CHRIS CLARK: Now to our Friday forum where tonight we're going to talk about how to win the battle for Iraq and how to win the next election in Australia.

This week the prisoner abuse scandal just seemed to go from bad to worse if that's possible.

On Capitol Hill in Washington, senior American politicians have spent hours looking at more pictures of torture and humiliation inflicted by American soldiers.

Here, the Government's about to mail out some nice fat cheques to families with children over the next two months and the Labor Party says it will give even bigger tax cuts than the Government's promising.

Anthony Albanese is the Opposition spokesman on Employment, Services and Training and he's with me in the Sydney studio.

Christopher Pyne is the Government's Parliamentary Secretary for Family and Community Services and he joins us tonight from Adelaide.

Anthony Albanese, Simon Crean says tax cuts for all, Mark Latham says maybe not.

Which should we believe?

ANTHONY ALBANESE, LABOR EMPLOYMENT SPOKESMAN: Well, what's very clear is that Labor will have a tax announcement down the track.

We've said that this is a highest taxing Government in Australia's history.

We've said that even with the Government's tax cuts announced on Tuesday night, bracket creep will still exceed them and we frankly were very surprised as were most Australians I think to find that those under $52,000 a year get nothing out of this Budget in terms of tax cuts.

We've said that the tax cuts will be made broader and they'll be made fairer, but the Government's had six months to work on this package and I find it quite hypocritical that they suggest that we should put out a response without the benefit of Departments of Treasury and Finance in two days.

CHRIS CLARK: OK, detail is one thing, but are you saying you haven't yet figured out just how far you can put those tax cuts down the income scale?

ANTHONY ALBANESE: We've said they'll be broader and they'll be fairer and we'll be making the announcement at a time of our choosing well before the next election.

CHRIS CLARK: Let me put it another way.

Should high income earners get a $42 tax cut which is what they'll get under the Government's plan?

ANTHONY ALBANESE: We've said that we will pass that package but we do not believe it goes far enough.

We think there's certainly an argument re bracket creep in handing back some tax to hard working Australians.

What we say is that those hard working Australians aren't limited to those who earn $52,000 a year.

Why should I get $42 a week and most of the battlers in my electorate get nothing?

CHRIS CLARK: OK.

Where are you going to find the extra money for health, education, training and all the other things you want to do if you're also going to give a bigger, broader tax cut?

ANTHONY ALBANESE: We have already found $8 billion in savings.

Today we announced a fully costed $700 million ‘Youth Guarantee’ program.

We've fully costed with savings in there.

And that is another example of where every time we've announced our policies, whether it be the plan to save Medicare, the plan to save higher education and make it more affordable, our child-care policy, today's youth guarantee, we have on each occasion indicated where the savings will be.

They've be all been fully costed because we've made sure that we've got it right and we'll get our tax policy right as well.

CHRIS CLARK: Christopher Pyne, I went back and had a look at John Howard's address in reply as Opposition leader in 1995.

In it he said, "If we put our policies on the table tonight, that bloke over there would pinch them all."

It's fair enough, isn't it, the Opposition says it will have its tax plans out in detail before the election and that the Budget reply isn't for that?

CHRISTOPHER PYNE, PARLIAMENTARY SECRETARY: Well there was a big difference in 1995 and that was that the Budget in those days was being handed down in the middle of the year and the Federal Election wasn't until the following March in 1996, so there was a very fair time period between the Budget and, in fact, when the next election was due.

I think what's interesting about what Anthony Albanese had to say was that he says that the Labor Party has found $8 billion worth of savings and yet he said the Labor Party is not ready to publish its tax policy, so if it's found $8 billion worth of savings, why can't it publish its tax policy?

CHRIS CLARK: Well you're handing out $51 billion odd over five years.

More than $4 billion in cheques is going out in the next couple of months.

There's another $2 billion effectively in tax cuts from 1 July.

Should people think that you're just trying to buy votes?

CHRISTOPHER PYNE: No.

What the Government has said is that we've handed down our Budget, the Budget comes down in May.

We want to get relief to working families, to carers, to those people on middle and high-income earners as quickly as possible.

We want to give people the chance to invest in their superannuation as quickly as we can.

There's no reason to hesitate.

Why delay the payment of these bonuses and increases in allowances and the Family Tax Benefit and so on?

Why wouldn't we bring it out as soon as possible?

In fact, it would be more cynical, Chris, to hang on to these changes and this terrific benefit for families till later in the year when the election is actually due.

In fact, the Government is paying people now because we're ready to pay them now.

There isn't any conspiracy of any kind.

ANTHONY ALBANESE: That's an extraordinary argument given that the cabinet made a decision last year to make these payments and they held off.

We've had the cabinet documents we've been raising in Parliament, they've held off so that they can make a pre-election announcement.

