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(generated from captions) slim advantage, I have to say.

I'll give it 2.5. I'm giving

I'll give it 2.5. I'm giving it

three. Trying to draw something

different, but I can't.

Something to do with how I

died. It's a tiger. I'm

serious. I don't know how I

know, but I just know - I know

I act like I don't care

sometimes. I don't want to

around the country next die. 'Push' opens in cinemas

around the country next

week. That is the show for tonight. Goodnight from us. Goodnight.

Closed Captions by CSI

Tonight - claiming

credit for staying in the

black. Today's national

accounts show how the stimulus

global economic is helping Australia defy

gravity. Australia clearly has

a champagne economy when you

compare it with other advanced

nations turnaround world ch -

nations around the world.

This Program is Captioned

Live.

Good evening. Welcome to

Lateline. I'm Leigh Sales. The

Government may be patting

itself on the back for keeping

the economy out of recession,

but the Opposition's far from convince thaitd's all Kevin

Rudd's good work. The Coalition

believe s its economic

management during the Howard years gave the Rudd team a head

start and it fears while the

numbers look good now that may

not be the demais the

future. If anything, the

problem is that all the money

the Rudd Government has spent

is leaving us with a burden

that is going to impair our

economic recovery over the next

few years. We've now got seven

years of deficits

years of deficits for what

appears to be five minutes of

economic downturn, with one

negative quarter. That's a

massive price to pay for a new

school hall. Joining Lateline

tonight is the Shadow Treasurer

Joe Hockey and we will also

talk in depth about the John

Della Bosca affair and whether

or not politician s private

lives are fair game. That's

head dlierns back coming up but first the other

head dlierns back from the

edge, Tim Holding talks about

the two days he spent lost in

freezing conditions in the Victorian Alps. Climate control

- one of the world's top

research bodies ing pushing for

science fiction-like projects

to change,000 planet works fit

gets too hot. And who to blame

for the Storm collapse. Australia's bucked the international trend to achieve

growth in a time of

growth in a time of global

accounts for the June quarter recession. The national

have revealed an economy

increasing in size and bouncing

back from the world financial

crisis. The result has pleased

economists and delighted the

government, which claims credit

for its multibillion-dollar

stimulus effort. But the

downside for consumers will

come if the Reserve Bank lifts

interest rates to keep the

growing economy in check. From

Canberra, Hayden Cooper reports.

reports. This is what stimulus

money buys - new houses and workers to build

them. Obviously it's pumped up

business around here, so we've

got 10 to do here where we are.

So every little bit helps. This

is a happy Treasurer. Good

morning. Or good afternoon. One

who says his stimulus plan has

saved the nation. Today's

national accounts show how the stimulus

stimulus is helping Australia

defy global economic

gravity. June quarter growth

came out stronger than most had

expected at 0.6%, the annual

figure is the same it outshines

the rest of the world, leaving

the US, the UK and Japan well

behind. Look, a pretty solid

result and you compare us to

what's around the world at the moment, it

moment, it is absolutely

daylight second, Australia

doing very, very well. State by

state, Victoria did the best,

registering 3% growth. SA, the

West and NSW followed. Tasmania

was stagnate and Queensland,

the Northern Territory and the

ACT provided the red ink. But

Kevin Rudd's firmly focus

ovends the national picture,

what and the open argument about

what might have been had the

stimulus not been spent. The

Australian economy would right

now have been in the deepest of recessions. And unemployment would have been going through

the roof. Of course if you

throw enough money at a

problem, some of it will stick

and it's good. It's good for

Australia. It is fantastic for

good Australia that we are showing

good economic growth today. We

welcome the news but now Mr

Rudd that has pull back on the

spending. Seasoned economic

watchers like Chris Richardson

agriet's an impressive result

but, unlike others in his

field, he doesn't believe it's

toast worthy. It's a not a

that. We apologise for this

The break in caption transmission.

The point is that the next 18 months interest rates in

Australia will go up 2%, maybe

2.5%, they are at emergency low,

low, they won't stay. There

some commercial Banks might

even jump before the reserve

does, although the Treasurer's

warning them not to. They would

want to have a very, very good reason. As the Government

itself admit, the road ahead

still has its challenges.

