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Govt describes Budget as economically responsible

ELEANOR HALL: As the senior figures in the Federal Government go from one radio or television
studio to the next in an effort to sell Labor's first Budget in 13 years, the assessments are
flooding in. The Budget is tough, it's not tough enough, it does what it promised, it doesn't meet
expectations.

The Opposition has accused the Government of not delivering the inflation-fighting budget it
promised and some economists are certainly questioning whether the multi- billion dollar spending
cuts and tax hikes are enough to subdue inflation.

The Opposition is also raising questions about the move to target the well off for Budget pain.

But the Treasurer says it is a Budget which delivers for working families and is economically
responsible.

Chief political correspondent, Lyndal Curtis, has spent the morning soaking up the sales pitches
and she compiled this report.

LYNDAL CURTIS: If you based Australia's productivity solely on its leader's movements on the day
after the Budget you would have to say, the country is doing well.

PRESENTER: The Prime Minister is in our Canberra studio and talking to him is ABC's political
editor, Chris Uhlmann.

CHRIS UHLMANN: Prime Minister good morning.

KEVIN RUDD: Good morning Chris.

PRESENTER 2: Malcolm Turnbull good morning.

MALCOM TURNBULL: Good morning Sheryl.

KARL STEFANOVIC: The Treasurer joins us now, good morning to you Treasurer.

WAYNE SWAN: Good morning Karl.

CHRIS UHLMANN: Brendan Nelson, good morning.

BRENDAN NELSON: Good morning Chris.

PRESENTER 3: Treasurer good morning

WAYNE SWAN: Good morning Sheryl.

PRESENTER 4: Kevin Rudd good morning and thanks for your time

DAVID KOCH: Prime Minister Kevin Rudd, joins me this morning. Prime Minister welcome.

KEVIN RUDD: Good morning Kochie, good to see you've got a coat on.

LYNDAL CURTIS: In the cool light of the day after the Treasurer bought down Labor's first Budget
since 1995, the Government is defending itself against claims it didn't do enough to cut spending
and rein in inflation.

There were spending cuts and tax rises, more than paying for the election promises. But the Shadow
Treasurer Malcolm Turnbull says it's not nearly enough to prevent more interest rate rises.

MALCOLM TURNBULL: If any more rate rises from now on, Wayne Swan owns. He started off the year
saying that the Reserve Bank, the inflation genie is out of the bottle, it's out of control. He was
effectively egging them to put up rates.

He then spent the next four months saying to everybody - and the Reserve Bank would have been
listening very carefully - that he was going to make massive cuts in spending to put downward
pressure on inflation.

No doubt the Reserve Bank like me took him at his word, thought that's what his going to do. I
thought he would go too far, I was a bit concerned about it. In fact, he has gone in the other
direction, so the Reserve Bank looking at this Budget will be very puzzled.

LYNDAL CURTIS: Brendan Nelson says it's a Budget without a plan.

BRENDAN NELSON: This is a Labor Government that is proposing to increase the spending of your money
by $34-billion over five years, savings of $16-billion, jack up your taxes by $19-billion and then
seek to tell you that in some way their going to make life easier for you.

LYNDAL CURTIS: The Government may have overplayed the expectations game, warning before the Budget
of significant spending cuts, led people to expect real pain.

What there is confined to those on higher incomes and the Treasurer says it's a mild fiscal
tightening, to do more would have risked a hard landing. The Prime Minister and the Treasurer
believe they've done enough.

KEVIN RUDD: I pose you the question when was there a last significant savings measure proposed by
the previous government? There was none, including the time when inflationary pressures were
building. We've actually turned the corner on this; we've said that this is a responsible way
forward.

WAYNE SWAN: Well we've done everything we possibly can in this Budget to strike the right balance.
We have inflation on one hand and a very uncertain international environment on the other.

LYNDAL CURTIS: The Government has been hammered on both ends of the income scale, dealing with
complaints that overlooked the worst off, not doing enough for pensioners and carers.

WAYNE SWAN: This is a tough Budget, but it's fair.

PRESENTER 5: Why take it out on the pensioners?

WAYNE SWAN: Well we haven't taken it out the pensioners.

PRESENTER 5: Do you think $10 a week is enough then Treasurer?

WAYNE SWAN: No I don't think it's enough, but it's all we could afford.

LYNDAL CURTIS: At the upper end it's been defending its broken election promise on means testing
family tax benefit part B at $150,000 of income rather then the $250,000 promised in the campaign.

KEVIN RUDD: We have looked overall at our welfare system of reform, we believe that 150 is a better
threshold across the system of payments and we believe therefore that's the right way to go.

LYNDAL CURTIS: The Opposition is having its own troubles with the newly minted rate at which some
government payments cut out.

Malcolm Turnbull last night believed the $150,000 figure would be seen as reasonable.

PRESENTER 6: Do you agree then with the principle that 150-thousand dollars is enough not to need
Government handouts?

MALCOM TURNBULL: Well I think a lot of families would disagree with that, it depends on their
overheads. But certainly $150,000 is well above average weekly earnings and it is a means test
figure that I think many people would think is reasonable

LYNDAL CURTIS: But Brendan Nelson is not so sure, and this morning refused to say if it was
reasonable.

