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Reaffirming the alliance, the Prime Minister to have his first face to face meeting with US President Trump in New York next week.The President looks forward to meeting the Prime Minister and showcasing the bonds, deep friendship and close alliance the US has with Australia.

Cory Bernardi's party to merge with Family First, bringing the number of Australian Conservatives to three. The man who authorised tear gassing at the Don Dale Youth Detention Centre gives evidence at the Royal Commission in Darwin. And in crisis mode, the Australian Olympic Committee board to meet over allegations of bullying and a toxic work culture.

Hello, Ros Childs with ABC News. The Prime Minister Malcolm Turnbull will have his first face to face meeting with US President Donald Trump next week. In February, the pair had a terrace phone call over a refugee deal made with Mr Trump's predecessor, Barack Obama. White House spokesman Sean Spicer says the two leaders will meet on a decommissioned aircraft carrier in New York. Washington correspondent Stephanie March reports. This meeting has been in the pipeline for a while but we understand from officials it was difficult to make sure that both Prime Minister Turnbull and President Trump would be able to be there especially considering it is happening less than a week out from the Australian Budget being handed down. Nevertheless, the meeting is due to go ahead next week on the USS Intrepid which is a World War II aircraft carrier that sits on the Hudson River in New York and has been converted into a museum. The meeting will take place as part of celebrations commemorations for the 75th anniversary of the Battle of the Coral Sea which saw US and Australian forces fight side-by-side in the Pacific. World War II veterans from Australia will be flown over for the event and it will be the first time that Donald Trump and Malcolm Turnbull have met face to face. Let's listen to what White House press secretary Sean Spicer had to say about what is going to be happening in New York next week.I want to proudly announce that on May 4, the President will speak aboard the USS Intrepid in New York City to commemorate the 75th anniversary of the Battle of Coral Sea, a major naval battle during World War II in which the United States joined with Australia to halt the advance of enemy forces. That same day at the museum, the President will hold a bilateral meeting with Prime Minister Malcolm Turnbull of Australia. The President looks forward to meeting the Prime Minister and showcasing the enduring bonds, deep friendship and close alliance the United States has with Australia.The event is being hosted by the America Australia Association and Prime Minister Turnbull has put out a statement and taken to social media to say that he is delighted to be coming to America to be meeting with President Trump and taking part in these commemorations. Security issues and the strategic alliance between the countries is expected to be high on the agenda. The Trump Administration has been preoccupied with what to do about North Korea's weapons program and we know that Malcolm Turnbull was speaking to the US defence secretary James Mattis just yesterday in Kabul about the Coalition's future in Afghanistan and other parts of the Middle East. No doubt the pair will look to use this as a way to move their relationship forward from the testy phone call they reportedly had earlier in the year over the refugee deal struck by the Obama Administration. For more on this, political reporter Stephen Dziedzic joins us from Parliament House in Canberra. What does Australia want to get out of this meeting with Donald Trump?Australia's main focus is trying to build up a rapport between Malcolm Turnbull and Donald Trump, particularly as Stephanie mentioned, in the wake of that acrimonious phone call which saw their personal relationship get off to such a bad start. The bilateral relationship between Australia and America is broader than the two individuals, nonetheless, particularly in the American system and in foreign policy, relationships matter. The feeling is, in the Australian foreign policy establishment, that it is vital that the two men establish a bond so they can have a coherent and close discussion about the relationship, particularly with... Particularly with acute questions over Australia's role in any expanded conflict in Iraq and Syria, what that might look like and what role we will have in the future as the war in Afghanistan grinds on. Expect the Prime Minister to put a lot of time and effort into this meeting. The Deputy Prime Minister Barnaby Joyce was asked about the meeting today and he said the main focus was really building up a chemistry between the two men. Let's listen to what Barnaby Joyce said.I think there is something of chemistry with two people meet face to face which is not present over a phone call. The Americans, just like the Australians, know how important this relationship is between the United States and Australia.Meanwhile, Cory Bernardi has confirmed his Australian Conservatives party will merge with Family First, what is the latest on that?That is right. It is the end of an era for Family First, the party confirming this morning it would essentially disband and merge with the Australian Conservatives party which was started a few months ago by Cory Bernardi. This is a concession effectively from Family First that the brand has been damaged by the controversy over Bob Day, their former Senator who was found to be ineligible to stand over a conflict around a contract. Cory Bernardi has the view that his stocks are comparatively on the rise. The conservatives confirmed this morning that Lucy Gichuhi, the new Senator from Family First who was elected to replace Bob Day will not be joining the party. She is going to sit instead as an Independent. Whilst Cory Bernardi has a couple of extra representatives at a State level now in SA with two upper house MLAs, he is still a one-man band for the time being in Canberra. Senator Bernardi said he invited Lucy Gichuhi to join the party but she said she wasn't yet prepared to make that commitment. Let's listen to what Senator Bernardi had to say.For those of us who have been around politics for a long time, we can understand the consequences and implications of significant decisions like this. We have our heads around it quickly. It is more difficult for those who are new to the political environment. We wish Lucy well