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(generated from captions) "and one for the whole nation," for the husband, one for the wife saying things like, "Have one holding babies who've been in the papers led by people like Peter Costello you've got a government this whole excercise, Maxine, is The bizarre thing about Well, I'm sure he's been misquoted. appreciates this? Do you think the Health Minister you're infertile, they're essential. if you want to have a child, if Well, I think they are essential Not all Liberals agree. are non-essential. procedures the Health Minister says for infertile women - is on IVF procedures And tonight the domestic debate I'm Maxine McKew. Good evening. Welcome to Lateline. This program is captioned live. to get out. and it's going to take us a while It's taken us a while to get there, in the fix we're in. And now we find ourselves And America's energy crisis. on social security reform. George Bush launches a new assault the lowest point of his presidency, with his approval rating at Tonight -

including partial privatisation. and is pushing big changes, the system is going bankrupt The President says to keep them out of poverty. rely on social security Nearly half of all elderly Americans called social security. public pension system to overhaul the hugely important selling his plan Mr Bush has been crossing the US, For the last two months his slumping approval ratings. and to turning around to the US President's troubled agenda Those priorities are key priorities for the American people. Tonight I will address two vital Good evening. in a prime time press conference. America's biggest television networks he faced the media and in his presidency, For only the fourth time doesn't do this very often. George W. Bush Norman Hermant reports. on either issue. winning over the US public So far, he's had little success to rein in energy prices. and he's under increasing pressure America's huge public pension scheme on plans to overhaul much of his political capital He's staked was domestic issues. of Mr Bush's rare press conference But the main focus of a government in Iraq. and praised the formation for Iran and North Korea the US President had strong words his second administration, 100 days into his lowest approval ratings yet. in the face of on prime-time television where George W. Bush has appreared First to Washington, of cutting dole payments. job agencies in charge the government plan to put And doing the spade work - in Baghdad leaves 20 people dead. as a spate of suicide bombings Security forces targeted remain undecided. as one-third of British voters Tony Blair hounded on Iraq Dogged by war, But first tonight's headlines. coming up shortly. and Malcolm Turnbull, Our debate with Lindsay Tanner they've decided to pick on IVF. more desperately needed than others, some of which are more urgent, of which there are so many, of medical procedures and yet across the whole gamut that we have more babies, and how important it is about fertility putting out all this stuff

to get it back on track, willing to soften his agenda showed a president If this press conference at the United Nations. John Bolton can get the job done I'm a little too blunt. Sometimes people say John Bolton is a blunt guy. he's standing by his nominee. but the President says during bruising Senate hearings, He's been called a bully ambassador to the UN. Mr Bush's nominee to be America's surrounding John Bolton, and tough talk on the controversy Bold talk on energy from safe, clean nuclear power. more than 78% of its electricity And today, France gets 58 plants in the same period. France, by contrast, has built since the 1970s. ordered a new nuclear power plant Unfortunately, America has not to, of all countries, France. unfavourably even comparing US efforts is more nuclear energy, one of the answers for America This week he said the US President is thinking big. To fix them, America's short-term energy problems. his kingdom couldn't solve told Mr Bush when Saudi Arabia's Crown Prince That was all too apparent this week to get out. and it's going to take us a while It's taken us a while to get there, It's taken us a while to get there, in the fix we're in. Now we find ourselves to find a solution. and the President is under pressure prices are rising From petrol to power, the President is his energy policy. The other priority for you will not retire into poverty. social security your entire life, if you work hard and pay into we'll make this commitment - for low-income retirees, By providing more generous benefits for people who are better off. will grow faster than benefits for low-income workers where benefits system in the future So I propose a social security the rich get less. the poor get more out of the system, adjusting payments so that something Republicans usually don't - he's now contemplating So, to try to reverse the slide, are opposed to Mr Bush's plans. up to two-thirds of the public But polls suggest

