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Interest rates set to rise

Interest rates set to rise

Reporter: Michael Brissenden

KERRY O'BRIEN: Welcome to the program. Later I will be talking with Immigration Minister Amanda
Vanstone about the missing Australian resident who languished in a State prison and immigration
detention centre for 10 months. But first - interest rates. The Treasurer, Peter Costello, says
that at around 6 per cent, we've been enjoying an interest rates honeymoon for the past 14 months.
But it seems the honeymoon may soon be over. Today the Reserve Bank gave its strongest indication
yet that interest rates would be on the way up again soon. Despite a cooling housing market, the
bank says the prospect of higher inflation, skills shortages and the prospect of wage increases
will see monetary policy tightened in the months ahead. This comes just a few months after the
Government fought and won an election campaign targeting the fears of a now highly mortgaged
electorate. Political editor Michael Brissenden reports.

MICHAEL BRISSENDEN: Well, if you didn't know what the main plank of the government's re-election
strategy was last year, you would have had to be walking around with your eyes closed and your ears
blocked. This was the interest rates campaign, and even with the cordite from the starter's gun
still in the air, the issue was one of trust.

JOHN HOWARD (PRIME MINISTER): Who do you trust to keep interest rates low?

MARK LATHAM (FORMER OPPOSITION LEADER): I'm going to sign Labor's low interest rate guarantee. My
word is my bond.

JOHN HOWARD: The last 10 days of this election campaign are a referendum on who can better keep the
Australian economy strong and interest rates low.

MARK LATHAM: We're putting the downward pressure on interest rates compared to Mr Howard's spending
spree.

MICHAEL BRISSENDEN: Of course, we now know who won that debate and why. Labor, under Mark Latham,
didn't have a convincing alternative attack against the constant barrage and historical reminders.
You didn't need to be a political strategic genius to know that few who lived through the 17 per
cent interest rates of the Hawke-Keating era needed too many prompts to relive the pain. But now,
for the first time since the October 9 poll, the Reserve Bank Governor says interest rates may well
be on the way up again soon. In the Governor's first quarterly policy statement for the year, the
bank says a combination of inflationary pressure and the effects of continuing firm demand could
lead to wages pressure that could lead to the need for further monetary tightening in the months
ahead. Those in the know say it's a pretty blunt message.

STEPHEN KOUKOULAS (TD SECURITIES): Well, the Reserve Bank statement was very hawkish, and by that I
mean that they expressed concerns that inflation pressures are starting to build.

CHRIS RICHARDSON (ACCESS ECONOMICS): They're worried about inflation rising, they're worried about
skills shortages and they're worried that they'll therefore need to put up interest rates here in
Australia. They've been hinting for a while, but they've just stepped up their rhetoric.

MICHAEL BRISSENDEN: But for the Labor Party, still looking desperately for a way to rebuild some
economic credibility, today was a told-you-so moment. Just remember, interest rates haven't
actually gone up yet, but it'd be a fair bet that this response has been sitting in Wayne Swan's
top drawer just waiting for the first whiff of upward movement.

WAYNE SWAN (SHADOW TREASURER): The Prime Minister constructed a political campaign that gave the
electors of this country the impression that interest rates would not rise under the Howard
Government. That was the subliminal message that the Liberal Party campaign pumped out only a few
short months ago, and now, we face the prospect of higher inflation and higher interest rates,
which is a direct result of Federal Government complacency. The Government has been aware of skills
shortages, the Government has been aware of infrastructure bottlenecks, but it has sat on its hands
and it has simply been smug and complacent. We've heard Treasurer Costello and Mr Howard
continually deny that there's a problem with the current account deficit. They've blamed it on the
dollar, they've blamed it on the drought. Well, this report blames it on the Howard Government.

PETER COSTELLO (TREASURER): Well, look, Labor can say what it likes, but the truth of the matter is
that in Australia's near full employment economy - 5.1 per cent - with inflation between the band
of two to three per cent, with an economy which is still growing, I think interest rates have been
stable for 14 months and at historic lows. From memory, the home mortgage interest rate is - what
is it - 6.25, I think, and when Labor left office, it was 10.5.