BRENDAN NELSON: We are having a serious look at the detail of some of the things because we found
with Mr Rudd and Mr Swan, they'll assert something and then you actually have a look at the detail,
and it's a little bit different. But as far as we're concerned, we will have a look at the
thresholds being applied.

LYNDAL CURTIS: There are challenges in this Budget for both sides of politics.

ELEANOR HALL: Lyndal Curtis with that report.

Opposition parties criticise Budget

ELEANOR HALL: As they arrived at Parliament House in Canberra this morning, members and Senators
from the Opposition parties lined up to condemn the Rudd Government's first Budget.

They accused the Government of creating two classes of babies with its means testing of the baby
bonus and of completely ignoring rural Australia.

And the Greens have condemned the climate change measures as a complete "flop".

In Canberra, Samantha Hawley reports.

JAMES BIDGOOD: Good morning everybody. This is a good news day for working people and the working
families of Australia, I'm proud to be a part of the Rudd Labor government.

SAMANTHA HAWLEY: A predictable response from a Labor MP, but as the only Government member to talk
to waiting media on the way into Parliament House this morning, James Bidgood was out on his own.

PARLIAMENTARIAN: Well it's a little bit of a nothing Budget really.

PARLIAMENTARIAN 2: It doesn't do much for my constituency.

PARLIAMENTARIAN 3: It's a typical Labor budget, higher taxes likely to cause high inflation,
there's nothing in it for the bush.

PARLIAMENTARIAN 4: I don't see anything in the Budget that does anything about fuel prices, about
the costs of groceries.

SAMANTHA HAWLEY: The MPs and Senators from the opposition parties were damning. The abolition of
the baby bonus for families earning above $150,000 from January next year was a key concern.

The Liberal MP Don Randall says voters in his electorate in Western Australia aren't happy.

DON RANDALL: Two senior schoolteachers in my state would probably earn that amount of money so
they're going to lose a lot of their entitlements.

SAMANTHA HAWLEY: His Western Australian Liberal colleague, Wilson Tuckey, says the plan to pay the
baby bonus in fortnightly instalments from next year instead of in a lump sum payment, is
offensive.

WILSON TUCKEY: They're also, as of the first of January, going to treat every mother as an idiot.
You know just work out the safety seat that you've got to put in your car and the second one when
you have a second child, and all of those costs need to be met on the day of the birth of the baby.
I mean you can't wait six weeks to buy the baby seat.

SAMANTHA HAWLEY: MPs representing rural areas including Coalition frontbencher, Sharman Stone, also
arrived disappointed.

SHARMAN STONE: When it comes to rural Australia, we've got about a billion dollars gone. And I have
to say that it is such a city-centric Budget.

SAMANTHA HAWLEY: The Budget does scrap Regional Partnership programs saving the government more
than $200-million on initiatives it claims were rorted by the previous government.

Nationals MP Paul Neville says that vital projects in his Queensland electorate of Hinkler will now
be dumped.

PAUL NEVILLE: 116 of the projects under Regional Partnerships, and I have two very important ones
in my electorate are being wiped. And that sort of blind ... that's inane to do things like that.

SAMANTHA HAWLEY: Mr Neville's Nationals colleague, Bruce Scott, is also concerned about the lack of
measures for the bush.

BRUCE SCOTT: It's really going to hit working families out in the bush, it's going to push up the
price of groceries and it's going to do nothing about addressing the issue of the petrol price
hikes that we've seen out in rural Australia.

SAMANTHA HAWLEY: And nothing to help combat climate change according to the Greens leader, Paul
Neville .

BOB BROWN: Australia has again got a government which simply does not understand climate change.
Where is Peter Garrett? Where is Penny Wong?

SAMANTHA HAWLEY: The Budget does include a billion dollar fund to help make Australian homes more
energy and water efficient. The money will help pay for low interest rates loans of up to $10,000
to help families invest in things like solar hot water and electricity.

Not enough, says Greens Senator Christine Milne who also thinks the $31-billion in tax cuts are
unfair.

CHRISTINE MILNE: As long as you preceded with those tax cuts the rich in Australia have got even
richer.

If you're on $300,000 in Australia you get 91 dollars a week in tax relief. If you're on $30,000
then you get $11. So c'mon you get $11 in one hand, you fill up the car with petrol and it's all
gone plus more out of you're wallet.

ELEANOR HALL: And that's the Greens Senator Christine Milne, ending Samantha Hawley's report.

Stephen Long analyses the Federal Budget

ELEANOR HALL: Now for a closer look at the economics of the Budget I am joined in the studio by our
economics correspondent, Stephen Long, who is just off the plane from Canberra.

So Stephen, given the economic changes facing the Government, is this a responsible Budget?

STEPHEN LONG: Well in a sense Eleanor it really depends on what happens in the economy in a very,
very uncertain environment.

But let's look at the criteria that was set up for this Budget. The inflation fighting Budget, well
on that criteria it hasn't really lived up to the hype. At best, it's neutral in terms of
inflation.

It won't do a lot to diminish inflation pressures in the economy. It has cut back the pace of
growth in Government spending which was running at four per cent per annum.

We're looking at just 1.1 per cent in real terms, in the coming years but it hasn't cut Government
spending and it really won't do a lot to alleviate those inflation pressures which may well
increase more than projected.

ELEANOR HALL: Well this was billed as the "Robin Hood" Budget, stealing from the rich to give to
the poor. Did it end up being a fair description?

