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CC Tonight, new year, old story. Interest rates are on

the up again. I would urge all

banks to be mindful of the impact on Australian

families. Surprise

front-runners in the race to

become American President. We

are one nation, we are one

people and our time for change

has come! Nairobi's nightmare

set to go from bad to worse and

a big show from the little

master in the second test.

Good evening, Joe O'Brien

with ABC News. The interest

rate pain is about to get worse. The National Australia

Bank has announced an increase

of 0.12%, independent of any

Reserve Bank hike. The other

big banks are expected to

follow suit, blaming the US

mortgage crisis. This comes as

many expect another Reserve

Bank move upwards next month.

It's a new year but the same old financial pressures are

troubling the Treasurer. We

take cost of living pressures

very seriously. And the

home-owner. Even without the official nod from the Reserve

Bank, interest rates just keep

on climbing. The NAB put

borrowers on notice during the

election campaign. I utwould

have thought we could do that

in the next month or two. Now

the bank has delivered, raising

variable home loan rates 0.12%

or $20 a month on an average

loan, the reason higher costs

flowing through from the

American mortgage melt-down.

We have been absorbing the

costs for about five months.

This change won't recoup all

the costs. The other three big

banks are watching on. The ANZ

will make a decision next

week. There's no doubt all the banks have been waiting for one

to take the leap. They are commercial decisions but I urge

all banks to be mindful of the

impact on Australian families and businesses of the interest

rate rises. The question now is

can borrowers expect more bad

news next month when the

Reserve Bank board meets

again? We expect the RBA to

raise rates by 25 basis points

at its February meeting. In

some respects it's cleared the

air for the bank. Clear air is

rare in politics and the

climate of raising rates is

Kevin Rudd's problem now. Labor

campaigned with vigour on the

cost of live and that's a point

the Opposition won't easily fOr

get. What's happened since

he's been elected is we've seen petrol prices and interest

rates going occupy and what's

Rudd and Wayne Swan got to say

about it? Nothing. The

parting gift of the previous

Government was elevated

inflation for an extended

period of time. The next big

test will be new inflation

figures due in a few weeks.

Barack Obama has taken his first step towards the White

House and possibly becoming America's first black

President. He's won the opening

Democratic nominating contest

in Iowa, sweeping past former

front-runner Hilary Clinton,

who was relegated to third

place. On the Republican side,

a big turn-out of evangelical

Christians ensured a win for

former Baptist Minister Mike

Huckabee, who overtook the

big-spending Mormon Mitt

Romney. Edwards is going to

stay in the front. To get the

Midwest farmers out in frigid

conditions, the campaigns

provided transport, snow

shovels, baby-sitting and

cookies. Caucus ises are

democratic but bureaucratic.

They divide up in terms of

their candidate and try to convince their neighbours to

change camps. The state-wide

results added up to a strong

and stunning win for Barack

Obama. The young first-term

Senator's promise of change

resonated with younger voters.

Hope is what led me here today.

With a father from Kenya, a

mother from Kansas and a story

that could only happen in the

United States of America. (All

relegated Hilary Clinton to Cheer) John Edwards narrowly

third place. And you have

created and started a wave of

change, a tidal wave of

change. The results a blow to

the candidate once thought

unstoppable but not a knock-out

one. I am so ready for the

rest of this campaign and I am

so ready to lead. We thank you

Mike Huckabee and praise you

Lord Jesus. The Republican

result is more stunning -

Christian Conservatives helped

Mike Huckabee stage a miracle

surge, despite being outspent

more than 10 to 1. Flanked by

Chuck Norris, the former

Arkansas governor promised to

keep fighting. Wherever it

ends, and we know where that's

going to be, it started here in

Iowa. Winning Iowa is important

but not crucial. This is the

longest, earliest and costliest

nomination process in US

history and there's still

plenty of time for

front-runners to fumble and

underdogs to have their day.

The candidates now head to new

Hampshire and Iowa returns to

relative obscurity. Mark Simkin

joins us from Des Moines Iowa.

