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Meet The Press -

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INTERVIEWS WITH DEPUTY PRIME MINISTER JULIA GILLARD AND US SENATOR JOHN McCAIN

6th April 2008

DISCUSSIONS ABOUT PM RUDD'S OVERSEAS TRIP, INTEREST RATES, INFLATION, PLANS FOR GETTING COMPUTERS
INTO SCHOOLS, COMING BUDGET, BY-ELECTIONS DUE TO POLITICIANS RETIRING EARLY, US SENATOR JOHN
McCAIN.

MEET THE PRESS PRESENTER DEBORAH KNIGHT: Good Morning and welcome to Meet the Press. The Prime
Minister's extensive world tour continues. Catch him if you can - in the United States, in Europe,
currently in London and soon heading for China, an itinerary noted with concern in Tokyo - left off
the long list. While in the United States, though, Kevin Rudd has done his best to avoid playing
favourites in the presidential race.

PRIME MINISTER KEVIN RUDD (Wednesday): My view is whoever wins the presidential election,
Republican or Democrat, they will know that in Australia they have a good and reliable friend.

DEBORAH KNIGHT: He also met the Republican candidate for the White House, John McCain. And we'll
have a special profile of the senator and presidential hopeful a little later. But while Kevin Rudd
is away, his Prime Ministerial clobber is being worn by his deputy, Julia Gillard, who's our guest
this morning. First, though, a look at what the nation's papers are reporting this Sunday, April 6.
Melbourne's 'Age' headlines with, "Rudd pledges annual update on indigenous crusade." The Prime
Minister will deliver a progress report on how the Government is closing the gap between Indigenous
and non-Indigenous Australians on the first working day of every parliamentary year. Sydney's
'Sunday Telegraph' reads, "They're having a lend." A Federal Government report shows homeowners are
slugged much higher exit fees by the big five banks for switching loans, than by smaller banks or
credit unions. Perth's 'Sunday Times' has, "Governor-General says 'Praise genuine achievers'."
Michael Jeffery has called on Australia to reject the hero worship of celebrity glitz and celebrate
real accomplishment and the wisdom of the elderly. And Brisbane's 'Sunday Mail' reads, "Nick D'Arcy
told it's time for damage control." The swimmer's chances of going to the Olympics have nosedived
after our Olympic Committee President John Coates said the scandal had disrupted Australia's Games
preparations. Julia Gillard is again wearing her acting Prime Ministerial hat and is our guest this
morning. Welcome back to the program.

DEPUTY PRIME MINISTER JULIA GILLARD: Hello.

DEBORAH KNIGHT: And welcome too to our panel, Malcolm Farr from the 'Daily Telegraph' and Brad
Norington from the 'Australian'. Budget night is fast approaching, now just over a month away on
May 13. And while the Prime Minister has been overseas, the Opposition Leader has been sounding the
alarm about the budget.

OPPOSITION LEADER BRENDAN NELSON (Thursday): I notice that Mr Rudd has had time to meet celebrities
and he had time to meet Senator McCain about the price of coffee in Canberra. I ask myself why he
hasn't got the time to talk to everyday Australians suffering with petrol, with groceries and
rising interest rates at the same time that the most important budget in Australia's recent history
is being put together.

DEBORAH KNIGHT: Julia Gillard, the Treasurer says it will be a tough budget. How hard will it be on
Australian families?

JULIA GILLARD: We've been very clear that this budget is going to be about delivering our election
promises. We have huge promises to deliver. We said to the Australian people we'd deliver an
education revolution, we'd be ending the blame game in health, and people will see those promises
delivered in this budget. But beyond our election promises, we are on a campaign to get rid of
waste, to drive for efficiency, to make sure that the budget is very lean. We have inherited a
high-inflation environment that's put upwards pressure on interest rates, that's the legacy of the
last government to the country, and we have to fight inflation - and having a fiscally disciplined
budget is one way of doing that.

MALCOLM FARR, THE 'DAILY TELEGRAPH': So, Minister, can you guarantee that Australian working
families will not be worse off after this budget?

JULIA GILLARD: Of course I can guarantee that they will see our promises delivered, and those
promises.

MALCOLM FARR: Will they be worse off?

