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Lateline Business -

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(generated from captions) at the title if they can have

some savings and have them in

the Stock Exchange. The Stock

Exchanges are always reserve

fooder the wealthy. Through

it but you've super funds now everyone is in

it but you've got to let them

in it. I'm talking about the

Labor Party. Is it a daft of

-- The Labor Party does its

best on these issues. You know,

to get something like super

through, you've got to crash

through a lot of barriers. It's

a hard re - reform is a very

hard business and it is not for pole-driven parties. The pole-driven parties. The

trouble about the Liberal Party

today and the Labor Party they

are focused and poll-driven. I

never was. I never was. Look at

the things that are around.

Look, we've had 15 years of

growth, low inflation, super.

These things came out of a

vision of the place being

better. Paul Keating, we're out

of time, I am afraid. We'll

you for coming have to leave it there. Thank

you for coming in to talk to us

on Lateline. I enjoyed it,

thank you.

criticised the US government British Cabinet minister has

for putting detainees in

Guantanamo Bay beyond the reach

of the law. The lord Chancellor was speaking to a group of

judges in Sydney tonight when

he described the use of the

prison camp as involved "shocking". Guantanamo Bay

involved the United States of

America seeking to put a group

of detainees beyond the reach

of the law and therefore, in

our view, it is contrary to

basic democratic values. We've

expressed the view privately to

the United States of America

that's the position. We've also

sought and obtained the return

of UK nationals from Guantanamo

Bay. He was also asked about

stripped of his detainee David Hicks who was

stripped of his British

citizenship by the Blair

Hicks was the responsibility of Government. Mr Fawkner said Mr

the Australian Government.

A quick look at the weather

now -

That's all from us this

evening. Tonight's interview

with Paul Keating can be

replayed on our website and you

can also download individual

stories or play back the entire

program from the site which

also contains our archives and

transcripts. For now, it is

over to 'Lateline Business'

with Ali Moore. Thanks, Tony.

Tonight , consumer confidence

bounces back from a 5-year low.

A disturbing rise in home

repossessions and Gerry Harvey

talks about profits, the economy, Coles Myer and whether

he's ever had a takeover offer. Would anyone bid for Would anyone bid for you? Are you expecting an

offer? No. Ever had an offer? Yes. Recently? No. If I had, I would say no.

To the markets and local

stocks bounce back as top miner

BHP Billiton recovered some of

the ground lost in the last

rose 40 couple of days. The All Ords

rose 40 points and the bench

mark ASX 200 also ended a 4-day

fall. In Japan, the Nikkei

edged up on buying of block

chip stocks. Renewed interest

in blue-chips and

commodity-based shares pushed

the Hong Kong market higher.

The Dow Jones opened at

11,498ment for a look at what's been happening in London trade

tonight I talked to Philip International a Lawlor from Nomura

International a short time ago.

Philip Lawlor, thanks for

joining us. The London market

is a bit choppy this morning,

lead from Wall despite the pretty positive

Street. Certainly, yes. We had

a good start to the day, but

we've seen it start to drip

away really on the back again

of prolonged weakness in the

oil stocks primarily Shell, but

oils are taking their toll on

the market again. At the same time investors are bowing

time investors are bowing

retailers? Yes. Again, we are

seeing some reasonably positive

news flea coming through. Next,

a big retailer in the UK,

announced surprisingly good

earnings today and we are

seeing a good bounce in the

stock. We are seeing positive

signs from the labour market as

well. So people here think

consumption demand will stay

quit robust. At the same time

do you expect most of the day

to be weak? I think as we saw to be weak? I think as we saw

yesterday, lots will be driven now by what happens with Wall

Street and what happens in Wall

Street will be determined by

the news flea in terms of

corporate earnings. We are into

the third-quarter announcement

season. The big numbers are

Goldman Sachs yesterday announcing surprisingly good

numbers and there is a lot of

focus on whether Lehmann will

match that. We are into the

period now with markets where period now with markets where

we will os late between each

bit of corporate news as it

comes through. What's the

pre-market saying for New York

tonight? Again, the futures

were just talking about it,

nudging down a smidgen, but not

substantially and if we have

two or three good bits of news,

in terms of corporate earnings

that will more than swamp it.

We had a good day yesterday so

it is not surprising to see them nudge down at the start. Indeed. What's start. Indeed. What's the

expectation on the corporate

earnings? Largely

optimistic? Yeah. At the moment

consensus numbers are still in

- we think markets are very

determined, driven by 12-month

forward looking numbers. At a

global level there has been no

change. We are looking for

roughly 12% earnings growth or

agogation is looking for agogation is looking for 12%

earnings growth and has had

little change. So the

third-quarter numbers, people

have dm opinioned down a bit.

