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ABC News Breakfast -

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(generated from captions) Up to half a

million civilians flee the Swat

Valley. The US says Pakistan

must show a greater commitment

to fighting the resurgent

Taliban. Georgia puts down an

Army rebellion and accuses

Russia of making an attempt on

the President's life. Federal

Government says it doesn't

expect to record a Budget

surplus for six years. Manchester United look

set to make the final of the

Champions League. This Program is Captioned

Live.

Good morning. It's Wednesday

6 May. I'm Joe O'Brien. I'm

Virginia Trioli. The top story on ABC News Breakfast - half a

million civilians have begun fleeing Pakistan's Swat Valley

as fighting increases between

the Army and Taliban

militants. There's been a surge

in Taliban violence in Pakistan

and across the bord ner

Afghanistan this year. And the

US Special Envoy Richard

Holbrooke says Washington

expects Pakistan to do more to

fight militants now dominating

parts of the country's west.

It is a state under enormous

social, political and economic

pressures and India is always a

factor. We have long felt that

our friends in Pakistan could

put more resources into the

struggle in the west. They have

been reluctant to do so because

of their long-standing concerns

and past history with India. The US Special Envoy Richard

Holbrooke speaking there. Now the Presidents of Afghanistan

and Pakistan have arrived in

Washington ahead of a meeting

with President Barack Obama

tomorrow. Michael Rowland joins

us now from Washington. It

looks like the deal in Pakistan

between the Taliban and the

Government there has totally

disintegrated. It has done so

within the last 12 hours.

There's been a concerted

Taliban push in that volatile

north western part of the

country over the last month.

There was an ever so tenuous

peace deal between Government

and the militants to stem the

advance of the Taliban. That

has collapsed quite

coincidentally given Hamid spectacularly. And not un

Karzai's visit. There has been

a counter-offensive launched by the Pakistani Army over the

past couple of hours. There has

been fierce fighting and

civilians are fleeing. We are

getting reports that the

Taliban are now within 100km of

the country's capital,

Islamabad. A volatile situation

and a serious one. Is it

possible the deal has disintegrated as a result of continuing and increasing

pressure on Pakistan? Yes, it

has, indeed. There has been a

lot of pressure going back years. This hasn't just come up

in the last month orp so for

the Pakistani Government and

more particularly the Pakistani

Army which traditionally has

been semi autonomous in its

being from the Government to

get tough with the Taliban and

go after al-Qaeda hide-outs in

the north western parts of the

country and to stop Taliban and

al-Qaeda fighters moving across

the pourous border between

Pakistan and Afghanistan. They

are going into battle against

Coalition troops, including

Australian soldiers trying to

win the war in Afghanistan.

There has been a concerted international effort and pressure on the Government to

get tough with the militants

that. Will be top of the agenda

during the talks in the Oval

Office between Barack Obama and

Asif Ali Zadari. The question

is whether Pakistan does have

the resources to properly

counter the insurgency in the

West. On face value it does.

You are looking at a Pakistani

Army with a strength of

conservatively 500,000 to

600,000 soldiers verses a

Taliban strength much, much

less than that. It is not so

much the numbers, it is the

intent. The will to go after

the Taliban. It's not just been

a case of the Pakistani Army

being focussed in security

terms more intently on India to

the country's south. It is also

a case of the Pakistani Army,

according to a lot of respected

analysts who watch the

situation, being infiltrated by

Taliban sympathisers. That does

take away some of the intent and willingness to go against Taliban fighters on the

ground. Is there increasing

concern in the US about the nuclear arsenal in

Pakistan? There is deep concern

about the nuclear arsenal,

which could include more than

100 weapons falling into the

wrong hands. I was just

interviewing John Bolton who is

the former US Ambassador to the

United Nations and he is

amongst a growing group of

people here in Washington

calling on the Obama

Administration to take decisive

action if there is even the

remotest threat of the nuclear

weapons falling into the

Taliban's hands. He told me

that he believes the Obama

Administration if that happened

would have no choice but to

send US troops across the border from Afghanistan into

Pakistan to secure those

nuclear weapons which will of

course create all sorts of

problems, not just for the

potential battles between the

US soldiers and the Taliban,

but also very state sovereignty

issues involving the Pakistani

Government. Michael Rowland in

Washington. Thank you. In other

news this morning a mutiny by a Georgian tank batallion near

the capital Tblisi has been

quashed. Georgian tharts say it

was part of a Russian-linked

attempt to stage a coup and

kill the President, Mikheil Saakashvili. Russian

authorities have denied the

allegations and says it is

expelling two NATO officials ahead of NATO military

exercises in Georgia tomorrow. The Federal Opposition Leader

Malcolm Turnbull says he doubts

the Rudd Government will ever

deliver a surplus budget. The

Budget is expected to show a

deficit of around $60 billion.

The Government had previously

said it expected to run a

temporary surplus but now

admits it isn't expecting to be

back in the black for six

years. A drug company is being

allowed to sell expire ed

stocks of an anti-viral drug.

Tamiflu will only be supplied

to hospitals with confirmed

cases of swine flu and doctors

will have to contact the drug

maker directly to ask for

supplies. The World Health Organisation says 30 people

have now died from the

virus. 50 asylum seekers are on

their way to Christmas Island

this morning after the 11th

boat interception this year.