STEPHEN LONG: Eleanor if this is the Robin Hood Budget then the Treasurer Wayne Swan is not a very
good thief. Basically, you look at the measures that are put in place to redistribute and put a
slug on those at the top end and there pretty minor. And they're very much contained.

The main cuts are for people on incomes of $150,000 a year or more who are now being means tested
for benefits such as family tax benefit part B, the baby bonus and the like. Well there's only
three per cent of employers in Australia who earn $150,000 a year or more. Middle income in
Australia is $40,000. 75 per cent of income earners get less than $75,000 a year.

So if you were going to attack middle-class welfare, you'd think if you were serious about it you
might looking a little further down the pile than $150,000. There are some interesting measures,
one that I've dubbed as the "Macquarie Bank cafeteria clause", where they're stopping people salary
sacrificing food and coffee that they buy in-house at canteens and George Gregan cafes famously at
Macquarie Bank.

But really the measures are pretty small and it won't please those who think that we saw a huge run
up of middle-class welfare under the previous government that needs to be pared back.

ELEANOR HALL: What else could have been targeted?

STEPHEN LONG: Well superannuation is a controversial area but that's really the big ticket item.
Brian Toohey made the point last night that spending on tax concessions for superannuation are now
bigger than spending on the age pension and superannuation benefits the well-to-do most.

The childcare rebate which has been increased from 30 per cent to 50 per cent in the Budget,
disproportionately benefits the well-off because they get a better tax write-off from it.

So there's a whole lot of areas where really this is still skewed towards the well-to-do, even
though Labor was at great pains to insulate the less well-off from the cuts in the budget, the cuts
to spending and to skew the tax cuts in their favour this time around.

ELEANOR HALL: To what extent was the Government hobbled by its election promises and particularly
on that $30-billion tax cuts?

STEPHEN LONG: Very much so and that's shown when you look at the way they've had to do weird stuff
basically to get the revenue savings and increase revenue. So you go through Budget paper number
two and there's 134 new savings measures, and they've had to slice and dice, nip and tuck to find
little things.

And there are doubts about to what extent some of those things will actually meet the revenue
forecasts that are being put forward by Treasury.

ELEANOR HALL: How credible are the Budget forecasts about inflation, unemployment and growth?

STEPHEN LONG: Well forecasting is always a dangerous game, I think you've heard me before quote
John Kenneth Galbraith that the purpose of economic forecasting is to make astrology look
respectable.

In this case, they're particularly rubbery because the economic outlook is so uncertain. If
inflation goes up more than expected, the Reserve Bank will crunch with higher rates and there will
be more unemployment and slower growth. If the world economy is weaker then expected we will have
more unemployment and slower growth and the inflation forecast from Treasury are a bit more rosy
then those from the Reserve Bank.

ELEANOR HALL: Stephen Long, our economics correspondent, thank you.

Govt announces $41-billion infrastructure fund in Budget

ELEANOR HALL: Construction and mining, education and health were big winners in last night's
Budget, with the Government announcing a $41-billion dollar infrastructure fund to go to these
areas.

The Building Australia Fund will receive a boost of $20-billion over two years, education will get
$11-billion and health will receive 10-billion dollars.

There's been criticism about the lack of detail in the massive fund, but most sectors have welcomed
the additional spending.

Brigid Glanville has our report.

BRIGID GLANVILLE: The image of massive coal ships queuing along the New South Wales coast for days
as they wait to load at the port of Newcastle, is an image the Government wants to erase.

Improving infrastructure to get the coal onto ships quickly is one of the reasons the Government
has given $41-billion towards infrastructure. It's giving half of it to a fund designed especially
to improve these supply constraints in the building and mining industries, and boost Australia's
economy.

It's now up to the Government-appointed group Infrastructure Australia, to work out exactly where
$21-billion will be spent.

Infrastructure Partnerships Australia is the nation's peak industry body. Spokesman, Brendan Lyon,
says it's obvious where that money needs to go.

BRENDAN LYON: But we would expect that things like ports and rail freight, and road freight will be
right up the top there, as well as measures to ease congestion in cities like Brisbane, Sydney and
Melbourne.

BRIGID GLANVILLE: How bad are those supply constraints?

BRENDAN LYON: It's a great inefficiency and burden on the economy when you can't efficiently get
your goods to market and get your goods to the ports. I mean, it's no secret that we face great
challenges, in particularly since the freight task is set to double over the next 20 years.

BRIGID GLANVILLE: The mining industry has welcomed the money that will be spent on roads, rails and
ports. But the industry says it's most excited about money in the education fund.

Brendan Pearson, the acting chief executive from the Minerals Council of Australia, says the skills
shortage is critical.

BRENDAN PEARSON: Well we know that we need an extra 70,000 workers by 2015. We also know that in
the last five years we've employed an extra 55,000, but during that period our vacancy rate has
quadrupled.

So we know that we need more skilled and semi-skilled trades people and we need more managers. That
means ... so it's very welcome to have an extra 630,000 places in the training and vocational
education sector. It's very important that there's an expansion of skilled migration to take up
some of the acute shortages that we've got.

BRIGID GLANVILLE: Of the massive infrastructure fund, $11-billion has been put aside to go towards
education. This includes money for universities, schools and vocational training.

