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Meet The Press -

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DISCUSSIONS ABOUT DOHA, FREE TRADE AGREEMENTS, PETER COSTELLO, LIKELIHOOD OF A RECESSION, LNP,
POSSIBLE MERGER FEDERALLY BETWEEN LIBERAL AND NATIONALS

MEET THE PRESS PRESENTER PAUL BONGIORNO: While Australia's politicians continue to slug it out on
how best to deal with global warming, there was a blast of cold reality from Geneva during the
week. The long running World Trade Organisation talks to achieve freer trade stalled at the last
hurdle. The so-called Doha round of negotiations has been on and off for seven years, and now looks
to be permanently off.

WTO DIRECTOR-GENERAL PASCAL LAMY (Wednesday): There's no use beating around the bush. This meeting
has collapsed. Members have simply not been able to bridge their differences.

PM KEVIN RUDD (Wednesday): And I am deeply deeply deeply disappointed about it's impact not just on
the global economy overall at these difficult economic times, but also for the impact for
Australian primary producers.

SHADOW TRADE MINISTER IAN MACFARLANE (Wednesday): Trade is a much simpler issue, relatively, a
complicated issue nonetheless, but a very simple issue compared to climate change and getting the
world to agree to capping emissions.

PAUL BONGIORNO: No-one more disappointed than our delegation leader at the talks. Trade Minister
Simon Crean is a guest. And later - is the new Liberal National Party in Queensland the shape of
things to come for the non-Labor side of politics? LNP State Leader Lawrence Springborg. But first
- what the nation's papers are reporting this Sunday August 3. The 'Sunday Telegraph' leads with
"Costello plots his return." The paper says Mr Costello believes the Liberal Party is prepared to
draft him into the top job and that Liberal powerbroker, Senator Nick Minchin, has always wanted
the former Treasurer to lead the party after the election. The Sunday 'Age' reports "Rudd plots IR
attack on Costello." The Labor Government is already planning a major Peter Costello scare campaign
focusing on his WorkChoices baggage. The 'Sun-Herald' reports "New Qantas emergency." A Qantas jet
was forced to make an emergency landing in Sydney last night after it began leaking hydraulic
fluid. The 'Sunday Mail' has, "$40 billion Games." As China has spent an estimated $40 billion to
stage the Bejing Olympics, our Olympic chiefs will demand a massive injection of funds from the
Rudd Government to keep Australia in the top seven nations. No-one's tried harder to save the world
trade talks than Simon Crean. His efforts have won praise from Australian farmers and business, but
the Federal Opposition believes the failure points the way to the fate of world climate change
talks in Poznan, Poland later this year and Copenhagen next year. Welcome back to the program,
Minister. Good morning.

TRADE MINISTER SIMON CREAN: Good to be back, Paul. Good morning to you.

PAUL BONGIORNO: Just going to those Costello headlines - 'Costello plots his return', it looks like
he may well be drafted. Labor has a lot to fear from him, hasn't it?

SIMON CREAN: I think we know that the Liberal Party's got a lot of problems, Paul, but whether
Peter Costello is the answer is another question. I mean this is a guy that whenever he's been
wooed, he's never consented and whenever he's chased, he's never succeeded. He's also the Treasurer
that has had a manic obsession in terms of pursuing an agenda that really cost the previous
government a lot in the last election, WorkChoices. And he's also a treasurer, despite his claim to
good economic management, that presided over an economy that gave us the highest inflation rate in
16 years and was never really able to stand up to the prime minister in reining back their budget
excesses. So let's wait and see.

PAUL BONGIORNO: By the sound of that, you'd welcome him back!

SIMON CREAN: Well, we - I think the least we have to worry about is what they're doing at the
moment. We have a range of issues, many of them legacies from their failure. The high inflation
was, in essence, a failure on their part to invest in the drivers of economic growth. Our poor
export performance is the failure to invest in infrastructure and skills, Paul. These are the
things that, you know, make an economy competitive. It's one thing to get your trade barriers
broken down but if you're not competitive enough or productive enough to take advantage of them, a
nation itself won't succeed. And this was a government, previously, that, in our judgment, was too
content to ride on the resources boom and it wasted the opportunity to set Australia up beyond the
resources boom.

