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(generated from captions) getting under way - that's good

- but it seems to me this will

be a very, very long time

before these talks prove

anything productive. I hope

that's a mistake on my part but

I wouldn't put a lot of money

on success, except that they are talking. These peace talks

are getting under way right now

and the current Israeli freeze

on settlement s expires in

three weeks' time and if settlement or building activity

begins again, there is no

chance of any peace settlement

of any kind, even with the moderates, isn't that so? That's correct, Tony. So

what do you think is going to

happen then? Because even as a

result of today's events, the

killings there has been a

restarting on a limited scale of some building activity? Well, to be perfectly

direct, I think the real issue

will not play out in Palestine

or Israel, it will play out in Pakistan. This is strategicicly the most consequential

catastrophe we've had. Imagine

in the United States everything

from New Orleans east to the Mississippi under water. In

Pakistan you have a strategic catastrophe because the

Pakistan military is not going

to be able to support what it's doing in the west and

Afghanistan, rebuilding that

country is essential. We're not

putting in enough aid and you

could see Pakistan implode in the the next three, four, five, six

months. That becomes a huge

disaster which would overshadow

everything else and at this

stage the administration is

regarding it as only a

humanitarian crisis. If it were my

my priority, it would be No. 1

ahead of everything else

because Pakistan really cannot

control what's going on and

after Hurricane Katrina, the United States Government is

probably decades ahead of

Pakistan in terms of modernity,

if the Americans couldn't do it

the Pakistanis have? If that over Katrina, what chance

becomes the case, you will see instability,

instability, violence, disease

. You can see what happened in

1970 in East Pakistan when the

floods caused such riots that

there was riots with India and East Pakistan became

East Pakistan became

Bangladesh. You are saying

essentially this foreign policy

triple play is missing a far

bigger problem. Let me go to

the third part of that triple

play which is Iran and that's

the other un intended legacy of

rise of the influence of Iran

and its leadership in the

region. Obama has managed to

put together a new package of

much sanctions. They appear to be

haven't really worked in the

past. Will they work this

time? No, they will not. They

will make life a little bit

more difficult. What we need to

do is to try to encourage

particularly Russia, China and

other countries to lean on

Iran, to get the IAEA back in

and to do whatever we k and if the Iranians are not prepared

to stand down in their nuclear

ambitions, if they are going to

build a weapon, we better put

in a Plan B because in a Plan B because the only

way to defer it through some

sort of military attack and if

that were to occur the

consequences would be far worse than an even nuclear-armed

Iran. The administration has so

much on its plate. It is

looking at Afghanistan to try

to begin a withdrawal some time

next year, but it certainly

overloaded. When you asked the

original question about

overstretching, the fact of the

matter is we probably have more

difficult foreign policy

problems as well as domestic

problems on our plate than any

administration or government

can handle. This is a bridge

too far in many directions, Tony. Harlan Ullman, on that

bleak note, we have to leave

it. Always good to speak with

you on Lateline. Tony, my you on Lateline. Tony, my pleasure. The former British Prime

Minister Tony Blair has

launched a political memoir,

documenting his part in the 2003 Iraq war and the 2003

self-penned volume self-penned volume called 'A

Journey'. Mr Blair says he has no regrets but is desperately

sorry for those who died. Tony

Blair also takes a swing at his successor Gordon Brown. Phillip

Williams reports. With a

just released a book that

leader and now he regrets the helped define his

loss of life in Iraq, but not

the battle itself Look, how can

you not feel sorry about people

who have died? You would be

inhuman if you didn't think that. But when whether I regret the decision,

I have to say I take

responsibility for it but I

can't regret the decision. As

for his decisions to give all

the proceeds of his book to

help rehabilitate injured

British soldiers he suggests

it's not, as some suggest, his

way after poll honour their commitment because

I believe what they're doing is

honourable and worthwhile. I don't believe their Sam face or

commitment is wasted. I believe

absolutely necessary on the contrary. It's

security and the security of

the world, but it's my way of

showing that sense of honour to them. And faced with a potentially nuclear-armed potentially nuclear-armed Iran,

