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This is PM Agenda. Hello, welcome to the program. Craig Thomson's lawyer says someone somewhere in the background is trying to manipulate the Thomson case for their own political benefit. Chris Mcardle says it is something like a Cafca novel. He is innocent and the case will go no somewhere after the raids at Mr Thomson's home and office on the NSW Central Coast. My interview with Tom sob's lawyer Chris Mcardle on the program. The 32 year-old Australian lawyer who works as a subsidiary of Ryo tint toe, stopped from leaving Monday goal la. That intriguing case, speaking to the Foreign Minister Bob Carr and the higher than expected inflation figures, the shadow treasurer, Joe Hockey my guest. We will check in with the US presidential race with David Speers. It's a busy show. Stay with us, the news headlines with Vanessa in the Sky News centre. Federal MP Craig Thomson is maintaining his innocence after police raided his family home and electorate office seizing bags of documents. As Kieren mentioned his lawyer has likened it to a Cafca novel. Denying hard evidence. It was the knock at the door Craig Thomson must have been dreading, New South Wales Police arrived just after 7 and left almost three hours later with bags of evidence. They took a couple of documents, I volunteered a couple of documents. They're asleep in bed and 15 strangers show up at their front door, shove a piece of paper through the front door and come in. Next his Dobel electorate office where more documents were seized for analysis. The lawyer says they were seeking examples of Mr Thomson's handwriting. That will prove he did not sign the dockets in the houses of ill repute. The detectives were acting on behalf of the Victorian fraud squad, investigating allegations Mr Thomson misused more than $100000 worth of union funds on prostitutes, carb withdrawals on travel. Thomson remains di h defiant. I've done nothing wrong. And doesn't expect this to lead to criminal charges. I'm confident at the end of this investigation I'll be vindicated. He's already fighting civil charges brought against him by his former union. Like something out of a Cafca novel. His lawyer were angry media were tipped off before the raid. Joof somewhere someone in the background is manipulating the institutions of the state for their own political purposes. The strain is also showing on wife Thomson's drive driving over Sky News camera equipment as she left. Given and after this statement that this is a family home, there's a three year-old and a one year-old who live here and I'd appreciate if we could treat this as the neighbourhood that it is. Craig Thomson doesn't sit in the Labor Caucus any more he's now a crossbencher, Labor still relies on his vote in the parliament. The opposition leader says this makes this the Prime Minister's problem. Yet again it is the Prime Minister's judgment which is in question, because for months, indeed years, she kept saying that she had full confidence in Craig Thomson. If Mr Abbot has evidence of that he should come forward forth with, or he should shut his mouth. We will not tolerate our client being condemned by innuendo or ageing student politicians mouthing off. The police investigation is expected to wrap up before the end of the year. David Lipson, Sky News, Canberra. And our reporter Cameron Price joins us, live now from outside Craig Thomson's home in bat obey. Cameron, I understand you have spoken with Craig Thomson's wife, a rattling experience for her today. How is she? Good afternoon, Ness, that's right, I spoke with zoe oh Arnold who left the family home taking out the family's two kids. Whilst not wanting to be interviewed on camera, she spoke about this morning's raid, she said it was a hill intimidating to have police in the family home and difficult to sit by and watch as police went through every room of the house including the kid's rooms. She wanted to make it obvious that police acted professionally, that Craig Thomson and zoe oh Arnold assisted police in whatever way they could. They gave them whatever documents they requested. She is standing by Craig Thomson. She said he is a kind father and a kind husband, and that he did, as she says in her mind, believes he's done nothing wrong. Vanessa. Cameron, thank you. The inflation figure has jumped for the September