The British PM, Tony Blair, has faced the public for the first time since he was pushed into disclosing confidential legal advice for the war in Iraq. The initial advice of the Attorney-General showed that although he believed British forces could lawfully participate in the US invasion, he could not be certain a court would come to the same conclusion. Mr Blair maintains he took the right decision, but his stormy reception on a televised public forum has shown that six days out from a general election, the public is still not in a forgiving mood. From London, Kirsten Aitken reports. Forced to release the Attorney-General's confidential legal opinion on the basis for war in Iraq, Tony Blair didn't have to wait long to gauge public reaction. Welcome to auto very special Welcome to auto very special edition of question time, with just a week to go until polling day... The leaders of the three main parties had already during wartime. to be convicted of murdering comrades is the first soldier since Vietnam Sergeant Hasan Akbar has been sentenced to death. as the invasion of Iraq began who killed two officers And in the US, an American soldier until we terminate them. We will chase them taking revenge of the Iraqi people. The Baathists, the murderers are remnants of Saddam's ousted regime. They are hypocrites, but they are not Mujahideen. They claim that they are Mujahideen, the brunt of the bombings. Iraqi security forces are bearing on US troops. calling for more suicide attacks the terrorist Abu Musab al-Zarqawi purported to be the release of a recording The attacks coincided with and a hospital. a communications centre The targets included police, and wounded dozens. has killed more than 20 people In Iraq, a series of car bombs Norman Hermant, Lateline. walk away from a political fight. it also showed he still won't leaders of the three main parties had already agreed to be questioned by members of a live television

audience. The Prime Minister was given the most hostile reception, given the most hostile reception, by far. What it was was a political decision to support your best mate, George Bush. (APPLAUSE) As well as that, if you weren't fraudulent, you're grossly negligent and for you're grossly negligent and for that you should be resigning anyway. If I decided the course you want me to take, Saddam Hussein would still If I decided the course you want me to take, Saddam Hussein would still be in charge of Iraq today, people would have been dying in Iraq. Conservative party leader Michael Howard was also given a tough time. After confusing the audience about his position on Iraq. Mr Howard claims the Prime Minister lied to his Cabinet about the legal basis for war. A war he still supports. Are you saying you would have still gone to war against Iraq if you had known there were no gone to war against Iraq if you had known there were no WMD in Iraq? Yes. That's exactly what I'm saying. On what grounds? On the grounds that I've just given - that Saddam Hussein was a threat to the peace of the region, was a threat to wider peace, he had tried to get weapons of mass destruction in the past The Iraq issue has kick-started what had been viewed as a rather lacklustre campaign. Its focus had been on domestic issues such as the economy and health. Most opinion polls still place Labour well ahead of the Conservatives. But Labour is anxious to move on from the war. Its significance, politically, is Irag's not going away. You know, the rule in PR: if you've got bad news, you get it all out at once and then see if you can weather the storm. But it's just coming out - drip, drip, drip - for Blair. But there is some relief for Labour the morning after it's toughest day in the campaign so far. Britain's most popular daily and backer of Tony Blair, the Murdoch-owned 'Sun', has turned its attention elsewhere. It is much more interested in the virtue: the newest girlfriend of actor Tom Cruise. Kirsten Aitken, Lateline. Following a landmark meeting, the leaders of China's Communist Party and Taiwan's opposition party have issued a joint statement rejecting independence for the island and agreeing to work together to reduce tensions in the Taiwan Strait. Lien Chan is the first senior Taiwanese politician to set foot on the mainland since the two sides split after the civil war ended in 1949. Despite the obvious warmth between Chan and Chinese President, Hu Jintao, relations between the two countries have been strained. Beijing has taken an increasingly hostile stance towards the pro-independence policies of Taiwan's incumbent Democratic Progressive Party. In today's talks, the leaders have agreed they should return to a 1992 consensus between Beijing and Taipei, which specified that the island and the mainland belonged to "one China". The Australian government says it's close to settling its differences with East Timor over oil and gas reserves in the Timor Sea. After three days of talks, Foreign Affairs Minister Alexander Downer has told reporters there has been good progress, with substantial agreement on all major issues. Most of the key elements have been incorporated into a draft text. There are still some minor issues to be agreed, but all the major issues have been agreed. Under the deal, Dili is