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Lateline Business -

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(generated from captions) see nothing less then, a

transformation of our cities,

we need to get much better

planning in place, and that is

a part of the Infrastructure

Australia agenda, and, indeed,

why we are establishing the

major cities unit as part of

moving forward. Will you moving forward. Will you look,

for example, at linking

satellite cities to the major

centres by fast trains, so that

you can take the pressure off

the population base in the

major centres, as they do in

many other countries around the

world, in Europe, in the United

States, to some degree, and

certainly in Asia. Certainly

that is one of the issues that

will be going forward. Of

course, the cities in Europe

and Asia have much higher

population, I was, in fact,

disappointed that we didn't get

a stronger submission for a

fast train, say, from Newcastle

to Sydney as part of Infrastructure Australia to Sydney as part of the

process, but this is... If you

did, are you saying if you did

get such a submission, you

would be willing to look

carefully at it and possibly

provide large-scale Government

funding. Well, certainly this

is a dynamic process. What we

have seen with the have seen with

Infrastructure Australia

process, is we have committed

to a quadrupling of funding on

rail, indeed, we are spending

more on rail in 12 months than

the previous Government spent

in 12 long years. This is

vital to our future, for both

freight, but also for passenger

rail. There's no doubt that

it's part of not just modern

cities, but it's got to be

of the climate change agenda as cities, but it's got to be part

well, we need to move towards... With respect,

there's not a lot on the books

right now in that regard. I

mean there are some projects,

some expensive projects for

inner city rail networks in

Brisbane and Sydney, but there

aren't the sort of wide-sweeping projects as you

referred to, linking satellite

cities together, taking the

pressure off a population base

like Sydney or Melbourne or Brisbane. That's correct,

there's projects, be it the

Northbridge rail project in

Perth is an exciting project

changing the nature of changing the nature of the City

of Perth by linking the city

for the first time in a way it

should be done. The obathroom

project in Adelaide, the Gawler

- Obalm project in Adelaide,

the Gawler electry fix air,

the extension of the rail line

from Noarlunga to Seaford, the

rail link in Melbourne is

exciting in the Melbourne

suburbs. They exist, of

course, by comparison with a major infrastructure project

like a fast train, they are

quite modest, if you'll forgive

me for saying so. I think the

regional rail link at $4.25

billion, that will transform

the way that Melbourne operates

and the way that regional

cities, indeed, such as

Ballarat and Bendigo are able

to relate to the City of

Melbourne are major projects.

That is a precondition for the

next stage of rail projects

that you would have in

Melbourne. We have moved

forward substantially. Can more

be done? Of course, that is the

case. And we need to be

vigilant and determined and

work as different tier Government, Commonwealth, State work as different tier s of

and local, but also with the

private sector to achieve these

olent tifs, we have made

substantial - objectives, we

have made substantial progress,

we have the largest ever infrastructure in Australian

history. It's progress in terms

of building economic

productivity into the future. Anthony Albanese, we'll

have to leave you there, we are

out of time. We thank you for

taking the time to talk to us

on Lateline. Good to be with you.

Iraq's deadliest violence in

more than two years left the

streets of Baghdad littered

with charred bodies, mangled

cars and shredded buildings,

two suicide bombs tore through

the heart of the capital

killing more than 130, and

injuring hundreds of others.

Blaming the attacks on

Al-Qaeda, the Iraqi Prime

Minister said they were

designed to create chaos, with

key parliamentary elections in

Correspondent Ben Knight January. Middle East

reports. (Sound of explosion). A mobile phone

camera captures the second

explosion, detonated moments

after the first. Once again,

the targets were Iraqi

Government buildings, this

Government buildings, this time

it was the Baghdad Provincial

Administration and of Administration and the Ministry

of Justice.

TRANSLATION: As we were doing

our business at the ministry,

an explosion took place,

sending up thick smoke,

covering us, I saw dead girls

and employees fallen on the floor. Water mains were destroyed, flooding the

streets, adding to the chaos,

while the city centre resembled

a car wrecking yard. Hundreds

of people were injured, dozens

trapped in the rubble.

