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Lateline Business -

View in ParlView

(generated from captions) of the new Senate confirms it

will remain a difficult place

long after this legislation

becomes history. No longer can

the Government of the day ram

things through the Parliament.

We now have a Senate which is

the house of review and things

can be looked at. I am always

willing to negotiate with the

Government to deliver a better

outcome for consumers. Fump is

not it. Meet the smiling

assassin.

It was a special day in the

swimming pool in Beijing today

with another gold to

Australia's Stephanie Rice. And

numerous records tumbling. In

addition, Michael Phelps became

statistically the greatest

athlete in Olympic history. In

a moment, Peter Wilkins will

update us on the Olympic

results but first we're joined

by Olympics reporter Lisa

Millar in Beijing. There's been

accusation of violence against

the Chinese police in Beijing

and a journalist is saying he's been detain and mistreated.

What can you tell us about

that? The noo t The media here

were wondering who was going to

be the first member of the

press corps to allege something

like this. A British journalist

for the ITN network says he

turned up to record a pro-

Tibet protest that occurred not

very far behind me near the

Bird's Nest. You could almost

call ate flash protest. It is

done very quickly. It was

foreign protesters. They alert

one or two media organisations,

those media organisations turn

up, film it, very quickly

before it's shut down and the

protesters are taken away. This

reporter got caught up in that

and was detained by the police.

He says he continued to tell

them that he was a British

journalist. He's the China

correspondent for the network

so he actually lives here in

Beijing and he has all the

accreditation to be covering

the Olympics as well. He says

he was dragged away to a

restaurant and detained for

about 30 minutes and that he

was man handled. He's showed

off some bruises to his hands

and scuffed trousers and

shoes. The Chinese have

certainly taken some criticism

over media freedom and you

mentioned yesterday the

military hard ware that had

moved in outside the media

village. How do you think this

latest incident will be

read? Firstly I can tell you

that military hard ware which

was the armoured personnel

carrier dis appeared this

morning as quickly and

mysteriously as it appeared

yesterday and took us by

surprise. So perhaps the

Beijing organisers thought it

wasn't such a flash idea to

have that kind of might on

display for the international

media. But of course this

latest incident is only going

to raise questions about how

determined the Chinese are to

follow through with their

pledges to have open access for

the journalists here. There's

still criticism on a daily

basis from some of the media

organisations about not being

able to access the Internet

that, that some websites are

still difficult to get to.

Those criticisms seem to be

deflected by the others and by

the Chinese. But certainly the

IOC has said it is definitely

going to investigate these

claims from the ITN journalist

today. We will see what they

turn up. Lisa Millar in

Beijing, thank you. Thank

you: And now with a look at

today's results, here is Peter

Wilkins. I saw Stephanie Rice's

family on television earlier

and I reckon they were about to

burst with pride. Why not. What

a performance. Two gold medals,

she's up in the echelon. If you

look at the performances from

swimmers and count all four

strokes she is the best female

swimmer in the world at the

moment. There's a bit of the

smiling assassin about her. She

is the type you would invite

around for tea and scones she

she could thrash you at

scrabble. The 400 there were

contrasting fortunes between

that and the 200 and the 400

she led all the way. Today, it

was much more of a battle in

the first leg, Natalie cog

landwas out in front and there

were people all around. But

after the backstroke leg she

crept up a little. It was a

ding dong battle down to the

line with Kirsty Coventry from

Zimbabwe and she just managed

to get there. It was a

brilliant performance and look

at that, the narrowest of

marriagins. Then she let out

this screech which you could

just about hear in Shanghai.

Just a wonderful performance so

two different races - the 400

led all the way and the 200

individual medley stunning

performance and two individual

gold medals now. Let me assure

you that nobody tlsh thrashes a

nerd like me in scrabble! I bet

Stephanie Rice would be happen

question if her career ends up

like Michael Phelps' He is now

the bench mark. She the

superstar. He now has number 10

and 11 which put him in another

stratosphere as far as Olympic

performances are concerned. The

previous best 9, and he has

just now gone to another level.

This race today or the 200

butterfly he followed this up

with a 4 bi-200 relay and he

was brilliant in there. Tha.

