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Early Agenda -

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ASHLEIGH GILLON: Good morning and welcome to AM Agenda, I am Ashleigh Gillon.

Well, Kevin Rudd is about to depart Australia for what could be his most important overseas visit
yet. Mr Rudd's talks with the US President Barack Obama will be dominated with the economic crisis
and the way forward in Afghanistan.

Joining me here in the studio now, the Labor Senator Mark Arbib and the Liberal Senator Mitch
Fifield.

Good morning to you both.

MARK ARBIB: Good morning Ashleigh.

MITCH FIFIELD: Good morning Ashleigh.

ASHLEIGH GILLON: Senator Arbib, Kevin Rudd's off to the US today. He's already flagged, he'll be
lobbying for China to play a greater role in the IMF as well as trying to convince other countries
to boost the sort of funding it gives to the IMF, it seems like a pretty ambitious agenda.

MARK ARBIB: Well this, I think you were right when you said this is probably one of the most
important trips an Australian Prime Minister has made overseas. We've got a global recession it
requires a global solution and global leadership, that's why it's important that Kevin Rudd is
meeting with President Obama because we need his leadership. We need President Obama to strike
forward, we've got a real toxic asset issue, we've got banks that are afraid to lend because
they've got so many debts on their balance sheets and we need to fix it.

Good news this morning was we heard reports that the United States is planning to release its
banking solution or put out a plan how it's going to deal with the toxic assets over the next week,
that's very, very good news. Again, we've got Kevin Rudd and the government working towards
reforming the IMF with a chair of the committee that's actually looking at those reforms and really
the IMF needs reform. You've got China one of the biggest economies in the world which has actually
got voting rights equivalent to Belgium which is crazy, so we need to beef up the IMF, we need to
give it more power so it can deal with these problems at the banking sector and the best way to do
that is to ensure that China and Asia plays a bigger role.

ASHLEIGH GILLON: Senator Fifield what do you see as the priority for this overseas visit?

MITCH FIFIELD: Well, I think the subject of IMF reform is important and it's good to see that the
government has picked up where the Coalition left off. Peter Costello was Treasurer, was a very
keen advocate of the reform of the IMF. The IMF essentially reflects the world as it was straight
after World War II, the weight of voting which various nations have reflects that. You see that old
architecture played out in the structure of the IMF and the World Bank where you have the IMF which
by tradition has a Managing Director who's a European, the World Bank which has a Chief Executive
who's an American so I think it is time that architecture was reformed.

ASHLEIGH GILLON: Australia is one of the smaller players in these talks, how much attention can we
expect the other G20 world leaders to pay to the sort of proposals that Mr Rudd is putting forward,
Mark Arbib?

MARK ARBIB: Well, we are chairing the actual committee that's looking at the reform so I think they
will pay a lot of attention to it, and we shouldn't forget we're the 15th largest economy in the
world so I think we have got an important voice there and Kevin Rudd is being up front and honest
about our position, he's been driving the campaign in terms of reforming in the IMF. He's been
talking for a long period of time about the banks balance sheets, because the truth is in the end
that you are not going to get a fix to global recession unless we can fix this banking crisis, and
until banks start lending to business again and start lending between financial organisations no
one can fix it. So, in the end everything we're doing here the stimulus package, the guarantees
etc, that's all about just providing a buffer. You know we've got a global recession which is just
reeking havoc world wide, in the end no one can stop it but we got to ensure that we're protected
as much as possible.

ASHLEIGH GILLON: So, Senator Fifield this isn't an overseas visit that we can expect to hear Kevin
747 jibes about, this is something that is worth doing?

MITCH FIFIELD: No we wouldn't quibble with this trip, it's important for the Australian Prime
Minister to establish a good relationship with the American president. I'm also pleased again that
the government is embracing the importance of the G20. The G20 is something which Australia under
the Coalition was very much involved in establishing, again Treasurer Costello was very keen for
the G20 to be established and the whole concept behind the G20 is that you get together the 20
nations, the 20 economies, which are systemically important to the global economy, so, the G20 is a
very important forum and it's the right place for Australia to put it's views forward on how to
bring some stability and how to reform some of the global financial architecture.

ASHLEIGH GILLON: We saw the former Prime Minister, John Howard, had a very close relationship with
George Bush, how important is it for Kevin Rudd to try to start a friendship on top of the normal
sort of relationship between the two leaders?

MARK ARBIB: Well, it's critical they get on there's no doubt about it, it's critical. The United
States is one of our most important if not most important ally and we need a strong and solid
relationship with them.

