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Australian Agenda -

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(generated from captions) Good afternoon. Welcome to

the program I'm David Speers.

The head of the Australian

defence force academy is returning to his duties this

week after a report into the

so-called ADFA sex Skype

affair cleared him of any

Commodore Bruce Kafer was wrongdoing. Commandant

subject to public criticism

from the Defence Minister

Steven a year ago when this

whole issue became public and

Bruce Kafer's decision to put

the young 18 officer, who is

the alleged victim of the sex

Skype affair, to put her in

front of a disciplinary

hearing for another matter

criticism from Stephen Smith all together came under sharp

at the time. He said it was

either irresponsible, insensitive, or completely

stupid. Well, according to the report, which hasn't been

made public today, but its

key findings have been, there

was no error of judgment on

the part of Commodore Kafer.

Stephen Smith is standing by

his criticism's made at the

time, he doesn't resile from

them one iota, but Bruce

Kafer is returning to his

role, defence fears legal

action if they don't put him

back in his old job. Coming

up we will look at the fall-out from this and the many other inquiries that

were launched on the back of

this ADFA sex Skype affair,

into the culture in defence,

we will be talking to the

head of the Australia defence

association, Neal James, he

was particularly critical of

the way the minister Stephen

Smith handled this at the

time. We are also going to

be talking to Finance Minister Penny Wong this afternoon about the national

accounts figures, weaker than

expected economic growth

figures. Will the Government

still be able to get the

budget back into surplus? It certainly has become a lot

more harder on the back of

these figures. And are

'Super Tuesday' the

republican race in the united

States still confused as to

who is going to emerge as the

nominee to take on President

Barack Obama in the contest

for the White House at the

end of this year, 10 States

were up for grabs today.

There has been a pretty even split and one still too close

to call. We will be taking a

good look at that as well, so

all of that coming up, first

we will check in on the other

news headlines this hour.

Thank you. Hello everyone.

The flood focus in NSW is

shifting to the central west

with the town of Forbes now

of particular concern, better

news for Wagga Wagga in the

Riverina district with levies

flood peak. The Prime protecting the city from the

Minister today toured the

region, promising Government support. The Murrumbidgee

River peaking lower than expected, it was good news

for the Wagga Wagga CBD.

Levies held, the city spared,

but north Wagga Wagga which

sits outside the levee banks

wasn't so lucky. The Prime

Minister toured the area,

seeing the devastation

first-hand. Getting to see

it from the air gives you a

really good sense of the

impact and when you see a

house that's got floodwaters

up to eves, then you just

know the damage that's been

done inside that home is

truly devastating. So for

people when they are able to

get back to those homes and

start the clean-up, it is

going to be a very heart

breaking time. She has promised Government support

but how big the damage bill

will be is still anyone's

guess. We are standing ready

to work with the State Government the way our

natural disaster arrangements

work is the State Government

makes requests of us and we

respond to those requests.

We have given a big tick to

every request we have

received so far and we will

keep working with the State

Government. But you can't

count the cost in infrastructure until the

floodwaters subside. The focus now turns to neighbouring communities, but

some good news on that front

too. We took an observation

flight around the area and

found about 300 square

kilometres of water, shallow

water, and we had some

concerns that that may end up

impacting on Griffith and it

seems that that is not the

case now, which is good news.

That water is flowing away

from Griffith and Griffith

was also planned to be, or

proposed to be isolated but that also hasn't occurred. We still have access to the

west. The main concern in

the state is now Forbes in the central west with

authorities on high alert for

nor flooding. We have

concerns continuing for peak

of 10.65 and the town is

currently broken into three

through a street called

Dowling Street and the rural

fire service are moving essential service people, like doctors, nurses and

others, through the town to

make sure that the services

in the town can be

maintained. Turning further

south now in Victoria and nervous residents in the

northern town of Nathalia are

hoping a levee built to

protect 170 homes holds as

broken creek rises to its

peak. The creek is expected

to reach 3.1 to 3.15 m and

that is shortly before

midnight. 17 properties

outside the levee are being

defended with 140,000 sand

bags around 30 Victorian

towns have been hit by flood

water and heavy rain is

forecast in Gibbsland from

tomorrow through to the

weekend. An inquiry into the

Skype sex scandal at the

defence force academy says

there is no basis for legal

action against its Commandant

Commodore Bruce Kafer. An

18-year-old cadet was

secretly filmed having sex at

the defence force academy

last year and the footage,

sent via Skype to a nearby

room where fellow cadets

watched on line. The Commandant Commodore Bruce

Kafer was stood aside while various investigations were

held. A frank and sober

assessment of the past but it

is also a very constructive

and positive way forward. He

was criticised by the

minister for allowing the

female cadet to face a

disciplinary hearing over a

separate minor matter. It's

now being confirmed that 50

of the 55 Australian graves

at the Benghazi War Cemetery

in Libya were damaged in an

attack by rebels last month.

