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This Program Is Captioned Live.

The top stories from ABC News -

people who were in a stolen car The top stories from ABC News - Three

police shot at in Sydney yesterday people who were in a stolen car which

will face court this morning. A 14

and 18-year-old were shot by

in Kings Cross yesterday after the and 18-year-old were shot by officers

car they were in mounted the kerb

ran over a woman. Another fatal car they were in mounted the kerb and

shooting has followed in Sydney's

south-west overnight. An unnamed man

was gunned down just after midnight

in the suburb of Riverwood. Peter

Slipper is arriving back in

this morning, to face allegations of Slipper is arriving back in Australia

sexual harrassment. The speaker of

the house is being sued by

33-year-old former staffer James

Ashby. Mr Slipper denies any

wrong-doing. Opposition leader Tony

Abbott says the government should

stand Mr Slipper down while the

allegations are investigated. More

united nations security monitors

be sent to Syria. The UN Security united nations security monitors will

Council has unanimously adopted a

resolution that authorizes an

deployment of up to 300 unarmed resolution that authorizes an initial

military observers to strife-torn

Syria to monitor a fragile

13-mont It aims to bring an end to the Syria to monitor a fragile ceasefire.

13-month old conflict in the

clash And a man has been killed. After 13-month old conflict in the country.

clashes between police and

in Bahrain. Ahead of this weekend's clashes between police and protestors fo

formula one grand prix.

say they're angry at the decision by formula one grand prix. Demonstrators

authorities to go ahead with the

event. The race was cancelled last

year and anti-government protestors yea

are again using it to publicise

case for democratic reform. Stay are again using it to publicise their

tuned now, for Insiders with Barrie

This Program is Captioned

Live.

Morning, welcome to Insiders.

The Gillard Minority government

has plunged into a fresh

crisis, one that could explode

on budget day, May 8. The Prime

Minister has to decide whether

she will stand by the Speaker

Peter Slipper in the face of

allegations of sexual

harassment and the misuse of

cap charges. If he goes again

the Government will be on knife

edge. If he stays the

Government will share the

political odium. Would you like

to respond to the allegations

made against you in the News

Limited press? All allegations

are denied. You deny that you sent your staffer inappropriate

texts? I've just said that all

allegations are denied and have

a lovely day. Will you step

aside while these allegations are investigated? The Opposition's actual willing

calling for you to step aside

while the allegations are

investigated, is that something

you will consider doing? What

this does go to the integrity

not just of the Parliament but

of the Prime Minister and of

the Government. The Prime

Minister cannot wash her hands

of this business the way she

has tried to wash her hands of

the allegations concerning Mr

Thomson because Mr Slipper is

no mere backbencher. Mr Slipper

is the Speaker of the

Parliament. Mr Slipper occupies

a very, very important office.

He is the guardian of the standards of the parliament,

the protector of the reputation

of the parliament. Well these

are just allegations. It's

important that politicians not

comment on legal matters. How embarrassing is it for your Government? Well, there aren't

the Government. Those issues allegations against anyone in

are a matter for Mr Slipper. On

that basis it's important that

we recognise the we recognise the separation between the judicial arm and

the political arm of the State. And we'll get back to that story in some detail when

we have a look at how the Sunday papers are reporting it

and we'll be talking to the Treasurer Wayne Swan whose

Budget would be overwhelmed if

the first sitting day is

consumed by a parliamentary

crisis. We'll go to the economy

now and the IMF this

now and the IMF this week

released a report on the global

situation and essentially they

judge that things are a little judge that things are a

better than they once were but

they get the feeling at any

moment the whole thing could go pear shaped again, very

helpful. And where does

Australia stand in all of That depends on who you listen Australia stand in all of this?

to. The Prime Minister says

it's confirmed Australia as the

world beater. Tony Abbott says

it shows Australia is under

performing. At least he was on

message. His Shadow Treasurer

on the other hand was

freelancing from the other side

of the world.

The IMF thinks the storm

clouds are clearing. Things

have quietened down since but

an uneasy calm remains. The IMF

has said that the Australian

economy is a world beater. A

world beater. A world beater.

This is great news.

the Australian economy will The IMF forecasts show that

outperform every other major

advanced economy this year and

next. The IMF has actually

the Australian economy. What downgraded its forecasts for

would he want? The US, the Eurozone? This is nonsense

stuff. A year ago it forecast

growth in the coming year at

3.5%. It's now downgraded that to 3%.

If I said to President Obama

do you want Australia's

unemployment rate, he would

start chewing his right arm off

to have it. Given the global

uncertainty a surplus is more

important than ever. This is an under performing economy. It's

time to get back in the black. And it's under

performing because of the poor

economic management of the

current Government.

We need to keep our pencils

sharpened when it comes to entitlements. Like a bad

parent, over the years they

have always said to voters you

can have what you want. You

always seem to be explaining

and defining what Joe Hockey

and Andrew Robb said, this the

drama for you at the

moment. Well I'm not sure that

there's any great drama

here. We need to compare

ourselves with our Asian

neighbours where the

State are far less. The Liberal entitlements programs of the

Party has said overnight

through Mr Hockey that they are

prepared to abandon Australian

families. Hang on, hang on. What he's saying in that

speech is we should cut into

pensions. Hang on, hang on. He

wanted to emulate a dog eat dog

world. Not that bad, is it?

