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Live.

Julia Gillard backs away from

plans to send asylum seekers to

East Timor. 10 Russians to

enter guilty pleas for spying

in a New York court. Battered

and bruised, punches thrown as Taiwan's parliament descends

into chaos. And spun out,

cricket's greatest wicket taker

announces his retirement. Good

morning, it's Friday, 9 July,

I'm Michael Rowland. I'm

Virginia Trioli. Prime Minister

Julia Gillard appears to be

backing away from her plan to

send asylum seekers to East

Timor. 3 days after announcing

the proposal Ms Gillard now

says setting up a centre on

Papua New Guinea is another

option. The Opposition says the

PM's refusal to name East Timor

as the preferred location is

proof her plan is unravelled.

Hz Ms Gillard says East Timor's

lead rers showing goodwill

towards the idea but President Jose Ramos Horta says it's a

long way off. We have not even

received a letter or a meeting with Australian ambassador or

anyone from Canberra to put

forward to us the details of

this proposal. We are ready to

meet with Australian side any

time to discuss it but let me

say from outset that A, we

don't have the infrastructure

so we are talking about if we

agree to go ahead with it, we

are talking about a whole new

side, a whole new building or

buildings with power supply,

with water, with sanitation,

medical facilities, recreation

facilities, all of that. So

this would take many, many

months. Jose Ramos Horta there.

For more Melissa Clarke joins

us from Canberra. This has been

an extraordinary bit of a backflip from Julia Gillard

just in 24 hours. Take us

through the comments as they've

been unravelling? Well, when

she initially announce whad she

want ed to do with asylum

seeker policy what she said was

she wanted a regional

processing centre and that

she'd approached East Timor and

spoken to the East Timorese

President about the possibility

of having that centre on East

Timor. What we've had in the

last few days where we've seen

the East Timorese Government

and the Opposition both be very

lukewarm about the possibility,

she then yesterday came out to

nominated East Timor in say that she never actually

particular, she just happened

to mention in that speech that she'd spoken to East Timor

about it. Now she hadn't

corrected or felt the need to

clarify that earlier until the

concern about how she had

managed this grew and grew and

it got to the point yesterday

wherein in two particular radio

interviews she felt the need to

recast or perhaps reexplain

precisely what she had

intended. Let's hear briefly

from those radio interviews

yesterday. I'm not going to leave undisturbed the

impression that I made an

announcement about a specific

location. Papua New Guinea, I

believe, is a signatory to the

refugee convention but

obviously I am now going to

build, you know, on the set of

conversations that we've seen

happen this week. And on a

summer of occasions during that

4 BC interview yesterday to

mention East Timor, where it

will be, she specifically and conspicuously did not see East

Timor and one of the quotes

from the later interview, the

'Australian' is that she said Perth 6 PR interview in the

she was not prepared to

unilaterally anounction a

definitive site for a processing centre in another

country. This might all seem a

little plotty to some people

but it's these specific

definitions and these shades

that are very important, aren't

they, Melissa, and they just

show you what might be going on

or going wrong with the Prime

Minister's scheme? What we've

seen from the Prime Minister so

far is her moves to try and

correct domestic issues but

what she's faced here is where

those domestic issues of how

the public feels about asylum

seekers and wanting to act on

international issues and that collides with

perhaps she didn't bring the

diplomacy or the carefully

worded language that's used

when you're discussing those

kind of international issues to

this domestic debate. And every

word and every detail is very

comes to these sorts of carefully scrutinised when it

international issue and it

seems by coming out and saying

straight off the bat we want a

regional processing centre and

I've spoken to East Timor about

it she put more emphasis or

perhaps as much emphasis as she

wanted but more than East Timor

was prepared to swallow at this

point in time. So that means she's now got an international

problem in dealing with East

Timor and other Pacific nations

who might now be worried that

the Federal Government will

come quock onge their doors but

also a domestic problem because

she hasn't actually changed

anything of the Labor Party's

policy towards asylum seeker

which is what she felt she

needed to do for the domestic

audience. She also has a

credibility problem now. The

Prime Minister surely can't be

arguing that black is white,

she can't persist in this

argument that she never

intended to leave an impression

that East Timor was the country

she was talking to because she

simply on the record as having

said exactly that? It just

becomes an issue of semantics

which I think most people would

turn off and think "Oh,

politicians, they're at it

again." It's semantic, you say

this, does it mean this. Both

Julia Gillard and Tony Abbott

have tried to present

themselves as plain speakers

and Julia Gillard spoke quite

plainly at the Lowy Institute

earlier this week so to now try

and reconstruct that or put a

different take on what she said

I don't think will be terribly successful. Melissa, Clarke,

thanks so much this morning. In

other news 10 suspected Russian

spies are facing a US Federal

Court in New York. Prosecutors

say they will plead GMTV. The

plea would open the way for a

possible spy swap with Russia.

Prosecutors say the Russians

lived in America and posed as

ordinary citizens. They claim

rush's external intelligence ud

ordered them to inflil Tate

circles to get

information. Last year the men

were cleared of involvement in

a plan to bomb 7 flights using

lick quid explosives but a jury

has found them guilty of

unspetiousified conspiracy to murder. Thousands of Israelis have called on the Government

to make a prisoner swap for

captured soldier Gilad Shalit.

