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Live. Undeclared gifts and

trips to China, Kevin Rudd says

he's disappointed, while the

Minister Joel Fitzgibbon should Opposition says Defence

resign over his relationship

with a Chinese businesswoman. The Navy says it has found

most of the fertiliser

containers that fell off the 'Pacific Adventurer' in Queensland waters during

Cyclone Hamish. Treasury

Secretary - America's Treasury

Secretary unveils plans for a

new single regulator to oversee the American financial system. And Ben Cousins limps from the

field as Carlton thrashes the

Tigers in front of 87,000 fans

at the Adventurer' in Queensland

unveils plans for a new single America's Treasury Secretary Hamish. Treasury Secretary - waters during Cyclone

Ben Cousins limps from the American financial system. And regulator to oversee the

at the Tigers in front of 87,000 fans field as Carlton thrashes the

at the Hamish. Treasury Secretary - American financial system. And regulator to oversee the unveils plans for a new single America's Treasury Secretary

at the MCG. Tigers in front of 87,000 fans field as Carlton thrashes the Ben Cousins limps from the

Good morning. It's Friday

27th March. I'm Joe O'Brien.

I'm Virginia Trioli. The top

story - the Prime Minister says

he is disappointed in Joel

Fitzgibbons after the Defence

Minister apologised for not

declaring gifts he had received

from a Chinese businesswoman. Speaking from Washington Kevin

Rudd stuck by his Defence

Minister saying he is doing a

first class job. The Opposition

says the publican no longer

trust Joel Fitzgibbons and

that he should resign over his

contrary statements on his

relationship with Helen Liu.

We'll be discussing the

opposition's response in a

moment, first let's listen to

what Kevin Rudd had to say from

the US. I'm disappointed that

he did not make these

declarations back then. I

expect better of Mr Fitzgibbons

Gibben in the future. It's

entirely appropriate that the

acting Prime Minister has

demanded an apology of him and

that he has rendered that apology. But Mr Fitzgibbons

Gibben is doing a good job as

Minister for Defence. There's a

big reform program in defence

and he is doing a first class

job. Thank you. The Prime Minister speaking in

Washington. Having to deal with

some messy domestic issues

while he is overseas. For more,

Ben Worsley joins us from

Canberra. How significant is

this admission overnight from

Joel Fitzgibbons that he did

not declare these two trips to China? It's reasonably

significant for a couple of

reasons - it detracts from the

Prime Minister's efforts to

fully support Joel Fitzgibbons

over the recent controversy

that came out yesterday 'cause

he has to be seen to be

punishing him, I supposer or at

lowest rerim and ing him for

not declaring these gifts. I

suppose overall it's another

cross against Joel

Fitzgibbons' name. There have

been a few issues. None of them

hugely major in themselves but

they all add up. He took a

friend and electorate worker on

a trip to Afghanistan which was

heavily criticised. There has

been this pay bungle with the

SAS which led to the Opposition initially calling for his

sacking or at least

resignation. Now this. A messy

confrontation, it seems, with

his Department, and allegations

of a covert investigation into

him by his own department which

is ugly in itself and obviously

now the fact that yesterday he

said there were only small

gifts exchanged at Christmas

time, birthday times, things

like that, then a spokesman

from his office said there had

been no gifts that would've

required declaration. Obviously

contradict ed via a statement

later on is very messy. Kevin

Rudd accept ed similar gifts

from a Chinese business when he

was in opposition. There are

numerous times that he flew to

China or around the world and a

Chinese company picked up the

bill. The difference of course being he declared that where he

was supposed to. There is some

independent commentary this

morning saying that Joel

Fitzgibbons should go apart

from the Opposition. Is there

any likelihood that's going to

happen? Not at this stage, Joe,

I wouldn't have thought. He is

in the middle or at the end

hopefully of a very long and

difficult reform process

through the Defence White paper

which is something he has been

working on since day 1 of

stepping into the portfolio 18

months ago. It's been thraied.

It's been a difficult process

by all reports. You would find

it very unlikely that he would

be shifted during that

process. And obviously a Prime

Minister, a government would be

very unwilling to move

essentially a senior minister

out of an important portfolio,

enwhen Australia is in edge

gauged in a - engaged in a war.

So at this stage that seems

very unlikely prospect. But it

must be said there are only so

many marks against name that

you can have in this business,

and Joel Fitzgibbons seems to

have just racked up another

one. Just over the question of

whether Defence officials

should've been investigating

their own Minister, it seems

like the Defence Department has

come out and said there are no

circumstances under which that

should happen. So there are a

lot of questions for Defence in

this as well. There are. There

is obviously an investigation

under way. The Defence Signals

Directorate, the body accused

in these reports of accessing

Joel Fitzgibbons' computer, by

law isn't allowed to

investigate Australian citizens

unless it has the direct permission from either the

Attorney-General or the Defence

Minister himself. You can't

imagine that being the case for

either of those gentleman to

give the nod to such an

investigation, so there is

suggestion that if someone

within that office, the DSD,

did undertake this without

permission then that's a

criminal offence. That could

get very messy at the other end

and would no doubt lead to a

further deterioration of the relationship between the Minister and his department. Thanks for that,

beb Worsley in Canberra. We'll

be speaking to the Opposition

Defence spokesman on this issue

later in the program. What do

you think about the situation

with Joel Fitzgibbons? Should

that, beb Worsley in Canberra. his department. Thanks for he go or stay?the Minister and

this issue later in the program. What do you think Opposition Defence spokesman on We'll be speaking to the

about the situation with Joel Fitzgibbons? Should he go or

stay?

