A brief explanation: the government controls the Notice Paper in the House of Representatives. This is the document which outlines the order and timing of debate, including the order of legislation.

Whilst there are set times when the Opposition can bring on debate on particular issues (such as in regular Matters of Public Importance), if it wants to move a specific motion it needs to first move a motion for the Suspension of Standing Orders.

Abbott attempted to do this during Question Time on March 21, whilst the government was preoccupied with the leadership spill that wasn’t. He sought to suspend standing orders in order to move: “That this House declares no confidence in the Prime Minister.”

The motion was carried by 73 votes to 71 but was defeated because a suspension of standing orders requires an absolute majority of 76 votes.

Abbott then announced that he would give notice of a no-confidence motion when the House resumes tomorrow. He didn’t say whether it would be no-confidence in the government or the prime minister. The difference is technically significant but may not necessarily be crucial to the outcome of any vote.

What all of this means, in practice, is that Abbott can give notice of his intention to move a motion but unless he has the numbers in the House to bring on an immediate debate it is in the government’s hands as to when, or if, the motion is brought on.

It is, or should be, inconceivable that a government would not immediately bring on for debate a motion of no confidence in itself. There is, afterall, no more important motion that can be moved in the House of Representatives than one which expresses a want of confidence in the executive.

The House sits this week and then adjourns until May 27, to allow the government to get out in the electorate and sell the Budget. Having announced their intention to move no-confidence, the Opposition could look silly if the week ends without such a motion being put forward.

Abbott’s Budget Problem

However, tomorrow night’s Budget exposes the Opposition to accusations of sabotage and irresponsibility were it to give notice of the motion when the House first sits. Even if moved after Treasurer Wayne Swan has delivered the Budget, there is the problem that a no-confidence motion would take precedence over all other business and could run for several days.

Whither the Budget?

Another important consideration for Abbott is the time set aside for him on Thursday evening to reply to Wayne Swan’s budget speech. This speech is televised live and gives Abbott a free kick at the government and the chance to dominate the media coverage on Friday.

You would have to think that the government’s response to the tabling of a no-confidence motion on Wednesday or Thursday would be to cancel Abbott’s Budget reply speech. They could rightfully argue that a no-confidence motion takes precedence.

With an election due in four months, thirty minutes of free television time is a gift Abbott is unlikely to want to surrender.

The Opposition’s awareness of this was apparent in the dissembling by its Manager of Business, Christopher Pyne, over the weekend. “The Coalition will move a no-confidence motion when the time is right,” Pyne is reported to have said.

What to do?

Looking Back To 1941

The only historical guide we have is the motion that brought down the minority Fadden government in October 1941. This is also the last time Australia had a minority government.

At 3.13pm on Wednesday, October 1, 1941, the Leader of the Opposition, the ALP’s John Curtin, rose in the Committee of Supply in the House of Representatives to speak on the proposed 1941-42 Budget.

The Committee – in fact, the whole House sitting as a Committee – was considering the first item in the Estimates, namely the provision of 8,470 pounds for “salaries and allowances” for the Senate.

It was still two months before the Japanese attacked Pearl Harbour. Hitler’s 267-day bombing blitz of the United Kingdom had already ended and no-one was in any doubt as to the seriousness of the conflict.

Curtin’s opening words were to say: “What we have to consider in this budget is, in effect, the problem of the ways and means of war. I put it in that way because I think it is desirable that the whole world — and more particularly our enemies — should know that whatever may take place in this Parliament this week will not in any way affect the complete unity of the Australian people, or the determination of this Parliament as a united body to prosecute the war to a successful conclusion.”

Curtin then delivered a long speech canvassing a wide range of issues, from the conduct of the war to child endowment and old-age pensions. Despite the temptation for each generation to see its problems as unique, Curtin’s reference to “equality of sacrifice” is as relevant today as it was then.

At the end of his speech, Curtin moved an amendment to item number one. The amendment sought to grant the money but demanded that the Budget be recast “to ensure a more equitable distribution of the national burden”.

The Committee Chairman, John Prowse, the Country Party member for Forrest in Western Australia, ruled the motion out of order. Quoting May’s Parliamentary Practice, Prowse ruled that each grant of money in the Budget is by a distinct motion which can only be agreed to, reduced, negatived, or withdrawn. No conditions or expressions of opinion can be attached.

Prowse said: “I suggest to the Leader of the Opposition that, in order to effect his purpose, he should move that the amount be reduced by a nominal sum.”

Curtin thereupon moved: “That the first item be reduced by one pound.”

The House then adjourned. When it met again the following afternoon, the Prime Minister, Arthur Fadden, spoke at length in response to Curtin. A de facto no-confidence motion was being debated.

The House met again on Friday, October 3, for more debate. There were bitter accusations and recriminations over the treatment of the former prime minister, Robert Menzies, who had resigned under duress just five weeks earlier.

At one stage, Menzies roused himself to plead: “I wish honorable members would leave me alone. It is a most unpleasant experience to be exhumed.”

At 4.15pm that Friday, a division saw Curtin’s amendment passed by 36 votes to 33, with four members paired. The two independents, Arthur Coles and Alex Wilson, had brought down the government by shifting their support from the conservatives to the ALP.

Fadden announced that “the Government desires an opportunity to consider its position” and the House adjourned until the following Wednesday, October 8.

When the House next met, Fadden had surrendered his commission and Prime Minister John Curtin rose to announce the formation of the first Labor ministry in ten years.

This is the only occasion on which an Australian government has been defeated by a de facto no-confidence motion in the House.

Perhaps there is a model in the 1941 debate for Abbott to follow this week.

A Possible Abbott Strategy

• Allow the Budget to proceed as normal tomorrow night.
• Let Wednesday pass with maximum media coverage of the Budget. Treasurer Wayne Swan will also speak at the National Press Club on this day.
• On Thursday night, Abbott rises to give his Budget reply speech in the House. At some point, he moves an amendment similar to Curtin’s. Alternatively, he could simply move no-confidence in the government and demand the debate proceed immediately.
• Abbott recounts the government’s budgetary mis-management, quoting extensively from its own words over the past couple of weeks. He challenges the independents to cross the floor and join with the Opposition, again reminding the electorate that the crossbenchers are the only reason the government remains in office. He demands an immediate election.
• When the House next meets, either in special session the following week, or on May 27 as scheduled, the motion to bring down the government will be debated in all its ugly glory. If the Opposition handles it well, they could dominate the news coverage.
• At some stage, probably in the week leading up to May 30, the motion will in all probability be defeated. Mind you, misadventure, treachery, bad luck or incompetence – things you can never rule out with the Gillard government – could see the motion carried. Then the government would be out and we can all cross September 14 out of our diaries.

What is the rationale for this scenario?

There is no reasonable expectation that a no-confidence motion will succeed. It will not be supported by the Greens member, Adam Bandt. The rural independents, Tony Windsor and Rob Oakeshott, seem rusted on. Like Bandt, they have a signed agreement with Prime Minister Gillard. They’ve come this far in nearly three years that there would be little to gain from destroying the government now.

The putative independents, Craig Thomson and Peter Slipper, can be expected to support the government since it is the only way they will retain a parliamentary salary for the next few months before they are consigned to the political dust-bin. Neither has any interest in assisting the Opposition.

Andrew Wilkie’s position would be of interest but Slipper’s support would cancel out any vote by Wilkie to defeat the government.

In other words, the motion could pass but most likely wouldn’t.

Thus, a no-confidence motion really forms part of the Opposition’s campaign strategy leading up to September 14. Gillard has thoughtfully gifted them the chance to plan the occasion down to the last minute.

The Opposition needs nothing more than an atmosphere of crisis and a sense of parliamentary instability to be the winners in this scenario. Even to lose the vote is to win since it allows Abbott to remind the voters of the government’s record and who supports it in the parliament. It allows him to derail the government’s selling of the Budget.

The government has been dead in the water for the past two years. It may pretend it is governing at the moment and it may hope that DisabilityCare and agreements with state governments over Gonski school funding will help it at the election, but the Budget shambles of recent weeks has only further damaged its reputation. The deficit of trust, authority and competence has never been more profoundly obvious.

It is in Abbott’s political interests to not disrupt the Budget and then to tie its contents to an all-out parliamentary assault on the government – AFTER he has delivered his speech on Thursday night.

It is, of course, possible that I have overlooked some important procedural rules in my scenario. Messrs Abbott and Pyne might even have a better idea. Nevertheless, I was mad enough to think that Gillard would announce the election date in January, so I could be on a roll.

Use the comments box below to ridicule me if I’m proved wrong at the end of the week.

The building was opened by the Queen. At the time, the Prime Minister was Bob Hawke and the Opposition Leader was John Howard.

The building was opened in Australia’s bicentenary year. May 9 was also the date of the first sitting of the new Commonwealth Parliament in Melbourne in 1901, as well as the date in 1927 when the provisional Parliament House was opened by the Queen’s father, then the Duke of York.

Six videos of the opening of Parliament House are available by clicking on this link. They include speeches by then Prime Minister Bob Hawke, Opposition Leader John Howard, House Speaker Joan Child and Senate President Kerry Sibraa. There is also an interview with former Whitlam government minister Fred Daly.

