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Tonight on the 7:30 Report, the manufacturering company where the workers select their bosses and
set their own pay levels.

We said to everyone look, this is what everyone makes in the company. Here's what the company makes
and its profit margin and here's what other people make at other competitors. Now you have
everything it takes to tell me what your salary should be.

It's paying off big time. Productivity is up, so to profits. Meet the businessman behind this
remarkable success story.

I have very little respect for the idea if I have enough terror people will do the right thing.

Replacement MP linked to Burke scandal

Replacement MP linked to Burke scandal

Reporter: Hamish Fitzsimmons

KERRY O'BRIEN: The Brian Burke scandal threatens to degenerate into farce, with the latest
revelation affecting the newly appointed Minister for Human Resources, WA Liberal Senator David
Johnston. Senator Johnston, chosen to replace the hapless Ian Campbell after he was forced to
resign after having a 20 minute meeting with Brian Burke, owns shares in two companies that have
employed Brian Burke as a lobbyist, with his partner, Julian Grill. One shareholding is small; the
other is in a company that's now in liquidation. They're unlikely to cause Senator Johnston
anything more than passing discomfort, but they do serve to underscore how closely entwined Messrs
Burke and Grill are with Western Australian business. Three State ministers have also been sacked
for their dealings with the disgraced former premier and his business partner, and federal Labor
leader Kevin Rudd is still endeavouring to minimise damage from his three meetings with Mr Burke in
2005. So why have the two lobbyists been so popular with big business in the West? Hamish
Fitzsimmons reports from Perth.

HAMISH FITZSIMMONS: They call this the big end of town, the half-kilometre stretch of Perth's St
George's Terrace that's home to the boardrooms riding the resources boom. From small explorers to
mining giants, they live here and do their business with the house on the hill, as it's known - the
WA Parliament. It's also fertile ground for lobbyists who can navigate the halls of bureaucracy and
political power, and the two biggest names in town are Brian Burke and Julian Grill.

JOHN LANGOULANT, WA CHAMBER OF COMMERCE: Everyone's known that Burke and Grill have been extremely
busy around town. In fact, you see them almost everywhere.

JOHN HALDEN, LOBBYIST: I think they had significant power within the Government. That's fairly
clear. They have had for probably 20 to 25 years.

HAMISH FITZSIMMONS: In recent years, having risen Phoenix-like from the ashes of WA Inc., Brian
Burke and Julian Grill, with their political nous and extensive contacts, have been crowned the top
deal-makers in town, guaranteed to get results. Their client list has included some of the biggest
names in mining and property development, including the iron ore miner Fortescue Metals Group and
the Australand group. The 7.30 Report approached seven of Burke and Grill's biggest clients, but
none would return our calls. Only this man was happy to discuss the pair, and what they did for his

MICHAEL KIERNAN, MONARCH GOLD: In my former positions I had Julian and Brian as advisers. There was
a Labor Government here, they understand the Labor psyche and they advised me on how to handle and
how to approach particular issues and particular people or departments.

HAMISH FITZSIMMONS: Veteran mining executive Michael Kiernan knows first-hand how influential the
former political power brokers turned lobbyists can be. He's revealed to the 7.30 Report that a
stalled project in the state's north west was swiftly resolved after Julian Grill took up the

MICHAEL KIERNAN: I know that in that case Julian did in fact speak to the head of department and
also had raised the issue with one of the ministers and, at the end of the day, the government
department did in fact not compromise but did, in fact, change their difficult position and made it
more accommodating for the company.

HAMISH FITZSIMMONS: Michael Kiernan says that, for the 40 or so clients on their books, Burke and
Grill represented excellent value for money. According to the evidence before the WA Corruption and
Crime Commission, smaller players happily paid retainers of up to $10,000 a month, while some of
the bigger companies were forking out success fees of more than $150,000.

MICHAEL KIERNAN: It's not a large cost if you're talking about projects that may be $10 million or
$20 million or in some cases hundreds of millions of dollars and in my case I had them on a
permanent retainer.

HAMISH FITZSIMMONS: Some argue Government over-regulation in WA has meant many companies have
resorted to paying big money to cut corners. John Langoulant from the Chamber of Commerce says few
players could get their projects over the line without the help of someone who knows how to speed
up the workings of the Labor Government.

