Australian Reserve Bank | Media Release on Interest Rates

Number	2011-19
Date	6 September 2011
Embargo	For Immediate Release

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
Conditions in global financial markets have been very unsettled over recent weeks, as participants have confronted uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth in Europe and the United States.

As a result, the outlook for the global economy is less clear than it was earlier in the year. Some temporary impediments that had contributed to a slowing in growth in some countries over recent months, such as the supply-chain disruptions from the Japanese earthquake and the dampening effects of rising commodity prices, are lessening. But the uncertainty and financial volatility is reducing confidence and may result in more cautious behaviour by firms and households in major countries. A number of forecasters have scaled back their global growth estimates over the past couple of months.

At this stage, little evidence is available to gauge any effects of the European and US problems on other regions. Prices for key Australian commodities have remained very high thus far, with growth in China continuing to look solid. As a result, Australia's terms of trade are now at very high levels and national income has been growing strongly. Investment in the resources sector is picking up very strongly and some related service sectors are enjoying better than average conditions.

In other sectors, cautious behaviour by households and the high level of the exchange rate are having a noticeable dampening effect. The impetus from earlier Australian Government spending programs is now also abating, as had been intended. Overall, the near-term growth outlook continues to look somewhat weaker than was expected a few months ago. Beyond the near term, growth is still likely to be at trend or higher, unless the world economic outlook continues to deteriorate. 
 
Growth in employment has been moderate this year and the unemployment rate has been little changed, near 5 per cent, for some time now. Reports of skills shortages remain confined to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn, though productivity growth has been weak.

Year-ended CPI inflation should start to decline towards the end of the year, as temporary weather-related effects reverse. But measures of underlying inflation have been increasing this year, after declining for the previous two years. While they have, to date, remained consistent with the 2–3 per cent target on a year-ended basis, the Board remains concerned about the medium-term outlook for inflation. A key question will be the extent to which softer global and domestic growth will work, in due course, to contain inflation.

Most financial indicators suggest that monetary policy has been exerting a degree of restraint. Credit growth has declined over recent months and is very subdued by historical standards, even with evidence of greater willingness to lend. Most asset prices, including housing prices, have also softened. The exchange rate is high. Each of these variables is affected by other factors as well, but together they point to financial conditions being tighter than normal.

At today's meeting, the Board judged that it was prudent to maintain the current stance of monetary policy. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.

                ____________________ | ____________________

Tony Abbott accepts PM's invitation to discuss a bipartisan plan for asylum seeker processing

Tony Abbott is pushing for the reopening of the controversial detention centre on Nauru. Source: AAP

Formal negotiations are set to begin within days on a bipartisan plan to process asylum-seekers offshore with Tony Abbott accepting an offer from Julia Gillard to attend a special briefing with senior government officials in Brisbane tomorrow.

Responding to the Prime Minister's letter outlining the offer earlier today, Mr Abbott said he was "happy to work with the government" to remove any legal hurdles preventing offshore processing.

"I am happy to accept your offer and request that the briefing take place in Brisbane tomorrow afternoon," Mr Abbott said.

"Since the High Court's decision last week, the government has effectively lacked a policy to deal with illegal boat arrivals and it's hardly in the national interest for this to persist."

But Mr Abbott took the opportunity to press the government on the Coalition's policy of Nauru. "No doubt you will take the opportunity provided by the Pacific Islands Forum to talk further with the leaders of PNG and Nauru about early re-establishment of the processing centres there," Mr Abbott said.

"There could be no reasonable objection to processing in Nauru (given your government's support for offshore processing on Manus Island) and, as you know, this is the course that I think the government should take."

In her earlier letter Ms Gillard proposed talks with senior departmental figures on the legal implications of the High Court scuttling of the Malaysian Solution and "their analysis of different policy approaches that are available to respond to irregular maritime arrivals".

"As you know, I will be attending the Pacific Islands Forum in New Zealand this week," Ms Gillard said. ''I hope that in my absence the briefing will allow you to consider opportunities to act in the national interest."

Mr Abbott had urged Ms Gillard to speak to Nauru’s President at the New Zealand forum to discuss a potential reopening of the island’s Howard-era processing centre but the Prime Minister said it was far too early to engage in such dialogue.

“It is premature for me to be pursing that agenda here at this forum given the High Court’s case of last week and that the government is still preparing its response,” Ms Gillard said from Auckland .

Despite a threatened revolt from Labor's Left faction, the government is seeking Coalition support to restore offshore processing as an option, including in Malaysia.

The government yesterday announced 335 who arrived since the Malaysian deal was struck would be processed on Australian soil following last week's High Court decision declaring the plan invalid.Labor is split on whether to do a deal with the opposition to allow offshore processing or to rule it out entirely.

With Ben Packham

                              ___________________  | ____________________

Stocks dive on recession fears as investor confidence plunges

• Scott Murdoch
• From: The Australian
• September 06, 2011 12:00AM

Source: The Australian

THE Australian sharemarket plunged 2.38 per cent yesterday amid fears the US economy was heading for a fresh recession and a survey revealed investor confidence in Australia has hit its lowest point since the first quarter of 2009.

About $30 billion was wiped from the value of Australian shares and Asian markets were also sold down heavily as the impact from the shock jobs numbers in the US that spooked Wall Street at the weekend was felt throughout the region.

The major European markets all opened more than 2 per cent lower last night.

The US non-farm payroll figures showed there had been zero job creation in the past month in the US, sparking worries that the economic recovery would stall or even slip into a recession.