MICHAEL BRISSENDEN: Well, yes, but this Government would be the first to recognise just how potent
the whole interest rate fear is, especially now, with a nation more heavily geared than ever, and
certainly much more heavily geared than it was when rates were at 17 per cent or even 10.5. At
least some market watchers believe that despite all the rhetoric about who to trust with interest
rates, the government's own big-spending election campaign was at least partly to blame.

STEPHEN KOUKOULAS: There's never one issue in isolation that causes rates to go up or to go down,
but I think when we look through the checklist of issues that have forced the Reserve Bank to send
a signal today that rates are about to go up, one of the issues that's certainly in the plus side
is the extra government spending, the cash handouts that were all during the election campaign at
the middle of last year.

MICHAEL BRISSENDEN: But not all economists see the same things in the tea leaves. Some, like Chris
Richardson from Access Economics, actually believe the Reserve Bank is jumping too late.

CHRIS RICHARDSON: I think the Reserve Bank is still locked in last year's mindset of a very strong
Australian economy. Some of our great growth has already disappeared, but the bank still doesn't
believe the official statistics coming out of the ABS. That means it runs the risk of making the
wrong decision and pushing up rates at a time when retail's already flat.

MICHAEL BRISSENDEN: Still, whatever the economists think, the real dispute and the real leverage is
at the political end of the argument.

WAYNE SWAN: Well, there's no doubt what the Reserve Bank is saying, that we're going to have higher
inflation and higher interest rates, and why are they saying that? They're saying that because we
have skill bottlenecks out there, we have infrastructure bottlenecks and we have skill shortages.
Now, these skill shortages and infrastructure bottlenecks are a direct result of Federal Government
complacency. The Government has simply been asleep at the wheel.

MICHAEL BRISSENDEN: The Government, of course, says what's needed is more reform - IR reform in
particular.

PETER COSTELLO: If you were to get, in a very low employment economy, wage rises which were not
based on productivity, and if that were to move into inflation, then obviously we'd have to take
action to contain inflation. But the important news is that we can manage these expectations with a
round of reform in industrial relations.

MICHAEL BRISSENDEN: There's a lot of "ifs" there, isn't there? Still, whoever's right and whatever
the causes, it looks like we're in for some interest rate pain in the short term. Given the big
mortgages most of us now have, a big rise would have serious political impact. But so far, the
prospect of a small increase only has both sides scrambling to find political advantage, and the
rest of us simply scrambling to find the extra money to pay for it.

Political storm surrounds mentally ill woman's detention

Political storm surrounds mentally ill woman's detention

Reporter: Matt Peacock

KERRY O'BRIEN: Cornelia Rau, a former airline flight attendant diagnosed with schizophrenia, has
become the centre of a political and public storm. For the past 10 months, the 39-year-old has been
behind bars, first in a Brisbane women's prison and then in South Australia's remote Baxter
detention centre, under the control of the Immigration Department. Cornelia Rau disappeared almost
12 months ago. Five months later, with no word of her whereabouts, Cornelia's family registered her
as missing with police. So how did she end up inside a detention centre, and why were authorities
so slow to diagnose her mental illness? The Prime Minister has promised an inquiry, and I'll be
talking with Immigration Minister Amanda Vanstone shortly. But first, this report from Matt
Peacock.

CHRIS RAU (SISTER): Well, she loved to travel, loves the beach, loves to swim, very health
conscious. Warm, vibrant. Got on well with the kids. Great empathy with other people. She had so
many friends.

MATT PEACOCK: Cornelia Rau, remembered by her sister Chris in happier days - the gregarious girl,
always on the move, playing with the children, excited about her job as a Qantas flight attendant.

CHRIS RAU: She was ideally suited to flight attendant work because she had a genuine interest in
other people, the Cornelia we knew.

MATT PEACOCK: Then tragedy struck - the same that sadly strikes many Australian families. She
developed a mental illness, one requiring drugs that she refused to take. Ten months ago, Cornelia
Rau was here, in Manly Hospital, when she disappeared.

CHRIS RAU: We assumed that she might have gone somewhere on the coast - that would always be a
place of refuge for her - that she would have travelled somewhere to the coast, incognito for a
while, just to draw breath or recuperate or to regain her sense of freedom.