Here you got the feeling he was

saving himself up and then down

the last lap he dragged himself

away with that huge wing span

of a long strokes, chasing the

world record . Was he going to

miss it it? Onth not on your

life, with this performance

another world record he got

it. It's a pretty cool title I

guess you could say. Now to put

this clampon into perspective,

we ventured into the world of

one of the legends of

Australian swimming, Forbes

Carlyle along with his wife

Ursula they guided the fort

unions of many young kids. The

grand old campaigners really

and Forbes Carlyle, he is still

at it there. Is there a Michael

Phelps or Ian Thorpe there we

don't know. Today he was

absolutely mesmerise ed. He's

guided the fortune s of some

great legends in Australian

swimming but today he was look

at a one in particular He

would be the greatest swimmer

of all time, without a doubt. I

think it seems sacrilege to say

so but he's streets in front of

Mark Spitz. Mark Spitz won

seven gold in 1972. Michael

Phelps is ready to eclipse that

as the new swimming war

horse He hates to miss any

training. So he's trained to

the T. He's got the capacity to

take a great deal of work, not

all swimmers that have that.

The champions too do and he's

got it. His technique is

magnificent in every

stroke. Not only that, it's

about his pool behaviour all

round which sets Phelps

apart. He is the master of the

underwater work. They call it

the fifth stroke of swimming -

the underwater butterfly action

that they go through. And he

has perfected it to a T. The

whole world is copying him but

he is still a long way in

front, that huge powerful kick

off the wall and he comes out

at the 15m in front of

everybody, he turns equal with

them he will be a body length

in front. He is a

phenomenon. Yes, a phenomenon

that sums it up pretty well. He

is on his way to winning eight

gold medals at a single Games,

he will have it up to 14 and

then there's London. Who knows

how many he will win. Briefly,

give us a sense of what we

should look out for

tomorrow? Back back in the pool

is where we should aim. Jessica

Schipper, big chance in the

200m butterfly. That last 10 or

20m might be the difference

between gold, silver or bronze

and the 100m freestyle, today

almost swallowed up in six gold

medals, Eamon Sullivan breaking

a world record that existed for

five minutes and a bit that was

broken by the French man

Bernard. Eamon Sullivan in the

100m freestyle, can he do

it? See you tomorrow. See you,

Leigh.

Questions have been raised

over maintenance at Qantas,

it's claimed the air Lyne

failed to install strength Jens

clips to stop cracking in

several Boag 737s. Last night

the air Lyne grounded six of

the jet s. Just weeks ago an

exploding oxygen bottle left a

hole in a Qantas jumbo and the

air Lyne reeling. A spate of

less serious incidents has

followed but now another

significant blow has forced

Qantas to ground six of its

busiest commuter jets. Until

we're certain that everything

is 100% correct, we cannot

operate the aircraft. What

we've picked up is a step in

the maintenance check that does

not look like it's been

completed and that is why we

have to go back and verify

that. But the union says it's

far more serious than that.

It's accused Qantas of failing

to fully comply with a

five-year-old air worthiness

directive to install strength

Jens clips in the front of the

planes to prevent cracking

under the cockpit. The instructions were issued by

bowing to strengthen the area

around the pilot oh ots' feet

so they could prevent

decompression of the aircraft. It is not a safety

issue. It is not part of the

safety of the aircraft and it's

not been at risk at any

stage. It is another incident

for the air safety watchdog to

investigate. We will make

independent judgments of what

we think of the health of

Qantas's safety systems. The

grounding of the six 737s meant

the cancellation of services

last night and today. It could

be some time before they're

back in flight. Now to the

weather - windy with showers

and mountain snow for Hobart. A few shores in Melbourne. Fine

but windy in Sydney. Mainly

fine in Adelaide and Canberra.

Fine in Brisbane, Perth and

Darwin. That's all from us.

Lateline Business coming up in

a moment. If you would like to

look back at tonight's

interview with Germaine Greer

or review any of the stories or

transcripts, you can visit our

website. Now Lateline Business

with Phillip Lasker. Thanks.

