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Transcript of joint press conference: Canberra: 20 October 2010: National Broadband Network; James Packer; Afghanistan



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The Hon Julia Gillard, MP

20 October 2010

Prime Minister

Transcript of joint press conference with Minister Conroy

Canberra

Subject(s):

National Broadband Network; James Packer; Afghanistan

PM: I'm joined today by the Minister for Broadcasting, Communications and the Digital Economy, and today the Government is reintroducing a landmark Bill that will facilitate the separation of the retail and wholesale arms of Telstra for the benefit of consumers.

Those reforms to the telecommunications sector will deliver the environment needed to ensure competition flourishes in the sector. Now this reform is vital because it will drive lower prices, better quality and more innovative services. In other words, this is a textbook micro-economic reform, creating transparent regulatory framework that delivers quality, choice and competitiveness, so consumers benefit and they don't face prohibitive barriers to entry.

So we are urging the Opposition today to not delay this Bill. Every day of delay for these reforms is a day of higher prices and less choice for regional Australia in particular. So we are saying to the Opposition, do not delay and cause extra days of higher prices and less choice, particularly for those Australians who live in our regions.

The Bill was originally introduced in September 2009, so the Opposition knows its contents and they've got no reason for unnecessary delay. Since the Bill was introduced last time, Telstra has entered into a Heads of Agreement with NBN Co. to partner in the delivery of this vital new infrastructure.

Now for too long Australian consumers have had experience of a telecommunications sector with far too much market concentration in one company. With this legislation we can effectively restructure the industry to build the National Broadband Network, to deliver broadband services to all Australians at a uniform wholesale price, meaning people who live in our regions won't be discriminated against.

And as we build this essential infrastructure across the country, the NBN will lift productivity, attract investment and create all important jobs.

Broadband not only stands to boost our nation's GDP by up to six per cent within a decade, but it will also transform the way we do business in this country and deliver services. It will transform the way we deliver health, as I commented

during the election campaign, enabling Australians to have their health conditions monitored from home. It will transform the way manufacturing does business, able to manage its supply chains more efficiently. It will enable farmers to monitor crops and respond quickly to weather changes. It will enable students in classrooms to have great access to the knowledge around the world. We are delivering these reforms, working closely with Telstra and they are very important to Australians everywhere.

So that's why today we'll introduce the legislation that allows a smoother transition and handover of the copper network to NBN Co. I'll ask the Minister to make some comments and then we'll take questions.

MINISTER CONROY: Thanks Julia

Well as the Prime Minister has said, the reintroduction of the Competition and Consumer Safeguards Bill is a key step towards delivering a vibrant and competitive telecommunications sector.

This is in the interests of all Australians. In the telecommunications sector, infrastructure competition has failed. Last week, Maha Krishnapillai from Optus told the Communications Day Conference:

"People talk about letting infrastructure competition work - maybe you should learn a lesson from history.

"We have empirical evidence of what happened in the late nineties where Optus rolled out a pay TV network down streets in suburban Sydney, Melbourne and Brisbane.

"Telstra went down the same streets, carpet-bombed the business case and effectively Optus and Telstra wrote off over $1 billion through that period.

He went on to say:

"We've certainly seen empirical evidence that that will not work and that's one of the main reasons we support the NBN."

Since 1997, and some of you have heard me say this before, there have been more than 150 telecommunications access disputes. This compares with only three in other regulated sectors such as airports and energy.

The Gillard Government is committed to addressing the mistakes of the past and establishing an effective and efficient telecommunications regulatory framework.

Reforms outlined in the Bill include restructuring the market to promote greater competition and strengthening consumer safeguard measures such as the Customer Service Guarantee and the Universal Service Obligation.

Importantly, the Bill also sets out a framework for Telstra to seek approval from its shareholders on the proposal to migrate fixed-line services to the NBN.

The Bill has been amended to provide the necessary legislative framework to support this arrangement, and to provide regulatory certainty to Telstra and its

shareholders. The Heads of Agreement is a critical step in delivering the much needed structural reform of the sector.

The Government has always said that any final agreement reached by Telstra and NBN Co is subject to independent scrutiny. The ACCC will review the arrangements proposed in Telstra's structural separation undertaking to make sure that competition issues are properly addressed.

