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(generated from captions) crisis, and wants centres set

up where men can talk about the

issues they face. My belief is

that the government has already

put in place and moneys, too,

to come pat the issues that women have faced and therefore

they already have a voice. But

the big lack of voice for

Aboriginal men, that's why

we're here today, to discuss

these issues. More meetings

are planned for other

communities in the coming

weeks.

Time now for a quick look at

the weather.

evening. Tonight's interview That's all from us this

can be replayed on our web

site. You can also download individual stories or play back

the entire program from the

site. Isn't that clever! Which

also contains our archives and

transcripts. For now, it's over

to Lateline Business. Tonight -

interest rate rises hit

business confidence. Watch out

ASX, the Kiwis are coming! And

have we reached the end of the

resources boom? The dynamic

that is about to be unleashed

by the post-bubble adjustments

of the American consumer and the cooling of the Chinese

economy suggests we're pretty

close to that top right now.

To the market. Local stocks

fell again today, with the big

miners and oil companies driven

down by falling commodity

prices. Both the All Ords and

the benchmark ASX 200 lost more

than 1%. In Japan the Nikkei

hit a one month closing low as

the fall in metal prices stoked

worries about global demand,

leading to a sell-off of steel

stocks. The Hong Kong market

rose as bargain hunters bought

blue chips. The Dow of course

opens shortly at last night's

closing price of 11,397.

London is trading and to see

what's happening on European

markets, I spoke to Rob Orr

from the financial times.

Thanks for joining us. The FTSE

is holding up despite a nervous opening? Yes, that's right. The

FTSE was very flat at the

moment. That's in spite of some

higher than expected inflation

figures this morning, which has

interest rates could rise by again raised fears that

the end of the year. That's

the fourth consecutive month

you've had inflation above Bank

of England levels? That's

right. The Bank of England has

a 2% target. That's four months

in a row that that target has

been breached. And a lot of

analysts are now looking at the situation. They think we could

see interest rates at 5% before

the end of the year. You also

have big news on the building

society front? That's right.

We've seen a big merger today

between Nationwide, the biggest

mutual and the third biggest

mutual. And this now makes the

biggest mortgage lender here in combined company the second

the UK. If it's been flat on

the FTSE, what's the trade on

the rest of Europe? Well,

European markets are slightly

higher. One feature we're

looking at today is the IPO of

Air Lingus, the Irish state

airline. They've priced their

IPO today. They priced the

range of the IPO, the final

pricing will be later in the

month. It's obviously a very

interesting time for airlines

with the terrorism issue.

People think it could be a

rather odd time to be floating

an airline. And there has been

a couple of other airlines

flighted, Air Berlin, Air

China. They haven't done very

well. People are keeping an eye

on Air Lingus at the

moment. What's the pre-market

looking like in Wall Street? In

Wall Street the futures were

looking slightly down. An

interesting feature is Bristol

Myers Squib, the drug company.

There could be some management

changes there. Obviously

yesterday the markets were very

quiet with the September 11 anniversary. They could be

quiet again today. Thanks for

that. Thank you. Later in the program, we

will be speaking to Stephen

Roach from Morgan Stanley in New York, who believes as you heard earlier that we've come

to the end of the the resources

boom. Commodity prices aside we

have the first evidence today

of the impact of bdz of last

month's interest rate hike. The

NAB's monthly business survey

shows that confidence,

expectations and conditions are

deteriorating. But as Phillip

Lasker reports, it won't be

concern to the interest rate

setters at the Reserve Bank.