quarter that economists are still predicting a cut in the interest rate on Melbourne Cup day. The carbon tax was a significant contributor to the increase. The treasurer says most Australians have been compensated, though. With the carbon tax bedded down, inflation has jumped, rising 1.4% for the September quarter. It was above predictions, but the treasurer insists it's steady as she goes. The inflation remains contained. This is despite the modest impact of the carbon price, that we have had always anticipated. No surprise about the biggest price increase, electricity up by more than 15%. That's the largest increase in electricity prices on a quarterly basis since modern records have been first kept. To put that into some perspective this is less than a third of the price impact from the GST under the liberal government. The treasurer says most of the impact of the carbon tax has now passed. So that does this mean for interest rate cuts? The Reserve Bank prefers to look at underlying inflation, 2.5% right in the middle of their preferred target of between 2% and 3%. Economists think that a rate cut on Cup day is more than likely. It looks to me like we are still very much on track with the RBA forecast 2.5% at the end of this year. What the RBA has said, I think we should keep this in mind, they will look through the temporary impact of the carbon price. Tom Connell, Sky News, Canberra. The family of fallen soldier, Corporal Scott Smith that is described him as a tremendous soldier who lived life to the fullest. The 24 year-old Special Forces engineer was killed instantly by an improvised explosive device in Afghanistan on Sunday. In a statement issued by Defence family members say the army was his second family and he he truly believed his actions were making a difference. They say corporal Smith had a great sense of humor and a larrikin charm. Three more suspected asylum seeker boats have been intercepted carrying a total of 96 pass ers injuries and crew. Border Protection Command has transferred them to the Co kos islands where they will undergo basic health and security check before being transferred to Christmas Island. It comes as the Secretary General of ASEAN rejecting as counter productive Tony Abbott's poll policy to towback asylum seeker boats to Indonesia. It is warned it could jeopardise the ties with Australia's naib. He says they're respond to go a misinterpretation of the coalition's policy. Scott Morrison says his plan is about working together with the region, especially Indonesia. Despite dry conditions and gusty winds in southern Queensland, emergency cruise have seized control of a number of fires across the region. Joel Philp has more from Crowe's nest, North of Toowoomba. Near in Crowe's nest one of the three fires around the town broke containment lines this afternoon and aerial water Bombers had to be brought in to get the fire under control. For days the town and the surrounding area have been swamd pd with smoke. Across the region dozens of fire continue to burn, stretching the resources of fire cruise who have been fighting blazes for weeks. Cruise say the mix of heavy fuel loads because of the mix of rains and dry weather means the conditions are some of the worst ever seen. With more hot weather ahead it's a case of watch and wait. Sky News in Crowe's nest. A Taronga Zoo keeper who was crushed by an elephant calf has been taken off the critical list, 40 year-old Lucy Mel low remains in intensive care after being pinned against a bol lard by the Thai elephant. She spoke to her family yesterday and is able to sit up in the hospital bed. Investigations into the incident are still ongoing. The sport, the Wests Tigers have finally made it official confirming at appointment of Mick potter as their coach. The Super League Coach of the Year has signed a two year deal replacing Tim Sheens sacked last month. Potter has sfent the past six seasons coaching in England beat off Kevin waulters and Matt parish. He began his career as a player for Canterbury and St George winning two premierships for the Bulldogs. Warm in the east, windy in the south and the west. 10 past 4 eastern side. Back to Kieran in Canberra as PM Agenda continues. Thanks for that. After the break Craig Thomson's lawyer Chris Mcardle. My investigation with Bob Carr and the shadow treasurer Joe Hockey, stay with us.

