Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant the accuracy of closed captions. These are derived automatically from the broadcaster's signal.
Lateline -

View in ParlViewView other Segments

(generated from captions) I feel really, um, all right. I'm happy for Tanja. Yeah. It's nice. MAN: How are you feeling, Matty? (LAUGHS) Um...fine, Cian. WOMAN: What are you expected to say? CLASSICAL MUSIC

Captions by CSI *

Tonight - Barnaby's

economic bubble We are going

into hock to our eyeballs to

people overseas. You have to

ask how far into debt do you

want to go. We are getting to a

point where we can't repay

it. The Opposition finance

spokesman makes a dire

prediction on debt. The

Government pounces. Barnaby's

comment shows he's unfit for a

position of economic responsibility, they are

totally ridiculous and irresponsible comments. This Program is Live


Good evening, welcome to

'Lateline', I'm Leigh

Sales. Iran has started new

work on uranium enrichment effectively thumbing its nose

at the west's latest threats to

impose further sanctions. Days

ago the Secretary of State

Hillary Clinton renewed the

assessment that Iran and North

Korea were America's greatest

threats. Some commentators,

like former Vice-Presidential

nominee Sarah Palin urge the

Obama Administration to keep

the military option alive.

According to one figure central

to the event that led to the

Iraq War in 2003, diplomacy has

a way to go. I think some well

calibrated sanctions might have

some impact in Tehran, I think

it will be desirable that the

community persuade Iran to

refrain from further

enrichment. Joining us tonight

is the former UN Chief Weapons Inspector Dr Hans Blix. That is

coming up. First the other headlines. Better scanned than

sorry, 200 million to be spent upgrading airport

security. Hitting home,

Toyota's Prius problems force a

recall of its cars in

Australia. And on 'Lateline

Business', Macquarie's profit

upgrade fails to calm an increasingly nervous market. Barnaby Joyce has a

knack for courting controversy

and has once again managed to

put himself at the centre of

political debate. The

Government is ridiculing the Shadow Finance Minister for

should going Australia is at

risk of defaulting on its

loans. Barnaby Joyce is

standing by the comment which

the Government labelled an

irresponsible slur, it

distracted from Tony Abbott's

effort to rally his troops

ahead of the election. From

Canberra Hayden Cooper

reports. There's one side of

Tony Abbott that Liberal Party

strategists want the nation to

reflect on. The tough guy

action man image, it's been

wheeled out at every

opportunity. What makes you so

confident. The last thing I am

is overconfident or cocky,

because it would be the first

time in well over 70 years that

a first-term Government has

been defeated. But maybe, maybe

history is going to be

made. It's a message he took

inside. To try to rev up his

parliamentary team. Yes, we can

win. That is the message. The

message that we are getting

loud and clear from the

Australian people is that

increasingly they don't like Mr

Rudd's great big new tax on

everything. They are sick of

the broken promises, so I want

to say to all of you, go out

there, sell the message,

respect your colleagues, but

train your fire on the other

side, and we can win this

APPLAUSE election.

One MP refrained from the

moment of hype, suppressed a

rye smile and applauded

reluctantly. The Prime Minister

is another who finds it all a

bit much. Three years ago it

was John Howard who accused him

of getting carried away. I

think he's getting a bit full

of himself. Mr

dealing with his new Speaker... Kevin Rudd is now

challenger, in a similar manner. We know that the Leader of the Opposition things he's

on a roll to win the next

election, we know he's had a

bit of a hoopla in the

partyroom about winning the

next election, one of the risks

the Australian public are

evaluating is what economic

risk do they buy. That is where the Shadow Finance Minister

strikes again. Barnaby Joyce

calls himself the gift that

keeps on giving. And the

Government couldn't agree more.

His errors troubled the

Opposition Leader, today once

more his words were turned

against him by a Government

grateful for the chance. At

issue was his warning to Australia could default on its

debt payments. You have to ask

the question how far in debt do

you want to go. We are getting

to a point where we can't re

pay it. Commonwealth debt of

the 5% of GDP is dwarfed by

other major economies, the

statement drew indignant fire

in parliament. We are the envy

of the world, not to Barnaby

Shadow Finance Minister, the Joyce. I'm on though my fourth

first three are back in the

pavilion with ducks beside

their name. The Senator spent

the day in Estimates Hearings

flared. Unprofessional you are where tempers

going it again. You are good at

manners, pointing,

pointing. Admissions were made,

a $450,000 broadband job for a

former Labour MP prompted

claims of jobs for mates. And

the conduct of Labour

backbencher, former health

union Boss Craig Thomson was

called into question, a breach

of electoral donation laws

leaving the union at risk of

prosecution, although the MP

proclaims his innocence. I put

it to you that Craig Thomson,

potentially is one of the

people who has breached this

act, and I would say in a most

heinous fashion. LAUGHTER

With the Abbott team growing

in confidence. LAUGHTER

LAUGHTER No wonder he's laughing.