JULIA GILLARD: Those promises are about making working families better off. We want to lift the
pressure on working families, everything that this government does recognises that working families
are doing it very tough. They have seen interest rates go up, they are in a high inflation
environment, that's the legacy of the last Liberal government to the country, on the one hand the
mortgage goes up, on the other you go down the shops and things cost more, so our aim is to leave
working families better off by delivering our promises and by fighting inflation so we take the
upwards pressure off interest rates.

MALCOLM FARR: Let's go to something specific. Do you favour the retention of the LPG conversion
subsidy?

JULIA GILLARD: I am not going to get into a game of rule in, rule out on budget matters. Of course
the budget processes are occurring now, and the budget will be delivered on budget night. What we
always see in the lead-up to every budget - and this isn't about the Rudd Labor government, this is
about time immemorial and the way journalists work - in the lead-up there's speculation on a
variety of questions. I won't play the rule-in, rule-out game . The budget is prepared, we are
clear, we'll be delivering our promises in the budget, and that will be unveiled on budget night.

BRAD NORINGTON, THE 'AUSTRALIAN': Is it not possible to give your view given your colleague
Resources Minister Martin Ferguson says he supports the retention of the LPG subsidy.

JULIA GILLARD: I just made it clear Brad the rule in rule out is a game I am not going to play. I
anticipate that every day between now and budget night I'll open up my newspapers and in one
there'll be a budget speculation story, and I think it will probably get to fever pitch it will be
about whether or not we are selling the Sydney Opera House or the MCG as a fund-raiser. I am not
going to get into that business. Budget preparations are confidential, and the budget will be
revealed on budget night. But people should expect to see the delivery of our promises. That's what
we said to the Australian people we would do on election day, and that's what we will do.

BRAD NORINGTON: The Reserve Bank governor Glen Stevens has been sending out mixed signals on
interest rates. He said that the economy appears to be slowing down, but he still is concerned
about rising inflation. Are you worried about a further increase in interest rates and the pain
that might inflict on families?

JULIA GILLARD: I've been worried about every increase in interest rates we've seen, of course.

BRAD NORINGTON: But are you worried about another one?

JULIA GILLARD: Can I just say I've been worried about every interest rate increase we've seen. We
saw a large number under the former government. We then, of course, inherited a high-inflation
environment, putting further upwards pressure on interest rates. What are we doing in response? We
are fighting inflation, because if we can deal with inflation, then we will not risk interest rate
rises that you would continue to see if inflation was higher. So we have to get inflation under
control.

MALCOLM FARR: Can we go to a core issue here? Who is right - you or the Reserve Bank. Glen Stevens
says the talk of mortgage stress is exaggerated. He says that inflation is not out of control. Now,
these aren't messages that are pleasant (a) to punters and (b) to you. Who is right?

JULIA GILLARD: Well, what the government has said is we've got a high-inflation environment. What
the Reserve Bank has said is inflation has concerned it. I think that they are, if you like,
compatible messages, everyone is worried about inflation.

MALCOLM FARR: No, they are not compatible, Minister!

JULIA GILLARD: Everyone is worried about the impact that has on interest rates. When it comes to
mortgage stress, there are, you know, a lot of different statistical measures of a mortgage stress,
but the measure I use is I talk to people in the streets as I move around, I talk to people in my
local community. And people report it's tougher and tougher to pay the mortgage, house prices have
gone up, interest rates have gone up, we are in a high-inflation environment, people worry about
the cost of things when they go to the shops, that means working families are under stress.

DEBORAH KNIGHT: Julia Gillard, school principals are warning that your pledge to role out a million
computers to school is facing descending into a shambles. Will you take their concerns on board and
change the way you roll out the policy?

JULIA GILLARD: The policy is rolled out, and every stage of it is working. We had applications
closed for the first $100 million actually on Friday evening. That first $100 million has been
targeted at schools that have the greatest need. That is, they have a ratio of computers to
students of 1 to 8 or worse. Now, some of those schools don't have any computers, if we are
counting computers less than four years old. So no computers less than four years old available for
students. Now, of the schools that are in that situation and we invited to apply for the first $100
million, 90% have applied. Now, when you get a 90% application figure, I think you can see this is
a program that is being met with enthusiasm in schools because they want their children, their
kids, their students to have the ability to learn in the modern environment, and that requires
access to computer technology.