ASHLEIGH GILLON: Mr Rudd's probably just one of a number of world leaders though lining up to get
into the oval office?

MARK ARBIB: Sure, but a lot of our policies are actually very, very similar to what they're doing
in the United States. President Obama actually mentioned what we're doing in terms of the stimulus
package almost a week and a half ago where he referred to Australia's stimulus when he was talking
about the world solution. The same time as that we are obviously engaged in Afghanistan with the
United States, we've got a very, very close bond there in Defence and we need to maintain it. So
it's I think it's a hugely important trip and no one should underestimate the importance of our
relationship with the United States and I think the Prime Minister knows how important it is.

ASHLEIGH GILLON: Well, I'm glad you raised Afghanistan, of course last week we saw the Australian
death toll rise to 10 it seems, when you look at the public opinion polls, that support for the war
in Afghanistan seems to wain the higher the death toll rises as you would expect. Most people are
expecting that the Prime Minister will be asked to sent more Australian troops over to Afghanistan.
How difficult is that decision in this context of this war becoming more and more unpopular?

MARK ARBIB: Well, we're not there yet, and the request hasn't been made so I mean we can't
speculate on something that hasn't happened but in terms of Afghanistan ...

ASHLEIGH GILLON: Even the Prime Minister was saying this is something that's more likely that it
will happen then not.

MARK ARBIB: Well, in the short term there has been a request for more troops around the Afghanistan
elections so I mean that's obviously, I think Stephen Smith was talking about that, but in terms of
over the long term we'll have to wait and see and obviously Afghanistan will be something they will
be talking about and obviously getting the strategic objectives right is what's important because
in the end obviously this war is not being won and something needs to change. And the United States
right now is looking at their strategic strategy or their strategy in terms of Afghanistan, the way
they are conducting the operations and I think that's pretty important and until we see that it's
going to be very difficult to judge whether we need to send more troops or not. Can I say though in
the end the Prime Minister made some very important comments yesterday about why we are in
Afghanistan and there is definitely been in the voters minds across-over between Iraq and
Afghanistan and Afghanistan has got nothing to do with Iraq. I mean the reason we are in
Afghanistan is because of what happened September 11, 2001 when Al-Qaeda flew jets into the World
Trade building. That was a huge terrorist incident, United States went into Afghanistan because
that was the staging post and the training ground for Al-Qaeda. Now we have got to make a decision
and the Prime Minister is saying we must stay the course in Afghanistan, we can't turn over that
area so once again it becomes a terrorist training centre for Al-Qaeda and I think he's right.

ASHLEIGH GILLON: Senator Fifield, do you think that more Australian troops in Afghanistan would
lead to more progress in that country, is that something the opposition is happy for the government
to consider?

MITCH FIFIELD: Look we don't have the benefit of the full advise that the government receives, we
don't have knowledge as to the ADFs capability at this point in time, that the ten tempo of
operations that they're able to sustain. We'd primarily be guided by the advise of the Defence
chief's, our overriding concern is the safety of Australian forces deployed in Afghanistan and if
there was to be a decision taken to deploy more ADF Personnel we'd want to be guaranteed that they
would be given the full support, the full resources that they need. But we'd primarily be guarded
by the advice of the ADF Chiefs.

ASHLEIGH GILLON: Well before Kevin Rudd is leaving this morning he did an interview yesterday on
the Nine Network where he said it's likely that Australia will follow the world into a recession
after all. Mark Arbib was he waiting until after the Queensland election to acknowledge this, I
mean Mr Rudd's been questioned about this over and over again but there's been no, you know, giving
in to this until yesterday morning?

MARK ARBIB: First of all he was responding to a question, so there was a direct question on it from
Laurie Oakes ...

ASHLEIGH GILLON: He's been asked direct questions on it a number of times.

MARK ARBIB: ... and second we did have the IMF report come out last week so we are in the, I mean I
thought he was talking about the IMF report which shows a projection that world growth will go from
positive 0.5 to negative 1 and what effect that will have on the Australian economy and what effect
that will have on growth and what effect that will have on the Budget, bottom line. I mean, I don't
think it was a surprise hasn't even made the front pages around Australia, so really I think most
people are prepared for what is happening overseas having a huge effect here. There's no doubt
about it this is a global recession that can't be stopped in the end what we've got to do is buffer
the Australian economy, buffer jobs, buffer business from the worst of it and that is what the
stimulus package is about and that is why we're spending something like $31 billion on
infrastructure, fixing our roads, fixing our rail lines and the biggest school modernisation in our
history, that's what the stimulus package is about.

