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Business Today for Australia Good morning. Welcome to

network. I'm Whitney Fitzsimmons. Coming up on the

program - fear factor - markets

in the US and Europe fall on

concerns Greece will reject EU's rescue package. Growth concerns Greece will reject the

questions with China's factory

impliations for its suppliers. slowing - one of the

And collapse fallout -

authorities in on the operation

s of MF Global. Those short s of MF Global. Those short by

but first a quick look at the

marlts. We will have more on

what will happen in trade at

the moment but first to US and

the Europe where there was

massive backlash against

Greece's Government calling for

a referendum on its latest

bail-out package.

For more on the market

action I'm joined by Tim Piper

interest rate cut affect market from Bell Direct. How did that

s yesterday in Australia? The

interest cut we saw interest cut we saw yesterday

had very little effect on the had very little effect on

Australian market. The market

was already trading lower by

about 1.3%. The market already pricing in around an about 1.3%. The market was

82% chance of a rate cut so the

market didn't really react when

the RBA cut the the RBA cut the official cash

mate to 4.5%. The RBA has noted that these economic woes are starting to have an effect on

the Asian economies. This is

the first cut since 2009. And

it followed some soft inflation

numbers last week which did give the RBA scope to give the RBA scope to cut rates yesterday. This is expected to

benefit the retail sector, heading towards

Business leaders have already heading towards Christmas.

come out applauding the decision from the yesterday. There decision from the RBA

yesterday. There was

corresponding pull back in the

below Australian dollar dropping

below $1.05 US and we saw - we

are seeing more cope store further rate cuts heading into

was next year. Around the region it

was a negative session. What

were the weaker sectors. As that negative sentiment weighed

into Asian markets, it was negative sector. The Chinese into Asian markets, it was a

stocks fell after the PMI manufacturing read come in

below expectation. It came in

at 50.4. That was below

expectation s of 51.8. It is

still above tha 50 level which

does signal expansion still.

This weighed on Chinese material stocks in

particular. We saw the Japanese

Nikkei fall after Panasonics is expecting large loss and we expecting large loss and we saw

Nissan motor fall as they get

15% of their profits from

Europe. The Reserve Bank's rate

cut didn't affect our market.

It was the materials, We finished down around 1.5%.

financials and energy stock

which were the hardest hit.

Volumes were very light on the

ASX yesterday because of the

Victorian Melbourne Cup public

holiday. Let's look at Europe.

There was a massive backlash

against that move fr Greece? A

huge backlash across European

markets. We saw massive falls markets. We saw massive

on the German and French

markets last night. This

follows news that the Greek

Prime Minister is calling for a

referendum vote on the new

bail-out package for the

region. The Prime Minister says

that the voters will support

him, however the market is very

fearing that if this vote is

rejected that Greece may well default. This translated to a huge sell-off in particularly the fl the huge sell-off in equities,

financial sector. We saw credit

Swisse and RBS bank falls last night. The German bond yield

fell and Italian and French costs substantially. The euro

market is concerned if this

Greek vote does fail what happen if Greece does default Greek vote does fail what will

will they be thrown out of will they be thrown out of the euro and will this crisis

spread into Italy and

Spain? Tim Piper from Bell

Direct there. Now let's take a close er look at wh what close er look at wh what is

happening with currencies and

commodities.

As we heard markets went

into a tail spin on the shock

announcement that Greece will hold a referendum on the Europe

rescue package. France and

Germany have called emergency

Prime Minister George talks with the IMF and Greek

Papandreou to head off another

wave of market volatility. It's here in strike It's here in strike driven,

bent burdened - - dent purded

Creece Greece that the new Creece Greece that the

threat has risen with tonne

expected announcement by the Premier George Papandreou that

there would be a referendum on

Europe's bail-out deal for his TRANSLATION: The referendum is country.

