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Australian Agenda -

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Good afternoon. Welcome to

the program. I'm David

Spears. John Howard used to

call it cleaning the

barnacles, scraping away

those un popular pieces of

the policy armoury to clean

up the ship and get it ready

for an election. It looks

like that's what Labor is

doing at the moment as well.

Two weeks ago Julia Gillard

backed down on asylum

seekers, embracing Nauru and

Manus Island as offshore

processing centres. Today it

was the carbon tax. No,

they're not getting rid of

the carbon tax, they're not

even lowering the price or

moving to an emissions

trading scheme earlier than

2015, but once we do get to

2015, the planned floor price

at $15 is disappearing, it

won't exist. That floor

price was designed to ensure

that, once we do get to a

floating price, should the

European price be a lot lower

than that, the Australian

price can't fall below $15 a

tonne, to provide certainty

and provide some reason to

invest in renewable energy.

From under a lot of pressure

from business, Opposition and

some in Labor ranks, the

Climate Change Minister, Greg

Combet, today announced the

floor price will go. He's

sugar-coated this

announcement by being able to

announce the linkage of the

Australian scheme with the

European Union's emissions

trading scheme. This is the biggest scheme in the world

and it will mean that from

2015 Australia is tied to

that European scheme. Our

price will match the European

scheme, and from today Australian businesses can

start buying European permits

that they can then use from

July 2015 onwards. The Climate Change Minister was pleased with this

announcement, even though, as

we say, it is quite a

backdown. They were always

matters that we were

addressing. On the issue of

the floor price, of course it

was part of the package as

originally announced. We indicated that we'd embark

consultation with the upon a process of

business community, which we

have done. Many concerns

have been raised by the business community about the

floor price, and we have been

cognisant of that and we've

been responsive now to it.

It was also an issue in the

discussions with the European

Union, and at the end of the

day, the Government is

determined that the best

outcome for us economically

and environmentally is to

facilitate the linkage with

the European Union. Just last

week Greg Combet on this

program was saying that the floor price was legislated

and they were going to stick

with it. Not anymore.

Cabinet met last night and

decided to get rid of that

floor price. The Greens,

however - this represents an

even bigger change of heart

for them. They were the ones

who insisted on this $15

floor price from 2015 on.

They demanded this as part of

the deal. Christine Milne,

Greens leader, had argued for

it ever since. Today the

Greens leader is happy with

this outcome because of this

deal to link in with the

European scheme. Senator Milne believes this will

deliver even stronger

benefits than the floor price

could. It means that all the

talk that has gone on in Australia about Australia

going it alone, Australia

going before the rest of the

world, Australia taking

action more than anyone else,

people can clearly see that

is a nonsense. From today

companies will be able to buy

into the European market and

there will be discussion from

now on about getting a treaty

by 2018 to have two-way

trading, by which time,

hopefully, other markets will

come on board. Christine

Milne is confident the

European price and therefore now the Australian price

predicting it could in the could be higher, even come 2015. She believes it won't be as low as it is now

years to come reach as high

as $50 a tonne. What gives Christine Milne that

confidence - we'll talk to

her shortly on PM Agenda.

What such a high price would

mean for Australian business.

While this softening of the

carbon price to an extent may

address some of the concerns

amongst the business

community, it's not going to

stop Tony Abbott's campaign

against the carbon tax. The Opposition Leader reacted to

this afternoon's announcement

from the Government, and made

it clear he'll keep this

fight up. This is just a bad

tax. It is a bad tax based

on a lie and every day and

the Government trying to

patch it up demonstrates how

bad a tax it is. You can

just imagine, can't you, the

Prime Minister going into the

next election saying "There

will be no floor price under

the Government I lead."

Plainly, every time the

Government touches this tax,

it gets it wrong. As I

mentioned, we'll be talking

to Christine Milne shortly,

also Climate Change Minister

Greg Combet on what this new arrangement will mean for

Australian business and for

the carbon price in

Australia. We're also

standing by this afternoon to

hear from Paul Henderson, the

former Chief Minister of the

NT, due to make a statement

any minute from now on his

future, a lot of speculation

he'll step down from the

Labor leadership in the NT.

We'll bring that live as soon

as we can. Let's go back to

the news room for the other

top stories. The Construction

Union has been ordered to end

a blockade at a massive

Grocon building site or face

proceedings in the Victorian

Supreme Court. It comes

after thousands of protesters

clashed with police in the

centre of Melbourne's

CBD. Chaos in central

Melbourne, as thousands of

police came face to face with

thousands of protesters, the

scene quickly erupted. There

was no violence this morning.