Hospitals were overwhelmed as

the injured arrived in waves,

the lucky ones were able to

walk away by themselves. This

was the second major attack on

Government buildings in Baghdad

after blasts in August that

killed nearly 100 killed nearly 100 people.

TRANSLATION: These government buildings, which were not

struck during the past six

years start collapsing one by

one, this plan to target the

political process. This is

supposed to be one of Baghdad's

secured areas, coming on the

same day Iraq's parliament was

trying to hammer out an

agreement to allow national

elections to go ahead in January. Iraq's Prime January. Iraq's Prime Minister

Nouri al-Maliki staked his

campaign for election on security. Although violence

across the country has been on

the decline, today's attacks

show the insurgents have the

ability to strike hard with

devastating effects. Earlier

reports suggest two vehicles,

carrying more than a ton of

explosives may have passed

through several checkpoints

before reaching targets. No-one

has yet claimed responsibility,

some Iraqi officials claim

Al-Qaeda or remnants of the Al-Qaeda or remnants of

Saddam Hussein's Ba'ath Party.

They appear to be aimed at

destabilising the Government

and are expected to get worst ahead of ahead of elections.


reconsider the security plan

drawn up for Baghdad, which is

targeted during the next stage

until the elections. The

question is will they succeed

in turning voters against in turning voters against the

Nouri al-Maliki Government or

galvanise them against the

attackers. As families of

victims began burying the dead,

the signs were goodnight for Iraq's Prime Iraq's Prime Minister. TRANSLATION: Three people were

killed, a map, his wife and

brother, this is the result of

the Government's struggle for

power, the poor people are the

victims of their running after

power. United States has

condemned these attacks, condemned these attacks, but

said it won't slow a withdrawal

of troops from Iraqi cities,

that means it's up to Iraqi

forces to maintain security on

the streets of Baghdad, and

it's a task proving to be a

major test. A quick look at the weather:

That's all from us, Lateline

Business coming up in a moment.

If you'd like to look back at tonight's interview tonight's interview with

Anthony Albanese, or review stories or transcripts, visit

the web site. Now here

is Lateline Business with Ali Moore. Tonight - sweetening the

deal - CSR launches a cut-price

capital raising ahead of next

year's demerger. Initially that

will simply pay down debt and

be solely used to pay down be solely used to pay down debt

in the current company. Bendigo

and Adelaide banks looks for a

ratings upgrade to compete with

the big four. That would get us

into the As, and under the

terms of the guarantee, we

would then be able to use the

guarantee and it would cost 100

basis points rather than 150.

To the markets - local

investors took their cue from

the neg Ty lead on Wall the neg Ty lead on Wall Street,

All Ords - negative lead All Ords - negative lead from

Wall Street. In Japan a weaker

yen and signs of better company

profits lifted the Nikkei

three-quarters of 1%. three-quarters of 1%. Hong

Kong's Hang Seng was closed for

a holiday, the FTSE up slightly

in morning trade. CSR is asking

shareholders for an additional

375 million to pay down debt

ahead of next year's demerger

of its sugar and building

units. The capital raising

coming as CSR revealed a half

year loss due to write-downs on its investment in Viridian Glass. Desley Coleman Glass. Desley Coleman reports.

The demerger of CSR's sugar and

building business is one step

closer with an announcement

today of a $375 million capital raising. That will pay down

debt and be used to pay down

debt in the current company.

When we get to march the

remaining debt will be split

approximately $300 million in

the Sugar renewable energy

business and $600 million in

what we call new CSR or the

building products and aluminium

business, giving them business, giving them strong

balance sheets. We think the

capital raising was necessary

as part of the demerger

process. I think that putting a

less amount of debt with the

sugar business makes sense

given its exposure to

agriculture, and I think the

capital structure looks like it

should work going forward. The

share offer has been priced at

$1.66, a 15% discount to the

stock's last traded price. CSR

shares remain in a trading halt

while institutions express

their interest in the offer.

