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Lateline Business -

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(generated from captions) killed 11 people, hopes are

pinned on the cap working

well They made so many

mistakes,ly be happy to see

them at least cap it so we know

what we've got in the water.

Right now it's blowing out so

much oil that nobody knows what

it is. They're trying is a big mistake through there but

they're trying. While a

significant step the new cap is

just a stop gap. BP's two

relief wells are very close to

intercepting the leaking well,

deep under the sea bed. From

there, heavy drilling fluid and

concrete will be poured,

hopefully sealing it. BP is

told a presidential commission hearing that the company has

brought in a specialist to

oversee the operation. He's

done 40 relief wells an he's

been successful 40 times. I

want his record to be 41 out of

41. As the engineers close in

on plugging the oil leak, the

sad legacy is the massive

habitat destruction, that will

keep clean-up crews busy for

years to come. A missing

Iranian nuclear scientist who

Iran claims was kidnapped by

the CIA has re a I pyred in the

Iranian section of the

Pakistani 'em Bassi in

Washington. He disappeared

while on a pilgrimage in Saudi

Arabia - Saudi Arabia a year

ago. Three recent videos have created confusion over the

scientist's fate. In one, a man

claimed to be him said he was

kidnapped by American secret

agents. In another he said he

was studying in the US and in

the third he says he's in

hiding and wants to return to

Iran. A US official says that

he's decided to return to Iran

of his own free will. Israeli

companies in the West Bank are losing thousands if not

millions of dollars in business

because of a Palestinian

boycott of all goods from

Jewish settlements. The

Palestinian Government's banned

the sale of settlement products

anywhere in the West Bank and

will impose hefty fines an jail

on stores or businesses that

breach the ban. Some settlement

companies are reporting a severe loss of business.

Afternoon Israeli authorities

have attacked the boycott as a

threat to the peace

process. Anne Barker

reports. These men are on a

mission. They're Palestinian

inspectors determined to rid

the West Bank of any product made in a Julie Bishop

settlement. In in a few weeks

volunteers like them will have

visited shous thousands of

stores I used to have 15% of my stock from settlements no

it's all gone. Yazzan runs a

supermarket in Ramallah, like

shop keepers everywhere he's

destroyed or trashed thousands

of dollars in settlement goods

from foods and clean ing

products to household supplies.

Today, inspectors are giving

his store the all-clear, the

yellow signs then tell

customers that this store is

free of settlement goods. The

settlements are illegal in West

Bank, so we must cut off their

support. We have to stop many

Israel goods and we we can

bring goods from the other markets. Israeli settlement products used to be sold

wherever in the West Bank. This

chick en meat comes from the

Barkan settlement and soon

anyone caught selling it will

face huge fines of maybe

$15,000 US and possibly two

years in jail. As part of the

Palestinian government's

campaign, Prime Ministerfy yad

recent bhi took part in a

symbolic ceremony to burn

settlement good. Goods. New

fines or jail for stores to WHO

continue to sell the product

also come into force by the end

of the next year.

TRANSLATION: The whole world

means the settlements are

illegal so their products are

illegal and we don't want

them. Already the boycott is

having an impact. This company

at the settlement near the town

of Nablus sold a quart ore

after television worth of television mounts last year and

now that business has gone. One

day we got a call that there

was boycott and an order from

Palestinian Authority that they

have to stop all the business

with us. So all of a sudden

they stopped ordering from

us. The settlement alone has

around 130 companies that make

everything from foods to

furniture to industrial goods. Until recently, many sold much

of their output to the

Palestinians, all have now cut

back production or found

alternative markets. It is

economic terrorism and we

expect the Israeli Government

to react to its swiftly and

rapidly. Ironically of the 8

,000 employees at this

settlement business say they

hope it ends. I say to MrFy

yad, you can put a boycott,

another boycott and another

boycott, we will win and you

will lose. But companies like

these will soon have to find

alternative workers. Now to

the weather - cold and windy in

Sydney, Melbourne, Canberra and

trade. Mainly fine in Hobart.

Warm with a late shower in Brisbane. Late shower in Perth.