DEBORAH KNIGHT: Time for a break. But when we return - should political parties pay for costly
by-elections. And it was a week when the Opposition Leader's listening tour of Australia turned
into a musical.

(SONG) # You and Brendan Nelson And the can-do team #

DEBORAH KNIGHT: Welcome back. You are on 'Meet The Press', with our guest this morning, Acting
Prime Minister Julia Gillard. Well, Kevin Rudd is now halfway through his 17-day world tour, with
an exhausting schedule of appointments and meetings. The PM has shrugged it off, but he's starting
to look and sound tired. Julia Gillard, has he taken on too much, especially with crucial budget
decisions awaiting his return and the 2020 summit?

JULIA GILLARD: I know Kevin Rudd very well, and he's always highly focused on the job and able to
do an amazing amount of work. I think, as people know, when you travel around the world, you are in
different time zones and the like. But Kevin is always on top of the game and everything that's
happening. This has been a very important trip for the country, a trip focused on getting
information and having discussions about the global economic environment and, of course, some very
important discussions at NATO.

BRAD NORINGTON: Nonetheless, Deputy Prime Minister, Mr Rudd has been criticised for a number of
gaffes, the odd verbal stumble, and also a half salute he gave to the US President, which was
picked up by cameras around the world. Is that the right sort of discipline for a seasoned diplomat
like Mr Rudd?

JULIA GILLARD: I think people expect their leaders to be human beings, and human beings have the
occasional joke, and Kevin was caught in a light-hearted moment and, of course, like every human
being on the planet, journalists included, Kevin has the occasional joke, and he was joking with
the half salute to President Bush. There was no more significance in it than that.

BRAD NORINGTON: Also related to Mr Rudd's world tour, he, of course, visited the candidates, some
of the candidates for the presidential election. As Australia's first woman Deputy Prime Minister,
would you like to see a woman in the White House, and do you think a woman in the White House could
bring a certain perspective that men may not to world politics?

JULIA GILLARD: I'm convinced that whoever wins the American election , we'll have an American
President who will be a great friend of this country, and that's good news for Australia. Our
alliance with America endures no matter who is in the White House or the prime ministership. It's
stronger than that. On the question of Hillary Clinton or Barak Obama, whoever comes through as the
Democratic nomination is going to make history, whether it's the first woman, or whether the first
African-American, it's going to be a very special moment in the political history of the planet.
I'm watching it with interest.

MALCOLM FARR: Minister, back to the school computers. Do these principals of these disadvantaged
schools know that they are going to have to find a lot of money to plug in - you can go down to
Officeworks and buy a laptop for $500, but you also have to have powerpoints to plug them into,
wifi, central computer, routers, airconditioning for a central computer, you have to be able to pay
an extra power bill for all these things. Do principals know you are not going to cough up with
that money, and they'll have to convince State Governments to come up with what could be an extra
$100,000 a schools?

JULIA GILLARD: What principals know we are working in partnership on the delivery of this program.

MALCOLM FARR: Have they been given guarantees they'll get the money from the state.

JULIA GILLARD: I can answer that question. We always said this will be a partnership. We are
working with our State and Territory colleagues, and the discussion we are having with them is
about us putting an extra $1 billion into the vital task of getting computers in school, and in the
delivery of that $1 billion, working with the States and Territories on related questions like
electricity supply, like, of course, professional development for teachers, like making sure that
curriculum is there that embeds the computer technology into learning. That partnership will make
sure that computers are in schools in circumstances where they can be used. That partnership is
working well, we are getting the $500,000...

MALCOLM FARR: By when will the first Federal Government provided laptop be up and humming with all
the support systems intact?

JULIA GILLARD: By June 30 this year.

MALCOLM FARR: No, that's when the money goes out. Are you - can you guarantee that all those backup
things, such as the extra power bills, airconditioning, the software will be available by then?