Glenn Withers, the chief executive of Universities Australia, says the money is desperately needed.

GLENN WITHERS: Research laboratories, to the teaching rooms, to student facilities, to libraries,
to our computing labs, student study spaces.

All of those things we've been in some ways not able to keep up with all the maintenance and all
the new investment we should be able to, and that's a bi-partisan comment actually, the decline
began with Paul Keating and continued with under the Coalition.

BRIGID GLANVILLE: The health sector will receive the rest of the money. $10-billion to go towards a
range of health services including building hospitals, breast cancer research, and dental services.

Dr Tony Hobbs is the chairman of the Australian General Practice Network. He says the Budget has
missed the mark.

TONY HOBBS: We certainly know that hospital infrastructure has been allowed to run down over the
last decade or so. However, we would also want to see some of that money invested very wisely in
primary healthcare infrastructure.

Economic modelling throughout Australia and throughout the OECD (Organisation for Economic
Cooperation and Development) countries shows that a well invested, well resourced primary health
care sector allowing people to access timely, affordable healthcare in their own communities
actually keeps people healthy, keeps them out of hospital and also drives cost efficiencies for the
Government over a period of time.

BRIGID GLANVILLE: As big as the $41-billion fund sounds, it's unlikely to put an end to bickering
between the states and the Federal Government. The mining industry says it's this problematic
relationship that's prevented vital infrastructure being built in the past.

This morning, New South Wales Premier Morris Iemma praised the Budget and money that's being spent
on infrastructure.

MORRIS IEMMA: This doesn't stop us saying that we're fighting for our fair share for the people of
New South Wales, whether it's health, education, whether it's infrastructure in transport.

What you have with last night's Budget is recognition that the Commonwealth has a role in building
infrastructure, in funding infrastructure, in nation building.

ELEANOR HALL: That's the New South Wales Premier Morris Iemma ending Brigid Glanville's report.

Panel debates Rudd Govt first Budget

ELEANOR HALL: Joining me now to debate this first Rudd-Swan Budget are Saul Eslake, chief economist
at the ANZ and former treasury staffer. And Bill Mitchell, professor of economics and director of
the Centre of Full Employment and Equity at the University of Newcastle.

Saul Eslake first to you, Wayne Swan says this is an inflation fighting budget, is it?

SAUL ESLAKE: I wouldn't necessarily say that it's an inflation fighting budget, unlike the last few
budgets of the Howard government, it doesn't put significant upward pressure on inflation by
boosting demand in circumstances where capacity is limited.

It does do a little bit to tighten policy by saving more than it spends and by allowing revenue
windfalls be added to the surplus rather then being used to cut taxes or increase spending. But in
a $1.2-trillion economy the $1.9-billion dollars of discretionary policy savings is too small to
exert any independent downward pressure on inflation and interest rates.

ELEANOR HALL: So you don't think it tough enough?

SAUL ESLAKE: I think it's an appropriate balance given the way treasury has been reading the
conflicting cross currents that will buffet the Australian economy this year.

The Treasury and the Government must have been more concerned then I would have been the risks to
the economy of cutting spending more aggressively then they actually have and there was certainly
scope for more wide-ranging expenditure cuts given the extraordinary increase in expenditure over
the last few years.

And so in that sense I think they could have more but they obviously felt that there were downside
risks to the economy that they couldn't completely ignore.

ELEANOR HALL: Bill Mitchell, has the government missed an opportunity here to deliver a much
tougher budget?

BILL MITCHELL: Well I think the budget is to tough in actual fact, so I go against the stream here,
I think that there are a lot of areas in the budget that have remained within the budget that
should have been cut.

Things like the job network, the bias... the federal bias to private school funding, private health
insurance, Work for the Dole, those sort of areas that have done nothing to develop capacities and
productivity, but on the other side I think a lot more money should have gone into helping
struggling low income earners who are feeling the strain of higher personal debt, high household
debt, rising interest rates and rising petrol prices and other sorts of prices.

ELEANOR HALL: So what exactly would you like to see them do in terms of trying to keep inflation
down and at the same time deliver a less tough budget?

BILL MITCHELL: Well it's a curious thing we've now got ourselves into saying that fiscal policy is
also got to be the inflation fighter I mean we've got very tight monetary policy over the last
three years, which is really, we don't know the effects of that yet, it's very uncertain. The
signal as Saul said are that the effects are going to be quite tough and I think you have all your
inflation fighting capacity and monetary policy, fiscal policy has to be more flexible and has to
be more targeted and I think that they certainly showed signs of being targeted in taking some
resources from high income earners and re-distributing them. But I don't think they did that
enough.

ELEANOR HALL: Saul Eslake there is an argument that to really tackle inflation the government
needed to cut in the spending capacity of more Austral8ians not just the wealthy, do you agree with
that?

BILL MITCHELL: There's an element of truth in that, although I'd endorse Bill's comments that more
could have been done to reduce the extent to which taxpayer's funds are used to support the
lifestyles of high income earners as opposed to low income earners, I wouldn't describe what was in
the budget as a comprehensive assault on upper-class welfare.

The fact remains however that if you want to slow an economy in which spending has been rising by
nearly six per cent in real terms as it did last year, to one in which spending is growing by less
three per cent in real terms as the Reserve bank says "has to happen", if inflation has to be
bought back within the target band over a reasonable period.

