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ABC News Breakfast -

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(generated from captions) A cynical cash grab. Wayne Swan threatens a crackdown on

the banks after a shock rate

rise on Cup Day. This Program Is Captioned


US voters head to the US voters head to the polls could change the country. I've in mid term elections that

been very disillusiond with the Democrats over the last

of years. Dozens killed as 10

explosions rock Baghdad. Ip and sealed with a kiss. Americain's

win makes the Melbourne Cup a truly international race.

Good morning. The top story on 'ABC News Breakfast' - the

Federal Government has attacked the Commonwealth Bank for nearly doubling the Reserve Bank's interest rate increase

to yesterday. And it's vowing now

when it unveils a reform package next month. The

Treasurer Wayne Swan says he

will announce a range of policy

changes to increase competition

between the big banks. The between the big

Reserve Bankly.ed rates by 25

basis points yesterday taking

the official cash rate to 4.75%

but the Commonwealth Bank's

decision to raise its rate a

further 20 basis points crew criticism

criticism from Mr Swan. This is

a cynical cash grab by the

Commonwealth Bank. There is no other way to look at it. I other way to

think Australians deserve much

better, especially on Melbourne

Cup Day, than to have this sort

of cynical decision from the Commonwealth Bank. All I can Commonwealth

say is it's little wonder so

many Australians are so angry

with our banks after watching

the behaviour of the

Commonwealth Bank. For more

Jew lie Doyle joins us now from

itself the Reserve Canberra. It was a shock in

decision but then for the itself the Reserve Bank's

to go those 20 basis points further was another shock? The initial announcement was enough

of a surprise and then what followed, that's really got

people quite angry.

there from Wayne Swan the Particularly what we heard

Treasurer. He was definitely

not holding back in his criticism of that move by the

Commonwealth Bank. He has

flagged that he will introduce

a suite of measures next month. We'll

We'll have to wait a few weeks to see what the government they're talking about is trying planing to do there. But what

to boost competition in the

banking sector. This all sound

as bit familiar, because the

shadow Treasurer Joe Hockey has been talking about this throughout the last week, throughout the last week, and

announced his 9 point plan to

also boost competition in the

banking sector and some of the

things he was talking about,

boosting the powers of the

ACCC, more encouragement for

banks to get into the market. smaller lenders and smaller

We can expect to see some

similar kind of things coming from Wayne Swan

Hockey has copped a fair bit of

flak for his attack on the

banks over the past week or so

but he certainly turned the

attack back on the government

yesterday. The banks see Wayne

Swan as weak and insip lid. They're right to because Wayne

Swan has no influence on the

direction of the Australian

us in the next hour. In other economy. Joe Hockey will join

news, Julia Gillard has wrapped up her South East Asian

trip? Yes. He finished his

visit to Indonesia

Issues that were talked about the regional asylum seekers

processing centre, and the reaction was similar to other

places, in that the Indonesian Prime Minister would like to

see more detail before

progressing it further. expect to see more talks next

year. They also talked about a

prisoner transfer agreement and

of course that could have some

impact for Schapelle Corby and the Prime Minister Julia

Gillard did raise her case as

well in those talks yesterday.

They also talked about a closer

economic partnership and to

start negotiations on that. And

also around half a billion

dollars in funding for more

schools in Indonesia. The Prime visit now and will be back in Minister

the country pretty much today. Tony Abbott, what's he up to

today? Tony Abbott and immigration spokesman Scott

Morrison are off to Woodside in

the Adelaide Hills. They'll

talk to locals there and visit

the site for the new detention

centre. They say they want to

hear about the concerns that

the locals have directly. The Immigration Minister was in

that area as well earlier this

week, but didn't actually hold

Opposition a public meeting. The

They have some concerns about there to talk to the people.

the impact on their local

community. He wants to hear

what he will be doing this about that first hand. That's

morning. It should also morning. It should also be

noted that up the Cup winner tipper yesterday on

Americain. Winners are grinners

as they say! At theft there

was one of us. Voting is under

way in the US mid term

elections with the Republicans

poised to win control of the

House of Representatives. Democrats are tipped to retain

a small majority in the Senate.

The house representatives and a third of the Senate are up for

re-election. We will cross to our US bureau very shortly for

the latest. At least 36 people

have been killed in a series of bomb blasts across Baghdad.

Another 320 were injurped in

the attacks which involved a

combination of car and roadside

bombs. Officials say at least

10 explosions should eight mainly Shi'ite areas of the

city. Two men in Greece have

been charged in terrorist been charged in terrorist acts.

The explosive deis vices were found at five embassies.

Officials say no-one was

injured in the attack and if Germany police are

investigating if a suspicious package

package contains explosives A gas explosion has blown apart a

row of terrace northern England. 15 people

were injured in the blast that

caused absolute chaos. Police, paramedics and firefighters

spent hours scouring the rubble for residents feared trapped. It's believed refurbishments

have been carried out in the

blast went off. Indonesia's kitchen of the house where the

Mount Merapi volcano is

continuing to pump out large clouds of ash. The ongoing activity has forced the cancellation of nearby airports. The British

Government has slashed defence

spending but it's going ahead

with a treaty agreeing to greater military cooperation

with France. This was President Sarkozy and David

Cameron six months ago. When

their hands meet again shortly

it will be in agreement over

shared defence.

want to maximise military muss

cell in a world of shrinking

budgets. Already the French are involved in the NATO led

operation in Afghanistan. But

what's proposed goes much further. British and French

troops will train together so

they can be drawn from their

national units at short notice

to form a rapid reaction force.

