any source it can get to keep the ship afloat. All foreign investment should now be treated in the same manner as that from the US, and we don’t need an FTA with every source country to do it. [17.03.06]

Fruit & veg marketing code: Inside Canberra reported (10 Feb) that Agriculture Minister, Peter McGauran, would be in the gun with fruit and vegetable growers if Woolworths and Coles were not subject to a mandatory code of conduct covering the wholesaling of fruit & vegetables. We can report the supermarkets have won - they will not be subject to the Horticultural Business Code (which could be unveiled in a few weeks) on the grounds they are not wholesalers. The code is ostensibly designed to lay down rules for the fair treatment of growers. John Anderson, in the last election campaign, promised to implement within 100 days a mandatory code covering the wholesaling of fruit & vegetables. Yet a year and five months have passed, and the code is still to be released. The Central Markets Association of Australia, says the code “risks anti-competitive behaviour if it does not apply across the entire horticultural industry”. Association spokesman, Andrew Young says - “If the Government decides only to regulate the central markets, it will be handing a competitive advantage to the major retailers in this country and the ability to pursue an even greater slice of the market than they already enjoy.” [17.03.06]

Trouble looms for Nationals: Growers also anticipate that supermarkets will put forward their membership of the Retail Grocery Code of Conduct as a reason they don’t need to be in the Horticultural Business Code. Yet the Retail Grocery Code is voluntary, not mandatory, and growers say as such it is not worth the paper it is written on. We reported in February news from north Queensland that unless growers there are satisfied with the mandatory code, they will not support the Nationals at the next election. Growers complain supermarkets by-pass traditional wholesale markets. The Federal Department of Agriculture estimated in 2004 that 70% of fresh food and vegetable supplies in supermarkets came from contract arrangements with major growers. Peter Darley, an apple grower in Orange (NSW) and chairman of the NSW Farmers Association horticulture committee, says this is sending the ‘family farm’ concept to the wall. He believes that unless something is done, 900 of the 6000 fruit & vegetable growers in NSW will leave the industry. [17.03.06]

Media winners and losers: The big winner from the proposed changes to the media legislation will be Murdoch and Foxtel. James Packer will be both a winner and a loser. Murdoch and Packer control 25% each of Foxtel, and Telstra has 50%. The changes to anti-siphoning laws upon introduction of “use it or lose it” provision governing sporting rights held by free-to-air TV, should mean more access to top sports for Foxtel. NINE has been a constant transgressor of the use it or lose it principle. For example, NINE in the past has had rights to Wimbledon tennis and the ‘Ashes’ series cricket in England, with both events occurring at the same time. The result was inadequate coverage of both events. NINE has Rugby League rights, yet normally shows only two club games a week - Friday night and delayed coverage late Sunday afternoon. So Packer could find himself losing sport on NINE to Foxtel, of which he owns 25% . The ban on internet TV stations is to be lifted, yet here the major players, NINE, SEVEN and TEN will be in a strong position to dominate this sector because of their access to content. [17.03.06]

Stokes brown nosing fails: The Canadian Canwest controllers of TEN could buy the station outright with the ending of foreign ownership restrictions, and perhaps could then on-sell it to Murdoch. A clear loser has been Kerry Stokes, with the refusal of the Government to allow existing free-to-air commercial stations to multi-channel. Stokes’ remorseless brown nosing of Howard hasn’t helped. He looked a winner only a few weeks ago when, at the Sydney bash to celebrate Howard’s ten years in Government, Stokes moved the vote of thanks to the PM. Murdoch could expand regionally as well, buying up TV stations in regions where he didn’t own the local paper. Its proposed the ACCC will have a big role in all of this, and it would probably refuse to allow Murdoch to own both the local paper and a commercial TV station - since it would dominate the advertising business in a region. The worst aspect of the Coonan blueprint is that it will strengthen the power of the moguls, rather than encouraging further diversity. [17.03.06]

Horror!!! -ads on ABC: It is becoming more apparent than ever what a disaster it was for Australia when Paul Keating allowed Rupert Murdoch to buy out the Herald & Weekly Times - despite the fact that Rupert was then a foreigner. Murdoch thus controls 75% of the circulation of Australia’s capital city daily and Sunday papers. The losers will also be journalists, which is a body blow to diversity. The key to diversity of opinion is maximising the number of editors and journalists. Under the Coonan model, newsrooms will be amalgamated when, for example, TV takes over radio. Perhaps the worst horror of all, is that Coonan is encouraging the ABC Board to discuss advertising options - at the same time she says she does not favour them. This is serious, and Howard immediately said he wasn’t in favour. There would be backlash against it by the ABC’s vast audience, particularly in the bush, which relies on the national broadcaster to provide them with quality TV and radio. Nor would Howard be unaware that existing proprietors would be hostile to the idea of the ABC carving out a large slice of a fixed total advertising pie. [17.03.06]

Telstra disaster continues: Sol Trujillo has been a disaster for the Government ever since he took over running Telstra. The Government, as the majority shareholder, could send him and his amigos packing, along with the man who appointed Trujillo, chairman Don McGauchie. It would be an extreme step, and probably would mean Telstra could not be sold in the life of this Parliament. Yet, that is how it is beginning to look now. Trujillo is considering a High Court challenge against government regulations, and he is obviously not going to give up fighting the regulation of Telstra by the ACCC. The Government cannot allow him to succeed, as this would fracture the Coalition. Surely Barnaby Joyce would not have given his Senate vote for the full sale of Telstra if he knew then what he knows now. [17.03.06]

Change in approach needed: Independent, Peter Andren (Calare, NSW), says Telstra has campaigned against government regulations since Trujillo took over. This, he says, is an indication of how shaky is the government’s guarantee that the sale of Telstra will not disadvantage country people. All of which illustrates that Barnaby Joyce was sold a pup by the Government in believing that millions would be paid out each year to Telstra to look after the bush. There is no guarantee this can be delivered even in the short, let alone the long, term. The Government should delay the sale so that it could be re-jigged. All of Telstra’s retail business and shares in Foxtel and other outfits should be sold to the private sector, with the Government-owned Telstra owning the infrastructure - access to which would be open to all at a price decided by an arms length body such as the ACCC. As things stand, there is no prospect of Telstra being sold at other than a firesale price, and it is not in the interests of taxpayers and shareholders for this to happen. [17.03.06]

New law on smash repair: The Iemma Government is coming under pressure to support legislation to break anti-competitive behaviour in the smash repair industry. In the next fortnight, independent Richard Torbay (Armidale), will put up a bill outlawing the “steering” of car owners looking for smash repairers to insurers preferred repairers. NRMA Insurance CEO, David Issa, has already announced the preferment system will be abandoned. He claims that only about 3% of customers would want to use their own repairer. This is contested by NSW Motor Traders’ Association CEO, James McCall. He points out that a Suncorp/GIO survey last November showed that 90% of NSW motorists wanted freedom of choice on selection of a smash repairer, and 91% wanted it in Queensland. Further, McCall points to the NRMA Insurance decision to pay back to motorists the $69 penalty it had imposed on those who insisted on making their own choice of smash repairer. [17.03.06]

Small biz issue in NSW: McCall says the amount the NRMA has estimated it will be paying back suggests that 5% of motorists were prepared to pay the penalty for choice. Obviously, if there is no penalty, the percentage of those wanting to make their own choice would be much greater than 5%. McCall says the Torbay legislation which imposes jail sentences and penalties of up to $165,000 on insurers who used preferred repairers or parts, will be supported by the Opposition and all seven independents. He adds, a number of Labor backbenchers have told him they want the legislation to pass. McCall claims small business all over NSW will be watching the Iemma Government. The major worry for small business, he believes, is not taxes or industrial relations. Rather it is the depredations of big business on small business, be it Woolies and Coles on suppliers, or car manufacturers on dealers. He predicts the Iemma Government will face small business anger at the next election if it does not support the Torbay bill. [17.03.06]

From the Gallery: Kim Beazley no doubt knows how the political master, John Howard, handles nasty pre-selection contests in the Liberal Party - he doesn’t get involved. Howard has never publicly supported a candidate for pre-selection in his life. Behind the scenes he could be applying the pressure, but he is never embarrassed by the outcome. Hence, in the looming battle in South Australia for the Liberal Senate vacancy, caused by the departure of Robert Hill. Howard will say nothing. Off camera, the PM could easily work against Hill’s choice, Simon Birmingham. Like the Labor Party, there are factions in the Liberal Party. Hill has been the leader of the moderates in SA, a role Amanda Vanstone will now assume. Alexander Downer and Nick Minchin dominate the Right faction. Their candidate for the Senator vacancy is Corey Bernardi, who harks from an old money family. Once having made the Liberal Party aware of his preferred candidate, the PM doesn’t like his view being ignored. Howard quietly supported Stephen Mutch - the sitting Liberal in Cook (NSW) - to win pre-selected against Bruce Baird, in 1998. Baird was once con-sidered a likely Liberal Premier in NSW. He won against Mutch and the PM has kept him on the backbench ever since. [10.03.06]

Beazley will survive Labor brawling: Kim Beazley will take Labor to the next election, and will probably lose. This is only one of a wide range of scenarios being discussed in the Labor Party this week, yet is as good as any. Not that the Coalition can count on a victory. A lot could happen over the next 12-18 months. Realistically, there is no Bob Hawke waiting in the wings to take the leadership from Beazley. Various teams are being talked about, but purely in speculative fashion: Kevin Rudd as Leader and Julia Gillard as Deputy, or Wayne Swan as Leader and someone from the NSW Right as deputy (perhaps Tony Burke). The media have reacted to the stoush brought on by Simon Crean as if Labor is the only party which has pre-selection dramas (see From the Gallery). [10.03.06]

Lots of noise about challenge to Crean: To kick out Beazley for such alternatives would guarantee a Coalition win. John Howard would pull on an early election before a new leader could get settled. If in the highly unlikely event Howard stands down and Peter Costello becomes PM, there will be no early election, and a Coalition victory would be less likely - whether or not Beazley remains as ALP Leader. The first point to make about Simon Crean is that had he not been challenged in pre-selection, nothing would have been heard from him about how dreadful the factions are, and he would not be demanding that Stephen Conroy stand down as Deputy Senate Leader. [10.03.06]

Bracks quite happy with pre-selection challenges: The criticism of Beazley is silly. He has been accused of not “supporting” Crean by tapping Conroy on the shoulder and saying hands off Simon. Conroy would have ignored him because, among others, Bill Shorten and Steve Bracks were quite happy with challenges to sitting Victorian MPs, including Crean. Had Beazley gone public and demanded Crean remain the Member for Hotham, he would have been seen as a weak leader when he was ignored by the Victorian Right. Beazley could hardly have gone in to bat for Crean alone. He would surely also have had to demand that Bill Shorten not challenge sitting front bencher, Bob Sercombe. Then Beazley would have been open to the charge of keeping much needed new talent out of Caucus. [10.03.06]

Conroy less than popular : It‘s a bit much for Crean to say that his leadership was “undermined” by Conroy. True, Conroy was working against Crean, but he was not on his own. The lead up to Crean standing down from the leadership was marked by extreme hostility towards him by the Canberra press gallery, and in Caucus, a sense of despair about his performance. In the end, Crean became the only Labor leader since the war denied the opportunity to take his party to a general election. There is no doubt Conroy is the most unpopular member of Caucus right now. Many share Crean’s obvious hatred for him. Yet the fact remains, he was elected by Caucus as Deputy Senate Leader, and only Caucus can remove him. Beazley is not going to waste time on the Conroy issue. He might well privately tell Conroy to go easy on factional warfare, but no more than that. All this has given Julia Gillard the opportunity to make numerous TV appearances, all designed to tout herself as a potential leader. She made a mistake on NINE, saying she would support Beazley “until the next election”. This allowed Beazley supporter, Senator George Campbell, to point out the logic of her statement meant she did not believe Labor could win the next election. Campbell said Gillard should go to the backbench and let someone who believes Labor can win replace her as shadow minister. [10.03.06]

Gillard’s leadership ambitions: Most Caucus members, irrespective of their faction, believe Gillard’s media performances this week were all about preparations for a future leadership tilt. Without being sexist in the slightest, a big majority of Labor MPs would agree that Caucus - neither now or in the future - would ever elect as leader a childless, single woman from the Left. They believe many women voters would be turned off Gillard as leader because she is so obviously pushy. The Gillard idea of Labor adopting the Liberal system of the Leader (and not Caucus) selecting the front bench lacks support. Beazley has rejected this as authoritarian, and indeed it is. This system has made Howard not so much a party Leader, but an emperor in government - who does as he chooses (especially with a neutered Senate). [10.03.06]

Power of Caucus: Labor does not need a front bench of ‘yes’ men and women, which is what the Gillard proposal would produce. She could retort that this is what you have anyway with the factions deciding who goes on to the front bench. If so, Caucus could consider a compromise. After the Leader and Deputy Leader in both chambers have been elected, the Leader could then chose who would fill the first six portfolios (or princiapl shadow portfolios). Caucus (or rather the factions) would decide the rest. By this means the Leader would be assured of getting what he/she considers the six best talents for the Cabinet. If you drill down, the excitement over the Crean pre-selection is all about the bitterness still within Caucus between those who opposed the election of Mark Latham, and those who supported him. [10.03.06]

Beazley policy tactics weak: Crean claims that, among Conroy’s many sins, is his role in undermining Latham. No, Latham undermined himself to the great cost of the party, and then then profited from his experiences by heaping contumely on so many in Caucus in his highly successful Latham diaries. The best approach Beazley can take is to do what he is saying he will do - get on with the task of defeating the Howard government. The more successful he is seen by his Caucus colleagues in so doing, the better for Labor. He needs to devote a lot more attention to policy, and to the tactics of selling them. He did not do this with his presentation on Tuesday of party policy on global warming. It was quite a good speech and someone obviously had done some solid work on it. But it was completely lost in the maelstrom of Labor backbiting. Surely some of Beazley’s advisers must have known that the day after the outcome of the Crean pre-selection, was the very worst time to release new policy. [10.03.06]

Minchin embarrasses on IR: While Centrebet punters have a good record in political predictions and have the Coalition as odds-on favourites to win the next election, they obviously could be wrong. Industrial relations remains a potent issue. Further, there is no knowing where the Cole Commission will go. The scoop by the ABC’s AM program on Wednesday, on the address by Nick Minchin to the HR Nicholls Society, is deeply embarrassing to the Government. Minchin said the Government would seek a mandate at the next election for another wave of IR reform (thus highlighting the fact - roundly highlighted by unions - that Howard had no mandate for the industrial relations legislation pushed through the Senate last year). [10.03.06]

