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(generated from captions) earlier was so secret and

highly protected I couldn't get

one letter of it. So the public

can judge themselves as to

whether the Government has any

more information, but from the

evidence of the case put

forward at the bail

application, and the evidence

of the way in which information

that was too secret to deliver,

suddenly becomes available and

then when you get to argue on

that material they say "we

don't want to detain him

anymore, we don't want to have

this the argument", the public

can make up their own mind

about. That I can't comment

about that, but the public can

make up their own mind, based

on that track record. Final

question - how significant is

it that the British police up

until now have not charged the

cousin who received the mobile

phone and the SIM card from Dr

Haneef, Sabeel Ahmed, with

belonging to a terrorist

organisation? What sort of

bearing does that have on your

case? Look, I think that is an

important legal argument

because if those people are not

members of a terrorist

organisation, how can I be

reckless as to whether I gave

the SIM card to a terrorist

organisation? I think that is

an important legal point, but

that is a point perhaps for

further down the track. That's

not the detail of that sort of

argument we haven't sought to

get into at the moment because the submissions that I made in

the bail application was based

on the Crown case at its

strongest as expressed in the

bail application and I didn't

need to get into more technical

arguments in order to make those submissions. Stephen

Keim, we will have to leave you

there. We thank you very much

for coming in to talk to us

tonight. No doubt I'll speak to

you again as this

proceeds. Thank you very much,

Tony.

Well, the Attorney-General

also says new legislation may

be needed to stop terrorism

suspects applying for bail.

Philip Ruddock raised that

prospect today when he was

asked about the case of three

Sri Lankan men charged with

supporting terrorism who

yesterday were granted bail by

a Melbourne imagine trait. One

prominent barrister says if the

Government was to intervene in

such a way it would be

tantamount to legal terrorism.

After 2.5 months in custody

Sivarajah Yathavan and his

friend walked from Melbourne's

court precinct yesterday. Their

third attempt for bail was

approved by the Supreme Court

judge and their co-accused was

later bailed by a magistrate. U

but their freedom as they await

further court proceedings on

terror-related charges may be

Attorney-General Philip Ruddock shortlived. The

wants the decision appealed and

has foreshadowed a possible

terror suspects are not allowed change to the law so that

to apply for bail. If on

appeal, those decisions were

upheld, the Government might

well want to give the court

some further advice as to how

these issues ought to be

addressed. A small number of

terror suspects released on

bail in Australia are kept on a

very short leash with onerous

conditions. The three men

bailed yesterday have each paid

a $100,000 surety and must

report to police daily. The barrister representing two of

them says the Attorney-General

is trying to prove a point by

moving to change a law that was

properly applied. This is a

demonstrating how tough they Government hell bnt on

are on terrorism and they say

they are concerned with the

balance of protection on the

one hand and individuality on

the other, but their actions really belie that I

think. Others say governmental

interference with cause immesh

able harm to the legal system.

This is a terrorist threat to

our legal system. Not by the

terrorists, but by Mr Ruddock

and his cohorts. The

Prosecutions is considering Commonwealth Director of Public

whether an appeal against the

granting of bail in this case

can go ahead. America's top

intelligence agencies have

warned ta al-Qaeda is gaining strength and preparing to

strike again in the United

States. The national

intelligence report says that

al-Qaeda's leaders may try to

report Sunni leaders for an

attack on US soil and the wous

is calling on Pakistan to crack

done on Islamic extremists.

John Stewart reports.

After September 11, the United

States Government vowed to hunt

down and wipe out al-Qaeda.

SIREN SOUNDS

Six years later, al-Qaeda is

still a major threat. Today

America's top 16 intelligence

agencies produced a national intelligence estimate with this

chilling warning. Their intent

is mass casualties and their

intent is spectacular destruction. Spectacular destruction, something like a

building falling or

something. The report says that

al-Qaeda's top leaders are taking advantage of a safe

haven in Pakistan's remote

tribal region. Here they have

been able to re-group and plan

further attacks. The US is

prodding Pakistan's President

Pervez Musharraf to launch an offensive in the border

region. I think first and

foremost we have to remember

that some military action is

necessary and will probably

have to be taken. The report

also warns that Sunni

extremists in Iraq could be recruited for international

terror operations. The National Intel jnce estimate states:

American intelligence

agencies have no doubt that

al-Qaeda is trying to move

operatives into the United

States. They found although we

have discovered only a handful

of individuals in the US with

ties to al-Qaeda's senior

leaderships and September 11th,

al-Qaeda will intensify its

efforts to place operatives

here in the homeland. They

acknowledged that efforts by

the United States and its

allying to fight al-Qaeda have

made the US homeland a more

difficult target for

terrorists. It's a view shared

by President George W. Bush. Al-Qaeda would have been

a heck of a lot stronger today

had we not stayed on the

offence. And while the report

once again has focused on the

need for Pakistan to crack down

on Islamic extremists, last

night there was a reminder of

the scale of the problems

facing America's ally t - ally. EXPLOSION

A suicide bomber killed at

least 15 people at a political

rally in support of a sacked

judge. During the past month,

more than 100 people have been

killed by suicide attacks in

north-western Pakistan. As many

as 200 people are believed to

have been killed when a Brazilian passenger plane skidded off a runway and

crashed into a warehouse in Sao

Paulo. The jet and the building

exploedsed into flames.

Officials say there were almost

certainly no survivors. Geoff

Simms reports. The A 23 Airbus

yashed on a runway recognised

as too short and often

slippery. The aifrl was on a

domestic flight from the south

of the country. It landed

without damage but then left a

runway, crossed a busy road and

ploughed into a petrol station

and airline building. It

clipped one taxi but the driver

and passengers were not

hurt. TRANSLATION: Then the

aeroplane hit us. The wheel hit

our cab and the cab stopped

immediately. Then the aeroplane

hit its wing on the airline

building and exploded. Everything exploded and even

ran out. 176 passengers and

crew are believed dead and more

than 20 people in the warehouse

and office building are almost

certain to have died in the

fire that followed. Though only

one body was moodly recovered.

A passenger on another flight

saw the accident as he was

taking off. TRANSLATION: The

control tower authorised our

flight departure but seconds

later, we saw the planes

explosion and the captain

continued. The tower asked him

to cancel the departure but he

went on and it was the most

prudent decision he could

make. The crash happened in

heavy rain and according to

some reports, a tail wind.

Conditions critics say allow no

margin for error on the short

runwayment no possibility for

over running and no hope of

taking off again when things go

wrong. The massive city of Sao

Paulo has grown around the

airport, preventing any runway

extension and the new surface

has not yet been grooved to

allow drainage. Brazil's

president has declared three

days of official mourning. Back

to Australian politics and a federal parliamentary inquiry

has been launched into home

lending practices amid growing

evidence of mortgage stress.

The inquiry will examine

whether tougher regulations are

needed with housing affordability emerging as a

major election issue. Labor is

continuing to focus on cost

pressures facing families.

Kevin Rudd tonight highlighting

child care as another key

priority. From Canberra, Narda Gilmore reports.