Airline passengers may be

subjected to full body scans

under a major security upgrade.

They can expect longer delays

and possibly higher fares as a

prompted by an attempted bomb result. The upgrade was

attacks on a plane in the

United States at Christmas.

Privacy groups are worried by

introducing full-body scans authorities will see more than

they need to. Emma Griffiths

reports. The failed plot to

blow up Flight 253 in the

United States on Christmas Day

lit the fuse on the security

rethink here. We must take

every reasonable measure to

underpin the security of the

Australian travelling public

using our airports. Those

measures target passengers

screening by high-tech X-ray

machines and body scanners, for

some, it's too much intrusion. They don't reach

inside crevices, but it shows

the outline of the human body,

a great proportion of the

population are concerned about

that. Those flying the planes

argue it's part of the price of

modern air travel. We can never

have enough safety in the

airline business, that threat

does and will exist for the

rest of our days. The

Government hopes it can improve

safety and preserve some

passenger modesty. There's

technology that produces what is known in the industry as a

stick figure, so it identifies

on the screen something that

has to be checked, without

identifying things that demure

people such as yourself might

not want to be checked. The

Government admits there will be

other impacts on passengers,

industry insiders say the

increased screening is likely

to lead to higher ticket prices, more hold-ups at

security and potentially flight delays. Security experts

welcomed moves to extend the

tougher security measures to

regional airports, to X-ray

cargo and double the number of

explosive detection dogs, some

say there's a gaping hole in

airport security still - out on

the tarmac. If you have a

fluorescent jacket and a torch

you can wonder around at nite.

If you go to an airport where

there's noght, you can do as

you please. The - noibd, you

can do as you please. Toyota

has been forced to recall its

flagship car the Prius at a

time when it's reeling from the

recall of 8 million of its

vehicles, tonight's recall of

the revolutionary hybrid will

be global, affecting 400,000

vehicles around the world,

including more than 2,000 in

Australia. It's a blow to

Toyota's cherished reputation

for quality as North Asian

correspondent Mark Willacy

reports. Bowing to pressure,

Toyota filed for a recall of a

Prius, a blow to the company's

pride and prestige. The Prius

is Toyota's biggest seller in

Japan, the company's most

popular hybrid, the car the

company is betting its future on.

TRANSLATION: We will recall

about 400,000 cars worldwide,

we'll deal with the matter

promptly to satisfy customers

in the United States, Europe

and other countries as quickly

as possible. Complaints about

temporary brake failures drove

the decision to issue the Prius

recall. In Australia the recall

will affect 2,300 of the latest

model hybrids, Toyota Australia

will contact Prius customers by

mail, and the company will take

up to an hour to fix the

software glitch with the Prius

antilock brakes, it's the

latest headache for the world's

leading carmaker, after a

global mass recall of other

models because of problems with

sticky accelerators and

sticking floor mats. Despite

recalling 9 million vehicles

around the world Toyota's

troubles are far from over.

They are facing legal action in

the United States over the

Prius and a formal

investigation by US authorities

over the safety standards of

its other vehicles. For the

grandson of Toyota's founder

the challenge is to rebuild the

company sads prized reputation

for quality and safety. Let me

resure everyone that we'll

redouble our commitment to

quality as a lifeline of our

company, with myself taking the

lead. With that in mind, Akio

Toyota will pack his bags for

the United States to win back

trust for the world's biggest

carmaker. Reports are questioning whether a

Queensland coal company has

signed what was claimed to be

Australia's largest export deal

with China, billionaire

businessman Clive Palmer, and

Queensland premier Anna Bligh

announced a 70 billion coal

deal with China on the weekend.