To what extent can Barack Obama

and Mike Huckabee be seen as

real favourites in the

respective party race s? It's

certainly been an unexpectedly

unconventional candidates. Mike decisive night for two

Huckabee, the former Baptist

Minister who's hardly known to

most Americans, except for the

fact he once lost 50 kilos and

Barack Obama who wants to be

the first black President of

the United States - consider

this, Barack Obama, a black

man, won convincingly in a

State that is 95% white and he

won more women voters than

Hilary Clinton did. From here

though, it's all about money

and momentum. The Clinton camp

is going to be campaigning

neuriously in new Hampshire,

the State that turned Bill

Clinton into the comeback kid.

80% of the people who supported

Mike Huckabee here are

evangelical Christians. They

held a prayer session at his

headquarters hoping for victory

before the vote but they're not

out in big numbers in new

Hampshire. It's still

unpredictable and we won't know

the nominees until super duper

Tuesday when the big states

vote and that's a month

away. What does the Iowa result

say about the way Americans are

feeling? It says that Iowans

at least are unhappy with the

current State of America.

That's eflect ed in the fact

there was a massive increase in

turn-out, particularly among

the Democrats, and also in the

people they voted for. Huckabee and Barack Obama promise and

represent change. They present

ed selves as unconventioned insurgent campaigners,

Washington outsiders and

criticise particularly the

foreign policies of the current administration. As John Edwards

said tonight, tonight was a win

for change, a defeat for the

status quo, but of course in

five days in new Hampshire,

that itself could change. Mark

Simkin in Des Moines Iowa,

thank you. In Kenya, the stage

appears to be set for more

violent confrontations between security forces and dym

strarts. Opposition supporters

have vowled to defy the

Government for the second day

running in the bid to hold a

mass rally in the capital.

Yesterday, troops used tear gas

and water canon to stop

demonstrators reaching the city

centre. They marched on the

city centre, carrying branches,

a symbol of peace. We want

peace. But security forces had

other ideas, firing tear gas at

the crowd.

As the water canons moved in,

the demonstrators ran, their

planned mass protest hosed down

by the authorities. But the

protesters were unbowed, some

offering to die if they had

to. I'm ready to die. They can

even shoot us but we want our

rights. We vote for change, we

didn't vote for corrupt

people. Nairobi's slums became

a battleground. Well done. As

the soldiers fired tear gas to

the taunts of demonstrators.

For some, the violence and

insecurity too much to bear.

(Cries) But in the centre of

the city, not a protester in

sight, the shops closed and the

roads sealed off. The sight of

the cancelled rally placed

under heavy guard. Security is

very tight here in Nairobi. The

city is practically locked

downment I'm standing in the

centre of the city and it's

almost deserted, except for the

military presence. More grief

over the terrifying tribal

violence. Here, women pull a

body from a river as they

search for victims and troops

use a water canon to try to

douse the flames.Opposition

leader ding ding ding went to

the city morgue and made

another claim of genocide.

I've seen so many dead kids,

children. I've seen bodies that

have been decimated by

fire. The man whose job he

wants, the President, has

offered talks but first the

violence has to end. I am

ready to have dialogue with the

concerned parties once the

nation is calm and the

political femptures are lowered

enough. - temperatures. Yet Kenya's temperature remains

dangerously high. In the

capital, two churches were set

on fire as the unrest continued

and with protesters set to face

troops again tonight in

Nairobi, further violence looks

init evitable. Pakistan's

President Pervez Musharraf has

acknowledged there's still

uncertainty over the exact cause of Benazir Bhutto's

death. This comes as new

clearer pictures of the attack

have been released, undermining

the Government's argument she

die dyed after hitting her

head. Here you can see the

lever she supposedly struck

circled but the film seems to

see her ducking straight down

without coming here it. President Musharraf concedes

mistakes have been made in the

conduct of the investigation.

I'm not fully satisfied, yes,

I'll agree, I'll accept that.

