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(generated from captions) was attempting to explain his dysfunctional behaviour. He

tried to explain a number of

times why he sexually assault

ed the children. He said he

can only put it down to

hubris. He said he was

convinced himself the attracted to power and

children were consenting.

Psychiatrist Dr Olav Neilsen

Told the court the

67-year-old has a low-risk

ever re-offending because of

his age. But he did say he

has ongoing paedophile

interests that will always be

there. "From my experience

pattern of sexual interest is

enduring. The behaviour can

go but the interest is

enduring". John Sidney Denham

Brigid Glanville, 'Lateline'. will be sentenced term.

The weather - rain periods

in Brisbane, showers in

Perth, Melbourne and

Canberra. Cloud increasing

but fine in Sydney, windy in

'Lateline Business' in a Darwin. That is all from us.

moment. If you would like to

interview with Air Chief look back at tonight's

Marshal Angus Houston or

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'Lateline Business'. Tonight

a done deal but junior miners

say they have been left high

and dry. If we are not

consulted we do not know what

the product is and if we were

going to be consult why would

they make an announcement

before consulting with us?

One of Australia's No.1

resource customer? My sense

in talking to Chinese

executives is more than

amusement in terms of why the

former Rudd Government would

introduce such a tax at such

a sensitive time. Tangled in

red tape. Small to medium

businesses struggle to cope

with new wage regulations.

First to the markets. New

financial year but the same

fragile confidence. The all

or lost 1.5% today as did the

ASX 20. Volumes were slim. In

Japan the Nikkei dropped 2%,

Hong Kong's was closed for a

public holiday and the FTSE

is down 1% in London. It has

not been confirmed but it

appears tonight that the big

miners and the Government

have reached a compromise

deal on the controversial

mining tax. The agreement is

expected to be formally

announced tomorrow but some

of the country's smaller

players are not celebrating.