Sunny in Darwin. If you'd like

to look back at tonight's interview with Joe Hockey or

review any of the stories or

transcripts, you can visit our

website and follow us on

Twitter and Facebook. Now

Lateline Business with Ticky

Fullerton Tonight, two steps

forward on solar, but doubts

remain as to whether the

Government is doing nearly

enough. Our question is how do

we get 30 projects up and

running by 2015, not just

two? No more easy money. Sign s

a global credit crunch is fast approaching. What is next? What

is left in the tool box? There

is not as much as there was a

couple of years ago. And local

hero, the Victorian film

industry booms thanks mainly to

Australian films. There's been

hardly any international

production because of the

Australian dollar which has

made it difficult to secure productions but local

production both film and

television has been

astronomical.

First to the markets and

early gains were lost with

miners weighing down the index.

The All Ords fell 29 points,

the ASX 200 did so too. In

Japan the Nikkei was down a

fraction. The Hang Seng also as

China said it wouldn't let the

brakes off the property sector.

In London, if FTSE is up 2%. As

the Federal Government grapples

with the most acceptable way to

put a price on carbon, its

handling of re new able energy

is also under fire. In

particular the 1.5 billion

dollar flagship solar energy

program is being criticised as

too little, too late. Australian manufacturers fear

they will have no chance of

being at the forefront of the

clean energy industry. Andrew

Robertson. In last year's

Budget the Government announced

it would spend $1.5 billion on

the solar flagships program. I

will result in the development

of two projects, one solar

thermal or heat based and the

other photovoltaic or light

based. 52 consortiums put

forward proposals they've now

been Whittled down to 8 from

which the winners will be

chosen next year. According to the Australian solar energy so

it's a good start, one which

could be a lot better Our

question is how do we get 30

projects up and running by

2015, not just two. There are a range of policy measures that

the Government can put in place

to facilitiate that process and

deliver big solar for Australia. John Grimes points

out that despite Australia

being a sun drenched country,

other Governments are making a

much bigger effort to harness

that solar power. The Indian

Government, for example, has

set a large solar target. Their

target is 22,000 megawatts by

2020. And so we will have up to

1,000 megawatts by 2020. The

other major point of contention

with the Government's solar

flagships program is that

Australia's only manufacturer

of solar panels Silex solar,

has been excluded failing to

make the final eight. Whilst

Australian technology is

prominent in the short list of

consortiums their panel s will

be - Chief executive Dr Michael

Goldsworthy did say that he saw

the solar flag 147 program as

an opportunity to accelerate

the expansion of Australia's manufacturing operation, adding

it will push on regardless,

hopefully employing more

Australians in green jobs in

the local solar industry.

The University of NSW Dr

Muriel Watt is chairman of the Australian Photovoltaic

Association. She says the

Government's selection criteria

virtually guaranteed no

Australian-based manufacturer

would succeed. You had to prove

that you had built and operate

add 30 megawatt power plant

previously and given that we

haven't had any 30 megawatt solar power plants in Australia

in the past, that would be very

difficult for Australian

companies to. The union which

represents workers in the

manufacturing sector believe s

the selection process for the

solar flagship program has been

very short sighted. Silex solar

is a leading edge Australian

manufacturer that's used Australian intellectual

property and research and

development to commercialise a

fantastic technology in the

solar area. But for Tim Ayres

is issue is much bigger than

solar? We have to decide

whether we're going to have a manufacturing capability in

this area and whether we're

going to be net experts of

leading edge technology or

importers of consumer goods in

the clean energy area Dr Shane

Watson share those sentn'ts

saying the Government z has

done nothing yet to foster a

sustainable industry. We have

one project being announced in

an ad hoc fashion for solar

support and programs that stop

and start and don't have any

long-term focus to them. Which

is why Dr Watt give believes

there's little incentive for

companies to invest in

Australia's clean technology

industries. To the US now, and

the reporting season is under

way on wreets. Always seenly

watch - keen ly watched it's a

barometer of the world's

economy. We're now joined by

Nariman Behravesh, chief of

Global Insight. Welcome to

Lateline Business. Thank

you. Just how important is this

reporting season in the US? It

is important when you pit it in

context that the - put it in

context that the markets have

been in great turmoil and

there's a been a lot of

volatility. The underlying

earnings picture is still very

good. Some of this is old news

in the sense that it's the

second quarter but the good

news it's solid, profits are

very strong in US scpients's

not all bad, even though

there's some bad piece of news

ate out there. Alcoa posted

stronger than expected second

quarter numbers. What does that

tell us about the broader

industrial sector? Well, the

industrial sector or or in the

US has had a very good first

half. However you measure it.