JOHN LANGOULANT: It's almost been that inertia has been the trademark of this Government and you've
needed external influence to try and get decisions taken.

HAMISH FITZSIMMONS: And what are those external influences?

JOHN LANGOULANT: Well, it's been Burke and Grill substantially, up to now.

MICHAEL KIERNAN: There was a lot of rhetoric that red tape was going to be cut and slashed,
environmental issues were going to be cut and slashed, and native title issues, and it simply
hasn't happened. And you've got practical mining people that need to get on with the job. They have
shareholders, they usually have banks breathing down their neck and they've simply got to get good,
factual advice, and lobbyists are able to assist in this area.

HAMISH FITZSIMMONS: While the fallout from the scandal drifts down from Parliament House, lobbyists
are also feeling very much on the nose.

JOHN HALDEN: It is Burke and Grill we're dealing with here, they don't represent probably the
100-plus lobbyists or Government relations people who are employed in Western Australia.

HAMISH FITZSIMMONS: John Halden is a former Labor MP and ALP state secretary; now he's a political
lobbyist. He says the lobbying industry has been tarnished by the behaviour of just two men.

JOHN HALDEN: There seems to have been a process in which you use them or they approached you
knowing full well the outcome.

HAMISH FITZSIMMONS: Did companies that didn't use them, perhaps, were they disadvantaged?

JOHN HALDEN: Absolutely. And we've had clients in that position.

HAMISH FITZSIMMONS: Still smarting from the CCC's revelations, the Carpenter Government is now in
full damage control. In the hope of restoring public confidence in the ways of government, it's
moved to set up a register of lobbyists to keep track of their dealings, but plenty of businessmen
are still nervous about just how their projects will get up and running without Mr Burke and Mr

MICHAEL KIERNAN: I'm not quite sure what's going to be able to happen in the future. Obviously the
effectiveness of Julian and Brian is now zip and I'm not quite sure how the circuit breaker is
going to be affected in the future. It is very frustrating, it is very frustrating trying to deal
with governments and government departments.

Australians leave E Timor as violence looms

Australians leave E Timor as violence looms

Reporter: Kirstin Murray

KERRY O'BRIEN: Britain and New Zealand have joined Australia in calling for all non essential
nationals to evacuate East Timor immediately, after supporters of a renegade army officer took to
the streets in a violent protest overnight. Anger flared on the weekend when an Australian led
international security force launched an armed assault on a compound where Alfredo Reinado was
hiding. Now peacekeeping troops are bracing for the reaction from locals to news that five of
Reinado's men were killed by Australian soldiers, rather than four, as was originally reported.
East Timor's President, Xanana Gusmao, has issued full powers to foreign soldiers to halt the
unrest. With elections only months away, the pressure is on to resolve the stand-off and restore
stability to the troubled nation.

KIRSTIN MURRAY: This is East Timor's most wanted man, seen here relaxing amongst his supporters in
their mountain hideout. When these images were recorded by an Australian film maker three months
ago, Alfredo Reinado said he was willing to surrender. On tape he makes a direct plea to President
Xanana Gusmao.

ALFREDO REINADO (TAPED MESSAGED, NOV 2006): My message is, please stop. I am not in hiding. If you
want me, tell me and I will be there. Don't use international forces to capture me. I am not your

KIRSTIN MURRAY: But the hunt is now on. Australian troops are combing East Timor's rugged terrain
with urgent orders to flush Reinado out of the jungle.

JOHN HOWARD, PRIME MINISTER: Well, the situation is a concern to me and to the Government. Those
evacuations are precautionary. I don't hold deep fears, but I do hold some concerns. The security
situation has got worse, and Reinado and his followers are a threat to the peaceful situation and
the stability of the country.

KIRSTIN MURRAY: Tensions are running high after troops raided his jungle compound at the weekend.
Reinado slipped the net, but five of his men were killed. President Gusmao gave the go-ahead for
the operation after hearing reports Reinado and his supporters seized weapons from police stations.
The East Timorese Government says President Gusmao had no choice.