45 of the damaged graves were

marked, the other five were

for unknown Australian

soldiers. All 11 New Zealand

head stones in the cemetery

have also been desecrated. Prime Minister Julia Gillard

says she was disgusted by the

desecrations but reassured

families their loved ones

will not be forgotten. We

will be in contact with the

families of those whose loved

ones lie in those graves and

our War Graves Commission

will be restoring those

graves. We will continue to

ensure, through our pressure

on the interim Government in

Libya, that there is a full

investigation of this matter

and that wrong doers are

brought to justice. Libya

has apologised for the

attacks and local authorities

have detained several

suspects. The republican

race for the White House has

heated up today with 10

States going to the polls to

vote for their man to take on

President Obama in November's

election. Mitt Romney is the

front runner and took out the

States of Massachusetts,

Vermont and Virginia. Tonight, we are doing some

counting, we are counting up

the delegates for the

convention and it looks good

and we are counting down the

days until November and that

looks even better. We are

going to take your vote, a

huge vote tonight in Massachusetts, and take that

victory all the way to the

White House. His close sest

rival, the conservative Rick

Santorum, has galvanised the

religious right wing of

Tennessee and north decoata.

We entup against enormous

odds, not just in the State

of Ohio, but in every State,

there wasn't a single State

in the list that I just gave

you, where I spent more money

than the people I was able to

defeat to win that State. In

every case, we overcame the

odds. Here in Ohio, still

too close to call. Yeah,

the key State of Ohio, as you

heard there, currently too

close to call between Romney

and Santorum. The latest

economic growth figures have

come in weaker than expected.

Australian bureau of

statistics figures show gross

domestic product growth of

2.3% last year, that is slightly less than expected.

Treasurer Wayne Swan

acknowledged the result was

somewhat softer than

anticipated and reflected

patchiness in the economy.

There is no doubt that there

will have to be significant

savings because we still have

an economy which is going to

be growing around trend. I

fear that there will be less

revenue and we will certainly

need to go through another

savings exercise, because as

you know, we have been

exercising very, very considerable expenditure

restraint, as we have

followed our fiscal rules to

come back to surplus in

2012-13. This is going to

make that task harder but we

think we absolutely need to

do it, given the circumstances. Victoria's nurses dispute appears to be

over. There has been a

break-through in negotiations

and nurses have agreed to end

their industrial action. The

bitter dispute has dragged on

for eight months but now an

end is in sight. Nurses and

the hospitals association

have aagreed to conciliation

setting a deadline of Friday

next week to reach an outcome. This is obviously

about ensuring that our

nurses are able to have a significant and fair pay

rise, but at the same time, protecting the arrangements

that are important for the

State. We will remain at that negotiating table until

there is an outcome and there

will be an outcome by the 16

March. No-one will leave

that table until it is

fixed. The dispute has seen

thousands of nurses walk off

the job and rolling four hour

work stoppages at 15

Victorian hospitals. The

action was in defiance of an

order by Fair Work Australia.

Nurses have now agreed to end

their industrial action but

concede they may not have all

of their demands met. It

sort of is a bit on a knife's

edge really in that we

haven't got an agreement as

yet, but I am very confident

that we will get a fair

agreement with the sns of the independent umpire at Fair

Work Australia. Nurses have

been seeking a pay rise of 18.5% over three years and

eight months. The Government

has offered them just 2.5%

each year. But the major

negotiations has been nurse sticking point of these

to patient ratios. Ted

Baillieu just doesn't want to

negotiate the best deal for

tax payers, he wants to

destroy nurse to patient ratios, that is what this fight has always been about.

That is what this fight has

always been about. It's

still unclear if the existing

nurse to patient ratios will

be maintained. Fair Work

Australia will assist in the

negotiations. Quick look at

sport now, Michael Clarke

admits he may have rushed his

recovery and returned too

soon from his hamstring

injury. The Aussie skipper

made 117 but injured his other hamstring in the

process ruling him out of the series decider tomorrow.

