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Meet The Press -

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INTERVIEWS WITH SHADOW TREASURER JULIE BISHOP AND HARVEY NORMAN EXECUTIVE CHAIRMAN GERRY HARVEY

October 19th 2008

DISCUSSIONS ABOUT GLOBAL FINANCIAL CRISIS, INTEREST RATES, BUDGET SURPLUS, TAX CUTS, CONSUMER
CONFIDENCE, BY-ELECTIONS.

MEET THE PRESS PRESENTER PAUL BONGIORNO: Good morning and welcome to Meet the Press. The week that
was saw the Federal Government take massive pre-emptive action to damage-proof Australia from the
looming world recession. Kevin Rudd made a dramatic U-turn on fiscal strategy, spending half the
budget surplus.

PM KEVIN RUDD (Tuesday): The global financial crisis has entered into a new, dangerous and damaging
phase, one which goes to the real economy - growth and jobs. And that's why the Government has
decidedly to act decisively and early.

OPPOSITION LEADER MALCOLM TURNBULL (Tuesday): We are not going to argue about the composition of
the package or quibble about it. It has our support. It will provide a stimulus to the economy,
that's for certain. And above all it gives justice to Australia's age pensioners in particular, who
have been doing it especially tough.

NATIONALS LEADER BARNABY JOYCE (Wednesday): You do not go spend half your nation's savings when the
world is heading into a recession. It is a very peculiar - and I would say to the extent it is and
the form it is - a dangerous piece of policy.

PAUL BONGIORNO: Shadow Treasurer Julie Bishop is our guest. And later - retailer Gerry Harvey and
the shoppers' strike. But first, what the nation's papers are reporting this Sunday October 19. The
'Sunday Telegraph' leads with, "Angry voters smash Labor in NSW by-elections." The ALP suffered
swings up to 23% in three of its Sydney heartland seats, losing Ryde and struggling to hold in
Cabramatta. The Nationals failed to win Port Macquarie, which went to an Independent.

NSW PREMIER NATHAN REES (Yesterday): The people of Lakemba, the people of Cabramatta, the people of
Port Macquarie and the people of Ryde have sent me a message today loud and clear - and the message
is "lift your game or else."

PAUL BONGIORNO: A swing of 10% against the Stanhope Labor Government in the Australian Capital
Territory has seen it lose its majority. "Greens the kingmakers," the headline in the 'Sun-Herald'.
Labor and the Liberals look like having seven seats each with the Greens picking up three. The
'Sunday Mail' says hefty tax cuts worth up to $10 billion are being considered by the Federal
Government if the global financial meltdown worsens. "Plan for tax cut surprise", the headline. The
Sunday 'Herald-Sun' reports a young backpacker branded a suspect in Britt Lapthorne's death has
denied involvement. "I did not kill Britt," the headline. A memorial vigil was held in Melbourne as
the young woman's body is being flown home. After another week of wild swings on world stock
markets, confidence is still to return in any convincing way. Here, the Opposition suspects the
Government knows more than it's letting on. Welcome back to the program, Julie Bishop.

SHADOW TREASURER JULIE BISHOP: Good morning, Paul.

PAUL BONGIORNO: Let's go to those amazing swings in the NSW by-election. It's very hard to see any
Federal implications from that, isn't it?

JULIE BISHOP: It's certainly been a political earthquake in NSW when seats like Cabramatta are
still in question, that had a 29% margin. The people of NSW are clearly sick of this incompetent
and arrogant State Labor Government. It does send a message to Labor about the way they've handled
their budget, infrastructure spending, and had this been a general election, it clearly would have
been a change of government.

PAUL BONGIORNO: Do you take heart from it?

JULIE BISHOP: Well, it is an indication that people are concerned about the way Labor governments
handle the budget, the way they handle infrastructure. It sends messages to Federal Labor, but it
is a particularly NSW outcome - a swing of 23% in a seat like Cabramatta is a political earthquake.

