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RR RUEHPT
DE RUEHPT #0030/01 1330842
ZNY CCCCC ZZH (MISSING MCN )
R 130842Z MAY 09
FM AMCONSUL PERTH
TO RUEHC/SECSTATE SECSTATE WASHDC
INFO RUEHBY/AMEMBASSY CANBERRA 0410
RUEHBN/AMCONSUL MELBOURNE 0300
RUEHPT/AMCONSUL PERTH 0434
RUEHDN/AMCONSUL SYDNEY 0304

C O N F I D E N T I A L SECTION 01 OF 02 PERTH 000030 
 
SIPDIS 
 
DEPARTMENT FOR EAP/ANP 
 
E.O. 12958: DECL:  5/13/2019 
TAGS: PGOV AS
SUBJECT: WESTERN AUSTRALIA POLITICS:  THE RUDD-BARNETT DUET 
 
REF: (A) 08 PERTH 53, (B) CANBERRA 357, (C) 08 PERTH 16, (D) 08 PERTH 50, (E) 08 PERTH 42 
 
PERTH 00000030  001.2 OF 002 
 
 
CLASSIFIED BY: Kenneth Chern, Consul General, AmConGen Perth, 
State. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary:  Western Australia (WA) looms large on the 
federal radar as talk escalates about the state's importance in 
the next federal election.  With Labor currently holding only 
four of 15 WA federal seats, analysts view WA as a potential 
pivot for federal Labor to retain power by offering a chance to 
increase that number.  Labor operatives see gains in the west as 
a hedge for Prime Minister Rudd against likely losses in eastern 
states.  The Prime Minister has engaged WA state Liberal Premier 
Colin Barnett in an asymmetric but pragmatic duet from which 
both men can benefit, but which threatens to drive a wedge 
between the WA and federal Liberals.  The global financial 
crisis is testing Barnett's ability to deliver on his election 
promises, but as he engages shrewdly with Canberra, business and 
governmental observers credit him with a steady hand, eight 
months after leading to power a state party most observers 
regarded as unready to govern (ref A).  End Summary. 
 
THE PRAGMATIC PREMIER 
 
¶2. (C) As the sole Liberal state premier in a matrix of 
Australian state and federal Labor regimes, Colin Barnett has 
developed good working relations with Prime Minister Rudd. 
Barnett runs his own agenda keeping WA's interests at the fore, 
realizing that the federal Liberals are unlikely to gain office 
soon.  His bid for federal funding from the "Building Australia" 
infrastructure initiative for the Ord River agricultural 
development scheme in WA's far north Kimberley region - the top 
of his "wish list" - has received a fair hearing.  Visiting the 
area last December, Rudd enthusiastically described the Ord 
River area as the "new breadbasket for Australia."  In April, WA 
leaders welcomed the announcement of an expanded national 
broadband program (ref B).  Treasurer Troy Buswell told the 
Consul General that he was pleased with this initiative, as it 
would not only spare the state from laying out funds for 
broadband, but also enhance WA's bid to land the Square 
Kilometer Array, a vast radio telescope project on which a 
19-nation consortium will make a siting decision in 2012 (ref 
C).  Along similar lines, Barnett publicly welcomed Canberra's 
A$21 billion (US$15 billion) stimulus, countering the attacks of 
federal Opposition Leader Malcolm Turnbull on Prime Minister 
Rudd's fiscal plan.  Barnett's bipartisan approach works well 
with Canberra and his good relations assure that financial 
benefits and federal assistance for major infrastructure funding 
will flow through, despite the tough budgetary decisions looming 
ahead. 
 
THE PREMIER AND THE PRIME MINISTER 
 
¶3. (C) An energy industry representative with close political 
connections remarked to the Consul General that Premier Barnett 
and Prime Minister Rudd, "quality people" from opposite sides, 
were "two bulls with an affinity and complementary DNA." 
Another well-connected business leader told the CG that Rudd is 
getting on well with Barnett in order to annoy the federal 
Liberals, split them from Barnett, and bid for WA seats in the 
federal election.  It is an asymmetric relationship, but the 
public perception of good WA state-federal ties also boosts 
Barnett in the eyes of his electorate, although this in no way 
helps Opposition Leader Turnbull.  This businessman noted that 
WA would be a very important battleground in 2010.  With only 
four of 15 WA federal seats in Labor hands, there was a real 
opportunity to win additional seats.  This was key, since Labor 
cannot control the global financial crisis and needs to win 
every seat it can.  Federal Labor figures, paying close 
attention to WA, have asked this businessman whether the 
Liberal-National alliance that runs WA will hold, and where the 
stress points are.  The businessman says the answer lies in the 
affordability, at a time of budget cuts, of the Royalties for 
Regions scheme that the National Party imposed on Barnett as a 
condition for allying with the WA Liberals to provide a 
parliamentary majority (ref D).  If the Liberals are careless, 
he added, Rudd will be able to drive a wedge between their WA 
state and federal parties.  If the Liberals had a second 
premier, the businessman concluded, it would be harder for the 
Prime Minister to play this game; the two Liberals might be able 
to "square off" against Rudd, and Labor premiers might also get 
annoyed with his tactics. 
 