Now back to David Speers in

Canberra as PM Agenda

continues. Thank you. After

the break, we will have a

good look at the inquiries,

several inquiries into that

whole ADFA sex Skype affair

last year. Bruce Kafer, the

commandant of the Australian

defence force academy will be

returning to his job this

week. The report inquiry

found no error of judgment on

his part. Is this an

embarrassment for the

minister, well, Stephen Smith

is standing by hit criticism

of Bruce Kafer. We will take

a look at that, as well as

the economic growth figures

out today, weaker than expected, making the

Government's job of getting

the budget back to surplus

that much harder. Stay with us.

PM Agenda. Well Commandant Good afternoon. Welcome to

Commodore Bruce Kafer is the

head of the Australian

defence force academy and he

is about to return to his

post this week, after what

has been a tumultuous year

for him. He was publically

criticised by Defence Minister Stephen Smith last

year for his handling of the

so-called ADFA sex Skype

affair. Not only publically

criticised but stood aside

from his role. Why? Well as

many will remember, an

18-year-old female cadet was secretly filmed having sex

with a male colleague at

ADFA. The footage was sent

via Skype into a nearby room

where some six fellow cadets

were watching. There have

been various inquiries and a police investigation into

this and proceedings are

still before the court's, but what Bruce Kafer did wrong, according to the minister at

the time, was that he then

allowed the 18-year-old female cadet to appear before

a disciplinary hearing over

another matter entirery, a

fairly minor affair involving

alcohol and absenteyism.

Stephen Smith said at the

time this was irresponsible,

or completely stupid. Well,

an inquiry conducted by

Andrew Kirkham was handed to the minister back in December. It still hasn't

been publically released but

its key findings have and

today the most sensational

finding was that Bruce Kafer

in fact showed no error of

judgment at all. The inquiry says it was reasonable for

this 18-year-old cadet to be

placed in front of a disciplinary hearing. It

sits on the fence a bit in

saying that it also would have been reasonable for there not to be a disciplinary hearing at that

time and also points out that

the female cadet was not actually asked if she would prefer the hearing to go

ahead or not. But most

Commandant Commodore Bruce importantly, it finds

Kafer showed no error of

judgment. This is in stark contrast to what the minister

said at the time. Today

Stephen Smith was not

resiling from his criticism.

I don't resile one iota from

anything I did or said at the

time. I believe it is wrong in principle and bad judgment

to advert eventually or

inadvertently put the

character of a potential

victim of a serious alleged

sexual assault into play at the time of the alleged

sexual assault. There is no

commissioned by the previous basis in the report

chief of the defence force

and I supported that at the

time. There is no basis,

legal basis, in the report

for not returning him to his

post. No apology from the

minister and no resiling from

that criticism last year.

Bruce Kafer will return to

his post. The minister

referred to issues or some

fears that there may be legal

action if defence don't

reinstate him. The whole

affair also sparked not just

a media storm but a number of

inquiries into the culture in

defence. They too have been

made public today. They show that there are issues that

need to be tackled as the

defence force chief David

Hurley agreed. There are serious issues that we must

address. The pathway to

change evolving defence

culture we are releasing

today describes the challenge

that defence faces and how we intend to meet that challenge

but make no mistake, we are

committed to tackling our

cultural challenges at their

source. An inquiry was also

established into past claims

of abuse which also sprang up

in the wake of this affair.

It has found that some 775

people have a case to make. The overwhelming majority of

them, a plausible case

according to defence. It has recommended a number of options, including the option

of a national apology to

victims of abuse in defence and also an ongoing formal

legal review to handle further claims and

investigate what needs to

happen in terms of

compensations or apologies down the track. Neal James

from the Australian defence association has been

particularly critical of the

Defence Minister's handling

of this whole affair. He

joins me now. Thanks for

your time. Firstly, are you

surprised by any of the

findings in relation to the

sex Skype affair and Bruce

Kafer in particular? Look,

there is one thing that has

surprised us and that is the

inquiries finding that the

cadet allegedly didn't

receive legal advice on the

separate issue. That is not our understanding of the

incident and we will be

following that up. Well, the

report says that some of the

claims were made in the media

at the time that her room was

covered in -- shaving foam,

that she was subject to

abuse, and that she was asked

to apologise for going to the

media over this, but none of

that was true. However, this cadet was not interviewed in

the course of this inquiry.

Yeah, and it wasn't clear on

why that occurred. I think

most people would have

assumed that would have

happened. It may have been

because she chose not to be interviewed or on legal

advice was advised no the to.

But again, it is not quite

clear why that occurred.

Now, what about the minister?

He is not resiling from his criticism of Bruce Kafer, he remains clearly of the view

that this was an error of

judgment on his part. Well,

Mr Kirkham found it wasn't

but more importantly, the

minister's comments here are

complete straw man defence.