Production, volumes, revenue,

profits, so it's been a very,

very good first half and it's

pretty much broadis based,

there's no industry that's done

particularly well or badly. If

first half of this year good

for the industrial sectors. We

have Intel later today. What

are the expectations there? I

think overall the technology

sector also has done very well,

probably one of the best sector

s among the industrial sectors.

I would expect the Intel

numbers to look very good.

We've had incredibly strong

volumes, double digit growth in

orders and sales and so north

the high-tech sectors. So it

will reflect in Intel's numbers

there is no question about

it. Compared to this time last

year, if we compare like with

like, the results should look

fantastic, I would assume. But

what about the result s in this

quarter compared to the first

quarter? Are they flattening

down a bit? Well, not so much

the second quarter. I think the

second quarter number also lose

good. It's the third and the

fourth quarter where we expect

some slowing in profits Slowe

growth and some slowing in

earnings growth. The US economy

is slowing, the global economy

is slowing, with' not

predicting a double dip. But we

are looking at slowing strends

and deceleration, so I would

expect that to show up in the

second half earn ing numbers as

we go forward. More broadly on

the economy, I've just seen now

that the US trade deficit

figures for May have come out.

They've widened unexpectedly

led bay big jump in imports

from China that helped over

power the best month for US exports since September 2008.

What do you think the likely

market reaction will be? It's

hard to tell. Again, if you dig

into the numbers, strong

imports mean domestic demand is

strong, which is good news. A

weaker export s suggest that

the US is facing some head

winds in terms of a stronger

euro - sorry, a weaker euro and

stronger dollar. So that is not

good news. My guess is the

markets will focus on the

earnings number ed today than

the trade number s So where to

from here? If we have the

stronger earnings numbers you

still have deficit s groaning,

unemployment high, the housing

market looks weak and

confidence is in pretty short

supply, I assume. You're exact

ly right about. That the US

economy is not completely out

of the woods. We only think in

terms of double dip as maybe

only about a 20% probably of

occurring but that said we are

looking at a lot of head winds,

all the things you just

messagesed plus the fact that

as I mentioned the dollar is

strong, ex ports not so good

for the United States, they're

slowing down, so all this suggests the economy will

struggle a little bit. So just

put it in context for a while

we seem to be growing at a 3 to

3.5% range, now we're looking

ing at 2.5 to 3%. Thank you for

talking to Lateline

Business. Thank you. To the

major mover s on our local

share market now - Rio Tinto

lost more than 3% as metal

prices came under pressure. Rio

electorates its latest

production figures tomorrow.

Energy Resources of Australia

two-thirds owned byry you fell

4.5%. Uranium production for

the second quart er almost halved. Fortescue Metals

slumped after Stelling a Senate

hear nag the new resource tax

favours bigger mine ers at the

expense of smaller players. On currency markets:

After years of feasting on

easy money, conditions are

tightening up for lenders and

borrowers. Some analysts say

that a global credit crunch is

looming as governments and

institutions face the pros

prospect of refinancing

trillions of dollars in

short-term debt. The latest

surveys point to some trouble spots for business with

confidence weakening and the

chances of higher interest

rates as lenders face cost pressures. Here is Phillip

Lasker. In the US and Europe

they're still not sure if

there's light at the end of the

tunnel. New problems threaten

the delicate recovery at every

turn. Interest rates can go no

lower and central banks have

pumped liquidity into the

system. If we do get to the

point where we have a double

dip which is not the J.P.

Morgan view, the question is

what's next, what's left in the

tool box? There is not as much

as there was a couple of years

ago. US Federal Reserve

chairman Ben Bernanke is using

one of the few tools left. A

plea to the risk averse anxious

banks. Making credit accessible

to sound small business s is

crucial to our economic

recovery and so should be front

and centre among our current

policy challenges. But small

business is well down the

pecking order of governments,

Banks and corporations seeking

too refinance trillions of

dollars in short term debt.