You see, there is no new policy that's

policy that's been announced

here. Well hang on, hang on,

hang on. It just shows he

really doesn't make a lot of

sense a lot of the time. As I

said, our program guest is the Treasurer Wayne Swan who is in Washington. He's just ended a

run of talks with the IMF and

the G20, that's coming up but

first we'll take a look at how

the Sunday paper reporting the

Peter Slipper story and it

dominates the front pages as a

single theme coming through

which is he must stand down.

That's a reflection of the

views really of the Opposition

and perhaps more relevantly the

view of at least one Independent, that being Andrew

Wilkie from Tasmania. Now the Government, what has become

clear is the Government is not

going to take the initiative on

this. Wayne Swan, I interviewed

the Deputy Prime Minister Wayne

Swan from Washington just a

couple of hours ago and here's

part of what he had to say on

the Slipper issue. But I've

been in Parliament a long time,

I've seen allegations come and

go, these are allegations that

are now in legal proceedings. I

think we should respect those

legal proceedings, we should

respect the processes. OK, that

interview in full is coming up

shortly but Niki Savva, there's your answer, they're going your answer, they're going to

tough this one out. Well they

can tough it out as much as

they like, it's still going to

have a very unhappy ending, I

think, whichever way it goes.

If Slipper is forced to stand

down he will still be entitled

to his pay and all his

entitlements as Speaker, he

will still be effectively

speaker. He will not be able to

go into the Parliament to vote.

So therefore the vote is lost

there to Labor. The

alternatives are for the Opposition to move a no

confidence motion against him

and hope that they get another

one of the Independents to vote

for him in which case he's gone. The other alternative, of

course, is for Labor to move a

no confidence motion in him and

I don't think they will do

that. Look, this has sleazy beginning and it's going to

have a sleazy ending no matter

which way it goes. So how does

it play out, Dennis, then, if

the Government does say look,

let the law take its course,

you get to the first sitting

day, Budget day, what happens?

As Niki says almost certainly

the Opposition will create

something out of this? I think what happens is that most media

outlets will start sort of

reassessing their strategy for

covering the budget. Do we send our senior political journalists into the budget

lock up or keep them out to

watch a potential political and

constitutional crisis on the floor of the Parliament? It's going to be a juggling act in

terms of how we cover those two

competing stories and I think

the public should be in no

doubt that these are two

stories of equal gravity. This

is a huge political story which

could have enormous

ramifications for the

Government. The Government's future depends on which way it

goes and how it plays out. It's

going to completely overshadow

Wayne Swan 's budget. The Government this week was sort

of putting together all the

blocks for its Budget selling

and the message it wanted with the Budget with speeches and

interviews carefully placed

here and there, key line things were going really well, the

Government was singing from one

song sheet and I think they all

got up Friday morning and

thought, you know, this is all

going well, we know where we're

headed and we seem to be

putting one foot in front of

the other which for this

Government is quite a feat. But

then suddenly Saturday morning

whack o, the whole thing is

blown asunder. Lenore, this is

different to the Craig Thomson situation. Craig Thomson hasn't

been charged with anything but

he's a backbencher, he's the responsibility of the Labor

Party. The Speaker is the

responsibility of the

Parliament. Well that's right

and Tony Abbott's argument is

that while you presume

innocence until proven guilty,

while all those caveat s apply,

while the Speaker sits above

the Parliament, he casts

judgment on the Parliament, for

that reason he should stand

aside while the allegations are

investigated. Ultimately that will be a decision for the

Parliament to make. From what

Wayne Swan is saying Labor

won't support that so then the

Coalition has to put together the rest of the votes needed.