The navy has confirmed the

location of 24 of the 31

containers lost from the 'Pacific Adventurer' during

Cyclone Hamish early this

month. The containers filled

with fertiliser were found on

the sea floor not far from

where they were lost. The

Queensland government is

seeking compensation from the

owners of the 'Pacific

Adventurer' for the oil spill. The Federal Government says it

will make a formal statement

next Friday in support of the UN declaration on the rights of

indigenous people. The former

Howard Government was only one

of four governments to oppose

the declaration at a 2007 UN

General Assembly. It was an

election pledge of the Rudd

Government to declare

Australia's support for the document. US Treasury Secretary

has announced plans for a new

single regulator to oversea the

American financial system. The

new entity would regulate

financial institutions,

services and markets as well as

all hedge funds and

derivatives. The measures are

steined to prevent the kind of

systemic risk-taking that's contributed to the global

financial crisis. British

police have launched an

investigation into claims an

MI5 officer colluded in the

torture of Guantanamo detainee,

Binyam Mohamed. Last month he

became the first prisoner to be

transferred from the Guantanamo

Bay detention camp under

President Obama. Mr Mohamed

claims a British intelligence

agent provided questions to

interrogators who tortured him

in Morocco. At least 20 people

have been killed and 35 others

wounded by a car bomb in

northern bag dard. 4 children

and 3 women were among those

killed, according to officials

at two local hospitals there.

The blast occurred in the

overwhelmingly Shi'ite district

of Shahab. Returning to the US

economy - and Treasury

Secretary Timothy Geithner has

announced plans for a new

regulator to oversee the American financial system. Timothy Geithner says the body

will produce a more stablesis

them that will be able to with

stand the shocks of banksing

failure that contributed to the

economic meltdown. To address

this will require comprinsive

reform, not modest repairs at

the margin but new rules in the

game. The new rules must be

simpler and more effective.

They must produce a more stable

system, one that protects

consumers and investors,

rewards innovation and is able

to adapt and change. We can't

allow institutions to cherry

pick among competing regulator.

We need to recognise risk does

not respect national borders.

Markets are global and high

standards at home need to be complemented by strong

international standards enforced more evenly and

fairly. US US Treasury

Secretary Timothy Geithner

speaking. Mark Simkin joins us

from Washington. It sounds like

a kind of APRA, hasn't America

already had one of those, or something like

something like ta? America

basically has a patchwork of

regulations. As we've

discovered in the last 6-12

months,s a patchwork that is

full of holes and hasn't done a

good enough job. This is all

about a sweeping reregulation

of American markets. In some

cases, a sweeping regulation of

parts of the sis tem that

haven't been reg ulated before.

Not only will we see this sort

of uber regulator that will be

able to regulate everything and

anything in the financial system there will be things

that haven't been subject to

those regulation brought under

its control, things like hedge

funds, private equity vehicles,

insurers like AIG, anything

that's big enough to pose'a

threat to the system is big

enough to be regulated by the

system is basically the message

they're giving out. That

includes other things such as

derivetives markets, the credit

default swaps which were such a

big part of causing the carnage

and chaos. All those would be

regulated in a way they haven't

been before. Some of the res

laigs are pretty intense. Sts

not just about increasing

capital reserves. It would mean

that there would be

standardised limits on

executive compensation, and of course, the ability of the

government to come in, seize a

firm and close it down,

liquidate it. It is a pretty

sweeping and significant set of

changes being proposed. Alan

green span was famously quoted

as saying the derifftives

market needed to be left the

hell alone. It was fine of

looking after itself. How times

have changed. Has time changed

enough for Congress to allow

such sweeping regulation and

reform? To go through? That's a

very good question. These

changes are going to require

legislation and therefore

congressional approval. There

are some pretty ideological

issues at stake here. In many

ways this is a repudiation of

raw capitalism. It's saying you

can't leave the market to

yourself, you have to reg

Lleyton it in a pretty serious

way. And therefore the

champions of the free market in

Congress, certain Republicans

are obviously not going to be

too impressed by this. They're

holding most of their fire at

the moment. Their reaction in

the hearing today was Luke warm

at best, I think. An perhaps

indicative of what was to come.

Perhaps one of the sharpest

exchanges, a Republican from

New Jersey said "this is a

radical proposal" then when

Timothy Geithner said..." It's

a prudent well thought out

proposal". The politician cut

the Treasury Secretary off and

said "You don't think this is

radical? What could be more

radical than the government ta

coming in, taking over and

clesing down private

enterprise, that's radical!" He

has a point. Yes! At the same

time, no-one on either side of

politics likes the idea of

major companies going bankrupt.

Republicans don't like the idea

of taxpayers having to pour

money into them. Everyone

realises something's got to be done and there's something

wrong with the current system,

so I think the arguments will

be more around the edges than

over the central need to For some sort of re-regulation. It's interesting

at a time that our Prime

Minister Kevin Rudd is in Washington, all the leaders are

singing from the same song

sheet, this is pretty much the

same coin of - kind of issue Kevin Rudd has been going on about. Very briefly, he is

still in Washington. Who has he

been speaking to? It's an

economic focus today. He is

giving a major speech that will

address some of the

international approaching

required for resolving this

financial crisis. He will be

meeting the chairman of the

Federal Reserve, Ben Bernanke,

the country's top banker and

Timothy Geithner. So no doubt some of the plans for America

will be discussed, what

Australia's experience has been

and as you say there is a different approach to regulation in Australia, perhaps there are some lesson

there is for the Americans.