There's no sign that economic

stimulus now shifting to

construction projects will be

wound back. In fact, if the

Treasurer has any regrets, it's

that he spent too lilt,

that he spent too lilt, not too

much. Wayne Swan is still ruing

the one that got air way - the

quarter of negative growth at

the end of last year. If we

could have had more stimulus in

December, then maybe that

figure wouldn't have moved the

way it did. So don't suggest he

went overboard. Look at the numbers. His proudest for some time.

time. At least 15 people are

dead and scores more injured

after a - powerful earthquake struck off the Indonesian

island of Java. Authorities

fear thetol may run much higher. Hundreds of kilometres

away from the epicentre in the

capital, Jakarta, office

buildings swayed in the 7.3

magnitude quake. Thousand fled

their workplaces and homes as

minute. buildings shook for at least a

minute. Medical teams are being

sent to villages near the epi

centre. When Victorian Cabinet

Minister Tim Holding slipped on

ice near the summit of Mount

Feathertop while hiking last

weekend he thought hi was going

to die. Today, the keen hiker

gave an entertaining press conference, ribbing his parliamentary opponents, thank

ing the volunteers who helped

look for him and insisting

people should still go walking

in the high country on their own. Rafael

own. Rafael Epstein reports

from Melbourne. Slipping off a

path and sliding down over

hundreds of metres of ice. Tim

Holding feared hi wouldn't

survive. I thought I was going

to die. When it was - I slid

very, very fast and if you've

slid on the ice before, you

will know you slide faster and

faster and you gather huge momentum. You think about a lot

of things. It's amazing how march you can

march you can think of in such

short period of time. But it

makes you reflect on your

priorities. After he fell, and

was below the snow line, Tim

Holding says he was confident

he'd pull through. And he says

he will hike alone again. I

don't think that's the issue. I

think it would be very

disappointing that the message

that goes forwards from this is

that you shouldn't hike alone. We live in an We live in an age where it's

good to get away and clear your head and

head and be a way from things.

That's the beauty of this part

of Victoria. You can be there

and not have a care in the

world, not carry whatever

baggage you've got from

Melbourne with you. When Mr

Holding was first spotted,

three helicopters in the media

were watching closely. How did

that feel? For first time in my

life I felt very good about

it! The brief kiss for his partner has

partner has been cri teekd on

talk-back raid yoe.s I hadn't

brushed my teeth for four

days! Bibut the cameras did

make him wary and he held back

when he saw his family for the

first time. The idea of going

through that in front of

everyone that was pretty

intimidating. That was more

intimidating in some ways than

the last couple of days had

been. He says hi doesn't want to xajlate the danger he

to xajlate the danger he was

in, but he says training with

the Army reserve was

helpful. Mental tough ness is

important. Being able to push

yourself when it's easy to give

in or to despair or just to get

i frustrated at yourself or the

situation you find yourself

in. Genuinely grateful for

messages of support from both

sides of State politics he

still had a swipe at his

political opponents. The ordinary Joe for the suburb s that goes walk

that goes walk by themselves in

an area by himself is a dill. A

Minister of the crown can be a

super dill. Bernie can have a

tracking device - device but

people have to want to find

you. And he says he will take

an epir k next

time. 55-year-old Alister

Rogers was called to a central

Queensland stud last July to

Queensland stud last July to

treat a horse suspected of

being bitten bay snake but it

was infected with Hendra virus

and Dr Rogers contracted the

disease. He was taken to

hospital in Brisbane two weeks

ago, and placed in an induced

coma. This is a virus that

doesn't just make you ill. It's

a virus that kills. And it will

happen again, surely. And

happen again, surely. And

something has to be done to

prevent that from

hatching. Three fellowworks

were treated with anti-viral

medication and released from

hospital with a clean bill of health. It may sound like

science fiction, but

governments are being urged to

consider using artificial

forests or sun reflectors in

outer space as emergency

backups if global warming

reaching worst case scenario.

Britain's Royal Society has done the

done the first comprehensive

review of so-called geoengineering options to atter

way the planet works. The

society says the world should

spend nearly $200 million

exploring options like spraying

sea salt into the atmosphere,

as Margot O'Neill

reports. Since human activity

is artificially heating the

planet, can human intervention

help rebalance the earth's

help rebalance the earth's thermostat? Britain's Royal

Society says geoengineering may

be dangerous and unproven, but

it must be investigated. It

points to options like

stripping excess CO2 out of the

atmosphere with giant forests

of artificial trees - the hope

is they will absorb CO2 more

efficiently than real trees.

You can deflect

You can deflect sun light and

custom built ships should spray

sea salt and make clouds more

shiny or have a giant sun

shade. Some of these techniques seem

seem a bit far fetched but if

we find the climate change

continue s as expected or is

worse than we expect we may

need some of these additional

techniques. So what we need to do

do now is some research into

their potential and

effectiviveness so that if we

need them they are available

when we need them. But there

are fears that it could alter

the earth's complex natural

systems in unintended ways,

which is why the Royal Society

is calling for urgent research. In Australia, that includes

looking at how to mimic volcanic eruptions which can

spew forth so much sulfur that

spew forth so much sulfur that global temperatures drop. The

CSIRO is looking into some of

the sulfur-based programs and

these involve dispersing

sufrlure in the upper

atmosphere to cool the earth.