With two rate increases in four

months, something had to

give. The recent rate increases

is starting to have a fairly

significant impact on the level

of business confidence. Also,

businesses are concerned as

they go forward to the end of

the year that things are gonna

continue to slow. Confidence

has been falling for three

months and expectations for

two, amid a deterioration in

trading conditions and profitability. A strong

resources sector is being

offset by the weaker retail,

wholesale and manufacturering

sectors. This man runs retail

and wholesale businesses as

well as restaurants. He sees

his customers becoming more cautious. I'm fairly

optimistic. I hope I can say

that it may continue getting

tough over the next few months

while people perhaps think

twice about what they're buying

rather than just rush out and

buy it. A sharp fall in

forward orders in this survey

would be a concern if it

continued. But Alan Oster says

so far, so good. If I was the

Reserve Bank, I would feel

National Australia Bank says fairly pleased with this The

the rate increases have done

their job, and it's lowered its

growth forecasts by a quarter

of a per cent to 2.5% this

financial year. Butt survey

also paint aspic tour of rising

wholesale costs, and capacity

constraints, suggesting a persistent inflation threat and

still higher interest rates.

Sentiment is one thing. Just in

terms of what businesses are

then saying about what they're

doing, their turnover, sales,

profitability, still holding at

a very high level. All of

those predictions could be

undone by a serious downturn in

the United States. The Reserve

Bank has already warned that

Australian recessions tend to

be induced by serious global

downturns. As we said, it was

a day of losses on the local

market. To look at trade and

the economic news ahead, I

spoke earlier to Bill Evans at

Westpac. Thanks for your time

. Commodity prices hit the

market again today? Certainly,

Ali, yes. We saw the market

down 5 # points. If we look at

the contribution to that fall

from resources and energy

stocks, they lost - they

contributed about a minus 60.

We needed the banks to knock

that fall off by about 8

points, which offset so fall in

the commodities. The banks, a

safe haven? I think the banks

are looking at a pretty solid

economy at the moment. Interest

rates are not that high. As the

Reserve Bank said in the

neutral zone. And of course we

saw some other positive

responses from Qantas. It was

up about 9 cents, obviously

benefitting from that fall in

the oil price. It's now down

about 15% from a couple of

months ago. What about today's

survey of business conditions?

Did that have any impact on

trade today? Oh no. Look, it's

a monthly survey. It's quite

volatile, and I thought generally speaking the results

weren't too bad. It was taken

after the August rate hike and

normally you would expect to see an impact response from

that. As you know our consumer

sentiment measure was down over

16% there is two types of

questions. The first lot

relates to general conditions,

but the second type of question relates to how business is

seeing their own business.

Those numbers look quite

resilient to me. I sernt

wouldn't be pointing to a huge

slowdown in the economy. The next consumer sentiment survey

is due out tomorrow. What's the

expectation? It will be a very

interesting result. The level

of consumer sentiment following

the 16.2% fall last month is

down at a level that we saw

momentarily back in March 2001,

but really, we haven't seen

levels like this on a sustained

basis since the aftermath of

the recession of the late 80s,

early 90s. I just can't believe

that consumers are feeling that

bad. So I'd be disappointed if we didn't see a reasonable

rebound this time. Alright.

You probably won't be the only

one. Thanks for joining

us. Thanks. The big movers

today included shares in both major Australian Airlines,

which benefit ed from the lower oil prices.

Miners and oil stocks were

among the big losers today. A

big drop in the price of zinc

pushed Zinifex down 10%.

It may be a lot smaller, but

that hasn't stopped the New

Zealand stock exchange from

throwing down a challenge to

the long-held monopoly of its

Australian counter part. As we

told you last night, together

with five of Australia's

biggest broking firms, the New

Zealand exchange is setting up

an electronic trading network,

initially designed to cover offmarket trades. But it's what

the new network potentially

could do in the future that's

stirring debate about an end to

the market dominance of the

ASX. The New Zealand exchange

is headed by Mark Weldon, who

joined me earlier from

Wellington. Thanks for talking

to Lateline Business. First of

all, if we can explain exactly

what you and the five broking

houses have set up, essentially

it's a platform for offmarket

trades? Sure, yeah. Your standard exchange does two main

things, it lists companies and

it trades them, and this has

nothing to do with listing, and

on the trading side, there is

onmarket and offmarket trades

and this platform will be

dealing with the offmarket

trades. So you're exactly

right. To start with, will it be limited to institutional

trades? It will be largely

limited to institutions because

those are the customers who

tend to transact offmarket, the

big bloc trades for the pension

funds and the super funds. Why

do it? For a number of reasons.