The boat was taking on water

when found off the West

Australian coast. The asylum

seekers, including a child, are

being taken to Christmas Island

on board HMAS 'Maryborough'.

Israel rejected a report that

says the Army attacked UN sites

during the Gaza conflict. 40

people were killed when Israeli

shells landed outside a school

in Gaza. The main food

warehouse was destroyed. This

announcement comes ahead of a

meeting between US President

Barack Obama and Israeli

President Shimon Peres in

Washington today. Canada has

joined Mexico protesting

against China's decision to

quarantine citizens against the

spread of swine flu. The

Canadian Foreign Minister has

asked Beijing to explain why it

has detained 22 Canadian

students.

In Beijing Mexicans are

checking in at their embassy

before checking out on a

special charter flight home.

Most had been tourists before

being caught up in the

influenza crisis. This

tourist says he's been in China

for ten days but because it had

become impossible to stay in

hotels he's decided to take the

flight home. At the same time

in Mexico City a Chinese

charter jet is loading Chinese

being flown home from the

epicentre of the crisis. This

Chinese tourist says she was

finishing her holiday when she

heard something terrible was

happening in Mexico and now

just wants to go home to

China. Mexico has labelled us disgrimer to the quarantining

by China of up to 70 Mexicans.

China says it is a community

health precaution and has asked

Mexico to remain objective.

Canada has been calmer and has

asked Beijing to explain why it

has quarantined 22 students in

China to learn Mandarin. It is

threatening to take China to the World Trade Organisation

unless Beijing backs down on

its ban of Canadian pigs and

pork. In Hong Kong, tourists

quarantined in a hotel have

received an apology, but no

reprieve. We can appreciate the

boredom, frustration and dissatisfaction that a

quarantine may have caused

you. We don't want to see that

either. But to contain the

virus which we don't know much

about, there is a need for

strict action. With more than

1,000 cases globally, the World

Health Organisation says it is

too early to tell if the outbreak is slowing

down. Mexico believes the worst

is over after a 6-day shutdown

ends. The President has gone on

national TV to outline an

economic stimulus package. TRANSLATION: I have already given instructions to members of the cabinet to

design a series of measures to

mitigate the impact of the flu

outbreak on the economic

activity of Mexico. The first

measure will be a promotional

cam obtain to convince

travellers Mexico is now safe.

The number of global swine

flu deaths has risen to 30 with

another 1,490 infections. In

what has become his daily

briefing rg, the World Health

Organisation's Assistant

Director-General Keiji Fukuda says it continues to affect

young healthy people. So far

among the cases being seen

everywhere, including countries

with a large number of cases,

is that the people being

infected continue to be

relatively younger people. So

in general we are seeing the

infections occurring in people

who are younger than 60 in

almost all countries. There are

some exceptions, but in general

the bulk of infections are

occurring in younger people.

Keiji Fukuda there. Returning

to the Federal Budget and the

Government's concession that it

doesn't expect to record a

surplus for at least six years

and I should correct what I mentioned in the bulletin

earlier. The Government had

said it planned to run a

temporary deficit, not a

temporary surplus. Hayden Cooper joins us now from

Canberra. Good morning. Good morning. We're looking down the

barrel of many years of great

deficits? We are. Six years. So

we now know what temporary

means. The Treasurer has been

saying this for a while and the

bad news for him is that there

could be two more elections

before the Government returns a

surplus and even then it is

certainly no guarantee. So you

can imagine the Opposition's

response in saying again that

it doesn't believe Labor will

ever return another surplus.

Pointing out also that World

War II went for six years and

you wouldn't call that temporary. Malcolm Turnbull

will be speaking at the Press

Club today. We can expect to

hear plenty more along those lines. It will be interesting

to hear. A long and kodgeent response that is well

anticipated now. Do we have

pretty much do you think the

worst news of the Budget out

now? Almost a week in advance

of the event itself? I think

so. This latest scrap of

information came again through

a coordinated Budget leak. By

that I mean it went to pretty

much everyone. It is the latest

effort to get the bad news out

of the way. Who knows, with

people expecting a deficit of

about $60 billion or more,

maybe they will come in and

return one around $50 billion

and people will think that's

actually a good thing. We must

of course bear in mind that it

is a massive turn around from

the $22 billion surplus

predicted last year and the $35

billion surplus expected for

this time next year to go from

that to around $60 billion is

quite a hit. I guess the

Government is assuming at least

in part that it has some good grace with the general

population because times are

difficult and the downturn is

so steep. And I guess in broad

terms unexpected given where we

were just a year ago. How is

the Government attempting to

spin this, Hayden? Well, as I

said, they are getting the bad

news out of the way and also

saying now to Malcolm Turnbull,

"What would you do? What areas

would you cut to cut back on

the f deficit and the

Opposition isn't saying it

would run a surplus." I don't think anyone believes it would

be. But my deficit would be

smaller than your deficit? Yes,

much smaller. It is in a much

easier position to say that

too. It doesn't really need to

come up with those savings on

where it would be cutting back

spending. But the mood seems to

be that it is going to be some

sort of a Robin Hood Budget.