This sort of issue will no

doubt be the Tom - topic of the

day. You can just see those Republicans making up - rge

frothing at the mouth. And

sharpen ing their pence as to

how they're going to

characterise Barack Obama when

this kind of thing starts

happening, the socialist

arrives. That's right. Let's

look at the front pages of the

major newspapers. 'The Australian' reports the Federal

Government's plans for a $7

billion revamp of higher

education have been recast in

the face of the new economic

reality. The 'The Australian

Financial Review' says the

Reserve Bank of Australia has

claimed deep interest rate cuts

are helping to insulate

households from the worst of

the international down tonne. The 'Sydney Morning

Herald' reports Defence

Minister Joel Fitzgibbon last

night admitted he failed to

declare two overseas trips paid for by Chinese-Australian businesswoman Helen

businesswoman Helen Liu.

Defence sources allege Ms Liu

has been mentioned in secret Australian intelligence reporting because of her close links with the Chinese

Government according to the

Canberra tiems rr. The

Adelaidetiser rr reports Defence Department spies have

been hacking into the Defence

Minister's lap top. there is a

very naughty headline there -

Minister snared in spy row.

Which is a polit misleading, I

would suggest. The Courier-Mail

rr labels the Defence

controversy the biggest Australian spy scandal since

the 1980s. The shun shun

reports Ben Cousins's return

ended in agony when he strained

his hamstring, or he did a

hammy as the vernacular has had

while the Richmond Tigers were

thrashed by Carlton. The 'Daily

Telegraph' says the elusive

leader of the Notorious outlaw

gang has been charged with

possession of anxiety pills as

the Premier Nathan Rees to do

whatever it takes to stop bikie

gang violence. The 'Northern

Territory News' reports the Top

End burned more than 22 million

litres of diesel so a power

station men to run on gas could

provide power to the state. The

'West Australian' says the

Reserve Bank has warned WA's

property market is in danger of

stagnation similar to of that

western Sydney. Finally 'The

Mercury' reports Tasmanian

teachers have warned of a mass

exodus of students as fears of

a crisis in the State's new

senior secondary education

system grow. The top stories on ABC News Breakfast this morning - the Prime Minister says he is

disappointed in Joel

Fitzgibbons after the Defence

Minister was forced to

apologise for not declaring

gifts he received from a

Chinese businesswoman. Kevin

Rudd says he is sticking by his

Defence Minister saying he is

doing a first class job, the

Opposition says Joel

Fitzgibbons should resign. The

navy confirms it's locate ed 24

of the 31 containers filled

with fertiliser lost from the

'Pacific Adventurer' during

Cyclone Hamish this month. The

Queensland government is

seeking compensation from the owners of the 'Pacific

Adventurer' for an oil spill

that spoiled kilometres of

coastline. The US US Treasury

Secretary giet giet unveils

plans for a new single

regulator, Timothy Geithner.

The new entity would regulate

financial instoogs, services

and markets as well as all

hedge funds and derivatives. The measures are designed to

prevebl the kind of systemic

risk-taking among banks that

has contributed to the global

financial crisis.regulator, Timothy Geithner. The new entity would regulate financial instoogs, services and markets as well as all hedge funds and derivatives. The measures are designed to prevebl the kind of systemic risk-taking among banks that has contributed to the global financial crisis. As

the same day as the Australian Reserve Bank's bi-annual

report. Its head Head of

Economics warned home buyers

about the dangers of too much debt. He also supported the

bank's general line that

Australia's already tight

supply of homes will support

growth in the building sector

towards the second half of the

year. They might be building as

much but borrowing costs have

dropped to the lowest lively in

45 years since the Reserve Bank

started cutting interest rates

from September last year. In

aggregate terms the fall in

borrowing rates has reduced the

debt servicing burden of the

house hold sector by

approximately 5% of house hold

disposable income. That imply

as significant amount of cash

flow relief, for spending on

other goods and services or to

save or pay down debt. That

means most people are better

off at the moment. However,

government incentives like the

first home buyers grant

shouldn't blind people to the

Ant and Deckers of too much

debt. House holders considering

entering into home ownership

need to carefully consider

their own circumstances

including whether or not they

would be able to continue

servicing their loans if

mortgage rates were at some

point to begin to return to

more normal levels. The

Government is still considering

continuing the doubling. First

home buyers' grant beyond June.

Nearly 30,000 new home owners

took advantage of the $14,000

grant in the 3.5 months after

it was introduced. While

housing affordability is still a

a problem. Demand for rental

properties remains high with

around 40,000 new dwellings

needed. We can Su-Wei with some

confidence - say with some

confidence that our housing

market is still relatively...

The relative tightness of the

Australian housing market is

one factor that will support home building in the period

ahead. It's important to boost

public and non-profit housing,

fully funded by government with

you we also need to get private

investment in. I think there is

room for an upswing in housing

in Australia. We went into this

downturn with a housing market

that was not overextended,

housing sector not

overextended, rapid population

growth, now much lower interest

rates. Very low vacancy rates

for rental dwellings. They're

the circumstance in which we

can see a considerable upswing

in housing by the end of this

year. Good news for those in

the housing and construction

sector like brickworks. Its two

major divisions, land and

development and building

products were hit this half,

but its overall result was

boosted by its investment

arm. First half profit jumped

534%, to $255 million. That

result was thanks to its share

in the sale proceeds. Aptly

named coal mine New Hope.

