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PM, Rudd target marginal seat -

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Reporter: Michael Brissenden

The Prime Minister and Opposition Leader have both targeted the marginal New South Wales seat of
Eden Monaro to sell policies ahead of the official election campaign. John Howard headed to
Queanbeyan, announcing a $40 million package to install seatbelts in country school buses while
Kevin Rudd visited a local high school, focusing on skills and attacking the Government over an
OECD report showing Australia was the only developed country to reduce public funding for
education.

KERRY O'BRIEN: But first to the capital, or just outside the capital to be precise, only a few
kilometres from Parliament House where the highly marginal seat of Eden-Monaro became the focus of
an unruly day of political debate, the oppositional political battle really.

The Opposition seized on some rather extreme comments made against the high-profile Labor candidate
by the Chief of Staff of the local Liberal Member and Howard Government Minister, Gary Nairn. And
the Government pounced on an embarrassing slip by Labor leader Kevin Rudd on tax policy, while he
was touring the same electorate this afternoon.

Political editor Michael Brissenden reports.

MICHAEL BRISSENDEN: For much of the political cycle, the towns and villages of Eden-Monaro happily
bask in the rewards and handouts that come to those handful of marginal seats that really matter.
And then they get on with life, free from political interference. But as we move closer to the
election date, the atmospherics in this so-called "bellwether" seat begin to change like no other.

For a start, Queanbeyan, the biggest town in a seat that sweeps from high country grazing to
coastal timber just happens to be 10 minutes drive from Parliament House. Like flies to sheep, the
politicians are inexorably drawn to the unassuming regional centre and the backdrops it provides.

KEVIN RUDD, OPPOSITION LEADER: Well, it's good to be here with Stephen Smith, the shadow minister
for education, Mike Kelly, our candidate for Eden-Monaro. And here at Queanbeyan High, this is a
fantastic school doing good things for our young people in this community.

GARY NAIRN, SPECIAL MINISTER OF STATE (to John Howard): Welcome to Queanbeyan.

JOHN HOWARD, PRIME MINISTER: Great to see you.

MICHAEL BRISSENDEN: Today both leaders made the short trip to Eden-Monaro. Kevin Rudd was pushing
his education revolution, flanked by the Labor candidate, Mike Kelly.

John Howard, along with the member for the seat, Gary Nairn, was at the local bus company to
announce a $40 million plan to install seat belts in school buses. At the time, neither of them
could have known how important Eden-Monaro would become to the rest of the political day.

MIKE KELLY, ALP CANDIDATE FOR EDEN-MONARO: The Howard Government has lost touch -

MICHAEL BRISSENDEN: Just last week, the Prime Minister told his party room that Eden-Monaro was a
seat the Libs would win. But Labor is confident it's candidate, a former military lawyer who served
in Iraq, will get across the line when the votes are counted. Mike Kelly is working the electorate
hard.

MIKE KELLY: Last few weeks we've driven over 16,000 kilometres, I've spoken to a few thousand
people now and -

MICHAEL BRISSENDEN: But at this community forum last week, he attracted some tough criticism about
his uncompromising opposition to Australia's involvement in Iraq.

DR PETER PHELPS, GARY NAIRN'S CHIEF OF STAFF: And you took part in it willingly because you weren't
sent over there, you volunteered didn't you?

MIKE KELLY: No, I was a soldier and I did what I was ordered to do -

DR PETER PHELPS: Oh, like the guards at Belsen perhaps. Are you using the Nuremberg defence - no,
no -

MICHAEL BRISSENDEN: Part of the campaign rough and tumble that any candidate could expect, you'd
think. But this one was a little different. The inquisitor just happened to be the local member's
chief of staff.

JULIA GILLARD, DEPUTY OPPOSITION LEADER: Does the Minister believe these words used are acceptable
to be used by anyone in any circumstances, public or private? Given the Minister ... given the
words were said by the Minister's chief of staff, does he endorse them and if he does not endorse
them, what will he do about it?

GARY NAIRN: I was not in attendance at that particular forum. My chief of staff did not attend that
forum at any direction from me. He was not at that forum as my chief of staff. He attended as a
citizen of Queanbeyan who received an invitation to attend the forum. But clearly - and so
therefore I can't particularly comment on whether those words were said or not because I wasn't
there. However clearly, Mr Speaker, I would not agree with any comments that might compare the work
of Australian soldiers with those in Nazi Germany.

MICHAEL BRISSENDEN: But as marginal seats can be, Eden-Monaro proved to be a fickle political
bellwether for both sides today. For the Labor leader, it provided the backdrop for one of those
campaign slips that can prove costly. The campaign of course hasn't yet begun, but the Government
has been trying hard to paint Mr Rudd as a phoney and a policy flake. The Labor leader has been
under pressure for weeks, for example, to produce a tax policy.

KEVIN RUDD: What I've said when it comes to the future of the tax system is that our plan will be
out there on the table for the Australian people to look at before the election.

MICHAEL BRISSENDEN: The Government's tax policy is the last Budget, and no doubt we'll find out
more about their future tax plans in due course as well. But the clear message from Mr Rudd is that
Labor is working on a tax plan and it will be released during the campaign, just as John Howard did
in 1996. So, with all this focus on tax, why was it then that Kevin Rudd doesn't seem to know what
the current tax thresholds are?

REPORTER: Can you name for me the rates and the thresholds at which those rates kick in?

KEVIN RUDD: Well, if you look across the - you mean, the ones when they take fully -

REPORTER: The Budget this year, July 1.

KEVIN RUDD: Well as of July 1, if you went through the four thresholds, I think the high threshold
kicks in I think at $175,000 and then I think it cascades down - down the spectrum.

MICHAEL BRISSENDEN: The response was swift and fierce.

PETER COSTELLO, TREASURER: He had one of those, "I wish the ground would open up and just swallow
me" days when he went out to Eden-Monaro. He couldn't name a single rate, he couldn't name a single
threshold, and the one that he named of $175,000 doesn't exist. And then he said, "I think at
$175,000, when I think it cascades down the spectrum."

Well Mr Speaker, tax thresholds don't cascade. Cascade is a form of beer, Mr Speaker, it is not a
form of tax threshold. And Mr Speaker, this would be amusing if it were not serious. The Leader of
the Opposition doesn't know what the Australian taxation system is. He doesn't understand it and he
should never be put in charge of people's mortgages, their businesses, or their jobs.

MICHAEL BRISSENDEN: Sure, it may seem a small slip but with the Government looking to sow any seeds
of doubt it can about Kevin Rudd, it was a devastating political opportunity. They might be behind
in the polls, but experience is a central theme of this political fight and one of the many things
the key members of this Government are experienced at is seizing every political opportunity that
might come their way.

Late this afternoon, another one surfaced. Sources described as anti-Labor from outside Parliament
revealed to the Nine Network that Kevin Rudd had a heart condition. The suggestion is that this
could affect him as Prime Minister.

NINE NETWORK REPORTER: Today, Mr Rudd confirmed the surgery but strongly denied any doubts about
his health.

KEVIN RUDD: Well as a kid Laurie, I had rheumatic fever like a whole bunch of other Australians and
then later in life in my mid-thirties, as often happens this way, the aortic valve was replaced and
I received a transplant. I have an annual check-up and I'm fine. The toughest thing I've done
physically is walk Kokoda last year. If there was any problem with me, I don't think I would have
been going - walking Kokoda. That was nine days uphill in extraordinary conditions.

MICHAEL BRISSENDEN: Yes, politics is a brutal business and the campaign itself hasn't yet begun.

KERRY O'BRIEN: Well, it has really. Political editor Michael Brissenden.