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Good morning. Kel come to Business Today Network. I'm Whitney program - funding pressures. Spain's borrowing costs soar as

EU leaders try to shore up confidence. Secure passage. The government does government does a deal to push its mining tax through

South Korean politicians Parliament. And trade boost.

finally approve a long delayed

agreement with the United

States. Those stories shortly,

but first, let's take a quick look at the markets. More on what

what will happen in trade today in a moment. But yesterday

around the region, the session

For more I'm joined by

Christine Ip from Bell Christine Ip from Bell Direct.

Good morning. How will regional

markets trade today? Good

morning. Looking overseas for direction and it is like it will be subdued in

regional markets. In Japan the

Nikkei ended lower yesterday despite a pullback in the yn.

In Hong Kong worries over the fail lure the of the US

committee to cut the US deficit capped gains in capped gains in the Hang Seng there is some good news for

regional markets there is talks

of a possible QE 3 after the Fed hinted at

Fed hinted at intervention in

the latest markets. This morning the local market is set

for a slide on the open. The

spy futures is down 24 points.

Given the

fears, it is looking subdued

today for regional markets. To

the US and on Wall Street it was a volatile session. What

can you tell us about it? There

were some big moves on Wall

Street. They saw the Dow down

That almost 100 points early on.

That was after disappointing data showed the US economy had grown 100% slower than

expected. Hewlett Packard was

down, and Netllix warned down, and Netllix warned of expected losses in 2012. Some

good news out of Europe helped

lift stocks off their session lows. The I in FF had moved to contain the European crisis. While it wasn't enough contain the European debt

to push stocks into positive territory, we saw stocks ending

down .5 of a per cent. The Fed has released its FOMC minutes. The minutes showed that the committee members were

in favour of easing policy further. The members have

pledged to keep interest rates at the Federal Reserve at record lows. We also heard the Federal Reserve discussing

the impact of MF collapse. the impact of MF Global's is limited. While collapse. They're confident it is limited. While that's all positive particularly the indication that QE 3 is on the table we didn't see any change

to existing policy there's also

some division evident among the

participants A bit of a mixed

home from hose minutes. The market was hoping for more decisive action from the FOMC. In Europe there was a negative day

negative day in trade? It is

seen European markets close

lower. Spain is paying the

highest yield in 14 years. saw Belgium and France

experiencing higher yields. And

big er than expected losses in

the banks. But the IMF has

announced new lending

produce positive results. And

before we go, what economic

data should we keep an eye

on? It is pretty quiet around the region today data. We have the local conference board leading index

out today. We are hoping for an

improvement to the minus .1 of

a per cent from last month. In

China we'll be watching out for the HSBC flash PMI but pretty quiet for data around the region. Thanks for joining happening with currencies and Now a closer look at what's

commodities.

The German Chancellor is supporting a change to the EU's treaty covering

which excludes euro bonds which excludes euro bonds as

the best option to help solve the zone's debt crisis. Angela

Merkel says it's too early to be debating euro bonds long-term solution. Even though maintaining they're not a

the European Commission is preparing to preparing to publish proposals

in support of them. Angela

Merkel is keen to quash Merkel is keen to quash the European Commission's renewed

push for so-called push for so-called stability

ponds by the 17 euro nations

considering such an due to the timing for due to the timing for

more appropriate as a last resort. It's despite the

commission's belief it could

costs of its struggling help bring down the borrowing

economies. Instead the German

chons lor insisted there will

be no quick-fix solution to the

Eurozone crisis. That is why

there will be no way around

responsibilities for giving up national

responsibilities for those countries which continue to

break the rules in the who do not stick to the rules

of the Eurozone, they must

expect the automatic consequences that a national

budget is no longer valid because one hasn't stuck to the

agreements in the community.

It appears Germany fears being

Europe's big ebs and most credit-worthy economy that it will be made to wear the brunt

of the costs. That's why for me treaty changes are not Germany

specific because we love

treaties or because we're so changes are for me an immediate part of solving the part of solving the crisis. So

France and Germany will soon France and Germany will soon

propose amendments to the European treaty instead. The

French President throwing his support behind Mrs Merkel in

France as he spoke before a

gathering of Asian businessmen

with the and ahead of a joint meeting

with the Italian Prime Minister

later this week. It sooks to cover the Eurozone, in return

for a deal on the European

Union's working time frame directive. There needs to be a

genuine convergens in economic policies in the widest sense

possible. That means a

convergens in fiscal policies.

With Mrs Merkel, we shortly make propositions With Mrs Merkel, we will

regarding the modifications of

treaties to prevent

diverging in the needs of treaties to prevent countries

budgets, economies or fiscal believes matters. Angela Merkel

believes investor confidence

can't be restored purely

financially, and that a

coherent political answer is also required. Meanwhile euro

bond markets have reacted with

a major sell-off with bond yields moving sharply Spain was forced to pay Spain was forced to pay a

record 5.11% on its Treasury

bills, more than double the rate at last month's auction.