PAUL BONGIORNO: In the 'Sun-Herald' there's a report that two of your Federal Liberal colleagues -
Senator Bill Heffernan and Alby Schultz - actually handed out how to vote cards in Port Macquarie.
Should they be disciplined? What's your view of their behaviour?

JULIE BISHOP: In Port Macquarie, there has been an Independent. Obviously people there are very
comfortable with an Independent. And that's been the result. I don't know the details of whom was
handing out cards for whom. But clearly the people of Port Macquarie have voted back in an
Independent. They've had one for some time.

PAUL BONGIORNO: But is it good for Coalition relations for Liberals to be handing out how to vote
cards against the Nationals?

JULIE BISHOP: Clearly the Coalition at a federal level is very strong and we continue to work
closely together. But in a seat like Port Macquarie, perhaps there are local issues at play there.

PAUL BONGIORNO: You won't be chatting to Bill Heffernan?

JULIE BISHOP: Not particularly, on that issue.

PAUL BONGIORNO: Going to the tax-cut story, would you support the bringing-forward of tax cuts?

JULIE BISHOP: In the absence of information, it's very difficult to know where the Government is
heading with fiscal policy. It's essentially turned fiscal policy on its head. Not two weeks ago,
the Government was insisting it must maintain a $21 billion budget surplus as a buffer against the
global financial crisis. This week, it says it must spend at least half of that budget surplus as a
buffer against the global financial crisis. Now, there has been this $10 billion stimulus package,
and we're looking at that. We had expected to receive revised economic forecasts and revised fiscal
outlook - we've not yet received that information - and today, it's reported that the Government is
looking at a $10 billion tax-cut stimulus. So what we would like to see from the Government is the
advice that they are relying upon, the forecasts that they have now, such would justify them doing
these things.

PAUL BONGIORNO: On Monday, before the package was announced, the $10.4 billion package was
announced, Joe Hockey and the Parliament floated the idea of the bringing forward of tax cuts. Do
you think, though, now, in light of the package, it's maybe panic and not a good idea?

JULIE BISHOP: There are different ways to stimulate an economy. You can do it through direct tax
cuts, income tax, through even a payroll tax cut that might stimulate productivity. You can do it
through...

PAUL BONGIORNO: Is there room for any of that, though, now?

JULIE BISHOP: What we would like to see is the Government's forecast as to how they expect this
package will impact on the economy.

PAUL BONGIORNO: Before they give tax cuts?

JULIE BISHOP: Absolutely. That's what's missing from this entire debate. There hasn't been any
revised forecasts. If there are no revised forecasts - if the case is, as it seems some journalists
are now reporting, there are no revised forecasts - then the Prime Minister should tell us that his
$10 billion package was based on a political judgment, not a considered economic judgment from
Treasury.

PAUL BONGIORNO: It's clear from answers both the Treasurer and Prime Minister gave in the
Parliament last week that there are no formal Treasury forecasts, nor modelling. The Government was
relying on collapsing markets and the IMF's latest revisions.

KEVIN RUDD (Thursday): These numbers for the global economy pre-date the convulsions in global
stock markets and capital markets of the last two weeks. Effectively what the Liberal Party is
saying is, "Wait for the data to roll in in the future, then decide that it's time to act," by
which time it is too late!

PAUL BONGIORNO: So no formal forecasts, no modelling. Do you think you should withdraw your support
for the package?

JULIE BISHOP: We want the Prime Minister to come clean and say the advice that he received over
that weekend that made him change the position from insisting that we keep a $21 billion budget
surplus to spending half that surplus in one hit before Christmas - it's not too much to ask the
Government to reveal the advice they received. Or was it a political judgment? If it's a political
judgment...

PAUL BONGIORNO: It seems they have revealed that advice, even to the businesspeople on Friday, the
Prime Minister claims it was the Treasury that advised them to do what they did.