That's the way the 'Daily

Telegraph' describes it today

in that it will cut back on

some of the measures the rich

have been enjoying for many

years. Let's face it, if that's

the way that this Budget is remembered, the Government will

be very happy. Good to talk to

you. Thanks so much. Let's take

a look at the front pages of

the major newspapers around the

country. The 'Daily Telegraph'

reports a Federal Budget will

slash superannuation tax breaks

to fund a pension increase. 'Courier Mail' says

the Government is desperate to

find savings amid reports the

Budget deficit may blow out to

$70 billion. We've been

speaking of $60. Do you have

have another ten? News that the

Federal Budget is expected to

remain in deficit for six years

tops the 'Sydney Morning

Herald'. The 'West Australian'

says the Federal Budget is expecting to slash health

spending by making changes to

the Medicare safetynet. Tough

economic times are in store for

those living in the ACT warns

'The Canberra Times' which

reports on the State budget

handed down by Treasurer Katy

Gallagher yesterday. The 'Age'

says the Victorian Government's

spending spree on major

projects will not prevent tens

of thousands of Victorians from

losing their jobs. The

'Australian Financial Review'

says the Reserve Bank's

decision not to cut rates

in the local economy. The the signals recovering confidence

'Australian' reports

Australia's biggest

universities have been ravaged

by the global financial crisis

with many reporting big

investment losses and the

University of Melbourne leads

the way with literally tens of

millions of dollars in

losses. A consultant has

recommended an investigation

into the Premier's Office after

staff were found to be abusing

their entitlements says the 'Mercury'. The 'Northern

Territory News' is reporting a

man named after Cyclone Tracey

has been charged with drink

driving. I'm not sure what the

connection is. And the 'Herald

Sun' says a veteran country

firefighter has hit back at

allegations he lit the bushfire

that killed 38 people in

Marysville. Now if you would

like to send us your feedback

on any of the stories we're

covering, contact us here:

Now the top stories on ABC

News Breakfast this morning -

up to half a million civilians

are fleeing Pakistan's Swat

Valley as the Army clashes with

Taliban militants. The US

meet the Presidents of President Barack Obama will

Afghanistan and Pakistan in

Washington tomorrow. He's

expected to urge them both to

show a greater commitment to

the fight against the Taliban. The Federal Government

says it doesn't expect to

record a Budget surplus for at

least six years. The

announcement comes as it

emerges that next week's Budget

is expected to show a deficit

of around $60 billion. And

Georgia has accused Russia of

being behind a military mutiny

that could have led to an

attempt on the Georgian

President's life. Russia has

denied any involvement and says

it is expelling two NATO

officials ahead of NATO military exercises in Georgia

tomorrow.

Now the Reserve Bank's

decision to leave the official

cash rate on hold yesterday

came as no surprise to

economists. The RBA reached its

decision saying there were

positive signs emerging in the

economy, but there has been a

raft of economic data pointing

to the depressed state of the

business sector, including

figures on demand for credit

prepared exclusively for the

ABC's 'Lateline Business'.

Andrew Robertson

reports. Credit reporting

agency normally releases an

index of demand for credit

every six months. But with the

economy in such a fragile

state, it prepared numbers from

January to March and revealed

them exclusively to 'Lateline

Business'. They reveal credit

demand at historic lows. In the

overall result being down over

the March quarter last year,

while concerning is not

surprising. Breaking down the

figures, the biggest falls were

in business credit card

applications, property loans,

commercial rental and hire

purchase. For Veda, it is a

sign that businesses are

changing the way they

operate. Australian businesses

are relying more so than they

have in the past on their own

working capital to fund their

businesses. So they are relying

on their ability to transform

their invoices into cashflow to

fund their businesses on a

day-to-day perspective. For

economists such as the

Commonwealth Bank's John

Peters, the lack of desire for

the economy in the credit doesn't bode well for

short-term. You would expect

business investment to fall

away this year from the record

levels set in recent years.

That will be a negative for

growth and one of the key

drivers of the downturn. The

Commonwealth Bank in

conjunction with the Australian

Industry Group has released its

latest performance of services

index, covering two-thirds of

the economy. Like Veda index,

it remains at an historic

low. These sort of figures

really confirm that non-farm

economy has been in recession

in the past few quarters. There

are signs of life with building

approvals rising for the fourth

consecutive months. It is those

signs of life in Australia and

overseas which prompted the

Reserve Bank to leave the

official cash rate at 3%,

noting that much of the

stimulus which has been pumped

into the economy in recent

months has not yet had time to

work. It is a decision which disappointed the business community. Quite clearly we

will see further deterioration

with respect to employment,

jobs deterioration and also

further deterioration in terms

of business investment. So on

both those counts we think

business needs the benefit of

further rate reductions. But

with some good news now

starting to filter through, the

Reserve Bank may not be in a

rush to deliver those rate

reductions any time soon.

Andrew Robertson reporting there. The global financial

crisis has slashed the value of

the investments of some of

Australia's biggest

universities. News Ltd reports

the University of Melbourne has

declared a $245 million

investment loss. The fall is

expected to put pressure on the

Federal Government to boost

funding for universities in

next week's Budget. The US

Federal Reserve Chairman Ben

Bernanke says the US economy is

likely to begin to improve

later this year. But he also

said economic recovery was

dependent on repairing the

American financial system. We

continue to expect economic

activity to bottom out and turn

up later this year. Key

elements of this forecast are assessments that the housinging

market is beginning to

stabilise and that the sharp inventory liquidation that has

been in progress will slow over

the next few quarters. Final

demand should be supported by

fiscal and monetary stimulus.