on her career.Lucy Gichuhi a few minutes ago put out her own statement saying at this time she is unable to determine whether the best course of action for her and her quest to represent the people of SA would be done through joining Cory Bernardi's party. She said she decided that is not the best course of action for her at the time being. Perhaps she is leaving herself a bit of room there. We may see her change her mind in the future. For the moment, it is two Independents sitting there in the Senate cross bench.Thanks Stephen. The man who authorised tear gassing at Darwin's Don Dale Youth Detention Centre is appearing before the Royal Commission into the NT's youth justice system. Here is Nadia Daly. What has been said so far?Ken Middlebrook, we have been hearing from him this morning. He is the man who authorised tear gassing in that 2014 incident. He has been at the helm of the corrections system for years, up until 2015 and he was at the top of that system during many of the incidents that sparked this Royal Commission. He is a much anticipated witness. He was corrections Commissioner from 2012-2015 and before that held various other roles in the corrections system. He oversaw the prison systems here in the Territory and for many years within that the youth justice system as well. Ken Middlebrook talked about some of the improvements he said had been made to the system during his time but he said, for many years, there was a lot of dysfunction and a lot of lack of funding and he blamed the former Labor Government for that a decade ago. He said he had no experience at all in youth justice prior to taking on a role here in the NT in 2007 in the corrections system. In the Royal Commission, he was asked about that controversial decision to move the youth justice system into the corrections system, so the same system as the adult prisoners, that was a controversial decision at the time. Mr Middlebrook said it gave him, as the corrections Commissioner, a lot of extra funding and some more resources to do more and it is worth noting that one of the first things the current Labor Government did, they came into power late last year, one of the first things they did was to move youth justice into the NT Territory Families department. That was a controversial move. We also heard in 2015, a different group of young offenders emerged or started to come through the youth prison systems here in the Territory, Ken Middlebrook described slightly older, bigger young offenders and he said they displayed behavioural problems and he said one of the reasons for that was the use of the drug ice. He said that presented a lot of problems for the staff dealing with them, trying to manage these kids who were very different to some of the ones they are seen before. He was asked what data was there to support that use of the drug and he said they didn't test the kids for drugs for that period so there was no data. Interestingly, he talked about a tough on crime approach that was very much seen with the previous Government here, the Country Liberals Government in the NT and he said this approach became a popular one for Governments to employ and it was partly for the desire to show that they were taking community concerns about crime seriously and to be seen to be doing something. Mr Middlebrook said that approach of being seen to be tough on crime leads to more prisoners in jail and doesn't necessarily solve the problem. Here is how he put it himself.I think we are in a very punitive community, repunitive society where people want their pound of flesh and politicians tend to read what they are talking to the punters about on the street. I know I have had this conversation with respected ministers in both Governments and the view is the community wants tougher sentences but building prisons is not the answer.What is next for the commission?We will continue to hear more evidence from Ken Middlebrook today during the Royal Commission and he is an anticipated witness given he was in charge of a lot of what happened at Don Dale Youth Detention Centre and the whole prison system here in the NT for many years. We are expecting to hear more interesting evidence from him. As you heard there, we are hearing not just about what happened in the prison system but some of the bigger social and political issues behind all of the things that happened that led to this Royal Commission. Some interesting evidence indeed and over the next few days, we are expected to hear from the former chief minister Adam Giles and the former corrections Commissioner John Elferink. Those two former politicians were - the former corrections minister and the former Chief Minister are from the previous Country Liberals Government who lost the election mid-to late last year and they will be giving evidence about what they did, what they knew and what they did when they heard a lot of the allegations about the tear gassing and mistreatment of detainees and so forth that sparked this Royal Commission.Thanks Nadia Daly. New South Wales police have set up a fresh unit to investigate people who could become perpetrators of extremist violence. The new squad will target those at risk of carrying out violent attacks inspired by the Islamic State group and others. The initiative will concentrate on mental health and how agencies can better work together to prevent terrorist acts. It will focus on individuals who pose a threat within the community but don't meet the threshold of the States' counter-terrorism and special tactics command. A similar program is being trialled in Queensland already.New South Wales police force is committed to protecting New South Wales and not just in terms of what we would consider classic crimes but there is a changing environment and we know there are people out there who are willing to do terrible crimes across New South Wales. We know these people aren't active current terrorist targets but are capable of acts of terrorism. We believe we need to move quickly to close this important gap. We know family members and neighbours will see changes in people and sometimes these changes happen very quickly. We know even after the offence, whether it be a vehicle borne attack or a stabbing around the world, there is often still that family members don't see those individuals as terrorists. We need to create a new pathway for people to feel confident they can reach out with police.An inquest has begun into the death of a former New South Wales police detective who killed