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Best-laid plans for a year of trouble

Sydney Morning Herald

Saturday February 5, 2011

Phillip Coorey is the chief political correspondent.

Plenty of obstacles are in store for Julia Gillard's goals, writes Phillip Coorey. WHEN Julia Gillard drew the curtain on 2010, the most volatile political year since 1975, she planned to grab a few weeks' leave and hit the ground running in 2011, determined to implement her policy agenda.Gillard had been on holidays for but a few days in mid-December when a boat carrying asylum seekers crashed into the rocks off Christmas Island, killing at least 35.She had no option but to return to work to deal with the tragedy and has not had a day off since.The new year was dominated by natural disasters - floods and cyclones - and the not insignificant issue of growing civil unrest in Egypt requiring the evacuation of hundreds of Australian citizens.Tragedy will dominate this week's resumption of Parliament. Tomorrow Gillard will attend a service to remember those lost in the Victorian bushfires of 2009. (Coincidentally, but conveniently, it enables her to miss the launch of Kristina Keneally's election campaign.)For Tuesday, the first day of sitting for 2011, the schedule, including question time, has been cancelled and the day dedicated to condolence motions for those lost in the floods.Dealing with unexpected circumstances is the lot of a prime minister and Gillard is not complaining.But, according to those close to her, she stressed to her ministers and senior officials over recent weeks to not let the unforeseen events distract from the more politically critical task at hand - policy delivery.Gillard ended last year promising 2011 to be a time of decision and delivery. She has committed by year's end to having the mining tax legislated, reaching agreement on a carbon pricing mechanism, deciding on a water plan for the Murray-Darling Basin, continuing the building of the national broadband network, starting the health reforms on July 1 as scheduled and implementing measures to increase workforce participation.Her message to her ministers is best summarised as: "Get it done".Greg Combet is determined to have a carbon price mechanism not only agreed to by the end of the year, but in legislation before Parliament and, if possible, passed.The budget cuts made to help pay for the flood damage enabled Gillard to clear the decks for a price on carbon by junking, deferring or capping carbon abatement policies such as cash for clunkers and solar rebates.These are politically vexed in their delivery and, compared with a carbon price, expensive ways to reduce emissions. They are also inequitable. Those unable to access solar rebates for example, because they are renters or apartment dwellers, subsidise the power bills of those who can through higher electricity costs.Tony Burke is already busting heads inside the Murray-Darling Basin Authority to deliver an outcome on water, and Nicola Roxon's priority is to usher in the health reforms. Unable to wait for the result of the NSW election on March 26, Gillard has called a Council of Australian Governments meeting for February 14.Keneally will be there but the state Opposition Leader, Barry O'Farrell, will be Gillard's concern.Health will be the toughest. Liberal-led Victoria and Western Australia are refusing to agree to hand over 30 per cent of their GST in return for the Commonwealth taking majority control of hospitals and O'Farrell is set to join them if he becomes premier.Gillard has raised the threat level, essentially saying that, unless the states sign on, they will be left to drown under growing health costs. Under the reforms, the Commonwealth would not only become the majority funder of the health system but pick up over the long term the full inflationary blowout in health costs. This is estimated at almost $16 billion in the five years to 2019-20. Gillard has told the states this week they can kiss that money goodbye if they do not sign up.Her main foe, as always, will be Tony Abbott.Abbott ended last year using a series of interviews to acknowledge his trademark style of opposing almost everything would not be enough to sustain the Opposition and launch it into government. He said this year would be dedicated to policy development.However, he began the year by opposing Gillard's planned $1.8 billion flood levy and it is not panning out as well as he hoped.With legislation to be introduced on Thursday, the levy will be the dominant story of the week. The levy plus $3.8 billion in budget cuts was established to meet the federal government's estimated $5.6 billion flood repair bill.Abbott says the whole lot should be funded by budget cuts, and yesterday the shadow cabinet agreed on the suggested cuts Abbott will use as arguing points next week.But there is concern among the Liberals that Abbott has not so much pulled the wrong rein but pulled too hard.Certainly, in recent days, he has often used that word so rare for him: bipartisanship. Like the Fonz trying to admit he was wrong, Abbott has offered repeatedly to sit down with Gillard to find more budget cuts rather than impose a levy.When Gillard spoke this week of a budget chock-full of welfare reforms to ensure everyone capable of working did so, Abbott rushed out a statement, again offering support.In fairness to Abbott, he has a solid track record in welfare reforms as a minister, and some of the best policies he took to the last election were in that area.But the gestures of support - so rare in the contemporary political environment - are being interpreted inside the government and beyond as a sign that the Liberal research has picked up public concern that his negativity over the floods has been a step too far.Abbott has been at pains to stress that he supports rapid reconstruction in Queensland; it is just that he disagrees with the levy. "The important thing is to let the Australian people know that the Liberal Party is on their side," he said yesterday.But, as is so often the case in politics, the nuanced message gets lost.Shayne Neumann, a Queensland Labor MP whose electorate of Blair has suffered widespread devastation, says the locals think Abbott is playing politics with the floods and is opposing reconstruction. "He doesn't get the magnitude of the problem. He is being partisan and parsimonious," Neumann said.Next door in the electorate of Wright the Liberal MP, Scott Bucholz, disagrees, saying people do not like the levy.Either way, Abbott is scheduled to be back in Queensland today stressing that he cares.Whether she really needs the levy or could find more money in the budget, Gillard has picked a fight with Abbott and, after an initially hostile response, appears to be winning. Most people realise they will not be paying it or it will not cost them very much.There is little doubt the legislation will be passed, giving Gillard what will be an important first victory in a year that promises to be every bit as volatile and unpredictable as the last.

© 2011 Sydney Morning Herald

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