The Bill includes provisions that will authorise, for the purposes of trade practices law, certain conduct engaged in by Telstra and NBN Co that is required to promote the structural reform of the telecommunications industry.

If the ACCC approves the undertaking, Telstra and NBN Co should be given certainty that their actions to comply with and are acceptable, for the purposes of the Trade Practices Act.

This will avoid the need for multiple regulatory processes under the Trade Practices Act, while still ensuring the necessary level of scrutiny on the details of the arrangements.

Other important measures in the Bill that provide greater certainty for Telstra include allowing Telstra to bid for spectrum, given it is proceeding with structural separation; and allowing the implementation of functional separation to be deferred, while the structural separation process continues.

And these are key parts of the Heads of Agreement with Telstra that are necessary for their shareholders to be given the certainty to be able to vote in the next extraordinary general meeting of Telstra.

The ACCC will not be able to approve Telstra's structural separation undertaking, unless it contains measures to improve equivalence arrangements to wholesale customers during the transition to the NBN.

Telstra's compliance with an undertaking will also become a condition of its carrier licence.

The fundamental reforms in the Bill address the long-standing inadequacies of the existing telecommunications regulatory regime.

These stretch back over 20 years and two governments.

This is an important step in the reform of telecommunications which will result in a wholesale only open access network, with protection for industry and consumers in the transition.

During the election campaign Tony Smith confirmed the Coalition would not support structural separation. But he did say the Coalition would support the important consumer reforms in this Bill to Parts 11-B and Part 11-C.

But just last week Malcolm Turnbull appeared to shift the position on structural separation.

He told the Communications Day Conference in Melbourne:

"...we must recognise that if vertical integration is indeed the problem, then a structural or functional separation is the answer."

So it is time for the Opposition to come clean on their position on structural separation of Telstra. And the reform, this incredible micro-economic reform that has held back this sector for 20 years.

The Opposition claims it wants transparency and scrutiny ... but at every step it has blocked and delayed the reforms that would benefit all Australians.

First, they blocked a debate in the Senate on the NBN until the ACCC's report to the expert panel was released - and the report was released.

Then, they blocked debate in the Senate until the Implementation Study was released - it was released in full in May.

Thirdly, they opposed the legislation because they claimed it was bad for Telstra shareholders - but the Telstra board is now recommending the deal to their shareholders.

Finally, they claim they need a cost benefit analysis to support the NBN.

But Malcolm Turnbull has twice been challenged - including by myself on Lateline recently - that if a cost benefit analysis gave a clear go ahead for the National Broadband Network would he support it.

He has continued to refuse to say that he would support the NBN even if a cost benefit analysis was positive.

And yesterday, we saw another stunt by Malcolm Turnbull that is designed solely to delay the National Broadband Network.

Mr Turnbull wants to the Productivity Commission to carry out a cost benefit analysis of the NBN.

So let's recognise the Opposition's stunts for what they are - they are willfully delaying millions of Australians from getting a fairer deal on broadband and telecommunications services.

Just today ... just today we have another piece of research which shows Australia has slipped even further behind other Western countries when it comes to broadband.

Every day these delays of reforms, is another day that Australians are more for second-class broadband service.

The Gillard Government is delivering on this through the NBN and Australians don't deserve any more delays.

JOURNALIST: Prime Minister-

PM: Yes Phil.

JOURNALIST: (inaudible) this legislation to lower prices, could you explain how much lower prices would be?

PM: Well obviously this legislation is about structural separation, so you've got, if you like, the backbone of the system, the thing that makes it work, separated from the competition that there can be on the system as service providers compete with each other to get customers' businesses. Now competition, by definition, is good for consumers, good for them getting packages they need at prices that they view as competitive and getting the best deal. We know that from economics 101, I'll have the Minister comment too.

CONROY: Let me give you some concrete examples of what's happening in Tasmania.

Let me give you some concrete examples of what's actually happening in Tasmania.

In Tasmania, these are introductory offers, we make that very clear, introductory offers.

You are seeing prices being offered of $30 for 25 meg download speeds. That is an exceptionally competitive package.

If you look at what another company is offering, they're offering $90 you get all your broadband and all your phone calls including your mobile for $90.