PAUL BONGIORNO: Well, just going to the...

SIMON CREAN: That's now the task for Labor and I think that we've made a very good start in very
difficult economic circumstances.

PAUL BONGIORNO: Well, going to the trade talks, what did it mean for Australia for those talks to
succeed?

SIMON CREAN: Well, it - obviously a lot and not just Australia but for the global economy. I mean,
we would have seen a big cut, 70% cut, in tariffs. We would have seen the end of export support. We
would have seen the end to the special safeguard mechanism increase quotas. It would have been
important benefits for not just agriculture but for manufacturing and resources, but significantly
for services. It was a very successful services signalling conference, which we had been
instrumental in pushing for, that actually saw big breakthroughs in offers on the table. So there
was a lot at stake, a lot on offer and a lot of progress achieved. Unfortunately, we did not clinch
the deal around one issue. It's disappointing, but progress was made in difficult circumstances and
I think it shows, Paul, that if there's sufficient will, you can make progress. There wasn't
sufficient will by all the players.

PAUL BONGIORNO: Does that mean these talks are dead and that progress is now lost?

SIMON CREAN: No, I don't - I think the answer to both is no. The talks are stalled. For how long is
an important question and I don't know the answer to that at this stage. It depends on how quickly
the will can be regenerated. But, um, but progress was made. A platform was built. Can we build
upon that platform in the regional architecture, say APEC or ASEAN, or through our free trade
agreements? What we haven't got is the legal backing that the WTO agreement would have given to
this overall Doha round, but we should not ignore the progress that was made. What we have to do is
to see how we can build upon it. Well, the Opposition says the Rudd Government now needs to rethink
its multilateral approach and give more emphasis to country-by-country deals.

IAN MACFARLANE (Wednesday): We've seen this Government successively cut the funding allowances to
both the China FTA and the Japan FTA. It needs to regroup, reassess that situation.

PAUL BONGIORNO: He's got a good point there, hasn't he? Is it a fact that the Rudd Government isn't
putting enough effort into the bilateral agreements that could also benefit Australia enormously?

SIMON CREAN: No, Mr Macfarlane is wrong. I mean we haven't cut the negotiation team on China or
Japan. Just factually wrong. But secondly, under them the FTA with China had stalled, stalled for
three years. Who's reactivated it? It's the Rudd Government, because the Prime Minister got
involved, I followed up. Similarly with Japan. Japan have sought from us the entering into an FTA.
We recently just signed the model FTA with Chile. So this argument that we've ignored or are
ignoring FTAs is just plain wrong. My point, though, is that we recalibrated the trade policy to
understand the fundamental building platform that is the multilateral round. That's not to say you
ignore regional or FTAs, but you've got to try and build the solid base. Now, what we haven't done
is to conclude that base, but we have made significant progress. It still remains a platform. The
question now is how we can utilise that platform to move forward.

PAUL BONGIORNO: When we return with the panel, we ask just how hard is it to be an Opposition
Leader under the pump. And on Wednesday, the Liberals and Nationals literally thrashed out the
Opposition's policy on climate change and probably settled on one. The unhappiest camper seemed to
be the irrepressible Wilson Tuckey.

REPORTER: What are you going to say this morning?

MP WILSON TUCKEY: When I get in there?

REPORTER: Yeah.

WILSON TUCKEY: Some of the words wouldn't be printable, so I'd better not tell you.

PAUL BONGIORNO: You're on Meet the Press with Trade Minister Simon Crean and welcome to our panel
Michelle Grattan, the 'Age'. Good morning, Michelle.

MICHELLE GRATTAN, THE 'AGE': Hello, Paul.

PAUL BONGIORNO: And Steve Lewis from News Limited.

STEVE LEWIS, NEWS LTD: Good morning, Steve.

PAUL BONGIORNO: Good morning, Paul. Opposition Leader is supposed to be the worst job in politics.
Simon Crean knows something of the travails. His party didn't allow him to lead it to an election
and yet his lowest Newspoll rating of 17% as preferred prime minister is higher than Dr Nelson has
so far reached. The Liberal leader is being overshadowed by Peter Costello and stalked by Malcolm
Turnbull.