JULIA GILLARD: We need to have the sequence here, and let me explain the sequence, we have the
first $100 million for the neediest schools, the States and Territories are working with us in the
delivery of that $100 million, the money will be delivered by June 30, the money will be spent on
computer technology and the partnership with the States and Territories will make sure that those
computers are in settings where they can be used. Then the balance, $800 million on computers and
$100 million on fibre to schools, so people can get rapid broadband access, on the further $800
million, we are working on the ongoing strategic partnership so the computers can be in schools,
being used, because we are working together with our State and Territory colleagues, and that
process is going well. The first $100 million will be delivered, there's an enthusiasm for it.

DEBORAH KNIGHT: OK...

JULIA GILLARD: 90% of the schools asking to apply putting in applications.

DEBORAH KNIGHT: We have seen this week Peter McGauran announce his retirement from politics. We are
yet to hear from other seasoned coalition backbenchers, such as Alex ander downer and Peter
Costello. Should it be up to the parties to pay for the by-elections? Should you, parties, Labor
and Liberal and Nationals, be footing the bill?

JULIA GILLARD: I think elections are always going be paid for by the Australian Electoral
Commission, paid for by the public purse.

DEBORAH KNIGHT: But coming so close to a general election?

JULIA GILLARD: Look, we are always going to have by-elections for legitimate reasons. Politicians
are human beings, they get unwell, family circumstances change, and despite their best expectations
that they were going to serve a full parliamentary term, sometimes people have to retire, ill
health and other matters. But what is going on here with the Liberal Party is of course quite
different to that. We have people that presented at the last election now saying they want to go.
We are saying to Brendan Nelson as leader of the Liberal Party, be true to your word. When first
confronted with this, Brendan Nelson said he would try and work with his colleagues, and organise a
super Saturday, we'd have all the by-elections at once, making them cheaper to do. Now he's
apparently saying that it's nothing to do with him. We are saying to Dr Nelson, "Be a leader of
your party, leadership requires talking to your colleagues, if they are going to jump ship, get
them all to do it so we can have all the by-elections on the same time day and at least contain the
costs for tax-payers."

DEBORAH KNIGHT: We'll await eagerly as to who the Labor candidates are for these by-elections as
well. Julia Gillard, we are out of time, thank you for joining us.

JULIA GILLARD: Thanks very much.

DEBORAH KNIGHT: And thanks to Malcolm Farr and Brad Norington. Stay with us on Meet The Press. John
McCain has secured the Republican nomination for US president, but who is the man whose odds are
shortening to claim the White House? And our cartoon of the week from 'Sydney Morning Herald' has
two bureaucrats contemplating some unusual gaffes from Kevin Rudd, saying "After all, he is human."
Don't tell HIM that."

DEBORAH KNIGHT: You are on Meet The Press. During his visit to the United States, Prime Minister
Kevin Rudd took the opportunity to touch base with both sides of the battle for the Democratic
parties presidential nomination, meeting Hillary Clinton and in a phone conversation with Barak
Obama, but he also met the Republican candidate Senator John McCain, once regarded as a rank
outsider in the contest, but now seen as a real chance to continue the Republican rule in
Washington. While the Democrats squabble, McCain is focused on the prize. This morning a special
CBS profile of the man who just might be the next US president.

ANNOUNCER: Ladies and gentlemen, please welcome Republican nominee for president, Senator John
McCain.

SENATOR JOHN McCAIN: Thank you Texas Ohio, Vermont and Rhode Island.

CBS REPORTER SCOTT PELLEY: McCain claimed the nomination at at end of an exhausting and emotional
day. The poll showed you coming in fourth New Hampshire, you were down to your last $50,000, your
opponents were outspending you massively , tonight you are the party's nominee. What is it about
you that got you here?

JOHN McCAIN: I think it shows that in America anything is possible. The next day he accepted an
endorsement that cuts both ways - the President is popular with the conservatives, but overall he
has the lowest approval ratings since Nixon and Carter.

PRESIDENT GEORGE BUSH (To McCain): I'm proud to be your friend.

SCOTT PELLEY: The United States is going to be in Iraq for years to come. Afghanistan is not going
well. Osama bin Laden is at large and the economy is slipping into recession. How do you make a
case for a third Republican term?