• Videos from the 1988 opening of Parliament House
• Museum of Australian Democracy (previously Old Parliament House)
• Parliament House

A State Opening of Parliament is the main ceremonial occasion of the parliamentary calendar. Escorted by the Household Cavalry, the Queen travels from Buckingham Palace to Westminster. She enters the House of Lords and directs Black Rod to summon the members of the House of Commons.

Black Rod, as the chief official of the House of Lords, is ceremonially denied entry to the Commons, a practice that symbolises the independence of the Commons from the monarchy. Black Rod knocks three times on the door of the Commons chamber. When admitted, he advises the Speaker that the Queen has summonsed members to the Lords. Members then proceed to the Bar of the House and listen to the Queen’s speech.

During today’s proceedings, as Black Rod summonsed members, Dennis Skinner, the 81-year-old Labour member for Bolsover, a seat he has held for 43 years, could be heard interjecting: “The Royal Mail for sale, Queen’s head privatised”. Some of Skinner’s jokes over the years can be found here.

The Queen delivers her speech from the Throne in the House of Lords. Today she was accompanied by Prince Charles and Camilla, Duchess of Cornwall. It was the first time she has been accompanied to a State Opening by her son and heir. As TIME magazine noted this week: “After more than 60 years, the Elizabethan era is drawing to a close, and the Charlesian age is dawning.”

The Queen’s Speech is written by the government of the day. It allows the government to outline its policies and proposed legislation for new parliamentary session.

• Listen to the Queen’s Speech (8m)
  PLAY
• Download a UK Parliament Factsheet on the State Opening of Parliament (PDF)

Text of the Queen’s Speech at the State Opening of Parliament.

My Lords and Members of the House of Commons

My Government’s legislative programme will continue to focus on building a stronger economy so that the United Kingdom can compete and succeed in the world.

It will also work to promote a fairer society that rewards people who work hard.

My Government’s first priority is to strengthen Britain’s economic competitiveness. To this end, it will support the growth of the private sector and the creation of more jobs and opportunities.

My Ministers will continue to prioritise measures that reduce the deficit – ensuring interest rates are kept low for homeowners and businesses.

My Government is committed to building an economy where people who work hard are properly rewarded. It will therefore continue to reform the benefits system, helping people move from welfare to work.

Measures will be brought forward to introduce a new Employment Allowance to support jobs and help small businesses.

A Bill will be introduced to reduce the burden of excessive regulation on businesses A further Bill will make it easier for businesses to protect their intellectual property.

A draft Bill will be published establishing a simple set of consumer rights to promote competitive markets and growth.

My Government will introduce a Bill that closes the Audit Commission.

My Government will continue to invest in infrastructure to deliver jobs and growth for the economy.

Legislation will be introduced to enable the building of the ‘High Speed Two’ railway line, providing further opportunities for economic growth in many of Britain’s cities.

My Government will continue with legislation to update energy infrastructure and to improve the water industry.

My Government is committed to a fairer society where aspiration and responsibility are rewarded.

To make sure that every child has the best start in life, regardless of background, further measures will be taken to improve the quality of education for young people.

Plans will be developed to help working parents with childcare, increasing its availability and helping with its cost.

My Government will also take forward plans for a new National Curriculum, a world class exam system and greater flexibility in pay for teachers.

My Government will also take steps to ensure that it becomes typical for those leaving school to start a traineeship or an apprenticeship, or to go to university.

New arrangements will be put in place to help more people own their own home, with Government support provided for mortgages and deposits.

My Government is committed to supporting people who have saved for their retirement.

Legislation will be introduced to reform the way long term care is paid for, to ensure the elderly do not have to sell their homes to meet their care bills.

My Government will bring forward legislation to create a simpler state pension system that encourages saving and provides more help to those who have spent years caring for children.

Legislation will be introduced to ensure sufferers of a certain asbestos-related cancer receive payments where no liable employer or insurer can be traced.

My Government will bring forward a Bill that further reforms Britain’s immigration system. The Bill will ensure that this country attracts people who will contribute and deters those who will not.

My Government will continue to reduce crime and protect national security.

Legislation will be introduced to reform the way in which offenders are rehabilitated in England and Wales.

Legislation will be brought forward to introduce new powers to tackle anti-social behaviour, cut crime and further reform the police.

In relation to the problem of matching internet protocol addresses, my Government will bring forward proposals to enable the protection of the public and the investigation of crime in cyberspace.

Measures will be brought forward to improve the way this country procures defence equipment, as well as strengthening the Reserve Forces.

My Ministers will continue to work in cooperation with the devolved administrations.

A Bill will be introduced to give effect to a number of institutional improvements in Northern Ireland.

Draft legislation will be published concerning the electoral arrangements for the National Assembly for Wales.

My Government will continue to make the case for Scotland to remain part of the United Kingdom.

Members of the House of Commons

Estimates for the public services will be laid before you.

My Lords and Members of the House of Commons

My Government will work to prevent conflict and reduce terrorism. It will support countries in transition in the Middle East and North Africa, and the opening of a peace process in Afghanistan.

My Government will work to prevent sexual violence in conflict worldwide.

My Government will ensure the security, good governance and development of the Overseas Territories, including by protecting the Falkland Islanders’ and Gibraltarians’ right to determine their political futures.

In assuming the Presidency of the G8, my Government will promote economic growth, support free trade, tackle tax evasion, encourage greater transparency and accountability while continuing to make progress in tackling climate change.

Other measures will be laid before you.

My Lords and Members of the House of Commons

I pray that the blessing of Almighty God may rest upon your counsels.

I came to it late in the day, some hours after the comments were made. My initial impression was that Abbott must have said something highly offensive.

For example, the News Limited website, news.com.au, told me Abbott defended his paid parental leave policy as a means of encouraging women of “calibre” to have children.

On Twitter, the article’s author, political writer Malcolm Farr, said the policy was all about getting women of calibre to “breed”:

Elsewhere, there was talk of Abbott’s new policy of eugenics.

Clearly, this was a major foot-in-mouth blunder by Abbott.

So I listened to what Abbott said. Here’s the full media conference and the specific question where Abbott made the “calibre” comment:

• Tony Abbott’s media conference – May 7, 2013 (22m)
  PLAY
• The ‘calibre’ question (3m)
  PLAY

I’m the first to admit that my command of English is pretty basic. But surely Abbott’s remark is innocuous?

There is a legitimate debate to be had over the merits of Abbott’s policy. Or do we prefer the warm inner glow of manufactured outrage?

In a statement, Governor Glenn Stevens said the RBA’s board “judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target.”

The Treasurer, Wayne Swan, said the economy had strong growth, low unemployment and contained inflation. He said there was no comparison between today’s low interest rates and the emergency rates that prevailed during the global financial crisis.

The Shadow Treasurer, Joe Hockey, said the Reserve Bank was showing leadership and doing the “heavy lifting” for the government by responding to a deteriorating economy. He said rates were now beyond emergency levels.

• Listen to Wayne Swan’s remarks (11m) – transcript below
  PLAY
• Listen to Joe Hockey’s remarks (6m)
  PLAY
• Listen to remarks by Peter Anderson, Australian Chamber of Commerce and Industry (4m)
  PLAY
• Interest Rates Since 1990

Text of statement from Reserve Bank Governor Glenn Stevens.

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 2.75 per cent, effective 8 May 2013.

The global economy is likely to record growth a little below trend this year, before picking up next year. Among the major regions, the United States continues on a path of moderate expansion and China’s growth is running at a more sustainable, but still robust, pace. Japan has announced significant new policy initiatives aimed at strengthening demand and ending deflation. The euro area remains in recession. Commodity prices have moderated a little in recent months though they remain high by historical standards.

Financial conditions internationally continue to be very accommodative, with risk spreads reduced, funding conditions for most financial institutions improved and borrowing costs for well-rated corporates and sovereigns exceptionally low.

Growth in Australia was close to trend in 2012 overall, but was a bit below trend in the second half of the year, and this appears to have continued into 2013. Employment has continued to grow but more slowly than the labour force, so that the rate of unemployment has increased a little, though it remains relatively low.

With the peak in the level of resources sector investment likely to occur this year, there is scope for other areas of demand to grow more strongly over the next couple of years. There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are for some increase in business investment outside the resources sector over the next year. Exports of raw materials are increasing as increased capacity comes on stream. These developments, some of which have been assisted by the reductions in interest rates that began 18 months ago, will all be helpful in sustaining growth.

Recent data on prices confirm that inflation is consistent with the target and, if anything, a little lower than expected. The CPI rose by 2½ per cent over the past year, and measures of underlying inflation gave a broadly similar outcome. These results have been pushed up a little by the impact of the carbon price. Growth of labour costs has moderated slightly over recent quarters while productivity growth appears to be improving. This should help to lessen increases in prices for non-tradables. The Bank’s forecast remains that inflation over the next one to two years will be consistent with the target.

Over recent meetings, the Board has noted that interest rates have already been reduced substantially, with borrowing rates approaching previous lows, and that the effects of this on the economy are continuing to emerge. Savers have been changing their portfolios towards assets with higher expected returns, asset values have risen and some interest-sensitive areas of spending have increased.

The exchange rate, on the other hand, has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time. Moreover, the demand for credit remains, at this point, relatively subdued.

