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(generated from captions) Program Is Captioned Live. This

Tonight, Barack Obama takes a

raincheck, again. He has a big

challenge on his hands and it's

in the Gulf of Mexico. That's

very difficult. It represents a

huge challenge for the US

administration. He's welcome in

Australia anytime he chooses to


Good evening. Welcome to

Lateline. I'm Leigh Sales. It

mining super profits tax has seems the debate about the

some way to run yet. In a week

in which Newspoll showed many

voters are less than impressed

with either Kevin Rudd or Tony

Abbott, the super tax dominated

the political scene. If Labor

loses the next federal election, Clive Palmer will

have a seat at the Cabinet

table. Mitch Hook will have a

seat at the Cabinet table. BHP

Billiton and Rio Tinto will

because they will buy the

outcome if Tony Abbott is

elect. Where in Labor's 2007

policy manifesto, Paul, did

Kevin Rudd say to anyone at any

time, at any stage that he was

going to bring in, if elected,

a tax on super profits? Our

guests tonight are former

Victorian Liberal Party President Michael Kroger and

national secretary of the

Australian Workers Union, Paul

Howes. Shortly we'll cross live

to Istanbul to talk to

correspondent Paul McGeough

about his experience on the

flotilla raided by the Israeli

military. First, the daughter

of a slain police inform ant

tells of her distress at the

dropping of charges against a

former Victorian policeman. And

the growing scrapheap of TVs

and computer screens causing a

headache for Australian

policy-makers. Preparations

were under way for a

presidential visit later this

month but Barack Obama's again

been forced to cancel his trip

to Australia and Indonesia. He

had to call it off in March to

push through his historic

healthoiform and this time he's

needed at home to deal with the

oil spill in the Gulf of

Mexico. The Australian

Government has its own domestic

dramas to deal with. Kevin

Rudd's publicly trashed the

tactics of one of the country's

largest mining companies,

Xstrata, after it announced the resources super profits tax

forced it to suspend investment

and cut jobs. Emma Griffith

reports. On his old stomping

grown in southeast Queensland, the Prime Minister was on the

job. We just worry about when

there aren't enough

apprenticeships young people

fall through the cracks. Here,

it seems, he was amongst

friends. Hi. But in Mount Isa

they want to put him out of

work. There's only one way to

fix it, get rid of Mr Rudd and

the Labor Government. A town

meeting was called to discuss

Xstrata's decision to suspend

the expansion of its nearby

copper mine. Confidence is

down already. Like a club over

the head of the mining

industry. The company says it

could still go ahead but only

if the Government backs down.

If we can get through that and

get a good tax outcome, there's

an front to that shaft mine to

be developed into the future -

an opportunity. There's no

sign of that. When you're

dealing with some of the big mining companies around the

world like Xstrata, it doesn't

pay to behave like a pussycat.

He should get off his horse and

stop accusing miners of being

ignorant liars and listen to

them. The criticism is

mounting closer to moment too.

It chairman of the Government's

Future Fund, David Murray, says

the tax must be changed or

abandoned and trucking magnate

Lindsay Fox isn't a man of the

Government's process. You

can't just go in for a big bite

of money and not have

consultation. I reckon they

probably went the wrong

way. The Labor Premier of

Queensland is pleaing for a

compromise. When the Prime

Minister and I speak on this

issue and others regularly and

I'll keep doing it. The Prime

Minister has unleashed a new

line of attack, painting

Xstrata as a long-time

political foe. The company

also campaigned vigorously with

the Government so they could

keep WorkChoices and AWAs in

2007/8 so I think we should

treat what they say with a

grien of salt. One of Kevin

Rudd's political friends now

won't be providing any distraction from the mining

debate. The US President has

had to cancel his visit to

Australia for the second time

this year because of pressing domestic concerns. This time

it's the peep beep oil spill that's keeping Barack Obama at

home. He has a big challenge

on his hands and it's in the

Gulf of Mexico. That's very

difficult and represents a huge challenge for US

administration. He's welcome in Australia anymore he chooses to

visit. It could be third time

lucky. He's indicated that at

a convenient time in the future

he will make his visit to

Australia and also to

Indonesia. But the looming mid

term elections in the United

States, Kevin Rudd's own

appointment with the ballot box

could mean that's later rather

than sooner. Thousands have

gathered in Turkey to mourn the

deaths of the activists killed

in the Israeli raid on an aid

convoy heading to Gaza. The

Prime Minister says Turkey will

never forget the attack.