When the French aircraft carrier the Charles de Gaulle is out of action

the British flat top will be

made available and vice versa. Ultimately the jets from both

countries are use either

nation's carriers. The British Government insists a surrender of

independence. There is nothing

in this treaty that restricts either

either country from acts where

we want to in our national

interest. We're talking about joint expeditionary forces with

our forces in all three working better together. That

makes perfect sense in a world

where resources are tight are

interests are increasingly common. This is common. This is not the first

attempt to join up the military

dots. When Tony Blair first

came into office he and then

French President Chirac promised a similar deal that

never happened. The difference

this time is simple economics.

Both sides are short of cash.

While the two countries have a

long and bloody history of wars

against one another, these straitened times and practicality is the order of

the day. US residents have

started voting in key

elections. The dblths are

expected to lose control of the

House of Representatives. For

more, Craig McMurtrie joins us now from Washington. Good

morning. It's 3 o'clock your

time there, so vote something

largely over. Any indication of

voter turn-out across the

out of Virginia some booths in

Virginia are saying they're

getting a steady stream of

voters. Pennsylvania, some

places are saying they're getting getting a heavier than usual turn-out. It's turn-out. It's worth remembering about 90 million

registered American also vote

today. That represents about

40% of the eligible voters. If

that happens today that will be a better than usual turn-out

for a mid-term election. You

don't get massive numbers

turning out for these events but in terms of when we'll definitively what's happening,

it's some hours away yet

because the polls won't close

here for another four hours

then four hours after that in

the west and some time after

that in Alaska. It could be a

drawn-out affair, particularly

in the Senate. People are

already speculating about already speculating about the possibility of challenges and

recounts. It can could be that

tight and it could tight and it could be drawn

out. How have the Democrats and the Republicans gone the Republicans gone about making their final pitchs to making their final pitchs to un decided voters? Anybody who has

a mobile phone in America today will have received at least one

text message from both sides.

There are emails going out, President Obama, for example,

in the White House has been

making phone calls to raid e yo

stations in key races. It's all

about getting out the vote,

because of course, there more register ed Democrats than

there are registered

Republicans but with only one and two registered voters

actually bothering to cast a

vote in the mid term,, it is

all about the turn-out. That's

why Democrats are so desperate

to push as many of or their

people to the polling booths as

possible. They are a better

oiled turn-out machine than the

Republicans. They are still hopeful that for them right at the end. It

could make the difference for

them. The President is making plans for tomorrow to

try to seize back control of

the political debate in Washington? Yes. It's

interesting. The White House

has already said he will have a

press conference tomorrow. He

has these events fairly rarely.

It's unusual for them to flag

if in advance like this. But I

think we can assume it's controlling the agenda.

Whatever happens in the next

few hours. Whether or not the

polls are right and Republicans

do take back the hous and pot

tejsly the Senate, but that looks looks like a long shot right now. Barack Obama seems to be

sending a message he is still

the Chief Executive, and he

will have a press conference

early the day after. He won't

cede the stage to Republicans

particularly potentially the new speaker-elect if indeed the Republicans get the House back in the next few

hours. Thanks for your time for

the moment. No problem. We saw

glimpses I thought last night

on the 7 o'clock news of the

political couple from

just think of Bill Clinton and Michelle Obama for a moment,

the two are out there on the

hustings looking fabulous, bang

on it and so impressive. Too much charisma in one

room. That's not even counting

Barack Obama. And hopefully if

the Democrats' point of view

the appearance of Bill Clinton

certainly in places like West

Virginia could make the securing the House of Representatives but maintaining

control of the Senate. Now a

look at the look at the front pages of the

major newspapers around the

country. The Commonwealth Bank has humiliated the Treasurer

Wayne Swan and thumbed its nose

at a parliamentary inquiry by

lifting its interest rates by nearly double yesterday's official rate rise. The

Canberra 'Times' says Mr Swan

has now flagged new reforms for Australia's financial system and accused

and accused the Commonwealth

Bank of a cynical cash other big banks are likely to

follow the lead of the

Commonwealth Bank. Cup day was

a shocker with the horse Americain upsetting pundits

while the Commonwealth Bank

upset home buyers. Banks are

under intense political

pressure as both government and

the opposition press for

reforms to limit interest rate

increases. The government will reveal measure next month to

try to rein in the banks. The

'Australian' says Mr Swan has the big four banks from exploiting their market

dominance. The 'West Australian' says it's

understood the proposals would

be the biggest be the biggest shake-up to Australian banks since the Hawke Keating government

allowed overseas banks to

compete domestically.

Families will pay up to $100

more on their monthly mortgage. The 'Herald Sun'

pictures the winner of

yesterday's Melbourne Cup. A Darwin teacher guilty to a charge of assaulting an 11-year-old

student. The focus this morning

on just what the package of

reforms that might be coming

from Wayne Swan is very

interesting. We've requested an interview with Mr Swan this

morning. He is not available.

He is heading off to Brisbane

but he is attempt ing or there

is news he might do a doorstop

this morning and make some

comments. There is a limit on

what Wayne Swan can do. They've already giving the ACCC greater powers to act on alleged

collusive behaviour between the

banks but in terms of pulling

so-called levers to

what banks raise what sort of

interest rates there's really nothing they can do. Ralph

Norris and others know full

well that's the case. If you

have a view on that, we will be

speaking to the head of the Australian Bankers Association

the peak lobby group

representing banks later in the hour. Joe Hockey will join us

on the program, too, for a line

that continues what he was

saying last week where he

started criticism of the started criticism of the bank.

