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Lateline Business -

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(generated from captions) transcripts you can visit our

website. Now here's 'Lateline

Business' with Ali Moore.

Thanks Tony. Tonight -

write-down worries, ANZ worries

reveals new provisions for bad

debts. It caught the market by

surprise at this time, although

obviously some of the ANZ

problems have been in the

press. Runaway bride - Lachlan

Murdoch forced to abandon a

marriage between Australia's

richest media families. It fell

away because James obviously

wanted more money for what are

the premier media assets of

Australia in an ungeared credit

cycle. And ten years on from

the waterfront war. Whatever

the wharfies may be, this is

over the top. This shouldn't

happen in this country. To the

markets, and Australian shares

closed marriaginally higher.

The All Ords gained 20 points

after heavy losses in the

banking sector offset gains in

miners. The ASX200 put on 5

points. In Japan the Nikkei

jumped over 1% to a 5-week

high. Hong Kong's Hang Seng

also rose more than 1% and in

London the FTSE is up 57

points. Investors abandoned

banking stocks today after ANZ

reported a more than 70%

increase in provisions for bad

debts. The forecast loss of

almost $1 billion for the first

half of the year surprised the

market and raised fears of more

pain to come from the global

credit crunch. ANZ has also

revealed it has substantial

holdings in nearly 100 listed companies as a result of the

collapse of stockbroker Opes

Prime. Neal Woolrich reports.

After 10 days of intense

scrutiny over the Opes Prime

collapse, ANZ is now facing

pressure on another front. The

bank has raised its bad and

doubtful debt provision to $975

March. million for the six months to

After 15 years of very, very

positive growth and a benign

environment, you inevitably are

going to get one or two

problems when that environment

changes. Look, it's caught the

market a little by surprise at

this point in time although

obviously some of the ANZ

problems have been in the

press. I wouldn't describe it

as serious but I think at this

stage the banks are starting to

take a more conservative line

towards provisions. I think

we'll see more than of

that. More than 90% of growth

bank's institutional division. in provision comes from the

ANZ says credit quality is

being affected by ratings

downgrades to some of its corporate customers as well as

its exposure to the broking

sector including Tricom and

Opes Prime. What's clear in

the credit cycle is it's

beginning to change. So we

intend to continue to take a very conservative approach in reviewing our provisioning

requirements. A fair amount of that's been priced into the stocks as we see them at the

moment. It really is a

question now if we see some

surprises, some negative

earnings surprises in those

results that really leads to

the banks falling further. Today's announcement

saw ANZ shares fall by 6.5%.

ANZ continues to sell off the

shares it acquired through the

failed Melbourne stockbroking

firm Opes Prime and expects to

recover all of the $650 million

it's owed. Mike Smith says the

banks only called in receivers after irregularities were discovered within Opes Prime's accounts and otherwise would

have let the broker continue to

trade. Last week the Federal

Court upheld ANZ's right to

continue selling the shares it

acquired through Opes Prime,

but some Opes Prime clients are

angry the bank never gave them

a chance to pay out their

margin loans and regain control

of their share

portfolios. Although we don't

expect any material losses from

this or other broker exposures,

I am mindful of the effect on

our reputation and on the many

Opes clients being impacted by

the fallout from the actions of

Opes Prime. Today, ANZ

disclosed it has significant

holdings in 89 companies worth

$350 million which it acquired through Opes Prime. They

include:

The bank has been criticised

for not disclosing these large

holdings sooner but Paterson's

Mark Toby says the focus is on

reclaiming money lent to the

broker. Once that is done I

think there will be moves to

lessen the impact on the

customers involved whatever way

they can and obviously to try

to take moves to address some

of the issues. But in the

short-term the bank's instinct is to protect their position.

That's what we're seeing happen

at the moment. Mark Toby says

any damage to ANZ's brand is

likely to last about six

months. But the practice of

stock lending now appears to be

permanently tainted. ANZ will

stand bits other stockbroking

clients, including Tricom, but

the bank is now undertaking a

full review of the risks

involved in securities lending.

Staying with Opes Prime and two

senior executives at Fortescue

Metals have been caught up in

the broker's collapse.

Chairman and Olympic champion

Herb Elliot was forced to sell

three million Fortescue shares

because of lending arrangements

he had with Opes Prime.

Executive director Graeme rowly

also had to off-load some of

his stake. But Fortescue

shares jumped 7% after it

finished building a key rail

track in Western Australia,

enabling it to send its first

load of iron ore out of the

Pilbara. CEO Andrew Forrest

says Fortescue remains on track

to start shipping iron ore to

China next month. Media heir

Lachlan Murdoch has pulled out

of a $3.3 billion bid toe

privatise Consolidated Media

holdings. Mr Murdoch 's new financial backers were unable

to agree on a price for Mr

Packer to reduce his nearly 40%

stake in Consolidated Media.