You can't achieve that without a lot of Australians feeling a certain degree of pain. At the margin
this budget has tried to redistribute some of that pain. But you can't avoid a certain amount of
pain being incurred if you were to prevent inflation from getting out of hand?

ELEANOR HALL: So is the Reserve Bank going to look favourably on this budget? As it deliberates on
interest rate policy?

BILL MITCHELL: I think they will be regard it as more helpful to their objectives then the last few
budgets have been, but it by no means removes the risks that interest rates could have to rise
again if either demand doesn't slow as both the government and the Reserve Bank now expect it to or
if the recent high rates of inflation start to feed into wage setting behaviour.

Fortunately an hour ago we just got some news on wages growth in the March quarter, which suggests
that at least so far this year that hasn't happened.

ELEANOR HALL: Bill Mitchell for many years now the cry from the private sector has been to address
the skills shortage, this budget has some... a lot of money going into these infrastructure funds. Do
you think that will help with the skills shortage?

BILL MITCHELL: Well I think will... again it is signalling the right intensions. But there's not
enough there. There is not enough money going into what I would call quality apprenticeship
training there's not enough money going to relieve the stifling budgets that TAFE system is now
trying to work under.

There's not enough money going to universities to train engineers and the sort of professionals
that are in demand because of the mining boom, so I think that the signal is yeah, that they're
recognising it for the first time in some years that the Federal Government has a role to play in
stimulating skills development. That's welcome, but there is not enough, it's not comprehensive
enough and it's not integrated enough.

ELEANOR HALL: Saul Eslake on this news infrastructure fund Malcolm Turnbull's criticism is that
there are no specific projects earmarked for funding it's just simply a fund labelled
"infrastructure", are you disappointed with that?

SAUL ESLAKE: No I'm not; I actually think that the dedication of the surpluses to funds such as
these is one of the very strong points of this budget, something I've personally been urging
previous governments to do for some time. You wouldn't however want to see the government embarking
on a wide-ranging infrastructure spending program this financial year because that would almost by
definition add to inflation at a time when the government and the Reserve Bank is trying to get it
down.

But what these funs do mean is that in the event that the economy does slow significantly there is
plenty of capital now available to support infrastructure programs that are not only needed to
expand the economy's capacity over the medium term but in the event of a down turn would also be
required to keep employment growth at a reasonable pace.

ELEANOR HALL: Bill Mitchell what do you think about the forward estimates on growth and
unemployment, do you think that the government is being too pessimistic or is it not being cautious
enough?

BILL MITCHELL: Well I think it's operating in such an uncertain environment. I mean we keep getting
mixed signals from the international sphere. You know last week we've seen Germany now showing
signs of a substantial slow down. But then the week before we saw that the US economy isn't slowing
down as much as people expected it to, so there's mixed signals.

And I think - again I go back to the point that reliance on monetary policy delivers this sort of
uncertainty, and so I think that its pessimism is being extremely tempered.

Obviously the Treasury has more data then we have as commentators, but I think that it's obviously
seeing that there is some slow-down occurring. I think that it's trying for the so called 'soft
landing' rather then a really meltdown-type inflation fight and I probably got the balance about
right.

ELEANOR HALL: And Saul Eslake finally to you, does the fairly cautious approach to spending cuts
indicate that the Government is more worried about the future of the economy then it's letting on?

SAUL ESLAKE: That's a possible interpretation. It could also be that the Government didn't want to
offend too many potential voters notwithstanding the very high standing that it currently has in
opinion polls. It could also be that the Government has as Lindsay Tanner has suggested a
longer-term plan to review government spending and doesn't want to make all of these decisions in
haste.

I hope that latter conclusion is the correct one because there is certainly considerable potential
as yet unrealised for a thorough going review on government spending and an unwinding of the
largesse of previous years.

ELEANOR HALL: Gentleman thanks very much for joining us.

SAUL ESLAKE: Thank you.

BILL MITCHELL: Your welcome.

ELEANOR HALL: That's Saul Eslake, chief economist at the ANZ and Bill Mitchell, professor of
economics at the University of Newcastle.

Govt health spending

ELEANOR HALL: As we heard earlier, a $10-billion fund is the centrepiece of the Government's health
budget.

The Federal Treasurer says it's an investment in future medical infrastructure and technology needs
and that the money will start flowing next year.

The Budget also includes a billion dollars that has been allocated to the states for public
hospital spending this year.

And another billion or so has been allocated to key election promises for dental health and GP
Super Clinics.

But, as Tanya Nolan reports, it's still not enough to please some health advocates.

TANYA NOLAN: Health and Ageing has attracted a large slice of the budget expenditure pie,
$50.3-billion worth in fact. It's a figure the Government says is a 3.5 per cent increase on last
year's budget.

It's come as a relief to the industry's peak lobby group, the Australian Medical Association, but
perhaps not such a sweet one.

ROSANNA CAPOLINGUA: The AMA is relieved that health didn't get the axe in the budget. A lot of this
of course is filling election commitments and keeping faith with the community.

TANYA NOLAN: That was Dr Rosanna Capolingua's response to the question of whether the AMA was
pleased with the $50-billion budget spend on health.

The AMA's federal president says her palpable displeasure with the budget comes from the
Government's well-flagged decision to increase the Medicare levy surcharge thresholds.

