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Australian Agenda -

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Good afternoon. Welcome to

the program. I'm David

Speers. The Prime Minister's economic forum in Brisbane

will wrap up in about an

hour. It's lasted less than

24 hours and there won't be

any sort of final communique

issued at the end. In Tony

Abbott's view, this whole

thing has been a political

stunt. In his words, "a

Julia Gillard begging

business to talk up the

economy and her government".

And, yes, there clearly has

been a political motive as

far as the Government is

concerned to keep the focus

on economic strengths and

what it's doing with the

economy, but is it really

such a bad thing that the

Government should sit down

from time to time with

business and take stock of

where things are at? Today

we did see a fairly frank assessment of where things

are at from the Reserve Bank

Governor, Glenn Stevens.

He's made it clear where he

thinks the biggest challenge

lies - productivity. That's

hardly a huge revelation, but

nonetheless. He says the an important message

productivity are there answers to boosting

waiting to be picked up.

Treasurer Wayne Swan about Coming up we'll talk to

that, what is the Government

doing to boost productivity?

We'll also talk to one of the

most senior business leaders

at today's business forum,

does he think it's been worth

while? Later we'll look at

how the economic debate is

playing out and indeed how the Government's fortunes are travelling in western Sydney,

a key battleground coming up

to the next election. Our

reporter takes a look at the

seat of Lindsay in Sydney's

west. First the top stories,

back to the news

centre. David, thank you,

hello everyone. Reserve Bank Governor Glenn Stevens has delivered a tough love

message to the Prime

Minister's economic forum in

Brisbane. Governor Stevens

says business and government

must do more to boost

productivity. David Lipson

is at the forum and he filed

this report. The Reserve

Bank Governor, Glenn Stevens,

set the tone of this economic

conference this morning,

putting the focus firmly on

productivity and urging both

business and government to do

much more to improve it. We

Productivity Commission. have a body called the

They have a long list of

things to do. My answer to

what we can do about

productivity is go get the

list and do them. They're

not popular. They're very

difficult and they're

politically hard in many

instances. But these people

are the experts, they spend

their whole life thinking

about productivity. Glenn

Stevens also focused on the

high Australian dollar and

said we shouldn't expect it

to come down any time soon

and we shouldn't necessarily

wish for it to come down

soon. He said there were

some advantages to having a

high Australian dollar,

particularly for consumers. He said those companies,

those sectors, that are

struggling under the high Australian dollar need to adapt, and that takes him

back to his original point about productivity. The

Treasurer, Wayne Swan, said

the Government was already

doing much to improve

productivity. The fact is

the Government has been

looking and working on issues

of lifting productivity

growth for a long period of

time, and I'm in agreement

agreement that we need to with the Governor, I'm in

continue to do that. The

point is that when you're trying to lift productivity

growth levels, these are

investments which take time and we are doing that, and we

have been working at a

variety of levels, not just

in schools and education,

infrastructure, but also in

regulatory reform, which the Governor also spoke about

this morning. The Opposition

leader, Tony Abbott, has

written off this economic

forum as nothing more than an

attempt by Julia Gillard to improve her standing in

government. It takes a

floundering Prime Minister to

go and beg business to talk

up her government. That's essentially what she's done.

She has invited the

businesses of Australia to

come to Brisbane to beg with

them to start talking up her

Government. Now, I think

that the businesses of

Australia are only too well

aware that the biggest threat

to their success is in fact

the Government itself. The

Prime Minister's economic

forum will be wrapped up by

the end of the day, but it

certainly laid out a few of

the challenge s still facing

the Australian economy. The

Australian Ambassador to

Libya says lawyer Melinda

Taylor is in good spirits,

despite being imprisoned in

the town of Zintan. She was

arrested on Thursday by

Libyan authorities accusing

her of spying. Ms Taylor

works for the International

Criminal Court and has been

defending the son of former

Foreign Minister Bob Carr dictator Moammar Gaddafi.

says it may be many months

before she's released. This

is going to be a long

investigation. Second, they

haven't allowed telephone

contact between Melinda and

her family. There's no

promise of an early release.

The Government is talking

about using up to 45 days to

carry out its own investigation. She's being

held in a prison cell with

another female detainee.