Junior miners like Atlas Iron

have claimed they have been

ignored A short time ago I

spoke to the company's managing director David

welcome to 'Lateline Flanagan. David Flanagan,

Business'. Thank you for

having me. We are hearing

about a mining tax

breakthrough. Are you happy

about that? Well I support,

I suppose Atlas is a member

of the junior fwra turnty in

Australia and we are a member

of AMEC and we expected to be

consult in the process so I

would be surprised if there

was an announcement that

supposed to be on a consensus

basis because we have not

been in the room and AMEC

represents 140 mining

were important and important companies and we thought we

for the development 6

Australia. So the Government

has not spoken to you or

contacted you at all, have

not contacted your

really important for the organisation? Well it is

Government to talk to the

majors so it is Xstrata, BHP

Billiton and Rio Tinto have

been in that room but AMEC

have not had a representative

in that room at all so they

do not feel they have been

consulted with and I suppose

the perception is ahead of

actually seeing any raw data

that is the outcome is going

to be a product of what is

important the majors and that

is not necessarily what is

important to the juniors. So

the fact that BHP Billiton,

Rio Tinto and Xstrata anyway

reach a deal with the

Government or a part of these

talks does not encourage

you? It is good there is

progress okay? We are not

andy tax reform and we all

want to contribute to

Australia but if we are not

consulted we do not know chat

the product is. If we were

going to be consulted why would they make an announcement before con

sumenting with us? Purely if

they announce it without

talking to us it is very hard

to turn things around. That

is the way we feel. There is

speculation they could make

an announcement as soon as

tomorrow. How would you feel

about that? I suppose I

would be concerned if there

was an announcement that took

place before there was proper

consultation and a consensus

because after all that is

where we thought we were head

wing Julia Gillard but maybe

not and maybe we have lot

more reason to be concerned

about the future of Australia. Here is the

speculation - one element

speculated on in this deal is

that the trigger points for

the tax, the uplift factor

will be around 12%. That is

acceptable to you? You

cannot just look at this tax

from one aspect. You see

lifting the uplift rate to

12% would obviously provide a

Big Ben fit to a company with

a large amount of expended

capital and juniors do not

have that, we do not get the

benefit and our business

models are not focused on

spending a large amount of

capital so that creates a

dissprirt benefit for one

company over another and

creates a advantage for one

company over the juniors. It

is supposed to be above cost

for the capital industry? It

is not anywhere near the

average cost of capital for

the industry. We cannot

borrow money to drill a hole

300 kilometres inland on the

back of an ideal it is those

people who go out with that

pioneering spirit u Mark the big discoveries which have

made our mining industry

great and we can not borrow

money from a bank. We have to

rely on equity markets and

the are effectively

confidence markets and right

now the confidence is low.

The mojo is gone and we need

to get it back by doing something quickly which does

not bring a disadvantage to

the juniors and that is what

we are concerned about. What

about the retrospectivity

issue? There is speculation

you will be able to inject

your existing assets into the

tax regime at market value?

One of the issues with that

is and again this is

speculation because we do not

know this has come but let's

imagine the market value of

the assets is high and then

the commodity prices were to

fall at some stage in the

future and those businesses t

profit margins would get

squeezed or moved into

different parts of business

thanks were integrated up

stream and down stream, those

companies may never end up

paying any tax. I do not know

if the market mechanism is

the right one to use. It

definitely provides a bigger

advantage to those companies

with larger assets and really

the junior end of town are

effectively the prospectors

but without the prospectors

you will not have the mid

caps and without the mid caps

you will not have the majors

and the risk is you end up

with a mining landscape

dominated by a few companies

which cannot be good for

anyone. What about a cut in

the headline rate of 40%?

Again the answer is the same.

You cannot look at any much

these things in isolation,

you need to sit down at a

stable with all of the key

stakeholders and work out

where the value is where, the

risk of and where the value

destruction situation for all

component and negotiate an

outcome good for everyone

because some of these majors,

these big mining companies,

their business is better

compared to a Coca-Cola-type

business an junior explorer.

The business model are so

vastly different so to think

those guys know our business

and can properly negotiate an

outcome on behalf of us I do not think they can and I do

not think to date the

Government has shown a true

an proper understanding of

our businesses to actually

tick the issues we have

brought up and implement them

so again we have not seen any

of the information that is

due to come out soon and we

are speculatesing. But to

date we have not been

involved in the process and

we are feeling very concerned

that's for sure. Does this speculation suggest you are

being done over by the big

players? I suppose we have

been in contact with the some

of the big players and they

assure us that is not the

case. But really we have not

seen this information and if there is an announcement

tomorrow morning we will make

our judgments then. David

Flanagan we will have to

leave it. There thank you for speaking to 'Lateline Business'. Thank you. Meanwhile a conflict

among three of Australia's

biggest miners has taken a

new turn. Fortescue Metals

says it will appeal a

decision which refuses them

access to its rivals key rail

lines in WA. The competition

tribunal says Rio Tinto and

BHP Billiton should not be

forced to open the Newman and

Hamersley lines in the Pilbara overruling Wayne

Swan. The ruling contain add partial victory for Fortescue

Metals. BHP Billiton will

have to open the Goldsworthy

for other users transporting

their coal to sport. Bill

bill will appeal. The AGL has

flexed its balance sheet

muscle to make a play for

junior oil and gas producer

Mosaic. At the core of the

deal is Mosaic's gas storage

capabilities in Central

Queensland where AGL plans to

create a gas storage business

in conjunction with BG Group.

Mosaic's share price was

given a boost finishing 66%

higher. With $25 million on

its balance sheet to play

with $123 billion is a drop

in the ocean. It is banging

on extracting long-term value

from Mosaic's storage in Central Queensland Gas

storage will become a very

important parts of risk

management for a company like

AGL especially where we will

see increased volatility in

the wholesale gas markets and the wholesale electricity

markets. In the short-term

the deal is crucial to an

existing agreement with

global energy company BG

Group. CEO Michael Fraser

told the market -

But how much BG Group will

contribute did the project

has not been disclose $. AGL

is ofrg 15 cents for every

Mosaic share which is almost

double Wednesday's closing

price and sent the stock

rocketing up 67% today to

close at 13 cents. There is always share-based

alternative of 1.30 1 AGL

shares for every 100 Mosaic

shares. AGL's share price

also gained in a negative

market. It is very positive

for Mosaic shareholders. Have

a look at Mosaic recently.