Dr Capolingua continues to argue that changing the threshold from $50-$100,000 for singles and from
$100-$150,000 for families will ignite an exodus from the private to the public health system

ROSANNA CAPOLINGUA: By the Governments own budgetary estimates the savings that they predict
that'll make from not having to pay the 30 per cent rebate on those patients that they expect to
drop out of private health insurance we calculate that there would be about 600,000 maybe more,
individuals that will drop-out of private cover.

If any number of those need to access health care through the public sector that causes an increase
in burden in an area and a sector that doesn't have any capacity now to cope with what it's dealing
with.

TANYA NOLAN: The AMA isn't totally dissatisfied with the budget.

Key promises have been funded: dental health for instance has attracted $780-million, $600-million
has been allocated to cut elective surgery waiting lists and $275-million has been given to
establish 31 GP Super clinics.

But Professor Stephen Leeder, an expert in health policy warns that these initiatives are not the
main game and are more politically pleasing than anything.

The director of the Menzies Centre for Health Policy at the University of Sydney says he's very
encouraged by the commitment to big ticket items.

STEPHEN LEEDER: Particularly encourage that the mummy has in large part been set aside as an
investment and not committed to itty-bitty projects all over the place. Mr Rudd made it clear at
the 2020 summit that while he is prepared to commit more money to health, he is not prepared to do
that until it's very clear what the appropriate strategy should be and the things on which it
should be spent.

And he has established the national health and hospitals reform commission and various other groups
to look into that.

TANYA NOLAN: Professor Leeder says the real test for the Government will be exactly where it spends
the money it's allocated, such as the $335-million given to closing the 17-year life expectancy gap
between Indigenous and non-Indigenous Australians.

A big part of the health budget is also being spent on prevention initiatives: $53-million to
tackle binge drinking, $15-million to fight smoking and $249-million on a national cancer plan to
improve diagnosis and treatment.

The other big time-bomb for the health system - the Ageing population - has also had some funding
increases, albeit small ones.

As promised 2,000 extra transitional care places will be funded for older people, who no longer
need hospital care.

Greg Mundy, CEO of Aged and Community Services Australia says he's relieved more than anything

GREG MUNDY: We were afraid that there would be cuts in the age care area, there were some lapsing
measures that they call them in the budget that we were concerned about and they will continue for
another year, so we feel that we've bought a bit of time.

TANYA NOLAN: But Mr Mundy says a lack of new thinking on Aged Care leaves him disappointed as well.

Money will be spent to build the skilled health workforce and much of it will be targeted at rural
communities.

And more than half-a-billion-dollars will be saved from the health budget, through cracking down on
Medicare fraud, reducing immunisation incentives and reducing training and education services for
GP's.

ELEANOR HALL: Tanya Nolan reporting.

Bad weather hampers rescue effort in China

ELEANOR HALL: China is pouring troops into the earthquake-ravaged province of Sichuan as
thunderstorms and heavy rain hamper the search efforts for survivors.

At least 12,000 people are known to have died in the country's biggest earthquake in decades, but
tens-of-thousands more are missing under collapsed buildings and mud.

Little is known of the devastation at the quake's epicentre in Wenchuan County. Although about
60,000 people are unaccounted for there.

China was planning to parachute troops and supplies into the region but was forced to call that off
due to the bad weather.

Stephen McDonell is the ABC's China Correspondent. He is travelling through the worst affected
areas, towards the epicentre, and I spoke to him a short time ago.

STEPHEN MCDONELL: OK well I'm standing in the middle of Yaojinsun (phonetic) which is a small
village up in the mountains to the North of the capital Chengdu and basically the whole village has
been flattened there's not a house left standing, there are pieces of certain houses, left
standing. And basically the people here are saying that all around here it's sort of a similar
situation in surrounding villages, it's still a pretty sad thing I've got to say.

At one stage we walked through here and we were looking around talking to the villagers and then we
noticed that in the middle of one of the houses that had been (inaudible) fallen over. There's an
80-year-old man and his body's lying in the middle and his family and friends are sitting around
in... actually right now and having some make-shift funeral for this 80-year-old man. And their
burning paper money as the Chinese custom at a funeral. You know to give someone money in the
afterlife and also burning incense and the body of that 80-year-old man is lying in the rubble of
his house.

ELEANOR HALL: Now rescue workers have finally reached the epicentre of the quake. What can you tell
us about what they're being confronted with?

STEPHEN MCDONELL: Well where the epicentre of the quake was. Its amazing how little information is
actually getting out of there. That rescue workers have actually been struggling to get into that
area in bad whether, with roads collapsed, landslides. They have even been sending paratroopers in
there to try and get to the people who are still stuck in Wenchuan which was at the epicentre.

I think that in the coming days we're going to have a pretty grim picture being painted for us of
what's going on in Wenchuan, because the destruction here, I mean I can tell you as we came up this
road, it's not just this village - it's just village after village after village.

And the further we came into the mountains the more the destruction is.

ELEANOR HALL: The whether has been a real problem holding up efforts even to get to people is it
still raining and what are the forecasts?

STEPHEN MCDONELL: We drove up here this morning from Chengdu, really we left about two or three in
the morning and it pored rain all the way. Now we've just come into this mountain valley and it's
just cleared a bit here. And maybe, that I suppose for this area might be a sort of good sign
because further up the road, we have Beichaun which is a very large area city where their talking
about thousands of people who are still buried up Beichaun.