Tonight - determined to sail

through the credit crisis, the

Commonwealth Bank prepares for

tougher times. I think there's

no doubt that the economy has

performed pretty well. But if

we look at sentiment across the

board, there is a view that

things are going to get

worse. One step closer - the

ACCC gives the OK to the merger

between Westpac and St

George. There wasn't that

degree of concentration or

aggregation of market shares

that we felt would have led to

a substantial lessening of

competition. And Telstra posts

what it says is a good end of

year result but the market begs

to deliver differ The negative

forces of revenue lost will get

smaller as we go forward, which

is a positive thing. First to

the markets - with investor

sentiment radled by new credit

market anxiety, Australian

shares took a hammering. The

All Ordinaries shed 94 points,

weighed down by falls in

finance and resource stocks.

ASX 200 fell 2% ending its five

session winning streak. In

Japan, softer than expected GDP

number s saw the Nikkei drop

over 2%. Worries about Chinese

banks saw Hong Kong's hang

essential end in the red for a

fourth consecutive session. And

in London, the foots kbri is

down over - FTSE is down over

1% 26789 opposing forces

confronting Australia's banking

industry were in full focus

today as our biggest bank

presented its annual results.

The Commonwealth Bank's full

year profit rose a solid 7% to

4.8 billion. But it recorded

the slowest earnings growth in

four years. At the same time,

the Prime Minister and Reserve

Bank enrd the interest rate

debate, saying any cut in

official rates should be passed

on. Desley Coleman reports.

ADVERTISEMENT: The brave - The

bank says it's determined to be

different. But it can't escape

the fact that the global credit

woes have infected all local

bank, interest rates are at

12-year highs a tnd economy is slowing. The Commonwealth Bank

today has report add very solid

operating result. In an

environment where many banks

have announced significant

losses and write downs, The

Commonwealth Bank dlaifrd

healthy 7% increase in profit

to 4.8 billion dollars.

Stripping out a one-off gain

from the March public listing

of US credit card company visa

and the modernising cost of its

banking systems, cash profit

was up 5% to $4.7 billion. On a

divisional basis, the bank grew

its market share in home

lending and household and

business deposits but gave up

ground in the business lending

and credit card markets. The only blemish during the year

has been the bank's exposure to

highly leveraged companies like

ABC learning, Centro, Babcock

and Brown and Allco Finance.

More recently

telecommunications group

Commander, which was passed

over to receivers just last

week. That's seen the bank

double its bad debt provisions

to $930 million. While bad

loans are on industry-wide

concern, the cost of credit has

been a sticking point for

banks. Speaking in Sydney, the

RBA tbt governor Lowe said over

the last few weeks the price at

which banks lend money to each

other has fallen by about half

a per cent age point. I think

that means that there is no

obvious reason that the Banks

could not pass through any

change in the cash rate. I

would say that those banks owe

it to working families, working

Australians who are under

financial pressure at the

moment that when official great

interest rates move that those

moves should be passed

on. While the banks in general

are in no hurry to lower

interest rates, Ralph Norris

says that his bank assesses its

position on a day-by-day

basis. It's a banket of

instruments that we use to

assess the overall cost of

funding, and so to just rely on one particular bench mark

doesn't give the total picture.

So certainly it has an impact

and certainly as I said we will

be doing our best to provide

the best possible rate that we

can . There is a serious

decoupling however of

commercial street rates being

provided by the banks and the

RBA's OCR. That is

substantially driven by the

banks looking to claw back lost

margin. Their cost of funding

remains historically quite high

and their hargment is until

they drop our retail rates are

un likely to drop substantially

in the short term. While there

were no surprises in today's

results, the market was looking

for a more upbeat forecast. We

intend to maintain a cautious

and conservative stance going

into the new financial year.

While conditions will remain

challenging, our expectations

is that we will continue to

perform well, relative to our

peers. CBA displayed its

caution by pulling out of talks

with Royal Bank of Scotland to

buy the ABN Amro Australian

businesses. Even though Mr

Norris expects to do better

than his smaller rivals in 2000

t, the rate at which the

economy slow s will remain a

major concern for the country's

biggest provider of home

loans. Later in the program we

will hear from Commonwealth

Bank CEO Ralph Norris. The

proposal to merge the St George

and Westpac banks has cleared

another hurdle. It's been given

the green light by the ACCC.