himself after leaving the force with post-traumatic stress disorder. Before he died, Ashley Bryant rang 000 outlining the reasons for his actions. His widow, Debbie Bryant, is campaigning for insurance companies to change the way they handle the claims of police officers suffering PTSD. Here is reporter Karl Hoerr. What has happened so far?The Coroner's Court has heard some details about this call that Ashley Bryant made shortly before he took his own life and in that call to the 000 operator, he said he had post-traumatic stress disorder and could no longer live with the trauma of it. He asked that what he was saying go to the coroner and said there needed to be more things put in place, including for the partners who suffer and Ashley Bryant's widow Debbie has requested that this call actually be played during the inquest. In his opening address, counsel assisting the coroner said that at the time that Ashley Bryant was medically discharged from the force in 2012, there was clear evidence he was suffering from PTSD as well as alcohol abuse and depression also. The following year in 2013, he had been assessed as part of his superannuation entitlements that he had made an application for a permanent disability declaration, however that was not forthcoming. There was only a partial impairment finding and the court heard that had the affect of worsening Ashley Bryant's mental health.How could Ashley Bryant's death change the way insurance companies handle similar cases?It may well change the way such cases are handled in the future, however, we know from the opening address so far that the focus appears to be on the appropriateness of the treatment of Ashley Bryant both before and after he was discharged from the force. The coroner will consider possible recommendations about the way that police officers are assessed, in terms of their mental health as well. There are a range of issues that the coroner will be considering at this inquest. Specifically relating to mental health and, in particular, post-traumatic stress disorder. Thanks Karl.

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The board of the Australian Olympic Committee will hold a crisis meeting tonight to address bullying allegations. AOC President John Coates has fiercely denied a culture of bullying and says he is the victim of an increasingly desperate and defacility tri-campaign by those who want to see him replaced by challenger Danni Roche. Here is Mary Gearin with more. What is on the agenda at this meeting tonight? There is no official agenda but it is those bullying allegations and anything else that the board might to dominate
not have heard about that is going to dominate proceedings. It is heating up as we speak. This morning, it has been confirmed to me that Fiona De Jeong has sent a letter to the board members, the executive, aiming to refute John Coates' denial of a bullying culture. We know a couple of nights ago he sent out a letter to the sports and the executive denying it. She says regrettably that is not her experience. Just hours ahead of that meeting she is attempting to make her presence felt in the room, I think you would say, and also we have seen that this morning there are in fact more allegations. One more allegation from a former staffer against the media director Mike Tankrid. That is only just coming out and Mr Tankrid has said he is not guilty of any wrongdoing formal complaint.
in this circumstance and it wasn't a formal complaint. The people who have called this meeting are concerned about what the board has or hasn't been told about any of the allegations that have been formal or informal and that will be the basis of the discussion tonight.How will this meeting feed into the campaign to replace John Coates and Mike Tankrid?The meeting was called by directors who are not on John Coates' declared preferential ticket. You would have to say the concerns of those board members are aligning. It is the concerns about the culture of the AOC but also more generally the basic concerns of governance that their contention is least
that there needs to be change, at least even if John Coates stays because you can't have a President, they would argue, for more than 26 years and have it not needing change. There needing to be more accountability and more lessening of the reins of power, having so much power invested in one man.How much support does Danni Roche have to take over?Danni Roche herself a couple of nights ago on 7.30 said it was very close and in my reading of the situation that is very true. There are sports who are saying there needs to be change. There are other people who are torn, who say "Even if you think there needs to be change, John Coates has done a lot and there is a lot of power" and experience invested in him. Has he been given enough of a message, if you like, to carry on into the future? It will be very tight. Tonight's meeting, would love to be a fly on the wall there. That will be John Coates's last chance to address those concerns in a board situation.Thanks Mary. Turkey has intensified its campaign against Kurdish rebels killing dozens of fighters with new air strikes in Iraq and Syria. Kurdish forces in Syria say the strikes hit military posts and communications facilities. The targets in northern Iraq were rebel control centres and ammunition dumps. The US has raised concerns over the strikes because they were not coordinated with American military commanders. Turkey says it is targeting militants from the outlawed PKK but five killed were Peshmerga fighters, key allies in the campaign against the Islamic State group. US President Donald Trump's plan to build a wall along the Mexican border has hit a snag. He has been forced to delay funding it because Democrat senators threatened to block the Budget bill if funds for the wall were included. Another controversial policy, the crackdown on undocumented workers, is having a big impact. The stage has been set for mass deportations and some employers risk losing their work force. Conor Duffy reports from central Florida.It is harvest time in Florida, even in spring it is baking hot and there is tonnes of kale to be picked. For more than half a century, Hank Scott's family have grown food. The vegies stay the same but the labour force has changed dramatically. There is no American, black, white, yellow from any background and they may get out here and they may last an hour, they may last half a day.Latinos have filled the breach. As much as 70% of them undocumented.