JOHN McCAIN: I can make a case that a less government lower taxes, less regulation, safer America
is what I can give America, but I don't underestimate the size of the challenge.

SCOTT PELLEY: Senator Obama calls you a genuine American hero who represents the politics of
yesterday.

JOHN McCAIN: That's a pretty good line, I think, and I - I understand that. Look, my response, of
course, is that I have the experience and the knowledge and the background to make the judgments
that are necessary to move this nation forward, and make it safe.

SCOTT PELLEY: You are saying that Senator Obama doesn't have the experience, he's too naive to be
President.

JOHN McCAIN: No, I'm saying that I have that. If the phone rings at 3:00am, I think the American
people would want me to answer it first.

SCOTT PELLEY: But no-one had expected him to be around to take that call. Moderates didn't like
McCain's support for the surge in Iraq, conservatives didn't like his plan for citizenship for
illegal immigrants. Contributions dried up. Before New Hampshire he burned through a $3 billion
loan that he had secured with a life insurance policy.

SCOTT PELLEY: What was the darkest moment?

JOHN McCAIN: There was so many, it's hard to pick one out.

SCOTT PELLEY: McCain centred his campaign on what was among the most divisive issues in America -
the surge in Iraq.

JOHN McCAIN: I believe we should not choose to lose in Iraq.

SCOTT PELLEY: As a naval aviator in Vietnam he walked away from an accident that killed 134 others.
He was shot down on his 23rd combat mission. The enemy offered to let him go because he was the son
of an admiral, but McCain demanded that other Americans be released first, so he remained 5.5
years. Because of torture, today he can lift his arms only so high. We asked him about American
interrogation methods today. Is waterboarding torture?

JOHN McCAIN: Sure, yes. Without a doubt.

SCOTT PELLEY: So the United States has been torturing POWs?

JOHN McCAIN: Yes. Scott, we prosecuted Japanese war criminals after World War II, and one of the
charges brought against them, for which they were convicted was that they waterboarded Americans.

SCOTT PELLEY: How did we lose our way?

JOHN McCAIN: I don't know the answer to that. I think one of the failures maybe was not to listen
more to our military leadership, including people like General Colin Powell on this issue.
(ADDRESSING A RALLY) If I have to follow him to the gates of hell, I will get Osama bin Laden and
bring him to justice.

SCOTT PELLEY: In your town hall meetings you are fond of saying you'll follow Osama bin Laden to
the gates of hell.

JOHN McCAIN: Yes.

SCOTT PELLEY: What are you willing to do?

JOHN McCAIN: Well, the first thing is not to tell Osama bin Laden what I'm going to do, but I'll
get him.

SCOTT PELLEY: Foreign policy is McCain's speciality, but for now most voters say they are worried
about the economy. On Capitol Hill he gets credit for reaching out to Democrats on big issues like
immigration and campaign finance reform, but his fellow politicians are critical of his high-minded
condemnation of money in politics. At 71 years old, McCain's health has been an issue. After his
presidential race in 2000 he was diagnosed with the most lethal form of skin cancer. How's your
health?

JOHN McCAIN: It's excellent, excellent. Thank you, and we'll be doing the medical records thing
with the media some time in the next month or two.

SCOTT PELLEY: There has been some criticism that you have not released your medical records. You
are saying in this interview you are about to do it.

JOHN McCAIN: We'll do it in the next month or so.

SCOTT PELLEY: Is it fair to say at this point in time there's no sign of a recurrence of cancer?

JOHN McCAIN: There's none.

SCOTT PELLEY: There is an occasional recurrence of McCain's temper. We saw it the day of our
interview when he became annoyed with the reporter's questions.

JOHN McCAIN (To other reporter): There's no-one, and you know it too.

OTHER REPORTER: So...

JOHN McCAIN: No, you know it. So I don't know even know why you ask.

SCOTT PELLEY: Now McCain is running a close race. He's behind in fund-raising, but he has a head
start on November as the Democrats battle on.

DEBORAH KNIGHT: So as November approaches all eyes remain on who the Democratic Party comes up with
to take on Senator McCain in the battle for the White House. Scott Pelley reporting there. That is
our program. I'm Deborah Knight, thanks for your company, see you next week.