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Nixon accuses police union of undermining her -

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Tonight - the Commonwealth Ombudsman launches a new inquiry into mental health in detention

We know that there are serious suicide attempts usually every night. It is a mass culture built
around fear and despair.

In the first week of July, there were 50 from around all of the places of detention and it just
tells us that there's something wrong and something needs to be looked at. This Program is
Captioned Live

Good evening, welcome to 'Lateline', I'm Steve Cannane. In a few hours time the US House of
Representatives is expected to vote on a expected to vote on a debt reduction plan put forward by
the Republican house speaker John Boehner. It is a key moment in the political stand-off over
raising the US Treasurer's borrowing limits. If the debt ceiling is to pay its bills to pay its
bills and the world's largest economy could default on its debts. Soon we'll be joined by Time
Magazine's Washington chief Michael Duffy. First our other headlines. Former Police Commissioner
Christine Nixon uses her memoir to strike back at her critics. Colonel Gaddafi refused to
relinquish power and condemns Britain's expulsion of Libyan diplomats still still loyal to him.

Detention centre self-harming prompts inquiry

Detention centre self-harming prompts inquiry

Broadcast: 28/07/2011

Reporter: Tom Iggulden

The Commonwealth Ombudsman has launched an inquiry into sky-rocketing rates of suicide and
self-harm attempts in immigration detention centres.


STEVE CANNANE, PRESENTER: The Commonwealth Ombudsman has launched an inquiry into the skyrocketing
rates of suicide attempts and self-harm in immigration detention centres.

New numbers reveal an average of three threatened or actual attempts across the detention centre
network per day.

In just one week earlier this month, there were 50 such incidents.

Political correspondent Tom Iggulden has this special report.

TOM IGGULDEN, REPORTER: The Commonwealth Ombudsman launched his official inquiry after seeing the
evidence of his own eyes.

ALLAN ASHER, COMMONWEALTH OMBUDSMAN: I spent a week on Christmas Island myself at the end of June
and there were 30 incidents in just that week. We then heard that in the first week of July, there
were 50 from around all of the places of detention and it just tells us that there's something
wrong and something needs to be looked at.

TOM IGGULDEN: An independent advisor to the Government on mental health in Immigration detention
centres is backing the inquiry.

LOUISE NEWMAN, MENTAL HEALTH ADVISOR: I think this is very appropriate, much-needed. We're at a
crucial time now within the detention system.

TOM IGGULDEN: The Ombudsman's obtained figures from the Immigration Department showing there were
1,132 instances of actual or threatened self-harm across the immigration detention network over the
last 12 months. One suicide's been confirmed over that period; there are coronial inquests into
another five suspected suicides.

LOUISE NEWMAN: There are serious suicide attempts usually every night. So it's a mass culture built
around fear and despair. And in fact talking to detainees, they describe that: their preoccupation
with death.

TOM IGGULDEN: Lateline's obtained internal documents from Serco, which operates the detention
network under contract from the Government. They're a log of self-harm incidents on the
violence-prone Christmas Island detention centre from May and June this year.

On the day of June 9, there were five incidents of self-harm, two hanging attempts, four threats of
self-harm and one of suicide ideation.

Another page advises, "Hoffmans to be worn by all officers at all times". Hoffmans are understood
to be knives given to staff to cut down detainees who've attempted to hang themselves.

So high is the suicide risk that detainees are not allowed their own razor.

"If the detainees need to shave, the razor will be provided while they have a shower and after they
finish they hand it to the officer, who then disposes of it."

Tomorrow marks three years since the Government announced an overhaul of the Howard Government's
approach to running the detention network.

CHRIS EVANS, IMMIGRATION MINISTER (July 2008): Policy initiatives I've detailed today, are I think
the beginning of a new approach, introducing new and more compassionate values to our detention

TOM IGGULDEN: The Ombudsman says spiralling self-harm rates don't appear to be consistent with
those values.

ALLAN ASHER: We think that the elaboration of those detention values represents current government
policy. That's what we're looking to encourage, and until that's changed, I think the Government
has bound itself to those.

LOUISE NEWMAN: We have people who've experienced torture and trauma, and Government policy states
that those people should not be detained. And yet they are.