Hank Scott voted for President Trump and supports his push for a wall and move to hire thousands more agents to kick out what he called bad immigrants who commit crimes. He worries it will also affect his valued workers, likes farmers across the country he fears there will be no-one left to work the fields.We have seen what it has done to the growers in Alabama, Georgia and North Carolina where the farmers have left entire crops in the field because they have lost their help. For the undocumented workers, the stakes are even higher and many have been driven underground. It has meant a profound shift in how they live their lives. They say even the simplest tasks like going to the shops or driving are now filled with fear because they believe even the small left interaction with authorities could see them deported. In town at the Catholic hope community centre, young leaders from Mexican and central American families are meeting to fight back against what they say is increasing racism.How many of you think that it is affecting your life or somebody that you know? Raise your hand.Now people are more worried. They look at you like "You're Mexican or Hispanic, you will get deported".Olivia Florez snuck across the border from Mexico 18 years ago. These days she rarely leaves the house except to go to work.People have been arresting us and if you go to get milk for the children, just driving a mile. They don't have any criminal records. They have been deported.Her children are US citizens and they fear their mum could be deported, leaving them stranded.In our family, in this case our father has been deported and we only have our mother which is more scary.Back on the farms, workers are vowing to fight and hope they will still be here for next year's harvest.

President Donald Trump's daughter, Ivanka, has defended her father's reputation on her first international trip as a White House advisor. In front of a women's empowerment conference in Berlin, the first daughter was jeered for praising her father's policies on families.He has been a tremendous champion of supporting families and enabling them to thrive in the new reality of... You will hear the reaction from the audience.Ivanka Trump struggled to explain her new role as a special advisor and when questioned about her father's attitude towards women she said he encouraged her to achieve throughout her life. Finance news now and here is Alicia Barry. Inflation numbers are out, what are they telling us? The concerns that we have had in the last couple of years about very low inflation sweeping the developed world and ending up here in Australia have perhaps been eased slightly by these numbers because we have seen that prices at the shops are back on the rise according to the latest figures from the Bureau of Statistics. The consumer inflation number or the CPI increased by half a per cent over the first few months of the year. That takes the annual inflation rate to March to 2.1%. It means the inflation rate is back within the RBA's target band of between 2-3% for the first time since mid-2014. The RBA's preferred measure, the core inflation, which strips out volatile items like petrol prices and fruit and vegetables, it increased from 1.5% in the previous quarter to an annual rate of 1.8%. That is still outside of the RBA's target band. It won't concern the RBA too much because it has increased and it is getting closer towards that target band but the RBA is expecting it to be back within its targeted range by the middle of the year. We're not there yet. The numbers should have eased some of the concerns around the low inflation environment. We have seen that across the world. The numbers show that the cost of petrol, along with housing, along with fruit and vegetable and power were some of the biggest contributors to the headline increase. That probably won't surprise households at the moment. The figures were slightly below the expectations from analysts which forecast a headline rate of 2.2% for the year to March.How is the market looking?We are seeing very strong day on the market. It is taking its cue from Wall Street today. The All Ordinaries up around 0.7% now.

Reports from the Wall Street Journal that US President Donald Trump's tax proposal expected on Wednesday US time will slash company tax to 15% from 35%.

Thanks Alicia. That is ABC News for now. I'm Ros Childs. Thanks for joining us.