Left over stock will be Left over stock will be added

to the retail pool. The

demerger was announced back in

June, and with due diligence

nearly cleat, Chief nearly cleat, Chief Executive

Gerry Maycock says the split still - complete, Chief Executive Gerry Maycock says

the split still makes sense. We

are trying to make it easier

for investors to decide which

sec tore to invest in. That's

the value proposition, that we

separate out the sugar

renewable energy business from

others and create two valuable

companies as a

result. Alongside the capital

raising CSR announced it will

take over Mackay Sugar's 25% stake in the refining joint

vesenture, and the company

brought forward interim - venture, and the company brought forward interim

results. The headline loss of

$156 million was due to a write-down to the glass

business Viridian, which CSR

bought at the top of the market. Stripping out the

one-off items underlining

profit was up 35%, to 97

million. Sugar earnings were

boosted by favourable weather

conditions, while the building

and aluminium businesses were

hit by the higher dollar. The

next half should be a good half

for the building products

business, they have the benefit

from the insoulation program,

and they also have the benefit

from the schools program

helping the bricks business.

Building products should be

good for the first half. Sugar

will be weaker, it's a seasonal

change, and happens every year.

Aluminium should be as

expected. The second half

should see slightly stronger

earnings from building

products, but overall 2010 will

be flat versus 2009. But Emily

Benhcke says once the split

occurs CSR offshoots will

capture any upside in the

cycle. The new chiefs of the

emerged businesses were not far

from Gerry Maycock's side, the

existing chief of the sugar operations Ian Glasson will

head sugar and renewable energy

business. Rob sidel will lead

building products and aluminium business, they'll take on the

roles when the break-up is

complete in March. For a look

at the day on the markets I

spoke earlier to Charlie

Aitken, at Southern Cross Equities. Investors were

feeling a lot more wary this

Monday. just a bit of a

cautious tone to start the

week. It was a wet month, the

market doesn't tend to go up on

wet Mondayses, believe it or

not. The currency was down,

taking heat out of the market,

that has been driving

everything at the moment. You

say that, at the same time

there's no sign of a retreat in

the Aussie dollar, is there. I

wouldn't necessary say that,

I'm bearish on the Aussie

dollar, I think it's over

bored. Full of speculators,

and is prone to a correction

and could happen this

week. This week eyes will be on

the latest GDP numbers out of

the US. I think that could be

the thing to drive the

Australian dollar down. In

America GDP is measured quarter

to quarter, this number will be

strong, up 5-6%, it's not like

in Australia where you look

back year on year. There's a

chance people will think

America is going better,

interest rates will go up. The

US dollar could rally, causing

trouble. That's what people are

wary about. In terms of

companies today Bunnings has

been talking up prospects

following from the investor

presentation last Friday.

Bunnings is preparing to go

head to head on hardware with

Woolworths, and Wooies was not

in favour. Related. Woolies had

a couple of days off after the

Wesfarmers analyst preparation

Friday. It's like a great

sparring match between two big heavyweight champions, the

market believes Woolworths one

day, Wesfarmers the know. .

Woolworths, I think is a

superior business. The market

is excited that Wesfarmers is

coming off a low base in Coles,

the Wesfarmers share price has

more to do with Coles than the

strength in Bunnings. What

about the share price of Felix

Resources, China got the

takeover green light from the

Government, did they get a

green light from investors. I

was surprised, FIRB have been

good at knocking everything on

the head. Felix shares opened

5%, opening the way for 5%, opening the way for others

to get involved. Generally the

market was surprised

considering what fish had done

in recent times. Grain - Firb

had done in recent times. AWB

completed a $240 million

capital raising. Successfully

completed with 106 million

share shortfall, it was

underwritten and

subunderwritten, it

successfully completed. AWB has

re capitalised and GrainCorp in

the soft space is re

capitalising. There's a lot of

volume in AWB, 20 million

shares as people who took the

placement took profits, the

share price held well. Of

course, it follows an earlier

institutional placement. That's

right, they were -

institutional placement was $1.

Most shareholders were up Most shareholders were up 20%,

I think the shares will do

better. AWB was positive in the

scheme of what

happened. Charlie Aitken, your

call for the rest of the week

on the broader market. Interesting week

coming, this may be the week

where the market has a pull

back. This could be a situation

where good is bad. If American

GDP is better than expected, it

could cause a rally in the US

dollar, and could upset the

market. I'm cautious, that

could be a pivotal week, only a

trading correction, nothing to

get worried about. The market

is due for one. Charlie Aitken,

thanks for joining us, only a

trading correction. To the

other major movers, BHP

Billiton falling more than 1%,

Westpac lost 2% on weaker Westpac lost 2% on weaker -

Woodside Petroleum lost 2%.