We know that sort of thing

works but we also know that

consequences in terms of there are potential

rainfall events and so forth. So there's some modelling being

done. That is a really smart

thing to be doing. We probably

need to be doing more of it

need to be doing more of it

because if we're un lucky we

will have to start row sorting

to some of these geoengineering

proposals sooner than we would

like. Graerps disagrees. The -

Greenpeace disagrees. The fact

that people are talking about

sun shades and artificial trees

to suck down carbon dioxide is

doesn't have ridiculous and the Government

doesn't have the spine to cut

CO2 emissions. But the pace of

climate change continues to

alarm many scientists who

believe the planet needs

emergency options that might

buy some time. We've already

built in a large degree of

warming, almost two degrees of

warming in planet earth. That

is enough to cause the collapse

of some ice shelf that may see

London under water. No-one can predict over what time those

shelves could collapse. It

could be next year or decades

off. That's the moment wren

when you would think the deployment of these geoengineering proposals might

be called on because they are

instain tainous. You with put

sufl nuclear the atmosphere and

within weeks you will start to

cool the planet. But you could

imagine a situation where

there's serious political

sorts pressure to resort to these

sorts of tech knowledges. -

technologies. The Royal Society

wants an international funds of

$200 million to begin

experiments as soon as z

responsible.- as soon as

possible.

And now back to our top

story - Australia's economic

growth. Wayne Swan claims it's

all due to the Government's

stimulus spending but the

Opposition certainly doesn't

share the same view. The Shadow

Treasurer Joe Hockey joined me

earlier in our Sydney stud

dwroe. Mr Hockey, thank you for

coming in. Great pleasure,

Leigh. Today's growth figure is

three times what the market had

been anticipating. Wayne Swan

is saying that's due to the

Government's strong stimulus

package. Correct? Of course Wayne Swan would claim that.

What a surprise clam No, he is

not correct. And there have

been a number of

been a number of factors that

have delivered Australia over &

very strong economic

performance . Firstly, unquestionably the Government in-Hertz add very strong

economy. We had economic growth

last year as the world economy

was hitting an iceberg,

economic growth of around 4%,

unemployment of just 4%, and

the Government had $40 billion

in the bank with no debt.

That's a great starting

That's a great starting

position. Secondly, we had no

massive financial collapses. In

fact, our banks went into the

top 12 performing banks in the

world. Thirdly, even today,

Leigh, the Government has stronger terms of trade than

the last days of the Howard

Government. And Australia was

the beneficiary of having an

exchange rate that went from

parity with the US dollar to 60 cents that delivered

cents that delivered a

windfall. Fourthly, you had monetary policy. The Reserve

Bank cut interest rates more aggressively than any other

country in the world, bar New

Zealand, and in Australia

because of variable home loan

rates it went straight through

to people's hip pockets. Surely those factors were second Troy

the billions and billions of

dollars that were pumped into

the economy. , no they weren't.

They were the main factors. But

They were the main factors. But

of course the Government's

massive spending program had to

have some impact and it did.

But as today's GDP numbers

reflect, the fact is that a lot

of the money hasn't even hit

the economy yet. All this

school funding hasn't yet hit

the economy. We've had the cash

splash which has hit and unquestionably the tax rebate

for equipment has hit as well.