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This program is live captioned by Ericsson Access Services. Today at the National Press Club an assessment on Donald Trump's impact on the Asia-Pacific. It's 100 days since Donald Trump was elected so how has the new Administration affected one of the world's most dynamic regions. Professor Michael Wesley, Dr Jane Golley and Professor Warwick McKibbin with today's National Press Club address. Good afternoon and welcome to the National Press Club and this Westpac address. I'm Chris Uhlmann. In just a few days it will be 100 days since Donald Trump became President of the United States. And typically the man himself has said of this mark, first during the campaign, that the world would be awed by what he achieved in his first 100 days, and now more recently that it was a rthd standard by which to be judged -- ridiculous standard by which to be judged. In an uncertain world it does not help to have such a mercurial President, but it is good for business, particularly for those who are charged with writing about international affairs, which brings us to this publication the Trump Administration's First 100 Days - What Should Asia Do? Some of the best finds in the world and Australia live at the Australian National University. We are pleased today to be joined by three of them. Professor Michael Wesley is professor of international affairs and Dean of the college of Asia and Pacific. Associate Professor Jane Golley is deputy director centre for China in the world, and Professor Warwick McKibbin is Professor of public policy and director of the centre for applied Mack # - macro economic analysis. We are grateful they can be here today to speak about what Asia could do at a time of Trump. I call first to the podium Professor Michael Wesley. (APPLAUSE)

Thank you very much. Can I give my thanks to the Press Club for hosting us here today. Well, ladies and gentlemen, Donald Trump is many things to many people. But, to me, he is an intriguing natural experiment. Along the lines of - one of the oldest debates in social sciences and that is to what extent do humans make history, or are humans the play things of history? We, here in Asia, in Asia and the Pacific, are in a region that is changing extremely fast. This has been happening for some time, the rise of the Asian economies, the increased competition, military competition that we're seeing in this part of the world, the competition, between the United States and China for regional leadership. All of these trends have been happening for decades now. And, yet, into this mix we have perhaps the most unconventional and unpredictable President in human memory. And so the question is is Asia's future going to be shaped by these powerful already quite manifest underlying trends that are going on and long predate Trump? Or is Trump going to be a change agent that changes the region, much faster and much more profoundly than these underlying trends? Well, 100 days into Trump's presidency - my not very helpful answer to this question is a little bit of both. The fact is that we are seeing all of the things that we saw before Trump was elected last November continue to become manifest. Economies continue to grow, arms continue to be bought, rivalries continue to be played out. And, yet, as our publication says, this is a President and an Administration that takes unpredictability to new heights of capacity. Really what we're seeing, I think, is a region that is still living out a strong psychological and power dependence on the United States. It wouldn't be the case if we hadn't seen so much shuttle diplomacy, so many people reaching out at so many levels from this region into the Trump Administration. Of course, it doesn't help that so many senior levels of the Trump Administration remain unfilled. It is also the case that the shuttle diplomacy in this part of the world is taking place not only with the United States. With e ear seeing -- we're see leaders, ministers start to fan out across the region and the region is adjusting to Trump, even as it's trying to work out what Trump means for the region. I think the biggest take-out for the region of Trump's election is that the world and the region can no longer afford to bet that the American liberal internationalism that has guided American foreign policy for the last 70 years and really been one of the underpinning structures for the world that we know today cannot be taken for granted. We saw the election of a president not by mistake, not - not a presidential candidate who kept his views about liberal internationalism hidden under a bushell, he trumpeted these values for America and he was elected on the strength of them. The message for the region is that whatever happens with Trump, whether he's elected out of office in four years or whether he leaves office in eight years, this underlying tendency within the United States is a strong one, and will continue to be politically strong. The lesson for all of us is that we cannot afford to continue to bet on that strong streak of liberal internationalism in American foreign policy. So, uncertainty is very much the tenor of the day. Uncertainty is going to continue to be part of the Trump Administration for the foreseeable future, if not for the entire first four years or only four years, perhaps, of the Trump presidency. In our publication, we had the idea of a predictor-meter, a way of trying to tell whether the new administration was becoming more or less predictable. Our judgement is in the first 100 day the Trump Administration has become less predictable off a very low base. (LAUGHTER) This sets out, I think, some very clear avenues of developments in our particular region that we need to watch. Firstly, the uncertainty surrounding -- uncertainty surrounding the Trump Administration means that the Chinese bid for regional leadership will be given space, and following the conclusion of the National People's Congress later on this Yee we can expect to see an energenised Chinese diplomacy in our part of the world. There is no question, in my mind, that China has emerged as the chief regional ideas entrepreneur in this part of the world. It is no longer the United States and it is no longer other countries that Prime Ministerially came up with the big ideas for new institutions and new ways forward. China has easily slipped into this role and will continue to play that role. The next big question, I think, is whether countries in the region that may be nervous about a Chinese or an uncontested Chinese leadership role, what