The equivalent Telstra package in Tasmania is $130.

So you are already seeing an impact and if you think it's an accident that at the moment Telstra and all of the other ISPs of Australia are suddenly offering higher download limits it's not an accident it's happening because of threat of entry of competition from the National Broadband Network.

You are already seeing prices and packages which include the download limits starting to be affected by what is happening in Tasmania and what is going to happen as the NBN is switched on in more and more homes across Australia.

So the National Broadband Network as Mike Quigley said last night will be providing its business case to the Government in the next few weeks and there'll be I'm sure a lot of information that's going to be available which will give a much stronger steer on what the mainland prices - as opposed to those introductory prices in Tasmania - are going to be and a lot of those questions will be able to be answered in a couple of weeks time.

PM: One at a time, Paul?

JOURNALIST: Senator Conroy if the Opposition succeeds in getting the Independents on side for this further inquiry, will that demolish the NBN?

CONROY: Not at all I mean the benefit, all around the world there are benchmark studies that have been done about the positive impacts.

My own Department released during the election campaign, or I released them on behalf of the Department, a couple of sectoral analyses in telehealth and in working from home and both of those showed positive impacts.

The IBM Access Economics study done just last year on a fibre-to-the-node, not even fibre-to-the-home so even as good an improvement as possible showed substantial productivity boosts.

So a cost benefit analysis will show that the boost to the productivity will be on par with the sort of examples that we see overseas.

So the Productivity Commission will be a complete waste of taxpayer's money to be engaged in this.

The financial case was set out in a $25 million study that we fully released, every word, all the claims that we tampered with it - we released every word of it and it showed that it is financially viable.

The Business Case will show when we release most of that information in a few weeks that it is financially viable so unless somebody wants to suggest that the benefits to the economy as a whole are negative from introducing this - a positive business case and a positive impact of broadband says this will be a positive outcome for Australia. Unless someone wants to argue that's a negative to over-balance the actual business case.

JOURNALIST: I was just wondering, Prime Minister, you said competition is economics 101, Senator you're saying that infrastructure competition has failed. Can you explain to me as a dummy on economics how can you have retail competition is going to help consumers, yet to have a complete monopoly at the wholesale infrastructure and how will we get the prices to be driven down?

CONROY: No, I could probably quote someone called Paul Fletcher - he wrote a book and he knows a little bit about the telecommunications sector in fact he knows so much in fact Malcolm Fraser had to take him with him to a couple of meetings with my officials - you've got a shadow shadow minister in Paul Fletcher.

Paul Fletcher made it clear, sorry Malcolm Turnbull, I've already made the jump, what he argues is the best outcome for competition is for one company to run the wholesale network and to have the proper regulatory framework just like we have a proper infrastructure regulatory framework in all these other sectors - gas, water, electricity.

The ACCC is bound to manage a wholesale monopoly but they would tell you and Graeme Samuel has said this publicly there's a quantum difference between trying to manage a vertically integrated monopoly and a wholesale only monopoly and they've managed it in all these other sectors without all of these disputes.

Where you've got a vertically integrated monopoly where you have the wholesale company favours its own retail company in its offerings, its behaviour

and its conduct that's why there's such as enormous breakthrough, such an important micro-economic reform that is structural separation.

So proper regulation of the wholesale company under proper scrutiny from the ACCC which are these powers and more powers to come will do we'll see the wholesale market levelled and you'll begin to see the sort of retail competition

that you're seeing in Tasmania.

JOURNALIST: Have you, or your office spoken with the Greens and Independents about blocking this Opposition move?

CONROY: I was in estimates until 11 o'clock last night so it was only announced during the course of the Senate Estimates so I haven't had a chance to talk to all of the minors and independents yet.

JOURNALIST: Are you going to have to rely on the Greens next July to get this through if the Opposition does delay it further?

CONROY: Well this is a bill that has been tied basically 38 / 38 in the Senate.

What one of the minor parties indicated is that they wanted to see a deal struck before they would consider this and I think now that Telstra are supporting this Bill - a deal has been struck - I think there is a fresh chance for this to pass the Senate before the 30th of June.