The share plunge came as a survey showed investor confidence in Australia has reached its lowest point since the first quarter of 2009, when the domestic stockmarket plunged due to the unfolding global financial crisis.

For the third quarter of 2011, investor sentiment in Australia fell 15.7 points to minus 21.7, according to a survey of 820 investors by CoreData.

It showed that 80 per cent of investors expect an economic slowdown in the coming quarter and 68 per cent expect business conditions to deteriorate.

Macquarie Private Wealth adviser James Rosenberg said markets would be depressed while question marks remained over the direction of the US economy.

"The market has pretty much closed on its low and that's obviously the result of the negative lead from the disappointing US data," he said. "As soon as the regional markets opened, they were all in the red.

"It's too early to say that the US is definitely going into recession, but most of the data is pointing to the fact that the rate of recovery is going to be slower." There isn't a lot of good news around at the moment."

Locally, the tone was negative from the start but worsened during the sessions, with the share-price falls of the major banks driving the market to close almost at its lows. The performance was also worsened by some major stocks, including BHP Billiton, trading ex-dividend.

The S&P/ASX 200 lost 101 points, or 2.38 per cent, at 4141.9 points, while the broader All Ordinaries index fell 97.3 points, (2.25 per cent) to 4224.2 points.

The Australian dollar was also caught up in the negative sentiment and tumbled from $US1.0675 to as low as $US1.0575 as European foreign exchange markets came online last night.

In Asia, the Nikkei index in Tokyo was off by 1.8 per cent while in Hong Kong the mood was darker, with the Hang Seng down 2.95 per cent.

The US market was closed for the Labour Day public holiday.

The Reserve Bank meets in Perth today to set interest rates for September. The interbank futures market tips there is a 22 per cent chance the board could order a 25 basis-point cut to the 4.75 per cent official cash rate. It also predicts that interest rates could be 127 basis points lower by this time next year.

The majority of economists have forecast that the RBA will leave rates on hold for the next few months.

NAB's chief markets economist, Rob Henderson, said the RBA's neutral tone on monetary policy was unlikely to change as financial market conditions.

                       ____________________  | _________________

Rudd | Gillard which one will it finally be....

Let Rudd resume rightful role

• Phillip Adams
• From: The Australian
• September 06, 2011 12:00AM

Cartoon by Peter Nicholson. Source: The Australian

JULIA, resign. (When I drafted this column a month ago, friends in the ALP begged me not to run it. Not because of any profound dispute with the content but because "it might make things worse". Now, things couldn't be worse.)

Resign, Julia. Resign yourself to the fact you've failed. Resign yourself to the fact nothing you do has a desirable political effect. Resign yourself to the fact that no matter what you say, nobody listens. Resign yourself to the certainty that you're leading your party to electoral slaughter.

You are about to elect Tony Abbott. Resign. You led the coup against Kevin Rudd. Yes, you were coy about it, feigning reluctance. At least accept this simple fact. Had you said no to the conspirators, Rudd would still be in his job.

You were as responsible for his removal and humiliation as was John Kerr for Gough Whitlam's. And it's been a disaster. The most inept strategic move since the NSW branch started serial-killing its own premiers.

On radio that night I said: "The Labor Party has just committed suicide.

Despite the media gush about "the first woman prime minister" a vast number of ALP supporters were equally infuriated by an act they saw as unethical, cruel, stupid and unnecessary.

John Howard and I agree Rudd would have won the next election, just as Howard himself recovered from equally grim polls to win again and keep on winning.

Until Rudd - not Simon Crean, Kim Beazley or Mark Latham - until Rudd defeated him. While long pro-Kev I'm not blind to his shortcomings. He can exasperate, even infuriate.

But I'm persuaded he's learned lessons about being more courageous and collegiate. And let the record show that the excuses used by you and your fellow assassins were the policy failures that you Julia, you, pushed in both the full and kitchen cabinets. They were your policy failures as much as or more than his.

At the same time you were blind to Rudd's achievements, most importantly his tactical response to the global financial crisis mark I. It was fast, intelligent and successful. Few believe you can perform to his level for GFC II.

Neither the voters, according to the pollsters, nor the frightened people sitting behind you in the Reps. They know the party is doomed but are paralysed. They don't have the guts to admit to a huge error of judgment and demand you leave.

That's why you must resign. You started this fiasco. Only you can end it. That's the only way to have a fighting chance. Not only in the next election but in the dramatic months between then and now.

I'll leave aside some of your policies, such as the obscene import-export scheme in refugees. We stopped sending cattle to inhumane deaths in Indonesia yet you were proud of a scheme that proposed sending refugees, including children, to inhumane conditions in Malaysia.

The Labor Party's record on refugees has been appalling since Beazley cowed to the Howard-Ruddock campaign to demonise "queue jumpers" and "illegals" with a "border protection policy" that redefined our borders.

And similar gutlessness can be seen on climate change. Unbelievable but true, your recent full-page ads selling the carbon tax don't mention it. Not a word! You've resigned the argument to Abbott and the deniers. Malcolm Turnbull has shown more courage than you.

However, the most urgent issue is GFC II. Rudd is far better equipped to deal with it than you.
The same polls you used to justify his dismissal show voters would prefer him back in office.
Unless you want to reduce the parliamentary Labor Party to a rump, you must step down.

Your co-conspirators must admit they got it wrong. Only with Rudd as prime minister will Labor have fighting chance against Abbott.

Resign, Julia. Resign.