NSW Libs dump on PM: The mandate would be to target “the whole edifice” of the IR structure, including the abolition of awards and the Australian Industrial Relations Commission. Minchin apologised to HR Nicholls members because the Government had not gone far enough in reform, adding - “The fact is the great majority of Australian people do not support what we are doing on industrial relations. They violently disagree.” This is a gift to Labor. Minchin tried to recover with the absurdity that he was only giving his “private view”. Howard’s fervent denials of any intention to go further on IR is of little value. Voters know all about Howard’s “never ever” promises. It’s hard to believe Minchin, an experienced politician, was so frank at a semi-public occasion, believing there was no danger of a leak. To make things worse, the NSW Liberals are dumping on the PM and supporting the Iemma Government’s legislation to keep nearly 200,000 public servants out of the Federal system. Polling has shown the NSW Libs how unpopular the IR changes are. [10.03.06]

Wheat farmers insist on single desk: Despite the steady flow of damaging evidence against AWB Ltd in the Cole inquiry, an overwhelming majority of wheat growers want the single desk system to continue. The Nationals cannot countenance an end to the monopoly, and further, it will be difficult for them to agree to monopoly power being removed from the AWB, and given to the Wheat Export Authority. Yet there could be dramatic developments ahead. An extensive survey conducted by The Land newspaper of 1002 wheat growers (a sample of 3.5% of total wheat growers - yielding a statistical error range of +/- 3%), showed 73% support for the single desk. Further, 69.3% believe AWB should maintain the monopoly, and 69.5% believe the company has been “unduly victimised” compared with other international companies named in the food-for-oil scandal. [10.03.06]

Strong support for AWB: Support for the retention of the export monopoly among non-AWB shareholders was 60%, compared to 76% for shareholder growers (81% of all respondents held AWB shares). The Land survey showed that WA backbencher, Wilson Tuckey, who is proposing a private members bill to remove the export monopoly from AWB, has little support in his home state. The survey found that 82% of WA growers want the monopoly maintained, and 76% of WA growers believe AWB has been unfairly victimised. The Land also had what it described as a “leaked” copy of a survey of 400 growers by AWB - taken in early February - which showed 75% support for the single desk. On these figures, Tuckey and other Liberal backbenchers demanding an end to the single desk will have to back off. Inside Canberra has suggested in earlier issues the AWB cannot be assured of returning to the Iraqi market, and this was reinforced by comments Mark Vaile made this week in a telephone hook-up news conference from Washington. [10.03.06]

Iraq market looks lost: The Trade Minister said it was entirely up to Iraq if it deals with the AWB in future, and “we need to respect that”. This had to be read against the background of a Sydney Morning Herald report earlier this week from Baghdad. The SMH quoted Iraq Deputy Prime Minister, Ahmad Chalabi, as describing AWB’s control of Australian wheat exports as “crazy”, adding that “the new deal is the new way”. He was of course referring to the insistence by the Iraq Grains Board that AWB could not bid for the wheat tender, which closed last week. Instead, three Australian grain traders won part of the tender. If this is to be a permanent feature of the Iraq market, the AWB’s absolute export monopoly cannot be retained. Should growers insist on the AWB alone operating the monopoly, then Australia would have to give up the Iraq market. Worse still, other Middle East countries might tell Australia they would also like the freedom to buy from other than AWB. In short, the concept of an AWB world monopoly would then be shattered. [10.03.06]

Govt’s economy failures: The Howard Government has an unjustified reputation as an incomparable master of economic policy. Its failures are becoming more apparent as the years roll on. Only last Thursday in the House, besieged Trade Minister, Mark Vaile, was bragging about Australia’s export performance. Vaile said that in 1995 exports were worth $93.9 billion, and in 2005 they had jumped to $176 billion. Very little of this had anything to do with the Government, such an increase (over 11 years), is hardly surprising, given the unprecedented boom in commodity prices. Four days later came the bad news: in January Australia recorded its worst ever monthly trade deficit of $2.7 billion. And this in the face of the best terms of trade in over three decades. Vaile is also proud of the free trade deals he has negotiated with the US, Singapore and Thailand. Yet in the first seven months of 2005/06, the trade deficit with each of these countreis had blown out compared to the same seven month period a year earlier. [10.03.06]

Cloud over China market: In total, the deficit with the three abovementioned free trade agreement countries increased by $2.5 billion. It may be early days to be judging the value of these trade agreements as negative, but these initial figures are anything but encouraging. This is not surprising, certainly in terms of the over-sold US free trade deal. When it was negotiated, such authorities as Professor Ross Garnaut (of the ANU) warned that the outcome could be negative for Australia. The Government and Vaile insist that the boom in exports of resources will continue, and that the trade deficit will eventually narrow. More independent authorities are sceptical that the China boom will last much longer. Ironically, it is said the sky high resource prices which are so benefiting Australia, will next become a factor slowing the growth of the Chinese economy. High prices are driving cost inflation - thus cutting into Chinese profits - which in turn deter continuing high rates of investment and output. [10.03.06]

Beijing plays tough on prices: The respected Colleen Ryan, the Beijing correspondent for the Financial Review, this week reported on outcomes of the current National People’s Congress (the Chinese rubber stamp ‘parliament’). Among the messages from the NPC, was the squeeze on margins within the manufacturing sector, which was becoming a serious problem for its ongoing health. The next day, it was reported the Chinese Commerce Ministry was threatening to block Australian iron ore shipments, and cap prices being paid to BHP and Rio Tinto. This is no surprise. Inside Canberra reported (March 2005) comments by Ma Xiuhong (China’s Vice-Commerce Minister) at a Beijing conference on the proposed FTA with Australia. She said the 71.5% hike in the price of Australian iron ore (clinched that month) had damaged trade relations between the two countries, and Beijing wanted to avoid a repetition. We commented this was said at the same time China was insisting Australia should recognise it as a market economy in advance of the FTA negotiations (which Australia duly did). [10.03.06]

Housing policy no help: Peter Costello is proud of his housing policy, and compares mortgage rates under Labor of 17%, to around 7.3% now. He says the First Home Owners Grant Scheme of $7000 (introduced by Howard in a panic in 2001 when he looked like losing the election), had assisted 760,000 Australians. What he doesn’t say is that low interest rates - combined with the first home owners grant and the halving of the capital gains tax - spurred the disastrous housing bubble in Sydney (and to a lesser extent, in Melbourne), whilst contributing mightily to the demand for imports. Investment was accordingly funneled into speculative residential construction, and away from productive industries with export potential. Howard once said he had not heard any home owner complain about the huge increase in the value of their home. Tell that to young couples seeking to buy a home. The Sydney Daily Telegraph (John Howard’s favourite paper) last month published a front page shocker, which the PM would not have liked. Under the screaming headline DEBT SENTENCE, the Tele reported on Housing Industry Association research findings - “The Sydney property market has become so expensive that most young couples will never pay off their mortgage within their lifetime. And housing affordability has plunged to the same dire level as during the recession, with crippling prices now matching the punishing 17% interest rates of the late 1980s as an obstacle to ownership.” [10.03.06]

From the Gallery: Political parties are making a welter of squeezing money out of the business community via expensive dinners. The Liberal Party circulated invitations to the standard targets for John Howard’s 10th anniversary bash pitching: help the PM celebrate his achievements, and for the privilidge, pay a mere $10,000 (table of ten). Last week there was a big fund raiser at the Hilton in Sydney for NSW Planning Minister, Frank Sartor, with Paul Keating as the guest speaker. Tickets for this were $250 a head, which is not bad for a lowly state minister. Lobbyists almost invariably respond to such demands for cash believing the parties keep a list of those who respond to invitations, and those who don’t. There is no suggestion of immediate retribution. But lobbyists believe consistent failure to turn up would be noted. Best not to risk getting offside with the parties. The political parties insist those who kick into party funds are not gaining any advantage. This defies logic. Why give money away for nothing? Most lobbyists believe it is better to be safe than sorry. There’s no point in being seen as a non-supporter of the Howard Government, and what Sydney developer would refuse kicking in for the Planning Minister? [03.03.06]

Costello’s tax study a stunt: Peter Costello’s tax study of international tax laws and tax rates is an obvious stunt. The information sought from the two-man study team is already at hand in Treasury. Costello needed only to have phoned, and Treasury would have had the required information on his desk in jig time. Chris Evans, Professor of Taxation at the University of NSW, in a letter to the Financial Review on Tuesday, hit the nail on the head saying the study - “has the potential to set back the serious personal tax reform agenda in Australia for a number of years, as the Treasurer will be able to announce that we have had a review, and everything has been fixed.” Evans added, the last serious review of tax in Australia, the 1975 ‘Asprey’ Review, took many years of consultation and analysis. The Ralph Review in the late 90’s, even though ad hoc and partial, still required over two years of work. [03.03.06]

Big end of town silent on fudge: Having spent over 12 months demanding a major overhaul of the tax system, the big end of town is silent. Where are their vehement public protests against the Costello stunt? Why hasn’t the Business Council or the Australian Industry Group torn into the Treasurer for his fudge of serious tax reform? Forget about ACCI, which bills itself as the top national body representing business. It is complicit in the stunt with its CEO, Peter Hendy, being one of the two-man study team. Also complicit is the other review appointee, Dick Warburton, chair of the Board of Taxation. They have been charged with reporting by 3 April, obviously so some gesture towards tax “reform” can be included in the 9 May Budget. Contrary to reports in the media, the study’s Terms of Reference do not ask for recommendations on tax changes. [03.03.06]

PM shows he is running Treasury: Interestingly, early on Tuesday morning the Prime Minister called Sky News down to his office for a TV interview which went to air at 8.30am. The purpose of the interview was to squash a front page yarn in The Australian, speculating on a flat tax regime emerging from the two-man study. The PM said there would be no flat tax as it would be unfair to the lower paid, and that was that. Howard was not waiting for the Costello study to conclude - thus providing a reminder that it is Howard, not the Treasurer, who takes the big decisions in all Government portfolios - including the Treasury. Labor didn’t make much out of all this. Beazley commented Australians were over- taxed, which they aren’t by OECD standards. The only tax cuts which should be considered are those which would encourage those on welfare to find some work. There is now a huge disincentive in the form of high effective marginal tax rates to those on welfare. Australians are generally not over-taxed, but they are lacking more comprehensive services and infrastructure - which should be provided ahead of tax cuts. [03.03.06]

Polls a damper on Howard’s celebrations: Newspoll and ACNielsen delivered unwelcome messages to Howard this week as he celebrated a decade in office. For the second consecutive poll, Newspoll has the Coalition behind Labor. Further, 70% of Australians believe John Howard is a liar. To be more precise, ACNielsen (in the Fairfax press) said this week that 70% of respondents to its poll - who had read or heard something about the AWB oil-for-food inquiry - believed the Federal Government knew about the kickbacks to Saddam. This is the same percentage reported in a survey last month by The Land newspaper who do not believe the PM’s fervent (and sometimes indignant) claims he and his ministers knew nothing of the kickbacks. Howard insists the AWB was asked about allegations of bribery, and denied them. Since AWB had a high reputation, that was the end of the matter as far as Howard was concerned. As Inside Canberra said last week, the PM’s central problem is that his sobriquet of “Honest John” has long since worn out. [03.03.06]

How Howard keeps winning: So why do people keep voting for him, and on balance are likely to do so again at the next election? The answer must come back to the standing of those involved in the profession of politics, which is abysmal. All politicians are regarded as tarred with the same brush: congenital liars, greedy and in the game for themselves, which is not only sad but makes for a citizenry interested only in what direct impact politics has on their lives. The national good seems to rate a distant second. Nothing better illustrated this than Howard’s brilliant device in the last election campaign of making the baseless claim that home mortgage rates would undoubtedly go higher under a Labor Government. Enough voters with mortgages either believed him, or were not prepared to take the risk on Labor, and thus the Coalition won a handsome victory. [03.03.06]

Wheat poses real danger to PM: According to ACNielsen, 56% of voters now oppose Australia’s involvement in Iraq, and 48% are against sending troops to Afghanistan. Yet, Iraq and Afghanistan are not front rank issues in Australia. Maybe the same will apply to wheat, yet there is a big difference: if Australia is seen to have lost all, or a large part, of the valuable Iraqi market, this will touch a lot of Australian hip pockets - and not only those of wheat growers. There are even more voters involved in the substantial infrastructure of the grains business - from country towns, to transport, to fertiliser producers who would be hurt. With a big majority of growers fully in support of single desk exporting, no matter what the findings of the Cole inquiry, there is a danger also lurking here for Howard. [03.03.06]

US may scuttle monopoly: Despite the assertions of a great victory for Mark Vaile reaped as a result of his trip to Baghdad, the reality is he gained absolutely nothing. Last week, Iraqi Grains Board head, Khalil Assi, repeated Iraq had no problems buying Australian wheat in the future, so long as it was not supplied via AWB whilst the Cole inquiry was underway. This is exactly what was repeated to Vaile. John Howard, in Parliament this week, could not handle a question asking what was the difference between what the Iraqis said last week, and this week. The United States may yet effect an end of the single desk Australian export monopoly by an unexpected route. If 70% of Australians don’t believe Howard that the government knew nothing of the AWB rorts, then he could hardly expect the US Administration and Congress, nor the Government in Baghdad to believe him. [03.03.06]

American pressure on Baghdad: The US undoubtedly is putting pressure on Baghdad to permanently blackball AWB wheat, and insist to the Howard Government that it will only buy from other Australian grain traders.The US could put it to the Iraqis that they have been lied to by the Australian Govrernment about providing $290 million in kickbacks to the hated Saddam, and that 2000 US troops have died delivering a Shi’ite dominated elected Government. US pressure could also endanger other markets such as Pakistan and Saudi Arabia. Australia could hardly continue a wheat monopoly which only operated in some markets, but not in the Middle East. This would mark the end of single desk trading. [03.03.06]

Keeping Olsen oiled: The media has gone overboard with reviews to mark 10 years of the Howard Government, which clocked in on Thursday. Alan Ramsey, in the Sydney Morning Herald, had a look at Howard’s appointment of 15 Liberal Party politicians to rewarding posts abroad. He solved what to many Howard watchers has been a puzzle: why has the PM been so generous to a failed former Premier of the least important mainland state of SA - John Olsen? He served briefly in the Senate before returning to state politics. An inquiry was held by an Adelaide QC into a deal between the Olsen Government and US-based Motorola Corp involving $240 million. The inquiry was scathing of Olsen, accusing him of “misleading, inaccurate and dishonest evidence.” In other words, he was a liar. Olsen denied the finding, cried and resigned. He did this within three weeks of the 2001 election, which was looking very tough for Howard. The PM was no doubt delighted when Olsen resigned, allowing South Australians to then concentrate on the Federal election. Howard won, and in the following year he appointed Olsen as Consul in Los Angeles for three years. When this was up, he appointed him to the even more lucrative and up market post of Consul-General in New York. It appears Olsen is guaranteed a lucrative government job as long as Howard remains PM. Would it be too cynical to suggest this was the outcome of a deal struck in return for Olsen’s resignation as Premier? [03.03.06]