He is now accusing, in effect, Bruce Kafer of

something he didn't accuse

him of last year over an issue that Bruce didn't

actually do, and that is

allegedly taint the

reputation of the young lass

involved, or indeed, there

really weren't too many accusations of that last

year, so the minister's

comments here are evasive

and, really, down right

misrepresentations. So

you're saying what he is

saying now is not what he

said last year? It is not

the excuse that he used when

he defamed Bruce Kafer last

year. You are saying that he

defamed Bruce Kafer. How?

By suggesting that he had

tainted the reputation of the

young cadet. That is what he

is claiming now, but that's

not what he said about Bruce

Kafer last year. So what

should happen now? You think

the minister should have

apologised today? Of course

he should have apologised.

We advised in December that

the sooner he apologise dd

bsher - because we said all

along the sooner the minister

apologised, the better. Minister Smith keeps digging

himself into a hole in this

regard. He really has got to understand, or you people

fail to understand, why this

is occurring. How would you

describe the attitude towards

Stephen Smith in defence as a

result of all of this? Well,

I've had 40 years experience

in the defence force and

twice I've seen the defence

force lose confidence in the

minister. Once was with

Peter reef over the children

over board affair and once

has been in Stephen Smith,

not just over the Kafer

incident, but over a large

number of other things. In a minority Government where the

Prime Minister's attention

has been on other things,

there hasn't been due

attention paid to this

minister's failure in the

portfolio. And it is

actually in the national

interest, quite frankly, for

him to move somewhere else.

So you are saying Stephen

Smith needs to go? We have

said all along it can't keep

going on like this. The

country is slow marching into a constitutional and

institutional crisis and it

has to be stopped and at some stage Stephen Smith will have

to move on. That is pretty

dramatic to say that. Are you saying the relationship

between the minister and

defence is unworkable? I

believe it is unworkable.

The chief of defence force

and the secretary have been

bending over backwards to

make it work. It is not

being reciprocated by this

minister. The constitutional principle is very important.

But it doesn't allow the

minister to act contrary to Westminster conventions or

the defence Act. He has to

act properly and lawfully and

civil control also needs to

be exercisedivally in the

sense of courtesy and politeness and natural

justice and other things. In

the case of Bruce Kafer, the

man was denied natural

justice, the minister then

interfered in a defence force

disciplinary proceeding

contrary to the powers, if he

had been the minister for

Social Security, and he had

interfered in a proceeding of a Social Security appeals tribunal, everyone would be

calling for his head and yet

he just seems to get away

with this all the time. To

be clear, are you saying the whole issue of civilian

control over defence could be

at some risk? There is no

such thing as civilian

control over defence, there

is civil control over the

military, it is exercised by

ministers on behalf of

Parliament and, quite

frankly, this minister

doesn't -- minister doesn't

exercise it properly. What is going to happen if he

stays in the role? Well, it

is going to be quite a

serious problem. Everyone

thought the reshuffle last

week would solve the problem

in a very gentle way in that

he would move somewhere else.

He lobbed to move somewhere

else and it didn't happen.

In a minority Government

situation, I suspect the

Prime Minister has got no

choice but to leave him where

he is but it will be an

increasing problem, because I

can tell you now that all

ranks of the defence force

have no confidence in this

minister, either as minister

or indeed as a man prepared

to respect natural justice

and courtesy. Can I ask you

this quickly about some of the other inquiries that have

been made public today. They

go to the culture in defence,

are you comfortable with some

of the recommendations that

have been made to, well,

firstly the findings about

the problems of the culture

in defence and what to do

about them? Look, broadly speaking, after a very quick review of the documents,

yeah, we are quite happy with

them. We have argued for

many of these things for some

time. Other ones will have

to be done rare carefully.

There is no doubt that there is a problem with drinking in

the defence force. There is

a problem with drinking with young Australians generally

and the problem in the defence force has changed

over time as the attitude to

binge drinking like it has in

Australia over time. That is

not an excuse for it in the

defence force but people need

to keep a little bit of sense

of context here. And the

other ongoing review of past

claims of abuse within

defence, this has found some

775 people have claims to

make, the overwhelming

majority we are told have a

case. The process from here,

a number of options have been

laid out, whether there's a

Royal Commission,

parliamentary inquiry, a

national apology, what do you

think should happen? I think there would have to be some

form of inquiry and we

wouldn't be against the Royal

Commission. Whilst there are

775 plausible complaints,

there needs to be a really

good nail down of how many of

them are serious and indeed

how many involve criminal

offences and even the

minister admitted today there

are no idea. There are good

grounds for a Royal

Commission but while we are

on the subject of inquiries, as the minister himself

admitted today, the Kirkham

inquiry didn't look into his

behaviour but as we said last year, this whole problem will

only be adequately solved if

there is an impartial inquiry

into the behaviour of the

minister into this whole saga

and that probably needs to

happen now too. Thank you.

