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ABC News (Sydney) -

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Tonight - secret reports put

the State's health system a

billion dollars in the

red. Inflation on the way down

- along with the world

economy. I think we can expect

to see international global

growth forecast yet again

revised down. Sveltering down

south - Melbourne and Adelaide

reach the mid-40s. And

Australian Open officials cop a

serve for not covering up

sooner. I was in an outer body

experience it was so hot. Good evening. Juanita

Phillips with ABC News. The ABC

has learned that the State

Government is sitting on two

independent reports that paint

a bleak picture of the health

budget. Both conclude that

hospital s in NSW simply don't

bills, and have enough money to pay their

bills, and that the Health

Department may face a funding

shortfall of close to $1

billion. Many small businesses

and medical supplyers have been

left waiting for payment, in

some cases for months. The

report were handed to the

Government last year, neither

has been released. More from

the ABC's State political

reporter Emma Griffiths. It's

no secret the NSW Health Budget

businesses are feeling the is not well but small

pain, owed millions of dollars

by the department. The Premier

says he wants to pay the bills

- Yes, I said this morn that

it's not good enough. But the

list of creditors is long and

varied. The Health Department

says by the end of this week it

will owe $117 million in over

the outstanding due accounts. We've reduced

the outstanding cash deficit

from $60 million to about $2 3

million. It's stirl going

down. But the problem goes to

the heart of the health

Budget's woes. The ABC has been

told that last year the State

Government commissioned and

received two draft reports into

the State's hospitals and their

finances. Both were made

Cabinetin confidence and have

not been released to the

public. One bluntly concluded

that the department had a

liquidity crisis that was

unfunded, the other that Area

Health Services were unable to

meet their savings target. The accounting firm

PricewaterhouseCoopers prepared

one of the reports titled 'NSW Independent Financial

Management Review'. The

144-page report found there was

a culture which focussed on

clinical outcomes to the

detriment of air

detriment of air Chiefment

clinical and financial out

comes together. That goes to concerns that the Government's

Budget is consumed by meeting

surgery target an doesn't leave

enough for the day-to-day

business of running hospitals.

The report predicts that by the

end of March the hept

department will have $600

million in liabilities, that's

on top of a $300 million

blow-out in the Budget already

acknowledged by the State

Government. Both reports

urge the Government to develop

a new funding model for

hospitals. And a short time

ago a spokesman for the hept

Minister responded to that

story. He says the amount owing

to creditors represents less

than 1% of the entire Budget of

the health department. And he e

says that new measures to

deliver better patient care and

wiser health spend willing be

announced in the next few

weeks. The world economy looks

sick enough already but it's

about to gets worse. The

International Monetary Fund is

tonight expected to confirm a

drastic downturn in global

growth forecast. And Westpac

Bank is tipping Australia's

economy will shrink by almost

1% this year. The Prime

Minister today got the latest

assessment from the US in a

phone call from President

Obama. Kevin Rudd is also

calling in more Premiers and

top economic advisers to help

design his next rescue

package. A grim procession of

State leaders is marching

through Canberra. Governments

all around the world are

struggling to keep up with the

incred ibly rapid

changes. Tomorrow the Premiers

of NSW and Victoria will give

their take on the financial

crisis and ideas on how he should fashion a second

stimulus package. The premium

now is to support growth and to

support - - job. The Opposition

says the first attempt was a

fairl. It didn't have the

stimulatory effect he want it

to have. A clearer picture of

how the Government's $10

billion pre Christmas gift Wass

used won't be in for months but

news Woolworths reported second in some rare good financial

quarter sales were up 8.8%,

partly due to the benefit of

the Government's stimulus

package in December. I think it

has had a beneficial impact in

terms of consumption. Any

benefit is likely to be short

lived. Westpac is now

predicting the economy will

contract by 0.7% this year, and

later tonight the International

Monetary Fund will release

another grim assessment on the

world's prospects for growth. I

think we can expect to see

internationally global growth

forecasts yet again revised

down. The global recession

loomed large in Kevin Rudd's

first conversation with Barack

Obama since his inauguration.

The President called the Prime

Minister this morning, and they

talked about the need for

coordinated international

action to combat the crisis.

They also agree nad both count

Royce should work together on

climate change and limiting the

spread of nuclear weapons. The

President sthanked Australia

for its contribution in

Afghanistan. But the prickly

question of lifting the number

of troops wasn't diskusds. The

US wants more help from its

allies but its top general

won't be drawn on whether

Australia will be asked to do

more. I am not the one to ask. It real sli for the President

to do that. It might come up

in the next conversation.