Demonstrators rallied in

Hamas to return the prisoner. Jerusalem demanding a deal with

The parents of the prisoner say

they will camp outside the home

of Israel's Prime Minister

Benjamin Netanyahu until their

son is released. Shalit was cap

schured by the Islamist group

in 2006. Taiwan's parliament

has descended into chaos with

opposing sides throwing rubbish

bins during a raucous debate.

The successful started when the

Government speaker rejected an

Opposition bid to debate a

trade pact with China. Two

member of the parm have been

taken to hospital with

injuries. An Australian actors

Toni Collette and roast Byrne

have been nominated for have been nominated for Emmy awards. Collette was nominated

for her role in the United

States 'United States of Tara'.

Byrne has been nominated for

her role in the legal drama

'Damages'. Indian police say

they will protect witnesses testifying against an accused

Australian paedophile in India.

Paul Henry Dean has appeared in

court to deny committing sexual

offences against boys and young

men in the India state of

Andhra Pradesh. Child

protection groups fear the case will collapse because Indian prosecutors have been moving

too slowly. The case against Australian paedophile Paul Dean

has been stuck in this Indian

court house for 9 years. All the

the while, Dean has been able

to walk free. Mr Dean, have you

abused children? Never. So are

you saying that these children

are lying? Sna Are you

innocent, Mr Dean? That is

correct. Dean was charged with

having unnatural sex with 12

boys in August 2001. He was

arrested on similar charges in

2008 but both cases have been

stalled, delayed, forgotten and

adjourned for months and years

at a time. This was supposed

to be the day that the case

against Paul Dean finally started moving forward. The

lead witness was produced

before the court but has asked

for more time. The proceedings

have now been delayed for yet

another week. Paul Dean has

been living in India on a false

Australian passport for more

than 30 years. He's been

repeatedly accused of sexually

abusing Indian boys but the

justice system has been

painfully slow. If the porp

traitor is out on bail and

those children fear what might

happen those witnesses are not

going to come forward and if

that's the case then the case

may just well collapse. Indian

police are promising to protect

the witnesses but after almost

a decade no victims have taken

the stand and testified in

court against Dean. If there

are any complaints of

harassment, exploit ation

countered by him, if anybody

comes to the police we'll take action. Dean could be

extradited and tried under

Australia's child sex tourism

laws but the Federal Government

says the current cases must be

dealt with by the Indian courts

first. If Dean is acquitted in

India he can't be retried in

the same case in Australia. So

they don't get benefit of those

laws and that is the failure of

our system. That is the failure

of our political system, legal

and judicial system. The trial

will resume on July 15.

Well as we mentioned earlier

the 10 suspected Russian spies are facing court in the United

States this morning. For the

latest North America

correspondent Craig McMurtrie

joins us now. What's been

happening in the court so

far? Well, we don't know the outcome of the court hearing.

All we know at this stage is

that for the first time all 10

of the alleged spice, the

suburban spy ring as it's being

called, they're together,

they've been all brought

together in this Manhattan

Federal Court room. It's

expected that there is going to

be some sort of quick swap of

prisoners between Russia and

the United States in a move I guess that could be directly

out of a Cold War handbook.

This was arranged through

negotiations between a very

senior State Department

official and the Russian

ambassador here in Washington.

A US prosecutor has said that

they are all going to plead

guilty to one charge of failing

to register as a foreign

agenting. Another charge, a money laundering charge, is

going to be dropped. The

expectation is that the judge

will order that they be handed

over to Russian authorities and

that tlai be deported and in

fact perhaps the one of the

accused who is most known, Anna

Chapman, the 28-year-old New

York real estate agent, her

lawyer has said he expects his

client to be back in Moscow in

24 hours. But the big

unanswered question, one of

several, is what happens to the

children. There are at least 5

children involved and the

question is will they also, as

you would expect, move with

their parents back to Russia

when as far as we're aware, the

children had no idea that their

parents were deep cover

agents. And Craig, I suppose

it's in the interests of both

Moscow and Washington to fast

track this spy swap to keep

their sometimes fraught

relations of late on

track? Absolutely. There's

nothing in this for either

Government for it to go to a

pessy trial. It's very clear

analysts both in Moscow and

Washington are saying it's very

clear that both administrations

want to put the spy scandal

behind them, get it out of the headlines and that's why

they're moving so swiftly. There are report out of Britain

that in terms of the exchange

on the Russian side there could

be two or three colonel s out

of the Russian defence ministry

who have been jailed for spying

and possibly a Russian

scientist. His lawyer has said

that his client is already in

Vienna. So things are moving

very quickly. Thanks for

keeping us up to date. It does

seem very strange to be talking

about spying in this day and

age somehow. I done know why

because of course that sort of

intelligence operations are

going to go on whether there's

a Cold War or an iron curtain

or not. But it still seems strange. And it's rare they're

caught in such spectacular

circumstances but it's like a

John le Carr novel really. It

is because I'm looking at a story here and they're accused

of trying to infiltrate US

policy making circles which in

itself really just describes

any lobbyist in Washington who

tries to infiltrate a US policy

making circle. Nothing

particular there. But

uncovering what and taking what

home exactly? What home to

Russia is the curious thing. I

wond fer they use those

microfilms that we saw in the

1960-style spy movies. I'm sure

they've gone digital by

2010. We'll look at the front

pages now. The 'Australian' is saying that the Prime Minister

has dramatically backtrack ed

on her plan to build a refugee

processing centre in in East

Timor. The Prime Minister began

retreating from her plan amid

why'dWidespread hostility to

the proposele. There's a

squingeing criticism and

analysis there from the chief

political correspondent

Michelle Gratton in the 'Age'

