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(generated from captions) accept there'll be a recession,

talk of those kind of things is

highly premature, and I point

out that although there was a

recession during the time of

the last Labor Government, the

last Government was in office

for 13 years. There was a

period of - a very significant

recession in 1990/1991, but

strong growth for the vast bulk

of the remaining period, the

remaining 11-12 years, so

clearly if there is a

significant downturn, a prolonged downturn, then there'll be political

consequences that flow from

that, I am not accepting that

that will happen, we moved into

a period of slightly slower

growth, but growth is still in

reasonable shape, retail sales

improved a fraction from where

they were, unemployment still

is very low, business

investment figures are strong,

the recent events are going to

knock some of that about a bit.

We don't know that that is

going to be prolonged or deep.

It could be, on balance from

what we know, it's unlikely to be. Lindsay Tanner, Finance

Minister, thank you for joining

us. Thank you very much.

European observers moved in

to monitor a cease-fire between

Georgia and Russia, they'll

oversee a pullback of Russian

troops from buffer zones near

two breakaway regions of

Georgia, Russians have kept their soldiers there since

August. In the Russian central

museum of the armed forces

where a century of conflict is

commemorated a room has been converted to display spoils of

a recent war. This exhibition

is titled the caucuses, five

days in August, dealing with

Russia's short war with Georgia

over the breakaway region of

South Ossetia, exhibits ranging

from captured Georgian flags to

images of dead and wounded civilians.

TRANSLATION: These events

shook the world. Naturally that

caused a great interest amongst

Russian people. We had to react

and show the developments of

these events. A mission is

under way in Georgia to ensure

that no new exhibits can be

added to the collection. About

200 European Union monitors

begun patrols trying to move

into areas that Russian troops

occupied since the August

conflict. We have been asked to

come in with the EU to be part

of the 6-part agreement

regarding the assisting the

Georgian and the Russians to withdraw to the buffer

zones. Under the French

brokered peace plan Russian

forces are to withdraw from

Georgian territory other than

South Ossetia and Abkhazia by

10 October. There's been

contention surrounding the

buffer zone set up by the

Russians around the breakaway

regions, before the EU mission

began Moscow said the monitors

wouldn't be allowed in

immediately. On the first day

of patrols some observers were

let through, others turned

back. The Russians gave a plan

for dismantling checkpoints,

they gave an order, but did not

say when. This is what we'll

want to continue talks with them. Russia tried to set

limits on the mission. Moscow

has been against EU monitors

going into South Ossetia and

Abkhazia, Russia recognised

both regions as indpendent

while pretty much the rest of

the world sees them as par of

the Georgia. During a -- part

of Georgia, during a ser noni

-- ceremony to celebrate the

soldiers, President Dmitry

Medvedev congratulated the TRANSLATION: We'll do soldiers.

everything we can to make sure

the two states, South Ossetia

and Abkhazia are stable, it's

our duty. As part of that duty

Russia intends to keep about

7,500 troops in South Ossetia

and Abkhazia. But President

Dmitry Medvedev assured that

Russia would honour its

commitments, pulling out troops

from Georgian territory by

October 10. The first clues

about the disappearance of the

wealthy US adventurer Steve Fossett may have been

discovered in rugged mountain

country in Eastern California,

he went missing more than a

year ago. Hikers found the

missing man's identification

paper, and unconfirmed reports

that an aerial search team may

have spotted the wreckage of a

plane. Connor Duffy reports. Last September Steve

Fossett took off in this plane,

vanishing a few hours later.

Despite an extensive search no

trace of the millionaire was

found, nor his plane. 13 months

later hikers stumbled on Steve

Fossett's ID and a wad of cash

during a day trek in a remote

forest. The ID card was black

or blue, theirs are white. That

stands out. The money in the

dirt didn't stand out but $100

or $200 that were bleached and

white stood out. It all stood

up. I went, "Huh". It's been a

little over a year. It will be

hard to determine how they got

there. The dis-Cofrey

reinvigorated the search for

the world renowned adventurer.

Rescuers report plane wreckage,

recovery teams will stay out,

combing the high country won't

be easy. The Mono County

Sheriff will have search and

rescue teams out there, 12

people, twided in four, doing a

grid search, as was mentioned.