Now from what he said yesterday

Andrew Wilkie sounded like he

probably would support some

sort of motion of no confidence

or dissent or whatever that

would seek to force the Speaker

to stand aside. From

conversations last night I

think Rob Oakeshott and Tony

Windsor are less inclined to

support that but I think like

most people they would want to

see the full jation

allegations, not just the

excerpts of allegations that

appeared in the weekend

newspapers and they'd probably

want to see what Peter Slipper

has to say when he gets to talk

to the media after returning to

Australia. And these are

allegations from a police

report. It's not as if these

are something out there in the ether. No, they're serious. What do you think in

the end then, Niki, is the more

serious allegation, the one involving the sexual harassment

or the misuse of the cab

charge. One is, I suppose, it's

a civil case, the other is a

criminal, a potentially

criminal prosecution. I think

they're both really serious. I

think on the one hand you have

the sexual harassment charges,

which are quite serious and whenever these kind of things

have been brought up in the

past against other figures

there's always been this view

that the alleged victim, you

know, needs to have their

grievances aired and to be

taken seriously. They shouldn't

just be swept aside. And this

is against, you know, probably

the third most senior member of

the parliament aside from the Prime Minister and the

President, he's the Speaker. So

it's not just like it's against

some, you know, nobody sitting

on the backbench. There's a bit

of history though with him as

well. Alex Someley a Liberal pointed out in a Queensland

paper this morning that he's

been a protected species for a

long time. The police report

has an account of something

that happened in 2003 when a

video of Peter Slipper on a bed

with a male was shown to Tony

Nutt who was working at the

time for John Howard and

nothing came of that. Now

- Well no complaints were - no

formal complaint was made by

the other party on this. It

could have been, you know, a

case of consenting adults in

which case, you know, there are

lots of politicians who are

charged with sexual indiscretions without having

the matter going to court or,

you know, being tested in some

other way. There are always

rumours about politicians and

their behaviour appropriate or not outside of parliament. But

it's now part of the civil

proceedings because according

to the complainant to the

alleged victim it goes to the

fact that, you know, people

knew about a pattern of

behaviour. A pattern of

behaviour, exactly. That's how

it's been brought in. They

didn't want to know, he was one

of theirs at the time, now he's

not and therefore there's every

reason to make a fuss about

it. That's true but I think

actually the cab charge is

potentially more damaging for

Peter Slipper because it is a

criminal charge, it's fraud against the Commonwealth. against the Commonwealth. A

civil charge wouldn't threaten

his position to take a seat in

the House of Representatives

but a criminal charge with a

sentence of more than 1 year in jail does threaten it, it

excludes him from taking a seat

in the Commonwealth and that's

where it becomes dangerous. The allegation is

- He gave multiple cab charges

to the limousine charges in Sydney. Without filling them

out. Signing them without any

details. We don't know what

happened to the cab

charges? No, we don't but what

we do know from FOI requests

that News Limited has put in

about Peter Slipper's

activities in Sydney, there are

a lot of weird looking journeys

all over Sydney at odd times of

the day and night. Now, if

Peter Slipper was somehow, you

know, protecting himself by

slipping a few extra cab

charges to the limousine

driver, we don't know that, but

on the surface of it that

question, I think, is open, then that is a serious matter. Now Arthur sin dean yos - Sinodinos is now in the

parliament, he was working with

Tony Nutt at the time this

video was allegedly shown, he said this yesterday. I can't

recall what we're talking about here. When it comes to Mr

Slipper a lot of people have

over the years talked about him

and there have been issues

around entitlements but I

cannot recall particular

circumstances that I think are

referred to in the News Limited

report. But in a sense that is

now ancient history. But does

it in some way blunt the

Opposition's attack on the

Government? The attack that

will inevitably come over the

next couple of weeks. I don't

think so. Well apart from

anything else the Government itself would have known about

Slipper's behaviour. It's not

like - They got plenty of

warnings. They got plenty of

warnings, everybody knew

exactly what he was like, they

knew the potential that there

was for things to go wrong,

they were asking for trouble with a capital T when they

bought his services and they've

got it. And the other thing is

the point that you made at the

beginning that the biggest

political impact of this is

likely to be just that it adds

to the air of Kay - chaos and tawdriness around this

Government. It distracted

entirely from the Budget which

was their big hope about

getting back on track and that

really is the take home message

for most people who are looking

at it from home. From the

moment that appointment was

made I remember Kerri Anne Walsh sitting where you are

Lenore saying the Government

was on a slippery slope from

this point onwards. There were

a lot of people giving that advice. The Government is seen by a large section of the

community as being in pow wer

the support of a backbencher,

Craig Thomson, who at the very least has some serious

questions to answer and a lot

of allegations floating above

himself in terms of rorting and

misuse of union funds. If you

put next to that the fact they're also there with the support of a Speaker who has

got allegations of fraud and

sexual harassment hanging above

him, the stench just becomes

even greater and the public

odium against the Government

increases. I think this will

hurt the Government in the

polls and I think any chance

they've got of getting that

vote above 30% I think is out

of the water until at least

this is cleared up. What about

the guy making the allegations,

James Ashby. Already within the

Government they're asking

questions about this saying how come it was all tied up so

neatly with a ribbon, handed to

the media and yet there was

never at any point, as far as we understand anyway, was there

any attempt to deal with this

internally? I think that's a

legitimate question. I think

anybody who raising an

allegation of sexual harassment, you know, is

entitled to have it taken

seriously and he is entitled to

have this allegation taken absolutely seriously. But I

think it's legitimate to ask

did he seek to in any way solve

these problems or satisfy

himself that he hadn't been recruited solely for the

purpose of, you know, becoming

a sexual partner of the Speaker

which is the allegation that

he's making in his claim. Did

he seek to resolve that in any

way internally before he

engaged a celebrity lawyer and

the whole thing has happened

incredibly quickly. So he was

engaged, he took up his job on

December 22 and according to

the reports by February he was

engaging in quite intimate

sexually explicit text

messaging with his employer and sharing a room in his Canberra

flat. So, you know, I think the

claims should be examined but

he is entitled to have them

taken seriously and to have

them examined. And if they're suggesting entrapment or

something he was easy to trap

because apparently they met in June, they were introduced to

one another in June and it was around about October that Peter

Slipper first started offering

him the job and then he took

the position in December. Based

on what we know, based on what

has been published all the

suggestive texts and all the

suggestive suggestions about

the kind of behaviour that

might or might not take place

came from Slipper about the

showering. That's true, I think Mr

Mr Ashby replied in ways that I

certainly would never text back

to an employer. I mean he was

replying in a similar vain but

the suggestions were coming

from Mr Slipper. I didn't get

that impression. I thought from

what Ashby was saying he what Ashby was saying he was

saying to Slipper that it was

inappropriate. Slipper was

asking for him to shower with

the door open and this guy was

saying no, you know, I don't do

that, none of my mates do that.