NATO's Secretary-General,

Anders Fogh Rasmussen, has

ruled out military

intervention in Syria as the

situation on the ground

deteriorate. Mr Fogh

Rasmussen is visiting

Australia and spoke at the

National Press Club. He

expressed outrage over the

actions of Syrian forces

against civilians. He says

kov ee Annan's plan is the

best proposal to bring peace

to the war-torn nation. A

foreign military intervention

is not the right path in

Syria. I do believe that we

should do our utmost to find

a political solution based on

the Annan six-point plan. Mr

Fogh Rasmussen is also

strongly critical of Russia,

which has today been accused

by US Secretary of State

Hillary Clinton of supplying

helicopters to Syrian

President Bashar al-Assad's

regime. He also thanked

Australia for its

contribution to

Afghanistan. A report shows

South Australians could be

paying the highest electricity prices in the

world once the carbon tax

takes effect. The Energy Users Association of Australia says South

Australians were already

paying the third-highest in

the world in 2011 and the

carbon tax increase of an

average of $150 in the next

financial year could take

them to the top. We're the highest-taxed State in the world by our State

Government, because of our

Federal Government we'll now

have to bear the burden of

the highest electricity

prices in the world. It is a

real hit to Adelaide cost of living. The Climate Change

Minister, Greg Combet, says

the carbon tax price rise in

SA is less than Treasury's

estimate of 10% and it's also

below that figure in NSW.

The Independent Pricing and

Regulatory Tribunal has

approved an 18.1% increase

for NSW power prices from 1

July. Half of the increase

is because of the carbon tax;

the other 9% because of

rising transmission costs for

power and poles. Residents in

WA are cleaning up after

another severe storm damaged

homes and uprooted trees.

More than 20,000 homes in

Western Australia are without

power after gail-force winds

of more than 100km/h battered

the State's south-west.

Forecasters say the storm is

moving east towards the Great

Australian Bight. More than

50mm of rain has been

recorded in some areas. A

quick look at sport now, and

Maroons great Billy Moore

says the Blues' bench will

prove the difference in game 2 at the State of Origin at

ANZ Stadium tonight. Luke

lastas, an though Watmough,

Ben Creagh and Trent Merrim

will start off the bench for

NSW and Moore expects them to

cause plenty of headaches for

the Maroons. I like your

bench. Any bench with Lewis

and Watmough has strike

power. If the forwards

settle into the game, get a

slight advantage, that bench

will score points. I've

always said Luke Lewis is one

of the best players and most

influential players in the

game. After hard work is

done, he knows where to be

and he's dangerous in attack. Maroons assistant

Michael Hagan says they're

not intimidated by the fierce

Blues crowd expected at ANZ

Stadium. Good players like

to play in front of big crowds, whether they're

behind you or against you, I

think that tends to lift your

performance. We have plenty

of big match players and I

think they thrive on that

sort of environment. The

Blues need to win to keep the

series alive or else the

Maroons will secure a 7th-straight series win. Tomorrow's forecast now - wet

and windy across the south

and south-east. It's 4.10

eastern time. Now back to

David Speers in Canberra, as

PM Agenda continues. Thank

you, Vanessa. After the

break, we'll look at the

Prime Minister's economic

forum wrapping up this afternoon in Brisbane, what

has it achooefd? We'll hear

from Treasurer Wayne Swan as

well as one of the senior

business leaders who has been

attending and that massive

electricity price increase

approved today in NSW, half

of it due to the carbon tax,

but the Government says

that's exactly what it

forecast these sorts of

figures. We'll look at all

of that. Stay with us.

Good afternoon. Welcome to

PM Agenda, coming to you live

from Parliament House in

Canberra. The Prime Minister

wanted a frank discussion at

today's business forum,

economic forum, that she has been holding in Brisbane and

it looks like she got one.

Admittedly cameras weren't allowed in for most of the

day, it was closed-door, so

we don't really know what

business and union leaders

had to say in their frank discussions, but the cameras

were allowed in for Glenn

Stevens's, Reserve Bank

Governor's opening address

this morning. He gave a

clear-eyed view of where the

economy is at. He repeated

much of his message he

delivered on Friday in a keynote speech about the need

for us to be optimistic about

where the economy is at,

glass half full, not half

empty. The peak of the

investment boom may have

passed, but plenty of reason

to be optimistic was the

message again today. He also delivered a particularly pointed message about the

biggest challenge we face in

the Australian economy, and

that is, in his view, boosting productivity. It

has been sliding for the last

six to eight years. There

are, he says, answers there,

solutions there, to boost

productivity; they just need

to be implemented. There are

probably a bunch of reasons,

and there might be some

veracity to all of them.