expected to agree to postpone negotiations on a permanent maritime boundary, in return for several billion dollars of extra revenue. Further talks will take place in Brisbane next month. The scope of the Howard government's push to get people off welfare and into work is continuing to expand. As well as single parents and people on disability pensions, it's now emerged the budget will crack down on suspected dole rorters. The government believes up to 25,000 of the country's long-term unemployed may not be genuine in their efforts to find jobs. It wants to put private job agencies in charge of finding who they are, and then cutting off their dole payments. From Canberra, Greg Jennett reports. The unemployment rate is the lowest in 20 years, but somehow not low enough to shrink the ranks of the long-term jobless. Convinced up to a quarter of those on the dole for a year or longer might not be trying to get a job, the government's preparing another crackdown. We will not accept a position where people are offered jobs, where people are offered taxpayer assistance to find jobs, and then fail to take up those jobs. The budget's expected to thrust the Job Network employment agencies into the front line, giving them power to It's a plan to sideline Centrelink, which until now has been the only one responsible for punishment. This is another example of the Howard government passing the buck. The Howard government is shirking its responsibilities to ensure dole recipients meet their obligations by handballing compliance with the system to the private sector Job Network providers. The Salvation Army's Employment Plus doesn't want the extra power. It is something in which we then become, if you like, the policeman. Compassion and patience, he says, is the way to work with clients. The right approach is the positive one. We're always going to be uncomfortable having to punish people. Job agencies already report thousands of people to the government each year for lack of effort, but upon investigation, Centrelink only suspends dole payments in 15 percent of cases. I have a real fear that if they had that power it would, in fact, lead to a big blowout in the number of people who get their payments suspended. On top of internal Liberal divisions over IVF, the outcry on the unemployment changes won't have escaped John Howard's attention on his return to the country this evening. As the government absorbs pre-emptive strikes on its budget, in the Labor Party, there's been another outbreak of self-analysis. Frustrated by the party's plight at the federal level, Labor elders have drafted a set of recommendations calling for changes to structure, an end to factional infighting, as well as policy boldness, courage and risk-taking before the next election. The plan, backed by President Carmen Lawrence and 14 others, has been distributed to federal frontbenchers for comment. Greg Jennett, Lateline. Well, now to tonight's Friday forum, in a week which has seen federal politics back at the top of the news agenda. Creating most heat for the Howard government has been Tony Abbott's plans to cut Medicare funding for fertility treatments, exposing deep divisions within the Cabinet. And while that issue has captured the headlines, the broader debates within the Coalition over tax policy and, for Labor, its general direction under Kim Beazley have taken a bit of a back seat. Well, two backbenchers with considerable interest in those issues are the member for Wentworth, Malcolm Turnbull, and Lindsay Tanner, the member for the seat of Melbourne. With the federal budget due in just over 10 days, it's worth noting that both are on the House of Representatives Economics Committee. So, gentlemen, welcome to you both. Nice to have you back again. BOTH: Good evening, Maxine. Now, Lindsay Tanner, we'll start with you. Questions around your future have been surfacing in the press again today. Have you had discussions with Kim Beazley about returning to Labor's front bench? No, I haven't, Maxine. We've had nine years of failure. We haven't had four losses in a row for the Labor Party since the 1960s, so I'm keen to ensure that we actually get serious about doing the things that are necessary to win, and I don't think we've done enough of them over the past nine years. We've been too reactive, we've failed to build the degree of inspiration, the vision that's necessary to win. We both have to inspire and to reassure, and we haven't done enough of either of them. So now is the crucial time when the foundations are laid for the inspirational vision that will help get us over the line. We're losing control of the Senate, which means that we are losing political relevance. We won't be as much in the frame in the day-to-day stories because we can't stop things in the Senate. I think it's crucial that we focus on building our policy vision. Well, do you want to, and are you seeking to come back to the front bench in order to push that particular view? Maxine, there's no vacancy. I'm not campaigning. Obviously I'll address any future opportunity at the time if and when it arises. What I'm passionate about