a failure of the Government,

which is wanting to pass on its

failure to the Greek TRANSLATION: Why are they people. With

holding a referendum after everything has already been decided? Just to be A-able ta walk

walk away from their own responsibility. What the responsibility. What the Greek

Government has been offered is

?100 billion euros ?100 billion euros of

additional bail-out loans and a

reduction of 50% in what it has

to repay banks. But they will

be painful cuts in public

services - higher taxes and

years of declining real wages for Greek people. Serious sacrifices. Now, even if all

goes to plan, Greece's

Government debts in 2020 will

still be 120% of h wha the

country produces and that will

make it extremely difficult for

the Greek economy to which is one reason why the the Greek economy to recover,

rescue package is unpopular. Given the present circumstances and with people

upset and angry about

austerity, you cannot really

call the outcome. That is why I

think it is probably a high

risk decision and not advisable under the circumstances. So

what do you think will happen

deal? Greece if the Greeks reject the rescue

deal? Greece will default and

it's already detaulted in leave tu row. In many respects

it's already detaulted in terms of the cut but it will default

and leave the euro. It will

probably be followed by similar action in Portugal, Spain,

Italy and even possibly

France. All over Europe, share

prices tumbled on fever fears

that debts won't be repaid and

big losses would be incurred by

Banks. In the UK, the FTSE 100

fell 2.2%, shares in Germany

dropped 5%, French shares were

5.4% lower, in Italy the drop

was 6.8%. And perhaps even more

wor I yg the price that the efly indebted Italian

Government has to borrow Government has to borrow rose

to record and almost un

affordable levels. It's a hideous backdrop to Thursday's

meeting in Cannes of the gfrmd

20 leaders of the world's most powerful economies with an

emergency dinner woon the Premier 357 Papandreou,

France's President Sarkozy and the German the German Chancellor Angela

Merkel now scheduled for

tomorrow night. As tomorrow night. As Europe's

wheel of fortune spins, the remedy for the Eurozone that was negotiated just five days

ago and was supposed to be the final word on the subject already looks like a losing

bet. A sharp slowdown in global demand

demand has resulted in a

surprise drop in the main gauge of China's manufacturing activity. The activity. The country's official PMI fell to its official PMI fell to its lowest

level since February 2009 as

new export orders dropped, particularly from the European

Union, its biggest export

market. But how much of a

concern is for this for raw material

material suppliers such as Australia? China's boom has

been built on exports. For

decades, the world's factory has churned out goods cheaply

to be sent off to all corners

of the global. But with

economic crisis elsewhere, some Chinese companies are wondering who is going to keep buying

their goods. You have exports

slowing down, Europe obviously

is in some economic troubles,

it's also China's biggest export market. In export market. In addition,

housing construction in major

cities is slowing. The

Government is blocking people

from buying property to drive

down prices. Less production, especially less housing, means

less steel. Less Chinese steel

would mean importing less

Australian iron ore. So why are

many still expecting very

healthy demand here for Australian raw Australian raw materials? TRANSLATION: China's TRANSLATION: China's economic growth will probably stay at

over 8.5 or even 9% because

this growth is coming more and

more from demand inside

China. As well as domestic

demand increasing, the housing

slowdown is only in certain

cities. And when prices have reduced, the Government will

take its hand off the brake take its hand off the brake and allow buyers back in. This

economy has its problems like

everywhere does, u but it's

hard to find an analyst here

with an overtly negative

assessment. They seem to think

that whatever the hurdles,

China's long-term prognosis

remains very strong. China is a massive potential massive potential market with enormous infrastructure

needs. This probably means much more growth

more growth to come. Two

more growth to come. Two of Australia's big four banks have

passed Passioned on yesterday's

quarter of a%age point cut by

the Reserve Bank. The move by

Westpac and the Commonwealth

Bank puts pressure on the other

two to give borrows some relief

and is seen as a backstroke for consumer spending. They queued

in the hope of a win in a horse

race, but most preferred some

help in the rat race. What

would you refer a win on the

Melbourne Cup or lower interest

rate? Lower interest rates. I

would prefer lower interest

rates. I would take the cut in

interest rates. And the Reserve

Bank came home. Down. 25

down. It was the first

reduction in more than 2.5

years, since the global

financial crisis. A cut of 25

basis points leaving the cash

rate at 4.5%. They didn't feel they needed to continue to have

a setting of monetary policy that was contract shunry because

because inflation doesn't look as

as though it's as big a concern

as they thought it might be. So

the board concluded that a more neutral stance of monetary

policy would now be consistent

with achieving sustainable

growth and 2 to 3% inflation over time. The board also

acknowledged the role of acknowledged the role of the strong Australian dollar in

deeping inflation in check and

signs that the global signs that the global turmoil

was making its mark. They seem

to be a little bit more

cautious about the global

backdrop and they see some

science that that could be affecting confidence

locally. So that is another reason

reason just to bring rates back

to normal rather than have them above

above normal. Those stuck in

the economy's slow lane were thankful for smallers innies an urged lenders not to discriminate against those who

