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Meet The Press -

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MEET THE PRESS

INTERVIEWS WITH SHADOW TREASURER JOE HOCKEY AND ACCI CEO PETER ANDERSON

April 5th, 2008

DISCUSSIONS ABOUT G20 MEETING, STIMULUS PACKAGE, NATIONAL DEBT, CHINESE INVESTMENT AND LENDING IN
AUSTRALIA, ONE-OFF PAYMENTS VERSUS TAX CUTS, RUDD AND TURNBULL'S RELATIVE POPULARITY

MEET THE PRESS PRESENTER BILL WOODS: Good morning and welcome to Meet the Press. The Prime Minister
is on his way home from arguably the most important meeting of his political life. The major
outcome of the G20 summit was a worldwide effort to reign in corporate spending and a
trillion-dollar bid to resurrect the global economy.

BRITISH PRIME MINISTER GORDON BROWN (Thursday): This is the day the world came together to fight
back against the global recession. US

PRESIDENT BARACK OBAMA (Thursday): We must not miss an opportunity to lead, to confront a crisis
that knows no borders.

PRIME MINISTER KEVIN RUDD (Thursday): It's been prime minister and presidents who have struck this
deal, but it's small businesses, tradies and young people who will benefit from it over time
because global action is necessary to support local jobs.

BILL WOODS: While the UK and US are with Australia in delivering more Government stimulus, the
Opposition won't budge on its position to abort all cash splashes.

SHADOW TREASURER JOE HOCKEY (Wednesday): Kevin Rudd's solution to a drought was to create a flash
flood and it did not work.

BILL WOODS: Shadow Treasurer Joe Hockey is a guest. And later - the surprising response to the
Government's dollar pay-outs. Peter Anderson from the Australian Chamber of Commerce and Industry
joins us. But first - what's making news in the nation's papers this Sunday, April 5. "Relief for
sacked staff," that's the headline in the 'Sunday Telegraph'. Prime Minister Kevin Rudd will today
announce 12 months of mortgage relief for the unemployed. The 'Age' is carrying the story,
"Mortgage belt hit as jobless rate rises." The national dole queue is growing at one of the fastest
annual rates on record. The number of short-term job seekers has leapt by 38%. The Melbourne
'Herald-Sun' carries the headline, "Schools lose out on cash." Principals claim stimulus package
money pledged by the Rudd Government for Victorian primary schools is being siphoned off by the
State Government. Kevin Rudd's mid-flight meltdown continues to create headlines, the Sydney
'Sun-Herald' claiming, "Give the man a chop: PM's mid-air meal snap linked to diet." The paper
asks, "Could the prime ministerial tantrum that reduced a flight stewardess to tears indicate an
iron deficiency?" We'll get onto that in just a moment with our guest, Shadow Treasurer Joe Hockey.
Welcome back to the show.

JOE HOCKEY: Thanks, Bill.

BILL WOODS: Firstly, the G20 summit - Kevin Rudd is riding a wave of popularity from that, how do
you rate his performance?

JOE HOCKEY: It's easy to be popular when you're handing out money, no doubt about that. He's handed
it out on a scale that Australia hasn't seen before. The fact is the policies he's announcing are
not giving business the confidence to go out and keep people in jobs, nor to create new jobs. And
earlier this week Malcolm Turnbull announced a major initiative for small business that focuses on
keeping people in jobs and giving small business an incentive to continue to employ people. So we
have a positive agenda, focused on employment,; Kevin Rudd has an agenda focused on popularity.

BILL WOODS: Before we get to the nuts and bolts, he is very hard to score points from at the
moment. The global statesman thing is working very well - Barack Obama, Gordon Brown, he looks very
good and his approach to the global situation has been endorsed by two of the biggest heavyweights
in world politics.

JOE HOCKEY: Of course, everyone will endorse each other given that if they're all in this
collectively they can shoot home the blame to others ultimately. But as the Prime Minister says
correctly, small business and tradies and young people are going to have to pay for this. They'll
be the beneficiaries - I don't think that's right, that's what he claims, I don't think that's
necessarily right - I think they'll be the ones that have to pay the increased tax, the higher
interest rates, to pay for this incredible cash splash that we're seeing.