Nonetheless, the issue is how

to get productivity to do

better in the future. The

Central Bank Governor also

made it pretty clear we shouldn't expect any sudden

drop in the value of the

Australian dollar. The

Reserve Bank has been under

pressure from union leaders

in particular to do more

about the Australian dollar, which is hurting

manufacturing. But Glenn

Stevens says the high dollar

isn't all bad news. For a

low exchange rate - every

time we put petrol in our

car, every time we go to a

store and buy consumer

durables or clothing, a lot

of which is imported, every

time we travel overseas, we're benefiting from the

high exchange rate and,

indeed, as consumers, the

exchange rate is one of the

devices that is imparting to

us the higher wealth. Well,

that message didn't sit too well with union leaders.

Here was the ACTU secretary,

Dave Oliver, talking to David Lipson at the forum

afterwards. I just think

it's a bit sort of one-sided

looking at the consumer end,

where we need to look at the

employment end as well, and that's something that we'd

urge the RBA to pay a

continual eye on, what's

happening to employment

levels in this country.

We've continually asked them

to give that consideration when looking at future

interest rates. The forum

will wrap up in about an

hour, with a closing statement from the Prime

Minister. We'll bring that to you live. Tony Abbott,

though, isn't waiting for the

outcome. He's already

labelled this whole forum a

political stunt. It takes a

floundering Prime Minister to

go and beg business to talk

up her government. That's

essentially what she's done.

She has invited the

businesses of Australia to

come to Brisbane to beg with

them to start talking up her

Government. Now, I think

that the businesses of

Australia are only too well

aware that the biggest threat

to their success is in fact

the Government itself. The

key question here is what is

this forum actually going to

deliver? Is the Government

actually going to respond to

anything that has come out of

this, or was this simply an

exercise in government

Ministers lecturing business leaders, telling them what the Government's program

already is? Well, we did

have a clear message, at

least that we know of, from

the Reserve Bank Governor,

Glenn Stevens, is the

Government listening to that?

I spoke earlier this

afternoon to Treasurer Wayne

Swan from the forum. Thank

you for your time, treasurer. The Reserve Bank Governor

kicked off proceedings this morning with a speech about

where the economy is at and a central focus was the issue

of productivity, which he

said has been falling over

the last six to eight years

in particular. Now, he said

productivity is the biggest

challenge we face, boosting

it is imperative to success.

What are you doing about this

productivity challenge? Well,

I think I made the same

points in my remarks last

night, David. I made the

point that there's been a

structural decline in productivity in Australia

over a decade. I also made

the point that when it comes

to overall productivity levels, we're in the top

dozen countries in the world, but because of the structural decline in productivity

growth, it's imperative for

us to attend to these

matters, and we've been doing

that from day one. When it

comes to lifting productivity

growth, there's no one instan

tanus thing that can be done.

It involves long-term

investments in skills,

education, in infrastructure.

That's what it requires.

That takes time to have an

impact. But the other point

I think we shouldn't lose

sight of is what the Governor

said about the strength of

our economy, about when it

comes to the economy, how the

glass is more than half full

and how the prospects for

Australia in this Asian

century are bright. Getting

back to productivity, though,

he said in particular that

governments need to go and

look at the list of reforms

recommended by the

Productivity Commission and

implement them. That was a

pretty clear message there to

the government. Proifkty

commission, there are plenty

of examples where various

recommendations -- Sorry, I

don't agree with that

characterisation at all. The fact is the Government has

been looking and working on issues of lifting productivity growth for a

long period of time and I'm

in agreement with the

Governor that we need to

continue to do that. The

point is when you're trying to lift proifkty growth

levels, these are investments

which take time and we are

doing that and we have been

working at a variety of

levels, not just in skills, education, infrastructure,

but also regulatory reform,

which the Governor also spoke

about this morning. But he did say when he's asked what

the answer is about lifting productivity, it's to look at

the list of things the

Productivity Commission has

recommended. Last week the Productivity Commission issued a report about industry assistance in particular and said that

although it benefits

generally the firms and

industries that receive it,

it typically imposes costs on

other sectors of the economy.

Does the Government have the right mix at the moment when

it comes to industry

assistance? Is too much

being given to struggling

sectors like

manufacturing? No, I do think

we have the right mix when it comes to industry assistance, because the other point that

the Governor and many people

make is that we need a

consensus in this community

about how we deal with structural change in our

economy. Of course we need

to have in place a range of programs that enable structural adjustment. That's what the Government

has in place. The

Productivity Commission and

many others are very vocal in

this space, and the Government is absolutely

proud of what we're doing in

terms of industry assistance,

because the bottom line here

is to have internationally

competitive industries, and

that is the case when it

comes to motor vehicles, for

example. But you don't think

it has a distorting effect on

the economy, on other

sectors, government

assistance going into

particular industries? I

think when you look at levels

of industry assistance in

Australia and compare them,

for example, to other

countries around the world

they are quite modest, but

they are important if we want to retain a community

consensus about making our

economy more competitive for

the long term and lifting productivity growth. Now, the

Reserve Bank Governor on this

whole structural adjustment

we're seeing in the economy made the interesting point

that he made the other day as well that this really would have been happening without the mining boom anyway,

