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(generated from captions) Good morning, welcome to

Business Today for Australia Network, I'm Whitney Fitzsimmons. Coming up program - oil fallout, US

stocks tumble on concerns stocks tumble on concerns about rising crude rising crude prices. Commodities wind fall, Australia's growth to be

underpinned by mining and farm exports. And temporary relief,

Japan's budget is pass bud the

debt concerns remain. Those stories coming up shortly stories coming up shortly but

first let's take a quick first let's take a quick look

at the market s and the local market's about to start the

day' session we'll have more on that

For more on the market action

I'm joined by Christine Ip from Bell

about the kick off the day's trade

trade l the decision from the RBA have any impact on that at

all? Well the Reserve Bank

left interest rates on hold at

4.75%. Now we didn't see much

of a reaction from the stock market after the announcement

but we did see the but we did see the Aussie

dollar drift lower and there

wasn't a lot of indication from

the reserve lately that they will

will raise rates but the market wasn't pricing in one.

Inflation has been consistent,

we've also seen a lot we've also seen a lot of

strength in the Aussie dollar

but the fall in wage growth and Queensland disasters have irned

Kated that a reserve is

comfortable to keep rates on

hold for the short time. So little reaction from the markets yesterday and we expect much of an impact on trade today. Alright, staying

in Australia and we're expecting December GDP to be

released today, what can you tell us? December GDP will be

released at 11:30 this morning.

The general consensus is a rise of 0.7% and that's compared to

a 0.2% growth in the previous quarter. Now we're expecting resources and mining to huge contributor, however weakness is expected in those industries like housing which

are dependent on spending.

Overall strong growth is expected. expected to be in that

resources and mining sector. And elsewhere China's

PMI fell, what impact will that have on regional trade? The

index has lost 0.7 points in fesh. The loss was less than

analysts expected. analysts expected. Despite manufacturing slowing to slowest rate in 6 months, it's

still a good number. It's still a good number. It's well above 50 which is a level that indicates expansion. Now off

the back of that we did see some relief in some relief in the markets.

It's eased investor concerns

that China may take on more

tightening measures to ease

inflation. But today we should

see a bit of rally in those property stocks which have

taken a dive since the

tightening began. To the US, share markets have tumbled off the back of violence in

Libya. It was doom and gloom on the US markets had two so lid days of gains in

the US and investors have had

thought they were in the clear.

But unrest in the Middle East has taken centre stage again. Those oil prices rose overnight

and Bernanke's comments commented to the Senate committee that prolonged

increases in crude prices will

pose a risk to recovery. So higher

higher energy prices means less

consumer spending and that's

going to hit recovery hard. going to hit recovery hard. So

off the back of that broad base

sell offs across the sell offs across the market, stocks were sold off well session and in the end session and in the end triple

digit losses for the Dow, the

major US indexes finishing

about 1.5% lower overnight. Now

we also saw manufacturing we also saw manufacturing data

out of the US, what has Shah shown? The manufacturing

continues to be strong in the US. The manufacturing index has

jumped to 61.4 in jumped to 61.4 in February. That's the highest level in almost 6 years. But comments

from Bernanke took the shine out of the data. The Federal Reserve has indicated that

growth stronger than the current level

and much more needs to be and much more needs to be done to spur US manufacturing growth. So growth. So unfortunately rising oil is oil is overshadowing that positive data and that's despite manufacturing growing

much more than expected in February. Alright, February. Alright, Christine, thanks for the update. That's

Christine Ip from Bell Direct there. Let's take a closer look at what's happening at what's happening with currencies and comod US Federal Reserve Ben Bernanke US Federal Reserve chairman Ben Bernanke has offered an upbeat assessment of the world's biggest economy saying

the recent surge in the recent surge in oil prices

is unlikely to have a major

effect on growth or inflation.

Appearing before a Senate banking commity said the spike in crude was unlikely to drag on unlikely to drag on America's

recovery as long as highest

prices aren't sustained. In New

York trading the price of West Texas crude jumped more than $2

to close at $99.63 a barrel and

Dr Bernanke also highlighted

increasing evidence that the

recovery has enough momentum to

become self-supporting. But he

cautioned jobs growth remains

far too anaemic indicating the Fed

Fed was unlikely to cut short its $600 billion program

markets remain on a knife edge

as events unfold across North Africa Africa and the Middle East.

