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Tonight - divided we fall -

the Liberal Party's leadership

showdown. I'm running to allow

my colleagues to have a choice

about the path forward. I will

talk to all my colleagues over

the next few days. There will

be a ballot. Did the

WorkChoices laws lose it for

the Liberals? Countdown over -

David Hicks faces court

tonight. And smooth ride, the

Lane Cove Tunnel passes its

first test. Today was just

fantastic. It saved me heaps of


Good evening, Juanita

Phillips with ABC News. The

dust of the state election

battle has barely settled, now

it's being kicked up again.

Barry O'Farrell is challenging

Peter Debnam for the Liberal

leadership. Mr O'Farrell says

he's the man to restore the

public's trust in the Liberals'

ability to run the state. For

his part, Peter Debnam says

he's ready and able for four

more years of taking on Labor.

State political reporter, Simon

Santow. Baghdad is not ready to

relinquish the Liberal

leadership. I will talk to all

my colleagues over the next few

days. There will be abat

ballot. He'll have to beat a

challenge from his deputy,

Barry O'Farrell. We've tried it different ways in the past.

It's failed. The two men are

old rivals. When John Brogden

resigned 18 months ago, they

both put up their hands to

become leader. Before the vote,

Barry O'Farrell pulled out. An

parliamentary Liberal Party O'Farrell leadership of the

would not have been a unite td

team in the way it was under

John Brogden and the way I

believe it can be under Peter

Debnam. So what's changed? 18

months ago I made a decision

not to run for leader on the

basis of unity. Today I'm

making a decision to run for

leader for the same

reason. Peter Debnam spent the

morning lending his sport to

the Liberals candidate in Port

Stephens where counting shows a

very tight contest. When it

came to questions about how

much support he'd received from

Barry O'Farrell... Did Barry

give you his full support

during the campaign? Barry

campaigned hard. I'm proud of

my team. The two men stood

shoulder to shoulder for many

policy announcements, but there

was unexception, the 11th-hour

release of the campaign

costings. That was a Barry

O'Farrell solo. Whoever wins

the contest will lead the

Coalition against a new-look

Iemma Government. Education Minister Carmel Tebbutt is

already heading to the

backbenches so she can spend

more time with her 6-year-old

son. It's the right decision at

this point in time. I'm not

ruling out coming back to the

ministry, but I'm aware in

politics, once you step back,

things change and move on and

other people come

through. She's been a fabulous

minister. A great local member.

She's put her family first and

I congratulate her for

that. Morris Iemma's freshened

up frontbench will be unveiled

later in the week. Today he was

concentrating on giving the

state's rail services a

makeover. He called in senior

executives and told them to

culture. And Simon Santow joins change the RailCorp

us from Macquarie Street. When

will the Liberals hold the

leadership ballot? That's the

problem. Both camps will tell

you they want it over as soon

as possible. Both camps also

know it can't be conducted

until all the seats are

finalised, particularly the

ones they hold hopes of winning

F they get extra members up,

they will be entitled to a vote

in what could be a tight

contest. Any indication on who

has the number? It depends

again on who you listen to. I

can tell you that Barry

O'Farrell's camp is quite

confident. They say they

wouldn't bother challenging if

they didn't have the numbers.