It would almost seem now that Wayne Swan is following in his

shadow. If you have a point of

view on that, let us know.

A look at the top stories on

'ABC News Breakfast' now - preparing to announce a package

of banking reforms. It's likely to include a number of the coalition's ideas. The Reserve

Bank has increased rates by 25

basis point, taking official cash rate to

4.75%. Voting has begun in the

US mid term elections. Analysts

are predicting a divide in

power with the Democrats tipped

to retain a small majority in

the Senate. The Republicans are

expected to take control of the House of Representatives. A series of bomb blasts across Baghdad

Baghdad has killed at least people. The attacks involved a

combination of car and roadside

bombs. The explosions struck

eight mainly Shi'ite areas of the city.

On Sunday Burma will hold its

first election in 20 years. Senior members of the country's military junta have resigned

ahead of the poll to create the

appearance of a transition to

civil government. But critics

say the election is a sham and

they're recommending people

boycott the vote.

report from Burma, but Zoe

Daniel has been in the country.

She filed this report.

be the first election in

years and only the second in

50, but here, life is all about

basic survive and getting

enough food to eat. enough food to eat. The

ordinary people of Burma don't

expect the election to change

their world. I can't guess but

if they tell us to vote we

vote. After decades of military lowest per capita GDP in South

East Asia. 90% of people live

on or below the poverty line. Political debate is not

tolerated. Reporting here is

difficult and our work must be

covert. But the impact of

repression is there for all to

see. Burma's capital Rangoon is

busy but dilapidated and desperately poor. Development

is needed. And the country's

and will stand as civilians at

the election to create an

illusion of change at least.

There is little evidence around

Rangoon that an election is

imminent but the local papers

are full of stories about the

polling day and fact that the

very holding of an election

represents a movement towards

democracy. The national

democratic force is an offshoot

of democracy campaigner Aung San Suu for Democracy, which is banned. From house arrest, she's recommended an election

boycott, but some members want

to run anyway and will do so

under another name. Even if the

election is - can you not hope

the election to be free and fair by world standards at least we can have civilian

government in place of a

military rule. This is a great

step forward. But 25% of parliamentary seats are

reserved for the military and

some anti-government ethnic areas have been barred from

voting. These recent pictures

show an ethnic village razed show an ethnic village razed by

the military due to perceived affiliation with border rebels. The old guard of Aung San Suu Kyi's party like political prisoner of two

decades Win Tin refused to

participate in the poll on

moral grounds. It's a human rights violation. The election

will be held on Sunday and

while the winner is already

known, the future of Burma isn't.

Water supplies in the Western

Australia's eastern wheatbelt

are literally

large areas of the state. Authorities are putting in place emergency measures to

ensure there is enough water to

last through summer but farmers are worried it's too late. It's

not a high rainfall area but

locals say Kulin hasn't been

this dry in decades. The town

dam is almost empty and the

football field is parched The

situation is pretty desperate.

Darren Kirby has had to sell

off a quarter of the stock to his property. He has been forced to cut water forced to cut water to his

farm, a 60 kilometre round trip

to keep the rest of his sheep

alive. We've heard a rumour

that the local stand-pipe could

be closed. The water department

has now surveyed 50 shires to

find out exactly how much water is available. The department's

old bores and using emergency

supplies from community dams to

help out. But it also has the

option of declaring an area

water deficient, which means the government will cut water

to farms to keep sheep and

cattle alive. As we move into

the hotter summer months, there

will be perhaps a need for a declaration. The Kulin Shire

says the government should have

acted months are disappointed with the response from the government. The dry seasons

advisory committee is

finalising its report on the

drought. It's expected to urge Cabinet to

Cabinet to set aside emergency funding to quickly respond to

the crisis.

Oil giant BP has returned to

profit making $1.8 billion just

over the last quarter. The

result is a stark turnaround

from its $17 billion loss

recorded from April to June that loss reflected the huge costs of the Gulf of Mexico oil

spill. BP has benefitted from a

higher oil price which boosted earnings in its exploration and production

The dollar again hit parity

at about 6 o'clock last night

on the back of the Reserve

Bank's interest rate decision. That coincided pretty

much exactly with my clicking

"buy now" on an overseas web

site. Well done! With the

sport headlines here's Paul Kennedy. Plenty of people nursing headaches today after a big Melbourne Cup yesterday.

Some people won money. Most

people lost it. Have to save up

for next year. Americain

the winner. Champagne glasses

were popular and punters knew

how they looked. I think

Shocking. Early birds paid

homage to 150 years of

history. We come as a different theme this year was

Archer. Short skirts braved

the forecast. Rain, hail or

shine, we'll have a great delay. Flemington delivered. There was plenty of everything.

At Werribee, vets examined

Bauer and it was quickly

apparent the horse's bruised

hoof hadn't healed in time to

run in the Cup. The day started

badly. The jockey to beat Bauer by a nose Bauer by a nose on Viewed two

years ago was also a late fall.

James Winks took his mount but

So You Think was the horse on everyone's lips, really almost everyone's. The thing is, he's

plainly going to be the sent

mental favourite and I suspect an unbackable favourite. Did

you want to say that again, So

You Think? Sorry? So You Think is obviously going to be the sentimental favourite. what's his name. It's probably

the best horse I have seen.

