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Business Sunday -

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(generated from captions) a ultra-mod parenting room And hardly complete without spacious, wireless, officeless. workplace of the future - Welcome to the white collar to business and to workers. and just how important it is the office Also this morning, assumption to make, yes. I think that would be a decent and Westpac? between the Commonwealth that there were informal chats were considering getting together, If the ANZ and National he was having talks with Westpac. the ANZ, just as the National was eyeing-off David Murray reveals that, And retiring Commonwealth Bank CEO to be part of the plan. a major accounting firm took and the extraordinary risk first super bank, what would have been Australia's the numbers and planning behind Edwin's secrets have leaked - 6.5 years on, to take over the ANZ. by the National Australia Bank the secret plan on 'Project Edwin' - Today, our special report Welcome to Business Sunday. I'm Ali Moore. Good morning. This program is captioned live.

on Friday night, at gunpoint from his family's home The 15-month-old boy was taken of a toddler in the city's south. over the alleged abduction in Sydney Three people have been charged for victims of the tsunami. and would allow reconstruction aid to 29 years of disunity in Aceh The agreement hopes to bring an end for decades. where they've lived in exile from Sweden, The rebel leaders arrived in the Indonesian province of Aceh. aimed at ending the conflict to sign a peace agreement in Finland Indonesian Government officials Separatist rebel leaders have joined to Sri Lanka's fragile peace process. the killing is a major setback Government officials have warned behind the assassination. The Tigers insist they were not to justice. to bring the perpetrators will leave no stone unturned The government of Sri Lanka controlled by Tamil Tiger rebels. patrolling territory with helicopters and military jets the capital, Colombo, for suspects, Soldiers are now scouring of the country's Foreign Minister. following the assassination a state of emergency, Sri Lanka has imposed for his former speech-writer. when he left his wife Mr Lange also made headlines in 1989 you know? he was king of New Zealand, Oh, it made him as though REPORTER: In what way? Power altered him. his own mother. including, at one point, But he had his critics and waters. from New Zealand's territory and nuclear-powered ships by banning nuclear arms when he defied the US and its allies in 1985, He cemented his place in history from 1984 to 1989. was Labour prime minister of New Zealand's anti-nuclear policy, considered the architect The larger than life leader, at the age of 63. has died of kidney failure David Lange Former New Zealand prime minister Good morning. Thanks, Ali. First, the news, with Helen Kapalos. the continuing dramas at Telstra. As well, we'll look at and a hang-out called the 'hub'.

Jones probably wished they hadn't. the players returned. A hour half later, the rain came again. Moments after that feat was achieved, have avoided the follow-on. COMMENTATOR: And Australia Test score against England. while, for Warne, it was his highest for plenty of punishment as Giles came in It proved a costly mistake a stumping chance. Geraint Jones fumbling He also had some luck - on their toes. keeping bowlers and umpires to bat again, Warne's next aim was to force England His half-century reached, to frustrate the English attack. Shane Warne the key as he continued when the weather finally cleared - leaving 31 to avoid the follow-on after a scoring error was discovered, to the Australian total Four runs were added for 5.5 hours. kept the sides in the dressing room persistent rain in Manchester their advantage, With England poised to drive home were 7/264, still trailing by 180. At stumps, the tourists Shane Warne is unbeaten on 78. the follow-on. Australia managed to avoid but, in that time, Just 14 overs were possible at Old Trafford. the third day of the third Ashes Test and the English weather has dominated To sport, while they deal with the tragedy. from her and her 11-year-old brother has asked the media to stay away Laura, Mrs Korp's 27-year-old daughter, committed suicide just hours later. of trying to kill his wife, Her husband, Joe, who was accused Maria Korp was cremated on Friday. of their parents. as she and her brother mourn the loss has appealed for privacy 'woman in the boot' victim The daughter of Melbourne's They'll appear in court today. including kidnap and break and enter. with a range of offences, have all been charged and a 21-year-old woman A 40-year-old man, a 26-year-old man, safe and well yesterday. but was found

And I'll be back at 8:30am with an update, but now it's back to Ali. Thanks, Helen. Back in a moment with the revolutionary technology that could solve all of Telstra's problems in the bush but it's being closed down. The aim is to provide rural areas with high-speed voice and Internet services for the same price as normal ADSL or ISDN. around the country: Taking a look at the weather that. COMMENTATOR: He goes, bang, cop to win the finals. must now win their last two games survive a late charge by Port, who second placed Crows had to The And, in AFL games overnight: with the 2-1 try victory. 5-game losing streak The Roosters halted their miserable with a win over Cronulla. their slim play-off hopes alive And the Roosters kept 22 to 10. Melbourne defeated the Warriors a 29-16 victory. to allow Souths to record after they let slip a 12-0 lead is effectively over and the Raiders' season To Rugby League, and Tri Nations hopes. to their Bledisloe Cup Rokococo delivered the knock-out Australia was on the ropes when with 30 unanswered points. to blow the Wallabies away from a 13-0 deficit The All Blacks recovered in Sydney. with a win over Australia last night the Bledisloe Cup New Zealand has retained In Rugby Union, Chris Hodgkinson, National Nine News. on his first Test century. who has his sights set Another life for Warne,