The competition watchdog says

the deal is un likely to

substantially lesson

competition. And a short time

ago its chairman, Samuel safrm,

told me why. The law section

50 of the trade practices Act

says a merger cannot proceed

only if it is likely to lead to

a substantial lessoning of

competition in a market. We

examined the markets

particularly in relation to

those markets where Westpac and

St George overlap. We looked at

the corporate and institutional

banking markets, looked at the

retail banks markets which was

perhaps the most significant

one and also at wealth

management issues. We

ultimately determined that in

none of those markets taken on

the national geographic basis

that we were consider ing was

there any likely substantial

less lessen ing of the

business. So for the purposes

of section 50 this plerj ser

cleared. St George's as guard

and Westpac's BT are big

players in financial services.

Why is that not a concern? We

discovered while the retail

platforms for wealth management

were an important issue and

were relatively concentrated,

we also found that there was a

degree of what I will call

demand side sub

substitutability and they

themselves provided for a high

degree of competition which

effect meant that the

aggregation of the retail

platforms which was the issue

we raised in our statement of

issues was not going to lead to

a substantial lessen ing of

competition in this

area. Banking analysts Fujitsu

consulting these our bank

product fees and margins are

the high are high est than in

UK, the United States and

Canada. Because this intensify

that situation? I don't think

so. We have to face up to the

fact that we have four major

banks operating in Australia.

And then we have a number of

smaller banks of which St

George is one. And in our

estimate and through all the

various marketings inquiries we undertook, we found that St

George was not a significant km

pettive constraint on the major

banks. While it had been in

sporadic occasions a price

leader in very narrow areas

with certain products and I am

thinking for example in certain

products in the loem home loan

area, that had not always been

the case. It had only be the

case in certain specific s

circumstances, generally

disbont was not seen to be a major competitive constraint on

the major banks. Is this a

green light for the banking

sector? Often asked that

question and asked it at the

very beginning of this in

relation to Westpac and St

George. No, it is not a green

light to anything. Every single

merger proposal is considered

on its own merits. And subject

to its own market quirns and

its only analysis. I think that

any astute observe ler look at

the decision that's been made

in relation to this matter will

determine that what we're look

ing at is Westpac one of the

large banks merging with a

smaller bank, St George, they

will neat noet the comments

we've made particularly in our

public competition assessment

which has been issued today

which reflects upon the

competitive constraintss or the

lack of competitive constraints

offered by St George and I

think they will fuss understand

how the tests apply. Frap

#3r57s this gives a guide to

the sorts of markets we

consider and in particular

the Io graphic markets in the

quantities that we have

anallised this on a national

market basis rather than a

state by state or regional

market basis. Again, they may

well in different implications

if we're looking at different merger proposals. Thanks for

talking to Lateline

Business. Thank, Phil. The

market was less than impressed

with Telstra's profit result.

13% increase in net profit for

the year was slightly lower

than expected. It led to

Telstra shares recording their

biggest fall in five months.

Simon Palan report ls. Telstra

CEO Sol Trujillo was quick to

play up the positive. Higher

mobile phone and wireless data

sales have increased revenue at

Australia's biggest

telco. Wireless revenue growth

12-plus%. Constant that again,

most of the world in developed

markets where you have 1100%

penetration you will find the

growth in the very low single

indigenous digits. Across the

whole business, Telstra has

reported a total 13% rise. It

was a result that was in line

with our expectation, a little

lower than market consensus but

with strong growth forecast in with strong growth forecast in

the years ahead. However,

Telstra's healthy profit for

the year gone Baz heavily

reliant on cost cutting. The

company aims to slash a quarter

of its work force by 2010. When

it comes to the other main

component of profit revenue,

Sol Trujillo concedes more work

is needed. Revenue growth for

year of 4.7% is only slightly

ahead of inflation. The

negative force revenue loss

will get smaller as we go

forward which is a positive

thing. Retail broadband reevern

you for the year - revenue for

the year grew by the all

important fixed line revenue

was down. The fall in fixed

line sales is one of the main

catalyst's behind Telstra's

five-year plan to reposition

itself to provide more Internet

and mobile phone services now.