After the break, 'Super

Tuesday' the race for the

republican nomination in the

United States, we will have a

look at the fall-out.

You're watching PM Agenda.

Time to check in on the news

headlines. The flood

situation in NSW remains a

concern this afternoon with

the focus now turning to the

central west town of Forbes .

Levees protect the Riverina

city of Wagga Wagga held the

rising floodwaters from the

Murrumbidgee River at bay and

some residents have been

allowed to return home.

Prime Minister Julia Gillard

today visited Wagga Wagga and

pledged Government support

for the city. Meanwhile in

Victoria, all residents in

the town of Nathalia have

been told to leave their

homes as floodwaters threaten

to cut off the town. The

Weather Bureau has predicted

the creek there will peak

between 3.1 and 3.15 m late

tonight or early tomorrow. 17 properties outside the

levee are being defended with

140,000 sand bags around 30

Victorian towns have been hit

by flood water and heavy rain

is forecast in Gippsland from

tomorrow through to the

weekend. The Defence

Minister Stephen Smith has

announced the results of the

inquiry into the ADFA Skype

affair. It found the female

cadet was not abused by

fellow cadets and was offered

counselling. The inquiry

also found there was no legal

basis for action against

Commodore Kafer who was stood

aside while various investigations were carried

out. He was also criticised

by the Defence Minister for

allowing the female cadet to

face a disciplinary hearing

over a separate minor matter. The republican race for the

White House has heated up

today with 10 States going to

the polls to vote for their

man to take on President

Obama in November's election.

Mitt Romney is the front

runner and took out the

States of Massachusetts,

Vermont and Virginia. His

closest rival, the

conservative Rick Santorum,

has galvanised the religious

right wing and while the

States of Oklahoma, Tennessee

and north dac Katy. The

State of Ohio is currently

too close to call between

Romney and Santorum. The

latest economic growth

figures have come in weaker

than expected. Australian

Bureau of Statistics figures

show gross domestic product

growth of 2.3% last year,

that was slightly less than

expected. Treasurer Wayne Swan acknowledged the result

was somewhat softer than

anticipated and reflected

patchiness in the economy.

In the final quarter of the

year, the economy expanded

0.4%. Economists had

predicted a much stronger

showing. In sport, Michael Clarke has admitted he may

have rushed his recovery and

returned too soon from his

hamstring injury. The Aussie

skipper made 117 but injured

his other hamstring in the

process. Placing him in

doubt for by the tri-series

decider and the tour of the

West Indies, Sri Lanka pulled

off another incredible run

chase reaching the target of

272 with 8 wickets in hand. Tomorrow's forecast:

Thank you. Well, if

today's primary contest in 10 States in the United States

was supposed to help the

republicans clear up who is

going to be their nominee to

battle it out with President

Barack Obama for the White

House, well, 'Super Tuesday'

wasn't really all that super.

It has resulted in more

confusion about who is going

to be the candidate, who the

front runner is, the latest

results show a pretty mixed

bag. Mitt Romney, who is

normally the front runner in

this, has won four of the

States up for grabs, he is

currently ahead in two others

but the big one, Ohio, he is

only ahead by a whisker.

Meanwhile, Rick Santorum has

won three States, Newt

Gingrich just the one. Geoff, thanks for your time.

Let's first just take a look

at what the various

contenders have had to say

today and see what we can

read into this what their

thinking is. The three

contenders being Mitt Romney,

Rick Santorum and Newt

Gingrich. Take a look. Tonight we are doing

some counting, we are

counting up the delegates for

the convention and it looks

good and we are counting down

the days until November and

that looks even better. We

are going to take your vote,

a huge vote tonight in Massachusetts, and take that

victory all the way to the

White House. This was a big

night tonight. Lots of

States. We are going to win

a few, we are going to lose a

few. But as it looks right

now, we are going to get at

least a couple of gold medals

and a whole pass full of

silver medals. This is

amazing. I hope the analysts

in Washington and New York,

who spent June and July

explaining our campaign was

dead, will watch this tonight

and learn a little bit from

this crowd. And from this

place. All three being as

upbeat as they possibly can

be. We have just got news

through while that waying

that the US net works are now

calling Ohio for Mitt Romney

but he has only won it by a

bhisker. What is the take

out from you from this 'Super

Tuesday' round of contests?

