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(generated from captions) This program is captioned live. Tonight - a draft report on the Kovco body bungle goes AWOL.

I'm deeply embarrassed by it and deeply regret the circumstances. John Howard gets retirement advice from an unexpected source. And the drought on the Central Coast forces drastic measures.

Good evening. Juanita Phillips with ABC News.

First, the body. Now, the report's gone missing. The Defence Force's blunders over the death of Private Jake Kovko keep on coming. The ADF has lost the sensitive draft report into how the soldier's body came to be left behind in Kuwait. To make matters worse, the document has been turned over to the media. The Chief of the Defence Force has issued an abject apology, taking full responsibility for the latest bungle. Private Jake Kovco's death and the bungled return of his body from Iraq, was the stuff of Defence's worst nightmares, but now it's even worse. The confidential draft report into just how the wrong body was returned to Australia has also been lost, left behind in a VIP lounge at Melbourne Airport. It's very embarrassing for us to stand up here and tell you things like we told you today. Not only was the computer disc lost, but it was handed over to broadcaster Derryn Hinch who's made some of the findings public. This, this...just the incompetence of the military. The report found the chain of custody of Private Kovco's body was, "uncontrolled and vulnerable to failure" and that the soldier appointed to stay with the body, didn't. It says the soldier, who'd been with Jake Kovco when he died, was ill-prepared and emotionally too close for his role as an escort. I've spoken to Shelley Kovco I've spoken to Judy Kovco, both thanked me for informing them. The draft report doesn't lay blame with any individual, but says the Defence personnel involved: At the end of the day, as the Chief of the Defence Force I'm responsible and accountable for everything that happens.

But the Chief of Defence has given no hint that that responsibility could extend to offering his resignation. From time to time, mistakes are made, we're human just like you are. I'm angry and disappointed that this has occurred, I asked the Chief of Defence to advise me whether it's a systemic problem, or whether it's human error. on top of another bungle. This is just one bungle That means yet another investigation into Defence failures, but whatever it finds,

it's another devastating blow for a defence force already under pressure over its failure to explain how Jake Kovco died and the delays getting his body home. Not to mention yet more pain for his grieving family. Dana Robertson, ABC News, Canberra. It was meant to be a day of tribute for the PM. It ended with some blunt advice - to quit while he's on top. The occasion was a glittering black tie reception for John Howard at the White House. One of the guests was media mogul Rupert Murdoch, and while Mr Howard basked in the praise of the US President,

Mr Murdoch added to the current leadership speculation by saying it might be time for a change. Political editor Craig McMurtrie reports from Washington. George Bush has thrown only a handful of state dinners at the White House. STIRRING ORCHESTRAL MUSIC PLAYS Months in the planning, the guests had been hand-picked, among them News Limited's Rupert Murdoch who says while he'd like him to stay, the PM should bow out while he's on top. VOICE OF RUPERT MURDOCH: It's always time for a change, I guess, but I wouldn't support that, he's on the top of his form,

and much better to go out that way than like Margaret Thatcher, or losing an election. The banquet's host might not agree. In the global war on terror

we have no better ally than Australia and John Howard. George Bush had gone to some trouble. BAND PLAYS 'YANKEE DOODLE' Earlier, on the South Lawn, he'd been unstinting in his praise of John Howard. He's strengthened our alliance - I value his counsel, I admire his courage. I salute your courage and your commitment,

your personal decency and your personal leadership. And after a lengthy meeting in the Oval Office, President Bush warmed to his theme. Somebody said, "You and John Howard appear to be so close, "don't you have any differences?" I said, "Yeah - he doesn't have any hair!" (Laughs) He wasn't finished...

He may not be the prettiest person on the block, but when he tells you something, you can take it to the bank.

..then George Bush was asked if he could work with another Australian leader. I suspect he's going to outlast me, so that is a moot point. COUNTRY MUSIC PLAYS The media mogul, who also doesn't appear to share the President's taste in music, doubts that. VOICE OF RUPERT MURDOCH: I doubt it - he's probably planning to go out at the top. It was the day the White House threw open its doors to John Howard.