                             _________________  |  _______________

Katter set to ride the fence....this time the State parliament

Katter could hang Parliament

• Steven Wardill
• From: The Courier-Mail
• September 06, 2011 12:00AM

KATTER MATTERS: Bob Katter in Tully earlier this year. His new party could control the balance of power in Queensland. Source: The Courier-Mail

QUEENSLAND could be heading towards its own hung parliament with Bob Katter's new party poised to snare significant support at the looming state election.

A new Galaxy Poll has revealed one in four Queenslanders are prepared to vote for candidates from maverick Federal MP's Australian Party.The extraordinary result for the fledgling movement is a severe blow to the Liberal Nationals which looked likely to cruise to victory on the back of voters determined to oust the Bligh Government.

The pain for the LNP from the surging support for Mr Katter has only been compounded by leader Campbell Newman's "just vote one" declaration.Such a strategy could help the Bligh Government retain seats in some areas by splitting the conservative vote, or win seats with Labor preferences.

It comes as the first batch of supporters putting their hands up to run for the Australian Party has been unveiled.The candidates come from an array of backgrounds, including a grocer, hairdresser, electrician, real estate agent and fish-and-chip shop owner.

Mr Katter described the candidates announcement as an "historic moment" for the party.
"Up to date we have really been just a name," he said."But we are hoping and praying we can now forge ahead."

But the polling, conducted exclusively for The Courier-Mail, shows the Australian Party's prayers may have already been answered with 23 per cent of voters saying they are likely to support it at the election, due in March.

The result was not initially reflected in the survey when voting intentions were asked of the 800 participants from across the state. However, when specifically asked whether they would back a Katter candidate, the poll found seven per cent were very likely to support them while 16 per cent said they were quite likely.

The dichotomy between the two results indicates Mr Katter and his candidates have significant work ahead to convert the flirtation with the party into solid support. However, the combined 23 per cent, which rivals Federal Labor's support in Queensland, is well above the party's own initial expectations.

If replicated at a state election, the Australian Party could achieve a result similar to the 11 seats One Nation gained in 1998 with 22 per cent of the vote. The poll will send shockwaves through the LNP, with many MPs and candidates already concerned about the party's standing in rural areas.

Support for the Australian Party is likely to be concentrated in north Queensland where the Katter brand is near omnipresent in some areas. The Australian Party candidates could not only spoil the LNP's efforts in some seats by not preferencing back to them but win seats if Labor puts them higher on the ballot paper.

Mr Katter said it was clear Queenslanders wanted Labor out but his task was to break the mentality that voters had to support the LNP.

Bob's best quotes

Bob Katter has become known the some of the more quotable quotes in recent times. Here's just a snippet of some of Bob's best.

"From all the people I am talking to they are not saying they want the LNP, they just want the other lot out," he said.

On homosexuality:
"I would walk to Bourke backwards if the gay population of North Queensland is any more than 0.001 per cent.''

On boat people:
"Stop them outside our waters, give them diesel, turn them around and send them back.''

On the Bradfield Scheme (turning north Queensland rivers inland to irrigate the interior):
"Those that oppose it are in the camp of pygmies, and that's where they should stay, because they don't know what they're talking about.''

On the return of tariffs to assist rural industry.
"There should be a 15 per cent charge on everything coming into the country.''

On the petty regulation he claims stifles rural and regional Australians:
"Can't go fishing, can't go shooting, can't go hunting, can't, I found out the other day, boil the billy.

On the carbon tax:
"If you want to deal the most terrible body blow to the economy, go down that track.''

On greenhouse emissions:
"(Greens leader Bob Brown) has the hide to say to the Australian people that it's causing massive flooding, when not a year ago .... they've been telling us that it's been causing the drought on the Murray Darling."

On his fledgling Australian Party:
"The people are crying out for something different. There are 20 to 30 per cent who refuse to vote for mainstream parties.''

                   ___________________________  |  ______________________

Newspoll | further grim news for a beleagued ALP

Tony Abbott's record lead over Julia Gillard: Newspoll

• Dennis Shanahan, Political editor
• From: The Australian
• September 06, 2011 12:00AM

Julia Gillard's personal support has plunged to a new low as Tony Abbott outstrips her as preferred prime minister and Kevin Rudd surges ahead as the best person to lead Labor.

The Prime Minister appears to have borne the brunt of public disapproval over the failure last week of the government's plan to send 800 asylum-seekers to Malaysia. Voter satisfaction with Ms Gillard, who is now forced to deal with the Opposition Leader to keep alive the option of processing asylum-seekers overseas, fell six points to a record low of 23 per cent as dissatisfaction jumped seven points to 68 per cent.

The only modern prime minister with worse personal support was Paul Keating, who had a satisfaction level of 17 per cent and dissatisfaction of 74 per cent in August 1993.

Ms Gillard's net satisfaction rating - the difference between voter satisfaction and dissatisfaction - is now minus 45 per cent. As Ms Gillard's personal standing fell, Mr Abbott jumped clear to a nine-point lead over her as the preferred prime minister, with a rise in support from 39 per cent to 43 per cent. Ms Gillard's support fell four points to a new low of 34 per cent.

This is Mr Abbott's biggest lead over Ms Gillard and the sixth Newspoll survey in a row in which he has been ahead as better prime minister. Mr Rudd, the former prime minister and now Foreign Minister who has been on sick leave for several weeks following a heart operation, also leapt well ahead of Ms Gillard as the preferred Labor leader. Asked who out of Ms Gillard and Mr Rudd was the best candidate to lead the Labor Party, voters chose Mr Rudd 57 per cent to Ms Gillard's 24 per cent.