Where Costello failed: Peter Costello puts three other of his achievements ahead of the GST - independence of the Reserve Bank; the setting of inflation targets; and reduction of debt. Just how independent the Reserve Bank has been is a matter of conjecture. Whenever there has been speculation an embarrassing rise in rates could be on the way, Howard, Costello and Nick Minchin have been on the sidelines trumpeting an increase is not necessary. History might reveal whether this pressure worked. The reduction in debt, of which Costello is so proud, is actually the blackest mark on his tenure as Treasurer. Howard and Costello became fixated about debt because they made so much of the $10 billion black hole deficit Beazley left Howard - this despite the much bigger debt in real terms Howard as Treasurer left Bob Hawke in 1983. [03.03.06]

Debt as a dirty word: Next came the debt truck. The then Coalition Opposition rolled this out to raise alarm in the community about the level of foreign debt (which has rocketed under the Coalition). This fixation led to the quite unnecessary burning and slashing in Costello’s first Budget in 1996. The reduction of Labor’s debt, most of which was properly incurred during the recession of the eighties and early nineties, was largely achieved by selling taxpayer-owned assets: Defence land; government buildings; the part sale of Telstra; and so on. The debt reduction was no achievement at all. As Labor’s Lindsay Tanner says - “Its easy to get rid of your mortgage if you sell your house.” Because of the political imperative to persuade taxpayers that debt is deadly, the Howard Government eschewed the well tried practice of providing long term government assets by borrowing. Instead, necessary infrastructure had to be funded from current revenue, and the Treasurer became the greatest tax collector in the history of Federation. [03.03.06]

NSW an example of debt aversion: Close to an election tax cuts, were preferred over the provision of services and infrastructure. Unfortunately for taxpayers, each state Labor government - having seen how debt aversion had been used so cleverly against federal Labor - adopted the same policy as Costello. This is why in NSW (and Sydney in particular), the incompetent Carr government brought on a crisis in hospitals and schools due to a lack of necessary spending. To deal with congestion in Sydney, the private sector was brought in to build highly profitable toll roads with proceeds going to the likes of Macquarie Bank. Rather than borrow for non-toll freeways owned by the state, Carr preferred to tax motorists through private tollways. Now, for God’s sake, there is talk in Sydney of levying a $10 a day congestion fee. All this with petrol at sky high prices, and with motorists paying 50c a litre tax in excise and GST. Yet, neither the Beazley Opposition nor the Iemma Government can bring itself to renounce such policies in favour of government borrowing for long term infrastructure and services. [03.03.06]

Qantas seeks shelter of ACCC: Qantas is pushing ahead with a strategy to get airport pricing back into the ACCC. A case in point is preparations for arrival of the massive double-deck Airbus 380. When the airports were privatised, the ACCC sought to retain control over pricing. It lost out, as the Government - wanting to maximise the sale price of airports - adopted what was called a “light handed approach.” The Sydney Airport Corporation (SAC) is to only provide short-term facilities for initial Qantas A380 flights (to start in the middle of 2007), and Qantas is happy to pay for this. After that, several hundred million dollars will be required for a major upgrade of the international terminal to deal with much larger numbers of A380s as all the big international airlines start flying their A380s into Sydney from 2009/10. [03.03.06]

Negotiations on A380 era stalled: Negotiations on funding this upgrade - between the SAC and the airlines, led by Qantas - are not getting anywhere, and SAC believes this is because Qantas wants to get the ACCC back as the pricing authority. SAC believes Qantas is making an all out effort on this. Even though the ground rules seemed clear when the airports were sold - ie: light handed regulation in return for big bucks for the Government - there is a loophole in the deal, namely, Part 3A of the Trade Practices Act. If a dispute emerges which cannot be settled, the ACCC can move in. Meanwhile, time is running on and SAC is concerned about not having enough time to provide needed A380 facilities. [03.03.06]

Crean on Govt pork barreling: Simon Crean, although fighting for his political survival with a pre-selection challenge, still had time recently to put out some interesting material on his shadow portfolio of Regional Services. He pointed out that four months after a devastating Senate inquiry into ‘Regional Partnerships’ made recommendations to clean up the mess, nothing has been done. With its Senate majority, the Government is most unlikely to do anything other than hope memories of the scandal will fade. The Howard Government has hurled millions of dollars into Regional Partnerships to buy votes in marginal electorates. One significant grant was to the Gunnedah Grains-to-Ethanol project in the electorate of the then Nationals Leader, John Anderson. Taxpayers tipped $1.1 million into this project, and it has yet to produce a single litre of ethanol. Another example was Coonawarra Gold Facilities, in Adelaide, which in February 2005 received $433,000 from taxpayers for a grape-seed oil venture. The company was wound up by creditors in December last year, and the plant was sold. [03.03.06]

Funds wasted in Eden: Then there is the scandal in Eden, in the Eden-Monaro electorate, a marginal seat held by the Special Minister of State, Gary Nairn. The Sea Horse Inn at Boydtown received $433,000 in 2000, and the electorate was promised 43 jobs by 2005. Over five years ago, the Inn closed for refurbishment and has still not reopened. Matilda’s Bakery was acknowledged by Nairn as a financial risk and could not secure a bank loan. Yet it received almost $1 million in 2000 and 48 new jobs were promised. The bakery closed in June 2005.The vessel, Spirit of Eden, was awarded $190,000 in 2000 and three new jobs were promised, yet it is no longer moored in Eden. Perhaps the biggest scandal is Beaudesert Rail (BR), which received a total of $5.7 million in grants and still has not traveled a single kilometre. The last offering - promised on 5 November 2001 - was a grant of $600,000. This was nearly eight months after an accounting firm, Lee Garvey, reported BR owed its creditors $1,244,644 and was technically insolvent. Following a Senate Committee inquiry (on which the Government Senators were in a minority), a long list of recommendations followed - including that the Auditor-General should audit the administration of Regional Partnerships grants. These recommendations have been ignored by the Government, no doubt because Government Senators on the committee reported it was all a political ploy, and there was really nothing wrong. [03.03.06]


From the Gallery: All Australian Governments are out to break the monopoly of the Royal Australasian College of Surgeons (RACS) to decide national surgeon trainee numbers. The Australian Health Ministers Conference (all state and federal Health Ministers) want the ACCC to look into the rights of the RACS. The states have a point. As they fund hospital training of surgeons they should have a say in the numbers trained. The OECD average of practicing specialists per 1000 population is 1.7. In Germany and Sweden it is 2.3, and in Australia only 1.2. The AMA says it is the States who are blocking extra surgeons because they are not providing enough money for training in hospitals. The doctors union is not keen, however, on changing the status quo as far as doctors are concerned. It resolutely opposes any expansion of medical treatment which can be undertaken by nurses and other health workers. This is in contrast to the current AMA support for Woolworths to establish pharmacies within its supermarkets in the interests of competition. Alan Ramsey on Tuesday clocked up 40 years service in the Federal Parliamentary Press Gallery. For decades he has been a much read columnist in the SMH. [24.02.06]

Wheat scandal getting out of hand: The Howard Government is struggling to maintain control of the Australian Wheat Board (AWB) bribery scandal. It is putting off the day of reckoning by asking critics to await the report of the Cole inquiry. It is hardly an answer to the outrage by wheat growers over the AWB’s failures. Cole’s report could be a disaster for the Government, but even if it isn’t, the central question remains: why did AWB get away with its illegal and deliberate trickery of the UN? [24.02.06]

PM’s veracity a problem: Howard’s central problem is that his sobriquet of “Honest John” has long since worn out. More than most Prime Ministers he has earned a reputation as a slick politician who can dance around the truth, but never be caught out telling an outright lie. As the evidence mounts every day from the Cole Commission of many warnings the Government had received about possible breaches of the oil for food program by AWB, it is becoming more difficult for Howard, Downer and Vaile to maintain the stance that there is no smoking gun. They simply accepted denials by the AWB, which had a highly respected reputation (Why?). As Inside Canberra has already reported, some 71% of respondents to a poll by The Land newspaper don’t believe the Government’s claim that it did not know of the AWB bribery of Saddam Hussein. [24.02.06]

Murdoch press gives Howard a caning: The PM was indignant about a banner page one headline in The Australian on Wednesday - “Everyone in Canberra knew” - and went on air to denounce the headline. The Australian hit back on Thursday - “It was skilful stuff: the Prime Minister defending himself against an allegation The Australian had not made. By denying a non-existent accusation, Mr Howard managed to bluff his way through the rest of the interview. As political theatre, it was hard to beat. As an explanation of why the Government ducked its duty to scrutinise AWB’s relations with Iraq at the highest level, it was a slippery stunt.” [24.02.06]

Delegation to Iraq a farce: Howard has made a complete goose of himself over composition of the delegation to Baghdad aimed at rescuing the Iraq market for Australian wheat growers. On Wednesday of last week (15 Feb), he announced that the delegation would be led by Mark Vaile, and would include AWB chair, Brendan Stewart. Prime Minister Howard further noted a current Iraqi Grain Board contract had been “deferred” because of arguments with the United States about price. He said the Government would “take advantage of the time available from this deferral” and the delegation would leave “as soon as possible.” He must have known then that Stewart had to attend the AWB annual general meeting in Sydney yesterday (then nine days away, as at the time of Howard’s statement). If Stewart was to go, he could not have left until today. In any event, Vaile’s father had also died - and was buried last Saturday - so the earliest the mission could have gone was Sunday, 19 February. [24.02.06]

Neat name change for Vaile mission: The urgency of the mission then disappeared, with news from Baghdad earlier this week that the wheat contract had been awarded. Australia was left out in the cold, and the wheat suppliers will be the US, Canada and the EU. The day after he announced the urgent mission to Baghdad, Howard replied to critics of the AWB being included in the delegation. He said it would be “illegal” for the AWB not to be represented, as it held the subject wheat in its pool. Now that the AWB won’t be going, the mission is being called a “government” delegation, so the illegality is removed by a label. Simple you see. Meanwhile, Vaile will depart in advance of Parliament returning to Canberra to sit next week. This will relieve him of question time, where he has been the Government’s weak link. Once it gets through next week, the Government will be free of Parliament until 27 March. [24.02.06]

Heffernan takes the good news to growers: John Howard - as Inside Canberra has forecast for some weeks - is not going to end single desk selling of Australian wheat. But the monopoly will be taken away from the AWB and exercised most probably by the statutory authority, the Wheat Export Authority. This became clear when Senator Bill Heffernan, the PM’s spear carrier, told growers at the Warracknabeal rally on Wednesday to stop worrying. The Government was not going to let them down, he said. Various authorities contend there would be an actual saving to growers if export competition was opened up. Allen Consulting says it would be up to $223 million a year. Andy Stockel, of the Centre for International Economic Studies, says it would be up to $360 million a year. [24.02.06]

Obscene subsidies in US and EU: In fact, how can anyone make an accurate calculation of what would happen should the single desk be abandoned? At least in theory, growers should surely be advantaged by such a monopoly. A huge majority think so. And Canadian growers are of the same mind about their single desk. If critics of the single desk are right (and it’s actually costing growers money), why is it that the US and EU keep hammering away with claims the export monopoly gives Australia an unfair advantage? Murray Jones, chair of the Grains Council of Australia, this week pointed out Australia’s competitors in the US and EU receive $140 to $170 per tonne subsidies, which they bank before their wheat sales cheque. The average net return to an Australian growers this year is likely to be $130 per tonne. [24.02.06]

PM on Muslim migrants: John Howard’s views on Muslim immigrants, published this week, were not masterfully timed as a diversion to take off some of the heat from the AWB scandal. Why? They came from an interview given two days before the 2005 race riots in Cronulla. At the time, Howard said of Muslim immigrants - “You can’t find any equivalent in Italian, or Greek, or Lebanese, or Chinese or Baltic immigrants to Australia. There is no equivalent of raving on about jihad ... that is a major problem.” The interview was given for a book, published by The Australian, to mark Howard’s ten years in office. The PM was quite happy this week to repeat such views. They don’t amount to a dog whistle against Muslims - more like a bassoon. Not unnaturally, the Muslim community wasn’t impressed. But controversial historian, Keith Windschuttle, thought the comments were just fine. In The Australian he wrote that Howard - in standing up to radical Muslims at home - was a role model for other Western leaders. [24.02.06]

Labor agrees with Howard: Labor hastened to agree ( no doubt believing most Australians would agree with the PM). Opposition immigration spokesmen, Tony Burke, said Labor welcomed Howard’s statement which was long overdue. Burke’s angle seems to be an attempt to make some strange political point about the Department of Immigration. Burke said - “Finally he’s (the PM) recognised that the Department of Immigration is one of the departments that’s relevant to national security.” He went on to refer to the deportation of Vivian Alvarez Solon and the detention of Cornelia Rau. “If you don’t know who you are kicking out of the country, you don’t know who you are letting in,” he said. Costello weighed in with an attack on “mushy multiculturalism” and repeated his view that if Muslims don’t like Australian law or values then they should get out. Allan Jones thought this was wonderful when he interviewed the Treasurer this morning. But will it appeal to Costello’s supporters in the Liberal party room? [24.02.06]

ALP leads on key issues: The latest issues polling by Newspoll perhaps explains why Labor is leading the government in polls. The top seven issues in order of importance are: Health & Medicare; Education; Economy; Welfare & Social Issues; National security; Leadership; and Industrial Relations. Respondents were asked which party would best handle these issues. The Coalition only won on two - Economy and National Security (albeit, by large margins - over two to one). Labor won on all the others decisively (except Leadership, on which respondents were not asked who did this best). Labor’s lead on Industrial Relations was 47% to 28% (with 25% other/none/ uncommitted). There is little evidence that Health & Medicare, Education and Welfare and Social Issues will be of any great help to the ALP in an election. Certainly, they were not significant in John Howard’s four election wins (except perhaps in 2004, when Latham lost votes for Labor by designating many private schools for funding cuts). [24.02.06]

Health & IR could be vital: Many voters would feel these issues don’t directly impact on their lives, or they don’t bother to discover the points of political contention involved. This could be different at the next election in the case of Health & Medicare - especially if hospital waiting times don’t improve, and the cost of Pharmaceutical Benefits Scheme drugs keep escalating. Labor’s lead in IR could be very significant if workers believe Howard Government legislation makes it easier for employers to pay them less, or offer worse conditions. Some 700 workplace agreements are to be renegotiated in manufacturing industry alone this year, and they are sure to lead to conflict. The US-owned Dana Australia has been the target for illegal union action over its proposal covering 300 workers at two plants in Melbourne. The company proposes abolition of rostered days off, a 20% pay cut for new employees, and a “modest” pay rise for existing workers if fully funded by trade-offs. [24.02.06]