SAHE DE SILVA, FRETILIN SPOKESMAN: We've been, or the Government's been, trying to get him to
surrender in order to face the courts over his actions, and he has so far refused to do so. Someone
who claims they want justice and refuses to submit themselves to the judicial system is not a folk

KIRSTIN MURRAY: But peacekeeping troops are now facing the backlash from Reinado supporters.
Overnight, street gangs carrying sticks and rocks roamed suburbs, looking for Australians. Flights
out of the capital are full, as Australians begin evacuating. President Gusmao has now given
soldiers and UN police sweeping powers to search and detain troublemakers, a move not welcomed by

INA BRADRIDGE: If Australians really think, really, really think they want to help my people, and
to see my country get better, you should work together with Reinado, including Xanana, including
other politicians and the people, and it's not just taking a side.

KIRSTIN MURRAY: Ina Bradridge acted as a mediator between the President and Reinado after the
former military police major, together with his soldiers, took to the hills last year over concerns
about discrimination and corruption. She says Reinado held great respect for the President,
dedicating a tattoo to the man he called his supreme commander.

INA BRADRIDGE: So Reinado is feeling, I think he's very disappointed to Xanana and as a leader -
he's really angry about it because Xanana in the first place has always supported him and for
Xanana to turn around and say, now, go and catch him, I think he's really disappointed. Very, very,
very, very disappointed.

KIRSTIN MURRAY: But with elections due within months for a new president and prime minister, the
Timorese Government acknowledges the timing of the attack was critical.

SAHE DE SILVA: Reinado needs to be brought in to prevent him from causing instability and violence
during the elections, so that voters can freely vote.

KIRSTIN MURRAY: The Australian military's defended its role in the raid.

authority has been restated in Same and the people of Same can now go back to living a normal life,
so I think it was a very successful operation. We will apprehend Alfredo Reinado.

DR DAMIEN KINGSBURY, DEAKIN UNIVERSITY: The East Timorese Government explicitly asked the ADF to
take the action it did take. They were acting very clearly on the part of the East Timorese
Government that decided that, despite attempts to negotiate, it really had run out of options and
run out of time.

KIRSTIN MURRAY: Reinado has successfully dodged capture for more than three days, hiding out in
terrain he knows far better than Australian troops. He's previously warned he will defend himself
if cornered.

ALFREDO REINADO: If, you know, any Australian would pursue me without any reason I would shoot
back. But I'm not doing that, I'm preparing. I know very well what Australian troops come here to

KIRSTIN MURRAY: Damien Kingsbury, a specialist in Indonesian affairs, believes the longer the rebel
leader remains a fugitive, the more popular he could become.

DAMIEN KINGSBURY: It's difficult to assess Reinado's support base at this stage. In terms of
numbers it's probably still a fairly small percentage of the population but even if it's only in
the order of 5 per cent or 10 per cent, that still is significant in terms of absolute numbers and
it's enough to destabilise East Timor for a considerable period.

KIRSTIN MURRAY: President Gusmao still hopes Reinado will surrender and face charges relating to
last year's violence. As for Reinado, he argues he's defending the best interests of East Timor.

ALFREDO REINADO: I'm not a rebel leader, I still love my institution. I hope that day by day I'm
still alive, still smiling and I want to see my country live with a peaceful country and keep a
good guarantee of stability and good for the nation, yes.

KIRSTIN MURRAY: But the Australian charged with capturing Reinado says he's no hero.

MALCOLM RERDEN: He chose not to stand and fight, he chose to run. I don't think that's an example
of someone who's in a position of authority or indeed coming out of the situation in the best

Interview with Semco's business guru

Interview with Semco's business guru

Reporter: Kerry O'Brien

KERRY O'BRIEN: Now to the maverick businessman who over the past 15 years or so has created what
surely must rate as one of the world's most unusual workplaces, with resounding success. Brazilian
entrepreneur Ricardo Semler turned business convention on its head when he took over the relatively
small family engineering term Semco, introducing a radical form of participative management giving
the workers a rather extraordinary say in the running of the company. As one of Latin America's
fastest-growing companies, Semco's work force has gone from a few hundred to 5,000. The turnover
has grown from about $40 million a year to more than $1 billion and the profits just keep going up.
The workers set their own wages and productivity targets and select their managers, and now Ricardo
Semler is applying the same principles to school, again, with startling effect. I spoke with the
Brazilian business guru, also the author of two best-selling books, after a business conference at
the Gold Coast.

KERRY O'BRIEN: Ricardo Semler, after the amount of time that you've put into it, can you say with
certainty that it really is possible to establish a truly democratic workplace in the modern world?

