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Major parties digest weekend's political bombshells

Major parties digest weekend's political bombshells

The World Today - Monday, 8 September , 2008 12:10:00

Reporter: Sabra Lane

ELEANOR HALL: To Canberra where the senior figures of all the major political parties are digesting
the results of a weekend of political bombshells.

In Western Australia the votes are still being counted but a hung Parliament is almost certain and
the leader of the National Party is in discussions with both Liberal and Labor leaders today about
forming a minority government.

We'll be crossing to our reporter in Perth for the latest on that shortly.

But while the National Party is celebrating its strong performance in the west, federally the
Coalition can take no heart from results in two federal by-elections on the weekend.

The Nationals lost the seat of Lyne which had been held by the party for more than half a century
and had been the seat of the party's leader, Mark Vaile.

And in South Australia, the once safe Liberal seat of Mayo is now marginal, and that's without the
Labor Party even running a candidate in the electorate of the former foreign minister Alexander

In Canberra, Sabra Lane reports.

SABRA LANE: West Australians went to the ballot box on Saturday five months before it was due.
Labor Premier Alan Carpenter called the election early to capitalise on the disarray within the
Liberal Party.

Just days before he called the election the Liberals switched leaders, dumping the blunder-prone
Troy Buswell for a man who was going to retire, Colin Barnett. He might now become the accidental

Speaking on ABC radio in Melbourne, Federal Finance Minister Lindsay Tanner said federal issues
didn't play any factor in that election. But he says every leader can learn from Premier Alan
Carpenter's mistake - go to the polls early and prepare to be punished.

LINDSAY TANNER: I suspect that future premiers and indeed prime ministers contemplating early
elections will take due note of the outcomes of the two early elections that have been called over
the past few months and that may exercise some influence on their judgement.

But clearly they were fought over state issues. We obviously will take due account of the messages
coming out of the election but it's clearly a state dominated poll.

SABRA LANE: The Nationals won four seats and could be king-makers. Their leader Brendon Grylls
campaigned strongly on returning mining royalties to the bush. He could help either the parties to
form government.

Federal Nationals Senator Barnaby Joyce told Radio National that there are lessons for his party.
He cites the WA result and the recent by-election in the federal seat of Gippsland.

BARNABY JOYCE: In Gippsland where we had a partisan message we had a huge swing towards, you know,
a swing against Labor and that was a great outcome for Darren Chester; in Western Australia a
partisan message and a very positive outcome. If you're reading the political tea leaves it's
pretty clear what you've got to do.

SABRA LANE: While the Nationals have done well in Western Australia, the Coalition performed poorly
in two federal by-elections on Saturday.

The Nationals lost its prized seat of Lyne in New South Wales, formerly held by the party's former
leader Mark Vaile. Prior to Saturday, it had been held by either the Nationals or the former
Country Party.

The seat now is in the firm grip of popular Independent and former National, Robert Oakeshott.

The National Party is currently undergoing a review and John Tanner, the federal president admits
there are tough choices ahead.

JOHN TANNER: We've got to take a real serious hard look at where we're going and to ensure that we
do head off in the right direction from here on. But it is a real wake up for us, it is.

SABRA LANE: Warren Truss hinted yesterday that maybe the best prospects for the party might be
breaking its links with the Liberal Party.

JOHN TANNER: Well that is one of the issues that was raised in the Anderson-Priebe report and we've
got a number of things to consider out of that and we're currently going through a consultation
process with all states.

SABRA LANE: Can you see the positives out of doing something like that - breaking your ties?

JOHN TANNER: Well, when you look at the outcome of Western Australia it's something we'd have to
consider, yes.

SABRA LANE: Mr Tanner says the party's executive in consultation with the states will decide the
party's future within the next six months.

JOHN TANNER: It is a very important time for the National Party and I think what we've seen at the
weekend is from one extreme to the other, where we've lost the seat of Lyne but where Western
Australians have really shown their relevance there over in Western Australia. And I think that
gives us a lot to consider.

SABRA LANE: You say it's an important time. The next 12 months - might that see the future success
of the party or maybe the death of the party?

JOHN TANNER: Well I sincerely hope you're right on the first one. Certainly the issues that we have
to address are the changing demographics etc, of our communities; and that's changing by the
minute. Now for us to be relevant we have to change accordingly. That's what we have to address.

SABRA LANE: And in Mayo, the Liberals have just managed to hang onto the seat of former foreign
minister Alexander Downer, narrowly taking it from the Greens.

John Warhurst, an Adjunct Professor of political science at the Australian National University says
none of the parties can take heart from any of the results but he says the Mayo result is not
particularly good for Liberal leader Brendan Nelson.

JOHN WARHURST: Brendan Nelson's situation as leader is probably terminal anyway. It certainly
didn't do him any good although he would probably say that he shouldn't be given too much blame for
the Mayo result anyway and they did after all win the seat ultimately. So mixed messages right
across the board as far as the parties are concerned. None of them would be particularly happy.

And it's Independents and Greens and I think the citizenry, the voters have shown that they're just
not enamoured with what the major parties are doing at the moment.

ELEANOR HALL: That's Professor of Politics John Warhurst, ending that report by Sabra Lane.