Journalist Paul McGeough was on

the flotilla and experienced

the raid first hand. To discuss

his experience he joins me now

from Istanbul. Paul McGeough,

Binyamin Netanyahu says the

people on these boats were

violent supporters of terror,

they were armed and basically

they were spoiling for a fight.

What do you say to that?

Um...some of the people on the

ships did have angle-grinders

which they used to sever some

of the metal spikes that held

the little chain fences around

the lifeboats. What they did

with them was difficult to see

from the vantage point that I

was at. The Israeli Government

has put out video of an unscene

person, which they say - who

they say was being beaten by

people wielding these spikes.

They've yet to produce the

person who was being beaten and

there's been no suggestion that

they know who it was. I've

spent a long time talking to

people who were on the ship in question. You hear varying

accounts. I've not been told of

anyone wielding spikes to hit

anyone. The first soldiers who were dropped from the

helicopters, I'm told, were

beaten with fists by a few

people or a group of people who

were on the top deck as they

landed on the deck but I've

also been told by several

people who were there that the

leaders on the ship moved in

very quickly to protect those

people and several people have

told me that they were then

offered medical assistance. As journalists, once the raid

occurred, were you and Kate

Geraghrty treated any

differently to the others on

the boat? Absolutely not. They

lost all their fear, we lost

all our gear. We were ordered

around at the point of a gun.

Kate copped the belt of a

taser, a stun gun on her arm,

in fact some of the accents

amongst the team of commanders

that came on to the fly-bridge

of the boat that we were on had Australian accent. We said,

"We're with the 'Sydney Morning

Herald'," we claimed our rights

as journalists and the response

was, "We know you're from the Herald." And the other one

followed up with, "No

worries." What about when you

arrived at the prison? What

was the situation there? Total

disregard bordering on contempt

for any suggestion that

journalists were entitled to

any sort of special treatment.

We were told that - notwithstanding the fact we had

been drag under to the country,

we were told we had entered

illegally. It was quite a

chaotic situation. At one stage

we were dragged into a small

office and when I arrived in

the office the gentleman

sitting behind the desk who

told me he was a judge was

chomping on a sausage roll. He

had the flag of the nation

behind him and also a sausage

roll in his hand. He said I had

entered the country without a

visa and I said I had come to

Israel for the last 20 years on

at least 20 occasions and never

applied for a visa. That threw

him a bit. He went back and

unsulted and said, "You still

broke the law." You seemed to

have a situation where they

were desperate to get everyone

out of the country as quickly

as they could. Israel has a very strong view about anyone

who lays a finger on any of its

troops. The notion that they

were prepared to deport all -

notwithstanding their believe

that some of these people were

wielding bars to break the

heads of their troops - tells

you one of two things, that

they don't really believe that

and they don't think there's a believable case to stand up or

they did realise the absolute

mess they had created for themselves internationally and

they just wanted to try and get

it over and done with as

quickly as possible. Paul

McGeough in Istanbul, we have

to leave it there. Thank you.