Just before Ms Gillard replaced Mr Rudd as Labor leader last year, Mr Rudd's lead was only 45 per cent to 40 per cent over his then deputy leader.

Although there are no moves for a challenge against Ms Gillard, Mr Rudd's public popularity continues to put him as the replacement candidate preferred by Labor MPs trying to save their seats.

After a devastating decision in the High Court last week wiped out the Prime Minister's Malaysia Solution for asylum-seekers, Labor's primary vote has stuck at a record low of 27 per cent.

The Coalition's has risen to 50 per cent - the highest since John Howard was prime minister at the time of the September 11, 2001, terror attacks.

Although Labor's primary vote remained unchanged, the record Coalition vote and a two-point fall in Greens support from 14 to 12 per cent in the past fortnight resulted in a record two-party-preferred result for the Coalition.

Based on preference flows at the last election, the Coalition has an all-time high two-party-preferred vote of 59 per cent compared with Labor's 41 per cent. Such a result at an election would reduce Labor to a rump of a party, wiping out dozens of Labor MPs including many ministers.

At the August 21 election last year the ALP secured 50.1 per cent of the two-party-preferred vote compared with the Coalition's 49.9 per cent.

Mr Abbott's net satisfaction rating remains negative at minus 13 but dissatisfaction with the Opposition Leader fell three points to 52 per cent in the past two weeks and satisfaction rose three points to 39 per cent.

Mr Abbott has accused the Gillard government of incompetence over the failure of the Malaysia Solution and demanded Labor adopt the Howard-era policy of sending asylum-seekers to Nauru for offshore processing.

Mr Abbott has been able to offer the government some support on an asylum-seeker policy while the Greens are seeking a change to have all asylum-seekers processed on Australian soil.

Ms Gillard yesterday refused to cede ground to Mr Abbott and said he could not just demand a narrow solution based on Nauru. "I believe if Mr Abbott is sincere about this offer, then he needs to make it very clear that he is talking about working with the government on offshore processing generally, not on his narrow solution," she said.

              _____________________  |  _______________________

Don Argus accuses ALP of reform that was politically expedient, but not in nation's best interests

• Andrew Burrell
• From: The Australian
• September 05, 2011 4:10PM

FORMER BHP Billiton chairman Don Argus has lashed the Gillard government over its "lazy" reform agenda on tax and industrial relations, warning that a failure to address Australia's "woeful" productivity growth could ruin the economy.

Mr Argus, who chaired Labor's mining tax panel, today described the government's tax reform agenda as politically expedient, and accused it of a lack of consultation with industry in the lead-up to both the ill-fated resource super profits tax and the carbon tax.

Mr Argus referred to the labour and financial market reform undertaken by the Hawke-Keating government in the 1980s, and John Howard's support for the GST, as examples of policy changes that took political courage.

But he said the Gillard government was wasting the benefits of the resources boom and risking the living standards of future generations by failing to address genuine reform.

“Australia still has enormous opportunity before it. We are positioned in a very unique way to benefit from the shift in the globe's economic centre of gravity from the western world to Asia,” the former bank chief, who stepped down as chairman of BHP Billiton last year, told a mining conference in Perth today.

“Yet I am concerned future generations of Australians will look back and lament that we did not make the most of what lies ahead of us.“I fear they will look back with regret that our leaders opted for the most politically expedient outcomes, not those that were in the best long-term interests of the country.

“I worry that future generations of Australians will have to contend with the results of `lazy reform'.” Mr Argus called on the government to address Australia's deteriorating productivity growth, which he said could lead to a decline in foreign investment and a return to the economic “dark days” of the 1970s. He said improved labour practices had been achieved in the mining industry under the use of individual agreements that allowed companies to directly engage with workers and to reward them for enhanced productivity.

But employers' recent concerns about Labor's Fair Work Act, which forces employers to negotiate collectively with unions, were proving well-founded, he said.

“Despite the objects of the Act stipulating that bargaining should deliver increases in productivity, my research suggests that unions are resisting management attempts to achieve efficiency-related tradeoffs or productivity improvements,” Mr Argus said.

“Instead of agreements being seen as key vehicles for reform and enhanced working arrangements, many employers now regard the bargaining process as successful if they manage to retain prior concessions that they gained, and for which they paid in previous negotiations.

“Some employers simply have not been able when faced with industrial campaigns to hold onto their earlier productivity gains and have reluctantly agreed to `go backwards' in terms of a loss of the flexibility permitted under their industrial instruments.

“Although the scheme of the legislation purports to mean that protected industrial action should only be used as a last resort where lengthy bargaining has reached a genuine stalemate, it appears that unions are using stoppages as a tactic to `soften up' employers either quite early in the bargaining process or, indeed, before bargaining even commences.”

In his first comments on the mining tax since handing a report to Wayne Swan on the contentious levy late last year, Mr Argus criticised the government for its failure to consult widely with the industry before its botched attempt at introducing the RSPT.

“The Henry review was touted as the most comprehensive review in 50 years or a `root and branch review' , but with little consultation,” he said.“There were similar problems with our first attempt at a resource rent tax, and the carbon tax also had a frighteningly scant amount of consultation with those outside political circles.”

Mr Argus said the government should simplify its tax system, noting that Australia had 10 main taxes that contribute around 90 per cent of the revenue and another 115 taxes that collect about $40 billion.