No clear winner after WA vote

No clear winner after WA vote

The World Today - Monday, 8 September , 2008 12:15:00

Reporter: David Weber

ELEANOR HALL: To the latest on just who will lead Western Australia. As we heard earlier it looks
like the leader of the National Party, Brendon Grylls, could the king-maker.

This morning both the Labor and Liberal leaders have been putting proposals to the Nationals on how
much they're prepared to spend in the bush to ensure the National Party's support.

Analysts say the Liberal Party cannot take it for granted that the National Party will support them
in coalition and there's still the chance that Labor could get over the line with one or two

But a Labor government would still be likely to work with the Nationals to ensure its political

David Weber joins us now in Perth with the latest. So David, are we any closer to knowing who has
the numbers to form a government?

DAVID WEBER: Well not really Eleanor, there's still up to five seats being worked out. The feeling
is that even if Labor gets enough seats and support from Independents it may still need the
Nationals, to work with the Nationals as a buffer. At least it could be the end of the week before
we know the shape of the government.

ELEANOR HALL: Both Liberal and Labor leaders have been courting the Nationals. Has the National
Party leader given any hint of which party he's more likely to support in a minority government if
it comes to that?

DAVID WEBER: Not really. All he's said is that whichever party is more capable of supporting his
Royalties for Regions policy, which he says is non-negotiable. Now the Royalties for Regions
policies involves up to $700-million a year under his proposal, to be pumped into the bush for
infrastructure purposes - roads, schools, health care and general infrastructure.

And he took this into the election. Colin Barnett, the Liberal Party leader wouldn't even meet with
him to discuss this. He described it as an election stunt and the Government, the then government
had dismissed it out of hand.

But now of course Mr Grylls is taking this to both parties and saying that this is non-negotiable
and if you want to work with us, this is what we need in the bush. This is some of what Brendon
Grylls had to say on ABC Radio in Perth this morning.

BRENDON GRYLLS: The National Party have been doing things very differently for the last three
years. We have campaigned in areas we've never campaigned in before. Our voter support has risen to
a level where it hasn't been for many, many years.

The people that wanted a Liberal government would have ticked the Liberal box on polling day; the
people that wanted a Labor government ticked the Labor box on polling day; and the people that
wanted the Nationals to win the balance of power, to negotiate with both sides to get the best
possible outcome voted for the National Party. I take that vote very seriously.

ELEANOR HALL: And that's the Nationals leader in Western Australia, Brendon Grylls there. David as
you said both the Liberal and Labor leaders were scathing about this policy, but how much humble
pie are they now having to eat?

DAVID WEBER: Quite a lot of humble pie. The then premier, I suppose, Alan Carpenter, now the Labor
leader, was saying that he thinks it would be very exciting to work with the Nationals. It works in
South Australia. He's talking about a coalition of interests and a purposeful, good government.

He was saying, I mean these are not things you would have expected Mr Carpenter to say. But he got
in very quickly to meet Brendon Grylls yesterday and the meeting between Brendon Grylls and Colin
Barnett today.

And then I think what happens under the party's constitution, they have to take whatever decision
is made, or whatever offers come to the National Party, to the membership before it's ratified.

ELEANOR HALL: So when will we know the result of that?

DAVID WEBER: Well that could be the end of the week at least but then we might have a better
picture of who might be able to form government.

ELEANOR HALL: But still several days yet before anyone knows who's leading the state?

DAVID WEBER: That's right. It is a big, I mean this has been a victory for Brendon Grylls because
under the electoral system, under the boundaries that the election was held, the National Party
looked like they were going to be wiped out. Now they really couched themselves as an independent

Brendon Grylls himself, he went into Parliament in his 20s, he's only in his mid-30s, seen as a bit
of a problem child by the hard men in the Nationals. When he made his maiden speech in Parliament
he praised Indigenous people, the disabled, gays, lesbians, members of ethnic communities, and
called for more compassion for asylum seekers. This is in December 2001. So not your typical
National Party leader.

And I think that indeed one National Party MP has told Colin Barnett that he's not prepared to work
with Labor. So there could be a bit of a struggle for Brendon Grylls, but it must be said he
wouldn't be pushing this line unless he had support within his party.

ELEANOR HALL: David Weber, thank you. That's David Weber our reporter in Perth with the latest on
the election there.

When a week really is a long time in politics

When a week really is a long time in politics

The World Today - Monday, 8 September , 2008 12:20:00

Reporter: Eleanor Hall

ELEANOR HALL: Well it's been a remarkable weekend in politics and not only in Western Australia.

The Federal Liberal Party almost lost a safe seat in a by-election; the Nationals federally did
lose one and now they're looking at their future; the Labor Party at a state level has taken its
second hit around the head from the electorate in a month after the Northern Territory election
only a month ago. And the New South Wales Labor Government has appeared to implode all by itself.

Well joining us now with their perspectives are some of the nation's most experienced political

In our Perth studio we're joined by former federal Labor leader and former minister Kim Beazley who
left his Western Australian seat of Brand last year after almost three decades in federal politics.

In Sydney is former New South Wales Liberal leader Kerry Chikarovski, who led the state opposition
between 1999 and 2002.

And in our Sydney studio we're joined by social researcher Hugh Mackay who last week on the program
when he was talking to us about his latest book "Advance Australia Where?" predicted that the
election in Western Australia could deliver some surprises.

Thanks to you all for being there.

Let's start with Western Australia. Kim Beazley, did you get a shock on Saturday night?