don't deliver the same PR

payoff. They need to pass on

official rate reductions for

both classes of borrows, both households which is important

in terms of impact on overall

consumer demand but also on businesses and business loans. It's less about the extra money it might put in

people's bank accounts and potentially just that feeling

that raties can go down will stimulate a lot of extra spending this Chris -

Christmas. It will give people that feeling that they can have

a bit of a splurge this

Christmas time. Has it given

people the feeling that more

interest rate relief is on the

way? Clearly woe would like to see an addition Al see an addition Al Kut. Clearly the Reserve Bank would not

because there is no hint of

more to come, even though a

first reduction in rates is

typically followed by more

cuts. The risk is probably

that they could do a little bit

more but I think that would

require more signs of problem s

in Europe and in China, for

example. And that affecting the

local economy. Unless you

believe that that was happen

ing, if RBA will sit still. Certainly for the moment we

think they're more likely to sit still for the moment where they are. The major they are. The major risk remains the indebted northern

hemisphere and the impossible fallout from every future

misstep on the path to a

solution. Regulators in Asia

have suspended operations at

local units of MF Global in the wake of the collapse of the US

brokerage company. Invol sen - insolvency administrators have

been appointed in Australia.

Future positions are being wound down and accounts in

Japan have been froze groan

protect investors. MF Global

filed for bankruptcy. The court

documents showing $40 billion

in assets against $41 billion

in denltds. Putting it among

the top 10 US corporate

bankrupt sis. An 11th hour deal

to sell the company fell through, reports from the US suggesting it collapsed suggesting it collapsed over

irregularities in the handling

of clients money. The major

cause of bankruptcy a string of

losses from European public

debt holdings totally around $6

billion US The market moved

against them so they against them so they found themselves in themselves in difficulty and that has flowed through that has flowed through to the Australian operations because

of course Australia is part of course Australia is part of

the global financial system and

that carries benefits in terms

of capital flows and investment

but it also means that when things

things go wrong offshore there

can be some slowon effects in

Australia. The effect here has

been swift. The Australian stock exchange suspended

trading of the three affected

companies. MF Global UK, MF

Global Australia, and MF Global Security us

Security us Australia and the

Australian arm has been placed

into administration. The

Australian securities

Commission Australia pected all

right of the company to be able

to trade on the exchanges and has taken the decision to close

out those transactions that are on markets. So they're doing

that today. The stock exchange

is being quite sensible with

some of them. Some of the

difficult transactions and also

doing so in the interests of

the various clients to try and protect their positions as

well. Deloitte will now work

closely with overseas

administrators to untangle the

complex money trail. Funds on

land, at least we of got our

foot on those. We've frozen

bank accounts. We don't have

control of clearing accounts.

We still may have to approach court for directions to get a

hold of funds and we're dealing with offshore jurisdictions with offshore jurisdictions and a multitude of

practitioners. So it could take some time to get through. The

US parent company had been

pushing aggressively into the

controversial contracts for

difference market and retail

investors including those in

Australia have been landed with

margin calls. An Australian

client of MF Global has told

the ABC that resumptions from

his CFD trading account than

frozen and says he was told by

the company client payouts were on hold. CFDs are a concern the Australian securities watchdog

has had for some time, even pub

lib - publishing documents for

investors on how to trade

responsible. At the ends of the

day, these sort of collapses

clearly don't do the sector any

good and I am sure the good and I am sure the sector

would agree with that, that

seeing collapses like this clearly doesn't assist trust

and confidence from

investors. Comparisons with the

Lehman Brothers collapse of

2008 have been played down, but banks here are counting the

cost of exposure. The banks have strict credit risk

policies and in sure against

the risks they take on. We

would expect the banks to be

taking a close interest in this

and managing their own situation. Trading in grain futures has also been

suspended, as MF Global are one of the biggest par tis pantses

in the country's agricultural

futures market.

Now to a disasters like

floods and cyclones plus the

high Australian dollar and most

recently the disruption to

flights with the Qantas flights with the Qantas dispute have all conspired to weigh

heavily on Australia's heavily on Australia's tourism sector. At the same sector. At the same time

Tourism Australia is trying to

engage more with the region. To

find out more about the

developments and challenges

facing the tourism sector I am joined by Andrew McEvoy,

managing director at Tourism

Australia. Welcome to the

program. Good morning. Now as I

mentioned it appears the

tourism industry in Australia

just can't get a break at the

moment. What is your view? There's definitely been a

lot of what I call constant shock. But it's not as bad as

many #3u7bdits would have it.

