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Newsline With Jim Middleton -

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Hello and welcome to Newsline, I'm Jim Middleton. Government's plans for warp Coming up - the Australian

speed broadband under attack

and Irish voters up in arms as

their politicians backflip and

accept an EU financial bailout

after all. The populace just

having to don't understand why they are

having to see the minimum wage cut, why they are seeing services cut across

just don't understand collapsed up to 50%. People

that's happening. They just don't understand why

backlashing against the that's happening. They are

Government because Wall Street's European legacy

later in the Korean peninsula is just one later in the program. The

step away from a war footing after North after North Korean artillery

rained down on a South Korean

island near their

western border. South Korea

returned fire and scrambled Air Force jets in retaliation. It's one of the most grave military exchanges since the end of the

Korean War more than half a

century ago. The shelling

occurred as 70,000 South Korean

troops were beginning an military exercise. Condemned by Pyongyang as simulating an invasion of the North. Gavin

Fang reports. Amateur video shown on South television showed the aftermath of the North Korean From Yeonpyeong island showed of the North Korean attack.

the smoke where. The the smoke where. The news agency said around 200 shells

in all struck the Jap Kell in all struck the Jap Kell o

Sea Island about 120 kilometres west of Seoul. South Korea

returned fire. The two sides

Koreans expressed fears that Koreans hour. In Seoul jittery South further this latest incident could spin think it's highly likely there will be a war with North so I feel more threatened." "I urge the threatened." "I urge

Government to take

measures," this man says. "We've North." International "We've only suffered by the

condemn the governments were quick to

attack. This is a and we've got to be very, very careful about ensuring none of Korea's benefactor something much worse. North

China, also said it was concerned about the TRANSLATION: clash. reports and we are about this and are awaiting

more confirmation. We call every side to take more action

to work towards the stability of the to work towards the peace and

peninsula. But that seems unattainable now as it has any time since the truce that ended fighting in the Korean War

War 6 decades ago. Just days

had a new uranium enrichment facility. That Pyongyang a second way of building a North's political building a nuclear bomb. The

also believed to be Kim Jong-il has been also believed to be unstable.

in October his youngest son Kim Jong-il has been sick and

and all but successor. In March the South

Korean navy ship the 'Cheonan' was sunk near the international was sunk near the border. An international investigation

found the ship had been by a found the ship had been holed by a North Korean torpedo

causing it to break in 2. 46 South Korean sailors were lost at sea. After South Korea vowed to respond in

kind to any more provocations

from a cross the border. They adventurism. Since the any recurance of their military

'Cheonan's sinking South Korea exercises with its allies in

the face of opposition from south has maintained its tough rhetoric. TRANSLATION: We are firmly ready to counteract against any enemy. With pride and front confidence working near the line. South Korea military is now on its highest non-war time alert so that sentiment may put to the test. Dr Leonid alert so that sentiment may be

Petrov lectures in Korean

studies alternate University of

Sydney. Leonid Petrov, welcome

to the

is not a casual mistake, can

you see any particular reason

for with North Korea taught me to be ready is somehow predictable in

whatever it's doing but sometimes it plays up and

sometimes we can't really

have explain what is going on. We

have to really understand the

society, we have to really read

what is going on, not inside the

North Korea but also outside.

And just last week the G20 took

place in Seoul just place in Seoul just south of

the DeMille tarrised zone. There were predictions that North Korea might escalate the situation and the situation and the relationship

with the North and South Korea

at the moment are at the moment are at all-time low, probably since the Korean

War. It's not exactly

unexpected thing what is

not much better than what on right now but it's probably

happened six months ago March this year happened six months ago in

'Cheonan'. Was there something

that happened at the G20 that

might have provoked Pyongyang

or was it the mere fact that

the G20 summit was meeting in

South Korea? G20 was big for South Korea itself because South Korea? G20 was big event

it demonstrated the

disagreement within South

Korean society. We all saw the footages of footages of protestors who met

the visitors with their angry demonstrations. Probably South Korea knew that there were going to be some kind of confrontation taking place confrontation taking place but I'm not sure it

prepared to but I'm not sure it was between North and South Korea

but I'm not sure it was prepared to Korea is trying to do is sending signals and these Korea is trying to do is just