The catalyst was clearly the

ASXSFE merger this year and

what's been interesting

actually over the last couple

of days is that everybody has

really seen entry into the

Australian market, which is now

the fourth biggest funds market

in the world, as inevitable.

It's not the case that the ASX

will remain the single player

forever. Soits quite

inevitable, and it's also a

global trend. The brokers have

very much decided around the

world that as exchanges consolidate, it's important

that there is competition both

on price, innovation and

technology. It's really a good

sign actually for Australia, in

that it follows the leading

financial centres. Will you be

pricing yourselves well below

the ASX's current pricing structure? I think that's fair

to say, that we will be coming

in reasonably well south of

where the incumbent is, that's

right. What if they match

you? The ASX is a great

company, very well run

commercial organisation, runs a

great market, and they will be

figuring out exactly what they

do and that's gonna be good competition. We look forward to

that You say this will be

limited to institutional

trades. They make up something

like 3% of the ASX's revenues.

But how much potential is there

for more products down the

track? Look, the key is getting

the first thing right, and

establishing a sustainable

platform. Where these things

have failed is trying to do too

much, too soon, and not taking

care of business. So once we've

done that, there will be a lot of opportunities that the board

of the new venture, which is

made up of ourselves and five

fantastic brokers, fantastic

guys run those businesses,

actually, will look at. No

question Can we look at some

of those opportunitys? The fact

that Commsec is a founding

shareholder, can we read into

that an from in the retail

market in the future? We would certainly look at everything on

a commercial basis and ensure

that the market had upper most

integrity and you would hope to

see improved outcomes in terms

of volumes of traffic and

liquid fee. As long as those

criteria are met, there is no

reason you wouldn't look down

that route at a stage 2 point. My guess over the next five

years is that you will see the Australian capital market start

to look quite a lot different

than it has in the five years

previous. How different? Could

you see yourselves setting up

an absolute rival to the ASX on

all fronts? No, look, I think

there are certain businesses

that are natural monopolies and

hard to shift, so clearing and

settlement, the ASX owns Chess,

which is a utility, there is

one for example in the United

States, there is one clearing

and settlement utility, and 12

competitive exchange or ECNs

providing competition,

innovation, speed and pricing

differences on the front of the

market. So we will never get

into clearing and settlement.

That's big infrastructure.

Should only be one player. But

around the edges, for niche markets there will always be

when you have one big player

some underserved, overpriced

segments and that's where we're

starting here. Starting in

offmarket but what else can you

do? Could you do onmarket? We

will be working with the

appropriate Australian

regulatory authorities, ASIC

and Treasury and we will be seeking an Australian market

licence, absolutely, and if you

did want to do that work, then

you would just have to put the

appropriate rule set in place.

But we will be doing this

absolutely transparently and in

a completely open way. You're

making a very clear challenge

to the ASX monopoly? That's

right, yeah. We're - we are

very, very definitely beginning

some competition for a very

small subset of the exchange

service's landscape, and it's a good shareholding group. We

know how to run a market, and

we've got five locals who know

the characteristics, and see

the opportunities. Anyone talk

to you about David and

Goliath? (Laughs) A couple of

people have mentioned the term.

I mean, yeah, the ASX is now

with SFE a very large, $5

billion company. We're about,

from an NZX perspective, about

1/50th of the size. I don't

think it's anything the ASX

will be losing too much sleep

about today. But it will shake

up the landscape a bit and be good forth customers and the

end user. When you rang them

to give them a heads-up on this announcement, what was their

reaction? It was polite, and it

was a reasonable but reasonably

short conversation. Thank you

very much for talking to

us. You're welcome.