It's a story of two worldses.

The UK, Europe and Europe given

their macro difficulties are their macro difficulties are in

decline but the region we live

in, one stop flights, same time

zone, include ing China, India, Indonesia, Vietnam, maish wra,

Singapore, all going very,

Wellisch and New Wellisch and New Zealand. In Australia it's a story of two countries. Capital countries. Capital city

Australia is going pretty well

and the regions are probably the ones suffering the

most. Are we still seeing the lagging impact,, though of

things like the floods and the cyclones that we had earlier in

the year? They definitely had

an impact. I think it was

valued at $1.4 billion in

economic impact for the Australian tourism economy over that period. And Queensland has

taken a bit longer to recover,

we saw some reality positive science of growth in the

domestic market this year.

domestic market this year. 4%

up on the trips taken and a

great March, April May, great March, April May, June

quart wrer we awe sau an 8% growth. Queensland did particularly well out particularly well out of

that. Is that atrainted largely

to the specific campaigns to Queensland? We work very hard

with Tour ifrm Queensland. with Tour ifrm Queensland. We

did a Nothing Beats Queensland

campaign. I think the airlines were fantastic, the were fantastic, the travel

agents an the industry up

there. So it's come back a bit

and consumers are feeling a bit

more positive about travel in

Australia. The high Australian

dollar has also been an issue

throughout the year. How

damaging has it been in terms

of dollars? It is interest. of dollars? It is interest. Our inbound numbers have inbound numbers have grown

despite the dollar. People

leave home with the amount of

pounds or US dollars or Chinese

Yuan that they expect to take,

it just doesn't buy them as

much. So So a high dollar is not necessarily a deter yenlt. Not in terms of people

showing up. I think it's definitely something that

Australians know very well and

it's encouragement for

Australians to go overseas. So outbound travel has been

impacted positively for outbounders by the Australian

dollar. You mentioned something

just before we came on air that

the Europe situation has a huge

impact which is not necessarily

something that is often talked

about in terms of about in terms of Australia's

tourism sector. Can you just touch on that for us? Tourism

and travel is a discretionary

item. So when macro economics

come into play as they are in

Europe and the Americas, and consumer confidence suffers, one of the first things people

put away is a holiday. So I'd

argue that the economics -

economic malaise of economic malaise of Europe, as

well as things like these

environmental taxes people are

putting on long haul travel

have had more impact than our

dollar, and the other things that people refer to. So what

you're saying is like news you're saying is like news like

Greece's referendum, shocks and

the volatility, they actually

are having more damage to the

tourism sector than other issues? Definitely. If people

feel gainfully ployed, positive

about life and the fact that

they have a job, they travel.

Travel largely outbounds. That

is the case in Asia. China,

Indonesia, Singapore, Malaysia,

New Zealand, they're all comes

in bigger numbers to Australia

but the Brit, French, German,

Scandinavians and the Americans

are not. And they are all in a

bit of economic trouble. We are

talking tants region. Has talking tants region. Has the type of foreign tourist to Australia Australia changed? Very much

so. China has become so. China has become our

highest value market. 500,000 China quleez will come to our

country this year, spend ing

$3.6 billion. That is the first

time they've headed the Brits

in terms of value. They are still not as big as Brits in

terms of number but they spend

more and the Kiwis are our

number one visitor, 1.1 million visitors. India is visitors. India is growing

exponentially. There will be 50

million outbound travellers

from India by 2020 and we need to capitalise on markets like

this that. Ooh, Indonesia and

the region. You've recently

announced a campaign with

Jetstar to attract Japanese visitors. visitors. They've traditional ly been frequent travellers. Why a specific campaign? I

think Jetstar now has 60% of

all the air capacity out of

Japan to Australia. Along Japan to Australia. Along with

Qantas and JAL, they own all

the capacity. So it makes sense

to line up with them and be

part of the Jetstar growth

plans. They're about to start a

low cost carrier with JAL

within Japan which will help within Japan which will help us get more access to the Japanese

consumer. Have you seen a

consumer. Have you seen a drop

in Japanese travellers? Most definitely. Japan has had

economic uncertainty for a long

time. The yen has depreciated against the Australian dollar.

