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Lateline Business -

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(generated from captions) They're considered the

barometers of global warming,

displaysier s that shrink as

the temperature rises. In New

Zealand the mighty Tasman

Glacier is disappearing.

Scientists say it's being

consumed by a lake formed from

its own melted water, a lake

that didn't even exist three

decades ago. New Zealand

correspondent, Kerri Ritchie

reports. The Tasman Glacier at

the boot of Mount Cook is an

impressive sight. It's 27

kilometres long and in some

places, 3 kilometres wide.

Scientists say it's shrink ing.

It's off the chart as far as

large-scale activity. The

glacier is 730 metres above sea level, but temperatures have

become too warm to keep it

frozen. In the 1970s there

wasn't any water here. Now

tourists take cruises along a 7

kilometre long lake which is

almost 250 metres deep. The

bigger the lake gets, the

faster the ice will

melt. There's just big areas

we've been having to stay away

from at certain times, yep,

depending on the behaviour of

the glacier. Glaciologists

estimate the Tasman will keep

retreating by around half a

kilometre every year. There's

no real prospect of any kind of

reverse unless there's another

Ice Age. That might be a long

way off. So you're going to

get a continued retreat. It's

small consolation, but

scientists don't believe the

glacier will be lost

completely. They say rocks

around the base will provide a barrier, protecting at least

some of the ice for future

sightseers. People came from

all over Australia today for a

national memorial service

paying tribute to those who

died in the simpging of 'HMAS

Sydney' 66 years ago. At St Andrew's Cathedral in Sydney

the bells tolled 645 times,

once for every man who

perished. Deborah Rice

reports. This was the day when

the 645 men who went down with

'HMAS Sydney' were finally

farewelled. At last we can say

goodbye to him - that's how I

feel. The'Sydney' was

remembered for its outstanding

battle record in the

Mediterranean during the Second

World War before it went down

in a battle with the 'Kormoran'

off the West Australian

coast. But more men were lost

in 'HMAS Sydney' than Australia

lost in the Vietnam War and

more even than she lost in the

terrible Kokoda Track. The

Prime Minister led the

thanksgiving. We remember their

courage, their determination

and their diligence, as they

gave their all to protect us

from oppression. And there was

a prayer for all to rest in

peace. We extend our sympathies

to the families of the German

sailors who lie nearby, gallant

also unto death. One Sydney

crewman who was on shore sick

when the ship went down

believes his mates were with

him in the cathedral today. I

just had the feeling that they

were all there with me and

something was going through me

to say, "Tell 'em we're

here". As the mourners spilled

out, so did their stories.

When stoker Robert Kennedy was

killed he left behind a pregnant girlfriend. His

family didn't even know he had

a daughter, until

now. The'Sydney' tore us all

apart in the beginning and now

it's brought us all back

together. Many who gathered

today spoke of being able to

stop searching. We waited six

years to see if they were POWs

and we waited another 60 years

and it was just a long, long

time, yes. It's like we can

finally put them to rest and

move on. But although the final

resting place of the'Sydney' is

now known, why it went down

with all hands still on board

remains a mystery. It doesn't

bring a closure. I've lost a

brother. A small service has

been held over the site of the

wreck. The Navy plans to take

more family members there in

November to commemorate the

anniversary of its loss.

That's all from us. If you'd

like to look back at tonight's

interview with Stephen Smith or review any of Lateline's

stories or transcripts you can

visit our website. Virginia

Trioli will be with you to

recall night. I'll see you

next week. 'Lateline Business'

with Ali Moore. Thanks, Leigh.

Tonight - Rio rallies the

troops and defends its

Billiton. There is something rejection of BHP

called a preconditional offer

lying on the table which is

subject to a raft of

uncertainities. Production

risks - Caltex says margin

pressure is eating into its

bottom line. If margins were to

drop in the second half of the

year significantly, we would

operate the business to

maximise cash which would be

cutting back on output if we

needed to. And credit squeeze -

is the Australian property

market set for a slump. There

are some segments of the market

that are certainly in a downward spiral at the moment.