Saudi Arabia's offered to plug

the gap left by Lybian supplies

has calmed nerves slightly. For Australia's oil companies high crude prices are a real benefit

but the industry is also preoccupied with the threat of

new taxes from the Federal

Government. Unrest there the

Middle East and North Middle East and North Africa

pushed up crude oil prices by

as much as 15%

2008's price spike of $147 a barrel is still fresh in the

memory and the prospect of

another oil shock as the global

economy only begins to recover, gave markets worldwide the

jitters. Even calming words

from the Saudis about filling

any supply gap hasn't helped drive the price back downened. Analysts around the world are

trying to work out trying to work out the potential economic impact. Many

believe the sustained period of oil at around US create asmajor drag on growth

as it pushes up import costs across almost every industry. If this current Arab world renaissance that world renaissance that we're seeing through North Africa seeing through North Africa and

then through the Middle then through the Middle East continues with dell tear yous

effects on supply of oil and we've seen about 1 million

barrel asday knocked out of barrel asday knocked out of the market out of Libya, if that

were to go through into other

major oil producers then we

would see the price spike up a point where it would actually be damaging to be damaging to global growth. Potentially bad for

economic growth but the oil

price surge is being welcomed by oil producers like small cap

explorer ureekia Energy. 80% of

the our revenue is from the oil price. From a corporate

perspective that's fantastic. Not so fantastic

for the industry is the threat

posed by new taxes. At an oil

and gas conference there was

concern about any looming

resources rent tax and the carbon week. The Federal Government at

the moment you don't quite know

what near going to do. They put

the resources tax on us

much consultation. So there is

a slight sort of a concern

about what the federal will do next. The Federal Government's

proposed mining tax and

petroleum resource rent tax

amendments are not helping much

in the relationship in the relationship between the State and the Commonwealth. The Government is yet to Government is yet to detail which industries will which industries will be

impacted by any carbon tax other proposed taxes for the resources industry will drive investors away. Everyone understands that businesses

have to pay tax but if it gets

to a point where it's just not

viable and too much of that

money for the risk and reward the

the equation falls too much on

the risk and not enough on reward, investors are reward, investors are going to go I'm out of here, I'm taking

my money and putting it in the bank I get 6% interest and

there's no there's no risk. The Australian Industry Group concerned about the competitive impacts

impacts of any proposed carbon tax. Saying

tax. Saying it risks sending jobs and emissions offshore. Well record breaking

rains, flooding and tropical

cyclone have failed to dampen

the nation's latest commodity

outlook. The forecast from

ABARE, the Australian Bureau of

Agricultural and resource economics economics paints a buoyant export picture. But there's a

caution ary note about where

those prices may be months time. A sombre tone

greeted the 700 farmers,

economist, bankers and policy

makers. They're gathering in Canberra for the Australian bureau bureau of agricultural and resource economic's science's annual outlook annual outlook conference. After the last 3 months you could be forgiven for question

fg commodity forecasting more art than science. This

year we have, of course, been hit with some of the worst natural disasters this country

has ever faced and has ever faced and the

agricultural sector has quite frankly taken a

the impact of excessive rainfall, flooding and Tropical Cyclone yas irk. They estimate

between 2 billion and billion was wiped from

productivity in the sector.

It's a similar story for agriculture. We estimate that

the reason adverse weather events have cost around $2.3 billion lost of agricultural production

crop losses total up to $600

million followed by fruit and vegetable losses of $225

million and cotton

totally $150 million. But there

is a welcome silver lining for some. Farmers are very

resilient so I don't see any

issues in terms of recoveries.