The third year of that plan,

analysts say Telstra is largely

on track. The dollar growth

they're getting now from

broadband exceeds the decline

that is occurring in that

traditional fixed line

telephony business. But the

broader market was not

reassured. Today Telstra shares

slipped to 4.32. The entire

market is down today. I don't

think you can make any

inference one way or the other

on that. Yesterday, Australia's

number two telco un fail veiled

flat first quarter profit but

it's opting to a leadership

position over the next few

years. Optedus is always

planning to do something,

threatening to do something but

they will never do it. Telstra

will pay a final dividends of

14 cents per share. With an eye

on the global plasma market,

the Australian Biopharm

suitical company CSL is

spending $3.5 billion to buy a

smaller US rival. The plan

purchase of Talecris

Biotherapeutics still require s

regulatory approval. But CSL

says the deal will increase its

product range and expand its

geographical presence. The

company also announced a 30%

rise in full-year profit to

$702 million. CSL shares were

suspended today while it raise

s $1.7 billion to fund the

purchase. It wasn't a day for

the faint hearted on the share

market. As we said earlier, the

iend fell bow low the - All

Ordinaries index fell

below. Overnight the price were

very weak. There was weaker oil

prices and weak er gold. So it

was going to be a tough day for

our market to perform. We

already wr down 121 point at

worst. We rebounded throw tlu

to day to be down about 8 a 5

but just couldn't hold that bit

of short coming as we saw and

we closed just over 100 points

gown down on the ASX 200. In

recent days we've seen the

sector going in op rate

direction. That was not the

case, though, today? No,

certainly that rotation we've

seen, very strong rallies in

particular stocks like Westpac

which has rallied nearly 25%

from the July lows came off

today on profit taking. It was down 88 crebs today.

Commonwealth Bank although the

result looked fairly benign, it

was down heavily in early trade

and rebound. It closed found

but certainly stocks in the

market through this reporting

period that are not meeting

expectations are being heavily

penalised. Where to from here?

The market is watching the

currencies very closely to see

if the US dollar might come off

from its pretty strong rally

and we may in fact see a pick

up in commodity prices post the

Beijing Olympic Tass Chinese

manufacturing sectors goes back

and start s picking up its

inventory levels which are rung

at pretty low levels at this

time. Was gold oversold? It

does look like it. If you look

back, ly - Lihir gold touched

$2.08 today and 2 last time it

was there was in 2006. If you

convert all that in into our

Aussie dollars in terms of gold

prices, the gold price is about

$200 higher now than it was

back in 2006. So certainly it

would appear at $2.08 Lihir was

extremely oversold. I reversed

some of that today and closed

at $2:22 and Newcrest followed

that lead up $1.41 through the

day. We saw a rally in the gold

price through the afternoon.

That's now continued post

market as well. Goodall has

taken a substantial - Goodman

fielder has taken a write

down. Goodman is reflecting on

the weak New Zealand economy

but also in terms of high dairy

commodity prices are impacting

their input costs thie. Taken a

non-cash writedown on

impairment cost of $170

million. Despite that, they've

reconfirmed guidance in the

region about $235 million. They

have confirmed that the

dividend will be flat. So the

market looked at that, the

stock was steady around $1.50

through the day. Thanks for

joining us. Thank you. To the

other major movers on our

market today - property stocks

fell on renewed credit market

bore wris.

Solid and safe - that's the

image the Commonwealth Bank is

attempt ing to cultivate in

this credit crunch world. The

Commonwealth Bank CEO Ralph

Norris says the 4.8 billion

dollar profit could have been

higher if not for the daucious

increase in provisions for bad

debts. As the bank chief keeps

an eye on a very uncertain

future. I spoke to Ralph Norris

a short time ago. Ralph Norris,

thanks very much for joining

Lateline Business. Thanks,

Phil. What sort of deterioration have we seen in

the quality of your loan book?

