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Lateline Business -

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(generated from captions) scheming to recognise January's

parliamentary election. A

head-to-head fight between Sharif and the other Opposition party led by Benazir Bhutto

divided Parliament. would produce a weak and

divided Parliament. Ms Bhutto

is trying to put on a brave

face about having competition

for votes. TRANSLATION: The

Government has made a decision

in giving Nawaz Sharif

permission to come back. This

is a success for our

negotiations. General Musharraf

is expected to quit as Armed

Forces Chief and be sworn in as

a civilian president on

Thursday. In the lead-up, he's

made the presidency more

powerful than ever before.

Only he has the power to lift

the state of emergency that

currently bans Opposition

parties from holding outdoor

protests and rallies. For the

second day running, police in

Russia have broken up an

Opposition rally and arrested

party leaders. Opposition

Leader Boris Nemtsov was among

dozens of activists arrested at

a rally against President

Vladimir Putin in Saint

protesters say Petersberg yesterday. The

protesters say the government

has been harassing those

campaigning against the Kremlin

in the run-up to next week's

parliamentary elections. The

another Opposition figure the

former world chess champion

Gary Kasparov was arrested at a

separate anti-Putin rally in

moss ko. He was charged with

organising an illegal march and

sentenced to five days in jail.

That's all from us, 'Lateline

Business' coming up in just a

moment. If you'd like to look

back at tonight's interview

with Helen Coonan or

Christopher Pyne or review

Lateline's stories or

transcripts, you can visit our

website. Now here's 'Lateline

Business' with Ali Moore.

Thanks, Tony. Tonight -

election endorsement, the new

Labor Government gets a tick of

approval from the market. It

was not just a victory for one

party, it was a very strong

decisive victory and it gave

the new Parliament a great

opportunity to drive things forward. While there are mixed

views from business, a welcome

for Kevin Rudd from the big end

of town. He's put a lot of

economic credentials. He's

conservative, he's put good

fiscal policy out there. So

there's a lot of things about him that business is not

frightened of. But for smaller

operators, worries about the

winding back of WorkChoices. I

don't want to see him rolling

it back. A it would create

more unemployment and b) it

would make it harder for small

business like ourselves.

Also tonight - Rio's

rejection. Rio Tinto explains

why it's worth more than BHP

Billiton is prepared to take it

over. First, though, to the

markets and with investor

confidence fortified by Labor's

resounding victory at the

polls, combined with weekend

gains on Wall Street,

Australian shares rose for the

first time in five sessions. Boosted by gains in

Boosted by gains in resource

and banking stocks the All Ords

climbed over 2%. The ASX200 put

on 141 points. Its biggest

1-day advance in two months.

The Nikkei bounded 1.5%. The

Hang Seng surged 4% and in

London the FTSE is up 20

points. Rio Tinto has

delivered a detailed defence of

BHP Billiton's $140 billion

takeover bid telling investors

in London tonight the company

is poised for growth and

repeating its view that the

three for one share offer from

BHP Billiton fundamentally

undervalues the business.

Outlining its plans, Rio

announced a more than $2

billion investment in new iron

ore mines in Australia, upped

its forecast asset sales

following the Alcan takeover,

predicted better than expected

savings from that Alcan merger

and promised a bigger dividend

. Here's some of what chief

executive Tom Albanese had to

say. When we rejected BHP's

recent proposal, we did so

because it is fundamentally

understood valued Rio Tinto and

its prospects. Today we'll

explain just where that value

lies in Rio Tinto. In doing

you'll see I'm comfortable in

saying Rio Tinto doesn't

necessarily need BHP. Well, for

a closer look at what Rio

Tinto's boss Tom Albanese has

had to say, we're joined by

Stephen Pope, chief global

strategist at Cantor Fitzgerald

in Europe. As Tom Albanese

just said, BHP may need Rio,

Rio doesn't need BHP, is he

right? What they've tried to do

today is put up a strong today is put up a strong

defence reason as to why if BHP

want to come and buy us they'll

have to up the ante and show a

better deal. The first shot in

a potential takeover scenario

is never the best crack of the

whip. There probably will be a

better price offering coming

through from BHP. I think what

you're seeing is they're trying

to show they're being very good

at managing the resource access

they've had so far and they can create excellent value.