Minimum pay case looms: Minister Neil Andrews appears to be nervous about the Dana offer, with his spokesman describing it as “an ambit claim.” [How does he know? The company would not be grateful in bargaining with workers to hear the Minister say, in effect, the company is bluffing]. Andrews should also be nervous about the first low pay case to be presided over by the new Fair Pay Commission (FPC). Everyone in the IR business knows the Government’s objective in taking minimum wage setting from the Australian Industrial Relations Commission was to slow the rate of wage growth. Just how much it will be slowed should become apparent with the first finding of the FPC towards the end of this year. [24.02.06]

Softening up low-paid: Meanwhile, it is also clear the chairman of the FPC, Ian Harper, is softening up the low paid to accept that the scope of any increase should take into account the interests of the unemployed. The low paid family struggling to make ends meet will not be easily attracted to the idea of them having to make further sacrifices to help someone else. For Howard, it would be a political disaster if the battlers came to believe they had been hurt by the new system. If IR does become a potent political issue, the threat of an ACTU campaign against the Coalition in marginal seats will be significant. The ACTU has more than $10 million to spend, and will use this cash for advertising in various forms of media - as directed by opinion polls. The details cannot be worked out, obviously, until the High Court rules on the validity of the Government using its corporation power for the IR legislation. [24.02.06]

Singapore owed nothing: Protecting Australian jobs was obviously a key concern for the Government with its decision to refuse Singapore Airlines access to the Sydney-US route. And so it should have been. Australia owes Singapore and its government-owned airline nothing. Having hung an Australian - despite the desperate pleas of the Australian Parliament - the autocratic Singapore Government (which is anything but a model democracy) is not the flavour of the month for many Australians. Singapore Airlines owes its success, when the jet age arrived, not to carrying Singaporeans to Australia, but to carrying Australians from Australia to Europe (via Singapore) when it was still a cheap place to shop. Whether Singapore would slash fares on the Pacific run is a matter for conjecture, as would be the benefits or otherwise to the Australian tourist industry. [24.02.06]

Qantas needs Aussie engineers: It would not benefit the local industry to encourage Australians to go overseas, and it is difficult to accept that - given the current value of the $A - the present level of fares are discouraging US tourists. It would be a disgrace if Qantas proceeds to export its maintenance work to China or Indonesia. Australian engineers over decades have been largely responsible for the airline’s outstanding safety record, and Qantas could expect little customer loyalty if the jobs go overseas. Importantly, it would be a serious blow to Australian engineering generally - which needs aircraft maintenance work to keep engineers up to date in high tech fields. Qantas should be encouraging Australian engineers, not discouraging them. With a virtual monopoly on domestic aviation - where fares have risen markedly since the death of Ansett - Qantas cannot cry poor mouth. If he wants lower engineering costs, Geoff Dixon and his top executives could show the way with say, a 25% pay cut of their own. [24.02.06]

Howard and conscience votes: The “conscience” vote last week on the RU486 abortion drug was unfortunate. It reinforced other precedents that the Liberal Leader (alone), has the power to declare a “conscience” vote in the Parliament for Government MPs. Howard previously allowed conscience votes on Northern Territory euthanasia laws and stem cell research. During RU486 debate, a number of Liberal speakers went out of their way to express gratitude to the PM for “allowing” a conscience vote. Liberal backbenchers have diminished their power and independence by conceding tht a conscience vote is up to Howard alone - not the Cabinet, let alone the party room. As we have reminded our readers, there is no such power in the hands of a Liberal Leader. In March 1963, the Sydney Daily Telegraph published a bomb shell picture of the Opposition Leader, Arthur Calwell (and his deputy, Gough Whitlam), waiting in the dead of night outside Canberra’s Kingston Hotel for the 36 members of the ALP National Conference to vote on the Menzies Government legislation to establish a United States naval communications base on the North West Cape. [24.02.06]

Fraser agrees with us: The founder of the Liberal Party, RG Menzies, leapt on this media image to deride Labor for running national government according to the dictates of the 36 ‘faceless men’. In contrast, he said, no Liberal MP could ever be directed by anyone as to how they should vote. Former Liberal Prime Minister, Malcolm Fraser, confirmed to us this week that when he was PM every Liberal could vote according to his/her conscience - on any issue. Fraser said - “Party discipline is much tougher than in my day, and it is not a good thing. People have been disappointed that I did not use the Senate majority I had to a greater extent. But there were people in the Senate (Liberals) like Reggie Wright and Alan Missen, and if I had tried to rush through some piece of legislation, they would not have allowed me. It might have been inconvenient, but that was the way it was.” He added - “A conscience vote is a matter for the individual, nobody else. Nobody can examine and know your conscience.” Fraser also revealed another right of Coalition MPs in his day - the right to vote against a Government measure if an MP believed it would not be in the interests of his or her electorate. Fraser told us he had discussed this with the deputy PM and National Party Leader, John McEwen. They agreed that if an MP came to their party leader and said they could not vote for the government on a certain issue - because it would not be in the interests of his or her electorate - “then so be it.” [24.02.06]

From the Gallery: Sophie Panopoulos is one of the loopiest Liberals in Parliament, in the Ross Lightfoot mould. In the debate on RU486, she fiercely took the anti-abortion line against the bill which would take decisions on the drug away from Health Minister, Tony Abbott. In the House on Tuesday she fumed - “Why should we as legislators ... let the faceless, unaccountable, undemocratic and unelected cabal at the Therapeutic Goods Administration supplant our role as accountable, elected and responsible representatives of the people?” The answer to this irresponsible and illogical blather is that voters would much rather trust the experts from the TGA to handle decisions on drugs than unreliable, untrustworthy and devious politicians. Workplace Relations Minister, Kevin Andrews, is hyperactive. He is wasting taxpayers money putting out streams of press releases (all ignored) headed “Crean Watch.” In these releases, he comments about the battle Simon Crean is having winning pre-selection for Hotham. Taxpayers are providing Andrews with a staff of 14. His industrial relations legislation is through the Parliament and he obviously hasn’t enough to do. Voters (even those in Hotham) are not at all interested in the pre-selection, let alone partisan comments from the sideline. [17.02.06]

Iraq wheat crisis - we told you so: Last week Inside Canberra said - “It would not be a flight of fancy to believe the US will put strong pressure on the Baghdad Government (dominated by Shiites and Kurds) to favor American over Australian wheat. After all, US wheat reps could argue, the US has lost 2000 troops putting you guys in power while the Australians are yet to lose a soldier and were paying bribes to your mortal enemy, Saddam.” This week, the Iraqi Grains Board said it would not buy Australian wheat until the Cole royal commission had completed its inquiry into bribes of $290 million paid to Saddam by the Australian Wheat Board. Our readers are not, therefore, surprised by this development. [17.02.06]

Howard alarmed as polls turn against him: John Howard is obviously alarmed. He is being accused by Labor of being responsible for the loss of the Iraqi market because of the Government’s crass failure to unearth the bribes the Australian Wheat Board was paying Saddam Hussein. The polls have turned against Howard since the Cole commission has so easily dug up the dirt on the AWB, and worse still, most people living in the bush may not believe the PM that he didn’t know of the bribes. This week, The Land newspaper - the dominant farmer paper in NSW - published the result of a web survey of its readers. The question put was - “Do you believe the Government’s claim that it had no knowledge of AWB’s payment of kickbacks to the Iraqi regime?” The NO vote was 70.1%, and the YES vote 29.9%. The Land says the poll - “is not scientific and reflects the opinion of only those Internet users who have chosen to take part.” True, but the result would be enough to worry Howard, and particularly the Nationals Leader Mark Vaile, who has been Trade Minister during most of the UN oil for food program when the AWB was bribing Saddam. [17.02.06]

Mission to Baghdad not impressive: Howard has to be seen to be doing something and has dispatched a mission to Baghdad led by Mark Vaile, together with AWB chair Brendan Stewart and wheat grower representatives. [The mission’s departure date has been complicated by the death, on Wednesday, of Vaile’s father]. The inclusion of Stewart has been criticised by the WA Pastoral and Graziers Association’s western grain-growers chairman, Leon Bradley. He says - “Brendan Stewart is part of the problem, not part of the answer.” Howard says the AWB has to be part of the mission since it owns the wheat in the pool. Yet Peter Howard, of grains trader OzEgrain, says there are 250,000 tonnes of wheat stored in WA and not delivered to the AWB which would be available for export to Iraq. The Vaile mission will be to plead a re-think of the blacklisting of the AWB, which will last till the Cole inquiry comes down. Yet John Howard, when interviewed by Kerry O’Brien on Wednesday night said - “The only thing I can do and should do is await the outcome of the inquiry.” Why then should the Vaile delegation ask the Iraqi Grains Board (IGB) to reverse its decision to await the outcome of the Cole inquiry before deciding on whether it will deal with the AWB in future? [17.02.06]

Vaile failure would hurt Nationals: If the Iraqi’s will not immediately allow the AWB back into the tender for the next big contract of one million tonnes (now deferred because of an argument the IGB is having with the Americans over price), the Vaile delegation will ask it to allow other Australian companies to tender. This would require the AWB to give up its monopoly, which Stewart has said it will only do “as a last resort.” The wheat industry and the Nationals have no reason to be confident about the outcome of the Vaile mission. Many in Parliament House wonder why Alexander Downer was not given the job of heading the Baghdad delegation. He is obviously more capable than Vaile, who has been singularly unimpressive in handling a barrage of Opposition questions directed to him on the wheat scandal. If Vaile is seen to fail, it will be a serious blow to the Nationals. Yet they can’t get rid of Vaile. The fact is there is no-one in the party who could be put into the parliamentary leadership of the Nationals to replace him. [17.02.06]

Slipper puts in the boot: Peter Slipper, who ratted on the Nationals when he lost his seat of Fisher in 1987 and joined the Liberals to win it back at the next election, is putting the boot into Vaile and the AWB. He says there is a question over Vaile’s future and the AWB “should be given the flick” and its monopoly power taken from it. Howard has rebuked him. The PM knows he must stick with Vaile and the Nats, and he will not abandon single desk exporting. As we reported last week, the outcome will be a compromise: the Wheat Export Authority (WEA) will have sole power to licence companies to export wheat; AWB will have an automatic right to export - but will lose its veto over other companies exporting. In short, the single desk will be operated by the WEA. Shrewd heads in Canberra say now is the time to buy AWB shares, which have fallen about a third in value. Even if it loses its monopoly power, it will still be the gorilla in the wheat market and, in any case, wheat exporting will diminish over time in importance as the company builds up its investments in other assets, notably Landmark (formerly Wesfarmers). This is a giant agri business growing rapidly and AWB shareholders will have no grounds for grizzling if the company loses its monopoly powers. [17.02.06]

Bad timing on troops: The blow to Australian wheat farmers comes at a time when Howard is considering keeping Australian troops in Iraq indefinitely at the request of President Bush. The idea is that this would help to bolster democracy in Iraq. The majority of Australians who have never been for the war in Iraq, but didn’t feel steamed up enough about it to damage Howard in the polls, might now start to feel angry. Neither Howard, Downer nor Vaile have been able to add anything to the basic Government case - ‘we asked the AWB and believed their denials because they had such a good reputation’. [17.02.06]

Polls turn around to Labor: There has been a 6% turnaround to Labor in Newspoll (taken 10-12 Feb), and the only explanation is the wheat scandal. The two-party preferred outcome two weeks ago was Coalition 52% - ALP 48%. Now it is ALP 51% - Coalition 49%. The Liberal primary vote has slumped to 36% (down 1%), and the Nationals are on 5% (down 2%). There has been a sharp fall in the PM’s satisfaction rating - to 45% (down 6%) - while Beazley’s satisfaction rating is at 36% (up 4%). The Morgan poll taken in early-February shows the two-party preferred vote as ALP - 52.5%, and L-NP - 47.5%. Morgan says primary support for the L-NP Government fell 1.5% (to 40.5%) - 5.9% below the result at the October 2004 Federal election. Primary support for the ALP was up 4% (to 42%) - 4.4% higher than their result at the 2004 Federal election. Had a Federal election been held in early February, the ALP would have won. [17.02.06]

Moore-Wilton worth more: Whatever Macquarie Bank is paying Max Moore-Wilton when he steps down as CEO of Kingsford Smith Airport (KSA) next month to run Macbank-owned airports worldwide, is not enough. Moore-Wilton, the former head of the Department of Prime Minister & Cabinet, has been locked into a desperate lobbying duel with Westfield on non-aviation developments at Sydney’s KSA. And, it appears, he has won. This is worth millions to Macbank and the other privately owned airports. Transport Minister, Warren Truss, who has only been in the job for five minutes since John Anderson retired to the backbench, is to amend the Airports Act in a manner which will greatly favor developers rushing to invest in projects at privatised airports around Ausrtralia on Commonwealth land that has been leased for 99 years. In yet another brushing aside of state rights by the Howard Government, the planning powers of state governments and local councils will now be weakened further by the amendments. [17.02.06]

Govt. aids airport developers: Of course, it is not Truss who guided these changes through Cabinet, but John Howard. The PM would not let an issue as big as this be run by Truss. Howard decided on the principles of the amendments and, without doubt, Moore-Wilton would have had his ear. The legislation will halve to 45 days the period in which interested parties must be consulted before developments on a privatised airport can be authorised by the Transport Minister. Previously, developments at airports did not require approval by the Transport Minister up to $10 million. This threshold will now be raised to $20 million. None of this is surprising. The Howard Government sold off 22 of its largest airports for $8.5 billion. In the finance industry, this was considered far too high and it was clear the investments would fail unless development for non-aviation purposes was subsequently allowed on the leased land. [17.02.06]

Airports are profit driven: Like it or not, state governments and councils are discovering what happens when a government asset which is a public monopoly (ie: an airport), is sold to the private sector. Airports are now profit driven. Moore-Wilton may have left his post at KSA before settlement of the outstanding issue of higher charges to airlines for aeronautical services is negotiated. But he will be in there lobbying for all he is worth on behalf of the Sydney Airport Corporation Ltd (SACL). At a time when the Howard Government is preparing to review its policy on the regulation of privatised airports, SACL and the airlines - represented by the Board of Airlines Representatives of Australia (BARA) - are in dispute over the pricing of aviation services. If not settled, it will go to the ACCC for decision. BARA claims the increase proposed by SACL would deliver a very high return on assets. The ACCC has found charges for the services are in most instances way above inflation. In a new development, Opposition competition spokesman Joel Fitzgibbon says the Howard Government should act against excessive charges by re-regulating the airports. We will back Max to win. [17.02.06]