REPORTER: Do you support Dr Nelson's leadership?

(MALCOLM TURNBULL DOES NOT ANSWER)

STEVE LEWIS: Simon Crean, good morning. You'd probably have some empathy with Brendan Nelson. Your
approval ratings in 2003 before you resigned never got as bad as Dr Nelson's. Do you believe his
leadership is terminal?

SIMON CREAN: Well, look, Steve, the leadership of the Liberal Party is up to them. I'd prefer not
to reflect on my past, only what I can contribute to the future. But can I say there are a couple
of observations that I would make? One is you've got to have policy consistency. The second is the
party does not reward the destabilisers. Now this is sound advice offered in good faith to the
Liberal Party.

(ALL LAUGH)

SIMON CREAN: Let them sort it out from there. I've not opened up a consultancy in leadership issues
for them, but there were some fundamentals that I think straddle both sides of the fence.

STEVE LEWIS: So on top of that gratuitous advice, you'd probably quite enjoy to have Dr Nelson
sitting there. All of your Labor colleagues would love to have him there.

SIMON CREAN: Well, I think when we look across at them, we just see consistent inconsistency after
inconsistency - and that's the problem. They haven't been able to get their act together on climate
change. They weren't able to get the story right on water but, most importantly, they want to claim
a legacy for having laid the basis for things when the fact is, in truth, they dithered. They
should have been out of the blocks ages ago on climate change, on water policy, on forging the
national consensus. They didn't. They were prepared to coast. The nation is paying a price for that
coasting and we're having to pick up the pieces from a long way behind.

MICHELLE GRATTAN: Can we now switch to your role and your challenge on climate change?

SIMON CREAN: Yep.

MICHELLE GRATTAN: This legacy that you've got - the Opposition and others would say that the
collapse of the trade talks has just shown that it will be almost impossible at Copenhagen to get
an agreement on climate change from countries like India, which, after all, was one of those who
wouldn't agree on trade at the end. Isn't that a solid argument? Don't you really face an
impossible situation here getting an international deal?

SIMON CREAN: Difficult, very difficult, but not impossible. And again I come back to the Doha
talks, Michelle. You've got to understand that, compared to seven years ago, or compared to when
Uruguay was done, the power balance has shifted. We've got to understand that. Previously, it was
the Western economies. Now we've got to deal with the BRICs - Brazil, India and China. But despite
all of the difficulties, and all of the complexity, we were able to get agreement with Brazil,
agreement with China, but not with India.

MICHELLE GRATTAN: But at the end, you did not get the necessary agreement. Won't it be the same in
the climate talks? And what does that mean for Australian industries, especially the export
industries that you have a direct in and responsibility for? Aren't they just going to be
disadvantaged when all this collapses?

SIMON CREAN: No. I think what it means is we have to persist and we have to work our strategies out
better. Now, I believe, in this Doha round of negotiations, that we did get a long way. I've made
the point before...

MICHELLE GRATTAN: But I'm talking about the climate talks. SIMON CREAN But the climate talks
themselves, Michelle, involve this concept of common but differentiated approaches, a common
commitment but recognising that countries at different stages of development need to make different
contributions. That's exactly what we had to deal with in Doha in terms of commitments to trade
liberalisation, in terms of commitments to opening up markets. My point is we made a great deal of
progress in getting there. Now, yes, we did not conclude the deal but we have - I've personally
learned a hell of a lot about this. The dynamic of being in the room with people day in day out,
rather than just engaging them 6 months, 12 months apart and rehashing the same arguments as before
is terribly important. I think the dynamic of getting people in the room and working towards a
solution, provided the political will is there - and that's a big proviso which we have to work out
- I think it is possible and we have to try every avenue to make sure we realise the outcome.

STEVE LEWIS: Simon Crean, while you've been away negotiating these trade talks, there's been
further very bad economic data, including on retail in Australia. Do you believe a recession is
possible in Australia? And what message are you picking up from talks in Geneva about how bad the
world economy really is?