Stripping out that one-off gain

profit was still up 26% to $51

million. Once again, our

diversified model has delivered

increased profits during this

period. The company, though,

has indicated that there is a

continually sluggish New South

Wales and South-East Queensland

property market, that will

hinder its profit going

forward, these markets ten toer

more meem medium density and as

such haven't really shown as

much of a recovery in the

property market as say, other

parts of Australia. The next

indication of when the recovery

might be will come with a

release of February's building

approval figures next week. To

finance now - the French

government is the latest

administration to crack down on

executive bonuses for companies

that have been bailed

out. France's banking sector

refused to come up with its own

code of conduct so the

Government says it will

introduce its own decree next

week. In local news, the chief

financial officer of Rio Tinto

is calling for Chinalco to

double its share offer to 18%.

The China owned business wants

to invest almost $20 billion US

in the Anglo-Australian miner,

however concerns over

international owner ship the

foreign investment review board

is keen to review the plan.

Let's look at the markets now.

All stocks are trading higher.

All stocks are trading higher.

In a few minutes the national

weather. Also ahead a review of

some of the newspapers. Today

our reviewer is Gideon Haigh

from 'The monthly' Paul Kennedy

is at the Formula One track in

Melbourne, Paul. G'day,

yeah. Just outside Gate Gate 1

at Albert Park. In just a

couple of hours when the sun

comes up the punt, will start

arrive ing. They'll take their

places for a 12 o'clock start

for practice runs today. There

is a lot of excitement this

yier about F1 because of the

turmoil strangely enough over

the - our summer. But more on

that in a minute. There was a

big sporting event in Melbourne

last night. The Carlton Blues

thrashed Richmond by 83 points

at the MCG in front of 87,000 fans. Ben Cousins, the man

everyone came to see, tore his hamstring and had to limp from

the field. Let's look at some of the highlights.

Ben Cousins tore his

hamstring. He is said to face

about 3 weeks on the sidelines.

There was some concern over him

at three-quarter time. The

medical staff did allow him to

play on in the last yier

quarter. They watched him

closely but there is nothing

you can do. He was running away

from Brendon Fevola, fell to

the ground, limped off. Now

there is going to be more drama

for him and the club as

questions remain about whether

it was suitable for him to come

o back to AFL. My highlight of

the night wasn't any of the

veterans or stars it was a

debutant Mitch Robinson from Tasmania, who we talked about

yesterday. Playing his first

game in front of 87,000 people.

Kicked 3 goals. Nobody had

heard of him. Look at this guy.

I was blown away, it's a

massive crowd. I'd never expect

to play in front of this a

couple of years ago. I was over

the moon the boys got up. It

was such a good win. Good first quarter. When did you know you were going to be

playing? Monday. I wasn't too

sure if I was gonna get picked

'cause I missed a couple of

weeks with my ankle. I couldn't

stop smiling. There will be a

lot of people happy in Tassie.

Does it make it extra special

to have your mum and dad in the

crowd? Mum and Dad said I made

them so proud. I'm just so

happy at the moment. Big shout

do all the tasio boys who want

to play AFL, just keep up with

the hard work and they'll make

it over. There has been a

developing story overnight,

tennis Australia have requested

the Davis Cup tie in India be

moved out of India in May.

Tennis off sishls are -

officials in India are laughing

that off, saying there's no

need to move it away from

Chennai. There could be a

little bit of drama. The

Commonwealth Games are there

next year, we'll have a story

later on about the Commonwealth

Games. Indian sports Minister

is in Australia at the moment

and has given reassurances

there. For the moment it's

Davis Cup. There has been

plerchy of - plenty of Drama

around the cricket. The IPL has

gone to South Africa. What will

happen with the tennis. F1 -

it's all about trying to find

out whose cars are fast est

here at the prac tig sessions.

Sometimes they turn up here and

it's Ferrari or McLaren, you

really wait for the big guns to

take it out. There's plenty of

interest today on the track as

well as the major event. You

mentioned earlier the

controversy about the

Australian summer. What's that?

All the controversy has been

been around the global

financial crisis and changes in

F1. The really interest ing one

is Honda pulled out of its team

only to be taken over by an

independent team, Ross Brawn,

the team is now called the

Brawn team. They're going in as

favourites. Jenson Button is

the driver for Braun, a couple

of months ago Jenson Button

looked like he didn't have a

car to drive in because Honda

had pulled out. Restrictions

have been wrought in - brought

in on how much they'd like

teams to spend, F1 has said if

teams spend under ?30 million

then they're going to be given

benefits and incentives. So

teams are going their own way,

nobody really knows how good

everyone else is. One thing is

sure, Braun has tested best in

the pre-season testing and

frare's lagging a polit at

moment. - a little bit at the

moment. You wonder if these

teams have been foxing and

they'll blow everyone off the

track today. The football was a

bit of an answer climax. That's

a scoreline no football team is

ever going to wan to see again.

Particularly an anti-climax

when it comes to Ben Cousins.

Yeah, I think it's very

damaging for Ben Cousins' year.

