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(generated from captions) To the markets. Ignoring an

overnight fall on Wall Street,

bargain hunters pushed

Australian shares higher.

Macquarie Group may have

delivered its first billion

dollar half year profit but

investors focused more on the

subdued outlook, marking down

the stock by close to 4%. Macquarie is earning second

half earnings won't match the

first as share market returns

ease back to long-term

averages. But Australia's

largest investment bank appears

to have weathered the global

credit crunch, unlike many of

its global peers. Neal Woolrich

reports. 2007 was been a

testing year for Macquarie

Bank, as it faced the global

liquidity squeeze, share market

corrections and failed takeover

bids for Qantas and Alinta.

Like many other years, some

pundits have been predicting

the demise of the millionaires'

fak factory. Last month Jim

Cramer joined a chorus of

critics. Now it's time to sell Macquarie. Apologies to

Australia, apologies to the

bank, I think it had a great business model. I don't like it

any more. Let's take it off the

table and forget about it!

Macquarie, you're out! But Australia's largest investment

bank continues to prove the

nay-sayers wrong. Macquarie has

tabled its first interim profit

above $1 billion, up 45% on

last year. I was astonished at the diversity of the result. It

was very, very impressive. It's

not all coming from one

particular area across the business the results are very

strong. Unlike America's major

investment houses, which have

written off billions of dollars

in losses from the subprime

mortgage crisis, Macquarie says

it's been unharmed. Our US mortgage business is very

small. We are not involved in

subprime in the US at all.

Right from the very outset of

our US mortgages business, we

took the view that we were only

going to lend on really

high-quality mortgage credits. Macquarie doesn't actually take

a lot of risk on its own books.

They've said for a number of

years and they just keep

druming into people that

they're more interested in

making fee income than they are

in taking proprietary risks themselves. But the bank is warning that second half

profits are likely to be in

line with last year and almost

a third lower than today's

interim result. Macquarie is

blaming a slowdown in asset

sales , and a return to more

normal growth on share

markets. It's not that we're

forecasting tough times; it's

rather that we're very

conscious that equity markets

have been really strong, and

they've been really strong

right around the world but they've been especially strong

in Australia and very, very

strong in Asia. That sparked a

3.5% fall in Macquarie's share

price today and it remains

nearly $20 below the record

posted in May. The intelligent

investors' Steve Johnson is

upbeat about its prospects but

warns that its infrastructure

business is likely to come

under competitive pressure. The

prices being paid are over what

these assets are worth.

Macquarie bought some assets

very cheaply 10 years ago. Now

world is on to the game and every investment bank in the

they seem to be paying some

extraordinary prices to me.

Alan Moss expects the

Australian economy will remain

very strong and while he's not

pessimistic about the US, he

says Macquarie will continue to

watch developments in America

with great care. Later - I will

be joined by banking analyst

Brian Johnson of JP Morgan to

look at the Macquarie result

and the rest of the banking

sector. Earlier I spoke to

market commentator pad pad for

analysis on today's trade. A

day of reversals, compared to

recent trends? Yes, a bit odd

this morning. The US dollar for

once had gone up and the Aussie

dollar had gone down and the

gold price, rather than going

up, had gone down and the oil

price had gone down. Everything

turned on its head today. A

fairly good day on the markets

here? Yes, not a bad day. Up

60, the futures this morning

suggested we'd call 38 on the

back of a 55 point fall on Wall

Street but all the industrials

were looking forward today.

Maybe there was a bit of a

switch out of resources into industrials and particularly

into the whole set of large

stocks that are impacted by

currency. We saw some very good

rises in the likes of Brambles,

Cochlear, ResMed, all those

stocks that have been going

down for months relative to the

market. Resources didn't do as

well as industrials today but

if we look specifically at

gold, that seems to have fallen

over. At one point it was below

the $800 mark. What does that

mean for all those gold

companies that have had such a

good run of late? Yes, gold

peaked out recently at $848 as

you say, just went under $800.