It's another sign big international institutional investors are shunning debt

from all but the safest of Europe's economies. To look more closely at currency markets I'm joined by Noonan. Welcome to the program. Good morning. Why is Angela Merkel Merc so resistant

to the euro bond

situation? Unfortunately she

is. There's really only two solutions for Europe. One would

be a common European bond. Which would be fiscal union. The other would be the ECB

being the lender of last being the lender of last resort. She's not a fan of

either of those? No, Germany is

against both of them. Germany believes in their hearts of hearts that the way around this is stricter rules. If everybody

plays by the rules, therefore

the confidence will return to the market. the market. Unfortunately, I

think that's incorrect, that assumption. A very German point

of view. Some people call it a

Calvinist view of the world,

the lazy countries that were

very slack and everyone's

paying the price for it but if you look at countries like

Ireland and Portugal, before this fiscal position was better than

Germany's. They weren't making

the mistakes that Greece was. Greece certainly was and was moving in directions

against all treaties. But that

wasn't the case in the wasn't the case in the rest of

Europe. So I think the approach

Germany is taking is a fairly

dangerous one A lot of analysts believe they will have to be forced to change course if they

want to see the euro want to see the euro stay alive. In they're forced to

change course, if this is change course, if this is a

no-win situation for them, will that mean for Angela Merkel domestically? Politically it's

damaging. That's one of the reasons they're being so stubborn. I believe that

they'll more likely they'll more likely take the

ECB route. The idea of Germany in a sense surrendering their sovereignty to a greater

Europe, to a greater bond

market where they'd have to pay

higher yields for one thing

it's against the constitutional

law of Germany. Allowing the ECB flexible stand to come in as

some say bazooka fashion and drive the bond yields of drive the bond yields of Europe

down, I think that's probably

more pat palatable, but Germany

is very much against that idea as well. She has said that

Germany doesn't have a new

bazooka to pull out out of bazooka to pull out out of the

bag yet we're seeing the IMF

extending a line of credit. I think it's a you actually read between the you actually read between the

lines is really for countries

who've been behaving themselves

who experienced the fall-out

that we're seeing in Eastern

Europe. Therefore the IMF will

extend them loans but it actually does not tackle the problems of countries such as

Spain, Italy and een France

raising their debt. It's a

mechanism to prevent fallout, further attack the problem. So I don't think it will have a lasting effect on the

effect on the market. He effect on the market. He has

said he can reduce the

country's deficit and help the economy, are you in economy, are you in support of that view? Well, you that view? Well, you know, seeing is believing. I do think

that Italy will make strides to curb spending to curb spending to curb the excesses of

is a positive thing and the markets will like that. However, at the same time , Italy has to generate revenue. They can only do that They can only do that by growing their economy. Further

cuts will not gree their

economy. Some policies have to

go in place for Italy's economy

to grow again. That's to grow again. That's why no-one is buying even with the no-one is buying Italian bonds even with the change

even with the change of leadership. So something has to

happen to allow European growth

to take off at some time soon and there's no sign of that

happening at all. I'd like to

move on to another currency

making news, India's rupee.

It's continuing to It's continuing to hit new lows. It's a very scary

situation over there. The Indian rupee was the darling of

the market, even into July this

year. Indian growth was very strong. Unfortunately in

India they cannot have a lot of

growth without also having

inflation. So you're getting

classic boom bust scenario

where Indian growth was extremely strong for the last

few years but the inflation pressures built and built and built.

built. The Central Bank is

forced to raise rates. Suddenly

the economy hits a wall and starts reeling backwards. With

the showdown in worldwide growth, the US is not going that that well, the slowdown has

hurt India even though they

don't have a big export economy. They don't have the tool to deal with it, because

they have a very large account deficit so they're dependent on foreign investment, whereas countries like China, for instance, have

current account surpluss so that gives them more that gives them more weaponry

to battle against the global slowdown. There are fears slowdown. There are fears that the Indian economy will have a currency is to weak. We're hearing that the RBI is

considering action. Given that

they don't have a lot of

weaponry in their cabinet, what

do you see they could possibly

do if they do need to take action? Probably the only thing ... Raise rates

again? If they raise rates again their economy is absolutely smashed. They've

probably raised rate toos much in response to their inflation

problems. That's the tricky job, measuring growth and fighting inflation

pressures. The only thing they

can do is intervene. That can do is intervene. That would only create a temporary respite

and the pressure also come on

again. Even if the market

doesn't sell the rupee

doesn't sell the rupee the

fact they won't buy it means

with their current account deficit, it will put deficit, it will put pressure on the the on the the currency. It will

remain at low levels time to come? Yes,

time to come? Yes, until India's fiscal position

improves and the fiscal

position is deteriorating.