BILL WOODS: The Prime Minister earned a new nickname this week, "Mr 74%". The latest Neilsen Poll
is showing that he is the most popular Prime Minister since Bob Hawke, a sentiment which is
seemingly reverberating around the world.

BISHOP OF LONDON, RICHARD CHARTRES (Monday): The election of Kevin Rudd constituted something of an
Obama moment for that country.

BILL WOODS: Well, it is difficult, isn't it? How do you get leverage on a situation like this, when
the Prime Minister is riding so high in the polls?

JOE HOCKEY: I know Kevin Rudd, he's not Barack Obama. Let's be fair dinkum about this, there's a
lot of back slapping going on amongst political leaders at the moment and I think sooner or later
we will hear the rooster crow when it's time to massively increase taxes, when interest rates go
up, when the jobless rate hits record levels, potentially in this environment. And I really hope, I
hope the Government gets it right, but the government has policy on the run. That's the problem,
they have policy born out of panic, born out of the Government's determination to be seen to be
doing something rather than well-considered policies that will deliver jobs, that will deliver
security into the future.

BILL WOODS: Before I ask you the next question, the stress of solving the world's financial crisis
appeared to have left the PM a little frazzled this week. Mr Rudd was forced to apologise after
flying off the handle in an in-flight meal on an RAAF plane. J

OURNALIST (Thursday): Do you have a bad temper?

KEVIN RUDD: All of us are human, I'm human, I'm not perfect and as I said before, if I upset
anybody on that particular flight, I'm really sorry, I apologise for it. And as I said at the time
to one of the staff on the plane, let's - um, that's it.

BILL WOODS: Now, you're the shadow treasurer, I'm the flight attendant handing you this on a plate,
that's pretty good leverage after what's been a Teflon-coated first term in office. What's your
view on how Kevin Rudd handled this situation?

JOE HOCKEY: I think Australians will form their own view. I think it's the responsibility of the
Prime Minister and all politicians to try to be polite under all circumstances, and sometimes it's
very difficult.

BILL WOODS: It must be very difficult for you, because you're a mate of his, you worked with him on
TV for a number of years, you walked the Kokoda trail with him, is he really a good bloke, is this
unfair?

JOE HOCKEY: I'll let the Australian people form their view. Over time more things will emerge,
people will form an opinion on Kevin Rudd, I'll leave it to them. What was more alarming out of
that entire incident, not just going off the handle at the RAAF staff, but the fact that his office
was lying to the Australian people about what actually happened, and this illustrates a pattern of
behaviour out of his office that they're prepared to mislead the Australian people as to the truth
of the matter.

BILL WOODS: Surely that goes back to him?

JOE HOCKEY: That's for others to decide. The fact he's now defending his press secretary when his
press secretary blatantly lied, I think that's wrong and ill considered and the Prime Minister can
fix that now.

BILL WOODS: Now, we will as I said get into the nuts and bolts on the G20 and what's flowing on in
terms of Australia's future, but generally speaking, were you pleased with how the G20 came about.
There was certainly doubts with Merkel the Chancellor of Germany and President Sarkozy of France
being quite belligerent going into the meeting, but it's all smooth now.

JOE HOCKEY: As Malcolm Turnbull and I said all along, we want to see a solution here, we want the
world to come together. If there is going to be more regulation, it should only be better
regulation, it should not be a substitute for, you know, political point scoring. We want the world
to get out of this. But the fact of the matter, a trillion dollars is a lot of money, a million
million dollars, it's a lot of money, and the world will have to fund this. Unfortunately, if you
have your cash splashes and spending everyone you have, you don't have any money for the rainy day
that may lie ahead.

BILL WOODS: Time for a break. When we return with the panel, is a third stimulus package in the
pipeline? Another budget. And while our Mandarin-speaking Prime Minister prides himself on his ties
with China, Kevin Rudd couldn't have looked more uncomfortable this week when he was forced to sit
next to Britain's Chinese ambassador on a television talk show. The producers ignored requests for
him to be seated next to his UK comrade, Foreign Secretary David Miliband.

KEVIN RUDD: We're both on the set together, it's a natural thing that you wouldn't mind parking
yourself next to each other as well. So I think people should put all that into a bit of context.