An important caveat is that our

forecast assumes continuing

gradual repair of the financial

system. A relapse in financial

conditions would be a

significant drag on economic

activity and could cause the

insipent recovery to stall. Ben

figures now. Bernanke there. Looking at the

figures now. Bernanke there. Looking at the cipient recovery to stall. Ben

gradual repair of the financial forecast assumes continuing important caveat is that our

activity and could cause the significant drag on economic conditions would be a system. A relapse in financial

Looking at the figures now. stall. Ben Bernanke there. incipient recovery to

In a couple of minutes, Vanessa O'Hanlon will be here

with the weather. Our reviewer

today is the former editor of

the 'Age', Michael

Gawenda. Here's sport. Football

first and Manchester United

have booked a spot in the

Champions League final after

gaining the upper hand on

arsenal. United found the net

twice in the first half and lead 3-0.

In years and years to come

he will remember that moment.

2-0. It is all over. Ronaldo

has slammed the ball past and Manchester United are on their

way.

And the Central Coast's

winless streak has continued

going down to Pohang 3-2 overnight in the Asian

Champions League. It was a

hat-trick to Denilson that

denied the Mariners. Let's look

at the action. In group H

Pohang took an early lead after

Huan was fouled and Denilson

scored with six minutes gone.

The defensive mixup let the Mariners back into the game

after 52 minutes. Grosnik took

advantage. Four minutes later,

the Australian team was ahead

when the free kick found its

way into the net, somehow. But

with 15 minutes to go, the

Stealers captain made it 2-2.

Three minutes from time,

Denilson celebrated in unusual

style after completing his

hat-trick send ing Pohang into

the next round. Lay scored

twice. two goals set them on

their way. Owea scored the

first. The match was sealed

late in the second half with

another goal. The Blue Wings

are in poll position to claim

the spot after Shanghai dropped

two crucial points in

Singapore. Armed forces took

the lead in the first half

through Latieff and took an

equaliser in half time to save

a point for the Chinese team.

FC Seoul kept their hopes alive

with a 5-1 win over Indonesia.

A belligerent 135-run opening

stand has helped Shane Warne's

Ragastan Royals to a 78-run win

over Punjab and second place on

the IPL ladder. Let's look at

some of their hard hitting

innings of 211.

COMMENTATOR: That is lofted

and will be our first maximum

second ball of the match.

Still on cricket and Australian selectors have again

come under fire following the announcement of the Twenty20

World Cup squad. Brett Lee

returns from injury with virtually no match practice.

Andrew Symonds's form is

questionable and Nathan Hauritz

has little experience in the

short format. Despite superb

Twenty20 form, Brad Hodge was

overlooked for national

honours. That was something you

mentioned yesterday, Brad Hodge

again, his form, as we said,

was superb. He scored the third

most runs in the IPL but again

no berth for the Aussies. Talk

us through the selection. The

questions that are being asked

about it and why they've gone

with that bunch. Well, Nathan

Hauritz has performed probably

better than a lot would have

expected in the recent five 50

over games against Pakistan.

That's probably helped his

cause a little bit. But the

most angst has come from

Victoria who are saying Cameron

White, their captain, a

hard-hitting batsman, derk

Nannes has been superb. He's

been described as one of the

fastest bowlers in the world

and the most difficult to face

in the pitch. By his captain. Yes, but he's taken a

lot of wickets and bowls at a

great economy rate. The

selectors did have to give

Brett Lee a run before the

Ashes to get him up on match

fitness. That is the

theory. This is his

practice? This is the practice.

One of the questions, is it a

four over spell he'll get in

the Twenty20 games and a bit of

a slap at the end of the

innings, will that be

sufficient or substantial

enough? Some practice. I guess

so. It is interesting though.

It seems as if they are going

for the names, for those with

the status and the standing

ahead of the actual literally

runs on the board. It is

Symonds and Lee. They've been the face of Australian cricket

for a while. You have to work

up your new faces. It's about

succession. This is a World

Cup. I see David Warner has

made the squad F you are look

together future, that is fair enough. You build towards the

World Cup. This is the World

Cup. This is where they need to

win. Thank you, Luke. ABC News

Breakfast can be watched live

on the web anywhere. Visit us

here:

Now with the weather for the

first time this morning, here

is Vanessa O'Hanlon and news on

wet weather around

Queensland. Good morning. For

today there will remain close

to the coast as south easterly

winds continue to bring showers

to Queensland's east coast.

Those winds are starting to

spread moisture over Queensland's interior and there

is also the combination of this inland trough. Showers and

storms will increase tomorrow

and into early next week. Today

will be similar to the past

week in the south-east. Once

again, the strong high is

giving a cold morning, but the

days will remain mostly sunny,

particularly for inland areas.

A front is moving towards

Tasmania bringing light showers

for some of the south-east

coast. Scattered cloud, more

showers along the NSW North Coast and into Queensland along

the coastline. The cloud over

the northern tropics will cause showers and storms otherwise

the skies under the high are

mostly clear. Around the states

for today:

In SA ksh frost about east

and showers about the far west

coast. WA - no changes, just

isolated showers for the Eucla

coast. Otherwise a fine and

sunny day on the way. Up in the

north - gusty easterly winds

during the morning. For the

Territory there is still

isolated showers over the Arnhem district and Tiwi

Islands. Looking ahead to

tomorrow and possible showers for Brisbane.

I'll see you in half an

hour.