You've increased your

provisions nearly $500 million? Interestingly enough

we haven't seen any significant

deterioratetation yaetion in

the last six months. We had

some issues in the first six some issues in the first six

months with some single name

expoesh urs but in the second

half we didn't see any

indications of deterioration of

the similar sort and if we look

at our consumer books, credit

cards, personal loans and home

lending arrears are lower this

time this year than they were

last year. So what do we take

from that in terms of how the

economy is going? I think

there's no doubt that the

economy has performed pretty

well but if we look at

sentiment across the board,

there is a view that the thing

are going to get worse. So as a

result of that we've applied

what we call an economic

overlay to say that we should

provide a little more from the

point of view that the

situation over the next 12

months could be a little more

difficult than it abhas-been in

the past 12 months. You grew

your home loan market share.

Isn't that proof that some

competitors are falling by the

Wayside due to the credit

crunch? I don't think there's

any doubt that the major

financial institutions have

increased their market share in

the home loan market as we've

seen a number of the non-bank

lenders being unable to compete

in what has become obviously a

very competitive market due to

the higher cost of funding. The

ACCC's given the St George-Westpac merger proposal

the green light, saying it's un

likely to substantially lesson

competition. Are you surprised

by that? , no I am not. I think

that the Australian market is a

very competitive market. And we

have obviously the major banks,

we have a number of smaller

banks, we have a wide range of

credit unions and so there are

probably 100 institutions of

different types that do compete

in what you could term as the

broader financial services

market. So does the decision

encourage you? Well, it doesn't

encourage or dis courage me. I

think it was a decision that I

didn't find surprising. I think

that given market concentration

tests that the ACCC applies

that the combined market shares

of both Westpac and St George

would not cause a concentration

issue. Today you pulled out of

negotiations to buy ABN Amro.

Did you reach the conclusion

commercial and investment banks

are not a good fit? We had

entered into a non-binding

arrangement to do due diligence

on ABN Amro and it was on the

basis of board approval. We

talked about that yesterday at

our board meeting and it was

hard to put together a compel

ing rationale to undertake that

acquisition in the end. So we

decide ed to discontinue the

due diligence and not go

forward to a purchase of that

particular asset. You are not

biding your time hoping to get

it as a better price as

condition ing s deteriorate? No

we're not. That is not the

reason behind the thinking. It

was really based around looking

at the overall economic

conditions, the outlook for

that particular industry and

where we currently sit in that

industry and we took a view

that the option was not a

compelling one. What about bank

west, would that be a better

fit? Aim not going to

speculation on any acquisition

opportunities. We look at all

opportunities as they arise.

And when and if we decide to

make a move on any particular

opportunity, we will obviously

make the appropriate announce competents. The Reserve Bank assistance governor Philip Lowe

said the 90-day bank bill rate

has dropped around half a per

cent in the last two or three

weeks. He says, "That's

significantly reduce ed the

bank's marriagetal cost of

short-term funlding,", sand he

said, "I think that means there

is no obvious reason that the

banks could not pass through

any change in the cash rate."

Do you agree with that? I don't

think there's any doubt that we

will pass through some change

in the overnight cash rate, the

official cash rate. Certainly I

would agree with that

interpretation. Obviously the

9046 day bill rate is one part

of our funding mix and

certainly our long-term funding

has had a significantly

increased cost attached to it

and we have not seen any

reduction in those long-term

rates. We've seen a significant

increase in the cost of term

deposits to banks over the last

12 months. And so the 90-day

bill rate is a part of the

funding mix and we will

obviously have an inpact on our

overall cost of funds. So what

I can commit to saying is that

we will do our best to pass on

as much of any reduction in the

OCR as we possibly can do. That

will be dependent upon our

average cost of funding. You

have the largest deposit base

in the country and fund ing

doesn't come any cheaper than

for the Commonwealth Bank, does

it? We do have a largest

funding rate but we have the

lowest standard variable

mortgage rate as well. So I

think that our customers do get

the benefit of our very strong

level of household deposits and

that's reflected in the fact

that we actually do provide our

customers with the lowest standard variable mortgage rate

>>ivenlth you would say gree

there will be enormous

community pressure on the banks

to pass on any cut in official

rates to home borrowers. What

is the chance, then, that the

less visible lending rates

might receive less favourable

treatment? I think the

situation here is that we don't

want to see different parts of

our business cross-subsidising

other parts. We operate in a

very competitive market place.