dividends, that's going They're going to pay more

dividends, that's going to please shareholders. Indeed they argue they've got better

iron ore deposits, better infrastructure and they're

better placed as a stand-alone

firm. If this is all about

just getting a better price, do

you think they will now get

one? Well, I'd like to think

the Rio board think they're

capable of operating on their

own in a market that continues

to grow. However I think

better shareholder value will

come about through a merger

between mining giants. I have

no doubt that BHP will come

back with a much-improved deal.

You're probably having to look

at something where once you

factor in the value of the

aluminium stream from Alcan,

it's more likely to be the mark

and this adds up with a cash

injection of probably coming

?71 billion. When do you think

that will happen? Rio says it's

about to start a road show, how

quickly do you expect BHP

Billiton to come back? Oh, I

think both sides have amassed a

good number of advisers from

the investment banking world,

so it's probably going to be.

I'd like to think you'll hear

something before the run-up to

Christmas. Then we know

markets start to slow down. Early in the next year I Early in the next year I think

you'll start to see definitive

soundings coming through. "OK,

we're going to come after you

and up the price and that's

when you'll see this deal

cracking on and get off to a

nice start in '08". What about

prospects of a rival bid? There

has been speculation about a

Chinese investment firm that's

been knocked on the head... but do you think we can discount

the prospect of a rival? I

would say the

would say the only mining rival

that could get involved would

be Anglo American. I don't see

Xstrata coming into the frame.

There were whispers saying

they've got Chinese funding

money behind, that caused

concern. I don't think the

Chinese will look to buy Rio

Tinto outright. I'm sure

they've got a stake. They do

need to have diversification of

their resource assets and investments. Generally for

them to buy it? No, no, I don't

see that happening at all. Do

you think the Chinese customers

in particular are unhappy about

this prospect? I think what

you're seeing is steel

producers around the world are

probably groaning, because they

sense that again, the balance

of power in the iron ore price

negotiations goes over to the

miners. But that's nothing

new. We've seen that before

already. I don't think there

would be any risk of a price would be any risk of a price

collusion between, say, a

combined BHP and Rio and CRVD.

If they were even a sniff that

they were clueding on the price

you'd have regulatory

authorities the world over on

their case and they had be hung

out to dry on the world stage.

So I just do not see that

happening. Stephen Pope, if you

look at what Tom Albanese had

to say in this evening's briefing it was briefing it was almost a mea

cull parks wasn't it? He made

the point that Rio has had a

history of overpromising and --

underpromising and

overdelivering and Trace been

underappreciated by the market.

There's going to be no more

hiding their light under a

bushel? That's right. What

you've seen with Rio is because

they've never beaten the drum

too heavily, you've seen that

net investments over a 5 hear period probably haven't

delivered as well as, say, with

BHP in terms of the return on

capital or maybe the actual

share price performance. That,

of course, has changed in the

last few weeks where the Rio

price has gone off to the moon.