What it means for gold stocks

is they are trading stocks

almost. If you look at the PEs

and yields on the likes of

Newcrest and Lihir, they're

both on PEs over 30, one of

them is on a PE of 44, and

they've got no yield or very

small yield on Newcrest at .1

of a per cent. Very little

investment fundamental value in

those stocks. So really,

they're playing for the gold

momentum, and the moment the

gold momentum turns of course, everybody's bailing out because

they have such big profits.

We've seen in the last three

months alone, Newcrest up 53%,

Lihir up 47% and things like

Dominion Mining up 160%, Pan

Australian up 9 8%. There are

a lot of profits to take and

there are a lot of people on

hot Coles about the gold

sector. If they thought for a

moment the gold price would

fall over, they're all out like

rats! That's the gold sector

but the big news and all the

focus is still on the BHP

Billiton bid for Rio

Tinto? Yes, absolutely. It boil

it all down the consensus is that BHP Billiton will pursue

Rio Tinto to the end. They will eventually get them. It will

take a lot longer and it will

be at a price somewhere closer

to $200 than the original $129.

And one newsletter, very close

to my heart, had an image of

Rio standing in a wedding dress

saying "No" and I think that

sort of sums it up. They seem

to be rejecting it on price,

not principle, and eventually

the price will be right. I'm

surprised, you even have them

in a wedding dress just yet!

Marcus Padley, many thanks for

talking to us. OK, Ali. To the

other major movers on our

market today:

News Corporation chairman Rupert Murdoch has used his

visit to Australia to criticise

both the coalition and Labor

for their campaign spending. Mr

Murdoch visited Adelaide, the

spiritual home of his media

empire, to update local

shareholders on his plans. Nick

Harmsen reports. He may no

longer call Australia home, but

for any aspiring Prime

Minister, Rupert Murdoch's

blessing still matters. Except

this election, he's not

prepared to give it to either

John Howard or Kevin Rudd. I

have no view on politics at

all. Instead, the billionaire

media mogul rebuked both

leaders for their campaign vows

to spend billions. Both sides

are throwing - are promising

all sorts of financial benefits

which will take huge

bureaucracies, incidentally, to

administer, in order to make

people more and more dependent

on the state. He may not want

to buy into party politics but

the News Corp chairman could

well have borrowed John

Howard's slogan bus he's

certainly going for growth. Mr

Murdoch says the company has

been largely inaffected by the

subprime-induced chaos in

financial markets. He told

investors that News Corporation

is tracking above its predicted

earnings but its too early to

change forecasts. On an

operating income basis News

Corp's earnings were up 23% in

the first quarter to just over

US $1 billion. And that growth

is being driven by its

specialty and pay television

stations around the globe.

Shareholders also learnt of

News Corp's plans for the Dow

Jones company when its $5

billion acquisition is

completed next month. Rupert

Murdoch plans to use Dow's prestigious 'Wall Street

Journal' brand to bring business news to China and

India and wants to increase the

journal's on-line audience

tenfold by making its

subscriber content free. But

he's no doubt aware of

criticism from some quarters

that the takeover will see the

masthead adopt Mr Murdoch's own

views. We don't want to damage

the uniqueness of Dow Jones,

whatever we do. And what of

the 76-year-old's plans for

retirement? Um ... I don't

know. Whenever they carry me

out! On today's performance, not any time soon.