But the fact of the

But the fact of the matter is

most of the stimulus hasn't hit

the economy yet and what it is

is proof that the Government

has committed to too much

spending. On your first point -

that the Government inherit add

strong economy - on that point

around the rest of the world

there were economies that

started in good shape and economies that started in bad

shape and they've all been

pummeled by the global financial downturn. Australia

has with stood that better than

anyone else. Therefore, doesn't

the Rudd Government's management of our economy

deserve some credit? In fact,

Australia started in a far

better position than almost

anyone else. Other countries

started in good position s as

well. Nothing like Australia's

position. Obviously having the

most significant benefit of the

terms of trade, favourable

terms of trade and China's

economic stimulus - I heard

economic stimulus - I heard

tonight a society Jenner al

expert from China identify that

China's very focussed fiscal

stimulus, massive expansion

program helped to deliver a massive commodity boom to

Australia during this period

and he discounted the claims of

the Rudd Government that they

had made a difference. If anything, the problem is that

all the money the Rudd

Government has spent is leaving

us with a burden that is going to impair our

to impair our economic recovery

over the next few years. We've

now got seven years of deficits

for what appears to be five

minutes of economic downturn

with one negative quarter and

it's massive price to pay for a

new school hall. How far should

the stimulus be wound back,

then, in your view? It should

be wound back significantly

- What does significantly

- What does significantly

mean? When you look at the

entire package that the Rudd

Government rolled out from the

Budget in 2008, they committed

over $00 billion of new extra

spending initiatives over the

forward estimates. 40% of that

money kicks in after the 1 July

next year. And Australians need

to ask themselves why will interest rates

interest rates go up, why will

interest rates go up whilst the Rudd Government is continuing

to spend money? So does that

mean that you want, that 40% of

funds, to be cancelled? We want

the Government to take the same

approach to all of its spending

that it has taken in the last

week, where in the blink of an

eye it was able to identify 1.3

billion dollars in savings, in pink baths and in social

housing, that instead of taking

off the massive debt burden

it's leaving it's re channeling

into a funding shortfall nits

school program. I want to pin

you down specifically. Whatary

dwroos you want them to

cut? You have to look

everywhere across the whole budget. What are your

suggestions? Every time I

suggest something they steal

it. I am not going to give it - if the Rudd Government wants

if the Rudd Government wants to

engage the Liberal Party as consultants on the economy,

we're available to help. But

you have to convince my audience that you have good

ideas so they will vote for you

in the future. So where should

the money be cut? Before they

lodge their ballot paper they

will have a clear understanding

of where we will take the

Australian economy and what we

will do

will do with the Budget. Over Over the next four

years the Government is going to spend

to spend over $1.2 trillion and

if someone were to suggest that

there's not $5 billion or $6

billion of savings over those forwards estimates they're kidding themselves. They're there. The Government can find

them. They've got got all the

resource of finance, all the resource

resource of Treasury. My main

concern is they inherited an

economy, the Government was

spending 24% of GDP, they've

spending 24% of GDP, they've

taken it up beyond 28% of GDP,

but by 2013 anyway 're still

over 26%. If you think the the

Government needs to cut

spending presumably you would

hold the view that the Reserve Bank should raise interest rates sooner rather than

later? Reserve Bank would not

have to move so quickly on

interest rates if there wasn't

so much fiscal stimulus. It's

pretty obviously. We still have

amongst the higher cash rate in the

the world. Central bank cash

rate in the world. The question

is why didn't the Reserve Bank

go further than 3%? Because

they had enormous capacity to

do so, most of the developed

world is at zero% or the

equivalent or they have quantitative easing where

they're printing money. The

Reserve Bank didn't go that far

because the Government had the

second biggest fiscal stimulus

in the developed world - second

only to the United States which

is in far deeper trouble and

had massive banking collapses.

This Government has spent so

much money. It is second big nest the developed world. At

the same time, the Reserve Bank

cut interest rates second only

to New Zealand in depth, 4.25%, a hassive

a hassive cut in interest rates

and in Australia because most

people on variable rates, the transmission

transmission factor to the average household has been far

more significant. So Australia

arguably overreacted massively overreacteded and the problem

we have is that that over re action with the Reserve Bank it

might be corrected and it might

be arguable that the Reserve

Bank acted prior entirely

appropriate to go to 3% but the

Government has got seven years

of spending, Leigh. Seven years of deficits to fund for

of deficits to fund for this package. You were asked today

about John Della Bosca and you

didn't want to talk about it in

detail in courtesy to his

family. That's fine. So let's

put the specifics of that

aside. Can I ask you generally

what do you think about

politician s private lives

being exposed when there's not

a rock solid case of conflict

of interest or breech of

duty? Look, I've always aspired to be

to be a Minister of the crown,

not a Minister of the church.

And I think morality is

something that belongs to an

individual but as a leader you

have a responsibility to

beknave an appropriate way. And

quite frankly what that

appropriate way is a matter of

judgment . It's for the public

to jurges it's also a matter of

judgment for the individual.

And I think, you know, when

someone's life is exposed like

that, my first thought is

always for their family, their

children. Their children didn't

ask for that. They didn't sign

up to it. Even their wives or

husbands didn't sign up to it.

I think sometimes there's an

element of voyeurism in our

community that is unnecessary.