The Board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand. At today’s meeting the Board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target.

Remarks by Deputy Prime Minister and Treasurer Wayne Swan on the Reserve Bank’s decision.

TREASURER: Today’s interest rate decision is welcome. What it does show is that interest rates are now even lower under Labor. I think this will be an interest rate cut which is going to be welcomed by families and by small businesses, and I think this is an interest rate cut that they thoroughly deserve.

Today’s cut means that a family with a $300,000 mortgage will pay around $5,500 a year less in repayments compared with when the Liberals were last in government. That is more than $100, more than $100 every week of the year for a family with a $300 mortgage. So it will be, and will continue to be, big savings flowing through to families and of course small business. Can I just say that I am pleased that the NAB and the Bank of Queensland have passed this cut through in full because low rates are good news for families and certainly good news for small business.

Now of course rates are now far lower than they were ever under the Liberal Party who in fact saw a situation where rates went up something like 10 times in a row. I think this will be a pretty big test for Mr Abbott and Mr Hockey. Can they support, say something nice about an interest rate cut, or will they go out there and simply continue to talk down our economy as they do day in day out, week in week out. So I think there is a real test here to see whether they can be responsible enough to welcome an interest rate cut. Because when you look at this rate cut what we have got is an economy with solid growth, low unemployment, contained inflation and lower interest rates. Of course, lower interest rates are playing a very important part in our economy at the moment to help us make the transition from resource sector growth through to non-mining sector growth. If you read the statement from the Reserve Bank today, they point to a number of interesting trends in terms of growth in the non-mining sector and they also point to the fact that the higher dollar and its continued rate is unusual. We all know that the high dollar is putting profound pressure on all sectors of our economy, particularly on the profitability of businesses and of course that then flows right through to government revenue. The unusual circumstances where we now have nominal growth in our economy below real GDP growth is not only reflected in lower profitability for small and large businesses right across our economy but is also having a very significant impact on Government revenues.

I want to make the point that this Government will always, always put jobs and growth first when we come to making economic policy. As we frame this budget we make no apology for the fact that our economic settings reflect the priority that we give to supporting jobs and growth right across our economy. Over to you.

JOURNALIST: Mr Swan, this rate cut is now below what you yourself once described as emergency levels, three per cent. Is there any cause for concern about the state of the Australian economy?

TREASURER: Well I note that last time there was a rate cut we had some commentary along these lines from the Liberal party. And that commentary then as it would be now is utterly irresponsible. To compare the level of interest rates at the height of the global financial crisis to the level of interest rates now is just utterly irresponsible.

As I said to you before, we have solid growth. We have low unemployment. We have a strong investment pipeline. We have strong public finances. We have contained inflation and we have low interest rates. Back then when rates where at that level the dollar was 60 cents, 60 cents. It sits today at around $1.02 to $1.03. That level of the dollar at that sustained high level is one of the factors that reflects our economic strength vis-a-vis the rest of the world. But it brings with it the challenges in the domestic economy, and one of those challenges is it puts a squeeze on profitability across our economy and we are living with the consequences of that now.

These rates are possible because the Government has had in place a responsible fiscal policy over the past five and half to six years. And because we have had responsible economic policy, because inflation is contained, the Reserve Bank is in a position to cut interest rates. To compare this level of interest rates to the circumstances of the Australian economy now to what they were at the height of the global financial crisis is simply utterly irresponsible.

JOURNALIST: But that is exactly what the Reserve Bank is doing today. If you look at the document from their most recent statement they compare the current rate of lending across the economy to where it was at the height of the recession. Are you saying they are irresponsible?

TREASURER: No, I am saying you are in selectively quoting the figures that you have. If I could read from the Reserve Bank statement today, let me just go through it. Let’s just go through what they have got to say: “There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are there for some increase in business investment outside the resources sector.”

They go on to talk about growth being around trend. The picture they are painting of this economy is in no way similar to the picture of the economy that existed at the height of the global financial crisis. That is the factor that you have to take into account. These rates are coming down because the Government has had a strong fiscal policy over a long period of time, because inflation is contained, and because of those things they are in a position to deploy monetary policy particularly in the face of the fact that we have a higher dollar which in itself is a result of the fact that we have a strong economy.

JOURNALIST: But are you saying that your definition of emergency levels now is different to what it was during the global financial crisis, that three per cent figure?

TREASURER: Well during the global financial crisis global growth had tanked. Global demand had fallen off a cliff. That is not what is happening in the global economy at the moment. Global growth is a bit below trend. Growth in Australia is a little below trend or around trend. To compare those two circumstances is simply to compare chalk and cheese. What we have here is the fortunate combination of circumstances of low unemployment, solid growth, high investment pipeline but we have with it a higher dollar which reflects our economic strength vis-a-vis the rest of the world, bringing with it challenges in domestic economic management which we are handling.

One of the challenges that flows from a higher dollar and our domestic strength, is the squeeze on profits for businesses across our economy, caused by that higher dollar. One of the reasons we are talking about very substantial revenue write-downs in this current year and across the forward estimates is a consequence of what has occurred with the dollar and our domestic strength vis-a-vis the rest of the world. And that is why trying to make any comparison between where Australia is today compared to where it was during the global financial crisis is grossly inaccurate. But given that you have raised the global financial crisis, one of the reasons our economy is so strong now is because of the decision we put in place along with the Reserve Bank to stimulate our economy through fiscal policy and the Reserve Bank through monetary policy to support it during a difficult period in the global economy.

JOURNALIST: Mr Swan, are you upset at some of the Treasury forecasts received back in October predicting a $1 billion surplus and news today that there is a $17 billion dollar hole in Government revenue . Are you upset with those…?

TREASURER: Well not at all. They are some of the finest public servants that have ever served in the Australian public service, who occupy the offices behind me.

I want to make this point and I want to make this very clearly in making economic policy you have to respond to changing conditions and what has changed dramatically in our economy, particularly since the end of last year has been an unusual set of circumstances where real GDP growth has been above nominal GDP growth. And a consequence of that has been a squeeze on profits right across our sector. We have never had a circumstance where the dollar has remained high as the terms of trade have come off. That is what occurred in Australia at the end of last year. As a consequence of those events I fronted up and told the Australian people at a press conference at parliament house at the end of last year in November that there was a squeeze on our revenues. As a result of that squeeze on our revenues we would be unlikely to come back to surplus in 2012-13. This set of conditions has prevailed. In fact, it has got even more significant since that time. The consequence of that is now a write-down in revenues, budget to budget, of $17 billion dollars.

At every step of the way I have informed the Australian people as these circumstances have evolved. That is the backdrop to this Budget. So what do responsible policy makers do in a changing environment,? They stand up, they talk to the Australian people about why circumstances have changed. I have done that on multiple occasions, I am doing it again today and I’ll be doing it in the Budget. And I will be explaining that responsible Governments don’t ignore changes in the events that are occurring around them. They take charge, they respond to them and they put in place the responsible polices for the future. And that is what this Government is doing because it is the right thing to support jobs and growth and to do it in the way in which we are doing it.

JOURNALIST: Treasurer, along those lines, what would you say to families who were going to pocket an increase to the Family Tax Benefit A but now won’t?

TREASURER: Well as the Finance Minister explained this morning, this was a difficult decision but a responsible one. Circumstances have changed dramatically as I have spent some time explaining today. And as a consequence of that we weren’t in a position to proceed with that. No one has lost any money, but we are not in a position to proceed with those additional payments that we thought were possible when the revenue outlook was much brighter. The revenue outlook has changed, the consequence of that is that responsible Governments must change. We have done that and we have done that for the very best of reasons, to support growth in our economy, to support growth in jobs and to make sure that we do the right thing by the Australian people.

JOURNALIST: [Inaudible].. sustained impact on the dollar?

TREASURER: I don’t speculate about the path way of the dollar. But I think you can read the Reserve Bank statement for yourself and draw your own conclusions.

The site has been online since June 1995, nearly 18 years ago. It has operated on the current domain name for the past 12 years. It contains thousands of pages of content and routinely attracts 100,000-250,000 unique monthly visitors.

The site has grown in every year it has been online. At one point, I even hoped it would become a full-time venture. It had a bumper year in 2010 due to the federal election and other political events. This election year promised to be the site’s best yet.

However, my personal circumstances dictate that the site’s time is up. It will disappear from the web when the current hosting arrangements expire. The companion sites, WhitlamDismissal.com and Watergate.info, will also close.

It has been a labour of love maintaining the site over the years. I would like to thank everyone who visited it.

- Malcolm Farnsworth

In a speech to the Per Capita think tank today, Gillard said: “The ‘bottom line for the Budget bottom line’ is this: the amount of tax revenue the Government has collected so far this financial year is already $7.5 billion less than was forecast last October.

“Treasury now estimates that this reduction will increase to around $12 billion by the end of the financial year.

“This unusually low revenue, which wasn’t forecast even a few months ago, creates a significant fiscal gap over the Budget period.”

Gillard said “every reasonable option” is on the table, “even options previously taken off the table”.

The government “will not cut to the bone” in next month’s budget.

She said: “In the Budget, the Government will do the right thing by the nation, the right thing for the long-term. We will save responsibly, even when that means spending less on things which are important and valuable. We will invest wisely for the future. No one will be singled out, the burden of our decisions will be shared across the whole Australian community.”