“This complexity costs businesses time and money - resources that could certainly be used more productively,” he said. Mr Argus also said he was deeply concerned about Australia moving before the rest of the world in introducing a carbon tax.

He said more attention should be given to the use of natural gas, which was more cost-effective than renewables and more likely to deliver a reduction in carbon emissions.

“This example highlights just how politically expedient this government's tax reform agenda has been,” he said.“The government has rushed ahead with proposals that are simply designed to navigate the political landscape of the day, and not in the best interests of our country.

“We need a more rigorous evaluation before large amounts of taxpayer money are spent on speculative investments in renewable energy that could actually be less effective than other options in reducing emissions.”

A spokesman for Treasurer Wayne Swan later rejected Mr Argus's claims that the government was failing to address productivity.“The fact is that we've seen a long-term structural decline in productivity growth over a long period of time after a decade of neglect from our predecessors in critical infrastructure and skills investment, as pointed our repeatedly by the Reserve Bank, including very recently,” he said.

“We can't flick a switch and turn that around, this neglect, and we know from history that it takes time to see the benefits of the long-term structural improvements we have been investing in from the day we came to office.

              ___________________________ | _________________________

Israeli protests: 430,000 take to streets to demand social justice

Up to 300,000 take part in Tel Aviv, 50,000 in Jerusalem and 40,000 in Haifa in Israel's biggest ever demonstration

• Harriet Sherwood in Tel Aviv
• guardian.co.uk, Sunday 4 September 2011 11.40 BST

Demonstrators in Tel Aviv. Photograph: Uriel Sinai/Getty Images

Hundreds of thousands of Israelis took to the streets on Saturday night in Israel's biggest ever demonstration to demand social justice, a lower cost of living and a clear government response to the concerns of an increasingly squeezed middle class.

About 430,000 people took part in marches and rallies across the country, according to police. The biggest march was in Tel Aviv, where up to 300,000 took part. There was an unprecedented 50,000-strong protest in Jerusalem, and 40,000 marched in Haifa. There were smaller protests in dozens of other towns and cities.

It had been billed as the "march of the million" but organisers said a turnout matching the 300,000-strong demonstrations four weeks ago would be a triumph. Israel's population is 7.7 million.

Saturday's demonstrations followed 50 days of protests that have rattled political leaders and led commentators and analysts to ask whether a new social movement would transform Israeli domestic politics for the next generation.

The movement, which has the support of about 90% of the population according to opinion polls, began when a small group of activists erected tents in Tel Aviv's prosperous Rothschild Boulevard in protest at high rents and house prices.

Tent cities mushroomed across the country and protesters rallied behind the slogan: "The people demand social justice." Among the issues raised were the cost of housing, transport, childcare, food and fuel; the low salaries paid to many professionals, including doctors and teachers; tax reform; and welfare payments. The government established a committee led by the economics professor Manuel Trajtenberg to examine the protesters' demands, which is due to report later this month.

Demonstrators in Tel Aviv on Saturday night blew whistles and banged drums as they marched in a carnival atmosphere to a large square for a rally. Residents hung banners from balconies and cheered as they passed. "We are the new Israelis," the student leader Itzik Shmuli told the rally. "And the new Israelis want only one simple thing: to live with dignity in this country."

He added: "Tonight we make history again. The people are supporting a protest started by the young people and, a week after the protest was proclaimed over, we are on the verge of breaking another record. From now on the government knows that at any given moment Israelis can return to the streets and must therefore deliver the goods."

Daphni Leef, one of the organisers of the original tent protest, said: "This summer is the great summer of the new Israeli hope born of despair, alienation and impossible gaps … The Israeli society has reached its red line, and has gotten up and said: 'No more.' This is the miracle of the summer of 2011."

Under a homemade banner saying "Walk like an Egyptian", Ruti Hertz, 34, a journalist, said that until this summer people had been privately ashamed of their inability to make ends meet. "Each person was lonely in their situation, thinking it's my own problem." That had changed with the protests.

She said that she and her teacher husband, Roi, were living on the same income as when they met 10 years ago. "We don't ask for much, just to be able to finish the month without taking from our parents."

Roi's monthly take-home pay of 5,500 shekels (£940) went on nursery fees for their two young daughters, she said.

Vered Cohen Nitsan, a primary school teacher from Netanya, said she had joined the march "to protest, to support the people of my country and [because] I wish my children will have an easier life in the future".

She added: "For years, you think you just have to work harder and struggle. And now people start to talk to one another and you see it's not your personal problem."

At a rally in Haifa, Shahin Nasser, an Israeli-Arab, said: "Today we are changing the rules of the game. No more coexistence based on hummus and fava beans. What is happening here is true coexistence, when Arabs and Jews march together shoulder to shoulder calling for social justice and peace. We've had it."

The protests have been criticised by some on the left for not paying more attention to the discrimination suffered by Israeli-Arabs, who make up 20% of Israel's population, or Israel's occupation of the Palestinian territories.

Weekly demonstrations, whose turnout had been steadily building, were suspended for two weeks after an attack by militants near the Egyptian-Israeli border in which eight Israelis were killed. Some commentators suggested that the movement had lost its momentum.

Protest organisers said the tent cities would be dismantled but the movement would continue with other actions. Many tent-dwellers had already left as the Israeli summer holidays ended.