ASHLEIGH GILLON: Well, Mitch do you agree with the Prime Minister that we are likely to see another
negative growth quarter next time round?

MITCH FIFIELD: Well, I think yesterday we saw Kevin Rudd acting like some freelance market
economist, he really delivered a punch to the solar plexus of confidence and this is what we've
seen Kevin Rudd and Wayne Swan doing since they were elected, all through 2007 talking down the
economy.

ASHLEIGH GILLON: Isn't he just being realistic though Senator?

MITCH FIFIELD: Well, it's the job of the Australian Prime Minister, it's the job of the Australian
Treasurer to talk up Australia's economic fundamentals, it's their job to be positive it's not
their job to talk down the Australian economy and that's what we saw. But if Kevin Rudd really does
believe that the Australian economy is going into recession, if he believes it's inevitable that
we're going into recession then you've got to ask yourself what was the point of the $42 billion
stimulus package. I thought the whole point of that stimulus package was to save Australia from
recession, now if Kevin Rudd believed Australia was inevitably going to go into recession before he
announced the stimulus package, then he was completely irresponsible in announcing a package,
delivering a package which he himself never believed would stop Australia going into recession,
it's unbelievable, it's unbelievable, Australia going into recession is inevitable.

ASHLEIGH GILLON: Let's let Mark Arbib respond to some of those claims.

MARK ARBIB: This is a really important point in terms of the stimulus package because when you look
at the global recession there is two ways you can deal with it; Malcolm Turnbull and the Liberals
say sit and wait, sit and wait let's see what happens, let's see how bad it gets before we act.
What we're saying is and we're backed in by the IMF, by the World Bank who say, act fast, act
early, spend money, invest in infrastructure because this thing is going to get worse and
governments need to step in while the private sector withdraws, because they are withdrawing, and
inject money into the economy, and if you don't, I mean we could have been staring at not just a
recession, a global recession a global depression and that's why countries around the world are
stimulating their economy. This is a ...

MITCH FIFIELD: But ...

ASHLEIGH GILLON: Senator Fifield why is it okay for people in your side of politics who are like
the shadow treasurer, for example Joe Hockey to say that it is likely we are in a recession but not
for the Prime Minister?

MITCH FIFIELD: Well, Kevin Rudd said that this $42 billion stimulus package was designed to stop
Australia going into recession. On Sunday he admitted that Australia is going to go into recession,
he said it was inevitable so, what was the point of a $42 billion stimulus package.

MARK ARBIB: Kevin Rudd has said time and time again ...

MITCH FIFIELD: He's admitted that the package has failed.

MARK ARBIB: This is about buffering our economy, protecting jobs and protecting business from the
worst of the global recession.

MITCH FIFIELD: But it hasn't worked. It hasn't worked. It's failed, he admitted it's failed.

MARK ARBIB: Well, things could be a lot, lot worse. A lot, lot worse if it wasn't for the actual
stimulus package. The first stimulus which came out last November, what has that seen, retail in
Australia going up, retail in the rest of the world going down. Housing market going up, first home
buyers getting in the market, the rest of the world housing market, the housing prices collapsing,
I mean, it is working but there is only so much one country can do.

When you're looking at a global recession [inaudible] for goodness sake ...

ASHLEIGH GILLON: Final word on this Senator Fifield and then we need to go to a break.

MITCH FIFIELD: Sure.

MARK ARBIB: ... in the United States they're living in tents at the moment, there are hundreds of
people living in tents. This is, they're calling it the great recession it's that bad.

ASHLEIGH GILLON: There is no doubt ...

MITCH FIFIELD: Ashleigh, this is all about Kevin Rudd innoculating himself from any responsibility
for anything in the Australian economy. So Kevin Rudd can say unemployment, well, that's the fault
to the global financial crisis, government debt that's the fault to the global financial crisis,
Budget deficit that's the fault to the global financial crisis, slowing growth that's the fault of
the global financial crisis. It's all about Kevin Rudd absolving himself of any responsibility for
anything in the Australian economy. The Australian government can do things to make the situation
better, they can do things to make the situation worse and to date they've taken action to make the
situation worse in Australia.

ASHLEIGH GILLON: We could keep debating on this one all day ...

MARK ARBIB: I wish we could keep debating on it.

MITCH FIFIELD: Please.

ASHLEIGH GILLON: ... but we are going to go to a quick break. Coming up we'll look at how Anna Bligh
pulled off a victory in Queensland and what it now means for the LNP, that's next Stay with us.