Tomorrow we'll double or triple

that. I believe one of the

items were the items located up

about 9700 foot level. There

are peaks above that. The

terrain is I'd say fairly

rough, mountainous. Steve

Fossett was declared legally

dead in February. The lack of

evidence encouraged conspiracy

theories about his fate. At the

time he disappeared he was

searching for a dry lake bed on

which to attempt a new

land-speed record. In 2002

Steve Fossett became the first

person to circumnavigate the

world in a hot-air balloon

finishing an epic flight in

Southern Queensland. A boatload

of suspected illegal arrivals

intercepted off the North Coast

of the WA has arrived at the detention centre on Christmas

Island. The 12 passengers and

two Indonesian crew arrived on

shore before midday. Their boat

was intercepted by the navy

near the Ashmore Island Monday,

nine are held in Christmas

Island's detention centre,

three juveniles kept under

superannuation elsewhere on the island. Immigration Minister

Chris Evans say authorities

don't know if any of the group

are seeking asylum. To the

weather - light patchy rain in

Adelaide, Melbourne, Hobart.

Showers for Perth and Dar twin,

showers and thunderstorms for Alice Springs and

'Lateline Business' coming up Sydney. That's all for us,

in a moment. If you'd like to

look back at the interview with

Lindsay Tanner or review the

stories or transcripts you can

visit the web site Now

'Lateline Business' with Philip

Lasker. Tonight a single set of

rules, the Government's plan to

stop irresponsible lending. In these uncertainly financial

times when we to a national

single regulatory structure in

financial service, it's a good

time to have a hard look at

some of the malpractice

occurring at the enls, minimise

and crack council on

it. Opportune time, big banks

looking to take over small

players. I think you'll see

consolidations, Running out of

money, the problem with falling

markets and living longer. That

creates a massive conflict

where they were more exposed

than what we are seg seeing in

the market downturn at the

moment. First to the markets.

And despite the revised Wall

Street bailout package passing

its first hurdle Australian shares lost shares lost ground.

Nervous investors staying on

the sidelines, All Ords falling

1%. ASX dropping, dragged down

by weaker resource stocks. The

Nikkei lost all of yesterday's

gains. Reopening after

yesterday's holiday, Hong

Kong's Hang Seng added 1% and

in London the FTSE has risen. We'll cross through We'll cross through shortly.

The markets may have been

quieter, the financial crisis

is with us, in Australia it's

creating the perfect cover for

a spate of takeovers in the

Australian banking industry.

After Westpac's bid for St

George the question was which

deal would be next. Speculation went into overdrive, Desley

Coleman reporting. The Reserve

Bank Governor, Treasurer and

Prime Minister said Australia's

banks are robust, solid and

profitable. The Chief Executive

of Suncorp Metway agrees, but

says that Australian financial

institutions will have to

become even more

resilient. They need to be able

to absorb the impact of major

crisis, returning to usual

performance levels as quickly

as possible. Soaking at the

CEDA forum in Sydney, John

Mulcahy said further

consolidation in the financial

sector was needed. Scale

well-managed accounts - I think

you'll see consolidations going

forward, I added - there's

added incentive, flight to

quality, but it's hard to

predict where it will be, when

it will happen, who'll be

involved. Newspaper reports suggesting that the

Commonwealth Bank has made a $3

billion offer for BankWest.

Which is owned by Halifax Bank

Bank of Scotland. The

distressed HBOS is in the midst

of a $20 billion takeover by

Lloyds TSB. It makes a lot of

sense for Commonwealth Bank

obviously the issue is one of

price, they don't want to pay

too much, like any acquisition,

in the current conditions you

probably won't be forced to pay

a large price. But it goes to

HBOS's need for capital. Both

banks played down the

speculation, HBOS told Labour


While the Commonwealth Bank

has announced to the Stock

Exchange that it regularly reviews acquisition

opportunities, but at this time

confirms, "We do not have any

offer with HBOS to acquire

BankWest". The Australian

businesses owned by HBOS

includes BankWest, retail and

business banking arms

comprising more than 120

branches, 6,000 staff, and 37

billion in deposits. BankWest's

exposure to the resource-rich

state of WA makes it attractive

for any of the big four banks.

The earnings, in particular the

first half, they made about

?100 million, for six months,

so if you extrapolate that, and

that's a fair run rate for what

they are doing you come up with

a number of the ord of $5-$6

billion. The banking sector

with a mixed session.