According to the 'New York

Times', banks worldwide owe

$5.7 trillion to bond holders

by 2012. Not to mention the

trillions owes by - owed by

governments. The ANZ bank

priced 1.25 billion dollars in

bonds toot at 90 bases pointers

of the swap rate but the global

uncertainty has seen banks

holding off, for better prices

which might backfire. Not only

are they perhaps a little bit

behind in their funding

requirement so there's a

quantity issue there, and

there's a lot to be issued and

to be funded but there's also a

price issue as well as we were

saying earlier, spreads have

moved out. So not only could

there be some indigestion in

terms of the amount of supply

but that supply will have to

happen at less favourable plies

foosh issue er s It doesn't

August well for a business

sector which is certain to face higher interest rates as a

result. Although the National

Australia Bank says it won't

hurt as much as some people

think. We see around 40% of

Australian business Dos not

want to borrow. So it's more in

the Australian context that

businesses is still feeling a

little bit nervous about where

the outcome is and not gearing

up. Now that might sound a bad

outcome but compared to

offshore where banks are still

refusing to lend it's a pretty

healthy outcome. But but if the

latest chamber of commerce and

industry's survey is any good,

the health sector has

deteriorated over the quarter. Looking at the

specific measures of sales, of

profitability, investment and also employment intentions,

they've also all deteriorated

over the period as well and

indeed so have the

expectations. Although the NAB

Nash's business survey for - National Australia Bank's business survey for the month

of June told a brighter

story. What this is sort of

saying is the economy at least

maintained a sort of trend

growth rate and if anything

it's slightly improved.

Different sectors doing very

different things. Mining

showing quite a lot of

strength, retail improve proved

in the June month but it's

still at very low levels. NAB

says the survey was taken

before the revamped mining tax

deal, so the drop in business

confidence was largely due to

the mining sector. Unlike the

debt market, one derivatives

market has been going gang

busters - confidents for

difference or CFDs but that's

come at a price, with some

retailers badly burntsz by the

high risk features of CFDs.

Last night we covered the new

guidelines by ASIC. Tonight a

view from one of the two

largest providers of CFDs, IG

Markets Australia. I spoke to

chief executive Tamas Szabo.

Tamas Szabo, welcome to

Lateline Business. Thank

you. Just how many traders are

using CFDs in Australia today,

do you think? It? It's reported

to be around 35 to 40,000. So

up a lot on the previous year.

Why is that? It's just really

the increase in volatility in

the underlying market, poet

global financial crisis CFDs

have become more attractive to

clients to capture the

short-term moves on equities in

the seasonal foreign

exchange. It know CFDs make

your shop a lot of money but

why should they be marketed to

retail investors? They seem to

be too risky for the US. Aren't

they banned there? Just clear

up the point on the US

regulation, CFDs have never

been actively banned in the

States. What the situation in

America is all clients have to

trade futures on the underlying

exchanges so you can't make

prices on the exchange would it

flowing through that individual

exchange. The xemgt so that is the foreign exchange market

which simence in America. And

that's all off the count er,

exactly the same way as CFDs so

it's not regulator bang them at

all. It's really the history of

the BTN Extra changes in the

States tloo, es multiple

exchanges, there's a lot of

liquidity and they're fundamentally very strong. So

that's what happens in the

US. I guess to answer your

question about marketing to

retail investor, CFDs are

marketing to people who are

active client base that fit our

client profile. We don't go out

there to market these products

to anyone who doesn't

understand the risks. So we put

an awful lot of effort to make

sure we are not taking on

clients that don't understand

CFDs. Clearly there are other

CFD providers who are less

scrupulous than you? That might

be the case and that's the

impetus behind ASIC's investigation. I don't know

what other providers do and I

guess this paper by ASIC is

really going to get the

industry to self- regulate in

effect and try and stop any providers out there taking

account s from people who don't

understand the risks. ASIC's

health check released yesterday

calls for self- regulation.

It's previously call these

products much riskier than a

night at the casino. Why did

the regulator back away from

banning them? They're rapidly

growing. They're very popular.