They came around the corner,

when you get horses and

people on foot, that causes

confrontation. Outgoing

Chief Minister Paul Henderson

speaking to the media on his

leadership future. Mic on?

Ready to go? It's great to

be here with Delia today.

Obviously after the election

loss on Saturday night, I've

been talking to family, work

colleagues, friends, about what the future holds for

Paul Henderson. This morning

I made a decision in my own

mind that I'm very

comfortable with and have got

great support for that I will

no longer lead the parliamentary wing of the

Labor Party. It's a decision

that I've come to very

clearly in terms of what I

think is in the best

interests of the party going

forward. I'm really looking

forward to going back to my

electorate. I first put my

hand up for public office

back in 1993 to contest the

seat of Nightcliff. Back in

those days I was really

excited, wanted to be a local

member of Parliament and of

course, through my journey,

in terms of politics, I've

had some amazing experiences.

But I've always enjoyed -

always really enjoyed - the

grassroots of being in the

electorate. Today I'm really

looking forward to getting

back to Wangooree, back to

the people who've elected me

for a fifth time, I'm humbled

by the support from my

community. I'm looking

forward to getting back and

engaging at a grass-roots

level as a member of

parliament to work with a

community that I love, where

I live, and who have

supported me for five

separate elections. I'm also

really looking forward to

working right across our

community. I have many, many

great community interests and

passions and I'm looking

forward to working with

sporting groups, with other

associations, with education

groups and putting back some

of the great experiences and

knowledge that I have to help

our community. For me, it's

the end of a journey in many

ways. I'm announcing today

that I obviously won't be

contesting the next election

in four years time, but

between now and then my total

support will be for Delia,

who has been unanimously

endorsed by our Caucus as the

new leader to take the party

forward in opposition. Delia

and I have been great mates

for many years, even before

politics. I think we were a

pretty dynamic team as leader

and deputy in that last term

of government and I'm really

looking forward to supporting

Delia as she takes on the

challenge of being Opposition

Leader to hold the CLP

Government to account. I'm

also really looking forward

to a mentoring role for our

Caucus as we move into

Opposition. I'm the only

person on our team that has

experience of opposition. I

was in opposition for two

years before we achieved

government and I'm going to

be a very strong mentor to

all of those Caucus members

on how to be a very strong

opposition in terms of

holding the governments of

the day to account for the

many promises that it made

right across the NT. For

myself, I'm looking forward,

my electorate officer, I'll

be out there tomorrow. I'm looking forward to getting

back to my community and

doing everything I can to

support Delia and our new Caucus team as we take on the

role of opposition. Over to

you, Delia. Thank you. First

I want to say it's been my

privilege to work with Paul

Henderson. He has been an

awesome leader. Every single

member of our team were happy

with the decision that he

wanted to make as to whether

he continued on as leader or

not, absolute and full

support for Paul Henderson,

genuine friendship and I look

forward to Paul being a

mentor to me. He has been a

leader, an incredible leader,

and he has a fantastic legacy

as Chief Minister of the NT

and also as a hard-working

Minister - 12 years of hard

commitment building the

Territory, leaving incredible

change and improvement in

people's lives. I respect

the decision he's made to go

back to his grassroots

community and electorate, to

sit above and mentor across

the team and to support all

of us into a new and

challenging role in

opposition, but a role that

we're not daunted by, a role

that we look forward to, we

look forward to getting out

right across the Territory,

engaging with Territory

orrans, listening to those

people who chose not to

support Labor this time, what

their issues are and learning

from that and re-engaging and

taking the lessons on. We've

got a dynamic, fantastic

economic growth across the

Top End, but how do you continue to see that growth

right across the Territory?

How do we ensure services

continue to keep pace? We

will be holding Terry Mills

in Government to account for

the many, many promises that

the CLP made right across the Territory. She's the new NT

Labor leader, Paul hendzerson

just announcing now he's

stood down from the role.

He'll stick around on the

backbench but won't contest

the next election in the

Territory in four years, so he'll be getting out of

politics. Delia Laurie takes

over as Labor leader there

after the election defeat on

the weekend, describing Paul

Henderson as an awesome Labor

leader. We'll have further

analysis of that from our

correspondent in Darwin

throughout the afternoon and

evening. Making her opening

remarks there in the new

role. After the break, we'll

continue with PM Agenda.

We'll be joined by Greens

leader Christine Milne, also Climate Change Minister Greg

Combet on this afternoon's

announcement of changes to Australia's carbon pricing scheme.

You're watching PM Agenda. Welcome to the program. A significant announcement from the Government this afternoon, as it tries to

clear up some of the policy

problems that have been

plaguing it for years.