Peter Debnam's camp says they

have the numbers and that one

thing that Peter Debnam's camp

has made clear is that if they

don't have the numbers or think

they don't have the numbers

before the contest, they will

go ahead with it. There will be

no vote that happens without a

contest. Alright, Simon Santow,

thank you. Labor campaigned strongly on industrial

relations in the NSW election

and that's forced John Howard

to fend off suggestions that WorkChoices is out of favour

with the voters. But today his

argument was undermined by one

of the Liberals own high

profile candidates. Pru Goward

was one of the Liberals star

candidates in the NSW election

and she has no doubt

WorkChoices did have an

impact. Certainly blue collar workers raised the issue of

what they were worried about

would happen to their penalty

rates. Take Pru Goward word for

it. ADVERTISEMENT: We'll hand

the IR powers across to Canberra. Labor campaigned hard

on industrial relations in NSW,

but John Howard says there is

evidence it was not a dominant

issue. There was an 8% or 9%

swing against the Labour Party

in the Hunter Valley. PM

insists he won't soften

WorkChoices and thinks families

have never had it so good. Work

wog families in Australia have

never been better off, Mr

Speaker. Dr Rudd! Kevin Rudd hustled off to a hospital

claiming that nurses could be

next to be forced on to

individual contracts and lose

employment benefits. It's one

of the concerns we've got. Far

from it, says Mr Howard, who

denied he'd make offering

individual contracts a

condition of funding for

hospitals as he has for

universities. The conditions

that apply in relation to the

employment of nurses in our

different. Indeed... Nurses in view is quite

this country, given the

responsibilities and onerous

work they carry out are grossly

underpaid. Labor argues that

shows WorkChoices is about

cutting wages. John Howard's

office says while nurses should

be offered individual

contracts, his Government won't

force the issue with the

states. Nevertheless, it does

portray a sensivity about

industrial relations, as does

the Government's refusal to

release updated figures

detailing the impact of WorkChoices. No-one has shown

me a formula that allows you to

compare apples with apples. If

that's the case, according to

Labor, the Government cannot

claim WorkChoices has left

workers better off. In a

matter of just hours, David

Hicks will face a military

commission in the United States

and his lawyers are going in

fighting. They are seeking

charges against the chief

prosecutor for allegedly trying

to silence Hicks's defence

lawyer, Major Michael Mori.

That dispute is playing out as

talks continue on a possible

plea deal for David Hicks. From

Guantanamo Bay in Cuba, North

America correspondent Michael

Rowland reports. The hearing is

still hours away, but the

sparring has already begun at

Guantanamo Bay. David Hicks's

lawyers are accusing the chief

military prosecutor of

professional misconduct over

his criticism of defence

tactics. Colonel Moe Davis

isn't shying away from his

comments and says the defence

public relation's campaign is

about to come to an

end. Tomorrow we'll get past

the fiction and down to the

facts. When the public hears

the facts, they might have a

different imprention than they

do today. Hicks has been

charged with providing material

support for terrorism. His

hearing will be the first held

under the new system. Hearing

is significant in another way

too. It will be the first time

David Hicks will have appeared

in public for 2.5 years. His

lawyers say that in that time

the Australian has deteriorated

both physically and

mentally. Hicks's lawyers say

his condition hadn't improved

when they saw him today. He had

dark and sunken eyes. He looked

very tired. Long hair. Full

beard today. Not sure whether

he will have a peered tomorrow

or not. That remains to be

seen. Terry Hicks in Washington

en route to Guantanamo Bay is

bracing himself for what he

expects to be an emotional

meeting with his son. We don't

know what David will be like,

how his mental condition or

physical condition is. We have

to be aware that he's changed

and we'll take it from there. Hicks is expected to

plead not guilty, but

negotiations are continuing on

a possible plea bargain, an

option his lawyers aren't

ruling out. If it was yourself,

you would be thinking, I

suspect, about how to get out

of this place. Talks on a

possible deal with continue

right up until the start of the

hearing. And the chief

military prosecutor, Moe Davis,

will be interviewed live

tonight on Lateline. PM has

welcomed tonight's hearing. Mr

Howard says while the process

has taken too long, the sooner

Hicks gets to trial, the sooner

he can be back in Australia.

I'm pleased that the

arraignment is coming and I

look forward to a very speedy

trial. I defend the legal and

human rights of every

Australian citizen and he will

not be receiving a fair trial

through the commission. Government has

refused to comment on the

possibility of a plea bargain.

In Iraq, the extra US troops

deployed by President Bush have

begun the dangerous task of

cleaning out the strongholds of

Sunni insurgents. US commanders

hope they can win the

confidence of a reluctant,

sometimes hostile, population.

It's a dangerous house-to-house

fight against bombers and

snipers. Middle East

correspondent Matt Brown and

cameraman Brant Cumming has

been on patrol with US forces

on the streets of Ramadi. US

troops backed by the Iraqi army

have been clearing this

insurgent stronghold block by

block. They've sealed off

large sections of the city. There's one point where

civilians can come through at

the north. This is how the

Americans plan to re-take

Ramadi, the capital of Anbar

province, the hartland of the

Sunni insurgensy. A few weeks

ago, the Ma'laab district in

east Ramadi was thick with

insurgents and roadside

bombs. Every time they used to

do patrols, they would make

contact every time. Now the

troops are determined to show

the locals that they, not the

insurgents, are the real power

here. But the insurgents still

roam free in the neighbouring

sector. So Apache attack

helicopters are called in to

prepare the ground for a major

assault. The troops must now

make sure the insurgents can't

flee the assault and fall back

into their sector. The way we

have it blocked off, it's

permeable so guys can get in.