is making sure that Labor gets out of this long-term hole that we've been in of being reactive and not setting the agenda, of not being on the front foot. The only really major theme that we have been on the front foot with over the last nine years, the only big idea in Australian public debate that we've been identified with, really, has been Knowledge Nation. It was the right thing - we just didn't do it well enough. We need to have big ideas out there, we need to be setting the agenda, we need to be the ones that are generating the debate. That hasn't been happening, and that's not a recent thing; that's a phenomenon that's been going for quite some time. I want to turn that round. Well, are you saying, then, that Kim Beazley has got the emphasis wrong? Because he's been very clear - and he repeated this at the Press Club recently - that the job of the opposition is to put pressure on the government. No, I don't think that's mutually exclusive with the idea of building new policy ideas. Obviously that's part of the job of the opposition - I don't have any disagreement with Kim about that - but it's not the only role that opposition has to play. And of course, Kim was the person who was the inspiration and the key to the Knowledge Nation idea, so the one instance where we have really pushed the boat out there, it was Kim involved. I voted for him in two leadership ballots, so I've got obviously no problems with Kim being the person leading us into this, but I think we've got an issue that's way beyond the question of who's the leader or how the leader approaches. It's a collective issue. We have been far too defensive, far too reactive, far too much allowing John Howard to set the political agenda. We've got to break out of that and we've got to do it now, not wait till the third year of the cycle or third year of the parliament. We've got to do it now and set the debates in the public arena. Malcolm Turnbull, I'm sure you've got a bit of gratuitous advice for Labor before we move on to other issues. It'll be taken in good spirit. I think Lindsay has very fairly and eloquently sort of recapitulated John Howard's criticisms of the Labor Party, which is that they're, at the moment, a party without policies and without ideas, and as Lindsay says, without an agenda. And that, of course, answers the question - why would anyone vote for them? And nobody would, unless you wanted a government without ideas or without an agenda. And so Lindsay's criticisms of Labor are very well made, but they underline the problem they have, that they've had for nine years, had only one idea. I don't think it was as great an idea as Lindsay does, but if you've only had one idea in nine years, what is the chance that you're going to come up...? One major theme that dominated public debate, Malcolm. Slightly different from what I said. Well, OK, one major theme in nine years. It's a big challenge to come up with an agenda for government in the next year or so. Malcolm, John Howard has a thumping victory under his belt. He's about to get control of the Senate. The one big idea that's been floated this week from the government is that IVF treatments should be limited and capped. In fact, the Health Minister, Tony Abbott, is saying they now fall into the category of non-essential procedures. Do you agree with him? Well, I think they are essential if you want to have a child, if you're infertile. Good point! (Laughs) Do you think the Health Minister appreciates that? Well, I'm sure he does. I'm sure's been misquoted, but I just say this... No, he hasn't. I assure you, he hasn't. Alright, well, children are essential. And if you are infertile, an IVF treatment or other fertility treatments are essential, so... Well, it sounds as if you're agreeing, then, with Helen Coonan, the Communications Minister. She apparently has made the point to the Prime Minister in a letter that infertility is a treatable health condition. Well, that's plainly correct. It is treatable and it is treated all the time and, I might say, treated much more generously under the Howard government than it was under Labor. Under Labor, not only, of course, did you not have the safety net - I mean, Labor is against the safety net, which of course makes all the treatments cheaper... Well, the safety net... You don't need the safety net. With the major increases in doctors' funding that we were going to provide, the safety net is unnecessary and your electorate gets a lot of money out of the safety net, Malcolm. It's the sort of people in your electorate who take all the loot out of the Medicare Safety Net, and people in low-income electorates that don't get anything. Well, you see, Lindsay's now demonstrating the major theme that he's going to develop, which, interestingly enough, is very reminiscent of his nemesis, Mark Latham, which is the politics of envy. I wasn't aware that he was my nemisis. (Laughs) Now, that got Mark nowhere, Lindsay, and it will get you nowhere either. Let me just make this observation. Under Labor, the Medicare limit was six cycles over your lifetime. And Michael Wooldridge changed that. That was 