Purely from a football

perspective. He is now gonna

have to rehabilitate from his

hamstring. It might take 3, 4

weeks, it might take 5 weeks

but what happens in that period

he is going to lose fitness. He

looked quite good last night.

He was able to get a lot of

handball receives. He won a bit

of football. He didn't look

great in one on one rr

contests, he looked a little

bit shabby. A couple of these

kids like Mitch Johnson picked

him up at one stage and flipped

him. He was battling to stay in

the game as it was. All the

fitness work he has done as

been crucial to him getting to

round one. If he slips behind

in that fitness it's going to

be hard for him to come back.

it's very damaging for Richmond

to play like they did last

night. It was a home game.

They're cashed up at the

moment, Richmond, . Cash is

about all they've got. Here is

the weather. Vanessa, New South

Wales is in for some cool

weather. That's right. There

has been a late burst of

summer. Sydney is waking up to

21. The cool change is due

today. A trough is moving with

a front along with showers that

will head up further north,

bringing that southerly change.

Another hot day for Western

Australia with the

north-easterly winds before the

trough makes its way inland bringing cooler conditions to

the West Coast. The high will

continue to keep things fairly

dry in the south from South

Australia and southern

Victoria, while westerly winds

maintain the showers in

Tasmania. The band of cloud

gradually moving north in a trough will cause a few showers

a round the Hunter, the cloud

over north and Western

Australia will combine with the

trough causing a few storms. A

few drops of rain expected over

Tasmania, with low cloud ahead

of a cold front. Queensland -

isolated showers along the east

coast and Cape York peninsula.

New South Wales - the low

pressure trough will move

through the north-east cause

ing isolated storms, mostly

this afternoon and north of the

Newcastle. In Victoria in the

south a few morning isolated

showers, most falling near the

coast. The cloud will clear to

a fine and sunny day. Tasmania

- cloudy, drizzle over the

west, you should see that

drizzle from the south this

afternoon. Cool to mild with

moderate westerly winds,

stronger in the far south.

South Australia - the

agriculture areas waking up to

early morning fog. It should

abfine day with cool to mild

condition in the south. Warmer

in the north. Western Australia

a fire weather warning is

current with the inland

subdistricts of the central

west. Late thundery showers

over the east and south and

west and south coastal

districts. to the weekend -

Brisbane some showers. warm and

sunny in Adelaide am 28 in

Perth. See you in half an hour.

Perth. See you in half an hour. the top story on ABC News

Breakfast - the federal

opposition is call ing for Defence Minister Joel

Fitzgibbon to resign after he admitted he didn't declare

gifts he had received from a

Chinese businesswoman. The

Prime Minister is sticking by

his defence Minister, speaking

from Washington Kevin Rudd said

that while he's disa-Port

Melbourned in Joel Fitzgibbons

he still thinks he is doing a

first class job (while he's

disappointed) Chris Uhlmann is

travelling with the Prime

Minister.. the Prime Minister

is being feted in the United

States and he is clearly

enjoying it. One thing he won't

be enjoying is being dogged by question abouts his Defence

Minister. After allegations his

own department was investigated

his behaviour over a

relationship with a Chinese

businesswoman he has now been

forced to apologise for not

declaring two trips he took

while in opposition. Those

trips were paid for by that

businesswoman. It's understood

the director general of

intelligence is looking into

the behaviour of Defence and

the Prime Minister isn't

pleased with his Defence

Minister. I'm disappointed that

he did not make these

declarations back then, I

expect better of had Mr Fit

Gibben in the future. It's

entirely aprocht the acting

Prime Minister has demanded an

apology of him and that he has

ren Kerred that apology. -

rendered that apology. Mr

Fitzgibbons Gibben is doing a

good job as Minister of

Defence. It's a big reform

program and he is doing a first

class job. The Prime Minister

has laid down the markers for

what he sees as success at next

week's meeting of the G20 in

London, the 20 major world

economies meet ing to discuss

the global economic crisis. The

Prime Minister says if that

meeting fails so will the world

economy. That's Chris Uhlmann

reporting from Washington.

Withth G20 summit in lon.d

just days away there are clear divisions emerging between

Europe, United States and

Australia. The

Australia. The the

Vanessa Rossy is a senior

research fellow in the international economics program

at chatham House. She joins us

from London. Good morning. Good

morning. It's an interesting

description by the cheque

Slovakian President of the

stimulus approach that seems to

be accepted as just general

wisdom amongst most Western

nations, tell us about the

disconnect here in thinking

between the two two sides of

this argument? It's quite

interesting that what it had

seemed rather a bore ing but

predictable move into G20

meetings with probably the

expected sound bytes coming out

the other end has suddenly

become a little more enlivened

because of these odd break-outs

of spats. This issue with

of spats. This issue with the

Czech Republic I think has been

simmering for a while but is

also overshadowed by the fact

that while the Czechs are

supposed to be in the EU

presidency seat the Czech

government has just fallen. So

we're going to have a very odd situation where somebody will

be a sort of interim head

there, but is is - has in the

really got a function as even a

head of State. I think some of

these noises coming out of

cheque Slovakia are sour grapes

over lots of things going on

and why Eastern Europe perhaps

feels like it wasn't consulted

enough or hadt hasn't had

sufficient attention paid to

its own problems or that it's

seen as part of the basket case

of Eastern Europe. There are a

lot of grievances boiling

there. This has come out in

terms of these sorts of

statements.. on top of of that

we've got this outbreak of

concern with the UK of this

strange events of while Gordon

has been talking to Obama, out

comes the manager of the Bank

of England not exactly giving

him a vote of confidence. What

does America need from Europe

in this meeting?

