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KIERAN GILBERT: First though, joining me here in the Canberra studio is the Minister for Foreign Affairs, Stephen Smith. Good morning, Mr Smith.

KIERAN GILBERT: What should Kevin Rudd's aim be when he addresses the Labor Caucus this morning?

STEPHEN SMITH: I assume the Prime Minister will, as he invariably does at Caucus, tell people as it is, that we're going through difficult political times. We're in the run-up to an election before the end of the year. Winning that election will be tough and we need to work through some current difficulties. But then get the Australian community to focus on the achievements and the effort that the Government has put in, particularly on the economy, the global financial crisis, economic growth, low interest rates, high employment, and to focus on those general matters and not just view us in isolation.

In the end, the election contest is always a choice, and I'm confident that when the community starts to focus on that choice, whilst the election will be difficult, the Government will prevail.

KIERAN GILBERT: Okay. There are some other areas in your portfolio we'll get to a bit later, but I just want to look at the politics of all of this at the moment.

Some nervous MPs on your side. Is today just about reassuring them, calming the horses?

STEPHEN SMITH: Look, in the run-up to an election, there are always nerves, particularly in the marginal seats, as people have to battle with thoughts of victory or loss. But you know, we've been around a long time and I've been through this myself in various guises. And often the best advice you can give to people is, don't worry about agonising about defeat or victory. Invariably it's the case that the things you have to do to win narrowly are the same things you have to do to lose narrowly, so just get on with it. So less agonising and more application.

But I have to say generally in the run-up to an election, a first-term Government, the Howard Government had its own difficulties going from term one to term two; the Hawke Government had its own difficulties going from term one to term two. These are not unique.

But I must say in terms of members and candidates in Western Australia and generally, I've been generally impressed with their resolve, with their approach and attitude. That yes, we're going through some difficult issues, but in the end, the Government has got a good track record. We're not saying we're perfect. We've done very well in managing the economy, and when the community start to focus on that and not just view us in isolation, then I'm confident that, both in the marginal seats and generally, in a tough environment and when people consider the risks that Tony Abbott brings, that we'll be successful.

KIERAN GILBERT: The West poll at the weekend, you know WA politics as well as anyone, The West poll suggested that Labor's primary vote had fallen to 26 per cent. Are things really that bad on the ground there?

STEPHEN SMITH: I don't believe so. Any poll is worthy of having a look at, but the cliché at this time of year, there's only one poll that counts.

It was a state-wide poll. In Western Australia, the Federal election, the contest will again be in the classic metropolitan marginals, as it has been not just for the last decade but for the last two decades. So Swan and Cowan and Stirling, Hasluck and Canning, that's where, in the last couple of decades, the fight has been.

Yes, we've got to work our way through the mining tax issue. One of the difficulties, I think, for us in Western Australia has been simply the noise. The community want to see the Government resolve the issue successfully. That doesn't mean necessarily resolve the issue to the agreement of all of the mining or minerals and resources industry, but they want to see less noise and more outcome.

KIERAN GILBERT: Gary Gray says it needs to be resolved within weeks, that there needs to be certainty within weeks. Do you agree with that?

STEPHEN SMITH: Well, certainly we want the matter resolved sooner rather than later, but I don't put a timetable on it because the most important thing is to get it right. There is a general acknowledgment that the minerals-resources industry does need to pay more tax. There's an argument about the design aspects. We're going through a very rigorous consultative process, not just the Treasury officials but the Treasurer himself, the Prime Minister himself, and the Minister for Minerals and Resources. We've made it very clear that we're looking at issues so far as implementation and transitional arrangements, as the Prime Minister has said.

KIERAN GILBERT: But some of the big companies, the mining giants, won't agree to anything, will they? Do you accept that they will try and ride this out?

STEPHEN SMITH: Well, in the end, that'll be a matter for them. In the end, they have to make a judgment about whether they want to genuinely engage and try and come to some outcomes, or whether they want to effectively have a fight or a political fight.

But from our perspective, we're working very carefully through all of the issues. We've made it clear it's a genuine, deliberative consultation process. The Prime Minister has referred to generous transitional and implementation arrangements. We want to get it right.

Yes, of course we would want the thing resolved sooner rather than later, but the most important thing is to get it right because here we're talking about the long-term economic basis so far as Australia is concerned.

KIERAN GILBERT: So what would be the best case scenario as far as you could tell? Is it, as The Herald reports today, to mollify some sections of the sector but not the whole industry?

STEPHEN SMITH: It's to get it right. I mean, we had years ago the comparable...

KIERAN GILBERT: But in terms of the prospect of a deal, to say to the electorate, okay, we've come up with a compromise, we've done our best. What is the best case scenario?