• Listen to Gillard’s speech (27m)
  PLAY
• Listen to Gillard answer questions (17m)
  PLAY

Text of Prime Minister Julia Gillard’s speech to Per Capita.

It’s a great sign of the growing recognition of Per Capita’s work that your Executive Director David has been in such good company at the international Policy Network’s Progressive Governance and Global Progress conference in Denmark.

Congratulations to you on the fine contribution Per Capita is making in the world of ideas.

With the Federal Budget just fifteen days away, I thank you for this opportunity to share with you the clearest possible picture of the purpose and context of our Budget deliberations.

This year’s Budget will be about a national challenge – and a national plan.

A challenge for Australia: to respond to the huge reductions in revenue growth over the next four years.

A plan for Australia: to make necessary investments in the nation’s future, to ensure that none of our people is left behind.

Tuesday 14 May will be no old-fashioned pre-election Budget night.

What the Treasurer will deliver will not be a political pamphlet – he will outline an economic program.

The Budget will outline the fiscal path for the coming four years, one designed both to take account of the nation’s current circumstances and to shape the nation’s future.

Our key long term objective, the progressive purpose of this Government’s fiscal policy is enduring.

It is:

• to maximise jobs and economic growth;
• to ensure sustainable funding over the long-term for the investments that strengthen our economy and the services our whole community relies on; and
• to keep inflation in check and give the Reserve Bank maximum opportunity to keep interest rates low.

The Government’s medium-term fiscal strategy – to deliver fiscal surpluses on average over the economic cycle – is designed to give effect to this purpose in practice.

It commits us to support jobs and economic growth when private sector demand is weak.

This is what we did so successfully during the Global Financial Crisis and, as a result, we kept around 200 000 more Australians in work.

It commits us to making Budget decisions so that in the good times and the hard times, through the inevitable variations in economic activity and Government revenue from year to year, we can afford the investments and services that make our nation stronger, smarter and fairer.

It also ensures that we don’t simply “chase revenue down” – we don’t cut to the bone and spurn wise investments, damaging jobs and growth now and in the future.

Instead our fiscal strategy responds to the economic cycle.

In the language of economists, we allow the Budget’s automatic stabilisers to do their work as well as actively controlling spending to reach surplus at the right part of the economic cycle.

That means for the coming Budget, we must fund new initiatives by making savings.

This is a necessary discipline.

This need for balance over the cycle has been summed up nicely by the Treasurer many times: if we are Keynesians on the way down, we have to be Keynesians on the way up – Keynesians right through the economic cycle.

The need to understand how the cycle is changing is summed up best in the remark so famously attributed to Keynes himself:

“When the facts change, I change my mind – what do you do, sir?”

In the face of the challenges we now face as a nation, this is what any smart leader, any forward-looking government, must be prepared to do.

So today I want to set out the facts that underpin the decisions our nation faces as we approach this year’s Budget.

First, the good news, the shared achievement that we should never take for granted.

Unlike so many nations, Australia’s economy is stable and resilient.

Our economic fundamentals are sound.

We have contained inflation, low interest rates, low public debt.

We are one of only eight nations in the world to have a triple-A rating with a stable outlook from all three major ratings agencies – something Australia has never previously achieved.

Our economy is now more than thirteen per cent larger than it was in December 2007.

We have bounced back from the Global Financial Crisis better than any major advanced economy.

If we had made the wrong decisions during the Global Financial Crisis our nation could easily be struggling with recession today.

Instead, Australia is now the twelfth-largest economy in the world – when Labor came to Government we were fifteenth.

Unlike the rest of the world, we have very modest debt – because we have borrowed in the right way and at the right time, to support growth during the global financial crisis.

Our level of debt is the same as a person earning $100,000 a year with a $10,000 mortgage.

Millions of Australians with mortgages and personal loans would love to be in a position where their only debt was equal to ten per cent of their income.

Similarly, countries around the world would love to be in Australia’s debt position and have an unemployment rate as low as ours.

Indeed, the fundamental proof of our resilience is our ability to create and support jobs.

Since 2007, we have created almost 900 000 jobs in this country, in a period when twenty eight million new people joined the jobless queues world-wide.

Our national prospects in the Asian Century are bright.

As the centre of global economic gravity shifts east, it shifts towards Australia.

Our diplomatic and trade successes in China last month, our improved relationship with India, our strengthening economic ties with Indonesia and our flourishing alliance with the United States – these are all proof that our plan to be one of the winners in the Asian Century is bearing fruit.

However – and this is key – while Australia is stable, resilient and close to centres of growth, the wider world economy is quite a different story.

There is serious, persistent weakness in global growth – and continued volatility in the global economy.

To take one example, a resource-rich nation like Canada has only grown by five per cent in total over the last five years.

The advanced economies grew at only 1.2 per cent last year and global growth reached only around 3 per cent.

This global weakness creates important economic pressures in Australia.

The contrast between our stability and resilience and the volatility and fragility of so much of the rest of the world is a reason for the continuing strength of the Australian dollar –consider this.

Today over 30 central banks around the world hold Australian currency in their reserves.

The increasing importance of our currency for central bank reserves worldwide is recognised by the International Monetary Fund.

Later this year, the IMF will begin quarterly reporting on central bank holdings of seven currencies and the Australian dollar will be one of them.

This shows we are a great investment, but that comes at a price.

The dollar’s strength puts pressures on our economy, particularly our trade-exposed industries.

It would be irresponsible simply to wait in hope for these pressures to ease.

So the Government has a plan to create and support jobs, based on our five pillars of productivity, designed to seize the opportunities that proximity to Asia creates.

This back drop to our Budget decision making – Australia’s resilience, global weakness, a persistently high dollar – have been known for some time.

What is new is how strong the revenue pressures on the nation’s Budget are.

We must plan for these strengthening pressures – and that is a key part of preparing our Budget for this year.

The persistent high dollar, as well as squeezing exporting jobs, also squeezes the profits of exporting firms: with lower profits for these companies comes lower company tax going to Government.

We can’t assume this will change soon.

The high dollar is also placing competitive pressures on firms here, who face new pressures from cheaper imports – holding down prices across the board, with the high dollar making it hard for these firms to pass on price increases, holding down profits – and in turn holding down company tax.

Consumers do benefit, but many businesses are doing it tough.

All this means the data on our economy now reveals a significant new fact.

This is the striking and continuing divergence between what economists refer to as real GDP growth and nominal GDP growth.

My best shorthand description of those terms is this.

Real GDP growth is growth in the volume of the economy.

The actual activity in the economy, how many jobs there are, the quantity of infrastructure we build, the amount of goods and services we export – how many tonnes of coal, how many international students pay for a course here, how many houses are built.

Nominal GDP growth counts this growth in volume and it also counts growth of the prices of all these things.

Today, real GDP is growing solidly – we’re creating more jobs, exporting more goods and services and buying and selling more from each other, just as we planned.

However prices are growing at a slower rate than is usual for this stage of the economic cycle, a slower rate than was forecast – and so nominal GDP growth for this current year is significantly slower than was forecast and we expect nominal GDP growth for future years to be revised down.

The current data shows nominal GDP growth after the first half of the 2012-13 year was an annual rate of two per cent.

At Budget last year, we had forecast nominal GDP to grow at five per cent.

What’s changed?

While the prices of our exports continue to be lower than their recent peaks because of weak global demand and increasing global supply, the prices of imports are now lower than forecast because of the strength of our dollar.

The prices of goods produced at home are also lower than forecast because competition from imports is so fierce.

This is now putting so much downward pressure on prices that growth in nominal GDP is actually lower than growth in real GDP.

What’s more, this has now been true for nearly an entire financial year – since the beginning of the June quarter last year.

This has never happened for such a long period in the whole half a century and more of the National Accounts.

Not during the global financial crisis, not during the 1991 or 1982 recessions.

Not even during the Menzies “credit squeeze” of 1961, which was effectively a deliberate policy attempt to slow price growth, do we find a similar effect.

Now, that’s a long explanation of a pretty technical fact.

But for the Budget bottom line, it’s a very meaningful fact – because, naturally enough, companies don’t pay tax on volume, they pay tax on value, which is driven by price.

The Pharaoh might have kept one fifth part of the grain from the field but the Tax Commissioner collects in dollars and cents.

So even if the economy is growing as much as expected, when prices are growing much less than expected, tax grows much less too.

The “bottom line for the Budget bottom line” is this: the amount of tax revenue the Government has collected so far this financial year is already $7.5 billion less than was forecast last October.

Treasury now estimates that this reduction will increase to around $12 billion by the end of the financial year.

This unusually low revenue, which wasn’t forecast even a few months ago, creates a significant fiscal gap over the Budget period.

Put simply, spending is controlled but the amount of tax money coming to the government is growing much slower than expected.

Inevitably, confronted with the facts, the economic simpletons and sloganeers will squirm and throw in arguments to distract.

First, you will be told that revenue for the next financial year is still expected to be more than this financial year. That’s true – at the same time our population will be larger, more people will be on the age pension, health costs will continue to rise.

Indeed the growth in health and in the age pension will be far higher than the growth in tax money.