We know that this is a Government that spends $32 billion when it's an election year but $3 billion in the intervening years.

With regard to the Family Tax Benefit, it's quite clear that one-third of all families who receive that benefit at the same time they're going to get $600 prior to July 1 but they're going to get a bill for the average debt of one-third of those families, that's $900.

They're going to lose more than they get.

CHRIS CLARK: Christopher Pyne, is this just going to be an election that goes to the highest bidder?

Is there nothing more to talk about in Australian politics this year?

CHRISTOPHER PYNE: No.

The most important issues in this election towards the end of the year are national security and who is best able to manage the Australian economy.

And I think most Australians will decide - I hope they'll decide - that Mark Latham and his team are just too big of a risk when it comes to interest rates and their mortgages, handling the Australian economy and also a risk in terms of our relationship with the United States.

I mean, Mark Latham has just cancelled his trip to the US because he knows that if he goes there he'll get such a bad reception that he thinks it will be politically damaging for him back home.

So this brave attacker of the United States President isn't prepared to go to the United States in case he gets embarrassment from the US President back.

So, in fact I think the major issues for the election will be national security and who is best able to manage the Australian economy.

On both of those issues, the Liberal Party is clearly the better party.

CHRIS CLARK: When people come to make that decision, should they be thinking about a government led by Peter Costello or one led by John Howard?

Why can't you put this issue to rest?

CHRISTOPHER PYNE: Well the issue - there is no issue.

The issue has been put to rest.

ANTHONY ALBANESE: Careful Chris, remember what happened last time.

CHRISTOPHER PYNE: John Howard is the PM.

And he will lead us to the election and the party room is entirely behind him and he has our full confidence and there isn't an issue in terms of the Liberal Party leadership.

CHRIS CLARK: So, when you said earlier this year on our program that there'd be a smooth leadership transition from Howard to Costello after the next election, that's changed, has it, that won't happen now?

CHRISTOPHER PYNE: We are very proud in the Liberal Party to be putting up at the next election John Howard for PM and Peter Costello for Treasurer and I'm not sure the Labor Party is as proud to put up Mark Latham as leader and Simon Crean as his Treasurer.

We've seen Simon Crean hidden for the last four or five months.

He's had a run in the park this week.

I think most people in the Labor Party would agree that it hasn't really been to the Labor Party's advantage.

Even today, as you said in your intro, he is saying something different to Mark Latham.

I'm not sure the Australian public are ready for Simon Crean to have his hands on the lever of economic policy and tax policy in this country.

ANTHONY ALBANESE: Well Christopher Pyne can't be believed.

What's extraordinary is he got whacked down after that Lateline interview.

George Brandis and Brett Mason and other members of the coalition were out saying the same thing last weekend.

They didn't get cut down and that might say something about the influence of Chris.

But what we've seen this week is the real dramatic policy impact of this division in the Liberal Party.

I mean, Tony Abbott goes to the cabinet with a policy, $60 million.

They're handing out $52 billion He goes to a policy, $60 million a year to have the pneumococcal vaccine available to stop 800 children getting infected a year and 50 kids dying.

In the Budget they talk about families.

Why does it get knocked off?

Because Peter Costello knocks it off.

Knocks off Tony Abbott's plan because of the leadership tensions within the Government.

CHRIS CLARK: Where are the policy differences between the Labor Party and the coalition?

They say tax cuts, you say bigger tax cuts.

They say work for dole, you say learn or earn.

Aren't you trying to out tough them on welfare?

ANTHONY ALBANESE: No we're certainly not.

The learn or earn program is a comprehensive, the most comprehensive youth strategy ever put forward by a political party.

Work for the dole is simply keeping people active.

It's not a job.

What we've got as a plan for 7,500 TAFE places, 7,500 new apprentices, 1,080 mentors to keep people in school.

We want 15,000 people to stay at school.

We have a plan in which every young person will either be in education, staying at school, in training, or in a job.

A real job, not a Mickey Mouse one.

A real job in a real work place to get that work experience which they need.

Because if you have a look at your average 28-year-old who's a long term unemployed person and have a look at what their background is, you can guarantee it, that nine times out of 10 they would have fallen into unemployment between those ages of 15 and 18.

What we say is that we actually have a policy for the future.

The Government has a policy for the election.

We have a visionary policy for the future.

None of these people get votes, but we think it's important to invest $700 million to lift them up, to give them that opportunity so they don't get left behind.

CHRIS CLARK: Christopher Pyne I'll just give you a quick right of reply before we go on to Iraq?

CHRISTOPHER PYNE: What's interesting about that answer from Anthony is that he completely failed to defend Simon Crean as the future treasurer in a Labor government which I thought was remarkable.

ANTHONY ALBANESE: Because it's not an issue.