Asylum seekers two weeks ago,

we saw the Prime Minister

back down there and embrace

Nauru and Manus Island.

Today it was the turn of the

carbon tax. This has been a

far bigger problem for Julia

Gillard. No, she's not

getting rid of it or bringing

forward the move to a floating price, but when we

do get to a floating price

away from the fixed carbon

tax period - when that

happens in mid-2015, no

longer will there be a floor

price. That's despite the Climate Change Minister, Greg

Combet, saying this to us

just a week ago on this

program. We've legislated

the floor price, that's quite

well known. I am discussing

with the European Union the

linkage of our schemes. It

is an issue that's in those

discussions, but we're

committed to the arrangements

that we've legislated. At

$15. That's the floor

price. Well, Greg Combet

announced this afternoon that

he's in fact been negotiating

for about seven or eight

months to link in with the European Union trading

scheme. Cabinet agreed last

night to make this change, get rid of the floor price

and link in with the European

scheme from mid-2015. What

it means for Australian

business from today, though,

is that they can start buying

European permits, which

admittedly are quite cheap at

the moment. They can bank

them and then use them from

2015. It might be quite

attractive to many of them.

The Greens in all of this -

they argued for the floor

price, but now they're happy

with this outcome. Why?

Because they say linking in

with the European scheme will

actually deliver bigger

benefits. To tell us why,

the Greens Leader Senator Christine Milne joins me now.

Thank you for your time.

It's not just Greg Combet who

told us the floor price was

there to stay, you did too.

You said in May speculation

about disallowing the floor

price signals uncertainty,

you said the Government is

not walking away from the

floor price, in May you said there won't be a change to the package between now and the election. Were you

misleading us? No, I wasn't

misleading you because no

decisions had been made at

that point. Certainly we were talking to the

Government about the issues

around this and certainly the

floor price was one of the

things we most strongly

argued for in the

negotiations through the multi-party committee. The

issue for us, though, was

making sure we had a floor

under the price. What we had

negotiated up until July last

year stood and was really

important because, without

it, we would have been

trading at the price of the

cheap international permits,

which is around $3.50, even

at the moment. What we then

had on the table was the

prospect of linking with the

European Union, but how to

work out how you would end up

with a higher price over

time. So that negotiation

has taken a long time. There's always been the

prospect of linking with the

European scheme, hasn't

there? Yes, but it was

certainly a long way off. We

never expected in the

negotiations last year, even

this year, that we would

actually get to this point.

That's why I'm excited about

it. I think it's a really

good outcome. It links the

Australian emissions trading

scheme with the European

scheme, it links us to 500 million people, everyone on

the same trajectory to invest

in green technologies, low-emissions technology, and

so on. From your perspective,

from the Greens' perspective,

it's only going to be better

than having a floor price if

the European price comes up

from where it is at the

moment. You said today you

think it could get to $50 or

even more a tonne. What gives you that confidence? That's the

projections of some of the

analyst s and that

essentially is what we're

doing. We are trading what

was a short-term floor price

between 2015 and 2018 for a

long-term price curve and

discussions with the European Union saying that they want

the price to recover and to

in fact go up considerably

because of the pipeline they

have of new investment,

particularly in renewable

energy and the like. But you don't know that that price

will go up, that that

European price will go up? I know Bloomberg have forecast

it to go up, but others like

society General, Barkleys,

they're not predicting it to

move much at all. If it

doesn't go higher than now,

it could damage investment in

renewable energy here, it could also damage the

budget? Well, here's the

conundrum: without the

linking of Europe and without

taking this risk, in 2018 you

risk the price falling to the

lowest price, that is the cheap permits on the

international level and big dislocation, you'd go from a

floor price of $17 down to

$3, $4, $5. Alternatively,

you go with what we're doing

now, linking with the EU and

you are hoping that the set

aside that they've set in

place will drive up the

carbon price and the floor

under the scheme. It's a

risk, David, yes. It could

happen in 2015, where we're

meant to have a fixed price

of $29, it could fall to $5

or $10? If that happens, the European economy won't have

any hope of making the shifts

it needs to recover. That's

why carbon pricing, unlike here in Australia so much,

but certainly in Europe, is totally linked in to their

economic recovery because

they have the whole green

economy focus, so they want

the price to go up to invest

in renewable energy,

particularly in Germany. The

UK has offshore wind in the

pipeline. They need a higher

price to make that viable.