RICARDO SEMLER: Absolutely. I mean if I went back to the company today and I said do these 5,000
people look like exactly the kind of people with the kind of happiness that I would like to see,
enthusiastically getting up on Monday morning and going to work, I'd say no. Do they have enough
power to actually change alone the path of this or that, probably not. But it's an experiment that
after 25 years and 25 years of growth in all kinds of conditions demonstrates that it's a much more
stable mechanism for people working together than the traditional business model.

KERRY O'BRIEN: We might just quickly move through a few basic areas and test how democratic a
process it is. To what extent is management chosen by workers, elected?

RICARDO SEMLER: They there's no process other than being anonymously evaluated by your
subordinates. So there's no process by which I, for example, could choose someone without first
having that person be interviewed by his or her future subordinates. So in that sense it's a
process that's that can't be diverted by management power.

KERRY O'BRIEN: So if his or her subordinates gave the thumbs-down, that person would not get the

RICARDO SEMLER: They would not get the job at all, no. There's no chance of someone being people
will be interviewed for a management job sometimes by dozens of future subordinates before they
actually get the job and they'll do it two, three, four, five times so by the time the person is
finally hired, everyone knows everything about them.

KERRY O'BRIEN: And what about how you arrive at a salary level for any individual worker?

RICARDO SEMLER: Basically, you know, we, as a company we know how much people make inside, outside
and how much we can afford. People know other things is, what do they need, what would they like to
have at this point in their lives, what do other people make doing other things and no one has all
these things together. So we give them these three and we say to everyone, look, this is what
everyone makes in the company, here's what the company makes and here's what people make at other
competitors. Now you have everything it takes to tell me what your salary should be. People's first
reaction is to say, okay, I'm going to multiply it by 10, but the fact is that in these six-monthly
budget meetings in which people put together their future, also anonymously, we decide whether
Kerry O'Brien is worth $8 million a year or not and the fact that you think you're worth $8 million
may not coincide with ABC's opinion and if it does not

KERRY O'BRIEN: I think my opinion would be somewhat lower than that.

RICARDO SEMLER: But my opinion of you is good. What I'm saying is what will happen is it won't
stick and so people will say, look, I think he's worth that, he's fantastic, but maybe at BBC in
London, not here, so the person is out of a job.

KERRY O'BRIEN: Your most recent book you call 'The Seven Day Weekend'. Surely that's a bit of a
misnomer, because it implies that we can have fun all the time and not have to work.

RICARDO SEMLER: Smart American editors, but it's tongue-in-cheek. It was originally called 'The End
of the Weekend'. But the whole rationale, of course, is, if you look at it and you say I work
Monday to Friday but then on Saturday and Sunday I do whatever I want - which isn't true any more.
You're taking your kid to soccer by 10am, you're going to your mother in law for lunch. If you
don't show up at the right time for a dinner reservation you lose the reservation. This is how your
weekend is structured. No one has any more idle time, and without idle time you don't rethink
anything. That's why we, the Semco Foundation, has also gone into schooling now and we have now 2-
to 14-year-olds in schools where they don't have to go to class if they don't want to, where their
vacation periods are variable and they take them with their parents whenever they want. What we're
saying is it's possible to contaminate the whole system and undo it as well.

KERRY O'BRIEN: Tell me about the school system, how well does it work? What is the evidence that it
works? What are the goals?

RICARDO SEMLER: Now, 20 days ago Bill Gates announced that Microsoft after looking at
100-and-something countries chose 12 schools around the world - and one of them is ours in Brazil
as schools of the future that they're going to try and empower, etcetera. What we're saying is,
when you look at your past and my past and anybody's past and say, when did we actually learn
something, it was when you were very interested at that exact moment and there was somebody who was
passionate on the other side. Never in any other situation. And so our answer is the following, do
I want a kid who is told to sit down and shut up? Do I want him there? What is the chance he's
going to retain any knowledge? It's very small. We say, show up when you want to and when you want
to you will learn enough for all that time when you would have rather been surfing or playing
soccer. It's very difficult for people to accept. BBC television just went down to film this.
There's a whole area where you can watch DVDs and TV the whole day long instead of going to class.
They set up their cameras there, they said, they kids must be here. But the kids don't stay there
for very long, because there's only so long you can watch a DVD before it gets boring. And then at
a certain point in time they come back. And if you make it interesting - for example, our courses
are not geometry or physics. Our course is setting up a bicycle, it's a three month course and you
start from scratch and you design a bicycle. To design a bicycle you need pi, and pi is 3.1416, but
if I tell you pi is very important you think it's an apple pie. Now if you want to do your own
bicycle the only thing to make a perfect circle so the thing doesn't unbalance is to learn pi. So
we set up these courses, we have chemistry in the kitchen. We found a different way of saying, this
is very interesting stuff. It's just that we've made it so boring, we've divided it into
disciplines and made your life so terrible that you hate it, but you shouldn't hate it. It's
wonderful to know how our life works.

