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This program is captioned live. Tonight - draws scorn from the States. the new Federalism formula

against Gaza militants. Israel launches more strikes a schoolboy turned superstar. And getting a kick out of He's the best soccer player.

Juanita Phillips with ABC News. Good evening. to centralise more power in Canberra The Federal Treasurer's idea

from the States. has met with flat rejection the Federal Government Peter Costello says

of the economy. should take complete control And that's prompted accusations and trying to bash the States. that he's being arrogant to the Solomon Islands, The Treasurer's jetted off but Peter Costello's call financial control for the states to hand over to the Commonwealth, and regulatory authority, including taxes has left premiers fuming.

Peter Costello can't be serious, his future leadership ambition - this is really about

to do with Australia. it's got nothing to be the PM of Australia. This is all about positioning a sort of arrogant thought bubble What you hear from Costello is as he boards the plane for Honiara. agrees there's a problem. Though the Shadow Treasurer does desperately require This country reform of Federal-State relations of Federal-State relations and you don't get genuine reform

by starting a cat fight. former premier, So does a long-serving though Bob Carr says Peter Costello's plan's a joke appoint state governments. and Canberra might as well in Australia is not working, The Federal model as practiced by cooperation. you'll only change it The PM isn't about to say publicly really aimed at the leadership. if it's all has said today RADIO ANNOUNCER: Malcolm McKerris

before the next election? that you'll resign from the top job (Bemused) Oh, yes. the Costello vision. But he isn't exactly embracing have to understand about this Um, I think what we who does things is that people don't really care as long as they get done. Alexander Downer, Though another senior Liberal, is on board. Well, I think he's right. an ongoing debate John Howard says it needs to be have faded. and old states rights passions But if anything, the Treasurer's comments the hackles of premiers, have only served to raise

Federal, State and Territory leaders ahead of the next gathering of scheduled for Friday week. Craig McMurtrie, ABC News. It's fast becoming a war of words law and order policies. over the State's the Director of Public Prosecutions Yesterday, on both sides, criticised politicians

as "looney tunes". describing their policies and the Opposition hit back - Today, the Government is "out of touch". both of them say Nicholas Cowdery His audience may have been teachers, directed at the State's politicians, but Nicholas Cowdery's words were and their focus on law and order. increasing penalties deters crime People who tell you that are talking through their hats.

It doesn't. with a personal attack. Today, the Opposition responded on law enforcement. He's been weak of weak attitudes He's adopted a whole range of criminals in this state. towards the prosecution Mr Cowdery either. The Government didn't spare

on his job - And I'd like him to concentrate and securing convictions, prosecuting criminals

about someone else's job. not lecturing promising to take on The Shadow Attorney-General's

of the Prosecutor some of the workload win government. should the Coalition by the courts are inadequate, Where the sentences imposed appeals are lodged. we will make sure has failed to reflect And he says the DPP from its justice system. what the community expects to community attitudes. He is insensitive the community viewpoint. He does not to seek to implement is equally damning. The Police Minister

he's appointed for life. He lives in glorious isolation - views that are way off the rails From time to time, he expresses

compared to public opinion. it's not about being weak, Late today, Mr Cowdery said it's about being right or wrong, always clear-cut. and he says public opinion isn't from some criminologists. And the DPP has received support into police, We're putting lots of money

into new prisons, we're putting lots of money responsibility for - and yet, the area that he's got and prosecutions - that is, the courts reasonable for some time, they haven't seen anything

in terms of resourcing.