The big question consuming

the minds of traders around the

world is whether the falls in

oil, gold and metals prices

mark an end to the five year

bull run. Do the recent

declines spell a correction or

a bursting of the commodities

bubble? One man who thinks

we're seeing the end of the

boom is Stephen Roach, chief

economist for the world's

biggest securities company

Morgan Stanley of the he joined

me from New York a short time

ago. Thank you very much for

talking to Lateline Business.

If we look at the recent falls

in commodity prices, is this

the sound of the bubble

bursting? Well, we'll never

really know if this is when the

bell goes off, but there are a

number of factors that make me

reasonably convinced that the

big moves in this commodity

run-up are behind us. And I

would point to really three

developments. (1), the bursting

of the US property bubble. This

will take a toll on the

American consumer, which is the

world's dominant consumer, and

that means lower demand for

lots of goods produced around

the world that have a high

commodity content. (2), the

overheating of the Chinese

economy. The Chinese economy is

growing too fast for its own

good. The government has taken

some actions that are aimed at

slowing it. I think they'll

take more actions as we move

through the year. China is the

biggest source of increment al

demand for commodities around

the world and the slowing there

would have a major impact.

Finally, the financial factors.

Investors have turned

commodities into an asset

class. Once they do that the

speculative aspects of these

markets take on a life of their

own. They've done that and

they're now unwinding. You say

that and you say the big moves

are behind us but does this

boom have a little way to go

yet before we do start a

downhill slide? Well, anything

is possible. But I think again,

the dynamic that is now being

unleashed or about to be

unleashed by the post-bubble

adjustments of the American

consumer and the cooling of the

Chinese economy suggests that

we're pretty close to that top

right now. Let's take China

first. I know you say that

there's likely to be a slowing

but we're not seeing any

evidence of it at the moment.

Yes, it may be overheated, but

all the talk in this country is

just about the insatiable

demand for what we get out of

our ground? Well, I mean, I

think that may be wishful

thinking down-under, because

China has become one of your

biggest customers but they now

have two sectors, investment

and exports, that are 80% of

their GDP and that are growing

at an unsustainable 30% rate.

They have a very lopsided economy, with private

consumption less than 40% of

their GDP. They have to slow down these investment and

export sectors. If they don't

they'll have capacity excesses

on the investment side, and

protectionism on the export

side. So China knows this and

they have taken actions and

thus far, they've only had

small results of success on

this course, and I think

they'll see more as we move

through the balance of this

year. In the US, you talk

about the bubble bursting in

property, but how weak is the

outlook in your view for the US

economy? Well, the housing construction industry has now

moved into recession. There's

just no question about it. And

we'll see sharp contractions in

building activity well through

'07. The impact of construction

on the GDP will take a sector that had been boosting our

economy by half a point a year

to a decline of a half a point

a year, or a swing of 1

percentage point. The consumer

will also be hit by a negative

wealth effect because

consumption has been running

about half a point faster than

real income for the past

decade. I'm looking for about a

2 percentage point reduction of

the underlying US growth rate,

which may not take us into recession but it will take us

into a very weak growth

territory that could feel just

like a recession. So when the

commodity bubble burst it is it

hasn't already burst, how long

does that bursting take and how

big a fall are we likely to see

in prices? Well, I think again,

that will very much depend on

the underlying fundamentals,

and the way in which investors

and speculate ors play the

asset class. I do think that

we're probably headed into a

two-year consumption adjustment

in the United States, and at

least a one-year slowdown in

Chinese GDP growth. So average

the two together, we could be

in for a downturn on an

irregular basis to be sure in

commodity of prices of

somewhere around a year and a

half and I would estimate peak

to trough declines depending

upon the commodity. Roughly

somewhere in the 25% area. So

you're talking about oil at

below $50 a barrel, $40 a barrel? Look, anything is

possible on a day-to-day basis.