Financially it has a small

positive operating cash flow

but that has been dwarfed by

its capital expenditure

program. AGL already has

pre-bid acceptance of 12.8%

of Mosaic shareholders.

Analyst Nick Raffan says it

is a good sign the deal will

get over the line Mosaic has

been battling on for a long

time and I would think it

would be some investors thinking now is a good time

to exit, we will cash in

now. But Mosaic's board is

still pondering the offering

and has urged shareholders to

sit tight. In a statement

today it said Mosaic

shareholders will be advised

in due course of the outcome

of any of these discussions.

AGL plans to more than triple

its gas reserves in the

medium term. Whether Mosaic

will play a part in that

strategy will depend on how

the Mosaic board plan the

proceed. Let's look at the

local markets. Earlier I

spoke to Martin Lakos in

Macquarie Private Wealth. It

has been 8 days of declines

on the trot and not much was

spared today was it? No

absolutely not. The overnight

news was not great. Looks

like Moody's or there is

rumours of Moody's

downgrading Spain's debt

which got the US market down

to 100 both in. The Chinese

manufacturing index came out

a bit disappointingly at 52.1

from 53.9 in May so again we

saw it hit its low in a

70-points trading range at that point in time. What

about speculation of a

compromise between the

Government and the miners on the resources super profits

tax? Did that receive much

reaction? It did. In fact

there was reports out that

there had been a compromise

made that, report includes

some detail but it has not

been confirmed but it was

enough for the market to

rally almost 40 points and

improve its 80-points loss to

half of. That in particular

understandably resource

stocks rallied hard. BHP

Billiton gained 70 cent in

that hour and trade and

closed 44 cent above its

lows. We had positive move

after market with a Japanese

survey showing Japan is

gradually coming through its

recovery and that might be a

slightly better set-up for

tomorrow but we will have to

wait to see how Europe

performs on the back of

thaeks bone difficult tour

Moody's debt issue. We saw

Leighton's holdings announce contracts in Indonesia, are they significant?

Yes, $50 million contract to

build a tunnel and road works

and a $50 million US contract

for port works. This will

push Leighton's work in hand

certainly towards the $40

billion mark. They have come

off a high of $41 early in

the year down to $28 today.

The stock was down 3% which

is positive news. Leighton's

is yielding 5% on this year's

dividend so there are

fundamentals starting to

emerge but the market is not

focusing in on fundamentals

at this stage. At the new

financial year begins not

such a happy new year there

seems a lot of conflicting is

in on fundamentals. How tough

is it for investors to sort through that at the

moment? Very tough.

Leighton's is a good example

when you get positive news

from the company but the

stock is down 3%. There is a

lot of uncertainty. Mick

news. We had the Moody's news

on Spain as I mentioned

before and on the same day

you had a better or a lower

take-up of fund fling the

European Central Bank by

Spanish banks and those

Spanish banks rallied hard.

So it is difficult to work

your way through but

ultimately fundamentals carry

the day and the market has

fallen a long way. We have

done a lot of work on the

duration of stocks, there is

a lot of the resources

looking like good value but

it will be difficult for

investors to jump in with

certainty until some of these

other issues particularly

Europe I'm proves. We will

watch the US employment data tomorrow night very

closely. On that partially

optimistic note we will leave

it there. Martin Lakos thank

you for joining us. Thank

you. The other major movers - another bad day for

financials. The big banks

were all below the waterline

One interested party seems to

be confused. John Leigh from

the sent tyre for independent

studies China finds the

resource tax issues puzzling

but Dr Leigh maintains the

tax will not prove a major

problem for China. There are

other hidden economic dangers

to deal with. He joined me a

short time ago. John Leigh

thank you for joining us ,

thank you, my pleasure. We

have not heard too much from

China during this debate

about the resources super

profits tax. How do you

interpret that? We seemed to

get more of a response from

China when we discussed

foreign investment rules?