extra money spent Mark Finlay would like to see on proven programmes from returning to crime. that discourage former prisoners Simon Santow, ABC News, Sydney. an Israeli soldier The militants holding for Israel to meet their demands. have set a new 24-hour deadline

in Israel released They want Palestinian prisoners do if the deadline isn't met. and they haven't said what they'll of complying. But Israel is showing no sign its military campaign in Gaza. Instead, it's intensified Matt Brown reports. Middle East correspondent northern Gaza overnight. The Israeli tanks rolled into invaded the Palestinian territory It's the second time Israel has in a week. The Israeli military says for explosive devices the troops were looking with Israel. and tunnels dug under the border In northern Gaza, a building being used by the al-Aqsa Martyrs Brigade - Mahmoud Abbas's Fatah faction - an armed offshoot of President was hit in an air strike.

to store weapons. Israel says the building was used by the al-Aqsa Martyrs Brigade Another building used

was also hit in the overnight raids. the release of its soldier, Israel remains committed to securing captured by Palestinian militants last weekend. And hopes for a peaceful resolution to this crisis are fading fast. All attempts to look for a political solution was rejected completely by the Hamas, its leadership. At this funeral for a Hamas man killed in an air strike on the weekend, the militants insist the Israeli soldier must not be handed over until 1,000 Palestinians held by Israel are also set free. The militants holding the soldier have now given Israel just 24 hours to comply. This is a prisoner of war - it's not a kidnapped soldier.

You have to end this suffering. You have to end this war. We know, we get bored of this bloodshed. The Palestinian cemetery near the border with Israel - reserved for the bodies of martyrs - is expanding fast. To Israel, the man being buried here today was a terrorist. To these men, he's another reason never to give in and never to give back the Israeli soldier until their prisoners are free. Matt Brown, ABC News, Gaza.

The East Timorese Government has convened for the first time in a month. The council of ministers has to get the country back on its feet after weeks of violence and political turmoil.

With no decision on a prime minister to replace Mari Alkatiri, the former foreign minister Jose Ramos-Horta is filling in. Foreign affairs editor Peter Cave reports from Dili. Calm has returned to Dili for the time being and, for the first time since the current crisis began in April, all parties are working together to try to sort out the mess. The ministers arrived by car at the building where the violence first began in April. They included Ana Pessoa, Fretilin's first choice as interim prime minister. But it's her former husband, Jose Ramos-Horta, who's expected to get the job if the President can convince Fretilin to accept the compromise. I leave it to the President who is in consultation with the political parties, with Fretilin - but I am optimisitic that some time this week he will agree on a prime minister.

Under the chairmanship of Mr Ramos-Horta, the ministers are expected to sort out the problems of providing a cash flow to pay for fuel to run power, water and health services, and to get the public service running again. They will also concentrate on looking after 150,000 displaced people, and getting them back to their homes if those homes are still standing. Former prime minister Mari Alkatiri also arrived at the Government palace today,

but he was not invited to join the meeting. East Timor's Parliament has been asked by the Prosecutor-General to remove Dr Alkatiri's immunity, so he can be interrogated about his role in sparking the current crisis and in forming and arming a private militia to terrorise his political opponents.

Fretilin members of parliament have moved instead to try to sideline the Prosecutor-General's office in any investigation of recent events in East Timor. Peter Cave, ABC News, Dili. An inquest has started in Queensland into the Childers backpackers fire, which killed 15 people in 2000. The inquest will determine whether anyone else should face criminal charges over the deaths. Six years ago, a fatal fire took just minutes to rip through the Palace Backpackers Hostel, killing 15 young travellers. Robert Paul Long is serving a life sentence for the murders. Today, an inquest began to determine why no fire alarms went off and exit doors were blocked and if someone should be held accountable. Detective Sergeant Robert Campbell told the inquest how the bodies of three backpackers were found below a window that had fixed bars across it and couldn't be opened. It's very shocking. You saw the interactive. It's a very tragic event. The backpackers weren't even warned of the fire because smoke alarms had been switched off

because they had been malfunctioning. The inquest heard

how the hostel's operators had been trying to get the alarms fixed just days before the tragedy.