It was Washington at its most grand, its most elaborate, and it was designed to linger in the memory... BRASS BAND PLAYS TRIUMPHANT MUSIC even if in the end, it didn't quite go to plan. Craig McMurtrie, ABC News, Washington. Rupert Murdoch's advice has prompted Peter Costello to end his vow of silence on the issue. The Prime Minister's heir-apparent described Mr Murdoch as "extraordinarily intelligent" and said that he pays "a great deal of attention" to what he says. Peter Costello's been scrupulous in his efforts to avoid adding fuel to the 'will he, won't he' fire,

but Rupert Murdoch's spectacular intervention was just too tempting to ignore. He is a very, very significant businessman globally and a great Australian and I always pay a great deal of attention to his view and I note carefully what he says. It's the first time the man who controls 70% of Australia's newspapers has suggested it's time for the Prime Minister to go. Mr Howard's been careful to keep the media magnate on side. They had dinner in Washington on the eve of September 11 and just last year, Mr Murdoch enthusiastically endorsed the PM. Australia is fortunate to be led and courage. by a man of such vision Now he's changed his tune, the Treasurer can't stop himself. He could well be Australia's most successful businessman ever - he is an extraordinarily intelligent person

and I always listen very carefully and I value his views. Whether or not John Howard is thinking of retiring, he'll see precious little of The Lodge in the near future. At the end of next month, he'll be globetrotting again, off to China, Germany, the Western Front, Israel and Jordan. The future is all the talk on the other side of the fence, too. Kim Beazley woke this morning to news that some unions have been polling, revealing that voters find him unelectable and that he's undermining their campaign against the new IR laws. I'm not even going to begin to discuss it. But others are. Sections of the NSW union movement are determined to replace Mr Beazley, not with AWU boss Bill Shorten, but with Kevin Rudd and Julia Gillard. They are now trying to convince those sections of the Labor left still clinging to Mr Beazley to switch, and Caucus, as whole, to take the plunge. Jim Middleton, ABC News, Canberra. The Pentagon has released previously unseen video footage of one of the September 11 attacks. It shows the hijacked American Airlines plane crashing into the Pentagon. The security camera footage shows the plane approaching from the right. In the next frame, the Pentagon building is engulfed in a ball of flame. The video was released because of conspiracy theories that the Pentagon attack was not caused by a plane crash. It's important that there be a complete record for history, and it also serves as a useful reminder about the terrible nature of the terrorist threat we face as a country. The attack killed a total of 189 people on the plane and in the Pentagon building. Accused terrorist Faheem Khalid Lodhi has taken the witness stand at his trial in Sydney. He's pleading not guilty to four charges, including plotting to blow up the Australian Electricity Grid and several Defence sites. Today, Faheem Lodhi told the jury that none of the allegations against him were true. National security correspondent Leigh Sales. Faheem Lodhi took the oath on the Koran

and immediately his defence counsel went to the heart of the case. Asked Phillip Boulten SC. Responded Mr Lodhi confidently. The defence case is that Mr Lodhi had legitimate reasons for the maps, photos and DVDs in his possession -

items the prosecution claims were tools for a terrorist attack. Phillip Boulten SC told the jury: Today, the court heard about Mr Lodhi's family and background, including his decision to migrate from Pakistan to Australia in 1998. He said. The jury heard how hard Faheem Lodhi worked when he first arrived in Australia to build a new life for himself. As well as upgrading his architectural qualifications at Sydney University, he worked nothing for two months to get a toehold in the industry. An ASIO raid on Mr Lodhi's house in 2003 netted a computer disc about violent jihad, but the court heard today that Mr Lodhi had never seen it before. The accused told the court he had aerial photos of Defence establishments because he'd worked at them as an architect and wanted pictures for his resume. He also defended owning a mobile phone in a false name by saying he didn't like giving out his personal details. Leigh Sales, ABC News, Sydney. The embattled wheat exporter AWB has lost a Federal court challenge to the powers of the Cole Inquiry. AWB wanted to keep secret a letter of apology drafted by its former managing director Andrew Lindberg in December last year. But today, Justice Neil Young accepted that the apology was prepared for public relations,

not legal reasons. I have accordingly rejected AWB's claim for a declaration by legal professional privilege. that Exhibit 665 is protected The company said the statement was not released because it was designed by a public relations consultant, whose strategy was to over-apologise. Andrew Lindberg is now expected to be recalled by the Cole Inquiry. Convictions have been recorded against Channel 7 and Melbourne's 'Sunday Herald Sun' for broadcasting an inflammatory story about a 14-year-old boy. 'Channel 7 News', 'Sunrise', 'Today Tonight' and the 'Sunday Herald Sun' were found guilty this week of breaching the law by broadcasting a story about a boy they said was trying to divorce his parents. The court was told they identified the teenager despite repeated warnings from government authorities and the head of the Children's Court. The magistrate, Lisa Hannan, imposed convictions against Channel 7 and the 'Sunday Herald Sun', A man and a woman wanted by police in relation to a double shooting murder in Sydney have been captured in Western Australia. They were arrested during separate operations in inner city Perth last night and will be extradited to New South Wales. Farhad Qaumi surrendered to heavily armed police last night after he was found in a one-bedroom unit in the Perth inner-city suburb