STEPHEN SMITH: Well, the best case scenario is that we get the policy right, and that is the focus of the Treasurer, the Prime Minister and the Minister for Minerals and Resources.

We had a comparable argument back in the 1980s with the Petroleum Resources Rent Tax and we worked very carefully through that to get the design elements right. Here we're having a discussion, some people say an argument, with the industry about the design elements of effectively a mineral resources rent tax, and we want to work as hard as we can to get it right.

Now when the Government does announce the outcomes of its deliberations, you know, not everyone is going to be happy. There will be some people who take a different view. Well, that's fine. It will then be a matter, if you like, in an election context, for the community to make a judgement about whether the Government has done the right thing.

We want to ensure that the minerals industry continues to prosper, but we also want to ensure that the community, the taxpayer, the nation, gets a fair return on the use of those proceeds. We've done that effectively in the past for petroleum resources, and we're confident we can do that in the future for minerals resources.

KIERAN GILBERT: There's been some speculation, of course, in the last few days about Kevin Rudd's leadership, the prospect of a change before an election. Is there any prospect, or is there absolutely no chance of Julia Gillard being prime minister before the election?

STEPHEN SMITH: I have to say I frankly have been gob-smacked by this apparently feverish media speculation. Anyone who's been around as long as you and I have knows that there's absolutely no basis to it. And I must say that this feverish excitement by sections of the media really, let's just, you know, have a Bex and a good lay down and focus on some of the realities here.

What are the realities? Kevin Rudd will lead Labor to the next election. Tony Abbott will lead the Liberal Party to the next election. The community will make its choice between those two leaders. And in that context I'm absolutely sure that, as we see in the polls, that Kevin Rudd will emerge as the preferred Prime Minister; largely because I don't think, when the community comes to make its judgement about Tony Abbott, it will believe that he is risk-free, that you can trust or risk Tony Abbott with managing the economic affairs of the nation, and at the same time managing the national security interests of the nation.

KIERAN GILBERT: Okay. Let - we've got to get to some issues...

STEPHEN SMITH: Sure.

KIERAN GILBERT: ...in your portfolio now. Israel has set up an internal inquiry into that deadly raid on the Gaza aid flotilla. They are going to have some international observers. Does this satisfy the Government's - what Kevin Rudd and yourself had been calling for and what the international community had been calling for?

STEPHEN SMITH: What Australia had been saying was that in the first instance we needed to ensure that there was a credible and transparent investigation, and Israel had to commission that. But the outcome of that investigation had to be the subject of scrutiny by the international community.

So we're pleased that Israel has established a commission of inquiry. But the test, or the measure if you like, will be in the outcome, not in the process.

So we welcome the fact that Israel has established, effectively, a commission of inquiry and we will carefully observe, as the international community will, both the process and the outcome. But the results of the inquiry will obviously be subject to the scrutiny of the international community. But in the first instance, in our view, it was important that Israel itself effected an inquiry.

KIERAN GILBERT: And on Iran, further sanctions to be announced by the Security Council, what can we expect on that front?

STEPHEN SMITH: Late last week the Security Council, through Resolution 1929, announced further United Nations Security Council sanctions against Iran on its nuclear program. Later today I'll be announcing Australia's implementation of that Resolution and also further autonomous sanctions so far as Australia is concerned on Iran, against its nuclear program.

In very many respects, this may well be the single most difficult issue the international community has to grapple with over the next year or so. We really need a change of policy approach here from Iran on its nuclear program.

KIERAN GILBERT: And just finally, on the issue of Kyrgyzstan, this looks like it could spiral into civil war in that country. What's your latest advice?

STEPHEN SMITH: The latest advice is that the Security Council will receive a briefing on Kyrgyzstan later this morning, our time. Russia is now moving to assist, following a call from the interim government for assistance over the weekend, and the Organisation for Security and Cooperation in Europe is also on-hand.

We want these matters to be resolved peacefully. We also want them to be resolved in accordance with democratic principles. You've got a very serious dispute in the city of Osh, the second largest town in the south of the country and we need to see that resolved peacefully.

Fortunately, on our advice, there are no Australians in Osh. There are some Australians who are registered in the capital, but that's some distance away. So we're not, at this stage, concerned about any Australians. But we do want to see these very difficult disputes resolved peacefully, but also resolved in accordance with democratic principles. And the regional community is also now beginning to render its assistance and the Security Council will receive a briefing on the matter later this morning our time.

KIERAN GILBERT: Foreign Minister, as always, appreciate your time. Thank you.

STEPHEN SMITH: Thanks very much.

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