they choose to do about it. Key among these, of course, is Japan, but there are other countries that are nervous about a Chinese leadership role as well. It will be extremely interesting for us to watch what they do in their bilateral and their multilateral diplomacy in the region to prepare and try and forestall an era of uncontested Chinese leadership. Thirdly, I think we will see a weakening or a continuing weakening of regional institutions in our part of the world. It is hard to look across the region and find any particular regional institution, from the oldest ASEAN, to the newest, the East Asia Summit, and to put all of our hopes in any of those institutions for dealing with the complexity and the turmoil that is possibly ahead. And, finally, the fourth issue is perhaps the most immediately worrying, and that is the willingness of small rogue countries, such as North Korea, to call the Trump Administration's bluff. That was perhaps the most unexpected element of the region's reactions to Trump's first 100 days. And, yet, as the brinkmanship continues, one starts to see a little bit of method in Kim Jong-un's madness. It is not only North Korea. There are a range of possible crisis points across this region, any one of which could come on to the Trump Administration and the rest of agenda at any time. So, very quickly to conclude, all of this sharpness the big questions and the big choices that face this region, and face this country, of course, this being this government's year for producing a foreign policy White Paper. There are four questions that we really need to think very clearly about, that the Trump Administration has made us confront even more starkly. Firstly, we need to confront and clarify what Chinese leadership means for this region. This is not an ease thing because Beijing isn't particularly clear about what that means. We also need to clarify what we're prepared to live with and what we're prepared to do about it. What the costs are of dealing with the scenarios that present themselves around a Chinese leadership bid. The second question is are the institutions in this region, so many of which Australia has played a leadership role in bringing about, are they worth continued investment? Can they be reformed? Can they be salvaged? Can they play a major role in taking this region forward to a more stable and more predictable future? Thirdly, what's the future basis of economic prosperity in this region? Will it be free trade or managed trade? Will it be free investment or will it be strategically directed investment. What is the future of geoeconomics a trend towards using economic means to advance strategic agendas in the age of Trump. My view is that it will only increase, but Jane Golley will say a lot more about that. And, finally, what are the dependable ways that are left to us for dealing with the tension points and the crisis points that North Korea looms as today. Are they mechanisms of bilateral diplomacy? Or can we think of other ways in which the region can deal with these? These are not small or easy questions, but they are very much right on our plate for today. Thank you. (APPLAUSE) Our next speaker is Dr Jane Golley, who is deputy director of the Centre on China in the World. Thanks. Nice to be here at the National Press Club. I was here just a week ago, debating whether or not Trump would kill the media. I think I was victorious in declaring that he wouldn't, and it's clear from today's presence as well. I focus on China predominantly, but Trump has taught me to - and brought me - right outside of my comfort zone in that regard. While his trade strategy remains murky, 100 days into his presidency, Trump has managed to get quite a bit done. He created the new national trade council and introduced or launch its buy America, hire America campaign. Also, appointing as its head the well-known China hawk, having bin books including Death By China, and a stun. Critic of China's un-Fair Trading practices. He withdraw America from the TPP. His election promise to punish China with a 45% tariff hasn't materialised, and it seems unlikely that it will. He's finally, just last week, agreed not to call China a kourns manipulate tore, which I think was a good idea. But it seems still pretty likely that US trade policy under scrum trouble will be more month -- Trump will be more protectionist and China will be the prime target of that. Meanwhile, in mid-January, as most of you will know, President Xi Jinping gave the keynote speech at the World Economic Forum and he celebrated the virtues of globalisation and free trade, rejecting the pursuit of protectionism, with a fairly explicit sort of finger listen pointing at Trump, which he likened to locking oneself in a dark room, with quite a poetic piece. After that speech, it was reported that Xi might become the champion of free trade in the international economic order, a role that has traditionally been accorded to the presidents of the United States. Trump is appearing to reject that role. I'm sure Warwick will talk more about to what extent. The question I ask myself - is it possible that China's president will instead take it up? Our Vice Chancellor asked me to provide some hope in this address. I'm afraid I'm not quite going to do that. (LAUGHTER) To explain why that's the case, I want to talk about geoeconomics. So, in the 2016 book, which I highly recommend. It is called War My Other Means, two senior follows at the council of foreign relations in the US define geoeconomics as the use of economic instruments to promote and defend national interests and to produce geopolitical results. And those results can be intended but they can also just happen as a consequence. Their book focused on China, two whole chapter, describing the strategies, and they are arguing that the geoeconomic playing field has tilted significantly against the United States, which has foten how the use these tools, and unless it is corrected the price in treasure for the United States will only grow. I think former US President Obama was well aware of this - these ideas. His American pivot and - or his rebalance towards the Asia-Pacific region, which of course he formalised here in Australian Parliament in 2011, and the TPP, in particular, was an explicit geoeconomic attempt to make sure that countries like China, by which of course he just meant China - there are no other countries like China - would write the rules of the global economy. We need to write those rules. Blackwell and Harris in their book come back to the TPP, stressing it as being the centre point of