And certainly if organisations

see the opportunity to take

advantage of pricing in a

specific sector they will. And

I think given the fact that the

out look for the year ahead is

lower levels of growth, there

will be, I think, a

significantly greater level of

competition in order for institutions to get their share

of the growth, or a greater

share of the growth. So that

pressure won't have - So that

pressure won't have any

implication for business

lending rates? I think they

will move in line with other

reductions that will happen as

a result of a change in the interest rate environment. Ralph Norris,

thanks for joining us on

Lateline Business. My pleasure.

The Reserve Bank was given

more food for thought today

with a higher than forecast

rise in the wage price index.

Market economists, some of whom

expect an interest rate cut as

soon as next month, say the

numbers are un likely to

trouble the lb RBA but others

are not so sure. Neal Woolrich reports. With Australia's

economy as hazy as the Beijing

sky Lyne, every bit of economic

data becomes crucial in figures

out what the Reserve Bank's

next move will be. Today, the

latest piece was revealed with

the wage price index rising by

4.2% for the year to June. The

figures were above market

expect it'ses but most

economist s argue they're un

likely to put upward pressure

on interest rates The numbers

that came out today on wages

suggests that growth has been

steady at around 4.25% where it

has been for the past year or.

So there was no new green light

as faster far as the Reserve

Bank on interest rates is

concerned from today's numbers but neither does it suggest

that there is really an overt

ak kaeleration. Investors

agreed pushing the Australian

dollar below 86 US cents to a

7-month low in the minutes

after the figures were

released. But la strobe

University 'sdom Harding argues

the RBA would be concerned with

the 1.5% jump in wages in the

June quarter, rougherly the

same as the inflation rate. The

private sector is still getting quite large wage increases a

tnd Government sector is not. I

think that is going to be worry

ing looking to what the Reserve

Bank might do and whether we

can have some constraint on

wage inflation. Don Harding

says the Ann RBA does not have

a clear picture of how much the

economy is slowing and thinks

the central bank would be

unwise to start cutting in

September. Because the GDP

numbers are coming out the day

afterwards and we want to know

how substantial they are and

the Consumer Price Index

numbers don't come out until October. I think they would be

better to wait until they got

both of those numbers out and

then think about what they will

do in November. Just to confuse

the picture even further, the

Westpac-Melbourne Institute

consumer sentiment index jumped

9% in August but remains

one-third below last year's

peaks. The surge in demand for

explosionives has seen Orica

finalise plan for a $560mm joint voent nuclear Indonesia.

The plant will produce 300,000

tonnes of ammonium nitrate

annually for Indonesia's

expanding resource sector.

Orica says its commitment is

the biggest by an Australian

firm for at least a

decade. This will be the

largest investment by an

Australian company for quite a

long period of time in

Indonesia. And I think that is

very important. Orica expects

the project will be fully

operation al by 2012. Now with

a look at tomorrow's crowded

business diary. The country's

large est stock exchange, the

ASX, tables its full year

earnings as does

Haightonholdings and Wal King

joins us on the program.

Stocklands delivers its

results. Oversee Sea, the

latest US inflation figures are

out. Before we go a look at

what's making news in the

business sections of tomorrow's

newspapers. The 'Age' examines

today's profit announcement

from the Commonwealth Bank,

despite mission its profit

forecast the 'Australian'

describes Telstra's numbers a

as stand-out result . The

'Sydney Morning Herald' looks

at the same story and the

'Australian Financial Review'

says the tax office is targeting wealthy individuals

and big businesses. In late

flus is more gloomy economic

data out of the US with

retailing sales suffering an

unexpected fall. In a sign

American consumers continue to

tighten their belts, total sale

s fell 10% last month. That is

all tonight. As I leave you,

the Dow is down 92 and the FTSE

is down 69. I am Phillip

Lasker. Have a good night.

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