Thank you for joining us. Thank you Whitney.

The Federal Government's

mining tax has cleared the

Lower House of Parliament. The

final vote passed earlier this morning after the government

agreed to a deal with Greens MP

Adam Bandt resulting in a must

measure to offset a shortfall

in revenue of $100 million over

the tax will raise $11 billion

from highly from highly profitable iron

ore, coal amounted petroleum

projects. The proceeds will be

use as small business tax

breaks, infrastructure and

funding for higher

superannuation but superannuation but some

economists and tax experts have

criticised the government for failing to engage with State

Governments and explain the measures properly to the community. The Bill will be debated in Senate next year. South Korea's government has

forced through a stalled free

trade deal with States during a dramatic session of Parliament of the it's America's biggest free

trade greemt since the 1994 North American free trade agreement with Canada and

Mexico. The opposition politics made the made the brazen attack just minutes before the vote. It was an attempt to derail an attempt to derail the passage of the controversial US free trade agreement which has divided the the country. After

the attacker was removed from

Parliament, proceedings quickly

resumed. The sweeping pact, first negotiated in 1997, first negotiated in 1997, was ratified by majority in a 151-7

majority in a 151-7 vote. They

ratified the Bill by surprise, so

ruling party should apologise

to the nation and announce that the ratification is invalid. Most of the opposition abstained from voting abstained from voting much to the government's disappointment. We tried our

best but it is beyond our

capacity. The US Congress

ratified the deal last month

and it has now been made law. It's trade deem since the North

American free trade agreement

with Canada and Mexico in 1994.

On the streets of Seoul, there's been

there's been a mixed reaction

to the deal. It should've

been ratified earlier. Our

country is trading well with the United States without the

free trade deal. I really doubt

we could get more with the agreement. The deal is expected

to increase US exports to Korea

by as much as $10 billion. But

South Korean farmers and other saying it threatens saying it threatens their livelihoods and favours US

interests over South Koreans.

The World Bank has warned

China's economy faces growing risks from Europe's debt risks from Europe's debt crisis and provincial government and provincial government debt. In its semiannual East Asia and Pacific economic update the bank revised upwards its growth

forecast for China to 9.1%. And while it's identified local government debt as the bank says China's financial system can system can cope with the load. We like the authorities

see a number of issues in China such as

such as the local government debt, the rapid credit expansion of the expansion of the past which may have resulted in some of the

non-performing assets. But overall, we

overall, we also know from a

very recent IMF World Bank

assessment of the financial system that the system is much

stronger than in

that it can withstand quite a few shocks. The bank predicts growth

growth will slow to 8.4% next

year, but says Beijing ensure a soft economic landing

through easing monetary policy. Economists are Economists are predicting increased demand for Queensland

zinc as Japan continues rebuild after the March

earthquake and tsunami. The bureau of resources and energy

economics says global zinc

consumption will rise by 5%

next year to 14.1 million

tonnes. It says the increase is

partly due to the massive reconstruction effort under way

in Japan. Last month, tok it yo announced a third extra reconstruction budget, billion dollars will be allocated to devastated areas

of the north east and is predicted to boost GDP by 1.7%. From April next year.

Australia's largest steel maker

BlueScope has embarkeded on a

new strategy to bolster its

weak balance sheet. The company

has announced a $600 million

capital raising which will be used

used to pay off existing debt.

The 40 c per share offer is a considerable diskounded on

BlueScope's last closing price

following a trading halt ahead of the announcement. The group has a debt of around billion while earnings have been hurt by the high

Australian dollar, low steel prices, strong raw material

costness and softer demand. BlueScope management says it

will work toward reducing costs

and also assess a range of potential acquisitions. Europe's second biggest travel

firm Thomas Cook renegotiating its terms with

banks after a sharp downturn in

business. A disastrous year of dropping consumer confidence and vol timt in north and vol timt in north east and

central Africa hit the central Africa hit the company

much harder than from Egypt, from Egypt, Tunisia, Thailand

and elsewhere has been worrying. Street battles the

Arab Spring and floods have put people off. Owen and his fiancee Suzanne from South

Wales have booked a ?5,000 knowing that all holidays from

tour operators are protected with they're still concerned. They were just the first company we thought we could rely They're a national institution.

When you want to book a

holiday, generally they're one

one of the first companies you

look at. We never thought

they'd be in any financial

difficulties. Thomas Cook's holidays have been making a splash for more than a century

and a half. It was the first to and a half. It was the first to

take people on holiday by air.