SIMON CREAN: Well, there clearly are concerns about the impact of the global economic slowdown.
Australia is somewhat cushioned by that because of the still-continuing strong domestic demand in
both India and China, which is reflected in our terms of trade. But Australia's not immune from
that global economic slowdown...

STEVE LEWIS: Do you think a recession is possible? Do you think a recession is possible in
Australia?

SIMON CREAN: I think....

STEVE LEWIS: The Prime Minister would not rule it out the other day. You've been talking with other
world leaders about the global economy. Do you think a recession is possible for Australia?

SIMON CREAN: I think there are many things that can be done to avoid that circumstance. Part of
that exercise was the pressure, the dynamic, if you like, that was driving most of us, not all of
us, but most of us, to try and conclude an outcome in Doha. The reason for that, Steve, is that, as
slowdown as world output is at the moment, world trade grows as a multiple of output. If we can get
trade flows going again, we can inject that much-needed economic impetus. This is why the round, in
itself, was so important, and why most people understand the significance of trying to get it back
up. Now, I hope in the cold light of reflection, I hope that there's a realisation that we did get
that close, that we can conclude it if we want to avoid the sorts of consequences that you
speculate about. I think that we have a robust world economy. I think it's one that Australia can
participate much more actively in and it's why we're paying a lot of attention to getting the
fundamentals right here so that we don't suffer.

PAUL BONGIORNO: Thank you very much for being with us this morning, Simon Crean. After the break -
is the Queensland Liberal National Party the future look for non-Labor politics? Lawrence
Springborg joins us. And the cartoon of the week borrows inspiration from World Championship
Wrestling. Bill Leak in the 'Australian' pins the Opposition leader in a full Nelson. "I have
arrived at a position on climate change that I'm very comfortable with."

PAUL BONGIORNO: It's not every day we witness the birth of a new major party, but that happened
last week in Queensland. The Liberal and National parties merged into a new entity, the LNP. The
amalgamated party hopes to end decades of competition and, at times, bitter rivalry. It also hopes
to end ALP dominance in the State. On Wednesday, party leader Lawrence Springborg visited his
allies in Canberra.

LNP LEADER LAWRENCE SPRINGBORG: We're going to do everything we possibly can to, you know, add
values and add members to ensure that you become the prime minister.

OPPOSITION LEADER BRENDAN NELSON: Well, we're working very hard on that.

PAUL BONGIORNO: And welcome to the program, Lawrence Springborg. Good morning.

LAWRENCE SPRINGBORG: Good morning, Paul.

PAUL BONGIORNO: Well, you are going to do everything you can to make Brendan Nelson prime minister.
Do you think it will be a lost cause?

LAWRENCE SPRINGBORG: Look, I've been in Opposition for a long time in my parliamentary career and
what often happens is that when people go from government into opposition, they want somebody to
come along and basically snap their fingers and to get them back into government straightaway. The
reality of politics is that that doesn't happen. It's a lot of hard work. Of course, there's the
benefit of incumbency that resides with the government. But we'll be doing our bit in Queensland,
the fastest-growing State in Australia and of course, in a few years time, we'll be the second
largest State in Australia and it's been that important to the Federal Coalition that we've had two
campaign launches for the last two federal elections in Queensland.

PAUL BONGIORNO: Peter Costello would be a better bet, wouldn't he?

LAWRENCE SPRINGBORG: I'm not going to make any judgments with regard to the Federal Coalition. They
will decide their own course of action. What I would say is I agree with Simon Crean - we can
speculate and talk about things but people don't necessarily reward those people that want to go in
and to basically destroy behind the scenes. They will make their own mind up in their own time, but
I will just say in so far as Brendan Nelson is concerned, he has shown tenacity and it's a
difficult job being an opposition leader, I know that, but you've got to do the hard yards. It
doesn't fall out of the sky in your lap, government, you've got to work for it.

MICHELLE GRATTAN: Now, you're all very ecstatic about this merger in Queensland, but surely it's
going to be very messy if there's not going to be a federal merger, and the chances of that this
term seem minimal, don't they?

LAWRENCE SPRINGBORG: Well, Michelle, I believe it can be achieved nationally.

MICHELLE GRATTAN: This term?