Another exit door in the same room where 9 of the 15 backpackers died

was also blocked by a bunk bed. The inquest was told that even though the fire alarms weren't working and bars were fixed across windows, it wasn't in breach of any laws at the time. None of the victims' families attended today's hearing

and there was very little interest from the local community. It's a fairly low-key approach from them today, as you can see. There's only one or two members of the community in the gallery.

So I think after six years, the locals have already had a lot of closure. 20 witnesses are expected to be called over the next week. Bridget Smith, ABC News, Childers. A funeral was held in Perth today for the 8-year-girl murdered last week in a suburban shopping centre. Hundreds of people attended the funeral of Sofia Rodriguez-Urrutia-Shu held at her local Catholic church. Mourners were told the little girl will be remembered as a kind and caring child with a contagious smile. Classes were cancelled so students from her school could attend. Many laid flowers outside the chapel in memory of their class-mate. Sofia was well-known and respected by her friends and teachers. She was always gentle, polite, respectful of everyone. The emotion of the service

proved too much for some young mourners who fainted and were carried out of the church. The coffin passed out of the church grounds through an honour guard of students. Tasmania's Anti-Discrimination Tribunal is being asked to overturn the ban that prevents gay men from giving blood. Michael Cain, from Launceston, was rejected as a blood donor in 2004 because, in the previous 12 months, he'd had sex with another man. Mr Cain challenged the Red Cross Blood Bank's policy and the Tasmanian Anti-Discrimination Commissioner has agreed there is a case to answer. I'm really excited that we're actually getting somewhere with this. The Anti-Discrimination Tribunal will hear the case later this year. Currently, the Red Cross doesn't ask if you have safe sex or not. It simply assumes if you're straight, your safe, and if you're gay, you're not,

and that's the policy that we want changed. In the past, the Red Cross has said the policy isn't aimed at sexual preference, but is the best way to ensure the safety of the blood supply. Australian doctors have turned to an unusual weapon to fight age-related blindness. They're getting some great results from a drug that's normally used to treat cancer. Rhoda Grundy has macular degeneration. She sought treatment in a new clinical trial at the Lions Eye Institute in Perth. Under a local anaesthetic, doctors injected a small amount of a cancer drug called Avastin directly into her eye. About twice in a lifetime of working in a field, you get a miracle drug and this is what this looks like because of the stunningly improved results we are seeing in what was previously an untreatable disease. The macular is the part of the retina used to focus on small objects. In macular degeneration,

leaking blood vessels under the retina create scar tissue, which blocks vision. Doctors say they are having excellent results using the bowel cancer drug. This new drug which blocks growth factor for blood vessels and stops leakage from blood vessels has proven to be quite the most extraordinary thing in, I'd say, 20 years in our field.

They have trialed it on 100 patients and most have had some improvement in their vision, including Rhoda Grundy. If you are not seeing and then all of a sudden you can see, it's lovely. Possible side effects of the drug include a risk of high blood pressure and stroke. But so far, no patients have shown any ill effects. The therapy is also being trialed to help patients with eye complications due to diabetes. Sophie Scott, ABC News. A Sydney financier has been jailed for 16 months for torturing and killing rabbits and a guinea pig. Brendan Francis McMahon bought the animals from a number of pet shops and then disposed of the bodies in and around his office in Sydney's CBD. Lawyers for the 37-year-old argued that he was suffering from psychosis, brought on by his severe drug habit. But the magistrate today rejected that defence,

describing the case as one of the worst examples of aggravated animal cruelty.

Well, hopefully it sends a strong signal that this behaviour is not to be tolerated and no excuse will be accepted - if you do the crime you can expect to be punished. The magistrate set a non-parole period of 12 months. Tonight's top story - the states have angrily rejected Peter Costello's vision

of a new federalism.