Victoria police have merged

separate investigations into

the murders of police informant

Terence Hodson and gangland

killer Carl Williams. Former

detective Paul Dale was charged

with Hodson's murder but

prosecutors today abandoned the

case against him. He's

expressed relief but police say

he remains a person of interest

and as Josie Taylor reports,

one of Terence Hodson's

daughters remains confident

justice will eventually be

done. Six years on from her

parents' murders, Mandy

Hodson's grief is still

raw. I'm a big believer in

karma. What goes around comes

around. And everyone has to

pay, if you like, the piper at

the end of the day. You have to

pay for what you've done. My

mum and dad, I suppose, are

living proof of that. They've

paid the ultimate

price. Terence and Christine

Hodson were shot dead in their

home in 2004. Mr Hodson was a

police informer who had agreed

to give evidence against two

drug squad detectives including

Paul Dale. Dale was charged

with arranging for Terence

Hodson to be killed before he

could testify but this morning

prosecutors formally dropped

the charge after problems with

a key witness. I'm relieved

this is finally over. I've

maintained my innocence from

day one of these events. I'm

totally innocent of the murder of Christine and Terence

Hodson. As the magistrate told

Mr Dale the charges would be

withdrawn, he turned and glared

at the detectives who had

charged him. I'd now like to

put this ordeal behind me and

try and move on. Good But he

remains a person of interest

for the Hodson murders and

other matters. I haven't got a

Mr For Mr Dale but I have got a message for those involved in

the killing of the Hodsons -

we're after you. The police

task force set up to

investigate the Hodsons

murders with will now work with

the police investigating the

prison murder of gangland

killer Carl Williams. Mandy

Hodson is in the rare position

of being able to speak

first-hand about links between

police in Victoria and the

criminal underworld. In the

past she's been charged with

drug offences and had a

relationship with a now jailed

drug squad detective, David Miechel. What was that world

like? I was told I was never

allowed to speak about David

Miechel to my friends because

of the relationship side of it,

being that it's police mixed

with, you know, criminals. Were

you shocked at the links that

exist there? Actually I was. I

mean, you think there's little

bits that are involved but when

you really get down to the

nitty-gritty of it all, really

it's scary to think of how much

corruption actually is out

there. Are you aware of other

corrupt police still acting in

the police force? Not me

personally. No, I don't. I

daresay there are. Do you have confidence that anyone ever

will be charged? Yeah, I do.

Even if they don't spend time

behind bars, I'm hoping that

the person that is responsible

and the reason why my parents

are dead will be named. Mandy

Hodson wants Victoria's new anticorruption commission to investigate her parents'

deaths. And did your dad ever

talk to you about what sort of

pressure was put on him to

become a police informer? He

used to use the term, "I'm a

dead man walking." So often in

life when people say things

like that you go, "Whatever."

You shouldn't take anything for

granted. I said I wouldn't to

do this...hopefully one day the

people that are responsible for

this and hopefully it will set

a precedent that everyone

should be held accountable.

There's a $1 million reward for

information relating to the

Hodson murders.

A 29-year-old unemployed

Brisbane man has appeared in

the city's Magistrates Court

charged with defacing two

Facebook tribute sites

dedicated to slain children.

Bradley Paul Hampson is

believed to be the first

Australian to face court for

such an activity. Police say

his arrest is a warning to

anyone thinking of exploiting

social networking sites.

Charlotte Glennie reports from

Brisbane. Alright, we seem to

have a problem with that story.

Let's move on to our story about electronic waste. In

Australia every year, more than

17 million televisions,

computers and other electronic

products with thrown away. Our

desire to keep up with the

latest technologies such as 3D

TVs means current models are

ending up on the scrap heap in

ever am creasing numbers and

what's going into landfill

contains dangerous toxins. A

recycling scheme was proposed a

year ago to deal with this

potential crisis in what's

called e-waste but it's nowhere

near being implemented. Karen

Barlow reports. Garbage -

no-one wants it and after it's

thrown away no-one wants to

know about it. Fed by the insatiable demand for

electronic goods, the

inevitable discards are

reaching critical mass. The

landfills of Australia are

busting at the seams with

e-waste. We are buying more

and more every year and dumping

more and more every year.

Councils don't want to do it,

the State Government doesn't

really want to know about it.

They're issuing fliers saying,

"We'll no longer take e-waste."

The leaves the consumer high

and dry. More than 17 million

TVs, computers and other

electronic product are

jettisoned every year. E-waste

contains hazards such as lead,

air' born mercury and

plastics. There are many

millions going into landfill

every year. This is where

what's thrown into suburban

bins gets another chance to

shine. Items that should have

been sent for recycling are

picked out by hand and machine.

This is one day's collection of

e-waste from two council

areas. Vacuum cleaners. A

keyboard that doesn't work.

There's a fan over

there. There's a built-in

oblesance to electronic goods.

They can quickly break or go

out of style. They end up in

landfill or, more rarely, go to

places like this. Australia's

largest e-waste recycler was

opened by the Environment Minister, Peter Garrett, two

years ago. It takes 10,000 tons

of e-waste a year and has the capacity to double that

amount. We are significantly

undercapacity now. Less than a

third or thereabouts. Some of

the goods shredded here worked

perfectly well or just needed

light repairs. Sometimes it

might just be a problem with a

power supply or a battery and

the consumer just wants to

upgrade, like the digital televisions for instance now. Despite the effort being

made here, more than 90% of

e-waste still goes to

landfill. Yeah, because it's

legal to dump it now. Landfills

can accept all these things.