because we've seen a dramatic change in household

behaviour, saving a lot more

and spending less. That is hurting sectors like retail

and housing, but the Reserve

Bank Governor clearly thinks

this is a good thing that we

are saving more in

particular. Do you agree

with that? Of course it's a

good thing, and I've said so

on many occasions. I've

spoken about the cautious

consumer, I've spoken about

the wealth and income effect

of the aftershocks of the

global financial crisis, and

clearly we are living with

those aftershocks. It is a

good thing we have an elevated savings rate. It's

also a very good thing that

we have strong consumption as well, and that's what you saw

in the national accounts last

week, this very good

combination of reasonably

strong income growth, reasonably strong

consumption, but also

elevated savings and, along

with that, contained

inflation. They are very

good outcomes for

Australia. Should those

sector s like retail and

housing get used to that?

The Governor seems to be

making it pretty clear, as

you do you, that we won't see

any dramatic change in this

any time soon. Well, I think

what the Governor was saying

and what I've been saying is

that we're not seeing

consumption which is fuelled,

if you like, by debt. What

we are seeing is an increased

savings rate, and that is

very good for the economy,

but we are still seeing strong consumption. We're

just not seeing a consumption

beams the likes of which we

had prior to 2007, which was not sustainable, and that was the point that the Governor made. Treasurer Wayne Swan,

we thank you. Well, that's

the Government's view of the

issues being discussed there

at the forum today. What

about the business leaders

who have attended? A number

of senior Australian business leaders have been there at

the forum, amongst them Steve

Sergeant, CEO and President

of GE in Australia and New

Zealand, GE of course

involved in many different industries - gas and oil in

particular. I spoke to Steve Sergeant a little earlier

this afternoon. Well, David,

you're right, I think

productivity is an important

issue for us to be focusing

on. I think at the macro

level there are really three

key levers we need to pull.

One is making sure we have

enough people with the right capabilities, the right skills in the right place

where the work is being done.

That's a real challenge for

all of us around the country

and we're working hard to develop the skill levels of

our people and being able to

get enough people to do all

the work we have. I think

the second big level we need

to pull at the macro level is

making sure we have the

infrastructure, so the ports,

the highways, the rail, the

hospitals - all those things

that unblock any potential

blockages. If you look at

the infrastructure investment

around the major regional areas and major cities around

the country, I think there's

an awful lot of investment

going in. Thirdly, I think

it's innovation, and we're a

country that really does a

pretty good job of

identifying ideas, and we

often struggle to get those

to a commercial outcome. I

think we do have a lot of

great innovative approaches

that really drive, frankly,

productivity. A good example

of that, frankly, is I really

admire Alan Joyce and the

Qantas team. You have a look

- they have created a

low-cost airline inside a

premium airline, and they are

easily, by far, the most

successful at doing that of

any airline company in the

world. Just on that example

you give there of Qantas,

Alan Joyce has faced enormous

industrial trouble in trying

to bring about those changes

you talk about. Is

industrial relations and

changes to the industrial

relations framework part of

the answer when we talk about

productivity? I think we

certainly need to be

collaborating a lot more with

government, with the union movement, with the community,

with businesses, to be really

able to identify those areas

of growth, those areas of

opportunity. Frankly, that's

what we're talking about

inside here. It's more about

Australia has some incredible opportunities before us right

now, and it's up to us to be

able to harvest those

opportunities. We've got an

opportunity here to set this

country up, frankly, for a

generation or two. Some segments are doing it a

little tougher as we go

through this transition and

we'll find that we've done that before, we've done that

in the 80s, we've done that

in the 90s, and I'm sure

we'll manage our way through this one too. But to do

that, I think we need to be

aligned, we need to eliminate

the divisive rhetoric, to eliminate the negative

rhetoric. We're actually in

a very good situation in this country and I think it's up

to the business community,

the Government, the union

movement, the broader

community and NGOs at large

to help us navigate our way

forward. So it sounds from

that like you are a glass

half full kind of guy. We've

heard the Government and the

Reserve Bank Governor talking

about the need to restore

confidence in the economy.