BILL WOODS: You're on Meet the Press. Our special guest is Shadow Treasurer Joe Hockey. Welcome to
the panel, Jessica Irvine from the 'Sydney Morning Herald' and News Limited's 'Steve Lewis'. Now,
it's widely accepted Australia is in a recession, yet another indicator this week was the dramatic
dive in retail sales, but most commentators maintain the government is on the money with its
stimulus strategy.

WARREN HOGAN, ANZ (Wednesday): Well, clearly the economy is under a lot of pressure, and without
the Government's fiscal stimulus, retail sales would have been a lot weaker a lot earlier, so the
numbers highlight to us that fiscal policy is working, that it's the appropriate tool.

STEVE LEWIS, NEWS LIMITED: Joe Hockey, tomorrow taxpayers will start receiving the $900 payments,
today the Prime Minister is announcing a new initiative with the banks where people who lose their
jobs will get mortgage relief. Isn't the reality at present, the brutal reality for the Coalition,
that the Government is do doing a good job, Kevin Rudd is doing a good job and you don't have any
answer to this economic meltdown to countering what the Government is doing?

JOE HOCKEY: Well, Steve if you think handing out money to people is the Government doing a good
job, that's your view and maybe that of the general public, but we're experienced in government, we
know you have to at some time pay off Labor's debt, and we know that a cash splash is not
generating the jobs, not just of tomorrow but tomorrow's exports as well. That's our concern. It's
like a flash flood being used to solve a drought. There is a structural problem that needs to be
addressed - the Government is not doing it. You know, sooner or later the Government will have to
cut back on things that will have a real impact in the community to pay for the cash SPlash.

STEVE LEWIS: You were in Tasmania with Malcolm Turnbull and the Shadow Cabinet. You get around,
what is the view of the man and woman on the street, how do they respond to the payments, they're
happy with it, aren't they?

JOE HOCKEY: For some, absolutely, they are receiving a cheque in the Government. But what they're
not aware of is that it's simply a loan, that sooner or later they'll have to pay back in more
taxes or higher interest rates and the Government is desperate to keep scoring political points in
relation to the global financial crisis. Even this announcement today about the mortgage relief for
people who are unemployed, it's a good initiative and we welcome it. But it was announced by the
banks two weeks ago. Ralph Norris the Chief Executive of the Commonwealth announced it two weeks
ago, Kevin Rudd comes back to Australia, puts his arms around the major banks and claims it his
own. There are lots of technical issues that need to be addressed. I really hope that all those
people with loans, credit unions, smaller banks, with the original mortgage originators, like
Wizard, I really hope they're covered as well and this isn't just a good competitive initiative
from the major banks.

STEVE LEWIS: Is there a chance that certain people will miss out, if they're with Aussie Home Loans
or Wizard? Is there a chance it will distort the market?

JOE HOCKEY: We don't know the details. It was a commercial initiative originally announced by the
Commonwealth. It's great the other major banks are on board, but there are literally hundreds of
thousands of Australians that don't have mortgages with the major financial institutions and
therefore they may well not be covered. I hope they are, I hope it's been thought through by Kevin
Rudd.

JESSICA IRVINE, 'SYDNEY MORNING HERALD': So the Government is now with the G20 out of the way,
thinking about the May budget, and what needs to be done. You're talking about saving for a rainy
day, do you think there's no case for further stimulus in the budget?

JOE HOCKEY: If there's going to be stimulus, our view is it has to be the sort of stimulus that
will build jobs and create export opportunities into the future. We have always supported
infrastructure, Malcolm Turnbull in his alternate package to the $42 billion stimulus outlined a
smaller package of $15 to $20 billion, he stated a number of initiatives particularly should be
focused on small business, but also we've had infrastructure commitments that we've always believed
in that should be there, and those infrastructure commitments focus on building jobs to the future
and importantly building the infrastructure that will allow us to create exports.

JESSICA IRVINE: What magnitude of spending do you think we need to see in the budget?

JOE HOCKEY: Well, Jessica, we don't know what the starting point is. Because the Government hasn't
come clean on the real numbers in the budget. Every time Wayne Swan opens his mouth, and you see
numbers come out of it, we really don't know what the starting point is, but we just caution that
you should not be splashing money around recklessly, you should focus on building infrastructure,
building jobs for the future, and every dollar spent today - and it's running at $2.2 billion a
week that the Government is borrowing - every dollar spent should be focused on jobs, jobs.