Having said that, if someone is distracted from doing their job, then they

job, then they shouldn't be in

that position. Reading various

blogs and websites today,

though, some people make the

argument that issues like

infidelity should be reported

because they go to the heart of

a person's character. Well, I

am not so sure about that. I

think there are lots of ways to

judge a person's character

without prying into what

happenings in their home. Are

you - happens in their home. Are

home. Are you worried we're

seeing something new in the way

that politicians lives are

reported in Australia, that we

could be going down that

British press model, where everyone's life is open slather? In politics you have

to assume that your private

life will become public. You're

asking me whether it's right or

wrong, I suppose the community

will form a judgment on that. Do you think politicians

have always had to make that assumption sor is that something new? You

something new? You can't go into public life without

expecting that everything will

become public. And whether that

is right or wrong, others will

form a view. I would hope that

you always judge a person on

what they do in their

professional life and how they

live their lives as a matter

for them and their god and

their family. However, having

said that, I think what's

happened

happened with John Della Bosca

is the State of NSW has been in

despair for a long period of

time. It has now turned to

anger. And quite frankly I

cannot believe that Nathan Rees

hasn't got the courage to call

a general election in NSW

because finally the people of

NSW have had enough. If I can

just stick with this issue

about the way politicians are

reported - the private lives of celebrity and Hollywood

celebrity and Hollywood stars

have always been open slather.

We heard today that the Queensland Premier Anna Bligh

will be going on celebrity

master chef. Is there

increasing a) blurring between

politicians and the type of

people considered

celeblities? Absolutely. Look

at the whole Kevin '07

campaign. Does anyone really

believe that Kevin Rudd is something who

something who is really hip and

- it's not his nature. Nor was

it John Howard's nature. People

have different natures. Because

Kevin Rudd did that, does ma

theen his private life - , no

and whether it's Kevin Rudd or

John Howard or anyone else, I

think they are perfectly

entitled to have their privacy.

For example, in the case of

Kevin Rudd, my view has always been

been consistent that his family

been consistent that his family

is offlimits and I take that

view very strongly. And in

politics it should be the

case. You know, quite frankly

you always have to try to

debate ideas and even though we all are guilty from time to time of attacking the person on

the other side, I think it's

important to recognise that

you've got to try to get back

to ideas and debate policy. And

I think that's

I think that's a measure of

good politics rather than

personality politics. Are

politicians scared to criticise

the media for the way its

sometimes reports these thing

force fear it could make one's

self a target? I saw Peter

Costello was very critical of

the ABC the other day. It am

coming to that. Full of

political bias. Look, there is

a reluctance among politicians

a reluctance among politicians

because, you know, you can have

your shot today and journalist

also always have the right of

reply. They've always got

control of the camera or the

microphone. Having said, that

I've had enough blow torches in

my political careers over the

years to recognise that the sun

always comes up the next day.

And you can have some terrible

front pages, cartoonisties can

be the most brutal of all

be the most brutal of all

players, but the sun does come

up the next day. Briefly, a

10-year study into media bias

was released by the Australian

National University today and

it found that ABC TV News has significant slant towards the

Coalition. Do we give you an

easy run? You're always too

easy on us! Look, it is I

believe audiences are very goo good

good at judging these things

dispo. Do you agree with neerk the ABC's hostile

territory? No, I think overall

there are some people who carry

a bias. There are some people

that inadvertently carry a

bias. It is very hard to be

very even handed as a

journalist, I understand that.

But a good journalist always

gets their guest to say things

that they don't want to say.

And I find that the most

difficult interviews for me are

the relaxed interviews where I

am not on my guard. Hopefully

you've made a few stumbles

tonight. Sure. Fi have I doubt

the ABC will pick up on

it. Thank you for joining

us. Thank you, Leigh. The British

British Government has again

denied that any deal was done

with Libya over the release of

convicted Lockerbie bomber Abdelbasset Ali al-Megrahi.

It's been alleged that

al-Megrahi's release was linked

to British business deals with

Libya. Libyan documents that

have been made public show that

one mb of the British

delegation did tell the Libyans

that the pressure Government

didn't want al-Megrahi to die

in prison. But British Prime

Minister Gordon Brown insists

there was no double dealing.

Europe transport Phillip

Williams reports. Who knew who

and when - the debate refuses

to cool over whether the UK

Government was complicit in the

release of Abdelbasset Ali al-Megrahi. The conservative

Opposition is accusing the

Prime Minister, Gordon Brown,

of diplomatic deceit. The

British Government stands

accused, indeed the Prime Minister stands accused of

double dealing. On one hand saying to the Americans they

wanted al-Megrahi to die in

prison but on the other hand

saying to the Libyans they

wanted him released. We've got

to get to the bottom of

this There was no conspiracy,

no coverup, no double dealing,

no private assurances by many

to Colonel Gaddafi. We were

clear throughout with the

libbiance an everyone else that this

this was a decision for the

Scottish Government. In an

attempt to defuse the row, the Scottish and British

governments have release ed the

paper trail leading up to his

release. In a meeting between

Scottish and Libyan

delegations, it's stated:

Mr Ram el says he told the

Libyans he couldn't intervene

in the case. I have not

discussed with th with the

Prime Minister either before

the event or after. I was responding to a specific

concern that the Libyans put to

me that they didn't pish

al-Megrahi to die in prison. In

response to that, in a conversation with my

counterpart, I made clear that

we were not activity seeking

his death in prison. But we emphatically and there is what

emphatically and there is what

I said to him at the time, we

emphatically would not intervene and it was a matter

for Scottish Ministers. Bill

ram el never spoke to me about

it but that is an accurate

record because everything we

published everything we have

without fear or favour. We've

published the lot. That is an

accurate record of a meeting

that took place. But suspicions

persist that there was least at

least a nod and a wink between

the British and Scottish governments that

governments that the UK saw

long term commercial and

diplomatic leverage if the

Lockerbie bomber was sent home.

Al-Megrahi is now in hospital.

He he's not expected to live

lodge. But the longevity of

Libya's Colonel Gaddafi is

still very much open ended. He survived pariah status to be

warmly embraced by Tony Blair

five years ago and more

recently by Gordon Brown.

recently by Gordon Brown. Now

he's been at the centre of

celebrations marking his 40

years in power. Missing all

Western leaders who were

boycotting eventers of the

Lockerbie release. The terrible

attack still has political and

diplomatic resonance 21 years

later. The southern Russian

town of Beslan has held a

commemorative service to mark

commemorative service to mark

the fifth anniversary of the the Beslan school massacre.

More than 300 people, more than

half of them children, died

during the final battle between

terrorists and Russian forces

trying to end the siege. For

many of those involved the pain

and fear has never'sed. Moscow correspondent Scott Bevan

reports. Across Russia, it's

been the day of knowledge, the

first day of the new school

year. But in Beslan it's been a

day of mourning. As the

community recalls when a local

school became the scene of

appalling suffering.

TRANSLATION: It was horrible.

It was impossible. On the first

of September 2004, a terrorist

group demanding an toends the

war in Chechnya took more than

1100 children, teachers 1100 children, teachers and parents hostage. Less

parents hostage. Less than

three days later Russian forces

stormed the school, and a&

battle raged. Some hostages ran

for their lives. So many more

lost their lives. At least 331

were killed, including 186

children. Five years on,

mourners have re returned to

the ruins of the school to

remember the siege, and the

loved ones they lost.

TRANSLATION: How could the pain

go away when Amy's girls the

same age as my daughter when I

see how tall and beautiful

they, are mine has gone. What

remains for many victims families and survivors is grief

and earning. They say they're

still waiting for the

Government to earns many

questions about the siege,

about how the authorities

responded, and why it ended so tragically.

TRANSLATION: There was not and

TRANSLATION: There was not and

still hasn't been an objective

investigation of the terrorist

act. Humanitarian group human

rights watch says until the

Government holds a full and

proper investigation, Beslan

can't heal. Wounds never close

but as the local community

still feels that new justice -

no justice has been done. This region has

region has been hit by a surge

in violence recently. Two weeks

ago, a truck bomb killed 25 in

nearby ingesh ETA. There are

fears of another massacre similar

similar to the one that tore

apart Beslan. Most

unfortunately in the current

situation it does seem to be

possible and this prospect is

indeed very frightening. As the people

people of Beslan hold three

days of memorial services, they

pray that this part of history

never re peats. Actress Cate

Blanchett has been injured in a

theatre form Prommance this

evening. The Sydney Theatre

Company's production of 'A

Streetcar Named Desire' was cut

short after the actress was hit in the head by

in the head by a prop. Cate

Blanchett was hit in the head

by the radio. And there were

two announcements - the first

announcement said could you all

leave the theatre slowly and

quietly. And we were all

thinking my god what's gone on. And

And then the next announcement was somebody else announcing

saying there will be a short

entermission because we had a

technical hitch. A

technical hitch. A spokesman

for the Sydney Theatre Company

says she will be well enough to

perform tomorrow night. Now to

the weather - rain, showers and windy in Sydney, Melbourne,

Canberra, Adelaide and Hobart,

dry in Brisbane, Darwin and

Perth. A possible storm in

Alice Springs. That's all from

us. Lateline Business coming up

in a moment. If you'd like to

look back at tonight's

interview with Joe Hockey or

review any of Lateline's stories or transcript, you

stories or transcript, you can

visit our website. Now

Lateline Business with Ticky

Fullerton. Thanks. Leigh.