Commonwealth Bank stronger,

Suncorp Metway was the biggest

gainer, investors speculating

that the Queensland-based group's banking acquisition

could be a target. On the

broader share market it's been

a subsued day and year across

the whole of Australia's

financial markets. A study by Australian Financial Markets

Association shows market

turnover in the year to June

registered a modest increase of

3%. To just under 122

trillion. We have a very robust

pension industry in Australia,

so there's very good cash flows

into the pension superannuation

industry in Australia, clearly

we had a downmarket, seeing

less activity from foreign

investors into the Australian

markets over the course of the

past 12 months and domestic

investors have been cautious

with their funds. While Westpac

is busy with a $17 billion St

George, ANZ and NAB deal with

exposures to the US and failed

broke e, analysts say the Commonwealth Bank is in the

best position to make a

significant acquisition. London

is more than halfway through

its trading day, to get the

latest news I'm joined by Tom

Houggard, chief market

strategist at City Index.

Thanks for joining us. We don't

seem to have a line. There you

are Tom. Can you hear me now,

thanks for joining us. I can

hear you. Tom, last time I

looked, the market was up about

1.5%, is that because of news

out of the United States. Yeah,

I believe it is. There was

growing sense of feeling here

in the London market that once

it passed through the Senate it

will be a pit stop to get it

through the house, so there's a

lot of optimism, but it is a

reserved optimism, not shared

by all the other European

indicies, looking at the German

index, it's not up in positive

the last time I checked. I

still think we have a couple of

days of uncertainity ahead of

us. The market looks like it's

setting itself up to be

disappointed to a great extent

if the bill doesn't pass. Yes,

and you know what, you play

that into my hand. What if is

not going to get through. As a

matter of fact there's a

growing camp here on the

trading floor believing if we

do get the rescue package, it

won't make much of a difference

to the economy in the - maybe

in the short term, not the

longer term, we have to play

out the underlying problems and

for the market you have to

contend with nonfund Pay rolls

released. You could get a

trouble whammy, there's no way

of telling what kind of day

we'll have tomorrow. One thing

I can tell you, if this doesn't

get passed I think that we are

at the press.of a serious

cecked. We already -- pres pee

of a serious correction,

there's nothing stopping the

market going further in a

crash-like panic. If it does

get passed, does it have the potential to stablise markets,

reducing volatility The market

has an ability to discount

anything. Right now I don't see

it in the market the way that

it is trading that they are

discounting this, which means

that it leads me to suggest

they are sceptical that it will

have any effect or, indeed, it

will pass through. Just very

briefly the European Central

Bank kept its benchmark

interest rate unchallenged. How

is that received. Well, it's

not being received particularly

well. It is disappointing when

we see our US counterpart being

so aggressive in their interest

rate policy from January this

year, now being at a rate of

around 2%, while we are still

contending with 4.5 to 5", we

have seen the European rates,

libo rates, and what they are

doing, that's the confident

issue, by them not log the

rates, I don't know what they

are wore -- lowering the rates,

I don't know what they are

worried about, we won't have

inflation if people have no

money to spend. Last year's $15

billion splurge into suspension

because of tax breaks appears

to have badly backfired.

Australians who put a million

dollars into super last year

have lost up to half their

money - on paper at least.

After five years of double

digit returns super has been

hit hard by the bear market

causing concern for many,

especially those close to retirement. The markets

white-knuckle ride of the past

four days has compounded a

horror year for Australian

superannuation funds. When you

are investing in growth assets

you expect markets to do up and

down. What we are experiencing

now is disappointing, but is

really expected as part of the normal investment cycle. According to research

groups SuperRatings the value

of the average super account in

a balanced fund tumbled 9%

since January, with market

conditions far from normal,

superannuation funds the

biggest single investor,

account holders are bracing for

a second straight year of

negative returns. For those in

the retirement hot zone, five

years either side of finishing

work, the combination of

drawing down income and negative returns could have

dire consequences. Combined

with the fact that, you know,

they need to have some exposure

to equities over the long term,

generally people are living

longer, then that just creates

a massive conflict where they

are more exposed to the risk

seen in the market

downturn. Wade Matterson from

consulting firm Milliman

calculated the impact of market

turbulence on retirement

savings, rafb revealing 90% of

85-year-olds will have money to

spend, in the last 12 months,

the risk of running out of

money by 85 jumped to one in

two. There appears to be little

benefit in switching to

traditional havens like fixed

interest accounts, but better

alinterpretives are

emerging. If we -- alternatives

are emerging, if we look at

products coming to market, they

are addressing some decisions

that people need to make, and provide guarantees around,

asset values, and income. Last

year's best performing balanced

fund was vaigs super, posting

the smallest -- Vision Super

posting the smallest negative

return of 1.7%. Chive executive

Rob Brooks advised investors

not to change anol gis. Backed

by Steve Schubert.. That'll go

on for month after Monday, it

will incover lots of investment

psychless, we'll save through

bull and bear markets. Industry

funds outperformed their retail

counterparts, super ratings

Jeff Bresnahan saying investors

should look closely at the

make-up of each funds

portfolio. You need to

understand how the fund intests

money, where they are made,

fees -- invests money, what the

fees are. Most funds aim for

annual returns, 3% above

inflation, is the accepted

wisdom. That is looking very

optimistic indeed. To the other

major movers on the market.