The Chinese company said to be

involved denied a specific deal

and further negotiations are

necessary for there to be a

contract. A perjury case

against former Victorian Police

Assistant Commissioner Noel

Ashby collapsed after a Supreme

Court ruling that evidence from

the State's police corruption

watchdog was inadmissible due

to an oversight. Noel Ashby was

accused of lying during

hearings conducted by the Office of Police Integrity, it

was investigating the source of

leaked information which

derailed a murder inquiry, the

Supreme Court ruled that the

oath taken by the former judge

conducting the hearings was

invalid, today Noel Ashby was

acquitted. Mr Noel Ashby was

paraded publicly, accused of

having done a range of things

that the court decided he

didn't do. Last year a case

against former plogs Paul

Mullett from the same

investigation, Police Association Paul Mullett from

the same investigation failed

due to legal technicalityies.

Sir John Chilcot, the man

heading the inquiry into

Britain's decision to go to war

with Iraq revealed secret

documents will form the core of

the investigation. Commenting

at the end of the public stage

of the inquiry, Sir John said

the documents could decide who

may be interviewed at a later

date. The last to appear was

former Foreign Secretary Jack

Straw, fronting for a second

time, he defended the legal

case for prosecuting the war. Europe Correspondent Philip

Williams reports from London.

A lone heckler shouts traitor

as the former Foreign Secretary

returns to something that has

become a lion's den. Emboldened

by secret documents pointing to

US intentions to invade Iraq

with our without a second UN

revolution or the backing of

its own Secretary of State

Colin Powell. Was there a point

where Colin Powell said to you

that even if Iraq complied,

President Bush had made a

decision that he intended to go

to war. Even if he complied

they made that

decision? Yes. Certainly not to

the best of my recollection. I

was going to suggest you may

want to look through your

conversations and check. I will

go through the records, I think

you are trying to tell me

something. That something is

hidden. What was on clear

display with Jack Straw's reply

to lawyers from his Foreign

Ministery who claimed an

invasion of Iraq was illegal

without a second UN

resolution. I think the process

followed in this case was

lamentable and there should

have been a greater

transparency within Government. Did it make a

difference that Jack Straw is,

himself, a qualified

lawyer. He's not an

international lawyer.

Famously not an international

lawyer, but I was able to bring

something to the party, which

was intense knowledge of the

negotiating history. And what

are the then Attorney-General

Lord Goldsmith's advice to

cabinet days before the war

began that the invasion was

legal. Why had cabinet not been

told it was a finely balanced

decision. The cabinet were

fully aware that the arguments

were finely balanced. Sir John,

it was impossible to open a

newspaper without being fully

aware of the balance of the

arguments. That is not, of

coursing legal advice. No. Jack

Straw said the cabinet heavy

weights wanted a yes or no

answer from Lord Goldsmith,

former international

development secretary Clare

Short gave evidence that her

attempts to question Lord

Goldsmith at the meeting were

shutdown. They said, "Clare",

everything was fraught, they

didn't want me arguing. I don't

challenge her recollection, but that's not my recollection. Clare Short also

made it clear she thought a

deal had been done with the Americans, that the United

Kingdom would back the war with

or without UN support, but Dr

Hans Blix and his team of UN

weapons inspectors should have

been given the extra time they

wanted in Iraq, time they were

not granted. We have made Iraq more dangerous as well as

causing suffering. The Iraq

Inquiry wants to question former members of the Bush

Administration, it's not clear

how many want to take up that

invitation, it's hoped the

panel will travel to Iraq where

the war and its aftermath are a

daily reality for everywhere.

And to discuss the Chilcot

Inquiry, as well as Iran and

North Korea's nuclear ambitions

I was joined a short time ago

from Sweden by the former UN

Chief Weapons Inspector, Dr

Hans Blix. Dr Blix, thanks for

joining us. Thank you. At the

Chilcot Inquiry, former British Prime Minister Tony Blair said

it wasn't enough to ask the

2003 question, that people

should ask the 2010 question,

which is what would the

situation be now if the US and

its allies hadn't invaded Iraq,

what do you think? Well, I

think that is kind of a defence

of the Iraq War that they

thought out afterwards. Before

they went there, they contended

with no hesitation whatever,

that there were weapons of mass

destruction, and they were in

imminent danger, that they had

to go there. If they went to

the British parliament saying,

"Maybe there aren't weapons,

but he might reconstate use them", I don't think they'd

have got an authorisation from

the parliament nor the American

Congress would have authorised

it. It's a defence construed

afterwards. It is doubtful that

the Iraqis could have

reconstituted the weapons, in

2003 Iraq was down on its

knees, and the UN system

foresaw that would be continued

monitoring in the future f

Iraqis allowed themselves to do anything the inspectors would have been able to report

that. So you don't think that

as some have suggested, we

could be seeing a situation now

if Iraq hadn't been invaded,

where Iraq and Iran would

perhaps be competing in a race

to get the first nuclear

weapon. On the nuclear weapons,

it's improbable. '97 and '98 I

and another reported the

infrastructure of enrichment.