Tony Blair warns we should be

prepared to go all the way. I

am saying that I think it is

wholly unacceptable for Iran to that nuclear weapon pons

capability and I think we have

got to them. Militarily? If necessary,

militarily. I think there is no

alternative to that if they continue to develop nuclear

weapons and they need to get weapons and they need

that message loud and clear. Domestic Kali the focus

is on his troubled relationship

with Gordon Brown, the man who eventually did take over and

lost the election, a contest

Tony Blair should have been won

if only the party had stuck to

its principles of reform. He possessing zero emotional described Gordon

intelligence People maybe

overestimated his capacity to

be Prime Minister. I think the

last three years when he was Prime Minister people underestimated his strengths. Gordon Brown has yet

to respond, but a decade-long

feud looks far from over.

Sweden's chief prosecutor is

re-opening a rape investigation

into WikiLeaks founder Julian Assange. The decision to

re-open the case follows an

appeal by a Swedish wam who

accused Mr Assange of raping

her. Last month Swedish prosecutors dropped the rape inquiry but allegations of molestation.

Julian Assange denies any

wrongdoing and says it's part

of a

US officials condemned the

leak and said it put the lives

of Coalition soldiers and

Afghan inform ants at

risk. Well, about 80

custody tonight after breaking

out of the Darwin detention

centre this morning. The

Immigration Department says the

men pushed through an electric

fence and staged a fence and staged a 7-hour long protest just outside the

centre. Some of the men have

been in detention for 10 months

and others have had their

applications for asylum

rejected. I need your help,

please, it's very important. My

children, my family and

everyone is there and there is

war in these places. Police and immigration officials negotiated with the men throughout the

stand-off ended when police moved in They didn't

voluntarily return to the

detention centre. Police took

them into custody pursuant to the Migration Act. The escapees now face criminal

charges. Returning to our

breaking story, the Coalition has released a statement

maintaining that their election

policies will deliver a Budget

improvement of more than $11

billion over the billion over the forward Estimates. It also says that

the Treasury has confirmed to the Treasury has confirmed to

the Coalition that 95 its policy costings are

correct. Well, a quick look at

the weather now: That's all from That's all from us. If you

would like to look back at tonight's interview or review

any of Lateline's stories or

transcripts, you can visit our

website and you can also follow

us on Twitter and on FaceBook.

See you again tomorrow.

Closed Captions by CSI. This Program is Captioned

Live.

Good evening and welcome to

'Lateline Business'. I'm Brigid Glanville. Tonight - stronger-than-expected growth

with mining and construction

booming, but what about the

rest of the economy? Know,

mining is really the that is driving the Australian

economy. It is real Lianne

economy that is firing on one

cylinder. And where is the

world's biggest economy going?

We will talk to Standard &

Poor's chief economist. A slow

recovery is a fragile recovery

and any hit from outside can

turn it into a second dip. My

guess is one chance in

three. And something we will

all have to face up to as the

population ages. The industry

is really bleeding underfunding, where residents

are unable to contribute to the

additional cost of the care

that's required in order for operators to actually break even, let alone make an adequate return on their

investment. To the markets and with the strong GDP figures

providing the momentum: Australia's economy is

growing at its fastest pace in

three years. 1.2% in the last

quarter and at an annual rate

of 3.3%. But the picture across

the whole of the economy is not

quite so rosy. quite so rosy. While mining and its associated construction

projects may be booming, times

are getting tougher for

manufacturers. Here is Phillip

Lasker. On today's numbers, Australians might be forgiven

for thinking that the global

financial crisis was someone

else's problem. All these

numbers highlight just how different the Australian economic story is, I We're going ahead at quite a

strong rate. Certainly no signs

of any double-dip in the figures we're seeing in Australia. What we're see

something an economy that something an economy that grew 1.2% in the three months to

June, the fastest pace in three

years. Annual growth is now

around trend, above 3% Mining is really the engine that is

driving the Australian economy.