They're saying, "We manage our

resources well and we can

estimate the true value," they

bought this copper mine in Peru

from BHP a while ago. OK the mining superstructure at the

top of BHP have changed. top of BHP have changed. The management have different

personnel. Back then they I

-- they didn't see the true

value. So trust us to manage

the property, don't trust the

other guy. Unfortunately, the

other guy has deep pockets and

I think they're going to come

back chasing hard. Stephen

Pope, again many thanks for

joining us. Thank you, my


At first blush it seems Kevin

Rudd is enjoying an

overwhelming endorsement from

investors. But market watchers

say today's rise was driven by

the mining heavyweights, BHP

Billiton and Rio Tinto. Most

agree the change in government

would alter the market fundamentals although fundamentals although some

individual winners and losers

are emerging. Neal Woolrich

reports. A 6% swing at the

polls op Saturday and a 2% rise

on the stock market have set

the scene for Kevin Rudd's

honeymoon with voters and

investors. While the Prime

Minister elect is expected to

chart a similar course to John

Howard, analysts say the end of

political uncertainty is a

positive for the market. I

think it was also pleased

because it was not just a

victory for one party, it was a

very strong decisive victory,

and it gave the new Parliament

a great opportunity to drive

things forward. But most market

watchers agree today's surge

was largely influenced by

factors other than the

election. I think today's rise

in the Aussie market was more

to do with the strong lead on the weekend from the the weekend from the Dow, and

the US markets. In addition to

that we also had strong moves

in BHP and Rio today. They've

accounted for one-third of

today's gains. Elsewhere on the market:

in a campaign noted for a string of me-too

string of me-too policies, two

areas of difference between

Labor and the Coalition stood

out - industrial relations and

climate change. Labor's plan

to ratify the Kyoto Protocol is

expected to have an adverse

impact on utilities, especially

those which rely on fossil

fuels and transporters. Resource stocks are likely to

be most affected by the winding

back of industrial relations

laws. There are going to be

significant changes in the

sector around the new

legislation which, the reform legislation which the Rudd

Government does bring in. It's

not something we're going to

see over the next six weeks or

six months. It's something

that will gradually be phased

in. Irnt Swiss's Peter Russell

says the mining industry is

more likely to be influenced by

global demands. Although it has

a major impact before more people have transferred to

WorkChoices than in other

areas, it's unlikely to be too

important, because the main

stumbling block to further

growth there is shortage of

people. So I feel fairly

comfortable about the resource

sector continuing to

perform. Among the other

industries expected to benefit

under Labor are child care with

the ALP promising a 50%

increase in the child care

rebate. Telecommunications

with plans for a $4.7 billion

national broadband network, and

renewable energy. That has

already started before the

change of Government, I think

if Kyoto is ratified, that will

be a symbolic act that will

help encourage yet more and I foresee a rush of

foresee a rush of a few more

IPOs in that field and

considerable more interest

building up. We've barely

started. But as with all

political announcements the

devil is in the detail.

Investors will now be keenly

watching the form that Labor's

greenhouse policies take, in

particular which activities are

favoured with subsidies or

punished with higher charges

like carbon taxes. To the other major movers other major movers on our

market today.

Now the election is over, the

focus has turned to what a new

Labor Government will do with the nation's industrial

relations laws. Labor's new

minister elect for workplace relations Julia Gillard says

individual agreements will be

abolished and the Labor Party

has also pledged to strengthen

unfair dismissal laws. That's

prompted concerns the planned

reforms could threaten the

profitability of small

businesses. Sue Lannin

reports. Sydney-based

wallpaper manufacturer

Signature Prints employs 19

people and exports around the

world. But the company's

owners fear that Labor's

planned changes to industrial relations laws

relations laws could hit their

business hard. We can probably

produce our designs and our

fabrics and textiles offshore

at a cheaper rate. It may

affect us that way. We have to

make clear business decisions,

that could be an issue. That

is a perfect expresso. One of

the changes by the Howard

Government was the exemption of

companies with fewer than 100

workers from unfair dismissal.

That is expected to be reversed

under Labor. Many small

businesses like this cafe in

inner city Sydney fear a return

of the unfair dismissal laws.