PM: Can I just, before we take the next question, can I just add there, and obviously the Greens and Independents will each announce their own position, but I think it's important to note that the Greens have been pro the National Broadband Network. It has been pivotal to Mr Oakeshott and Mr Windsor, who understand its benefits for regional Australia. Its benefits for regional Australia are well understood by Mr Katter and he has made some public comments about that today.

And of course Mr Wilkie comes from Tasmania and because Tasmania has seen the first of the rollout and it has consequently become the subject of a lot of community discussion in Tasmania, people would see, I think, that Tasmanians are very in favour of the further delivery of the National Broadband Network in their own state.

Now the pivotal issue here is what is Tony Abbott and Malcolm Turnbull's position. Because the question you raise about the Senate numbers only becomes relevant if Mr Abbott and Mr Turnbull back delay and in doing that they will be backing higher prices and less choice for Australians.

JOURNALIST: Did James Packer advise either one of you prior to his move yesterday to acquire a bigger stake in the 10 network? And have either of you indicated a disposition to Mr Packer about your attitude to anti-syphoning rules?

CONROY: I certainly, it was news to me, I read it online. So no he didn't call, didn't advise me.

And Mr Packer has been as I think was reported in the newspaper an active lobbyist over the anti-siphoning list.

PM: I was not advised and obviously saw the reports this morning.

CONROY: he's been part of an ongoing discussion I've been having with all of the parties so in terms of where we finally, we haven't reached a final decision so there's nothing to indicate.

JOURNALIST: Is it fair to impute that Mr Packer would have a good idea about where the Government is lining on anti-syphoning?

CONROY: Well he's been involved in the discussion in that he has is a player on the pay-TV side of the debate so he is conscious of the discussions but the Government hasn't made a final decision yet.

JOURNALIST: The big three miners are accusing the Government of breaking the heads of agreement of the mining tax negotiations insofar as you're not going to fully compensate any future royalties.

Are you confident that you indeed have not broken that agreement, if not the spirit of the agreement, and secondly for fear of not getting an opportunity, how is it that you propose to accommodate Andrew Wilkie on the Intelligence and Security Committee, given that legislation insists that the Government has a majority on that committee?

PM: Ok, well on the first question, can I say I think there are a number of assumptions in that question that I don't share and in answering it I don't want to be seen to endorse. The position from here is, obviously, there are a range of matters that are being discussed through the policy transition group that Don Argus is leading, with the participation of the relevant Minister, Minister Martin Ferguson, and obviously in that policy transition group there is a broad range of discussions and we welcome that, that's exactly what we wanted to happen. That's what the policy transition group is for.

We have said all along we'll credit existing royalties and scheduled increases and the policy transition group is going to advise Government on the best way to provide certainty to the industry, given that policy setting. Now in implementing the Minerals Resource Rent Tax we obviously won't be giving a green light to State and Territory governments to increase their royalties in a way which means the Federal Government effectively foots the bill.

As is well known, the proceeds of the Minerals Resource Rent Tax will be going to support a key range of changes to drive economic growth, reducing company tax, increasing our national savings, providing other tax benefits for small businesses. So that's where the matter stands. We will keep working through with the policy transition group.

Sorry, the second question, sorry about that. The Government will be making announcements about committee positions, I believe during the course of next week.

JOURNALIST: (inaudible) want Parliament to engage on any more engagement in the future. They want to pass that law. Adam Bandt is going to put that up

today, is that something you support?

PM: I'll listen to Mr Bandt's speech but the mechanism we have used for providing this information to the public and the Parliament is a Prime Ministerial Statement to the Parliament. That is noted by the Parliament. People obviously then get the opportunity to put whatever view they want to during the course of the debate on it. That's the mechanism that I would use for annual Prime Ministerial Statement, so I committed myself to that.

JOURNALIST: Senator, if I could, a basic element of the NBN, while there might be value for e-commerce and e-health, isn't it true that most households will not need want or use the boosted broadband services that you will provide, but they will nevertheless have to pay for them?

CONROY: Firstly the premise if wrong on two counts.

Firstly they're not being forced to pay for a connection it's being connected by the NBN for free and they don't actually have to take the service - this is the Tasmanian circumstance so they're not actually - you connect something to the side of the house but they don't have to take the service, they can keep using their copper line for the moment.

