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Compo deal talks continue -

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(generated from captions) As negotiations continue tonight between the NSW Government and James Hardie over compensation for asbestos victims the Federal Treasurer has stepped in with a warning. Peter Costello says the Commonwealth won't tolerate any legal immunity

for James Hardie directors as part of the deal. And there'll be no special laws allowing James Hardie to claim tax breaks on compensation funds. NSW says a deal must be struck by Thursday,

or it'll pass hostile legislation forcing James Hardie to meet its obligations. Rachel Carbonell reports.

(All chant) Shame Hardie, shame. Crunch time is fast approaching for an asbestos compensation deal and the Treasurer, Peter Costello, had some firm words for those at the negotiating table. We call on the NSW Government not to give any immunity whatsoever to the director of James Hardie, Mr Speaker.

Mr Costello says giving immunity would frustrate the $7.5 million investigation into issues arising from the Jackson Commission of Inquiry into James Hardie's asbestos liabilities, and any litigation arising from it. The Treasurer also warned that no special tax laws will be enacted to help James Hardie minimise tax on compensation payouts. The James Hardie directors ought to accept responsibilty to the victims, to the poor people who have been injured by their product, and the shareholders Mr Speaker, ought to be bearing the cost of that rather than putting it off onto the Australian taxpayer. The NSW Government insists a deal must be reached by Thursday,

otherwise it will pass legislation which it claims will force James Hardie to pay up. Neither side wants that, and despite the animosity and frustrations of the past, both support the company's efforts to avoid tax on compensation funds. There been some legal suggestion that James Hardie's move offshore

might stymy its ability to claim tax concessions under current laws. James Hardie is taking us into unchartered taxation waters.

It's also taking us into unchartered corporate legal waters. That's why there's a been a question about special legislation being set up in order to facilitate it. Author of 'Asbestos House', a history of James Hardie's involvement in asbestos, Gideon Haigh says a tax deal may still be possible and he's criticised the Treasurer's comments. If you're prepared to accept that the payment of compensation is a legitimate business transaction, then it's hard to see what Peter Costello's logic is.

But the Treasurer has his supporters, including South Australian Independent MP Nick Zenophon,

who has campaigned strongly for legislation to speed up compensation claims by South Australian sufferers of asbestos disease. I can understand the Treasurer's point of view in that James Hardie, unlike CSR, unlike BHP, has attempted to shift its corporate structure overseas to the Netherlands. Rachel Carbonell, Lateline.