They have been conspicuously quiet about the resource tax.

The reality is they do not

know how the tax will

operate, what impact lit

have. Both will roll out the

new projects on the supply of

commodities in the market

generally of my sense in

talking to Chinese executives

is it is more bemusement as

to why the former Rudd

Government would introduce

such a tax at such a

sensitive time in the

economic cycle so it is

bemusement the political

motives rather than the

economic ramifications of the

tax. We saw the PMI rewleesed

which was weaker-than-expected. Does

that suggest the slowdown in

the Chinese economy is broad

anything? It does suggest

that some what but I would

not put too much emphasis on

that. The PMI figure was 52.1

which is the second

consecutive monthly slow down

but remember anything that

over 50 still represents a growth in manufacturing

output and the Chinese have had 16 consecutive months

over 50 for the PMI index.

This slow down was largely

expected. It was a result of

a dwrad Ewell slowing of the stimulus that occurred in

2008, 2009. I do not think it

has taken anyone by surprise

in China anyhow. But there is

more to come? Would you

expect the manufacturing

sector to slow even further?

A few months ago, 6 months

ago we would have said no but

I think now we would say yes

because of what is happening

in Europe. The American

situation is not taking anyone by surprise in China

but the European situation

was not something they had

bargained for and that has

thrown a real wildcard into

the export sector for the

quite sure how to view Chinese and they are not

that. As far as you are

concerned then if the

slowdown in manufacturing is

not yet a major concern what

do you view as a major

concern? If you talk the

Chinese economists and if you

listen do the domestic

speeches of the Chinese

leaders themselves, their

main concern is the addiction

the economy has to fixed

investment. To give an

example of the degree to

which the Chinese growth

model depends on fixed

investments in 208-2009 lend

fringe banks double from $700

billion to $1.4 trillion US.