Do you agree then that

business has an obligation to

be positive about the economy? Absolutely, and I

work for a large global

company. Australia now is

our second-largest country in

the world outside the United

States. We would say this is

as vibrant as any economy in

the world in which we do

business. We're in some of

the sweet spots, in the oil

and gas and LNG space, in the

mining space, but we're not

in every sweet spot, so there

are segments of our business

that we're still working hard

to grow. Whoo about the carbon tax? Do you think

that's going to be a good

thing or a negative for the

economy? When it comes to

climate charge, we take a --

climate change, we take a

very pragmatic approach to

it. First of all we ask the

question is climate change

occurring, yes, no? Science

would suggest yes to a degree

of certainty. Is climate

change being caused by man-made activity, you have

to look - there's a variety

of different studies, but

it's in the 90%. We sit there and say if climate

change is happening and it's

about a 90% certainty that

it's being caused by manmade

activity, clearly governments

around the world, communities

around the world, will want

to do something about that.

What are they going to do?

As a company, the first thing

we do is we mitigate the

risk. What is the risk?

It's about how do we reduce

our energy usage? So we've

done a lot of things over the

last four or five years on

how to reduce our energy

usage and make us much more carbon efficient. With

regard to that, we are

supportive of a price on

carbon. We think an

emissions trading scheme is

the most efficient. There

are 32 other countries that

have this, and I think it's

important for Australia to

adopt it, because, quite

frankly, we are on a per

capita basis the heaviest

emitter in the world of - in

the developed world. We'll

see major trading partners

take action in this regard,

including countries like

China. I'm concerned that if

we don't take action, we may

get left behind. But at $23,

is the carbon price too

high? Look, I don't have a

view on that. The market

will determine what the price

should be. I will give you

one viewpoint, that in all of our internal investments

since around 2004 and 2005,

when we look at major

investment that is going to

be made around the globe, we

put an internal price of

$30. Just finally, Steve Sargent, you've been sitting

around the table with the

Prime Minister and other

cabinet ministers today, do

you think this has been worth

while, do you get the sense

the Government has been listening as well as talking? Absolutely, I think

it's been very worth while.

Australia has before it right

now an incredible

opportunity, an incredible

opportunity to set this

country up for, frankly, a

generation or two. We also

have some areas in the

economy that are really struggling with the structural transformation

that we're going through

here. So we need to be able

to align our resources, align

our thinking, to make sure we

execute on the opportunities

as well as bring the

industries along through that

adjustment phase and be able

to help them through that

adjustment phase. Unless

we're all talking and

generating ideas and

identifying on those few

areas to prioritise and focus

on, you know, it's hard to

get this stuff done. Steve

Sargent, President and CEO of

GE in Australia and New

Zealand, certainly echoing

the Government's confidence

about where the economy is at at the moment. After our

break our panel will look at what's been going on at the

forum. Has it been a worth

while affair? Dennis Atkins

and Matthew Franklin - stay

with us.

You're watching PM Agenda.

In a moment our panel. First

a quick check of the news

headlines. The Goff nor of

the Reserve Bank has told the

Prime Minister's economic

forum in Brisbane that the

strong Australian dollar is

helping spread the benefits

of the mining boom. Mr

Stevens' comments come a day

after Julia Gillard called on

business and union leaders to

speak out about the strength

of Australia's economy. The

Prime Minister says it's in

the interests of business and workers that confidence

grows. It follows a new

survey that found business conditions had fallen to the

lowest level in three years.

The Australian Ambassador to

Libya has visited detained

Australian lawyer Melinda

Taylor and says she's in good

spirits. Ms Taylor was

imprisoned after being

arrested last Thursday and

accused of spying. She works

for the International

Criminal Court and has been

defending the son of former dictator Moammar Gaddafi.

Mean time, Foreign Minister

Bob Carr says it may be many

months before she's released

from jail. NATO's

Secretary-General, Anders

Fogh ras Mewson en, says

whilst the situation is

deteriorating in Syria, foreign intervention is not

the right move. Mr Fogh

Rasmussen is visiting

Australia and spoke at the

National Press Club. He

expressed outrage of the

actions against Syrian

civilians. He says Kofi's

plan is the best solution to

bring peace to the war-torn

nation. According to a new report, South Australians

could soon be paying the

highest electricity prices in

the world once the carbon tax

takes effect. The energy users association of

Australia says South

Australians were already

paying the third-highest

prices in the world in 2011

and the carbon tax increase

could make them the most

expensive. But Climate

Change Minister Greg Combet

says the carbon tax price

rise in SA is less than

Treasury's estimate of 10%

and is below the figure in

NSW. Residents in Western

Australia are cleaning up

after another severe storm

damaged homes and uprooted

trees. More than 20,000

homes in WA are without power

after gail-force winds of

more than 100km/h battered

the State's south-west.