Local shares fell by around 1%

as concerns persisted about the

health of the banks and lower

metals prices brought down

resource stocks. The All Ords

lost 53 points, the ASX200

dropped 65. The Nikkei ended

weaker but the Hang Seng bucked

and trend gaining 1.5%. The

FTSE is down nearly 2% and

we'll cross to London shortly.

The chairman of Rio Tinto has

again made it clear BHP

Billiton's takeover approach is

well out of the money. Paul

Skinner has told Rio Tinto's

annual general meeting in

Brisbane he won't negotiate with any party with any party who's proposals

undervalue the company. He

says the big miner will report

strong earnings this year as it

increases production to keep up

with demand from China. Andrew

Robertson reports. As

shareholders of Rio Tinto

arrived at a Brisbane hotel

this morning, they were aware

it could be the company's last

annual general meeting as a

stand-alone entity. Even

though many institutions are

believed to support a merger,

the smaller investors Lateline

Business spoke to, who were

also shareholders of BHP

Billiton are right behind Rio

Tinto's handling of the

takeover approach. I'd like to

see Rio stay separate, I think

for the moment. Their past

record shows how good they are

and whatever they decide will

be the best for us. BHP is

proposing 3.4 of its shares for

every Rio Tinto share, valuing

the bid at about $170 billion.

But Rio Tinto chairman Paul

Skinner says at this point

there's nothing to talk

about. We don't have an offer.

There is something called a

preconditional offer lying on

the table which is subject to a

raft of uncertainities, which

will not necessarily reach a

point of conclusion for quite a

time. While formal negotiations

haven't started yet, both

companies are firing shots at

each other to try to win the

hearts and minds of investors.

In the latest barb BHP Billiton

boss Marius Kloppers has

accused Rio Tinto of missing

the boat in energy because it doesn't produce oil, something

Paul Skinner rejects. The

internal synergy relationship between the two

between the two is not strong,

and certainly from a Rio Tinto

point of view we don't have

aspiration to develop an oil

and gas component of our

portfolio. Chief executive, Tom

Albanese describes Rio's heavy

exposure to aluminium and

uranium instead of oil as an investment in the next

generation of commodities, with

the extra boost of using

hydroelectricity as a power

source for aluminium

production. We do anticipate in

a carbon price world that there

will be an added premium put on

the ability to convert a

kilowatt hour into a pound of a

lun mum and we've got the

technology to doit. Despite a

dip in Rio Tinto's latest

quarterly production record the

resources boom shows no sign of

slowing, but Rio says an urgent threat to its Australian operations is poor

infrastructure in the eastern

States. It's heartened by the

Rudd Government's creation of a

new body called Infrastructure

Australia which includes Rio

Tinto director Sir Rod Edington. Listening to Rod's

perspective, he conveys to us a

very strong determination on the part of the Federal

Government to really get to the

root of some of these

infrastructure challenges in the economic interests of

Australia. Another area of uncertainty, not just for Rio

Tinto but for all miners, is

the impact of a likely

recession in the United States.

Paul Skinner is convinced China

will be a shield, saying a

detailed study commissioned by

Rio Tinto has found surprising

strength in China's domestic

economy. If you look inside the

Chinese economy you find a very

significant component of GDP,

45% thereabouts in investment,

another 30% thereabouts in

consumption. The actual

external trade component within

Chinese GDP on a net basis is

less than 10%. Which if Mr

Skinner is right, is good news

for Rio Tinto's bottom line and

further justification of his

refusal to countenance BHP

Billiton's proposed takeover

bid at the current level.

Wesfarmers says it's had overwhelming support from institutional shareholders for

a $2.5 billion capital raising.

The institutional leg of the

rights issue will raise about

$# 40 million to help pay for

last year's $18 billion

takeover of the Coles Group.

