Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant the accuracy of closed captions. These are derived automatically from the broadcaster's signal.
Lateline Business -

View in ParlView

(generated from captions) ballot. We are not frientened

about that. Let me ask you this

because you've spent a long time and a lot of effort

putting this the together, have

you polled it? We've done some

research on these propositions. What's it tells

you? There's a very high level

of support for the proposition

that if a majority of employees

want a collective agreement in

a workplace then the employer

should be oblige ed to do it

and the levels of support for the proposition are in the

order of 80% amongst swinging

voters in marginal seats and I

think it is something that we

welcome debate about for that reason, aside from the fact it

is good policy and respects

people's rights. You've only

got to see there's a dispute in

Canberra at the moment on the

Defence Department. I met some

of the workers yesterday. There

is a contract down there who is

taking over a contract for some

of the services for the Defence Department. They're insisting

on AWAs , 10% pay cut and

you'll lose your job unless you

sign it. That's the terms.

That's John Howard's system.

The thing that it takes from

these workers, not only their

living standards, but their

dignity and that's the sort of

thing that has to be changed

when there is change to these

IR laws. I want to go back just

finally you've polled this in

marginal seats. We have,

yeah. You say 80% support? Indeed. Have you

polled the opposite, support

for the Government's

position? We do a lot of

research on these issues and

people do not like individual

contracts and people

increasingly are learning

exactly what they are about.

They're not about employees

freely exercising some choice.

They're about an employer man

play on bargaining and that's

why business will resist our

proposal because they want

exclusive rights. They don't

want to have employees have a say. They don't want unions to

have a say. They want to have

the only say and that's the

system that John Howard is supporting. Greg Combet, we'll

have to leave you there.

Obviously more to discuss, but

we'll have to come back to that

at a future time. Thanks for

joining us. Thank you. The

deputy chairman of Russia's

Central Bank has been shot dead

by two gunmen in Moscow. Police

believe the attack on him was a contract killing and may have

been prompted by his efforts to

clean up the country's banking

system. In recent years he had

withdrawn the licences of

dozens of banks and just last

week demanded tough er

sentences for money laundering.

The Prime Minister and his

Cabinet held a moment's

silence. A quick look at the

weather now - mainly fine in

Brisbane and humid change

developing for Perth and

tomorrow should be fine in the

other capital cities. That's

all for this evening. Tonight's

interview with Greg Combet can

be replayed on our website at and you can

download individual stories or

play back the entire program

from the site which also

contains our archives and

transcripts of most of our major stories. Maxine McKew

will be with you tomorrow

night. Please join her then. It

is over to 'Lateline Business'

with Ali Moore. Thanks, Tony.

Tonight Alcoa's plans for the

large est alumina refinery face

opposition. A vision of the

future from technology leader

Cisco Systems and the rash of

takeover activity in the health

sector. There's a lot of consolidation that is needed in

this industry to match pace

with what the private hospitals

have done.

First to the local markets

and Australia shared in the

global move upward today with

resource stocks in demand once

more, both the All Ords and the

ASX 200 rose by 1%. In Japan t

Nikkei was up 1.25%. Honda and

other export stocks did well.