the United States geoeconomic strategy in the region. So, Trump's scoring pretty badly on that score card. Now, meanwhile, China's geo-economic strategy is gaining momentum, primarily under the banner of the belt and road initiative, or the one belt, one road initiative. Recently renamed to make it sound less confronting. This is actually a fantastic economic initiative in a lot of regards. It's trade enabling if you could, it is to promote or to promote trade to enhance policy coordination between China and its many, many, verging up towards the 100 mark, BRI partners. But that doesn't make - mean that it isn't strategic, and while Chinese officials have downplayed that idea, one of them put it as the BRI being a grand strategic design to counter the TPP, which he saw as a deliberate employ by the US to control the rules of international trade, in ways that undoubtedly challenge and threaten China. Whether anyone else sees that as the objective of the TPP, it is possible, certainly, to view it as a containment policy. Viewed in that context, with Trump dropping out of the battle altogether, it seems like that particular geoeconomic victory goes straight to China. Is the that good news for the international economic order as we know it? I don't think so. As I said, there is a lot of merit in the economics of the BRI, but that doesn't stop it from being fundamentally incompatible with the international economic order as know it. It's a state-led, state-controlled, state-directed initiative, where state investment is directed into state favoured regions across the country. The reliance on state-owned enterprises for those investments is seen in the strength - or the dominance of state-owned enterprises in China's overseas investment portfolio. Of course, many of those SOEs are backed by Chinese development finance, a number of those, which the inventor of that finance has been the servant of China's national strategic interests. These features, I think, understandably make a number of people uncomfortable about what we, Michael and I, have described as a grand transnational development strategy by a riding great -- rising great power and one headed by a come mist party state at that. The geoeconomic rivalry isn't bad. Here is a bit of hope. With China pouring money into the region, other countries have responded, so, for example, Japan has introduced $a 110 billion infrastructure project and India has ramped up what it's now calling its Act East policy. Both strategies are ex-plexally -- attempts to counter China's influence. They won't only help limit the region's reliance - economic reliance on China, but they will provide the much-needed infrastructure funding that can spur economic development. I'm also hoping - can't help it - I am optimistic - that this kind of rivalry will spur President Xi Jinping to liver up to his Davos words. There is lots that China can do with regard to the belt and road initiative and the projects therein to make sure that the state-owned enterprises compete on a pore level playing field than they have in the past, to make sure that those Chinese development institutions, like the Asian Infrastructure Investment Bank - I think they have done a good job on that so far - provide more regionally inclusive governance and make sure that they play the game in the ways that have benefitted us so much in the past. But then there is still a bit more bad news. There is more in China's geoeconomic tool kit than the BRI. I can think of that as the carrot, but the stick is fairly unique, the method China is using to against countries. The latest is South Korea, which decided to deploy the US supply anti-missile system. The Chinese media - the state - actively discouraged - encouraged the boycotting of Korean goods and tourism, blocking tour groups from taking tours to South Korea in the weeks that follow, having an imhuge impact on the South Korean economy. That's obviously not going to win China friends in the region, and it's not going to enable him to be the free trade champion that we're hoping he could be. I am meant to be talking about Trump but I am more comfortable talking about Chai N last week Trump made - the TPP manure is a pretty weak won in geoeconomic terms. It really opens up the region for China's lead. But even worse is what I am going to describe as his first geoeconomic tweet last week, in what he said, "Why would I call China a currency manipulate tore when they were working with us on the North Korean problem?" At least there isn't going to be a currency war and looks like there won't be a trade war, but solving this nightmare of a problem is going the require far smarter geoeconomic tools than this one and probably a lot less tweeting. (LAUGHTER) Finally, a lot of the questions will be about how Australia told respond. That is a trickia area. I am going to say this - first, I think it's a really good idea that we're not blindly and zealously following the US front. So when Prime Minister Malcolm Turnbull defied Trump declaring that the TPPP might go ahead with the US, and even China might join, I think that was a good response. As - for our decision to reject the BRI, I'm not so sure that was a good idea. I can talk more about that if anyone's interested. Shouldn't step on the North Korea point because I am going to defer all those questions to Michael. But on North Korea, and back to this tweeting idea, I think our owner Foreign Minister's decision to openly pressure China into taking a harder line is one that I would think carefully about, and I'm just goings to hope - again - that she had some very detailed geoeconomic analysis underpinning this call, which could clarify not only the effectiveness or not of sanctions - and I think we might fall on the latter point there, but also the possible economic punishments that China might use, should we continue to push on that front, and whether we're again acceptable or agreeable to sort of paying those economic costs. Of course, that's not to mention how Kim Jong Un would react, whatever the economic costs of protectionism emanating from the world's largest economy and coming towards the second largest economy, for those two economies and the rest of us, really become immaterial if someone decides to press that button and drop the bomb. I think it's going to take far more clever foreign policy to en sure that doesn't happen and that matters more than anything else. Thanks. (APPLAUSE) Our final speaker is Professor Warwick McKibbin, who is Professor of public policy and director of the Centre For Applied Macroeconomic Analysis.