in the right-hand column. The

'Courier Mail' says the PM was

forced bon on to the back foot yesterday saying she never

committed to location for the centre. Julia Gillard's Dili

solution appears dead in the water reports the 'Daily Telegraph'. I saw a photograph

there of a very high profile

and popular figure being kicked

off a very high profile and

popular reality TV show. That's

all I'll say. Yes, I won't ask what show

what show it. Is Residents in

the suburb of Gungahlin will

be among the first Australians

to access new superfast

Internet speeds. The 'Herald

Sun' stay as-Melbourne mum

desperate for a daughter is

flying to Thailand to visit a

specialist IVF doctor. The

'Sydney Morning Herald' says

the Government's investigating

allegations of kickbacks in the

Green loans scheme knlsmt the

Gillard Government is preparing

to sound out business on

introducing a carbon price. The

'Advertiser' says families and

business owners will be offered

energy saving household

appliances as the Government

tries to restore its green

credential. The 'West Australian' says 3 violent

gangs are poised fin strait the

State. The 'Mercury' reports on

the anversaway of a dark day on

Tasmanian roads. And the

'Northern Territory News' says

a teenager charged with

murdering his father has been

granted bail. Now no doubt

there's going to be a fair bit

of commentary this morning on

what appears to be a pretty

surprising backtrack by the

Prime Minister Julia Gillard on

just where she has said that

refugee processing centre is

going to be. Now any of us who

have gone back through the transcripts of that Lowy

Institute announcement we've

been left in no uncertain terms

that she was actually speaking

about East Timor and the

conversations have begun with

East Timor so this is very

surprising. The Prime Minister

herself made it very clear, she

didn't actually say we want to

set up a processing centre in

East Timor but she basically

said everything but in terms of

talks with the leaders over

there and as you discussed with

Melissa Clarke, it raises

serious credibility issues for the Prime Minister all of less

than 3 weeks into her

tenure. So we wait to hear from

you this morning and no doubt

there be an avalanche of comment. You can Se send emails

to:

The top stories on ABC News

Breakfast. The Prime Minister

seems to be retreating from her

proposal to process asylum

seekers in East Timor. Julia

Gillard says setting up a

centre in Papua New Guinea is

another option. The Opposition

says the PM's plan for asylum

seekers is now unravelling. 10 suspected Russian spies are

facing a Federal Court court in

New York. Prosecutors say

they're all going to plead

guilty paving the way for a

possible spy swap with Russia.

It's alleged that the Russians

lived in America and posed as

ordinary citizens. Indian

police say they will protect

witnesses testifying against

accused Australian paedophile

in India. Paul Henry Dean has

appeared in court where he

denied committing sexual offences against boys and young

men in the Indian state of Andhra Pradesh.

3 men in the United Kingdom

have been found guilty of

plotting to murder by becoming

suicide bombers. The men were

recruited in 2006 by the ring

leader of what became known as

the airline bomb plot. Their

plan to take liquid explosives

on board aircraft radically

change the way we travel. The

BBC's June Kelly report. They

lived on the terror streets of

London but these young men had

declared war on the

West. Remember, as you bomb us

you will be killed. They were

visitors to the house which had

become a bomb factory. Behind

their own front doors they were

preparing to become suicide bombers ready to commit mass

murder. There will be martyrdom

operations and bombs for your

land. There will be daily

torment in this world and a

greater torment awaits you in

the here after. Wahid Zaman,

Arafat Khan and Ibrahim satisfied that they were deadly

serious in their intent and

were party to the conspiracy to

murder. Sadly this reminds us

that there are people in the

community that are intent on

doing us harm. The cell leaders

were found guilty last year of

conspireing to blow up

transatlantic planes. It's the

plot which transformed air

travel and led to restrictions

on liquids in hand luggage.

When it came to the explosives

the bombers were planning to

use, we asked an expert to use

the same mix on this fuselage.

It would have been far worse

in a pressurised cabin at high

altitude. The 3 men convicted

today lived a dual existence , partly embracing a Western

lifestyle. Wahid Zaman worked

at a London toy store and supported Liverpool Football

Club but in his suicide video

he urged Muslims to wage holy

war against the West. Ibrahim

Zavant devru up in East London and signed up to a radical form

of Islam. He became obsessed

with martyrdom. And Arafat

Khan, a hip-hop fan, a drug

user and a nightclubber, while

making marriage plans he was

recording his suicide video as

he prepared for death. By going

for aircraft the leader of the

cell wanted to wound Western

economies right at their core.

The 3 convicted today may not

have been told the target but

each was ready to slaughter

hundreds of people. To finance

nows now and protests against

Greek austerity measures have

left thousands of tour is

stranded on summer hol deas. Flight in and out of Greece

have been disrupted as air

traffic controllers walked off

the job. It's the sixth strike

in as many months ahead of a controversial parliamentary vote on overhauling the pension

system. The IMF and European

Union say the measures are

needed to help Greece recover

from debt. Now looking at the

markets and the Dow has closed

higher again.Quleern

To sport now and there's been

a high profile departure from the world of international cricket. Here's Paul

Kennedy. Thanks, Michael. Good morning. It's Mutiah

Muralitheran a couple of days

ago he leaked it to his manager

so it wasn't a big surprise.