Pressure on tax cuts: As we move closer to Budget day - 9 May - a lot more pressure will build from the Government backbench, ACCI and the Business Council for tax cuts. Journalists will speculate about what Costello will do with his “war chest” (ie: the 2005-06 surplus which could reach $15 billion. This is a common mistake of journalists. The surplus can’t be carried over to the coming financial year for tax cuts, or anything else. There is no large safe in the Treasury basement into which the surplus is stuffed for future use. Once the Budget is brought down, a line is drawn under it and the surplus goes to pay off Government debt. This year will be different: it will be paid into the Future Fund which cannot be touched until 2020. There it will be used by the fund’s managers to punt on the stock exchange (see last week). The Business Coalition for Tax Reform (BCTR) has put forward a proposal that the tax system could be reformed (meaning lower rates) if existing deductions, exemptions, rebates and the like were done away with. Very logical, but almost impossible to achieve in political terms. [17.02.06]

PM no tax reformer: This was demonstrated by its discussion paper referring to an “all in” approach to examining tax concessions. The paper mentioned negative gearing as a concession which should be examined, and immediately provoked outrage from the building industry. BCTR chairman John Stanhope had to issue a press release saying his members were not advocating abolition of negative gearing, merely that its abolition should be debated. The building industry doesn’t want it debated, nor does the Government. John Howard is not going to go down the path of removing the vast array of tax concessions for this industry, and then having to put up with the awful political fallout. If he did follow the BCTR path, he would be doubly attacked - first for removing the concessions and then for not lowering tax sufficiently to compensate for their removal. [17.02.06]

Case against tax cuts: Before going too far down the track of tax cuts, Labor should also ponder the retort by Robin Brown, President of the ACT Council of Social Service, when replying to the Business Council advertising campaign - “Locking in or losing prosperity: Australia’s choice.” Brown said the BCA ignored the fact that Australia’s overall tax take is among the lowest in the OECD as a proportion of GDP. Nor did it explain why we needed a lower tax take. He then asked - “Why do we need less taxation when Sweden, with a much higher tax-to-GDP ratio, has higher productivity and higher GDP per capita than we do? And it has a much better wealth distribution and lower poverty level.” The answer to Brown’s question is simple: Swedes are much cleverer than Australians, or at least the capacities of their captains of industry and governments over decades have far outstripped those of Australia. Sweden, with a population of a mere 9 million, is a world leader in high tech manufacturing and engineering, design of everything from furniture to fighter jets and has world class companies able to match it with the best. Australian companies and government’s should devote less energy to tax cuts and more on figuring how we can get smart and do more than ship out natural resources dug straight from the ground. [17.02.06]

Papuan asylum seekers: A delicate problem coming up for Australia is the future of the 43 West Papuan asylum seekers now incarcerated on Christmas Island, and awaiting a decision on whether they will be granted refugee status. It will be far harder for the Government to engender the hostility of Australians towards them than the boat people of the Tampa episode. After all, the latter were “people of Mediterranean appearance” and the slippery Peter Reith assured voters there would be terrorists among them. Further, the PM said he wouldn’t want to see people come to Australia who threw their children overboard. There is a natural sympathy towards all Papuans in Australia since the Second World War. And opinion polls say that (rightly or wrongly), a majority of Australians don’t particularly like Indonesians and this would be magnified by the dreadful sentences being handed out to stupid young Australians in Bali for drug running. The Papuans are manifestly supporters of the Free Papua Movement (aka freedom fighters) and fear for their lives if they are returned. They did not come to Australia courtesy of people smugglers, but by their own courage and determination in dugout canoes. [17.02.06]

Barnaby Joyce impressed: Barnaby Joyce, who with other MPs went to Christmas Island and interviewed the Papuans, has told ABC radio he was impressed by their sincerity and believed they would be in danger if their application for refugee status was turned down - meaning they would be returned to West Papua. The Menzies Government strongly supported the Netherlands in its resistance to claims by Indonesia for sovereignty over what was once Dutch New Guinea. Presidents Eisenhower and Kennedy sided with the Indonesians, and told Australia and the Netherlands to back off. Since the Indonesians lost control of East Timor, they have taken a hard-line with the Papua separatists, some of whom want to join a federation with Papua New Guinea and others who want full independence. In 1969, the Indonesians instituted a mock Act of Free Choice. A small number of hand-picked Papuans were taught a few simple pro-Indonesian phrases, and then told to repeat them in front of an international audience. [17.02.06]

From the Gallery: While John Howard continues to insist Australia can’t ‘cut and run’ from Iraq, and is sending more troops to Afghanistan, ponder this: the last MP who actually fought in a war is to retire at the next election. Graham Edwards (Cowan WA) lost both legs in Vietnam. The wheel chair bound MP says he loves politics, but at 59, is finding the trips to and from Canberra and Western Australia increasingly arduous. After the 1949 election, the Parliament had an abundance of ex-servicemen of both wars. There was a VC (Charles Anderson), and winners of many Military Medals and DFCs. When Australia went to war in Korea, plenty of MPs knew war was hell. Now there is only one, and he is not on Howard’s side of the Parliament. One of the 49-ers was Sir Reginald “Curly” Swartz, so dubbed for his shining bald pate. A senior minister in successive Menzies governments, he died this week aged 94. Curly was a Major in the AIF and as a POW, was a guest of the Emperor in Changi. At question time, Curly was noted as a deflector of Opposition questions by his ability to give infuriatingly long answers, which were regularly punctuated by Opposition interjections of ‘time’. [10.02.06]

Bad week for Howard on wheat scandal: It’s been a bad week for the Government with Howard and his ministers stonewalling questions in the House, rather than giving any detail as to why the Government failed to pick up that the Australian Wheat Board knowingly paid $290 million in bribes to Saddam Hussein. Howard continues to argue the Government knew nothing because it had been assured by the highly reputable AWB that such allegations were false. A serious development after question time had concluded on Thursday was the resignation of the AWB Managing Director, Andrew Lindberg. In Canberra, this is seen as the AWB running up the white flag of surrender. The export wheat monopolist is going to cop it in the neck from the Cole inquiry, and Lindberg - who had such a bad memory when giving evidence - has had enough. Labor is saying Lindberg has accepted his responsibility, and now the Government should also accept its responsibility. [10.02.06]

Howard appalled by bribes for Saddam - in 2003: The Coalition hopes the scandal of the AWB will not hold the interest of the electorate. Some commentators are putting the argument that we can’t be too hard on the AWB because everyone knows that to do business in the Middle East bribes are essential. This might wash with any other market, but not the Iraqi market when Saddam ran the country. Recall the Prime Minister’s address to the National Press Club in January 2003 as he strove to justify the invasion of Iraq - “We’re talking about a regime (Saddam’s) that will gouge the eyes of a child to force a confession from the child’s parents. This is a regime that will burn a person’s limbs in order to force a confession of compliance ... He (Saddam) has cruelly and cynically manipulated the United Nation’s oil-for-food program. He’s rorted it to buy weapons to support his designs at the expense of the well being of his people.” [10.02.06]

Loss of wheat markets will concern voters: It may well be the hypocrisy the quote exposes will not be enough to arouse public opinion. There have been numerous polls taken over the years to show the public did not believe Howard was telling the truth (such as in the children overboard case), yet they kept voting for him. What could incite voters to anger would be for the AWB’s folly to directly reduce the income of wheat farmers, and thereby, many more Australians. The US might already have put strong pressure on the Baghdad Government (dominated by Shies and Kurds) to favor American over Australian wheat. After all, US wheat reps could argue, the US has lost 2000 troops putting you guys in power, while the Australian’s - yet to lose a soldier - were paying bribes to your mortal enemy, Saddam. [10.02.06]

Baghdad goes cold on Aussie wheat: This week the AWB share price slumped 10% (and thousands of wheat farmers are shareholders) when news wires out of Baghdad reported Australia would not be considered for a one million tonne wheat contract worth over $200 million. An unnamed Iraqi trade official was quoted as saying - “We are seriously considering an American firm.” On Wednesday, the meeting between Australia’s Ambassador in Washington, Dennis Richardson, and Senator Norman Coleman ended with the Senator saying at this stage he would not go ahead with his own Congressional committee investigation into AWB kickbacks. Yet he also made it clear that he expected the Cole Commission to report fully on the issue. Coleman didn’t mention Howard’s refusal to expand the terms of reference to allow Cole to report on the Government’s role. Still, it is reasonable to assume Coleman will be less than satisfied if the Cole report has nothing to say about the role of ministers. [10.02.06]

US moves to end AWB monopoly: The influential US National Association of Wheat Growers (NAWG) his week urged patience in dealing with AWB allegations, and said - “We must all keep in mind the political undertow surrounding criticising a wartime ally.” He further cited the close relationship between Howard and Bush. But NAWG president Sherman Reese told Capital Press (an agriculture newsletter) that once the facts were established, his organisation would join other farm groups with “guns blazing” to pressure Congress and the administration to force an end to the AWB’s export monopoly. In this Congressional election year, there is no doubting the clout NAWG has in Washington. Yet for Howard to abandon the single desk system is politically impossible. [10.02.06]

PM cools single desk debate: The Nats will insist the monopoly power remains, although (as we reported last week), it would be exercised entirely by the statutory body, the Wheat Export Authority (WEA). The AWB would have automatic rights to export wheat whilst other companies would need the approval of the WEA - which in effect would operate the single desk system. This is also the proposal put forward by Liberal backbencher, Wilson Tuckey. The majority of farmers favor the single desk system and cite reasonable argument that the wheat monopoly is needed to offset the advantage US wheat growers have from receiving Government subsidies. Mark Vaile and the Nationals would have to walk away from the Coalition if the Liberals insist on ending the single desk regime. [10.02.06]

Costello lucky: The PM realises this, hence in the party room on Tuesday, he poured cold water on the idea of any early dismantling of the monopoly. Peter Costello was looking relaxed this week. The focus on the wheat scandal could not have been better timed for him. But for it, he would have been in the spotlight from the Opposition at question time answering queries as to why he pushed for the appointment of Robert Gerard to the Reserve Bank Board when Treasury was plainly opposed. This was revealed since Parliament last sat in December by documents obtained from Treasury by the Financial Review via FOI. In 2004, and after his appointment, Gerard donated $262,000 to the Liberal Party. Then there was the question of whether Costello had misled the Parliament by not disclosing Treasury had advised the Government’s IR legislation would initially worsen productivity. [10.02.06]

Record exports not enough: Official figures for international trade in goods and services for December show imports were down by 1.3%, while exports surged by 7.1% - driven by a 22% increase in metals exports. This is a sign that major resource projects are finally coming on stream, and export bottlenecks are being cleared. Yet although we are digging the stuff out of the ground and shipping it off as fast as we can, the deficit for the month was still $1.2 billion. Just as well there is a resource boom else we would be in trouble. Peter Roberts, the Fin’s much admired writer on industry issues, is one of the few on the paper who actually believes fostering manufacturing industry is a good thing. At the weekend, he wrote a first class piece headed - Is Australia just a quarry? And the answer was - more or less. [10.02.06]

Value adding fails: Ever since Jack McEwen vowed to pursue policies which would mean Australian exports would be more than just extractions from the ground, successive Governments have talked a lot about using our bountiful ownership of resources to build value-adding industries. But not much has been achieved - with the notable exception of the aluminum industry - which is competitive due to its access to cheap energy. Roberts points out that despite $183 million being spent by the WA Government on infrastructure - and the Feds smoothing the way for new projects - developments on the Burrup Peninsula have been disappointing. Margaret Beardow, of Benchmark Economics, says Australia has failed to build high value industries on the basis of our raw materials. Compared to Germany - whose exports are competing with Japan and the US, Beardow says (Australia) is being “left at the low end of the scale competing with the likes of China”. [10.02.06]

Fruit & veg marketing code: Agricultural Minister, Peter McGauran, is in the gun with fruit and vegetable growers who believe Woolworths and Coles have used their influence to block attempts to introduce a mandatory code governing wholesale marketing - which would lay down rules for fair treatment of growers. The Central Markets Association of Australia (CMAA) says the code “risks anti-competitive behavior if it does not apply across the entire horticultural industry.” Andrew Young, spokesman for the association adds - “If the Government decides to only regulate the central markets, it will be handing a competitive advantage to the major retailers in this country, and an ability to pursue an even greater slice of the market than they already enjoy.” [10.02.06]

Woolies, Coles criticized: Peter Darley, an apple grower at Orange (NSW) and chairman of the NSW Farmers Association’s horticulture committee, tells us that in the last election campaign John Anderson promised to implement within 100 days a mandatory code covering the wholesaling of fruit and vegetables. It was not expected this target would be reached, but now that this has blown out to 400 days, Darley says growers’ patience is being tested. Further, McGauran is not prepared to allow grower representatives to examine the Horticultural Business code he is working on until legislation for it goes into Parliament. Growers are not used to this sort of treatment from National Party Ministers for Agriculture. The news from north Queensland is that unless growers there are satisfied with the mandatory code, they will not support the Nationals at the next election. The core of grower complaints is about supermarkets by-passing the traditional wholesale market. Agriculture officials estimated in 2004 that 70% of fresh food and vegetable supplies in supermarkets came from contract arrangements with major growers. [10.02.06]

Free trade no help: Darley says this is sending the family farm to the wall. Unless something is done, he believes 900 of the 6000 fruit & veg growers in NSW will leave the industry. Growers are also bitter about import competition. Orange growers have been offered ‘below cost of production’ prices by processors due to cheap imports of Brazilian orange juice concentrates. Apple growers are up in arms about 198 million litres of apple juice concentrate coming in from China -thus ruining the market for locally grown second grade apples, which go to juicing. Free traders would say too bad. Yet it can’t be denied - no OECD country (apart from Australia) would allow imports to threaten such significant industries in their own country - the US wouldn’t nor would the EU or Japan and nor would China for that matter. Australia under Labor and Coalition governments have for decades stuck to a policy of presenting itself to the world as a nation which shows its commitment to free trade by the openness of its market. Yet precious little by way of market access to other countries has been opened up to Australian farmers as a result. [10.02.06]

Boswell small business champion: Small business will lose an influential voice inside the Coalition should veteran Queensland Nationals Senator Ron Boswell miss out on pre-selection for the next Senate election. Boswell has not adopted the Barnaby Joyce line of threatening to cross the floor over small business issues. Yet he has been very influential behind the scenes - resisting attempts by the major oil companies to have the Petroleum Sites Act repealed on the grounds it would hurt thousands of service station operators (servos) across Australia. He has also been an active opponent of Woolworths and Coles, believing they have been able to exert pricing power over farmers and other supplies. Hence, he was opposed to the attempts by Woolworths to get into the pharmacy business. Things are not looking good for Boswell, who was recently damned by faint praise from Queensland Nationals Leader Lawrence Springborg saying, Boswell had done “a fairly good job” for Queensland in the past, but “other very good people” wanted a Nationals Senate spot. [10.02.06]