Thank you very much. Delighted to be here to talk to you about the Trump Administration's economic policies. It's a difficult task, because we don't actually know what the economic policies will be at this point. What we can do is look at this in a number of different ways. One is to look at what Trump the candidate said during the election campaign and try and work out whether any of those policies are likely to be implemented. You can go to contract with America page and you can see - I have been through this to try and work out what policies map on to the promises. When you do that, you see that many of the promises are quite vague and, in fact, many of them have already been implemented. What you also discover quickly is that President Trump appears to be conservative on social, environmental and immigration policies, but very much left wing on trade and economic policies. That makes it difficult for him to have any constituency, any robust constituency, within the condbres. What is required for most of the policies that the Trump Administration is funding. If something has to be funded it has to get through Congress. It isn't clear because we have a Republican majority, that, in fact, the Trump policies will get a clean sailing through. The second - I will come back to that because what I will talk apart - apart from the trade policy which is not subject to Congressional oversight - what matters at the moment isn't what President Trump believes, it's what - who wins the battle inside the White House. There is a bat of -- battle of economic ideas between goldman sicks, conscientious -- Bannon, and Tillerson. It appears that the Bannon group are losing. More reasonable views coming from Tillerson and Goldman Sachs dominate. That is important. That tends to swing you away from extremes, back towards a more optimistic view. The key point I want to take away from this is that in all of this discussion it does matter what Congress does with funding. It does matter what happens to the debt limit. It really does matter what happens at the end of the week when there has to be some funding passed through Congress. The second issue, which I want you to take away, is that some of the individual policies that both President Trump and many right wing economists believe in the end to have very important unintended consequences. So when you actually look at what the policy does in a broad sense to the US economy and, therefore, to the Asia-Pacific region, it tends to be when you add it up to be the opposite to what you expect. That is one reason why you need economists to try and unravel the complexities. (LAUGHTER) To quote droum who would have thought it would be so complicated? Let me go through a couple of key areas. There are many policies to be implemented which have have economic consequences for the US, but also the Asia-Pacific region and Australia F we start looking at some of the key ones, fiscal policy - that divides between government spending and the revenue source. The big issue on government spending is the President promised not to touch any of the key entitlement programs, Medicare, Social Security, so there's no reforms promised there. What he has promised to do is a trillion dollars of infrastructure spending, to build a wall, with Mexico, although I understand today that the wall's not in the budget, which means the private sector must be going to build it. And, thirdly, a key build-up in defence spending. The spending programs you can cost them - we have costed them and put them into our models. That is a significant increase in government spending in the US, in an economy which has gross debt to GDP over 100% of GDP and net debt around 80% of GDP. Someone has to pay for that. The argument is you can use dynamic scoring, which means you can work out the long-term benefits and project them back to the present and make everything like revenue neutral, so you can increase spending on infrastructure and eventually it will pay for itself. They are relying on that for their tax policy. If you look at the tax policy, Trump the candidate had a different policy than the Republicans in condbres. He wanted to reduce the corporate tax rate from 35% to 15%. And compress the personal income tax brackets from 7 to 3, and reduce the rate. Quite a significant tax reform. In the sense of lowering revenue, but actually not making it revenue neutral. The Congress had a totally different idea. That was to convert the income tax base, where you tax the income of US corporates, to a value-added tax T way you do that, without being complicated, is you change the tax system so that you tax imports and you give credits for exports, and that is - from an economics point of view - a sensible way of running tax policy. The key killer is in the transition from the income-based system to the value-added system to. Give you an idea of what would be required to do that, take someone like Walmart, they import a lot of cheap goods from overseas, mostly China, they then sell them and export them. Under - and sell them to the US consumers. Under the revised tax system that business model wouldn't work. You would close pretty much Walmart, any of the major corporations who are moving funds offshore, because under oh value added tax it is advantageous to produce in the US. Business models would change dramatically. Which is a good idea, because the current business model in the US doesn't work well from a tax point of view. But the transition would destroy Republican senators in about seven or eight key locations. It won't get through congreet # -- Congress. The border tax adjustment idea is left what, is left is a tax cat, 15% tax cut. What that does is generate a very large budget deficit. Now, again, the Administration argues that economic growth will rise to 4%, this will be self-financing. Same arguments as an dear the Reagan tax cuts, same under the Bush 1 and 2 tax cuts. It doesn't work that way. As much as you would like to have a revenue neutral tax cut where the revenue itself is generated through economic growth, it is unlikely. What does that mean? If you put the spending changes and the tax changes, if it got through Congress, you would have to have a big increase in US Government debt, which may or may not get through Congress, but you also probably increase the US budget deficit by about 5% of GDP. That's a big deal. That has to be paid for and in our modelling who pays for it? Well, the same mechanism that's been paying for US budget deficits since the early '80s. Foreign capital flows into the US, drives up