Also, our irrigation dams are

all full now so at all full now so at least for irrigate agriculture that's

really good news. Some farmers would say towards the end of

the season we had too much rain

and that knocked the gloss and that knocked the gloss off what would have been a fabulous

season. I think the rain is certainly better than getting

dust, that's for sure. The

natural disaster toll is also

being offset by buoyant export prices and demand countries

prices and demand from countries such as China and

India. For next year we're

expecting that Australian commodity exports will

for the first time ever. That's

a dramatic increase over what

we've seen compared to this

year we're expecting $220 billion in exports which is

again a big increase from last

year, about a 29% increase there. Visitors from across the

Tasman share the optimism. In

is the time to be a is the time to be a farmer,

absolutely. Even in New Zealand capitalising on what's happening here in Australia, the droughts in China, know, our agriculture has been largely the bureau cautions global commodity prices are expected

to ease following a peak within the next 12 months. Over the medium term we're expecting prices to start to ease and that's because when you have high commodity prices it tends to to encourage increased production both in Australia

and globally. So as the

production comes on stream

we'll see an easing of prices

over time. But that doesn't

mean export earnings will drop too. The bureau forecasts too. The bureau forecasts the value exports will be maintained

around the current level in real term oefrs the next 5

years. And to look closer at the commodity sector I'm joined by

by Jonathan Barrett, welcome by Jonathan Barrett, welcome to Business Today. Alright, let's

start with oil. Now you were

predicting it to trade in a

range with a target of about

$81 a barrel and it $81 a barrel and it wouldn't

break that unless something

major happened. Well something major has happened so what are your thoughts on this? Well is a major event. I think

no-one thought what would

actually occur. I think the key

at the moment as we focus on

Libya is how this will spread to the major will spread to the major oil producers being Saudi Arabia

and Iran and I think that's the

one we've really got to focus on. It's interesting you say

that because there are protests

in Iran that have been hosed

Dunn. How concerning is this to

the oil sector? It is, it is a major one because you look at number one and number number one and number two

producer and in Iran or Saudi

Arabia and Iran but Arabia and Iran but more importantly when you look at Iran they border on to Iran they border on to the straits of Hommus straits of Hommus where 30 to

40% of all sea born oil goes

through. So if this does

escalate you have a major event

occurring which will restrict

the supply of oil to the global

commodity. So it is an issue.

We've got to be wary, there is a lot of misinformation going

around. How so? What do you mean by

and those stories create that

volatility and it's that volatility in the market then

creates other moves and it

feeds on itself the whole time. So what you're saying there then there then is it's more the

psychology of what's happening

than real fundamentals? Yes, absolutely. Because when you

look at it this fear is driving

the market. We have enough oil,

that's not an issue at moment. You know, inventry levels are at record high, strategic reserves are

full. What about supply

matter at the moment because we

have enough oil and we produce

enough oil to placate any form

of demand at the moment. If

demand would pick up we'd OK. Saudi Arabia has 4 million barrels of

barrels of excess capacity.

They said they will turn They said they will turn the tap on another half tap on another half a million, which they've done. They which they've done. They will

increase that. It shouldn't be

too much of an issue. That in

fact did bring oil prices

slightly lower but then they

spiked back up again? On more

information that came to hand.

You know, concerns in Bahrain where there were more conflict,

more protests. Then we had in

Tehran, more issues as well. So

it's this information which

we've got to look through and sort sort through what is misinformation and what is

solid information and how Mr -

will that affect the supply of

oil. Given the volatility, oil. Given the volatility, the

unpredictability and as you unpredictability and as you say

it's now being asked it's now being asked by

psychology not fundamentals, as

a forecaster and strategist

does it feel a bit few tile to

going to go? It's in your

stride. You know that you're

looking at an end game here.

You can say well what

effectively is going to occur

and if it does what's going to happen? What's going to happen

to the eastern economies,

what's going to happen to the Western economies and that to

me is the driving point. Oil at

100, oil at 120. We've already

seen equity markets take a bit

of a tumble and that's probably

going to continue. Oil goes up,

equity markets go down as

rise in oil prices eroads the

benefit of the stimulus package and austerity programs. We

heard earlier in the program

that Ben Bernanke has said that

these high oil prices won't

affect the US recovery, provide

they'd don't stay high for

long. It doesn't appear that that's going to happen so

what's your view on that? Is he

just trying to hose down sentment over there? I think he's trying to hose down

sentiment. At the end of the day higher oil prices don't work well

But I think he is actually

trying to say well look, we

feel that this concern in the Middle East is temporary and as

it is temporary it shouldn't

have too much of a concern. But

it's just a one thing, higher

import prices relate to higher

inflation. That is a concern when you have austerity. It has

affected petrol prices, how

long until it affects things

like food in other sectors? Absolutely because it does feed

through. A today has to affect what we

pour into the harvester because

it will all affect those cost.