                ___________________________  |  __________________________

Tony Blair to meet Palestinian and Israeli leaders in peace push

Effort to avert collision over Palestinian bid to win UN recognition of statehood

• Harriet Sherwood in Jerusalem
• guardian.co.uk, Sunday 4 September 2011 18.11 BST

Tony Blair has been the Middle East quartet's special envoy for four years. Photograph: Stefan Wermuth/Reuters

Tony Blair is expected to meet Palestinian and Israeli leaders this week in an attempt to find a path back to peace negotiations and avert a potential diplomatic collision over a Palestinian bid to win UN recognition of their statehood.

The former British prime minister has reportedly been entrusted with the task of finding a formula to restart talks that would be acceptable to the members of the Middle East quartet – the US, the European Union, Russia and the United Nations – as well as to both sides in the conflict.

Blair met Binyamin Netanyahu, the Israeli prime minister, last week and has further meetings scheduled for this week.

The US is accelerating efforts to forestall the Palestinians' bid to win recognition of their state, according to a report in the New York Times. Barack Obama is anxious to avoid a situation where the US has to veto such an attempt, thus risking the anger of the Arab world. The US has made it clear it will wield its veto if the issue comes to a vote at the security council.

Blair is said to be pushing for a consensus around the key issues of borders and acknowledging Israel as a "Jewish state". However, Israeli officials are unhappy with Obama's speech in May in which he spoke of a Palestinian state "based on the 1967 lines with mutually agreed land swaps", saying this should not be the starting point of talks.

The Palestinians reject formally acknowledging Israel as a Jewish state as it disregards the 20% of the population that is Palestinian and undermines the "right of return" for Palestinian refugees.

Both sides have little confidence in the other's expressed willingness to return to negotiations. There are also difference of opinion within the quartet that may prove difficult to bridge.

Blair has a long track record of negotiating between the Israelis and Palestinians built up over four years as the quartet's special envoy. According to Daniel Kurtzer, former US ambassador to Israel, the US administration needed a high-profile political figure to push the parties towards negotiations.

"There is a bit of outsourcing going on to someone like Tony Blair just to see if he can make something work," he told Reuters. "If he can, the administration will glom on to it and if he can't the administration has not soiled its nest."

                _________________________  |  __________________________

Embattled Gillard may turn to the Opposition as it turns the screw

• Dennis Shanahan
• From: The Australian
• September 05, 2011 12:00AM

Illustration: Bill Leak Source: The Australian

LABOR'S asylum-seeker policy is in even worse trouble than it was last week after the High Court's demolition of its Malaysia Solution: swapping refugees for illegal boat arrivals.

There is a massive public repudiation of the Gillard government's handling of asylum-seekers arriving in Australia. It is much worse than when Kevin Rudd started to lose the policy argument and popular support in late 2009.

More than a year after Julia Gillard promised to "fix" the issue of illegal boat arrivals, support for the government's policy has gone backwards and is now considered "bad" by three out of four voters. But this is not just a case of voters thinking the government has handled the issue poorly or that the High Court has dealt Labor a blow.

A similar ratio of voters, three to one, believe the Coalition would handle the issue better. This perception - although with a high level of support for what would be the Greens' policy of all onshore processing, as well as those who are undecided - puts the Prime Minister at the mercy of Tony Abbott.

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The Opposition Leader is again in a position of being seen to set the political and policy agenda despite not being the prime minister. By offering to compromise on his own policy to support Labor, Abbott is exploiting Gillard's lack of authority and the weakness of minority government.

Chris Bowen, whom colleagues say earned their respect by being prepared to resign after the High Court loss, has tried valiantly to retrospectively undermine the Coalition's Pacific Solution from the Howard era and thus weaken Abbott's position today.

Yet these duelling positions on policy and legal interpretation of the court's ruling are a political ploy. Abbott wants to be seem to be "governing" in a positive sense to get a good outcome, while drawing Labor into a potential legislative nightmare. Bowen doesn't want to really abandon offshore processing, while casting doubt on using Nauru.

The irony is that both sides want to keep offshore processing as a policy because it is the strongest option to act as a deterrent for both sides. The prospect of returning to the systems of more than a decade ago with bulging detention centres, years of delays and endless legal appeals is not really an option for either side.

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Australian Solicitor General legal opinion on High Court decision

If your keen on knowing the Australian Government Solicitor's legal advice to the Government on the High Court controversial decision then click on the below link. 

http://resources.news.com.au/files/2011/09/04/1226129/101737-solicitor-general-advice.pdf

Malaysia Solution judiciary hits back at Julia Gillard's 'unfair' criticism

• Joe Kelly
• From: The Australian
• September 03, 2011 12:00AM

OFFENDED judges and magistrates have hit back at Julia Gillard's criticism of the High Court and Chief Justice Robert French, labelling her attack as "unfair" and "extraordinary".

As Labor waits for legal advice from the Solicitor-General on the High Court's decision to overturn the Malaysia Solution, the Prime Minister was yesterday forced to clarify the intention of her attack.

Ms Gillard said she had sought only to put the facts of the matter on the table because the public was entitled to an explanation and, strengthening her rhetoric, claimed the High Court had "changed the law". "I don't resile from one word of what I said," she told Sky News.

"The simple facts are that there were precedents that obviously those advising us legally drew on. "Some of those precedents are from the current Chief Justice of the High Court himself. "They were part of what the legal advice to us rested on."

Ms Gillard dismissed suggestions she had challenged the separation of powers as "ridiculous" and provided a reassurance her government had accepted the court's decision.

But the Judicial Conference of Australia -- with a membership of more than 600 judicial officers across the nation -- yesterday suggested Ms Gillard had gone too far.