THE PIVOT OF THE FEDERAL ELECTION? 
 
¶4. (C) Former Deputy Prime Minister and Opposition Leader Kim 
Beazley told the Consul General that federal Labor, keen to pick 
 
PERTH 00000030  002 OF 002 
 
 
up additional WA seats in 2010, are targeting the 
closely-contested Swan and Cowan electorates in particular.  WA 
performed badly in 2007, giving only a 46.7% vote to Labor, 
against their national figure of 52.7%.  Beazley noted that 
there is "low-hanging fruit" ripe for the picking and that WA is 
coming into sharper focus amid increasing fears that seat losses 
might be inevitable in New South Wales.  Beazley's comments were 
substantiated as the Rudd government headed west for a rare 
community Cabinet meeting in the battleground Cowan electorate 
on April 22, bringing along the entire federal Cabinet. 
Addressing the local business community on the same trip, Rudd 
reaffirmed his intention to visit the state more regularly and 
to stay mindful of WA's importance to the national economic 
well-being.  In an April 14 editorial, "The Australian," the 
national daily broadsheet, opined that the west was "vital to 
Rudd's chances" for re-election, and that gains there could be 
achieved to offset possible losses in New South Wales.  Beazley 
told us that after WA Labor's disastrous state campaign last 
year, federal Labor has already taken control of the coming 
federal campaign in the state:  it will be run by Foreign 
Minister Stephen Smith and Immigration Minister Chris Evans, 
along with MP Gary Gray. 
 
PLACATING PERTH AND THE REGIONS 
 
¶5. (C) Thrust into state party leadership just weeks before the 
2008 WA election, Premier Barnett is gaining a reputation as a 
steady hand.  However, confronting the economic downturn, his 
government faces dilemmas in maintaining its creditworthiness 
while delivering on its commitments, including Royalties for 
Regions - the provision of 25% of resources royalties to areas 
outside Perth.  Treasurer Buswell's early announcement of 3% 
cuts across all government departments to avoid a budget blowout 
has met fierce bureaucratic resistance, particularly in the 
health and education sectors, and major city projects already 
have been scrapped in favor of the Ord River project in the 
Kimberley, a natural gas hub in the same region, and the Oakajee 
iron ore port project at Geraldton in the Murchison region (ref 
E).  Over time, one business leader notes, there is a risk:  the 
evident goodwill in metropolitan Perth toward the regions will 
sour, and the WA Labor Opposition will contend that money is 
being wasted to build hospitals in sparsely populated places 
while people in the city are denied adequate medical facilities. 
 This in turn would strain the alliance between Barnett and WA 
Nationals leader Brendon Grylls, whose advocacy of Royalties for 
Regions played well in rural WA and gave him the balance of 
power that he tipped to Barnett in WA's parliament.  It is 
notable that the May 12 federal budget added further handouts to 
the state coffers with the promise of additional infrastructure 
expenditure, including A$339 million (US$238 million) for the 
Premier's pet project at Oakajee and A$236 million (US$165 
million) for Perth inner-city development projects.  Little 
wonder that Barnett and his Treasurer, Buswell, who writes the 
checks to pay the nurses, teachers, and police, ignore the 
criticisms of the Federal Opposition leadership and gladly 
accept succor from Canberra.  As Buswell recently confided to 
the CG, "You have to be nice to the federal government, they've 
got the money!" 
 
COMMENT 
 
¶6. (C) WA, Australia's most conservative state, defied the 
national trend by moving toward the Coalition in the 2007 
election.  Up to five Liberal seats are therefore competitive 
enough to attract serious Labor attention, and a four-day visit 
by the Prime Minister.  As columnist Peter Van Onselen wrote in 
"The Weekend Australian" May 3, "Labor may have its problems in 
states such as NSW, weighed down by maladministration and 
scandals surrounding federal marginal seats.  But the west is a 
different story.  It is an opportunity, and Rudd knows it."  For 
his part, Premier Barnett has no choice but to acknowledge 
Rudd's largesse, whether through stimulus or infrastructure 
projects in far-flung areas of the state.  He recognizes that 
what is good for Rudd is not necessarily bad for him, as both 
seek support for the benefits they bring to WA.  By the same 
token, Barnett has made some limited criticisms of the federal 
Labor government for spending funds too quickly.  The challenge 
for Barnett is to maintain his balance, his credibility, and his 
base of support even as the Prime Minister moves toward a play 
for WA votes, and continued national leadership, at the expense 
of Barnett's federal Liberal counterparts.  End Comment. 
CHERN