Home ownership is still the

great Australian dream and to

achieve it, many families are

stretching their budgets to the

limit with some lenders only

too happy to help. I have

clients who are in receipt of

Centrelink payments only as

their means of income who are

being approved for loans well

in excess of $300,000. With

reports of mortgage stress and

loan defaults on the rise, a

snap bipartisan inquiry has

been called to examine the boom

in easy credit and the

behaviour of lenders towards

homeowners in trouble. The

Reserve Bank, regulators,

lenders and consumer groups

will all give evidence. I think

it will high light the extent

of the problem and also whether

the issue should be addressed

in terms of regulation. This

is an issue that people have

talked about and if some light

can be shed on the subject,

well and good. Lenders maintain

they are being

responsible. Default rates are

increase ing a little but at a

very low base. Banks are

doing the right thing. Lending

standards remain high. But

consumer groups say that change

is needed. There needs to be

some really specific regulation

of mortgage brokers. The

inquiry will report before the federal election. Kevin Rudd

has been campaigning hard on

the issue of housing affordability. John Howard says

it has always been a government

priority. But the Prime

Minister maintains first home

buyers are still better off now

than in the past. The

percentage of dispose able

income now needed to service a

housing loan for a first home

buyer is lower than what it was

in 18989. (1989) Out of touch,

court the Labor leader. Kevin

Rudd has seized on the pressures facing Australian

families include ing grocery

and petrol prices. Now he's

homing in on child care. Blow a

kiss. In a speech tonight, Mr

Rudd announced plans for a new

office of work and family under

a Labor Government within the

Prime Minister's Department,

designed to drive a response to

what he calls a "child care crisis". I believe a Prime

Minister should have direct involvement in the formulation

of policies to get the balance

right between work and families

for all Australians. He says

the new office would monitor

child care availability, price

and quality. Labor also is

promising to help fund more

childcare centres and pay to

train more workers. In

Victoria, Ford is putting the

brakes on its Geelong engine

plant. It will close within

three years, leaving 600

workers without jobs. Their

union describes the decision as

"devastating". It blames the

Federal Government for not

doing enough to save the

factory. From Melbourne

Stephanie Ferreir reports. Ford workers Brendan Sexton and

Kerry Mckorty are just engaged

and had looked forward to a promising future until

today. We just finished

building a house. We get the

keys this week. The news is devastating. What are we going

to do? Ford told workers this

afternoon of its decision to

shut down the plant and instead

import V-6 engines from the

United States. Whenever you are

talking about potential job

losses it is not easy, but we

are taking a decision today

that I believe ensures our

future here in Australia. The

manufacturing workers young says that the Federal

Government has failed to rescue

the plant. John Howard you

should support workers in

Geelong like you did in Holden.

There is a new aluminium plant

there as Fisherman's Bend. What

about the worker s at Ford. I'm

absolutely disgusted. And local

business leaders say the there

will be massive flow-on effects for Geelong's economy. You have

to look at 600 jobs multiplied

by 3. There will be an impact

of nearly 200 jobs on the

region which will have a big

impact on Geelong as a

whole. But the Government says

it is stepping in. It's

announced a joint state federal

package of $24 million to

attract jobs to Geelong. The

Government says that a bail-out

was never an option. Ford

didn't ask for any assistance

and our Government already has

been very generous to that

company. We provided $52.5

million last year. And he says

it's not a sign of doom for

Australia's automotive industry. The mistake to make

sheer is to read too much into

this announcement. Ford will

expand in other areas and that

is a good news that Ford are

here to stay long term. The

swree long plant is expected to

close in 2010 when new emission

standards for engines come into force. A quick look at the wetter

now.

That's all from us. 'Lateline

Business' coming in in a moment

F you would like to look back

at the interviews or

transcripts visit our website

at, abc.net.au/lateline. Now

here is 'Lateline Business'

with Ali Moore. Thanks, Tony.

Tonight Fortescue Metals global

search for funds nets the iron ore hopeful for half a billion

dollars. Now the project is 40-450% complete the market is

starting to get a bit more

comfortable with the

project. Alert, but not alarmed

- the Reserve Bank governor

applauds recent changes in

global bond markets. Because

there's more pricing for risk.

If that per se is what happens,

I suspect most people then, in

my line of work, will welcome

it. And the stars align -

retailers cash in on rampant

consumer demand and an

Australian dollar flirting with

US $0.90. I don't think I've

ever been more confident or

seen an economy that's strong

er...

CC

First to the markets and

Australian shares closed at a

one-week low, dragged down by

mining and energy stocks. The

All Ords closed nearly 1%

weaker. The ASX 200 gave up 5 3

points. In Japan, a slide in

exporters saw the Nikkei lose

more than 1%. Hong Kong's hang

seng shed 215 points as profit

takers stepped in and the FTSE

is down for a third straight

day. We'll cross to London

later the program.

A global roadshow by Fortescue

Metals Group has yielded $500

million to fund aggressive

expansion plans at its iron ore

project in the Pilbera. The capital raising provides the

money to try to ensure

Fortescue Metals delivers 45

million tonnes of iron ore a

year when it starts production

next May. Dianne Bain reports.