Well, I think Mitt Romney

remains the only person out

of this field who can be

nominated by the republican

party, but he is not going to

get very much momentum out of

today at all. It is not like

he is going to be sprinting

to the finish line. We are

going to have a long race and

Mitt Romney is going to keep

limping along and his problem

is he just can't convince the

republican base that he is

their guy. Rick Santorum is

doing well on a shoe string.

He does very well among poor

republicans, sort of the

white working class. Mitt

Romney can't get those votes,

that is what we know. Now,

where should Mitt Romney have

done better today? Is it just that white working class

that you talk about, is it

the fact that he is seen as the Richie rich candidate

here, where is he failing? I

think if you look at him as a

candidate, he has probably got three significant liabilities and they just

aren't going away. The first

one is that he looks like

plastic mit, he is an inauthentic guy that doesn't

connect with voters so, that

probably holds for everybody.

Second, he did Romney care,

healthcare reforms in

Massachusetts, so how can he

attack Obama care, that make

it's pretty hard for the

republican right to like him.

And third, you called him

Richie rich, I call him the

1% of the 1%, Occupy Wall

Street is mad as hell at the

top 1% of the US. Well, Mitt

Romney is in the top 1% of

the top 1%. So it is pretty

hard for him to sort of

deflect the criticism that he

is part of the problem, not

the solution when it comes to

the US economy. In terms of

regions today, I think the

most important thing was that

he couldn't get traction in Tennessee, a big southern

State. If this was going to

be a ground swell, finally to

say that Mitt is our guy, you

would have expected him to win Tennessee, but Rick

Santorum looks like he won

Tennessee pretty easily.

Yeah, now Rick Santorum is

still in the race. What

about Newt Gingrich here? He

won the one State but can he

really afford to keep going?

Well, he can - Newt Gingrich

can afford to keep going because his single big

backer, you know, a Las Vegas

casino maggate, as long as

that person is willing to put

another $5 million in his

pocket, he can continue to

campaign but Gingrich won his

home State of Georgia, if he

was going to have traction, particularly in the south

which is what he said, he

would have expected to do

very well in Tennessee and he

didn't. So I think Gingrich

stays in the campaign, mostly

for nuisance value but only

because he has got a single

big rich backer, the super

packs that we have been

hearing a lot about. It is

Santorum not only doesn't down to Santorum, Romney.

have much money, it is very

hard to see how just

arithmetically he could get

enough delegates to be in

front by the convention. So

absent a new candidate,

absent a broken convention,

Mitt Romney is going to be

the nominee but there is just

not a lot of excitement and momentum surrounding him at

the moment in an environment

in which the US economy is

doing better, sure, there are

still massive problems, and

economy Barack Obama's with the improvement in the

opinion poll ratings are

going up again. I just don't

think today is going to look

like a very good day for the

republicans when all is said

and done. President Obama is looking pretty relaxed. He

was asked about the

republican contest today, early today. Have a look at

what he had to say. Mitt

Romney has criticised you on

Iran and said hope is not a

foreign policy. He also said

tactless President since that you are America's most

Carter. What would you like

to say to Mr Romney? Good

luck tonight. No, really?

Really. Bottom line, he

must be loving watching the republicans tear each other

apart and also looking at the

quality of the candidates and

the fact that Mitt Romney is

the likely can tender that he

will face. He is going to

have a plethora of ammunition

to run against him now.

Absolutely. Obama has that

thing where he cracks a joke

and then slowly the smile

comes over his face.

Sometimes that might be

manufactured. Today I think

it was probably real. But

however there is a concern

for Obama and the concern

probably is in the foreign

policy field, you know, if

something that he is trying

to manage down happened,

which is something like an

Israeli air strike in Iran,

all bets are off. It would

drive up petrol prices in the

US and middle America

wouldn't like that. No

surprise that there are

references to Iran and Jimmy

Carter. Jimmy Carter lost in

1980 to Ronald Reagan amid a

deep America recession, when

he looked like a weak President against aran. Mitt

Romney might hope that that

is the script that will get

him into the White House but

I don't think anyone is

confusing Mitt Romney with

Ronald Reagan at the moment.

So, what is going to happen

from here? What are the next

big primaries to look out

for? And can Mitt Romney

really seal this thing before

the convention itself? Well,

I don't think you should be looking at States at the

moment. What the republicans

did was decide that

essentially all their

contests until April should

be some form of proportional

representation, so no winner

takes all in the States, so

no knock-out punch, no

surprise to me that the first

thing Mitt Romney said in

that grab you had from his

victory speech in

Massachusetts, was delegates.