So we are basically saying we

will take the educated risk,

if you like, of the price

recovering in the European

Union and driving a higher

price, but what we're giving

Australian business is the

forward cost curve. From

today they can look at the

European price and they know that will be the Australian

price. Where do you think it

will be, that European price,

in 2015? Well, I believe that

it will be at least our floor

price, if not higher. So at

least $15, if not

higher? That's right. But it

could still mean a drop from

$29 down to wherever it is.

That would hurt the budget,

wouldn't it? In the event

that occurred, it would, but the Treasury has clearly done

its modelling, saying $23

price leading up to $29, so

you're not going to have that

level of dislocation. I

would like to think that

Treasury is right and I'm

prepared to back them and certainly my discussions with

the Europeans would say the

price should be heading in

that direction. That is what

we are working towards, but

the overwhelming good news

today is that the emissions

trading linking the emissions

scheme here and in Europe

shows that we are on the way

to global trading and

addressing a reduction in greenhouse gas emissions, and that has to be good news. Greens Leader Christine Milne, thank you. Thank

you. After the break we'll

talk to Climate Change

Minister Greg Combet. Stay

with us.

Welcome back to the

program. We heard there from

the Greens Leader, Christine

Milne, on this afternoon's

announcement from the

Government it's doing away

with the floor price that was

to apply to the carbon tax or

the floating carbons emissions scheme from 2015.

Now it will be linked to the

European price and move

accordingly, up or down.

Joining us now, the Climate

change Minister, Greg Combet.

Thanks for your time,

Minister. You sat here a

week ago today and said the

floor price is here to say,

it's legislated. What

happened? Cabinet made a

decision I announced today,

until the policy has changed

I stick with the policy

-- You argued within cabinet, obviously, something different? I've been

consulting with and

negotiating with the European

Union, but until the policy decision is made, the

pre-existing policy stands

and I have a responsibility

to argue it. Is it a

concession that the original

design was flawed? No, it's

not a concession that it was

flawed, but we undertook when

we announced the policy in

July last year to consult

business in particular over

the design of the floor price

that was proposed and we've

taken a considerable degree

of time in doing that.

Business didn't want the

floor price implemented at

all, that was the preferred

position. We've had a lot of

submissions to us about that.

It also was an issue in the

discussions with the European

Union that we've been having.

It's difficult to link a large market where one part of the market has a

particular price constraint

like a floor price. For

those two reasons, I

determined that I'd take a

position to cabinet to recommend that the floor price be not proceeded

with. The argument you always

made and the Prime Minister

made for this floor price was it would give certainty to

business. It's the same

argument you've used about

why we need the fixed-price

period for three years. If

they no longer need that

certainty, why not go further

and go to a floating price

today? There's even better

certainty now, that is the certainty we'll have a

linkage with the European

Union once we move to a fully

flexible emissions trading

scheme from 1 July 2015 and

that the European Union price

will effectively be the

Australian carbon price.

That's a significant thing.

That's the biggest carbon

market in the world,

sophisticated futures markets, financial

instruments available,

business will have - they

know how to work with

markets, that's their

business afterall. It's gone

up and right down, it's not

the most certain price in the

world, is it? You're not

even certain where it will

go? The long-term trend price

over the last four years and

the futures market averaged

$23, but it's been seriously

impacted, it's true, by the

Greek debt crisis and the financial difficulties that

Europe has been experiencing.

But the European Union of

course has to address not

just the financial and debt

issues over the course of the

next period, but also as taking steps to strengthen

the price of their emissions

trading scheme. Again, if

that's going to give business

certainty, why not do it

today? Why not link in with

that European price and go

right now to a floating price? I've always felt there

were good policy reasons, one

of them is it provide s certainty and confidence

about what the price will be

while we're getting the

carbon price implemented in

the economy. It also allows

us us time to establish all

the mechanisms for an

emissions trading scheme,

which is a market instrument where we'll have a regulator

and a set of auctions that

take place for units. We

need to make sure that's

established with the best

possible security, we're

working on that, it takes

time. It also allows us to have negotiations with other

countries, including the EU,

about linking our schemes.