KERRY O'BRIEN: Do you have any respect for a corporate culture, say, an investment bank, a very
successful investment bank, where part of the culture is that everybody's at their desk by 7.00 or
7.30 in the morning and the one who leaves before 7.00 at night is regarded as something of an
aberration, and maybe they do make big profits and they get big bonuses, so why isn't that culture
a symbol of success to you?

RICARDO SEMLER: It's basically a military culture - when you think, what's the difference between
Colin Powell and Jack Welch, are they not interchangeable? Sure they are. In an MBA or somebody
from West Point we talk about military terms all the time. Our business has this strategy, we're
going to outflank them, we're going to fire them; this is the whole rationale.

KERRY O'BRIEN: This is also the age of the MBA, isn't it, that MBAs are seen as a kind of necessary
prerequisite on the road to the top? Again, what respect do you have for that kind of thinking?

RICARDO SEMLER: Very little. I mean, I've stopped now but I've been doing, teaching MBA at MIT and
Harvard, and both places I look at those MBAs and I say, I want you to look at the reading material
here and you're going to find Kafka and Marco Polo and Freud. I don't want to teach you about Peter
Drucker and strategy of this and that. You can pick that up any time you want. The real question
is, how do I keep you at 45 from buying a red sports car and trading in your wife for a 19 year old
model? You know, that's an essence of life that we want to talk about. The rest you can learn, it's
not that difficult.

KERRY O'BRIEN: And what respect do you have for the business culture, the corporate culture that
believes that you have to have a certain amount of fear in the workplace as a motivating force for
your workforce?

RICARDO SEMLER: Which is again the military paradigm. You take a flank of 11,000 Anzac people in
Gallipoli and you say, guys, we figure that it's you 11,000 who need to die, okay, and a guy says,
actually, no, if you were to ask me, and so you say, I'm not going to ask you, and what I'll tell
you is the following. If you do not actually go to Gallipoli I will kill you anyway. The sergeant
has orders to execute you if you try and leave. So then it doesn't really matter that you try and
run against a few bayonets on the other side because you're going to be killed anyway. That kind of
fear in a company says, you show up here, you do your thing, we'll take care of you - which is not
true nowadays, we can't take care of you, we don't know that this job is going to Thailand within
two years - and you do as I say, you'll be all right. And so the whole concept is already flawed at
the very beginning. So I have very little respect for the idea that if I have enough terror people
will do the right thing.

KERRY O'BRIEN: So what happens from here for you, because I know you've got no great respect,
either, for the five year plan? Do you have any idea where you and Semco will be five years from

RICARDO SEMLER: No, and I try not to think about it in the sense that I don't it will always be, I
think people's futures are always based on wishful thinking. You don't really say, I see myself
five years from now in a hospital with a tremendous cancer problem. I don't see people looking at
themselves five years ahead and seeing that if they don't have the antecedents. So, basically,
people are wishful thinking. I will be better, the company will be better, I will be happier, I
will have more kids and so forth. And so it's an exercise, that I think you're not even ready for
life if you actually prepare yourself so far ahead that you are actually forced to follow the path
that you set for yourself instead of just watching and realising you can take a dramatic right turn
and nothing else will happen. I'm coming here from a honeymoon in Samoa. So you never know where
your life is going.

KERRY O'BRIEN: Ricardo Semler, thanks for joining us.