Lachlan Murdoch has been Andrew Robertson reports.

looking for a career-making

deal, but in the current

financial climate, it's not

easy. In the end it's a matter

of bad timing. So much has

changed in the credit markets

in the last couple of months

that what looks a great deal on

paper at the right time in

January has ultimately proved

very difficult to put

together. The initial proposal

in January was for a cash and

scrip offer which would see Mr

Murdoch control 50% of

Consolidated Media with James

Packer lifting his stake from

37% to also own half the

company. It valued

Consolidated Media at $4.80 a

share, or more than $3 billion,

but the signs were not good

when Mr Murdoch's sphrans-based

private equity backers walked

away. Mr Murdoch found new

backers who agreed to fund the

bid for 75% of Consolidated

Media, meaning James Packer

would be selling shares.

However those new backers refused to pay

refused to pay $4.80 a share

and CCZ media equities analyst

Roger Coleman believes that

will be the final straw. It

fell away because James

obviously wanted more money for

what are the premier media

assets in Australia in an

ungeared entity at this stage

of the credit cycle. My

reading of it is the deal done

in the exact format that was originally specified would have

still got done, but I don't

think that was necessarily ever

on offer. Consolidated Media

Holdings has a 25% stake in PBL

Media, which owns Channel Nine,

magazines such as the Australian Women's Weekly and

big stakes in websites such as

Nine MSN. It also has a 25%

stake in Foxtel, half of

Premier Media the owner of Fox

Sports and 27% of employment

website Seek. In announcing

his withdrawal from the

takeover, Mr Murdoch indicated

he may come back with another

proposal, and as with his first offer, timing will be

crucial. It'll be a race

between the easing in the

credit markets worldwide for

him to get the credit versus

the price recovery that is

going to occur in the CMJ share

price as valuations improve in

the stock market. The failure

of Lachlan Murdoch's failure to

secure Consolidated Media is a

blow to his bid to step out of

his father's shadow in the

media world. According to

Roger Colemen there are good

business reasons why Rupert

Murdoch should have provided

and money. It's worth the

synergy gains between what CMJ

has already got. Not to mention

the benefits from a tie-up in

free-to-air and pay-TV, as well as magazines. There was

further confirmation today that

Australia's economic cogs are

slowing. The gap between

imports and exports blew out to

a record $3.3 billion in

February and private sector

surveys have shown a fall in

both job vacancys and building

activities. Desley Coleman

reports. Australia's 2-speed

economy continues to operate at

different paces. But today, there was confirmation the

brakes are being applied.

While interest rates are biting

in the mortgage belts of the

country, bad weather which

affected and mining industry

Wells infrastructure constraints dampened the

ability to deliver our two

biggest exports - coal and iron

ore. As a result, Australia's

trade deficit blew out to a

record $3.3 billion. In

seasonally adjusted terms

February exports fell 4% while

demand for im ports was

understanding changed at $21.5 billion. Clearly today was a

very bad number. We shouldn't

look at it as a symptom of a

weak export performance. We

need to look through it and say

there were temporary factors

driving down exports here. Things will improve going

forward. A lot of that

improvement is expected to come

from better weather conditions

but more importantly a rise in

commodity prices. With this

year's round of iron ore price

negotiations well under way,

today a South Korean steelmaker

confirmed a 210% rise in the

price it will pay for

Australian coking coal. The

other side of the trade deficit

coin is demand for imports.

While consumer hunger for

foreign products has slowed,

imports were buoyed by a spike

in big ticket items like

aircraft. The fact that Cappex

imports have been very strong suggests that the business

investment cycle is in good

shape. One of the problems for

the economy has been a lack of

capacity and a lack of

infrastructure in particular.

So the fact we're getting a lot

of investment in those areas I

think is very positive. Today

also revealed weaker job ad

numbers for the second month in

a row. All the losses were

newspapers.