Production, etc was destroyed.

It takes a long time to rebuild

that. Nuclear, of course, was

the most important. Now the US

and the United Kingdom tried to

maintain that the Iraqis were

working on the nuclear sector,

alleging that a contract to be

had concluded between Iraq or

the importer of uranium oxide

had taken place, but Mom ham

add elbarda showed in the

Security Council that this was

a forgery. I think the nuclear

dossiers, which is the most

important, was also the most

destroyed and to recover that

in a country destroyed like

Iraq in a few years time was

out of the question. You acknowledged yourself that Iraq

did obstruct your

investigation, that they

weren't happy participants in

inspections, why were Bush and

Blair not right to assume the

worst? Well, in the 1990s,

where we were, therefore, eight

years from the IEA and the NI

and from New York, and there

were a great many unresolved

assignment issues resulted from

that time. Inspectors went away

for a few years, we got in in

2002. But at that time the

United Kingdom and the US took

unresolved issues as being

weapons, they were weapons, we

said they were unresolved

issues, they said they were

weapons, and they referred them

to the intelligence , without

telling us what the

intelligence contained. The

intelligence we had was shaky.

We were able to show them in

January 2003 that there were

errors in the intelligence,

they gave us a number of sites

to which they suspected. And we

went to about 3 dozen of them,

in no case did we find weapons

of mass destruction, we found

conventional weapons, other

stuff, but no weapons of mass

destruction, we told that to

the British and Americans

counsel. They should have realised sources of

intelligence were poor and they

should have re-examined

evidence. Tony Blair denied his

mind was made up in 2002 to go

to war, that he had an open

mind about it, was that your impressioning in your dealings

with him in the lead up to the war? Yes, I certainly don't

think I could say that I feel

he was determined to go to war. There was an important difference between the US and

the United Kingdom. For the US

in 2002 they did not feel

consfrants from the UN Charter,

they had written in their

national security doctrine in

times of terrorism and

missiles, they did not feel a

limitation to go to war only

when the Security Council

authorised or when they were

attacked by an armed attack.

The British it was different,

they felt UN restrictions were

important, that's why Blair was

anxious to urge the US to go

the UN path, he persuaded Bush

to do so, maybe the calculation

s were that Iraq would

obstruct, they'd then go to the

Security Council for an

authorisation to start the war.

They were disappointed, Iraqis

cooperated on procedure, they

never stopped an inspection,

giving us access at all times,

which they did not do in the

'90s, but we were not able to

in the short time, we had three

months of inspections to clear

up many of the unresolved

issues, what we did in that

period was to spell doubts

about the evidence that the

United Kingdom and the US had

appropriated. Although the US

and the United Kingdom have

maintained that they had the

authority to go to war under UN

resolution 14:41, they did, as

you point out seek the second

resolution in 2002. Jack Straw

said at the Chilcot Inquiry,

that they were seeking that

because if they had got it

Saddam's regime would have

collapsed like a pack of cards.

What do you make of that. I

don't see that Saddam would

have made much difference, not

upon Saddam, if there was a

second resolution in March 2003. I think the British

needed to resolution because

1441 was not. In the view of

most lawyers, it was not an

authorisation for anybody to go

to war against Iraq. The resolution warned about consequence, inspectors were to

report to the Security Council,

the Security Council would

consider the matter, but

conclusion that any member of

the Security Council could go

to war - I think it's not

justified. What they came with

in 2003 was, I think, a very

thin fig leaf. They said that

the accumulated breaches in the

'90s and 1441 together gave

them an authorisation to go to

war. However, an authorisation

of the Security Council in a

situation when three permanent

members were against it, When

they could not get a majority

for such a resolution, is that

an authorisation of the council. Mr Straw said a report

that you drew up on the eve of

the war had made an indelible

impression on him, and it

convinced him that Iraq's

non-compliance with weapons

inspections was profound, based

on what you said, it doesn't

sound like that's the

impression that you would have

imagined that your briefings

would have created. No, the

report that we presented on 7

March was one that had caused a

great deal of work for us to

do. We had been structed by the

Security Council at the end of - instructed by the Security

Council at the end of 1999 to

define the unresolved issues, and find which were the key

ones, and we spent a lot of

time to do that, we were asked

which the council to try to

resolve precisely the key

issues, and if they were

resolved, the council was ready to suspend sanctions. That was

the background on the report.