There is absolutely no law

banning this stuff from going

into landfill. It's not in

place yet but last November the Federal Government said it

would support a product

stewardship scheme in exchange

for a small increase in the

cost of new electronic goods,

companies would arrange for

recycling at the end of the

product's days. From just a

few cents to maybe $30

depending on what sort of

object it is and what it's made

out of. The more valuable

materials that go into that

object, the more it is likely

to cost less to recycle. The

idea of a new producer

responsibility has been

embraced by most, but not all,

companies. It's understood two

computer companies aren't keen

to take part. This is where

the Government needs to step

in. 80% of the producers who

are willing to pay for the

fructbe recycled have been

requesting the Government to

ensure that this is made into a

level playing field and this is why legislation is

important. Depending on the

parliamentary process, such a

scheme may start next year but

there's no guarantee. New ways

of e-waste are coming in all

the time. 3D TVs have arrived

and in a month's time the

digital TV change-over kicks

off in Mildura. That means

there are 5 million TVs on the

chopping block as of the next

coming few years. Now we have

a choice here, do we send them

to landfill or do we recycle

them? And Steven Conroy has a

lot to answer for here because

he's been badgered by the

industry and environment groups

for over two years on this issue and nothing has been

done. The communications

Minister has reafirmed the

Government's commitment to a future e-waste recycling

scheme. In a statement, the

Minister says:

We're on the ground. We're

the ones facing it. We're the

soldiers, as it were. One of

the biggest not-for-profit

waste recyclers is being

dragged financially under by

e-waste. It's costing Reverse

Garbage about $100,000 a year.

What are people going to do if

Reverse Garbage says no. We're

not servicing the individual,

we're servicing the big end of

town, banks, we're providing

free services to schools, to

hospitals. The amount of

schools, once Kevin Rudd initiated the new computer

program, we endeavoured to take

all the old computers from the

State school system. We nearly

drowned under the weight of

that. Reverse Garbage says it

can't wait for a national

e-waste program. It's poised to stop taking e-waste

altogether. The reality is for

seven years we've been doing

this un assisted and something

needs to happen now to help

not-for-profits. It's time that

you came and gave us a hand

because I could sit here and

wait for another bill to be

passed and I still hear nothing. Until there's a

market, all this e-waste will

just go to waste.

Now let's try again on our

story about a man being charged

for defacing two Facebook

tribute sites dedicated to slain children. Police say his

arrest is a warning to anyone

thinking of exploiting social

networking sites as Charlotte

Glennie reports from Brisbane. 12-year-old Elliott Fletcher

was stabbed to death in a

Brisbane school playground in

February. That same month, 8-year-old Trinity Bates was

found a short distance from her

Bundaberg home, allegedly

murdered. Tribute sites were

quickly set up on the social

networking site Facebook but

within hours the sites were

flooded with pornographic

images. Clearly the commune

felt that the material posted

was offensive. The Queensland

police that have reviewed the

material are also of the view

that this is particularly

offensive material. Early this

morning, police raided a

suburban Brisbane home and

seized computer equipment. They

also arrested 29-year-old

Bradley Paul Hampson who

appeared in court this

afternoon charged with five

offences including possessing

and distributing child

exploitation material. The

police prosecutor told the

court that Hampson had a morbid

fascination with dead children

and he'd expressed fantasies in

this regard. The judge refused

an application for his bail.