MATT PEACOCK: Cornelia Rau had headed for the coast in far-north Queensland. What never occurred to
the family is that, within weeks, she was in custody - the start of 10 months behind bars, first
here at Brisbane's women's prison, then at the Baxter detention centre for illegal immigrants in
the South Australian desert.

JOHN HARLEY (SA PUBLIC ADVOCATE): I was informed that she was in solitary confinement; that she's
under lights the whole time and on closed-circuit television, regardless of whether she's going to
the toilet or engaging in her daily ablutions.

MATT PEACOCK: South Australia's Public Advocate, John Harley, says he learnt of her plight from
refugee groups tipped off by fellow detainees about the troubled woman who spoke German.

JOHN HARLEY: She was allowed out for about six hours a day, but then on some occasions they
actually used four guards in riot gear to get her back into the room; that she was eating dirt in
the yard; that she was removing all of her clothes. She was showing all signs of being someone who
was extremely mentally disturbed.

CHRIS RAU: To be stuck in one spot and locked up would have been utter anathema to her. It would
have really sent her mad, and she was already in quite a bad way, obviously. We have no idea to
what extent her condition has worsened as a result of this.

MATT PEACOCK: The big question remains: how could someone be imprisoned for nearly a year merely
because she was sick?

JOHN HARLEY: It's a total mystery to me as to how that could have occurred, and why anyone would
have thought that she was necessarily an illegal immigrant to Australia. Just because somebody
speaks in a foreign language and they're disturbed, why does that mean that they're an illegal
immigrant to the country? It just beggars belief.

MATT PEACOCK: By September, her family had notified New South Wales Police that Cornelia Rau was a
missing person, and the usual notices began to circulate, like this article in a Sydney newspaper.
But Federal and State police and politicians are scrambling today to explain how a missing person
notification is a purely State matter. There is no national database.

BOB ATKINSON (QUEENSLAND POLICE COMMISSIONER): The only way I can see how it could have been
handled any differently would have been in a set of circumstances that has already been
demonstrated, as I understand it, to be unacceptable to the Australian public, and that would be
that everyone in Australia had an Australia Card and their fingerprints and/or DNA recorded.

MATT PEACOCK: According to the Queensland Premier, the Commonwealth's to blame.

PETER BEATTIE (QUEENSLAND PREMIER): See, what we have is a partnership with the Commonwealth on
these illegal immigrants, and we put illegal immigrants in some of our prisons for short stays, but
they are under the direction of the Commonwealth.

MATT PEACOCK: South Australia's Public Advocate says he too was powerless to intervene when
Cornelia Rau was transferred to Baxter.

JOHN HARLEY: I don't have any authority within detention centres, and that's been made very clear
to me by the department - they don't recognise my authority at all - and there was very little that
I could do.

HOWARD GLENN (RIGHTS AUSTRALIA): The federal prison at Baxter doesn't have a visitor, doesn't have
an inspector, doesn't have any of those checks and balances that we have in the State prison
systems.

MATT PEACOCK: According to refugee advocate Howard Glenn, Cornelia Rau's treatment is not unusual
for an asylum seeker in this country.

HOWARD GLENN: People say, "Why are we treating an Australian like illegal immigrants?", and people
let it go that we're treating 250 illegal immigrants in exactly the same way. That number have been
in detention for over three years now. All of them have got mental health problems.

MATT PEACOCK: For Chris Rau and the rest of the family, there are many questions remaining that an
appropriate inquiry should address.

CHRIS RAU: A judicial inquiry with an open airing of the evidence, with no attempts to cover up
information that's inside the detention centres - for example, video footage - or any sort of
medical records that were taken would back up the Government's claims that she was assessed. Well,
let's see the medical records, for example. What was said during these records? How long was she
assessed for? Who assessed her? Where was she assessed?

MATT PEACOCK: But the biggest question has been answered: she is still alive.

CHRIS RAU: It's such a conflicting whirlwind of emotion. Our overwhelming emotion on Thursday
night, when we found out that she was there, was relief and happiness that she was alive, you know;
anything is better than dead. And now when we look back, as more information's coming out, I just
feel so sorry for the horrific conditions that she was under, and my heart goes out to her. (sobs)
So let's hope some good can come out of it.

KERRY O'BRIEN: Matt Peacock with that report.