signals are also directed

not homogeneous. South Korean politicians diverge in their attitude towards the current conservative policy of leaning back towards North

know the previous 10 years of so-called sunshine policy which were pursued demonstrated

completely different state of cross the DMZ in their peaceful co-existence and ultimate this is this is visible right now and people in South Korea can sense affairs and they affairs and they attribute it

to the current South to the cur I politics. Sout politics. South Korea insists

that the North Koreans fired first and that first and that they responded, however, a however, a North Korean spokesman insisted that South Korea fired

into North Korea or towards the merely retaliated. This suggestings, I would imagine, that they in any what has occurred, that this stand off can stand off can only get worse? Nobody really knows happens in the disputed waters

of the Sea we can call it. Even with

'Cheonan' incident still the

results of investigations are inconclusive. South Koreans believe that North Koreans attack, Russian attack, Russian report says it was a mere technological incident which resulted in the torpedo to being caught in the fishing net. North Koreans deny any bad enough the North shelling and missile attack actually happened. It actually actually happened. It actually leds us to the conclusion that Pyongyang is going on and it's really in control and this really tragic accident or accident or tragic incident in near near Yeonpyeong island

demonstrates North

ready for the war and this war which actually never

agreement can be moment and North Korea is ready for the continuation of war the Korean people this war of unification is going to be the war of attrition is something

to change their miserable to change their miserable life. For For them, for North Korean

people war is not as bad as their peaceful their peaceful life and they're probably getting manipulated with the Government

regime is trying to consolidate impoverished population around its

its leadership apparently leading to the unification and ultimately

skirmishing around the DeMille trrkised zone but any kind of

conflict may easily escalate

into there any connection

possibility of a connection, do you think, between you think, between this incident and revelation of the existence with something like 2,000 that North even more serious

aspect of its capability? Well

it would be fair enough to link

this mixing signals coming from Pyongyang now there Pyongyang now there was

delegation 10 days ago led by a

former US diplomat who served

under Clinton and Bush

Administration. He was given the impression that North

Koreans were building a Koreans were building a light

water reactor, a peaceful

program. Just one week

when an official from US

Government involved in nuclear

research visiting Pyongyang he was apparently taken to and demonstrated something demonstrated something which he conclude ed was the uranium enrichment facility. He was not

allowed to take any photos, he was quiet until he returned to

the United States and consulted the United States and privately consulted his Government about

the apparent program. We done

really know what was going on

and I don't think there's any hard evidence that hard evidence that what North

Koreans are doing is really uranium

uranium enrichment facility, uranium enrichment facility, if not a plutonium process ing

facility or light water reactor so it's still a mystery what's

going on. But clearly going on. But clearly North Korea is trying to attract existence to its It's trying to send a strong mess toidge the world that it's

not satisfied with the current

state of affairs where the state of war is continuing. The

war may resume any moment and without a really without a really strong peace

treaty and security assurance

given to Pyongyang Government

the situation may get out of control very easily. Leonid Petrov, thank you very much. My


Japan, South Korea and Singapore are some of the lucky countries when Japan, South Korea and Singapore are some of the countries when it comes to broadband broadband speed. But in Australia the politicians Australia the politicians are divided over an divided over an ambitious government plan to similar quality to more than 90% of the population. The National Broadband Network is Australia's

Gillard infrastructure project. The

Gillard Government says it's an

Opposition dismisses it as a white white elephant. From Canberra political editor Catherine

McGrath. 1, 2, 3, push. an ambitious plan

almost all Australians to high-speed broadband. Today right here, in Midway right here, in Midway Point, some of the possibilities that

the National Broadband Network will Opposition says that at $43 there hasn't been enough

scrutiny. There are so many things screaming out for support, public support, public transport, roads, water, roads, water, hospitals, schools, all of these

competing for dollars. Now

the Government has done is said we're scrus going we're scrus going to put all

our financial eggs, your taxes,

into the NBN basket. The NBN is absolutely critical absolutely critical to driving productivity, productivity, to driving