The Agreement with Telstra is that we shut down ultimately the copper network and then the only way you can make a fixed line phone call is on the NBN.

So you will be able to - notwithstanding the confusion that Malcolm Turnbull repeated again that he suddenly believes people are going to lose the ability to make a phone call.

As was clinically explained by Mr Quigley last night when the NBN replaces a piece of copper you will take the plug out of one socket and you will plug it into a different socket and you will keep making the same phone calls completely.

So this idea that suddenly you'll be losing your - which is the whole basis of some of what he claimed yesterday that you're losing your phone line is just wrong.

And I invite Mr Turnbull and everyone who's interested to have a read of the transcript where Mr Quigley explained that really complex process pulling socket from the wall and plugging it into a different box and you still get your phone service.

You don't have to take broadband you can ... there will be an offering for just a phone service.

And let's be clear not withstanding some confusion that has been the public situation all along.

I don't know how this confusion keeps arising this completely erroneous claims are made and then become almost urban myth like $6000 for wiring.

This is completely false. I don't know how many times I've read it on the front page of some newspapers - it's completely false.

Mr Quigely says it's completely false, I've said it's completely false and users in Tasmania - who are using the National Broadband Network - know it's completely false because they haven't had to re-wire their homes.

PM: Could I also, we'll just keep taking questions, could I also say, Malcolm, obviously the Minister's answer is precisely right, but I'd also say let's not get into a position here, where we are denying ourselves the benefits of the future. I've lived a bit of a time, I think you have lived at least as long as me, perhaps a tad longer... I succeeded Barry Jones in this place, who famously said that one day there would be more computers in Tasmania than cars. And right around the nation he was ridiculed - most ridiculous statement anybody had ever made, what a load of nonsense, more computers than cars, how could anybody be so stupid?

And look where we are today, with computer technology. With the phones we hold in our hands. Did you foresee, when mobile phones came out, that we would be using them, with the capabilities and for the purposes we do today? That very few people standing in this audience, would ever be more than six or seven inches from their Blackberry, or their iPhone? Did you foresee that?

We'll before we talk ourselves into saying what Australian's want is the old telephone network, let's actually think about the promise of this technology for the future. You characterised it as just e-health and e-commerce. That characterisation is nonsense. It's like saying, when we first got mobile phones, that the only thing we were ever going to have was the one that came in the suitcase that you carried around. It's ridiculous.

JOURNALIST: Ms Gillard, there's increasing international pressure for negotiation with the Taliban and some early negotiations. Does Australia support that and do you see any role at all for Australia in such negotiations?

PM: As I said in my speech yesterday, there are discussions about political reconciliation and reintegration. Obviously, the political reconciliation process is one that President Karzai has outlined a process of bringing people together and I think, essentially, whilst other nations can assist, political reconciliation for the Afghan people has to be under the auspices and the leadership of the Afghan people.

There are conditions, obviously, President Karzai has been clear about that. Political reconciliation need to be about a laying down of arms and an acceptance of the Afghan constitution and democratic processes and practices, particularly elections. Now there's also at a more localised level some reintegration processes, you know, there are people who have obviously done some work for the insurgency, perhaps, you know, digging a ditch in which an improvised explosive device is later placed, but they do that to earn money, trying to feed their families. And if there is another way that they can get money and feed their families then they will choose that other way, they are not motivated fighters. So at a local level there are reintegration efforts of that order

Well I think we've just got to be very careful here about terminology. Obviously, there is a political reconciliation process, which the government wants to see

worked through, which is about the laying down of arms and the acceptance of the Afghan constitution. Ultimately, these are matters that need to be determined by the Afghan people.

JOURNALIST: (inaudible) national level, if they do agree to lay down arms, do you have a problem with the Taliban and the ideology they bring forming part of a provincial or national government?

PM: Well, look, I want to be really careful about terminology here, because I can easily see this ending up at cross purposes.

I don't accept the characterisation 'they'. I am not suggesting and did not in yesterday's speech suggest that we would see some grand bargain here. What I think is more likely is that some - some - people who may have had some association with the Taliban will, through these political reconciliation processes, work through, so the use of the terminology 'the Taliban' is not appropriate and not what I mean.