KIM BEAZLEY: No, I actually predicted a Labor loss so the shock...

ELEANOR HALL: You were always a pessimist weren't you?

KIM BEAZLEY: The shock, no, I always believe our polling. And this is not something that is not a
matter of record. I wrote a piece for a Fairfax website along those lines.

And so I am slightly surprised I suppose to find us in a position where we might win, where Alan
Carpenter according to Antony Green, and I looking at the seats myself don't quite see things this
way, but he seems to think that 28 seats plus two Labor Independents, 30 out of 59, is a serious
possibility by the end of the week, in which case Carpenter has won.

I don't think - I always am a pessimist in Western Australia for one reason - demographics.
Demography in politics is king. Now we do argue around policy and issues and leadership and the
rest of it; but the basic demographics determine the degree of flexibility you have.

And in Western Australia, the demographics most strongly Labor around the country - blue-collar
working class and non-English speaking background migrants - are present in the electorate at about
half the level they are in Sydney and in Melbourne and Adelaide.

So you can have a messy Labor Party in Sydney that can win an election and you can have a messy
Liberal Party in Western Australia that can win an election. What you can't have is a messy Labor
Party winning an election here or a messy Liberal Party winning an election in New South Wales.

ELEANOR HALL: And is it a messy Labor Party that's the problem there?

KIM BEAZLEY: Well look, they've had their challenges over the course of the last little while.

They were very lucky to be in government. They won government the first time, Geoff Gallop,
basically because of Court's industrial relations legislation which if anything was even tougher
than John Howard's.

And that created a revolt amongst some of the traditional Liberal voters so they turned out in a
very safe Liberal seat the industrial relations minister for example.

They won last time really only because of absurd promises made by Colin Barnett who if he'd kept
his mouth shut during the election campaign would have beaten Geoff Gallop. So I guess we were
always cruising for a bruising.

Alan Carpenter is carrying a lot of weight at the moment now for the decisions he took and leaders
always have to. My criticism of this particular situation is not that the election was too early
but it was not early enough.

And if they'd actually called it after the last Labor Party state conference, gone in with Troy
Buswell as Liberal leader, we'd have got another one of those unexpected results like the previous

ELEANOR HALL: Hugh Mackay, looking at the elections generally over the weekend including the
by-elections, is there a general message to all major political parties?

HUGH MACKAY: I think there is Eleanor. And of course I agree with what Kim is saying about the
specific situation in the west. But I think in the present era, those specific demographic things
are a bit less significant than they usually are. I think we're at a very strange turning of the
tide - socially, culturally and politically - to do with re-engagement.

The story of most of the last 10 years has been the story of voters but also citizens who were not
particularly engaged with political or social issues, who had really turned their backs on the big
picture, turned the focus inward, become very self-absorbed, you might say self-indulgent, even
self-obsessed - racking up our record levels of personal and household debt to fund our

And then something changed. Oh, by the way, while we were in that mood, we were never going to
change governments. Federal, state, territory governments with the exception of South Australia in
I think 2002, all returned with increased majorities.

Not because people loved them but because when the mood is one of disengagement, people are never
going to rock the boat politically because too many other boats have been rocking for them and what
they want is a bit of calm, a bit of stability.

So, the tide turns. And it began to turn in 2006. We started to emerge from this period of
self-absorption and disengagement and to sit up and take notice about WorkChoices, about climate
change. Various things woke us up.

Once we were awake, we started to take interest, to get re-engaged. Now a re-engaged electorate
after a long period of acquiescence and disengagement is a feisty electorate. And I said in the
book, in a couple of places, what this means is there is no magic in incumbency the way people were
saying for the last 10 years. It wasn't about the magic of incumbency; it was about the dream run
politicians have when the voters are in an acquiescent, disengaged frame of mind.

Now they're not and every government, federal, state and territory, needs to look out because it's
not that voters are particularly angry with those governments, although there's always a bit of
disenchantment the longer you've been in office, but it's mainly about a mood for change.

It's actually a reflection of a new optimism in Australia, a new sense that there are challenges
here we could meet and we'd better pay close attention, which means everyone politically is more
vulnerable including the present Federal Government in their first term. Everyone is more
vulnerable than they have been for 10 years.

ELEANOR HALL: Kerry Chikarovski, what do you make of what Hugh Mackay is saying there? Is the
electorate across Australia waking from some kind of political torpor? Have you seen that?

KERRY CHIKAROVSKI: Well I would hope that he's correct, that they're looking for change, because in
Western Australia will hopefully be the first in the tide of change and we'll go from being all red
to all blue. That would be fabulous from my perspective.

Look I think there is an element of what Hugh is saying that's correct but I also think we need to
not discount the very good job that Colin Barnett did. I mean five weeks ago when he took over as
leader, everyone was saying that the Labor Party were pretty well entrenched. I mean even at the
start of the campaign, people were not talking about a change in Western Australia.

Clearly the Liberal Party and again, and the National Party give them their due, the National Party
have campaigned particularly well in Western Australia. And the tide was turned not only because
people wanted it to turn in the way that Hugh has been suggesting, but I think because there's been
some pretty good political campaigning over there which has helped it.

ELEANOR HALL: Well we heard our reporter in Perth talking about a new style of leader form the
National Party. Staying with you Kerry Chikarovski, do you think that there's something in that new
style that he's projecting there?