"Responsible criticism by one branch of government of another is a healthy sign of a free society," said the organisation's vice-president, Philip McMurdo.

"Irresponsible criticism, especially from a Prime Minister, could tend to upset the balance of separated powers which is essential to that society."

The JCA said yesterday Ms Gillard's statement that the High Court had missed an "opportunity" to smash the people-smugglers' business model fundamentally misconstrued the role of the court and was "misguided". "It is not the court's role to look for and take 'opportunities'.

Its job here was to decide whether the minister's actions were lawful, according to the statute which the parliament had enacted," the JCA said. Ms Gillard's decision to single out Chief Justice French for special criticism was described as "extraordinary" and "unfair". "He is one of six justices who reached the same conclusion. The seventh dissented," Justice McMurdo said.

The rebuke from the legal community comes as the government prepares to receive the advice of Solicitor-General Stephen Gageler on the consequences of the Malaysia Solution for offshore processing.

The advice, expected within days, is thought to confirm his initial oral counsel to the cabinet on Wednesday night following the High Court's decision to overturn the Malaysia Solution.

Some Labor MPs believe there will be scope for offshore processing to continue despite Ms Gillard's warning that the decision could throw the practice into doubt.

While the Solicitor-General's legal advice could tie the future of offshore processing to the need for further legislation, the opposition says this step is not necessarily required.

"There is nothing in the High Court decision that outlaws offshore processing," opposition legal affairs spokesman George Brandis said.

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Respected cleanskin might save the furniture

• Peter van Onselen, Contributing editor
• From: The Australian
• September 03, 2011 12:00AM

As the saying goes, two things are certain: death and taxes.  A third may be the demise of the Prime Minister, imminently or at the next election. Her dwindling band of supporters is pleading with people not to write her off. Given her fighting qualities, that's a fair position. But a straw poll I did with three of the most senior members of the press gallery of the past three decades suggests no prime minister has been up against it as seriously as she now is. Any comeback would be quite something.

Julia Gillard is under enormous pressure, as she has been since she replaced Kevin Rudd. But now the pressure is showing. Her swipe at the High Court decision on refugees being sent (or, rather, not sent) to Malaysia was emblematic of her problems. She has lost touch with the public and everything she says or does is now seen through the prism of her unravelling government.

The High Court, in its judgment handed down on Wednesday, moved the goalposts. Doing so is its right, but it caught the government off guard. Gillard's reaction, therefore, would have been understandable had it occurred in private. But calling a press conference a day after the judgment and using it to lambast the Chief Justice - a Labor appointment - was what we political scientists like to call a politician coming dangerously close to impingeing on the separation of powers.

Gillard's fall from grace has been as rapid as it is disappointing. She will always be Australia's first female prime minister, nobody can take that away. If she survives full term, of our 27 prime ministers she would move into the top half for length of service (sitting at lucky No 13).

But serving out a full term is looking less likely. If her internal party opponents don't move her on, or if she doesn't recognise the damage she is doing to Labor and step aside voluntarily, midway through next year Andrew Wilkie looks set to withdraw support from the government if his poker machine reforms aren't legislated.

Wilkie has made it clear it won't be good enough for Gillard to deliver only Labor votes on the floor of the house (a hard enough task, given the popularity of clubs and pubs in Labor seats). Gillard must also win over the rural independents, who aren't exactly rapt with the reform ideas.

But for Gillard the problem of poker reforms is a distant one. She has far more immediate issues to contend with, such as surviving until the end of the year. It is no longer just right-wing commentators who think she is in trouble. The mainstream media thinks so, too, and why not when Labor's primary vote is at record lows and Gillard's dissatisfaction numbers are lower than those faced by any prime minister in history.

Last week I wrote in this column that Defence Minister Stephen Smith should be considered as a replacement. A cleanskin from a mining state, Western Australia, with respect among his colleagues for his factional allegiances and his job as a minister, he is suited to saving the furniture. But the caveat still exists that for such a shift to work it needs to be bloodless.

Smith is hardly the front-line alternative to Gillard, so it important to establish why the other contenders aren't or shouldn't be in the mix. They include Kevin Rudd, Simon Crean, Bill Shorten, Greg Combet and Chris Bowen. And, given recent media reporting, it is worth pointing out why drafting former Queensland premier Peter Beattie into federal parliament is a fantasy.

The Beattie option can be dismissed because if Labor can't find an individual among its serving parliamentarians, what does that say? Throw in the complexity of trying to win a by-election in these tough times, just to get the retiree into parliament, and the move should be seen as fantasy. Any talk of Bowen can also be dismissed given the problems in his immigration portfolio.

Back to the serious options, and why none of them are as workable as a move to Smith. Rudd undoubtedly would have the best superficial chance of saving Labor were he to return as prime minister. He could keep the independents onside, even adding his mate Bob Katter to the numbers. But not enough of his Labor colleagues would wear a Rudd return; they remember his autocratic style. And it wouldn't be long before the voting public remembered why they turned off him in the first place.

Popularity derived from martyrdom doesn't last when you cease being an outsider. If Labor moved to Rudd it would be a case of the party once again thinking changing leaders is a solution of itself, rather than fixing systemic problems - the impression the government is too close to the Greens (Rudd in his last speech as leader said he would not be lurching to the Right on asylum-seeker policy) - or finding a way out of the carbon tax debate (Rudd described climate change as "the greatest moral challenge of our time").