There were no great tears or drama associated with his

retirement. It's been coming

for a little while, I guess. He's

He's offered to spep step away

from all forms of the game if a

young spinner can take his

part. He will play one more

Test against India at Galle,

that famous ground in Sri Lanka

where Shane Warne once held the wicket taking record. Let's

hear from the record wicket

taker. We all as cricketers

have dreams so when I was young

I never thought I will play for

Sri Lanka but I managed to play

and I had that dream as well to

winning a World Cup is most

important thing. Actually it

happened. So that's the most

important thing, cricketing

thing in my life. I had a chat

with the chairman of selectors

and the captain and the

selectors and I gave my view that for the continuing about

the one-day cricket is I

thought that there are many

youngsters so if they said they

need me for the World Cup they

can try the youngsters and see

whether they perform well and

if the team, if I can fit in

then I will come and help. I don't regret anything because

all the things what I done is

memories, the memories will be

there with me because I enjoyed

with the team-mates, we had so

many things, we like a

family. I've been very

fortunate to spend 10 years of

my career playing alongside

Murali. I watched him do

wonders in the field, work his

magic for the benefit of Sri

Lanka. He played with all his

heart and he always played with

a smile. That's true, he was

always smiling. 792 wickets.

That's the Sri Lankan captain

paying tribute to Murali. Let's

go to the Tour de France. It

was another sprint finish so

there was no great movements in

the overall classifications.

They're not yet into the mountains but it was the day

for Mark Cavendish who hasn't

been able to ride his best and

sprint his best certainly in

the first couple of stages and

he was involved in some falls.

You will see how emotional he

was after the race and he had a

great lead out man in

Australian Mark Renshaw. Let's

take a look at the finish. As

they come for the line, here

comes Cavendish, Mark Cavendish

is going to burst through the

line. He's back. Mark Cavendish

will win this and he's being

challenged. What a sigh of

relief. Goodness me, Mark

Cavendish has won.

It's an incredibly feeling,

you know, all that emotion, all

that pressure's built up all

year, it's finally, you know,

come to an end and for sure

we're going to try for more

stages but thank god it paid

off. In AFL Nick Riewoldt is

back and it doesn't seem that

long ago all of a sudden that

he did his hamstring against

Collingwood. It was a long time

ago, a couple of months indeed and St Kilda still on top of

the ladder so to bring in the

competition's best player will

be a great for them going into

the finals. Ben Cousins won't

play. He was hoping to play but

it was just too short a turn

around. Brad Ottens will be

back for the Cats and Fraser

has been left out again for

Collingwood and Nick Maxwell is

still struggling to overcome a

calf injury and won't play.

Sumo wrestling is struggling to

stay on its feet following a

decision for the broadcaster to

drop the sport's tournament.

Police have raided houses

looking for evidence of crime

syndicates. Another day of

disgrey for one of Japan's most

popular sports. Police won't

say exactly what evidence they

found, if any, at these sumo

training facilities. But the

search did cause deep shame in

the sumo community.

TRANSLATION: I am sorry for the

trouble because of us. At the

centre of the scandal are these

men, high profile champion

wrestling and his stable master

were suspended from the sumo

tournament for their alleged

involvement in an ill legal

baseball gambling racquet. As

many as 60 members of Japan's

sumo association have been

linked to the scandal. Sponsors

are pulling out and NHK has

stopped televising sumo live.

It's the first time in 50 plus

years so the whole situation is

very, very serious. The

wrestlers are accused of

betting tens of thousands of

dollars on baseball games with

gangsters acting as go betweens.

TRANSLATION: It was shocking,

sumo is the national sport of

Japan. I hope wrestlers will be

more aware of their responsibility.

TRANSLATION: I liked sumo and

have been watching it since my childhood. It's an

entertainment business as well

as a sport. So I understand

there might be some big flow of

money and so on but it should

not be this shady. The gambling

scandal is the latest in a

string of incidents that have

knocked sumo wrestling out of

favour with fans. With a top

wrestler recently resigning for

drunken misbehaviour the

athletes are going to have to

fight hard and clean to regain people's trust. Scandal

everywhere in the world of

sport. But not in Murali's

case, he never did anything

wrong other than bowl in a way

that was questioned by others

and that was the big scandal

surrounding him but he always

maintained his dignity right

till the end. 792 wicket and

one stage he said he wanted

1,000 wickets well he just didn't quite get there. No

special drama with his

announcement either, no great

Kim Hughes tears or anything

like that. He didn't chuck any

his tronics or anything like

that. And he'll Tewesly saying he'll play in the World Cup

next year if they want him but

if in between that a young

spinner or a couple of young spinners emerge he'll happily

watch and cheer them on. So

he's got one more Test and that

will be worth watching against India. He will probably take a

swag of wickets. He was put

through every single test you possibly could be put through

that action of his and he was

never actually found to be in

breach of formally in breach of anything although it was always

the impression created by that

slightly curved arm adds it

came over the top of his

head. I think he's got rubbery

wrists and I think he did go

past the 15 degrees that they

allowed you to bend but then

they increased that so there

was always question marks and

there will be question marks.