Queensland police say they're

increasingly concerned about

what they call trolling where

people post images and content

on Internet tribute pages,

intending to offence. They say

they hope Hampson's prosecution, which they believe

is an Australian first, will

act as a deterrent. If

convicted, he could face up to

10 years in jail. What we want

to do today is to make it very

clear to the public that you

are not anonymous when you go

online. Police have the capability, when you commit an

offence online, to be able to

track you down and hold you responsible. Police say it

would also help if Facebook

acted more quickly to remove

offensive material when it's


The battle over the Rudd

Government's mining tax raged

this week with miners and

Ministers facing off in

Canberra but if Tuesday's

Newspoll is to be believed, Australians may have stopped

caring about not only when wins this battle but perhaps the

war, by which I mean this year's federal election. To

discuss why, I'm joined from

Melbourne by former Victorian Liberal President Kroger xroing

and in Sydney by AWU national

secretary, Paul Howes. Let's

start with the super profits

tax which has been causing the

most controversy in politics

this week. When someone like

David Murray, the chairman of

the Future Fund, says the tax

needs to be changed or

abandoned because it contains

several significant flaws,

isn't that pretty persuasive,

Paul Howes? It is also pretty

persuasive when you listen to

20 of Australia's leading

economists who have endorsed

the tax and tax experts say it

is an elegant tax. Certainly

there is going to be

discussions over the and zien

and the nature of this tax and

that's good, there should be discussions but at the end of

the day the essence and the

question that we have to ask

ourselves are do our big mining

companies pay a fair level of

tax, reinvest a fair level of

money back into the Australian

community for the right to mine

our resource s? Absolutely not.

That's why we need to get this framework right because if we

don't get it right now, resources aren't renew scpble

once they're dug up they're

gone. If we don't get it right

now we'll be making the same

mistakes we made in the last

boom when we got inlevels of

taxation so completely out of

kilter. Michael Kroger? Well,

Leigh, the last time Paul and I

were on your program I asked

Paul to ring Lindsay Tanner to

tell him to stop Kevin Rudd

meddling with the tax system

and lo and behold what happens?

Two days later he comes out

with this disaster. All I can

say is Sir Rod Eddington who is

one of Australia's most

distinguished businessmen and

helped the Rudd Government

earlier on came out this week

and said, "This has to start

again. This is another Kevin

Rudd catastrophe from a man out

of his depth and not qualified

to be Prime Minister and he's

dragging people along in the

Labour Party and discrediting

him as well and making people

like Paul follow him down a

dark passage and into what I

think is going to be a defeat

for Labor at the election. Do

you feel you're being forced to follow someone down a passage

you don't want to travel down?

I can speak for myself and my

union's had a position about

supporting a profit-based tax

in the resources sector for

over 30 years, predating Kevin

Rudd and predating me. Labor

people support the tax because

it's the right thing to do for

our country. Everyone agrees

that the taxation levels for the mining industry at the

moment are not right. They're

not right. Thaw are getting

away with far too much when you

consider that these resources

in the ground belong to all

Australians and it's only fair

that all Australians share in

the massive wealth being

generated by our mineral explorationyism think you'll

find that people like Lindsay

Tanner are very supportive of

this tax. The party is fully united behind Kevin Rudd on

this because it is the right

thing to do for the long-term

interests of our country. Michael Kroger, the trade

figures released this week show

a dramatic surge in mining

earnings, doesn't that give

weight to Paul Howes's argument

that Australians deserve a

share of Senate We hear the

argument that we deserve a

reasonable share and these are Australian resources and belong

to all Australians. Who owns

the fish in the sea? That a

sill analysis. Who Who owns

the old growth forests? If you

look at old growth forests,

most old growth forestry work

have the a substantial levy

paid by forestry companies to

the State. Can they pay more?

Possibly, Michael. Can the

fishing industry pay more?

They're a $2 billion industry.

Why aren't the very wealthy

fishermen and women in this

country, who are depleting our

natural fish resources, why

aren't they paying a super

profits? What are you saying,

Michael Kroger, that the mining

industry is being unfairly

singled out? This is an

absurdity. You bring in a

retrospective tax. You see, this Government doesn't

understand how the mining

industry works. You spend years

and years on feasibility

studies, spending millions of

dollars, years of approvals

with sample drillings in

employing thousands of people

and get to a board making a decision on whether to mine or

not and that's based on predicted returns over a mine

life and we're finding halfway

through a mine life, decisions

taken years before, the whole

tax regime changes which affect

the profitability of the mine

and may have meant the

companies wouldn't have started

the mines in the first place.