They say it will make it harder

to hire people and could send

some small businesses

bankrupt. I don't want to see

them rolling it back, a it

would create more unemployment

and b), make it harder for

small businesses like

ourselves. Arrigo Pillon is worried about the abolition of

workplace agreements. The

rentals have all gone up, the

wages have all gone up, then

you have the GST factor, you

have all of these factors

combined which narrows your

margins. And, therefore, small

business is not doing as well

as they were in the '80s and,

therefore, we can't afford to

go back to the '80s. At the big

end of town where workplace agreements and unfair dismissal

laws don't have much laws don't have much impact

it's a different world. As

AMP's Craig Dunn prepares to

take the baton from Andrew

Mohl, he's hoping for support

from Labor on changes to who

woulding tax. -- withholding

tax. I think in the area of

withholding tax and some of the

ways we're taxed as an

industry, they do possibly put

barriers in place in terms of barriers in place in terms of

developing our financial

services industry

internationally. Andrew Mohl

says productivity must keep

pace with the resources boom

and big spending by

governments. We have to lift

the productivity capacity of the economy to cope with that

and, you know, that's a challenge that the Labor

Government has set out a series

of policies in order to try to

meet that. Back on the factory

floor, Helen's main concern is

preserving the legacy of the

founder of Signature Prints,

flamboyant designer Florence

Broadhurst. From a change of

government, I would like to see

more support, especially with

heritage issues. In the

background you will notice the

Florence Broadhurst Library of

Design. Not only do we need to

maintain the lie brar, but preserve it for the

preserve it for the future

generations. It's a nervous

time for Australia's small

businesses. To see what the

big end of town thinks of

Labor's election victory, I was

joined earlier by Heather Ridout from the Australian

Industry Group which represents

some 10,000 employers across a

range of sectors. Heather

Ridout, welcome to Lateline

Business. Good to be here. Is

business nervous or relaxed and

comfortable now you have a Rudd Government? We're never relaxed

and comfortable, we've had a

good look at Kevin Rudd. He's

put a lot of policy out in

areas we agree a lot about. We

all agree something needs to be

done about climate change,

better State-Commonwealth better State-Commonwealth

relations, a better

coordination of infrastructure.

He's conservative, good fiscal

policy out there. There's a

lot of things about him

business is not frightened of.

Areas like WorkChoices they

have narrowed the differences

between themselves and the

Government policy and addressed

important issues to business

like pattern bargain, areas

around right of entry provisions, the construction

reforms have gone a long way there.

there. So a lot of the really

raw issues were hard-fought,

but a lot were negotiated in

the lead-up to the election.

Business had a chance to have a

good look. Is it fair to say it

is business as usual, or do you

see some elements waiting? I

don't think business wants

business as usual. I think

business is looking for real

action in a number of areas.

So we'll be disappointed if

Kevin Rudd comes in with this mandate mandate and doesn't give more

certainty to business in a

number of areas and I think the

issue like Commonwealth-State

relations that is a major

gateway. If we can get that

right, get a good deal done

that, it will be an enabler of

fast and better solutions to a

raft of issues we face.

Whether they're education,

whether they're infrastructure,

whether they're broadband or

water. Occupational health and

safety - it's all there. So I

think business as usual it's not, and not, and business doesn't want

business as usual. It wants

investments in medium-term

productivity and capacity

building initiatives. You say

you've had a good look at Kevin

Rudd over the past year, how

well a known as quantity, he's

not just him as the Prime

Minister now but his team, how

well do you know them? Wayne

Swan we've known for many years

as a junior politician. Mick

Young brought him to our

offices in North Sydney and

introduced him to our council as a budding potential

politician. So I suppose

that's 16 years ago, a long

time ago. Julia Gillard, we

didn't know her as well in

health but we've spent an awful

lot of time this year arguing

the toss about workplace

relations reform. She's tried

to adopt the language and

understanding of business.

There's a long way to go in

that debate. I think Stephen

Smith, he's a good guy with

lots of credentials. Lindsay

Tanner is well-known. Simon

Crean was a minister and Kevin

Rudd himself, I hear has a

spent a lot of time in our

national executive. We know

him reasonably well, but I

think the Australian people

have never seen him in this

role. He's got some way to

go. Have you been approached to

work on the business advisory

council? I haven't, but I think

we will work with them in whatever aspect

whatever aspect of it. I mean,

I assume I will be quite close

in terms of trying to shape

these policies, because we have

a lot at stake and we've made

our views clear. How important

is that council? I think it's

fundamental. I mean, business

has to have an honest robust

discussion. We've got to toss

off ideas of political

correctness in dealing with

government. It won't help them

or business. But I feel if we

have that constructive open

dialogue we can tell them in a

way that's not offensive, it's

trying to be constructive, get

a better solution. Business

has to realise the Labor Party

have had an emphatic mandate.