STEVE LEWIS: Joe Hockey the coalition opposed the $42 billion stimulus package. Are you saying that
the Government in the budget announces something similar, the Coalition will oppose it again?

JOE HOCKEY: If there is waste, mismanagement, we will oppose it, Steve.

STEVE LEWIS: Even though it could be a budget appropriation bill, you will be prepared to oppose it
if you consider it bad policy?

JOE HOCKEY: Steve, we've always opposed bad policy, and we will continue to. And understand this -
the Government is borrowing $2.2 billion a week to fund itself now. That's a huge hay mount of
money they're borrowing, mainly from the rest of the world, someone must pay for it.

STEVE LEWIS: Let's talk about that, because clearly China is one of the major purchasers of those
Treasury bonds. Now the Government has been accusing the Opposition and yourself of playing the
racist card on China. Is that a fair criticism of the Opposition?

JOE HOCKEY: Not at all Steve. It's a repugnant criticism. The fact that the Government has lowered
itself to running the "race card" as they call it, the yellow peril line, is absolutely repugnant.
For anyone to suggest that I'm a racist or any of my colleagues are racist is just outrageous. One
of the things that makes me angry - and I must say this is the sort of politics they play - if you
try to engage in a proper debate with proper scrutiny about what's happening in Australia at the
moment, what happens is the Government has a political line they throw at you. It's just the same
old way Labor does things and I find it, it really gets under my skin.

JESSICA IRVINE: If you're not racist, that's not your line, would it be OK if China bought every
single bond we issued to the market to fund the deficit?

JOE HOCKEY: Our concern is that it's a single foreign government behind all of this, engaging in
the purchasing of assets and allegedly in the purchasing of Government bonds, so they're both in
the debt side of the equation and the equity side and we want is total transparency. We will move
an amendment at the first opportunity to have total transparency on exactly who is lending
Australia all the money the Government is borrowing.

JESSICA IRVINE: Should there be a cap on how much a particular country could buy?

JOE HOCKEY: The question is - what is in Australia's national interest and is it in our national
interest to have a foreign government - not a foreign corporation, we welcome foreign investment,
we need that - but the argument is, is it in our national interest to have a foreign government
buying a lot of assets in Australia and at the same time lending Australia a lot of money.

STEVE LEWIS: So China ends up lending us $40 billion to fund the $200 billion of debt we will
eventually get to, are you saying that would be a bad thing?

JOE HOCKEY: No, I'm saying that the Chinese Government is acting in the interests of the people of
China. We want the Australian Government to act in the best interests of the Australian people.
We've just seen recently some diplomatic argie-bargie between China and the United States because
China has massive investments in the United States. We shouldn't allow ourselves to be in any way
beholden to a foreign government, and the Liberal Party believes not only in our financial security
but in our national security, and sometimes I think that the Prime Minister is more focused on
other things than focused on what is in our national interests.

STEVE LEWIS: Joe Hockey, while Kevin Rudd is hitting 74% and your leader is plummeting the depths,
he's hitting approval ratings that probably move him fairly close to someone like Simon Crean. Does
he still have the full confidence of the Federal Opposition?

JOE HOCKEY: Can I tell you, Malcolm Turnbull is a man of principle, a man of great personal
dignity, he is a man who is committed to getting Australia back on track. Malcolm Turnbull puts
Australia first, he puts Australian jobs first and that's why he's our leader and why we totally
support him and we want him to beat Kevin Rudd.

BILL WOODS: On that note we have to leave it there. Thank you for being with being with us, Joe
Hockey. We will take a break. Up next - the survey shows Australian business saying no to the
one-off hand-outs.

BILL WOODS: Welcome back to Meet the Press. There's speculation over next month's federal budget is
in overdrive at the moment. Most commentators have applauded the Government's effort to kick start
the economy. Would a third stimulus package be welcome, though? The latest survey from the
Australian Chamber of Commerce shows almost 80% of Australian business would prefer tax relief in
the budget, with just 1 in 20 keen on another of those one-off payments. Here to tell us more about
that, welcome to the programme, ACCI chief executive Peter Anderson. Thanks for joining us.