But Hong Kong was slightly down

on profit taking. In New York,

the Dow of course opened

shortly at last night's close

of 11,543. Well, all eyes are

on some key economic data due

out in the US over the next few

days, starting with retail

sales and import prices, both

of which were released a few

numbers and to see how markets minutes ago. To look at the

are reacting, we are joined by

Tom Hougaard from City Index in

London. Tom, thanks for your

time. Retail sales and import

prices, both have,in slightly

higher than expected. That's

right, but the market hasn't

taken too kindly to it. I think

the big worry here is as the

housing market cools, it is

beginning to show an impact on

the consumers who are leavage

up to the chimney so to speak

and right now we are

unfortunate ly calling the Dow

down about 50 points. The

retail sales came in as

expected and it is including

the auto sales, actually was an

improvement to what economists

had expected but it's still a

mark ed difference to what we

saw last month. We saw 0.6% but

0.2% this time. If the

economists are right we are

begin ing to see colling of

themy and you would expect

stocks like Wal-Mart and other retailer s to suffer as a

result of it. How has the FTSE

reacted? The FTSE reacted as I

looked over my shoulder, from

the point of the numbers being

released declining about 15

points until now. So, it

doesn't look like we're going

to have a particular rosy start

to the Wall Street session. Of

course we all know that

anything can happen once the US

session gets going, but for now

it looks like the US futures

are pointing to a lower

open. More key numbers

tomorrow. CPI out of the

US. That's right. We've got the

CPI which is another key factor in the inflation gauge and I

believe that this is one of their more important numbers

that the Federal will be

looking at and of course we are

all trying to decipher the

Fed's speech and figure out are

we going to see another quarter

base point. From a domestic

point of view in the UK we are

expecting another 285 base

point rate hike and I believe

the economies are suspecting

the same thing in the US, but

the number released tomorrow

will give us more clues as to

what they are thinking. Tom

Hougaard, thank you for

bringing us up-to-date. Thank


Back home and more news of

takeovers today with

Australia's biggest health care

company making a bid for

Primary Healthcare's pathology

business. Prim prime said they

received a proposal from

Symbion but it could take time.

The offer comes as DCA group

says it is considering friendly

reports. takeover offers. Sue Lannin

Australia's health care

companies continue to be eyed

by private equity firms, hungry

to make a profit. The latest

potential target is DCA group,

which owns retirement homes and radiology clinics in Australia,

New Zealand and Britain. The

private equity groups are

looking for further out than

maybe some investors are and

they've realised there is

fundamental value that isn't reflected in the share

price. DCA's share price has

risen on takeover speculation

to $3.15 from $2.21 in early

August t lowest since 2003. We

think it's been fundamentally

undervalued ever since the bad

news came out regarding the

profit down grade from increase

in salaries to radiologists and

the company not winning the

contracts in the UK. Others say

they can't understand why a

private equity firm would be

interested in DCA because it's

run efficiently and there is

little room for improvement.

The potential buyers are

believed to include Pacific

Equity Partners, Macquarie Capital Alliance. Although

they've all refussed to comment

on any deal. Iron Bridge

Capital said they've had talked

with DCA and thinks it's a good

business but highly priced. Pacific Equity Partners

previously owned Guardian

Healthcare in New Zealand which

was brought by DCA and

Macquarie owned Aged Care

Homes. DCA employs around 300 radiologists across Australia

and analysts say the biggest challenge facing any new owners is maintaining their

goodwill. Some of the

radiologists when the DCA

umbrella have been through

several acquisitions in recent

years and another one may be

the icing on the cake. That is

one of the critical risk

factors of any potential suitor

to DCA's radiology business, is keeping the radiologist happy

and on board. While radiology

makes up the majority of DCA's

income it is possible a new

owner will split the company

up. One should think of it more

as a radiology company. Will it

be split up? It is too early to tell, but that's a possibility. The health care

industry is high ly regulated

and dependent on gift funding

but is attract toif the private

sector. If you are ill you need

to see the doctor and see the

radiologist. Those dynamics

make it a good business going

forward. Having said that there

is margin pressure due to government constraints on

spending and higher costs, especially through wages. Industry investors say

while the segment is

fragmented, more consolidation

is likely and with the ageing

of the population retirement

homes are seen as a good

buy. Later the program - we'll

hear more about takeovers in

the health sector from the CEO

of MBF Eric Dodd. Next, to Western Australia where the

government has approved a $1.5

billion expansion of Alcoa's

Wagerup refinery. The expansion

would make Wagerup, south of

Perth, the world's largest alumina refinery and strength

the company's position as the state's biggest industrial

producer. Business groups have

welcomed it as a windfall, but

some local residents are

concerned it will generate more

pollution. Di Bain reports.

The Government has taken more

than six months to approve the

project and the anticipated

backlash has already begun. We

are approving the propose ed

expansion of Alcoa's Wagerup

refinery. Shame on. You Alcoa's Wagerup refinery

first caused concern in the surrounding communities in 1996. Residents began claining

of ill health, blaming strong

emissions from the plant but

the State Government says the

company will have to abid by

more than 40 strict conditions

for the expansion to go

ahead. It can be done. We are

doing it. I'm proud of what we

are doing. One of the

conditions compels Alcoa to buy

the property of landowners who

want to relocate. Former Deputy

Premier Hendy Cowen will

oversee the scheme and says

that landowners have six months

to make up their mines. It is

predominantly focused on four localities, Yarloop, Cookernup,

Wagerup and Hamil. But the

strict environmental conditions

aren't good enough for Alcoa's opponents. It's inevitable that

more people will get sick if

the expansion goes ahead. Alcoa

rejects the claim and says it

has spent $25 million on

feasibility studies which

include environmental

safeguards, says the project

will generate $17 billion in

revenue for the state. It will

add 3,000 direct and indirect

jobs into the region and 1500 jobs during the construction

phase so it will be quit

important economically. Today's

decision may be a win for

Alcoa, but the company faces

spiralling construction costs

and a chronic shortage of

labour. That means cost

blow-outs, which its bird of

directors in the US may be

reluctant to approve. Di Bain

there. To more details on our

markets now and the day's

economic news here at home, I

spoke earlier to Steven Milch

from St George Bank. Steven

Milch, thanks for joining us.

