LETTER FROM MELBOURNE

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LETTER FROM MELBOURNE 1 AUGUST TO 4 SEPTEMBER Federal Governme ere Pliics ON THE CAMPAIGN TRAIL Peas in a pod Kevin Rudd, with his fresh slogan ‘Kevin ‘07’ (T- shirt/online campaign … some say very American), has rejected claims that there are not significant differences between himself and the Prime Minister. A key difference between Labor and the coalition emerged this month as Labor signalled its intention to overhaul the $26b annual commonwealth special-purpose payments to the states. Under the policy being considered, Labor would give more freedom to the states to choose how the commonwealth funding is spent. Premier Brumby gave the proposal ’10 out of 10’ saying ‘co-operative federalism is the way to go’. Prime Minister John Howard said the policy would be a retreat on major reforms; would drag the nation back 50 years; and also said Rudd was shying away from his responsibilities on health and education. Rudd said under a Labor government the states would have a greater degree of accountability, ensuring they would deliver ‘real outcomes’ for taxpayers, the Financial Review said. The same day (1 August) the Prime Minister announced the Federal Government would bail out Tasmania’s Mersey Hospital near Davenport, which he says will cost about $45m. The PM’s only concern is attracting enough staff. The Tasmanian Government had decided to close the community hospital down. Howard also said if the program works out, his government may do similar things elsewhere. The hospital is in the ‘knife-edge federal seat of Braddon’, The Herald Sun reported. One senior doctor at the hospital quit in protest of the move, which also drew criticism from Premiers around the country including Victorian Premier John Brumby who described it as a ‘grab for power’. Associate editor of The Age Shaun Carney wrote that ‘to seize the initiative, Howard has junked the [Liberal] party’s fidelity to genuine federalism. Rudd has called it pre-election cherry-picking. And the Victorian Rural Doctors Association president named about a dozen Victorian rural hospitals which are ‘in www.kovess.com p 03 9562 2248 m 0412 317 404 PO Box 1412 Central Park East Malvern, Vic 3145 a desperate struggle to stay open’, and said if the Federal Government were serious about the plan it would take control of 550 regional and remote hospitals nation-wide, The Herald Sun said. Kevin Rudd pledged $2b to overhaul the nation’s health system and vowed to take control of hospitals if the states did not get reform under way by 2009. The Age’s Carol Nader said it is unlikely for any Federal Government to take control of public hospitals, but that if they did the states might be secretly glad to be relieved of the task. Rudd’s policy received cautious support from the premiers. The West Australian Chamber of Commerce and Industry called on the commonwealth to become sole funder of health care in Australia, saying Labor’s policy does not go far enough, the Financial Review said. Swing An Age/Nielson poll, released on 13 August, showed a 3 per cent swing towards the government in the ‘two-party preferred’ vote. Labor, however retains a significant lead with 55 per cent, to the government’s 45 per cent. The punters are picking a Labor win with Centrebet paying $2.62 for a coalition win and $1.57 for a Labor victory. The Herald Sun ran the front-page headline ‘Old, tricky and losing’ and outlined Howard’s weaknesses as seeming too old, dishonest and too clever, whereas Rudd, 49, is perceived as compassionate, likeable, proving his ability to lead. Howard became a grandfather this month when daughter Melanie gave birth to Angus Benjamin Howard McDonald, which may fuel the ‘too old’ fire. Prime Minister vs The Premiers The Federal Government is battling not just the federal Opposition but also the state premiers, accusing them of doing the Opposition’s dirty work. The Federal Government has released an advertisement that says ‘Kevin Rudd’s Premiers… are borrowing $70b and plunging Australians into debt again’ The Age reported. Age writer Michelle Grattan, described the campaign as bold to ‘run on Labor being the high interest rate party even when rates have gone up four times under the Coalition’. The advertisement was released in the lead up to the Reserve Bank’s decision to rise interest rates this month, in an attempt to shift the blame onto Labor ‘Charles Kovess is Australia's Passion Provocateur.’ He has helped many large corporations and many Government Departments to improve leadership behaviours build better teams unleash passion and build world-class performance. Mention this ad when you contact us and we'll send you a FREE one-hour audio CD valued at $25.00" premiers, the Financial Review said. According to The Age experts rejected the claim, saying ‘federal spending on tax cuts has been more inflationary than state government spending on infrastructure’. Federalism vs Centralism The Federal Government seized power over public housing, and is investigating whether it can override state bans on uranium mining, as well as intervening for Tasmania’s Mersey Hospital (see above). Prime Minister John Howard has been hinting at a greater level of partnership between the Federal Government and local authorities to bypass the States where they are failing to deliver, The Age said. The Federal Government has been considering in Queensland a referendum to override state power over local governments, hoping to capitalise on a backlash against Queensland council amalgamations (which would halve the number of local councils in Queensland) and also to divide Kevin Rudd from the premiers. Premier Peter Beattie has removed a ban on federally funded plebiscites, which could have seen councils sacked if they held a referendum, The Age said. Premier John Brumby says Howard is attempting to centralise power to Canberra and ‘cheating’ Victorian tax-payers by undermining the state’s ability to provide better schools, hospitals and public transport, The Age reported. In contrast to the government Rudd says a Labor Government would give the states more freedom on how they spend federal funds. NSW Premier Morris Iemma threatened to pull out of the national water plan saying the Federal Government is reneging on commitments. Howard also put Iemma on the spot, according to The Age by offering up to $4m to keep open a Canberra timber company, conditional on the NSW government offering the company a long-term contract. Howard also intervened for a group of severely disabled residents in his seat of Bennelong, The Age said. The Herald Sun (29 August) gives a practical breakdown of the differences between the Labor and Government industrial relations policies. On the question of federalism, the Prime Minister is pushing a doctrine of ‘aspirational nationalism’ as the best basis for federal state relations, ‘We should be neither centralists nor believers in the states’ rights. We should be aspirational nationalists’, he said, The Age reported. The Business Council of Australia said the government’s new interventionist federalism did not dispel the need for review of the inefficient overlap of federal and state responsibilities (costing tax-payers an estimated $9b a year). The BCA advocates a systemic overhaul of federal-state responsibilities. The Age’s Steve Burrell wondered whether the next federal election will be the ‘beginning of the end for the states as we know them’ noting both sides of politics seem to want to extend Canberra’s control over how certain tax revenue is spent. Pulp mill Forestry company Gunns’ proposed pulp mill in the Tamar Valley in Tasmania was fast-tracked by Premier Paul Lennon when the company threatened
1 AUGUST TO 4 SEPTEMBER LETTER FROM MELBOURNE to drop its plans for the $1.7b project on the grounds of undue delays. The federal environment minister Malcolm Turnbull is involved because he is required to examine the effects the mill may have on marine species and migratory birds. Gunns says the amount of effluent containing dioxins that will be pumped into the Bass Strait is less than a third of world’s best practice rates. Opponents aren’t keen on any dioxins. Turnbull found himself under considerable pressure when ex-advisor and friend to John Howard, and Telstra Board member Geoff Cousins, who has land in Tasmania, put his money and mouth behind a campaign against the proposed pulp mill. His campaign included many high-profile figures. Treasurer of Tasmania Michael Aird said the site for the proposed pulp mill is an existing heavy industry zone that predates the wine and tourism industries in the region and has happily co-existed with them for many years, in a letter to the Financial Review. Turnbull’s decision awaits a report from the chief scientist, due when the campaign may have started… Interest rate rise The Reserve Bank of Australia raised interest rates 25 basis points to 6.5 per cent (about $40 a month extra to the average home-loan), the highest level since November 2006. Howard suggested the RBA’s decision to raise interest reflected strong economic growth, which he claimed resulted from the Coalition’s good management. Howard warned Labor’s industrial relations policies would push rates further up. An assessment by the Financial Review showed the federal coalition having made $7.5b in spending proposals, compared with $2.6b from the Opposition. The government found another $3.7b in the federal budget surplus taking the surplus for 2006-07 to $17.3b, however the extra money will be locked away through the creation of a new fund for health and by directing more money to higher education. This move stops Labor using the extra dollars in its own election promises. The RBA governor Glenn Stevens said in the June quarter, underlying inflation grew at 2.8 per cent, according to the Financial Review. Brian Toohey wrote in the Financial Review that the Labor Party can show its economic credentials by responding to any Government promises of big tax breaks by saying it won’t risk the pressure on inflation and interest rates. The Financial Review had an interesting ‘election