So revenue growth will be less than natural growth in key areas of expenditure and is spectacularly lower than reasonably predicted.

It is the failure of growth in tax money to match reasonable predictions that creates the Budget challenge.

Second, you will be told it isn’t about less tax money in but about spending.

However, as informed commentators like Tim Colebatch pointed out last week, excluding east Asia, total government spending in Australia is already the second lowest in the developed world.

Of the advanced Western economies, only Switzerland spends a smaller share of its economy on government than does Australia.

The total size of government here is less than the US, less than the UK.

Not as measured in revenue either, measured in spending.

And let me reiterate, for the future we will continue to match new spending in the Budget with savings.

Given all this, tax money down, spending controlled, the question for Budget planners is difficult to answer, but simple to state: how, and how fast, to fill that significant fiscal gap?

Some of the above factors will return to trend – overall, revenue is being revised downward over the coming four years, not permanently.

However in part, this is a return to normality – returning to long-term averages.

Australia will not go back to the extraordinary revenue peaks of “mining boom mark I” from 2002-03 to 2007-08.

While we should expect revenue to improve as we move to the production and export phase of the current mining boom, it’s clear that the extraordinary revenue peaks of the mid-2000s won’t be repeated.

The overall story: by 2005-06 the share of the economy taken in tax reached a peak of 24.2 per cent – compared to 22.4 in 1996 and 22.2 as we reported in our last update in October.

The huge profits of that time meant that company tax revenue reached an astonishing 5.3 per cent of GDP in 2006-07 compared to a share of 4.5 per cent of GDP last financial year – a fall of around $10 billion in company tax a year.

Capital gains tax was 1.5 per cent of GDP in 2006-07 – last financial year it was 0.4 per cent.

We collect less than one-third of the amount compared to seven years ago and in dollar terms the drop in tax collection is around $15 billion a year.

Quite apart from any other factor, remaining competitive in the contemporary global economy doesn’t allow us simply to turn back time on tax collection by dialling up tax revenue to these levels.

If I can summarise a complex picture in a few brush strokes, it’s these:

The prices for what Australian companies sell overseas are lower, imports are cheaper, local competition is fierce.

Those things add up to business making less profit than planned.

That puts pressures on our stable and resilient economy and it is one reason businesses and workers still need to work so hard to get ahead.

When businesses make less profit than planned, it also means Government gets less money in tax than expected.

That’s the big challenge for the nation in this Budget – and it defines the decisions the Government’s confronting as we put the Budget together.

Once again, to break this complex picture down in to a personal story.

Imagine a wage earner, John, employed in the same job throughout the last 20 years.

For a period in 2003 to 2007 every year his employer gave him a sizeable bonus.

He was grateful but in his bones knew it wouldn’t last.

The bonuses did stop and John was told that his income would rise by around five per cent each year over the years to come.

That’s the basis for his financial plans.

Now, very late, John has been told he won’t get those promised increases for the next few years – but his income will get back up after that to where he was promised it would be.

What is John’s rational reaction?

To respond to this temporary loss of income by selling his home and car, dropping his private health insurance, replacing every second evening meal with two-minute noodles.

Of course not.

A rational response would be to make some responsible savings, to engage in some moderate borrowing, to get through to the time of higher income with his family and lifestyle intact and then to use the higher income to pay off the extra borrowing undertaken in the lean years.

Running a nation is always more complex than running a family budget and analogies only work so far.

But I trust the nature of the challenge we confront is now clearer, understood within the framework of the purpose of our fiscal policy and the detail of our medium-term fiscal strategy – and I trust that all would acknowledge the Government has some serious decisions to make and announce in the coming two weeks.

As we make those decisions let me be crystal clear about what we will and won’t do.

We won’t, during this time of reduced revenue, fail the future by not making the wise investments that will make us a stronger and smarter nation.

Better school funding and school improvement will not be jeopardised.

Our nation cannot afford to leave children behind or to leave our nation’s future economy limping behind the pack, unable to attract the high wage, high skill jobs of the future.

To return to John, you would not expect him to stop funding his son’s top quality schooling or his daughter’s university studies.

He would know that to do so would be to condemn his family to a poorer future.

And we won’t fail to make the wise investments that make us a fairer nation.

DisabilityCare must not be jeopardised.

A fragmented, unfair, inefficient system hurting 400 000 Australians with disability and their families and carers – and putting at risk anyone who could acquire a disability – cannot be left in place.

Once again, we wouldn’t expect John to deal with his temporary loss of income by failing to properly support the care of his wife, who has a profound disability.

What is more, these necessary investments are affordable if we make smart decisions.

So the way we proceed with these investments is to fund new structural spending with new structural savings.

But, because we now are confronted with new facts and far more significant reductions in tax money than was expected, we are going through the process now of making decisions to spend less in some areas than we had hoped, to raise more in revenue in some areas than we had planned.

Guiding us as we make these decisions is the key principle of burden-sharing.

Because I lead a Labor Government, I lead a Government which understands that the whole of society benefits from the services Government provides.

In turn we believe that the whole of society should carry a fair share of the burden of funding Government, that the whole of society shares the burden of these saving decisions.

The more who share the work, the lighter the load for all.

Business, families, institutions.

Everyone benefits – so everyone contributes.

In the national interest, for the common good.

Now, there are no easy choices.

Of course as a Labor Prime Minister, I find these decisions both urgent and grave.

This revenue discussion is not historical, it’s very contemporary.

There is new news here compared to six months ago – and new news here compared even to three months ago.

Therefore, I have expressly determined we need to have every reasonable option on the table to meet the needs of the times, even options previously taken off the table.

The nation and the Government must have maximum flexibility to deal with these complex – and rapidly changing – events.

That is my approach.

In the Budget, the Government will do the right thing by the nation, the right thing for the long-term.

We will save responsibly, even when that means spending less on things which are important and valuable.

We will invest wisely for the future.

No one will be singled out, the burden of our decisions will be shared across the whole Australian community.

We will not cut to the bone.

That is the Government’s approach – and it is a bright dividing line in Australian politics today.

I began by saying that this Budget will be about a challenge and about a plan.

It will also be about a choice.

Our opponents and their friends crudely flaunt the bitter language of the cut throat and the brandished axe.

We govern for all Australians, we govern to strengthen the economy and to spread the benefits to all.

Those values illuminate modern Labor every day we govern.

I thank you for the opportunity to discuss them with you today.

The decision was taken at the bank’s Board meeting today. Rates were last reduced in December 2012. During 2012, rates fell by 1.25%. This followed a reduction of 0.5% in 2011.

In a statement, the Reserve Bank Governor, Glenn Stevens, said: “There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy. Further such effects can be expected to emerge over time.”

Stevens said economic growth was “close to trend over 2012, led by very large increases in capital spending in the resources sector”. The peak in resource investment is “drawing close”, he said.

Inflation is consistent with the medium-term target of 2%.

The ALP was quick to release this graphic:

• Interest Rates Since 1990

Statement from Glenn Stevens, Governor of the Reserve Bank of Australia.

At its meeting today, the Board decided to leave the cash rate unchanged at 3.0 per cent.

Global growth is forecast to be a little below average for a time, but the downside risks appear to be reduced. While Europe remains in recession, the United States is experiencing a moderate expansion and growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs of stabilisation. Commodity prices have declined somewhat recently, but are still at historically high levels.

Internationally, financial conditions are very accommodative. Risk spreads are narrow and funding conditions for financial institutions have improved. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Borrowing conditions for large corporations are similarly very attractive. Share prices are substantially above their low points. However, the task of putting private and public finances on sustainable paths in several major countries is far from complete. Accordingly, financial markets remain vulnerable to setbacks.

In Australia, growth was close to trend over 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions. Looking ahead, the peak in resource investment is drawing close. There will, therefore, be more scope for some other areas of demand to strengthen.

Recent information suggests that moderate growth in private consumption spending is occurring, though a return to the very strong growth of some years ago is unlikely. While the near-term outlook for investment outside the resources sector is relatively subdued, a modest increase is likely to begin over the next year. Dwelling investment is slowly increasing, with rising dwelling prices and high rental yields. Exports of natural resources are strengthening. Public spending, in contrast, is forecast to be constrained.

Inflation is consistent with the medium-term target, with both headline CPI and underlying measures at around 2¼ per cent on the latest reading. Labour costs remain contained and businesses are focusing on lifting efficiency. These trends should help to keep inflation low, even as the effects on prices of the earlier exchange rate appreciation wane. The Bank’s assessment remains that inflation will be consistent with the target over the next one to two years.

There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy. Further such effects can be expected to emerge over time. On the other hand, the exchange rate, which has risen recently, remains higher than might have been expected, given the observed decline in export prices. The demand for credit has also remained low thus far, as some households and firms continue to seek lower debt levels.

The Board’s view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate. The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand. At today’s meeting, the Board judged that it was prudent to leave the cash rate unchanged. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target over time.

Google can score it as a win.

I thought the number of visitors to AustralianPolitics.com from the International Space Station Control Room was unusual when I checked the traffic figures on Google Analytics this morning.

The real-time Location Map of visitors to the site said there was 41 of them.

They were in the United States. Later, they had moved to Australia:

By this evening they seemed to be somewhere over the Pacific Ocean:

The White House’s video titled “A Statement From the Briefing Room” was a little easier to pick.