This is part of what Tony Abbott told the media earlier in the day. This has raise very serious matters for the Prime Minister yet again it is the Prime Minister's judgment which is in question because for months, indeed years she kept saying that she had full confidence in Craig Thomson. She now needs to explain how she could say that given what is coming out now into the public arena. For more than the developments today I spoke to Craig Thomson's lawyer, Chris Mcardle from our Sydney studio. Chris Mcardle thanks for joining us. What exactly was seized in these raids of Mr Thomson's home and office today? I don't have the inventory in front of me, the usual thing the police take when they execute search warrants is electronic and paper records, an important thing they took was a sample of his handwriting. That will prove after their handwriting people look it, it will prove he did not sign these pockets in these houses of ill repute. I think I just heard Mr Abbot make remarks just then as I was listening that suggested that Mr Abbot is alleging that my client has committed criminal wrongdoing. If Mr Abbot has evidence of that he should come forward forth with, or he should shut his mouth. We will not tolerate our client being condemned by innuendo or ageing student politicians mouthing off. This is unacceptable conduct. Our client is an innocent man. Obviously from your message this morning as well the handwriting, as far as you can ascertain is going to be the clincher in this case. The clincher in this case is if fellow hasn't doesn't anything, if anyone wants to prove he has they better get on about it. They have just spread smears. People are walking up to me in the street saying that bloke watch out for him. How would they know? People have smaerd his name, unwarrantedly destroyed, the sort of garbage remark people have made. Like Mr Abbot. This must stop and must stop today. Mr Thomson has done nothing wrong, police have an obligation to investigation, and part of that is confiscating documents, which they have done with the corporation of Mr Thomson. What worries me a television van with a satellite dish on it appeared outside his house after the police. The press knew about it one to two hours before we did. You have to ask is the purpose of the raid the administration of justice ah is the purpose of the raid continuing the campaign against my client. Are you suggesting the authority are engaged something outside of their duties? The police aren't, they have an obligation to investigate things raised. Somebody told the news van with a satellite dish on it with enough notice to get there after the police, they got there from Sydney to Wyong. Who else other than the police might have provided it? You might know that better than me. It seems to me the police would be the only ones of thoj of what they were going to do today? If you have information you should come forward with it too. I don't have any information. One of the problems with this matter, people with no information are sounding off. You're saying that the scandalous aspect of this is the press arrived at the same time. It often helps with raids, though, doesn't it? I don't do criminal law usually. I've had cases where my clients have had their cases raided with search warrants and I've never seen a satellite outside a house before. Police are an independent statutory force with certain obligations, they rang me to give me a courtesy call that they had arrived. They acted with great courtesy towards me and my client and his staff and his family. However, someone somewhere in the background is manipulating the institutions of the state for their own political purposes, which is, if I may understate the situation, improper. Oc, your client has seemingly tried to distance himself from the politician investigations into the HSU, it is quite clear from this raid where the focus is, at least in part? My client, our advice to our client that is he will not be arrested. He will not be charged with a criminal offence. That will not happen. If we're wrong about that he would be acquitted at the first hearing, because he hasn't committed a crime. As far as the matter before the Federal court goes which is a civil matter, regarding breach of the Fair Work Act, we will win. He hasn't done anything.Has Mr Thomson agreed to be interviewed by strike force Carnarvon, if not why not? We're lawyers, we act in the legal interests of people. We advise everybody without exception not to be interviewed by the police. That's the normal democratic right which seems to cause some sort of discomfort to people, democracy. This is a civilised society, we will act in accordance with the pre-cepts of this society which some how upsets people. Mr Mcardle you said your client is Holding up well, but no human being could take this for much longer. Is there consideration of quitting parliament and trying to gain privacy and be done with this? Ask him that, I'm certainly not breefld on his career. What about him and his family? How are Holding up after the raid and the screw needed to? Does that question really need an answer? I'd like one, if you can? I want everybody to think about it. They're asleep in bed, and 15 strangers show up at their front door, shove a piece of paper through the front door and come in.Think about that.Particularly if you've done nothing.So...It's something something out of a Kafka novel. People are saying he's done stuff, they have said it 100 times, they can't be wrong can they? Where to from here, Mr McardleWhere to from here will be nowhere. The police will not charge him. If they do he'll be acquitted very quickly. We're off to the Federal court, he will win that. Plus, I'd