Retail shareholders are

entitled to one new Wesfarmers

share for every eight ordinary

shares they own at a price of

$29. That's a 20% discount on

Wesfarmers last closing price

of $36.37. Wesfarmers' shares

are suspended from trade. Embattled stockbroker Tricom

Equities has won a reprieve. The Australian Stock Exchange

has returned an $8 million

security deposit and lifted

bans it imposed which stopped

the company from trading

warrants and loan securities.

The ASX placed restrictions on

Tricom earlier in the year when

it became the first stockbroker

in more than 30 years to fail

to settle trades on time. The

company is in talks to fiend a

partner to take a 35% stake in

the firm. Tricom managing director Lance Rosenberg has

told Lateline Business, two

banks, one local and one

foreign, are conducting due

diligence. A day after

unveiling its first profit

slide in a decade, ANZ has

raised its standard variable

home loan rate by 0.1%. The

bank says the increase is a

result of the rising cost of

borrowing. At the same time,

the fallout from the subprime

disaster and global credit

squeeze continues to be felt

across the world, with Swiss

bank Credit Suisse announcing

an extra $5.5 billion in

write-downs causing its first

quarterly loss in five years.

For more we're joined from

London by equity strategist

Henk Potts from Bob Carr clas.

The bad news just keeps coming,

just when you think there's

light at the end of the tunnel yet more multi-billion dollar

dollar write-downs? I think

that's right. It certainly was a very disappointing set of

numbers coming through from

Credit Suisse today. First

quarter loss came in at $2.1

billion Swiss francs. The

market was anticipating a loss

of 857 million Swiss francs.

They were suggesting it's going

to be further write-downs

coming through to, say, 5 billion Swiss francs coming

through on the back of that.

It certainly has been a very

difficult time for them. They did, however, say they've

reduced their exposure to

commercial mortgages and to finance leverage which is

certainly seen as good news and

also suggesting its core

business, private banking has

seen good inflow of funds.

Some post office in there as

well along with a disappointing

result. Shares rising a little

bit today. Certainly been a

very poor performer over the

course of the last year, down

42% over the last 12 months.

Slightly better actually than

its cross town neighbour UBS

who's been hit hard with the

credit crunch, their shares

down a massive 54% over the

past 12 months. What about the

entire financial sector? Just

last week some of the big bank bosses were actually being

brave enough to call bottom? I

think it's too early to say

that, we know the authorities

around the world are working

hard to alleviate some of the

problems generated because of

this credit crisis. We know

that during this credit crunch

the banks have become more risk

adverse. Therefore they've

made it harder and more

expensive for businesses and

individuals and financial

institutions to borrow money.

Central banks have been cutting

interest rates and providing

liquidity to the most

distressed parts of the credit

market and there's stimulus packages as well. There's

hopes that with time, those

weapons will start to fight off

the threat of the credit

crunch. Looking away from

financials Starbucks has cut

its profit outlook. If we move

to technology we've got more

positive news from Apple? A

differing picture. Starbucks

shares down 10% after saying

they're going to have to slash

their quarterly and full-year

outlook because of the problems

we've been seeing that

consumers are under pressure

being squeezed in terms of the

amount of money they've got to

spend. Apple are saying,

demand for our makintosh

computers remains strong. IPod

is doing OK, sales up 1%, so

also the I phone as well.

Differing picture there, also

we saw Apple shares fall

slightly. They are up some 70%

over the course of last

year. Talking about doing not

too badly if we look at China

today, China's down something

like 50% from its peak but just today the Government slashed

the tax on share trading and it

shot up 10% in one day. What

are European investors making

of this? Well, I think it's an element of confidence they're

trying to boost back into China

but it doesn't really alleviate

the long-term picture. We

remain pretty positive about

the outlook for China. The

Chinese economy's grown at an

average of 9.8% over the past

five years. Compare that to

the developed nations the

#2k3w7 nations just 2.2%. --

G-7 nations. They have

problems. Inflation is a

massive issue, along with the

fact valautions look relatively

high. It's still all about

having a balanced portfolio

between developed and emerging

markets and beyond in a being diversified between the

different markets as well. You

have to ask the question of how

linked and Chinese stock market

is to the Chinese economy.