TOM IGGULDEN: The Ombudsman will work with a committee of mental health experts and says he'll
leave no stone unturned, including an examination of the Government contracts under which Serco
operates the detention centres.

ALLAN ASHER: We're entitled to speak to anyone and to see any document we want at any time.

TOM IGGULDEN: The Government says it too is concerned by the rate of self-harm in the detention
network. A spokesman for the minister told Lateline, "The Immigration Department and the contracted
health services provider ensure people in detention have access to mental health care, including
mental health nurses, psychologists and psychiatrists. All personnel who work with people in
detention are trained to recognise and respond to the warning signs and risk factors of self-harm."

The Immigration Minister, Chris Bowen, has initiated his own investigation into better mental
health strategies at detention centres, working with, amongst others, the head of Suicide
Prevention Australia, Dr Michael Dudley.

Tom Iggulden, Lateline.

Taliban claims responsibility for suicide attacks

STEVEN CANNANE, PRESENTER: There's been a series of deadly suicide attacks in Afghanistan in
Australian-controlled Uruzgan province tonight.

At least 17 people were killed when three suicide bombers and a group of gunmen attacked official
buildings at a militia base in Tarin Kowt.

The Taliban has claimed responsibility for the attacks and joining us now from Kabul is the ABC's
Afghanistan correspondent, Sally Sara.

Sally, what is the latest we're hearing?

SALLY SARA, AFGHANISTAN CORRESPONDENT: Well these attacks have gone on for some hours in Tarin

It began with explosions near the office of the deputy governor and then there were also attacks
near the central television radio station and also near the compound of local militia leader
Matiullah Khan.

These explosions were followed by heavy gunfire. There are exchanges of fire between Afghan forces
and the insurgents.

Coalition military helicopters were hovering overhead and Australian and coalition commanders have
been closely monitoring this situation as it's unfolded.

But it's been a very serious attack in Tarin Kowt this afternoon local time.

STEVE CANNANE: Sally, who was the target for these attacks?

SALLY SARA: It's unclear at this stage. The Taliban has claimed responsibility as you've said.

They got into - close to the deputy governor's office and then very close to Matiullah Khan's

He's an important figure and powerbroker in Uruzgan. He's the nephew of Jan Mohammed Khan, an
adviser to president Karzai who was assassinated less than two weeks ago.

So there are a lot of connections between those in power in Afghanistan and this is another very
serious attack.

STEVE CANNANE: As you mentioned there's been a string of attacks on prominent Afghan officials and
figures. What's the connection here?

SALLY SARA: A lot of these attacks have been focused in southern Afghanistan, particularly in

This attack today in Tarin Kowt not only going after high profile figures but as often happens
tragically it's civilians who are caught in the middle of this.

And there's been a lot of sadness this afternoon with the death of Omid Khpalwak who was a BBC and
Pajhwok journalist and also worked as a freelancer for the ABC gathering material earlier in the

So it's very, very sad as this story's unfolding.

STEVE CANNANE: And Sally, just finally, why would Matiullah Khan be a target?

SALLY SARA: He's a man who has many friends and many enemies. We're yet to establish exactly what
has happened.

These attacks were also close to the state-run media offices as well, so in the next few hours it
will become clear exactly what's happened as the local officials try to get this situation under

STEVE CANNANE: Sally we'll have to leave it there but thanks very much for that update.

Sally Sara in Kabul.

Nixon accuses police union of undermining her

No transcript available.

Christine Nixon's role. Fears

Stalemate on debt ceiling infuriates Americans

Stalemate on debt ceiling infuriates Americans

Broadcast: 28/07/2011


There are fears Republicans and Democrats will not be able to negotiate an agreement to raise the
government's debt ceiling and avoid a default on more than $US14 trillion.


STEVE CANNANE, PRESENTER: Fears are growing that Republicans and Democrats will be unable to
negotiate their way out of a crisis that threatens to see the United States default on its massive
debt as early as next week.

Top Republican John Boehner is appealing to conservative members of his own party to back his plan
to cut the US budget and raise the debt limit.

His efforts follow a threat from the White House to veto the bill even if it's passed, which
appears unlikely as Democrats in the Senate have said they won't accept it.