If we start with today's

economic news on housing

starts, they were down in the

second quarter? Yes. Dwelling

commencents fell 2.3% in the

June quarter. It looks like a

weak number on the surface and

indeed the annual number is

still negative, but we have to

remember there was a 9.1%

increase in dwellings being

commenced in the March quarter.

It's only a modest pullback.

Looking forward we know that

building approvals rose

strongly in July and there are

other positive indicators in

the housing markets such as

increased leaning and higher

rentals. So we are confident

we've passed the of the of the

housing cycle. More imneedity

relevance is what the bank of

New Zealand said today and what that has done to our

dollar. Yes, well, certainly as

expected the New Zealand bank

of held rates steady but of

greater interest is what they

attach in the commentary. They

said that inflation is proving

difficult to pull down in New

Zealand and as a result they are not so confident that

they'll be able to get through

without raising rates again.

The market has reacted. They've

pushed up money market yields

in New Zealand and the New

Zealand dollar is trading

around 1.5 cents higher at US $0.66. What's that done to our

dollar? 'S marching to a

different beat. It a esbeenle

affected by commodity prices.

They stabilised last night and

so has our dollar. It's found a

little bit of support, in fact.

Back through US $0.75 currently

trading around 75.50. That

helped the equity market

today? It certainly helps the

mining shares and overall

equity market. We had a good begin polling a good lead in

the US, but for mining shares,

I would still be a little bit

cautious. I think today is a

bit of a relief after some

quite heavy selling in metals

and oil and so forth. So on

balance, we think there's still

further down side in the medium

term for commodity prices and

therefore I'd be a little

cautious still, resource

shares, despite a good

performance today. Steven

Milch, thank for your time. My

pleasure. Top mover on the ASX

today was Vision Systems again.

It rose 11% after American digs

no tick company Syomov launched

a $500 million bid trumping a

rival offer.

One of Australia's largest

private equity health insurers

says it is still keen the but

Medicare Private and pay itself

pursue a public listing as it

tries to expand nationwide. MBF

has revealed its ambitions on

the day it announced a 20%

increase in full year earnings

to $181 million. Eric Dodd is

MBF's chief executive and he

spoke with 'Lateline

Business''s Andrew Robertson.

Rick, how would you

characterise MBF's performance

last year? Andrew, another very

strong year for the company.

The fourth year of record profits across the group. I

think the most pleasing aspect

was that it was delivered from

all parts of the business.

#6 It contributed to that

result and importantly within

the private health insurance

side over half of that profit

came from underwriting. Of

course MBF these days is for

than just a health insurance

company. A lot more, Andrew. We

now have a life insurance

operation, we've started a

wellness movement through our

interlife business and we are really looking to make that

personal protection space very

much a part of our strategy as

we take this company forward. A

point you made a number of

times that your profit

announcement was that health

funds of insurance companies

and they can't just rely on

investment returns any more for

their profits. Well, they have

in the past. There's been an

overreliance, in my view, on

investment returns. Looking at underwriting side of the business is very important for

us and we now put a lot of

emphasis on that and, as I say,

over half of that return came

from the underwriting side of

the business. It is a very

important fiscal measure of how

business is performing. Another

point you made of the profit

announcement is your goal was

to make MBF a truly national

player. That's very important,

too. As you've seen the consolidation within the

private hospital sector. Over

recent years they were more

efficient as a whole. They are

national in their coverage and

their ability to negotiate

effectively on behalf of our

membership needs us to be

operating at a national level.

I think there is a lot of

consolidation that's needed in

this industry to match pace

with what the private hospitals

have done and I think those

within the private hospital

sector really support that as

well. So following on from

that, how disappointing is it

for you that for now at least

you're blocked from buying

Medicare Private? It is

disappointing, but as I said

this morning we respect the Government's position and we'll

move on and look at other

options that we have available

to us to achieve the same end

to really get to that national

presence and broaden out and strength all parts of our

business. So can you expanded

on what the other targets might

be? There are certainly a

number of players within the private health insurance side

that we'd like to I guess

partner with, whether that be

by acquisition, alliance, members of the jurier or

whatever. I think they always

need to be done on a friendly,

if you like, basis to be effective. There are also opportunities outside of the

pure health insurance side that

would allow us to expand

nationally as well. In other

parts of that financial services aspect of our

business. Given your expansion

plans there is a public listing

on the cards to raise capital

to pay for him? That's one of

the options that we certainly

have at our disposal. We had pretty extensive exercise under

way to look at all options.