Tonight on the road to recovery

- is it time to end the

stimulus package? It's too big

and it was wrongly focussed.

Now is the time to step back

and re assess the situation. It

is changing in a direction very

different to what the Pes miss expected six to

expected six to 12 months

ago. Storm front - unraveling

how the Queensland financial

group collapse and who is the

blame. There was a fall in the

market and that expose failure,

in systems, in people in processes. And moving

processes. And moving with the

times - Australia Post shifts

its business from snail mail to

insurance. First to the

First to the markets - and

the All Ords followed Wall

Street lower despite strong

growth figure, closing 75

points down. The ASX 200 was

also well down on the day. In

Japan the Nikkei fell nearly

2.5% amid concerns about the US

financial sector. Hong Kong's

hang essential was also hit,

closing down nearly 2%. And in

London, the FTSE has lost

ground in morning trades. The Australian economy has

Australian economy has defied

the global downturn and

completed its 18th convective

year of growth. While the

result was better than

expected, Australia's prospects

remain finely balanced. That's

leading to a wide range of

views about what policy makers

should do next. Neil Woolrich

reports. The Ashes are lost and along with it some national pride but Australians can concoal themselves with one of the best

the best performing economies

in the developed worlds. The

Bureau of Statistics says gross

domestic product grew by 0.6%

in both the Junequarter and the

year to June. Increasing in

farm and government inventories

odded 0.6 points to growth. Household consumption

contributed 0.5%. The drigest

drags on growth were reduction

s in non-form inventories and a fall in

fall in net exports. The composition was very

encouraging. With' seeing the

composition shift from net

export s driving growth in this

economy to underlying demand

being quite strong. The

previous two quarters all the

growth came from essential lay

plunge anymore ports. The GDP

figures did nothing to turn

around a dark day on the share

market. However, the Australian dollar

dollar gained around 1 cent against the US in afternoon

trade, in expectation of

tighter monetary policy. It

won't be long now before the

Reserve Bank starts to move on

those interest rates and, after

all, our governor has been very

fair in warning that the rates

where they are were emergency rates and they will have to go

up. And the surprisingly

resilient GDP figures now have

analysts revising their

expectations on a number of

other fronts. The Treasury forecasts that unemployment

could peak at 8.25% is now at

the pessimistic end of market

expectations. Even though

demand for labour remains. So

and economist s are tipping the

Government's Budget deficit

this financial year should be

much lower than the $57 billion

forecast in May. Essentially

ever since the May Budget the data is

data is as surprised on the

upside. So the Budget deficit

will be much smaller than what

the Government had projected. I

think that does take some of

the heat off the Government

around trying to bring that deficit down. Professor Neville

Norman argues the Government

should now consider withdrawing

some of its stimulus programs,

even though that may dampen

demand. It's not a risk, it's a

necessity. That is probably

what we need to do. I don't

think they need to do it

immediately but the evidence is

immediately but the evidence is

now gaining that they've got to

get ready for this and things

like schools program and so on

it's unfair just to cancel

contracts and they won't. While private business investment

also rose strongfully the Junequarter, industry groups

are urging the Government to

proceed with caution before

winding back assistance

packages. Much of the growth

has occurred in areas where the Government's stimulus

Government's stimulus package

has had a direct impact. What

that tells us is that there is

still some underlying fragility

in the Australian economy. The stimulus program that's going to

to dominate spending over the

next couple of years is related to longer term infrastructure

project, it's related to

investment in the economy and

that's sorely needed. It's

certainly should rule out any

further direct fiscal stimulus

further direct fiscal stimulus

such as the cash handouts. That

is inappropriate now. Warren

Hogan says demand may soften as government stimulus programs

wind down but it's un likely

the economy will go backwards.

He believes a sustained recovery is now more assured

but it's only likely to be slow

and gradual. Let's take a look

at what happened during the

day's trade. Earlier I spoke to

Martin Lakos from Macquarie Private Wealth.