Vanstone resists calls for judicial inquiry into woman's detention

Vanstone resists calls for judicial inquiry into woman's detention

Reporter: Kerry O'Brien

KERRY O'BRIEN: I spoke with Immigration Minister Senator Amanda Vanstone late today from Canberra.

KERRY O'BRIEN: Amanda Vanstone, you must've had some fairly detailed discussions with your
department by now, I would think, given all the circumstances of this case. Are you any the wiser
yet as to exactly what happened?

AMANDA VANSTONE (IMMIGRATION MINISTER): I'm a little bit the wiser. I'm always a bit hesitant to
say "very wise" about something, but a little bit wiser. I think there are two issues. One is: what
sort of system do we have in Australia for missing persons, and in particular, to take account of
missing persons who may have a pre-existing mental condition? Is that good enough, and the answer
clearly has to be: something's not right, because this woman slipped through the cracks. If, when
she went missing, the notification was there and the process had worked as I think we would all
hope it works, she would have never come into immigration detention - never. But then you come to
the next issue, which is: once she was in immigration detention, what was the process of dealing
with her mental health issue?

KERRY O'BRIEN: Is it true that Cornelia Rau was kept in isolation for all but six hours a day for
at least part of her detention in Baxter?

AMANDA VANSTONE: For part of. I don't have the details of how many days. I'm told that she would
have been - she was shifted to a different compound because of behaviour that was causing concern
and embarrassment to some of the other residents, including, for example, undressing and some other
matters. For some of the time that she was in the other compound - which is where people who have
behavioural difficulties can be sent - for some of that time, she would have been in and out during
the day as she chose; for other times, she would have only been out for a limited number of hours a
day, out of her own room.

KERRY O'BRIEN: And what about the claims that she was kept under the lights for the periods that
she was in isolation; that she was constantly under camera surveillance; that she would sometimes
be seen eating dirt in the yard; that she would take all her clothes off; that she was sometimes
manhandled back to her room?

AMANDA VANSTONE: It was clear to Immigration that this woman had some behavioural problems and
needed help, and they set about the process of ensuring that she could get that help. She arrived
in Baxter having come from the Brisbane Women's Correctional Centre, where she must have - I
haven't seen the files from there, but no doubt they're available - they must have had some
concerns, because she went to, I think, the Princess Alexandra Hospital and, from what I
understand, was admitted for a week for a pretty thorough assessment, and the assessment there was
that she didn't exhibit the criteria for a mental illness, even though she behaved oddly. In any
event, that assessment was made by professionals outside of the immigration system, outside of the
police.

KERRY O'BRIEN: The South Australian Public Advocate, John Harley, says he went to your department
in early December to express concern about the condition of the woman that he'd been told about,
who we now know as Cornelia Rau, and he was told to mind his own business. Do you know anything
about that?

AMANDA VANSTONE: Well, I know Mr Harley, and I'll have a discussion with him at some point about
his concerns. I think he's a very reliable person. I mean, I know him personally. I haven't seen
those remarks, and I'll pursue that. What I can say to you is this: that as soon as she arrived at
Baxter, within a couple of days, there were some concerns about what the situation was, despite the
report that came with her saying she didn't exhibit the criteria for a mental illness. She saw a
psychologist, then a psychiatrist, within a month, I think, or a day or so away. The psychiatrist
saw her and said, "She needs better assessment." Within a few days of that - I don't remember the
exact dates, but within a few days, we were talking to the state mental health authorities that
have a triage system, a telephone triage system, for people in rural and remote areas, and within
two weeks, I think, of seeing the psychiatrist, all of her files in relation to her health issues,
the behaviour she manifested, the psychologist, the psychiatrist, the reports from Queensland - all
went to South Australian Mental Health.

KERRY O'BRIEN: You haven't said what kind of inquiry you intend to have, but I assume, given all
the public interest aspects of this case, that surely it has to be a public inquiry and it has to
be seen to be an inquiry independent of bureaucracy and of bureaucrats.

AMANDA VANSTONE: Oh, look, I'm certain that it needs to be seen to be independent. I'm equally
certain that there are the two factors that need to be looked at: how is it that someone with a
mental health condition, who'd either checked herself out or absconded, I don't know, and went
missing and was listed as missing, albeit quite a few months later, could be in any facility in
Australia and the stories not match up? That's just a practical thing that needs to be looked at.
And then...