in this meeting? We should

firstly think what does the

world need. Certainly one of

the more positive things that's

probably going to come out are clearer statements about how

much funding will be put on the

table for the IMF to help bail out countries under

stress. This will probably be

helpful to the emerging market

developing world. In terms of

what America itself needs, it

was really hoping to get more

commitment from bigger fiscal

programs from a number of

countries, and in particular

I-he ink Europe as one of the

contributors. It really doesn't

seem to be happening in terms

of this particular dialogue. It

lookses as if the US is turning

to looking at what else it

needs to do for funding, look

after itself and perhaps this

is in the going to be quite

such a cosy club for them and

what they expected in in terms

of fiscal support. If I can

characterise it generally - is

that European unwillingness or

is it simply an inability to

contribute in that way? Because

many European countries as

you've been saying have been

doing it really tough? It's a

mentionture of things. The

Czech Republic statement maybe

goes a bit far in saying that

fiscal laxity is the road to

hell but you have to understand

there is quite a broad European

opinion, not perhaps UK, but

European opinion which has some

sympathy with this view that

simply spending more and more money, especially in way that

is they don't necessarily feel

is productive is a waste of

taxpayers' money and isn't

really going to help us out of

that thcrisis. That Moi may not

be entirely correct but that's

an important view, not only

amongst the politicians but

also amongst voters in

countries such as Germany.

German elections will be

can'ting up next year answer German politicians will pay

attention to that. In terms of

who idea put money on the table unfortunately Germany really is

the key to this, not many other

countries have the ability to

pay out more than they're

already paying. We can see this

problem breaking out for the

UK, there is clearly stress in

the southern countries answer

to some extent in Eastern

Europe. The Germans have to be

the key to unlocking some

the key to unlocking some

further money. Realistically

even if they put more and some

other countries joined in the

maximum you're likely to raise

by this exercise is perhaps 2,

$300 billion at most. In this

case what is it - about half a

per cent of world GDP. This is

not going to be a sufficiently

big stimulus to really rescue

the US economy. Finally, our

Prime Minister crut has been

repeatedly attempting to warn

about the danger threatening

develop ing countries. It's

going to be very hard to get

Europe's attention on that

particular issue, isn't it I think they'll probably feel

they've done quite a lot on

that particular front by

putting together this package

which is just swefr swr over

$100 billion which is new aid

for new bem ber States and

Eastern European countries to

help finance problems. They've

already put out some of this

money to help Romania. I think

on that score the news is

somewhat better than the news

in terms of the fiscal stimulus

in say, Germany or France and

the impacts on the US. Not

quite so gloomy. But I think

Australia is also clear you

have to have warnings of the dangers of this grave recession. recession. It's almost

impossible for countries to

avoid it. At least for

Australia you have extreemgly

low government debt. Many years

of surpluses, I'm rather

surprised that the Government

in Australia hasn't been

putting out larger fiscal

packages to help out. We've had

much criticism here that the

fiscal packages are too large,

the opposition thinks it's

racking up surpluses we can't

possibly sustain. The racking

up surpluses or sits? Deficits,

I'm sorry, yes. I think having

had a long period of about 10

years or more of surpluses and

with government debt stock way

below 20% of GDP, surely

Australia is very well placed

to help spend its way through

this recession. It's a cyclical

problem. The commodity prices

and trade will turn up in a and trade will turn up in a

couple of years. To get

yourself from here to there

it's probably a usefulle thing

to look at what you can do for

yourself. I don't pretend that

the Australian economy can

really pull the rest of the

world. You need somewhere the

size of China to do that. We've

got our fingers crossed that

will happen. Indeed. In other

news - the navy has found 24 of

the 31 containers lost from the 'Pacific Adventurer' during

Cyclone Hamish early this

month. The containers filled

with fertiliser were found on

the sea floor not far from

where they from were lost. The

Queensland government is

seeking compensation from the owners of the 'Pacific

Adventurer' for the oil spill that polluted kilometres of

coastline. The Federal

Government says it will make a

formal statement next Friday in

support of the UN existing support of the UN existing

declaration on the rights of

indigenous people. The former

Howard government was one of

only four naigs to oppose a

deck lar aig at a 2007 UN

General Assembly. It was an

election pledge of the Rudd Government to declare

Australia's support for the

document. The US Treasury

Secretary Timothy Geithner has

announced plans for a new

single regulator to oversee the

American financial system. It

American financial system. It would regulate financial

institutions. It is designed to

prevent the kind of systemic

risk-taking that has

contributed to the global

financial crisis. British

police have launched an

investigation into claims an

MI5 officer colluded in the

torture of Guantanamo detainee

Binyam Mohamed. Mohamed last

month became the first prisoner

to be transferred from the

Guantanamo Bay detention camp

under President Barack Obama.

Mohamed claims a British

intelligence agent provided

questions to interrogators who

tortured him in Morocco. At least 20 people have been killed and 35 others wounded by

a car bomb in northern bag cad.

4 children and 3 women were

among those kill ed according

to officials at two local hops.

The last occurred in the overwhelmingly Shi'ite district

of Shahab. US Secretary of

State Hillary Clinton has vowed

America will stand shoulder to

shoulder with Mexico in

increasingly desperate struggle

with powerful drug cartels.