It's real Lianne economy that

is firing on one cylinder at

the moment. A massive increase

in the terms of trade of more

resources sector, boosted the than 12%, thanks to the

income side of the national

accounts and flowed through to mining profits. The company profits data that was in

it in the capital spending today's release, you could see

data, you can see the way trade

accounts have turned around,

the increase in wages and

salaries coming through as

welling and that income flow

will support a lot of economic

activity this year. There were

signs that government economic

support was beginning to wane

while households, enticed by

the discounts on offer, were ramping up their spending and dipping into savings. It was a

surprising development, given the Reserve Bank claimed

households were helping dampen

economic activity by saving

more and spending less. Still,

the economists saw it as part of a welcomed shift. Probably

the most encouraging sign in

today's data is indications the

private sector is starting to

take over, and that's exactly

what we need to see to sustain

the upturn that we have at the

moment. But there is at least

one area of concern. The latest performance

index fell to a five-month low,

with new orders down. The

sector is battling a number of headwinds, including a hung parliament. I think created some uncertainty within manufacturing. I think import

competition is still very

strong, and of course, the

Aussie dollar is still pretty strong. It was a different

story for Chinese manufacturing

where the latest numbers showed

a pick-up in activity which

augurs well for Australian miners. So does all this

strength mean earlier interest

rate rate hikes? Certainly

doesn't appear to be any

immediate need to rush in and

raise interest rates, but

certainly the way the economy

is evolving, it does suggest

that next move is more up and

down. If you look at the

inflation scenario I think it's much less threatening that

perhaps it appears perhaps a

quarter or so ago, with

continuing concerns in Europe

and the US, but also you will

continue to get deflation

imported through Chinese goods and the like. Certainly today's

numbers banished any thoughts of interest rate cuts. QR

National has told staff their

jobs will be at risk if the Queensland

coal rail network to a consortium of mining companies,

but the miners wanting to buy

the network hit back a kusing

QR of waging a desperate public relations

relations campaign. Kim Lyell

reports. QR National is push ing ahead with the State

Government's plan to publicly

float the coal rail business

later this year. But the

generous counter offer from Government is considering

miners to buy the network's

tracks. QR National has warned

staff the sale would put jobs

and the company's future at

risk. Look, Look, in the way

that I communicate with my colleagues in the company, of

course I'm going to be

relatively straightforward and

relatively blunt about it. He

says in the letter there would

be nothing to stop the miners

running their own trains or

outsourcing work overseas to

the cheapest

this is much to do about

nothing or some sort of

desperate PR campaign. The

truth is there is no way that

there will be any fewer jobs as

a result of this in either the

short term or the long term. In

the long term, there will

certainly be more jobs. Those

unions who have been opposed to

the privatisation have been

say it is would be quiet in recent weeks. The ETU

counterproductive to comment on

something from someone who has

a vested interest. I absolutely

have a vested a vested interest in looking

after what, as the chief

executive, I believe is the

best outcome for this company. The State Government say it is has no firm deadline

for a decision, but talks have

been positive. On the face of it, Australia's strong economic

figures look to have gone down

well with the markets. For his

take, I spoke to David Halliday

from Macquarie Private Wealth. David Halliday, thanks

for joining us Not a problem. Now, no problem. Now, no inspiration from Wall Street today on the

share market. Was it all down

to the surprising the national accounts? I don't

think you can say it was all

down the surprising strength,

but it certainly was a large

part to the huge GDP figure

that came out today. Obviously

both quarterly and annualised

GDP growth was exceptionally

strong, coming on the back of

strong Rae tail sales figures

yesterday. It really spurred us

up to the next level. I think

maybe also an element of

short-covering, the market does feel like it's been a little

underbid for the last couple of

days and people decided to

start covering some of those shorts and at the same time we

had manufacturing data in

form of PMI coming out from

China and that shows that

Chinese economy isn't slowing

as much as we firg thought. Indeed the banks and

miners bounced back from yesterday. Is it

sustainable? That's really the

$50,000 question. We had an up

on Monday, down Tuesday and up today.

today. Everyone is saying will

this whole market thing hold or another down day tomorrow? But

the GDP data, the BMI data,

held back in the past month or

two, but to some extent those

fear also be allayed and the

resources could in fact go on

with it. At the same time the

Coalition in betting market as

peer to be firm to take

government. If that turns out

to be the case we know that the mining resources rent tax will

be scrapped or at least changed

dramatically so some element that have kicking in. And chemical company Nufarm has

been dumped What's behind that? Been dumped again. Not a profit warning

this time which will please

some people. This company has a

great history over the past two years of warning after profit warning.