They'll be welcoming a change in the whether because it's been terrible to try and get through
rubble and to be digging with the rain pouring down, people slipping all over the place and also to
get through on the roads for that matter.

ELEANOR HALL: The soldiers who reached the worst effected area had to go in on foot is there much
hope of rescuing people without that heavy lifting equipment that they can normally bring in?

STEPHEN MCDONELL: According to reports we've heard, we're hearing people calling out for help under
large, I suppose what you would call hills of rubble and they didn't have the equipment needed to
clear those hills of rubble so it might be pretty tough for them actually. I can't imagine that
just by using your bare hands - for example where I'm standing right now there is rubble all around
me, you could never move it if you wanted to, with your hands, you would need heavy lifting
equipment.

ELEANOR HALL: What about the schools, have soldiers been able to get to all the schools and get the
children out now?

STEPHEN MCDONELL: No they're still struggling away at those various schools. The one that we went
to yesterday was the 900 students are still there. And actually in that area there were several
other schools quite close to there which also had students trapped. An interesting thing I suppose
to have come out of going to that school that we went to yesterday was that you could see the only
part of those buildings that was left standing was the stairwell and there's a little bit of that
in this village as well.

You can see that larger buildings, people say that you should go to a stairwell for protection and
it does seem to pan out that way. In that school yesterday virtually all that was left standing was
the stairwell and all around there was just buildings which was collapsed.

ELEANOR HALL: And Stephen what's the Government saying about its ability to handle the disaster?

STEPHEN MCDONELL: Well they're certainly not saying that they are... don't have the numbers I suppose
for people to put into this or that sort of thing. But there also urging rescue workers on, not to
waste a minute because they are the words from Premier Wen Jiabao is that wasting you know even one
minute or even one second could be a child's life.

Because the other thing that's being said is that it's not too late still to rescue people. There
will be people in the rubble who can still be pulled out and will have survived and for rescue
workers not to give up hope. I suppose the thing that powers them on is if they can rescue someone
and see what they're doing is worth while, I suppose and start digging again.

ELEANOR HALL: And that's Stephen McDonell the ABC's China correspondent in Sichuan province.

UNICEF warns child trafficking could worsen in post-cyclone Burma

ELEANOR HALL: To Burma now where the UN and charities are warning that children who survived
Cyclone Nargis are now facing another risk.

They are warning that orphaned children are in danger of being snatched by child traffickers and
even the army.

With foreign aid workers still being denied entry, the task of protecting the children is falling
to local police.

UNICEF's Child Protection Specialist, Alexander Krueger, has been speaking to Samantha Donovan.

ALEXANDER KRUEGER: Children are especially venerable after any kind of emergency and Burma is a
confirmation of this trend. The problem is that we face a certain number of unaccompanied and
separated children, which have very little support from families or they are totally alone and they
are more exposed to traffickers and exploitation and abuse, the problem we're looking at is also a
question of how many families are extremely vulnerable and not accessing support and the risk they
are going to break down and leave many more children without care.

SAMANTHA DONOVAN: Has UNICEF been able to make any sort of estimate at the moment as to how many
children may be at risk?

ALEXANDER KRUEGER: Most of the children are at risk in the areas so for the moment what we know for
sure is that when have reported 558 children were separated in total number. Of those 24 are
totally alone, the others still have a family member with them. We are now finishing the
assessments in other areas this is a situation in the Irrawaddy division. In other areas there are
reports of other separated children and those are the most at risk.

SAMANTHA DONOVAN: We've heard that two people - trafficking brokers - have already been arrested in
Rangoon, what can you tell us about those arrests?

ALEXANDER KRUEGER: We have reports from our offices in Yangoon about this attempt of trafficking
that has been caught. Those two people have been arrested but we don't have many more details about
it.

SAMANTHA DONOVAN: How would these traffickers actually be operating and approaching children in
camps?

ALEXANDER KRUEGER: The operating procedures of traffickers are very different and take many
different shapes according to the situation. Generally they have brokers in communities or a
mid-man in the different communities. So those are people addressing and approaching families and
asking them to release their children promising a better life or more support for the future of
their children and so families who are in extremely difficult situations they might be tempted or
they might be hope that these promises is actually true and so that is generally how it starts.

SAMANTHA DONOVAN: And where would most of those children end up?

ALEXANDER KRUEGER: There is an internal problem in Myanmar of trafficking so mainly for child
labour, very intense trafficking from different divisions and there is also am international
problem of trafficking towards the neighbouring countries with a much higher standard of living and
a stronger economies. So they can really, I would say at the moment a more internal issue but as
the crisis will develop will become also as it was before an international problem.

ELEANOR HALL: And that's UNICEF's Child Protection Specialist, Alexander Krueger, speaking to
Samantha Donovan.

Clinton wins West Virginia primary

ELEANOR HALL: In the United States, Democrat presidential hopeful Hillary Clinton has scored a
largely symbolic victory in the latest nominating contest.

She's trounced frontrunner Barack Obama in the West Virginia primary.

But Senator Clinton's win is unlikely to slow her rival's march to the Democrat nomination.

Joining us now is our Washington Correspondent Michael Rowland.

Michael, how useful a win was this for Hillary Clinton?