Gold stocks mirksed. JB Hi-Fi a

big gainer, jumping 5%.

big gainer, jumping 5%.

Sluggish global growth and a

stronger dollar eased

inflationary pressures, with

producer prices edging 0.1%

higher in the September

quarters, below market expectations and some

economists cut forecasts for

CPI figures due out Wednesday.

But the markets are tipping a

quarter of a percent interest

rate rise on Melbourne Cup Day

and the Reserve Bank will be

concerned about house and land

prices. The cost of land rose

1% in the September quarter,

and the Housing Industry

Association warns the upward

trend will continue because of

population growth and chronic

undersupply. Australia's major

banks enjoyed a remarkable run

this year, with three of the

big four doubling their share

prices. A major test of prices. A major test of those

valuations comes this week,

with the ANZ and with the ANZ and the National Australia Bank reporting

full-year earnings the the

numbers are expected to show

the big four have tightened

their grip on the local market

with interest margins rising

and bad debts about peak. Neal

Woolrich reports. The global

financial crisis led to financial crisis led to the

downfall of several

international banks, international banks, including

Lehman Brothers, and the Lehman Brothers, and the UK's

Northern Rock. In Australia

it's been an opportunity for

the big four. Foreign

competitors retreated to home

markets, second tier markets, second tier lenders

have been starved of funding,

this week National Australia

Bank and ANZ report their full-year results and analysts

expect cash profits for both

should be up slightly or at

least steady. More importantly

the earnings per shares will be

significantly down in the range

of 10-15%, primarily due to the

large numbers of new shares

issued during the financial

year. The drop in earnings per

share has been factored in by

analysts. So the key variable

this week will be bad debts.

With the Australian economy

performing much better than

previously thought, Dean Fergie

from OC funds management says

he'll look for signs that ANZ

and AMP's share funds are

slowing The banks have been

scif. The economy improved ahead of ahead of expectations,

including the banks, banks that

are Conservative in terms of provisioning may right back

some provisions, if they don't

do so this half, it's likely

they'll do the next result. The

growing dominance of the big

four banks has been reflect in

the share price this year. From

trough to peak all but Westpac

have more than doubled. Price

earnings ratios are at

historically high levels.

That's led some to question

whether the current

whether the current valuations

of the big four can be

sustained. I guess the issue is

that the profitability is

possibliy at a low point or are

starting to come off their

lows, so the valuations may

look expense ive on today's

numbers, but the profitability

we see this time next year may

be greater, making valuations

more compelling. A measure the

bank profitability is the net

interest margin, the difference

between the cost of raising

funds and the amount they

charge customers to use that

money. David Ellis says the

latest round of profit reports

could show the major banks

widened net interest margins by

a tenth of 1% putting them further ahead of the second

tier institutions. So they are

going to continue to struggle.

You can reflect it in the

margins, they are the regional

banks, of the regional banks

are lower than the major banks,

major banks have cemented their

dominant market positions,

particularly in the residential

loan sector and the retail

deposit sectors. Obtaining funding to take advantage of the significant opportunity

before us remains a major

challenge. Wholesale funding

markets are likely to improve

in the coming month, the big

question remains to what extent

this improvement will result in

a sustainable source of

economic funding for the whole

economy. Mike Hirst is pledging

to work with the Government to

promote competition and a more

level playing field in the

banking sector, these days more

so than in the past, that seems

much easier said than done. The

boss of Bendigo and Adelaide

Bank, Mike Hirst told

shareholders at the shareholders at the company's

Annual General Meeting in

Bendigo that the bank should be

given a credit rating upgrade,

a move to cut funding costs. At

the same time the banks chairman Robert Johanson used

the meeting to warn of dangers

of heavy-handed regulation in

the wake of the financial

crisis, Robert Johanson joined

me from the Melbourne studio

this even. Robert Johanson,

welcome to Lateline Business.