This is why scenier people

around the world are talking

about sovereign risk in this

country. You have been saying

Xstrata is playing politics

with this but wouldn't

suspending project worth more

than $500 million for reasons

of playing politics be a case

of Xstrata cutting off its nose

to spite its face? Xstrata's

actions yesterday are extremely

duplicitous. I've got a long

history with Earnest Henry and

I know speaking to Xstrata

years ago about Earnest Henry,

the company saying this project

may not be feasible in the

long-term. Drilling the extra

hole in the ground may not be

the feasible way to go. What's

happened over the last couple

of years? You've had the

copper price on the LME

yo-yoing up and down and certainly this decision could

have been made without the RSP

and probably would have been made without the

RSPT. Opportunistic?

Absolutely and Xstrata have

form on this. Xstrata has form

on bullying Governments around

the world on these issues and

Kevin Rudd is right in saying

he won't be intimidated. Is the reason Kevin Rudd is

digging his heels in over this

policy because he's

back-flipped on so many other

that now he feels like he needs to somehow rescue his

credibility by seeming to be

the strong man? This is the

right thing to do for the

country and we can't allow a

group of very wealthy

individuals to try and buy

policy outcomes from our

Government. What we know is

that if Labor loses the next federal election, Clive Palmer

will have a seat at the Cabinet

table, Mitch Hook will have a

seat at the Cabinet table, BHP

Billiton and rintedo will

because they will buy the

outcome if tabset elected. It

is right for the Government

elected by the people, unlike

the mining companies, to

determine policy in the

interests of all Australians.

Leigh, I just must answer that.

What mandate does Kevin Rudd

have for this tax? Where in

Labor's 2007 policy manifesto

did Kevin Rudd say to anyone at

any time, at any stage that he

was going to bring in, if

elected, a tax on super profits

or what he calls a super

profits tax above 6%, in the

mining secit? Michael, you

will find that Labor went to

the election with a clear

platform to overhaul our

taxation system. Overhaul. I

want to explore other issues.

The Victorian Liberal MP Petro

Gorgio delivered his

valedictory speech today and

said Tony Abbott's plans to

turn back asylum-seeker boats

is cruel and unworthy of support. Michael Kroger, is

that correct? No y don't

believe that's right but

Petro's stood on the issues for

a long time and good luck to

him. He's made a good

contribution as a member of

party. He has one view of the

party. Most of the party have a

different view. Do the people

who run the party listen to

people like Petro Gorgio? The

people who run the policy are

the parliamentary party not the organisational wing. They have

heard his views and don't agree

but respect them. If Petro had

been a member of the ALP he

would have been called a rat

and trader and been expelled

years ago. On our side we allow

the freedom of speech and

tolerate the views. As well as

Mr Gorgio's remarks, we've had

revelations in it the recent

weeks that Malcolm Fraser is no

longer a member of the Liberal

Party. Did Malcolm Fraser

change or did the Liberal Party

change? I've got No Doubt

that Malcolm Fraser changed. I really do believe that. A lot

of the people that followed

Malcolm Fraser in Government

were people that were very much

part of his Government. John

Howard had been a Treasurer in

his Government for many years.

Lots of people like Philip

Ruddock were in the parliament

when Malcolm was Prime

Minister. Do you think the

Liberal Party's moved further

to right the in the years

you've been involve would it?

To the right, I don't think it

has, no. I think from the mid'

70s onwards when there was

economic reform worldwide

there, was a change in thinking

which permeated Western

democracies through Thatcher,

through Regan where we had to

lower the size of Government,

reduce Government intervention

in people's lives, lower taxes,

smaller Government, freeing up

the workplace, freeing up the

ports, the whole economic

revolution that took place

during and post-Thatcher

permeated the West and certainly permeated Australia

and it's a very good thing it

did. This week's Newspoll

shows one in four voters is now

alienated from the two major

parties. Why do you think that

is, Paul Howes ? I think the

Government's had difficulty

selling its achievements over

the last while and certainly this was always going to

happen. I mean, Tony Abbott's

been very good at rebuilding

his base. He has Turnbull

moderated a lot of the party's

views, he's been disgryr at

putting his party back into -

firmly in the extreme right of

- motivating the base by

harkening back to policies like WorkChoices. Your base must be

very concerned about the

startling drop in Kevin Rudd's

approval rating. This is not

usual for Governments after two

years. It is unusual to drop

almost 30 points in nine

months. You've got to remember

we had unrealistic levels of

support for Labor in the first

two years after the election.