of Victoria Park. The 23-year-old and his 30-year-old girlfriend, Claire Flitton, were wanted over the March fatal shooting of two men in Granville in western Sydney. An Australia-wide bulletin was put out in relation to this homicide. We became aware they were in our State - definitely in our State within the last couple of days. Professional boxer, 26-year-old Bassam Chami, and his 25-year-old friend Ibrahim Assad were gunned down in the street in what's believed to have been a dispute over drugs. The murders sparked a series of revenge shootings and NSW Police formed a special task force to deal with the violence.

It's understood Mr Qaumi and Miss Flitton drove to Perth

in the days after the March shootings. WA police launching a covert operation last week to plan the safest way to arrest the pair. We were able to cordon off the area - it was in a block of flats over in Victoria Park. Very difficult area to get into because of the narrow passageways and what have you. And during the police negotiations he surrendered himself without any problems. Today, NSW police arrived in Perth and successfully applied to have the couple extradited to Sydney. Police fear a third offender has fled overseas. That's is a possibility and it's one avenue of inquiry that we are actually following up. Qaumi is facing two charges of murder, and one attempted murder from an earlier nightclub shooting. Flitton is accused of being an accessory. Sue Short, ABC News, Perth. A new report's come up with 10 major infrastructure projects that would give the State's sluggish economy a shot in the arm. The NSW Property Council says if the Government invested $18 billion, the pay-off would be 50,000 new jobs and a permanent boost to the State's economy of nearly $9 billion. These are projects we believe are required in the next 10 years. Now, in infrastructure terms, that's just next week. The Property Council says the most urgent project is to build distribution centres in Sydney's outer suburbs, where goods could be transferred from rail to road transport. Also targeted is a passenger rail link in the north-west and a rail line to complete the dedicated freight line between Sydney and Melbourne. Other projects include upgrading the Pacific Highway, a gas-fired peak-load power station and a water recycling plant. The Central Coast is the latest region to feel the impact of the drought. From next month, there'll be tough new water restrictions, and the local water authority says it may have to resort to controversial desalination measures.

Sydney may have placed desalination on the backburner, but, on the Central Coast, drastic times have authorities contemplating drastic measures. Desal has been a dirty word for a long time, however, we have never had this water crisis we've got now. There are quite a number of sites for desal plants that our staff have had a look at. Dam levels have dropped to an alarming 17%, compared to around 40% in Sydney. The local Gosford and Wyong councils are responsible for supplying water

to the Central Coast's growing population. And today they decided to put off a final decision on desalination for another four weeks, while staff work on detailed costings and environmental impacts. We are in crisis situation and when you're in crisis situation, sometimes you have to take unpalatable decisions. In the meantime,

stringent water restrictions have been imposed. Residents face a complete ban on hosing their gardens. They have to do something, though.

If you're going to run out of water, you're in serious trouble. They should have acted a couple of years ago. I mean, we all knew it was going to happen. But some are critical of a lack of large-scale recycling. The idea of the sewage and so forth - we use ordinary water for that, other countries don't. We need to change our thinking dramatically. The State Government's stepped in to help by extending its scheme to encourage the use of water-efficient washing machines.

We are keen to work with the councils to ensure that they deliver on their obligation to have a secure source of water for the residents of the Central Coast.

The Premier is also offering to cut environmental river flows and speed up a pre-treatment plant to help fill up Central Coast dams. Simon Santow, ABC News, Wyong. Accident victim Sophie Delezio is smiling again and has spoken to her family

after 12 days in a medically induced coma. Doctors at Sydney's Royal Children's Hospital have been reducing her medication, and yesterday, they took some tubes out so she could breathe on her own again. Specialists have ruled out any spinal damage, but say 5-year-old Sophie may need skin grafts over the next few weeks. To be relating in what looks to be a normal way with her brother and her family - and she's produced. There's been a huge public response to Sophie's latest battle, and letters and donations continue to pour in. Tonight's top story - the Defence Force has admitted to yet another bungle over to the death in Iraq of Private Jacob Kovco. It's lost a draft report into the bungled repatriation of the soldier's body. And still to come - the biff is back as 'The Man' takes on 'The Machine'. The Federal Indigenous Affairs Minister, Mal Brough, has been told to 'put up or shut up' over his claims that paedophile rings are operating inside Aboriginal communities. He's been accused of grandstanding,