Today the flavour in the

sell-off in the market was to

do with the blowout in the

company's debt. On just 14 July

they reported that they

expected their debt to sit

around the $450 million mark.

Today they said it would be

something more like $620

million, an increase of million-odd over the course of the last few weeks,

justification for it but nonetheless it has ballooned out pretty

Set travel World, was that a

predictable response from the

market? It really was. The

shares jumped about 11.5% or 16

or 17 at the close, up more

throughout the course of the

day. All came down to the

decision by the ACCC to allow

their merger with stellar

the travel and leisure sector

is increase ing quite heavily

particularly on the online

space and also direct supply from airlines and hotels and

other suppliers. That was the justification for allowing merger, but certainly investors justification for allowing the

welcomed the merger and the

share price reacted accordingly. David Halliday,

thanks for joining us Thank

you. The financial and mining

stocks led today's rally. Rio

Tinto was up more than 3%, while the Commonwealth Bank

gained just over 2% N giant,, Woolworths claimed battle of the supermarket

nearly 50 cents and waes

farmers which owns Coles

advanced to $32.72. Turning to

currency markets and the currency markets and

impressive GDP numbers had a

big impact on the dollar which

at one stage was up more than 1

cent against the greenback

before falling back a little. It made significant gains

against the yen and American

dollar. To commodities:

Wall Street has had its

worst August in more than 10

years, down 4.5%. As fears grow

about the strength of the Reeve

cover. The economy is still growing,

growing, but unemployment is

close to 10% and the housing

market is still in trouble. Earlier I spoke to David Wyss,

Standard & Poor's chief economist. David Wyss, thanks for joining 'Lateline

Business' Thank you. How likely is a double-dip recession in

the US? It could a slow recovery. A slow

recovery is a fragile recovery

and any hit from outside could

turn it into a second dip. My

guess is about one chance in

three. You say your chances are

one in three. What are the

likely indicators that make you

believe that there will be a recession? Housing market,

those sort of factors? Well,

the housing market is taking a

double dip, but we expected

that. We knew that the strength

we saw in the spring was bought

because of that big tax rebate

so we program that expired in April,

back there. The big problem is

the consumer. The consumer is

just scared, doesn't want to

spend, being more cautious. spend, being more cautious. As

individuals I applaud that

because we should be saving more money, but from the

economy standpoint, we would

like to get people living

beyond their means like

normal. Is the consumer not

spending because of the big

mortgages on houses? To some

extent that's true, but the

biggest thing he is too scared.

Got caught with too much debt

last time, worried about

savings especially with of us approaching retirement

age and worried about building

savings in a hurry. Basically

he is right. Consumer spending

has been up last month or

better than expected. Is this

enough to keep America out of a

recession? What we're seeing

now is enough to keep us out of

recession. Final demand growth

has been growing at about 2.5%

for the annual rate for the

last four quarters or so.

That's positive, it's good, but

not a lot of strength, and the worry is worry is if the consumer gets

hit by something else, say an

oil price shock or another

financial meltdown, they could

pull back into share shell

really quickly. You say growth

is around 2.5%. If that lovers

around there, goes to 2% or

slightly lower, how worried are

you about a growth recession

where growth is so low it

creates low unemployment? Well,

we're expecting growth to be

between 2.5 and 3% for the next

couple of years. That's enough

to bring the unemployment rate

down but not very fast. We're

improvement in the unemployment

rate. Obviously the politicians would like to

would like to see it coming down more sharply, better

chance to get chance to get re-elected that

way. So a job else recovery? We

are seeing a bit of a jobless

roo cover, but I caution people

every re-sofr ri is a every re-sofr ri is a jobless

recovery. What else can the US

do to stimulate growth? One of

the problems is we're running

out of tools. The government is

spending I think as much as it

can afford to. I think the deficit

down. The Federal Reserve is

already taking interest rates

down to zero. You just can't

cut them any further. You can do some work on quantitative

easing but quantitative easing

works to bring down other rates

and those other rates are

already very low. Long-term

government bonds are already at

2.5%. How low can you push them

and what good will it do So Ben Bernanke has no other option? Well, he would have to do more of the same. I'm afraid