CHRISTOPHER PYNE: The thing about Anthony Albanese's response is you have to look at Labor's record and for Anthony to say that there's $700 million spent by a Labor Government on the youth guarantee.

Well, Labor spent $1 billion on the One Nation program, the working nation program which was a complete catastrophe.

ANTHONY ALBANESE: One Nation were your friends.

CHRISTOPHER PYNE: There are less jobs.

It was actually one of your government's programs, the One Nation program, but nevertheless you've forgotten that.

There were less jobs after that program than before it had started.

The other thing about the Labor Party's record, apprenticeships were almost wiped out under the Labor Party.

There were 60,000 young people a year missing out on university and TAFE places under the Labor Party, so you don't actually have to listen to what Labor says.

You actually have to listen to what it does and see what it does in the State level, in its previous guise as the Government.

And Labor simply can't be trusted.

They're note ready for Government.

This Government is ready to continue to govern, Labor is not ready for Government.

CHRIS CLARK: OK, let's move on to Iraq for a moment.

Christopher Pyne, Tom Freedman writing in the New York Times says that while he now thinks the war in Iraq, he's always been a supporter of it, he says the Bush team aren't the people to be doing it.

He describes Bush as having a moral vision, but no moral influence.

Do you think America's lost the moral high ground?

CHRISTOPHER PYNE: Well, I think the revelations in the last week or two about the prison in Iraq have been utterly repulsive and have done great damage to the reasons why the coalition of the willing went into Iraq to eradicate that country of Saddam Hussein's vile regime and there's no doubt that has been a tremendous error and the Labor Party - the United States Government have admitted that and Donald Rumsfeld has said that it was like a body blow when he was given this news.

No one is trying to defend what happened.

It was a mistake.

A small number of people in the United States forces made an egregious error, but that hasn't changed the fact that the Saddam Hussein regime was a blood-thirsty dictatorship that murdered hundreds of thousands of people in mass graves and I am glad that Government was removed.

So when you say that has it got the moral influence to continue the campaign that was begun early last year, then I think it does and I think the Iraqi people overwhelmingly are pleased to see the back of Saddam Hussein.

I mean, who wouldn't be?

And America and its allies are working towards handing over government to the Iraqi people on June 30.

We would like to see a flourishing democracy in that country that can be a beacon for the rest of the Middle East.

That will be difficult, but none ever thought it was going to be easy and the United States is the country to lead that...

CHRIS CLARK: Sorry to interrupt you there, but we're running against time here.

Anthony Albanese, you might not have greed with the war in Iraq but now we're there shouldn't we fix what's broken?

ANTHONY ALBANESE: Well, we should own up to our responsibilities.

It's the Government who's running away from them.

CHRIS CLARK: Do we own up to our responsibilities by pulling the troops home for Christmas regardless of the situation on the ground?

ANTHONY ALBANESE: Our responsibilities as an occupying power have been there.

We believe are an occupying power and have ongoing responsibilities.

The Government says that it's nothing to do with them, any of the treatment of these prisoners.

However, under UN resolution 1483, didn't come in till May 2003.

Under the Government's own definition, it was an occupying power.

The International Committee of the Red Cross say that there were systematic abuses occurring during that time and yet the Government walks away from that responsibility.

You have Australian soldiers who've captured Iraqis but they say because there was an American with them, It's nothing do with us.

You have a Foreign Minister who on this program two days ago couldn't say, wouldn't make a formal request to major Mori about what's happening to the two Australian citizens and how they've been treated in Guantanamo Bay.

It's up to Australia - when you talk about responsibility, this is a Government that's walked away from its responsibilities with regard to the mistreatment of Iraqis and indeed the mistreatment also of prisoners in general.

Chris just gave it up when he spoke about the moral high ground, he spoke about the need to get rid of Saddam Hussein.

Well that actually wasn't the reason we were given for going to war.

We were told about weapons of mass destruction and the moral high ground, of the United States was undermined by the fact that they're not there and the fact they didn't participate through the United Nations.

CHRIS CLARK: OK and there gentleman, I'm sorry Christopher Pyne.

CHRISTOPHER PYNE: Anthony Albanese has just said something very important.

He said that the Labor Party position is that we have ongoing responsibilities.

and yet his leader has said that they will cut and run by Christmas, so he, yet again, is saying something very different.

ANTHONY ALBANESE: Those responsibilities are there until the handover which occurs on June 30.

CHRISTOPHER PYNE: You're saying something different to Mark Latham.

You're just like Simon Crean.

ANTHONY ALBANESE: No, I'm not.

CHRISTOPHER PYNE: Yes, you are.

CHRIS CLARK: Gentleman, I'm sorry, Christopher Pyne, Anthony Albanese, we've run out of time.

Christopher in Adelaide, Anthony Albanese in Sydney, thanks very much for talking to us tonight on Lateline.