spendometer’. Work choices narrow Business groups behind an advertising campaign to promote WorkChoices are not concerned. They say their focus on policy would prevent reprisals should Labor get into government. the Financial Review said. However, HIA did not take part because it did not want to jeopardise private negotiations with the Labor Party over industrial relations policy. In the advertisements, most of the large employer groups are clearly shown on the advertisement. Age writer Kenneth Davidson wrote that the campaign ‘uses research that cherry picks data to reach required conclusions’. According to The Age senior writer Michael Bachelard, ‘whichever side of politics it comes from, much of the research tells a similar story: WorkChoices is contributing in a major way to John Howard’s poll troubles’. The government’s $37m campaign ‘Protection for Under 18s’ to sell its workplace legislation has been axed, after it was discovered that one of the actors was himself a bad employer who ripped off junior staff, including his son, according to The Age. Kevin Rudd has pledged to retain some aspects of the Howard workplace reforms in an attempt to woo business including limiting union entry to workplaces, but reaffirmed his commitment to axing the government’s Australian Workplace Agreements (though many of them will stay in force until the end of 2012). His attempts to please all, drew criticism from both sides, The Age reported. Tony Steven, chief of the Council of Small Business Organisations of Australia, COSBOA, said small business supported the current government’s IR laws and ‘outcome-based pay instead of this slavish adherence to time served’, The Herald Sun reported. BHP Billiton also renewed its support of WorkChoices, while opposition to the Labor planning in the mining sector remains strong. However some of Australia’s biggest employers said Rudd’s updated policy meets many of their needs, The Age reported. Building industry Chief executive of Leighton, Wal King, tentatively welcomed Kevin Rudd’s commitment to review his party’s policy on the Australian Building and Construction Commission, but said the building industry needs to see more details, the Financial Review said. Building Unions were preparing for old-style protest against WorkChoices in Melbourne, The Age reported. A NSW government report says the WorkChoices has been bad for low-paid women, saying they often miss out on adjustments in the minimum wage, and when wage rises occur they are often accompanied by an increased workload. Federal workplace relations minister Joe Hockey said the report went out of its way to find the worst-case examples the Financial Review reported. A F F A I R S O F S T A T E We know the policies, processes and people in Canberra and in Spring Street. Can we help you resolve a particular regulatory issue T 03 9654 1300 14 Collins Street, Melbourne Old wounds Peter Costello was accused of vowing to destroy the Prime Minister if he didn’t stand down by April 2006 at a private dinner party. Costello is reported to have said John Howard ‘can’t win; I can. We can, but he can’t’. Michael Brissenden, The 7.30 Report’s political editor produced notes from the event. Costello denies the accusations, The Age said. Rudd admitted to having been to a strip club while drunk in New York City in September 2003. Rudd described himself as having been a ‘bit of a goose’, The Herald Sun said. Voters were divided, accusations of smear campaigns, politicians were asked whether they had been to a strip club … Broadband road block Treasurer Peter Costello introduced a bill to prevent a future government from directing the Future Fund to invest in specific projects. The move threatens to block the Opposition’s plan to use the fund to build a national broadband network. Federal Labor still believes it could fund its $4.7b broadband policy, The Age reported. Hot water Under a Labor plan to phase out electric hot water systems, households will have to have to pay up to $6.5b extra from 2012 to replace their old systems with solar hot water, The Age said. NSW Premier Morris Iemma has criticised the Federal Government’s ‘dithering’ on its emissions trading scheme, and its failure to signal a future carbon price. Iemma said ‘the lack of precision around the commonwealth’s carbon trading scheme’ creates an uncertain investment environment and exacerbates the already complex process of financing and building a power station, The Australian Financial Review reported. Fight for the faithful John Howard and Kevin Rudd, both men of faith, appeared at a National Press Club dinner sponsored by the Australian Christian Lobby, which was webcast live to 700 churches. Gittin’ stuck into the PM Age writer Ross Gittins has suggested that ‘spin and deception, as much as good fortune, have marked John Howard’s reign’. In a separate article Gittins argued that the employers Industrial Relations campaign holds no weight, given Rudd’s
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LETTER FROM MELBOURNE

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