HARRY REID, SENATE MAJORITY LEADER (DEM): It is not a solution and it will not pass. Every
Democratic senator will vote against it. I don't know how many more times we need to say that, but
it's true.

STEVE CANNANE: The ongoing stalemate is infuriating many Americans and creating serious jitters on
Wall Street, which suffered its worst day in two months.

Obama has waited too long: Duffy

creating serious jitters on Wall Street which suffered its worst day in two months. To discuss the
political impasse over raising of the debt ceiling Washington by Time Magazine bureau chief Michael
Duffy. Good to talk to you, Michael.

Good evening

. How did it come to this? How world's biggest economy be on the brink of defaulting on its debts?

The US Congress is designed to do nothing quickly and when it is of a mind to do nothing at all, it
can really slow things down. The right-wing of the Republican party is very much party is very much
against raising the debt wants to shrink the size of government and sees this as the letter, the
hammer in order to force what it sees as a kind of free spending democratic President to do it.
They have enough votes to get us to this point. They may have enough votes to actually take us over
the cliff some time next week. This morning in Washington here we are really dancing on the edge of
that cliff in a way I haven't seen us do in about in the 31 years I've been

is this stand-off of the divide in American politics at the moment?

It is a good example, but it is a little more extreme than reality. This is still a centre-right
done ter right that's suspicious of government, us push of government spending, and believes we
have spent too much. That belief, however, does not extend in most Americans's view shut the thing
down, let's stop paying our bills, which is where we're going to be on Wednesday morning, kind of
like a household that can a household that can pay its mortgage but can't buy groceries or fill up
the car with petrol or buy its kids food. This is somewhat of a cartoonish view of the American
view of government, but it is important to remember that this is still a mostly Republican minded
think now, however, they would like the problem solved. This morning there's some hint that there
might be a compromise that's achievable in the five days, but by the five days, but by the time
they get that done, the country will be pretty unhappy with the way Washington is performed this

Let's talk a bit about that. There's that division between Washington and the rest of America.
There's a lot of people in broader America saying get on with it, sort this problem out.

Right. Fundamentally, we are a country that wants to fix its problems, address the issues that we
have, compromise with people we disagree with. disagree with. Bill Clint on had a great expression
of govern ing in-America. He said it was trying to do deals every day with people who want to kill
you. It is part of the process in all democracies which you have to make room and give and take and
compromise. This group of Republican freshmen in the Lower House is a no compromise, no surrender,
no quarter bunch of folks. They're almost new to politics, almost all of them. They have one
mission, they're almost religious in their belief that Government must be slung, that taxes cannot
be raised, that spending must be cut, so much so that they would take us all the way to this point.
The rest of the country probably agrees that ledgeatier, Congress has gone too far in the last two
years with spending with no real impact but doesn't want to bring the economy to its knees. That's
what will happen next week if they continue down this road.

You mentioned that new breed of Republicans in the partyroom at the moment. That's led to some
really interesting tensions, wasn't it, because John McCain, the previous Republican presidential
candidate has said that that their behaviour is unfair and he used the term bizarre to describe
them. It led to real itself, hasn't it

He called the freshmen Hobbits, which was a pretty... That's fighting words. This is a group of
about 75 newcomers. They tend to be younger than McCain's generation. They tend to be from the
south and the west. They tend to be born in the age after the Reagan They weren't in Washington
when compromise was more common, when parties worked together. Now we have the the Democrats and
the Republicans in Washington don't know each other, they don't special lies together. When John
Boehner was named speaker at the end of last year, Obama didn't know his phone number. They didn't
know how to reach them him. They had to reach out to one of out to one of Obama's aids fishing
buddies to get Obama's cell phone number. The lack of knowledge about each other really has widened
in this country. The cultures right and left and left live apart, live in different worlds, and as
we've seen in this debate, they have their own sets of facts. The Democrats say if we don't come to
a dole, the country will default. Many of these freshmen think no we won't. We won't. Everything
will be fine.

President Obama seems to be blaming it all on the can be sheeted home to him. He's let the
Republicans do the running on debt reduction. He ignored the advice from his debt reduction commit
knee in ways to implement debt reduction.