like to put a lot of people on notice, stop saying defamiliar tree thing about my client. We have already started suing one problem we will not stop. The way not to get sued is not to defame my client. Finally, you said it's something out of a Kafka novel on one hand, you also said the police have done their job. Mr Thomson said they were courtesy, is there not a contradiction in those two points? The police are acting in accordance with their democratic constitutional duty. It is other people who are out of the Kafka novel. Mr Mcardle, I appreciate your time, thanks for that. My pleasure. Oc, so now to the case of a 32 year-old Australian lawyer, who has stopped from leaving Mongolia last week. The lawyer concerned works for the subsidiary of Ryo tipt oh, I spoke to the Foreign Minister Bob Carr on that issue and other issues including the Thomson matter. Foreign Minister Bob Carr thanks for your time. The case to the 32 year-old lawyer Sarah Armstrong, stopped from leaving Mongolia last week, she is the Chief legal counsel for the subsidiary of a major organisation, Rio Tinto. What's the latest advice the Government's got? She's been stopped from leaving the country, she's not detained, not under arrest. Her passport has not been removed. We're in contact with her through David Lawson our Consul General there, I opened the Consulate General three weeks ago when I was in Batar, we hope it can be resolved in the context of a very good relationship we have build up with Monday goal yachlt there is a massive Australian investigation in mining, in-- Mongolia. There are 7 hub Australians living tlrks 500 visiting at any time, a lot of the leadership of Mongolia have been educated under the special scholarship program. Hopefully we can resolve it. They're seeking their help in a corruption and tax evasion case. What does the Government know about this case? I don't want to speculate about it, I think it's probably more helpful for her position if we just stick to the bare bones. She sought to leave the country, she's been prevented from doing that. We have got strong representations to the Mongolian authorities both to the embassy here and the ministry of Foreign Affairs in Batar. You were there recently, you have only just recently renewed your contact with your counterpart there, have you sought to speak to him? I'll do that at the right time. It is important not to defy your best shot too early in the piece, but I've got - I enjoyed a very good meeting with the Minister, I have spoken to the Minister over the phone as well, so I met him in New York in the UN, so I hope with that relationship and the acquaintance I've now built up with the country's president, Prime Minister, that we - we will have an atmosphere where this can be resolved. You're optimistic about the case? I have no seen to feel this is going to be a drawnout affair, but we simply don't know. I want to qualify it, we simply don't know. The important thing is this, that she's had the presence of an Australian Consul General, who has had conversations with her on three occasions, and is very eager to see this through, to accompany her with any meetings she is inquired to have with Mongolian authorities. I want to ask you about the Asian century White Paper due on Sunday. Apparently one of the key themes is going to be taking the relationships in the region beyond just that at the Government to government level, engaging in much more lower level, local engagement on education, in the workplace, people to people Links. How important is that as Australia looks to the Asian century? Well, if you go around Asia you are struck by the high number of people in leadership who have studied in Australia or who have sons and daughters studying in Australia. I think that's a clue to the future. The other point that stands out is the effortless economic integration taking place. So in Singapore, for example you have Australian business people who regard Singapore as an extension of Australia. I think that is a good thing. That's a foundation for Australia's future. We have got this region to our North that's the fastest growing in the world, and if we have got business people out of this country basing themselves in Singapore to do business in Meanmar, cam bode a, Vietnam is that is a good measure of how adaptable and flexible the Australian people are. Is this about fleshing out some of the obvious things, we know in a sense China, India, Indonesia, Japan Korea, our key North partners. A lot of narratives unfolding, in Australia it is all good. It was very encouraging to have the support of so many Asian nations when we stood at the ballot in the Security Council, for example. Our relationships are in good repair throughout this region. Only today we have got a Pete manage parliament house here of the Philippines president, I just had a meeting with her Foreign Minister Albert Dal Rosario, the level of cooperation is fine. Minister, I know it's not your area of responsibility. I want to get your reaction to it, the drama today, the former MP Craig Thomson his home raided by police. What is your reaction? I'm not commenting on that. With something like this you've got to say it's in the hands of the authority, the hands of the police. I don't think it's at all appropriate that members of parliament provide a running commentary. I think the people of Australia want something like this to be resolved professionally, and that is with the police, with the courts, and let the politicians stand back and let that process take its place. Minister, I appreciate your time. Thank you. A quick break on the program. When we return the shadow treasurer, Joe Hockey, my panel fill Curie and Steve Lewis. -- Phil.