(gun fire) Mexico is at war

with itself. The heavily armed

drug cartels are taking on the

police and the army and often

winning. More than 7,000 people

have been killed in the last

year. Many brutally. Earlier

this month five eskis were left

on the side of the road. Inside

each was a human head. This man

is accused of dissolving ght

victims of one cartel in acid,

he's known as the stew maker

and apparently admitted

disposing of 300 bodies. Drugs

are pouring across the border

into the United States. And

weapons are flowing back in the

other direction. Violence is

spilling across the border too.

There have been 700 kidnaps in

Phoenix in the last 2 years. Phoenix in the last 2 years. This texts-based armoured car

company has seen a huge surge in orders from nervous

Americans. We have a lot of

James-bond-type options. The

smoke screen. Road tacks.

Electric shocking door handles.

The spike in violence is

alarming politicians as well as

citizens. Senators grilled the

homeland security secretary

this morning. The Mexican this morning. The Mexican drug

cartels are engaging in brutal

answer inhumane tack tirks -

tactics the kind that we on

this committee, the secretary

and the American people have

come to expect from terrorists

and that's exactly what they've

become. The Texas governor

wants the admin station to send national guard troops to the

border, and the President is

considering the request. In the

agents meantime he's deploying more

agents and helicopters, as $700

million surge. We are sening

millions of dollars in

additional equipment to provide

more effective surveillance, we

are providing hundreds of

additional personnel that can

help control the border, deal

with Customs issues, we are

co-ordinating very effectively

with the Mexican government and

President Coldaron

President Coldaron who has

taken on an extraordinarily

difficult task in dealing with

these drug cartels that have

gotten completely out of hand.

It's also deployed his

Secretary of State. Hillary

Clinton touched down in Mexico

with the drug war at the top of

her agenda. The criminals and

king pins spreading violence

are trying to corrode the

foundations of law, order, friendship, and

friendship, and trust between

us and that support our

continent. They will fail.

Hillary Clinton bluntly acknowledged Americans are contributing to the problem,

they're supplying the guns

abuying the drugs. I have

discussed with the secretary

and with the President what the

United States can do to reduce

the demand for drugs in our own the demand for drugs in our own

country and to stop the flow of

illegal guns across our border

to Mexico. (gun fire) A

Pentagon study warns the

situation is so precarious

Mexico could become a failed

State. The Mexican government

bristles at those suggestions.

It's put a $3 million bonty on

24 drug Lords and a $1.5

million boupy on their

Hillary deputies. Just hours before

Hillary Clinton arrived military police paraded one of

the country's most wanted drug

smugglers before the cameras.

The Obama administration is

discovering one of its most

serious foreign policy

challenges is a lot closer to

home than expected. You're

watch ing ABC News Breakfast.

The top stories - the Prime

Minister says he is

Fitzgibbons after disappointed in Joel

Fitzgibbons after the Defence

Minister was forced to

apologise for not declaring

gits he received from a Chinese businesswoman. Kevin Rudd says

he is sticking by his Defence

Minister saying he is doing a

first class job, the opposition

says Joel Fitzgibbons should

resign. The navy confirms it's

found 24 of the 31 contairns

Queensland government is filled with fertiliser. The

owners of the 'Pacific seeking compensation from the

owners of the 'Pacific

Adventurer' for the oil spill

that polluted kilometres of

coastline. The US Treasury Secretary Timothy Geithner

unveils plans for a new single

regulator to oversee the

American financial system, the

new entitiy would regulate financial institutions,

services and markets as well as

hedge fund and derivatives. The

measures are designed to

prevent the kind of systemic risk-taking that has risk-taking that has contributed to the global

financial crisis. For look at

the National papers we're

joined by Gideon Hague from the

monthly rr. You have the

pleasure of discuss ing fits

Gibb.-gate. Do we give it a

'Gate'? Has anyone called him

smamer? The first thing that

struck me was what's not

leading the front pages is "am

Rudd goes to Washington". One

would imagine normally the

Prime Minister shaking hands

and oozing ungs on the world

stage that he loves so well

would be the stock of front

page stories (ooze ing unction)

I imagine he won't be particularly pleased about having been displaced

having been displaced by a

ministerial misadventure but we

do have the Minister snared in

spy row. It's not exactly

Profumo. The spying part of the

story didn't really go any

where yesterday in the sense

that the Defence Department

denied that there was anything

like the kind of haunting of - or following of the or following of the Minister

going on that was alleged in

the Fairfax papers yesterday. But. Let's get the 'Sydney

Morning Herald' up, the front

page and look at that. Yes,

indeed. That's where we've gone

now," she paid for China

trips". She, the madam Midas at

the bottom this have row that

Who is also pictured on the

lamb front of 'The Age'. Gough blit

lamb - Whitlam is there as

well. Is he implicated? My

word, this is getting serious. The intelligent lay

person would be forgiven for

wondering exactly what is wrong

with a Minister having contacts

with a foreign national that

might be associated with a

government that we're meant to

have good relations with. Now

the story has gone to the level of failure to

disclose. Undeclared

gifts Which is the cardinal sin

these days. It seems sometimes

you could bury ten people in

your back garden and - as long

as you disclose tted it would

be OK. Of course, now the poor

old Minister is perceived as

damaged goods. I still don't

have a strong sense from these

stories exactly how Fitzgibbon

is said to have antagonised his

department. He has laid claim

to the biggest overhaul or

reform in the history of

Australian Defence. But so far

as I can see in the background

features all he seems to have

done is curtail a few perks

among members of the

ministerial defence chiefs.