They have cards. They can't

bring vehicles in, but they

have a means to transport

weapons. That means fresh

roadside bombs and more dreaded

snipers closer to home. We've

had a few guys get killed and

wounded from snipers. That's

where the Iraqi forces and

their local intelligence prove

crucial. Guided by an

informant, they've raided a

home and hit pay dirt. This

sniper will be questioned for

days, perhaps weeks and

everyone is quietly pleased.

But the sniper is just one

among many who still refuse to

give in. These troops got

attacked by three rocket

propelled grenades yesterday,

two the day before and another

today. But if they pull out any

time soon, this sector will

once again become an insurgent

stronghold. If past experience

was anything to go by, the Lane

Cove Tunnel had the potential

to cause some serious

headaches. But to the relief of

both drivers and politicians,

the tunnel's first test in

peak-hour traffic was a

reasonably smooth ride. After

all the build-up and

anticipation of traffic chaos,

in the end it was one of the

smoothest runs into the

city. Today was just fantastic.

It saved me heap of time. No

traffic. It was good. But there

were, as expected, some

confused drivers changing lanes

where they shouldn't have to

avoid the tunnel. Unfortunately

the signage is a bit

confusing. There was the odd

bus which didn't take the right

exit to stay en route.

Authorities say the peak was

probably a little less chaotic

than normal because the change

of daylight savings and an

attempt die some drivers to

avoid the area entirely. During

the morning peak, about 3,000

cars an hour used the tunnel

and in the 24 hours to 1pm, f 4

p drivers took advantage of the

toll-free ride. The tunnel is

on target to reach around

80,000 cars a day. After all

the planning and scrutiny, the

tunnel boss, Ian Hunt, could

finally exhale. It is a relief

that this morning has been

smooth. RTA, which took a

caning over its role in the

Cross City Tunnel fiasco has

reason to be happier this time

around. The early signs are

good with this particular

tunnel. There's been very good

discipline in driver behaviour. Local residents say

their health is now at risk

from the unfiltered stacks. The minister's conditions of

approval allow up to 14 tonnes

of toxic particle matter to be

discharged into the local

precinct each year. The

afternoon peak ran smoothly.

The tunnel operator says a more

accurate test will be the next

two days, traditionally the

busiest on the roads.

Tonight's top story - lirp

leader Peter Debnam is

preparing to fight off a

challenge from his deputy,

Barry O'Farrell. Still to come

- Australian swimmings golden


It's shaping up as the

supermarket sale of the

century. Retail giant Coles is

opening thes doors to a

takeover and says everything

must go. Some of its best buys,

sa Office Works and Target

could be sold off separately

and analysts say recent flat

profits won't deter bargain

hunters. It's been a turbulent

time at Coles lately. Now

Australia's second biggest

retailer has tabled a

disappointing first-half profit

of $501 million, up 3.5% on

last year. The market wasn't

expecting a good result. The

market got what it expected. We

are acutely aware that we do

have some short-term business

challenges but this is a great

company with great assets.

Chief executive John Fletcher

concedes he's not pleased with

the performance of the

supermarket division. He blames

that in part on the dismissal

of a key executive who was

sacked for misconduct. Coles

denies it failed to keep

shareholders aware that

earnings were falling behind

sce. We completely reject that

at any time we've misled shareholders. Today Rick Allert

revealed the board's plans to

sell off the company, either as

a whole or in parts. We're

going through an ownership

review process. What that will

determine is what values

potential owners put on

it. This is a company in the

top 30 of global retail

revenues. This will be well

sought after around the world. Coles takeover plans

could face Opposition from the

former chairman, Solomon Lew.