I'm involved in discussions,

albeit fairly preliminary in

nature, with other partners

in the Asia Pacific region about linking with them as

well. So, from today,

Australian business can start buying European permits under

the announcement that you've

made. Yes. They're pretty

cheap at the moment compared

to the $23 a tonne price

here, you can buy them for

less than $10 and then, what,

bank them until 2015 and then

count them against your

emissions then. Are you

encouraging business to do

that, to take this bargain

price at the moment? It's a decision for business to

make. Sensible business

people make sensible

decisions. They'll make

their own judgments about

what the future price in

Europe may be and

consequently what the price

in Australia may be once we

move from the fixed-price

period to a flexible,

international ly linked

emissions trading scheme on 1

July 2015, they'll start

buying units. Electricity

generators sell contracts

three years in advance,

they'll be planning their

carbon liability a few years

in advance. Tony Abbott says

he still can get rid of this scheme, even though Australian businesses can

start buying up European

permits. Is he right? I

notice he's very sensitive

every time I say that he

can't and he won't repeal it

and he's sensitive because

that's the truth. He doesn't

traffic much on the truth, he

traffics a lot in deceit

about these issues. The the

fact of the matter is we have an international responsibility. This links

us to the largest international carbon market

in the world. It means that

we'll have the same carbon

price as our second-largest

trading bloc as 30 other

countries which operates with

530 million people. There is international action. Tony

Abbott made the absurd

statement again today that

there's no carbon markets anywhere and certainly not in

the Asia Pacific region. It

is just plain wrong. There is

not in the US, California notwithstanding. California

is a bigger economy than

Australia. There's not a

national emissions trading

scheme there, there's not a

national carbon price in

China nor Canada. There's an

emissions trading scheme in

parts of Japan, in Tokyo,

seven emissions trading schemes are being developed

and implemented in China as

we speak, and we're working

closely with the Chinese

authorities on those. The Korean Government has

legislated for an emissions

trading scheme to start in

2015. California, which is a larger economy than Australia's, believe it or

not, has an emissions trading scheme in place. I think

it's currently around $20

Australian, the price there.

Quebec has introduced one,

other provinces in Canada,

other States in the US have

limited emissions trading arrangements. This is

growing. We're going to be

linked directly with

countries like the UK,

Germany and France from 1

July 2015 and it's absolutely

incontrovertible that action

is being taken at an

international level, that we

are playing our fair share,

that's all we're doing, and

we're developing it in close

relationship with

international partners. Can I

ask you finally about the

budget impact of today's

decision? Treasury had

modelled that the price would

be $29 a tonne from July 2015 and you've said that you

won't take away any of the

benefits, the tax cuts and other benefits, this is

paying for. What if the

price now falls below $15 or

down to $15, even $10, surely

that will leave the budget

with a hole? Well, I've said today we stand by the

Treasury modelling, and we

do. That means we stand by Treasury, which has done the

most exhaustive work of

anyone, more than you or I individually or other

commentators, on predictions

of carbon pricing, taking

into account a range of

factors. That's come out

with a view that the carbon

price will be $29 in 2015-16

and that it was an international price. We're

standing with the Treasury

modelling. It has proven to

be very accurate. The

modelling was surely done on

what was the legislation, to

have a floor price of $15.

That's now gone, so doesn't

the modelling change? The

floor price was simply a safety mechanism, if you

like, for wild fluctuations

in price. The Treasury

modelling was done taking

into account all the relevant

factors and particularly what

was going on internationally

and it was an international

price that they have

predicted in 2015-16. That

is the most detailed work

-- Do you stand by it? We

stand by it, that's what we

believe it will be. We

believe the European price

will recover. There are a

couple of things I want to

say about it, when people are

thinking about this: what

has proved to be the most accurate since the carbon

price was brought in? The

answer is the Treasury modelling, on the most

important issue, electricity

pricing, they got it bang on,

in fact proved to be a bit

conservative in various

States. Independent

regulators and the market are

pricing the carbon price in

exactly the way the Treasury

predicted. I think it's time we stopped bagging the

Treasury, that the Opposition

does, and have some

confidence in its work. They

do good work. It's very

thorough, it's independent of

the Government and it's

proven to be very accurate.

There's no reason to doubt

it. I think we're entitled

to have every confidence in it. Greg Combet, thank you.

Thank you, David. Time to

check in with the news

headlines. Here's Van es a

trezise. The Government has

made a major concession on

its carbon pricing scheme,

announcing it's scrapping the

legislated floor price of $15

per tonne. The carbon tax is

currently at $23 per tonne

and will transition to an

emissions trading scheme by

2015. The original pricing

scheme was scrapped after

negotiations with the

European Union that will see

the two trading schemes

linked in three years. The Opposition Leader, Tony

Abbott, says the Government

is patching up the carbon tax

just two months after its

introduction. Construction

workers at the Sydney Grocon

site have announced they'll

stop work tomorrow to discuss

violent clashes between union officials and police in Melbourne this morning. The

company has now extended a

court injunction preventing

union officials from

blockading the Melbourne building site. Members of

the CFMEU have been

protesting at the site since

last Wednesday. Twin sisters

who were known for their

battle with anorexia have

died in a house fire in

Geelong, south-west of

Melbourne. One woman in her

40s died overnight, while the

other was taken to hospital

in a critical condition, but

died a short time later.