This is PM Agenda. In a moment the shadow treasurer Joe Hockey, first headlines with Vanessa Trezise.Federal MP Craig Thomson has again insisted he's done nothing wrong after police swooped on his home in the NSW Central Coast. Police seized bags of evidence which are believed to include computers and samples of Mr Thomson's handwriting as part of their investigation into allegations of fraud within the HSU. Opposition Leader Tony Abbott has spoken about the raid, saying police have shown a lot of diligence to ensure low-paid workers money is not misused. Inflation has risen at a faster than expected pace in the September quarter, putting a November interest rate cut in doubt. The 1.4% rise in CPI was driven by a massive 15% spike in electricity prices. It's the first inflation reading since the carbon tax was introduced. In the meantime treasurer Wayne Swan says the carbon tax is only to blame for part of the increase. The family of fallen soldier corporal Scott James Smith has described him as a tremendous soldier with a great sense of humor and a larrikin charm. Special Forces engineer corporal Smith originally from the Barossa Valley was killed in Gavaskar Afghanistan by an explosive device during a compound clearance operation, the 39th Australian soldier to fall. His body will be flown home this week. Queen tan Bryce will stay on as Governor General for six months longer than plans. She was due to finish in the role late last year, her term has been extended until March 2014. She was the first woman to be appointed Governor General in 2008. Prime Minister Julia Gillard praised miss Bryce for carrying out her duties with distinction. Mike Potter will takeover the reins of the Wests Tigers confirmed as the club's coach. He will return to Australia after spending the last six seasons coaching in England. He replaces the sacked Tim Sheens yet to accept the new position offered to him by the Tigers. The weather warm in the east, windy in the south and the west. This is PM Agenda. Today's inflation figures came in higher than expected in the September quarter inflation rose 1.4%, up 2% on 12 months ago for his reaction I spoke to the shadow treasurer Joe Hockey a bit earlier. Joe Hockey, thanks for your time. We have seen inflation jump by more than had been expected for the September quarter, the treasurer Swan says it does remain contained. It's within the RBA band. Do you agree it is, it does remain contained at this stage? Well, there are alarming signs in the underlying inflation data, but the bottom line here Kieran is electricity pricev gone up by more than 15% in the last three months. That's the largest increase in electricity prices on a quarterly basis since modern records have been first kept. That is a huge hit on Australian families, gas has gone up 14%, for the year private health insurance has contributed to an increase in health care costs of 7.2%, that is a direct result of the Government's own hand and actions. So no more execution s, Mr Swan, you are directly responsible for these increases, don't run away from them. You are increasing the costs of living for every day Australians quite deliberately. You must concede that state regulators increasing power prices over and above the carbon tax is driving a large part of that 15.3 increase in power bills? State Labor has been in government for decades in NSW, in Queensland, in Victoria, there's no liberal government that has been in for more than two years in the key states and they are the ones, the Labor Party that have made a mess of electricity infrastructure in those states. Whether it's state Labor or federal Labor they are directly responsible for these price increases, and they need to fes up, they need to be up front with the Australian people. It is their deliberate strategy to increase the price of electricity, increase the price of gas, increase the price of health insurance. The ACCC is calling for a new look at legislation lags in this industry. Do you support that push? Well, of course, but it's not the execution for what is happening at the moment. Julia Gillard and Wayne Swan always blame someone else. Wayne Swan spent most of his press conference today trying to blame the opposition, taik talking about the GST introduced 12 years ago. Enough, enough! Australians have had a gutful of the Government running away from its own actions. They have deliberately gone down this path. They choose to go down this path. They have made life harder for every day Australians. Labor has to finally accept responsible for -- responsibility for cost of living increases for every day Australians, they've made it happen. There is an expectation that after the mid year budget update, while you've been critical of a lot of the measures you will allow the savings measures through the parliament to make it