KERRY O'BRIEN: Given that this is a matter, a very serious matter, that involves two
jurisdictions...

AMANDA VANSTONE: Oh, more than two. It involves four.

KERRY O'BRIEN: Four jurisdictions. Then I would suggest to you that that makes the case for a
public inquiry, an independent inquiry and a judicial inquiry absolutely compelling.

AMANDA VANSTONE: Well, I'm not certain of that at all.

KERRY O'BRIEN: Why?

AMANDA VANSTONE: Well, first of all, I'm certain it has to be independent. I'm certain it has to
have cooperation of all of those jurisdictions to really be effective. I'm not certain that it's
appropriate to have the inquiry public, although clearly, the public are entitled to know the
outcome of the inquiry.

KERRY O'BRIEN: Doesn't it have to be a transparent inquiry?

AMANDA VANSTONE: Well, it has to be conducted in a transparent manner. That doesn't mean that
everything - for example, are you arguing that all of Ms Rau's personal files should be made public
so that everyone can pore over every bit of her life? I mean, I wouldn't be.

KERRY O'BRIEN: I would suggest to you that a judge would be perfectly competent to make those
assessments.

AMANDA VANSTONE: Well, I think, with respect, I'm not sure that the - to the extent that any errors
have been made, they are such...

KERRY O'BRIEN: Royal commissions have the power to hear evidence in camera.

AMANDA VANSTONE: Yes, no, I understand that. I do understand that. But I think, with respect,
you're elevating the issue. I'm not certain at this point that the errors that were made, to the
extent that there were any made, were such that it requires that level of scrutiny. To the best of
my knowledge, immigration officials and States will be perfectly open and willing to get this
matter resolved. No-one wants to see this happen again. I don't think anyone - South Australian
Health...

KERRY O'BRIEN: Putting it bluntly, if there has been a stuff-up or a series of stuff-ups, then
there are people in whose interests it may be to cover this up, and surely again, it's in the
public interest that the public sees a transparent process that they can trust.

AMANDA VANSTONE: Mmm. Well, two things. I've seen a number of Premiers saying we have to get to the
bottom of this. I doubt if they'd then back pedal once they understand that their own jurisdictions
may be involved. I feel sure they're perfectly genuine and they do want this matter resolved; they
want to see what went wrong to make sure it can't happen again. I can assure you, the Australian
Government doesn't want this to happen again. We do want to find out what went wrong. And I just
make the point, Kerry: what's in the public interest and what the public are interested in are two
different things.

KERRY O'BRIEN: Amanda Vanstone, thanks for talking with us.

AMANDA VANSTONE: Thanks very much. Always a pleasure.

Local film industry looks for more hits

Local film industry looks for more hits

Reporter: Mick Bunworth

KERRY O'BRIEN: Once again, Australians were left with a warm inner glow at the weekend after two of
our top actors, Cate Blanchett and Geoffrey Rush, won the coveted pre-Oscar US Screen Actors Guild
Awards. It's easy to assume from the regular accolades Australian actors and film makers attract
around the rest of the world that the industry at home must be in pretty good shape. In fact, some
of the mainstays of the local film industry have been warning for some time that all is not right
here in Australia. A quick glance at last year's box-office receipts shows that we're spending less
money on watching local films. With many of the big names returning home this year to star in local
productions, can Australian film recover and return to the commercial success of films such as
Strictly Ballroom and Muriel's Wedding? Mick Bunworth reports.

MICK BUNWORTH: What was the last good Australian film you saw?

MAN: Ooh, you're going to have to edit out the pause here.

MAN: Chopper, I suppose.

WOMAN: I'm a big fan of Priscilla and Muriel's Wedding.

MAN: Ahh... the last good Australian movie.

MAN: Bad Eggs or Bad Egg - yeah, I liked that one.

MAN: That one set in Sydney, um, with ... oh gosh... no, it's not coming to me.

WOMAN: The one that Mick Molloy was in.

WOMAN: Crackerjack.

WOMAN: Yeah, that's right.

MAN: It's a mystery murder/drama, about two years ago.

WOMAN: The Bank and Lantana.

MAN: Lantana.