After a month-long road trip,

FMG has won a ringing

endorsement from banks and

trading houses, both oversees

and for the first time in Australia. That's probably the

most exciting and positive

outcome that we believe from

the whole of the... The company

will re issue 14 million of its

shares at $36 each, a discount

at today's closing price of

$28.45. The extra money will go towards increasing the iron ore

output of its proposed project

from 45-55 million tonnes a

year by 2009. Analysts say that

the company's stock will be

diluted but the interest from

Australian eninstitutions shows

faith that the project will be

completed. Now the project is

40-50% complete, the market is

starting to get a bit more comfortable with the

project. FMG is racing against

the clock to build a rail and

port for it project to service

the demand for steel from

China. Bond holders can recall

their money if the project

stalled. The Government says

FMG's expansion plans combined

with those of BHP and Rio Tinto

will see a tsunami of iron ore

exported out of the Pilbera to

accommodate the company's

expansion demands, it wants all

of the Pilbera ports to be run

by one body. We are going to

need to have people who are

going to be on the case every

day trying to put forward to

advance the environment al

approvals, to be doing the

complex contract well

negotiations. BHP, FMG and Handcock Prospecting are

believed to support the concept

of a single Port Authority for

the Pilbera, however the

government's plan may face some

resistance from Rio Tinto which

is understood to have

reservations about the running

of at least one of its ports.

Given global demand for

resources, it comes as no

surprise that Rio Tinto rammed

up production in the last

quarter. The mining joint

increased iron ore output 11%

to a record 37 million tonnes. Rio Tinto also boosted copper

and aluminium production, but

heavy rain saw coal outputs

slump 27%. Investors were more

focused on weaker metal prices

and shares closed half a per

cent weaker at $97. At the same

time, Oxiana say ps it will

look closely at any assets Rio

may sell in the wake of its $44

billion bid for Alcan. The

copper miner says it remains on

track to meet full-year targets. European markets have

been trading for a number of

hours and for the latest news

we are joined by Neil Hume,

senior stock market reporter at

the Financial Times. Thank you

for your time, Neil Hume. The

FTSE is down again in morning

trade. What is worrying

investors in More fears about

the sub-prime mortgage market

in the US. Overnight we had

news from bare sterns that two

of their large funds investing

in this area have basically

blown up. One has no value left

in it and another has 9% and

those fears have rippled across

the Atlantic to European

marketsed to and are weigh ing

on the FTSE which is down for a

third straight day. Of course

we're less than an hour away

from a speech by Ben Bernanke,

the governor of the Central

Bank. What are markets

expecting to hear from him,

particularly given the focus on

the sub-prime market? They are

looking for him to issue some soothing words about these

particular funds and any sort

of implications from it. Uhm,

and they will be looking for

any sort of comments that he

might make on the outlook for

interest rates as well, which

of course is key for the sort

of housing market and the sub-prime market in the

US. When you look at that news

re Bare Sterns is the market

thinking there are many more

cases like that? I think they

are and the real thing that the

Bare Stern case showed us is

that no-one knows the value of

the sub- prime as sets are.

They trade rarely. It's been a

nasty surprise. There are fears

there could be some sort of constagen that could spread out

from this fund and affect

others. If we could look where

you are in London on takeover

news, supermarket chain,

Sainsbury's has confirmed it

has received a preliminary

approach. Private equity has

already had a bit of a look at

that route. Who is hunting

today? It's a company called

Delta II, which is an

investment vehicle backed by

the Prime Minister of cat tar.

They built up a Sainsbury's of

25% over the last couple of

months and this morning they've

come out with news that they

have approached the board of

Sainsbury s to see if they are

interested in accepting an

offer for them. The problem is

whether the founding Sainsbury

family want to sell-out or not

and the signs are they do not

want to sell for pretty much

any price really. They are not

the only family that's in the middle of a takeover bid at the

moment or a takeover offer. We are looking at Rupert Murdoch

and his pursuit of Dow Jones.

What's the latest on that

tentative agreement with the

board, if not the family, that

we heard about yesterday? Well,

the board agreement does seem

to be in place, but I mean,

again, the key here like with

Sainsbury's, is the family. If

the family don't want to play

ball, the ball - the deal is in

serious danger of nom coming

pass. What do you think the

Bancroft family will do? It is

finally ambulanced. The Dow

Jones share price will close

about $56 last night and the

offer 60. So there is some doubt amongst people that the deal will actually come

through, but I think that sort

of gap is narrowing, following

the sort of board of recommendation and the noises

coming out of some of the

members of the Bancroft family

that they are prepared to

accept the offer. Finally in

New York, the Dow Jones of

course the stock index pushed

above 14,000 point points

yesterday. Obviously it hinges

on what Ben Bernanke says. But

what are the futures telling us

act today? It looks like it

will open lower. Aside from the

sub-prime stuff, I think there

will probably be a desire on behalf of some investor s to

lock in a bit of profits and see what bern bern has to say

and look at the market again

from there. Neil Hume, thanks

for talking to us.