1996. Malcolm, you of you all people know all the multiple factors that are out there meaning that women - why women are delaying pregnancies and having babies later and therefore in need of, if you like, these kind of reproductive technologies. Sure - well, we recognise that. The Liberal Party - the coalition in government recognise that and has made much more generous provision. OK. Are you in favour of keeping that generous provision? I'm in favour of us funding procedures, fertility procedures, which have a real prospect of success. That's a matter for doctors and their patients? It's a medical question, plainly. Exactly, it's a medical question. And it will vary from individual to individual. Lindsay Tanner, what's your view on this? Is there a case for rationing subsidies? What Malcolm's ultimately saying is that the government's going to be half as good as what Labor was 10 years ago, therefore, what's everybody complaining about? Well the key thing he's missing, of course, is that IVF emerged... No, I'm not. Lindsay, Lindsay... That's effectively what you're saying, Malcolm. You're talking about three treatments as opposed to six. No, no, no, Lindsay, the thought that has been floated in the press - and I don't know whether it's government policy or not; I've just read about it in the press - the thought that's been expressed is that there would be a limit of three cycles per annum up until the age of 42, and then three thereafter. In total, for women over 42. So you're discriminating in terms of age. OK, I just want to get the facts straight about Labor. Labor's limit was six cycles over your entire life. Well, as I say, it's a long... OK. So your colleagues when they were in government, Lindsay, had a very, very stingy and niggardly approach to fertility. Sorry, let Lindsay have a reply here, please. Which leads to the point that I was halfway through making, which was that IVF first emerged well into Labor's term in government, and obviously has changed considerably over that time. The number of women seeking to access it has obviously increased substantially. You're dealing with two things that are very difficult to compare. Ultimately, the bizarre thing about this whole exercise, Maxine, is that you've got a government led by people like Peter Costello, who've been in the papers holding babies saying, "Have one for the husband, one for the wife and one for the nation", putting out all this stuff about fertility and how important it is that we have more babies, and yet, across the whole gamut of medical procedures, of which there are many, some of which are more urgent, more desperately needed than others, they've decided to pick on IVF - the one thing that goes directly against that whole message about we need higher levels of fertility. Malcolm Turnbull, amongst others, has pointed to this problem. It just doesn't connect with their overall position. That is a point. There are a lot of mixed messages here, aren't there? You've asked me what I think. As I've said to you, I think that these procedures should be funded - and of course, no procedure should be endured unless it has a realistic prospect of success... A 40-year-old woman in your electorate at Bondi Junction comes up to you tomorrow morning and says, "Look, Tony Abbott doesn't want us to have abortions, "but he's going to make it harder for us to get pregnant. "Can you explain that to me, Mr Turnbull?" What will you say? Well, I think that's a comment that people will make, and it's a fair comment, and the question - that's not to say that it's... I'd agree with it. I don't think Tony Abbott is trying to make it harder for people to have children, but, you know, where I'm coming from is a very simple basis of principle, which is that fertility treatment is important. It is an essential procedure if you want to have children, and having children is the most important right that any of us have, and there is nothing more important that any of us can do than to have children, because we all have an interest in each other's children. What's the bet this idea will be dropped before the budget? Well, I'm not a bookmaker, but I... I'm not a bookmaker, so I'll leave that to you and Mr Tanner. Alright. Lindsay? I've become "Mr Tanner" now? You obviously got a bit upset, Malcolm. I've always treated bookmakers with respect, Lindsay. (Laughs) (Laughs) I do have SP bookies in my family background, so we can have a chat about that later. Let's move on to a big question, and that's the question of tax and how much we pay. You both probably noticed the Centre for Independent Studies has declared today is Tax Freedom Day - that's the first day of the year, apparently, when you start working for yourself and not working for the Treasurer. The point they make, I think, is taxation now absorbs 32% of GDP. Malcolm, if we don't change this equation, your view is that we're going to lose talented workers, aren't we? Oh, there's no question that if your taxation system is uncompetitive, you lose a lot of talented people, and, you know, there are a million Australians living overseas at the moment. Most of