he is pushing on a string but

it's the only string he has to

push on. Does the US not need a period of re-adjustment? Well,

we need a period of re-adjustment, yes, we need a

deleveraging of the economy,

particularly the consumer

sector, but it's easier to do

that with the sector growing

than looking at double-digit unemployment rates. Many

companies were too debt ridden

to do much more than survive on

bailouts. It tooks years to recover. Is this a risk in the

US? There is a risk of this in

the US. The good news is that

Ben Bernanke was a student of

the business cycle and

particularly a student of Japan

in the '90s. I think he has a

good idea of the banks made by

the bank of Japan, including

not stimulating enough, and I

think he will avoid those

mistakes, but just because you

know what somebody else did

wrong doesn't necessarily mean

you know what to do that is right and there is still a

danger that the delemplging of

the economy will push

into the same kind of deflation

ri spiral that we've been

seeing in the last 20 years in

Japan. You seem confident that

growth in the US will be around

2-3%. The housing market is in

a terrible state. Surely any prerequisite for any stable

recovery is a stable housing

market? The housing market has

to stabilise. It doesn't have

to be the leading sector in the

recovery, but can't continue to

be a burden on the economy. The

housing market can't cause a has already got to be too

small. Construction of GDP has

been taken from 6% to 2%. Even

if it goes to zero, it can only

cause half the cause half the much damage as

it already house. But Shorely

it undermight bes consumer confidence Yes, I would be

concerned about it if

unemployment goes to

double-digit rates because that will lead to more foreclosures. Housing prices have been rising

for the last six months like things are stabilising in

terms of prices. We do expect

sales to go down. I think you

will see another price dip once

this stimulus program, once the tax rebate tax rebate runs its way

through, but I think it won't

be as bad as it was a year ago

when we were looking at double-digit declines for two

years. David Wyss, we'll leave

it there but we will all be

watching the US closely. Thanks

for joining us this evening. Thank you.

has told the Stock Exchange it

may be forced into liquidation

after environmental issues in

Kingaroy N July, a government aud tit stopped work at the company's underground coal

gasification plant. Despite the

levels being well below Australian standards for drinking water, Kingaroy

residents raised their concerns.

concerns. Cougar management say

it is has come Palestined with

the department's request They

regarding the source, cause and did not provide enough

extent of the ground water

contamination. Cougar directors

have told the AKX there ASX there is a reasonable

expectation they can raise

additional funding to continue

but won't comment until after

Friday's meeting with the

Environment Department. A new

report is high liking the

inadequacies of funding for

aged care. Consulting firm

Deloitte says there needs to be

a complete rethink to attract investor

There are growing concerns

about meeting future demand

with sta tisics of people aged

over 70 will almost triple over

the next ho years. With ageing

comes the massive challenge of

providing adequate care for

millions of extra people who

are not just older but living a

lot longer and the aged care

system is already struggling to

cope. One of the key issues for

aged care is the low returns on

aged care facilities at moment. Our margins are very

low. Which means aged care

facilities are not being built

at a rate which will provide

for Australia's future needs.

About 9% of the population

aged 70 or over which is about

2 million people. This is

expected to rise to 20% in the

next 40 years or about 5.7

of million people. By the middle

of the century, 10% of the population could be over 80. At

the moment it's 4%. That's

predicted to see government

spending on aged care triple as a

a proportion of total revenue

to 9%, but by 2050 there will

only be six people of working

age for everyone over 80, down from the current 16. Access

Economics health economist Dr

Henry Cutler believes

overregulation is one of the

key factors stifling investment

in aged care. There are price

controls on the amount of money

they can charge to individual

residents. There is regulation

on the up in of places that the Government will subsidise at

any one time, in particular

aims of regulation in aged care

is to provide a standardised

service across the country. Dr

Cutler says that thinking is

now outdated. Investment needs

to be encouraged by allowing providers to differentiate

their products by offering

different types of services in

aged care. The Government needs

to stop creating a market where

there is cross-subs ziezation

from low care to high-care

individuals as well and match up the costs of care to

McMillan is at the coalface as head of retirement living

services for Australian Unity

and knows only too well the

struggles faced by to make an adequate return in

aged care. Really bleeding with chronic underfunding where

residents are unable to

contribute to the additional cost of the care that's

required in order for brat ors

to actually break even let

alone make an adequate return on their investment. Derrick

McMillan says the statistics are an indication of are an indication of how unappealing the sector is to

private investors In 2005 a number of beds were allocated.