The top story on ABC News

Breakfast - up to half a

million civilians have begun

fleeing Pakistan's Swat Valley

as fighting increases between

the Army and Taliban militants. There's been a surge

in Taliban violence in Pakistan

and across the border in

Afghanistan this year. The US

Special Envoy Richard Holbrooke

says Washington expects

Pakistan to do more to fight

militants now dominating parts

of the country's west. It is a

state under enormous, social,

political, and economic

pressures and India is always a

factor. We have long felt that

our friends in Pakistan could

put more resources into the

struggle in the west. They have

been reluctant to do so because

of their long-standing concerns

and past history with India. US Special Envoy Richard

Holbrooke there. Now remember

you can always make a

contribution to ABC News

Breakfast. If you would like to

comment on the stories we're

covering today, contact us

here:

In other news this morning,

the Federal Government is being

criticised for saying that it

would only run a temporary

Budget deficit. A Government

source has been quoted as saying that Labor doesn't

expect to record a surplus for

at least six years. Next week's

Budget is expected to show a

shortfall of around $60

billion. A mutiny in Georgia

has been crushed. Soldiers at a

military base were reportedly

planning a rebellion. Georgian

authorities say it was part of

a Russian-linked attempt to

stage a coup and kill the President. Russian authorities

have denied the allegations.

Moscow says it is expelling two

NATO officials ahead of NATO

military exercises in Georgia

tomorrow. A second person has

died in the US of swine flu. The World Health Organisation

says 30 people have now died

from the virus. In Australia, a

drug company is being allowed

to sell anti-viral drug past

their use-buy date to fight

swine flu. Tamiflu will only be

used to supply hospitals with

confirmed cases and GPs will

have to contact the drug maker

directly to ask for

on their way to Christmas supplies. 50 asylum seekers are

Island this morning. They were

on the 11th boat stopped this

year. It was taking on water

when found off the West

Australian coast. The asylum

seekers including one child are

being taken to Christmas Island

on board HMAS 'Maryborough'. In

Turkey the first funerals have

begun for 44 people killed in

an attack on a wedding. Masked

men armed with rifles and

grenades burst into the

ceremony near Mardin in

south-east Turkey. Eight people

have been arrested over the

murders. Turkey's PM says the

attack was the result of an

inter-family dispute. The

torture debate is continue in

the United States after Barack

Obama authorised the release of

memos outlining techniques used

the Guantanamo Bay. Two senior

administration have defended members of the Bush

their actions. Michael Rowland

reports. It's been more than

seven years since the first

detainees were shuffled into

places like Guantanamo Bay. The

debate over their treatment is

as fierce as ever. Waterboarding violates

our ideals and values. I do

believe that it is torture. Mr

Obama has stirred a political

hornet's nest with his decision

to release memos that detail

the interrogation techniques

used against terrorism

suspects. The documents were

written by Bush administration

officials to justify tactics

like waterboarding. This is

where the suspect is bound, his

head covered with cloth and his

face then doused with water.

According to one of the memo s:

It's been revealed, the

alleged mastermind of the

September 11 attacks was

waterboarded nearly 200 times

over the course of one month. The memos tell us that

the laws were broken and that

the Justice Department went to

graeth lengths to justify what

were clearly illegal acts of interrogation. Other memos

justified the use of tactics

including facial slaps, sleep

deprivation, forced nudity and

confinement with insects.

President Barack Obama says

those that conducted the

interrogation s won't be

prosecuted, but is offering no

such guarantees for the Bush administration officials who

approved the tactics. With

respect to those who formulated

the legal decisions, I would

say that will be more of a decision for the

Attorney-General within the

perimeters of varies laws and I

don't want to pre-judge that. So Obama could move on

and not go after the lower

level guys and still be

faithful to his statement by

going after the upper level

people. I think it is a

carefully worded statement. I'm

not saying I'm hopeful he will

do that, I'm only saying there

is room for pressure. Senior

Democrats are keen to begin the

investigations. We don't just

turn the page without reading

it. We want to make sure what

the mistakes were so the Obama Administration doesn't make

these mistakes. Over the last

week there has been a furious

rear-guard action from key Bush administration figures, some of

whom could be in the

investigator's sites. Dick

Cheney insists the tactics

yielded valuable information. With the

intelligence programs and

terror surveillance program as

well as the interrogation

program, we set out to collect

that kind of intelligence. It

worked. It's been enormously

valuable in terms of saving

lives, preventing another mass

casualty attack against the

United States. He is challenging the President to

release other memos he claims

prove this. Former Secretary of

State, Condoleeza Rice, tried

to defend her role while being

grilled by university

students. Is waterboarding torture. The President

instructed us that nothing we

would do would be outside of

our legal obligations under the

convention against torture. So

that - by the way, I didn't

authorise anything. I conveyed

the authorisation of the

administration to the agency

that they had policy

authorisation subject to the

Justice Department's

clearance. OK. That's what I did. Is waterboarding

torture? The United States were

told nothing that violates our

obligations under the

convention of torture. So by

definition, it was authorised

by the President. It did not

violate our obligations under

the convention against

torture. Thank you. As the

political battle rages,

America's top general has been

reinforcing the military's

opposition to tangtics like waterboarding. These techniques

could be used against us and

have for a considerable period

of time. Those who authorise

the interrogation techniques

are finding themselves increasingly isolated. Michael

Rowland reporting there. Now the West Australian Government

has offered $3 million to a man

who was wrongly imprisoned for

more than a decade over a

murder. It's been described by

the WA Government as the

largest offer its ever made but

it has received a cool

reception from Andrew Mallard.