Now for a quick look at the

major movers on our market

today. Engineering firm Sedgman

was the session's biggest loser

shedding 8%. Equipment hire

company Boom Logistics

continued to slide after

yesterday's profit warning and

Santos shares edged slightly

higher today. It announced

plans to build a $7 billion gas

plant in Queensland. On

commodity markets, Brent crude

oil is edging towards $76 a

barrel and lead is trading

close to a 3-month high while

copper is steady. The

Australian dollar is again

trading against most major

currencies. While the

Australian dollar has climbed

towards US $0.88 is causing

heartache for some, it does n't

appear to be troubling the rob

governor. He is not troubled by

the 50-year highs. He is taking

a hands off approach to the

boom in credit saying that the recent reprising of risk has

been welcomed by central banker

s. Neal Woolrich reports. The

Australian dollar continues to

chart fresh 18over highs

leading to increasing worries

for exporters and local

businesses that compete against

imports, but the man

controlling Australia's main

economic leaver appears unperturbed. I don't think it

is that surprising that we have

a pretty high effective

exchange rate given what is

going on with the relative

prices of the import and export

basket. Whether it's at the

right level, I'm not offering

any comment. I don't think it's

useful to do that. With the high Australian dollar driving

down the price of imports and

therefore inflation, it is a

situation that the Reserve Bank governor might prefer to leave

alone. Economists argue that

central bankers could take a

more active interest in

currency movements. It is

certainly an issue that is

coming under increase ed

scrutiny and discussion among

central bankers in the world.

Not just levels of currency but

how financial markets and

pricing of financial assets can

actually affect, potentially affect, consumer behaviour and

therefore inflation. A more

pressing issue for the global

economy is the health of the US

sub- prime mortgage market.

Investors continue to worry

that with the abundance of

cheap and available finance,

too much has been lent to

American borrowers with

chequered credit histories.

That's already forced a

reprising of risk. Basically

credit spreads right across the

spectrum are quite a bit higher

now than they were several

months ago. You've had a move

upward in long-term yields in

the US market driven by the

Treasuries but even beyond that

spreads have widen't quite

significantly. Concerns over

the US sub- prime mortgage market have spread to Australia. The 'Wall Street

Journal' is reporting that

Citigroup and JP Morgan are

selling a troubled Australian

hedge fund as American firms

look to contain their sub-prime

losses. But Glenn Stevens says

that central bankers will not

be too worried if the more

exotic and highly geared

private equity funds take a

financial hit. To the extent

all of that calms down a bit

because funding costs go up,

some what, and because there is

more pricing for risk, if that

per se is what happens, I

suspect most people in my line

of work will welcome it. Glenn

Stevens is tipping that any

problems in the US sub- prime

mortgage market would be

unwound in an orderly fashion.

But he warns the situation is

evolve ing daily and will need

to be closely monitored. The

higher dollar and strong

consumer demand have combined

to provide near perfect

conditions for the major

retailers. David Jones has more

than tripled its profit

forecast and now expects

second-half profit to rise 42%

to around $38 million. Shares

in the upmarket retailer closed

1.5% higher at $5.61 extending

this year's gain to 35%. And a

strategy of opening retail

outlets inside David Jones and

whyier has helped clothing

chain Country Road lift

full-year sales by 16%. Staying

with retail and the good

conditions saw Harvey Norman

announce a 15% rise in fourth

quarter sales, an increase

driven by demand for new

technology. The rise bricks the

full-year sales growth to 16%

with strong demand continuing

into the current financial

year. Harvey Norman boss Gerry

Harvey is as optimistic as he's

ever been about the current

retail climate. I spoke to

Gerry Harvey earlier this

evening. Gerry Harvey, wl come

to Lateline Business. Thank

you. Strong sales growth for

the last quarter and the year

overall driven once again by

demand for technology. Is that

demand insatiable? At the

moment you'd have to say yes

because the penetration of

plasma and LCD is not high. The

price of a plasma was $20,000

and 30,000 and 15, 10, 7, 4, 2,

2, 1. She our units are up 30,

40, 50%, but our dollars are up

just a little bit because the

prices have come down so much.