The trainer was confident of a

13th victory. He is bred to do

it. What are we waiting

for? The stallion started for? The stallion started the shortest Cup favourite in

decades. Racing!

So You Think was buffet ed

down the straight the first

time, and pulled hard in the

running. Shocking dropped

to last. Despite things not

going to plan for its jockey,

So You Think hit the front in the straight. Americain is

coming away. Scored by two

lengths Maluckyday. Americain

is the first French horse to

win the Cup with a French jockey

job is so easy when we have the best race and the best horse. It was very, very confident before confident before the race and

Gerald do a very good ride. It's a truly

international event. An American-bred horse, French

trained, Hong Kong-based jockey, and Australian owners. I never drink champagne but

but maybe tonight yes.

Hopefully not all punters lost their shirts. There is Gerald Mosse blowing kisses again to the crowd there. He was fined $300

for doing that. Not allowed to

make any gestures before you cross the finish post. But a piffle in the scheme of

things. $6 million is the

prize money. The big winners on

the track yesterday were in the

- in the crowd were the

sporting community that knows

Gerry Ryan who's the owner. I

know that the cyclist that got behind all backed

Americain. Gerry Ryan is a good

friend and probably talked it

up. We should've listened to the jockey after the the jockey after the Geelong

Cup, he said "This will one the Melbourne Cup". Gerry Ryan's

business Jayco the caravan

giant, he has backed a lot of sports, personally backs

cyclists like Cadel Evans. So he

he has a genuine interest in sports. The Midas touch when it

comes to horse racing. He sat

down with a business owner and

other - another business owner

five years ago, I think they're members of the

members of the Carbine Club and

they said why don't we give

this a go? So they started

buying horses. One of their

purchases was a French-trained

horse. Whachls the atmosphere

like out there yesterday? 110,000 people. Good

terrific crowd. I saw So You Think go to the lead and thought here we go thought here we go . The acceleration of Americain was

just amazing and great to watch

but so many lovely substories

of the day. Because it of the day. Because it was a French team and the English

wasn't terribly good the

strapper headed off with the

horse after it had been paraded

in the ring and the Channel 7

reporter went up to the

strapper and said you're wanted

in the ring, you get a prize. She is is with the horse. No, you need

to go to the ring. What? to go to the ring. What? The strapper dashed up to the

podium to receive her little cup. Completely overwhelmed. It

was gorgeous. Now it's the fourth international horse

that's won the race. The first

Cup people weren't too happy about it. But now it's celebrated and there's

different stories and different

colourful characters that come

through. He is a great character, good enough. He is more articulate and gives you more

insight into what the horse is

doing than many other jockeys I

have heard. He has the have heard. He has the face out

of a Victorian edition of Punch

magazine. It's like a caricature from Victorian times. It's fantastic. What a great

great note. At some stages

yesterday he was asked is it

the greatest race, the best win

he has ever had, and he said

jockeys have short mem

memories. My last one is always

my best race. Blake Shin broke

his fall yesterday --

leg yesterday in a fall. They

enjoy it when they win. The

Australian cricket team is hope thog get a win on the board very, very soon. They play Sri

Lanka in a one-dayer today.

Ricky Ponting spent some time

yesterday threeg balls at Mike Hussey. The two veterans of the

team are trying to pull each

other through these tough

times. This is what Ricky

Ponting had to say about his friend

friend Mike Hussey and

Australia's chances overall of

lifting their spirits. Unfortunately for him

he missed out twice but he is

very clear in his own mind

about what he needs to do. He

feels he is on the right track.

So class players like him generally find a way to get it

done. I'm sure that over the next against Sri Lanka you will see

some score some runs of the

very competitive in the second

Test match in India without get

AIG cross the line there is no

sugar coating anything. We know

we have some work to do. We

haven't played one-day cricket

for a little while. The guys

are keen and we want to turn

around our fortunes. It's

important we start getting that

winning feeling back around the group again. It's always a different feel when you are

winning and we have to start

that off pretty soon. Ricky Australia's upcoming match

against Sri Lanka. That's it for sport. 'ABC News Breakfast'

can be watched live on the web

from anywhere. Visit the main

ABC News web site there is a

link there to news 24. Vanessa

O'Hanlon joins us for a look at

the weather now. Thick cloud is blanketing Parliaments of

the Northern Territory and Queensland. It's triggering

storms and heavy rain over

Queensland. Light showers and high Over the coming days a trough

will deepen over Queensland and

a low will develop in the Coral

Sea increasing rain along the Queensland and New South Wales


Still to come we'll speak to the head of the Australian

Bankers Association, probably

the man with the hardest job in

Australia this, defending the rate increase by Commonwealth Bank. He will find an argument,

though, I reckon. And also we

will be getting all the latest

from the US on the from the US on the mid-term elections. Julia Gillard elections. Julia Gillard has

raised the idea of a regional

asylum seeker processing centre

in a meeting with Indonesian President Susilo Bambang

Yudhoyono. He says there needs to

to be more discussion before

his government can say whether

it will support that proposal.