Broker downgrade saw Fortescue

Metals dropping 8.5%. AGL

Energy closing half a per cent

lower, announcing a sale in LNG

Elgas project for $221 million. On the other side of

the ledger CBH resources climbed

climbed 8%.

Launching a hostile $68

billion for rival zinc miner

Perilya, sending shares

skyward, and Perilya closed

16.5% stronger. On currency

markets in the run-up to

tomorrow's vote on the Wall

Street rescue package:

Profit taking pushes gold


Today's COAG meeting agreed

to changes that mean the

Federal Government will take

over responsibility for all

remaining areas of consumer

credit by the middle of next

year. Now, every credit

provider needs to be licensed

and part of an external dispute

resolutions scheme. I spoke to

the man driving the changes, Minister For Superannuation and

kompt law Senator Nick

Sherry. Thank you for joining 'Lateline Business'. Good

evening to you and your viewers. How significant are

the changes announced

today? They are very

significant in the sense that

we are moving to a simple

national regulatory system in

financial services, and it's

making a strong regulatory

system strong stronger in view

of some of the financial

turmoil we have seen on world markets, caused fundamentally

by lack of regulation,

supervision and mort broking in

the United States. We are told

that our regulators here have

done a great job which is why

we'll be more resilient. Why do

we need these changes? It's

making a strong system

stronger, in Australia about

20% of financial products are

still regulated supervised by

the States and Territories,

that's inefficient. We have a

national market, national financial services system,

having one set of rules for all

financial services in Australia

and their distribution is very

porn, important efficiency

important, important efficiency

for business, there's a range of consumer protections that

need upgrading. Are the

consumer protection - will they

be tougher? They will be, we are transferring the credit

code from the States into

Federal law. At the same time

we'll introduce national

regulation licensing of

mortgage brokers, credit

providers, there'll be a

low-cost disputes mechanism and

much tougher requirements on

responsible lending. We know

that Australian households are

carrying a lot of debt and know

that they are reducing their

debt. We've been told that by the Reserve Bank and various

other people. Has the horse

bolted in a sense. People are welcoming these changes. But

are they coming too late. Look, in these uncertain financial

times, moving to a national

single regulatory structure in

financial services it's a good

time to have a hard look at

some of the malpractice

occurring at the edges, and

minimise it, cracking down on

it. You'll iron out the details

as I understand it of payday

lending in the second phase of

these changes. But do you think

the idea of a capped interest

rate for that type of lend

something a good idea. That's

an issue, some States have a

cap, some don't. We need a

uniformed system of protection,

the level of cap, what will be

established we have to sort out

the detail. We have different

requirements, that highlights

one of the difficulties. When

you have national providers

with different regulations and

protections in different

states. There'll be a greater

focus on responsible lending,

particularly in this area of

pay day lending, we want to be

proactive as a Government in

minimising this type of lending

full stop. What would that

intervention involve. We'll

work out the details, we'll

have greater levels of

responsible lending. You have

been fairly swift in addressing

this sort of consumer credit

issue, not so swift in issuing

licences for competitors to the

Australian securities exchange.

What's happening there. Well,

there's a decision to be made

by Cabinet, we have three

applications. The issue

involves more than considering

the licence competitors to the

ASX. We have to look at the

supervision of the markets, and

that, in itself is a major job

when we have a whole range of

other issues to deal with at

the moment. The announcement

today, the short selling. So

you are suggesting that

decision a long way away. I am

not suggesting that, I'm saying

that there's a significant

number of issues before the

Government as a consequence of the US subprime financial

crisis, a very significant

number, somewhat unexpectedly

compared to, say, a year ago

when the first licences for

competition to the ASX were

sought. Because the former

chairman Morris Newman said

issuing new licences would

fragment the market, weakening

the market and be

counterproductive to your aims

of making Australia a financial

hub. I take the point of

Maurice, we don't want a

Federal Government mented

market or supervision if we had

-- don't want a fragmented

market or supervision, they

have assumed importance in this

context and compared to the financial circumstances of a

year ago. We have also introduced restrictions on

short selling, as they have

done elsewhere in the world.