Thank you. Your CEO Mike Hirst

called for Bendigo and Adelaide

Bank to be rerated. You are

feeling optimistic about the

outlook Ratings have become

very important in the pricing

of the Government guarantee. I

think that if in conditions as

of a few years ago, the of a few years ago, the state

of the bank now would be of a

state where we would expect to

get rerated. But we'll see how

that works out. How big a

ratings upgrade are you calling

for. You only move one notch at

a time in that business. That

would be good enough for

you. That would get us into the

As, and under the terms of the

guarantee, we would then be guarantee, we would then

able to use the guarantee and

it would cost 100 basis points,

rather than 150. At 100 basis

points it starts being possible

to raise money and deploy it

profitably, whereas for us at

this rate, it's not. Tell us

more of where you are at in

terms of a business. If you

look at your bad loans, they

peaked months ago, back in

February. We are largely a

retail householder bank. Our

deposits are virtually all

drawn from retail part of the

market, and our loans are

virtually all into the small

business or household end of

the market. That part of the

market's been, you know, is in

very good shape. In fact, a lot

of deleveraging occurred -

started to occur a couple of

years ago. When interest rates

plunged people seemed to take

the chaps to get household

debts down. As you say, the

arrear in housing lending,

credit cards, all those things

are coming down, it's looking

good. Your CEO said today you

planned to access $8 billion

that the Federal Government is

putting into morting-backed

securities, is there -

mortgage-backed securities, is

there a sign that the market is

gearing up Members equity did a

smallish issue of

non-guaranteed mortgage backed

securities, it was an expensive

issue, for about $250 million,

that's a month or two ago. In

all these markets there are

some glimmers of hope. But we

are a long way from being where are a long way from being

we were two years ago. You

talked at your AGM about how talked at your AGM about

the swift bailout of banks and

non-banks in the crisis will

only induce, in your words more

inappropriate risk taking, do

you see that applying in this

country or is too big to fail a

foreign concept. I think I said

could lead to. That's the

danger, that people who have

survived once because they've

been bailed out, if - unless we

are able to establish rules and

principals to ensure incentives

for risky behaviour aren't

exaggerated, and that those

risks are control, that is the

danger. Does it apply in this

country. It could apply in this

country. We have had here,

we've been fortunate to have

strong regulators, and a fairly

disperse the marketplace, so

there haven't been players in

this market who were too big to

fail. But that is a danger.

It's interesting that in the It's interesting that in

United Kingdom at the moment United Kingdom at the

they are talking about maybe

breaking up some of the banks.

Now that are nationalised

effectively, but breaking them

up so they can have then again

a competitive private banking

mark, but one where the

Government and the regulator

can cope with it. You also

talked today about the risk I

guess of some regulatory

backlash, and there's a

proposal around that's been

discussed by the prudential

regulator APRA and others for

rules governing bank liquidity.

