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(generated from captions) This program is captioned live. Tonight - to the turmoil in Timor. emergency rule, but no end Early learning - sweetener. the Premier's latest Budget

And from life support to full of life - why Sophie's all smiles. her bear - that's Big Ted. So we'd like to give Sophie Thank you. You are most welcome, sweetheart.

Juanita Phillips with ABC News. Good evening. and chaos in the streets - Confusion at the top in East Timor tonight. that's the picture of life and the PM, Mari Alkitiri, The President, Xanana Gusmao, in control of the country. both claim to be Adding to the political turmoil, the United Nations says in refugee camps, 70,000 people are living to their homes. too frightened to return

reports from the capital, Dili. ABC correspondent Geoff Thompson on the ground, While some petty attacks continued to the skies. some fires of revenge sent smoke while others ran free. Some perpetrators were detained, SOLDIER: Is this your house?

Your house? Yes. You're stealing this, yeah? (Speaks local dialect) he says, "They burnt our house already," "so I'm taking this for mine." is calmer, Though the situation in Dili the Australian military believes are being coordinated. some of the attacks the coordination at this stage, We don't know who is doing but we are working to find out. who's running the street But confusion over who's running the country. is nothing compared with working out Last night, emergency measures, President Xanana Gusmao enacted and declared of East Timor's security forces. he was taking sole control

a state of grave crisis. We chose to call this situation Refusing to resign, Mari Alkatiri says East Timor's Prime Minister as the President. he is as much in control a misunderstanding somewhere. I think that is really said it. I don't think the President today Some clarification was offered of the international forces by the commander in East Timor. and the Prime Minister - The President both of 'em - who I have spoken to are working together. It isn't one or the other, those forces jointly. they're actually controlling

that nothing's changed at all - Which means, in effect, made homeless by this crisis. an opinion shared by those

(Speaks local dialect) This woman says in her neighbourhood there are still houses being burnt and she's afraid to go home. If there is security in this city, feeling it. the people here are not yet The United Nations estimates in camps like this around Dili. that 70,000 people are now living the only authorities in East Timor And foreign forces are now that they trust. Geoff Thompson, ABC News, Dili. the Defence Force has decided After the Kovco fiasco, the return of bodies itself. that, in the future, it will handle Officials are now finalising their report

was left behind in Kuwait in April, into why Private Jake Kovco's coffin has ordered the Chief of the Defence Force that from now on,

on military planes all bodies will be brought home or charter flights. that the bodies of ADF personnel Defence will endeavour to make sure on an Australian aircraft. will be repatriated two Australian personnel A minimum of the body at all times. will also travel with Air Chief Marshal Houston says might have to be used in some cases, contractors and commercial flights but only as a last resort. the Government The ACTU has accused being protected of lying about award conditions system. under the new industrial relations The Government's own figures individual contracts from a survey of newly registered show that in every case has been removed. at least one award condition The Prime Minister says the same survey shows most people are getting pay rises in return. tens of millions of dollars The Government spent about the new workplace system - on a campaign to reassure people most still in storage - including 6 million booklets, were protected by law. promising that award conditions of 250 new individual contracts But the ACTU has seized on a survey at least one award condition, which shows all have dropped with most axing penalty rates and annual leave loading.

We have not told one lie at all, to the Australian community it is the Government that has lied and the Australian work force. of distorting the facts, The PM accuses the Opposition of the new contracts arguing that 84%

than the comparable award. have higher wages the dishonest fear campaign. Typical of the fear campaign,

also under pressure But his Government's over a Cowra abattoir case, citing operational reasons where the company sacked workers at lower pay. only to hire them back, The ACTU says by the Office of Workplace Services a report to the Government under the new regime. shows that's allowed should immediately repeal, The Government on the basis of this report, gives businesses this opt out. the section of the laws that The attitude of the Labor Party everybody lose their job - is that it's better that it's better that that occur, of the work force than there be some adjustment to keep the firm going. It was a grouchy day all round.