• Google embraces April Fools’ Day with Google Nose, YouTube Closure And More

The new line-up was necessitated by the sacking of Simon Crean and the resignations of Chris Bowen, Martin Ferguson and Senator Kim Carr, and parliamentary secretary Richard Marles.

Speaking at a press conference this afternoon, Gillard announced that Gary Gray will become Minister for Resources and Energy, replacing Martin Ferguson. He will be joined in the Cabinet by Jason Clare.

Anthony Albanese, a prominent Rudd supporter, takes on Simon Crean’s former responsibility for regional development and local government, in addition to his existing role as infrastructure and transport minister.

Craig Emerson takes on Chris Bowen’s former role as tertiary education minister, whilst retaining his existing job as trade minister.

Senator Jan McLucas takes Human Services, formerly held by Kim Carr.

The Department of Climate Change has been merged with the Industry department to become the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education.

There will be four new ministers in the government: Catherine King, Senator Don Farrell, Sharon Bird and Senator Jan McLucas.

Five new parliamentary secretaries have been appointed: Michael Danby, Andrew Leigh, Amanda Rishworth, Shayne Neumann and Senator Matt Thistlethwaite.

• Listen to Gillard’s press conference (33m)
  PLAY

Text of a media release from Prime Minister Julia Gillard.

Changes to the Ministry

Today Gary Gray joins the Cabinet as Minister for Resources and Energy, Minister for Tourism and Minister for Small Business.

He has been a tireless advocate for business in his own community and in Western Australia and will bring that purpose to promoting the interests of the tourism sector and small business.

His current roles as Special Minister of State and Minister for the Public Service and Integrity will be taken by the Attorney-General Mark Dreyfus.

Jason Clare joins Cabinet as a full member while retaining his current responsibilities.

Anthony Albanese is promoted and takes on the critical role of Minister for Regional Development and Local Government, taking over the work done by Minister Crean across regional Australia since the 2010 election.

Anthony has previously held these portfolio responsibilities and they neatly complement his existing role as Minister for Infrastructure and Transport.

He will be supported by Catherine King in the Outer Ministry as Minister for Regional Services, Local Communities and Territories, and as Minister for Road Safety.

Tony Burke adds Arts to his existing portfolio work. He has a longstanding interest in the arts and was a keen recruit to the task.

He will be assisted by Michael Danby as his Parliamentary Secretary whose lifelong commitment to the arts started when, as a teenager, he worked in his mother’s art gallery.

The critical human capital and productivity portfolio of Minister for Tertiary Education, Skills, Science and Research will be taken by Craig Emerson. Craig will retain his current roles as Minister for Trade and Competiveness and Minister Assisting the Prime Minister on Asian Century Policy.

Craig will be assisted by two junior Ministers – Don Farrell, as Minister for Science and Research and Sharon Bird as Minister for Higher Education and Skills.

As part of today’s changes, the Department of Climate Change will be merged with the Industry Department and will become the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education.

As such, Greg Combet is now the Minister for Climate Change, Industry and Innovation and his Parliamentary Secretary, Yvette D’Ath will also have a revised title.

Jan McLucas is appointed Minister for Human Services. Jan is a very experienced Parliamentarian, having served as a Shadow Minister and as a Parliamentary Secretary since 2007. I am delighted that I have been able to promote Jan to this role.

Don Farrell will also be Minister Assisting on Tourism, and Bernie Ripoll will be Parliamentary Secretary for Small Business, both in Minister Gray’s portfolio.

Andrew Leigh will be Parliamentary Secretary to the Prime Minister. Andrew will bring to this post his distinguished academic record in public policy and economics.

Matt Thistlethwaite becomes Parliamentary Secretary for Pacific Island Affairs and Parliamentary Secretary for Multicultural Affairs. Matt strengthens our team with his ability to focus on the large multi-cultural communities in Sydney.

Amanda Rishworth, a great local campaigner, becomes Parliamentary Secretary for Sustainability and Urban Water, retaining that portfolio in South Australia. She will also be Parliamentary Secretary for Disabilities and Carers.

Shayne Neumann MP, who before his parliamentary career established and ran a successful law firm, will be Parliamentary Secretary to the Attorney-General and Parliamentary Secretary for Health and Ageing

I will recommend to Her Excellency the Governor-General that new members of the Ministry be sworn in on Monday 25 March 2013.

Transcript of Prime Minister Julia Gillard’s press conference.

GILLARD: Thank you very much, good afternoon.

As Prime Minister, I strive to lead a government of purpose and a government of unity.

I have always been and continue to be crystal clear about the values that drive me, drive this Labor Government.

We are the only political party prepared to face up to modern challenges and to shape a future that will deliver for all.

We are the only political party capable of strengthening our economy and managing it in the interests of working people.

We are the only political party dedicated to opportunity for all, not just a few, particularly the opportunity for every Australian child to get a world class education.

This sense of purpose and these values are what drives me and what drives the Government.

And even in the last fortnight those values and this sense of purpose was on display, when we saw the best monthly job creation figures in 13 years.

When we created a new and fairer deal for childcare workers.

When we passed into law Disability Care Australia, the most important institution created in our nation since the creation of Medicare.

But while purpose was driven us on, unity has eluded us.

And that unity spectacularly eluded us last week.

Like Australians around the nation, I was appalled by the events of last week.

My political party, the Labor Party that I love very dearly, was self-indulgent.

Our eyes were on ourselves rather than doing what we should – being focused on the nation.

It was an unseemly display but out of that has come clarity.

It is now very clear indeed that I have the confidence of my colleagues to lead the Labor Party and to remain as Prime Minister.

It is also clear that Kevin Rudd has appropriately acknowledged he will never lead the Labor Party again.

In these circumstances the leadership contest that has been within Labor is over.

So today, as a government, we can be united and with a sense of purpose – a government of purpose and a government of unity.

In the months ahead, I am determined that we will show to the Australian people self-belief, not self-indulgence.

To show them that we have always got our eyes on them and their needs, not our eyes on ourselves.

My challenge, our challenge, is to get up every day determined to do better that day for the Australian people than we have done the day before.

In a world where our future is not assured there’s nothing automatic about a strong and prosperous future for our nation.

In a world where our future is not assured we must get up every day determined to make the right decisions to shape a strong, smart, fair future or our nation.

To get up every day to make sure we are meeting the needs of families under all of the the pressures of modern life.

And as a political party too we must get up every day determined to win the only political contest in Australian life that matters, and that is the contest between the Government and the Opposition come 14 September.

That contest is about whether or not on 15 September, I will lead a majority Labor Government or Mr Abbott will lead a Liberal Government focused on taking money out of the hands of Australian families, cutting jobs and cutting services.

Today, I announce the team of Ministers and Parliamentary Secretaries I have selected to get on with the job of governing in the interests of all and to lead our campaign for Australia’s future.

I will be today recommending a range of ministerial appointments to the Governor-General.

First, Minister Anthony Albanese is being promoted and will take on the critical role of Minister for Regional Development and Local Government, taking over the work done by Minister Crean across regional Australia since the 2010 election.

Minister Albanese will add these responsibilities to his current portfolios of Infrastructure and Transport. These portfolios complement each other.

He will be supported by Catherine King in the outer ministry as Minister for Regional Services, Local Communities and Territories and as Minister for Road Safety.

As the Member for Ballarat she is one of our strongest voices in regional Australia and she will build on the excellent work she has done as a Parliamentary Secretary.

Tony Burke adds Arts to his existing portfolio. He has a long-standing interest in the arts and is a very keen recruit to this task.

He will be assisted by Michael Danby as his Parliamentary Secretary, whose lifelong commitment to the arts started when, as a teenager, he worked in his mother’s art gallery.

The critical human capital and productivity portfolio of Minister for Tertiary Education, Skills, Science and Research will be taken by Dr Craig Emerson.

Craig will retain his current roles as Minister for Trade and Competitiveness and Minister Assisting the Prime Minister on Asian Century policy.

I believe this combination has great synergies in our Asian Century agenda.

That means of course that we are seeking to secure for our country all of the economic opportunities that can flow from this century of change in our region.

Dr Emerson will bring a personal passion and credibility to this role.

Craig will be assisted by two junior Ministers: Don Farrell as Minister for Science and Research, and Sharon Bird as Minister for Higher Education and Skills.

They are both proven Parliamentary Secretaries and are ready to take on these new responsibilities.

As part of today’s changes the Department of Climate Change will be merged with the Industry Department and will become the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education.

As such Greg Combet is now the Minister for Climate Change, Industry and Innovation and his Parliamentary Secretary Yvette D’Ath will also have a revised title.

Gary Gray joins the Cabinet as Minister for Resources and Energy, Minister for Tourism and Minister for Small Business.

He brings personal knowledge and experience to the role, as of course he is a former senior resources sector executive.

He has been a tireless advocate for business in his own community and across the state of Western Australia and he will bring that sense of purpose to promoting the interests of the tourism sector and small business.

Energy policy is of course no longer just about supply as we move to a cleaner and more productive economy, energy efficiency is central to energy policy and it will be central to the work undertaken by Gary Gray’s department, the department known as DRET.

Gary will be assisted in tourism by Don Farrell and in small business by Parliamentary Secretary Bernie Ripoll.