Yes. It is a great point. He waited too long. Those proposals came out at the end of last year and
when they did he didn't endorse them. He didn't say anything about them. He let the Republicans go
first and by the time he jumped into the conversation here himself with a few weeks to get the deal
done. As you noted at the top, in Washington nothing happens in a few weeks. It take that long just
to get meetings with people. I think his main fault his main fault was he didn't seize the
opportunity seize the opportunity when it was there. He waited quite a long time and left himself
really no margin for error and now we're down to five days left and he's kind of retreated from the
scene which I think has made him look weak. After coming out several times last week in public and
trying to stoke a fever for a grand compromise, a big deal that was solve a lot of solve a lot of
problems, he's now retreated now retreated a bit and he hasn't really improved his standing as a

In a few hours time we're going to see a vote in the house on John Boehner's bill. Tell us how does
his bill different on debt reduction compared to the Democrats's bill?

That's a good question. There are two competing versions now with five days to go both coming of
the Congress. Boehner is essentially cuts discretionary spending, everything but defence, a little
bit of entitlement of social security and hell care. The Democrats version which will be taken up
over the weekend regardless of what happens in the house has non-discretionary cuts but also a much
bigger hunk of defence and military spending. It would would do other things Republicans would not.
The democratic bill at least on paper is a little bigger in terms of how much it would cut. About
2.7 trillion. The Republicans is 2.2, 2.3. Best is they'll find some way to marry those two.
They're not that different in what they would propose in how they would get us through the next
year so there is a window. It is not a big window, window for a compromise if if both sides can
find the wisdom to take it.

One of the differences between Boehner's plan and Reed's plan is plan and Reed's plan is under
Boehner's plan there's the debt ceiling is only temporary. We could be going through this in a few
months time again if the Boehner plan pass, couldn't we?

We could. It is a good point. They don't have agreement yet on how often they want to do this.
Usually limit increase about once a year, sometimes he was retwo years. The Republicans think this
is such a good issue for them they should do it every four, five or six months and now they have
decided this is where they're going to make their stand. The White House has said over and over
again has said over and over again we don't want to do this every four five or six months. We don't
want to do this until the elect next November and so they're fighting about that as well. My bet is
at the day Obama will give in on that to avoid default. We'll see if the Republicans make their
stand there.

John Boehner's bill or his plan is going to be voted on in going to be voted on in a few hours
time. What chance is it going to pass? There's going to pass? There's a whole lot of Tea Party
people within the Republican movement who have described this plan as an embarrassment.

Yes, this the question of the. It will be embarrassing to John Boehner if the problem and he can't
get it through his own Congress. There are about 240 Republicans in his Caucus, in his party. Needs
to get 217 of them. Most people people believe he will not be able to do that and Democrats will
have to provide a dozen, two dozen, whatever the number is, to get it passed. It may not pass at
all. The Democrats may decide to fold their hands and watch him fail. That's the level of
dysfunction. It is not just between the two parties getting a long. That's definitely broken. Even
definitely broken. Even inside the parties people are not compromising. That's a real level of
dysfunction and breakdown that really is unprecedented in a generation here and here and it tells
you just how divided the public is, the party is, about the direction of the nation. It is a grim
prospect for them this morning. The reporters for time who are on the hill tell me that Boehner
will squeak by but it

he does squeak by, it then goes to the Senate. I'm assuming this will be compromises in the Senate
and it will end up in the house next week.

The way it is supposed to work. Where we're going there are no we're going there are no maps. There
are no roads. The way it is supposed to work Boehner will pass his by a hair today. It will go to
the Senate. Harry Reed, the democratic leader version with some sweeteners for the Republicans, tax
cuts, some devices that will some devices that will force certain cuts at certain times, things
that mollify, hope to mollify some of those freshmen who are so hard over, and then pass that with
both... Bipartisan support send it back to the house and say if you don't pass this we're going to
default. Essentially stick a the last couple of weeks would make you think that will work. They
seem to be taking don't they won't take yes or an answer. We'll see. That's what this weekend is
going to essentially be about, either side can force the other to say yes.

Looking ahead, who is likely to come out on top in this game of brinkmanship politically speaking?