KERRY CHIKAROVSKI: I think what Brendon is doing is reflecting his particular constituency. We
know, and I mean I would have thought that the result for the National Party in Lyne this week and
would also prove that, we know that particularly in the country people are tired of politicians who
are toeing the line and are not actually representing their electorates.

And what's happened federally with the Independents is that they have been very feisty, very
individual people who've gone out and who have been particularly engaged with their electorates.

Now I think that's what Brendon has done in Western Australia. He has projected that same sort of
feistiness about his electorates.

ELEANOR HALL: Kim Beazley, how do you feel about the possibility of the National Party in WA being
the king-makers?

KIM BEAZLEY: This is a different National Party from the National Party you're interested in. Now
I'll give you another example to the other ones added by your correspondents.

We are one of the few states with legal abortion laws, not based on interpretations by the courts
but actually legislated by Parliament. The bulk of the Nationals voted for freedom of choice. Now
if you assume the sort of background of Nationals in the eastern states you would assume not one of
them would have. Over here I think all of them did, or there might have been one or two deviations.

The National Party here has been persecuted by the Liberal Party for years, monstered by people
like Wilson Tuckey, monstered by people like Colin Barnett, and they're sick of them. And they've
suddenly worked something out - the bush is sick of the major parties too and the National Party
are less vulnerable if they look as though they're feisty and defending the bush interest and not
terribly worried about who happens to be governing in Perth.

Now it is possible that the voting will produce a situation at the end of the week where Carpenter
plus, and it won't produce this situation if people take out their recriminations on Carpenter now
as opposed to when the situation becomes clear, but if he can hold the show together it is possible
at the end of the week that he could govern with the Labor-Independents and no-one else. He would
be very foolish to do that.

It will be much smarter now to test this new National Party, test the way that they're thinking and
see if you can't come up with an agreement with them irrespective of whether or not you can form a
government without them.

ELEANOR HALL: And Hugh Mackay what do you make of this idea of a new style of National Party in
Western Australia?

HUGH MACKAY: Well, what Kim says about the peculiarity of that party in the west is obviously true
though this is a symptom of a couple of other factors that are currently working in the electorate
which is increasing confusion about who stands for what.

The idea that a Labor government will be governing with the support of the Nationals is kind of
unthinkable anywhere except Western Australia at the moment, but becomes thinkable everywhere once
it happens in one place. And that's a symptom of people saying, well, what do they really stand
for, which is a big issue for the major parties.

The other factor I think that's operating at the moment and Kerry alluded to it is when you have a
change of government federally, the probability, in this case to the ALP, the probability of state
voters wanting the opposite colour in their state becomes very high, especially in New South Wales
and Victoria where there's a long tradition of this. Voters love tension in the system. They love a
hostile Senate...

KERRY CHIKAROVSKI: Whether, and you actually lose the opportunity for the state government to be
blaming the federal government all the time for its problems, which is what's happening in New
South Wales at the moment, you know, whoever is running New South Wales and what day is it...


I'm sorry, that's a bit unkind. But I mean, whoever is running New South Wales with a Labor
government federally in Canberra, can't turn around, having had this huge thing which Mr Rudd was
campaigning on about cooperation and working together, so when there's problems in the state now
you can't turn around and say, oh my God, it was John Howard's fault or Peter Costello's fault.

ELEANOR HALL: Now Kerry Chikarovski you're clearly watching what's going in the New South Wales
Government with some interest. But do you agree with the Federal Liberal leader Brendan Nelson that
an early election should be called in New South Wales?

KERRY CHIKAROVSKI: Oh look I would love to have had that opportunity when we were in government,
when we had the circumstances as such, such as when we had just won the Olympic bid to have called
an early election. I would be surprised that there would be that possibility. I'm pretty sure we
looked at it fairly closely and I'm pretty convinced that the legislation wouldn't allow you to do

ELEANOR HALL: And now what about the near loss of Mayo for the Liberals? That's pretty bad news for
Brendan Nelson. Is it the last nail in the coffin of his leadership Kerry Chikarovski?

KERRY CHIKAROVSKI: Look I wouldn't have thought so. I think Mayo was a particular electorate with a
long-standing member with a high personal vote. Alexander was popular. Having said that, one of the
things which I find whenever you have a by-election is that people actually don't like by-elections
and often they will vent their spleen if you like, by saying no, we're not going to support the
party who's actually caused the by-election. So I wouldn't be too concerned if I was Brendan, no,
not at all.

ELEANOR HALL: Kim Beazley, what do you think about Brendan Nelson's leadership? How threatened will
it be by the loss of this seat when the Labor Party didn't even bother to run?

KIM BEAZLEY: Look I think Brendan Nelson's leadership is in trouble anyway. I don't think he really
particularly, I know he makes these enormous statements about being hard to shift and people don't
know how hard I fight and all the rest of it, but he has a slip of the tongue when the prospect is
put to him of a Costello leadership in which he says he'd welcome it!

So I think in his heart of hearts he knows that probably the game is up for him at some point of
time and I don't think these by-elections make any difference to that one way or another.

I think there's something in what Kerry says, by the way. People hate by-elections. They'll accept
a by-election if your member has died or is very sick or if he's a party leader, but they don't
take kindly to the view that somebody who's been a minister takes his pension and quits ought to be
rewarded by any support for the party. So I think frankly the Liberals were cruising for a bruising
in Mayo.