easier if and when you're in government, is that a fair assessment? No, we haven't made any final decisions. I'm interested that the Government is at odds with itself today, Martin Ferguson distancing himself from Wayne Swan's decision to fiddle with company tax receipts. Let me make this point about the company tax issue which businesses are now outraged about. If you are asked as an every day Australian to pay 14 months of mortgage repayments by the bank in a 12 month period you've got to find the money. Business is now in exactly the same position. The Government is getting an 8.3 billion windfall in its budget out of all of this. If Wayne Swan's budget is improving by $8.3 billion, there is $8.3 billion coming out of someone else's pocket, it's certainly not Wayne Swans. Will you revoke it if you're elected to office? The Government has completely blindsided everyone with this. Kieran the Government spent enormous amount of money asking Ken Henry to have a review of taxation, recommendation 26 Ken Henri said don't change the business tax system in the short and medium term. The Government has changed it. They've got a Business Tax Working Group which follows on from a business tax summit. This government has completely everyone, with this announcement. It will affect the cashflow of business. It will affect the budget bottom line. It will affect shareholders, but this government doesn't care, because it's scrambling for more and more revenue. As many economists are starting to reveal the underlying deficit, the true deficit is yet another legacy of Labor. It is going to be far worse than what Labor has claiming. You still haven't said you would revoke that measure? We haven't formed a view yet. We are still working through with the business community the impact of the decision, and again it creates further uncertainty sometimes, if you keep chopping and changing decisions like this. Sometimes it's better to oppose it up front. Sometimes it is better to leave it and find other adjustments that might help business through the malaise of incompetent government. On the dramatic developments, the police raid of Craig Thomson's home, the new independent MP, have you got any reaction to that today? Well, the police didn't go around to have a cup of tea with Craig Thomson. It's a very serious issue, and Julia Gillard spent a lot of time defending Craig Thomson, now we will find out just how far that will go. Joe Hockey, thanks for your time. Thanks, KieranTo our panel, joining me from News Limited is national correspondent Steve Lewis and the herald Chief political economist Lewis. The lawyer says someone in the background ts man nating the case for their benefit, what he's seen is like a Kafka novel. What do you make of that? Mr Mcardle has only been engaged by Thomson for a matter of weeks, he's going to do the bidding of his client as you would expect. He came out last week and said that somebody who accused Mr Thomson of ripping off un yaw funds would be sued, but I think if Mr Mcardle goes and talks to a few members of the Health Services Union they'll be very happy to say, that yes, Mr Thomson based on the evidence, efr whel mg evidence is guilty of misusing union fund. Mr Mcardle can say what he wants, the evidence is overwhelming and it's mounting and it's mounting as a result of what we saw this morning on the Central Coast. Mr Mcardle is adamant he is innocent, if he is charged it will be thrown out of court on the first day? Again you'd expect him to say that. I invite anybody to go back and look at the evidence. It hasn't been proven. It hasn't been. Fair Work Australia were criticised for taking a long time. At the end of the day they came up with a lengthy report, they filed their statement of claim last Monday week. There is a raft of proceedings from that. We have two separate police inquiries, both of which have the potential to lay criminal charges against Craig Tom some. Let's wait and see. Potential, though, he hasn't been convicted yet? He hasn't been arrested, hasn't been charged. Oc, Phil Currie let's go to you. The law adamant his client is innocent, he took a decent swipe on the opposition leader. He decided offence is the best form of defence, go on the front foot and show your evidence, shut your mouth he said to Tony Abbott. Let's not loose sight of the process here. This story lost sight of process ages again. There is actually still a legal process, as we see see Craig Thomson has not been charged with any criminal offence, he is an innocent map. They are going to push that line, they're entitled until the coppers belly up with a charge. After three years...That's a civil charge. 