Conservative commentators have favoured a return to Crean as Labor leader. And why wouldn't they: it was his record for unpopularity as Labor leader that Gillard surpassed recently. While Crean would be seen by business as a steady hand, he has little support in the caucus; and if Gillard needs replacing because she doesn't resonate with the public, Crean hardly improves the situation.

Shorten is a leadership option. His disability services scheme and championing of a lift in the compulsory superannuation rate are two things Labor has done right. But he is a junior minister and needs time to improve his parliamentary performances.

The Left likes to think it can replace one of its own with another in Combet. But as Climate Change Minister his fortunes are linked to the carbon tax and it remains unpopular. More likely Combet is a chance for the deputy's role if Gillard's stepping aside involved a double change.

Watching Gillard thrash around in the public domain (all the while continuing to work the corridors successfully in Canberra) is sad. She was cajoled into the leadership by a brutal factional revolt before her time. She had no choice. In politics you have to take your chances. Gillard did just that, but it hasn't worked out. Speculation about her future won't go away without a turnaround in the polls, which is looking less likely by the day. It's become a death roll.

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Abbott calls for election as PM digs in on leadership

• From: AAP
• September 04, 2011 8:43AM

Australia's Prime Ministership should be decided at an election and not by faceless men in the Labor party, Opposition Leader Tony Abbott said, as Julia Gillard dug in over questions around her leadership.

The High Court's decision on Wednesday to rule the government's proposed refugee swap deal with Malaysia as unlawful delivered a fresh blow to the PM and the government, prompting Ms Gillard to tell Sky News she wasn’t “going anywhere”.

"I will be leading the Labor party to the next election," she told reporters in Canberra.

"Every day from now until then I will be fighting for the Labor values, for the things I believe in, for jobs, for education, for opportunities, that is what you will see me doing.”

Ms Gillard’s comments came as Treasurer Wayne Swan also dismissed speculation of the Labor Party switching leaders before the next election, in the latest support of the PM.

"Julia Gillard is tough as nails and she is going to lead the Labor party for a long period of time," Mr Swan said in Brisbane. "She's up to tackling the big challenges that this country faces - putting a price on carbon and delivering the national broadband network, fundamental health reform."

Recent polls have had the Labor Party's primary vote below 30 per cent for the first time.

Speaking to reporters at Birdsville, in Queensland's west, Mr Abbott said the only way for Australia to get policy right was to not just change the leader, but also the government.

"This is a government which has been untrustworthy and incompetent," he said.

"This is a government which has no right to ram through the parliament a carbon tax that it has no mandate for.

"The leadership of our country should be determined by the people at an election, not by the faceless men plotting behind the scenes."

Mr Abbott, just moments before being asked about in-fighting in his own party, said Labor was consumed with indecision and riven with factions.

Liberal MP Peter Slipper, who has been accused of parliamentary expenses rorts, HAD reportedly threatened to resign from the Queensland Liberal National Party.

Reports said Mr Slipper, who defied Mr Abbott by accepting the deputy speaker's role in the hung parliament, made the threat as a result of claims former Howard Government Minister Mal Brough would challenge for chairman of Mr Slipper's Federal Division Council.

Mr Slipper said the appointment of Mr Brough would create "a completely dysfunctional FDC that was unable to work with the federal member".

His resignation from the party would have given Labor a two-seat buffer over the Coalition. However following Mr Brough's appointment to the FDC post last night, Mr Slipper said he was prepared to work with his former parliamentary colleague, and denied he had threatened to resign.

“I would be prepared to put the past behind me and while the outcome of the meeting was not what I hoped for, I'm prepared to work with the elected FDC executive, including Mal Brough," Mr Slipper said.

Mr Abbott had said earlier Mr Slipper and Mr Brough were both loyal members of the LNP and the issue should be sorted out at a local level. "Peter is a strong, loyal member of the Coalition down in Canberra and I would expect that to continue," he said.

Senior Labor figures this week moved to shore up support for Ms Gillard after the High Court’s ruling. Mr Swan today defended Ms Gillard's decision to single-out Chief Justice Robert French for criticism.

"The government's response has been totally appropriate," he told reporters.

"The high court struck out in a completely new direction and effectively changed the law.

"The prime minister was perfectly entitled to point that fact out ... it is entirely a responsible thing to do as the leader of government.

"She did it in a responsible and measured way."

Mr Swan called the media conference in Brisbane to draw attention to Labor's "good budget management" on the back of "disappointing jobs data out of the United States" which showed the economy created no jobs in August.

"Unemployment in Australia is at 5.1 per cent; in the US it's 9.1 per cent with 14 million Americans unemployed," he said.

"And there's a very clear reason for that difference. Australia got the big economic calls right during the global financial crisis and the global recession and the consequence of that is that the fundamentals of our economy are strong."

Just 14 months since being toppled, former Prime Minister Kevin Rudd has been named as a possible contender for the Labor leadership in the wake of the High Court’s decision. Cabinet ministers Stephen Smith, Simon Crean, Greg Combet, assistant treasurer Bill Shorten and former Queensland premier Peter Beattie have also been named.

But Mr Swan would not be drawn on whether he was disappointed his name hadn't been put forward as potential leader.

"This sort of media talk and gossip is nothing more than that and it should be treated with distain," he said.

He said Mr Abbott was playing politics by offering to work with the government on immigration detention issues while knowing that the High Court's judgement cast grave doubt on plans to process asylum seekers offshore.

"It's just another demonstration of how unqualified he is for high office," Mr Swan said.

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