The prospect of another

interest rate cut next week

looks even more likely on the

back of the latest inflation

figures. They show that prices

are falling at the fastest rate

for 10 years. The biggest

factor was cheaper petrol, that

helped reduce the annual

inflation rate to well under

4%. The Treasurer says

inflation should keep

falling. An approaching global

recession has its compensations

- collapsing petrol prices, and

a new take on the inflation

problem. As a policy issue in

the next 12 months, it's dead. It basically doesn't

matter. The rare fall in the

Consumer Price Index for the

December quarter was the

biggest in a decade, sending

Australia's annual inflation

rate tumbling from 5 to

3.7%. Petrol prices plunged

nearly 20% in the quarter,

while car prices fell 2.5%. But

necessities like food and rents

rose towards the end of last

year. Still, the Treasurer has

no doubts. I think it's now

clear that inflation in

Australia is sub siding. As it

is of course around the

world. And it's sub siding in

response to the global

financial crisis. The Reserve

Bank's inflation fore cast like

everyone else will be in the

process of being revised

down. That suggests inflation

will fall into the RBA's 2 to

3% target zone more quickly.

The Reserve Bank holds its

first board meeting this year

next week. And no-one doubts

the outcome - there will be

interest rate cuts. The only

question is how big? Analysts question is how big? Analysts

predict a cut of between half

and one percentage point. The

global story is very ugly and I

think the Reserve Bank next

week is set to cut big again

probably. There's plenty of

ugliness here too. Another

major retail serious in

trouble. The Strathfield Group

is in administration, while

shopping isn'ter giant

Westfield announced a cut in

its distribution to

shareholders. America's new

Middle East envoy George

Mitchell arrive s in Israel

tonight and faces an immediate

challenge. The fragile truce in

Gaza is under threat after the

worst outbreak of violence

against the cease-fire. An

Israeli soelds ier was killed

by militant. Israel responded

with an air strike and by send

ing in tanks and troops. It's

also hit tunnels on the board

of with Egypt used for

smuggling supplies. A warn ing,

this story contains discurbing

images. Israeli forces once

more on the attack in Gaza

after a patrol was hit near the border. This jeep was the

target of a roadside bomb.

Israeli soldiers who moved in

after the blast themselves came

under fire. Militants also

launched a grenade.

launched a grenade. One Israeli soldier was kill and

three were wounded. Israel was

swift to respond. And air

strike injury add militant in

southern Gaza. Troops also

reportedly shot dead a

Palestinian farmer. Hamas

blames Israel for the violence

and accuse s it of aggression

after the cease-fire. "

TRANSLATION: Stop the

aggression completely against

the Palestinian people, to lift

the siege and reopen all the

border crossings.

TRANSLATION: We do not intend

to ignore event such as

occurred today. We will not

allow Hamas and its allies to

continue with hostile actions

and we will respond. That

message was reinforced by Israel's Foreign Minister in a

speech to the world Jewish

Congress. We are not going to

show restraint anymore. We need

to change the rules of the game

in this region. In an ominous

warning, Israel's Prime

Minister, Ehud Olmert, says the

main response is yet to come

ie. It's a clear warn doing

Hamas that Israel is prepared

to pick up where it left off 10

days ago when the shoot ing

stopped. George Mitchell is due

here tonight for talks with Palestinian and Israeli leaders

but the chance of lasting peace

remains as distant as

ever. Australia's south-east is

sweatering in a record

heatwave, with temperatures

topping 45 degrees. Parts of

SA, Victoria and NSW are expecting at least several more

days in the 40s. In Adelaide

and Melbourne, the heat caused

extaenceive train delays and

thousand of homes lost power. In Adelaide, by 10

o'clock this morning the

mercury had tipped 40 degrees.

Beach goers sweltered as the

temperature sored to 45.7, make

it the hottest day in 70 years.