You don't like the idea. We

need the bank liquidity rules

as applied here - we had

tougher rules, we had tougher

rules about capital adequacy in

Australia, about a whole host

of the components of - that

make up banks, make our banks

risk profiles, we had tougher

rules here. What we are now

looking to do is re set rules

for the entire world, and I

think the concern is that then

those rules will get set for

the weakest players. So the

problem is if - you problem is if - you know, I am

not sure who the weakest

players are at the moment, but

if you look at a country like

iceland, where the banks are

disastrous, if we set rules for

Australia, to protect Iceland

against the chances that it

will lose its - that it will

have another banking meltdown,

a lot of the work, the good

work done here and a lot of the

extra value that was able to be

delivered into the Australian

community as a result of that

well regulated competitive

market will be sacrificing. In

this debate currently held, is

there a real risk that that

will happen, that there'll be a

lowest common denominator

approach. The issue I touched

on today was the - some of the

proposed liquidity rules. Do

they go that far. Well, no, not

in of themselves. But there are

- I think it's just, you know,

we should be reminded of how

these things can go too fafr,

after the disasters, you know,

after the - I mentioned today

after the disasters of the 2000

wreck, we had the sarbane Oxley

set of rules coming out of the set of rules coming out of

United States. Looking back,

people would say they didn't

achieve very much, they

certainly added a lot of

complexity to it, and they

didn't give us the signalling

device that is we needed going

into 2007 and 2008. If the

proposal that is currently

around in this country

regarding liquidity rules, if

it's put in place, what would

it many for a bank like yours

in relation to charges to

borrowers. For the liquids we'd

earn the rate you earn on

Government securities. Because

you would have to hold

them. That's right. As them. That's right. As opposed

to the rate we learn on the

bills of other banks. Let's say

there's a percentage

difference, all banks need to

hold a certain amount in their

liquidity. For that amount we'd

earn a 1% difference. Now, inevitably that's a loss of

earnings capacity for the bank,

the shareholders will,

therefore, have less profits

available to them, pressure

will be, to that extent, it's

only a modest extent. Will be

on borrowers to pay more,

depositors to receive less. It

will work its way out, but

inevitably a shrinkage of

earnings at one point will be

felt throughout the

organisation. In and of itself

- but there'll be other - - but there'll be other - a

whole set of other things

coming as well. I think I was

just saying let's not be -

let's be very grateful for the

decisive and strong action

taken, you know, we were - look at Professor Ross Garnaut's

book, we were close to a 1930s

meltdown in the banking system,

let's be grateful we didn't get

there, and be thankful to those

people who took the action to

stop us getting there. Now

let's be cautious and ensure we

preserve the good things that

led us to have a good banking system. Robert Johanson, thanks

for talking to us. Thanks. Now

a look at the business diary,

the National Australia Bank's

be released. Surf ware quarterly business survey will

manufacturer Billabong has an

annual meeting and toll road

operator Transurban. Before we

go a look at what is making

news in the business sections news in the business

of the papers. Sun McKay -

ANZ's pledge to keep rate -

rises in line with Reserve Bank

moves. The Financial Review -

Government policy putting wind

power at risk. Sydney Morning

Herald - Macquarie Group could

be forced to make right downs on investments in

Europe. That's all, as I leave

the FTSE trailing 8 points or

0.1 of 1%. Dow with an opening

of 13 points. Or 0.1 of one per

cent. If you want to visit any

web site part of the program, visit the part of the program, visit

where you can watch the program

on line or down load as a

feedback, at vodcast. We'd love your vodcast. We'd love

I'm Ali Moore, goodnight.

Closed Captions by CSI

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'This internet thing is really working for me. Soon, it wasn't at all satisfying chatting online. We exchanged phone numbers and spoke... a lot.' Hello. Hello. Sometime, somehow, one of us whispered "I love you".

We decided to hook up for a holiday in Thailand. Meeting each other in person was the only way to know if all of this was real.'

Um... It's... it's Boxing Day today. I'm feeling pretty good. I'm feeling pretty good, it's nice to be away from my computer. on my laptop and, you know, the whole online, the online thing. Um, I've not had break from my phone, though. Uh, um, I've had a really fun couple of days with Sandeep, still in hot communication. Friday night, the night before Christmas Eve... (CLEARS THROAT) I went out to a lesbian club... ..and I saw a girl that I've seen around for the last six months, and she's really cute.

And it was... interesting, I felt a bit torn. I wanted to go and speak to her and maybe have a dance with her... and I wanted to, possibly, go home with her, but... I felt a bit conflicted, because I feel... somehow... ..taken or... Can you go away, please? GATE SQUEAKS Can you shut the door, actually? I tell friends and I think, they think, I'm a bit cr-r-razy. But I don't feel like I am. I feel like she's the one I want to spend the rest of my life with. It's very odd. I've never met her and I feel this. 'Does that make sense? Am I getting too carried away?

Mum will sort me out.' (Intercom) WOMAN: Hello? Hi, it's me. And we just started chit-chatting. It was weird, though. It just felt 'on', from straight away. It was cool. And you just kept it going since November? It's quite a while. It's actually going to be exactly... exactly 4 months. When you meet up? It's gonna be pretty nasty, I reckon. It will be all right. Yeah. GIRL: What is it? Gulab jamun. And Bollywood! LIVELY INDIAN MUSIC AND SINGING Looks like a lesbian story to me, up there happening, doesn't it? It does. Yeah. You. Meanwhile, Sandeep was filming her own video diaries. It's get... it is going to be scary. I know, nobody believed me.