Fixed investment in a Chinese

economy constitutes 55% to

65% of Chinese GDP. This is

the highest of the any major

economy in the world and

recorded history. The data

suggest assist investment are

going into project that are

not offering acceptable

commercial returns and in

fact most investments are

undertaken for political

reasons and for job-providing reasons not commercial

reasons so there is a real

none performing loans problem

about to rear its head which

occurred in the 90s. Like

those empty cities that have buildings but no people? Precisely. If you

look at various research on

the kind of investment return

thanks these companies are receiving, for construction

in China we hear about the

big success stories but we do

not hear about the hundreds

of thousands of construction

projects that are not so

successful and the estimate

is 40% or 50% of construction

projects in China offer zero

returns which is not

sustainable. How is this

going to play out? What do

you see happening? Is it all

going to cause a collapse in

China or are they go to go

get through this? I think

there are two options. If

they keepinging the way they

are going then you will have

if not a collapsed but a very serious downturn which will

have social and political

ramifications in China. The

second option which is the

happy option which be for the

Chinese Government to grant

much greater investment

support for the private

sector in China which at the

moment is suppressed in

favour of the state

controlled sector f that

occurs there is a much better

chance that China can raise

domestic consumption which

would allow the economic

project trito be more sustain

in and allow across the board

incomes to arise in China

which creates a more stable political and social situation in the country

which is the happy option for

the country. John Lee. Thank

you. Thank you. The new

financial year might Bray few

shocks for many small

businesses as they come to

terms with new regulations

and wage rises. A reduction

in awards from 4000 mainly

state-based ones to 122

Federal ones was supposed to

make the system more simple

but there are fears it will

add to the wages bill at a

time margin are already being squeezed. Michael Troy

reports. The lunchtime rush

at Garfish restaurant in

Sydney's north might appear

like business as usual but

there is a lot of confusion about the industrial

relations laws as penalty

rates and loadings change

Business are paying more for

employees working the same roster as last week to this

week. It is an enormous

change and for our businesses

because we are moving from

what was a state-based system

through to a Federal system

so not only are all the wage

rates changing but whole

jurisdiction is

changing. John Hart speaks on

behalf of tens of thousands

of restaurant and cafe owners

and says on the 10th

anniversary. GST there is a

new headache The bookworkers

are usually the owners, they

do this between the midnight

and dawn shift and that is

what they have to do in a

small business. He estimates

up to 70% of businesses may

not even be aware of their

new obligations. We are keen

to get the word out there but

a lot of business are putting

their head in the stand. Ingance of the new

laws is no excuse for small

businesses to comply.

Workplace inspectors will be

out in force prompting calls

for leniency. Employers face

fines of up to $33,000 for

each breach. Prosecution,

enforcement a heavy hand of

regulators should be a last

wanting to do the wrong resort of people clearly

thing. Most employers believe

in fairness, want to do if

right thing and the

Government regulator needs to

make sure they are very

undering that employer are

going to find some real

challenge in this

transition. Peter Anderson

from the Australian Chamber of Commerce and Industry says

the Government has broken its

promise to bring in the

changes at no cost to

employers and the timing is

very poor. We know there is

a two-speed economic recovery

at work here in Australia. A

lot of the small service

industries, retail, cafe,

restaurant, insurance they

are in the slow lane of a

two-speed recovery jet they

are are the one thanks will

particularly feel the pinch

when the next pay roll has to

be made up. Adding to the

signs that growth is slowing

a drop in the Australian

performance of manufacturing

index. Figures for June fell

3.4 to 52.9 just a above the

level indicate evening grow.

While this still shows expansion it is the first time in 6 months the figure

has dropped.. clear think pay

as you go growth is easing on

the back of new orders and

production. Heather Ridout

says we have not made up the

ground lost in the economic

crisis. Australia can run

but not hide but we are in

Asia and three-quarters of

our exporters have gone there

over the last 3 years. While

manufacturers can focus on

the Asian market the

restaurant trade is the in a

downturn. Interest rates are

starting to come up which is what affects discretionary

spend. Combine would the regulatory changes it could

spell a much leaner tax year

ahead for many small businesses. Australia's

wholesaler Metcash has largest liquor and grocery

announced it will acquire the

Franklins chain of 58

supermarkets in NSW. Metcash

plans to on sell the stores

to independent IGA retailers

and will operate the stores

until the sale program is

completed. Meanwhile retail

sales are holding up despite

recent rate rises and softer

consumer confidence. Sales

drew 30.2 of a per cent to

$20 willon in May. That was

less than expected but it is

still the third monthly rise

in a row. Clothing sales and

department stores were up but

sales of household goods were

down 1.4%. The numbers have

seen some economists suggest

rate rises may be on the

agenda next month. A look at

tomorrow's business diary.

Shipbuilding company AS

krmplt's Steve Ludlam is at the Israel Chamber of

Commerce in Adelaide. The

office of financial

management issues $700

million in Government bonds.

The administrators for Sonray

Capital Management hold a creditors meeting in

Melbourne and overseas there

are two key indicators in the

US non-farm payrolls, the

number of new private sector

jobs created and the overall unemployment rate.. The

before we go a look at what

is making news in the

business sections of term's

newspapers 'Herald Sun' says

a deal with the miners on the

resources tax will be

announced today. The

Australian says the miners

have won key concessions and

the revamped deal will

exclude gold, copper, nickel

and uranium. The Australian

financial review calls it a

backflip and says two

separate new tax regimes will

be unveiled, one for

petroleum and another for the

bulk commodities and the

'Sydney Morning Herald' says

creditors in Sonray Capital

Management will find out how

many cents in the dollar they

are likely to get back. That

is all for tonight as I leave

you the FTSE is down 37 and

the Dow Jones is down 10. I'm Phillip has sca, have a good

night. Closed captions by CSI

THEME MUSIC We just got here in a Mini Coop. Hey, wow, we just got here. We brought all our equipment in the Mini. There's a lot to be really thankful for. I don't think we had a very conventional upbringing and we had to be really resourceful and really creative. 'Cause we didn't know what a punk scene was, we didn't know what was cool. The coolest city was an hour away and that wasn't even really cool. So we had to make it up as we went along. It really gives us such a great advantage because it teaches you independence from a really young age.