Why would you do that? There is documentary evidence here, and

I think that's where it is a

real problem for Peter Slipper

and why he has got some serious

explaining to do. Yes, we all look forward to his

explanations. The plane that

was going to Sydney was

redirected to Brisbane so it

may be a while before the media

catches up with him this

morning. We'll go to our feature interview. Wayne Swan,

the Treasurer and Deputy Prime Minister is in Washington, he

has just ended a round of talks

with the IMF and the G20 so

we'll see what he had to say this morning. Treasurer, thanks for joining us from Washington this morning. Good morning, Barrie, good to be with you. If

we can deal with the Peter

Slipper matter first, will the Government continue to support

Peter Slipper as Speaker in the

House of Representatives? Well,

Barrie, these are allegations,

as I understand it, that have

been made in legal proceedings.

I don't intend to comment on

the allegations but he is

entitled to the pre -

presumption of innocence. I

know there will be politicians

running around beating drums

but the fact is they are allegations

allegations , they are in legal

proceedings and I don't intend

to comment on thep. -

them. They may be allegations

but they're serious

allegations. Tell me how this

doesn't bring the Parliament as

a whole into disrepute? I this

I the first point, Barrie s not

to bring the legal system into disrepute either. The fact is

that they are allegations. I'm

in Washington, I've not necessarily seen the response

so far but I think it's

important to keep this in

perfect - perspective. They're

just allegations in legal proceedings, serious

allegations but they should be

allowed to run their normal

course. So you're saying that not only will the Government

move against him but you don't

expect that Peter Slipper would

independently take a decision

to stand aside? Well, Barrie, that would

that would be a matter for Peter

Peter Slipper but I've been in

Parliament a long time, I've seen allegations come and go.

These are allegations that are

now in legal proceedings. I

think we should respect those

legal proceedings, we should

respect the processes. OK, if

you then decide to ride it you then decide to ride it out, when parliament next sits, that's Budget day, you can

expect the Opposition to make a

lot of this. How will that not

overwhelm the budget? I can

understand why the Opposition

would want to run away from

Budget processes and the

economic debate. They've in fact been doing it all of fact been doing it all of this

week. I mean Mr Abbott is - has

to the IMF forecasts, he's been completely botched his approach

running down the economy. We've running

seen the debacle of Mr Robb

defending the ANZ interest rate

hike and of course the debacle

of Mr Hockey. Here going to

want to run away from an

economic debate come what may.

When it comes to these

allegations they're involved in

legal proceedings and I don't

intend to comment. Are you

prepared to let a situation

crisis will overwhelm the develop where a parliamentary

Budget? The Budget is very important and that should be

the priority, Barrie, of the

Opposition. But of course they don't have any credible economic policy, they have had

a shocker of a week when it

comes to economic policy. Their

the place so I can imagine spokespeople have been all over

they're going to want to run away from a very important economic debate because they've been doing it for a couple of

years. It's true, isn't it, if

Peter Slipper was lost from the

be Speaker's position that would

be another number, almost certainly that you would lose.

area, effective government Andrew Wilkie is now in a grey

would be very

difficult? Barrie, I don't see

it through that lens. The fact

is that these are allegations,

there are legal proceedings

going on, I don't intend to

make it my role to comment on

those legal proceedings. OK,

we'll go to the economy now,

the issue that's been consuming

you for the last few days.

Australia's made a contribution

now to the IMF, $7 billion,

what did we get in return? Did we ask for anything particular

l dr dsh particularly from the

Europeans and was anything

forthcoming? Well, firstly,

Barrie, let's be very clear, we

have made a commitment to a

loan, a loan that may never be

called upon, a loan which is a

contingent loan which if it were called upon would be

repaid in full with repaid in full with interest

happened with our commitments and that's what has always

to the IMF but what has

happened here has been very

important, not just for

Australia but particularly for

our region. For example, there

is a very big commitment from

Japan, a commitment of $60

billion. The fact is that we billion. The fact is that we do

need to ensure the IMF is

IMF has its own - sorry, the conditions. But of course the does impose very stringent the IMF, where it is involved, countries we have ensured that combined with other G20 through Australian action the G20 over the past year and been a debate going on through the of the way the IMF operates, resource the IMF. But in terms through this decision to better the global economic outlook get is far greater certainty in Europe or elsewhere. So what we from events particularly in through to the global economy any contagion which may flow particularly so it can prevent adequately resourced,

international community commitments because the billion. All up $430 billion in a commitment from Japan of $60 contributed. As I said before, most other developed economies decided not to be part. But matter where the Administration for their Congress and it's a occasion. It has been a matter didn't contribute on this anything? Well, the Americans Americans contribute, if economy. And what did the contagion in the global should there be some further the Europeans are providing addition to the resources that special resource for the IMF in been dealing with here is a financial resources. What we've financial resources. What Europeans have their own

understands how important it is

for the IMF to be adequately resourced, particularly given

events that have occurred like

they did back in 2008,

2009. But when a country the

size of America commits

nothing, Australia commits $7

soft touch? Well, we've made a billion it makes us look like a

very small commitment. very small commitment. The

total commitment is $430 billion. Our commitment

billion. Our commitment is

representation proportionate to our

representation on the IMF and

many other developed economies

have made far larger

commitments than the commitment

Australia has been a consistent that Australia made. But

supporter of the IMF because we

are one of the biggest

beneficiaries of strong global

growth. As a great trading

nation our economic health

depends upon the health of the

particular global economy and in

particular the regional economy

and what you are seeing here is

very big commitments from Japan. You will see a very big

commitment from China and when

you look around the region significant commitments from countries as small as Singapore

because they all know that the

health of our economies in this

growing global economy. OK, region depends upon a healthy,

what's the mood that you're

picking up around the traps? picking up around the traps?