What President Karzai has talked about, what I am now talking about, is a process of dialogue which would involve some people who would've been associated with the Taliban in the past, and obviously some pivotal conditions and the foundation stones of those conditions is the laying down of arms and the acceptance of a democratic Afghanistan.

JOURNALIST: (inaudible) Tony Abbott's idea (inaudible) more time to question suspected insurgents once they're detained?

PM: Well, obviously I'm happy to work through on advice about these questions, but once again I think we just have to be a little bit clear here. The 96 hours, as I understand it, is in ISAF guidance as well as in our guidance. The 96 hours is the amount of time that detainees are retained by Australians before they then go into detention arrangements, which we do not run.

JOURNALIST: Prime Minister, you've placed a 10-year involvement in Afghanistan. Post 2014, does that by necessity involve a military engagement, or can it be provided through other forms of assistance?

PM: Well, what I said in the speech yesterday is what I meant. We are looking - the international strategy here, the international strategy that we support, the new international strategy, is to build capacity to enable transition.

Transition is not date-based. Transition is conditions-based. It's about conditions on the ground. It will be a process, not a day. Different places in Afghanistan will transition at different times to the leadership of the Afghan security forces.

My view is, and I'll be making this - made it clear yesterday - I'll certainly be making clear as we move towards Lisbon and other discussions, that pivotal to transition is that the capability of the Afghan forces to provide that leadership is irreversible. We shouldn't transition out only to transition back in.

As an area transitions, then forces like our own would take less and less role over time. Once again, that needs to be conditions-based and it will be different

place by place.

JOURNALIST: Ms Gillard-

PM: -Yes, Phil.

JOURNALIST: Back to the Taliban question - Alexander Downer was quite explicit in that piece he wrote the other day. Is that a form of language you're not prepared to able to embrace as Prime Minister, when he says the Taliban must become part of the political process there - sit in the parliament, it would never be in the majority but it would, if you like, a Sinn Fein with the IRA, bringing that conflict to an end. Is that, are you not prepared to go that far at this stage?

PM: Well, look, I'll let Mr Downer pick his own terminology, and I think he is, you know, trying to conceptualise what the future may look like.

What I would say is these are processes that need to be worked through. You know, President Karzai has obviously started a process. It's very, very early days. I do not see the prospect of a grand bargain. I do think we are talking about elements of the Taliban, not a grand bargain, and so I wouldn't use the same terminology as Alexander Downer, and I'm not sure it's helpful to draw analogies between one country and other. I presume he's trying to draw the analogy with Ireland in order to help explain things to people, but I often find when you pick an analogy with another country there will be things that are very, very different, and analogies can get unhelpful as a result.

JOURNALIST: Prime Minister, I was wondering if-

PM: Well, just do Denis, and yes, Karen, and then we'll go.

JOURNALIST: On Afghanistan, can we take it from what you've said this morning that Australia, at Lisbon or in other meetings, would not support any proposal which included bringing Mullah Omar into the government structure in Afghanistan?

PM: Look, I'm not going to be drawn on war-gaming through. You know, you could put a million scenarios to me. What, obviously, we're there to do in Afghanistan is to deny Afghanistan being a safe haven for terrorists. It therefore follows that the Australian Government would not support - and Coalition members, I think we can say this broadly - would not support any arrangements which may facilitate a return of Al-Qaeda to Afghanistan, using it as a safe haven or for terrorist training

But I also think we've got to be a bit careful here about what is for us to decide and what is for the Afghan people to decide. We have had elections in Afghanistan. They haven't been without problems, but we have had elections. You know, there, a national government, fragile as it is, is being formed.

I spoke yesterday and I believe this - that entrenching democracy in that sense will be the work of a generation of Afghans; so - their government, they're going to have to work through to entrench democracy in that way.

JOURNALIST: Prime Minister, on that point, we still have an unstable Afghan

Government, and there's a lot of international discussion about corruption and the fragility of that situation in terms of governance. There are analysts here, including Hugh White, who say if we only focus on strengthening the military and then we see that as our benchmark for leaving in terms of security, that we risk creating a situation where you have a strong military and a weak government which becomes a failed state, even worse than the instability you see in neighbouring Pakistan where you do have a strong military and often a weak government?