JULIE BISHOP: It's not enough to say "Treasury said go early, go quickly, go households." That's
not enough. Surely Ken Henry...

PAUL BONGIORNO: Are you reserving judgment or still backing the package?

JULIE BISHOP: We can understand there must be a stimulus. We can see what's happening around the
world in the global financial markets, the problems with banking sectors around the world. But
Paul, what the Government must do is set out the economic forecasts it has now. We're not saying
they have to produce the mid-year economic and fiscal outlook now, but at least give us the advice
upon which they relied. Because otherwise, we're not going to know what advice they had now and how
the package will in fact impact on the economy. I guess that's why Lindsay Tanner is raising the
question of tax cuts - have they got it right? Is this package big enough? Is it appropriately
targeted?

PAUL BONGIORNO: When we return with the panel - Kevin Rudd's disdain for extreme capitalism and the
obscenity of greedy bankers. And on Wednesday, the Prime Minister was asked to let the nation go
behind the scenes and find out what he really says to his Treasurer and Finance Minister when
dramatically bad economic news comes their way.

KEVIN RUDD: Things like, "Oh, damn."

(AUDIENCE LAUGHTER)

KEVIN RUDD: "Oh, Bother, Wayne."

(LAUGHTER)

KEVIN RUDD: "Dash it, Lindsay."

(LAUGHTER)

PAUL BONGIORNO: You're on Meet the Press with Shadow Treasurer Julie Bishop. And good morning to
our panel, Fran Kelly, Radio National Breakfast.

FRAN KELLY: Good morning, Paul.

PAUL BONGIORNO: And the Economics Editor for 'The West Australian', Shane Wright. Good morning,
Shane.

SHANE WRIGHT: Good morning, Bonge.

PAUL BONGIORNO: The show stopper at the Prime Minister's Press Club address was his attack on
greedy financiers. Mr Rudd has little sympathy for bank executives who walk away with millions
while their poorly regulated businesses leave shareholders and customers empty-handed. He's
proposing tough global reforms.

KEVIN RUDD (Wednesday): Obscene failures in corporate governance which rewarded greed without any
regard to the integrity of the financial system. What we have seen is the comprehensive failure of
extreme capitalism, extreme capitalism which now turns to Government to prevent systemic failure.

FRAN KELLY: Julie Bishop, doesn't it make sense in this time of Government bank bailouts around the
world to make some kind of link to chief executive salaries and good, sound, reliable business
practices?

JULIE BISHOP: What was curious about the Prime Minister's announcement on greed and excesses and
risky behaviour was that he essentially identified the Australian banking sector, yet in the weeks
leading up to this statement he has been emphasising how strong our banking sector is, how well
it's managed, how prudential the regulations have been, and the kind of profits that have enabled
our banking sector to withstand the onslaught elsewhere. And yet, at that Press Club lunch, he
essentially says, "Risky behaviour and excessive greed exists in our banking sector and I'm going
to do something about it." Now, if he's going to identify banks - and of course we saw the next day
pictures of our bankers and our bank executives lined up throughout the media - then he should
identify the risky behaviour and the excessive greed. I don't believe it is an issue within
Australia. We did not - our banking sector did not - contribute to the global financial crisis.

FRAN KELLY: So you think there's nothing need to be done to put any kind of limits or regulation
around executive salaries here?

JULIE BISHOP: I believe it's a matter for shareholders. And I would urge shareholders to be far
more activist. They are the owners of the companies. We have superannuation funds and industry
funds that are significant shareholders in companies. They have a lot of influence and they should
exercise that influence far more often than they do.

FRAN KELLY: The fact is, the institutional shareholders don't intervene like that, do they, and the
mum-and-dad shareholders don't have the power to?

JULIE BISHOP: The institutional shareholders do have the power, and I believe that's where the
emphasis should be placed - our super funds should vote, they should be exercising their influence
at these meetings where exact salaries are considered. They are the owners of the company. That's
where the issue should lie.