The more interesting result in terms of this weekend's fixtures was the result in Lyne because the
National Party either takes over the Liberal Party like they did in Queensland or gets out of the
ambit and the umbra of the Liberal Party as they have in Western Australia, or they die.

ELEANOR HALL: Yes, it's a very interesting question isn't it, and Warren Truss has said he's
looking at the future. Can I come to Hugh Mackay? What do you think is the future for the National
Party federally? Should it merge? Should it split completely from the Coalition? Does it have a

HUGH MACKAY: Well it clearly has a future because it's now become influential. It's made a move in
Queensland, it's now talking federally. It's become a chameleon and that makes it dangerous for its
political opponents and even for those who thought that they were political allies. I think which
way the Nationals will jump federally and in all the states is simply an open question.

ELEANOR HALL: Very quickly to you Kerry Chikarovski. Does the National Party have a future?

KERRY CHIKAROVSKI: Well I think they do but they need to be very careful because if you look at all
the Independents in the Federal Parliament now, in large measure they are in National Party seats,
or what were National Party seats and that's because there has been a disenchantment.

But I also should point out for example in Lyne, Rob Oakeshott who has won that seat was an
incredibly popular, local, Independent member in the State Parliament. And so what he's done is
transferred a recognition rate. And to be fair to him, he's been seen as a deliverer and he's
actually, you know, delivered for his electorate.

The difficulty always becomes in Federal Parliament it's much, much harder to deliver on those
sorts of bread and butter issues than it is in the State Parliament. A State Parliament Labor Party
happy with provide him with the bucks to do what he needed to do to keep the seat. It will be
interesting to see what the Labor Party do at federal level.

ELEANOR HALL: Interesting times indeed. Kerry Chikarovski, former New South Wales Liberal leader,
thanks very much for joining us.


ELEANOR HALL: Thanks also to Kim Beazley, former federal leader for the Labor Party, and social
researcher Hugh Mackay.

Rates won't keep sliding down: RBA governor

Rates won't keep sliding down: RBA governor

The World Today - Monday, 8 September , 2008 12:25:00

Reporter: Richard Lindell

ELEANOR HALL: The Reserve Bank governor Glenn Stevens is hosing down expectations that interest
rates are at the start of a big slide down.

Addressing the House of Representatives Standing Committee on Economics in Melbourne this morning,
the governor noted that the economy is slowing, but he said he thinks the chances of recession are
slim. That would reduce the need for the Reserve Bank to ease rates quickly, particularly while
inflation remains a problem.

Richard Lindell has been listening to the governor's comments and he filed this report:

RICHARD LINDELL: Anyone expecting a rapid succession of interest rate cuts in coming months would
be disappointed by the tone of governor Glenn Stevens' speech.

GLENN STEVENS: I think in the near term the question will be - do you we hold here or do we go down
a bit more? I don't think, unless something quite surprising happens, it seems to me unlikely that
we'll be reversing course up again in the near term.

RICHARD LINDELL: The Reserve Bank's key role is to control inflation which is still rising and is
forecast to peak at five per cent at the end of the year.

But governor Glenn Stevens argues that on balance the Reserve Bank can show patience and restraint
in its bid to tame inflation.

GLENN STEVENS: Rather than trying to achieve that larger fall by pushing inflation down more
quickly, the broad strategy is to seek a gradual fall but over a longer period. This carries less
risk of a sharp slump in economic activity though it does require a longer period of restraint on

On the other hand it carries the risk that a long period of high inflation could lead to
expectations of inflation rising to the point where it becomes more difficult and more costly to
reduce it.

RICHARD LINDELL: And it's that balance between controlling inflation and maintaining growth that
the Reserve Bank is now looking for. It's the reason why the RBA moved to reduce rates last month,
with the central bank now forecasting even slower growth in the months ahead.

GLENN STEVENS: I don't think we're in recession now. I don't think there's the evidence to suggest
that. We are in a period of slow growth, rather like two or three episodes of that nature that I
can recall over the years. You know I think it would be dishonest to deny that there's any
possibility at all that you could have a recession, there's clearly some probability of that.

But I think the most likely outcome still continues to be the one that's in the outlook that we've
put out over the last six months.

RICHARD LINDELL: But unlike the episodes of slower growth in 1991 and 2001, where interest rates
were slashed quickly, this time there's too much momentum in the economy to warrant similar cuts.

Craig James is the chief economist at CommSec.

CRAIG JAMES: There is still the potential for the Reserve Bank to cut interest rates modestly, but
not decisively. And what the governor has highlighted is that inflation is still high, the business
sector and the government sector are still stimulating the economy. And it's likely that we're
going to see consumer spending recover in coming months as a response to the tax cuts, rate cuts
and also lower petrol prices.

The challenge though to get inflation under control is going to take quite some time. It's going to
be a degree of time before we get inflation back from the target band. So certainly the Reserve
Bank governor is not suggesting that we can cut interest rates decisively over the next couple of

ELEANOR HALL: That's Craig James at CommSec ending that report from Richard Lindell.

Govt again rebuffs calls for more troops to Afghanistan

Govt again rebuffs calls for more troops to Afghanistan

The World Today - Monday, 8 September , 2008 12:30:00

Reporter: Alexandra Kirk

ELEANOR HALL: Australia continues to rebuff calls for more troops to Afghanistan.