Japan is gelding hold old sore

our peak numbers of 800,000 in

the 1990s is now like 400,000

now. We think there's growth

and this low cost model will bring more consumers to Australia. The Indian campaign

is a recent launch as well. How difficult is it difficult is it to repair Australia's image or Australia's image or attract

Indian tourists in light Indian tourists in light of the recent situations we've seen

with Indian studentses and that

the like? That definitely did

damage the metric we look at

various once. One of the one

was Australia is a was Australia is a very

welcoming country and it did do damage with that. Working with

the high commissioner we've

been up in that market for been up in that market for

eight years. We started a

campaign called sap welcome sy

telling the Australian story

through the eyes of Indians, so yetting well known Indians to

tell our story on our be half and that's working well. We

want to up the anteon India

because there will be a lot of

gret in the next

decade. Touching on this briefly, the Qantas briefly, the Qantas industrial

diss put, did that have much

damage to the tourism sector? I think it was contained well

within that 36-hour period. within that 36-hour period. I

think because of think because of that the industry has surety, so it's

been a good result for tourism

to get that surety where there

is no industrial action that

can happen now. Thanks for joining the program. Thank you. Consumer group Choice has

criticised Qantas for the delay

in re - retunding customers

inconvenienced by the weekend fleet grounding, it's called on

the airline to pay extra cover credit card interest inkurd by

those who had to pay thousands on new tickets. Qantas on new tickets. Qantas has confirmed confirmed 98,000 passengerses were disrupted by the decision

to ground its global fleet to ground its global fleet in response to industrial action

by three unions. While some

immediate refunds were

available for passengerses who contacted the Qantas contacted the Qantas call centre it could be months

before online refund requests

get processed. A Qantas spokes person said out of pocket

claims such as accommodation, phone calls and food were

likely to take longer. The

owners of the Melbourne Cup winner Dunaden earned $3.6 million

million in prize money, not bad

for a day's work. And while retail tourism and retail tourism and hospitality

businesses also came out businesses also came out in

front on Cup day, there was a

cost in terms of cost in terms of lost productivity around the nation.

It's a boom time for pub,

clubs and restaurants as people

flock to Ren ven dwrus watch

the rice race. While the rice race. While in Victoria it's public Victoria it's public holiday for employers in other states

it's an afternoon of lost

productivity. If you actually

stack up all the numbers an you look at how many look at how many hours people

will stop working as will stop working as a consequence of consequence of the festivities

around the Melbourne Cup, it amounts to almost a billion

dollars in pure productive

loss. The chief executive of HR

firm Ranstadt says the Cup

carnival is getting bigger

every year and many employees

expect to be given the

afternoon off Queensland seems

to be the most celebrative of

States. The stats show

States. The stats show the people in Queensland really

like to party around the

Melbourne Cup, they get really engaged, organise lots of events.

events. So percentage wise they

would be the most engaged an

then of course there's Victoria

who for obvious reasons are

very much en engaged. Least is

the guys in Canberra who would like to get on with things and

don't seem to be that festive on Melbourne Cup day. But

despite the lost work hours, employers benefit in ways. If you take into account

that actually the productive

lost terms into good morale,

staff eventses and team spirit

we actually believe that the

overall impact of the Melbourne Cup to Australian business is

actually very, very

positive. No doubt these party

goers will drink to that. goers will drink to that. And

now let's take a look at what's making headlines around the

region. The 'Wall Street Journal' says regulate Norse

Asia scrambled to suspend

operations in local units of MF

Global holdings in the wake of the collapse. The managing director of HSBC says

director of HSBC says inflation

in Hong Kong is likely to

accelerate in mid- 2012. And the 'Financial Times' says a

senior newspaper at the British newspaper group told a barrister in was strong

evidence of illegal activity evidence of illegal activity at 'News of the World' in June

2008. That is all for this

edition of Business Today. If

you'd like to look back over

any of our interviews, please

visit our website. We look

forward to your feedback. I'm forward to your feedback. I'm

Whitney Fitzsimmons. Thanks for

joining me. Enjoy your day. Closed Captions by CSI

This morning, several children among the eight dead

in the Indonesian asylum seeker

boat tragedy, around 20 people

are still missing. Many, if not

most of around the 20 people

missing, will be very, very

difficult to recover alive. This Program is Captioned

Live.

The father of the Afghan soldier diggers on Saturday says his

son was not a member of the

Taliban. A shocking period on

Victorian roads over the last few days. Seven dead since

Saturday. And shame in the

gentleman's game - Pakistani

cricketer Salman Butt and Petero Civoniceva found guilty of spot fixing. Brsh You're

watching ABC News 24. I'm Jorn. Taking a quick look at the