He spent 12 years in jail for a

crime he didn't commit. Andrew O'Connor is in the Perth

newsroom. What has Mr Mallard

said about this? The question

is what is a man' life worth?

12 years in prison. According

to the senior counsel he's been consulting, it's worth double.

He offered a cool reception to

this. At the weekend his

supporters came out with a

figure of $7.5 million saying

that was the only figure that

would adequately compensate him

for 12 years in prison and the

difficulties that he has endured. Now the State

Government straight away tried

to hose that down and said Mr

Mallard's supporters were doing

him a disservice by inflating his expectations and came out

with a $3.25 million offer. Mr

Mallard says his lawyers advice

stand and he is determined to

pursue the higher amount. Give

us an idea of what happened in

this case? Well, I guess the

background of this case is that

it's been running here for

about ten years. It's been a

high profile case in WA. It has

been seen in recent times as

the most egregious example of a

miscarriage of justice in a state that has more than its

fair share of these cases. He

was arrested, prosecuted and

jailed for a crime that he did

not commit. The subsequent investigations into that investigation by police found

serious flaws in what the

police officers had done. They

ignored contradictory evidence

in pursuit of the prosecution

and denied the defence access

to contradictory evidence

during his trial. He had to

fight it to the High Court to

have his conviction overturned

in 2006 and a subsquefnt

investigation by the Corruption

and Crime Commission in WA made

serious findings of misconduct

against two police officers and a prosecutor. The Government

felt obliged and compelled to

make this record offer. Putting

you on the spot, but was any

action taken against the police

officers and the

prosecutor? Well, the two

officers until recently were

assistant commissioners. Now

one of them has left to take up

a job with the emergency

services here. The other one is

fighting an effort by the

Police Commissioner to have him

removed from the police force. The Director of Public

Prosecutions is yet to make a

decision about the future of

the senior prosecutor. Mr

Mallard has launched a legal

action against those three and

several other people he allegations were involved in

the mishandling of his cases.

That's one of his gripes. As

far as he can see, no-one has

been held to account for what

happened to him. No-one has

lost their job, been sacked or

suffered any penalty apart from

him. I think that's part of the

reason that is motivating his

push for greater compensation. Andrew O'Connor

in Perth, thank you. Police in

Sydney have conducted raids

across the city, targeting

hell's angels bikies. They

seized drugs and illegal

weapons and arrested two

alleged hell's angels members.

Rachael joins us from one of

their headquarters in Sydney.

Rachael, good morning. Tell us

where you are and tell us about

what is a set of coordinated

actions by the police. I'm in

the suburb of petersham outside

the headquarters of the city

chapter of the hell's angels.

It is the building behind me

with the green corrugated iron

door and the black metal gate

there. That was one of the

buildings that was targeted

yesterday in the 31-property

raid that police launched

across Sydney targeting

specifically the hell's angels

motorcycle gang. Yesterday in

the raid they netted weapons,

drugs and a car that was used

on the day of the brawl at

Sydney airport back in

March. I was going to say that

two men were arrested as a

result of the raid and they

have been charged with drug

offences and will appear in

court later this month. The

Comancheros boss applied for

bail yesterday? That's right.

The President, Nick Hary

applied for bail and has been

in custody since that airport

brawl. It is alleged that he

has been - witnesses have told

police he was in the thick of

the brawl and that he was one

of the men that bashed Anthony

Zervis to death on that day.

His defence lawyers say there

is not enough evidence to be

holding him at the moment in

custody. They say that it is

targeting him because of the

position that he holds within

the Comancheros bikie group and

not on direct evidence against

him at the Sydney Airport

brawl. It came out in court

yesterday that one witness has

told police that he threatened

Anthony's Zervis's brother on

that day saying, "I'll get you

next. I'll be back to get you."

Time tells us that indeed he

was shot in the driveway of his

home days after his brother was

killed in the Sydney Airport

brawl. So the magistrate

yesterday that that was enough

evidence at this stage to keep

him behind bail. The defence

lawyers say they will take that

application and appeal against

the decision of the magistrate

in the Supreme Court. And Rachael, finally, what is the

Government doing to toughen up

anti-biking legislation? Well,

the first bill, the anti-bikie

legislation was passed back in

March. It was raced through

Parliament here in NSW because

it was at the height of what

was being called a bikie war at

that stage. Now the Rees Labor

Government said the legislation

was needed to crack down on the

association of outlaw motorcycle gangs and that

legislation was passed. Now

they are introducing another

bill to further that piece of

legislation and it cracks down

on things such as the

recruitment of motorcycle gangs

recruiting new members. One of the Police Commissioners

yesterday said this recruitment

phase is important because they

have evidence that bikie gangs

are contacting young men in

street gangs in Western Sydney

and some gangs such as the Muslim brotherhood association

and that people are actively

recruiting for bikie gangs at

the moment. They need this

piece of legislation to go

through Parliament to crack

down on that ability of bikie

gangs to recruit. Now at the

moment the Opposition is saying

that it's not going to support

this legislation. Of course in

NSW there are two Houses of

Parliament and the Opposition

is needed to support the

legislation if it is to pass

the upper house. At this stage

the Opposition says it's not really interested in supporting the second piece of legislation. Rachael, thank you

so much. Now Vincent Van Gogh

is most well known for his

amazing art, but in terms of

his life's story, we always

hear that he cut off his own

ear in a fit of

rage. Researchers are saying it

could have been cut off in a

fight with his friend and

fellow artist Paul Gaugin.