PM: Well, what I would say to that is it is not correct to somehow contrast that with what I said yesterday, and try and analyse it and say the two things are different. That's not what I said yesterday.

What I said yesterday is we are there, training the Afghan National Army. We are there training police. We are there involved in aid and reconstruction work. We are actually doing that in a combined taskforce.

What's the aim of our mission? To deny Al-Qaeda a return to a safe haven.

How will we acquit that mission? Well, the military mission will be acquitted by enabling transition to Afghan-led forces; transition conditions-based, a process area by area.

How long's that going to take? Well, the advice to me currently: 2-4 years. President Karzai has said he'd like that to have happened by the end of 2014, but it's conditions-based.

After that stabilisation of security occurs, I have said that we will be engaged to the end of this decade at least with training and support and civilian works, aid and development works, and then I have said I believe it will be the work of a generation of Afghans to build democracy.

So, it's not correct to say that somehow I am conceptualising a military mission which comes to an end and there is no further support to Afghanistan, and that is in fact the complete reverse of what I said yesterday.

JOURNALIST: (inaudible) will be an international (inaudible)

PM: The aid work that we do is about direct services - schools, kids in schools, girls in schools; it's about health, kids getting immunised, infant mortality coming down, places that people can go to get health checks, access to doctors and nurses which they haven't had in the past; and it is about strengthening governance.

JOURNALIST: (inaudible) do you mean that there is a possibility a large number of Australian troops could remain in Afghanistan after 2014, or do the bulk go and then-

PM: That's not what I said either, and I'd refer people to the words of the speech. What we are obviously looking at here is a circumstance where we acquit our mission: Uruzgan province, training the fourth brigade, training police, we are engaged in aid and civil work as well. It is integrated.

We then enable transition, place by place, to the leadership of the Afghan security forces. As they take the lead, we in a security sense, can obviously give leadership to them and start moving back, and what I have said is I believe, on the best advice to me at the moment, that that transition to their leadership will take 2-4 years - President Karzai says by the end of 2014 - and then we would stay engaged to the end of the decade at least, in some way supporting security and aid works.

JOURNALIST: Prime Minister, I think it's that engagement beyond 2-4 years, 2014, conditions-based - is that engagement to the end of the decade, in your mind, still military engagement, or is it other forms of engagement, civilian, that sort of-

PM: I think we can conceptualise that there would be some overwatch functions for a period of time, and then we could conceptualise that there would be continued support for training over a period of time, but-

JOURNALIST: (inaudible)

PM: Well, Australian troops who are trainers, so our military, in providing training, obviously does a range of work that is not direct combat work. For example, you can imagine trainers being there, supporting leadership development for the Afghan National Army. We've got fantastic training of our officers in our Defence Force. You'd imagine people doing that, but we're in a situation where we've got to work this through, conditions-based, but I wanted to sketch out for the Australian people yesterday as best I can what the future is going to hold, and I wanted to be as frank as I could with Australians about what their expectations should be about Australia's engagement in Afghanistan.

So, you know, I think it was as frank an assessment as I could make it for the Australian people to understand our mission.

JOURNALIST: (inaudible) transition is irreversible, isn't that running the risk of telling the Taliban that if they can overwhelm the Afghan army there's no chance of the Coalition forces coming back in, and-

PM: -No, complete reverse, Mark - the complete reverse. Security, the Afghan National Army being able to provide security, is obviously them able to provide security to have stability to not have the insurgency, to not have the return of the Taliban.

You know, to characterise my words any other way is really to twist them indeed. We are there training; we are there working through, place by place, district by district. There would be transition at a time that the Afghan National Army had the capability to deliver the security necessary - not before. That's my very point, and so that's what irreversible means, not what you're suggesting.

JOURNALIST: (inaudible) how do you know the Taliban won't overwhelm the Afghan army after you've decided that you're not going back in?

PM: Well, you can assess capabilities of defence forces. We assess the capability

of our own. We've got the view of the capability of other parts of the world. Our soldiers are there, our trainers are there, training so that the Afghan National Army has the requisite capability.

Can our trainers, our soldiers, judge capability? Well, obviously they can. They judge their own capability every day. They train people every day to make them capable.

Thank you.