Julia Gillard arrived at the presidential palace just as two more boats carrying asylum

seekers arrived off Christmas

Island. The passengers on

board, 142 more reasons to

press her case for a regional

processing centre for asylum

seekers. And today, Ms Gillard

left open the prospect that

Australia would use anti-people

smuggling funds to pay regional

partners to be part of the

plan. If there is a better way

flew a regional protection

framework and regional

processing centre to deploy those

that. The President remains

interested, but unconvinced,

deferring the issue to a

regional meeting to be held

next year. We have to discuss

in depth to ensure that this is

a solution. There are more than

2,400 asylum seekers currently

registered in Indonesia, many

living in the backblocks of

Jakarta. Around 850 more acknowledged refugees. For me,

if I'm work ing, it's OK. After

an ugly run-in with people

smugglers who brought them here

from Malaysia, she hand her

family pulled out of making the

final trip to Australia. In

Indonesia this was supposed

took breakthrough year for

refugees who rely on the system

not the smugglers but Australia has been significant commitment. Australia agreed to take 500

refugees a year from Indonesia.

It was a dramatic boost but so

far, last 52 have been accepted. accepted. If the government

neats its target, more than

half of the refugees currently living in Indonesia will

suddenly be picked up and moved

to Australia. Another who might

one way or the other find their

way to Australia is convicted marijuana smuggler Schapelle

Corby. While her plea for the President's mercy each his desk, Julia Gillard

pressed her case behind closed

doors. I don't believe it's in

Schapelle Corby's interests for me to deal with this matter

a detailed way publicly. A

Supreme Court judge has

recommended a substantial cut

to Schapelle Corby's 20 year

jail term. Today the President didn't rule

didn't rule out

clemency. Justice must be

upheld. But he also emphasised

Corby's ability to earn time

off for good behaviour and possibly benefit from his new

push for a prisoner transfer

agreement with Australia. Another touchy subject, human rights abuse by rights abuse by Indonesia's military, also came to the fore

on this trip. Local activists

urged Julia Gillard to take up

the issue, but the President

says there's no need for

foreign intervention and Ms Guilt lard seemed satisfied

with his response. I think the support from Indonesia to do a proper human rights promotion, that will

give a lot of value for

Indonesian situation on human

rights I think. A spokesperson

for the Prime Minister says the

issue was discussed with the President but it wasn't mentioned in the press

conference after the meeting. The Federal Government is

working on a plan to improve competition between the banks. It's likely that include am in the coalition's ideas. The Treasurer Wayne Swan

says he will announce a range

of policy measures next month

to try to increase competition between

between the banks. The Reserve

Bank lifted rates by 25 basis

points yesterday, taking the

official cash rate to 4.75%.

Vote something now under way in

the US mid-term elections with

the Republicans poised to win

control of the House of Representatives. Analysts

predict a divide in power with

the Democrats tipped to retain

a small majority in the The House of Reps and a third of senators are up of senators are up for

re-election. At least 36 people

have been killed in a series of bomb blasts across Baghdad.

Another 320 were injured Another 320 were injured in the attacks which involved a

combination of car and roadside

bombs. Officials say at least

10 explosions struck eight

mainly Shi'ite areas of mainly Shi'ite areas of the city. Two men in Greece have

been charged with terrorist

acts in connection to a series

of parcel bombs sent of parcel bombs sent to

embassies in Athens. The

devices were found at five embassies. One of exploded at the Swiss embassy

but no-one was injured A gas

explosion has blown apart a row

of terrace houses in northern

England. Fire officials say 15 people were injured in the

blast that caused absolute

chaos. Police paramedics and

firefighters spent hours

scouring the rubble for residents residents feared trapped. After meeting Julia

Gillard yesterday, President

Yudhoyono flew to Jakarta to meet those displaced by the Mount Merapi eruptions. The

latest activity saw hot gas and

searing ash cloud spew from

mouth of Mount Merapi fanned by

strong winds. From seismic and

visual data, there've been four

eruptions starting early in

morning and lava trick Lin down

3 kilometres. The ash was as

high as 700m. Scientists are

warning of more eruptions. so villagers continue to race

back to their homes to retrieve belongings and check on crops

and animals. We're afraid. But

we do it because we have to take care of housework,

including the caring of the

animals during the day, so we

have to have the courage. 400

kilometres east of the capital Jakarta, Mount Merapi has

killed 38 people since it began

erupting a week ago. Thousands of villagers have been

evacuated to shelters outside the radius around Mount Merapi's

once fertile slopes, which are

now blanketed by grey ash. This

latest blast comes as Indonesia

battles to cope battles to cope with last week's earthquake generated

tsunami across the west coast

of Sumatra. The military is

coordinating help and recovery

efforts. US voters are going to

the polls in the mid-term

elections today. The vote will see a new House of

Representatives elected looks like delivering control

of the lower chamber to the

Republicans. On this

Autumn day a America is voting.

We're in northern Virginia.

Here a democratic Congressman

may lose his seat to a Republican challenger. That's a

story being told in scores of

districts across the country.

The Republicans are staging a

comeback and the Democrats' control of Congress is in serious

told us of their anxiety and

frustration with the economy

and with politics as a whole. Things haven't whole. Things haven't turned

around as quickly as we anticipated two years ago. I

don't particularly wear for the way in administration is

governing the country. We need

to change what's going on downtown. That's what I was

here to do. The early signs

are that Americans are voting

today not for continuity, but

once again for a

story of this election may turn

out to be that certain crucial

parts of the electorate became

disaffected with President Obama and his party and Obama and his party and dri.ed

away from them. The ruling

party always expects these mid

term elections to be difficult but

but the only question being

asked across America today is

how bad will the results be for

the Democrats? The President

released be a an Internet video

out and vote. You've got out and vote. You've got a

chance to change your community

and your country. All you have

to do is vote. These elections

of course are also of course are also a verdict on

his first two years in office.