The IMF said this week the

world economy is doing a little

better but it could go bad

again in a flash. How worried

are are these groups about the

world economy and particularly

Europe? I spent a lot of time

talking to G20 finance

ministers as well as Christine

Lagarde, Ben Bernanke and other

leaders, Barrie, and the fact

is there is a more positive

outlook in the first part of

end of this year than there was at the

end of last year but there are

still very big challenges in

the global economy, a high

degree of uncertainty and

volatility but the one thing

that really stood out in all of

my discussions was their

appreciation of how strong the

Australian economy is. I mean our growth, according to IMF

forecasts, will outperform that

of every other major of every other major advanced economy. They think it's

incredible, for example, that

the Australian economy is now 7% bigger

7% bigger than it was prior to the global financial crisis whereas the economy of the

United States has only just got

back to where it was prior to the global financial crisis. The British economy, for

example, is still 4% smaller. So when they look at Australia and see an unemployment rate of

5.2%, strong public finances,

big investment pipeline, stable

financial system, they see a

strong economy. They see all of strong economy. They see all of those things but here in

Australia what people see are

jobs being lost in

manufacturing, they know that

their household bills are

going up, the house prices have

fallen, the value of their superannuation has fallen, that's what they're

feeling? Yes, and of course we

still do live with many of the

impacts of the global impacts of the global financial

crisis and the global recession

and they still flow through,

for example, to our share

market. And they have produced a a cautious consumer but when

you look at the overall fundamentals of the Australian

economy, an official

unemployment rate of 5.2%,

growth returning to around

trend, strong public finances,

what we have got here is a very

strong economy compared to the

rest of the world. It's simply

chalk and cheese. But it

doesn't mean to say that there aren't pressures elsewhere in

our economy. We do have a

patchwork economy. Those in

retail are doing it

retail are doing it tough. Many

in manufacturing are doing it

tough but overall we're doing

far better than the rest of the

world. What's the view on the

US economy, it's expanding but

only just? Yeah, the US economy

is beginning to grow again and

it would be fair to say many

people are hopeful for a

stronger year. There's also

risk here later in the year

when the Congress has to face

up to the challenge of whether

they are going to make very

they are going to make very big structural changes to their budget. So that injects a

degree of uncertainty into the

global outlook and uncertainty

into the outlook for the United

States economy. So uncertainty

in Europe, uncertainty to some

extent in the United States but

a better picture but what we do

see is a stronger picture in

our region, a strong Australia

but a strong Asian region and

that's very important for the

future not just of our country but for the

but for the global economy. The

Asian region, for example, is

going to supply about 50% of

global growth this year and 60%

of global growth next year. OK, you're saying now with the

Budget coming up you do plan to

deliver a surplus and this will

help the Reserve Bank cut rates

in the future, how does that work, how are the two

related? Well, because as I was

saying before, Barrie, we've

got an economy returning to trend growth which is about

trend growth which is about

3.25%, unemployment rate of 5.2%, a very strong investment

pipeline. These are precisely

the conditions in which a Government should be bringing its Budget back to surplus,

particularly given the

international uncertainty. It's

a matter of fiscal credibility,

Barrie, bringing it back to

surplus in these conditions is

what anyone would expect,

particularly when you see the

problems flowing from sovereign debt

debt and very loose budgeting elsewhere

elsewhere in the world. With

these conditions in place it's

imperative to bring our budget

back to surplus. It provides a buffer against international

uncertainty but does provide

additional room for the Reserve

Bank to cut interest rates if

it desires to do so. So it

gives the Reserve Bank more

flexibility. Why did you say

then in 2009 that the fiscal

stance of the Government has no direct effect on decisions of

the Reserve Bank? Well, first the Reserve Bank? Well, first

and foremost what we're dealing

with here is both fiscal policy

and monetary policy and back

during that period monetary

policy was expansionary, fiscal

policy was expansionary. The

fact is we're bringing fiscal

policy back to ambulance -

balance or surplus, that's very important. The Reserve Bank

since that time has tightened

monetary policy and bought it

back to about average. They

will take their decisions

independent of the Government and they and they have outlined the

circumstances in which they may

decide to change rates. But

that's entirely a matter for

them. But what I do know is

that the world expects an

economy like ours which is

growing around trend, which has

the fundamentals I've talked

about this morning to be coming

back to surplus and that's what we're going to do. You're

saying to the Reserve Bank in effect that it ought to lead to

a cut in interest rates but you

said back then it was absurd

and wrong to suggest a link

between the stimulus and the

cash rate by the Reserve Bank

but now you're saying there is

a link and it should give the Reserve Bank the flexibility to

bring rates down? Barrie the

circumstances are entirely

different now from back then.