And still to come - a celebration of those dream holidays on Sydney's waterways. Was he a murderer or a martyr? -

a century on the debate over Breaker Morant is still going on. Two new monuments have been unveiled in South Africa commemorating the Boers allegedly killed by the Anglo-Australian soldier. As Africa correspondent Zoe Daniel reports, the ceremonies have reopened old wounds and old arguments. In the footsteps of Breaker Morant, relatives of Australian soldiers and South Africans killed follow their family heritage, yet they have different views on the course of history. What we see is a group of professional soldiers, lieutenants

who, shall I say, the wheels came off and they committed crimes that was beneath their dignity. Breaker Morant fought in the Boer War early last century. Today he lies in a Pretoria war cemetery, but back then, he and Peter Handcock fought in the largely Australian company, the Bushveldt Carabineers. The story of their execution was immortalised in a 1970s film.

MOVIE FOOTAGE: We caught them and we shot them under Rule 303!

Morant and Handcock were accused of murdering a missionary, the Reverend Daniel Heese, because he saw them kill a group of civilians. Les Perrett had a great uncle who was killed in the Boer War

and he is one of a group of Australians who are trying to better understand the conflict and the Breaker. Morant, of course, as you know, in some schools of thought was plainly a murderer. I don't see it in that light. I think there were just as many incidents of murders on both sides over the period. One, two, three - up. There are two memorials to the alleged victims of Breaker Morant and his men being unveiled in this area. For the families, they will help keep memories alive, but it's also likely that they will fuel debate about Breaker Morant and whether he was truly a war criminal or just a scapegoat. Zoe Daniel, ABC News, Limpopo. The Reserve Bank board meets this week to consider interest rates. Today, there was some new information released, which may come into play when they make their decision. Here's Phillip Lasker. And now a few words about Australia's major obsessions - property, shopping and sport. Building approvals rose 3.3% in May largely due to a strong pick up in apartments. So, is the worst over for the building sector on the east coast? It's a little too early to tell because interest rates only went up in May and it will take longer for approvals to be affected. Retail sales fell in the same month after a strong April. It was the first fall in eight months. People may have bought less food, but they continued to buy household goods. In other words, TVs and home theatre equipment. It's been described as the football World Cup boost. None of this is likely to influence the Reserve Bank's interest rate deliberations, but for the record,

most fortunetellers expect the bank to keep rates where they are for this month, at least. Interest rates don't seem to be weighing on investors, with the share market beginning the week 16 points higher. The latest retail sales data did not help department stores like David Jones. Telstra also slipped back as Finance Minister Nick Minchin said T3 was looking less likely this year. Oil refiner Caltex lifted its profit forecast by 14%. And tug boat operator Adsteam jumped to a 7-year high

after accepting a takeover offer from a Danish oil and shipping group. Key metals were firmer with copper making a comeback. Overseas markets started the week on a positive note as well. And the Australian dollar is up against the greenback. It will buy US$0.744. And that's finance. The battle for a mental edge is under way in Melbourne as the Queensland and New South Wales sides

focus their attention on Wednesday night's State of Origin decider. With the sell-out crowd expected to be neutral, both captains have looked to the past for inspiration. Darren Lockyer has played in Origin deciders before but admits this match is something special. They're all very big, but I just think, the fact Queensland hasn't won a series

for...this is the fourth year running and me being in charge and captain of the team, it's probably the biggest Origin game I've played to date. The Maroons were spurred on by emotion and home crowd support when they dominated Game 2, but Melbourne is neutral territory and the Blues are claiming their stake. Queensland try to say they've got the mortgage on passion but over the last few years, NSW are getting right up there and we're very passionate about wearing that blue jersey. Both captains vow their teams have the mental edge.

It won't be a problem with emotion. You've got 80 minutes to win the series.

This is a big game in the scheme of the Origin history for Queensland. Far from being fearful of rugby league's showcase being played in the AFL's heartland, Mick Malthouse wants more Origin football in Melbourne. If the NRL are going to make this game work, they've got to keep doing the work down here, it can't just be one off. When asked for a tip at a NSW luncheon this afternoon, Malthouse knew which side his bread was buttered on.