So how long can that demand

last? Well, there's a new big

plasma out at the moment 103cms

or 106 and it is $100,000. We are actually going to order

some because we think we can

sell them. There is new product

coming out, bigger product

coming out, there is better

product coming out. So, I think

it's going to stay strong for a

long time. And for the first

quarter of this financial year,

I know it is early days, but no

sign of momentum slowing? I

think from July 1 this year, I

don't think I've ever been more

confident or soon an economy

that is strong ir, I don't ever

recall sitting there on first

July, the beginning of a

financial year and think ing,

this is about as strong as I've

ever seen it. What is so different? Is it just the

numbers? Well, you've got very

low unemployment, you've got

relatively low interest rates.

They are not quite as low as

they were. You've got people

that own houses that have all

doubled in price in the last

five years. I was up at

Hamilton aisle the other day

and you see that house is 3

million and that is 4 million

and that is 8.5 million and

this is on Hamilton island.

What about on the mainland at

Airlie Beach. One sole there

for 9 million the other day. It

is like millions! We're not

used to hearing house prices at

this level. So, you know,

you've got average people that

have got houses worth a million

dollars. 2 million dollars

even! But to be Fareham millton

island and Airlie Beach are not

exactly representative of the average Australian housing

region and we are getting story

after story about the large

percentage of people's pay

packets that is going towards

paying mortgages. How do those

accounts it is with the demand

that you're seeing? Are there

pockets of weakness? Sure there

are. There are areas where

people are really struggling,

no doubt about that. But if you

take the view that 33.3% of

Australians own their houses

and they have doubled in price

and that have no mortgage

problems. 33% say their rent

have gone up, but there is 33%

that are buying, but not all of

that 33% that are buying are

having great difficulties. A

small percentage are. There is

a whole heap of the others who

aren't having difficulty paying

off their home. They are

earning a lot of money and they

are happy because they bought

it for 500,000 and now it is

worth a million. We've got a

strong economy and we have got

a relatively strong Australian

dollar at over US $0.87 nudging

Uzbekestan $0.88. We are

Independent seeing inflation.

Is that higher dollar helping

to keep prices down? It is

because if you are a retailer

like Harvey Norman db any

retailer - our product is, we

are bringing it in at a cheaper

price this week than last week.

We should be selling it -

doesn't always work like this,

but the price pressure, as you

said, has been removed. We saw

an apparent ly sanguine view on

the rise of the dollar express

ed by Reserve Bank governor

Glenn Stevens today. Are you

also sanguine, perhaps even

enthusiastic? I don't know that

I'm enthusiastic because I'm in

business and the businesses

where I am where I export, this

is a real pain and it is a real

pain for horm in that a lot of

our suppliers are going broke

at the moment. Manufacturing

furniture and that sort of

thing, they are falling over

because they continue compete.

All of the Chinese products

coming in. It's knocking our

manufacturers out. I don't like

to see that. We have a lot of Australian-made promotions with

furniture trying to keep the

Australian product running, but

like when the dollar goes to,

say, 90 cents, maybe it will go

to $1, this will put huge pressure on Australian

manufacturers and rural exports

and that sort of thing. So in

the current climate, are you

still interested in opening a

rival to the Coles group's

Officeworks business? We've

registered the name Office -

OFIS. What does that stand

for? Well, it is just - when

you advertise, it is short, you

can put it in a little block on

a building or something and

people will make what they make

of it but it will be our idea

of OFIS. We are not going to

call it Officeworks or Office

Depot or Office Macs. They are

the big ones in the world. We

are going to call it OFIS. When

it is it opening? We would hope

to have the first ones opening

within the next 6-12

months. Will it be a franchise business? Ahhhh, maybe not.

More likely it won't be than it

will be. On the Coles Group the

broker Meryl lynch said today

that the market is materialy

underestimating the amount of

capital expenditure and working

capital it is going to cost

Wesfarmers to turn Coles

around. Do you grow? Yes, I

do. I think bun, has been a very successful business, but

again there is a lot of Chinese

product in there. It's just

price ed to sell and it is

hardware and they put it in a

big shed and they've been very

successful, but that doesn't

mean that that level of ex per

tease that you've got to do

that - expertise that you've

got to do that means you can go

and run food stores any better

than, say, a Coles. I don't

know how they figure they can.