business, Julia Gillard, Earlier the leader of Opposition caused a stir with this. by cutting off Tony Abbott over there be not further heard. I move that that sniveling grub on another Labor frontbencher He'd used the same language without being thrown out. All of us go too far. and Julia Gillard wasn't so lucky. But the Government used its numbers Craig McMurtrie, ABC News. to have killed off a proposed merger Mark Vaile and John Howard appear of the Queensland Liberal and National parties, but the fallout is spreading. Now Mr Vaile is under pressure from within to shift from Trade, to a less demanding domestic portfolio. Political correspondent Jim Middleton. Lawrence Springborg's grand scheme is dead in the water. But you have to have the support and if the support is not there then you cannot go that way. The proposed merger is not going to be achievable. Barely 72 hours ago, the Queensland Nationals leader and his Liberal counterpart Bob Quinn were convinced they'd win over John Howard and Mark Vaile. We will allay their concerns and be able to move forward. But they seriously underestimated the determination of the PM to quash an idea he regards as divisive folly. The Liberal Party brand in Queensland is the strongest political brand in that state. If the two parties work together in coalition they will get the best result. But that's not the end of it, there's blood on the floor and bodies on the political battlefield. The Nationals Federal President David Russell's been sacked. Mr Quinn and Mr Springborg may yet get the chop. That is a matter for the Queensland parliamentary party. Labor's been leaked a highly damaging Liberal Party document detailing the takeover plans. In Parliament, the Nationals' leader resorted to

one of Sir Joh Bjelke Petersen's favourite sayings as he fended off Labor ridicule. Don't you worry about that. The episode, particularly the fact that the scheme was developed behind his back, has seriously weakened Mr Vaile's standing. Now, he's under pressure from his own party

to switch from the demanding Trade portfolio to a domestic ministry

so he can keep a closer eye on his flock. I'm not going to speculate on that. To try to repair the damage, John Howard decided this evening to hold peace talks with Lawrence Springborg and Bob Quinn on Friday. It's also an open question whether Peter Beattie will call an early election in Queensland to capitalise on the days of division and disarray. Jim Middleton, ABC News, Canberra. It's one of the biggest issues facing families with young children - a critical shortage not just of child care, but preschool places, which prepare their kids for formal education. The State Government announced today it's setting aside $85 million to boost places and keep fees down. But critics say that's not nearly enough. Soaring fees, a lack of places, and a decade of neglect - preschools in NSW are lagging well behind the rest of the country. One angry parent couldn't wait to hear what the Premier was going to do about it. We want some relief now rather than... The rescue package amounts to $85 million over 4 years In the short term, it should stabilise, ah, fees and, over the longer term, enable more affordable preschool to be provided to families and children. Eventually, every 4-year-old will be entitled to 2 days a week of preschool for a year.

That will require the creation of 10,000 extra places with fees to be capped at $15 a day. I should be able to take my son to preschool and not have a financial decision to make - whether it's affordable. As an authority on the sector, professor Tony Vinson agrees.

He welcomes the money, but says the shortfall is as high as $90 million each and every year. I have to say that the amount that's envisaged isn't going to achieve all that we need to achieve. An argument rejected by the Government. This is enough money. That this will do the job. Administrators have watched subsidies slide from 80% to just 20%. People have had other priorities. I think children are generally seen to be low in the pecking order. They don't have a political voice. The issue has the potential to be a vote-changer, with the Opposition promising four times the financial commitment. Parents are losing choice in where they send their children to early education. The Government hopes today's announcement will change that perception. Simon Santow, ABC News, Sydney. It's crunch time for the Cross City Tunnel. The half-price toll period ends next week and the Government is scrambling to do a deal to appease angry motorists. Adding to the pressure - a report from the Auditor-General critical of the way the original deal was negotiated. Almost three months of a half-price toll and still just around 30,000 cars a day are using the tunnel - two-thirds below projections. The Auditor-General says the Government's motives for the tunnel, were good, but: The way the Government went about it was - left something to be desired.

It didn't understand, or consider adequately, the implications of the toll. He says the toll is too expensive for the relatively short trip and drivers have shunned it in protest.

In his report today, the Auditor-General says there was a fundamental flaw in the negotiating process. The Government wasn't trying to get the cheapest toll possible. It could have done that by trading-off a controversial $100 million payment from the contractor. This is, without a doubt, without a doubt, one of the most damning indictments of this Government's incompetence. The Auditor-General also found the Government failed to consider the impact of road closures. The way forward is for negotiations with tunnel operators to resolve some of the issues around the public roads and we're presently doing that as we speak.