We had expansionary monetary

policy then, we had

expansionary fiscal policy

then. Both elements of policy

have withdrawn considerably

since then because our economy

has an unemployment rate of

5.2, because it is growing

around trend. That's around trend. That's why it's

appropriate for us to return to

surplus and why it's

appropriate for the Reserve

Bank to take its decisions

independently and if it decides

to do so to bring down

rates. And if there is any

initiative in the Budget on

means testing do you now expect given what

given what Joe Hockey had to

say the Opposition will support

you in terms of

entitlements? Well, Joe Hockey

said that his objective was to

cut social welfare spending or

the social safety net by

something like $90 billion something like $90 billion if

he was going to use the

benchmark that he cited of

Korea. $90 billion is a very

big hit to pensions, a very big

hit to the Budget and of course

it was Mr Hockey and his party that

that opposed the means testing

of the private health insurance

rebate. He wasn't signing up to

anything like that. He just

said governments in the future

had to look harder at

entitlements? Well, we have

been looking hard at our budget overall through all of the budgets that I have delivered

and every time we've put in

place a measure to make entitlements more sustainable

they've been opposed by Mr

Hockey. There is a report this

morning that suggests Joe

Hockey didn't support Tony Abbott in the party room on the

question of opposing the Government's means test on the private health insurance? Well,

I mean Mr Hockey and Mr Abbott

have been all over the place

this week, all over the place

on aged care, all over the

place in terms of the banks

putting up rates, all over the

place when it comes to the

economy. Barrie, they don't know what they're doing. Wayne

Swan, thanks for your time this morning, appreciate it. Thank

you.

This is a war with a purpose,

this is a war with an end.

We're not talking here about a

withdrawal, we're talking here

about a transition to Afghan-led security

responsibility. The next stage

of transition, tranche 3, will

be announced soon. We may well

get there in advance of 2014. I

have no reason to think that it

shouldn't be possible to finish the job sooner rather than later. While that's good, it's

not quick enough. It is time we

brought the troops home safely

and we would like to see that withdrawal from Afghanistan

start straight away.

We want them to come home with a success under their

belt, not a failure. The war in

Afghanistan has been a failure

on just about every level. The

war is lost, it's just holding

the line. Bin Laden is dead,

most of Al-Qaeda's senior

leaders have been killed or

captured. There have been fewer

attacks by insurgents than in

the same month in the previous

year. The Afghan national

security forces are strong

enough and they're getting even

stronger the way the transition is moving forward. It's all about the Prime

Minister wanting to get this off the table as an election issue at next year's federal election. It would be a

shameful thing if after nearly

12 years of deployment in

Afghanistan and the loss of

more than 30 Australian lives

this mission were shortened for

reasons of domestic political

convenience for the Labor

Party. The requirements of the

new international strategy led

to the adoption of the

timeline, not the other way

around. There will be a mission beyond that and that

will be to keep training the

Afghan forces. So lit be the

real test now as to everything

that we've done over the past

10 years whether the sacrifice

has been worth it. The 32

families who grieve on a daily

basis are not doing that

grieving in vain. We have a

strategy, a mission and a time

frame for achieving it. We are serving our national interest in Afghanistan.

So I think a popular move,

unquestionably a popular move,

so popular it will probably

demand a preelection timetable

but the curious thing about

this was that Julia Gillard's

speech was billed as a

significant speech and it's

because she was announcing a

withdrawal when people were

expecting 2014, came in earlier

and yet she added this

qualification, have a look. I

don't like to argue with members of the media but I

would seek to remind you that

in November, in my address to

the Parliament about

Afghanistan, my most recent

update to the Australian

Parliament, I did say in that

speech that timing to complete

transition in Oruzgan was not

yet decided but that it could

well be completed before the

end of 2014. Seems to be saying

there now this is not a big

deal and both Bob Carr and

Stephen Smith had to make

clarification to our allies and point out the timetable is

still in accordance with the agreement we'd signed up to. I

think it might be a situation

where the spin got a bit out of

hand and ahead of the story. If

you look back at what Julia

Gillard actually said in the

speech she didn't say "I have

taken an explicit and

unilateral decision to withdraw Australian troops one year

early." She didn't say that.

She was saying that she was

confident that this meeting

that she's going to in Chicago

in May will result in an

international timetable which

would allow troops to be

brought home along that time

line and that mid 2013 would be

a key milestone, etc, etc. But

it was widely interpreted as

bringing our troops home one

year early and that meant that

then the Defence Minister and

the Foreign Minister had to

quickly clarify to allies and

other nations with troops in

Afghanistan that no, no, we're

still in line with the international

international timetable, we're

not doing anything unilateral,

we haven't made a unilateral

decision. So I think it was a

situation where the spin around

her speech kind of got out of

hand and ahead of the actual

policy announcement. It wasn't

just the media, every

contributor to that debate assumed or took this as an

early withdrawal. And the spin

did get it out of control but the spin was created by the

Government. It was senior

government officials who

previewing the speech the night

before it was delivered gave

the message that this was about

bringing forward the timetable

to bring troops home. Now the

Government had always said, as

Julia Gillard pointed out there, that they had had a

qualification in everything she

said, Stephen Smith had been

saying and others, there was

always this qualification or earlier. This speech gave a

definition to what or earlier

meant but it didn't take the

actual on the ground situation

in Afghanistan any further than

what we knew before. I think

the Government wanted a bring

the troops home earlier story

out there. It got one but then

it had trouble putting together

the message after the fact. Internationally. Well domestically and

internationally. A lot of

journalists came away from that

speech quite confused about

exactly what the Government exactly what the Government was

saying because there were some mixed messages in what Julia Gillard

Gillard was saying and this is

a problem this Government has

all the time of trying to get a

clear message out. It very

rarely succeeds. What about the

mixed messages comeing from the

Opposition then. Joe Hockey's

speech in London and the

interview on 'Lateline' where

he talked about entitlements.