It remains a season of

discontent at this round of

annual general meetings. Today

Insurance Group Australia bore

the brunt of investor anger,

after a drop in its profit and

share price. Chief executive

Michael Hawker admitted it had

been a disappointing year, but

he says the future looks

better. IAG shares closed down

half a per cent to $4.42. The

fierce storms that struck the Hunter Valley in New South

Wales and the United Kingdom

earlier this year have also hit Australia's biggest home and

car insurer. Insurance

Australia Group says it paid

out more than half a billion

dollars, and that was a major

reason for a drop in profit in

2007. IAG also faced a storm of

sorts, at its annual general

meeting in Sydney. It's fair to

say our financial performance

during 2007 was very

disappointing. I've already

outlined the impacts of factors

such as the storms. However our

performance was also affected

by various market cycles and other challenges within our

individual businesses. But

investors were in no mood for

contrition. Well, I think it's

dissatisfying and I think the

majority of shareholders today

would be very upset by it. It

hasn't performed well. As a

shareholder I'm not happy and I

wanted to make that point to

the board. I feel the board

really let the shareholders

down. They also made their

concerns known about IAG's

plans to raise remuneration for

executives. Shareholders

criticised what one investor

described as the disconnect

between performance and pay.

They asked why executives were

getting more money when both

IAG's share price and its

profit have fallen. It was only

two years ago we stood here and

increased the aggregate pool

for directors to $2 million and

yet we're being told today that

we need another substantial

rise. Chairman James Strong

says the 12% vote against the

pay increase was expected. I

see that as a protest vote. And

a protest comment today. I

think it was nothing like what

you've seen in some other

examples in recent times. And I

won't be more specific than that because I'm probably friends with the people

involved. He says today's

serve wasn't so bad, compared

to the past when the company

was formed out of the NRMA

Insurance Group. That was

actually a teddy bear's picnic

compared to some of the early

ones. Today Mr Hawker reaffirmed the company's

forecast for revenue growth and

says he is confident about the

year ahead. Clearly I'm

disappointed with the results.

And as a shareholder myself and

a significant amount of

remuneration tied up in shares

in the company I'm disappointed

in terms of where the share

price is, and I understand the shareholders' concerns about

that. And we're doing whatever

we can to try and improve that

situation. As a shareholder I'm

fae somewhat concerned about

the fact that --

I'm somewhat concerned about

the fact that the company's

expansion doesn't seem to be

going according to plan. And

Michael Hawker has again dismissed speculation that he

will be replaced by former

Promina chief Mike Wilkins, who

has joined the insurer. We're

very pleased Mike has joined

us. We've employed a number of other people out of the

insurance marketplace as some

of the other M & A work's occurring, people have become

available. We're using that as

an opportunity to bolster the

management of the company. Michael Hawker says

major purchases are on hold

number the cash flow's in from the company's expansion in the

UK. --

until the cash flow's in.

Macquarie Group's half-year

profit today underlined the

strength of the financial the

sector but when it comes to the

retail banks they're all

warning of higher fund costs.

All the major banks have now

report and while profits were

stronger, no bank has ruled out

another rise in interest rates

even without an official move.

Meanwhile St George has

confirmed acting Paul Fegan

will officially get the top job

two weeks after he unveiled a

billion dollar profit for St

George. His predecessor Gail

Kelly is busy taking over the

reins at Westpac. So how strong

is the banking sector and what

to make of Macquarie's profit,

but its sub tud outlook? I'm

joined now by banking analyst

Brian Johnson from JP Morgan.