SHANE WRIGHT: Ms Bishop, you've seen the Government change its budget priorities. What about your
own, which, it still stands, Brendan Nelson's announcement of the cut in the fuel excise?

JULIE BISHOP: That remains our policy, and we most certainly remain committed to lower income
taxes. We remain committed to lower taxes. But the Government has turned the budget on its head.
Two weeks ago, they were committed to a $21 billion budget surplus. Today, they won't commit to a
budget surplus. We're reading about massive defence contracts being cancelled. We're now reading
about bringing forward tax cuts. So who knows what state the budget will be in in six months time,
let alone two years time? We remain committed to that policy.

SHANE WRIGHT: So what happens to the Ergas review, which is still ongoing, which will have some
form of tax cuts. Where does it leave you, as the Shadow Treasurer, trying to put together a budge
budget policy going forward?

JULIE BISHOP: That's why it's so important for the Government to release the information they have
now. On the forecasts they have about the budget. We haven't seen any revised fiscal outlook on
revenues or expenditures, or on any revised forecasts on unemployment, inflation, on growth
generally.

SHANE WRIGHT: So are you saying that your tax policies and the Ergas review is contingent on what
you've got left in Treasury?

JULIE BISHOP: Well, it's self-evident that our ability to deliver tax cuts at a particular time
will depend upon what's in the budget. Now, if Labor trashes the budget over the next 6-12 months
or two years, then obviously people will have to revisit their priorities. But we remain committed
to the policy. The question on our ability to deliver it in the time frame we would like will
obviously depend upon what sort of budget we receive from the Labor Government. Now, if they do a
Paul Keating on us and the budget is in deficit, well, you'd have to consider how you'd be able to
deliver on all your promises.

FRAN KELLY: On that, in your view, would putt putting the budget in deficit be trashing the budget?
If this recession is deep and long enough, would you support putting the budget into deficit?

JULIE BISHOP: I would I'd like to know the situation now, I'd like to know the forecasts the
Government has.

FRAN KELLY: By then, you will know the forecasts, because that's some time off. At a point, would
you support a deficit budget if that is required to get things going?

JULIE BISHOP: A as matter of principle, we are committed to budget surpluses and we believe the
budget can be maintained in surplus and we would like to know more about what the Government is
planning, particularly as Wayne Swan has refused to guarantee a budget surplus. Having spent all of
this year essentially accusing the Opposition of tinkering with their budget surplus, now the
Government's spending half that budget surplus in one hit before Christmas.

FRAN KELLY: I wonder what you think of the Prime Minister's attendance at that summit on Friday
with the 150 senior executives, because Malcolm Turnbull didn't seem impressed with it. He said,
"Kevin Rudd was ignoring small business, the engine room of the economy, and spending time with the
top end of town." Is that how you felt? Was it inappropriate for the PM to be there?

JULIE BISHOP: I feel that small business has been overlooked in this whole discussion.

FRAN KELLY: Was it inappropriate for the PM to be at that summit?

JULIE BISHOP: The Prime Minister can take advice from whomever he chooses. Obviously I would have
assumed the Prime Minister has been getting advice from the big end of town throughout the year.
But the point Malcolm is making is that nobody is focusing on small business. When we were calling
for the full effect of the interest rate to be passed on, we were thinking about small business. As
I understand it, for many small businesses have not yet received an interest-rate cut on
small-business loans, on their overdrafts. That's where the focus must be - small businesses need
to be secure and stable so that they can continue to employ people, because one of the big concerns
that we've got is unemployment. And the Government hasn't told us what the forecasts are - the
revised forecasts - for unemployment. We've got to focus on job security, job stability.

SHANE WRIGHT: Talking about employment, WA has the most restrictive shopping hours in the country
by a long factor. Have you talked to Colin Barnett about what seems to be core Liberal Party policy
- freeing up business to do what they want?