37 breaches of industrial law, plus the raft of other breaches of the un yaw rulesIt's a civil charge. They are civil. Talking stuff that would disqualify him from parliament. That's right, the Victorian - well he's disqualified or not. There is absolutely every potential for these matters to continue well into the new year. If criminal charges are laid we're likely to see the Fair Work Australia put on the backburner or stayed. That is going to carry through well into the new year. I'm certainly that Mr Mcardle and Mr Thomson Mr Find ways to try and delay proceedings. Whether this is actually a final lysed by the time of the next election or not we don't know. You're saying its overwhelming evidence, other people have made similar assertions. I suppose the point is he hasn't been charged yet. That it is about giving him a day in court, if he is charjdz? The overwhelming evidence based on all the material that's been put out there, based on the findings of Fair Work Australia that Mr Thomson misused hundreds of thousands of dollars of union funds. Fair Work Australia are seeking to recover some of those fund. There are two separate police actions looking at those matters, looking at allegations he received along with Michael Williamson kickbacks from a union supplier. Where does he go to from here in your view? In my view I think it is most likely the Victorian police will probably move over the next seven weeks, perhaps the next month, certainly before Christmas to finalise their inquiries, and we will wait and see where that goes, and if criminal charges are laid, if Mr Thomson is arrested I think it takes him clearly into a whole new level. Phil Currie, your thoughts on it, particularly the on particulars of it, I'm interested to get your thinking on that? Like we said we haven't seen a criminal charge, the opt particulars are terrible having the plod kicking your door at 7 in the morning for a sitting MP, he's not the first. It looks bad. The opposition will try to link it back to the Government which still relies on his vote. You know, if the police end up charging the bloke with any criminal offence I don't know, I'm not privy to what they're on about. I think this thing could be done and dusted by Christmas in a political sense of theIf there are no charges hrbHe still has the civil trial, that will go at snails pace, we won't see the end of that before the next election. The damage is done. Every time it appears in court and stuff everyone is going to be reminded of it. I think if they don't charge him with anything criminal that will be a huge, huge relief for all involved. If they do as Steve says they will kick it up to another gear. At the end of the ta we don't know if they are going to. We haven't seen the evidence. We don't know what they've got. I recall we have the whole issue of Peter Slipper, he's resigned over the emails. He is still facing potential action by the Commonwealth DPP. It hasn't gone away. After the Australian Federal Police investigated him for alleged misuse of Cabcharge and other reports involving parliamentary entitlements. Also don't forget, that newspapers and journalists are pursuing the whole issue of the Australian workers union and Julia Gillard's involvement with that dating back to the mid 90's. You have all the issues swirling around, they're not going that way, adding to a public perception that politics is pretty sordid. A Miasma of sleaze. You said it. The cuts albeit the coalition very critical of them, are likely to see them pass through the parliament? You know, I spent a lot of time yesterday talking to Back Benchers, pretty smart ones, thinkers and shakers, we have seen this before from the coalition, you come out, you jump ugly on the budget measures, remember the class war fares a couple of months ago, they were screaming from the parapets at class warfare, waving through the Senate without a hiccup. You see the same pattern. The coalition is a sniff away getting into government. If they don't Labor will do the heavy lifting on savings. They have to do it themselves. Apart from private health insurance, I can't see anything announced on Tuesday that the coalition is going to bloke, they will shove through the health insurance changes as well. How has it gone down that mid year budget update? It has caused certain in certain sectors, like business. I think the direction they are taking on middle-class welfare is a good move, no doubt that John Howard entrenched, if you like, a sense of entitlement. We have seen this government, I think quite sensibly and properly wind that back, but people don't like it when entitlements are taken away from them at the same time. As Phil said at the end of the day the opposition will support it despite huffing and puffing. Beyond the politics of it Joe Hockey deep down would be happy to reign in some of that entitlement too. Gentleman thanks for your time. When we return we will cross to Washington, David Speers has filed a report for us.