but the minister says the problem is so bad that the only option is to remove some children from their families. In a world away from the despair Aboriginal communities, of Australia's toughest Mal Brough was, today, Indigenous Affairs Minister

launching a parenting website. unlike these children, He says,

is especially bleak, the future for some Indigenous youth

operating in Indigenous Australia. and claims paedophile rings are If you have people in authority, in Indigenous communities, who are allowing this to occur if they are not paedophiles what are they, in a collaborative fashion? and if they're not operating to respond He says police have been slow and had this warning for abusers. who are abusing their children. We take the kids away from parents to go to these communities Anyone that cares that we would not allow will see children those circumstances today. to remain in But some within Labor ranks says or shut up. the minister should put up on television - This grandstanding

needs to stop. I'm saying to Mal Brough today - about paedophile rings If Mr Brough has evidence straight to the NT Police, he should have taken that point on a national TV show. not use it as some sort of debating

Warren Mundine says ALP National President is far too common abuse in communities turn a blind eye. and claims too often police in the communities is Well, the biggest problem we've got to black-on-black crime, is that when it comes

or it's not taken serious. it's either ignored 'they' meaning the guilty -

from the innocent. have to be taken away is tonight in Central Australia The Indigenous Affairs Minister with Indigenous leaders. where he will again meet Liv Casben, ABC News. in Beaconsfield The search for answers is under way of miner Larry Knight opened. as the inquest into the death at the gold mine. Evidence focused on safety told the inquest The manager, Matthew Gill, safety measures were adequate he's unsure whether at the time of the fatal rock fall. on the same machine Larry Knight was working as Brant Webb and Todd Russell.

Mr Gill said he believed

by an earth tremor. the Anzac Day rock fall was caused highlighted The Coroner, Peter Wilson, and its operations that safety of the mine is central to the inquiry. I have control of the mine site, that control but I wish to relinquish as soon as I reasonably can. I can't do that, however, that safety is assured. without first being satisfied The inquest has been adjourned. It's expected to reopen in the next few months. To finance now, and the local share market closed steady today

after resource stocks staged a mild recovery. Here's Alan Kohler. After a 3-day fall totalling 187 points peak to trough - or 3.5% -

the All Ordinaries index closed almost exactly square today. Basically, the story was that resource stocks generally recovered, especially the medium-sized ones like Zinifex that were hammered yesterday and the industrials that are sensitive to consumer behaviour in Australia - like banks and retailers - went backwards, among resource stocks. cancelling out the rises fall in consumer sentiment in May And the reason for that was a sharp to a 7-month low, Westpac-Melbourne Institute survey. according to the latest The good news is that this,

wages growth, combined with moderating on the backburner. will put another interest rate hike wages growth tipping over This graph clearly shows

to about 4.2% last year. after lifting from 3.5% But the interesting thing is the public sector. that it's entirely due to

Government wages were galloping along at 4.6%

as the private sector. and are now back to the same 4% Overall it's pretty amazing of economic growth, that despite 15 years and labour shortages, low unemployment

plus a resources boom, no wages break-out, not only is there but wages growth is falling. the net wage rises through tax cuts. Maybe it's because we're getting recovered today - Here's why resource stocks commodity prices stopped falling. back above US$700 an ounce. In particular, gold has jumped Copper and oil also rose modestly to forge ahead - and the wheat price continued over US$4 a bushel because of the ethanol boom. And, last but not least, more than US$0.01 the Australian dollar has surged

to US$0.7725, went into reverse after the American currency economic data in the US overnight. following weaker-than-expected And that's finance. for next week's opening match The NSW Origin line-up is still unclear the team's preparations. with injury concerns dogging today, Centre Matt Cooper was ruled out

team-mate Mark Gasnier while his St George-Illawarra is also struggling for fitness. It's only a week until Origin 1, to piece together his team. but Graham Murray is still trying Matt Cooper is out. and was inconvenienced, He tried to run yesterday and Matt just said so the doctor, the physio with the test. it wasn't worth going any further an opportunity for Eric Grothe Cooper's withdrawal creates to make his debut for the Blues. but never made it onto the field. He was picked six years ago, 'Cause of my knee, mate. in that year, I had six operations after that, so, yeah, I'm alright now. I'm not going to pull out 'cause I'm scared this time.

on standby for Mark Gasnier - Penrith's Luke Lewis remains at the traditional team photo today. even standing in a hip injury Gasnier's still trying to overcome about his fitness tomorrow. and will make a final decision Oh, look, I think I'm travelling OK. training to playing. But I don't think you can compare In Super 14, the Waratahs Wendell Sailor's absence has forced to revamp their backline against the Hurricanes. for Friday's semifinal Daniel Halangahu will start the game at flyhalf, to fullback. with Mat Rogers switched What we've done is put players in positions

they're very familiar with. season last year on the wing for us Peter Hewat's played the whole a lot of Test football at fullback. and Mat Rogers has played The Wellington-based side is expected to start as favourites in the history of the competition. in their first home semifinal Mark Douglass, ABC News. in Australian boxing history One of the most anticipated fights this evening. will be held in Sydney have been quite vocal Anthony Mundine and Danny Green about each other's ability over several years, but never met until tonight.