Clearly, the somebody bank

private opportunity prevented

us from moving down a certain

path or had us I guess

concentrate ing on that

opportunity for a while, but

now that's been shelve ed we

will certainly look vigorously

at all other options that are

available to us. Eric Dodd,

talking to Andrew Robertson.

You may not know too much about

them, but Cisco Systems is a

global leader in producing

network equipment, the switches

and routers that make up the

Internet back bone. Now it is

changing. Instead of just

dealing with the biggest

corporates, it wants to be a

household name with consumers.

Cisco Systems senior Vice President is Howard Charney

whose job it is to sell the

vision and he's made a flying

visit to Sydney coinciding with

the release of statistics

showing there are now more than

3.5 million of Broadband

connections across Australia,

up 67% on 12 months ago. Total

growth in the June quarter was

down on the previous 12 months.

Howard Charney joined me in the

studio late yesterday. Howard

Charney, thanks for talking to

'Lateline Business'. You'

welcome. Cisco is in the

process of re inventing itself

if you like of being a pour

networking supplier, the old

switches and routers. Why the

re invention and what's the

target? The re invention is

necessary because I mean when

all is said and done t network

has become a valuable utility,

but now people are beginning to

value things that sit on top of

the network. The network is

almost taken for granted now.

It is critical infrastructure.

Now we need to re invent

ourselves so the network is,

for example, video capable.

Video, you will see that, tell

fanny, you'll see that,

wireless you, 'll see that. We

are re invent ing it to

something that lives in the

realm of plumbing to something

you are going to see. What

would have Cisco's brand in it?

In my home, the television, the

video? No, not the television

itself, but the television, for

example, is useless without the

signal. It is just a box. In

fact, it's a pretty useless

box. So what we would provide

to you is a window to provide,

say, television content over

the network. Not just over the

airwaves and not just over the

cable, but over the network.

You'd be able to use that box,

say, for your high-speed

Internet access. You'd be able

to use that box, you might use

it today already, for obtaining

telephony servicest. Is that

the future, everything is

around that? It's about turning

the network, the common

platform of the network, into

the universal communications

vehicle. It is kind of

amazing. So how do you do that?

How do you turn from a company

that's traditionally dealt with

the really, really big

companies right down to the

consumer who is looking to have

a single network in their

house. We do it in a number of

ways. One is it's not possible

to have a device that sells for

$10,000 US and for me to

convince you to put it in your

home. We need very in expensive

devices. That's one. Two, we

need a Chan fell of

distribution. So you would

partner, say, with a Telco and

you need also products which

are simpler. The products that

we sell to banks, complicated. The products that you would

sell to a consumer must be

ultimately simplistic. We

talked about the Internet and

the future there, but you're

very well moan for saying that

the Internet revolution is yet

to come. Mmm. What do you mean

in terms of what we haven't

seen that we will have

eventually? So, for example,

you will have video two way,

real-time video, not just

between two people, but perhaps

20 people that is so good that

you will not know that it is

just a machine talking to you.

It will be dolby 5.1 audio. It

will be a visual that is so

good that when I move, it will

appear to me as if, or appear

to you as if my eyes actually

move with me. So a next

generation of video will

replace what you currently

have, which will be really

startling to all of us. So who

will win and who will lose? That's a very good

question. So, it is clear that

the infrastructure will be

purchased to build out this

next generation network. We'd

like to believe that we win

because we are perhaps one of

the I think the largest

prevayior of this type of

technology. Content providers

win and in a new age you have

to have content because what is

the medium worth if it doesn't

deliver anything of value? So

major content providers,

Disney, Sony, these companies

appear to win in the new world.