We are getting some weaker

numbers, but really it's coming

off an extremely high base and

I think what the Reserve Bank

does want to see is unemployment firstly stop

falling and even rise a little

bit, because we are going to

see a lot of increased wage

pressure over the coming months

and I think one way to cap that

out is to have the unemployment

rate rise a little bit. The

construction industry is also

losing a bit of steam. The Australian Industry Group's construction index posted its

first negative reading in seven

months. Falling 5.5 points

thanks largely to weaker

commercial activity. It's

unlikely we'll see an improvement until I think the

second half of 2008 going into

2009. And if there are further

interest rate increases well, I

think that improvement will be

pushed out even further. And

the only bright spot for the construction industry is the

continuing high level of demand

driven largely by the shortage

of rental and commercial

properties. To some of the major movers on our market

today:

The boss of BHP Billiton

petroleum says there are no

plans to sell off the oil

division even if it proves a

deal breaker in the bid to take

over Rio Tinto. Petroleum

chief executive Michael Yeager

gave an upbeat assessment of

where his company sits today.

He says investors will be given

an update next month on

progress with the takeover bid.

Mike Yeagere, was in Perth

today for an industry

conference and he joined me

earlier this evening. Mike Yeagere,, welcome to Lateline

Business. Ali, good to be with

you. If we can start with the

proposed takeover of Rio Tinto,

there's going to be an investor

presentation in about a month's

time, what is there to update

shareholders on? I think we

always want to make sure that

our shareholders are fully

knowledgeable of the state of

our business and the last time

I addressed the shareholders in

a meaningful way was in about

October of 2006. So it's now

probably appropriate to just

bring everybody up to speed.

What we've got going is a very

strong business today that is really starting to accelerate

in a good way. We have our

volumes growing rapidly. We're

a major part of BHP Billiton.

Certainly we just want to make

sure that that whole context is

understood by the shareholders

and look forward to it in early

May. You say the oil division

is a major part of BHP.

Indeed, today you were quoted

as saying you were the safest

part of BHP. That's a big call

isn't it? What makes you so

confident that under no

circumstances will you be hived

off if and when this deal takes

place? Well, Ali first of all

let's just look at where we've

been. BHP Billiton petroleum

has been a key part of this

corporation for 40 years. The

Bass Strait was the genesis of

the petroleum business and last

year we sold more gas out of

the Bass Strait business than

we ever have those 40 years and

those assets have another 20,

30, 40 years of life. We have

the North West Shelf business

in Western Australia that has

another 20, 30, 40 years of

life. So these two huge pieces of base operation are extremely

strong. And now we have a

series of projects on top of

that, as well as our operations

and other countries that give

us about a 10% of annual growth

rate over the next four to five

years. We're doing that with a

bias to liquids, which means

we'll capture these extremely

good prices that are in the

near term. We're doing it in

fiscal terms that are the best

in the world where we capture

literally 80 plus percent of

every dollar of revenue. So I

don't know what others would

think, but I do know this is a

big part of BHP petroleum and

we spend absolutely no time

looking at anything other than

trying to make it bigger and

better every day. Do you have a

commitment from your board that

you remain part of the group no

matter what, even if it was a

deal breaker? All I can do is

tell you we don't spend one

minute in our boardroom looking

at anything other than trying

to make it better. Our exploration budget has been

raised from $400 million to

$700 million. We have

brand-new operations in a

number of different place where

is we're exploring right now.

So everything that we're doing

every day is to grow the

petroleum business and nothing

else. As you say, you've

doubled your exploration

budget. Is that, though,

because recently your discovery

rates have been lower than that

of your peers? I don't know

about that. Certainly we have

not explored in a grassroots

sense to the degree that we'd

like to in several years.

Mainly because we had had such

good fortune prior to that in

finding big things. In the

early part of this decade we

found a series of large fields

around the world both in the

Gulf of Mexico and in Western

Australia and we've spent the

lion's share of our time since

then in the appraisal and now

the development of those. So

in that sense we are upping our

exploration budget, mainly to

get back to the grassroots of

exploration that are very, very

necessary, and in doing so,

we're going to be doing that in

Columbia, Malaysia, the deep

water Gulf of Mexico, more in Western Australia. So we're in

very oily and gassy parts of

the world with big acreage positions, positions our

competition would love to have.

We're really optimistic about

continuing to add to our

exploration success. As you're

aware we made the biggest

discovery in Western Australia,

the big discovery this year,

it's our largest in the last five years. Despite your

exploration, the Federal

Resources Minister Martin

Ferguson said today that

Australia faces a $25 billion

trade deficit in petroleum

products by 2015. Indeed he's

keen for more exploration.

He's put up 35 new offshore

areas up for grabs just today.

But do you believe Australia

still has large, new

undiscovered oil

provinces? Right now there's no

doubt that the geology is more

favourable to gas. We do have

some oil discovered recently,

and BHP petroleum has a big

piece of that. We had a

project on stream last

November. It is still sitting

at 80,000 barrels a day today.

We're developing the Pyrenees

field another field that will

come on in 18 months time. Of

the oil that's out there we're

clearly in the middle of it.

