Round 2: Rating their interest in View from the Arch

26/10/2007 - 20:29


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This week, as Prime Minister John Howard incurred the wrath of dog-walkers and Opposition Leader Kevin Rudd was ticked off by angry choristers, the economy remained the number one issue as the consumer price index was released.

Round 2: Rating their interest in View from the Arch

This week, as Prime Minister John Howard incurred the wrath of dog-walkers and Opposition Leader Kevin Rudd was ticked off by angry choristers, the economy remained the number one issue as the consumer price index was released. Also this week, both men dropped in to WA as the worm made a comeback - an option not available to unionist Joe McDonald.

Rate rise looms

An unexpectedly high inflation figure looks set to push interest rates up again next month, dealing a blow to Prime Minister John Howard's re-election hopes.

Soaring food and housing costs pushed the underlying consumer price index to three per cent annually - the top end of the Reserve Bank of Australia's target range of two to three per cent.

Financial markets have now priced in an 82.5 per cent chance of rate rise on November 7, up from 58 per cent the day before the index was released.

The data released today by the Australian Bureau of Statistics showed consumer prices rose by 0.7 per cent in the September quarter, for an annual inflation rate of 1.9 per cent.

But underlying inflation - the RBA's preferred measure - surged by an average of 0.95 per cent in the quarter, based on the trimmed mean and weighted median outcomes.

That leaves the average annual rate of underlying inflation at three per cent and at the top of the central bank's comfort zone of two to three per cent.

RBA governor Glenn Stevens said in August: "If it is clear that something needs to be done, I do not know what explanation we could offer the Australian public for not doing it, regardless of when the election might be due."

For most economists, a rate hike in November is a fait accompli.

Economists say the RBA is almost certain to lift rates at its next meeting on Melbourne Cup day - the first election campaign rate rise in Australian history and the sixth rate rise since the coalition won the 2004 election on a promise to keep interest rates low.

By many accounts, a rate rise two-and-a-half weeks before the November 24 election would be bad news for the coalition, already trailing Labor by 16 points in the latest opinion polls.

Mr Howard and Treasurer Peter Costello attempted to play down the CPI figures, pointing instead to the headline inflation figure of 1.9 per cent and warning of a recession if a Labor government scrapped industrial relations changes.

Mr Howard said the headline figure was the lowest CPI on an annual basis since December 1999.

"It's always finely balanced," he told reporters in Perth.

"There are always inflationary pressures in the community.

"And the worst thing you could do for inflation and, therefore, interest rates now would be to reverse the government's industrial relations changes, because that would lead to a wages breakout and could easily slow the growth we're now enjoying and produce recessionary circumstances."

Mr Costello also mentioned recession, saying Labor industrial relations policy would wreck the economy.

"If we were to go back to union control of workplaces and go back to pattern bargaining and moving wages by awards from profitable to unprofitable sectors of the workplace, you would unleash such inflationary pressures in this economy as would end in recession, as has always happened in past periods of economic growth in Australia," Mr Costello said in Melbourne.

But Labor leader Kevin Rudd said the coalition had failed in its 11 years in power to address the causes of inflation.

Mr Howard and Mr Costello were happy to take credit when figures were positive but were Academy Award winners when it came to evading responsibility, he said.

"You can't see their trail for dust when the number is less attractive," Mr Rudd told reporters.

Labor's treasury spokesman Wayne Swan said Australia had the second highest mortgage rates of any advanced nation, behind New Zealand, while rental costs had risen by 5.8 per cent over the past 12 months.

In the past five years, food bills had risen by 21.4 per cent, health costs by 30 per cent, and education costs by 40 per cent, Mr Swan said.

"Despite these figures, John Howard still believes families have never been better off," Mr Swan said.

Former Labor prime minister Bob Hawke also jumped on the bandwagon, labelling Mr Howard the worst economic manager in Australian history and accusing him of "b***ering up" the economy while treasurer in the Fraser government.

The debate and ....

They say one can tell how bad a musical is by the number of times the cast shouts "Hooray!"

One could probably tell how uneventful a debate is by the amount of press coverage given to the behaviour of a TV station, rather than what was actually said.

In what is likely to be the sole debate of the campaign, neither the Prime Minister nor the Opposition Leader managed to land a knockout blow on the other, with only one new policy announced.

But that didn't stop the two men from deriding each other, with the Prime Minister accusing Mr Rudd of being a pessimist on Australia's future.

"I have a fundamentally optimistic view about Australia's future. Where as, Mr Rudd has a fundamentally pessimistic view," Mr Howard said.

By the end of the 90 minutes, it became a competition of who is the greatest optimist.