Some people think he doesn't

deserve the record but I think

it's an argument that won't be

settled and it's best just to

celebrate his dignity and the

way that he played with way that he played with great sportsmanship. That's the way

I've come to terms with it. I

used to think he was a chucker

like a lot of Australians but I

think he deserves the record

and I think he's been

great. The numbers tell the

story. Now ABC news Breakfast

can be watched live on the web

anywhere. Visit the main ABC

News site and you will find a

link. There Vanessa join s us

with wet er. Some heavy falls

around the country. From the

satellite image a strong front

and trough is spreading rain

and increasing winds and

bringing a colder change to WA.

Mild gusty northerly winds will then push into South Australia ahead of the front and we've

also got low cloud over the NSW and Queensland coast spreading

showers again today. In Queensland afternoon show

Ferris the central and southern

interior. Patchy light rain

over the south-east and also

along the east coast. In NSW,

isolate ed showers will remain

along the coast and adjacent

ranges. Fog about the

south-west and frost over the southern ranges. Victoria, fog

and frost will be followed by a

cool and mostly sunny day with

light to moderate northerly

winds. A sunny afternoon in Melbourne. For Tasmania,

morning fog patches and

widespread frost. Isolated

light showers in the north,

otherwise a fine day as Hobart

heads for a top of 13 degrees.

In South Australia, patchy rain

will develop near the western

border. It will extend to Yorke

Peninsula and Kangaroo Island

late this evening and strong

northerly winds in the west.

WA, hail a cross the west and

south. Squally thunderstorms

for the south-west and rain

acrss the north of WA. The

sunshine's back for Darwin and

just a possible shower for the

north-east coast. Warmer for

the fer toir's south.

You're watching ABC News

Breakfast. Still to come we'll

be smeecking to Greens senator

Scott Ludlam about the scraps

of the Government's green loans

scheme. And also ahead we'll

have a review of some of have a review of some of the

newspaper an this morning we'll

be joined by Chip Legrand from

the 'Australian'

newspaper. Leading the news this morning Prime Minister

Julia Gillard appears to be

backing away from her plan to send asylum seekers to East

Timor. 3 days after announcing that proposal Ms Gillard now

says setting up a centre on

Papua New Guinea is another

option. The Opposition says the

Prime Minister's latest refusal

to name East Timor as the preferred location is proof

that her plan is unravelling. 10 suspected

Russian spies have pleaded

guilty to acting as illegal

foreign agents. The suspects

are facing a US Federal Court

in New York and that move paves

the way for a possible Cold War

style spy swap with Russia. A

British court has convicted 3

men linked to a plot to blow up transatlantic flights in 2006.

Last year the men were cleared

of investment in a plan to bomb

7 flights using lickt

explosives but today a jury

found them guilty of

unspecified conspirty to murder

based on threatening martyrdom

videos they recorded. Indian

police say they will protect witnesses testifying against an

Australian paedophile in India.

Paul Henry Dean has appeared in court accused of committing

sexual offences against boys

and young men. He denies those

charges. Taiwan's parliament

has descended into a punch up with opposing sides throwing

rubbish bins in that raucous

debate. The scuffle started

when the Government speaker

rejected an Opposition bid to

conduct a debate over a trade

pact with China. Two members of

the parliament were taken to

hospital with injuries. Now as

Virginia just mentioned the

Government is struggling to

find a destination to process

asylum seekers offshore. Diplomatic turbulence has forced the Prime Minister to

shy away from naming East Timor

as her preferred place. Now

Julia Gillard has raised Papua

New Guinea as a second option.

From Canberra Nick Harmsen

reports. It may not be his

state of origin but Tony Abbott

had little trouble winning over

banana benders. Rudd was a dud,

this man's a champion . In the marginal seat market place that

is Brisbane's west, both

leaders sought to capitalise on

the potent issue of asylum seekers. Look, for all of Kevin

Rudd's faults at least he knew

something about foreign policy

which plainly the new Prime

Minister doesn't. Julia Gillard

insists her solution is proceeding full steam

ahead. What's new is my

determination to achieve this.

What's new is my determination

to relentlessly pursue it. But

settling on a location for

asylum seeker processing is far

from resolved. Where will it

be? Well, this will have to

emerge from the work with our

regional neighbours. So you

don't know? That's exactly why

I said there would be no quick

fix. On Tuesday the Prime

Minister pointed to an East

Timor solution. In recent days

I have discussed with President

Jose Ramos Horta of East Timor

the possibility of establishing

a regional processing centre. A

statement she's now distancing

herself from. I'm not going to

leave undisturbed the

impression that I made an

announcement about a specific

location. 6 times she refused

to name East Timor and by day's

end she'd even suggested an alternative. Papua New Guinea,

I believe, is a signatory to

the refugee convention but

obviously I am now going to

build, you know, on the set of conversations that we've seen

happen this week. In the

inevitable rush to an election

date. I figure it will be

August 21 or 28, one or the other. The Opposition says

Julia Gillard has erred by consulting the President of the

East Timor and not the Prime

Minister who heads the

Government. Depending upon the

agreement of a foreign

government before she's even

got that agreement, before

she's even properly consulted

with that government, is a prime minister who doesn't

really know what she's

doing. If we were to do it the

other way, people like ABC

journalists would accuse us of

doing it in secret and ask why

you weren't told. The murky

Waters surrounding the border

protection debate clouded a for

more positive message for the Government. The unemployment

rate has fallen to a 17-month

low, con founding economic

forecasters. The headline

figure is down to 5.1% driven

by a rise in the number of

part-time jobs which almost

doubled the increase in

full-time positions. We've

created 350,000 additional jobs

over the last year. That is a

very good outcome for the Australian economy and what has

been very difficult

circumstances else wrr. But

it's an outcome that may

influence the Reserve Bank's

thinking at its August meeting.