He said we should be nearer the

Asian model than the European

model and the obvious point to

put to that is you don't come

to this with clean hands. When

was the last time you supported

the Government when they tried

to implenlt means testing. An

ins frens in the papers saying

Joe Hockey's hands are cleaner

than you might think because he took on Tony Abbott in the

party room over a couple of

these things including the

private health insurance. I've

got some sympathy for Joe

Hockey's speech in London. I

think he's right, that the

broad point he was making was

right. I think he made a

mistake in then making an

international speech in an

internationalor text context

and then quickly doing that

interview on 'Lateline' where

he was going to get pinned down

on what im-I meant for

Australia. He's in a very difficult position because Tony Abbott has different messages

for different audiences. He

will give big headline speeches

where he says he's the guy for

small government, he's going to

cut government spending by

drastic amounts but then he's

the guy who says it's class war

fare when the Government tries

to just limit the increases in

the cap on the family tax

benefit. I mean in practice he

hasn't met an entitlement he

didn't like but his big

speeches say he's going to rein

it all in. That leaves his

Shadow Treasurer in a difficult

position and I actually think the speech Joe Hockey made was

a good one. But he took it

further than that by saying on the one hand you need to look

at entitlements but he did say

that we needed to move closer

to the Asian model. I think

Joe's problem was not so much

the speech but the interview

after where he got himself

tangled up in knots a bit. tangled up in knots a bit. I

think if he had left it to the

speech the speech I thought was

very good and made some very

good points but then he went on

'Lateline' and he didn't really

have a clear enough idea in his have a clear enough idea in his

head, I think, about how it

would apply back home and that

was the mistake. So I think

what that shows there is that

Joe probably needs remedial

media training as does Andrew

Robb probably. You know, Lenore

is right, they are trying is right, they are trying to,

you know, set a course for the

Liberal Party, for a Liberal Government on what the

parameters will be and Joe has

decided, you know, he's going

to shake off the cuddly bear

image, he's going to be the

brown bear and he's going to

try and make sure that it is a government that tries to live

within its means and cuts back

on entitlements. But there's

been all this sort of

commentary after Joe Hockey's

speech that, you know, they've

got the wrong economic team and

that it should really be

Malcolm Turnbull and Arthur

Sinodinos. Now mar - Malcolm

Turnbull and Arthur Turnbull and Arthur Sinodinos

are extraordinary talent, but

they would be saying the same

thing. Malcolm Turnbull said

similar things in a speech this

week. Changing the economic

team wouldn't be solving the

problem. There's not going to

be a swap, nothing's going to

happen this side of the election. All of this enabled Julia Gillard to start running

a scare campaign of her own.

Wayne Swan contributed a little

bit this morning when he

suggested that maybe pensioners

and others were going to lose

how much, $90 billion. $90

billion. It's as good a figure

as anything. You think the

carbon tax is bad what about

the $90 billion pension gouge

coming from the Coalition. That's an extraordinary number

and it must have been sort of -

perhaps it was on the menu in

Washington. There was 90 something and he thought that's

a good number, let's take that

one. Let's hear from Julia Gillard and Tony Abbott on

this. What Mr Hockey is talking

about is huge, widespread cuts

to the supports that families

need, whether it's child care,

family payments, the pension, carers' benefits, the supports

that many families rely on to

get by day to day. Joe

get by day to day. Joe is

making the very obvious point that governments have got to

live within their means. You mentioned Andrew Robb, as well,

Niki, and his contribution was

to sort of stick up for the

banks in terms of raising

interest rates when the Reserve

Bank is saying they should come

down. Here's Andrew Robb. I'd

have to look at their books.

You know, they're not stupid

and I don't think they would Willy nilly put up

Willy nilly put up their margin

like this if they weren't

suffering a problem with their

margin. Do you think that needs remedial training? Remedial

training, yes. Not quite not

how to answer questions but

they both need to have a very

clear idea of what it is they

want to say before they do any

kind of serious media interview

and it seems to me that they allow themselves to

allow themselves to be side

tracked. I'm not saying that

they should end up sounding

like robots, which a lot of

people in the Government do

now, but there are ways of

handling these kind of issues

and I think they've fallen down

a few times on that. Could I

just make the other point about

Gillard. Last year she addressed the Sydney Institute

on the importance of work and the importance of getting

people off welfare and into

work and she basically said,

you know, taxpayers should not

support people who can work and

there are people out in the

community who can work and

don't. So there is a similarity

there in that kind of message

too. She probably expressed it

a bit better than Joe did but,

you know, what's the difference

between what she's saying and what Joe's

what Joe's saying. The other

thing about Andrew Robb is I

don't think it's very helpful

for your finance spokesman to

go out one day and say

something that a day or two later the Governor of the Reserve Bank says is nonsense. OK, now on the