And that's not the only record

likely to be set. We may see a

6-day run of 40 degrees or

greater. The only other time

we've seen that has been in

1908 during the Federation

drought. The city's

infrastructure buckleded under

the heat. Around 8,000 people

were left without power, free

refreshments or dished out to

appease delayed rail

passengers. No such luck for

commuters in Melbourne who were

left high and dry when train s

failed. More than 60 services

were cancelled. Those that

couldn't heat the heat got

amongst it. It's great. I love

the hot weather. But a high of

43 degrease challenged even the

keenest of beach

goers. Boiling, f ching. The

city's pools were packed with

children determined not to miss

out on the last few dayses of

school holidays. Get to have

fun, enjoy the water, play with

friends. J With an increased

risk of dehydration, the

elderly were doing what they

could to battle their thirst. I

don't enjoy them but everything that can be done is done to

make it more tolerable. But

still paramedics treated 10

patients for heat related

illness. And tomorrow is set to

be another scorcher. The

heatwave won't ease until the

weekend. A Sydney driver who

stopped suddenly in front of a

pack of cyclists causing them

to crash has been found of nent

driving. The accident left

several in the group injured,

including champion cyclist

Michelle Ferris. Hassan Bakr

Syd said he was forced to stop

because of mechanical problems. Champion cyclist Michelle Ferris was one of

around 60 riders on a routine

training session in May last

year. But the former Olympian

was left baert nd and bruised

when a car stopped in front of

her, causing her to go up and

over the boot. For that split

second you're worried about

your life because all you have

in front of you is a car and a

back window. Does yoefrns

cyclists were involved in the

pile-up on the early morning

ride. We were going 45, 50km/h.

My first, say, recollection was

cyclist ducking left and right

trying to avoid the car. The

driver sped off, failing to

give his details. But today

after missing earlier court

appearances Hassan Bakr faced

court. Defending himself,

Hassan Bakr told the court that

he had moved his vehicle into

the left lane because his car

had experienced mechanical

difficulties. He said there was

no road rage involved, and he

didn't mean to cause the

accident. But when asked why he

failed to stop at the scene,

Bakr accused the psych loifs

being intimidating. Bakr was

convicted of three driving

offences an fined $1,200, but

the legal process is not over

for the unemployed father of

two. The cyclist also now

seeking up to $45,000 in

compensation. As students went

back to school today, the State

Government announced plan s to

keep them there for a couple

more years. The minimum school

leaving age has been raised

from 15 to 17. The Premier says

it will prepare teenagers

better for the future. The

change will bring NSW into line

with other States. Simon Palan

reports. First day back at

school, and a visit from the

Premier. I would like to become

a Labor politician. If you need

work experience, let us

know. There were career enhance

ing office and a new policy

announcement It provides

additional educational opportunities. From next year

the 60-year-old law allow ing

stients to drop out of school

at 15 years old will be

scrapped, completion love the

year 10 high school certificate

will be compulsory. Then,

students under 17 who want to

leave school will have three

options - vocational training,

an apprenticeship or paid

employment of more than 25

hours per week. I reckon it's

great. Anything to do with

education for the young kids

for their future is great It's

a good idea but it needs a lot

of support and I don't flow if the Government could fund that sort of thing at the

moment. The Opposition says the

policy has been announced three

times already, and is worried

the Government won't be able to

deliver. It needs to be matched

by additional services to make

it work properly. Of course

there will be additional

resources. That will be worked

out over the next 12

months. Official figures show

early school leaf eers are 2.5

times more likely to be un

employed. And this is to

hopefully address poor literacy

and numeracy. I think the

package seems OK provided the

implementation is handlinged

reasonably well. The implementation will cost

taxpayers around 100 million.

Tonight's top story - the ABC

has learned that the NSW

Government is sitting on two

independent reports that put

the State's health budget a

billion dollars in the red.

Still to come - Jelena Dokic

says she's begun a new chapter

in her career.

An Australian man charged

with child sex offences in

India has been identified as a

Western Australian who has been

on the run for 35 years. Paul

Henry Dean fled Bunbury in

1973, after being accused of

embezzling up to $140,000. He's

now charged with abusing

children at an orphanage in

India. South Asia correspondent

Sally Sara reports from Puri in

the Indian State of orris ya. Inside this prison is an

Australian man awaiting trial

on child sex charges. We were

unable to film him but we

recorded his voice during a

brief meeting inside the jail.