Wall Street opens shortly, what

are the futures telling

us? We've got big economic data

coming out later. Durable

goods numbers along with March

new home sales, along with

companies reporting as well.

The likes of Motorola, Ford and

Microsoft coming out. The

futures indicating a weaker

start. We're currently calling

the American markets down 52

points at the open. Henk Potts,

many thanks for talking to us. Pleasure.Pleasure.

The battle for control of

West Australian newspapers is

far from over, despite last

night's shareholder vote which

went against Seven network

boss, Kerry Stokes. The

newspaper group is expected to

cave in to Mr Stokes' demand

for seats on the board. What

form that will take is a major

sticking point. Frances Bell

reports. Kerry Stokes was

defeated yesterday, but he

wasn't about to give up his

involvement with West

Australian newspapers. We

continue to own 20% of WAN and

continue to take an active interest. The existing board's victory was far from

convincing. They won about 60%

of the proxy votes. But institutional shareholders want

the company to agree to Mr Stokes' request for board

representation. The board says

having Mr Stokes himself or

fellow Seven director Peter Gammil as directors would

represent a Conor Smith of

interest. It's expected to ask

Mr Stokes to nominate someone

not directly associated with

Channel 7. One possibility is

the former head of Vodafone who

nominated for a position

yesterday. However, the

chairman has his

reservations. I think anyone

who reports to Peter Gammil or

Kerry Stokes may well be a

problem. But Channel 7 says it won't accept any condition

which excludes Mr Stokes or Mr

Gammil. Analysts believe the

battle is far from over. I don't think it's in either of

their interests to make it

drawn out. They are very

commercial people. They would

have a good understanding of how quickly this needs to be

resolved. The board is expected

to discuss the matter on Monday

and will then set up talks with

Channel 7. The issue is

conflicts and we would like

somebody who can come to the

WAN board without

conflict. Shares in West

Australian newspapers slumped

by more than 30 cents at

today's close. Kerry Stokes

can legally increase his stake

by 3% every six months without

having to launch a takeover bid

and there's an expectation that

buying will begin sooner rather

than later. Australia's only

listed oil refiner Caltex has

warned it may cut production if

refinery margins continue to be

squeezed. Caltex operates two

of the country's seven

refineries and accounts for 30%

of capacity. The company told

shareholders at its AGM today

that first quarter pre-tax

earnings fell 34% because of

weak refining earnings and

lower volumes. The news wasn't taken well by investors, who

sold the stock off 7%. I spoke

with Caltex CEO Des King earlier this evening. Welcome

to Lateline Business. Thank

you. You've warned you'll cut

production if refinery margins

fall below operating costs, how

close are they right now? We're

a long way away from that

point, but we just wanted to

make people realise that we're

certainly prepared to run this business for the long-term and

that means running for

maximising cash. So it would

be, for example, if margins

were to drop in the second half

of the year significantly we

would operate the business to

maximise cash, which would be

cutting back on output if we

worst-case scenario and we needed to. That's just a

certainly hope we don't have to

go there. You say worst-case

scenario, but given the rising

cost of crude and the stronger

Australian dollar, neither of

which show any sign of turning

likely than not to become around, is your scenario more

reality? I don't think it's

likely to become a reality, but

it's important that we have

plans in place should that

eventuate. What's really going

to happen is going to depend on what happens in the United

States. The United States is

the biggest consumers of fuel,

particularly petrol. If their recession becomes extended that

could impact the margins for

petrol. It's really that

refining margin that's

important. We certainly hope

the US slowdown isn't exetended

and they start getting back on

track for growth again. It's

just scenario planning for

us. Let's look at the price of

oil. It's currently nudging US

$120 a barrel, is $200 a barrel

on the cards? Where do you

think it's heading? We wish it

would go lower rather than

higher. We don't know. It's supply and demand. But looking

at how the world's demands for

energy keep going up and up, I

think a $200 oil price is

somewhere in the future. We

don't know how far away it is.