If you think about the cleaning

of the area, yes again I am not satisfied. Why did they do

that? It was unnecessary and

shouldn't have been done, but

if you are meaning they did it

by design to hide evidence,

no. President Musharraf also

denied evidence of Government

or military involvement in

Bhutto buts's death. The former

Attorney-General of the Solomon

Islands has been granted bail

after facing court on child sex

charges. Julian Moti will have

to live with his parents and

report daily to police after he

raises bail of $100,000. His

lawyer said the charges were politically motivated and will

be vigorously defend said. Moti was flown back to Australia

last week from the Solomon

Islands, charged under the

child sex tourism counts with

seven counts of indecently

dealing with a girl in Vanuatu

in 1997. His lawyer said the

charges were baseless and had

been dismissed by a Vanuatu

court. He said Moti believed he

was being targeted by the

Australian Government. He told

the court Moti was a vocal

opponent of the Regional

Assistance Mission in the

Solomons and played a role in

expelling Australia's High

Commissioner. The lawyer said

he believed the charges were a

result of underhanded political

intrigue. The prosecutor said

he couldn't explain why it took

Australian officials so many

years to lay charges but

rejected suggestions they were

politically motivated. He

argued Moti had previously

skipped bail in Papua New

Guinea in 2006. The magistrate

set bail at $200,000 and told

Moti me must live at his

parents house and report to

police daily. A woman and her

teenage son have faced court,

charged with murdering a man in

Sydney on New Year's Day. It's

believed 61-year-old John

McCann was attacked with a

tomahawk. The court was told

there was a long history of

violence between the man and

the woman accused of his

murder. She and her 14-year-old

son have been denied bail.

It's believed a 13-year-old

girl was strangled in Sydney's

north-west last night and then

her father killed himself.

Their body bodies were found in

a Pennant Hills hills townhouse

by other family members

returning home from work. I

believe it was a mother and son

who made the discovery. They're

very upset, it's a tragedy. A

young girl, 13, at the beginning of her

life. Detectives spent the day

interviewing the family and neighbours to try to establish

what happened and why. Floods,

fires and fiercem winds -

mother nature and not looking

kindly on the nation at the

moment. Rising waters are

tonight peaking in northern NSW

and heavy surf continues to

batter the coastline. In Darwin

they're on high alert as tropical Cyclone Helen bears

down. In Darwin they're

battening down the hatches and

stocking up supplies as tropical Cyclone Helen approaches. Cyclone Helen is

expected to reach the Top End's

west coast tomorrow morning.

Forecasters say it's not yet

clear if it will hit the

capital but authorities are

worried there will be mayhem if

people panic and try to leave

Darwin at the last minute. They

want people planning to leave

to move now. Heavy surf

continues to bather coast of

southeast Queensland. One young

surfer lost his board. The

16-year-old had to cling to a

shark note net for an hour and

a half before a surf life saver

a came to the rescue. He had

been out for 20 or 30 minutes

trying to search in the big

surf. He was risking his life

to save my life. I wads proud

of that. The low pressure

system whipping up surf in

Queensland has brought rain and

floods to NSW. Several people

have been rescued from glad

flooeded cars, others are

stranded on rural properties.

Floodwaters are expected to

peak tonight. Along the NSW

coast, the forecast is for

fierce swells up to 3m high.

Several Sydney beaches have

already been closed. Most

others are expected to follow

suit this weekend. In Victoria

they're fighting bushfires. A

massive back-burning operation

is under way in Gippsland. In

Perth, firefighters have mopped

up bushfires that destroyed

four homes yesterday. Police

believe at least one of the

blazes was deliberately lit.

Tonight's top story - banks have started raising interest

rates, with the Reserve Bank

expected to lift them again

next month. Still to come,

cricket's man in beige goes

bronze.The Australian army is

supporting moves by the Federal

Government to make the Defence

Force more family friendly. Longer postings and greater

career incentives are being

exampled in a bid to overcome

the shortage of recruits. Today

the army's top brass took the

new recruitment strategy to a

colourful and noisy venue. The

chief of the army knew just

where to begin this year's

recruitment drive. Summernats

is Australia's most

testosterone-fuelled event and

providing an ideal recruiting

ground. We're after people who

are technically oriented. This

is where they come. The new

Federal Government is putting a

high priority on improving the

welfare of defence families.

