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Labor 'entitled to pursue Coalition' over adv -

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Labor 'entitled to pursue Coalition' over advertising

The Australian's political correspondent, Dennis Shanahan, says Labor is entitled to pursue its
line of questioning over the Coalition's election advertising. He says Prime Minister John Howard's
recent speculation on interest rate rises over the next 12 months is "quite extraordinary".

BARRIE CASSIDY: But, first, standing in for Paul Kelly, the Australian's political correspondent,
Dennis Shanahan. Good morning, Dennis.

DENNIS SHANAHAN, POLITICAL CORRESPONDENT, THE AUSTRALIAN: Good morning, Barrie.

BARRIE CASSIDY: Should the government be embarrassed at the very least given that the Reserve Bank
was clearly concerned about the political advertising?

DENNIS SHANAHAN: I think that people are entitled, and the bottom line, to think that interest
rates will remain low, and Labor is perfectly entitled to pursue the line. So that's what we have
at the core of this debate on interest rates. Now, I think that as far as the particular instance
is concerned, I think Mr Beazley may have been just laying it on a little bit thick to suggest this
was the biggest story in 25 years. Certainly, the Reserve Bank had grounds to be concerned about
the advertising. They had received a complaint. But after all, it was one flyer that was the
problem. After all, as well, interest rates haven't gone up again, 0.25 per cent. Never has so much
energy been expended on one rise of 0.25 per cent and no rise of 0.25 per cent.

BARRIE CASSIDY: A lot of that energy, though, was expended by the government after the last rates
rise. They didn't take it all that well.

DENNIS SHANAHAN: No, and they didn't handle it well. They have now been seen as heavying the
Reserve Bank. John Howard's longstanding, and Peter Costello's longstanding, effort of trying to
avoid commenting on interest rates; on Friday, we actually had the Prime Minister predicting what
range there would be in interest rate rises over the next 12 months. It is quite extraordinary for
him to be getting in and suggesting all of this after so many years of trying to avoid talking
about interest rates. So I don't think they have handled the rate rise well. The bank is perfectly
entitled to say that there was a disproportionate reaction from consumers for the first rise and
they are not going to have a second. The government has embarrassed the bank by its behaviour.

BARRIE CASSIDY: It was a big week focussing on Asia and in particular the Indonesian President's
speech in the Great Hall. At one stage, he was offering his country as the bridge to the rest of
Asia. Was this important stuff as you saw it?

DENNIS SHANAHAN: I saw it as very important. I think the President's speech gave us a completely
different view from Indonesia of Indonesia's approach in the future. He actually used the term of
looking south, trying to encourage Indonesians to look towards Australia and encourage Australian
investment to look to Indonesia as a bridge to the north. So a North-South dialogue. I think that
Kim Beazley's characterisation of the President as he welcomed him to the speech was spot on. We
haven't had an Indonesian leader with such an understanding and a sympathy towards Australia. And
with public interest in Indonesia favourably disposed towards Australia at the moment, I think that
it's a big step forward.

BARRIE CASSIDY: That's giving the credit of course to the Indonesian President. But is it difficult
now for Labor to run the line that this government is not sufficiently and properly engaged with
Asia?

DENNIS SHANAHAN: I think that some of the critics of the Howard Government policy have overstated
their case for too long. They dug in and said, "Howard can't deal with Asia." Certainly he has made
obvious mistakes. It is certainly not without problems in the future. But I think we have to
recognise that there have been some material advances in our relations with Asia, and certainly
John Howard hasn't achieved that diplomatically. In fact, he tries to rule out a dependence on
"diplomatic architecture", as he puts it.

BARRIE CASSIDY: This East Asia Forum, that seems to be becoming the litmus test of just how
seriously Australia is being taken in the region. Is that a reasonable development?

DENNIS SHANAHAN: I think that's a reasonable characterisation. It certainly will be a litmus test,
although, of course, Howard calls this part of the diplomatic architecture. He says it's built on
the signing of the Treaty of Amity and Cooperation; that that is something he's not going to agree
to. His diplomatic approach to the East Asia Summit is that Australia has to get in there on its
own right and it won't be going through diplomatic hoops to do so. The real problem I think is not
Malaysia but China. If we are admitted, it will be a sign that China, and Malaysia to a lesser
extent, are giving Australia a red carpet into Asia.

BARRIE CASSIDY: Dennis, thanks for your time this morning.