Many thanks for talking to us

tonight. Thank you. If we look

- before we look at the broader

industry, it's no surprise I

guess about that confirmation

of Paul Fegan's appointment to

St George but how big a task

does he have ahead of him given the strength ft current

results? A big set of shoes to

fill? The biggest problem is

that Paul faces is that the

operating environment for a

regional bank is much harder

than it was previously. He is

an outstanding internal

candidate but the sad fact is

the global liquid fee crunch

has closed down the access to

securitisation markets on

anything approaching an

economic basis. That hurts the

St George Bank business

model. When you look at that

business model and the whole issue of securitisation and

access to funding, as I said in

the introduction, no bank has ruled out moving again on

interest rates even without a

Reserve Bank move. Do you think

we'll get another move? Perhaps

I'm a bit radical here. If you

listen to what the banks are

saying, ANZ and NAB are pretty

clearly communicating they

would love to move. If you look

at it, Westpac seemed to be

more sanguine, but Commonwealth

Bank keep on saying "We have a

lot of retail deposit, we don't

feel we have to move

straightaway." If you add to

that the fact that both

Commonwealth and Westpac have

lost a lot of housing market

share as interest rates fell,

it's a fantastic opportunity

for them to sate there with

differential ricing ANZ and NAB

were to move differentially. I

would prefer to be borrowing

off Commonwealth Bank than their peers. Is it really

likely that half the banks would move unilaterally and

half wouldn't? We're in

fantastic game of Russian

roulette. No-one will move

until they're convinced

everyone will move. At least

two competitors are saying we'd

like to move straightaway but

we keep having Commonwealth

Bank saying we're very well

position the, we have a lot of

retail deposits. Ralph Norris basically communicateed this at

the AGM the other day. I just

think it's a really big

problem. Not everyone is

equally adversely impacted and

that gives someone like

Commonwealth Bank a massive

competitive advantage. I want

to look at the strength of the

overall sect yo in a minute,

but firstly, Macquarie's result

today. Up 45%, despite the

nay-sayers and still because of

the outlook, the share price

goes down, a not very buoyant

lot of forecasts there? You

have to put it in the context

that as recently as September

they held an operational

briefing at which time they

told us the result would be up

some 40%. In typical Macquarie

Bank fashion, once again, 40%,

in September, actually equals

45% by the time the results

rolls around. As it typical

with Macquarie Bank there is a

phenomenon I like to call

Macquarie Bank-speak where they

say one thing and always

deliver something much better.

The outlook statement delivered

today is the same outlook

statement that's been delivered

with every amazing interim

result I have seen in recent

years. Macquarie Bank is no different to what it was

before, the fact is that seasonally their earnings tend

to come through in the first

half rather than the second

half but people should be under

no illusion, Macquarie Bank is

doing very well. All that talk

about the market not being -

equity market not being as buoyant, about asset sales

perhaps becoming a bit tougher,

about the seasonal factors,

no-one should worry too much,

this will be stock-standard

second-half, as usual, will be weaker than first but not

dramatically down? If you look

at it, this year they're on

track for 20% earnings growth

off 40% earnings growth the

year before that is premised on

a sharply lower second half,

where you don't get the benefit

of asset realisation gains

coming through. There is a

bigger to play out here. In

this environment where some

banks have really been caned

you want to invest in companies

that have a lot of cash that

can go out and buy assets very, very cheaply. Now, Macquarie

Bank itself has a billion

dollars I'm guessing of surplus

capital that it could apply to

some kind of strategic

acquisition if something was to

pop up. But on top of that, the

Macquarie funds have $13

billion that they could invest

in the equity of

infrastructure. Macquarie Bank

is in exactly the right spot to take advantage of this weakness

that we're seeing in asset

values. You're I suppose a

long-term bull when it comes to

Macquarie Bank but you hold to

that, even when you see

comments like that coming out

of the Blackstone Group

overnight, that they've no idea

where what they're calling the

subprime black hole will end.

You're virtually saying

Macquarie is

bulletproof? People should be

under no illusion. This

subprime black hole is massive.

In the ut states there's $10

trillion out of housing loms

outstanding. 1 trillion of

those are subprime, and I mean

Sri Lanka subpril. Out of that,

about $500 million is what we'd

call adjustable rate mortgages.

Thus far, these mortgages when

they adjust the rate goes up

big time. If you look thus far

we've probably seen about $100

billion of those priced

upwards. It's generated losses

so far of about $45 billion.

That would suggest you probably

have another 250 billion

dollars, and that's a big

number any way you cut it, of

loan losss to come out. So the

first thing is, when you have a

look around the world at the

moment, it's not a great time

to be an investment bank. What

I would contend is when you

look at Macquarie Bank, Macquarie Bank isn't quite an

investment bank. Macquarie Bank

is turning itself into the

world's pre-eminent

infrastructure funds manager.