There's a lot of benefit to the

products offers. Us as a

business have grown rap lid

idly in in Australia and

globally. The product has lot

of growth. People do have a

certain risk profile where they

may want to risk a portion of

their funds and make a high

return. Obviously you can make

a loss on that money as well,

so as long as people understand

that the money that people

allocate to CFDs should be

money they are willing to lose,

that is actually OK in my

mind. But they can lose a lot

more than just the money they

put down, can't they? The way

that we work is we ask for a

dessit from a client and we -

deposit from a client and we

make a lot of effort to make

sure that client doesn't lose

that deps yi. That can happen

but it doesn't handon a regular

basis. We do also offer clients limited risk accounts where

they cannot lose any more than

they have on the accounts and

some other providers may offer

the same. So ASIC is now asking

for Mo new disclosure bench

mark an a call for all dividers

to provide a policy on

suitability. Everything on that

paper is what we already do. We

don't have to make any changes

to our current procedures. I

guess there is going to be a process of speaking to the

industry we we will want to be

involved in to make sure that

everyone has an agreement on I

guess what providers ask

clients and the suitable

requirements as well. I guess

what you should worry about is

the lowest common de nam noter

- the providers who don't Watt

care and just want the

customers coming in. It's not

good for industry. We are keen

to make sure that there aren't

people out there who don't

properly vet their

clients. Size Was the problem

with CFD or pooling clients

departmentits to cover other

clients? This has been going on

for quite some type. There was

a consultation paper in August

2009. We were heavily involved

in that consultation process.

We put in our own submission.

We are of the belief that CFD

providers should not be allowed

to pass any client funds

through to hedging broe,

because it exposes clients to

risks. And that is something I

think clients will find it very

hard to understand and I don't

think disclosure is necessarily

the right route to tackle that.

So I do - I am of the view that

ASIC would thaik that further

and go down the route of out

law ing that practice, it's

something the US has recently

looked to do. Is it issue that

the issue of CFD could decide

not to close the trade and they

can cothat effective and avoid

losses? I don't believe so. We

always have to provide a price

to our clients. It is important

to bear in mind that while it's

an over-the-counter market, all

our price s are based on

underlying prices. They are

traded on exchanges. There's generally always a price

available for a client. And in

Europe for example a

requirements we have to provide

best execution to our clients

so we can't provide a price

that is worse that is available

elsewhere. There are a number

of thing s that we do in

Australia by default, like

suitability testing and the

client funds which is now gaining some traction in the

UK. If retail investors don't

know anything about CFDs, where

do you suggest they go? ASIC do

provide some information about

them on their FIDO website.

Most CFD providers will provide

information on CFDs and offer

extensionive education program

ss as well. It's been an

important part of an offering

to have a very robust education

system. So we are very keen to

make sure that our clients

fully understand how CFDs work,

what the risk an fees are and

any other question they have.

Transparency is something we've

promoted for a number of years

now and believe it's crucial in

the market at the moment. Tamas

Szabo, thank you for talking to

Lateline Business. You're very

welcome.

A boom in local production

has led to a bumpy year for

Victoria's film and television

industry. As Kirsten Veness

reports, the industry turned

over more than $200 million last finance financial

year. It's not hard to walk

past a film set in Melbourne

and at Sandown Racecourse the

movie about jockey Damien

Oliver the tup is in the - 'The

Cup' is in the thick of

filming: It's just one of 60

dlm productions that started in

the year just gone and it's

estimated $230 million has been

spent in the State during that

time. There's been hardly any

because of the Australian international movie production

dollar but local production

both film and television has

been astronomical. The last

spending boom was two years ago

when the Hollywood TV serieses

the Pacific Pacific came to

Melbourne. But now it appears

the international block busters

are not needed so much. Talk Og

our crew guys they've told me

it's the busiest for 11 years

which is exciting because it

means boyies can not have to go

interstate looking for work or

overseas. Movie 'The Killer

Elite' is currently being

filmed at Melbourne's Docklands studio and the executive

produce er says the Federal Government's rebate has

troughs in our domestic helped There are peaks an

industry an at the moment I

think what we're sighing is

many months to years Midday

Report worth of hard work to

prepare us for the producer

offset. The situation appears

to be improving at Docklands

itself. A few years ago there

was talk of the studios

standing virtual ly empty being

too expensive. They're now at

about 65% capacity. Film

Victoria says the strength of projects signatures film

production is being more

resilient and able to sustain

the industry in the long trm

vrment I think very much these

things in cycles and what is strong this year is not

necessarily going to be strong

next year. Film Victoria says

it's funding eight film and

productions so far this

financial year. Now a look at

the business diary the

Westpac-Melbourne Institute has

the monthly report on consumer sentiment. Treasurer secretary

Ken Henry speaks at a CEDA

event looking at the challenges

and priorities for Australia.