Greenwood leaving Guild: On the subject of Woolies’ pharmacy ambitions, an important lobbyist in this struggle, Stephen Greenwood (CEO of the Pharmacy Guild), has announced his resignation. He leaves after 14 years - the longest serving Executive Director of the Guild ever. His shoes will take some filling. Greenwood succeeded in defeating Woolies mainly because he was able to persuade John Howard that it would be a bad thing for small business, and for the Australian health system, if the largest purveyor of cigarettes and liquor (and now into gambling in a big way) also claimed it had a role in helping people to remain healthy. Greenwood retires after playing a key role in negotiating the fourth five-year agreement between the Government and the Guild covering payments to pharmacists for dispensing medicines under the Pharmaceutical Benefits Scheme. Despite earlier threats by Health Minister, Tony Abbott, to allow Woolworths into the pharmacy business if the Guild did not agree to his initial demands on price reductions for dispensing, the Guild is pleased with the final outcome. [10.02.06]

Future Fund legislation: Shadow Finance Minister, Lindsay Tanner, led for the Opposition in this week’s House debate on the Future Fund Bill 2005. He said Labor was not opposed to the legislation per se, and would vote for the bill. Tanner then proceeded to tear the bill to pieces, and move amendments (which won’t, of course, be carried). Perhaps Labor is not prepared to kick up a fuss about legislation that the great majority of voters have no interest in. In any case, if they win government at some time in the future, they can do what they like with the Fund, including closing it down. His main point, which Inside Canberra has been putting forward ever since Costello first raised the idea, was that it was not necessary. Tanner said the rationale for the legislation was - “highly questionable, since it was dealing with a finite problem - public sector superannuation liabilities - which over time would be reduced as the various defined benefits super schemes have been closed to new entrants into the Public Service. [10.02.06]

Fund rationale dubious: Tanner said the Government had decided to artificially maintain the government bond market at a given level in order to ensure a minimum level of liquidity. As it has the capacity to repay most or all of government debt, it therefore has to find something to do with the money. The end result is that by maintaining a substantial debt of $50 to $60 million, it is continuing to borrow - and by implication - borrowing for the Future Fund to play the stock market. This means it’s going to be necessary for the fund to always beat the bond market and the bond rate. If it is not, it is subsidising the bond market, Tanner explained. He added that while he suspected the fund would be able to beat the bond market, there was no guarantee that it could do so. He said the Government claimed the Future Fund would be a locked box impervious to politicians using it to curry favor with voters. Yet the explanatory memorandum of the legislation reveals the Treasurer and the Finance Minister can issue an investment mandate to the fund’s manager and board to tell them the direction of investment policy. Not only that, the two ministers, in so doing “can consider broader policy and national interest considerations.” Tanner says, and Inside Canberra agrees, this is code for National Party pork barreling, such as the infamous Roads of National Importance program. [10.02.06]

People & Events: The Productivity Commission is to undertake a research study into the Australian Government’s relationship with Standards Australia, and the National Association of Testing Authorities. [10.02.06]

From the Gallery: One ministerial reshuffle all pollies were particularly interested in was the promotion of Gary Nairn from a Parliamentary Secretary to Special Minister of State, replacing Senator Eric Abetz. This gives Nairn responsibility for pollies’ perks like printing allowances. Meanwhile, pressure is mounting for the Government to reverse Howard’s panic reaction to Mark Latham, in advance of the last election, advocating putting the parliamentary super scheme on the same basis as everyone else. Neither Labor nor Coalition MPs were keen on this. Howard worked a swift compromise. Existing pollies would keep the wonderfully generous super scheme, while MPs coming into the Parliament for the first time from the 2004 election on would be on an accumulation scheme and would receive only the 9% super levy from their employer (the taxpayer) that the rest of us get. This means there are now two classes of pollies – one class with the deluxe super and another with the community standard. The newcomers don’t like it and they have a good deal of sympathy from the MPs on the gravy train super. What will Nairn do in his role as keeper of the pollies’ perks? Will he get Howard’s ear for a change? [03.02.06]

Wheat provides govt with its worst crisis:.The Iraqi wheat deal bribery scandal has embroiled the Howard Government in its most serious political crisis since it came to power in 1996. Worse, it comes hard on the heels of bitterness by the Nationals over the defection to the Liberals of Julian McGauran, with Mark Vaile saying “the boundaries of the Coalition partnership have changed.” (see - Trade talks to test Nats). Howard, arguably the most enthusiastic Prime Minister ever for the American alliance, has brought about a situation where Australia’s standing in Washington has plummeted. There is no telling where the anger of US Senators over being misled by the then Australian Ambassador Michael Thawley will lead, but it doesn’t look good. [03.02.06]

US Senators on the warpath over AWB: Republican Senator Norm Coleman, chair of the Senate committee inquiring into “illegal under-the-table” payments to the Saddam Hussein regime, has written to the current Australian Ambassador, Dennis Richardson, saying he’s “deeply troubled” over being misled in 2004 by Thawley over the role of the Australian Wheat Board Ltd in the oil-for-food UN program. Thawley lobbied Coleman for his committee not to hold an inquiry into the AWB. He assured Coleman the AWB was absolutely clean. Now the damning evidence before the Cole inquiry makes it quite clear the AWB knowingly provided almost $300 million dollars to Saddam and plotted ways to conceal this breach of the rules of the UN program. The seven members of the US Senate’s agricultural committee have questioned whether the Cole inquiry was sufficiently independent of the Howard Government “to be entrusted to investigate the matter?” [03.02.06]

PM should redraw Cole inquiry terms of reference: This alone should give Howard good reason to re-think his decision to draw up terms of reference for Cole which prevented him making any findings about the role of the Government in the scandal. Cole may request this today. Meanwhile, wheat grower and Howard’s spear carrier, Senator Bill Heffernan, has weighed in saying the interests of Australian wheat growers have been damaged and deplored that it has become a “political” matter. This is a pointer to Howard’s tactics when Parliament meets next week. He will say Labor is damaging Australia’s wheat industry by trying to score political points. That is all very well, but who played politics in the middle of the 2004 election campaign by sending in Thawley to lobby Senator Coleman so his committee would not investigate the AWB? And who drew the terms of reference for Cole so tightly that he cannot criticise the Government? Howard of course. True, the US Congress is greatly influenced by the very influential US wheat lobby. But that does not justify the Australian Government being party to misleading the Congress. [03.02.06]

Beazley should not overdo the politics: Kim Beazley made a good point at the Press Club on Wednesday - if Howard does not have a proper inquiry by allowing Cole to report on the actions of Howard Government Ministers and DFAT, the US Congress will certainly have an inquiry. Such an outcome could greatly strain US/Australian relations. There is a school of thought in Parliament House that Howard should have told the Congress to bugger off and that it had no business investigating an Australian company. That has a certain jingoistic appeal, but lacks reality. Can the mouse ignore the elephant, particularly when you are part of the US invasion of Iraq? Yet Beazley should not overdo the political attack on Howard. His theme should be that the Cole inquiry’s terms of reference should be expanded to take in the Government, not to hurt Howard but to help the Australian wheat industry, by showing the world Australia conducted a full and thorough inquiry into the AWB. Beazley should lay off the personal stuff that he has got into in recent times. At the Press Club on Wednesday he said Brendan Nelson couldn’t get a date at university. Beazley seems to be intent on discarding the Mr Nice Guy image. There is no fiercer political warrior than Howard, but he always avoids this type of personal attack. [03.02.06]

Trade talks to test Nats: The Nationals crisis meeting in Sydney this week, following Julian McGauran’s defection to the Liberals, decided on the Nationals being much more assertive in policy matters. (After a decade of subservience to the power of John Howard, Coalition voters might say it is about time). After the meeting, Nationals Leader, Mark Vaile, declared - “After recent events the boundaries of the Coalition partnership have changed.” As Trade Minister, Vaile’s determination to assert Nationals’ priorities are about to be tested. In early March (an exact date has yet to be decided) Vaile will attend the Washington review of the Aust/US Free Trade Agreement. The American side will press him to agree to repealing the Mark Latham amendments to the laws setting up the FTA. These prevented drug companies “evergreening” the life of their patents through court processes. [03.02.06]

Sugar demands weigh on Vaile: The sugar industry is pressing Vaile to insist, at the Washington review, that Australian sugar gets reasonable access to the US market. There is no chance the Americans will agree to this. Should Vaile give way on the Latham amendments and fail to get anything for sugar he will deservedly be lambasted by the sugar industry and National voters. Then there is the problem of the proposed free trade agreement with China. Following three rounds of preliminary talks, substantive talks are to begin soon. Ever since the China FTA initiative got underway (at Howard’s initiative) the prospect of significant gains of access to the Chinese market for agriculture has been regarded as unlikely. [03.02.06]

China disappoints Aust farmers: Following a frank speech by the Chinese Ambassador to Australia, Fu Ying, it could be said the prospects for gains for Australian farmers look remote. In a speech on Monday to the Asian Society, Madam Fu made it clear China would give very little. She cited the 150 million unemployed in China’s rural areas as a reason China could not give Australian farmers greater access. Madame Fu said past Chinese dynasties had been overthrown by rural unrest. The reaction of the National Farmers Federation to this was weak. President Peter Corish lamely saying: “We are certainly not setting out to harm the livelihoods of Chinese farmers or anyone else’s.” A more robust response was required, such as publicly warning Vaile that if there was to be nothing for agriculture, there was no point in a FTA. And of course there isn’t. Mark Vaile early last year declared the Chinese FTA had more potential than the US FTA (which as things have turned out is not much). There is no enthusiasm among voters for a FTA deal with China, particularly those in manufacturing who see their jobs being already threatened by Chinese imports. [03.02.06]

Beijing FTA not needed: There is nothing in the FTA for China and this was obvious before the first preliminary talks which were only held because, at Chinese insistence, Australia agreed to recognise China as a “market economy” when it came to assessing dumping claims against Chinese imports. This is a concession which has been withheld by the US and EU. News of Australia giving away such a valuable negotiating tool was greeted with joy in China. Newspapers declared that this was the single big win China was after. China is, and will remain, a major customer for Australian iron ore and coal, with or without an FTA. Reductions in Australia’s tariffs on manufactured goods would merely hasten the destruction of swathes of Australian manufacturing, but in any case, China has no trouble right now overcoming Australian tariff barriers. The only winners for Australia of any significance could be banks and insurance companies who want to operate in China. Australians are hardly likely to be dancing in the streets at this prospect. It is about time Labor came out and said in plain terms it does not support a FTA with China. [03.02.06]

Threat to Senate: majority In the immediate aftermath of the Julian McGauran ratting, Nationals Senators, Fiona Nash and Barnaby Joyce vowed to vote first as Nationals and members of the Coalition second. No doubt following Mark Vaile’s declaration of “new boundaries” in the Coalition, they will see their threats as in line with the Nationals new assertiveness. This could have a big impact on Howard’s Senate majority. For example, Howard might not be able to end the monopoly export power of the Australian Wheat Board. He has said the monopoly could be reviewed (see last week). Similarly, legislation to extend federal jurisdiction into areas now within the province of the states could also be stymied. Barnaby Joyce last year said he had concerns about state rights issues raised by the Government’s industrial relations legislation. [03.02.06]

Howard the ultimate centralist: The National Party has always been a strong advocate of state rights, which is why it has historically given the Senate absolute support. Last week Attorney-General, Philip Ruddock, referred to the coming challenge in the High Court by the states to the Commonwealth relying on its corporation powers for the industrial relations legislation. Ruddock said - “Over time, we might find as the Commonwealth powers - particularly corporations power - (are) tested that there might be a wider range in which the Commonwealth is able to move.” He added - “Obviously, I will be alive to whatever powers the Commonwealth has if it will help effective reform.” The Howard Government is easily the most centralist since federation. It would put the Whitlam Government in the shade. The attack on state rights is gaining momentum despite the Liberal Federal Council last year strongly endorsing a pro-federalism resolution, which Howard both spoke against and voted against. Now the centralist drive of Howard could be blunted by the Nationals Senators (always assuming Labor votes against the Government in the upper house). [03.02.06]

Future of wheat monopoly: The future of the monopoly powers over exports of the Australian Wheat Board Ltd (known as the single desk) is up in the air. The evidence given so far to the Cole inquiry has given rise to debate on the future of the single desk. Peter Costello weighed in this week, in an interview on ABC, by saying he believed other companies should be able to export wheat, but then added existing legislation permitted this. He is half right and half wrong. The weird situation is that the Wheat Export Authority (WEA), a statutory Commonwealth Government body licenses wheat exports. Yet, if a company other than AWB wants to export wheat, the WEA must consult the AWB (now a public company listed on the ASX) which has the power to veto exports by any other company. [03.02.06]

Nats wants single desk: Vaile and Agriculture Minister, Peter McGauran, has been making it clear this week that the monopoly power will continue (whatever the Cole findings) and it will be exercised only by the WEA. The veto power of the AWB will be removed. Within the AWB this is not a make or break issue. The company’s earnings from its wheat export monopoly are by no means the principal source of income. AWB has long faced the inevitable removal of its monopoly power, which is why it has been making big investments in other assets, notably Landmark (formerly Wesfarmers). This is a giant agri business growing rapidly and AWB shareholders will have no grounds for grizzling if the company loses its monopoly powers. The politics of the issue will then come down to what the wheat farmers want. On latest indications, a majority would still want to keep the single desk. [03.02.06]

Polls on Govt lead look dubious: Be careful with the latest polls, they are hard to believe. Newspoll and ACNielsen (both taken late January) agree that Labor is making heavy weather of it, and Morgan (taken mid-January) says Labor is doing just fine. Newspoll (which is the one most of the pollies look to) has the Coalition with a two party preferred 52%, ahead of Labor 48%, unchanged on a fortnight earlier. Yet, this is based on a big fall in the Liberal primary vote to 37% (down 4%), being mostly offset by an amazing almost doubling of the Nationals vote to 7% (up 3%). The sample for assessing the Nationals vote has to be difficult with the party holding only two federal seats outside Queensland and NSW. The only obvious explanation for such a strange outcome is that voters were annoyed with the Liberals, and sympathetic towards the Nationals, over Senator Julian McGauran defecting. Common sense would suggest 90% of voters would not know who Julian McGauran was. [03.02.06]