AUSTRALIAN CHAMBER OF COMMERCE CEO PETER ANDERSON: Good morning, Bill.

JESSICA IRVINE: We have the next slot of cash handouts arriving from Monday for individual
taxpayers, $900 each, it's been warmly received and has supported retail spending to a degree that
it is better than it would be otherwise. Aren't your members out of touch in thinking the cash
payments are not doing anything to boost confidence in spending?

PETER ANDERSON: We certainly believe that the Government has acted correctly to move to provide
economic stimulus to the economy since the downturn occurred the end of last year. What we're now
seeing from businesses is a strong commitment towards further tax relief as part of an economic
stimulus and that tax relief should be in the form of personal income tax reductions as well as tax
relief for businesses themselves, particularly through taxes on jobs like the payroll tax. Business
support for ongoing stimulus means that we will support a budget which supports the private
economy, a budget which supports employment and also a budget that puts down some markers to try to
address what will be an important national challenge, to ensure the budget returns to surplus one
we're through the recession.

JESSICA IRVINE: But if you're in favour of tax cuts, tax cuts, once you give them, you can't get
them back and they keep going to the forward years. Won't that just make it harder to drag the
budget back into surplus when we need to?

PETER ANDERSON: There's a number of ways you can do that. Obviously, lump sum payments once the
surplus has been paid, constitute a very significant one-off cost to the budget. What personal tax
cuts do is provide ongoing relief in the form of higher incomes, and that will be important as we
move into a period of recovery from the economic recession. We need not just set ourselves up here
to deal with the circumstances at the moment, but we need to set up our economy so that it can take
full advantage of growth when growth starts to turn around.

STEVE LEWIS: Peter Anderson, we heard the Reserve Bank admit last week admit we're in recession. Is
that your view, is that ACCI's view that Australia is now in recession?

PETER ANDERSON: Well, it's certainly the way businesses are seeing business activity. We look like
having at least two negative quarters of negative downturn, and that means a technical recession.
What's more important of the technical definition definition, though, is what we do to support the
economy at this time. And one of the most important measures the governments need to attend to is
to take cost pressure off businesses. The Reserve Bank needs to reduce interest rates further, the
retail banks have not passed on the full value of past interest rates to their business consumers
that needs to occur.

STEVE LEWIS: Should the Government, the Rudd Government be doing more to pressure the banks to pass
on those interest rate cuts, particularly in terms of business loans?

PETER ANDERSON: No doubt about that. The Government has been working with the business community
and the banks to try to encourage the banks to do more. There is more that needs to be done here,
because only about 2.5% of the 4% reduction in interest rates towards the end of last year and
early this year were passed on to business consumers. That means that there is a break on the
potential for businesses to be able to work their way through this recession. What we also know is
that there's been a deprivation of credit flows into the business community. A lack of credit is
like putting one's arms and hands around the necks of small businesses and depriving them of
oxygen.

JESSICA IRVINE: But doesn't some of the small business lie with business - they're the employers of
workers in the economy, what can they do to retain staff? Do you think they're doing enough?

PETER ANDERSON: There's been plenty of initiatives taken by businesses to try to retain employment.
We've seen our employment rate creep up but not as fast as has occurred in other industrialised
countries. That's because we started from a lower employment rate and businesses have put in place
a lot of measures to try to hold jobs. But we can't do that in the longer term.

STEVE LEWIS: Peter Anderson, we saw this week Holden announce major restructuring in Adelaide, the
loss of the afternoon shift. Do you expect other large companies, your members are going to
announce similar job restructurings - will jobs go, will afternoon shifts be gone in manufacturing
for instance?

PETER ANDERSON: The Holden arrangement is a good example. Because there is business, employees and
unions working together to try to maintain jobs and in that process arrangements have been put in
place to reduce working hours on certain shifts to take cost pressure off the business. Some
businesses will be able to continue to do that. But our concern is that unless government takes
cost pressure off businesses themselves, then in the medium and longer term, businesses will not be
able to maintain those temporary measures.

BILL WOODS: We have to leave it there. Thank you very much for your time this morning. Thank you
also to our panel, Jessica Irvine and Steve Lewis for joining us. If you have any questions you'd
like to ask future guests, email us. Until next week, goodbye.