ASHLEIGH GILLON: Welcome back to AM Agenda joining me this morning on our panel of politicians,
Labor Senator Mark Arbib and Liberal Senator Mitch Fifield. Let's turn our attention now to Anna
Bligh's victory in Queensland. Now the re-elected Premier faces the tough job of delivering on her
campaign promises like creating a 100 000 jobs for example. First though she's going to reshuffle
her Cabinet, the Premier says as promised we can expect to see some new faces in the line up.

ANNA BLIGH (archive tape): Obviously, if we are going to put new faces into the Cabinet, we need to
make sure that there are some vacancies and that's a tough thing, I've certainly asked a number of
people to consider moving on in their political career, that's not an easy thing but it's important
for our government and it's important for Queensland, I promised renewal and that's what I'll
deliver.

ASHLEIGH GILLON: Mark Arbib, when this new ministry is lined up we'll see a new face of Labor I
guess, this is Anna Bligh putting her stamp on the government, she's no longer simply Peter
Beattie's successor.

MARK ARBIB: Yeah It's a very good start for Anna Bligh. Elections have messages for everybody, for
oppositions as well as government and the important thing when you win is to actually sit down and
think about what the message is, and she has taken it onboard. She's straight out of the blocks,
working hard, straight onto the health issue and that's important and already she has announced
that Paul Lucas her deputy will take over the health portfolio and I think that is a very, very
smart decision. Health was one of the big issues in the election, big state issue there's no doubt
about it, so for her to be getting ahead on that is great. In the end Peter Beattie was able to, I
guess, construct a transition through to Anna Bligh and it's been done brilliantly. I was very
surprised that the result was so large, I expected them to do better [inaudible].

ASHLEIGH GILLON: Well you were the first, on Sky's election coverage, to call Anna Bligh's victory
on Saturday night of course the polls were pointed towards an LNP victory, what do you think it was
in the end that made voters stick to Anna Bligh when it came to the crunch time?

MARK ARBIB: Elections are always about choices and we had two distinct choices here that voters had
to make. Anna Bligh is someone who was working hard, building infrastructure, trying to stimulate
the economy and protect jobs. Understood the significance of what was going on globally, on the
other side you had the LNP and Laurence Springborg and this is a guy who had said there was no
global recession, wanted to cut a billion dollars a year from the Budget in the middle of a global
recession he was talking about cutting a billion dollars a year which would have led to 12 thousand
jobs going down the drain. So you had on one side Anna Bligh saying she was going to protect jobs,
on the other side the LNP saying they were going to cut jobs so I think in the end voters made the
choice given those two alternatives.

ASHLEIGH GILLON: Senator Fifield what do you blame for the LNP's loss?

MITCH FIFIELD: Well, I think voters in Queensland on the polls clearly wanted to change government.
Queensland's hospitals are in disarray, infrastructure is crumbling, the Queensland Budget is
deeply in debt. Queensland has wanted to make a change but I think our side of politics let them
down. We didn't give them a viable alternative and so they felt they had no option but to stick
with the government that was there. But I think that's a great shame because Queenslanders did want
to change government, we didn't give them a viable alternative and I think part of the reason for
that is the LNP. We needed to make a head way in Brisbane, going into the election we had two seats
out of the 38 seats in the Metropolitan Brisbane. You can't win government in Queensland if you
can't win in Brisbane and unfortunately the LNP was to people in Brisbane felt they seen as the
national party in drag, what they wanted. What they needed was a Liberal alternative and I don't
think the people of Brisbane had that.

ASHLEIGH GILLON: So are you suggesting that the LNP merger is been an experiment that has failed,
are you suggesting now that the two parties go their separate ways?

MITCH FIFIELD: Well, I've always been of the view that the best way to maximise the non-labor vote
is to have two separate conservative parties working closely together, that was my view. The
Queensland party took a different view, the merger happened and I think it's too late to unscramble
the LNP. What needs to happen now, is that the LNP needs to complete its transition to becoming the
Queensland division of the Liberal Party of Australia. That is the legal status, that is the legal
name of the LNP that needs to be reflected in the branding, they need to call themselves the
Liberals, we've got to have an end to the situation where the LNP is just seen as the National
Party with the word Liberal in front of it.

ASHLEIGH GILLON: I think the Nationals would have something to say about that?

MITCH FIFIELD: Well, the LNP is the Queensland division of the Liberal party, the problem is the
electorate saw the LNP as the National party with a slightly different name.