His current roles as Special Minister of State and Minister for the Public Service and Integrity will be taken by the Attorney-General Mark Dreyfus.

Jason Clare joins Cabinet as a full member while retaining his current responsibilities.

Jan McLucas is appointed as Minister for Human Services. Jan is a very experienced parliamentarian, having served as a Shadow Minister and Parliamentary Secretary since 2007 and I’m delighted that I’ve been able to promote her to this role.

Further Parliamentary Secretary appointments are as follows.

Andrew Leigh will be Parliamentary Secretary to the Prime Minister, to me. Andrew will bring to this position his distinguished academic record in public policy and economics.

Matt Thistlethwaite will become Parliamentary Secretary for Pacific Island Affairs and Parliamentary Secretary for Multicultural Affairs.

Matt strengthens our team with his ability to focus on the large multicultural communities in Sydney; obviously the lead Minister, Minister O’Connor, is Melbourne-based.

Amanda Rishworth, a great local campaigner, becomes Parliamentary Secretary for Sustainability and Urban Water, retaining that portfolio in my original state of South Australia where I think it belongs.

She will also be Parliamentary Secretary for Disabilities and Carers.

Shayne Neumann MP, who before his parliamentary career ran a successful law firm, will be Parliamentary Secretary to the Attorney-General and Parliamentary Secretary for Health and Ageing.

I am happy to take questions.

JOURNALIST: Prime Minister, you say your Government governs for all.

A couple of your Ministers have expressed, or departing Ministers have expressed, concern about the reversion to class warfare, issues concerning the focus of the Government not being at the middle ground.

What do you say to that today?

GILLARD: My focus is on Australian classrooms and what happens in them and that’s at the centre of Australian political life and the life of our nation.

We as a political party have always been dedicated to ensuring that there is opportunity for all.

That kids get a chance at a great life by getting a great education.

That people get a chance at a great job and prosperity for their family.

That’s what drives me, that’s what drives Labor; it’s driven us in the past, it’s driving us today and it will drive us in the future.

JOURNALIST: Prime Minister, Anthony Albanese seems to be a protected species in Labor.

A lot of his contemporaries, who were doing as he did last week, in Kevin Rudd’s office talking about numbers and about how they thought they might be able to defeat you have stood down, you’ve said took the honourable decision, and Anthony Albanese has been promoted.

Can you explain the difference in your approach to those?

GILLARD: A number of my colleagues determined to resign from the executive, from being a Minister or a Parliamentary Secretary. They’ve taken those decisions and I have described those decisions as an honourable course.

For Minister Albanese of course he has given a public explanation of his position. I have always been able to work with Minister Albanese well. He has been very central to the life of this Government.

And I believe he will serve very well and with a very strong sense of loyalty into the future.

JOURNALIST: Prime Minister, further to Kieran’s question on criticisms from the outgoing Ministers, Martin Ferguson was saying that the class envy, the class war which started back in May 2010 with the beginning of the RSPT as it was then.

He also said that your party, the Government, needs to improve relations with the business community and start acting in a more inclusive way.

Do you take on that criticism or do you deny its veracity?

GILLARD: Well, former Minister Ferguson will offer his own views.

But my views are as follows. It is in the Labor tradition to have profit-based tax for turbocharged sections of the economy that are very profitable.

I’ll remind that it was a Labor Government that brought in the Petroleum Resource Rent Tax, a tax designed to tax the most profitable part of that industry, when it is at the peak of its profitability.

It is therefore in the absolute mainstream of Labor tradition to have a similar arrangement for other sections of the resources sector, and that’s what the Minerals Resource Rent Tax is; a tax for when mining ventures are at their most profitable so that can be used for the benefit of the Australian nation.

Both of them, both taxes – the PRRT and the MRRT – recognise that the underlying asset that is being exploited belongs to the Australian nation as a whole.

As for the Government and our relations with the business community, we each and every day have to do better and strive better than the day before.

I have said that to you, I am determined that I and the Government, every member of it, gets up every day determined to do better than we have done the day before.

So I am always prepared to pursue deeper and better relationships with stakeholders in Australian society, including the business community.

But I have very deep connections and continuing exchange with the business community now.

I have invited them to the table in new and innovative ways including the tripartite council I have brought together and the work we’ve done through the Business Advisory Forum at COAG.

I’m always open to building on that for the future.

JOURNALIST: Two questions if I may. Stephen Smith spoke about zero tolerance from now on.

Between now and the election, if any people in the Cabinet or frontbench starts destabilising, will you not hesitate to push them out as you did with the others last week?

And on a completely separate matter, Kyle Sandilands, do you regret appearing with him on the lawns of Kirribilli yesterday?

GILLARD: I’ll take the second part of it first. What I did at Kirribilli yesterday was have around a large number of children from Bear Cottage.

Bear Cottage is a service for very, very ill children. Indeed for children who are on some occasions in the last stages of life; they don’t have long to live.

And what I did yesterday was spend some time which meant between chocolate, sunshine, games and Kyle appearing in a rabbit costume, people had a smile, had a joke, had a laugh, engaged the hour.

I think as Prime Minister, making those kids happy for an hour is a very good use of my time.

On the first question, as I said last week and I’m happy to say it again, the contest within Labor is over, it’s done, we can now proceed with unity to the next election and beyond.

There of course should be no tolerance for any conduct which diverts eyes from our proper purpose, which is concentrating on the needs of the Australian people.

JOURNALIST: Prime Minister, on the Climate Change Department merger, do you expect to save money from that, first question?

The second part is, what will you say to criticism that you’re watering down your commitment to climate change by doing that?

GILLARD: To the second I would say that would be irrational indeed.

Anybody who thinks you can survey the names of departments and somehow come up from that survey as to what a government’s policy priorities are I think is really engaged in a fool’s errand.

On the reason for the merger, we of course, in delivering carbon pricing and in its initial implementation, had to have a sizeable number of people who were doing the very complicated policy work and then of course overseeing the initial implementation.

We are well into the implementation now. Carbon pricing is working well, so it is inevitable, natural, logical that the number of people you need for the task has reduced.

So yes, compared with the peak of the staffing of Climate Change when the policy work was in full flight and when the implementation work was in full flight, of course part of the natural cycle is less resources are needed.

And given all of that, it makes sense logically to merge it with Greg Combet’s other department and when you stand back from it of course, what is putting a price on carbon about?

It’s about the future of jobs, the future of industry and the best innovation we can have in our economy, which is why that is the logical fit.

JOURNALIST: Did you have a dysfunctional Cabinet up until the events of last week?

Does this give you a chance to change the way the Cabinet works, refocus it, is there any indication of a change in direction with the announcement today?

GILLARD: I’ve been very clear with you about our priorities as a government.

It’s about jobs, it’s about opportunity, it’s about getting every child a great education, it’s about getting ready for the future including having the best of infrastructure like the National Broadband Network.

It’s about building the new institutions of fairness like Disability Care Australia.

It’s about making sure that we support families under day-to-day, very modern pressures with that precious task of family life. That is what drives the Government. That’s what we are working on.

Of course, I will work properly with my Cabinet colleagues.

I do want to make sure that Cabinet is functioning and functioning well.

And I am very confident with this Cabinet that it will do so.

JOURNALIST: Prime Minister, I have spoken to key Aboriginal leaders across the country who say they were hoping for a new Indigenous Affairs Minister today.

That’s not the case. Is Labor ostracising black voters across the country?

GILLARD: We are ensuring that Indigenous Affairs is in the most capable hands that it can be in and that is Jenny Macklin’s hands.

JOURNALIST: (Inaudible) she is the right person?

GILLARD: She is a fantastic Minister doing remarkable work and I never for one second considered not having her continue in that role. She is an amazing person doing a great job.

JOURNALIST: In your answer to Mark’s question, you said you can work well with Mr Albanese. There is an implication there that you work less well with some of the Ministers whose resignations you’ve accepted.

Can you tell us in your mind, what is the distinction between the support they offered for Kevin Rudd and the support Mr Albanese offered?

And secondly, do you accept the criticisms of the likes of Martin Ferguson and Simon Crean about some decisions that have been made and the way they’ve been communicated, and will you be changing your approach?

GILLARD: I will be doing what I’ve outlined today. So that’s what I’ll be doing.

On Minister Albanese I’m not going to be dragged back into what I have rightly described as an appalling week.

Minister Albanese has been very clear publicly about his conduct last week. I’ve always felt a sense of comfort with Minister Albanese and his position.

I felt that last week, I feel it now, it’s appropriate for him to not only continue but to be promoted and that’s why I’ve taken the decision.

JOURNALIST: You didn’t feel it with others; you didn’t feel the same way?

GILLARD: I think Minister Albanese has dealt publicly with this matter. I don’t have anything to add on that. I’m not recanvassing the events of last week. It’s done and dusted.

JOURNALIST: On the specific criticisms that have been made of your style and decision making from Mr Ferguson and Mr Crean, what do you say to those criticisms?

GILLARD: Being in Cabinet comes with a set of rights and it comes with a set of responsibilities. My Cabinet colleagues as selected by me today will be fulfilling both.