"You know something? I'm every bit the optimist you are, Mr Howard," Mr Rudd said.

Both sides claimed victory after the event, with the government deriding Mr Rudd's performance as "bumper sticker sloganeering", while Labor termed Mr Howard "cranky".

...the fund

During the debate, Prime Minister John Howard announced a plan to set up a climate change fund, aiming to cut greenhouse gases by putting a price on carbon and auctioning pollution permits for trade.

Set to begin by 2011, the federal government said it would earn billions of dollars a year from the sale of carbon pollution permits under its emissions trading system, with the proceeds going to develop clean energy technology and reimburse low-income households hit by higher power bills.

"The proceeds from those auctions - those permit auctions - will, before long, run into billions of dollars every year," federal Environment Minister Malcolm Turnbull said the next day.

Mr Turnbull said the government had yet to decide on the method of helping pensioners and other low-income households cope with rising electricity bills the trading scheme will cause.

Mr Howard said the assistance could come in the form of an annual payment.

Mr Howard said the easy part of climate change policy was to talk in lofty terms about reducing greenhouse gas emissions.

"The rather more sobering, realistic part of the debate is to recognise that over time this will have price and cost impacts in Australian households," he said.

Federal Labor said it supported the planned use of the fund, but the coalition had given little detail and measures to cut emissions were needed much sooner.

"It is absolutely a right thing for that revenue to be directed towards climate change efforts, whether it is to do with supporting clean energy or making sure that people who are less well off in the community are compensated," Labor environment spokesman Peter Garrett told reporters the next day.

"(But) Mr Howard is talking about a climate change fund that won't be operative for five years. It probably won't be producing any results for a great deal longer."

The Australian Greens said the fund should be used to make homes energy efficient rather than giving people cash for their power bills.

"Leaving people in energy inefficient houses and driving petrol guzzlers locks them into long-term energy poverty which no relief cheque will address," Greens climate change spokeswoman Christine Milne said.

The PM heads west...

Later in the week, when the debate was all but forgotten, Mr Howard made the trip to Western Australia to open the Liberals' campaign, and to make a few announcements of his own.

The first, and probably the biggest, were details of a $405 million federally-funded plan to upgrade roads around Perth.

Part of the money will come from the federal government's $22.3 billion Auslink II program but some funds are new.

The major plank of the funding will be a $232.5 million improvement to road access at Perth Airport.

"These priority works will deliver a road network accessing the airport of the highest standard ensuring airport access is as efficient as possible," Mr Howard told reporters on the edge of Roe Highway.

Also included in the election commitment is a $110 million upgrade to the Tonkin Highway from the Leach Highway to the Roe Highway.

This will include widening the Tonkin Highway to six lanes.

A string of smaller road improvements makes up the rest of the package to be known as the Perth urban roads program.

Mr Howard also announced $5 million in funding for the WA Cricket Association to develop a cricket academy, to belocated at the University of WA Sports Park, near Challenge Stadium.

"We understand and expect that the State Government will contribute a like amount and if that happens then with the other resources available the academy can go ahead," he said.

However, WA Premier Alan Carpenter told ABC Online the funding should not be taken at face value.

"What he's done in previous election campaigns to to make a whole lot of commitments and then nothing ever happens, he reneges on them, so what I would prefer to do is to wait until after the election and if Mr Howard is re-elected then we'll start some negotiation on some of the commitments," he said.

On a national basis, Mr Howard committed committed a re-elected coalition government to spending $75 million to create a competitive grants program for emerging renewable energy technology.

Mr Howard made the announcement at clean energy developer Carnegie Corporation's Fremantle facility.

Carnegie has spent the past 10 years developing technology that will be able to generate both electricity and drinking water from the ocean.

Mr Howard also promised a $5 million grant to Carnegie so it can develop its wave technology to a commercial phase.

Rudd heads west too

Meanwhile, pouring rain created an ill-timed backdrop as Opposition Leader Kevin Rudd made a climate change announcement on his first election campaign visit to Western Australia today.

Accompanied by Labor's environment spokesman Peter Garrett, Mr Rudd toured Caversham Primary School in outer Perth's Hasluck electorate - which Liberal MP Stuart Henry holds by a thin 1.9 per cent margin - after making an early-morning flight from Melbourne.

None of the 12-year-old students telling Mr Garrett about their solar energy projects appeared to recognise the former Midnight Oil frontman, but he made a splash with the teachers.

"We wanted to shake his hand," one said, after posing for photographs.

Towering head and shoulders over the children - and most of the staff members - Mr Garrett helped announce an $150 million boost to a government program that puts solar panels and rainwater tanks in schools.