With the Goldmans, the name of

the game is dam opinioning down

and coming in a cent or two above expectations. That's what

the market is showing, it is

receptive to that. A result

coming in slightly above

expectations. We know all about

that in Australia. Philip Lawlor, thank you for talking

to us. My pleasure.

Australia's love affair with

new technology has helped

retail er Harvey Norman lift

full-year earnings by 20% to

$230 million. The result today

coincided with the release of

figures showing a big bounce

back in consumer sentiment,

which has Harvey Norman

confident the good times will continue.

continue. Andy Robinson

reports. When Tim Cahill was

scoring for the Socceroos in

Germany he was kicking goals

for Harvey Norman as

Australians spent up big to watch the World Cup at

home. The top-line im pact was

actually on a solid bed or base

of what is an excellent

cornerstone of our electrical

business and cornerstone of the

growth of the company. The World

World Cup inspired surge in

sales of audio visual equipment, helping Harvey

Norman lift revenue by 16% to

$2.3 billion with all three

divisions of the company

posting strong results. Property was the best

performer, lifting profit

before tax by 42%. The

retailing division was up 27%

with profit from franchising

dragging the chain with a 7%

increase to $250 increase to $250 million. A key

reason for the apparent

weakness in franchising was

Harvey Norman's financial

assistance to their franchise

holders to help fend off strong

competition from other

retailers. We are just going to

stand and deliver. If anyone

wants to come in and take our

territory or have a go at our

territory and we will do what

ever is required to at least

maintain our position. And that

was good news for retail

analysts who give analysts who give the up thises

up to Harvey Norman's performance. Very strong

result, certainly a head of our

expectations. We were looking

for a number around $21 9

million profit so 20% growth to

$22 9 million is a pretty good

result in anyone's terms. The

market agreed with the

assessment with Harvey Norman

shares adding more than 1% on

the back of it good result.

However, fellow retailer Just

Group which also relies Group which also relies on

discretionary spending, paid

the penalty for missing

analysts' expectations. Its shares were down more than

2.5%. Despite the fact that the

clothing group's full-year

earnings were up to $57 million

which depart ing head was

pleased with. Sales a tad under

$700 million, up 10.3%. All

figures being a record for the

company and enabling us company and enabling us to

announce a fully franked final

dividend of 8.5 pence her

share. That pring brings it up. Companies like Just Group

and rm Harvey Norman will be

buoyed by the latest consumer

sentnt figures. 12.5% bounce

back, the biggest jump in five

years after the interest rate

inspired fall in August. Shock from the from the higher interest rate

rise on the consumer wasn't as

great as we first thought. What

we have known is the consumer

is linked to petrol prices and

if we think they will be easing

back over the next few months,

that's a good-news story for

the domestic businesses here. That means that retail should remain strong in the

months ahead. I'll be speak ing

to Gerry Harvey later in the

program. Also reporting today was West was West Australian winemaker

Evans & Tate which declared a

loss of $64 million. It's the

second year in a row the

struggling winemaker has

recorded a loss, leaving

investors without a dividend.

But, the company says a new

structure is beginning to work.

According to managing director

Martin Johnson Evans & Tate is

scaling back its operations to

focus on premium wine. It is

taking us back to our roots. taking us back to our roots.

That's whateverive as a brand

was built on - premium quality

and the premium segments of the

wine market. That's where

Evans & Tate has always been.

Just in the last few years it

had moved into the high volume,

lower priced business in the

east and we've moved away from

that now. Meanwhile,

Queensland-based mine er Macarthur Coal

Macarthur Coal posted a record

annual net profit of $149.6

million, an increase of $133 - 133 bears on last year's

result. Ken Talbot warned that

net profit for the current year

is likely to be significantly

lower, due to reduced revenue

and higher mining costs. Well,

to look at how the local market

reacted to all of today's

profit and economic news, I spoke to Tony spoke to Tony Morriss at the

ANZ. Tony Morriss, thanks for

talking to us. Not as strong as

you might have taughten of our market today given Wall

Street's performance? It was up

reasonably strongly, marly the

technology sector. The SNP was

up and it was match ed by us in

this time zone. It probably

isn't as strong considering the positive numbers we had today

and considering the miners were

starting to recover. I suppose,

on the back on the back of consumer

sentiment rye, people might be

looking at the possibility of a

rate rise later this year. That

might have held the market

back. Is there still worries on

the commodity front,

though? We've had a big

shake-up from oil and gold

prices. They are down 20% from

their highs over a couple of

months ago. Several factors

going on there. I think there's

a lot of people feeling perhaps

we've seen the best overall in

terms of our commodity terms of our commodity price

gains in recent years. I view

this more as a constructive

shakeout and there has been

some evidence of bargain hunting today, moving into some

of the miners. There is still a

little bit of dubious feeling

about the market. It's only a

very - seeps like a limited

recovery back above the 5,000

level for the ASX 200. Given

the commodity concern and also

of course those very strong

consumer confidence numbers today, what is this meaning for today, what is this meaning for the dollar? There's lots of