They had spoken publicly

about their anorexia, calling

it an insidious disease.

Victoria Police say the fire

is not considered suspicious

and are investigating if a

cigarette might have been the

cause. Tropical storm Isaac

continues its path along the

coast of the US state of

floor da, with forecasters warning it's set to

strengthen to a category 2

hurricane. Isaac is due to hit New Orleans almost seven

years to the day after

Hurricane Katrina, but it's

not expected to be as

powerful. Isaac has already

caused 24 deaths in Haiti and the Dominican

Republic. Former NT Chief

Minister Paul Henderson has

stood down as Labor Party

leader. Mr Henderson said he

will continue in politics and

will take on a strong mentor

role. His place will be

taken by Delia Laurie, former deputy leader and Treasurer.

The move follows the country

Liberal Party's convincing

win in Saturday's Territory

election. In sport, Kevin

Sheedy has been re appointed

as head coach of Greater Western Sydney for a further

year. The announcement comes

nearing the end of the club's

debut season in the Alf.

Showers developing in the

south-east, mostly sunny in

the east and the

north. Vanessa, thank you.

We're going to change topic

now and look at Kevin Rudd's

re emergence on the scene

today. He gave a speech at

the launch of a new biography

on Goff Whitlam. Paul Kelly,

the Australian's editor at

large, was there and joins us

now. I want to play quickly

what Kevin Rudd had to say, a

couple of remarks. One, he

listed his achievements on

the reform front, his legacy, if you will, as Prime

Minister. Have a look. When

the Australian Labor

Government was elected in

2007, it was elected on the

basis of a clear program of

policy reform, including a

new approach to productivity

driven by new large-scale

investments in skills,

education, training and

infrastructure, including a

national broadband network,

an education revolution,

health and hospitals reform

and rat fikation of Kyoto, a

renewable energy target of

20%, a price on carbon, the

abolition of WorkChoices and

a new and active foreign

policy in our region and the world. The Government

continues to implement a

program of reform under Prime

Minister Gillard, including a national Disability Insurance

Scheme of far-reaching

importance for our people. Listing there, Kevin

Rudd, the bulk of

achievements during his time

in the Lodge. He also took a

swipe at Tony Abbott, saying

he is beatable at the next

election, but did not specify

by whom. He has neither the

temperament nor the policies

to occupy the highest office

of this country, the office of Prime Minister. That is

why I believe Mr Abbott is

entirely beatable at the next

election, because increasingly the Australian

people see what it may mean

to take a conservative leader

such as him on trust. Paul

Kelly, what did you make of

Kevin Rudd's speech

today? Well, David, this is

the sort of speech which

Kevin Rudd is quite good at.

He was launching the new

biography of Goff Whitlam, so

he talked a lot about Goff Whitlam, but he also had two

other messages. One was he

stressed that the Government

that he led, like the Whitlam

Government, had been a

reforming Government and he

went through his

achievements. The other

point to make was that he launched a very strong attack

on the conservatives and he

compared the Tony Abbott

conservatives today to those conservatives back in the

1970s who attacked and

demolished the Whitlam

Government. Essentially his

message there was that the

conservatives have nothing

constructive to offer,

they're simply demolition

politicians and they exploit

fear. So essentially he's

attempting here to further

discredit and attack Tony

Abbott. Where do you think

Kevin Rudd's mind would be at

on the leadership at the

moment? We've seen some improvement for Julia

Gillard, or for Labor at

least, in the polls, and talk

of any leadership change

seems to have slipped away,

for now at least. Where do

you think Kevin Rudd would be

- how would he be feeling

about this whole issue? Well,

I think he would probably be

very much aware of the trend

in the polls. He watches the

polls very closely. He would

see that there has been a

pick-up in the polls for the

Labor Government and for

Julia Gillard. Of course, he

would also be acutely aware

of the fact that Labor is

still a long way behind. The

advantage which Tony Abbott

currently enjoys remains a

very substantial one. I

think the other point to make

here is that Julia Gillard at

the moment is radiating this

sense of determination and

tenacity. She knows that her

strategy is starting to work

and we can see now the

Government rolling out a

series of new policies and

policy changes. We've got

offshore processing in Nauru

and in Papua New Guinea, and

of course we've got the

change just announced today

in relation to carbon

pricing. This comes off the

back of the announcement

about the national Disability

Insurance Scheme, and we know

the Government will be

announcing soon changes when

it comes to school policy.