JULIE BISHOP: I haven't spoken to Colin specifically about it. I suspect that he knows my views. I
believe in deregulation in the shopping-hours market. Fortunately, it's a State matter that they'll
have to grapple with. But that's my view.

SHANE WRIGHT: But have you and the rest of the Federal Liberal Party in WA put enough pressure on
Colin Barnett to change?

JULIE BISHOP: Colin Barnett has been a Premier for a number of weeks now. He has a number of
priorities. I don't know that shopping hours is a priority, but as a Liberal I believe in
deregulating shopping hours. It will be up to Colin how he handles that matter.

PAUL BONGIORNO: Julie Bishop, there's another matter that did cause the Howard Government some
difficulty, namely what to do with nuclear waste. Brendon Grylls, the Nationals leader in WA,
thinks that maybe the world's waste could go to WA.

JULIE BISHOP: That would not be possible in Australia under current Commonwealth laws. There is in
place a policy to bring Australia's nuclear waste into the Northern Territory. The waste that we
have currently comes from medical nuclear reactors at Lucas Heights, and the waste is currently
being stored in hospital basements and capital cities around Australia. There is a Commonwealth
plan to have a nuclear waste repository in the Northern Territory. It would not be possible under
Australian law to bring in the world's nuclear waste.

PAUL BONGIORNO: You wouldn't want that law to be changed?

JULIE BISHOP: I see no reason to.

PAUL BONGIORNO: Thank you very much for joining us today, Julie Bishop.

JULIE BISHOP: Thank you, Paul. Up next - a retailer's eye view of the crisis from Gerry Harvey. And
Warren in the 'Daily Telegraph' has found one happy recipient of Kevin Rudd's bucket of money. "Now
this is the recession we had to have."

PAUL BONGIORNO: You're on Meet the Press. In boom times, people feel confident enough to shop till
they drop. But when fear and uncertainty grips shoppers' wallets, this mall in Cleveland, Ohio,
shows what can happen - only 5 of the 160 outlets remain open. In Australia, the Roy Morgan
consumer confidence survey is now at its lowest level in 17 years after a precipitous drop last
week, and business is alarmed.

GREG EVANS, CHAMBER OF COMMERCE AND INDUSTRY (Wednesday): All our surveys of our members show that
sales, profits and investment in employment growth - in those critical areas which depend on
discretionary consumer spending - we're starting to suffer very badly.

PAUL BONGIORNO: One of the country's biggest retailers, Harvey Norman makes no secret of the fact
times are tough. Welcome to the program, Executive Chairman Gerry Harvey. Good morning, Mr Harvey.

HARVEY NORMAN EXECUTIVE CHAIRMAN GERRY HARVEY: Morning.

PAUL BONGIORNO: How tough are times?

GERRY HARVEY: Well, they're not dreadful. I mean, our sales are down a little bit at the moment so
what I'm going to do - and I've started on Tuesday - I'm going to put out the last four weeks of
written sales every week on a Tuesday. Because we've got a shop in every town in Australia with
10,000 people or more. And what we can produce is something that's happening now - today's figures.
All the figures that you get are like, one, two, three months old. If there's a mechanism that can
produce what's happening out there in the marketplace at the moment, then every politician, every
banker, financier, economist - every retailer - I mean, if we put out those figures every week,
we'll give you an indication of what's happening in the marketplace now.

PAUL BONGIORNO: So is this a design to put pressure on credit markets to keep the money flowing?

GERRY HARVEY: No, it's information. What they do with that - you know, it's useful information.
I've had a number of economists already write, ring and say, "Can I get those figures on the
Tuesday?" Because they see it as a valuable tool.

SHANE WRIGHT: Mr Harvey, has there been any confidence movement, do you think, since the
announcement of the package? And do you think it will show up in the 'Harvey indicator' on Tuesday?

GERRY HARVEY: Too early for that, but certainly if you return $10 billion to the consumer it'll be
spent right across the spectrum. So, you know, that'll show up between now and Christmas.