And that's a very, very

different proposition. The way

you make money in investing is

not buying really good mines or

butcher shops or other shops.

It's when people are telling

you it's a butcher shop but

it's an abattoir. If you look

at Macquarie Bank, it's not an

investment bank. It's the

world's pre-em nent manager of infrastructure assets. Let's look aths the broader industry.

We've seen a pretty solid set

of results. How well placed is

the industry and the big four

banks and indeed would you make

a call on which one you think is best placed at the

moment? Well, as I sit in the

results presentations I always

come out and I think, jeez,

every result was absolutely

fantastic. When I go back to

the office and go throughout

numbers, not all of the results

actually were all that flash.

We saw some major cracks

appearing and that really does

highlight that we could actually see revenue growth

slowing down in the year hid E

Where are the cracks? It comes

down from a few things. If you

look at these results this were

inflated by - some banks had

very, very low levels of loan

losses. Others had fantastic

levels of trading results. Most

had very low levels of tax. All of those are probably

unsustainable. Given all those

factors, the fact that most of

them still delivered circa the

10% EPS growth the market had

been expecting tells you the

quality of that EPS growth was

somewhat looking. If we roll

that forward the combination of

those factors but also a

stronger dollar, rising loan

losses it creates significant

earnings head-winds going

forward. I think the

fundamental rules in this

environment are, you invest in

banks that basically aren't

overly reliant on wholesale

funding. Who do you like the

most? Commonwealth Bank. Who

do you not like? ANZ. There

you go. That's the call. Brian Johnson, many thanks for

talking to us this

evening. Thank you.

Timber giant Gunns could

face a $2 billion legal battle

over its planned pulp mill in

northern Tasmania. It's already

won provisional approval for

the controversial $1.7 billion

development but a local lobby

group says it has 200 people

interested in joining a class

action against Gunns, its

shareholders and it's

financiers. The lawsuit could include claims for loss of

value to propertieses and

businesses in the Tamar Valley.

Now a look at tomorrow's

business diary. Qantas chairman

Margaret Jackson will front her

final AGM and James Packer will

also retire from his

directorship at the meeting.

Fertiliser maker Incitec Pivot

releases its all year earnings.

A third quarter wage price

index is released and Ben

Bernanke is expected to announce changes designed to

improve the transparency of

interest rates decisions. Wal

Mart reports its latest earnings. Analysts will be

searching for any signs of a

slowdown in the US economy.

Before we go, a look at what's making news in the

business sections of tomorrow's papers. The 'Age' says BHP

Billiton and Rio Tinto senior

executives are busy in London

trying to secure shareholder support. The 'Australian'

examines Macquarie Group 's billion dollar half year profit. The 'Australian

Financial Review' leads on the

latest subprime mortgage

morning and the 'Sydney Morning

Herald' predicts tough times

ahead for Margaret Jackson. If

you want to review any part of

the program, visit our web

site. I'm Ali Moore. Goodnight.

Closed Captions by CSI This program is not subtitled THEME MUSIC In the weeks before the formal campaign began, 4 Corners found five voters in a single marginal seat who voted Liberal last time around but were thinking of switching to Labor this time. Historically I've followed probably Liberal more

and John Howard is a good candidate but so is Rudd as well, so I'd prefer to leave my decision until a few days before I have to. Mr Howard to me, he's been in politics a long time and I liked what his party stood for but Kevin Rudd seems to be, I don't know, I just, I like him. All the other years we vote for the Liberal. I want to try to see what's the difference between the two parties, you know. So this time? I like to vote Labor. I'm not 100% sure.