factors going on with our

dollar. I think it's definite

ly the case the dollar has

weakened in line with the moves

on oil and gold. We are seen as

a commodity currency although

there is limited implications

in the longer term about that.

We had a failure last week to

get above 77 cents on the

dollar. The major thing driving

it down at the moment is the US

dollar is stronger a head of

the G 7 meeting this weekend in the G 7 meeting this weekend in

Singapore. If the US dollar is

strong e, that is on our

Australian dollar and finally

we have seen quite a few fleas

selling Aussie dollar against

New Zealand dollar. It's a

very, very volatile cross and

people seem to be preferring

the New Zealand dollar at the

moment. That's been weighing

on the Aussie. Tony Morriss,

thanks for your time. To the

major market movers now and

Coles Myer was up again,

hitting a new record of $14.40. Talk continued of Talk continued of a new

takeover offer. It is something

that Gerry Harvey has a bit of

to say about when we talk to

him shortly. Brambles, after

the chairman told shareholders

the company expected solid cash generation. Vision Systems rose

over 5% to a 5-year high after

saying it was in talks about a

potential merger with a women's

health care company in the US.

Woodside Petroleum, which has

price, been slipping with the oil

price, went up on the back of

gold gold, complaining its

rating from a hold to a buy.

One of the few losers today was

the Just Group, which as you

heard earlier, fell 2.5% after

its full-year earnings were

below expectations. In other

business news the Australian

Securities and Investment

Commission has banned Sydney

businessman Jim Byrnes, once an

maining corporations for adviser to Alan Bond, from

maining corporations for five

years. More Byrnes was involved

with four failed companies

which included auction houses

that dealt in antiques and fine

art, property development and

construction. The four

companies were wound up owing

more than $6 million. Unsecure

creditors get back less than 50

cents in the dollar. ASIC said

that Mr Byrnes management

demonstrated incompetence, lack

of commercial morality and disregard for disregard for his statutory

doubts as a director. Back to

Harvey Norman now and company chairman Gerry Harvey says

despite some weak spots, the Australian economy is strong

and on the day of his annual

results, he still found time to

talk act private e quity bids

for his competitors and own

business. I spoke to Gerry

Harvey earlier this evening. Thanks for talking to 'Lateline

like sales Business'. Thank you. Like for

like sales up 7% but, as you

said with the results, Fran

chie es experienced difficult

trading conditions and tough

margins. Is that continuing?

The current year? Yeah. In

certain places. Like in Western

Australia at the moment we are

experiencing a boom that's

unbelievable. The same thing is

happening in North Queensland.

But the rest of Australia is

not pvernling like that. So, when you put all when you put all of our

business into one, it's

performing quite well. But, in

July and August we've got a lot

of our stores battling to get

last year's sales in NSW and

Victoria and all of those

places. But not in Western Australia. North Queensland,

way up there. It's very, very

strong there. Now, with petrol

prices just dropping at the

moment, I'm thinking we'll have a very

a very good August, July,

September quarter. If you look

at it from where you stand

today, as you said, you're

hoping for a better September

with lower petrols, but for the

full year double-digit profits

again. I don't know about

profits, but in turnover from

July to December this year, it

does look as if we'll have a

growth of about 10-15%. What

does that mean for does that mean for profits? Generally it

follows. And for the full

year? There's no reason to believe that that won't

continue, but I don't know what

will happen in January 2007

onwards, but there's no reason

to believe it won't be

fine. You've talked about your

experience in different states,

but overall, what's your

reading of the economy? It is

exceptionally strong. I don't

believe it's ever been anything believe it's ever been anything

like as strong as it is right

now in Western Australia and

North Queensland. You look at

the figures there and you say,

wooh, it is just unbelievable.