While John Brumby addresses the

American Chamber of Commerce.

Before we go a look at what is

making news in the business

sections of tomorrow's newspapers. The 'Australian'

says NAB's dis counted mortgage

rates are winning the market

share. And the 'Sydney Morning

Herald' says coal seam gas

projects worth 10s of billion

of dollars are on hold over environmental impact concerns.

That's all for tonight. As I

leave you the markets are

healthy. The Dow is up 1.1%,

113 point tance FTSE is up

1.8%, 92 points. I am Ticky Fullerton. Thanks for watching.

Goodnight.

Closed Captions by CSI THEME MUSIC Just hold up for two seconds. TWO-WAY RADIO: Last week on Four Corners in Afghanistan we accompanied Mentoring Team Alpha as they probed counter-insurgency warfare's invisible front line. SOLDIER: Holy shit, was that the main charge detonator? I received wounds to my upper left thigh, hip, left hand and to my face. IEDs going off in front of people, and just, the frag was buried too low, so they didn't get fragged. It's just, it's nuts, how much luck we've actually had. Yeah, copy that, mate, I'll stop moving the gear on to the road. Tonight we go further with Alpha Company into more uncharted territory to the battle for the faith and trust of a brutalised people. (SPEAKS LOCAL DIALECT) Is that your mosque? At the moment we can promise things but they are not going to trust us completely, and to be honest, they probably shouldn't. But once we build a patrol base and we have a permanent presence it'll be a lot easier for us to give them things and they'll know we are not going to leave them the following day for the Taliban to come in and destroy everything. TWO-WAY RADIO: IED path, DDD dock. The journey takes Alpha Company to its most dismal day, the day luck runs out when Sappers Moerland and Smith are killed. The day before we were having a conversation of how much he loved his job, how much he loved being here, doing the job. Get out there and do it for them, we do all this for our mates. The reason we we get up each morning and get out there and go and find this shit is for our mates. I think that's what soldiers actually fight for, they don't really fight for highfalutin ideas. They fight for the mate who's next to them, they fight for their own pride and they fight for the things that they intuitively have in the back of their mind, that they're Australian soldiers and they have certain things that they must do, and they'll do it. TWO-WAY RADIO: Hey, you can move up on to the road with your two. Yeah, mate, I'm already there. Tonight, a comprehensive measure, from the ground level in the Miribad Valley, Afghanistan, of pain and gain in this war of inches. Don't get too comfortable... (SOLDIERS TALK ON TWO-WAY RADIO) We can always assume that we're obviously being watched in this location especially, and it's obviously something for everybody to be mindful of, especially to overwatch positions. Be prepared to provide immediate support... The patrol makes ready. It is the start of June, 2010, The subsequent weeks will be Australia's blackest of the Afghanistan conflict, with the deaths of six soldiers. Two of them belong to this close-knit company, Mentoring Team Alpha. Alright - groupings and tasks - FK11 Alpha groupings - driver - Snowy, supervisor - Farley... Considering the risks, soldiers here commonly say the losses would be higher but for luck. The IED threat for Patrol Base Wali is considered moderate. Another reason might be care and discipline applied to every move. Well, many people would say that a careful war is a contradiction in terms. Is it possible to fight a careful war? Yes, it is. It is, and Australians do it. Australians are particularly good at this. With rare exception, we have been enormously successful in carrying out really hard-edge military operations while protecting civilian people. And that is absolutely part of our policy, it's the way we are trained, it's the way we must do our business. (SOLDIER TALKS ON TWO-WAY) The mission has been planned for months. Word had gone out to local elders that the International Security Assistance Force, or ISAF, plans to build a new base in the Mirabad, at Musaza'i. Yep, it's all go, mate, we're gonna cross. Yeah, wicked. The area between the existing bases, Wali and Atiq, is a Taliban trouble spot, and the Taliban plainly know the soldiers are coming. While Route Wale, through the green zone is direct, it is avoided in favour of the dascht, the desert, where every choke point is checked by engineers. Hey, Jorgo, you on comms? No, his comms are fucked up. The Australians, with Dutch commandos in support, arrive at dusk of the preceding day to check the ground where the shura, or meeting, is scheduled for the next morning. Smithy's the front one now, with the dog. Yeah, see him.