Forecasters say the storm is

moving east towards the Great

Australian Bight. More than

50mm of rain has been

recorded in some areas. In

sport, Mal Maninga has urged his Maroons to charge out of

the blocks and wrap up the

State of Origin series in tonight's showdown in Sydney.

The Queenslanders went for their traditional team walk

this morning, as they prepare

to win their 7th straight Origin series. The weather -

wet and windy across the

south and south-east

tomorrow. Vanessa, thank

you. Welcome back to the

program. We'll welcome the

panel as well, Matthew Franklin from the 'Australian' newspaper and in

Brisbane Dennis Atkins from

koourm. Welcome to you both.

Matthew, as I said earlier, a

lot of the forum today was

closed doors, so we don't

know what's gone on. We saw

the Reserve Bank Governor

this morning. He delivered a

pretty strong message on

productivity, this is the big challenge we need to address.

Do you think this was a veiled criticism of the Government for not doing

enough on this? I think it

was an unambiguous message.

He's making the point a lot

of business people make, there's great things happening about the economy

but we have work ahead, we

have various things to do to

make the economy more

productive, some less

contentious ones, such as

harmonising rules of laws

between all of the States,

that's one thing, maybe tax

reform, but then there's a

big contentious one, the

issue of labour reform.

That's where the labour

industrial relations laws -

that's the one that is a

problem for Labor. Glenn

Stevens didn't specify

exactly what should be done, but he did say take a look at the Productivity Commission's recommendations, they're all

sitting there. Absolutely.

It's unambiguous. He's a

very professional public

servant, he's not going to be

partisan or disrespectful. Productivity is the he will

sfant in the room. The Labor

Government says they've made

great strides in this area,

and some areas they have. A

Government that sees itself

as reformist, there is un finished business here.

That's the point that the

Reserve Bank Governor was saying. Dennis, it doesn't take necessarily the Reserve

Bank Governor to tell us that

productivity is the

challenge, but it does

crystallise this issue to

hear it so plain ly un

ambiguous ly, as Matthew says, at the forum

today? Yes, absolutely.

Glenn Stevens made the point

often made, he quoted Nobel

prize winning economist Paul

groogman saying productivity

is not everything but it's

almost everything. He also

made the point when you look at productivity and analyse where productivity has slowed

in Australia over the last

few years, he says it's a mix

of just about everything. He

says there is no one thing

that has gone wrong in the Australian economy that has

caused our productivity to

lag a bit. Now, the Government takes some heart

from the figures last week,

the national accounts last

week, which showed an

upparticular in productivity

-- uptick in productivy, but

as Matthew said there is an

un finished agenda. Government, business and

unions know it's in there.

One of the interesting things

that came out from what I

understand when the forum

went into closed session,

Jennifer west Kot from the Business Council of Australia

made the point that

productivity increases should

not be seen as a way of

cutting wages. Now, I

understand that got a very

welcome reception from the

trade union people there -- I

bet it did. -- and a

dialogue happened along those

lines. So the Government

and, from what I understand,

business and unions took a

great deal of heart out of

the debate about productivity

that flowed out of Glenn Stevens' speech this morning

and they think that there's a

dialogue that can go on and

can bear some fruit for the

country. Well, Wayne Swan -

we spoke to him earlier. He

says on this productivity

question it's about investing in skills and education,

which is what the Government

has been doing. But there's

no doubt part of the puzzle

is also industrial relations.

Now, you mentioned there, Dennis, that Jennifer

westicott says it doesn't necessarily mean cutting

wages, but clearly business

want more flexibility, don't

they, to allow productivity

improvements? Yes, they do,

and I think one of the

business people I spoke to

this afternoon said that they

think they've got a good

person to talk to in Dave

Oliver, the new head of the

ACTU. They think that he has

a much more constructive

attitude towards these

things. They think he's

going to be a fierce advocate

of his own side and of the

trade union movement, but

they think that he is going

to bring a maturity and an

attitude to this debate that

they think wasn't there in

the past. Matthew, looking

politically at this forum, clearly the Government's motivation here has been to keep the focus on the