Service providers, although

it's difficult to know which

service providers. Service

providers win bus they're the connection between the content

and the end consumer. So where

does Australia fit in the whole

spectrum of innovation and

take-up? Are we up in the top,

in the middle, down the

bottom? Australia ranks up

there in the top five of the

most technologically advanced

countries of the world, but the

danger is that it's a fluid

list and so Australia does rank

very high and apparently the

culture is such that the uptake

of technology is very attractive. It's a fluid list,

though, as you say. It is

fluid. Are we doing enough to maintain your position? That's

the issue. I can't answer that

because I just can't. I don't know. But you posed the

question. Yes, I do pose the

question. So let me put it to

you this way: there are

certain priorities you must

have. For example, you must

have Broadband everywhere. It

must be 24 x 7 and always on

and it must be very cheap. If

it is not all of those things,

it is not very good. So that

also guess part and parcel with

the list and I can't give you

the formula for how you achieve

that end, but it is

necessary. If what you say is

right we have a way to go. Howard Charney, thank you for

coming into the studio. You're

very welcome.

Overseas now and at a meeting

in Singapore today the

international International

Monetary Fund cut its economic

growth forecast and raised its

inflation outlook for

Australia. Its half yearly

world economic outlook report was released as the

organisation prepares for its

annual meeting with the World

Bank. Australia's growth

forecast for 2006 has been

trimmed from 3.3 to 3.1%.

Inflation, focused by higher

fuel costs, is expected to

accelerate to 3.5% from 2.6%.

In stark contrast, the IFM

upgraded growth for Asia,

predicting Asian economies ex

including Japan, would expand

by Mr Than 8% this year. #6 to

Thailand and Qantas subsidiary

JetStar is one of the first

airlines to move over to

Bangkok's $4.5 billion airport.

Sit due the start flying out of

the facility alongside Thai

Airways top. Over the next two

weeks other airlines are

change to Suwannapoom airport expected to finally make the

after years of delays, but

there are still plenty of

sceptics who won't believe it

until they see it. The ABC's south East Asia correspondent Karen Percy reports on her

visit to the airport this woke.

At the moment, the only traffic

moving through Suwannapoom

airport includes tour groups,

VIPs and journalists and of

course the army of builders who

are putting the finishing

touches on the facility. But

that is all due to change. Net

star will join Thai Airways

here as of tomorrow andor the

next two weeks, there will be a

gradual increase in activity as

the shift into the new airport

takes shape. When it opens

officially, the operators, the

airports of Thailand Company,

boast it will be one of the

largest airports in the world

at more than 560,000 square

metres. It will be the second

busiest airport in the region

after Tokyo, dealing with 76

flights an hour. There will be

a heavy emphasis on retail

andn't takenment facilities and

the company says security will

be the most up-to-date in the

world. To poe tect the airline

and the passengers we have 26

scanners machines, which is the

best quality in the world at

the moment and we have more

than any airport in the world. But Suwannapoom has

taken six years to build and

the opening has had to be

delayed several times. The question everybody of course

wants to know, given the delays

to now, is the airport going to

open on 28th September? Certainly. The only

word I say is "certainly". We

are ready for 2 #th. The

Airports of tie & Company is

bet ing on major growth at this

facility and is currently

designed to take 45 million

passengers a year, but with at

least half of the world's

population, including the

growing markets of China and

India all within a 5-hour

flight of Bangkok, the

operators have expansion plans

to deal with 120 million

passenger as year within two

decades. Karen Percy reporting

from Bangkok. As we heard

earlier in the program, the

Australian dollar has fallge to

a 6-month low against the New

Zealand dollar. The currency

rose against the greenback. The

prison of gold has improved. It

is up more than $4 at around US

$594 an ounce. Fresh talks

about sanctions against Iran

and speculative buying pushed

up the price of oil. It is

trading around US $64.50 a

barrel. A look at tomorrow's

business diary. Union tab

shareholders will vote on the

members of the jurier of

Tatyoon. The HIA renovation

monitor for the union quarter

is due. Before we go, a look at

what is making new miss the

business sections of tomorrow's

newspapers. The 'Age' looks at

the IFM's concerns about

inflation and the implications

for Australia. 'The Australian'

warns that Macquarie Bank may

miss its target for floating

assets out of its balance

sheet, which will disappoint investors. The 'Australian

Financial Review' reports on a

tax break for foreign

executives and in the 'Sydney

Morning Herald' Macquarie Bank

chairman David Clarke rails

against the financial

regulator. That's all for

tonight. As I leave you, the

FTSE is up 16 points. I'll be

back on Monday with all of the

day's business news and issues,

but join Maxine McKew tomorrow

night for a full business wrap

on Lateline. If you want to

review any part of tonight's

program, you can visit our

website at:

We'd also love to get your

feedback. Our email address is:

Captions produced by I'm Ali Moore. Goodnight.

Captioning and Subtitling