MICHAEL ROWLAND: Well it was largely puristic as you say, but still it was a comprehensive drubbing
of Barack Obama. Hillary Clinton will end up winning this contest by about 65 per cent to 28 per
cent, that's a two to one margin. On the basis once again of white blue-collar voters, of which
there are many in West Virginia.

A short time ago the former First Lady has spoken to a raucous crowd of reporters, she's used this
strong victory to declare the race for the Democratic nomination was far from over and here's a bit
of what she had to say.

(Sound of crowd cheering and clapping)

HILLARY CLINTON: There are some who have wanted to cut this race short...

CROWD: Boo!

HILLARY CLINTON: They say give up, it's too hard, the mountain is too high, but here in West
Virginia you know a thing or two about rough roads to the top of the mountain!

(Sound of crowd cheering and clapping)

ELEANOR HALL: Very upbeat Hillary Clinton speaking there, so Michael, no hint then that Hillary
Clinton will take the opportunity of bowing out of the race on a high?

MICHAEL ROWLAND: No, no and given what she said to her crowd there we can expect her to go right
through until the last Democratic primaries on June the 3rd in the states of Montana and South
Dakota.

But she faces a couple of challenges, big challenges, she's $20-million in debt and money for the
Clintons is getting harder to raise, given that Barack Obama's on a seemingly unstoppable march
towards that denomination.

And secondly the so called "super delegates" who will end up deciding this contest have been going
over to Barack Obama in a steady flow. He's picked up about 30 or so in the last week and there is
every indication that flow will continue, so they might end up making Hillary Clinton's decision
for her, but she certainly intends to stay for at least the next few weeks.

ELEANOR HALL: And how has is Barack Obama dealing with this loss?

MICHAEL ROWLAND: By ignoring it basically, he didn't even spend anytime in West Virginia today, he
had long conceded this race. He was in Missouri tonight as the results were coming in. Missouri is
one of the battleground states in the general election and he spent more time talking about john
McCain than he did Hillary Clinton.

He's also used a speech there to express confidence, the party wounds in the Democratic ranks will
be able to heal by the time of the general election, rolls around in November and he told his
supporters he was confident the party could come together.

BARACK OBAMA: There's a lot of talk these days about how the Democratic Party is divided. But I
have to tell you I am not worried. I've been campaigning in 46 states of the last 15 months all
across America and I'm not worried about the Democratic Party being divided, there's too much that
unites us as Democrats. There's too much that's at stake as a country.

ELEANOR HALL: And that's the Democrat frontrunner Barack Obama. And Michael Rowland on the line
there from Washington.

IVF technique identifies successful embryos

ELEANOR HALL: Australian researchers have developed a technique which they say will help identify
the genetic makeup of those IVF embryos which are most likely to result in a pregnancy.

The researchers recruited 48 women and used DNA fingerprinting to identify which successfully
implanted embryos.

The lead author of the research, published today in the journal Human Reproduction, is Dr Gayle
Jones, from Monash University's Immunology and Stem Cell Laboratories.

Our reporter Barbara Miller asked Dr Jones why it's so important to identify which embryos are
likely to successfully implant:

GAYLE JONES: If we can increase the predictive value then we can confidently transfer only one
embryo to achieve a pregnancy rather than transferring multiple embryos to achieve a pregnancy.

BARBARA MILLER: I thought clinics had moved away from transferring multiple embryos, how many
embryos are typically transferred these days?

GAYLE JONES: They have moved away from transferring multiple embryos, and in fact law in Australia
... or regulations in Australia require the transfer of only two embryos, and in many instances
only one embryo is transferred.

But that's usually for very young patients with a limited infertility history. And in some
countries such as America there are no regulations and still a large number of embryos are
transferred. And so the conditions and regulations and laws change from country to country.

BARBARA MILLER: So you've been using DNA fingerprinting to try and identify which embryos could
develop successfully. What exactly does that mean?

GAYLE JONES: When you transfer several embryos and only one implants and produces a baby at the
end, you're unsure as to which is the embryo that actually resulted in the baby.

So by DNA fingerprinting the embryo where you take an amount of DNA from the resulting baby and an
amount of DNA from the embryo before it is transferred, then you can do a fingerprint match and
identify the embryonic origin of the child. And then you clearly know which embryo was responsible
for the baby.

BARBARA MILLER: And what have you discovered by using that technique?

GAYLE JONES: Well we've just developed this technique to be able to identify when multiple embryos
are transferred to a uterus, which one is viable and which one is non-viable.

BARBARA MILLER: So the next stage would be to use this technique to try and identify genetic
markers which would indicate that an embryo would successfully implant. Is that right?

GAYLE JONES: We're accumulating samples now. What we will do is we'll DNA fingerprint to match
viable and non-viable embryos at the end, and repeat our micro-ray (phonetic) experiments and
refine our current list of genes down to a much more user friendly subset of genes from which we
then will test a group of genes to find out which are the more highly predictive ones, and finally
arrive at a panel of about five to 10 genes that could be put into a very rapid same day test for
use in IVF clinics.

BARBARA MILLER: How far away would the development of that test be?

GAYLE JONES: We actually have to wait for children to be born; we think it will be at least two
years.

ELEANOR HALL: Dr Gayle Jones from Monash University, speaking to Barbara Miller about that
Australian IVF research.