The new NATO Commander in Afghanistan is calling for a significant increase in troop numbers to
ensure success against the Taliban but Australia's Defence Minister Joel Fitzgibbon says he won't
increase the total number of Australian soldiers.

From Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: NATO's new chief in Afghanistan General David McKiernan has asked Washington to
send more troops beyond the 10,000 extra already flagged, arguing as things stand the international
coalition is struggling to win. And he wants NATO allies and coalition partners to bolster their
commitment, including Australia.

But Defence Minister Joel Fitzgibbon is holding the line that there will be no expansion of
Australia's 1,080 strong military presence unless NATO comes to the party. On the general issue on
the need for more troops in Afghanistan, Joel Fitzgibbon says he and the NATO General are singing
from the same hymn sheet.

JOEL FITZGIBBON: Since coming into government, I've been arguing for greater troop numbers in
Afghanistan. We need greater troop numbers to improve our progress. But Australia is the largest
non-NATO contributor and I've made it clear on a number of occasions that we have no intention of
sending more troops while ever so many European countries remain under-committed.

ALEXANDRA KIRK: Joel Fitzgibbon is sticking to the current commitment but says it's under constant
review to maximise soldiers' effectiveness and protection and ensure they're not overworked.

JOEL FITZGIBBON: It is true that our special operations task group, that is our special forces
people, have had to sustain rotations for a long, long time now. We'll constantly look at how we
can take the pressure off our special forces by constantly reviewing and potentially reconfiguring
out commitment.

We're doing that today by sending the guys with the mentoring reconstruction task force and we'll
continue to keep these matters under review.

ALEXANDRA KIRK: The Minister says he will always follow the advice of the Defence Chief Angus
Houston and will restate Australia's position to Washington soon.

JOEL FITZGIBBON: In all my conversations with my counterparts in the United States, and I'll be
talking to Secretary Gates again tomorrow, I sense that they absolutely understand that we are
overstretched and fully appreciate that we are doing more than our share of the work.

I believe that our numbers there are about right. And it's not just about quantity; it's about the
quality of the work we're doing. We're reconfiguring that again today with the deployment of the
mentoring team and I believe the numbers are about right.

ALEXANDRA KIRK: Dr Robert Ayson from the Australian National University's Strategic and Defence
Studies Centre thinks Australia could boost troop numbers in Afghanistan.

ROBERT AYSON: I think if Australia really, really wanted to, if it was regarded as an absolute,
national priority then Australia could do so. But I don't think Australia wants to increase its
commitment. And I think Australia has concerns that it could be an open ended sort of thing, that
you could actually put more and more into Afghanistan and it might never stop.

So I think the Government would like to draw the line in terms of its current commitment but if it
absolutely, you know, absolutely wanted to it could increase it. I just don't think it absolutely
wants to.

ALEXANDRA KIRK: Is it a tough line to take, do you think, or difficult line to walk, to say that,
you know, Afghanistan is terror central, but then not to want to commit any more troops?

ROBERT AYSON: Well yeah. I mean since coming into office the Government has said that it's more
interested in playing a part in the discussions about the future strategy of Afghanistan and of
course the emphasis on Afghanistan and perhaps slightly less emphasis on Iraq means of course that
Afghanistan looms larger in terms of the international commitment that Australia is making.

And so to some extent the Government has risked making a bit of a rod for its own back on this. And
when you argue that NATO needs to do more and that there needs to be a greater overall commitment,
the finger will come back pointing at you to say, well, you need to make an extra commitment too.

And so it's going to be a bit of skilful diplomacy for the Government to then say, well, we think
Afghanistan is very important, we don't want to see things going backwards in Afghanistan but we
want to retain the commitment of Australian forces and not to increase it.

ELEANOR HALL: That's Dr Robert Ayson from the Australian National University ending that report by
Alexandra Kirk.

US Govt seizes control of mortgage giants

US Govt seizes control of mortgage giants

The World Today - Monday, 8 September , 2008 12:35:00

Reporter: Peter Ryan

ELEANOR HALL: The US Government has today seized control of two of the largest and most vital
players in the US mortgage industry.

Fannie Mae and Freddie Mac have been dangerously weakened by the worst housing slump since the
Great Depression.

The two companies underwrite more than half of the mortgages in the United States and the bailout
could cost the Government hundreds of billions of dollars. But analysts say the Government has
little choice, as business editor Peter Ryan reports.

PETER RYAN: In the United States, the headquarters of capitalism, there's a strongly held theory
that enterprises, even banks, must be allowed to fail.

But when it came to Fannie Mae and Freddie Mac, which together guarantee a mind-boggling
$US6-trillion in mortgages, theories and principles were rewritten in a frightening new financial

HENRY PAULSON: Fannie Mae and Freddie Mac are so large and so interwoven in our financial system
that a failure of either of them would cause great turmoil in the financial markets here at home
and around the globe.

PETER RYAN: The US Treasury Secretary Henry Paulson says Fannie Mae and Freddie Mac will be seized
by government and run as a conservatorship.

The companies' financial obligations will be met whatever the cost to underpin confidence as the
housing slump approaches levels not seen since the Great Depression.

Henry Paulson wasn't mincing his words as he explained the consequences of allowing Fannie Mae and
Freddie Mac to fail.