I think Swiss Bankers will very well. Foreign currencies with AAA ratings. It is possible of course
that simply the spectacle of Washington fiddling while worldwide confidence in its currency and
confidence in its currency and its political system fades, means that we've already lost, that the
ratings agencies will downgrade our debt even a little which which is a huge defeat for the
country. Interest rates could rise even if we don't default. There are no winners can see and in
some ways, we've already lost the battle. I think, though, if you had to be think, though, if you
had to be the biggest loser here, it is probably President Obama because he'd gone into this fight
hoping to raise revenues, that's not going to happen. Went into this fight hoping to limit the
limit the number of cuts. That doesn't seem to be limited. And most importantly, he tried to get
the grand bargain, the giant fix that would flattened rates and closed loopholes and cut spending
and that's not going to that's not going to happen. It is hard to see how he has come out of this

That debt reduction commission of course advised him that he should increase taxes which is
incredibly difficult in the current volatile political situation in the US. There were some really
interesting analyses in the US A where it said Americans were paying the lowest lowest levels of
income tax since 1950. since 1950. 9.2% of income is going towards tax. Can America ever solve that
problem of debt and deficit without raising those tax levels up again?

No, it's going to have to come up with... You're right b half of Americans pay no income tax.
Usually on the lower end of the spectrum and it's become politically impossible to raise them at
allment we're going to have to take a longer view, close the close the many trillion dollars of tax
loopholes that lots of and deductions and find a way to flatten rates for everyone but have
everyone pay something. That's a very difficult political fix that takes great leadership, great
vision, and the ability to compromise on both parties and at the moment we don't have it. That is
holding the nation back at home economically, it is reducing its ability to have a say in world
events, it say in world events, it is really limiting the United States at a moment when That's the
real tragedy here. It is real lay a failure of courage.

It will be a fascinating day in politics in Washington. Thanks very much for talking to us,

for talking to us, Michael.

Thanks, Stephen.

Libya threatens court action over diplomat expulsion

STEVEN CANNANE, PRESENTER: Britain has become the latest country to formally recognise Libya's
rebel coalition as the country's legitimate government.

It's expelled the last Libyan government diplomats from the UK and invited the rebels to install
their own ambassador in London.

But the move has had little effect in Tripoli, where the Libyan regime has scoffed at the move and
threatened to take Britain to court.

It's also made no impact on the rebels' military campaign to defeat Colonel Gaddafi's forces.

Middle East correspondent Anne Barker reports.

ANNE BARKER, MIDDLE EAST CORRESPONDENT: Rebel supporters rallied outside Libya's palatial embassy
in Hyde Park celebrating the latest move against Moamar Gaddafi's regime.

REBEL SUPPORTER: I'm from Misrata, he's from Zuwara, he's from Beida.

ANNE BARKER: Britain has expelled all Libyan government diplomats from London, giving them three
days to leave the country, and it's formally recognised the rebels' own transitional council as
Libya's legitimate government. It's now inviting rebel leaders to send their own diplomats to
replace those who've been sent home.

WILLIAM HAGUE, BRITISH FOREIGN SECRETARY: We no longer recognise them as the representatives of the
Libyan government and we're inviting the National Transitional Council to appoint a new Libyan
diplomatic envoy to take over the Libyan embassy in London.

ANNE BARKER: The decision prompted a defiant response in Tripoli, where Colonel Gaddafi still looms
larger than life over the war-torn country.

The Libyan government says Britain's decision is illegal and irresponsible and it will take the
matter to the International Court of Justice.

KHALED KAIM, LIBYAN DEPUTY FOREIGN MINISTER: It's unprecedented in the international diplomacy -
history of the international diplomacy and of course it both violates the national British laws and
international law, specifically the Vienna Convention on diplomatic relations of 1961.

ANNE BARKER: Britain's move also paves the way to hand the rebels tens of millions of dollars in
frozen oil money. It's a much needed political and financial boost.

FATHI HARIBA, FORMER LIBYAN EMBASSY ADVISER (translated voiceover): This is very positive. It's a
psychological boost. And the Transitional Council will be able to use the unfrozen funds to help
the Libyan people.