FRAN KELLY: There's no doubt it'll be spent, but do you think it will be enough to kick-start the
economy, and do you support the notion of maybe the Government bringing forward the planned tax
cuts?

GERRY HARVEY: Well, it'll help, but look, there's a big picture out there - there's a world crisis,
and regardless of whether you give $10 billion back or not, it's really not going to solve the
problem. I mean, this is the Government acting in a way that they see is the best way to solve this
problem. And it will help, I guess. But it's not the...

FRAN KELLY: It's a world crisis fuelled largely by debt. That's what started it.

GERRY HARVEY: Mm.

FRAN KELLY: What about - are you concerned at all about customer offers that you have - two years'
interest free, that sort of thing? Bob Brown has called that sort of lending practice a debt trap.
Are you planning to wind those sorts of offers back?

GERRY HARVEY: No. Because it's been around a long time.

FRAN KELLY: Sure.

GERRY HARVEY: And people are in debt - most people are in debt. If your fridge breaks down tomorrow
and you're a mum and dad and three kids and you haven't got any money and you want a fridge, it's
handy to have an interest-free offer there, isn't it? So if I said, "I think we'll get rid of
that," I'm sure - I don't think that's - that's not the problem. And it's debt. It's not consumer
debt that's the world problem. The world problem is much bigger than that. It's, you know, the big
banks in the world falling over one after the other. It's banks not lending to one another. It's
banks lending to their customers, if they can lend to them, and when they do, putting a surcharge
on it.

SHANE WRIGHT: The Reserve Bank has made mention of how low the default rates on home loans have
been. Have you seen, through your customer base, like, an increase in defaults or people falling
behind?

GERRY HARVEY: No. And that's because, you know, because we've still got 96% of people employed out
there. So there's no reason for them not to pay at the moment. And so default rates are still fine.

SHANE WRIGHT: There's been a lot of talk about whether Australia will fall into recession. The US
is going to fall into recession. Do you think the package is large enough to avoid that, or is
Australia too far gone?

GERRY HARVEY: I'd be hopeful Australia won't fall into recession.

FRAN KELLY: We're all hopeful of that!

GERRY HARVEY: The fact that we have got high employment levels, and, you know, we have got a very
strong economy - I mean, it's just a tragedy that this economy has been infected largely from
outside, not internally. And so this great economy we've got is under pressure from things that
happened in other countries.

FRAN KELLY: The Opposition, we've just heard, was critical of the Prime Minister for not focusing
enough on helping small business. Isn't the $10.4 billion spending package largely going to help
small business?

GERRY HARVEY: Yeah, but the point is that the banks are not lending to small business at the
moment. And if they are, they put a surcharge on it. So it's difficult for small business at the
moment. If you haven't locked in your requirements, the bank doesn't really want to talk to you too
much at the moment. It's pretty important that that changes. There's no doubt the interest rates
will - they are - dropping, and I don't know what they'll drop to, but 3%-4% is not impossible in
this sort of climate.

PAUL BONGIORNO: You heard - you've got an ally in Julie Bishop, Federal Liberal from WA, for the
deregulation of shopping hours there. Do you have a plan now that you've got a Liberal Government
in that State to push ahead with your campaign?

GERRY HARVEY: Well, it was a Liberal government - Nick Greiner's government - that first brought it
in in NSW, and Kennett followed. But I think, you know, the other States might have been Labor
governments that brought it in.

PAUL BONGIORNO: So Colin Barnett hasn't got any excuses?

GERRY HARVEY: The other thing is that the Labor Government, had they got back in in Western
Australia, promised to bring it in. So when you talk Liberal and Labor on shopping hours, it's a
bit confusing.

PAUL BONGIORNO: OK. Thank you very much for being with us today, Gerry Harvey. And thanks to our
panel, Fran Kelly and Shane Wright. Until next week, goodbye.