So this is all part of the

Julia Gillard strategy. Just

finally, Paul, another former

Prime Minister, John Howard,

made some comments earlier in

the months that have now been

leaked to the Financial

Review, comments that are

uncomfortable, I guess, for Tony Abbott on industrial relations, on the strength of

the economy, on foreign

investment from China. What

do you make of this? Does it

make life more difficult for

Tony Abbott? Look, in policy

terms here, John Howard is

dead right, there's

absolutely no reason why the

country couldn't go back to

the industrial relations

system we had between 1996

and 2005. That was the

system over which he presided

before he introduced

WorkChoices. The comments he

made about Chinese investment

again I think were very

sensible. What these

comments highlight is the

extent to which there has

been a change of sentiment

inside the Liberal Party,

inside the Coalition. They

are more wary now and more

cautious now about industrial

relations reform. That's

quite understandable. And of

course Tony Abbott is more

cautious than John Howard is

on the question of Chinese

investment. So I think it indicates that there are

tensions and divisions inside

the Liberal Party on these

issues where, when John

Howard was Prime Minister,

there was pretty much firm

agreement on them. Paul Kelly, thanks for your time

this afternoon. After the

break, we'll go to our panel,

joining me here in Canberra

Malcolm Farr and Kerry-Anne Walsh stay with us.

You're watching PM Agenda.

Joining me now in the

Canberra studio Kerry-Anne

Walsh, a political

commentator, and Malcolm Farr

from Thank you

both for joining me. John Howard used to call it

cleaning offer the barnacles,

a couple of weeks ago Julia

Gillard did the backdown on

asylum seekers. Today it's

not a huge backdown, but it's

a symbolic one, isn't it, on

the carbon tax? I think it's

more than symbolic. I think

it's very risky. A couple of

things - one, we have the Greens actively supporting

this move closer towards

market purity on a program,

which is a bit unusual. We

have the Government banking

heavily on the Treasury

having got it right that the

carbon price, international

carbon price, or

European-Australian carbon

price will be greater than

$15 in three years time. Who

knows where it will be.

Those Treasury estimates came

forward before Europe was

really struggling, a couple of countries like

that. They're based on the

European price being $29 a

tonne in 2015. At the moment

it's less than 10 bucks. All

sorts of projections that it

will go through the roof, but how reliable they are we

don't know and the Government

will have big bills from

pension increases and other

compensation will have to

pay. Really everything is

based on a hypothesis that

things are going to improve

in Europe and that the price

is going to go through the roof. Politically this does

give the Government an

answer, though, doesn't it,

to the argument that we're

way out in front of the rest

of the world? It does. We may

still be for a few years, but

from 2015 we'll be locked in

with Europe. That's right.

It internationalises it, a

good thing, it will be harder

for Tony Abbott to mount the

argument that Australia is

isolated, as you said. I

think it boxes him even

tighter into a corner in

terms of how he's going to

unpick this if he gets into

office, and that still is of

course an "if". None of us

are international

accountants, but you'd assume

Aussie businesses would be

looking at the European price

right now and say I'll buy

some of those permits, thank

you very much? Absolutely, at

$10 you'd leap into it so in

three years time you can say

I've already done this. If

Tony Abbott says I'm afraid

it doesn't matter, we're pulling the whole scheme to bits, you would be justified

in saying "Hang on, how am I

going to get compensation for these transactions that you've done over the next

year or so". It removes an

acute political vulnerability

the scheme had with business,

which was always rather upset

about the fact that there was

going to be a fixed minimum

price from 2015. That could

be of greater value for the

Government than just about

anything else. What about - I

tried to ask Greg Combet

about this, why not go to a

floating price right now?

They're still using the

argument that business needs

certainty. Well, perhaps it's

not something they wish to

put now back on to the legislative agenda. They

would have to tinker with

it. Then the compensation would really be out of

whack. They're being beaten

around the head by the

Opposition as it is now. A

couple of other issues,

Campbell Newman - we saw

yesterday or the day before a

huge drop in his popularity

in the galaxy Poll in the

Courier-Mail and Wayne Swan

is trying to link him to Tony

Abbott and say Tony Abbott

will do what he's done with

job cuts. Is it a similar

situation, can he get away

with that line? Of course

Campbell Newman used the

20,000 figure, that there

were 20,000 surplus public

servants in Queensland. Of

course he hasn't moved to get

rid of them all, but then Tony Abbott also used that

figure, he's used that figure

in the last 24 hours, that

there have been 20,000 more

than when John Howard was in.