The Greens say there'll never be a happy compromise on the toll. It's a failed project. It was ill-conceived model that they came up with. in terms of solving the congestion that is gripping Sydney. The Government and the tunnel operators are in last-minute talks, with the half-price toll due to end next week. The minister won't reveal any of his bargaining chips, including whether one proposal is a toll subsidy. Adrian Raschella, ABC News, Sydney. Drought-hit farmers are worried they'll be sent to the brink in ruin by an increase in bulk water prices. The Independent Pricing and Regulatory Tribunal has recommended price rises of more than 25% in some areas. The tribunal calls it an acceptable increase. The farmers say it's an added burden in tough times. When combined with drought-low commodity prices for our wine grapes, these prices will potentially drive some producers to the wall.

The recommendations are yet to be accepted by the Government. Police in Queensland claim to have smashed one of the country's biggest drug rings in a series of raids across the State's Far North. They seized millions of dollars worth of cannabis along with gold bullion and several hundred thousand dollars in cash. It took more than two years but police believe they've cracked a sophisticated drug syndicate. It has been operating for 10 or more years It has been operating for 10 or more years Police allege the cartel was producing more than 450kg of a potent form of cannabis every year. It was being grown on two North Queensland cattle properties. They've sent members of the syndicate into Holland, Amsterdam, where we'll be alleging high-quality seed was purchased.

The owner of Bulworra Station near Cairns had no idea his property was being used to grow millions of dollars worth of the drug. Access to these properties was only via helicopter and there was no road access to the actual plantation sites. Locals in nearby Chillagoe are shocked by the discovery.

It mightn't be for the right reason but at least people are going to know where Chillagoe is. A cache of gold bars and several hundred thousand dollars in cash were found buried in a mine shaft near Mareeba. Police are also moving to seize other assets including property, helicopters, boats and jewellery. We've taken out restraining orders on properties which are valued in excess of $4 million.

So far, more than 50 people have been charged with drug-related offences and police expect that number will rise. Dea Clark, ABC News.

Tonight's top story - political uncertainty adds to the confusion in East Timor. And still to come - party time for Sophie Delezio. The relief effort in central Java is starting to kick into gear as the death toll from the earthquake gets close to 6,000. Another 20,00 people are seriously injured, and there's a desperate need for international medical assistance. An Australian Red Cross surgical team is leaving for Java tonight, but they're not the first Australians on the ground there. The ABC's Philippa McDonald reports from Yogyakarta. The quake that shattered much of central Java on Saturday flattened at least 30,000 homes. In remote inaccessible villages in the countryside, food is being airlifted to survivors. It's the first they've seen since the quake. Some people who have received aid say it's not enough. This woman only has instant noodles to feed over 30 family members. SIRENS WAIL This is another Indonesian disaster for Australian nurses,

Libby Bowell and Linda O'Brien. They've come from Banda Aceh, making them among the first Australians to help here in central Java. of these people I think seeing the determination

to just get on with their lives and want get back to some form of normality These people people may have lost their homes but they're OK. Others are battling to recover from serious injuries as well. There's been quite a lot of facial injuries and fractures. Because of the humidity, there's also a lot of gangrene setting in. Five days after the quake, the injured are still being brought in anyway they can by anxious relatives. This man says his mother's had no treatment and needs help immediately. By the end of the week, Australian surgeons will have established operating theatres here. But with gangrene setting in, it's going to be hard to save arms and legs. But there's good news for the little baby girl we featured on Monday - her mother has been found alive, but is seriously traumatised by the earthquake. Saturday's disaster destroyed entire neighbourhoods and families,

and it will take a long time for people here to rebuild their lives. It's been another day of widespread violence across Iraq with 50 people reported killed. At least three separate explosions resulted in the bloodiest day for several weeks. The worst took place at a popular market,

30km north of Baghdad. At least 25 people were killed and more than 60 were injured. The Pentagon has conceded that the level of violence in Iraq has reached its worst ever level over the past three months. New figures show the AIDS epidemic appears to be slowing down, although it is still a serious threat. A report released by the United Nations shows AIDS has killed around 1 million people a year since it was recognised in 1981. It says there are still 4 million new infections every year and that young people are increasingly among those affected. Today, AIDS has a woman's face - more than 50% of those being infected are women and young people and this is where we really need to be vigilant and work hard.