innovation in our economy providing basic services to all

parts of the country at an affordable price, Mr Speaker. This is the type of

cable that's being used within

the NBN roll out. The National Broadband Network is Broadband Network is a resource the Government believes country should have. It country should have. It will give most homes access to broadband speeds 100 megabytes mer and Korea already have and Korea already have speeds of 100 megabytes but those speeds. So Australia will probably be ahead probably be ahead of Japan in the ubiquity of these the ubiquity of these very high speeds the super fast broadband connection comes at a super

high price and that makes it

the most expensive infrastructure project in

Australian history and if it goes ahead it will be goes ahead it will be built over the next 8 years. It involves the

involves the roll out of laser, across the country and Australia's a 7% will be and satellite

services. Although the upfront long-term investment

a good time to be making

current strength of the

Australian economy and this

a good time to be investing a good time to be investing in Australia's future. The Government has build and run the system. Australia's broadband South Korea, Singapore and Sweden and it needs to change. I think it would

pity if the National Broadband Network didn't go ahead. I think it is a very piece of national infrastructure. The latest hold refusal to release the business

plan nor the NBN. Opposition

and cross benchers want to and cross benchers want to see the plan before they vote on

the bill. Prime Minister, have you read the NBN business And if so, why can't everyone else? Obviously the Government is working

is working through its internal processes including cabinet

processes about this matter and I am not intending to I am not intending to comment

on them publicly and if that means that the Opposition is going to scream and shout like

a pack of schoolchildren well I

will allow them to do that because any member of Opposition who served as a cabinet minister cabinet minister understands

what cabinet in confidence means. It's not a question of blocking, it's a question of deferring deferring the legislation.

Obviously I want to try and

deal with this as expeditiously as possible but this is Australia's biggest infrastructure project. infrastructure project. This involves $43 billion, up to $26 billion of taxpayers' and I think it's important that we have all the facts before

us, that the parliament us, that the parliament makes an informed decision. Last week an informed decision. Last week even the OECD about the NBN's reliance on

fibre optic cable saying in a

report that it could forestall the development of as yet unknown superior alternatives. The OECD expressly recommends expressly recommends that competition between technologies be maintained, not

suppressed, as is the plan with the NBN. The OECD the NBN. The OECD also criticises the Government for

its failure to conduct a cost benefit analysis and expressly

recommends that the planning infrastructure be improved infrastructure be improved by independent, rigorous, published cost benefit

analysis. In the last few weeks the OECD report and the OECD report and the ongoing political campaigning of the

Opposition have led to increased questions about the

national broadband network. As

a result it's only now that its a result it's only now that its cost and value are being extensive debated. In the latest development Prime Minister Julia Gillard has

confirmed that the Government

has hired outside consultants

to assess the strengths to assess the strengths andnesses of from Canberra. Irish eyes are definitery not after its Government caved after its Government caved into demands from demands from the European

to agree to a financial rescue are whether the $130 billion bailout

bailout will work and Irish voters will accept Irish voters will accept the austerity measures that go with it. with Italy to follow. with Italy to follow. James Shugg is senior

joining us. Hi, Jim, good to be

here. Is this enough? Will this

get Ireland out of trouble? Will it work for the rest Will it work for the rest of Europe? Look, Europe? Look, Jim, we're pretty pessimistic about pretty pessimistic about that, frankly. The will help provide support for the Irish banking the Irish banking system and the term but look, it's incredibly this is actually having to take place. We've place. We've got a by-election coming up this weekend which Government lose a seat. We suspect that Prime Minister Cowen will actually probably be deposed by his own party. He

was part of the boom, he was the the finance minister when everything was

hot in Ireland. He encouraged a lot of the practices to take place that is now place that is now causing so many problems in the

system. Then there's going be an election Government will probably lose.

Basically the point I'm measures that have to be put in

place by governments to place by governments to secure

this funding. This is the point

we've been making for a long time. We

time. We actually don't think there's any real resolution to this European sovereign debt crisis other than countries, that is governments in to fully repay the debt that they owe to their investors. So does that mean does that mean that you're saying that the Irish have not

got the will to what they have committed to or that there that there are so many doubts that it will simply spread the contagion from one contagion from one country to another political will does seem to be there but the minimum wage cut, why they are

seeing services cut across the board, why their

why it's going to remain in

recession, why housing People have collapsed up to 50%. People just done understand why that's happening. They that's happening. They are backlashing against the