I like the economy the way it is but I want our economy to be thought of. If someone was going to look after the strugglers for housing and that, yeah, I would go for them. It's on these Australians, and about a million others like them, that the outcome of this election will depend. In the space of a six week campaign, can John Howard coax them back into the Coalition fold? Can Kevin Rudd turn a vague intention into an actual vote? Tonight on 4 Corners, we watch the campaign through five sets of eyes - what matters to them, what doesn't,

and will any of it decide their crucial vote? The Nepean River marks the boundary between the great Sydney basin and the Blue Mountains beyond. Centred on the town of Penrith, the electorate of Lindsay lies on both sides of the river. 50 years ago, this was a landscape of farms and market gardens.

But with the coming of the M4 and the remorseless rise of house prices nearer the city it's now home to the squinters. During the week, family breadwinners drive east towards the city and the rising sun. JENNIFER BYRNE: What was Mr Rudd doing today while Mr Howard was dropping broad hints about the election date? ANNABEL CRABBE: Mr Rudd was continuing on his global tour of hospitals. In the evening, they drive home, with the sun in their eyes again. On weekends, this could be any suburb on the fringe of any city in Australia. It's the world Mark Latham came from. Plant manager Mark Roser has voted Liberal for at least the past three elections. This time he's thinking of declaring John Howard's long innings over.

One reason, he says, Kevin Rudd is not Mark Latham. I'd probably talk about it being a pleasant change

to have an Opposition that looks attractive.

For some time now the alternative to the Liberal side of things hasn't been very impressive from my perspective and I guess if you if you look at the polls with Mark Latham, he became very unpopular very quickly. So it's not just me. In fact, when he first became leader, Mark Latham boosted Labor's popularity as much as Kevin Rudd has done. How are you Mark? Good, good. How are you?

In Latham's case, of course, it didn't last. For most of this year, the pollie-watchers in Canberra's press gallery

have been waiting for Rudd's honeymoon, too, to end. How did that health stuff go down last week? But as John Howard's election date options narrowed,

the polls continued to defy predictions. I don't think it's just the gallery.

I think the whole political glitterati have these set views

about what happens in election campaigns - at this stage the polls turn, this stage they turn again. The fact that we're defying gravity on so many fronts - particularly given the strength of the economy - it's left people, I think, with a lack of confidence about what's going on. that it's really happening.

They can't believe, despite all the evidence at the polls, that this is what's actually going to happen on election day. We look now at the seat of Lindsay,

It was on election day 1996 that the seat of Lindsay was first captured by the Liberals. The prediction there, a Liberal gain. Jackie Kelly's unexpected victory over Labor's Ross Free helped deliver government to John Howard. She's held the seat, and has been one of Howard's favourites ever since. But now the Liberals face a tough battle on the banks of the Nepean. And this is Greg Hinquist who has run this club since I was vice-captain of Boats here. To John Howard's dismay, Jackie Kelly has decided not to stand for re-election. The new Liberal candidate, her former electorate officer Karen Chijoff, is a comparative unknown in Lindsay. With a margin of less than 3%, she'll need all the help John Howard can give her. Karen - who I can't even pronounce her last name-

she is someone who I haven't got a clue what she stands for. Good morning, how are you, Karen Chijoff. The phoney campaign has been running at full tilt in seats like Lindsay for months.

Nice to meet you. What's your name? Donna. Hello, Donna. Thank you for all you've done. Thank you very much. There's little hostility to John Howard as he sweeps like a minor whirlwind through a Penrith shopping plaza. Quite the contrary. How are you? How old are your children? I've got four and I've got a fifth on the way. Excellent. And a stay at home mum. Good on you. My husband works. We're doing well. That's good. That's very good. Are you getting any of those family tax benefits? Yes! Excellent. Very good. There's enormous power in direct human contact

with a face you've seen a thousand times on television. How are you, sir? Every hand shaken, every picture taken, can translate directly into votes. How long have you been working here? 10 years. 10 years! A hairdresser, hey? I saw him in the Penrith press, in the Penrith plaza, and a lot of my clients said they saw him out, that they're going to vote for John Howard because they saw him in the plaza, so I guess that makes a difference for them.