It contained a great many

issues which had already been

reported by Butler in his sort

of testament report at the end

of - in the beginning of 1999,

so they shouldn't have come as

a surprise, I don't see it was

a revelation, it was a very meticulous respect, what was

knew in it was it told the

Iraqis what could they do to

help to resolve a number of

issues, I don't know that other

members of the Security Council

felt it was a revelation like

Mr Straw. As the world looks

now to Iran and North Korea,

and their strategic ambitions,

do you think lessons have been

learned from the Iraq experience? Well, the situation

in Iran and Iraq, of course, are different. Iraqis had

nothing in the sphere of

nuclear sphere in 2002. Iran

has a big nuclear sector, two

nuclear power reactors, a lot

of other research in the

nuclear field, research

reactors, and enrichment.

There's a big difference. I

think the tracks from the Iraq

affair are a warning sign, and

I believe and I hope also that

it will lead to the conclusion

that they do not jump in to war

until action is warranted. You

hear diplomatic path has not

yielded results. People should

ask what results will come from

the use of armed force. That is

on the question of legitimacy and reasonableness, but there's

a legal issue works it be

permissible in today's world

and a UN Charter to wage an

armed action against Iran, I

don't think that's the case.

What would they bomb, potentially Iraqi intentions. Given the problems

with armed action, if we could

look , though, at the idea of

sanctions, which is what

pressure is mounting around at

the moment, the UN Security

Council has already imposed

three rounds of sanction, Iran

announced it's stepping up its

uranium enrichment, when do you

decide sanctions aren't working

or aren't enough? Well, I think

that they still have diplomacy,

there's a lot to do in the

field of diplomacy, I am not

critical of the position of the

Western States and Russia at

the moment. I think well

calibrated sanctions might have

some impact in Tehran, and I

think it would be desirable

that the world community

persuade Iran to refrain from

further enrichment. Not because

it's prohibited by the

non-proliferation treaty, but

it increases tension in the

region, I think there are a lot

of things that could be done.

For instance it strikes me in

the case of North Korea, the US

and other promised that if they

have a nuclear deal with North

Korea, they would give North

Korea diplomatic relations with

the United States. And with

Japan, and they would be ready to give North Korea guarantees

against attacks. We have not

heard about similar chips being

put on the table to Iran. This

is one example, on which they

can talk. On the case of North

Korea, are you optimistic about

the prospect of the Six-Party

talks making progress. Well, it

seems that right at the moment

there is a little more hope. The North Koreans sent an

important negotiator to Beijing

after a visit by the Chinese to

Pyongyang. However, we have

been through many of these back

and forth in the past. I think

the problem I see is that North

Korea has been offered, I

think, practically everything

they've been asked for. They

had help to build up the

country, they had rice, oil,

electricity, the World Bank,

IMF and whatnot. Diplomatic

relation and a non-aggressive

pact. Even so they have not

come along. One wonders what at

the root has been the problem.

We know there's a succession

problem, maybe that is over,

and maybe that will clarify new

lines, maybe the military say

there is a constant danger,

therefore you, the Korean

people need us the military and

the bomb. It's hard to assess.