Nielsen’s huge change in one month: Surely the burgeoning National vote couldn’t be explained on the grounds that voters blame the Liberals for the Australian Wheat Board paying bribes to Saddam Hussein, but not the Nationals. Newspoll and Nielsen were taken before this week’s release by the Cole inquiry of letters written by Howard and Mark Vaile to the AWB, stating the monopoly wheat exporter should stay in close contact with the Government on Iraqi wheat sales, adding to the difficulties Howard has of claiming he and the Government knew absolutely nothing about the payment of bribes. The Nielsen poll has the Coalition weaker than Newspoll with a two-party preferred 51%, to Labor’s 49%. Yet, this represents an astonishing turnaround as its December poll had Labor on 55%, and the Coalition on 45%. It is hard to think of anything of an earth shaking nature which happened over the holidays to explain this extraordinary change. Nielsen doesn’t give separate primary support figures for the Liberals and Nationals, so we don’t know whether the big leap in the Nats vote is supported by Nielsen. Morgan has the Coalition primary vote at 39%, and Labor at 43%, giving Labor a huge two-party preferred lead of 54%, to the Liberals 46%.[03.02.06]

Chaney clashes with Henry: In a novel argument, Michael Chaney, President of the Business Council of Australia (BCA), has mounted an attack on Treasury saying its poor record on forecasting Budget surpluses makes it difficult for proponents of tax “reform” to mount a case. Treasury head, Ken Henry, rejected the Chaney claims saying they “did not bear scrutiny”. Chaney might gather more public support if he and other advocates of tax reform (particularly of reducing the maximum marginal tax rates) could explain what is meant by Australian tax rates not being “internationally competitive.” Is he talking only of personal income tax rates, and if so, is it suggested that someone on $100,000 would take themselves off to Singapore to save a few thousand dollars in tax? [03.02.06]

CEOs rolling in it: Embarrassingly, while the BCA argues that CEOs are not adequately compensated by international standards, its own member CEOs are doing very well compared to other taxpayers. In the Journal of Australian Political Economy, it has been revealed that research by John Shields from Sydney University shows in the past 15 years the average yearly income of BCA CEOs has risen 564%, to $3.4 million. The average CEO is now earnings $65,700 a week. The BCA has of course championed the Howard Government’s IR legislation providing for greater labour market flexibility (which is not taken to mean higher wages for workers). [03.02.06]


From the Gallery: Peter Dutton (Lib Qld) is no longer Minister for Workforce Participation. He is Revenue Minister and Assistant Treasurer and has told The Australian he wants to simplify the tax system: “Tax is going to be part of the Government’s agenda. I’m looking forward to the challenge.” This is a fine example of political big noting. He may have a B.Bus (Qld Uni of Technology), but Dutton will soon find out Peter Costello is not anxious for his advice on tax policy, even more so because he is such a favourite of Howard’s. Dutton was a mere slip of a boy of 30 years when he defeated Cheryl Kernot in Dickson, a bitter blow for Labor. To Howard’s delight Dutton held it in 2004 and then, just to help him consolidate, the PM gave Dutton more resources as a junior minister. Dutton should also understand that it won’t even be Costello who has the final say on tax, it will be Howard. As in all things the PM makes the final decisions. It may be undemocratic and not strictly according to the Westminster system but he is the only minister the voter is really interested in. [27.01.06]

McGauran defection causes political earthquake: Out of the blue, Senator Julian McGauran, a non-entity seat warmer who is unknown to voters, has caused an upheaval in the Coalition and engendered poisonous relations between the Liberals and Nationals. His decision to rat on the Nationals and join the Liberals was bad enough in itself. But when it led to the loss of a National portfolio in the ministerial reshuffle, it aroused white hot anger among Nationals. Their anger is now directed not so much at McGauran, but at Peter Costello and the Victorian Liberals. John Howard may say he is satisfied Costello didn’t poach McGauran, but the Nationals are convinced he did. [27.01.06]

Princess Fiona - a rebel with a whip: The seriousness of this was hammered home on Wednesday morning’s ABC radio program by new Nationals Senator, Fiona Nash (NSW) stating - “I will certainly be focussing on being a National Senator first, and a Coalition Senator second.” Nash has made an impact in Canberra, and at only 40 years of age is regarded as very bright, with a promising political career ahead of her. Significantly, last year she was critical of Barnaby Joyce’s declaration that he was going to vote as a representative of the Queensland National Party. Now Nash is adopting the same line. She can now be seen as a rebel with a whip as, ironically, she will be taking over in the Senate as the Nationals’ Whip, replacing Julian McGauran. [27.01.06]

Joyce more independent than ever: Joyce said on Wednesday losing the portfolio “didn’t recompense for the efforts of the Queensland Nationals in allowing the Government a majority in both Houses” He added he will be even less inclined to be worried by pressure from his colleagues for voting against the Government.. The Government’s Senate majority looks shaky. Liberal Queensland backbencher, Peter Lindsay says three unnamed National MPs had told him they were likely to follow McGauran into the Liberal Party because of their anger over Joyce’s actions. Lindsay is merely pouring petrol on the flames. Queensland National backbencher, Paul Neville retorted that current Nats anger was hardly likely to encourage more defections. Lindsay is reported to be angry Howard didn’t promote him to a Parliamentary Secretary spot vacated by Cairns based Liberal, Warren Entsch. It went to Bob Baldwin (Lib, NSW). [27.01.06]

Former Nats leaders would have been defiant: Make no mistake, former Nationals/Country Party leaders - Page, Fadden, McEwen, Anthony and Sinclair - would not have copped the loss of a ministry. They would have been prepared to put the Coalition on the line on the question. Vaile has accepted the loss, even though it was open to him to suggest there had been a change in the rules of arithmetic used by Howard in his justification for taking a Minister away from the junior Coalition partner. Vaile could have refused to accept the Howard view that there had been no poaching of McGauran. It was open to him to insist that clearly, Costello and the Victorian Liberal Party had a role in McGauran’s defection. This would amount to a breach of the spirit of the agreement between the Libs and the Nats on the composition of the Coalition. A serious crisis would result, the outcome of which would most likely be a backdown by Howard. With a stroke of the pen he could expand the outer ministry by one to buy off the Nationals. [27.01.06]

Nats finished in Vic: The McGauran defection marks the beginning of the end for the Nationals in Victoria. The Nationals (in the days when they were the Country Party) were a major political force in Victoria under the leadership of Jack McEwen. Now they have no Senators, and only two House seats and they will fall to the Liberals when the present incumbents, Peter McGauran (Gippsland, Julian’s brother) and John Forrest (Mallee) retire. The writing was on the wall for the Nationals when Murray - which had been held by the Nationals/Country Party since 1949 - was lost to the Liberals Sharman Stone in 1996 following long serving deputy National Leader, Bruce Lloyd’s retirement. [27.01.06]

PM to stay on and on: John Howard’s ministerial reshuffle points unerringly to what we have been consistently reporting there is no prospect of him retiring before the next election and handing over to Peter Costello. If Howard wins the prospectively October 2007 election, he will saddle up for another term and fight the election after that, if his party allows him. Only a serious health problem for himself or Janette will bring about the PM’s voluntary retirement. The reshuffle was surprising for its modesty – leaving aside his merciless treatment of the Nationals. Around Parliament House it was generally accepted that Andrew Robb and Malcolm Turnbull would be promoted straight from the backbench into a junior portfolio. It was even thought Robb might have gone straight into Cabinet. No way: they were given 3rd prize - as Parliamentary Secretaries who have no power to do anything. Yet they would buy and sell most ministers, junior or Cabinet. Turnbull has been given the job of Parliamentary Secretary to Howard, with special responsibility for water policy. Hang on a minute, John Anderson on his retirement said he was very proud of the fact he had fixed up water policy. [27.01.06]

Strange priorities on education: The Nationals won’t be too keen on a Lib from the Eastern Suburbs of Sydney having a big say on water. After all, farmers own water. While no portfolio could be found for Robb and Turnbull, Senator Santo Santoro (a former Queensland State Liberal Minister and the leader of the Right wing conservative Queensland Liberal faction), went straight from the backbench to become Minister for Ageing. It’s a non-job, but he is a minister. So far in The Senate, Santoro has been most prominent for his efforts to prove there is a Left wing conspiracy in the ABC against the Howard Government. It says something about the values of the Press Gallery that Dr Brendan Nelson’s move from Education to the Defence portfolio is seen as a “promotion.” [27.01.06]

Billions going for foreign wars: Right now, Australia could do with a lot more education and a little less Defence - especially multibillion dollar destroyers and the very latest US jet fighter - both more suited to a NATO, Middle East or Straits of Formosa environment than our own region dotted with failing Pacific Island states. Fortunately, Julie Bishop has picked up the Education portfolio and moved into Cabinet. She will do a much better job than Nelson. He gave highest priority in his time in the portfolio to his political advancement by: (a) bashing the Labor States education efforts; and (b) standing over the universities by demanding they adopt Howard’s industrial relations policies if they wanted any federal funds. [27.01.06]

Future of wheat monopoly: Mark Vaile is in a weakened position and he is soon to face a big test - can he stave off moves to end the Australian Wheat Board’s monopoly on wheat exports? It is now obvious the Cole inquiry will be damning of the AWB knowingly providing some $30 million in kick backs to Saddam Hussein under the US’s food-for-oil program. This threw into the face of the Government the dreadful hypocrisy of having sent Australians to war in Iraq whilst the AWB was busy providing Saddam’s regime with funds that could be used for bullets and bombs to attack Australian soldiers. John Howard has already said the AWB monopoly role “is something that should be looked at”. He added - “Up until now, the Government has had a policy of having a single desk for exports. That’s a policy that can always be reviewed.” The AWB was set up as statutory export monopoly in 1939 with a monopoly power at the insistence of the Country Party. Wheat growers, who suffered grievously during the depression, were convinced the only way to cut out conniving middle men who were driving down wheat prices was to set up a single seller. This is probably still the view of a majority of growers. [27.01.06]

AWB dysfunctional: Yet, the privatisation of the AWB in 2001 has created a big problem. Paul Kerin, a professorial fellow of the Melbourne Business School, told the Fin last week the incentive system in the AWB and the lack of commonality between the interests of wheat growers and shareholders makes it dysfunctional. A number of Liberals are against the AWB monopoly as it flies in the face of Government policy, which is supposed to encourage competition, resist monopolies and allow the market to rule. It could also be argued that, to some degree, the refusal of the Government to end the export monopoly gave the EU an excuse to dismiss Australian complaints about European agricultural subsidies at the WTO Hong Kong meeting. To to get legislation through the Senate ending the monopoly will now be very difficult for Howard in the face of the threat of more floor crossing by Barnaby Joyce, and now Fiona Nash.

Minchin odd on super: For some reason not apparent to everyone, Nick Minchin has a reputation as being very smart and a good administrator. This certainly did not show through this week with his backflip on getting rid of the 15% tax on superannuation contributions. On Monday he was all for removing the tax, saying - “This is a tax that is of dubious value and ... whether in this budget or in the future, it’s something that should be very much on the Government’s agenda for consideration. It is a great bone of contention in the Australian system that we do tax super three times – going in, while it’s there and when it comes out.” The next day, these comments made news everywhere. Then Minchin had a talk with Costello, and suddenly there was a change of tune with Minchin saying - “However, I see this as part of a longer-term (debate) over national savings - not to flag any immediate intentions by the Government to reduce or abolish the tax in 2006/07.” This enabled Labor to sneer, with Treasury spokesman Wayne Swan saying the Government was split, as Assistant Treasurer Mal Brough had attacked Labor’s proposal to scrap the 15% tax. [27.01.06]

No sense in dumping tax: Yet, proponents of scrapping the tax should ponder Fred Argy’s response (Fin, Tuesday) that it would widen the tax breaks for higher earners and add relatively little to the retirement benefits of low income workers. Argy says that removing the tax might encourage some to contribute more to super. But if it reduced government saving equally (the tax is worth $3.3 billion to revenue), and if middle to high income earners merely switched from other forms of savings to super, it might even have a negative effect. Argy adds - “So it would fail the equity test while doing little or nothing for economic growth.” Argy says the issue of rorting tax by higher income earners has to be addressed. Argy is spot on. The maximum contribution attracting the 15% concessional tax is $100,000. So by income splitting, an executive on $300,000 could contribute $100,000 for his own super - and the same for his wife’s super - on which they would pay only 15%, and have only $50,000 each left which would face normal tax rates. [27.01.06]

Costello lectures on savings: Meanwhile, on AM on Tuesday, Costello again read the lecture on how the government knows best about what to do with each citizen’s money, saying - “Let me make this point - that the way in which we are building savings in this country at the moment is by having the Government save (through surpluses), and if the Government gets out of the business of savings at a time when individuals are borrowing and businesses are borrowing, then you won’t have any of the components of saving going on in our economy, and that will not be good for national saving.” So, Costello says the government should not balance the Budget, but rather take more in taxes than it needs, and then put the surplus into the Future Fund. This will ensure public servants receive their pension in 20 years time. Oh joy. All this to solve a non-existent problem. The cost of pensions for public servants over time will reduce because they will all be in an accumulation fund. [27.01.06]

Parliament sittings: The following are the scheduled sitting dates for Parliament this year: Feb - 7, 8, 9 - 13, 14, 15, 16 (House and Senate estimates ) - 27, 28. March - 1, 2, 28, 29, 30. May - 9 (Budget day), 10, 11 - 22, 23, 24, 25, 29, 30, 31 (House and Senate Estimates). June - 1 (House and Senate estimates) - 13, 14, 15, 19, 20, 21, 22. Aug - 8, 9, 10, 14, 15, 16, 17. Sept - 4, 5, 6, 7, 11, 12, 13, 14. Oct - 9, 10, 11, 12, 16, 17, 18, 19 - 30, 31 (House and Senate Estimates). Nov - 1, 2 (House and Senate Estimates) - 6, 7, 8, 9 (Senate only) - 27, 28, 29, 30. Dec 4, 5, 6, 7. [27.01.06]

Treasury head on FOI: Treasury head, Dr Ken Henry, this week gave an unexpected and surprising insight into how he views freedom of information applications for sensitive material from his department. On Monday, The Canberra Times published a full page feature on Henry which was authored by the paper’s writer on the Public Service, Paul Malone. Specifically, Henry was speaking about FOI applications for information about the development of government policy. He was quoted as saying - “The way this is going, there are only two possible consequences I can see for this department. I’m satisfied, having reviewed a number of them, that by and large they have been motivated by a desire to either embarrass the Government and Treasurer, or the department. Now it is not my role to help people embarrass the Government. So how am I going to respond? There are two likely responses. The first is that you will see Conclusive Certificates (issued by the Treasurer) that it is not in the public interest for the information to be released, issued on every one of them. That’s very likely.” [27.01.06]