He's taking legal action over

the way Coles handled a takeover approach last year and

his stake could be a stumbling

block to any future

deal. Another property

investment company has gone

bust leaving debts of hundreds

of millions of dollars. The

collapse of Fincorp will leave

almost 8,000 investors out of

pocket. Fincorp investors

lured by glossy ads are

smelling something, but it's

not per fume. Fincorp's

behaviour has worried consumer

advocates for years. I was

concerned of the high interest

rate and the high-risk product

being marketed as a low-risk

product to vulnerable

retirees. Almost 8,000 retail

investors might be hit as

Fincorp goes into

administration, owing nearly

$300 million. Administrator,

Korda Metha says all

redemptions and interest

payments will be frozen and it

won't be in a position to

estimate returns to investors

for some time. It says

Fincorp's six development sites

in Victoria and four in

Queensland, will be sold or

developed. They may information

be nothing for the punters at

the end of the day. Nine

directors have resigned from

the company in 18 months,

including chief executive Craig

Stubbs, who left in January,

citing ill-health. Denise

Braily has questions for the

corporate regulate ASIC for not

taking tougher action after

Fincorp was in court two years

ago. Why they allowed dishonest

people to continue operating

and raising another further

$100 million. She's expecting

another 10 company tosses

surface with similar problems

within two years. The Fincorp

story isn't being played out

across the broader economy. In

its latest financial stability

review, the Reserve Bank says

business balance sheets are in

good shape and the level of

problem loans is quite low. It

said household finances were

reassuring and unlike the

United States, there was not a

sharp increase in problem

loans. To the markets and BHP

Billiton has broken through the

$mark for the first time since

last May helping the share

market to a strong rise. BHP

Billiton shares jumped 3%, to

$30.04 today following the end

of the company's $3.5 billion

buy back and the continuing

strength in the oil price.

While BHP shareholders will be

happy, they will be reflecting

that while their investment has

done nothing since May 17 last

year, apart from dividends and

the buy-back, the market as a

whole has gone up 15%. CSL has

gone up 50% and Paladin has

doubled. Today the all

ordinaries rose 0.6% and apart

from BHP Billiton other

resource stocks led the way.

Woodside up 3.5%. ERA, 4%. AWB

shares had a big day as well,

up 6.7%. Computer shares rose

3%. The February-March share

market correction has been all

but recovered. The index is

less than 1% below the close on

February 26 when the reversal

hit. The ASX200 is just 10

points away from breaking

through the 6,000 point barrier

again. A lot of the strength in

resource stocks seems to be

related to the krut oil price,

which has gone up 10% in a

week. Although the petrol price

is rising rapidly, even without

the impact of the latest oil

price surge. The national

average rose last week for the

8th straight week. Rural

confident has rebounded

according to the latest survey

from Rabo Bank. It's been a

grim time in rural Australia as

farmers battle the drought, but

as the new year has begun with

summer rainfall and good

weather forecasts, along with

stronger commodity prices, so

have spirits lifted. Finally,

the Australian dollar drifted

today, but it's firmly above 80

US cents. That's finance. New

figures have been released

showing just how successful

bowel cancer screening has

been. The bowelscan programme

run by Rotary has picked up

hundreds of tumors in patients

before they even noticed any

symptoms. 77-year-old Dick

Lamont works part-time in this

Sydney chemist. For five years

he's been selling bowel cancer

screening tests and using the

test himself. Last year it

showed the first stages of

cancer. Doing it yearly on a

regular basis you have a good

chance of getting it early and

there's no problem at all. New

figures show just how effective

the bowelscan tests have

been. Across the whole country,

the figures is up to around 250

cancers in the last couple of

years. So it's picking up a

significant number of cancers

and obviously people's lives

are being changed by it. At

these patients didn't have

obvious symptoms, many would

have gone un diagnosed until

their cancer was more advanced.

The Federal Government is

rolling out its bowel cancer

screening programme this year,

sending kits to anyone between

55 and 65. Because the disease

was picked up early, Dick

Lamont didn't need any

chemotherapy or radiation

treatment. When it's over and

you look back and think,

really, it saved his life and

it couldn't have been a better

outcome. Now you can look

forward. Dick Lamont says he's

now a passionate advocate of

the screening test. I try to

talk them into it. The bowel

scan test is an annual Rotary

project and the kits are sold

in chemists across Australia

every March. The Australian

women's freestyle team has

upstaged a hot field to claim

the gold medal in the 100m relay at the world

championships in

Melbourne. World record hold er

Germany could only manage 4th.

Jodie Henry came from behind in

the final leg. The Australian

team entered this 4x100 relay

without expectation, but hopes

soon rose. Lenton flying in

lane 3. Lenton gave them the

lead and Australia held its own

through two laps, Melanie

Schlenger, before America's

third leg gave them

ascendancy. Jodie Henry was up

to the challenge. In a

thrilling sprint home, Henry

delivered in a new championship

record time. Henry wins for

Australia! Henry had repeated

her come-from-behind Olympic

performance. I did the same

thing at the Olympics so its

old news for me. It was all a

cruise for Liesl Jones in her

first hit-out. Australia's

world record holding

breastroker moved comfortably

into the final. While Australia

arrived in Antigua and surveyed

the venue for the first super-8

match tomorrow, rising violence

in Zimbabwe appears likely to

force the cancellation of the

tour there late they are year.