them are people of managerial or professional ability. Our best brains. Well, they're among our best brains. where everyone has to stay in Australia and can't leave, but the... But we want a good flow back and forth, don't we? But the reality is that talented Australians, particularly - for talented Australians, particularly young Australians, it's a borderless world. Their services are in demand everywhere, and if we have an uncompetitive, excessively onerous tax regime - the type that the Labor Party, I might say, has always wanted us to have, and when they did have, together with the Democrats, the numbers in the Senate, went to great pains to prevent taxes being reduced... Now, come on - it was Labor in the '80s that got rid of the rorts that you actually complain about, quite rightly. Well, if they got rid of them, I wouldn't be complaining about them. Well, they certainly started the hard... You guys have been in government for nine years, Malcolm. How about talking about what YOU have failed to do? Let me be very clear. As far as - and I think most people who think about tax would agree with this. We should have a tax system that is simple. It's got to be de-complicated. It's too complex. We should have a tax base that is broad and we should have tax rates that are much lower and with much - we shouldn't have a difference between company tax and personal income tax, or at least not a significant one, because, of course, it creates the opportunity for arbitrage between one and the other. Well, look, here's a bold idea. Lindsay Tanner, you want Labor to be bold. At the recent Melbourne Institute conference on sustainability, the whole question of tax was on the agenda, and the ANU economist Ross Garneau, as you know, has proposed a flat tax of 30%. That's levied from the first dollar, with the elimination of all deductions, and then a negative income tax for low-income people. Is Labor ever likely to run with something like that? I think that proposition's worth examining. Obviously the key question you've got to look at, Maxine, is the ultimate equity outcomes. The thing that's difficult to assess without really serious examination is the impact of abolishing deductions - which certainly would be progressive, because deductions ultimately favour better-off taxpayers - and the impact of getting rid of the threshold, which also would ultimately favour lower-income taxpayers if you're compensating them for that. Whether that would counteract the obvious negative impact on equity that you would get from having one rate or reducing the rates... I think there's certainly a case for simplifying, flattening and broadening the tax base, but ultimately, the measure you've got to assess it by is: what does it produce in practice, in outcomes? What does it mean for an ordinary worker on 35 grand a year who's struggling to feed a family, to get by? Do they go up in tax obligations or do they go down? What does it mean for the ordinary citizen and what does it mean for the sort of people in the public housing estates in my electorate who are battling on very low incomes? Will it be mean they'll be better off, worse off? Sure. Ultimately they're the issues you've got to assess it by. But certainly we've got to have a look at those kind of ideas. Simplification's important, but equity's crucial as well. Let me ask you, do you accept the proposition that, in fact, Malcolm put in his speech at the Melbourne Institute, and that is, in fact, the case can be put that if, in fact, you lower taxation, you can actually grow revenues? I don't necessarily agree with that. That is called the Laffer curve theory that Ronald Reagan ran up giant budget deficits in the US with, the theory being that if you actually cut taxes, you'll create more economic activity and you'll end up getting it back through the back door through increased taxes anyway. History suggests that that's a very dubious proposition. It's not absolutely wrong, but you need to be very cautious about it, and you certainly can't assume, as Reagan did and as I suspect some of George Bush's advisers have done, that happily cutting tax will lead to this poultice of revenue that comes from more economic activity. It's a much more complex thing. On the other hand, Malcolm, you were quoting, I think, UK figures that show just this? Well, when Margaret Thatcher and Ronald Reagan both, at round about the same time, made very substantial reductions in income tax, particularly in the high rates of income tax in their countries, not only did - and removed a lot of concessions, so they broadened the base and lowered the rate - not only did you have an increase in tax receipts overall, but the percentage of tax that was paid by people in the top 10% of incomes actually increased as a percentage of the whole tax take. Clearly, if you're taking with one hand and giving with the other, that's possible, but that's a separate issue. The question of knock-on economic effects is a different matter from what Maxine's asking you about. With respect, I think you overlook the dynamic nature of all of this. No, but that's precisely the