Here's Rob Cross. Anthony Mundine and Danny Green sidestepped each other for the final time at last night's weigh-in. Both came in comfortably under the 76.2kg limit for the super middleweight bout. Green maintained his recently adopted silent approach, leaving his fans to do the talking.

(All chant) Green machine! Green machine! Green machine! Mundine's camp has admitted to nerves as the fight has drawn closer, but the man himself was giving no outward sign of anxiety.

How ya doin', man? Time to show 'em. The reward for tonight's winner is the chance to fight for a world title. An Italian newspaper has linked Socceroos goalkeeper Zeljko Kalac to the betting scandal that's rocked the country's soccer league. Four clubs, including Kalac's side AC Milan, are being investigated for match-fixing. The newspaper has footage of Kalac laying bets. Football Federation Australia says the goalkeeper has given an assurance he's not involved in any illegal betting. Kalac is part of Australia's 23-man squad

for next month's World Cup in Germany. And A-League champions Sydney FC

have appointed former England international Terry Butcher as coach for the next two seasons. Butcher replaces Pierre Littbarski, who left the club after refusing to take a pay cut. The coach of the world's best golfer, Tiger Woods, says

Adam Scott and Stuart Appleby are the most likely of the Australian professionals to win a major. on Queensland's Sunshine Coast Hank Haney is as the keynote speaker at the Asia-Pacific PGA conference. I'd say probably Adam and then Stuart Appleby because of the way they, you know, strike the golf ball, and not just that, they're both a little bit farther down the road in terms of experience. It won't be easy though - Haney says Woods has room for improvement. Works by some of the biggest names in art, including Picasso, Boyd and Chagall, have gone under the hammer in Melbourne. One of the key offerings last night was a rare painting by colonial artist Eugene von Guerard, which sold for nearly $100,000.

Auctioneers say it's an important work because the artist included himself in the picture. We've sold probably the most important known German picture by Eugene von Guerard. He is a German artist, but we count him as an Australian. It's not a record price for an Australian work by von Guerard, but I think it probably is for a German work. The Von Guerard was discovered in a private collection in Germany. Pro Hart's painting of the Sydney Opera House sold for $43,000 but failed to set a record. And a Picasso etching fetched more than $18,000. The weather now, with Mike Bailey. Thanks, Juanita. Good evening. Some cloudy periods are on the way for tomorrow, but rain should again be confined to the north coast. Clear skies made a comeback today in Sydney, where temperatures went from 13-21 degrees, 1-above average. Right now the temprature is average. Around NSW - cool to mild, especially overnight. Rainfall - not much but confined to the NE corner. In the capital cities today -

Mostly dry except for Brisbane. The satellite picture shows - not a lot of rain production North Coast will expect rain tomorrow. Around NSW tomorrow - Isolated showers on the North Coast and some fog in the east. In Sydney tomorrow - a dry day with patchy cloud. The outlook for Sydney - A lot brighter than it will be. Juanita. Chance of showers in the evening and in the morning. Juanita. Thanks, Mike.

Now before we go, another look at tonight's top stories. The Defence Force has apologised after a report on the bungled return of Private Jake Kovco was lost, and ended up in the hands of broadcaster Derryn Hinch. Speculation about how long John Howard will remain in the top job is gathering momentum, with media mogul Rupert Murdoch suggesting the PM should quit while he's on top. And some good news for Sophie Delezio - she's come out of a coma 12 days after she was struck by a car. And that's ABC News for this Wednesday. I'm Juanita Phillips. I'll be back with updates during the evening and 'Lateline' is along at about 10:35. Goodnight. Closed Captions produced by Captioning and Subtitling International Pty Ltd This program is captioned live. Welcome to the program. It seems incredible,

...andgave him the defence

...andgave him the defence portfolio a few months ago. He must be having

second thoughts after his latest

nightmare following the death in

Iraq of Private Kovco cover. With

Angus Houston, Mr Nelson's

Angus Houston, Mr Nelson's staggered journalist at a late afternoon

journalist at a late afternoon press kofrs by announcing that Defence