I think the underlying demand

for what have been scarce supply commodities including

oil will continue to push

prices higher than otherwise

might be the case, but I

couldn't rule out an oil price

that temporarily dips or tests

the $50 threshold. I don't

think anyone could accuse you

of being an optimist on the economy! Thank you so much for

your time this evening. Thank you very much.

Pack home, and Australia's skills shortage is not helping

in the confidence stakes, and

IT industry experts say their

sector is suffering more than

most. They're warning of

drastic ramifications for the

broader economy. Simon Pallen

reports. For job seekers the

world over, the dot com crash

in the late 90s has left a

lingering bad taste that changed thinking about a career

in the IT. A few years ago

people were saying "Maybe IT is

not the way to go." It got a

bad name through the tech crash

of a few years ago and it's

meant that a number of people

have held back. Enrolments in school and university computer

courses are still dropping off

particularly among females but

as computers and the Internet

become increasingly crucial to

business, IT job vacancies have

jumped around 30% in the last

year. Now there are fears the

shortfall will place massive

constraints on the Australian economy. Absolutely. It is a

concern. So much so, the

Federal Government has launched

an IT career awareness program.

It's funding a new web site

which providing profiles of

successful IT workers, industry information and links to

current jobs. The focus is on

attracting staff to the public

service, with promises of flexible hours and quality

training. I think the other

thing that ought to be said is

the range of jobs, not only

within individual departments,

but between departments as

well. Industry bodies blame

the private sector particularly

for failing to attract, retain

and train IT staff. But the

biggest issue, they say, is the

industry's image problem. It

was a back-room programming job

many, many years ago. It's now

moved to a business support

type of profession, where you

need a lot of human skills,

soft skills, presentation,

business acumen, how to put a

business case together. But

even in the less technical

realm of the IT industry a

massive shortage remains

forcing many Australian

companies to increasingly

sponsor foreign workers to fill

the gaps or move more work offshore. To Melbourne now,

where the Victorian Supreme

Court heard today that Steve

Vizard's former book lived an

extravagant lifestyle despite a

modest salary. It included a

$28,000 ocean cruise, two

first-class tickets to Paris,

costing $18,000, and half a

million dollars in Diners Club

bills over 8.5 years. Roy

Hilliard told the court Mr Vizard approved payment for

almost half of those expenses,

toting a quarter of a million

dollars. Under

cross-examination, he admitted

he did not keep a record of

those approvals. But he did

remember Steve Vizard saying he

wished he was going to Paris,

too. Mr Hilliard conceded he'd

rebootedly breached his duty as

a company director to act

honestly and failed to keep

proper records over nine years. The case against Mr Hilliard,

who is accused of stealing $3

million from Mr Vizard,

continues tomorrow. Now a

quick look at currencies.

Now a brief look at

tomorrow's business diary. As

we mentioned earlier, the

Westpac Melbourne institute Sur

survey of consumer Conservative

against for September is released. Harvey Norman results

are out. Also reporting

tomorrow, the Just Group and

troubled wine company Evans and

Tate. As well the past MP's

Andrew Mohl will address the

Trans-Tasman Business Circle.

Before we go, a look at what's

making news in the business

sections of tomorrow's newspapers. The 'Australian'

has investors piling out of the

share market amid concerns that commodity prices will fall further and the 'Sydney Morning

Herald' reports that

engineering group Downer EDI is

facing losses and claims for

damages over the Sydney

cross-city tunnel to the tune

of $70 million. And that's all

for tonight. As I leave you,

the FTSE is up 8 and the Dow is

up 16. If you want to review

any part of tonight's program,

you can visit our web site:

We'd also love to get your

feetback. Our email address is

on your screen now.

I'm Ali Moore. Goodnight. Captions produced by Captioning

and Subtitling International