Philip Williams has this report

from London. It's perhaps the

world's most famous missing

ear. The iconic Dutch artist

cut it off with a razor in a

fit of madness. That is what

has been widely believed. Now

two German academics say their

research indicate his friend

and fellow artist Paul Gaugin

was the culprit, cutting it off

with a sword. They say Van Gogh

wrapped it in a cloth and gave

to it a prostitute called

Rachael. TRANSLATION: We are

convinced Paul Gaugin did it

during a quarterly. It is not

clear if it was a deliberate

attack or an accident, but that

Vincent Van Gogh covered it up

and kept his silence to protect

his friend. The new version

comes after years of research

into police and medical

records. It is dismissed by

some historians. Whatever the

truth, the Dutch genius took it

to his grave. He died after the

connection between him and his

ear was severed, about 1.5

years later. It's a nice

theory. It is interesting to

hear the different theories. I

don't know about this one, I

will buy the book. You are

watching ABC News Breakfast.

Here is the top stories. Up to

half a million civilians are

fleeing Pakistan's Swat Valley

as the Army clashes with

Taliban militants. US President

Barack Obama is meeting with

the Presidents of Afghanistan

and Pakistan in Washington

tomorrow. He is expected to

urge both of them to show a greater commitment to the fight

against the Taliban. The

Government has been criticised

for saying the Budget deficit

would be temporary even though

Australia is predicted to be in

the red for another six

years. The Federal Budget is

expected to be at least $60

billion in deficit. Georgia has

accused Russia of being behind

a military mutiny that could

have led to an attempt on the Georgian President's life.

Russia has denied any

involvement and says it is

expelling two NATO officials

exercises in Georgia tomorrow. ahead of NATO military

For a look at the national

papers we're joined by the

Melbourne University lecturer

and former editor of the 'Age', Michael Gawenda. Good

morning. Good morning. Enjoy your time at Melbourne

University while it lasted

because the university is going

broke and clearly you won't

have a job for very much

longer. That was an interesting

introduction! Well, I think it

is obvious the universities

were going to lose money that

they've invested in the market.

I think you are talking about

the lead story in the

'Australian' this morning. It

is an interesting story that

all the universities have lost

money. Melbourne University is

not the only one that has lost

money. I think the University

of NSW has lost significant

money and as the

Vice-Chancellor of Melbourne

University says, this is paper

losses at the moment. That's

what the argument is. If you

don't realise the losses, they

are losses on the investment.

But the fact is they use money

that they earn on their

investments for research and

scholarships and all sorts of

programs and those programs

will have to be delayed for a

while and some cut. I think

there is little doubt about

that. So it's a very

interesting story. I would like

to know - this is not just

happening at universities I

imagine. I imagine some of

Australia's top schools that

have got similar sorts of

investments would be losing

money as well. There would have

to be little chance that the

universities are going to get any extra money out of the

Government in the Budget to

compensate for this? That's the

word. The Bradley review is not going to be implemented at the

moment. It will be delayed.

They are unlikely to get extra

money. So, yes, times are

tough for universities at the moment. We know that local

councils around the country,

for example, ended up having

surprisingly large

ex-possessures to the sub-prime

crisis in the United States and

took big losses and questions

were asked about their

investment practices. Do you

think there are questions about

the auditing and investment

practices of the universities

as well? I don't know. I

imagine that, for instance,

that... If were you editor you

would be asking the question I

would be asking why there are

different levels of losses at

different universities. Some universities have lost more

than others. That goes to how

they've invested the money. And

the settings that they've

had. Yes. They are set by the

university council I assume. So

I would certainly be asking

questions about that. And then

there is the other question is

any of it going to come back.

They say they are paper losses

at the moment, but if you

believe what people are saying

about superannuation that's

been lost, a lot of that won't

come back. You would have to

assume they won't get a lot of

it back either. There is a

vague contradiction in the university saying they are

paper losses when it is

recurrent expenditure and money

going on courses and research

year on year, that is a

contradiction. The contradiction is in fact they

are using the earnings in terms

of funding... Then it's not paper, it is real

losses. That's right. The

earnings are cutting whatever

it is by a third. They have a

third less to spend. That's

true. Take us through another

one of the other yarns you

wanted to look the 'Australian'

interested you? Sorry,

'Age'. The 'Age' was

interesting because there was a

staigt Budget in Victoria and

the State Government has

managed the Brumby Government

on paper to keep the Budget in

surplus, which is some

achievement. Only reason it's

done that is because it's getting cash from the Federal

Government. They are borrowing

a lot. $11.5 billion for a

State Government is a lot of

borrowing. I thought the other

interesting story was the story

that the police are examining -

that one of the magistrate's in

Victoria has been stood down by

the chief magistrate because of

some questions about how she

explained a speeding fine that

she got. Now that story has

ecos of other stories I won't

mention. No-one's mentioned the

name yet. I don't think we

should. I won't mention the

name, but it is interesting. It

is hovering around. It is. The

question is whether she was

actually driving the car in one

of the tickets she got for

speeding. I think she has been

stood aside for the moment. She

has. Stood down by the chief magistrate. It is interesting. With a father who

is prominent in the Melbourne

community. Well, he is prominent in the Melbourne community and the suggestion is

she said her father was driving

the car at the time. Oh, Lordy.