The report found HIV rates have dropped in some African countries, but are on the increase in India. To finance now, and share prices tumbled today as both resource stocks and the banks were hit by a wave of selling. Alan Kohler has the details. Well, that rally was short-lived. It was 132 points on the All Ordinaries over 3.5 trading days, recovering a third of what was lost in the May correction. But today almost 100 points was sliced off it - and most of that in five minutes

after the market opened this morning. There was no recovery as the day went on. And that followed a 1.6% fall on Wall Street overnight, which was, in turn, sparked by another rise in the oil price to more than US$72 a barrel. But it wasn't accompanied by gains in metal prices. Copper and nickel both fell sharply. So the scene was set for some carnage on the local market today, and it duly happened. BHP Billiton and Rio Tinto were crunched following reports overnight that Chinese steelmakers had rejected the proposed 19% iron ore price rise. And the smaller resource stocks were sold off as well, led by Oxiana, Excel Coal and Lihir Gold. And the difference with today's market was that the banks were given the same treatment as the resource stocks because brokers JP Morgan and UBS had downgraded the whole sector, saying all the banks were overvalued. Well, they are a bit less overvalued tonight. It's not often you see banks with a dollar sign in front of their falls for the day. Today's other big news is that we have a new and ignominious record - 49 trade deficits in a row, only previously matched in the 49 months from February 1981

when there wasn't a commodities boom. The consolation is that the trade performance improved a bit in April but as the graph shows, it's still dreadful. Last night, by the way, Canada reported another trade surplus. We would have had a surplus too if it wasn't for oil imports, as the red line shows. Foreign exchange traders didn't mind though. The Australian dollar is steady against both the US dollar and the trade-weighted index. And that's finance. Keep Brett Finch or bring back Craig Gower - the halfback debate is heating up ahead of the second State of Origin rugby league clash. Gower missed the first game due to injury

but he's hoping to make his comeback for Penrith on Sunday. New South Wales coach Graham Murray says

he doesn't mind who the selectors choose, as the Blues attempt to wrap up the series in Brisbane. Craig Gower, obviously, is picked for this weekend that I noted, there, but if Brett Finch was picked again I'd be happy with that as well. I know Finchy played well last week but it's a different game so hopefully I'll get the opportunity. Graham Murray predicts Matt Bowen would be replaced by Karmichael Hunt as Queensland fullback, with Darren Lockyer remaining at five-eighth. Lleyton Hewitt has put recent injuries aside to win his first round match at the French Open.

The tournament's 14th seed beat the Czech player Jan Hernych in four sets. Here's Rob Cross. Clay mightn't be Lleyton Hewitt's favourite surface, but he's certainly got the wood over Jan Hernych. For the fourth time in the past 12 months the former world number one had the measure of the Czech. Hewitt missed last year's French Open with a rib problem, and an ankle injury threatened to keep him out of this year's event. LLEYTON HEWITT: Come on! COMMENTATOR: Oh, brilliant stretched volley there from Hewitt. But Hewitt showed no sign of injury worries as he advanced to the second round with a 7-6, 3-6, 6-2, 6-0 win

over the 96th-ranked Hernych. CROWD CHEERS UMPIRE: Game, set, match. Well done, Lleyton Hewitt! The 14th seed is through to the second round. Hewitt is on course for a fourth round meeting with defending champion Rafael Nadal. Samantha Stosur had a disappointing 6-0, 6-3 loss to 19th seed Ana Ivanovic, who Stosur beat at the Australian Open. Fifth seed Andy Roddick was another first round casualty, retiring after losing the first two sets to Spaniard Alberto Martin. Australia's first opponent at the World Cup, Japan, has sent a reminder to the Socceroos how tough their task is going to be. The Japanese led World Cup hosts and one of the tournament favourites, Germany, 2-nil after 65 minutes of their practice match in Leverkusen. Japan's Brazilian coach Zico praised his players creativity and tenacity and their speed unsettled the usually steady Germans. Germany struck two late goals to salvage a draw, but the result was a reality check for the home team, which opens the World Cup in 10 days' time against Costa Rica. Australia's big hurdle in the group stage, Brazil, has been preparing against club sides. Not unexpectedly, it scored 21 goals in its past two matches including this morning's 8-nil drubbing of Swiss team, Lucerne. Brazil's only international warm-up game is against New Zealand on Sunday. Aboriginal art is about to take centre stage in the capital of Western culture. A new museum in the heart of Paris will showcase one of the world's ancient traditions

through the work of a new generation of Indigenous artists. These are the artworks in the prestigious new Paris museum that are soon to be unveiled to the world.