But, in the rest of Australia,

you haven't got that strength,

but it is still strong. It's

still strong we're still very

strong. Do you see that overall

strength in the economy

continuing? Is it

sustainable? Uhm, yes. In a sustainable? Uhm, yes. In a way

because we're in Ireland and

Europe and Asia and New Zealand

and here and we look at all of

those economies and the GDP in

each one and all of the other economic indicators and that

sort of thing, it is pretty

good everywhere. We are heading

for another interest rate

rise? If you had asked me last

week or something like that

with petrol prices tending

upwards I would have said maybe

not and looking at some of our not and looking at some of our

sales figures, because I think

we're a great indicator. We've

Australia and New Zealand. If got a shop in every town in

something is happening we see

it I think before anyone. I

would have said there's a fair

chance there won't be, locking

at petrol prices coming down

right now and the fact that tax

cuts gave back more money than

we took in are rate increases

and that sort of thing, I think

it's more likely there will be

one than not now. In one than not now. In November? Some time before

Christmas. If petrol prices do

continue to come off and we get

another rate rise, what will

that do to the economy? No, no,

it will be a slight softening.

That won't have any effect

virtually in Western Australia and North Queensland. It won't

have too much of an effect on

the 33.3% of people who own

their own homes. It won't have

too much of an effect of 33.3% of people who rent. of people who rent. It will

have an effect on the 33.3% of

people struggling with

mortgages. When you put the

mixture together a quarter of a

per cent rise and another

doesn't just stop

thoughts before about the things. You've shared your

running of Coles Myer. Has the

bird done the right thing by

rejecting that private equity

offer? Coles Myer shares were

$4, 5, 6 arrest $4, 5, 6 arrest z they've run

the company a lot better in the

last few years so now their

shares are 8, 9, 10 and

suddenly there is a takeoff and

they are 12, 14, 15. Maybe they

should be $20 if the company is

being run extremely well. Do

you think they've done the

right thing? I'm not privy to

their latest plans and whether

they are going to actually get

a $20 share price in 3 or 4 a $20 share price in 3 or 4

years. If they are and they are

so sure they are, then they are

doing the right thing rejecting

it. If they don't get that $20

share price in the next three,

four, five years they've

certainly done the wrong thing.

They should sell right now. Is

it a case of not if but when

Coles Myer is sold or is it inevitable? Sit probably

inevitable. It is probably

inevitable the Woolworths will

be sold, too. Why is it be sold, too. Why is it

inevitable? I just think it is

inevitable because if you look

at most public companies over a

period of years, they morph and

get taken over and go broke.

You look at all the top 100, 20

years ago and I don't know what

the answer is, but of the top

100, is there 10 or 20 there 100, is there 10 or 20 there

and wool worth also be today? You say both Coles Myer

sold? Sooner or later,

yes. What about Harvey Norman?

Would anyone bid for you? Are you expecting an offer? No. Ever had an offer? Yes. Recently? No. If I

had, I'd say no. Would it be

your right to say no? That's a

good question. And the answer is?

is? We better not go there,

OK. But how recently was the

offer? Oh, that's good, isn't

it, because there was no

offer. You were made an offer,

but it was some time ago. No, I

didn't say - I intimated that

we might have been made an

offer somewhere in the past

whether it was one year ago or

21 years ago, I won't say. Do

you think you'd be a you think you'd be a target? Uhm, maybe, but in -

there would be a lot of targets

before us. Gerry Harvey, thank

you very for your time. Thank

you.

Gerry Harvey also told me

that if Coles mier is sold, he

could be interested in the

Officeworks chain. One area of the economy where some people

are hurting is housing, the are hurting is housing, the

boom for some is turning into a

bust. Court figures show a

sharp rise in home

repossessions in Sydney and

Melbourne. 'Lateline Business'

has an advance copy of a report

to be released tomorrow that

shows the ACT is also feeling

the squeeze. And it raises

questions about the business

practices of some home lenders.

Stephen Long reports.

Canberra is a rich city, but even

even the aflounce ACT is

feeling the pain of record debt

and rising rates. A new study

has found a 40% increase in

court actions by lenders to re

possess homes between 2004 and

2005. This year, it's worse. In

2006 we're already up on those

figures and it looks like we're

set to top the record-breaking

figure from last year in 2006. And 2006. And that won't surprise

the credit rating

agencies. Arrears on housing

loans have increased by about

50% over the past two years. We

are finding now that there's

been an increase if borrowers

that are in more severe

arrears, so where there are at

lest 90 days if arrears or the

equivalent of three paints in

arrears. They say lenders are arrears. They say lenders are acting faster to obtain

judgments and execute them N

the main, it's not the big

banks. What our report found

was that over 68% of actions

that were taken from 2002 to

2005 were taken by non bank

lenders, also known as non

conforming lenders. That is

despite the fact that what we

know about market share is it

is much smaller than other is much smaller than other

types of lenders being banks,

credit unions and building

societies. They are a big part

of the problem. You'd expect

the arrears and defaults on the

loans to be higher and that's

what we are experiencing. They

are currently running at twice

the level of your standard

housing loan. Manufacture o the

clients I've seen in my service

that come for help when facing

repossession actions actually

end up with these end up with these no dock or

low dock loan products and many

things said in the applications

to obtain those loans for them

are false and misleading and

the information is put in there

by finance brokers, un

scrupulous finance brokers,

without the consent and

knowledge of the clients I have in my service.