Years of recession,

unemployment, war and political

drama. If the Republicans do

take one or even both houses of

Congress, Barack Obama will find it even harder find it even harder to govern for the next two years.

American voters are in volatile

mood. Today we think it will be

the Democratic Party that are the targets of their anger. The West Australian Premier

says he is disappointed the

Immigration Minister didn't

meet him to discuss plans for a detention centre at Northam.

Chris Bowen spent several hours

in Leonora packing in

to the detention centre a look

at the school attended by the

detainees' children . About 200

people are being housed in the former mining camp and the Immigration Minister held up its operation as success. I

have no plans to move out of

Leonora. The system is working

well. The local shire has been a strong supporter of the camp

since it opened nearly five

months ago and also wants to

see the facility remain. The

council is

council is very positive about

the whole situation. While the

community seems to have

accepted its local centre the

reaction in other regional

towns has been mixed. Community

leaders here say they're

willing to speak to people in

Northam about the benefits a

detention centre there could

bring to the town. But the premier remains concerned about

plans to build a centre for

1,500 single men in Northam and

says he is disappointed the

minister didn't meet him after visiting the town yesterday. I

would've thought as a courtesy on such would've gone to the trouble of at least making some contact with the premier of Western

Australia. Mr Bowen Cabinet commitments prevent him

attending a community meeting

in Northam on Thursday but he

is planning another visit soon.

Swimming lessons are already

popular with parents. Now it

seems those classes might have

other benefits, including

helping intellectual

development. Pools are development. Pools are a

child's playground. They have a great time. She sees us driving

towards the place and she starts kicking her legs and squealing. Usually the squealing. Usually the only lessons are the toddlers learning to swim. It's fun. But

researchers think there may be

other benefits with the simple

strokes making kids smarter. They're more skills are better. They seem to

be more

intelligent. Researchers at

Griffith University in Brisbane

are studying 10,000 swimmers

under the age of 5.

started last year and have four

years to go, but early findings indicate the pool is almost

just as good as a classroom

when it comes to intellectual

and social skills. It looks

like that the early swimming does enhance children's development. Stephanie Rice had

lessons as soon as she was born. She says

but the sport is great for

confidence. I definitely would

suggest swimming as a sport

every kid should do. While the

mental effects are mental effects are yet to be

determined, coaches say the l

physical and safety benefits

make any lesson worth while.

Laurie Lawrence's granddaughter is just

is just 17 months, but already

she's swimming circle s around

others. If there is no other

key benefits, fun, fitness,

health and safety, it's a

no-brainer. And it seemed there are life lessons as well. The federal Swan is preparing to announce a package of banking reforms

which is likely to include a number of

number of the federal

coalition's ideas. The Reserve

Bank has increase ed the base

rate by 2 5 basis points. Analysts predict divide in power in the US mid

term elections. The Republicans

are expected to take control of the House of Representatives.

A series of bomb blasts across Baghdad Baghdad has killed at least 36 people. The attacks involved a

combination of car and roadside

bombs. The explosions struck

eight mainly Shi'ite areas of

the city.

A look at the Wednesday

papers, we're joined now by good to see you good to see you again. Thank

you. How did you go in the Cup yesterday? You'd be

un-Australian if you didn't

have a bit of a punt. I went my first ever Melbourne Cup yesterday. It's taken you this

long? It has indeed. I'm a slow

learner. But it was a fantastic

experience. I mean the whole

event is astonishing, the

colour and the movement and the

excitement. And even with

diabolical weather and Melbourne at its best/worst yesterday.

yesterday. All five or six

seasons in the one day. It's a

fantastic spectacle. But

nagging at the back of your

mind and you don't want to be

puritanical about these things,

is that so much gambled on the

Cup that others would love to

get a small slice of

particularly those who are

programs in the lower echelon of

of the social strata. The

'Age' is one of many papers focus on is there is a beautiful

photograph there of the jockey

on Americain saluting the crowd. Blowing a very expensive kiss. Very expensive

kiss indeed. He rode a perfect

race but there was so much publicity about So You Think,

if he did have a chance you

probably got a fairly easy run.

You could pick your gaps. But

he timed it perfectly. And he gave it a surge at the clock

tower. That was the one horse

the only horse that Bart Cummings mentioned was a horse

that had caught his attention

and was seriously a chance against So You Think. If anyone

was listening to Bart, lord he knows his horses. He does. So

You Think didn't do badly? No,

it's run third. I was pleasantly surprised to realise

that the owner is the owner of

Think Big whom I celebrated a

victory with in the 1970s

because he had boys at Grammar and I taught them. I

know nothing about horses but I

did speak to somebody who knows

a bit about horses from Hong

Kong on Friday night and he in

turn happened to be talking to

Michael Kinane who rode Vintage

Crop for the first international victory in 199 He said Kinane told him get

your money on Americain. I

think Kinane probably knows

what he is talking about. He

knows the Melbourne Cup and he

knows Americain I like you

might've had a mini windfall

yesterday. We both got the

trifecta, I think. How many did

you box in it? I box ed six

many Oh! You're trying to tell

us there some skill in all of this! I had five. Shut up! That's not really a try effect fast You can box your