If you look back at the period

between' 96 and' 98 when Labor

won the popular vote at the

1998 federal election, this the

same scenario John Howard faced

in the leadup to the 2001

election. I think some Labor

party activists in the leadup

to 2001 were measuring the

curtains down in The Lodge and

it clearly turned during the

campaign. It turned during the

campaign in the 2004 election.

This will be a very tight

campaign but there will be a

clear choice between a party

that stands for substantial

reform and putting a bit back

into Australia and a party that

stands for big mining bosses.

Michael Kroger, what do you

think is the source of this

fairly widespread dis

illusionen ment with both

parties and what effect might

it have in the election? I

don't accept it's

disillusionment with both

parties. This Government may

lose the next election. What

you see is two things happening

- one, people take a middle

course, they park their vote

before they come to the

election and secondly, the electorate in Australia don't

like saying they got it wrong

so quickly. It is very unusual

- the last one-term Government

was 1931. The Australian

electorate are not used to

picking a Government and

throwing them out within three

years. They don't do. It they

haven't done it in 80 years.

The electorate is perplexed by

Rudd's performance. He seemed a wonderful campaigner during the

election and a disastrous and incompetent Prime Minister and

they're as bewildered as the

members of the Federal parliamentary Labour Party

are. We're out of time. Paul

Howes and Michael Kroger, a

pleasure to have you. Thank

you, Leigh. Thank you. Now for

our regular Friday night chat

about the economic issues of

the week, we're joined by

Economics Correspondent Stephen

Long. You've got the latest up

to the minute US jobs numbers.

What are they telling us?

They're very disappointing,

Leigh. The median forecast from

market economists was 536,000

jobs would be added in May in

the US. It was 411,000 jobs on

the official estimate but most

of those jobs were temporary

Government hire for the US

census. There was virtually no private sector employment

create. The unemployment rate,

strangely, has actually fallen

but the commentary - I haven't

had a chance to drill down into

the figures but the

commenterary is that that is

because discouraged job seekers

are dropping out of the labour

market. This is a major blow because there was anticipation that the employment situation

in the US would back up other

anecdotal evidence that the US

wasfirmly in recovery. Not

good mews given what's going on

in Europe? No and we've had

some bad news out of Europe

tonight. The Hungarian

Government has come out and

said some extraordinary things

- or at least a spokesman for

the Prime Minister has said

that Hungary's economy is in a

grave situation because the

previous Government lied about

the economy and manipulated the

fact to hide its true state and

that default is certainly a

possibility and there has again

been some level of skepticism

about this in some quarters

saying that this is a message

for domestic political

consumption. But bear in mind

that before we had the debt

woes in southern Europe, in the

so-called Club Med economies,

it was Eastern Europe that was

the main locus of worry and

Hungary was one of the

economies in a really bad

state. That saw markets pare

early gains before we had the

US numbers come out which will

certainly rock the markets as

well. Might it have to attract

the same sort of bail-out from

Europe that we saw Greece

have? Yeah, well, Hungary's

already had a level of bail-out

and if what the Government's

saying, if you're not going to

take it with a grain of salt

and say it's a reflection of

the true situationer it's

pretty bad news, especially

because Hungarian banks have a

big link with banks in western

Europe and there's lot of

cross-exposure. Where does

Australia fit into all of this?

Where does it leave us?

Fortunately we've hitched our

little red wagon to China which

is still recording very, very

strong groith but China and Australia can't stay isolated

from what's happening in the

Western world and you are

already seeing Chinese manufacturing exports slow

because of the hit to Europe

and growth which was already

virtually zero in the Euro zone

will obviously go down with

what we're seeing. You can't

say we're impune but we're in a

better state. You've certainly

got a 2-track economy but the

second track is going to get a

bit rocked by the worsening

rumbling of the locomotive of

bad news rocking down the first track up in Europe. Interesting. Stephen

Long, thank you. See you next

week. To the weather -

That's all from us. If you'd

like to look back at tonight's

panel with Michael Kroger and

Paul Howes or review any of

Lateline's stories or

transcripts, you can visit our

website and follow us on

twitter and Facebook. I'm back

Monday night when we'll have a

special interview with the

former British Prime Minister,

Tony Blair. I'll look forward

to having your company for

that. Goodnight. Froupt

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