Well, who do you reckon I'm going to go for? LAUGHTER You might think all Victorians are dumb, but let me tell you, I am sticking with the Blues. Both states will complete their preparations when they train at Docklands tomorrow. Matt Brown, ABC News, Melbourne. Australian cyclist Robbie McEwen has been narrowly beaten

in the opening stage of the Tour de France. McEwen was edged out by the Frenchman, Jimmy Casper,

who outsprinted the more fancied competitors to record his first-stage victory. The 184-kilometre opening stage and back into Strasbourg took in a loop out of in the Alsace region into Germany. and with a short incursion yellow-jersey earner, Drama followed the prologue Norwegian Thor Hushovd. A spectator interfered with him the bunch sprint. as he jostled to join from wounds He was left with blood pouring as the finish unfolded. Jimmy Casper, I think! COMMENTATOR: A win for 33-year-old Robbie McEwen Frenchman Jimmy Casper finished just behind evergreen German rival, Erik Zabel. and just ahead of his will wear the yellow jersey American George Hincapie second stage. into tonight's 228-kilometre

the interfering spectator The type of hand sign carried by has been banned from use the remaining stages. during the final kilometres of Formula One Grand Prix, At the United States a first-lap crash 10 cars were involved in which had Nick Heidfeld's BMW four times. flipping through the gravel overcame the disruption best Ferrari's Michael Schumacher his 87th career victory. to steer his way to

Fernando Alonso's championship lead The German has closed Renault driver

to 19 points, with eight races remaining. the British Moto Grand Prix Spain's Dani Pedrosa has won Nicky Hayden's world title lead. to reduce his Honda team-mate Valentino Rossi finished second, Seven-time world champion

Max Melandri was third, Australian Casey Stoner, fourth. and American Patty Hurst And Sweden's Annika Sorenstam to decide the US Women's Golf Open. will play off over 18 holes CROWD EXCLAIMS LOUDLY She thought she had it, Roger. How'd it miss!? the final round tied at even par. Sorenstam and Hurst finished John Hayes Bell, ABC News. resigned as England soccer captain An emotional David Beckham has after almost six years in the job. to make the announcement Beckham had hoped

in the World Cup. after leading England to victory to his reign, But far from a fairy-tale finish quarterfinal loss to Portugal he had to watch his team's from the injury bench. I have lived the dream, to have worn the armband I have... I am extremely proud and been captain of England I will always be grateful. and, for that, has often overshadowed a career Beckham's celebrity status

with its share of ups and downs. with free kicks, Renowned for his ability the ire of fans. the 31-year-old also earned after being sent off Beckham was vilified at the 1998 World Cup. during England's defeat of three unsuccessful Cup campaigns He's been a member for the national team. and wants to keep playing to his Sydney roots today, Socceroos star Tim Cahill returned to a hero's welcome. students at his alma mater - The midfielder wanted to meet Bexley North Primary - and pass on a few tips.

We want Tim! (All chant) We want Tim! could keep them away. Not even school holidays turned out in their hundreds. Pupils past and present

(All scream) almost two hours signing autographs The Australian midfielder spent and chatting with fans. for aspiring athletes. And he had this advice You know, the dream can come true. just like you guys and you girls - I'm just a normal boy, if you really put your mind to it. you can play any sport you want then returned to the oval The World Cup double-goalscorer he played on as a child. (Crowd Oohs) some of that Socceroos' magic It was a chance to show off for the students. and the chance of a lifetime a superstar like that Yeah, it's really good having come to our school. a good soccer player - Because he's such, like, and everything. he's like really good with tricks his tricks and stuff. Like, I just want to copy And he's the best soccer player. there was a need for security. And just like in Germany, you know, that's understandable - They're all a bit wound up, but, here - they've got a hometown superstar so, nah, they've been great. in the World Cup It's just as good as playing turned up, because, um, a lot of people have I can't be here longer for them. and, you know, it's just sad that and to the country and to the team. He's such a credit to his family, to come here - For him to give us his time it's just brilliant. will spend the next two weeks The 26-year-old midfielder in Australia of Everton. before returning to his English club Sydney. Liv Casben, ABC News, Norwegian boat builder 80 years ago, a pioneering