It works downstream so that

high oil price today will

be in the market in 3 to 4 months time. Of course another commodity that has broken

records, has been pushed to

stellar heights is gold. It

appears that it's well and

truly going to blow those

predictions out of the water so

what are you thinking here? It

was very large move last night. Whe broke

hietion. So it put on $20

overnight? $20 overnight and overnight? $20 overnight and it

is this ground swell of

uncertainty. Equity markets under pressure, oil under pressure, oil going

higher. What we're seeing is people moving to equality. It's

interesting because you do

notice sometimes with a rise in oil it doesn't necessarily correspond with a lowering of

equity markets, they seem to be sort of separate. It is, but

this is once again this

contagion, this whole area is everything goes. You will notice the US dollar wasn't

bought last night on concern,

normally that's a safe haven.

We've found people because they feel it's a safe

haven, equity markets under

pressure, where do we go? I

think people have poured into gold and as a result of that

it's broken these highs and if

it remains above these highs

then we can see gold price then we can see gold price

continuing to trade upwards of 450, 1,500 even. Briefly looking at that ABARE report Australia's commodities sector, how critical are these how critical are these warnings

that resource companies should

limit their exposure, given the

strength of the Australian

dollar? I think it's very

important because we've now got

a lot of uncertainty out there, which is primarily which is primarily come back from the Middle East which will

affect growth. If it affect growth. If it affects

growth in Asia it's going to affect the demand for our commodities. And it doesn't appear the Australian dollar is

going to go lower? At the

moment she looks very well moment she looks very well bid. If it breaks that

it to go higher. At these

levels I'd want to be more

cautious that I don't spend too much money on infrastructure at these levels. Thanks joining the program.

The latest manufacturing data

from China and India indicates growth projections for both economies to remain on track.

Economists say a Economists say a slight moderation in China's official purchase manager's index issued by the Bureau of by the Bureau of Statistics reflects the week-long

new year holiday more than any

real loss of momentum. The real loss of momentum. The PMI

reading fell from 52.2 if February, it's third

consecutive month of decline. A

similar index for India shows

manufacturing growth accelerating in February with HSBC's India PMI rising to 57.9

from 56.8. But rising input prices and prices and inflation are accompanying strong growth in both countries fueling expectations of future interest rate rises in coming months.

The latest statement by Reserve Bank of Australia points to global points to global inflationary pressures. Despite talk pressures. Despite talk of commodity booms, surging investment

investment and skills shortages, the Reserve shortages, the Reserve Bank's

board says it expects inflation

to remain under control for at

least a year. It seems more frugal households are helping counter the inflationary mining boom. This is a rare sight in a

post global financial crisis world, a contented central banker. I don't think they're trying to change the message and I think the message

is that the Reserve Bank is comfortable with comfortable with the settings of monetary policy for the moment. Just how long that

moment will last is what's

being debated as the RBA being debated as the RBA opted to keep the official cash rate

at 4.75% for a fourth month.

The RBA says it expects inflation over the year ahead

will continue to be consistent

with the 2% to 3% target. with the 2% to 3% target. So

some economists were predicting

the next the next rate increase would be

seven months away. Others stuck

doggedly to their forecasts. We

think by the time we get

towards mid year, maybe May,

June, that's when the next

installment will come through.

We'll have a cleaner read on

the economy at that point post

the floods. We'll have the the floods. We'll have the next set of inflation readings and we can see what sort of damage

the floods and so on have done

to the inflation story and then the from that. The RBA expects the flood damage to inflation to be

mild or temporary. It shortages restricted to the inflationary risks like skills

resources sector so far and

strong Australian dollar, highlighted the role of the

falling wages growth, and the strong Australian dollar, past

cut retailers as helping keep inflation under control. I

think the key issue have households become more cautious permanently or are

they more cautious because of

the settings of interest the settings of interest rates and because of the effect the global financial crisis

Our view is this won't Our view is this won't be permanent, it's. Although the latest retail sales numbers

suggested consumers weren't

completely spent. National retail sales jumped 0.4%

through Brisbane. Sales even

picked up in Queensland. But

monthly household goods fell the most in 27 years, on monthly household goods sales

the other hand food had its

biggest rise in 12 years. Part

of it was rising food prices

rather than increased volumes.