A campaign rate rise would

augur ill for Julia

Gillard. Are you thinking of

being prime minister? Well, you

know, there will be job

opportunity there at some

point. Just not, she hopes, too

soon. The Federal Government

has released a series of highly

critical reports looking into

the failure of one of its key

2007 election promises. The

green lons scheme involved

granting industry loans of up

to $10,000 to improve energy

efficiency in as many as 200,000 homes but after a

litany of woes, the scheme has

now been dumped. After months

of delay, the Government

released 3 audit reports

simultaneously, taken together

they are a damning indict ment

of the execution of public

policy. Penny Wong the minister

now in charge won't talk, her

office declining to make her available for comment. There

was no hesitation from the

other side of politics. The

report shows that 149 different

guidelines around procurement

and delivery of government

service were breached, legal

breaches in the delivery of this environment program. Between this debacle

and what occurred with the home installation scheme the

Rudd/Gillard Government has

been incapable of managing

quite important and essential

green energy initiatives. The

most critical report by

Patricia Faulkner, a former top

bureaucrat now with KPMG. It

examined the operations of the

Federal Department of Environment where public

servants awarded lucrative

contracts to firms paid to

manage and operate the green

loan scheme. Faulkner found widespread lack of compliance

with normal practices along

with some highly suspicion

transactions. In 5 cases the

Government paid half the value

of a contract up front only for

the deal to be cancelled with

no services ever delivered. And

according to Patricia Faulkner

no effort was made to recover

the money. In several other

instances 100% of contracts

were paid in full for no

services. And a practice called

contract splitting where one

big contract is divided into

several smaller value contracts

to get around the requirement

for approval from a more senior

bureaucrat. Faulkner found inappropriate relationships

between public servants and

suppliers and that personal

benefit may have been a factor

driving procurement behaviour. An investigation into possible

criminal breaches is still

under way at the Department.

The Coalition believes one head

should roll immediately. Peter

Garrett still has a seat at

Julia Gillard's cabinet table.

That's not good enough for a

minister who has led the

Government in debacle after

debacle. Instead of loans, the

Government will in future give

grants to an unspecified number

of accredited assessors, but

that is un likely to provide

work to the many thousands of

people who trained as assessors

in the first place. We've

trained up thousands of these

guys, the accreditation process

has been a mess, but a lot of

people with a lot of goodwill

want to get into the this industry, they want to get on

with assessing people's energy

efficiency and water efficiency

in their home an it's such

important work. What we're

looking for toond what's

missing is the Government's

proposal for how to get these

guys into productive work

because it's very important

that we get them back on track. The Government says it

has now changed the way public

servants work, insisting there

are new rules for administering

a brand new green program that

will be phased in over the

coming months. Higher rent and

family break downs are pushing more older women into the ranks

of the homeless. For the first

time women over the age of 45

are outnumbering older men at

government-funded homeless

shelters. It's an ordinary

house in an ordinary suburb but

it's a house of hope for

Elizabeth who turned to this

refuge because she had no where

else to go. There's a fine line

tweeg having a roof over your

head and having nothing. The

62-year-old was a professional

who lost her job, then her home during the global financial

crisis. More divorces, higher

rents and the economic downturn

have driven up the number of homeless older women. The

latest government figures show

women over 45 make up 9% of the

clients in crisis accommodation. That's higher

than the rate for men in the

same age group although more

older men are homeless. We're

seeing a wave of ageing single

women entering the homelessness

population. Domestic violence

is a major reason why older

women become homeless.

47-year-old Kelly Seychelles

was abused by her ex-husband,

then by her boyfriend who

kicked her out. I got to

Central and bought a cup of

coffee. That's the only money I

had. I felt totally destitute. This refuge has just

10 beds and is the only one

specifically for older women in

the country. The manager says

referrals have jumped in the

past year but it gets no

government funding. We need a

lot more housing. We need the

refuges are really great and if

we had some more of this, this

is where they're going to

heal. There's not enough places

like this because so many women

have been abuse and they really

have no where to go. That's because becoming homeless can

happen to anyone. The wife of an Australian journalist killed

by Indonesian forces in East

Timor in 1975 says if Indonesia

is serious about democracy it

must let its people see the

film 'Balibo'. Shirley

Shackleton went to court to

call for the ban on 'Balibo' to

be lifted. On her way into

Jakarta's administrative court

Shirley Shackleton admitted she

was terrified. The 78-year-old

was expecting a grilling by

Indonesia's film censors. My

support for the rule of law,

for the rule of demorkcy, for

the hope and the dream of

democracy and my support for

the 'Balibo' film. Ball Roe Baz

ban twid Indonesian Government

last year. The film tells the story of 5 Australian

journalists including Shirley

Shackleton's husband Greg who

were killed when Indonesian

forces invade ed East Timor in

1975. Indonesia maintains the

reporters got caught in

crossfire. Shirley Shackleton

says 'Balibo' shows what really

happened - murder. To clarify

the lies, the cover up or in

good Australian slang the cat

is out of the bag. Afterwards Shirley Shackleton says she was

disappointed she didn't get to

say more. Maybe I scared them.