We've got to to make things

happen and make it better for

Australia. By doing it better

for business in a way that can

also be better for

Australia. You talk positively,

but if we can look at specifics

like industrial relations and

if we remember the ads funded

by big business, but those ads

raised and spectre of union

thugs taking control if the ALP won government. Do you have

any concern about a resurgence

of union power? What a windback

of reform further than what you

know? Well, I think it's going

to be Kevin Rudd's challenge to make sure people don't get

alarmed by those issues. We

deal with unions every day

settling disputes, really tough

situations and 95 times out of

100, 99 times out of 100 we

find them co-operative.

They've got to do a job.

They're not all thugs walking

through with blazes and turning

off the lights? Eit wouldn't

have been an ad we wanted to be

part of. It was their decision

to run them. But the unions

have been a force for good but

they've also been a very

disruptive force. And the

construction industry, for

example, has been a classic

example. The tough cop on the

beat has been fundamentally

important in turning around the

thuggery in that industry and

we don't that to go

backwards. If we can turn to

the other side of politics now,

John Howard has gone, Peter

Costello has gone. Who do you

think should lead the Liberal

Party? I'm not a political

commentator Ali, I think they

have a lot of talented people.

That's good. They have Brendan

Nelson, they have Malcolm

Turnbull, they have people like

Andrew Robb in Melbourne who

are very talented. Business

doesn't have a favourite? We

never get involved in politics, that's why we didn't get in the

campaign. In a sense, they are

good people and I think the

noises coming out of the

Liberal Party are vital that they regroup and they regroup and revisit and

reform. It's a great political

institution and Australia needs

a strong opposition and what

we're seeing is worrying, I

think. Are you seeing them fall

apart when you look at the

numbers of people? I think when

you see the Liberal Party out

of government in every State

and Canberra and a new broom

coming in, it's going to be

important that the leadership

of that party really holds

together and unifies behind a

new agenda, but deals with its

problems and I tell you if

Labor hasn't dealt with its

issues that will be shown up in

government and if the Liberal

Party doesn't deal with their

issues it will be shown up in

Opposition over the next few

years. What do you think is the

key issue for the Liberal

Party, why do you think they

lost? They're I'd logically split. The split. The right have been

forceful in the party and it's

severed a lot of their

connection to a lot of ordinary people and the issues that concern them. I think there

are a lot of very smart people

in the Liberal Party who have

picked up on that. I think

they've also been quite good on

ideas, but just not quite able

to translate that into the

futuristic messages that were

required in this election to

win. A key issue for the

Liberals now is going to be

fundraising, will business give

to a party would

power? Business has got to

support both sides of politics.

We want a robust contest of

ideas. The great thing about

this election is we had a great

contest of ideas about

WorkChoices, education, broadband - all these big

issues. We had a robust Opposition, a strong government

and they went head-to-head. I

think we'll eget better policy

out of that. Heather Ridout,

many thanks for talking to

us. Thank you. Shareholders of

Rams Home Loans have approved

the sale of the company's brand

and distribution network to

Westpac, with those who bought

into Rams' initial public

offering losing close to 90% of

their money. Today's annual

general meeting had been

expected to be fiery. In the

end the meeting lasted just

half an hour, with the chairman

John Kinghorn blaming new

accounting rules for the

company's problems. A financial

institution that purchases a

5-year security must market

that security at the end of every month and book any gain

or loss. In a volatile market,

investment managers are not

prepared to risk an immediate

accounting loss irrespective of

the long-term merits of an

investment. Rams' shares jumped

to 36 cents after Mr Kinghorn

revealed the company was on the

way to refinancing $5.5 billion

in debt. But that's still well

below July's listing price of

$2.50 a share. Now a look at

tomorrow's business diary.

A look at what's making news

in the business sections of

tomorrow's papers. The 'Age'

found no sign of panic as

investors endorsed Kevin Rudd's

win at the polls. The 'Sydney

Morning Herald' covers the same

story. The 'Australian

Financial Review' says Labor

has challenged the Senate to

abolish the WorkChoices laws as

soon as possible, and the

'Australian' leads Henrio's

defence of BHP's $140 billion

takeover offer. That's all for

tonight. The FTSE is up 1

point and the Dow Futures are

up 44. To watch any of

tonight's stories again, you

can visit our website. Or

watch the whole program on ABC

2 just after 7 o'clock tomorrow

morning. You can write to us.