question of the carbon tax and

Tony Abbott was really quite

firm on this, this week that he

says if he wins the next election and the Labor Party

refuses to cave in on the

carbon tax that he's determined to

to go to a double dissolution,

here he is. It's hard to

imagine the Labor Party beaten

in an election that's a

referendum on the carbon tax

committing suicide twice by

resisting the new Government's

mandate. But if they do, there

is a constitutional procedure

designed for just this

eventuality. It's called a

double dissolution. I would not

hesitate to seek a

hesitate to seek a second

mandate to repeal this toxic

tax. Indeed it would be my duty

to do so. Now Lenore, you raise

a fascinating scenario here,

that if he was to go ahead with

that you have an election late

next year, late 2013, and a

whole bunch of new senators are

elected but they don't get to

take their seats until the

middle of 2014 by which time middle of 2014 by which time if Tony Abbott got his way there

would be another election and they would be facing

they would be facing another

election before they got to sit

in the red chamber. I think

Tony Abbott has built his

entire political success entire political success on repealing the carbon tax. He

has to say that he can do it

and he can do it quickly and

easily. But there are scenarios under which it would be much

more difficult for him to do.

In the first instance those

scenarios are predicated on him

not winning control of the

Senate and there are some Labor

advisers who are actually quite

concerned at their current level of

level of polling the Coalition

could in fact win control of

the Senate and then Tony Abbott

can do what he likes. But if he

didn't win control of the

Senate he would either have to

satisfy the requirements for a

double dissolution, that is two

rejections by the Senate 3 months apart within the time

frame of late next year to July

2014 and the Senate's allowed

constitutionally allowed to

have inquiries and committees

have inquiries and committees and can do all sort and can do all sort of things

to drag it out. Or he'd have to

wait until after the new Senate

took its place in 2014 which

would put the repeal into sort

of early 2015 probably. This is

all predicated, as he quite

rightly says, on Labor still

maintaining its support for a

carbon tax and he says look, if

they were swept out of office

in an election largely fought

on that issue they might change their mind. They

their mind. They might. They're

still saying they won't and if

they don't then it could be

much more complicated than he's

letting on. Dennis, there is a prospect of prospect of that. What Lenore

calls the 4-2 scenario that the

Coalition would have to achieve

around the country, you can see it happening in Queensland, you

can see it happening in NSW

perhaps. Western

Australia. Western Australia. NSW might be the tough NSW might be the tough one. It

might be the tough one but certainly if there was an

election at at the moment in

Queensland I think Labor would

be struggling to win more than

one Senate seat and two would

be the absolute maximum and I

think from what I'm hearing the

same is the case in Western

Australia. NSW could be a bit

iffy but the numbers in NSW are

just as bad as they are in

Queensland. Now, the tobacco

story went to - the tobacco

challenge went to the High Court

Court this week and Nicola

Roxon put a powerful argument

as to why the tobacco industry

has been singled out. Here she. Is The tobacco company said the

next threat could be forcing

McDonald to remove the gorlden

arches or selling alcohol in

plain bottles, could this be a

step further? No, I don't think it

it is. This is put forward by

companies who want to have a

further reach. Tobacco if it is

used as intended will kill you,

no other product is in that

category. St That blunt enough

for you? For with our panel

shortly but now here's Mike

Bowers and Talking Pictures.

I'm Mike Bowers I'm director of photography for the 'Global

Mail'. I'm talking pictures

this morning with the one and

only Jack the Insider always

inside the belt way with his

opinions. How are you? The

last thing you want to get from

Joe Hockey is a hand grenade

that he lobs in from the other

side of the world. Never mind a

post card. Joe Hockey is on

lathe Lynne it's 4:00 in the

morning in the UK. You get the

morning in the UK. You get the impression by some of impression by some of these performances do they speak at

all? They're probably in the

same room but I gather they

don't talk to one another.

There's Joe Hockey, Tony

Abbott, Andrew Robb and every

now and then one will pop up and say something ridiculous

and the other two will have to

come forward and explain what

they really meant. They're on

the same bike at these times

but pedal ing in different directions? Well perhaps they're pedalling in different directions. Tony Abbott looks

like he would like to do some

work but he's got some weight

down the back there, carrying a

bit in the saddle bags. Their

ability to snatch defeat from

the jaws of victory, who

knows. Yes, he doesn't look

happy there. He looks back at

Joe and says "Gee, it's hard

work with you on the bike with

me, champ." Jon Kudelka has

picked up on that theme with

his cartoon. There's Joe

getting off the plane back in

Australia and people would

quite like a few details from

you, Joe. And there's that

sense of entitlement then, very

good from Kudelka. I don't have any answers. None whatsoever. Swanny seems to be

sticking to his word and the

word is surplus. By By hell or

high water, scorched earth if

you like down the track. It's

all about the surplus. Here he

is wandering around the desert with the

with the instant surplus, just

add water and not a drop to be

seen. And he hasn't got any. He

can't afford any because we've

got to have a surplus. He has a

magnificent Swan face, he's

becoming his caricature. He is indeed. It's often said the

older you get you get the face

you de