Now the second biggest operator after Thompson, it sells 22

million holidays a year across Europe, employs 31,000 staff, but going into a lean winter

the company's weighed down by

?900 million of debt. Banks

granted 100 million of extra

funding last month. Now funding last month. Now it's asking for

asking for more. We are negotiateing with our banks.

The banks have always been very

supportive to us. And I am very

confident that they will give us us the extra cushion that we need. Thomas Cook is expected

to close 200 of its shops. It's

getting rid of planes and

selling hotels. selling hotels. All measures

which will worry its staff which will worry its staff but

which are designed to help turn

the business around. There are high hopes that Thomas high hopes that Thomas Cook's

banks will ride to the rescue but the travel industry is

watching anxiously, concerned about any knock-on effect on other businesses. The current

annual general meeting season has once how out of touch with reality

executive pay has become. Big

bonuses are being paid even

when shareholders have suffered

big losses and for some who follow corporate governance

closely it's time for radical action to control the excess. Shareholders largely turned a blind eye to executive pay when

the economy was pooling but it's not booming now and a

string of high protest votes against this remuneration reports reveals many shareholders have had

enough. We're seeing results where executives are being paid

substantial bonuses for los making ventures questionable business strategies where shareholders

are losing a lot of money. BlueScope Steel and are BlueScope Steel and OneSteel

are who examples of companies

continuing to pay big bonuses as shareholders have suffered

big losses. Others such as Commonwealth Bank, Wesfarmers

and QR National reset missed

bonus targets to make them

easier. The big question is how to stop that seemingly unjustified transfer of wealth

from shareholders to

management. In France, Germany management. In France, Germany

and Japan, people run big complex organisations complex organisations for far

less money than Americans and

Australians and the English increasingly pay

themselves. Professor Jack Grey from the University of

Technology in Sydney believes

the reason executives in

Australia are so highly paid is

that there's no genuine market for their services. Markets

work best when both sides have equal information and power.

Here is a case where the information is information is only one sided

and the power is only one sided

because shareholders are too diffuse. Which for Professor Grey means in Australia all the

power rests with people such as remuneration consultants directors and the executives

themselves who all have vested interest in pay being as

high as pok. He also looks to non-English speaking countries

of examples of how it can be done better such as Germany. They have a board of

directors and a supervisory

board that is largely made up of union and of union and employee representatives. And compensation has to go through them. That's limited the average pay packet of CEOs average pay packet of CEOs in Germany to around 40 times average weekly earnings. The Australia Institute's Richard Dennis believes the tax Dennis believes the tax system

could be used to put a brake on executive largesse. He believes there should be an upper limit salaries and anything over that

should be regarded as a

gift. We want to force boards why they're paying why they're paying so much and why they're willing to agree to payments that are over a

threshold which renders them no

longer tax deductible business

expenses. He'd also like to

see the abolition of the 50% because he believes it

encourages excessive share based payments. Big companies

are continually looking at

offshoring to try to lower

their wage costs. However University of Technology's

Professor Jack Grey wonders why

it's only jobs at the lower it's only jobs at the lower end

of the pecking order being sent

to cheaper countries. How to cheaper countries. How about

we say executive salaries in

Australia are too high, we'll

move the whole of Qantas's

operation, executive operation, executive operation

to Germany or India and there

we will not get any we will not get any lower quality, in fact we'll

will be at a 10th of the cost. Failing that Professor Grey thinks it's time for

boards to share up for their

shareholders and instead of

trying to hang on to executives

at any cost, be prepared to let

them leave if they're not happy with

with their remuneration. Now a

look at what's making headlines around the region. The

'Standard' reports Hong Kong's inflation edged up last night as

with will peak in the past quarter. The 'Wall Street Journal' says Japan two main Stock Exchanges will merge in

January 2013. The the

'Financial Times' also covers

that merge yes which has been described as a stepped towards

revitalisation of the Japanese economy. That's all for

Business Today. If you want to

look back over any of our interviews, please visit our

web site. We look forward to your feedback. your feedback. I'm Whitney Fitzsimmons. Thanks for joining

me. Enjoy your day.

Closed Captions by CSI

Welcome to Telstra. This is Ray.

Good morning. You're watching ABC News 24. I'm Joe O'Brien. A special O'Brien. A you this morning. We plan to bring you much of the bring you much of the memorial service for victims of last Friday's nursing home tire in

Sydney. That's a live shot you

can see there now from the

Quakers Hill Anglican Church. This service is due This service is due to get

under way at any moment. As you can see from the shots there, hundreds of people are attending this service for the

victims of that terrible fire

in Quakers Hill. That's a

suburb in the north west of Sydney. The death toll now

stands at nine. A 35-year-old nurse

nurse has been charged with

several counts of murder. He is

due to appear in court

tomorrow. It's expected he will

faced a digsal charges when he