trifecta, baby. State election. You're looking at the 'Herald

Sun'? I think this is a going

to be a very, very interesting

election on 27 November. There is news about what the

opposition plans to do opposition plans to do with

this much vaunted and long

promised rail link out Doncaster. This is along the

Eastern Freeway but the policy

announced yesterday by the

opposition was just on 1.5

sheets of paper, double spaced, not costed. Haven't we come

across that sort of thing

before leading into before leading into elections? No-one cared. There will be

promises galore. We saw that in these things? The Treasury

didn't do all that well leading

into the federal election. And

that's the opposition's point

as well. We're in opposition. We can't cost this thing. But

you would

that's been so long discussed

and desired by so many and has

so many obstacles in its way,

that you have to go a bit further than just a 1.5 page

wish list. Oh one hopes they

will go a little further than

that. But look as you discover,

pretty well all of these major infrastructure projects undertaken by

out in costs. It's a pretty tough election for the premier

to win. The tide seems to be

going against him particularly

in the areas that are of

interest to local people, cost

of living rises, water rates

look like doubling over the

next five years, electricity is

going up and home loans have

just gone up with the RBA rise announced yesterday. The

'Australian' is focusing on

changes to it. V ownership in Australia. That's Australia. That's another issue

I'm taking an interest in. When

James Packer firsts a kended to

the empire --

first ascended to the empire he didn't show much interest in

television. But now he has made

a sortie back into Channel 10,

he will be in direct

competition with his best man.

Not sure whether you married

women take on your brides maids

of honour or whatever you call

them but he will be taking on

his best his best man. I think he has

shown he is pretty serious but. I suspect underneath it all

there might be a bit of a grab

for some of the sport that the

free-to-air channels seem to be

garnering a moment with a view

to trying to get across to the

other channels. It spits David

Gyngell - they're good mates. There was some There was some speculation that David might go over

10 to work with James Packer.

No longer the case obviously. Sports and free-to-air and

free-to-air and pay TV is

shaping up as the big battleground in the next few

months. Interestingly during

Channel 7's coverage of the Melbourne Cup, there was

a number of very nicely put

together very sleek ads running

the keep sport on free-to-air

campaign. Nothing is free to

air. You simply pay through the products you buy that the advertisers used to sustain these so-called free-to-air channels. Nothing in this channels. Nothing in this world is free. Yes, boss! The

'Australian' newspaper? I

looked at the story that featured Stephanie Gilmore winning her fourth world surfing title. surfing title. She is a fantastic young woman. Appears

to be so wholesome and genuine

and loving what she does and

with a beautiful smile. Then

directly underneath is that

story on mental health being a

top worry for Australians.

There was a survey through

Kings College London that included the UK, the US, China

and Australia, and mental

health came out as a top worry for Australians and realistically so I think. Maybe it's fact

it's fact we publicise mental

health a hot more, but as a

former schoolmaster you'd also

have to think that perhaps we protect our young people a bit

too much from some of the ups

and downs the vagaries of life

and they don't learn

resiliency, which is terribly important as an adult.

Resilience has become the

buzzword at the moment it would

seem in raising young people. Paul Kennedy joins us on the

couch this morning. There is

cricket around at the

moment? I'd be interested to -

we'll show you pictures of

Stephanie Gilmore's win later

on, but interested to get your take on Ricky Ponting's

position at the moment. Are you

pro-ponting? Do you want me to tell the truth? Yes. I've

never been a huge fan never been a huge fan of Ricky

Ponting. I think he is a

wonderful player. I think he is as good a player as we've had

probably over the last 50

years. There are some who are

doubting his ability to remain

at the top now. But as a leader

I have reservations. There have

been instances throughout his

captaincy where he hasn't

really galvanised his team as a leader. He leader. He has joined the troops in the trenches. There have been occasions when he

needs to step back from that

and be a father figure as it

were. That's somebody who comes from the sort of background I

come from and I'm bound to have

those sorts of views I guess.

That's being unfair on a man

who has the spotlight on him

relentlessly. What do you think

will happen in the Ashes then?

I am concerned. I'm concerned

if you were a really rabid Australian Australian supporter. If you're like myself and have this

grandly wonderful view of world

cricket, you'd have to say it's maybe not such a maybe not such a bad thing that

the worm turns every now and

then but I think England will

perhaps find it tougher out here

here than they might've thought. Conditions are

different. The tracks are

harder. The light's harsher.

It's hotter. And I don't think

they will have quite the effect

that they have in England where play till 10 o'clock at night if you have the energy. Let's

hope it's tough on them anyway.

Thanks for your take. We will show

surfing a little later. Vanessa

Vanessa O'Hanlon joins us for a look at the weather. Cyclone

Greg has weakened to a Category 1. What's so significant about

this system is it's the first

cyclone for the season which runs November through till April and with cyclones more inclined to

develop around Christmas.

Experts have been predicting a very active cyclone season very active cyclone season no.

Cyclones yet but with another

rain event on the way I'll look

more closely at what's

happening off the Queensland

coast next hour. Plenty more on the CBA's

shock rate rise after the break

and also the US mid term elections. Stick around.

A cynical cash grab. Wayne

Swan threatens a crackdown on

banks after a shock rate rise

on Cup Day.

US voters head to the polls

in mid term elections that could change the normally am a democratic voter but I've been very

disillusioned with them over

the couple of years. The Republicans are all for

themselves. S tos killed as 10 explosions rock Baghdad. And

sealed with a kiss. Americain's

win makes the Melbourne Cup a truly international race.