I agree with most people who

say that the Chinese have an

important role in persuasion

and squeezing the North

Koreans, so I think Obama has

been right in not allowing

himself to be provoked by the

North Koreans, that's the easy

way done. I think they are

doing well at the

moment. Speaking generally,

when do you think it is right

for States to go to war. I

think that we should accept the

United Nations charter made a

big change in the world. 100

years ago it wouldn't have made

restrictions at all in going to

war, after two world wars and

the end of a Cold War, I think

the restrictions in the UN

Charter, that is to say that

you are allowed to use armed

force in self-defence against

an armed attack without asking

anybody, and you are allowed to

go to war if the Security

Council authorises you is a

good rule. It's not easy to

apply in all situations, which

have seen how in case of

Kosovo, they did not have an

authorisation, and the British

said it was an exceptional

situation, it's not seen as a

press dent. A humanitarian

gags, we see Tanzania attacked

You behind awithout permission

and the UN accepted that, in

the case of Iraq, if they are

going to the General Assembly

and ask for an authorisation

there'd be a no. By and large

the rule we have is one we

should respect. After so many

hundred years of free war, the

world is getting to some

restrictions, we should not

throw that overboard as was done bit the Conservatives in

Washington in 2002. If we could

finish by returning to the

Chilcot Inquiry, in the United

Kingdom. Is it accurate that

you have not been invited to

appear before that. Well I've

been asked that question

before. I do not try to invite

myself to anybody. If they want

to hear me, fine, I'm trying to

- I'm reading their transcripts

of what they have been saying

there, I came to the Butler

inquiry a couple of years ago

in London about the intelligence and I've been to

an inquiry in the Netherlands,

I'm perfectly ready to go, I am

not inviting me to

anybody. Given the inquiries

that have taken place though,

do you consider this inquiry to

be useful to add anything

new? I think so, I think it is

very interesting, you see,

interesting to see how the

British Government worked at

the time , how they reasoned,

and I was pleased to see the UN path was something of

importance to them. I had good

cooperation with the British,

and I certainly thought that

and hopped they'd have

attraction with their so-called

- hoped they have attraction

with their benchmark approach.

I think they made strong

efforts to get a UN

authorisation, the evidence on

which they relied, and which we

consistent did not see, that was crumbling, it was too late

in the day, I think, for them

to move off the military train,

they had 250,000 men or more

sitting in the desert, and it

would have been demoralising if

nothing happened, it was too

late for the British to get

off. Dr Hans Blix, thank you

for making time to join us tonight. Thank you.

The Federal Government is

suspending the use of foil

insulation in its rebates

program because of safety

concerns. Three roofing installers have been

electrocuted while fitting the

material, electricians and the

Opposition say the ban doesn't

go far enough, and want safety

checks done on all homes fitted

with the foil insulationing

Emma Pollard reports. Foil

insulation has been installed

in about 37,000 homes since the Federal Government introduced

the 1200 rebate last year. It's

supposed to help save energy,

but can act as a conductor,

electrifying the roof of a

house So far we have seen three

fatalities from this program,

two from installers staping

through foil and a third where

a worker contacted an existing

electrical fault in a

ceiling. A 25-year-old man in

Farr north Queensland was

killed last week. Because of

this terrible fatality and the

fact that I want to make 100%

sure there aren't any other

additional measures we need to

make it safer then we will

suspend for the moment. Unions

say they are happy with the

change, but they have concerns

about the program. They want an audit

audit of all installers and

safety checks for houses that

had foil insulation fitted. The Opposition and Master

Electricians also want a review

of insulation already

installed. I'd encourage the

Federal Government to take

ownership, paying for the

audits to be completed under

the scheme to ensure the

community is safe following the

program. We want a guarantee

today that every home which has

potentially been electrified

will be subject to an audit,

subject to repair, we do not want to see further tragedies

under this program. The changes

are too late for Sunny Barnes,

whose 16-year-old brother

Reuben was killed installing

insulation in Rockhampton late

last year. It's not good enough. Something like this

people shouldn't be dying. For

four already, it's just - it

needs to be at a complete

halt. The Government has urged

anyone with insulation safety

concerns to contact a qualified

electrician. Now to the

weather, showers or storms in

Canberra, Melbourne, Hobart,

Adelaide and Darwin, humid but

dry in Sydney, Brisbane and

Perth. That's all from us,

'Lateline Business' coming up

in a moment. If you'd like to

look back at the interview with veteran international diplomat

Dr Hans Blix or review any of

the Lateline's stories or

transcripts visit the website

and follow us on twitter and Facebook. 'Lateline Business'

with Whitney Fitzsimmons.

Thanks, tonight a shift in

Macquarie's model creates

short-term pain for

shareholders. They are doing

as well as they can given the

circumstances that they are in.