So I think it's still the case

relatively cautious and that households are being

retail trade is still pretty relatively cautious and that

modest. Today's national account figures are expected show the economy grew strongly

in the 3 months leading up to

Christmas despite general

belief it was slow into belief it was slow into 2010.

Medium estimates are for a lift

of 0.7% GDP during the December

economists at National quarter. However senior

Australia Bank David de Garis

is somewhat more cautious in

his outlook saying today's

numbers will give a clearer picture of where the economy is

at. There has been a strong perception out there that the

the economy has softened through

the latter part of last year.

The GDP will provide us how

fast that slowing fast that slowing was. Most

economists have upgraded their

expectations after recent data expectations

showed a lift in government

spending and business investment. Senator Stephen

Conroy has spoken at the

Australian broadcasting summit

saying the media landscape saying the media landscape has

changed at a rapid pace and is

more complex and demanding than

ever before. He delivered the

final terms of reference of the convergence review into regulations in an attempt to

bring media regulation into the

digital age. Here's some of

what he had to say. Consumers can access the same type of

content across multiple devices - TV, mobiles or tablets, while a consumer safeguards a consumer safeguards applying to this content differ from

device to device. As well, the

increased levels of content and services from also place pressure on regulations. These are also place pressure on our

regulations. These are just

some of the issues that need to

be looked at in the review. The

national broadband network and the switch to digital only

television play a key role in

the convergent media Australia. Ubiquitous high the convergent media in

the delivery of speed broadband will transform

models and social interaction. health services, business

It will also further

revolutionise the way TV content is delivered and revolutionise the way film and

consumed across consumed across Australia.

Well that's Senator Stephen

Conroy, minister for broadband communications and the digital

economy speaking earlier there. Japan's

Japan's struggling government

has managed to push through trillion dollar budget for the has managed to push through a

next fiscal year in an effort to boost the flagging economy. But sot MPs from Prime Minister

Naoto Kan's own party boycotted

the vote as his popularity

went continues to slide. The budget

went through the lower house

despite 16 of the Prime

Minister's own MPs refusing to TRANSLATION: back it.

TRANSLATION: As officially

announced the bill for general

budget of 2011 has been passed

by parliamentary vote. Mr Kan

who's facing a widening rift in

his ruling democratic was relieved to see it passed. his ruling democratic party,

TRANSLATION: I'm very glad and

happy that the budget has

passed the lower passed the lower house because

the matter is urgent for the

still faces hurdles. The Japanese people. But the budget

Japanese economics minister

says if future budget related

bills are blocked by the

Opposition it could cripple the Government.

TRANSLATION: Some say the Upper

House's rejection of a bond

insurance bill would result in the Japanese version of a government shoutdown. I'm very

worried about such a possibility. Mr

have sunk to 20 % after his

landslide victory less than a

year ago and he's facing

growing calls to resign. Now

let's take a look at what's let's take

making headlines around the

region. The 'Financial Times'

reports that the SEC has filed a civil case against ex-Goldman

Sachs director Gupta for

incider trading. The Hong Kong Standard reports that the Hong Kong monetary authority is warning interest rate hikes

will come earlier than expected

in Europe and the US foresees large fund outflows from local deposits. That's all for this edition of Business

Today. If you'd like to look Today. If you'd like to

please visit our back over any of our interviews

Australianetwork.com/businesstoday. We look forward to your

feedback. I'm Whitney Fitz

Tiimons. Thanks for joining me,

enjoy your day. Closed Captions by CSI

This morning - chaos on

the border. Libyans flee their country

country as the battle for Tripoli looms. Time is of the

essence. Thousands of lives are essence. Thousands of

at stake. This Program Is Captioned Live.

Also today - two charged over yesterday's Commonwealth

Bank cash grab. Insults fly

calls for two Liberal MPs to be sacked. There is a bigotry, sacked. There is a bigotry, a

racism, even a hatred which

corrupts some of their policies. And Galliano gone. policies. And

Fashion powerhouse Fashion powerhouse Dior sacks

its lead designer for an anti-semitic