economy, but perhaps, more importantly, get people

talking in positive tones

about the economy. We've

heard a couple of business

leaders do that, Steve

Sergeant from GE was just

telling us he's also one of these glass half full kind of

guys. Do you think

politically it has been a success? I think it's too

early to say, but I think

that the Government is, in my

view, extremely optimistic to

think that having a forum

where they have a lot of guys and ladies in suit saying

"Wow, the economy is in great

shape" - that doesn't mean

anything at all to the

55-year-old man who's watched his superannuation collapse,

to someone worried about the

value of their house, to the

bloke down the corner from me

who runs an ap Olsry shop and

told my wife the other day

the economy for him is in

recession and he's putting

people off. The messages the

Government are putting are

reasonable messages, but the

argument is in two worlds

here: one is in what the big

figures say, and the other is

the lived experience of a lot

of people. I think that is

why Tony Abbott so quickly

jumped on this today to say

that Julia Gillard has had to

invite business people,

embarrassingly, to stand up

and say how good the economy

is when Tony Abbott knows

because the people he's

talking to - they don't think

it is in great shape, they're worried. Dennis, it's a good

point and the reality is most Australians probably don't

even know this forum has been

on today. What do you think,

politically what does what we've seen today and I guess

over the last week blunt Tony

Abbott's attack at all on the Government's economic management? Not in the short

term, no. Tony Abbott does

get out there day after day

with a message that rings

bells in the roufrnlg rooms

and around the kitchen tables

of Australia. He has a

message that responds to

people's most immediate fears

and needs. So in the short

term, no, it doesn't blunt

Tony Abbott's message, but it

does allow the Government to

try to construct what is a

longer-term message and what

they hope is that they'll be

able to use this and try to

build a dialogue between

business and unions with

government input that may

help them. Now, there are

all sorts of things that will impact on whether or not that

is going to be a success in

the medium to longer term,

but this is all the

Government can do, because it

has been so pounded by Tony

Abbott's relentless campaign

on the carbon tax and on

various other economic

message s. Julia Gillard

admitted this in interviews

last weekend, where she said

she'd been doing all the

heavy lifting and now it was

time to move on from that.

So she knows that she's been

on the ropes in terms of this

debate and in terms of this

argument. In the short term,

no, Tony Abbott is still

making more yards than the Government, but the

Government hopes that it is

setting a scene for something

beneficial down the

track. When we talk about what's really affecting

people's hip pockets, one of

the big factors is electricity. Prices are

going up. In NSW the

decision today from the independent umpire is there

will be an average 18%

electricity price rise.

Separately to that we've also

seen a report today from the Energy Users Association

saying that in SA they're

about to pay the world's highest electricity price

once the carbon price comes

in. In NSW the independent

umpire is saying half of that

18% is due to the carbon tax,

so 9%. The Government says

that's exactly what we

forecast, but will people be

that nuanced? I think Greg

Combet, the Climate Change

Minister, has been fastidious

and I'm sure he's right, this

was within our forecast, but

I think it will mean nothing.

As Dennis was just saying,

Tony Abbott has been out

there in an extremely strong,

careful campaign with simple

message s for 18 months or

more undermining this carbon

tax. What matters to people

is an 18% increase in their

power bills, not whether it's

half here or half there, they

think about their hip pocket.

The problem the Government

will have is cutting through

that, and cutting through the very simple messages Tony Abbott has been mentioning

and will continue to mention.

I think it's really tough for

them. In that case, it really

is bad luck for the

Government that there are

other price pressures

boosting the cost of electricity? Yes, it is very bad luck, and the Government

is up against it. Even if

the increases in electricity

after 1 July were only down

to the carbon tax, they were

only about 9% or 10%, and the

Government could say "We're fully compensating that with

the money we're giving you",

that still would be a tough

ask. But the fact that

they're 18% or even more in

some cases makes it even

tougher, because a lot of people will think that's all

due to the carbon tax. If I

were the Government, I'd be

out there saying "Look, your

electricity prices are going

up by 18%, about 9% or 10% of

that is down to the carbon

tax, we are compensating you

100% for that. Why don't you

go to the State Government

and ask for compensation for

the rest?" That's a good

point. On that, we'll see

what sort of answer we get.

Dennis Atkins, Matt Franklin,

good to talk to both of you,

thank you. We'll see how the

carbon tax is playing out in

one key political battleground, western Sydney. Stay with us.

With the carbon tax just a

couple of weeks from being

introduced, how are the

politics of this playing out?

One key battleground always

worth looking at in western

Sydney is the seat of

Lindsay, currently held by

assistant Treasurer David

Bradbury. He always faces a

battle and will do when the

next election is held. We've

tested the mood on the

streets. Here in the seat of Lindsay we're about as far

west as you can go in the

Sydney basin before you start

to climb the Blue Mountains.