A Labor government would spend up to almost half-a-billion dollars over eight years to give all of Australia's 9,612 private and public schools grants designed to cut greenhouse gas emissions by 27,000 tonnes a year, Mr Rudd said.

Schools would be able to apply for up to $20,000 to install two kilowatt solar panels, and another $30,000 to install energy-efficiency improvements such as rainwater tanks, solar hot water systems and lighting upgrades.

The ALP had also promised $10 million towards the cost of a third desalination plant in Western Australia, with Labor's infrastructure and water spokesman Anthony Albanese also announcing the party would commit $2 million towards guaranteeing water supplies for two small lakes at inner city Hyde Park in Perth.

It also would provide $4 million for the upgrade of drainage systems in Perth's Canning and Southern River areas.

Labor's desalination pledge would provide half the cost of a $20 million desalination plant at Wellington Dam, near Collie, south of Perth.

The state's water resources minister John Kobelke today said the WA government was looking at matching federal Labor's $10 million for the proposed new desalination plant.

Other Policy Announcements

The Coalition has promised:

  • $4 billion pensioners and carers package.
  • $700 million for crossing near Brisbane.
  • $208 million to establish technical defence colleges for Yr 11 and 12 students and an additional 2200 Defence scholarships for school leavers.
  • $174 million for 4661 community based water management projects.
  • $40 million for breast prostheses.
  • $22 million over five years for paralympic athletes.
  • $75 million for renewable energy grants
  • $15 million to control feral animals.
  • $15 million World Heritage listing of Kokoda.
  • $10 million upgrade of Peninsular Road in far north Queensland.
  • $8.5 million for the 2009 World Masters Games in Sydney.
  • $7.3 million for sports stadium on the Sunshine Coast.
  • $6.5 million to the (Sir Donald) Bradman Foundation.
  • $5 million for medical clinics in the bush.
  • $350,000 to secure the Blue Gum forest in St Ives (NSW).
  • $250,000 Anglican Church restoration in south Perth.

This puts the total amount allocated at $39.53 billion over the course of the campaign, with $5.51 billion committed this week.

Meanwhile, the ALP has pledged to spend:

  • $1.5 billion to lift the childcare tax rebate to 50 per cent.
  • $489 million for solar panels and water tanks for schools
  • $77 million to improve quality of child care workers.
  • $52 million for NT roads.
  • $1 billion up-grade to Melbourne roads.
  • $5 million to match coalition announcement for Sunshine Coast sports stadium.
  • $43 million for McLaren Vale (SA) winegrowers to switch to treated recycled water.
  • $69 million in petrol grants for non-profit organisations.
  • $500,000 for general upgrades in Parramatta.
  • $7 million for roads in Penrith region.
  • $8.5 million for rural health scholarships.

The ALP committed $3.26 billion this week, bringing its total to $40.22 billion.

Bits and Pieces

  • Both Mr Howard and Mr Rudd visited Campbell Barracks to pay tribute to SAS Sergeant Matthew Locke, who died yesterday in a firefight between the elite SAS and Taliban fundamentalists in Afghanistan's troubled Oruzgan province.
  • Construction Forestry Mining and Energy Union WA assistant secretary Joe McDonald was officially expelled from the ALP this morning, one day after the Liberal Party launched an advertisement attacking Mr Rudd over the ALP's failure to act after suspending him earlier in the year. Mr McDonald plans to appeal the decision.

The final word

In a week where the PM told an audience that a plan to create two new technical colleges specialising in defence studies was "fully funded until 1916", and Opposition Leader Kevin Rudd found a long lost relative on FM radio, the final word goes to former Queensland Premier Peter Beattie.

Mr Beattie told ABC Radio this morning that people should show respect to the PM and Opposiotion Leader, saying abuse was "undignified and inappropriate."

As has been previously mentioned, Mr Rudd copped a blast yesterday from a 74-year-old choir member who called him an "ignorant bastard" for gatecrashing a Tasmanian community centre's birthday party.

And Mr Howard was heckled on his morning walk two days running this week by disgruntled voters.

"I didn't like the guy who made the smart remark to the prime minister when he was walking," Mr Beattie told ABC radio today.

"I think that's unnecessary.

"I don't think it does any harm to have a bit of respect for the office of the prime minister.

"And I must say to the two gentlemen in Tasmania - I just thought that was a bit over the top.

"I don't think that was terribly helpful being rude to Kevin."

It was Mr Beattie's first foray into the Federal Election debate, describing himself as a "humble retiree".

No such thing, Mr Beattie.


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