We've got to move on from that situation the LNP has to become fully both in function and in name,
the Liberal party brand in Queensland. One of the problems with merging two parties is that all
major political parties have a base level of credibility and trust and recognition which has been
built up over decades and I always thought it was naive to assume that that level of support in the
community would automatically transfer to a new entity. Not everyone follows these things as
closely as we do in this building and I think the LNP didn't mean much to a lot of people but to
those in Brisbane that it did mean something to, it meant the National party.

ASHLEIGH GILLON: Comments like that though Senator Fifield might be seen as pretty unhelpful the
leader of the Nationals, Warren Truss, Malcolm Turnbull over the weekend have said that this is the
right way to go, yes there needs to be a bit of a change of strategy. Do you think that the sort of
comments that you're making could actually hurt the party more than help them in this case?

MITCH FIFIELD: Not at all you've got to be honest after an election defeat and this was a defeat. I
do wonder if we might have actually gone better had we had two separate parties but we'll never
know. The merger is a reality, I completely agree with Malcolm and Warren that the LNP shouldn't,
split it should stay together, but we've got to make it work and the way we make it work is by
making sure that it becomes fully the Liberal party in Queensland. That's the only way that we can
make in roads into Brisbane and we've got to.

MARK ARBIB: I would imagine Barnaby Joice's head would be exploding right now, it would be so red.

ASHLEIGH GILLON: It would be because obviously a lot of people in Queensland thinks this is has
been a success despite the election loss, there was a swing of only 4 per cent or so.

MITCH FIFIELD: For a political party you can't say it's been a success apart from the fact that we
lost the election. The whole purpose of a political party is to win and hold office.

MARK ARBIB: It was a failure, there's no doubt.

MITCH FIFIELD: We lost.

ASHLEIGH GILLON: Mark Arbib do you think though that the combined forces did make it harder for
Labor? Finally it seemed like the LNP had got its act together as opposed to the bickering that
we've seen over recent years.

MARK ARBIB: Compared to the last election when you had Flegg and Springborg both competeing over
who was going to be the Premier if ...

ASHLEIGH GILLON: You've forgotten his name already.

MARK ARBIB: I know he's from the past Laurence Springborg got to channel him. When you had Flegg
and Sringborg both competing over who was going to be the leader I think obviously there's been an
improvement in terms of the LNP. They've shown some discipline but the truth is as Mitch is saying
and I have to say Mitch is always honest with these things, he was the first Liberal to come out on
WorkChoices and say WorkChoices isn't dead and now he's out on LNP, LNP is DOA dead on arrival.

It is dead.

ASHLEIGH GILLON: Mark Arbib I think you've got a challenge in your mind that everytime you come on
this show, you have to mention WorkChoices.

MARK ARBIB: Yes, yes I do. Let me tell you why because it's still in the Liberals DNA, the Liberals
will never let WorkChoices go, never.

MITCH FIFIELD: Let it go.

ASHLEIGH GILLON: Let's not go there.

MARK ARBIB: But can I just say, Mitch is right the LNP should have done a lot better and they
should have better and they should have done better in the Brisbane suburbs and the Gold Coast
suburbs, that is where they needed to pick up ground and that is where we were vulnerable and they
picked up nothing I mean the swings and the gains they made in the those suburbs are negligible and
this means not just do they have a problem now, they've got a problem at the next election while
our margin is still huge. I mean it's still talking about 12 seats so I think Mitch is right in the
end Liberal voters in Brisbane suburbs are not going to vote for a National party leader.

ASHLEIGH GILLON: Is that what it comes down to, you need a more urbane face to appeal to those city
voters?

MITCH FIFIELD: You need a face that reflects Brisbane which is where you have 38 seats. We went
into the election with 2 seats we've come out the other side of the election with 4, at best maybe
5 or 6. You can't win elections in Queensland unless you make in roads into Brisbane, you make in
roads into Brisbane by giving the people of Brisbane a choice that's attractive to them, the people
of Brisbane want to choose between Liberal and Labor, they don't want to feel that they've been
denied the choice and I think that was the case. There is a bit of good news in this we've got some
new talent that's come into the Parliament we did have a swing towards us something in the order of
3.6 per cent which Queensland colleagues have pointed out, if that was reflected on the Federal
Election we would have picked up maybe 5 seats. But we lost, Labor won and we've got to take the
lesson and provide the people of Queensland with a viable alternative.

ASHLEIGH GILLON: A very small silver lining there Senator Fifield, thank you for your time. Mark
Arbib thanks for your time.

MITCH FIFIELD: You take them where you can find them.

MARK ARBIB: Thanks Ashleigh.