And the options available to them. Woodside's part nirs

agree on a site to develop

Browse Basin gas. We are

excited. This is the second

best day of Browse ever, as far

as I'm concerned, the first day

since we found it. Property

developers face a tough year in

2010. We can't get the finances

that we need, and the cost of

money has increased so

substantially we are having

trouble bringing the same level

of housing into the


First to the markets, after

shock falls on Wall Street

overnight the All Ords did well

to close just 18 points lower.

The Axiom Equities fell a third

of one - ASX 200 fell a third

of one%, the Nikkei finished down, Hong Kong's Hang Seng

made solid gains, in London the

FTSE is higher in early trade. Macquarie spent much of

the past year transforming its

model and revenue base, it's in

a strong position compared to

its global peers and issued a

profit upgrade. The prospect of

higher profits wasn't enough

for a market that had priced in

a bigger number and investors

promptly wiped 6% from the

share price. Andrew Robertson

reports. Macquarie Group is a

company in transition, moving

away from the highly leveraged

listed satellites engineering

so much of its profits to newer Les exotic opportunities provided by the global

financial crisis, at last

year's investor briefing Macquarie's profits had been

halved and the future looked

bleak. Compared with last year,

as we know, the businesses in

this market generally are

tracking better. And we are not

seeing a deterioration in terms

of how the underlying

businesses are tracking. Nicholas Moore says

the second half will broadly be

in line with the first half

result of $479 million, there's

a chance the second half could

be 10% better, taking to full-year results to a billion

dollars, that will be just over

half the profit of two years

ago. They are doing as well as

they can given the

circumstances that they are in.

The options available to them.

It's a sound strategy, it's -

they are basically taking what

they do well here, replicating

it overseas. In the last six

months Macquarie has been

expanding its overseas

footprint with a string of

acquisition wigses in broking

and energy trading Macquarie's

strategy in international

approaches had been a niche

approach, selective, where it

would go into new market, where

it thought it could add

specialist value, the story

today is a broader brush approach, looking like

Macquarie is trying to build a

full service bloeble investment

bank. Which Greg Hoffman says

will leave Macquarie boss

Nicholas Moore leading a

company with a different risk

profile A couple of years ago

he knew what his base fees were

coming in from the funds, now

he's at the mercy of global

equity markets, debt markets

and foreign exchange markets as

to where the profits will come

from. Macquarie swimmed to a

new strategy not reliant on

listed satellite funds has a

downside, a strategy meaning

huge profit growth like the years leading to the global

financial crisis will be hard

to replicate, and for that reason Axiom Equities Brett Le

Mesurier isn't surprised

Macquarie's shares have been

heavily marked down. To support his view Brett Le Mesurier

compared the productivity of Macquarie Group staff over the

last 10 years with the Consumer

Price for the same period, the

blue line shows how the listed

asset fund such as Macquarie

Airports and Macquarie

Infrastructure turbocharged the

earnings generated by each

staff member between 2004 and

2007. Now the listed funds have

gone, profit growth returned to

tracking inflation growth,

which is the red line. What

they need to do is hire more

people, buy more businesses,

and that will require more

capital, and the question is

can they hire those people and

buy those businesses. Such that

it increases the return on

equity for shareholders. Right

now shareholders clearly have

their doubts. By its usual

standards today's half year

profit report from Cochlear

fell short of the mark,

investors looked through the

result to the potential

provided by a new generation of

hearing aids and the promise of

strong double digit full-year

growth. Michael Troy

reports. For nearly three

decades Cochlear has been a

great corporate success story,

leading the world in the

development of hearing

implants. Fundamental strategies around the tremendous opportunity we have

to provide the gift of hearing,

through this implantable

technology did not change

during the global financial

crisis . Cochlear's half year

results to December revealed an

8% rise in net profits to $75

million. The result relative to

the company's historical

performance of double digit

revenue on profit growth, I

thought was average, below

trend. CEO colents says the

high Australian dollar cut -

Chris Roberts cut profits. That

was offset by the launch of ear

implants. The half was a sale

of two quarters, we didn't sell

that many of the Nucleus 5 in

the first quarter, we were

rolling it out. In fact our

Cochlear unit steals growth for

the December quarter was 13%

compared to 7% for the entire half. Roberts wouldn't comment on speculation that it's about