Government because of that. even though governments recognise the budget deficits the simply won't let them. In happening tomorrow in Portugal? There's a general strike protesting against the Portuguese Government's Portuguese Government's budget austerity measures. So to rightly worried about the finances going

it's very likely we're going quickly to Portugal and once border you've even got Spain. to run, I'm bond holders worked out the Greek Greek Government, did them over, now over, now they've done over the Irish,

is next up is Portugal,

Spain, and perhaps even Italy, is that I'm not suggesting it. You can

see it already in the prices. The cost f insuring debt, the debt of the debt of the Portuguese Government has risen phenomenally over the last months. Government bonds those countries are yielding many hundreds of bases higher than German Bunds. A couple of years many hundreds of bases points higher couple of years ago the difference higher than German Bunds. A couple of years difference was just marginal. couple of years ago the difference Investors have been making for

quite some time Investors have been distinction between the security of Germany and the real risks now associated with

lending money to the peripheral

European economies. The issue

is as those - it becomes -

investors become more concerned about lending to these economies, the price these

governments have to pay to fund their budget deficits rises

even further. It

we really are concerned that at

some point probably within some point probably within the next year we're probably next year we're probably going

to have fo see what we call a restructure of

restructure of the debt of some

of those French and Germans are already

making a lot of noises that they want creditors, the investors, the guys that actually lent

actually lent the money to

these governments to actually

wear some of the pain and

that's what's making investors that's what's making investo very nervous because they

recognise that at some future

point they may only get

something like maybe 70 cents

in the dollar back from lent to governments in Europe. Looking outside Europe. Looking outside Europe, for example, when Argentina defaulted on its defaulted on its debt some

years ago there was all sorts

of hell to pay but

of hell to pay but eventually Argentina turned its economy

well. Are you suggesting that's around and is now doing quite

not possible, that will not happen in Europe? Look,

would - we suspect that we are living standards in the periphery take living standards in had an absolute party from had an absolute party from 1999

up until about 2007, 2008, when interest rates, which fell to

when governments took advantage of housing booms and of he revenues asso revenues associated with that to put in place lots of spending, lots of

infrastructure, putting on lots

of public sector that is all gone now. They cannot the comfortable and party lifestyle that many Europeans have experienced over the last decade is gone now and as I

say, we think it will be up say, we think it will be up to

a generation are really on a again because if we again because if we do see that debt restructure talking about in some peripheral peripheral European economies investors are investors are going to be very, very shy and very, very nervous, very, very reticent to governments again. So the living standard going to see for Europeans I greater than we

greater than we saw in

Argentina. Let's take a look at Asia Pacific, during the global financial crisis a couple of years ago, despite the years ago, despite the fact that the institutions

countries and still took a fairly severe, if

brief, hit. Will that

again with this cry sition in -

crisis in Europe? I don't trade finance, the letters of

credit that are used to finance

trade within and into and

of Asia were European banks

trouble. They pulled back

their home markets. Some of them were effectively nationalise was a gaping hole. There was

this lack of why global trade took that

really big hit in late 2008 and early 2009. The good news for Asia now is so much Asia now is so much more of that in Asia is actually Asian banks by banks that Asian banks by banks that are

in much better shape. Our sense

is that even though it's going

the be very serious for the banking system in because the banks are the ones

that are owed much of the money

from the

will have a lot of difficulties

going forward, we don't think they will have the same impact into offer Lehmans in 2008. James

Shugg, good to talk to again. Thank, Jim, very much. And that's all for now. For

program information you can visit our website

You will find a your view on our coverage and you be back at the same

tomorrow with another edition of News dis line. I'm of News dis line. I'm Jim

Middleton, thanks for watching, bye for now. Closed Captions by CSI

This Program is Captioned

Live. Tonight - South Korea

admits to firing missiles before the North Korean attacks.

A national day of mourning

for the hundreds trampled for the hundreds trampled to

death in the Cambodian cap at Phnom Penh. The Phnom Penh. The dramatic moment when disaster struck, a New

Zealand coal mine. The situation for those who

are below ground is bleak and gets bleaker gets bleaker by the hour, by the day. And the day. And battling back, Michael Clarke digs in for an

Ashes fitness test. Live across Australia, this is ABC News 24, is ABC News is ABC News 24, I'm Richard