Then came Pepper Homeloans

and Liberal, NAB and ANZ.

People drawing on their super

in a sometimes fruitless effort

to save their homes is another

trend highlighted in the

study. We are also concerned

that there is no credential

regulation of the non bank-lending sector and that bank-lending sector and that

has some significant concerns

about their conduct and the

ways in which they are

unregulated largely. The sharp

rise in default rates in the

ACT is parallelled in NSW. It

is with rarts that court orders

for row repossession are more

than double than four years

ago. If the economy is doing so

well, if everyone is profiting

from this booming economy, why

is it that house repossessions in NSW

in NSW have doubled in one year

and gone up almost 40% in the

ACT in one year and why is it

set to increase in 2006? Clearly, there is something

very wrong going on. And though

they are coming off a le base,

defaults are set to grow as

interest rates spark. Stephen

Long reporting. Away from the

economy to talk of potential

new business for Australia's

players in the oil industry. players in the oil industry.

The new Iraqi Government has

invited Australian companies to

play a role in re-developing

its own industry. Iraq says it

can play a big part in

alleviating the world's oil

worries but it needs huge

investment to rebuild and

expand the industry's damaged

infrastructure. A key adviser

to the Iraqi Prime Minister was

in Adelaide today to put his

case to an industry forum. Nick

Harmsen reports. It's

It's one of the most volatile

places on the planet, but for

the oil industry, Iraq contain

as multitude of riches. As its

former oil minister told a

petroleum conference in

Adelaide today, Iraq's current

production of 2.5 million

barrels a day is only the

beginning. It has more than 40

discovered oil feeds with

reserve and potential capacity exceed

exceed ing 4.5 million barrels

a day. Sit a resource that the

fledgling government is keen to

exploit but it needs some $250

billion US of investment. It is

opening up its own Monday

employsed oil industry and inviting the world in. Of

course there will be

opportunities for Australian

oil companies who we know and

who are also interest who are also interest ed to

work in Iraq. There's little

doubt how Australia's major oil

and gas players will view

that. As a delicious, tasty

apple just waiting to jump on

to it. But there remains one

major problem - security. Since

the oil-for-food pipelines and

refineries have been subject to attacks, but according to the

government, things are improving. Our government improving. Our government are

totally committed to break down

the insurgency and to normalise

the situation. And that's an

outcome the oil industry and

the world eagerly awaits. Nick

Harmsen reporting. Still in

South Australia in China's state-owned Sinosteel

Corporation has formed a

strategic alliance with Pepinnini Minerals to develop

uranium deposits in the state. The mem ran

The mem ran dumb of

understanding shows the First

Direct involvement of a Chinese

company in the potential

development of two uranium

deposits in Australia. The

$30.5 million that Sinosteel

will pay for a 60% stake in a

new company will include $6

million for exploration of

metals other than uranium. And

now for a quick look at

currencies. The Australian

dollar fell below the US $75.cent

$75.cent but recovered in late

er trade. It is now worth

75.20. Gold has been volatile,

falling again. Gl>> Oil is up

marginly. Now a brief look at

tomorrow's business diary.

Macquarie Bank's investment banking group has what banking group has what it is

calling an operational briefing. The Bureau of

Statistics releases June

quarter new housing starts. Bis

Shrapnel is holding a business

forecast ing conference and

Austar's CEO John Porter is

address ing an American Chamber

of Commerce briefing. Before we

go, a look at what is making

news the the papers. The 'Age'

reports higher commodity prices

that helped boost Australia's that helped boost Australia's mineral and energy earnings by

$22 billion. The 'Australian

Financial Review' says the

retirement village sector is

now one of the hottest property sectors in Australia. That's

all for tonight, as I leave

you, the Dow is down 16 and the

FTSE is down 5. If you want to

review any part of tonight's

program you can visit our website at:

You can now watch the entire You can now watch the entire

program online or download it

as a vod cast. We'd also love

to get your feedback. Our email address is:

I'm Ali Moore. Goodnight. Captions produced by Captioning and Subtitling

International.