Just the fact that they saw him in the plaza. Nicole and Matthew Willis aren't so easily won. They've voted for John Howard three times in succession. But they're doing it tough these days. It's rare that the whole family can get together. Right now, Matthew's working six 12-hour shifts per week as a security guard. Nicole has a full time job educating the disabled. They rent a modest house in Penrith with little hope of buying their own. Matthew Willis hasn't given up on John Howard but he does know that the booming economy he hears about hasn't done him much good. The Australian economy's very important, I believe, but I also want our individual economies considered and it would be nice that someone came forward

and said we're going to do this for you. We're going to do that for you,

rather than just keep putting the money into surplus, actually start spending money on us. That would be nice. We hate you. You've taken away our work rights, and we hate you. The numbers men say that voters like the Willises, young people in their 20s and early 30s, are turning against John Howard. This is a group that is either very affluent or feeling very stressed about their financial circumstances. Both of them have one in common -

they've only known John Howard as prime minister and they've only known the economy when it's growing. The 'Australian' newspaper's George Megalogenis has studied leaked private polling from the Liberal party. It matches his own study of the 2006 census returns. They see a younger alternative in Kevin Rudd and have sort of grasped him. Now in the Liberal party polling this is the group that's swung the most violently against the Liberals. I think John Howard's past it a bit now. He's had his turn. I think it's time for someone else to go in. Mr Kevin Rudd. APPLAUSE A month before the election was called, Kevin Rudd came to Lindsay to stage an early campaign launch before an audience of Labor faithful. I've come to Penrith today because it's here, and in places like it, that Australia's working families will decide

our nation's future direction in just a few weeks' time. Rudd's strategists grasped early on that to talk about the big economic picture plays to John Howard's strength. Australians are looking for leadership that extends a helping hand wherever possible to working families in dealing with the problems of today. They don't talk about macro-economics anymore. They talk about kitchen table concerns - work, family, housing pressure, cost of living, petrol prices. Now that's why Labor have been able to seize the initiative, Australia needs this new leadership. APPLAUSE But Matthew Willis says it'll take more than rhetoric

to make him change his vote. If someone was to give us a better offer for the struggling people but it, just, I haven't heard Kevin Rudd's policies or what he's going to do so... If your leader isn't cutting through with the message, for the local candidate, there's always the old-fashioned way. Labor candidate David Bradbury has been knocking on doors in Lindsay for years. A former mayor of Penrith, he's stood for federal parliament twice before. Both times he lost to Jackie Kelly. This time he's finding that the issue that was John Howard's biggest plus three years ago has become a potential vote-winner for Labor. I guess, David, the only thing that I think about is probably what everyone does that has a mortgage, is interest rates. That what really concerns me the most. Homeowners in Lindsay don't even have the consolation of knowing

that the value of their house is rising with their mortgage premiums. In Western Sydney, house prices have been falling. Prices are falling there because there are more sellers than buyers. There are a lot of people who came into the property market late in Lindsay who are feeling stretched, who are probably resentful. SONG: # 'Cause we are living in a material world # And I am a material girl # Deanne Pierce has three girls, and their material world is comfortable, but definitely stretched. SONG: # Some boys kiss me some boys hug me # I think they're OK # After the twins arrived, the Pierces took out a substantial additional mortgage to put an extra storey on the house. Deanne works 15 hours a week in a call centre to supplement the policeman's salary her husband brings in. We're doing OK, but things are tougher. It is harder to make ends meet. Of course, last time around John Howard said

that interest rates would always be higher with a Labor government than under the Coalition. He did, and he fibbed. Well, no he didn't fib, but I trusted that he'd keep interest rates low 'cause that was a consideration when I voted last time. He said that he'd keep them low, and because I feel a little let down, I guess I'm opening my mind up to considering other options and what Mr Rudd may have to say, a little more than I would ordinarily in the past.