Then they've got K-Mart and

Officeworks and I think they

are bitting off a lot. If they

can pull it off, that is great.

Frankly, if it was me and I

owned shares in Wesfarmers, I

would sell them. Mind you f I

had shares in Coles, I would

sell them, too. Meryl gives

Wesfarmers a low probability of

success within the next five

years. How long do you think it

will take Wesfarmers to turn

the Coles group around? Well,

it is all people. The people

that are at Coles in the last

20 years have had this problem.

They can't make it work. Not

like it should work. So, when

Wesfarmers comes along and says

"I can do it". How? Who have

you got? Why can you do it? I

don't think they can answer

those questions. How do you

rate the chances that if you're

right, down the track, some of

these businesses might come on

the market again? At least

50/50 chance. Which bits? The

whole lot. And would you have a

go next time? If it comes up

again in probably the same

situation, you know there, will

be a lot of people interested.

Would I look at Officeworks

tomorrow if it came up? Yes. I

wouldn't have to open up my own

chain. Gerry Harvey, thanks for

talking to Lateline Business. Thank you.

The Tax Office is warn ing directors their personal

affairs as well as the affairs

of the companies they run will

be targeted in this year's crackdown. Echoing recent

comments by the Treasurer, Tax Commissioner Michael D'Ascenzo

says the ATO will also take a

close look at leverage to ensure companies are

nottiousing debt to avoid

paying tax. Andrew Robertson

reports. Big business is big

business for the Tax Office and Michael D'Ascenzo wants it to

stay that way. The top 100

Australian companies generate

45% of crooked tax revenue and

if you are to go down to about

the next 2,000 they pick up 67%

of company tax and 36% of total tax. All of thoeps companies

are trying to minimise their

tax and the condition -

Commissioner says it is up to

directors to make sure they

don't break the law. This year

the ATO is focusing on a wide

range of issues, including the

tax value of assets, breaches

of rules around capital losses,

the use of hybrid securities,

raising the level of debt to

reduce tax bills and the

financialing of large

infrastructure projects. David

Williams is a tax specialist at

erns and young and he argues

for global players complying

with these and other issues is

no easy task. Just about every

transaction that the company

enters into has at least one

tax implication somewhere in

the world. It may be more than

one implication so what that means is that tax departments

need to find a way to be better connected with the operations

and more integrated into the

financial accounting side of

things and not just a silo

dealing with tax technical

issues. The big end of town

gets much of its tax advice

from members of the Institute

of Chartered Accountants. Tax

council Ali Noroozi says before

any ATO crackdown business

needs to know what is expected,

citing the laws around levels

of debt and equity which are

topical with the rapid growth

of private equity deals. The

tax office and payers have not

always grade on it. It is a

difficult piece of legislation.

Before you can examine that

closely or audit a particular

client you need to have

guidance out there so people

know how it is they are

supposed to comply. To keep

directors even more on their

tows, the ATO is also targeting

their perm tax returns,

particularly the reporting of

income from share incentive

schemes and tax havens. Now a

look at tomorrow's business

diary. Macquarie Bank gets top

billing. It is reel lessing

first-quarter earnings and also

holding its annual meeting.

Woodside Petroleum releases its

production report and BA tables

its monthly bulletin and

overseas we get the sales

figures. Before we go a look at

what is making news in the

sections of the papers. The

'Age' looks at that time impact

of Glenn Stevens' speech

and'The Australian' leads on

Santos's proposed gas plant and the Australian 'Financial Review' says that the Tax

Office is targeting people with

offshore bank accounts and the 'Sydney Morning Herald'

examines the stronger than

expected numbers from David

Jones. That's all for tonight.

As I leave you the FTSE is down

53 and the Dow is down 612 a

head of Ben Bernanke's speech.

If you want to review any part

of tonight's program you can

visit our website at, abc.net.au/latelinebusiness. Or

you can watch the show online

or download it as a vodcast.

We'd also love to get your

feedback. Our email address is,

latelinebusiness@your.abc.net.au.

I'm Ali Moore. Goodnight. Closed Captions by CSI