Private Wealth. Martin Lakos,

as we have heard the economic

growth figures have been better

than expected. Was there any

movement on the local market

off the back of this? We've

down about 95 points prior to

the number s coming out. We saw

a modst rally of about 25

point. The momentum on the

upside couldn't take hold and

the market held those levels

through afternoon. The numbers

were better than expected that's for

that's for sure. So it was the

overnight wobls on the Wall

Street that have been the big

influence? Undoubtedly. It

appears that US investors are very hungry for further

evidence of recovery. Overnight

there were still some good

numbers coming out of the US,

Ford reported better sales in

August, up 17% to the previous

correspond ing August. Toyota

and general motors reported good sales post

good sales post the cash for

clunkers program. Prospective

home sales up about 3% for July

and then of course the very

important manufacturing index

in the US - again all

positivement it appear s that a

lot is now factored into market

s considering the US has

rallied nince 50% and our

market is up 38% since the same

time period. There's lot time period. There's lot built in to

in to expectations. The defence

did defensive stocks fair

bitter today locally? There's

some rotation that's been

taking place. With the market

hitting a new 11-month high on

Friday, stocks like Fosters,

Woolworths, Westfield and s we

farmers all performed well and

again same today with

Wesfarmers down 5 cents at

$25.53, Woolleys z waup up

five. Fosters was up 5 cent. CS

sl. Boosted bay share bye

backand Westfield up 11 cent s

so very credible performance s,

given the overall market was

down 11%. Where do you see the

market going now? Is this the

beginning of the September

blues? If you look back at

blues? If you look back at

statistics sept is the worst

month in the last 20 year force

returns for investors. Unlike

the headlines that come through

for October, so there's a

little bit of nervous ness

around about. They's co

incident that the markets are

run very hard and in Australia

having had such a well

reporting season there's a lot

of fat in the market. We're not

expecting a huge amount of

expecting a huge amount of

downside. With the reporting

season we will continue to see earnings upgrades and that's is

a very prow powerful driver for

the market and there's a lot of

cash sit tong sidelines. That

will estimate what falls we may

see. We expect the markets to

pull back a bit and that will probably present investors with

some buy ing opportunity over

the next month. Thank you for

joining us. Pleasure. To the

other major movers on the market - Babcock and

market - Babcock and Brown

Infrastructure Group has gone

into a trading halt pend ing a

re capitalisation announcement.

NAB lost 3% after a $309

million tax write-down. Telstra shares dropped after another

board member announced he was

leaving. And the big miners

were down, with Rio Tinto

losing $1.26.

The parliamentary inquiry

prompted by the collapse of

Storm Group is continuing its public hearings today sitting

in townville, the headquarter of the

of the depailed group. The

inquiry heard claim and counterclaim about whether

storm or its bankers were responsible for the margin

calls on Storm client s which

caused so much pain as

financial markets felted down

last year. For many, though,

the real story is not about

margin loans but how financial

planner s get paid. The

committee headed by Federal

committee headed by Federal MP

Bernie Ripoll is inquiring into

many aspects of the financial

planning industry and in his

words the collapse of Storm is

a case study in what can go

wrong. There was fall in the

market and that exposes failure

in systems and people and

processes. If we can identify

what those are and have a

better system out out f it,

that's what we're trying to

achieve. The committee has

received 367 spition many of

received 367 spition many of

them focus on the perceived

confloiffects interest base ned

on the way the financial plan

ers are paid. According to the Australian Securities and

Investments Commission,

financial planners receive only

one sixth of their income from

purely giving advice, which

according to long-time

campaigner for reform Robert

Brown is why most people don't

use financial planners: Its not

use financial planners: Its not

because they don't want to or

don't need, to it's Baw the financial plaerns don't want to

talk to them generally speaking

unless they have investable

funds on which commissions or

percentage fees can be ern earned. Sydney based Damian

Cullen is one of those

financial plaerns. He charges

his clients a%age of funds

under management and.

under management and. I

think if you have ethics and

you're an honest person you

will do always what's in the

best interests of your clients.

If you do that, legislation is

almost irrelevant. Sul Damian

Cullen says the issues around

fee s versus commissions are

not black and white and he says

his business would be greatly

affected if he was forced to

charge an hourly rate like

accountant and solicitors. A

lot of my clients are younger

wealth Cate Caters rather than

retirees. A lot of those people

don't have large lump sums of

money, so if I have to charge

them an hourly rate IT's large

percentage of what they have to invest. The superannuation

industry is at the heart of

much of the debate about financial planners and the way

they're paid. Despite the

concerns of people like Damian

Cullen, the head of the

industry's peak lobby group

believes the push for genuine

fee for service is now

unstoppable. With the recent

ASIC guidance on product advice

and single issue advice, I

think what we can see is

financial planner s who will

restructure their business so

they will provide scale

services, so they can provide

one-off advice on a a single

issue or full financial plan for

for life. This is an example of

why financial plan ers are

copping so much criticism over

what many see as

commission-based product

selling. It's a statement of

advice or financial plan for a

middle aged woman who is going

through a divorce and what

wanded some help with her money. The Government was in a

Government defined

superannuation fund as well as

an industry fund. Both funds