From a pure subsurface

standpoint, we never say never,

but it's much more prone to gas

going forward. As you said, BHP

Billiton's oil division is

forecasting growth of around

10% in oil and gas production

for several years, what happens

then? I think for several years

we'll be, our current project

pipeline takes us out to 2011,

2012 in the kind of sense that

I've described and that's just

with what we have in execution

today. The things that would

follow on from that are the

projects that we have in

earlier phases of evaluation.

We have opportunities in

Trinidad, others here in

Western Australia, new projects

in the Bass Strait and around

the world. And then, of

course, this new exploration

aekage that we've picked up in

Malaysia, Columbia. We'll know

by that time where we are in

those places and we're very

optimistic. I can't fail to

mention the big gas that we've

already discovered in Western

Australia, both discoveries.

So all this is not in the

numbers I've described and

those are the next set of

opportunities we're trying to

bring forward. We're very

optimistic about continuing

this. Let's talk oil price.

Oil has jumped the US $100 a

barrel barrier. Earlier today

it was around US $107 a barrel

in Asian trade. What do you

think the outlook is for

price? You know, we really try

to make sure we look at that

supply-demand picture and

understand that as well as any

of the other fundamentals right

now and there is no doubt that

supply and demand have

narrowed. Is there enough

supply to meet demand? Yes

there is, but when it's

narrowed this much then

obviously you and I can both

see the behaviour and the other

things taking place in the

market today. So that

fundamental is tiegtder than it

has been in a while. The

second major fundamental is

that a lot of the new oil and

gas that has been developed in

recent times has been at a much

higher price and higher cost.

That's both in regards to the

type of resource, whether it

be, you know, the Alberta

All-sands or the deep waters of

the world where the rig rates

are much higher. But there are

a number of things that have

caused our process to be

greatly higher. When that oil

is more expensive that's

another piece of cushion if you

will, under the floor of

it. You see the price staying

around $100 for the foreseeable

future? I think in the near

future there's no doubt that

the fundamentals are strong for

process to stay up, whatever up

means. But it's really because

of those fundamentals. Mike

Yeagere,, many thanks for

joining us. Thank you for

having me. It's been described

as the industrial war we had to

have to achieve reform on the

waterfront. Ten years ago the

dispute at Australia's ports

reached a climax, pitching the powerful Maritime Union against

Chris Corrigan, the then head

of transport and logistic's

firm Patricks. A decade on

both sides are claiming credit

for a very different industrial

landscape. Philippa McDonald

reports. The Maritime Union

downed tools today for a

minute's sielts to commemorate

the waterfront dispute. -- silence. They really ought to

have about an hour's silence

for the working families that

for 50 years were ripped off by the industrial thuggery on the

waterfront. It was one of the

most highly charged

confrontations, in Australia's

industrial history. Security

guards with dogs took over

Patrick wharves late at night

to evict workers. First thing I

said over the radio to my crane

partner is I asked him whether there was trouble with the

police. The union leader at the

time saz those tactics prompted

a wave of public support. A lot

of them said whatever the

wharfies may be, this is of the

top, this shouldn't happen in

this country. For seven weeks,

union members were without jobs

on Patrick wharves as the

resolve of the company and the Government was tested in the

court. John Howard on behalf of

Australian taxpayers offered

Chris Corrigan's company about

$150 million as it turned out,

which was to pay all of the

redundancy and accumulated

leave entitlements of Chris

Corrigan's employees, provided

and on the condition that Chris

Corrigan sacked his entire

workforce. Chris Corrigan says

it was just a loan and while

union members were eventually reinstated, the landscape had

changed forever. If you look at

productivity per man that went

up between four and five

times. Today from New York, the

former Prime Minister said:

Ten years ago, 18 containers

were moved every hour on

Australian wharves. Now the

figure is 28. Now a look at

tomorrow's business diary.

Opes Prime administrator will

brief creditors on what assets

remain if any following the

brokers' collapse.

A look at what's making news

in the business sections of

tomorrow's papers. The

'Australian' leads on the ANZ's

$1 billion debt warning. The

'Age' says ASIC has named a

second Opes Prime director as possibly being involved in

covering up losses of the

collapsed broker. The

'Australian Financial Review'

looks at the same story. And

the 'Sydney Morning Herald'

examines Lachlan Murdoch's failure to buy Consolidated

Media Holdings. The FTSE is up

1% or 61 points the Dow Futures

up 66 points or 0.5%. If you

want to look at any part of

tonight's program again, you

can visit our website. You can

watch the show or download it

as a vodcast. I'm Ali Moore,

goodnight. Closed Captions by CSI