HENRY PAULSON: This turmoil would directly and negatively impact household wealth from family
budgets to home values to savings for college and retirement. A failure would affect the ability of
Americans to get home loans, auto loans and other consumer credit and business finance. And a
failure would be harmful to economic growth and job creation.

PETER RYAN: Fannie Mae and Freddie Mac are products of the Great Depression and were created to
deliver the dream of home ownership to America's middle class.

But with one in every two American homeowners' clients of Fannie and Freddie, some are facing a
financial nightmare as the value of their mortgage threatens to exceed the value of their

JOHN SNOW: There are serious risks to the financial system if the obligations of Fannie and Freddie
aren't met. Those are real risks.

PETER RYAN: John Snow was treasury secretary in the first Bush administration. Speaking to ABC
NewsRadio this morning, he had a reminder for anyone thinking this is just an American problem.

JOHN SNOW: Governments all over the world have invested in Fannie and Freddie - banks, pension
plans, university endowments all over the world have made investments in the paper, the loan
obligations of these entities. And they relied really on the sense that there was an implicit
government guarantee. And now it's been made clear that that implicit guarantee is more than

PETER RYAN: The announcement was endorsed by Australia's Reserve Bank governor Glenn Stevens when
he fronted a House economics committee in Melbourne this morning.

GLENN STEVENS: Well I think what the American authorities have done in the brief look at it that I
managed to do this morning is the right thing. The implications it strikes me is likely to be
positive for markets at least in the near term because it's a source of uncertainty that's closer
to resolution. On the whole I think this is a step they had to take but it's good that they've done

PETER RYAN: The decision also came as a relief for Australian share market watchers, who in recent
months have been underscoring the global importance of Fannie Mae and Freddie Mac to investors.

SAVANTH SEBASTIAN: Any sort of failure from either of these two would cause drastic ramifications
across the industry - not just with housing loans but personal loans, business loans. And really
any failure of any sort had to be avoided and that's why you've seen the US Government step in.

PETER RYAN: Savanth Sebastian is an equities economist at CommSec. This morning he watched the
Australian share market surge more than three per cent as investors jumped on a rare piece of good

SAVANTH SEBASTIAN: A sharp turn around, similar to what we saw with Bear Stearns earlier on in this
year when JP Morgan took them over. We're seeing significant gains for the banking sector,
diversified financial stocks also seeing strong gains.

If you just have a look across the board there's a sea of green: ANZ is up 6.5 per cent; you've got
Westpac up four per cent. Look at the diversified financials and Macquarie who there has been a lot
of concerns about borrowing costs and the amount of debt on their balance sheets, are up 11 per
cent today.

So a sharp turn around for stocks and it's really a reprieve from the fear-driven environment that
we have seen over the last couple of months.

PETER RYAN: Both Barak Obama and John McCain have been briefed on the rescue plans for Fannie Mae
and Freddie Mac; and for many their strategy on how to revive a sinking economy will be critical
when voters go to the polls in November.

ELEANOR HALL: And that report by our business editor Peter Ryan.

Gillard's teacher training plan meets with resistance

Gillard's teacher training plan meets with resistance

The World Today - Monday, 8 September , 2008 12:42:00

Reporter: Simon Santow

ELEANOR HALL: The Federal Government says it wants to improve teaching standards in Australia by
increasing the pool from which teachers can be selected.

The Education Minister Julia Gillard is trying to convince education academics and the states and
territories that they need to make it easier for university graduates without a teaching background
to become teachers.

But the proposal is meeting a fair degree of resistance, as Simon Santow reports

SIMON SANTOW: Julia Gillard says she's not afraid to change the way students become teachers, no
matter who she offends in the process.

JULIA GILLARD: There are a number of ways of becoming a teacher in this country today. Some people
take a four year course to become a teacher. Others get a university qualification say in science
or arts and then do a one year graduate diploma.

We are obviously talking about accelerated models that change the balance from how much is done
sitting in a university lecture theatre as opposed to how much is done learning in front of a

SIMON SANTOW: But you do realise though Minister don't you that you are cheapening what is done in
that graduate diploma by offering to scrap it or to shorten it?

JULIA GILLARD: What I realise is if we do nothing, we will end up with people going into teaching
courses who have barely passed year 12. That is the trend that we're on at the moment. With demand
for teacher education falling, the scores to get into teacher education are going down.

And while some very bright young Australians decide to go teaching, it's possible to get into a
teacher education course having done not much better than passing year 12.

SUE WILLIS: That's just simply not true. It's, I mean it's not a matter of what I make of it, it's
just statistically not true.

SIMON SANTOW: But that's the sort of rhetoric that the Minister is using.

SUE WILLIS: Well I don't know. I haven't heard the Minister actually say that and it well may be
that there are some people who are coming through in some courses who are coming through. But I
know, I've analysed the data in Victoria ever since 1998 and the quality of people entering
teaching has increased remarkably over that period of time.

SIMON SANTOW: The other side of the argument is Professor Sue Willis, the Dean of the Faculty of
Education at Monash University and the president of the Australian Council of Deans of Education.

SUE WILLIS: The quality of people entering teaching at the moment is as good as it's ever been and
has been improving.

SIMON SANTOW: Professor Willis says it's a mistake to assume that postgraduate education diplomas
don't teach people how to teach.