He receive refused to confirm

if he's Western Australian man

Paul Henry Dean. Can you

confirm that your identity is

Paul Henry Dean? I have no

comment, I have no comment. I

have no desire to speak with

her, she is from the press. But

Indian police say they're now

sure the man they arrested is

pall Paul Dean, who fled

Australia more than 35 years

ago. Now we know his identity

that he is Paul Dean. Paul Dean

was koods of embezzling funds

from a bank, travel agency but

he fled the country while still

under investigation. The CBA

bank, through real estate

wheeling and dealings totalled

$140,000 at the time. Now

police have charged Paul Dean

with sexually abusing children

at this orphanage in India. I

was not proud of that, no. That

was my fault to trust him,

yes. That I confessed. He was

carrying a passport under the

name of Allen Rose r and

claimed to be a monk and a

doctor. But his brother says to

his knowledge he had no medical

qualifications. Um, tho, he's

done no medical training what

soever. The accused was also

charged with child sex offences

and the possession of

pornography in the neighbouring

state of Andra Pradesh back in

2001 but he escaped police custody and continued to

volunteer at local

orphanages. If convicted on the

latest charge, Paul Dean will

face up to 10 years in jail in

India and will then be deported

to Australia. On to finance

now and today's inflation

figures contributed to a strong

rise by bank stocks, pushing up

the share market for the second

day in a row. Alan Kohler has

the de tails. The All

Ordinaries has gone up by 4% in

two days, and looked at over a

slightly longer period investor

also no doubt will Sela

braeting the fact that the

market hasn't fallen. Basically

it's been a period of gains

among the mining companies

offset by falls among the

banks. And it's banks that led

the way today because of a

birth of bargain hunting.

Commonwealth and ANZ both went

up 6.5% while mining leader BHP

Billiton also went up but a lit

less than 2%. Rio Tinto fell 3%

because of a hint from the

company that it's considering a

share issue and Boral fell 15%

after the company cut its

profit forecast by 40%. Shares

on Wall Street went up 1%

lation night and US stocks have

also been steady for two month,

although the S&P 500 has gone

up 5% since the inauguration of

Barack Obama. Here are a few

details of the consumer price

index. Basically it was petrol

and drugs down, fruit and rent

up. Net result - prices fell a

bit on average. But it's not

deflation. Just a fall in the

petrol price because the price

of oil fell for almost the

whole quarter. It only stopped

falling on Christmas Day. Here

is a graph of the headline and

underlying inflation rates. The

headline rate is down from 5 to

3.7% but the one that Reserve

Bank watches which is core

inflation has hardly fallen at

all. It doesn't include petrol

prices. The Aussie dollar has

gone up a bit but not much. The

market has had a rate increase

of at least 0.75% next week

pencilled in for some time. The

heatwave down south caused

havoc at the tennis today. At

the Australian Open organisers

were criticise for not closing

the roof on centre court at the

beginning of the day's play.

One women's quarterfinal was

played in 40 degree heat. The

next one started with the roof

open but finished in air conditioned comfort. Closing

the roof appeared to help

Serena Williams reach the

finals but it was the delay in

doing so made some angry.

Despite a 41-degree forecast,

the roof remained open for the

quarterfinal between Carla

Suarez Navarro and Elena

Dementieva. It's going to be 41

today, 43 tomorrow, they the

hottest week in the month why

not close the roof for the

players an the spectators. The

roof Wass closed during the

next match between swill yams and Svetlana Kuznetsova. They

should have closed the roof for

both quarterfinals. We cannot

make a decision on a forecast.

If we had yesterday for example

the forecast was to be in this

condition, and if we had made

the decision yesterday on the

forecast to close the roof we

would have been wrong. Several

greats dis agree, saying it's

an open and shut case. If there

are no other women's and men's

singles matches on any courts I

think the smart thing to do is

to close the roof. Would you

close the roof? I would. I

think's level for both

people. Svetlana Kuznetsova had

her moment in the sun, taking

the first set against Serena

Williams before the extreme

heat policy was finally

invoked. Kuznetsova continued

her dominance early in the

second set, appearing to have

every Williams attack covered.

Desperate point. She served

for the match, but under the

roof Williams regained her

cool. She leveled at a set all

and then steam rolled her way

into the sphfs. Williams will

play Elena Dementieva, who was

lucky to be on court for just

95 minutes in defeating Suarez

Navarro. Last night, saw the

Roger Federer of old - against

Juan Martin del Potro. That is

magnificent. Even Federer's un

paralleled game was taken to

new hieths. He won the last 13

games in a match lasting just

80 minutes. Apologies for

that audio problem. She says

she's begun a new chapter in

her career and she's already

setting her sight on this

year's other grand slam event.