I'm Ali Moore, goodnight.

Closed Captions by CSI

NARRATOR: You're about to enter an environment which will be the most challenging your brain will ever have to deal with. Your brain will have to perform complex tasks. Yet we can all do it without thinking about it. You're going to a party. MUSIC BLARES It may seem effortless, but whenever you mix with other people, your mind performs phenomenally complex tasks at a dizzying speed. In fact, what we do at a party would leave the world's most powerful computer standing. From the moment you enter a room, you pick out one face from another. You begin a series of detailed assessments of every one. From what their faces tell you, you decide what you think of them, and even start to understand what they are thinking. In this program, we'll be exploring just how our mind does this. And how what happens in a place like this shapes the world we live in. This is the story of how we relate to other people.

And understanding how our mind does that can help us use it better. We'll see experiments that show the hidden potential of your mind. We'll learn how to tell a fake smile from a real one, how to tell if someone really likes you. We'll see how all of us can read minds. We'll discover how an experience like this... ..can tell us who to trust. And we'll find out just what our mind must do to win the friendship and love of those who matter most. We all rely on our mind as we try to win over people that we've never met before.

WOMAN: Good afternoon, class. CHILDREN: Good afternoon, Miss Bragg. (Sings) # Are you sitting nicely? (Children sing) # Yes, we are. # But the mind of 30-year-old primary school teacher Mia Bragg is about to face a particularly tough challenge. There is something very special. What's happening to Miss Bragg in the holidays? Um, Mardi? GIRL: You're getting married. I'm getting married... And as well as tying the knot, Mia will also have to get to know dozens of people she's never met. And I tell you why - 'cause my boyfriend comes from New Zealand. That's where his family are,

and I haven't met his mum, I haven't met his dad, I haven't met his sister. So, I'm going all the way over there to meet his family. When are you getting married? I'm getting married on 15 August. CHILDREN: Hip, hip, hooray! (Children cheer) MIA: It's been an absolute whirlwind since me and Matt met. It's been like a fairytale. Well, we met, and then 1.5 months later, he moved in, and then just a month after that, we got engaged. And it will have been 10 months that we will have actually known each other when we get married. Ask her if Paul and that are coming around on Friday. Mia will have to assess, understand, and win round Matthew's family. It'll be one of the most complicated things her mind has ever done, and we'll be following her as she tries to do it. Yeah, on Friday, yeah. (Cries out) No, I will get on with them.

But why is getting on with people so complicated for our mind? Well, let's start at the beginning. First, we have to be able to tell each person apart. If we couldn't do that, life would be very difficult indeed. Just imagine if all faces looked the same to us. It would be a nightmare. But we can tell each other apart, and it's a skill we start to develop the first chance we get. WOMAN: Keep it up, keep it up, keep it up, keep it up, keep it up, keep it up, keep it up, keep it up, keep it up. And another one. Come on, Kel. Longer pushes. (Woman cries out) Push it out again. It's not allowed to stay there - come on, push. Just one last push, and push. Come on, Kelly, push it. Come on, Kelly. Push again. And again. Push, Kelly. The hardest is the last one. Go on, Kelly. Keep panting now. Open your legs and pant. Keep panting. (Screams) Utterly defenceless, this little girl seems to have come into the world with few social skills. MAN: I name this ship Isla. (Woman laughs) But she does have one crucial one, and within seconds of being born, she uses it.

Trying to open her eyes, trying to open her eyes. Through the blur of her first sight, baby Isla instinctively turns towards a face. Got big feet. This strengthens the bond between her and her mother. But this, the first face she's ever seen, is also physically altering her brain. This first moment of Isla's social life

is stimulating her brain at the tiniest level. Our brain contains complex networks of brain cells called neurons. Like all of us, Isla has been born with a staggering 100 billion of them. These neurons are connected to each other