We are very aware of the

disruptions families have

suffered over the years and the

negatives those dislptions have

been in terms of reception in

some quarters. We need to find

policy, develop policy which

will address those disruptions. The Government is

considering longer postings and

more family health centres

among its incentives. Will it

be enough? The army's probably

a pretty cool thing but living

away from family and friends is

a big problem for people. I

think it would be a lot of

work. I don't think I could

handle the time away from

home. I don't want to leave

the family. A lot of people

say, "Recruit the soldier but

retain the family," and we need

do that. We're taking a lot of

steps. I thinks there more

things we can do. While event

like this provide plenty of

potential recruits, the army

face as tough job of returning

to its peak employment level of

the 1980s.In finance, the Australian share market ended

the week on a positive note,

despite continued nervousness

about the US economy, however

there was more bad news from

the shopping centre owner sent

row after the market closed.

Could this be the eerie calm

before tonight's US job

numbers? Obviously a weak

result will trigger more

recession talk and hurt

equities markets. Today the All

Ordinaries closed almost thren

points higher. The share market

was rescued by the usual mining

sector suspects, companies like

CSL continued to suffer, QBE

has agreed to buy a-Sharon

insurer north point for $160

million and Centro's share

price was up 15% before it issued the classic Friday

afternoon statement, saying

it's unable to extend its

interest rate hedging, that

means it's less protected from

rising interest rates, warning its earnings would be volatile

and announced its Chief

Financial Officer is on

extended leave for health

reasons. The 'Financial Times'

reported these three Australian

banks have become part of the

Chinese Government's investment

portfolio. The Chinese bought

stakes of less than 1% of these

institutions. As you heard, the

National put up variable home

mortgage rates due to the

credit crunch. This graph shows

how bank funding rates have

gone up since the subprime

crisis hit and how they're

beginning to ease. The same

can't be said for the bullion

price which edged close to US

$869 an ounce at one stage. The

Australian dollar is weaker

against the US currency but

still above US 88 cents have. A

good weekend and that's

finance. The great Indian

batsmen Sachin Tendulkar has

dominated day three of the

second Test in Sydney, guiding

India to a 69-run first innings

lead. Brett Lee was the best of

the Australian bowlers. Many at

the SCG would have wished for

two things on day three, good

Australian bowling coupled with

an innings to saver from Sachin

Tendulkar. He and Saurav

Ganguly obliged on the batting

side of the wish list,ing their

way to a century stand,

enjoying an assault on Brad

Hogg. But with Ganguly on 67,

Hogg struck back. Michael

Clarke gave Tendulkar an

anxious moment before, new ball

in hand, Brett Lee delivered

for his skipper and that

wishlist before lunch. And

again after, combining with

Gilchrist to snap up Dhoni and

Kumble to send India plummeting

to 7/345. Even though Tendulkar

was still there, few would have

anticipated what followed as

Harbhajan Singh matched the

batting supremo from Mumbai are

time and finesse. Tendulkar's

38th Test hundred came with a

sense of relief and joy around

the ground, taking his SCG Test

average beyond 300, amid

building frustration, some

Australian fieldsman may have

been less complimentary. A

boundary gave India the lead.

Harbhajan Singh departed for

63. Brett Lee took his fifth

calbut Tendulkar remained

unbeaten on 154. Off field, the International Cricket Council

announced plans to further

embrace technology by trialling

an expansion of the third

umpire referral system during

September's champion's trophy.

Batting and bowling teams have

limited rights of appeal to the

third umpire. We'd like to

trial that. The ICC is

considering allowing umpires to

stand in taste matches in their

home countries. A statue

honouring the former Australian

Test cricket captain Richie

Benaud has been unveiled at the

SCG. Dig inatries and hundreds

of fans gathered for the

ceremony. The statue is the

first in a series of 10, paying tribute to Australian sporting

greats. To be given the honour

of having the first supture

there of a number of cricketers

is something that is deeply

appreciated and it is a great

honour. Three other cricketers

and two players each from rugby

league, rugby union and the AFL

will also have their statues

erected at the SCG. They're

unlikely to be able to make the

same claim as Benaud. His

statue stands on the spot where

he used to park his car.

Tasmania has had a win over NSW

at Bellerive Oval in the

domestic Twenty20 competition.