question Maxine's just asked you, which is about the dynamic knock-on effects, which you haven't answered. What you've actually talked about is the question of trade-offs for higher-income earners who might win by a lower rate but lose by having deductions or concessions knocked out. Separate issue. Your point's quite correct on that, but you haven't responded to the Laffer curve point. But the Laffer curve point is all about - what you're really criticising Reagan for is expenditure. The reality is that revenue did increase as a consequence of lowering rates. Now, if Reagan went off and spent... Nothing like was projected. Let's not get into an arcane argument about that. This reminds me of Kim Beazley-talk, spending half an hour talking about Bob Hawke's economics. Malcolm, specifically, I want to ask you what I asked Lindsay. This notion of flat tax, which, of course, used to be a joke... Like flat Earth. Joh Bjelke-Petersen used to talk about it years ago. What did you think of what Ross Garneau was putting up? Affordable? Well, Ross Garneau's proposal is not affordable in anything like the near term, and he concedes that. It's a great thing to talk about. Let's just talk about flat tax, though. What's interesting about flat tax is that years ago, it was a flat-Earth idea - it was a crazy idea. You've now got a large number of countries that have introduced flat tax, and the 'Economist' had a cover story on it the other day. Most of Eastern Europe, Russia, Poland, Ukraine, the Baltics have all introduced flat taxes, and I think it's very - it would be very arrogant of us not to have a very close look at tax reform experiments in other countries and see what we can learn from it. That's precisely Garneau's point - that, in fact, something big needs to be done instead of all this tinkering round the edges. And, arguably, we went through Peter Costello's tax reform and, as you say, we have ended up with a far more complex Tax Act. The accountants are walking away because of this complexity. They are walking away from their desks. I agree. I said recently that taxation was a black art. You agree that Costello got it wrong, do you? No. Peter Costello, he's not infallible, but he's right almost all the time. (Laughs) Very interesting! Malcolm, have some self-respect, please! Let me just make an observation, though, about incremental reform, because it's an important one. I was in Jerusalem the other day and I had a meeting with Bibi Netanyahu, who's the Finance Minister. On his desk was a very well-thumbed book by Roger Douglas, which I couldn't help but noticing, and Douglas has been a great New Zealand economic reformer... We remember him too, yes. And I said, "What's the main thing you've learned from Douglas?" And he said that Douglas had taught him, or he'd learned from Douglas, that if you're going to reform your tax system, you cannot do it incrementally - it's got to be big. You go for the big bang. And that is what Peter Costello and John Howard did with the new tax system and the GST and so forth. Well, hang on. It's not what they did, and now you've got... Well, they did. That was a big reform. You're asking me whether we should have another one. They have performed a very big reform. Let me just end on this point. You've got a re-elected Howard Government and what are they talking about? Knocking off IVF for women, right, and that would save something like seven... Wait for the budget. ..$7 million, and worrying about voluntary student unionism. Where's the big bang from this re-elected government? Well, wait for the budget. It's going to be a very exciting night. Oh, OK. Alright. Gentlemen, we will wait for the budget.

Thank you for a dynamic discussion tonight. We'll see you again. Thanks. Thanks very much, Maxine. A slowing in housing credit and a dip in new home sales have increased the likelihood of the Reserve Bank keeping interest rates on hold. The number of new home loans rose 1% last month, producing the slowest annual rate in 3.5 years. At the same time there's been a slight fall in new home sales, with inner-city apartments the hardest hit. The news has served to strengthen market opinion that the March interest rate increase may have been the last. I think the next big move on interest rates won't be until next year when we will probably see rates come down, but that will be because the world economy will be slowing down in the face of much higher US interest rates as we move into this year and next year. The Reserve Bank board meets again on Tuesday. To the markets now. The All Ordinaries continued to fall amid profit downgrades and an overnight slide on Wall Street. Most of the major banks were down. The resources sector took a battering. London's FTSE is ahead in early trade. The Australian dollar is firmer against the greenback. Now to the weather. That's all for this evening. If you would like to look back at tonight's debate or review any of Lateline's stories or transcripts, you can visit our website at: Tony Jones will be back on Monday night, so please join him then. Goodnight. Captions by Captioning and Subtitling International.