The purchasing of the joint

strike fighters was apparently

a big point of tension between

him and the decent. -

department. If you're right, if

this is what it boils down to

tension or resentment even

between a Minister and his

department this is a remarkable

way for it it play out. It does

speak about our ambivalence

about our relations with China,

are they friend shall are they

foe? Are they sinister people

from the east? There is a story

in page 17 of the 'Herald Sun'

rr today, quite an interesting

story, 'Herald Sun'

investigation looks to have

been carefully leaked by Joe been carefully leaked by Joe

Hockey. China pumps billions

into Aussie rescue. Which is

about the high proportion of

Australian bonds being bought

by the Chinese in recent weeks

it does smack slightly of

ingratitude. "They buy our

bond, they give us suits, we

just give them just give them back." It is

slightly strange story. I'm

struck by twha what this might

reveal about the way in which

we interact with China and the

way that we feel slightly

menaced by China at the same

time in the way we hope they

buy our mineral resources and materials. It's no surprise

China is coming to the rescue

in that regard. China have the

ammunition in their locker. If

you think about the timing of

this story in relation to Kevin

Rudd's quite inexparticularable

secrecy about the dinner he had

with the sort of the Head of

Chinese propaganda here in

Australia, there needs to be no

secrecy it seems to me about

the Prime Minister sitting down

and having dinner with anyone

from any friendly nation. It

does come together in the way does come together in the way

you describe about a continued

anxiety and nervousness about

proximitiy to a nation ta that

at the same time we hope is

going to drag us out of this

crisis. That's the subject of

an editorial in the 'Herald

Sun', quite a Pitty editorial

today - Pithy. Thnch story is quite

quite a Sydney story as well as

a Melbourne story. It does seem

the fascination with the bikie

gangs in Sydney, the

'Telegraph' leads with a story

today on the arrest of the

unfortunate head of the

Notorious outlaw gang, named

after the girl band - I guess -

who has been caught with not a

huge drug making apparatus but 26

26 Xanax. I guess the

'Telegraph' will be - has been

looking on in envy writ the

'Herald Sun' rr and they will

view this story as their own

version of 'Underbellly'. I

have been struck by how

Notorious, the ban Didos and

Brothers for Life all sound

like boy bands or girl bands. I like boy bands or girl bands. I

accept that description.

Anti-anxiety medication. It's a

stressful job. If I was in a

band like that I'd be

compreetly stressed out. Very

amusing that. Return ing to the

big story of the day and its conebs to Kevin Rudd. How have

you been viewing Mr Rudd's trip

to Washington? He seems to have

been received reasonably warmly

and had his views heard. He

does, I think that's because

the Australian economy seems to

have performed relatively well

compared to others a round the

world. Ing there nothing really

meaty that's come out of

it. That's right but there was

never going to be anything of

substance. I was amazed by the

mileage Kevin Rudd got, that he

was the guy who called the

meeting. Kevin Rudd does

specialise in meetings and as

den Ness Shanahan points out in

'The Australian', it's the

implementation that lags. There

is going to be more and more

attention paid to that as the

second year in the Rudd

Government starts. Here is Paul

Kennedy with sport. Still

propped outside gate 1 here, a security guard is just behind

me. We're awaiting the arrival of the drivers and of the drivers and their teams

in the next half hour. All of

them turn up not quite knowing

what they'll get from the F1

season ahead. There was a big

game of football between

Carlton and Richmond last

night. Ben Cousins suffered a serious hamstring injury.

Richmond were beaten by 8 p

points. - 83 points. For

Richmond it is a sad day, they'll have to

they'll have to reassess. To

the United States - Australia's

most exciting basketball

prospects seems to have played

his last home game at the St

Mary's College basketball.

Patty picked a great time to

shoot 23 points to play a great

game in the national

invitational tournament. He

called all his school mates and

supportsers from the school on

to the court to celebrate with to the court to celebrate with

him. Some incredible pictures.

They're so grateful Paddy Mills

has been with them for a couple

of yeergs. It seems he will

nominate for the NBL draft. His

season coming to an end still

got oner two games. To the

Socceroos - they're relaxing

there in Sydney, in a week long

camp ahead of game against

Uzbekistan next week. If there

is a more relaxed sparting team

in Australia I'd Reich to see them. The European stars have

got together. It's a luxury for

them to spent a week together.

Pim Verbeek knows his squad

could win this game then

qualify for its second

consecutive World Cup finals

next year. Uzbekistan have sent

a warning saying they're

bringing their strongest team

over here next week. In the

meantime they have to play

Qatar in Tashkent on Saturday night. night. They won't have the preparation the Socceroos are

having this time around: They

don't stand a chance! (Virginia

laughs) (Paul loves) Now with

the weather, daylight savings

ends this weekend?. It does for

Western Australia. The rest of

the country have to wait till

next week. A trough is moving

with a front bringing a

southerly ji change. Another hot day hot day if Western Australia

with the north-easterly winds

before the trough makes its way

inland. That should bring some

cooler conditions to the West

Coast and the high will keep

most of south of Victoria and

also South Australia fairly

clear while the westerly winds

will main thain those showers

in Tasmania. The band of cloud

gradually moving north in the

trough will cau