MICK BUNWORTH: We love the movies. The Bureau of Statistics says they're our favourite leisure
activity outside the home and last year the Australian box office recorded its best year yet. But
we're not rushing to see films about us. In fact, Australian films made up just one per cent of the
total box office. So what went wrong?

KIM DALTON (AUSTRALIAN FILM COMMISSION): Well, I think the first factor we have to draw to your
attention is that, last year, the year that you're reporting on, there were 12 Australian feature
films released, and the year before that, when the box office percentage take was significantly
higher, there were round about 20 Australian films released. So when you release half the number of
films into the marketplace, it's a tough call to suggest that you should be maintaining market
share.

MICK BUNWORTH: The Australian Film Commission's Kim Dalton says the reason for the drop in
production is simple: less cashed-up investors prepared to take a punt on Australian stories.

KIM DALTON: Well, the numbers of films that get made is absolutely and directly related to the
amount of production finance that is available, and we've seen a downturn in production finance,
and that goes for funding from government sources, but particularly there's been a downturn in
funding that's been available from the private sector, both within Australia and internationally.

MICK BUNWORTH: The Film Finance Corporation, responsible for distributing government funding of
more than $50 million a year, says it needs to be more accountable for box-office failure.

BRIAN ROSEN (FILM FINANCE CORPORATION): The FFC should be accountable in making these decisions,
and if we get it wrong, then I should lose my job, and that's the way it is. But that's something
that I believe we have to do. There has been too little accountability, and with accountability
will come responsibility to taxpayers' money.

MICK BUNWORTH: The Film Finance Corporation chief says his organisation and the industry were
acutely aware of the need for change well before the poor returns for 2004 were announced.

BRIAN ROSEN: A year ago, we started seeing that this was starting to happen with Australian films,
and the Film Finance Corporation, in conjunction with the industry, did a major shift in its way of
funding for feature films, and we're now taking a more creative approach to films, in that we are
evaluating them - not just what the marketplace deal might be, but really, where they sit
creatively and what sort of audience reach they might have.

MICK BUNWORTH: But 2005 promises some potentially significant new Australian films. Director Robert
Connelly gave us The Bank in 2001. His next feature, Three Dollars, opens in 12 weeks' time. Robert
Connelly points out that a film's cultural and commercial life extends well beyond the box office.

ROBERT CONNELLY (FILM DIRECTOR): I think of the success of a film like The Bank. It had a terrific
theatrical release but then it opened at No. 1 on video and DVD, and then, six months later,
Showtime had it at their No. 1 position on pay TV and then it played on Channel 9 on free-to-air
TV. So over actually two-and-a-half years, that film reached, you know, 3 million or 4 million
people in Australia.

MICK BUNWORTH: Robert Connelly cautions against the Australian film industry reacting in knee-jerk
fashion to 2004's poor box-office returns.

ROBERT CONNELLY: A cynical commercial venture is easily picked by a smart, intelligent audience,
and I think history has shown that when we've made cynically contrived commercial films, they
haven't worked. The Australian cinema that I love and that has made a lot of money in this country
are films that, at the time, were not perceived to be commercial but were definitely perceived to
be really, really good strong films.

MICK BUNWORTH: It's a salient lesson for those about to embark on a career in the Australian film
industry. Somewhere in this class of Melbourne film students might just be the next Peter Weir or
Gillian Armstrong and, within them, perhaps, a remarkable story about us.

ASSOCIATE PROFESSOR JENNY SABINE (VCA FILM AND TELEVISION SCHOOL): I think there is an optimism but
there's also a sense of reality. Here at the Victorian College of the Arts, we have a lot of
industry people come in and teach as well, and they've got a reality about what's going on in the
industry, the ups and downs of it, but they've also got an optimism about what they're going to do,
and they know that if they're persistent and tenacious and have a bit of luck and they've got
talent, it is a possibility, and they've got that drive to try and bring off that possibility.

ROBERT CONNELLY: A whole range of Australians that are succeeding have been given their breaks here
by a terrifically kind of adventurous and pioneering side of our industry. You know, I think we've
just got to keep up that spirit - I think we've got to return to that spirit, rather than getting
too caught up in the notion of what's commercial. I mean, you know, that's going to be the death of
our industry.

KERRY O'BRIEN: Mick Bunworth. That's it for now, so I'll just say goodnight.