Good morning. The top story

on 'ABC News Breakfast' -

Federal Government has a

attacked the Commonwealth Bank

for nearly doubling the Reserve Bank's rate increase. The

Treasurer says he will announce

a policy changes to increase

competition between the big

banks. The Reserve Bank lifted

rates by 25 basis rates by 25 basis points yesterday. For more we're joined by the joined by the Australian Bankers Association Chief Executive Stephen Pretend for the purposes of

this conversation I'm a

Commonwealth Bank customer. I

have read recently about the 6.1 billion profit for the

bank, I have read about the CEO's 16 million salary and

incentives package. I tune in

to 'ABC News Breakfast' this

morning to hear about the

nearly doubling of the official

rate increase nor CBA home loan borrowers. I have a rate to

feel very angry don't I? We

recognise that these are very

unpopular decisions. It is very

hard to understand why this is

necessary when banks are so

profitable. Whileest banks have a responsibility to a responsibility to their customers, they also have a

responsibility to make sure

that our banking system remains

safe, stable and healthy. 30

cents in every dollar that we

lend in Australia has to come

from international investors. They particularly in the uncertain times to see we have a solid and

healthy banking sector because

they're prepared to lend us

that money at reasonable

prices. How does this square up

that the funding costs aren't

nearly as bad as they say they are? The Reserve Bank has

saying there has been a Marge a

number impact for some time on funding costs. The Commonwealth Bank yesterday acknowledged that. It said that funding

costs have been higher by about

2 basis points, but it's been nearly a year since the

since the banks have passed on

those funding costs. There is a

cumulative effect there. Youed

a .2% each month, you come out

with the figure that the

Commonwealth Bank has passed on yesterday.

yesterday. Is this a case of

the banks' shareholders rating

higher than the bank customers? Banks have a legal

obligation to look after the interests of their shareholders

as any corporation does but banks don't see the

shareholders as being necessarily their one and only concern. In fact they recognise

that to be - to remain solid and healthy a need to do the right things by

their customers but they also

need to be able to make sure we

can continue to raise that money internationally. The

consequences of not being able

to do that is that money will

become more expensive which

will obviously fuel higher

funding cost. Ultimately we

mightn't have enough money mightn't have enough money to lend. Then a situation where people won't

be able to get the loans to buy

their houses or to run their

'. All of this is cold comfort

to many Commonwealth Bank

borrowers who are facing much

bigger than expected home loan

repayments starting virtually immediately? The banks have

been warning for some time and that's why it has been very

important for the banks to talk

about this, so that people were

aware this was the possibility

and this might happen. Mortgage

rates at the moment are around

the average for the last 10

years. They're actually than they were three years ago

but we understand that are

people who are finding it very

difficult F people are finding

it difficult to meet the new

repayments the first thing they should do is should do is talk to their bank about whether they can

negotiate an arrangement that

will help them out. The banks

have stood by tens of thousands

of customers over last couple

of years who have got into

financial difficulty so we

recognise it is very tough for

some people. But equally

mortgage rates are still around the

to assume now the other major

banks will follow suit and

raise rates higher than the

Reserve Bank has? I can't speak

for what the other banks will

do. They all say they have

similar pressures as the Commonwealth Bank does? How they respond to that will

depend on the individual banks.

They all face the dilemma of having to plans their

responsibilitys to wr thust kers

to their customers with the

responsibilitys to continue to

raise funds internationally.

Why don't banks therefore look

at possibly cutting deposit

rates as a way of easing

pressure on borrowers? Well,

I'm sure they'd like to do

that, but deposits here in

Australia are still a better

source of bank funding than

relying on that offshore money. They can extent that it doesn't mean

that they aren't attracting

those deposits. There is fierce

competition out there for deposits at the moment. That's keeping the price up. It's fair to assume when wholesale funding funding costs overseas do come

down, the banks will cut

interest rates by the relevant

amount when that happens? That is a fair assumption. The CBA

yesterday said that that would

be the case. We can expect that

from the banks regardless what

have the Reserve Bank does if

there is a reduction in their

funding out, an out-of-cycle rate cut that is quite a possible

scenario. But having shade

that, we have to recognise that

because banks take out money

for long periods, they will be

replacing pre global financial

crisis money with more

expensive post global financial crisis money for some years

yet. The pressures aren't about

to ease any time soon but at

the point we do we'll see the

banks cutting more than the

Reserve Bank as they have dob

Commonwealth Bank given the

intense political row at the

moment over banks. Is this

Ralph Norris's way of Ralph Norris's way of saying that banks won't be bullied by

Federal Government laets of regulation, Senate inquiries and the like? I won't

speculate on CBA's motives but

I will say that both sides of

politics are well aware of the

reality of funding costs. The

banks have been explicit about

the pressures

under for some months now. I

know it's very easy and very

popular to bash the banks, and

we can well understand why. But

we also need to remember when we attack the strength of the

banks, the profitability. Banks

we're rs attacking the stability of Australia's

banking system. It is that

stability which is one of the reasons why Australia did so

much better through the global financial crisis than financial crisis than countries

like the UK or the US, where

they still have unemployment up

around 10%. And finally,

critics like the independent senator Nick Xenophon who as

you say was instrumental in getting the inquiry under way

are saying this is yet another

example of the major banks taking taking turn to announce

unpopular rate increases. It

was Westpac going for 45 basis

points last December, it's the

CBA's turn now. Can you

categorically deny that is happening? Absolutely. If you

look at the pattern of various

moves, there is no pattern there. The idea that the banks get together

turn it is is just ludicrous. Thanks for your time in morning. Voting is under way in

the US mid term the US mid term elections with the Republicans poised to win

control of the House of Representatives. Analysts

predict a divide in power with

the Democrats tipped to the Democrats tipped to retain a small majority in the Senate. The House of Representatives

and a third of