The French have embraced Australian Indigenous art

like no other nation, employing eight distinguished artists to paint the walls, facades and ceilings that will form the gateway to the Musee du Quai Branly, close to the Eiffel Tower. It's major. art commission, that's ever come out of Australia - Indigenous or otherwise. Gulumbu Yunupingu from Arnhem Land was one of those chosen to create artwork. Her response was a constellation of stars that will bring images of the Northern Territory

to the heart of Europe. About the universe, the stars in the Garak, in my language I say, "Garak", up there, universe. Curators Hettie Perkins and Brenda Croft have overseen the project, which they believe will transform the international perception of Australian art. In one master stroke, the Musee du Quai Branly has drawn back the musty covers of antiquated museum practice to reveal the power of an exceptional art movement. The artists have examples of their work displayed in Australia's leading galleries, but the new to be permanently installed in Paris will showcase their talents to the world. 5 million visitors are expected to visit the museum every year. Among the first will be the artists, who are travelling to France for the opening ceremony by French President Chirac on 20 June. Anne Maria Nicholson, ABC News. There were more tears shed for little Sophie Delezio today, but this time it was for all the right reasons. Just a few weeks ago, it looked like she might not survive her latest car accident. Now, Sophie's ready to go home from hospital, but not before a special performance by the stars of ABC's 'Play School'. Just 3.5 weeks ago, Sophie Delezio was on life support. This afternoon, a little grin showed that the horrific accident at a school crossing was a distant memory. (Sings) # Open wide, come inside, it's Play School # It was hard to believe that is same girl whose body was broken twice. Breaks to her ribs, chin and collarbone are mending,

so today she set herself to master some important skills. # Polly put the kettle on, we'll all have tea # Sophie spent eight months in hospital after her first accident, when she suffered burns to 80% of her body. This visit will be much shorter. JUSTINE CLARKE: And in the morning, Miss Polly's dolly was much, much better. Sophie Delezio underwent her 31st operation last week - a skin graft. It went well and she's expected to leave hospital soon. When she gets home, there will be some extra toys. So we'd like to give Sophie her bear - that's Big Ted. Thanks. You are most welcome. Other children did not miss out. She was so excited this morning, "When are they coming? When are they coming?"

Sophie can't wait to get out of hospital so she can spend her pocket money. I've got more money than my Mum. For her parents, there is joy that her spark has returned. You show them your muscles. David Spicer, ABC News, Sydney. Some promising black cloud's hanging around the coast today, but did they deliver the goods? Here's Mike Bailey.

Thanks, Juanita. Good evening. The good came again to the South Coast, but not to Sydney.

The city's had just 40.4mm of rain in May, more than 80 below the average, making it 5 of the past 6 months with below-average figures. Temperatures today were also that way -

2-down on the norm for the coastal range of 9-18 degrees. Tonight a bit below the average. Around NSW -

Rain favouring the SE corner of the State. Rainfall - Good falls further north. In the capital cities today - mostly dry but rain in Adelaide. The satellite picture shows - cloud into NSW likely to produce rain in the far SW of the state.

Rain tomorrow - for Canberra and Melbourne. Around NSW tomorrow -

frost patches on the slopes and ranges. In Sydney tomorrow -

early frost inland and tops of 20 inland. The outlook for Sydney -

rain to return for the weekend. SOI has gone in the opposite and is lowest all year. Juanita. Thanks, Mike. Now before we go, another quick look at tonight's top stories. The mayhem on the streets of Dili is being reflected in East Timor's politics. Both the PM and the President claim to be in control. The PM plans to meet Queensland Liberal and National leaders to mend fences after killing off talk of a merger. And critics say the State Government's plan to spend $85 million on preschools doesn't go far enough. And that's ABC News for this Wednesday. I'm Juanita Phillips. I'll be back with updates during the evening and 'Lateline' is along at 10:35. Goodnight.

Closed Captions produced by Captioning and Subtitling International Pty Ltd This program is captioned live. Welcome to the program. And the situation in East Timor remains confused and tense with periodic fires and gang violence still flaring sporadically through parts of the capital, Dili.

While Australian troops continue to make their presence felt, as many as 70,000 refugees are still homeless, still living a makeshift existence, as authorities and aid agencies struggle to maintain a guaranteed flow of food and water. But within the East Timor Government there is still clearly conflict

over President Xanana Gusmao's declaration last night