ANNE BARKER: Britain is now one of 29 countries, including Australia, that recognise the rebels'
council as Libya's rightful government. Along with France it's also relaxed its opposition to
Colonel Gaddafi's staying in Libya if and when he steps down as part of a new push to end the
five-month war. But it's had no impact in Tripoli where pro-Gaddafi supporters continue to hold

KHALED KAIM: I tell the British government they are flogging a dead horse. The rebels will not be
benefitted from this.

ANNE BARKER: And Colonel Gaddafi himself appears as determined as ever to stay in power.

MOAMAR GADDAFI (translated voiceover): Everyday as the bombardment intensifies so will our
resilience. Our belief and determination will strengthen.

ANNE BARKER: Whatever their political gains, on the ground the rebels are still fighting an uphill

Despite recapturing towns like Brega in Libya's east they're struggling to make further advances
except in the mountains south of Tripoli where they're holding out against the Libyan forces.

But there's still around 100 kilometres from the capital and rebels now believe that NATO doesn't
want them to move any further just yet.

Anne Barker, Lateline.

WA to hear landmark GM contamination case

STEVEN CANNANE, PRESENTER: A West Australian farmer is set to launch legal action against a
neighbour who allegedly contaminated his property with genetically modified canola.

The landmark case will be heard in the WA Supreme Court and will scrutinise the rights of farmers
to decide what they grow on their land.

Minsi Chung reports.

MINSI CHUNG, REPORTER: It is the first time an Australian farmer is taking another to court over GM
crop contamination.

Kojonup wheat grower Steve Marsh was stripped of his organic status last December and has since
been unable to sell his crops at a premium but there's also been an emotional cost for Mr Marsh,
who says he shouldn't have been forced to take his lifelong friend Michael Baxter to court.

STEVE MARSH, KOJONUP FARMER: Had proper regulation been put in place and the evidence properly
dealt with at the time, because as I say, a lot of people knew this couldn't be contained. We
shouldn't be in this position. That's the saddest part.

MINSI CHUNG: The WA Government rolled out trials of GM canola in the southern half of the State in
2009. Mr Marsh alleges Mr Baxter, who is his neighbour, was negligent in allowing GM canola to blow
on to his property and is suing for loss of income.

It is believed to be the first legal action of its kind in Australia. The test case is expected to
have far reaching implications for Australian agriculture.

MARK WALTER, SLATER AND GORDON: Where there's neighbourhood conflict, it's always a difficult
decision to make but there is a high level of concern in relation to what is going to happen with
GM crops and how that might impact on their farming practices.

SCOTT KINNEAR, SAFE FOOD FOUNDATION: It will tear rural Australia apart and hopefully this case
will be the only one and hopefully the legislators will see the impact of Steve's case and the
result will change legislation quickly.

MINSI CHUNG: Lawyers for Michael Baxter say he denies liability and will defend the case. A
spokesman for the Agriculture Minister says the government can't comment because the issue is
before the courts.

Minsi Chung, Lateline.

NSW raids bikie gangs over tax fraud

STEVEN CANNANE, PRESENTER: New South Wales police say they've conducted the biggest raid against
outlaw bikie gangs in the state's history.

Hundreds of officers swooped on nearly 20 locations around Sydney and arrested 10 people in
connection with a multi-million dollar tax fraud.

Ben Worsley reports.

BEN WORSLEY, REPORTER: Just a fortnight ago, Mostafa Jouayde was released from jail to attend his

Now the 30-year-old Hells Angels chief is back behind bars, one of 10 people arrested this morning
in a massive police operation.

ARTHUR KATSOGIANNIS, NSW GANG SQUAD: Today's arrests will have a substantial impact on the illegal
activities of a major chapter of the Hells Angels.

BEN WORSLEY: Nineteen locations were raided, homes and businesses linked to an alleged tax fraud
and money laundering syndicate.

The former Bandidos boss Mahmoud Dib was also arrested but not all involved are from inside the
bikie world.

ARTHUR KATSOGIANNIS: Three of the people arrested today are in fact accountants.

BEN WORSLEY: Police allege businesses, both real and fake, were lodging false tax statements.

ARTHUR KATSOGIANNIS: From those false business activity statements we will be alleging that these
individuals received a significant GST refunds.