To me, The Mars Volta is just a celebration of irrational thought, it's a celebration of all the impulses and desire that spring from the darker side of your subconscious. So instead of pushing it off and going, "Why did I dream that? That was really fucked up," you celebrate it and you put it on paper and you turn it into a song, you turn it into music. Let's go. Move, move. I came here to do work experience aged about 15 and I got to do a bit of mucking around with files and sort of reorganising stuff and had a little go on the mastering desk. I was quite impressed with the fact they have to repaint the walls every six weeks because they get so much graffiti on them. So much abuse. Mm. "I hate The Beatles." That was one of my jobs as an intern, I had to Tipp-Ex the wall. Every day. Cool. Hello. Hi.

We don't have a very complicated songwriting process. People always - "Tell me about your songwriting." It's like really, really organic, really natural. Nothing's really contrived, there's no concept. Spur of the moment. Very spur of the moment. Standing In The Way Of Control was completely written almost front to finish in like five minutes. It came as fast as the guitar parts did. They come out so naturally, that sometimes it's so personal, I don't even realise it. Until after the record - Yeah, until the record's done. And I'm like, "Oh God." Interviewers will be like, "This is what it's about." And I'm like, "Uh-oh, it is," I didn't realise it, it's all retrospective. I'm like, "Oh no." What are you going to do? I think it's better that way. It's better than - ? I walked my dog, today ? It was such a pretty day out there. ? (ALL LAUGH) It's so loud, for some reason.

? Your back's against the wall ? There's no-one home to call ? You're forgetting who you are ? You can't stop crying ? It's part not giving in ? And part trusting your friends ? You'll do it all again ? And I'm not lying ? Oh ? Standing in the way of control ? Yeah, live your lives

? By the only way that you know, know ? I'm doing this for you ? Because it's easier to lose ? And it's hard to face the truth

? When you think you're dying ? It's part not giving in ? And part trusting your friends ? You'll do it all again ? But you don't stop trying ? Oh ? Standing in the way of control ? Yeah, live your lives know

? Oh ? Standing in the way of control ? We live our lives ? Standing in the way of control

? We either live our lives ? Because we're standing in the way of control ? We live our lives in the way of control ? We either live our lives, lives, lives ? Oh ? Yeah ? Oh ? Yeah ? Your back's against the wall ? There's no-one home to call ? You're forgetting who you are ? You can't stop crying ? It's part not giving in ? And part trusting your friends ? You'll do it all again ? You don't stop trying ? Oh ? Standing in the way of control ? Yeah, live your lives ? By the only way that you know, know. ?

It's like people constantly use the word 'work'. "You guys work a lot." And for us, it's we get to play a lot. We have to take advantage of the fact that we don't have to fucking work for a living. That's crazy and absurd within of itself, you know. Where we used to go and work at a restaurant or be a telemarketer or secretary or clean toilets or make pizzas, now we don't have to, so now we can spend our time doing what we were doing at 15, so, of course, we're going to play all the time, we've been blessed with an opportunity to just fuck off for the rest of our lives and make music that pleases us and makes us happy and is a lot of fun to play. HUMMING People keep saying intellectual and intellectual music and we couldn't be further from that. There's not a lot of thought that goes into what we do. We're not as serious as people think. We're a lot closer to Zappa's sense of humour. And there is a lot of that - Or League Of Gentlemen. The TV series, of course. Everyone here will know that. In America, people go, "That comic book movie?" "No, no, you have to see this series."