JOURNALIST: Ms Gillard, on the class issue, I think that criticisms have not just been of the mining tax and so on but also the rhetoric of the Government, of Wayne Swan, of yourself on occasions, the attack on the billionaires and so on.

Do you think with hindsight that that language could have been, should have been chosen better?

GILLARD: I think for us as a Government we have got to be clear about our values and about our priorities, and as a Labor Government we do govern in the Hawke and Keating tradition.

And if I can give what you I think is the best example of that and much under-commented on in the modern age, it is that we are the only political party presenting at the next election with a belief in the power of markets and their role in a modern economy.

I believe in the power of markets, as did Hawke and Keating. I believe you can have well-functioning markets that enable you to run a nation and a society of fairness.

Mr Abbott doesn’t believe that. Look at his climate change policy. It would make a Soviet central planner blush, his climate change policy.

So in the mainstream of the Hawke-Keating tradition, we believe in the power of markets, we believe in their efficiency. Of course they’ve got to be properly regulated; we believe that markets can be used to strengthen an economy.

We’ve overseen growth in our economy at the worst time in the global economy, so a lot of the nonsense you hear about do we believe in growing the pie or better distributing the pie, we have grown our economy and yes, we believe that its benefits should be fairly shared and that that growing economy should be managed in the interests of working people.

That is the Hawke-Keating tradition. That is the tradition of this Labor Government.

JOURNALIST: Prime Minister, you’ve created a couple of super-ministries and a couple involve a fair bit of domestic and foreign travel, particularly Dr Emerson’s and Mr Albanese’s ministries.

Do you think that they will have too much on their plate and how disruptive are all of these changes in the lead-up to the budget and having Ministers with ERC and so forth?

GILLARD: The budget preparation will continue as it is continuing now.

In terms of the balance of work for Ministers, I did very directly consider that.

To take a Minister like Dr Emerson, number one he is assisted in the trade portfolio by a Parliamentary Secretary so he does have a team to support him.

Number two of course, Minister Emerson is now a very experienced Trade Minister. So he’s not dealing at the upswing of the cycle where you’ve got to learn every bit of what’s in these very complex transactions.

If you want him to give the oration about everything that’s under consideration in all of the international trade negotiations he involves himself in, well, good luck and we’ll see you back in June because that’s how long it will take.

So because of his experience and that depth of knowledge, I am very confident he can perform both roles. And there are clear crossovers between these roles.

We obviously discuss resources when we come together like this because of their importance to our economy. But don’t forget the importance of international education.

Don’t forget that that’s one of our big trade items, and don’t forget it’s the sort of thing that is often discussed at international meetings because we seek to encourage people to come here and study in Australia and pay good money to do so.

JOURNALIST: Prime Minister, do the independents – just on Anthony Albanese – did the independents indicate to you that they would like him to remain as Leader of the House?

GILLARD: I didn’t speak to the independents about Minister Albanese’s role as Leader of Government Business. I did speak to the independents and talk to them about Minister Albanese performing this role.

One of the agreements we have with the independents is that there be a minister in this role.

JOURNALIST: Prime Minister, one of the things did mention out of last week was the media laws. It was obviously something that you believed needed to be reformed. Will you be taking a new package to the election campaign?

GILLARD: As we indicated last week, those – we succeeded in getting two media law Bills through that are important to our media market and to their operation; one the licence fee rebate which recognises the changing economics of free-to-air television; two the verification that there wouldn’t be a further free-to-air network given the changing economics of free-to-air TV.

The expanded mandates for the ABC and SBS, the further support to community television, and all importantly, the obligations about Australian content across the multichannels, recognising the changing platforms across which everybody works whether they be public broadcasters or commercial broadcasters so we did succeed in getting that through.

On the other Bills, I’ve indicated that they were over at the end of last week; that is the Government’s position.

We made an endeavour to get them through. That endeavour wasn’t successful.

So that is the end of those Bills. As for any further statements on media policy, you should not expect them to be in the form of the Bills before the Parliament last week.

JOURNALIST: Prime Minister, continuing on the independents and their involvement in these changes, is it reasonable to say that the chances of any substantial increases is regional funding is now greater under Mr Albanese than it was under Mr Crean?

GILLARD: Our funding, remarkably increased funding for regional Australia, is already there in the Government’s budget papers so I would refer you to all of the decisions we’ve taken for the benefits of regional Australia.

Of course the independents represent regional seats and so Mr Oakeshott, Mr Windsor, you would expect them to be fierce advocates of regional Australia and they are.

As is so many of my own political party – Catherine King, for example, who has been appointed as a Minister today; just one example of a Labor person who fiercely advocates for regional Australia.

We’ve responded to that advocacy by already allocating new resources and we will continue to allocate from those resources.

JOURNALIST: Prime Minister, the current generation of union leaders today basically described Martin Ferguson, his views, as being 30 years out of date and really not understanding the reformist spirit of the Hawke-Keating Government.

Do you agree with those views? And secondly, what do you say to the suggestion that Gary Gray will be too close to the resources sector having worked for Woodside for seven years?

GILLARD: I’m not going to involve myself in the details of that debate.

What I would say for the reforming agenda of this Labor Government, is I think when we look at the history of workplace relations reform, we’ve got to understand the history in a time sequence.

I very much supported the enterprise bargaining focus of the Hawke and Keating Governments.

It was controversial at the time; came against a backdrop of a far more centralised system and they moved to enterprise bargaining including the ability of people to enter an enterprise bargain without the involvement of a trade union.

That concept, enterprise bargaining, possible with unions, possible without unions, is at the centre of the Fair Work regime that we have brought into effect.

What that means is under Hawke and Keating they had a very centralised system and moved to a system with more movement in it.

Then of course, the Howard Government of which Mr Abbott was a key member, blew that out of the water and went to a system where working people’s conditions could be smashed and people could be sacked unfairly and never have any say about it, against that backdrop of having blown up any Australian understanding of how workplaces should work, we’ve introduced the Fair Work system.

And at the heart of it is the concept that came out of the Hawke-Keating era of enterprise bargaining.

On Gary Gray, Minister Gray I think brings appropriate expertise to the portfolio of Resources and Energy.

JOURNALIST: Did Minister Albanese or any of the other Ministers you retained offer at any stage their resignations in discussions you’ve had?

GILLARD: No, I did not and I did not seek them.

JOURNALIST: Prime Minister, Simon Crean today went on Alan Jones and discussed a fair few things. Amongst others, he said one message you have to get is not to attack superannuation.

I think he put it that the Government shouldn’t build their surplus by attacking the surplus of retirees. What do you say to that?

GILLARD: Well, superannuation is a precious Labor creation.

It is only in this country because of the work of Labor Governments and it only be increased in this nation for working people because of the work of this Labor Government.

And so superannuation is only ever safe in Labor hands.

In the hands of the other side of politics, what you see is the cuts that Mr Abbott wants to impose on some of the lowest income Australians in our nation, the people who most struggle for a dignified retirement because they retire with very low superannuation balances.

So, I can assure everyone, superannuation – that is a system which gets working people a decent retirement and treats working people with the dignity – that will always be at the core of what we do.

JOURNALIST: What about new taxes on nest eggs?

GILLARD: Well look, I have already ruled out, as you would be aware, taxation on the withdrawals that come in the retirement phase.

JOURNALIST: Prime Minister, how are these changes, particularly the merging departments, impact on public service numbers? Will we see a decrease or increase?

GILLARD: These changes in and of themselves are not impactful on the total number of public servants.

Obviously there are people moving to take different responsibilities, but for Climate Change, that has been happening for some time now, obviously people who were in the absolute depths of the policy work weren’t needed to keep performing that policy work once the model was struck and legislated and done.

People who were there at the absolute height of the implementation, many of them have gone to other functions already because we are well into the implementation phase, and as you all know, every bit of nonsense we had to listen to from the Opposition about what carbon pricing would mean and how the implementation would work has been proved spectacularly wrong.

JOURNALIST: Prime Minister, why did you keep Mark Butler and Bob Carr in their current positions and are you concerned at all about what role they played in the destabilisation?

GILLARD: Well, clearly not.

JOURNALIST: Prime Minister, you said that the leadership was done, it’s all over.

Was there a sense of satisfaction that you finally disposed of Kevin Rudd last Thursday, and if he is running for Griffith, how will you campaign with him?

GILLARD: I’ve described last week as appalling for good reason and so that was my sense of feeling about the events of last week.

As I’ve said over the weekend when I was asked these questions, I will campaign with all members of the Labor team, including Mr Rudd.

JOURNALIST: At the start when you said unity spectacularly eluded us, last week was appalling, Labor was self-indulgent.

Is that in a sense you trying to – is that sort of an apology to the Australian people for what happened and trying to – because a lot of the polls and pundits and people on your own side say there is no way Labor can win the election now.

Are you trying to, I guess, apologise to the people?

GILLARD: Well, the words mean, Phil, what the words mean.

And on the question of the election, as I said in my statement to you at the start, the only genuine contest there is in Australian politics is whether on 15 September there is a majority Labor Government led by me with a clear plan for the nation’s future, with a plan to keep growing and strengthening the economy and a plan to support working families, or whether Mr Abbott is Prime Minister, with all of his negativity, with his plans to take money away from Australian families, and his plans to cut jobs and cut services.

That’s the real contest.

Thank you very much.