LAWRENCE SPRINGBORG: I believe it can be achieved this term. I'm not going to give gratuitous
advice to my federal colleagues, but Brendan Nelson is on the record as saying that he supports a
merger at a national level.

MICHELLE GRATTAN: Well, I think you'd better start because they seem very slow getting it going.

LAWRENCE SPRINGBORG: Look, basically, we had a lot of people saying to us in Queensland over the
years that it couldn't be achieved here. We've achieved it here in Australia's fastest growing
State. I think it can be used as the template, and I think that following on from the discussions
that we're having nationally it can be achieved in the short to medium term.

STEVE LEWIS: Lawrence Springborg, are you talking to Warren Truss, your federal leader, are you
talking to people like John Tanner, the Federal President of the Nationals, to say, "Come on, guys,
we have to get this merger in place"? Are you pushing them hard on this?

LAWRENCE SPRINGBORG: They know my view and of course I speak with them regularly.

MICHELLE GRATTAN: What's your timetable?

LAWRENCE SPRINGBORG: Can I finish, please? They have lots of priorities that they have to deal
with. Certainly they are very interested in this issue and, Michelle, your point is right - it will
make it a lot easier next time if we can achieve it nationally before the next federal election. I
had a timetable in Queensland. I achieved the timetable in Queensland. My urge to my federal
colleagues is it would be far better to be able to do it before the next election.

STEVE LEWIS: Lawrence Springborg, John Anderson in his recent review said, the National Party, the
Nationals, face a slow declining death like the Australian Democrats unless it embraces radical
change, and he does favour a merger. Do you agree with that? That the Nationals will be gone in
some years if the status quo remains, a separate party?

LAWRENCE SPRINGBORG: I agree with John Anderson and Michael Priebe, who have done this report, that
certainly there's a lot of logic in a National merger. However, I remind people that we've just won
the Gippsland by-election too, with the second largest swing to an opposition in the last four
decades, so that was very, very significant. But that doesn't mean that the impetus and the reason,
the common sense for a national merger should stop, but, yes, I agree and I would prefer to see
that we pool our resources, we consolidate so we're in a better position to provide that viable
alternative for Australians at the next federal election.

MICHELLE GRATTAN: Would you like, for example, to see conventions by both the parties at a federal
level this year, to try to get this kick-started federally?

LAWRENCE SPRINGBORG: Well certainly we planned the conventions in Queensland. They worked
exceptionally well. As you all know there were some pretty significant major and unforeseen twists
and turns up here. I don't know if the convention model is the best model federally. I do know that
both parties will continue to discuss this and I do understand from their support that it's
something they would like to bring to a conclusion. There is no reason to stop this, but I'm not
going to give them gratuitous advice about timeframes. Needless to say, I think this term would be
right and I will continue to give weight to that argument.

MICHELLE GRATTAN: But there's a lot of opposition, as you know, in Victoria and NSW, to a merger.
How would you suggest they overcome that?

LAWRENCE SPRINGBORG: We've got to listen to the people, and most Australians actually believe that
when it comes to providing cohesion on the non-Labor side of politics, we'd be best to be together
with a single non-Labor entity up against the Labor Party. Now, in Queensland we had the body
politic, the political establishment, who argued against what the people wanted. Once we got it to
our membership, our membership in Queensland proved overwhelmingly, resounding, almost unanimously
that they wanted it and then we could take it to a convention. If we actually open our eyes to what
is common sense, then it's something that we can achieve. Now people, obviously they have some
concerns. You'll get a mixture of egos and those sorts of things, but it's a case of actually
looking beyond. Every political organisation needs to undergo a metamorphosis from time to time.
It's like a business. It's something that you need to do to meet the contemporary values of
Australians. We've done it here in Queensland. It should happen nationally. I won't provide
gratuitous advice about a timeframe. Needless to say, if we can keep the constructive negotiations
that are happening between our leadership and our organisations behind the scenes, I believe we can
progress it and progress it quickly.

PAUL BONGIORNO: Thank you very much for being with us this morning, Lawrence Springborg,

LAWRENCE SPRINGBORG: You're more than welcome.

PAUL BONGIORNO: And thank you to our panel, Steve Lewis and Grattan. Until next week, goodbye.