New tennis fan's favourite

Jelena Dokic was philosophical

today after her Australian Open

campaign ended in a hard fourth

quarterfinal last night. Jelena

Dokic arrived at the Australian

Open with a wildcard and no

expectations. She leaves as a

top 100 ranked player with the

nation's hopes riding on her

future. The end of a magical

ride for Jelena Dokic. I have

never seen the Australian

public in a tennis match take

to a player like they did to

Jelena and be so one

sided. Last night in her fifth

grueling 3-setter, the anxiety

of every point gripped Rod

Laver Arena. CHEERING AND

APPLAUSE Despite her defeat to

Russia's Dinara Safina, fans

didn't feel let down. We're

sorry she lost but it's so good

to see her back in Australian

tennis. You lost but you didn't

lose because everyone loves

you. The return to form has

inspired others, even in

today's heat. I saw Dokic last

night and she lost but she put

up a good fight so I thought I

would do that. Dokic says she's

aiming for a consistent year

and is already focussing on

this year's other grand

slams. I played every

tournament the same, so Roland

Garros, I've done well there,

Wimbledon also. So maybe

another goal will be to do well

at the US Open. Given she stays

injury free for the next 12

months an everything off the

court is, you know, in shape

and relaxed, she's going to be

top 10 when she comes here and

plays again next year. Dokic

will join Australia's

Federation Cup team in Perth

next week. The Socceroo

also open their Asian Cup

qualifying campaign when they

meet Indonesia in Jakarta

tonight. The Australian team arrived onld on Monday. The

Indonesian side on the other

hand has had a month to prepare

for the game. As well as that,

Australia will be without all

its big name European stars.

Coach Pim Verbeek admits his

make shift side faces a tough

challenge. We have no excuses,

this is the best team we have

for players playing in the

A-League. We do have better

player, that's true, in Europe,

but it is for us a good challenge. A crowd of almost

90,000 is expected to attend

the game. Now, was it a plot to

assassinate the Queen or simply

the work of vandals? Whatever

the case, it's come to light

that there was an attempt to

derail the Royal Train in the

Blue Mountains 40 years ago.

The train was carrying the

Queen and Prince Phillip on

part of their Australian tour,

and it's just been revealed

that it struck a log placed on

the line near Lithgow. It's

taken an 81-year-old former detective Cliff McHardy all

this time to reveal what he

never saw. But was told about

the day after the Royal Train

passed tlau cutting on its way

to Orange in the central west.

The train, he heard, had struck

a thick log on the track. It

dragged it up to the entrance

to the beginning of the

Bowenfels rainway station,

about 150 yards from

memory. The Queen and Prince

Phillip may have been in the

dark as much as anyone else and

there the retired detective

believes the authorities wanted

to keep it that way. They

wouldn't want the royal couple

to know or any publicity

because they had a lot more

tour and it might give other

galoots ideas. Some were saying

xraizy conspirors were behind

an assassination attempt. You

can spectate in all ways yet it

might have been somebody angry

against the royalty or anything

like that, it's just - but we

never ever found the basis for

it. In fact the detective

himself is not so sure it was a

group at all. One person could

do it. Buckingham Palace says

there's no record of anything

untoward on the Royal Train

ride to Orange. Inside, or

outside the carriages. Well,

Sydney may not be in for the

heat wave they're suffering

down south but we still had

something of a record month in

terms of temperatures. The city

has recorded the highest number

of days above 30 since 1991.

We've also had two consecutive

nights over 24 degree, a new

record. The average temperature

is in the city so far this

month have been sitting and

27.6 degrees and that makes

this the fifth warmest January

on record. It will remain clear

overnight with the temperature

falling to the high teens to

the low 20s.

The clear skies over the

south-east is an ominous sign

there is little challenge on

the way from the current

conditions. The high in the

Tasman will continue to direct

hot and dry air over the

south-east, including much of

NSW. Forecast models are stluth

will be no significant cooler

change until Monday, 9

February. The only falls in NSW

will be isolated light showers

about the north coast and

ranges tomorrow. If you think

44 in Adelaide is hot, the morn

willing only dro drop to 32

degrees with Melbourne hovering

around 28 degrees. Winds will

be from the north-west to the

north-east across the State

with isolated sthoirns far

north coast and the adjacent

ranges.

It looks like it will stay

warm well into the end of next week. Tonight's top stories

again the - the ABC has learned

that the State Government is

sitting on two reports showing

the health Budget is in dire

straits. And extreme

temperatures in Victoria and SA

have emergency services there

on high alert. The mercury

peaked at 45.7 in Adelaide

today. That is ABC News for

this Wednesday. I will be back

with the Late Edition News at

120:30. Don't forget cious ABC

News Breakfast tomorrow morning

on ABC2. Goodnight.

Closed Captions by CSI This Program Is Captioned Live.

Welcome to the program. I'm

Ali Moore. The financial crisis

which began on Wall Street has

triggered a worldwide

recession, and while

Australia's economy is not

technically going backwards,

jobs are being lost and

unemployment is set to rise in

the year ahead. The big

question is by how much?

There's mounting speculation

the Government will soon

announce a second package to

try to kick start the economy.

But with the head winds from offshore, what can the

Government do? Despite the

first stimulus package consumer

spending is drying up and now

there's concern the retail

sector will be next to feel the

full effect of the financial

storm. Thea Dikeos reports.