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9am With David And Kim -

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(generated from captions) # Take me home # Week 2 of the

campaign, and it's dull, bland and

boring, a billion here and there, boring, a billion here and there,

all that cash, still we are snoring.

Where is the front bench, shouldn't

they be seeking attention, perhaps

they are locked up in Kevin Andrew

detention, maybe they realise what

is coming. Week 2, anything to

mention. Labour's education

mistakesman Kevin Smith, mistakesman Kevin Smith, Nick

Economou, and former Victorian

party leader Michael Kroeger. Am I

right, is it dull? Not at all. I

don't think so. Not at all. Yesterday was good fun in Tasmania.

Indeed. A lot of the campaign has

been like that. There's been funny

bits and pieces, contributions from

the fringe players, like the

Chasers and what have you. I

thought the controversy of the worm, thought the controversy of the worm,

indeed, and a very interesting

debate, quite a high quality one.

The leaders' debate. That was good

television. That kicked off the

second week of the campaign. Who

strode into this week leading, do

you think? I think Kevin won the

debate. I would say that. That

seems to be the general impression.

I thought the key quality that Kevin showed in the deba Kevin showed in the debate was, in

a sense, a calmed, assuredness and

confidence that he was up to the

job as Prime Minister. That hasn't

been much commented on, but I

thought it was important. So you

had the debate, which Kevin won,

and the controversy with the worm,

I'm soft on the worm, I watched the

worm, and through the week Kevin

has done well, yesterday there was

colour and light.

colour and light. It always happens

in campaigns, it happens. Michael,

I'm sure you differ in your opinion.

I thought John Howard did well in

the debate. He's lost all the

debates prior to that this one. He

hates them. He's won the elections,

that tells you the debates aren't

critically, what wins or losses you

the election is policy. That's

where John Howard

where John Howard is at his best.

He's not strong in debates. It's a

challenge forum, whether it's Australian or American,

particularly when you are in

politics for a decade you always

get (what have you done in the last

10 years", Howard's at his best. Is

an interest rate rise an interest rate rise during the

election going to flatten John

Howard's chances. I don't think so,

if there were to be one. The more

the election is about the economy

and economic management the better

it is for the government. No-one

thinks Wayne Swan will be better

than Peter Costello. 22 per cent

think that. 50-odd per cent think

Costello's best, and the rest don't

know. This is the best issue for

the government. No matter what it

economy or is, if you are talking about the

economy or trade unions, it's good

for the government. An interest

rate rise, it will be a historical

moment, it's never happened in a

campaign before. It will have to

hurt. Rates won't be hurt. Rate ECO I hurt. Rates won't be lower. No-one

things Wayne Swan will have rates

lower. The reason rates have gone

up five times is simply because of

the powerhouse of the Australian

economy. The economy is is doing so

from 10 well. When you reduce unemployment

from 10 per cent to 4 per cent, you

have more people in work with

spending power. These people have

spending power, they are putting

demand pressure on the economy.

It's because the government is a

victim of its own success. It

managed the thing so well. Feel

free to jump in. The problem for

John Howard is this: he's been

saying all of his Parliament,

families have never been better off

or had it good. He's lost touch

with the fact that a lot of

Australians, families are under

financial pressure. For young kids

home affordability, getting into a

new home is out of reach. Grocery

prices up, petrol, child care. Families are under pressure, and

he's saying "You've never had it so

good", that's the first problem. He

interest went to the last election saying

interest rates will be get at record lows. There's been five

increases, putting pressure "We

don't want there to be another one",

if there is, there'll be six in a

row. The Reserve Bank warned the

government they had to do something about capacity, skilled shortages.

One of the problems is an electoral

problem. It depends on strong

support in outer support in outer sush suburban electorates in the major cities.

They were strong in the last

election, responding well to Mr

Howard's campaign on interest rates.

The problem for the government is

they'll have to go back to the

voters and say - they'll have to

account for what's happened in

economic policy since then. These

are volatile electorates. If there

are new home buyers, angry with the

government over what has happened

to interest rates, to interest rates, combined with

another issue, which is the

industrial relations matter, then

it may well be that the government

could be in serious trouble. Surely

you can't blame a government, or

alluding to as Michael said, for

the fact there's a booming economy,

a resources boom in India and China,

that there is a drought which is

affecting food prices, and

increasing petrol prices, due to increasing petrol prices, due to

overseas influences, you can't

blame a government for that. That's

economic debate. Most economists, a a great source of frustration or

quite a few, is ordering the

government not to bring in the tax

cuts. This is a political problem,

and the problem for the government

is it went into the last election

saying this, to that electorate,

and we can tell from the

and we can tell from the electoral

figures, that was the issue they

focused on. Paul Keating said it

was recession we had to have. No

government should have made the

promise to keep interest rates at

record lows. We know it's a matter

for the Reserve Bank, that's a good

thing, the Reserve Bank sets them.

What can government's do, they can

a target inflation continue to run surpluses and have

a target inflation rate and they can do the long-term productive

things for the economy. We have a skills crisis, infrastructure capacity clients, and the Reserve

Bank has been saying as early as

1999 we need to do something about

the constraints in the economy, and

they've added to the pressure much.

The April is this: John Howard came

into government with Labour have

having left a

having left a massive debt behind,

the economy. Steven's boss, Paul $90 million, they couldn't manage

Keating, tried to claim credit.

Hawk and Keating could not manage

the Australian economy. Rudd and

Swan won't be able to. Hawk and

Keating were figures of

significance in the country. Rudd

Hawk and Swan, are poor imitations of

Hawk and Keating, if they couldn't

manage it, these two poor fellows

have no chance, not in a climate

where American may be facing a

recession. Our economy was in a

mess when Howard took over. He and

Costello did a brilliant job. The

more we talk about interest rates

the better it is for the government.

Even though people don't like

interest rate rises, it will be

lower, history proves that. lower, history proves that.

Steven's boss Paul Keating left us

with 17 per cent rates, bankrupted

a lot of small businesses. Are

people's memories very long. On

this stuff, very lock.. When we

came to office in '83, we had

unemployment over 10 per cent,

inflation over 10 per cent, and 22

per cent interest rates. We need to

focus on the future, investing in focus on the future, investing in education and skills education and skills to keep the

pressure off interest rates. Out of

time. Let's hope next week is

interesting. Feel free to have a

bite of Kevin. Back after