BEN WORSLEY: All up, police allege $5.5 million was made. Today's raids were the culmination of 18
months of cooperation between police and the tax office.

As well as cash, 10 guns were seized and a stash of steroids.

ARTHUR KATSOGIANNIS: The investigation has been tedious and complex.

BEN WORSLEY: But increasingly it is the style of investigation used by police to strike at bikie
gangs. Last week another Hells Angels chief, Felix Lyle, was charged in a separate fraud case.

ARTHUR KATSOGIANNIS: This is all about, about hitting these people in the hip pocket.

BEN WORSLEY: New South Wales Police have joined other states calling for Federal legislation to
tackle bikie related crime.

The Premier has written to the Prime Minister in support.

BARRY O'FARRELL, NEW SOUTH WALES PREMIER: We want to stamp them out. We want to see an end to them
and I think the best way to do that is back the police and have Federal national legislation.

BEN WORSLEY: Police expect more arrests after this morning's raids.

Ben Worsley, Lateline.

expect more as after this morning's raids. Now to the weather. Morning rain for Hobart, light rain
develop ing in-Adelaide, a possible shower in Brisbane, showers in increasing in Perth and mostly
sunny in all the other capital cities. And that's all from us. If you'd like to look back at
tonight's interview with Michael Duffy or review any of the Lateline's stories or transcripts you
with visit transcripts you with visit our website. You can follow us on Twitter and FaceBook. I'll
see you again tomorrow night. Good night.

Closed Captions by CSI This Program is Captioned Live

Good evening, welcome to 'Lateline Business'. I'm Ticky Fullertonment Australia's biggest
investment bank, Macquarie Group, says it will survive a US debt default but not unscathed.

We can't believe it is a good thing. We think it will be a think it will be a bad thing obviously.
The implications to the business will be bad. I think put very simply.

An untapped untapped source of wealth. Australian firms look to take advantage of the thrifty
nature of the Japanese.

Fund managers globally look at accessing the household wealth of Japanese investors as Grail.

Weighinging up the costs of a stellar career. Gail Kelly reflects on the dangers of trying to have
it all. The put rocks in life. Put them in first. Children, first. Children, relationships, home
your passions, your health. Put them in first and pay attention to them. To the markets, growing
fears about a US debt default weighed heavily on markets around the world. The All Ordinaries fell
more All Ordinaries fell more than 1.5%. ASX 200 down 7 3 points. Hong Kong's Hang Seng defied the
trend and was slightly up. the trend and was slightly up. Market kind to Australia's biggest
investment bank Macquarie Group. The company is sticking to its forecast that annual profit will be
higher than the previous year, but the market upheaval has taken a heavy toll on some parts of the
business. As the share price slipped close to its lowest level in more than two years, Chief
Executive assured shareholders at the AGM Pakistan is doing better than its competitors and its
competitors and with could stand serious market turmoil.

Production is down at the millionaires factory. The first quarter has been first quarter has been
marked by some pretty serious events that really is sapping confidence in the world. It's sapping
cover tense from the point of view of retail inn investors and inc-Tuesday institutional investors.
We're experiencing a lack of confidence.

Macquarie confirmed speculation I've weaker first-half profit for the months to September and
scrapped its profit growth forecast for the fixed forecast for the fixed income, currency and
commodities division, a division accounting for 70% of last over's trading income. But it stepped
up its expectations for the expectations for the funds management division.

The market facing businesses have suffered with the weak market conditions, but against that we've
got our annuity style businesses that have continued to grow over the period. This is our funds
management our corporate asset finance group.

Macquarie is still expecting to improve on last year's full-year profit of $956 million if the
markets don't get significantly get significantly worse. But with the debt ceiling negotiations
still deadlocked in the United States, an unprecedented default by the US is still on the cards.

We can't believe it is a good thing. We think it will be a bad thing obviously. The I'm Mick
indications to the business will be bad. Put very simply, it is again like where we've been in the
last few years. It is a place we've never been before. Until we get there, we don't know.

That simple and frank observation didn't help Pakistan's Pakistan's share price which tumbled more
than 4%. Nicholas Moore assured shareholders at the AGM that the bank was well placed to meltdown
without a plan B.