But we have gone further. We

have actually banned certain

types of Short selling on all

stocks, what is the reason for

that? Other markets only banned

short selling in certain sectors, for example financial

stocks. Yes. Why have we

broadened that restriction. For

a couple of points - it's a

temporary ban, we don't intend

to legislate for a Pan ban, it

will be the decision of the --

permanent ban, it will be the

decision of ASIC on covered

short selling, ASX on naked

short selling. The fundamental

argument was, and the situation

we faced, was that covered

short selling in respect of

financial stocks in almost

every part of the world it was

felt, it was believed, and I do

accept this argument that the

Australian market is smaller

and the structure and nature of

the market is smaller. If we

closed the door to financial

stocks, we would have left the

door open for other areas, in a

smaller market, smaller market,

particularly property and

mining. We still believe the

consequences of leaving the

door open would have been very

serious, this was a decision

that we welcomed, we supported,

we were consulted, it was in

the best national interest, we took into account our local

circumstances and the nature of

our market here. Senator

Sherry, thanks for joining

us. Goodnight. Take over target

Rio Tinto came out swinging the

day after BHP Biliton had a

victory with Australia's competition regulator, Chief

Executive Tom Albanese says the

current financial ruptions do

nothing to alter Rio's

rejection of the BHP's takeover

bid and had stern warnings for

local policy makers. Neal

Woolrich reports. Australia's

competition regulator might not

be opposed to BHP Biliton's

takeover bid to Reino, Rio

Tinto refuses to budge. The

fact is that Rio Tinto has no

need to be bigger for bigger

sake. We have the scale, we

have the strength and we have

the resilience to weather this

storm easily on our own. There

doesn't appear to be a great

reason to stay indpendent in

today's day and age, there's synergies that BHP Biliton will

gain from teaming with Rio, and

equally Rio will gain from

teaming with BHP Biliton. Tom

Albanese argues that BHP

Biliton has not given investors

enough information to assess

how much the $6 billion Olympic

Dam expansion could be worth,

saying Rio's board has no

incentive to change its course,

even though Rio's share price

is at a 15% discount to BHP

Biliton's offer. This has

emphasised day to day share

price movements shouldn't

influence long term

thinking. Policy makers were

turned to, worried about

increasing foreign investment

into Australia and third party

right to use the infrastructure

of other companies. Tom

Albanese believes a confusing

access regime, and plult Mr Ownerships risks development in

the west as it has on the East

Coast. If those conditions were

repeated in the Pilbara, you'd

have to say it would make it

more difficult to put new mines

in the Pilbara, and discourage

a longer term view on

thinking. Turning to the global

credit crisis, he supported the

US financial rescue package,

but argues concerns about

global growth have been

oversold expecting the Chinese

economy to expand at 8% a

year. The global credit crunch

has been blamed for Perth based

performer pos eyeden nickel to

suspend operation, they

announced a display on the Mt

Windara project 20km north of

Laverton. Chaired by Andrew

forest, it finalised a $50 million funding package with

Harbor Due Capital. It is has

been forced to reserve

resources. To operate in the

current market not taking

accounted of the situation is

fool hardy, projects like this,

at some stage, need significant

funding support, and the environment for that is

obviously under a great deal of

stress at the moment. Work will

be suspended at the end of the

month. Soaring coal and iron

ore exports see Australia

report its biggest trade

surplus in 11 years, August

surplus total $1.4 billion, the

second biggest on record, and

the second surplus in the past

three months. Exports climbed

6% during the month, boosted by

a 26% surge in earnings from

coal. At the same time imports

fell 2% as a result of a 25%

drop in fuel imports. Virgin

Blue's plans to ply to the

United States have run into

turbulence. A strike at Boeing

delaying the launch of its

daily service to Los Angeles by

two months to the end of

February. Boeing can't

guarantee an arrival date to

the three new planes it ordered

to run the service, shares in

the country's second biggest

carrier closed 1% lower at 36

cent. A look at the business


Final Before we go, a look at

what's making news indeed business sections of tomorrow's

newspapers, the age leads on

today's surprisingly strong

trade figures, the Australian

says investors are questioning

the value of the Wall Street

rescue package, and 'Australian

Financial Review' says the infrastructure packages are

being fast-tracked. And that's

all for tonight. As I leave you

the Dow is down 78 points, and

the FTSE is up 34 points. I'm

Philip Lasker, have a good


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