That's enough of an excuse

for Wayne Swan to be able to

link the two. Of course,

Tony Abbott hasn't backed

away from the fact that he

wants to slash public service

numbers. But politically,

that would hurt in seats

right here in Canberra, which

Labor holds. They're not vun vulnerable seats at this

point. There are Liberals

who are concerned about what

is going on in Queensland

with the new Premier, but one

thing on his side is that he

will be able to point to a

previous Labor administration

Anna Bligh's and say I'm not

keen to do this either but we

have to for this, that and

the other reason, they have

an audit commission report that's reported along those

lines. Politically it's

defensible if they can move in that direction. There are

some levels worried. No Opposition Leader should rule

out cuts to the public

service. Kevin Rudd as

Opposition leader said he'd

take a meat axe. He rewound

that rhetoric. What did you

think of his speech today?

Was it deliberately provocative? Of course. He

doesn't ramble that stuff out

just because he feels like

it. I think he's getting a

bit desperate. I think maybe

he can see the chance of a

second crack after the February challenge slipping

away from him. I think Julia

Gillard has had a very good

week and a week is a very

long time in politics. So I

think -- You could be right.

I honestly don't know. We're

just speculating. But I do

know that a lot of times when politicians launch books,

they talk about themselves

rather than the subject of

the book or even the author.

They can't help

themselves. If you're talking

about Kevin, he talks about

himself all the time too, I

guess. You can understand him

defending his legacy. He

wants to put himself in the

same basket as Whitlam and a

reform agenda. Please! It's

not necessarily provocative

on the leadership front for

him to defend his legacy,

talk about what he did as

Prime Minister? He'd know everything is seen through

the prism of the leadership,

why would he do it? He might

be many things, but he's not

a dill. Then saying Tony

Abbott is beatable. "by me ",

look at me". He sure is

more optimistic than a lot of

his Labor colleagues, isn't

he? Labor will be saying thank God somebody in the

party is optimistic. The

other former Prime Minister,

John Howard, what have you

made of what we've read in

the Fin Review in the last

few hours Even though Tony

Abbott is being verballed by

Labor figures on WorkChoices

-- He's not going to bring

WorkChoices back? He's not

politically stupid. Well,

most times he's not. George

Brandis has done the

categorically absolutely 150%

rule out, so you have to say

they're not going to go

there. It doesn't mean that

Labor can't whip up a hell of

a storm around it. Plenty of

Liberal ranks do want to go

there. Three of them in the

last 24 hours have made the

call. A lot more are holding

their tongues. What Tony

Abbott calls the golden age

was very attractive because

there were heaps of

middle-class welfare coming

through the front door, you

had to stand back. House

prices kept going up. People remember and think that

wasn't too bad. Tony Abbott

has been milking that by

harking back. But the thing

is you can't pay homage to

the Howard golden age unless

you pay homage to all of it,

not little bits and pieces.

You can't say "except for his

current views on the economy,

except for WorkChoices,

except for this, that and the

other." That's the

difficulty for Mr Abbott,

he's finding himself having

to be picky and choosey about

what he insisted was this

overall golden age. It was the strength of the economy

he commented on, foreign

investment from China. He's

no dill either, and those

sorts of so-called private

briefings inevitably get

leaked. That was a massive

exercise to tape it and then

leak it. 200 people were in

the room. Are they all hand

on heart it won't go outside

the four walls? God bless

them. Of course they

did. The final issue, boat

arrivals, another one came

today. 15 or 16. Five in four

days, I think that's 15 or 16

since two weeks ago the

Government toughened up -

admitted ly no asylum seekers

have been sent to Nauru or

Manus Island, it's probably

too early to judge whether

this will have an impact on

slowing down boat arrivals

until that happens. In the

two weeks since the announcement they haven't

really slowed. The

Government has two positions

on this: one is they're

saying it's a closing down

sale by the people smugglers, they're ramming as many people as possible into the

boats and pushing them off

while they can; secondly,

once it's seen people turning

up on Nauru and going into

the relatively makeshift accommodations and

facilities, then the message will quickly go back and

there will be a slowing down.

Of course, the Opposition

doesn't believe that, it believes the Government

hasn't gone far enough and

needs to do more. But the

problem is that the

Government has left itself

open, having said two weeks

ago from this point on

there's going to be a

succession of more boats

arriving and it will look

like it still doesn't have a

grasp on the issue. What

happens if they keep coming? Exactly, where are

they housed? I think there's

a piece missing here too,

which is whether or not

people believe that facing an

in definite period on Nauru

is better than facing a very,

very long time in very bad

conditions in Malaysia. So

they may well feel that being

under the supervision of

Australian authorities on

Nauru is much better than what they're facing

already. We shall see. Kerry-Anne Walsh, Malcolm

Farr, good to talk to you

both. Thanks for that.

We'll be bake same time

tomorrow. Thanks for your

company as well. See you

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