They will be able to nail that

down quickly. The man involved

is now a member of the Italian

Parliament. There are a number

of seats allowed to be given to

ex-pats. They will be able to

find out quickly where he was

at the time. Indeed. Just

echoes of other stories which I thought was quite interesting. Nicely walked around. And the 'Sydney

Morning Herald'? I thought the

interesting story was the story

from the OECD. A survey in the

OECD shows that Australians are

the least partying people in

the world. We no longer have

bash aqueues. Only 3% of our

leisure time is spent with

friends. It seems a remarkably

low... Who says that? Do you

sit in front of the

TV? Compared to the highest,

the most social people in the

world are the Turks who spend

43% of their leisure time with

friends. The average is around

30%. So we really of the OECD

dks - it's around 30%. People

need to get out more. They

obviously spend most of their

time watching television or

playing computer games. We need

a life be in it campaign. We do

or the survey is a load of

nonsense and you can't believe

a word of what is in it. That's

this week's survey. The same

survey suggested that the

French sleep the most of any

country in Europe. It is not surprising. You mean sleep

together or... It didn't go

into that. How boring! That is

what is interesting. Not whether they sleep longer than anybody else. We want to know what they are doing in the beds! The 'Daily Telegraph'... It is Budget time. The 'Daily Telegraph' how would they treat the Budget. They have a huge graphic of cud as Robyn hood. He looks nice in tights. Wayne Swan is Fry Tuck and they are robbing the rich.

They do it in their own magnificent style, but the story is in every paper. This has been a leak that they are

going to pay for the pension

increase by doing something to

the rich. I'm not sure who the

rich are. It's the

superannuation benefit that a

certain number of people above

a certain income level get. I

think they will cut that back. Wealthier earners will

be paid less to put super away. How away. How much will that

contribute to a pension

increase? A fair bit. There is

an advantage. People are

whacking away super. The tax

break they get will be huge. I

think the concessional tax

amount is $100,000 which means

all of that is taxed at 15%. If

they cut that in half and you

can only put $50,000 in and you have to pay 46%

have to pay 46% tax on, that is

a big tax savings. They will

make money out of that. Seems

fair too. Nice to see you.

Thank you. A reminder you can

watch us streamed live every

morning here: Now, here is

Vanessa O'Hanlon with the

weather. Thanks, Joe. It will

be fairly dry around the country as a strong country as a strong high is

dominating the weather. It is another cold morning in the

south-east. It will be a mostly

sunny day, particularly for

inland areas. A front is moving

towards Tasmania. That will

bring light showers to the

south-east coast and as south

easterly winds continue to bring showers to Queensland's

east coast, they are spreading moisture over Queensland's

interior and with the

culmination of an inland trough

over the next week showers and storms

storms will increase. With

scattered cloud, more showers

are expected today along the NSW North Coast and the

Queensland coast. The cloud

over the northern tropics will

cause showers and storms.

Otherwise the skies will be

mostly clear under that strong

high. Around the states for

today: Queensland have squally

showers before spreading into

the central interiors. NSW the central interiors. NSW -

isolated showers along the

coast and adjacent ranges.

Should remain north of Gosford.

Otherwise a fine and sunny day

ahead. Victoria - frosty start.

Morning fog in the south and

the ranges. Light showers about

the west and Central Coasts.

For Tasmania today - scattered

showers for the west far south

and Bass Strait islands. It

will be cold at first with

possible frost ahead of a cool

and mild day. SA - little frost about

about the east and more light

showers about the far west

coast and southern agricultural

areas. WA - there are no

changes. Just isolated showers

for the Eucla coast. Otherwise

a fine and sunny day on the

way. To the north - gusty winds

in the morning. Isolated

showers over the Arnhem

district and Tiwi Islands, but

most of the cloud is high. Tomorrow Tomorrow - showers should ease in Melbourne and Hobart.

Still ahead on ABC News news

- we'll speak to the opposition

health spokesman Peter Dutton about the swine flu

outbreak. And the shortage of

the anti-viral drug Tamiflu.

Don't check the use-buy date,

it could be expired when given

to you by your doctor. That's to you by your doctor. That's

OK. We'll find out why after

this short break an ABC News

Breakfast.

Up to half a million civilians

flee the Swat Valley. The US

says Pakistan must show a

greater commitment to fighting

a resurgent Taliban. The Federal Government says it

doesn't expect to record a

Budget surplus for at least six Budget surplus for at least six years. Georgia puts down an Army rebellion and accuses

Russia of making an attempt on

the President's life. And

Manchester United beats Arsenal

3-0 to book a place in the Champions League's final.

Good morning. It's Wednesday

6 May. I'm Joe O'Brien. I'm

Virginia Trioli. The top story

on ABC News Breakfast - up to

half a million civilians have

begun fleeing Pakistan's Swat

Valley as fighting increases

between the Army and Taliban

militants. There's been a surge

in Taliban violence in Pakistan

and across the border in

Afghanistan this year. And the US Special Envoy Richard

Holbrooke says Washington

expects