very much Australian. started a tradition that became has been marked with an exhibition And now the story of the Halvorsens

at the National Maritime Museum. It's a bygone era, is still afloat. but the dream, for the lucky few, is worth - And no matter what 'Ku-ring-gai' say about $1.5 million - David Ritchie isn't selling. might be up to our children. No, not in my lifetime... say $1.8 million - Go a bit higher - 'Silver Cloud II' either. and Tony Mackay isn't selling Many a boatie would say

they're the classiest pleasure boats Australia has ever produced, or ever will. will never be again - A boat like this the tradespeople have gone, there's no-one that can build it, that's gone. it's something in life When Lars Halvorsen brought his young family to Australia 80 years ago, than a tool chest he was armed with not much more business. to set up his boat-building He brought his children into it too, to the gunwales, and though they were Norwegian quintessentially Australian. what they built became since the Halvorsens built boats, It's been a long while among Lars's children - but Trygve - at 86, the youngster of the exhibition. thinks his dad would approve He'd be most proud. He was a wonderful tradesman. were built for use in Australia - All up, about 1,000 Halvorsens that's down to about 200 now. So, to go for a ride on one is just a bit of a treat. We found a couple of hundred of them, particularly in Perth - we were surprised, 29 large boats in Perth. No official records were kept, but tying the knot on board was common. Boating is romantic. The exhibition, after all these years, is a bit like a honeymoon. Geoff Sims, ABC News. The weather now and winter's off to a biting start, Mike? You could say global warming's giving us a miss, Juanita. Good evening,

and official figures show this winter's shaping as the coldest in years. The average minimum across the State last month was just 2.87 degrees - the second lowest on record for June. Sydney's coastal average minimum was 8.7 degrees -

And, the city's average maximum of 17 was the lowest since 1989. That combination produced the coldest opening to winter since 1982, but snowfalls on the Southern Alps have remained patchy. Temperatures today went from 9 to 19 degrees - a top that's 2 above average. Similar figures were recorded around the region.

Pressure is rising. In the north it was -6 at Glen Innes. Rain was the big talking point.

Jervis Bay was the wettest place in NSW last month. Less than 1mm of rain in Perth. Off the NSW coast, a trough has been active.

There'll be a bit more rain as winds continue. Inland NSW should return to dry. Scattered showers about the coast, becoming isolated. Frost about the ranges. Sydney - a few showers and partly cloudy tomorrow. Further outlook - showers will clear and it will become fine, early shower on Friday. Thanks, Mike. Now, before we go, another quick look at tonight's top stories - the states have ruled out a proposal by Peter Costello for the Commonwealth to take full control of the economy. The State Government and Opposition have dismissed criticisms of their law-and-order policies

by the State's top prosecutor, Nicholas Cowdery. And Israel has stepped up its offensive in Gaza, while Palestinian militants who kidnapped an Israeli soldier have set a new deadline for their demands to be met. And that's ABC News for this Monday. I'm Juanita Phillips. I'll be back with updates during the evening and 'Lateline' is along just after 10:30. Good night. Closed Captions produced by Captioning and Subtitling International Pty Ltd

This program is captioned live. Welcome to the program. And tonight - another challenge to the Government's controversial WorkChoice laws.

The case of a young soccer international trying to kickstart a career in the coal industry, who found herself out in the cold because she wouldn't sign an individual contract that allowed her boss to fine her $200 if she took a day off sick

without at least 12 hours' prior warning. Prime Minister John Howard recently labelled opposition to his AWAs as a "dagger at the throat" of the country's resource sector.