You can see them in the

distance behind me. It's

centred around Penrith and is

a classic mortgage-belt seat,

as you can see from the

number of new rooftops behind

me. Indeed, it seems that

new housing estates like this

one seem to crop up like

mushrooms after rain. In the

last few years it's been one

of the most marginal and hotly contested seats in it's

whole country. It doesn't

look like that is about to

change. The incumbent is

David Bradley. As assistant

Treasurer, he now has a direct hand in government and

all the electoral advantages

that a higher profile brings.

Here, with Greg Combet, he's

announcing a green grant of

half a million dollars for a

local business. I think that, particularly in recent

times with my elevation to

the min industry, I've

received a lot of really

positive feedback from the

local community. I think for

a lot of people they're

proud, not just of David

Bradbury, but proud their local member has the

opportunity to serve in the

min industry and to be at the

centre of the Government's economic response and

economic policies. The

Liberals are re running 2010,

with Fiona Scott securing

pre-selection again. I'm

very focused on how we can

repeal all these taxes that David, assistant Treasurer, has absolutely been involved

in, how we can take the

burden off families, how we

can be proactively working

for the people in Lindsay. They're both

targeting voters like Robert

Walker, a new dad with

another child on the way.

His first home and mortgage

in a local housing estate -

to pay the bills he works

mornings, his wife in the

afternoon, their family time

is precious. It would be

nice to have a little bit

more time together, but I

guess it's a fact of life

that we need to work. They

keep a close eye on interest

rates. Every quarter of a

percent that comes off does

make things a little bit

easier, and I guess it gives

you the opportunity to do a

little bit more saving. And

concerned about the strain on infrastructure caused by a

big Australia. In Canberra,

you hear a lot about

immigration and asylum

seekers as big issues in

outer suburbs like this one,

and this is one of the

reasons why. Over my right

shoulder you can see the big

open spaces that the people

out here hold so dear, over

my left shoulder the latest

land release and indeed the

heavy machinery already has

moved in to start building

hundreds of new homes here at

Glenmore Park. Many people

here trace this big squeeze,

as they put it, back to Canberra and the Federal

Government's policies on

immigration and asylum

seekers. I guess we're

concerned about the population levels in

Australia and the immigration

levels. I guess in western

Sydney our quality of life is

dependent upon our open space

and green space and sense of

space. That is one of the qualities of western

Sydney. There's one other

issue on everyone's lips.

Probably the carbon tax. I

think the carbon tax is a

dreadful tax. I think it's a

tax that at this time we

don't need and I think it

will affect all our lives and

we're only starting to see

the start of it now. The

carbon tax is wrong. I think

that we pay enough tax and if

we keep going the way we're

going, little businesses like

the place I work for won't be

here anymore, and we'll have

Woolworths and Audi and

everybody else buy us out,

that's wrong. We support our

farmers and local community

and chart charities and

things like that, so we should support everybody. Doesn't sound like

you'll be voting Labor? No,

definitely not. We are a big

mortgage belt, so when the

cost of living goes up, interest rates, that affects

people here, and people are

really nervous come 1 July

what that will mean for their

hip pockets. They're seeing

their electricity prices sky

rocket and they don't know what will happen next.

There's a lot of fear about

that. Fiona Scott lost this

seat by less than 2,000

votes. She believes if Julia

Gillard had flagged a carbon

tax before the last election,

she'd have an office in

Canberra today. The people

of Lindsay were lied to at

the last election. They were

told there would be no carbon

tax "under the Government I lead", and now we see there

is going to be a carbon tax.

We fought a very hard fight

and I'm anxious to get out

there and to work really hard

for the people of Lindsay,

because we deserve a credible

Government out here. Do you

think that promise lost you

the election? I think it was

a very, very strong

contributing factor to it,

absolutely. This is

certainly not the most

popular policy anyone has

ever introduced, but if what

the Australian people

exclusively are looking for

is popular policies, I suspect they're the sorts of

policies that were endorsed

year after year in places

like Greece. I never ever

hid the fact I wanted to put

a price on carbon. I'm on

the public record, always

have been, I was in the

Parliament, I went to the

2007 election clearly saying

I'd price carbon, and we said

we'd price carbon. While

we're talking, a driver

screams abuse out the window.

Someone just yelled out of a

car at you, calling you a liar. Is that something you

cop often around here? Look,

I didn't hear that comment.

Look, you know, I had to

break it to you - this might

come as news to you - we have

a pretty robust democracy in

this country. As someone running for elections for, as

I said before, over 13 years,

one of the great things about

the Australian people is that

they don't pull any punches. If there's any seat

where the gloves are likely

to come off come election

time, it's this one. David

Lipson reporting there from

the seat of Lindsay. That's

all for today's show. We'll

be back the same time

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