SUE WILLIS: Nobody could argue with the notion that we want to attract the brightest and best into
teaching and that we want teaching to become a career of first choice. Everybody would endorse

However even the brightest and best need to be well prepared. We may attract the brightest and best
into law and medicine but we wouldn't let them practice law and we wouldn't let them practice
medicine unless they were very, very well qualified.

So if we want good outcomes for the children in our schools and particularly those children who are
at the present time the most disadvantaged children, who are living in some rural communities which
are having difficulties attracting teachers, children who may have literacy issue and so on, they
need the very best and that means certainly that they need able teachers who are bright but they
need very well-prepared teachers as well.

SIMON SANTOW: The Federal Government says it's concerned that trainee teachers don't spend enough
time in front of the classroom before they embark on their career.

Julia Gillard has been studying other models and she likes what's on offer outside Australia.

JULIA GILLARD: Our whole aim here is to have the best and brightest teaching in those schools that
need quality teachers the most. And when we look at what is being done overseas, we see excellent
results. We see the best and brightest go in teaching. We see them going to schools that need them.

We see those new teachers making a difference to the results of those students. And importantly
after their first two years of teaching, even though they've got other options and potential jobs
with businesses, more than half of these new teachers elect to stay teaching because they love it.

SIMON SANTOW: Somewhere in the middle are school principals.

BARBARA STONE: Well as a product of the era when the brightest and whatever were courted to
actually do and have paid for them a diploma of education, I'd have to feel that that isn't the

SIMON SANTOW: In the independent sector, there's acknowledgement that graduates who haven't
completed extra teaching qualifications find it hard to become teachers.

Barbara Stone is the principal at MLC school in Sydney and speaks for the Association of Heads of
Independent Schools of Australia.

BARBARA STONE: Certainly I know that rather than going to medicine and law, a number of my
contemporaries went into teaching because we saw that as an exciting opportunity to be able to do
something, but also there was some in a sense pay-off in that our fees were reduced in relation to

So I think that's a huge under-estimation of why people go into teaching. I think that teachers go
into teaching because they want to make a difference and the best thing to do is to improve the
standard of the profession, and the reputation of the profession, and the ease of entry to the

ELEANOR HALL: And that's the principal of MLC Sydney and president of the Association of the Heads
of Independent Schools, Barbara Stone. She was speaking to Simon Santow.

Expert claims North Korea's leader is dead

Expert claims North Korea's leader is dead

The World Today - Monday, 8 September , 2008 12:50:00

Reporter: Karen Barlow

ELEANOR HALL: He doesn't appear in public very often so it's difficult to verify but there are
allegations today that North Korea's leader Kim Jong-il has in fact been dead for five years.

A Japanese expert on North Korea is claiming that the role of the "Dear Leader" has instead been
played by a group of doubles since 2003, when he says the President died of diabetes.

Karen Barlow has our report.

KAREN BARLOW: The word "reclusive" hardly does Kim Jong-il justice. The 66-year-old was last seen
in public on August the 14th when he inspected a military unit.

He is known for dipping out of the international spotlight for months on end, especially when
relations with other countries such as the US are strained.

The leader has been thought to be ill for some time but Japanese-North Korean expert Professor
Toshimitsu Shigemura is proposing a far worse state.

TOSHIMITSU SHIGEMURA: Already he has died. A lot of information came from Pyongyang.

KAREN BARLOW: The proof of the North Korean leader's passing is varied and rest on the main claim
that Kim Jong-il is being played by a number of convincing imposters. The fake Kims are said to be
the wrong height and are always shadowed by one of four senior military figures.

TOSHIMITSU SHIGEMURA: A Japanese TV station checked his voice print four years ago and the result
was the voice was different, the former Kim Jong-il and now Kim Jong-il, so there are questions.

KAREN BARLOW: Kim Jong-il's secret death is impossible to verify and other North Korean experts
have called the claim silly.

Professor Toshimitsu Shigemura is not completely certain himself but has been in contact with
unnamed close friends of Kim Jong-il.

TOSHIMITSU SHIGEMURA: But they are pretty high, maybe 60 per cent or 70 per cent; it's possible.

KAREN BARLOW: Not a hundred per cent?

TOSHIMITSU SHIGEMURA: Yeah, we can trust those persons so we trust, we are trusting this person
with the information.

KAREN BARLOW: This would mean that the world, including Vladimir Putin and Hu Jintao, have been
negotiating with an impostor.


KAREN BARLOW: Kim Jong-il has ruled the secretive Communist state since the death of his father Kim
Il-Sung in 1994 but his father remains the state's eternal President beyond death.

So who pulls the strings now if Professor Shigemura's claims are correct?

TOSHIMITSU SHIGEMURA: Well some of the military leaders, also the party leaders, and government
leaders. Several person is conducting the North Korea's government, yeah. Actually the North Korean
Government is guided by those people, those leaders, not only one person. Now they are collective

KAREN BARLOW: The best chance to test the theory could come tomorrow when Kim Jong-il is due to
appear at a military parade celebrating 60 years since the founding of North Korea.

TOSHIMITSU SHIGEMURA: He will be the double Kim Jong-il, it will be positive.

KAREN BARLOW: You're certain of that?

TOSHIMITSU SHIGEMURA: Yeah. Maybe he will appear, I think.

ELEANOR HALL: That's Japanese Professor Toshimitsu Shigemura ending that report by Karen Barlow.