Ignore Govt embarrassment: As for the second response (which is already happening), Henry said that documents will not be produced, as communications on sensitive policy issues will be verbal. He added - “Communication with the Treasurer is obviously vital. But because of FOI, records are not always kept.” Yet he also says it is “very important that records are kept of oral communications with ministers and ministers’ offices, and that there is an accurate recording of not just the decision, but the considerations underlying the decision.” It is not Henry’s role to concern himself as to whether information gained via FOI applications will embarrass the Government. Anything but. It is his duty to see that, as far as his department is concerned, the FOI Act is adhered to. The Act says nothing about the right of bureaucrats or ministers to decide for or against providing information on the basis of what they think is, or might be, the applicants’ motives. Nor does Henry have the power to decide on an application. It is solely a matter for the FOI officer in Treasury. [The Act refers to this officer as “the decision maker”, and each department has one]. It is this officer who alone decides the outcome of an application. [27.01.06]

People and Events: Stephen Jones has been appointed for a three year term as National Secretary of the Community and Public Sector (CPSU) union. He has been with the union for 12 years. Contact (02)8204 6943. David Spencer has been appointed Australia’s Ambassador for Asia-Pacific Economic Cooperation (APEC). He is currently Special Representative, Hong Kong WTO Ministerial meeting. Brian Opeskin has been appointed Deputy President of the Australian Law Reform Commission. Federal Court Justice Mark Weinberg has been reappointed to the commission until 31 March to enable him to complete work of the review of federal sentencing laws. [27.01.06]

From the Gallery: Ms Anne Plunkett has been appointed Australia’s Ambassador to Ireland and the Holy See. She will be keeping the seat warm until the PM wants to reward a retired pollie with this most sort after post. She replaces John Herron, a former Minister in the Howard Government, who was appointed in January 2003 in return for him retiring gracefully from the Ministry. Other luminaries who have held the post include Vince Gair and disgraced former WA Premier, Brian Burke. Former Speaker Bob Halvorsen got the job for agreeing to resign. Howard thought he was giving the Opposition too good a go as an “independent” Speaker. NINE asked the Australian cricket heavies to put on another 20-20 cricket hit and giggle between the Aussies and the South Africans on the same day SEVEN will televise the ladies Open tennis final in Melbourne. This looks like being a ratings winner, with the tactics of NINE being obvious. Surprisingly, the Packer flagship was knocked back. This is the first sign that James Packer doesn’t have the clout of his late father. Kerry believed he owned Australian cricket (which he pretty much did), and wouldn’t have accepted a refusal. [20.01.06]

Howard in trouble over AWB corruption: John Howard appears to have forgotten the maxim - never set up a royal commission unless you first know the outcome. To date, the Cole inquiry has found plenty of evidence that the Australian Wheat Board Ltd corrupted the UN oil-for-food programs for Iraq when selling wheat to Saddam Hussein’s regime. Labor can sense a prospect of pinning Howard with a breathtaking act of hypocrisy: being in the know about $300 million of corrupt funds being sent to the Iraq dictator, while claiming (after no WMDs were found) the justification for the invasion was for regime change. [20.01.06]

Downer now directly implicated: This would be an echo of the pre-World War II ‘Pig Iron Bob’ affair, when wharfies refused to load pig iron for Japan in defiance of the Menzies Government. The wharfies argued (perceptively) the product could come back against Australians in the forms of bombs and bullets. Howard’s terms of reference for the Cole inquiry prevent the commission from making findings or recommendations about the Government’s role in the scandal. The PM justified this by saying the UN Vockler inquiry had found no wrong doing by the Government. Now there is evidence Alexander Downer may have known of the AWB’s corrupt practices. [20.01.06]

Question time grilling looms for ministers: It appears a near certainty that his department knew all about what was going on. John Agius QC, assisting the inquiry, has already revealed DFAT officials have been investigated and questioned and are likely to be called as witnesses. Further, DFAT okayed the AWB decision to use a Jordanian company to truck wheat, a company which turned out to be the front vehicle used to pass on the bribes to the Saddam regime. When Parliament resumes next month there will be a searching examination by the Opposition of Howard, Downer and Vaile as to what they knew and demands the inquiry be extended to Government activities in relation to the scandal. Irrespective of whether Howard is forced to change the terms of reference, the evidence is looking so damning that he can be accused of a cover up in formulating the current terms of reference. [20.01.06]

Cabinet reshuffle soon: An announcement by Howard of a reshuffle of the Ministry is close, perhaps even later today. It would seem Defence Minister, Robert Hill, has yielded to pressure and agreed to resign to become Australian Ambassador to the UN. He didn’t want to go, and has told sympathetic colleagues - why would you want a job entailing picking up Alexander Downer at the airport? Howard needs to get rid of another Minister, or increase the size of the Ministry, since he is anxious to promote prominent backbenchers Malcolm Turnbull and Andrew Robb. The Sydney Morning Herald, this week, described Hill as one of the best defence ministers in recent times. In fact he was a flop. Hill got rid of the former Secretary of Defence, Allan Hawke - a competent manager - and replaced him with the then Ambassador to Indonesia, Rick Smith, who has had trouble handling the immense managerial load of Russell and keeping its accounts balanced. [20.01.06]

Minchin tipped for Defence: Smith has been unable to sign off on Defence accounts because of doubts involving the status of some $6.9 billion in assets. Last November he told a Senate Estimate Committee that, this financial year, Defence would spend some $77 million (including $42 million of staff time) on measures to attempt to straighten out the accounting mess. Leading accountancy firms have been hired. Then there have been revelations of questionable behaviour by Defence Materiel Organisation officers in letting contracts for equipment. Howard is believed to want Senator Nick Minchin or Tony Abbott to switch to Defence to get Departmental management back on track. [20.01.06]

Costello still in trouble: Peter Costello’s bad year of 2005 has continued into January. Although most Australians on holidays would not have noticed, nor cared, that Robert Gerard’s nomination as a candidate for the Reserve Bank board came not from Treasury, but from Costello’s office. Liberal MPs would have noticed. Documents obtained by The Financial Review (through the Freedom of Information Act), revealed Treasury was never keen on Gerard, and had warned Costello he was too close to the Liberal Party to be seen as independent. Costello repeatedly rejected names suggested by Treasury. Costello made it plain to Treasury (through his Chief of Staff, Phil Gaetjens) he wanted Gerard. Treasury had little more than a day to conduct checks on Gerard. The documentation does not show Treasury had warned Costello of Gerard’s problems with the Tax Office, and this leaves the question hanging why not? It was common knowledge in Adelaide through published accounts of court cases. [20.01.06]

Treasury washes hands of deal: All this weakens the case made by Costello in question time last year (under the cover of it being a joke) that Howard and the South Australian Cabinet Ministers were ecstatic about the idea of Gerard going to the Reserve Bank board. This was an attempt by Costello to get his colleagues to share some of the blame for the dreadful decision to appoint Gerard. The Treasury documents make it plain that, from the very start, Costello was the initiator of the appointment. An interesting point is that Treasury allowed the documents to go to the Fin under FOI. The Australian has been locked in legal battles with Treasury for years over being denied access to Treasury documents relating to the Budget and economic forecasts. Costello has been resolute in resisting demands by The Australian for documents. In the current case, maybe Treasury decided it would be a good idea for everyone to know that it certainly did not approve of Gerard. One Gerard appointment which can be sheeted home to Howard was putting the major South Australian donor to the Liberal Party on the PM’s Community Business Partnership, a body designed to promote corporate social responsibility. According to the Fin, Gerard failed to attend any meeting of the body for 18 months. [20.01.06]

Latest poll bad for ALP: The latest Newspoll is depressing news for Kim Beazley and Labor. Over the holiday period between the middle of December and the middle of January - the Coalition got back to an election winning position. Two-party preferred the Coalition is now on 52%, and ALP 48%. In the middle of December, Labor led with 51%, to the Coalition’s 49%. It’s difficult to grasp why 350,000 Australians would switch sides in this period (unless of course the poll is plain wrong). Admittedly, Labor and Beazley did nothing exciting in this period. The aftermath of the Cronulla riots would not have helped Labor. Yet voters seemed uninterested in the Costello disasters of appointing Robert Gerard, and then having it revealed that Treasury believed the IR legislation would actually lower wages and reduce productivity (see later item - IR benefits minor at best). Nor was the Coalition hurt by news of a hike in private health insurance premiums, continued high petrol prices and the decision to despatch additional troops to Afghanistan. [20.01.06]

More bad trade news: The worst news for Australia over the holidays was the continuing failure of the Government’s trade policy. In November, the trade deficit hit $2.5 billion - the 44th consecutive monthly deficit and the worst for nine months. Exports rose only 0.6%, but imports jumped 7.2%. (Disturbingly, imports of consumption goods rose 11%, to $4.3 billion). And this while prices for commodities were at record levels. Unsurprisingly, the Trade Minister, Mark Vaile (while ignoring the deficit), issued a press release saying exports were the second highest on record which only served to underline the failure of trade policy. Various excuses are put forward for the jump in imports to higher levels. For example, there have been one off capital goods imports such as aircraft, machinery and telecommunications equipment. Again this emphasises Australia has to rely on overseas investors to provide funds enabling imports of such essential items. [20.01.06]

Raising funds abroad: Some economists believe Australia can avoid a balance of payments crisis through the mechanism of the floating dollar: it will sink in value to reflect the strain on the balance of payments making exports more competitive. Yet imports will be correspondingly dearer and more Australian dollars will be required for repatriation of profits and payment of debts to foreigners. John Edwards of HSBC points out that the ability of Australian banks to raise funds abroad in Australian dollars has allowed Australia to run current account deficits of the present proportions. This minimises the currency risk, says Edwards, “but the servicing of foreign debt will soon be a real problem”. He adds - “The only way out of this iron arithmetic is for Australia to export more than it imports - which it has not done other than intermittently for the past 30 years.” [20.01.06]

Hughes warning: An obvious way to begin clawing back the trade deficit is to increase the value of exports of manufacturers. Noted economist Barry Hughes points out the failure of exports after the great successes of the eighties and nineties. The latest annual export revenue for broad manufacturing (including simply transformed manufactures like steel) is more than 5% down on the peak in the year to March 2002. He says - “Volumes are now struggling rather than galloping”. Hughes points out the value of elaborately transformed manufactures (ETMs) are down 3% from the 2001 peak. While ETM volumes are up 10%, this is limp compared to past results and sluggish in relation to surging world trade in manufactures. And Australia has been losing market share of manufactured exports. “There is no reason to give up on manufacturing but every reason to think ahead about the shape of its future,” Hughes says. [20.01.06]

Industry Dept. relaxed: One who should be doing a lot of thinking about the future of manufacturing is Mark Paterson, who has been head of the Department of Industry Tourism and Resources (DITR) for the past four years. Those in manufacturing do not normally read The Canberra Times, but had they read the edition of 2 January - with its extensive broadsheet profile of Paterson - they would have been disappointed. Nowhere in the article was there any suggestion Paterson and his department were treating with any urgency the need to boost exports of manufactures. Rather, Paterson nominated energy market reform as a success story of DITR. Paterson has spent a lot of time on the internal operations of his department, such as cutting down on meetings. But as far as people from outside coming to the department for aid (such as manufacturers), he is not encouraging. “We don’t go out and advocate significant intervention in the market,” he told The Canberra Times. The author of the Paterson article, Paul Malone (a former DITR officer) reminded Paterson that shortly after his appointment to DITR, he told a luncheon there were people putting out their hands for serious amounts of money and they are “the most belligerent, obnoxious correspondents I have ever seen.” [20.01.06]

Visitors don’t understand: Paterson told Malone he stood by that, but he didn’t see as much of it now. Paterson is not entirely welcoming of visitors from the private sector. He said many people in the private sector don’t fully understand public policy, and the process of public policy development. “That’s obvious when you see people come to town. They argue invariably from a position of vested interest, or of their interest at least. And they don’t think about how that links in with broader government policy. They don’t think about the second and third round effects of what they might be advocating which are some of the things that we need to do in providing advice to government.” The Paterson interview reinforces the view of the great majority in manufacturing industry: DITR is hopeless and has been for many years. Those in industry would hope that Paterson would see it as his job to form Government policy so that it assists manufacturing. Instead, Paterson leaves the impression government policy is carved in stone and those poor sods coming to Canberra for a little help should realise government policy comes first. [20.01.06]

Employers in dark on IR: Just why Australian Business Ltd released (5 January) results of a survey on their members knowledge of the Government’s IR changes is a mystery. The survey revealed only 13% of ABL members understood the industrial relations changes. This confirms what was obvious - the secretariat of ABL and no doubt those of ACCI, and the Australian Industry Group - all gave the Government unquestioning support for the IR changes without first ensuring their membership understood what as involved, and latterly approved. Paul Ritchie of ABL told ABC radio - “Information has to move from being broad-based TV feel good advertising to very practical messages and very practical information that any business person can use.” Which rather puts the Government in the cart. This was the very point of Labor’s objections to the $55 million Government ad campaign - it was wasted and was mere political propaganda for IR reform before any legislation saw the light of day. [20.01.06]

Spin doctors out of tune: A spin doctor for IR Minister, Kevin Andrews, responded to the lack of understanding by employers by saying this was not surprising, as the legislation had only passed on 9 December. In so doing, the spin doctor cut right across the argument John Howard has been running in rebuffing complaints there had not been sufficient time for the legislation to be properly examined by the Senate with a very limited Senate committee inquiry. Howard insists it had been well known for years what sort of IR system he was after, and had made a ministerial statement on the legislation on 26 May. In short, said Howard, there was no need for more time for the community to examine the legislation. The PM’s argument was obviously specious, and the survey of 1500 ABL members reinforced this. Not only has the IR package been slammed through Parliament with most of the population having no idea of what it is all about (except to be deeply suspicious of it following the effective ACTU ad campaign), but the benefits have been grossly oversold. [20.01.06]

IR benefits minor at best: The Treasury, in a confidential 6 October minute to Peter Costello, said the initial effect of the IR changes would be to reduce productivity. The Melbourne Age’s biannual economic survey (released 3 January) revealed that most respected economists are divided over whether the IR changes would make a positive or negative impact on the economy. A majority agreed the results would be small and slow to emerge. BIS Shrapnel’s Richard Robinson, in a scathing assessment, said the reforms would only lead to higher productivity in the next downturn because of an increase in sackings. “Clobbering low-paid, unskilled workers will not increase the economy’s productivity,” he said. Treasury also said the reforms would deliver lower wage growth for low-paid workers. Costello responded to the Treasury finding by saying he was “very doubtful” about the Treasury conclusion. Peter Hendy, of ACCI, retorted he would be surprised if the Fair Pay Commission “after taking fully into account the economic effects of its decision “ would deliver faster wage growth than under the present system. All of which means that at best the IR package will deliver nothing like the cornucopia of benefits claimed by the Government. [20.01.06]

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