He is in front in delegates,

he has got the organisation

to keep accumulating

delegates. It is just not -

there is no land slide out

there. It is pretty hard to

see that. I don't know what

the image is. Is he limping

to the finish line, is every week like pulling teeth for

him, I don't know. It is not

a smooth process for Romney

and I think at this point,

the republicans need it to be

a smoother process because at

the moment, the attention is

on them and it is not

positive. Is it fair to say,

I mean, everyone always says

money is what talks in US

politics today and the fact that Mitt Romney's loaded

would suggest that he would

be able to blow the others

out of the water, but there is clearly another issue

here, the dislike for Mitt

Romney amongst republicans,

the less cashed up candidates

are still hanging in there?

Yeah, Santorum is literally

running on the smell of an

oilily rag but he continues

to be able to do that because

he does, you know, he doesn't

have the money but he has the

commitment of the

conservative base. Now, that

is also interesting because

it is not like Rick Santorum

was the original candidate of

the conservative base. The

conservatives are still

running an ABM strategy.

Anybody but Mitt and Rick

Santorum is the last one

standing. You know, Santorum

has got millions of wartses

on his body as well. The

fact that he can do well in

this environment, with no

money, with being way out of

the mainstream on birth

control, looking now like he

is a Washington insider, not

an outsider, which he is, he was in the Senate for two

terms, the fact that he is

doing well and doing well

among the base just tells you

how much the republican base

cannot bring itself to rally

behind Mitt Romney. Really

good to talk to you for your

analysis on 'Super Tuesday'.

Thanks so much for that. My

pleasure. After the break,

we will look at the economy,

the latest figures were released today for the dooeds

quarter, they are weaker than expected, making the

Government's job to get back

into surplus that much

harder. We will be talking

to the Finance Minister Penny Wong.

Welcome back. As we saw

yesterday, the Reserve Bank

kept interest rates on hold,

expressing confidence in the

way the economy is travelling

at the moment. But today,

the economic growth figures

for the final three months of

last year, the December quarter were released and

they are weaker than expected. They show the

growth on a quarterly basis

fell to 0.4%, that is down

from 1% in the previous quarter annually the growth

rate now at 2.3%. Still, the Government remains committed

to getting the budget back

into surplus, even though it

acknowledges it has now

become even harder. The

budget will be returned to

surplus in 2012-13 as

promised. As a Government,

always made the decisions necessary, some of the very

tough ones, but the decisions

necessary to find the resources to support communities in need and we

will keep taking that

approach. Well, it is going

to be, Wayne Swan says,

probably his hardest budget

that he hands down in May as

a result of all of this.

Here he was today. This is

my fifth budget. You throw

in a couple of major economic

statements and four we have

done a few, I think in some

ways it is going to be the

hardest of them all. So, how

much harder is this now going

to be and where can we expect

further cuts if they do

happen to fall? I spoke a

little earlier to the Finance

Minister Penny Wong. Thank

you for your time. The

growth figures today are softer than many expected. How will this affect your

plans to get back into

surplus? Well, yes, you're

right, the growth figures are

softer than some expected. Obviously there are some good

signs that continue, in terms

of these national accounts,

and certainly if you compare

us to all other major

advanced economies we are

doing extremely strong. But

it does make - this does make

it more difficult. What

concerns you most in the set

of figures? Look, I'm a Finance Minister, lots have

things concern me, but the

reality is we have seen many

revenue right downs since the

GFC, 140 billion over five

years and some 20 billion

between budget and MIEFO, the

midyear review. So obviously that history is - has been

something that we have had to

deal with. And that is continuing. So if you do want to get back into surplus, you will have to

make further spending cuts,

aren't you? Well, it is too

early to tell. We are seeing some revenue weakness but it

is too early to tell.

Leaving that aside in terms

of speculation, as the Treasurer said, you always

have to make savings. We

have had to make savings not

just offset new spending but

also to reflect what's

happened to revenue in the

last couple of rounds and we

will continue to have to do that into the future. Some

of the cuts that you have

made are really putting means

tests on various hand-outs,

like the childcare rebate,

the baby bonus, you are

trying to do it on the health

care rebate as well. Are there more means tests to

come? Is this the sort of

pattern we can expect? This

is budget speculation. I

think it is budget

speculation. Look, we don't

resile at all from the

changes that you have spoken

about. It is our job as the

government to make sure the

systems are susstaysable. It

is our job to make sure that

whatever savings we make are

as fair as they can be and

that is what we have done.