I hope so. She'd like to meet

the former military captain who

an Australian coroner found

ordered the killings. He is

retired now but was a minister

in the Indonesian Government. I

would like to ask him did he

film my husband's death. But the censorship board says the

ban should remain in place to

protect Indonesians.

TRANSLATION: This film has the

ten dency to judge. If you see

it you will know what I mean.

It will open old wounds. It

will be at least 2 weeks before

a decision is made on the

'Balibo' ban. Shirley

Shackleton says Indonesian

citizens deserve to know the

truth, even if it's painful.

A multimedia artist who comes

from a long line of Australian

soldiers is the latest official

war artist to capture the

conflict if in Afghanistan. His

relatives fought in the first and Second World Wars as well

as Vietnam. Instead of joining

up he took a video camera

instead of a gun. It's a high

tech war in an ancient land

where soldiers where helmet

cameras into battle and email

hoimHome via wireless Internet.

What better way to capture it

than through high tech art. We

needed to bring this conflict

the right artist. That art it

was Sean Gladwell, the first video artist to be commission fwid Australian War

fwid Australian War Memorial.

He also uses photography to

explore his fascination with

how people adapt in the face of

such foreign panoramas.

Wielding cameras instead of

canvas, he spoke a language the

soldiers understood. I think it

made sense to use technology

rather than get a kind of easel

out and start oil painting

because the guys, of course,

who I'm kind of working with in

this video were very acustomed

to technology. It's in their

workplace and they've all got

lap tops, they're all connected

wirelessly to their base. As a

skate wer a passion for extreme

sports he was a hit with the

troops. Shaun yus got on really

well with the troops and he

really brought them out. He captured what they wanted to

say about themselves. Often

they would better operating

cameras than I was so I thought

I may as well just hand these

cameras to the guys and we can

use them together on a project.

It was nice to experiment with

their use of the camera. The

result shows a soldier and the

artist circling each other,

digicams in hand filming the

dust as the military hard ware

trundles in and out of view. It

represents a soldier being stalked but also stalking. It's

a new view of Australia at war

but it's war just as the

soldiers see it, through the

lens of technology. You're

watching ABC news Breakfast.

The Prime Minister appears to

be retreating from her proposal

to process asylum seekers in

East Timor. Julia Gillard now

denies ever mentioning a

specific location for the regional processing centre and

says setting up a centre in

Papua New Guinea is another

option. The Opposition says the

PM's plan for asylum seekers is

unravelling. 10 suspects

Russian spies have pleaded

guilty to spying. Paving the

way for a Cold War style spy

swap with Russia. The 10 were

accused of conspireing to act

as secret agents on behalf of

the Russian Federation and of

money laundering. And Indian

police say they will protect

witnesses testifying against an accused Australian paedophile

in India. Paul Henry Dean has

appeared in court to deny

committing sexual offences

against boys and young men.

We'll take a look at the

Friday papers and wore joined

by Chip Legrand from the

'Australian' newspair. What's

happening out there? It's a

weird day. All the papers are

in furious agreement as to what

the main story is and what the

story is and what the headline

should say. If we look at how

the various papers are tleeting

it. Here we have the

'Australian' where you've got

the PM retreat on Timor plan.

And if we look at say the other papers, you've got Gillard in

retreat on Timor, so basically

word for word in the 'Age'. And

if we keep looking, Julia's

boats policy sirvings. Do you

think they forgot the other T

there. There are many boats not

just one. En that's right. And

if we go to the best tab loit

headline is in the 'Sydney

Morning Herald' where it's

quite punchy. Just need to sort

of scroll in a little

bit. Don't know if we. Can But

Gillard eats her words over

refugees is the headline

there. Which neatly sums up

what she's trying to do. It

does. Look, there's some really

interesting reporting on all of

this. The 'Sydney Morning

Herald' has a fun story about a

6-page memo that the Labor

Party apparatchits or the Party apparatchits or the MPs

answering questions about this

policy which it should be said

is still in the early stage.

These are the lines if you're an MP doing the rounds at the

moment, these are the Lyons

you've got to learn. So the

first thing you have to say is

"I agree with the Prime

Minister. The people who

expressed concerns about asylum

seekers are not red neck." You

want to try that on. Do uwant

me to say it to you? That's OK.

The other one is "Expecting

that governments have a clear

and firm policy to deal with a

difficult problem does not make

you a racist." They're the

talking points. But knave moved

on from that. Now they've got

the deal with problem number 2

which is oh my goodness, black

is white now, apparently and

even while wee all have the

quotes in front of us of what

Julia Gillard did say at her

Lowy speech they've now got Lowy speech they've now got to argue that she somehow didn't

say thasmt Let's go back to

what she said because this is

the key phrase here where she

says "In recent days I've

discussed with President Ramos

Horta of East Timor the possibility of establishing a

regional processing centre for

the purpose of receiving a

processing of the irregular

entrants to the region." In

that are we to understand that

it means anything other than trying to establish a

processing centre in Dili? It seems pretty clear and she was very keen to give very keen to give the