Now, to the United States and the presidential race. Barack Obama and Mitt Romney have hit the trail in the key swing state. It comes after yesterday's final debate. Our political editor David Speers is in the United States, in Washington following the developments. He filed this report.Kieran, this final debate, which as you know focused on foreign policy, was fascinating, not in that it broke any new policy ground but not repositioning that we saw from Mitt Romney. He had been critical of Barack Obama on a number of fronts, Libya in particular, he's also been critical about setting a deadline for the withdrawal from Afghanistan and Iran as well not being tough enough on Iran. What we saw last night from the rep l Republican contender was a new tone if not position on each of the key issues. Now trying to show very little difference between himself and the President as we do get closer and closer to this election in what is an extremely close contest. He does not want to open up new fronts on these areas, he clearly wants the battle to be fought in the remaining fortnight on the domestic policy front which is of course of most concern for the American electorate. This has frustrated Barack Obama, no doubt about it, the repositioning from Mitt Romney not just on foreign policy, as he sees it on domestic issues as well, he has coined the phrase Romneyesia on this, he used it in Florida. We will see in the final fortnight frantic campaigning blitzing as many swing states as they can. It will come done to how good the grassroots networks are in the states, how much money they have to spend. Hundreds of millions have already been spent. Nothing will be left to chance. Don't worry about that in this final fortnight. I spoke to Matt brown, the centre of American progress, which is a group that Links together's politicians parties and strategists around the world centre left and parties in political movements, he has worked on three of Toni blare's campaigns in the UK has been in the US for the last four years, watching this campaign closely. We talked about how the campaigning is now being conducted, the impact of the three debates.The general takeout from the final debate seems to be that Barack Obama won the polls, the polls show that as well. Do you agree with that firstly, do you think it's going to give him enough momentum going into the final weeks of this campaign? Look, I think the snap polls after last night's debate are clearly in favour of the president, most of them having between 25 and 32 points ahead of who won the debate. In terms of the question of momentum, it's clear that the first debate was the one that change the momentum of the campaign, both in terms of validating Romney's decision to try and run as a sen electricity rather than a tea party Republican candidate. If he hadn't been successful in that first debate you would have heard more complaining than you have from conservatives. From the vice presidential debate onwards you have seen that tide stemming from the response to the vice president and the last two debates the President himself. Less a question of momentum, more a question of halting a tide moving in Romney's favour. In that regard he's done what he needs to do. Is it fair to say the debates in this campaign have been more important than previous campaigns, particularly that first debate? I think - looking at things right now you could make that analysis, the jury is out on that. That is more two reasons: one historically president's incumbent presidents do badly in the first debate. Everyone remembered how Reagan wiped the floor with Monday Dale. We have two competing situations, the first is we have the air walks, clearly in terms of national polls, in terms of like ability Romney seems to have used the debates well. He has attempted to put himself on an equal footing with the President. In last night's debate he tried to show he is a safe option not dangerous, tried to undermine some attack the Obama campaign has laid against him. The big question is what are the ground games going. Enormous amount of money spent in terms of vetters, to get out the votes, people are voting early, the question will be in the key battle states how good is Romney vis a vis the Obama campaign who has an impressively sophisticated GGV. The distinction between two things, the Republican machine or the Romney campaign, then there is an unprecedented amount of outside money going into the cycle. You look at institutions like crossroads, funded by the Coke brothers and run by Carl Roath. They are essentially doing field operation in Ohio alone. There is a parallel organisation there that are using perhaps more sophisticated techniques and the Romney campaign itself. They're not actually working on behalf of Rodney, they're running on conservative issues, it is clear who their preferred candidate would be, the people who turn out for the polls will likely vote for. That's the great unknown. If you remember in 2004 people expected John Carey to be more competitive. What surprised people below the radar Carl defined three million new voters on the Republican side of the ticket. I do not suspect that had happen this time around. I also think that the field operation of the Obama campaign is very very solid. Matt brown, thank you. Thank you. David Speers reporting from Washington DC, as the race heats up over the next couple of weeks he will be reporting every day on PM Agenda. Full coverage as the Obama/Romney race comes down to the final stages. All for PM Agenda today, thank you for your company I'm Kieran Gilbert and the news is next.

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