Is there a point at which

revenues, if there is a

continued deterioration in

revenues, this whole thing of

getting back into surplus actually will hurt the

economy? Is there a point at

which you have to say look,

you know, it might be better

to stay in deficit? Look,

first I'm not going to

speculate on what's going to

happen to revenues, we have had the discussion about

that. But more importantly,

let's remember why we are

returning to surplus. We are

returning to surplus because

treasury still continues, and

it is consistent with other forecasts, that the economy

will grow at trend, at a time

when that is occurring, you

want to return the budget to surplus. The second point to

make, and it is a very

important one, that you need

to be clear that you are serious about fiscal responsibility at this time.

We see in Europe every day

the consequences of Governments not doing what they said they were going to

do when it comes to their

budgets. We are serious about making sure we are

responsible, it is in the interests of the country that

we are. It is responsible to

get back into surplus when

the economy is growing at

trend. Is it growing at trend based on these

figures? Well, you know, we

had a stronger result, the

quarter prior to this, this

is obviously, as you said,

softer than some expected.

You did see growth in exports

and some modest growth in

consumption but they are good

signs and through the year, you see business investment

very - growing very strongly.

These are good signs but this

is a hypothetical. We make

judgments on the best advice

an we make judgments about

what is the best economic

decision for the country.

How do we keep the country

strong? And we believe it

will be bringing the budget

back to surplus. There is

nothing in these figures that

means it shouldn't happen?

Look, we anticipated, and you

might recall, there was some

revision in the forecasts at

the midyear review, we

anticipated you would see

some of the global head winds

impacting on the Australian

economy but, you know, we

still have the forecasts that

we have outlined and they

mean a return to surplus is appropriate. I'm not going

to get into speculation about

where the economy, you know, what might or might not

happen. My job is to look at

what is the forecast, what is

the best decision for the

country. What impact are the

floods going to have on the

budget? Too early to tell on

that, sorry to say that

again, but it is true. I

think one of the better

things in these figures is we

see the coal production, the

export out of Queensland is

returning. That has taken longer than anticipated. Certainly in terms of the

current floods, our first

thoughts are with the

communities who are affect

and obviously the

Government's assisting with

emergency relief... There is a difference to the

Queensland floods, as you

say, it is not shutting down

coal mines, it is not wiping

out whole towns or bridges in

a lot of infrastructure at

the moment at least. Well,

all I know is that we have -

there have been some significant flooding events

and obviously there are

communities affected, we do

know that the floods in

Queensland last year were

very significant. They had a

greater national economic

impact. That's true. The opposition today, Joe Hockey,

has said that the Coalition will definitely deliver a

surplus in their first year.

That's today's line, is it?

That is what he has said

today based on today's

figures, they will deliver a

surplus in their first year

and that they will do this by

cutting waste in the budget.

Do you say that there isn't

waste to be cut in the

budget? What I would say is

this. What Joe Hockey

outlined today wasn't a plan,

it was a grab at the slogans,

more of the same. He says'

wants a budget surplus but he

has got a $70 billion black

hole. He says he wasn't tax

cuts but he can't find them,

they are not deliverable.

The reality is no-one will

take Joe seriously until he actually puts forward

costings that add up, he

hasn't done that yet. He has

to, surely, the Coalition

have to wait until closer to

the election to work out

where the numbers are going

to be. We have seen the

figures move around this

year. This is what they say.

This is what they say. But

the reality is you have got

to look ahead and you have

got to say well how do we

fund this? What Joe Hockey

is doing is saying I'm going

to oppose the mining tax,

oppose this source of

revenue, I'm going to

privilege the wealthy miners... At least they doubt

the figures. No no, that is

not reasonable. He is saying

he is going to oppose the

revenue source, for whatever

reason, because my priorities

are what they are, but I'm

going to continue to fund the superannuation component,

don't know how I will fund

that, he says I'm going to

fund tax cuts, don't know how

I will fund that. Nothing

adds up and the reality is

this is not deliverable. I think they are starting to

realise it and I think that

is why you are seeing Andrew

Robb coming out and occasionally telling people

what he really thinks and saying well our policies

aren't finalised because he

knows, he can't fund

everything that Tony Abbott

has promised. Thank you.

Good to be with you. Talking

to us early yerl earlier. There will be more economic

data through the course of

this year -- week, including jobs figures. So a bit more

to come in terms of working

out where things are at with

the economy. We are out of

time for today's show. Do

stay with us after the break,

the very latest Sky News including more on the ADFA sex Skype affair, the fall

out from that as we have seen

this hour, Defence Minister

Stephen Smith standing by his

handling of this last year,

but now coming under criticism from the Australian

defence association. We will

have a bit more on that. Stay with us.

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