Lleyton Hewitt is through to the quarterfinals of the Adelaide international after

defeat the Argentinian Jose

Acasuso in straight sets. The

home town hero continued his

Australian Open preparation

with a sharp display against

the world number 65. Jose

Acasuso wads the last person to

defeat Lleyton Hewitt over five

sets, that result coming in

Argentina in a 2006 Davis Cup

tie. While this match was on

Hewitt's home turf, Acasuso was

always going to put up a fight

but Hewitt took the first set

and the Argentine struggled on

serve early in the second. The

South Australian broke the

world number 65 again late in

the set to give himself a

commanding 5-2 lead. Hewitt had

little problem serving out the

match and later admitted it was

nice to get revenge for the

2006 result. A little bit. I

owed him that tonight. It was

good to do it like that too in

front of my home town

crowd. You could have been fOr

given for thinking Serbia were

playing in front of a home

crowd at the Hopman Cup last

night. Despite a pulled muscle,

Jankovic took it up to

Argentine Gisela Dulko. But the world number three didn't last

much longer, the injury forcing

her to withdraw from the

singles to save herself for the

doubles. Novak Djokovic was

there to carry the flag as the

20-year-old took apart Juan

Ignacio Chela 6-2, 6-3. Oh,

yes, a stinging drive down the

line. In the doubles Jankovic

showed she could still play,

even on one leg. However it was

Djokovic who got the serves

over the -- got the Serbs over

the line and into the final

against the United States. I

have a Superman partner who is

playing with me. Jankovic has

been ruled out of tonight's singles match with Venus

Williams, giving the US a 1-0

lead going into the final.

She'll play in the doubles good

Djokovic can win his match. One

of sailing's eldest statesmen

is in Hobart for the annual

dragon class championships. The

Sydneysider is proof amateurs

can compete at the sport's top level. 81-year-old Gordon

Ingate is a fierce competitor.

I only like to win. I like to

hear two guns, one of the guns

at the start and I like to hear

the next gun which is the gun

at the finish. The Australian

sailing identity has raced

yachts for more than 70 years.

He he was selected in three

Olympic Games squads and

competed in the Admiral can's

Cup but he's better gone for

joining Sir Frank Packer on get

in the America's Cup campaign.

We showed the Americans they'd better watch out because it

would be a matter of time

before we won it. Mr Ingate is

disturbed by the huge salaries of professional sailors. In the

19 70s, the amateur crews

competing in the America's Cup

paid their way. He worries

children are joining the sport

for the wrong reasons. When

they hear about how some of the

professional crews are paid,

they're looking towards that.

He personifies what sailing is

about, it's an activity you can

do for your whole life. And

winning is - well, famous

sailor Ted Turner often told me

that win is spelt F-U-N. Gordon

Ingate will compete in the

national dragon championships

beginning on Monday.Let's take

a look at the weather now.

Here's Graham Creed. Thanks,

Joe. It was a sticky if not

somewhat windy day in Sydney

today with temperatures ranging

from 26 to 28 degrees.

Flood warning continues for

the Wilson River.

And flood warning continues

for the Richmond River. Cloud from Cyclone Helen

dominates the north-west of the

country. Cloud over our State

is from the low off the Queensland coast and by

tomorrow morning the low should

be near Byron Bay but it will

be weakening so the winds and

flooding rains should slowly

start to ease overnight tonight

or tomorrow in the northern

areas of the State but the rain

will still be heavy at times,

particularly in the mid north

and north coast and in the

Northern Territory, falls of

200mm or more are expected.

Thanks, Graham. Another look

at tonight's top stories - the

NAB is leading a hike in

interest rates, independent of

the Reserve Bank. An official

rise in rates is expected next

month and the opening rounds of

party nominations have seen

Barack Obama move ahead of

Hilary Clinton as the Democrats

candidate for President. Mike

Huckabee won on the Republican

side. That's ABC News for now.

I'll be back with updates

during the evening. Have a

great weekend. Closed Captions by CSI

CC Tonight on the '7:30

Report', unhappy new year. Fuel

prices up and now one major

bank raise said streets, with

the others expected to --

raises interest rates, with the

others expected to follow

suit. It means we'll be asked

to make continual sacrifices,

tighten the belts again. As

soon as Lisa was born I knew

there was something wrong. When

I picked her up, I felt like

she could just fall through my hands. And one mother's

mission, a 1200km walk to keep

her daughter's legacy alive.

This is just the start.

Welcome to the program. I'm

Heather Ewart. Also tonight, we

cross to Iowa for the day's