But even though the world is

going into a slower growth this

year, China and India are still

going ahead and a number of

people are saying we're going

to consume over a million

barrels of oil a day. If we

bring it back to Australia and

the price at the petrol pump,

what will that mean, we're

already close to $2 petrol? We

are and if you look at the cost

of crude, petrol today is about

$1.50 on average and the cost

in crude in that is 80 to 85

cents. It is a large component

so it does impact the price at

the pump. Obviously if the

Aussie dollar gets weaker that

will actually drive up that

element of the crude price if

the crude price stays the same.

Hopefully it will soften, but

the long-term trend

unfortunately is for higher

crude oil prices. Can you be

anymore exact than that? What

do you think the price at the

pump will be in, say, three

months' time? It's very hard

for us to project that. It

depend on refinery production

worldwide, US demand - a whole

number of features. But I

think there may be ups and

downs, but long-term

unfortunately I think the price

of petrol is going to keep

climbing. At what point do you

think price will really become

probative for motorists? At

what point do people stop

buying petrol, leave the car at

home, curtail the amount of

time they spend on the

road? We've seen slow growth.

If you look at the demand in

2007, compared to 2006, there

was only 0.8% more petrol consumed in Australia 07

compared to 06. When we look

at the most recent result, first quarter 08 compared to

first quarter 07, it was pretty

flat. People are already not

buying more and, in fact, we're

starting to see the impact of

the higher prices on consumption. Let's return to

the issue of refining. You've

made it clear in the past that

Australia needs a strong

refining industry to ensure

energy security. If you were

to cut production, would that

be the thin edge of the wedge

for the refining

industry? Refining in this

long-term future as long as country can have a good

it's got a level playing field

against the refineries

offshore. But today Australia

imports 25% of all the

petroleum products consumed in

Australia and for diesel

particularly, a third of all

diesel consumed is imported.

So you're right Ali r, we do

need a viable refining industry

for that security of supply.

If we were to trim production a

little bit it wouldn't have a

major impact. The bigger issue

- we've got seven refineries in

Australia, two of which are

owned and operated by Caltex.

If one of the competitive

refineries were to close down,

we'd be importing more . There

is a big issue here. Also the market is growing quite significantly in Australia,

particularly for diesel and jet

fuel. We can easily project by

2030 if two refineries let's

say have closed and everything

we can do to make sure it's not

Caltex, but if two of the seven

refineries are closed by 2030

with the growth in the market, Australia could be importing

70% of all the petroleum

products used in this country.

That's a security of supply

issue that we're certainly

concerned about. How do you

make the Australian refineries more competitive? Two of the

seven are yours, you're up

against the very big Asian refineries? It goes back to

cost efficiency. This is a

very high-volume thin-margin

business. We've got to work

harder and harder to be more

cost efficient. Do you have to

have less refineries? You say

higher volumes, does that mean

more consolidation? We have to

get the best utilisation out of

the refineries we have. For

the fixed costs of running a

refinery, we get our costs per

litre down . We need to make

sure the Government ensures a

level playing field so we don't

have more regulation that adds

to cost compared to some of the

offshore refineries. Given a

level playing field, our refineries can compete the best

they can. What will a carbon

trading scheme do to the

viability of the refining

industry in Australia? So if we look at the refineries in

Australia, let's look at

Caltex, for example. Caltex

emits just under 200 metric

tonnes a year of carbon

dioxide. So let's say a carbon

costs $40 a tonne that's an

extra $80 million operating

cost. I think the Government

is looking at industries like

ours that we wouldn't pay that

cost initially until some of

the offshore refineries in India, for example, had to pay

a similar cost. So there may

be a phase-in for a while on be a phase-in for a while on

that. The other part, though,

of carbon cost is what it does

to the motorist. In the

currently proposed trading

scheme companies like Caltex

would have to go into the

market and buy carbon Credit

Union Australia its and pass it

along to motorists in the cost

of fuel. So, for example, at

$40 a tonne for carbon that

equates to 10 cents a litre.