Broome remembers WWII air attack

Broome remembers WWII air attack

Reporter: Kellie Tannock

KERRY O'BRIEN: The bombing of Darwin and the Japanese mini submarine attack on Sydney Harbour in
1942 are well documented episodes in Australia's rare home front experience of war. Not so well
known, though, is the Japanese air raid on the north west pearling town of Broome, just weeks after
the Darwin attack. It's estimated more than 100 people died, mostly Dutch women and children who'd
just fled Java after the fall of Singapore. Sixty-five years on, survivors returned to Broome at
the weekend to commemorate that fateful day. Kelly Tannock reports. Aboriginal and Torres Strait
Islander viewers should be aware it contains images of deceased persons.

MARGARET ROBINSON: It was terrible because they had to pick the mothers and babies up off the

THEO DORMAN, RAID SURVIVOR: These were the shorts I had I wore at the time and in the backside here
you see two bullet holes.

KELLY TANNOCK: In a town now famous for its pearls, resorts and high priced real estate, there is
little to suggest Broome was once the target of a devastating Japanese air attack. But when the
tide is low in the mud of Roebuck Bay, you can still see the rusted relics of the day war came to
Broome. The Dutch flying boat wrecks have been there since the Japanese flying planes fired down
them on March 3, 1942. In a matter of months, Japan had taken Singapore and was advancing south
towards Australia. Darwin had been devastated by Japanese bombers. With Java facing invasion,
allied commanders began evacuating what was then the Dutch East Indies. Over two weeks, 8,000 Dutch
refugees passed through Broome on their way to Perth and Sydney.

SILVANO JUNG, MARITIME ARCHAEOLOGIST: The Japanese wanted to close a sort of aerial escape route
from Java and hence the air raid was ordered on the Broome aerodrome. When the Japanese pilots
arrived here they found 15 large flying boats at anchor and that would have been beyond their
wildest expectations.

KELLY TANNOCK: The flying boats on Roebuck Bay were full of Dutch families who'd left Java the
previous day. They had been waiting to take off. Theo Dorman was six years old, his father killed
in action just off Java just two days earlier.

THEO DORMAN: My mother had brought with her one suitcase but a large box with soldiers and a toy
aeroplane. And suddenly there was a lot of noise and a lot of click, click, click, click of machine
gun bullets hitting the plane and a short while later the plane was on fire.

KELLY TANNOCK: Bleeding from a bullet graze, the young boy escaped but became separated from his
mother when they jumped overboard.

THEO DORMAN: I was taken by the current under the burning wing and it was scorching hot.

KELLY TANNOCK: He was eventually rescued by an American navy barge and reunited with his mother. In
the chaos of the Java evacuations there were no reliable passenger lists and no certainty about how
many were killed. Margaret Robinson is one of the few still living in Broome who experienced the
raid. Her brothers and cousins collected the bodies along the beach and jetty.

MARGARET ROBINSON: They put it on the mass grave on the front beach, they dug a big hole and buried
it there.

KELLY TANNOCK: About 30 bodies were found and have been reinterred in Perth, but dozens more are
thought to have perished in the sea. The flying boats were among 24 allied aircraft lost that day.
Thirty wounded US servicemen died when their Liberator transport was shot down off Cable Beach.
There were many feats of courage that day. Charlie D'Antoine was refuelling the flying boats when
the enemy attacked and his heroic swim through the burning wreckage saved many lives.

CHARLA CLEMENTS, CHARLES D'ANTOINE'S NEPHEW: He didn't see it as a heroic thing. He saw it as
something that anybody else would have done at the same time if they were in the same situation.

KELLY TANNOCK: In the Netherlands, the Kimberley man was proclaimed a hero, although he declined an
invitation to attend a royal reception there. But, in Australia, Charlie D'Antoine's bravery went
unrecognised. Sixty-five years on, the people of Broome and survivors who've long ago returned to
the Netherlands have reunited. Theo Dorman, now a retired lieutenant commander of the Dutch Navy,
returned for the first time to attend the weekend's formal commemorations. But it was his discovery
of a small unlabelled relic at the Broome Museum which transported Theo Dorman instantly to that
steamy morning on a plane in Broome.

THEO DORMAN: This was my little toy soldier that I played with between the blisters of the
Catalina, just before the attacks started. Well, it's of course more or less closing a page but, on
the other hand, yes, having peace with what happened.

KERRY O'BRIEN: Another small but dramatic slice of Australian history. Kelly Tannock with that

That's the program for tonight. We'll be back again tomorrow. Goodnight.