The Australian team is

scheduled to travel to Zimbabwe

in September, but political

forces want the tour scrapped

with as little financial

impediment as possible. We have

to look at the contract in

detail, simply to breach the

contract that could be

expensive, but there may be

other ways around it. Australia's win over South

Africa was a timely reminder of

the team's powers. Showing

teams around the world that

we're not down and out. We're

up and ready to go and take on

anyone during the

tournament. India's exit from

this World Cup was confirmed

with Bangladesh's win over

Bermuda. In a rain-shortened

match, Bangladesh struck early

to reduce opponents to 3/11.

The revised target of 96 from

21 overs proved a modest

obstacle. There were concerns

at 3/37, but Bangladesh moved

through to the next phase

without further loss of

wickets. It was a bit close,

the heart was pumping a little

bit, but the boys haven't been

in the situation before.

They've done very, very

well. In a blow for New

Zealand, dashing opener Lou

Vincent has broken his wrist at

practice and is out of the

tournament. In results just in

from the swimming world titles

in Melbourne, Jessicah Schipper

and Libby Lenton have gone 1, 2

in the 100m butterfly final.

They were the fastest

qualifiers. Here are the

closing stages. Can Schipper

dig? Lenton goes after her with

Schipper. It's Caglan. Lenton

and Schipper, Schipper and

Lenton. Libby Lenton has won

the championship. Now if you've

seen the film 'Dead Man

Walking', you may be familiar

with the woman who wrote the

back its based on, Sister Helen

Prejean. She's one of the

world's best known campaigners

against the death penalty and

is in Australia to help promote

the opera based on her book.

Within weeks she'll be back in

America, a reluctant witness to

the execution of a woman in

Texas. Teddy Tahu Rhodes

cemented his opera reputation

in 'Dead Man Walking' when he

played the prisoner condemned

to death in the United States.

Now he's reprizing the role

that has made him surer than

ever the death sentences are

wrong. We face it now. There

are people on death row in

different countries who are

Australian and it's easy to sit

back and accept that has to be

the way or you can have people

that are prepared to say what

they believe in. Sister Helen

Prejean is one of those

people. The death penalty at

large is Guantanamo Bay, Iraq

and David Hicks, now an

Australian caught in the

net. Actress Susan Sarandon's

movie pore trail of the

Catholic nun who counsels

prisoners on death row

re-opened the debate on capital

punishment. 11 years on and

Sister Helen campaigns

relentlessly against the death

penalty and continues helping

those awaiting execution,

including Cathy Henderson,

sentenced to die in Texas next

month. I've accompanied six

people to execution and Cathy

would be my 7th person. I'm not

accepting that she is going to

die because we're fighting for

her life. I stay in the life

place until finally it's clear

that they will kill her.

Kirsti Harms plays Sister

Helen in a production that will

blend opera with rock. It's

mainly about the virtue of

compassion in life and how that

stacks up against the power of

vengeance and the power of

fear. The opera will have its

Sydney premiere in September.

Time to check the weather now

with Mike Bailey. Good evening.

There are still very isolated

showers along the NSW coast

following the weekend change,

but they will contract north

tomorrow while cloud and

south-east winds have kept

Sydney's temperatures below

average for the coastal range,

17 to 24. That was as good as

it reached anywhere in the

metropolitan and nearby areas.

Not much cloud to report from

NSW with the exception of a

coastal fringe where of course

there has been a little light

rain there. Will be more of

that in the early part of

tomorrow about most of the

coast, gradually contracting

north. Still some on-shore

winds feeding the system and

the winds will be quite gusty

about the northern part of the

NSW coast over the next 24

hours. The rain fall

projections indicate patchry

rain in the far west of NSW by

late Wednesday.

Thanks, Mike. Tonight's top

stories again - Barry O'Farrell

has announced he'll challenge

Peter Debnam for the Liberal

leadership. And David Hicks is

set to face a US military

commission in a matter of

hours. And that is ABC News

for this Monday. Goodnight.

Closed Captions by CSI

Tonight on the 7.30 Report -

sale of the century. Coles

goes looking for a buyer, but

has the board left its run too

late? They've got themselves in

perhaps a worse situation by

bidding up their prospects and

maybe they won't get the same

offer again. The blackcurrants

in Ribena contain four times

the Vitamin C of oranges. And

the schoolgirls who humbled a

multinational giant. A lot of

people are saying, "How does it

feel that you took down a major

company?" I thought of all the

false advertising claims and I

thought, "Go get 'em girls!"

Welcome to the program, and

first, Federal politics. In

the wake of yet another State

Labor victory - this time NSW -

and this time, with claims

there's a message for John