Only half of those beds to this

stage have been built. That's a

very strong indication that

there is not the incentive to construct new facilities. Mr

McMillan says removing both the

GST an construction of aged care facilities and ik on people who sell their

homes could make it atrikt tiff. Neglect forgive gearing could boost returns and in

terms of availability of capital she thinks

superannuation funds should be

encouraged to look at aged care

as a class of infrastructure investment Set aside superannuation pools to invest

in aged care. Whatever the porj would be lower he risk,

obviously lowerer returns but a

long-term aim to increase the

levels of funding Productivity Commission is residential levels of funding into

conducting a detailed study of

the aged care sector and has

received more than 400

submissions. Those involved in

aged care are hoping the

commission's report, due out commission's

later this year, will offer

everlasting solutions to one of

the biggest problems Australia is facing. Private equity firm

Lazard Carnegie Wylie has sold

the Australian and New Zealand operations of Dun and

Bradstreet to its US parent company. Lazard says it made

than three times its original $100 million on the

investment in 2007. Dun and Bradstreet provides commercial

information on 165 million

Australian-New Zealand companies worldwide. The

operation has returned revenue growth

growth of 130% over the last

decade, mainly from debt

collecting, credit reporting and business marketing. Dun and Bradstreet says it is now

pursuing an aggressive growth strategy in Asia. James Hardie

over Industries has lost its dispute

that could cost it more than

$380 million. The case dates

more than 10 years and was centred on a subsidiary RCI.

RCI tried to avoid paying the

taxes when moving ownership of

its US companies offshore. Lawyers representing asbestos

victims says the rule something

a blow to James Hardie's bottom line and that could have

consequences for compensation.

James Hardie shares closed down diary and the Bureau of Statistics has the trade

balance for July. Wesfarmers

Richard Goyder addresses the Australia-Israel Chamber of Commerce in Sydney. Metcash

holds its AGM.

Before we go, a look at

what's making business news overseas. The 'Wall Street

Journal' says currency

has hit $4 trillion a day. London's 'Financial Times' says

BHP Billiton's attempted

takeover of Potash looks more

hostile by the day, with the Canadian company's boss

accusing the mining giant of

highly unethical behaviour. That's all for

tonight. You can watch 'Lateline Business' Monday to

Thursday at 8:30 each night on

ABC News 24, as well after

Lateline on ABC1. I'm Brigid Glanville. Thanks for company. Goodnight.

Closed Captions by CSI.

has ever happened before. Nothing like this Don't! Just stop, just stop now!

big deal about Claire? Why? Tell me, Daddy! What's the Oh, Daddy! I'm not married to you! Yes, you are, get used to it! you. You are its sole purpose. Klein & Utterson exist to follow Please! Argh! No! No, for God's sake, no! You have some questions? A few, yes. You have my husband in a box! It's Hyde we want. So who is he now? How do you know which one he's stabilised as? We open the box. Sorry, Poole, mislaid my keys. Good morning, Dr Jekyll.

We weren't sure when you'd be returning. Will you be requiring breakfast? No, I think I've eaten. I have, I've eaten. Any messages? One caller, the same gentleman as before. He said he would call back, after ten o'clock this evening. Gentlemen do not call after ten o'clock. I could contact the police if you're concerned.

Alice said his manner was odd. I have business with this man. We are... connected. He spoke to Alice? The maid, yes, sir. He came to the kitchen door this time. I'll talk to her. Is she still in the kitchen? Dr Jekyll, I could send for her.

Alice? You had a caller today. He's coming back tonight. Ten o'clock tonight. Mr Hyde scares me. Mr Hyde scares me very much. But not half as much as that man today and his questions.

The Strange Case of Dr Jekyll and Mr Hyde.

My wife thinks I should throw it in the fire. But my publisher is interested. You called at the house while I was out today. You spoke with the maid. Yes. I'm sorry, background details, you know. I have provided you with sufficient details. You have kept within the limits of what we agreed?