impression that a processing

centre would be set up based on those negotiations in East

Timor. And she certainly didn't

correct that. In the ques that

followed she left that hanging

as the sort of a take out

message from that speech that

that was what they were

planning to do. But of course

all this in the last 24 hours

has really come unstuck and as

all the papers are reporting

today you've had the East Timor

parliament that's basically

condemned this move, you've got Jose Ramos Horta is taking it

on as far as negotiation bus

the best line was from Xanana

Gusmao yesterday after talking

with his President about this

issue for some length came down

and fronted the press and in

that lovely tone of his was asked about the Australian plan

and he looked down the barrel

of the camera and said, "What

plan?" It was a great moment in

sport. That's the phrase that will stick with us from yesterday. And now of course

there's suggestions of where

else you might be able to put

this centre in the region. It

is incredible that it's come to

this and unravelled so quickly,

particularly when the take out

from all the newspapers in the

last couple of weex has been

that Julia Gillard can barely

put a foot wrong. This would

appear to be the wrong foot in

absolutely the wrong place in a

very surprising way. There was

a nice line from Scott Morrison

who said Julia Gillard's now seeking asylum from her own

policy which is pretty good. If

question get further into the

coverage of this because the

next question of course, OK, if

it's not going to be in Dili

where are you going to put snit

we've got Rowan Cullogh who is

our Asian Pacific editor. He

spent all day on the phone

yesterday trying to find

another suitable spot and - On

behalf of the gve, that's nice

of him. I tell you we can't

really help them out. The

leading candidate, if you could

call such thing, seems to be

Manus Island in Papua New

Guinea and they housed I think

about 360 asylum seekers during

the Pacific solution. But the problem with Papua New Guinea

at the moment is there's

probably going to be a vote of

no confidence in Michael

Somare's government in the next

few weeks. If that's the kind

of environment you can negotiate this kind of commitment is unclear. If you

go through the rest of the

region countries like Singapore

and Malaysia they're not signatories to the United

Nations convention on refugees

and it counts them out. If you

go through the others it leaves

places like Fiji. A very stable

place at the moment! Samoa

which is too prosperous, it

doesn't have the same economic

incentive as perhaps other

countries to take this on

Tuvalu even got a mentioned but

it's not much bigger than Nauru

so you might run out of room

and it could be sinking. Which

knringes you back to the source of the problem, Indonesia. Fix the problem at its source. Twheas Jose Ramos Horta

was saying last night on

'Lateline'. He says if you're

sitting in a camp in Indonesia,

you've basically been

processed, you've done the

interviews you, don't need to

be coming here, you stay where

you are. The 'Australian''s got

a story on one of their own

slamming the policy. He didn't

get the memo from head office.

He got an email from an 80 -year-old constituent of his

who was very upset at what she

saw was the hardening of

Labor's heart on the whole

asylum seeker issue and he responded back not only to her

but all - every MP in the

Victorian lower house saying

that he was hanging his head in

shame, it would make him

ashamed to be the leader of a

Cambodian community, an MP and

a member of the ALP and he

talked about this cruel and

unconscionable treatment of

asylum seekers. Moving on to other stories, the 'Herald

Sun''s got a story that's bound

to become a talking point today

and for days to come. I think

we can all sympathise, not all

of us, but a woman in

Melbourne, she's got a

5-year-old, 3-year-old,

1-year-old all boys, desperate

ly wants a girl and she's

prepared to pay $15,000 to go

to Thailand where they have

basically sex selection

treatment for IVF. Now I think

probably agree, I mean if she

was to have another boy now

that would be four boys under

the age of 6, I think we could

probably characterise that as

cruel and inhumane treatment to

have to put up with that. So

let's hope that she does end up

with a girl but it's

interesting that she has to go

to Thailand for this. There's

the debate over whether this

sort of procedure should be allowed. Sex selection should

be allowed here, yes. It's

being held up and she's getting

frustrated with the delay. Lit

come in time because there's

already genetic screen of

embryos as part of IVF. There

one people out there struggling

to have children who would say

you mean you can have another

child easily? Don't come

complaining to me. Because

there are childless couples out

there who have been paying and battling for years to have children. Sitting down with

someone who is wrangling 4 boys

under 6 we'll see how we go. As

one of 7 who grew up down the

street of a family of blokes I

think you could survive it.

Good to see you, Chip. Now we have some news to share with

you. Routers is reporting that

10 Russian agents arrested in

the United States have agreed

to be deported to

Russia. Reuters also quotes US

officials as saying Russia has

agreed to release 4 individuals

in jail in Russia. So that news

hitting the wires at the

moment. So we were reporting

earlier they had pleaded guilty in a court in New York and that

would pave the way for the spy

swap and it would seem that the

spy swap is actually going to

go ahead, Cold War style. All

that's missing is checkpoint

Charlie. Here's Paul with the

sport. Muttiah Muralitharan has

announced his retirement. I was

leaked a couple of days ago by

his manager but here he is at a press conference talking about

his career and he was paid

tribute by Kumar Sangakkara who

said he was a champion and

there's certainly no doubt ant

that. To the Tour de France and

Mark Cavendish has had an

emotional win. Just a few

stages in this is one of the

best sprinters in the world, he

hasn't got a win yet, now he

has and he crieded on the

podium. So it means a lot to

him and his team. And in

football Nick Riewoldt is back

for the Saints and they are looking good now. They're

sitting on top of the ladder

and played much of the year

without their inspirational

skipper. And just quickly, to

the Lebron James story, it will

be announced live on TV in the

States and a network in

Australia as well where he will

stay at the Clevela