I would like something a little bit more of a catastrophe plan given that it is not just wild-eyed
enthusiasm using the wild-eyed enthusiasm using the word catastrophe and major economic crisis. It
is more of a foreseeable reality now even than four years ago.

With return on equity falling from 26% five years ago to below 10% now, the Australian Shareholders
Association called on Nicholas Moore to reports Macquarie was not covering its cost of capital. Mr
Moore dismissed the measure Mr Moore dismissed the measure as theoretical.

It is profit less prosperity. The company is going out backwards. Nobody is suggesting that
Macquarie is going out backwards because they've suggested that the return on equity will improve,
but were it not to improve, shareholders would need to be very concerned.

Shareholders weren't concerned enough to reject the new pay arrangements which could Nicholas Moore
walk away with Nicholas Moore walk away with $2.5 million worth $2.5 million worth of performance
shares. In the last five years, five years, Japanese investment in Australia has quadrupled to more
than $50 billion. That figure though remains small compared to Japanese household wealth which
amounts to more than 15 trillion dollars or 10 times the size of Australia's current asset
management sector. Those households are now on the look out for high yield investments and
Australian fund managers are keen to capture a share of the market. Emily Stewart reports.

The Japanese could well be the world's best savers and they're now on the look out for somewhere to
invest their money.

Fund managers globally look at accession the household wealth of Japanese investors as the Holy the
Holy Grail. There's over 15 trillion dollars worth of investable asset the held by households. 66%
of that is sitting in cash and deposit earning next to no yield.

A report commissioned by Austrade and written by PricewaterhouseCoopers finds Australia is the
second largest destination for Japanese offshore investment after the United States. With Japanese
investments in Australia quadrupling over the past five years, to 53 years, to 53 billion dollars.
Around 96 of these very muches are in Australian bonds. Mark Johnson from the Financial Centre
Taskforce says this could widen to well.

They see higher yields, the potential for higher yields, they see the potential for growth, and
they see that coming from a market coming from a market with which they're not unfamiliar.

There are several trends occurring in Japan that are providing Japan that are providing an
opportunity for fund managers. Japan has an ageing population and baby boomers are starting to
retire, but in vestors are receiving a falling rate of return from pension funds and this is
fueling the appetite investments.

Wealth is also soon to be handed down to the next generation and younger people are expected to
have a less conservative attitude to investing. Debt woes and instability in the and you
instability in the and you states are also providing an opportunity for Australian fund managers to
increase their market share.

When you look at at people's attitudes to investing coming out of the Global Financial Crisis,
people are wanting to be more conservative and looking for economies that provide financial
stability such as Australia.

Mark Johnson says Australia has advantage over many countries.

Setting up of the


Setting up of the superannuation system and the outcome of the reforms has been to make the
Australian superannuation system amongst the most efficient in the world. That's not just in funds
management, it is in all the back the back office, the support, the IT and so on. Probably
comparable only to Kay couple of of countries in the world.

The funds management sector funds management sector plans to push further into Asia with a proposal
to create a uniform regional market for investment funds. ANZ has interest rate forecast and
expects the Reserve Bank next week to lift the cash rate by 25 basis points to 5%. The ANZ earlier
predicted the next rate rise wouldn't be February while many other economists tipped rates will
remain on rates will remain on hold in the in the 9 next year. It is mainly due to the much than
anticipated inflation figures this week.

We now have clearly have an uptrend in inflation over the first-half of of the year. Our core
inflation measures are running at 3.5% annualised in the first six months of the year.

The bank believes a Reserve Bank move on Tuesday will reduce the risk risk of potential
inflationary pressures and avoid the need to raise rates a few times down the track. But the ANZ
concedes the outlook may revised again early next week if crisis talks this weekend fail to resolve
the US debt crisis. For a look now across the local the local market, earlier I spoke to Stephen
Pill from RBS Morgans. With Wall Street suffering its worst day in two suffering its worst day in
two months, I guess the Australian market was never going to get off scott free, was it?

It was a very poor lead-out out of Wall Street overnight. The market terribly in the end. The banks
in particular took a bit of a hampering today. The stand-out there was Macquarie. That was down
down 5% at one stage finished not far from that. All the major banks were down. It was