If we had that scheme motorists

would be paying 10 cents a

litre more for their petrol if

the Government had a trading

scheme that averaged $40 a

tonne. So your view would be

that you have to exclude

refining and exclude fuel? I

think refining should be

excluded until the competitive

refineries offshore have the

same kind of arrangement.

Otherwise I think literally you

will drive more refineries out

of business in Australia, which

is not good for security of

supply. I think for the

motorist, rather than suddenly

jump up the price of their

petrol, we should have other

initiatives, long-term

initiatives to drive fuel

efficiency that will then, as

the fleet turns over, means

that the motorist won't be

paying a lot more money for

carbon for their fuel.

Enjoying the same lifestyle but

with more fuel efficient

vehicles. Des King, many thanks for talking to Lateline Business. Thank you.

Yesterday's high inflation

figures mean little relief is

in sight from higher interest

rates. In its half-yearly

survey the Australian Property

Institute has found a rate rise

could have an impact on the

lower end of the residential

market. Despite the bleak

assessment, some areas of the property market are performing

well. Michael Troy reports.

Rising interest rates may have

slowed the property market, but

buyer interest in some areas

like Sydney's Northern Beaches

remains high. Within the first

week we found that we had three

interested parties, over 46

groups of people through, four

contracts out and a final sale

price of $1.85 million which is

$100,000 more than the vendors

were happening. Cunningham's

Property at Balgowlah says

despite gloomy prediction s

that property prices may drop

as much as 30% if a recession

strikes they've had an

excellent month. The market in

pockets of Sydney is still

quite strong. Real estate agents may, of course, be

talking up the market. Last

week, official figures showed a

6% drop in home loans taken out

by owner occupiers in February.

Investment loans fell by

9.5%. There are some segments

of the market that are

certainly in a downward spiral

at the moment. Every Sitch

months the Australian property

institute surveys fund managers and property

analysts. Something like 90% of

our respondants indicated if

interest rates went above 9% or

significantly above 9%, but 9%

seems to be the threshold, then

there'll be bigger falls than what we've experienced so far. The Real Estate Institute

of Australia agrees and says

the Reserve Bank heedz to look

carefully at the impact of

higher interest rates on

low-income earners. --

needs. It affects the people

that can't afford to pay for

it. It's aimed at slowing the

economy and doing certain

things, but the people who have to pay don't have the ability

to do it anyway. So unfortunately, it just brings

this enormous amount of

pressure onto the wrong people and particularly through their

housing. Other analysts believe

the rate rises so far have just

brought booming markets back to

normal. I don't think it's

going to send the market

backwards, I think it will just

take the rate of price growth

back to a more normal level in

the markets that have been

booming eg, Brisbane, Melbourne

Adelaide, and sort of slow

things down further in Sydney. The Australian Property

Institute survey, though,

reveals despite the expected

slowdown, some areas could benefit. The residential

property market isn't expected

to grow for at least two years.

The commercial sector, though,

is doing well and there are

signs that investors are

returning to the property

market in general. There's a

shortage of supply out there

that's shown up in tight rental

markets. Vacancy rates below

1% in Sydney and Melbourne and

generally around the rest of

the Australia they're in the

order of 1.5% or so. Tight

rental markets bringing tighter increases in rents and basically over the next few

years there's a lot of upward

pressure in terms of prices

because of shortages not a likelihood that there would be

downward pressure. With

inflation still considered too

high, the next six months could

be an interesting time for the

housing market. A look at

tomorrow's thin business diary.

A look at what's making news

in the business sections of

tomorrow's Anzac Day

newspapers. The 'Age' says

SinoSteel is promising to be

transparent in its bid to snare

Midwest. The 'Australian' is

leading in the war of words

between Rio Tinto and BHP

Billiton, and the 'Sydney

Morning Herald''s weekend Focus

is the ANZ and its involvement

in the Opes debacle. As I

leave you, the FTSE is down 60

points and the Dow Futures

indicate the Dow will open in

about 2 minutes time, up 29.

Earlier I said that gold was at

a 3-year low at $957. I should

have, of course, said a 3-week

low. I'll be back on Monday.

Goodnight.