to make a bid for a division of

Siemens in Europe but said

they'd focus on organic

growth. We can grow enormously

by what we are doing because

there's a huge unmet clinical

need for these implantable

devices, which should translate

to full-year profit growth of

15%. They are banking on a

strong sales pipeline from the

next generation implant. In

terms of picking up growth from

here, delivering the next faze

of shareholder value, it's what

management are banking on. So

are shareholders who marked the

shares up 3.5% on the better

than expected outlook. Reserve

Bank Governor Glenn Stevens

told his fellow Central Bankers

that they need to do more to

stop asset bubbles developing,

the governor addressed a closed

door symposium of leading

Central Bank officials from

Asia, the US and Europe to mark

the RBA's 50th birthday,

European Central Bank's President Jean-Claude Trichet

was forced to leave to attend

an emergency meeting in

Brussels, called as debt

consearches surrounding EU

members intensified. It was

about how countries like Germany and France would

respond, does it create for

countries the problem that we

may have for banks of countries

being too big to fail. Does

that in turn increase the

likelihood that countries will

in future engage in the

irresponsible fiscal behaviour

bringing Greece to this

position. Reserve Bank Governor

Glenn Stevens says the ability

of Government to reduce debt

will be a complicating factor

in setting interest rates over

the next few years. Sovereign

debt issues are weighing on

investor sentiment for a look

at the day on the local market

I spoke earlier to Marcus

Padley at Patersons Securities.

Marcus Padley, the European

debt situation is weighing on

local markets. So how important

is the 4500 level on the All

Ords? Yes, well, 4500, we are

flirting with dropping below

4500, the relevance of that is

the next technical support

levels, 4100 which suggests we

are going to fall 9%, we are

have fallen 9.7%, holding on to

45 00 people see that as

significant. As far as the

European debt problem is concerned. I think that's being

viewed as an issue which we

have used as more of an excuse

rather than being a real fear.

The European economic recovery

will be slower than we thought.

It will take time to sort out,

that's what the market is

worrying about, that we've

overestimated the speed of

global economic recovery, it's

an issue, it doesn't look like it will below up the way everyone thinks it

could. Looking at corporate

news, Alumina suffered a 4-year

losses, how did the market

react. Not too badly they were

done a per cent. Profits were

below expectations, on the

flipside Bradken, in resources,

who services the resources

sector had a better than

expected result, they were up

about 12%, I think basically

Alumina is in one of the

unsexiest businesses in the

resources area at the moment,

which is Alumina. But the big

ones in the sector, will be BHP

Billiton's results tomorrow,

about 90% of their revenue is

coming from petroleum, iron ore

and coal. The last six months

of last year saw price rises in

most of those commodities, it

will be a good number, they are quarterly production numbers

from last week from OK, and the

statement OK. Hoping for a

good number from BHP Billiton

form. To the retail sector,

David Jones seems to have

impressed investors with

quarterly sales figures. I

wouldn't say so much inspired,

the share price was up a couple

of per cent. Sales numbers

didn't dazzle, we had a series

of poor retail sales numbers

from Woolworths, Harvey Norman

and David Jones rrs. They did

what Myer did, upgrade the

earnings guidance for the year ahead which some brokers

expected them to do, they were

up 2%. All the retailers have

been underperforming in the

market ever since Myer floated

last October, most of them are

down between 17 and 22%. And

Myer, itself, has lost Myer

shareholders which included a

lot of their customers,

employees, a net 493 million,

almost half a billion they have

taken out of the retail equity

value in the last few months,

that hasn't done the sector

sentiment any good at all. Marcus Padley, nice to

talk to you. My pleasure. To

the other major movers on the

market. Shares in Oz Minerals

fell half a percent after the

company forecast a full-year

profit of up to $30 million,

Tabcorp was one of the big

losers, down 6%, Cazaly

Resources added more than 2%,

after a WA court said yesterday

the miner has a case in its

battle with Rio Tinto over an

iron ore deposit. Optus's owner

Singtel added 2.5% on the back

of a 24% prize in third quarter

earnings. On currency markets

the Australian dollar is up

against major currencies. On

commodities - gold bounces back

from the lows of last week, and

in New York a weaker US dollar lifts oil prices.

Australia's property sector

is emerging from a bruising 18

months, it's left its mark on

the bleats of developers, the diversified property group

Australand posted a full-year

loss of nearly 300 million, and

future growth may be hampered

by red tape and the chronic

undersupply of land, Francis

bell reports. 2009 was a tough

year for the property sector,

particularly for Australand,

which is exposed to commercial,

industrial and residential