It was another big week in the profit reporting season, with mixed results. Telstra unveiled record numbers, but gave what amounted to a profit downgrade. Revenue from its fixed line business is falling faster than ever, and growth in higher margin areas, like mobiles, is easing. At the other end of the spectrum was News Corp, with a 40% jump in net profit to $2.7 billion, surprising shareholders. News Corp also raised its dividend for the first time in more than a decade. Elsewhere, an expansion into bottled water and fruit juice paid off for Coca-Cola Amatil, whose interim profit climbed 17%, while higher export coal prices are helping Wesfarmers. Telstra's $4.4 billion profit this week failed to calm markets or the government's nerve. But, as Ross Greenwood reports, one of the very answers Telstra and the government are seeking is about to be discarded for a lack of funding. Sol Trujillo sparked the political debate when he questioned funding of rural services. But this week he, his chairman Donald McGauchie, and Sensis boss Bruce Akhurst had to quell the flames with PM John Howard. The debate did nothing for Telstra's share price - well below $5 for the first time in months, and wiping almost $3 billion off its market value. The profit warning for 2006 on the heels of a $4.4 billion profit did even more damage and it even brought this from the Treasurer. If legislation passes to allow us to resolve the ownership question in relation to Telstra, the Government will make a decision based on the commercial outcome. Those in the bush don't care about economics, or politics. They just want a good phone service. The sale of that last 5% or whatever of Telstra was the biggest breakthrough we ever had here - when the National Party stood up for its constituents is relatively affordable. The actual research we are doing will cease work next year. for Satellite Systems the Cooperative Research Centre to completing their study, But, despite being so close to towns right across the country. high-quality communication services capable of providing a satellite broadband network have been working towards a group of Australian scientists For the past seven years, of $1 million per year. is about to be axed for want this technological solution at the forefront of providing one research organisation is taking place, is, at the same time this debate What does seem totally bizarre, but it may cost a whole lot less. It may cost $5 billion, This may cost $2 billion. telecommunications service. to provide a universal advanced technology Clearly, Australia needs to work with them in some way. We'd be very happy and we respect that. that they do not wish to sell perfectly clear, the founders, and they have made it We have had conversations with them is total invention. made an offer for Skype RADIO INTERVIEW: The report that we free Internet telephone service. for Zennstrom's 18-month-old he had offered US$3 billion this week denied reports Just as an aside, Rupert Murdoch them out in the transition. So I think we are actually helping for phone companies. from telephony to broadband access of revenue streams so there is a transition goes away from them, so it is always a big revenue source to charge for phone calls, no phone company will be able and if you fast-forward by 10 years into free that telephone calls are turning It's obvious to me via the broadband service. is free phone calls the natural follow-up Once there is broadband in the bush, at a reasonable rate. that's broadband Internet access That's one of them - That stuff up there. from that sale of the 5%? actually get And what sorts of changes did you that we now have got. and forced the changes

mobiles and broadband and so on - new telco world - in the highly competitive having to try to make money Telstra's business risk The market has well and truly pinged ..the escalator down. straight for the escalator... only to see them head paying one price for shares in T3 by another T2 - there's no risk of being ambushed on at least one point - Telstra shareholders can rest easy Existing and any future here's Terry McCrann. and with shareholders in mind, And, still on Telstra, Ross Greenwood reporting there. off the ground and into production. in hopes of getting the study for investors the team will now have to search But without any future funding, to drive the cost down. then, hopefully, we'll be able effectively and then use the satellite in, say, in a wireless network, a number of users in some way, And if you can aggregate of providing the service. a cost-effective way what you have to find is population, particularly with the dispersed a very large geographic region, that you can really cover is one of the only ways while satellite communication is that, The whole driver behind this of putting them together. but it uses a smart way the local wireless technologies - the satellite link, conventional wireless technologies - basically uses what are fairly on satellite broadband The work that we're doing The principles behind it are simple. or remote communities might need. that people in rural range of different services in being able to provide the whole it'll make a major breakthrough with this type of technology, there are ways forward If we demonstrate bottlenecks in metropolitan areas. as the satellite link will bypass than city connections It may even be faster as normal ADSL or ISDN. for the same price and Internet services with high-speed voice The aim is to provide rural areas Minister Brendan Nelson. of Education, Science and Training The scheme falls under the direction proposed multibillion-dollar fund. could alleviate the need for the which, if successful, $1 million a year for research In other words, a year for about seven years. was of the order of $1 million which regrettably didn't get funded, within the CRC, The program we proposed

to takeover a competitor. assessing NAB plans from the Bank's 34th floor, The consultants will work top banks. involving some of the nation's an extraordinary tale of deception After the break, or a George Trumbull. whether he hired a Paul Anderson Don McGauchie is The question for Telstra chairman to sell the rest of Telstra? is it now too late or no Barnaby Joyce, whether Barnaby Joyce for the government is, The interesting question of $5.25 in T3. getting the nominated price even more difficult even though it makes It is an offer the PM has to decline, that pipe to your wallet. its core lucrative monopoly - it wants to be allowed to maintain In return for this 'spend', the proposed $5 billion, Yes, Telstra will spend to hot-wire the bush. by offering to spend your money to cover these risks New CEO Sol Trujillo made a big play Butch Cassidy ones? What will be the rules going forward? the political and regulatory risk. The market has also pinged and make it wider. and it wants to keep the pipe to your wallet Telstra sees it as its pipe as their basic link to the world. fixed phone Most Australians would see that essentially your home phone. in the old telco world, even outrageous, monopoly profits while sustaining its extraordinary,

Well, now Business Sunday has obtained scores of leaked documents merging with Westpac. and admits he was once looking at firmly back on the agenda, banking policy has put the four pillars who we'll be speaking to shortly, David Murray, Retiring Commonwealth Bank chief Uncle Tobys Plus. FUNKY MUSIC plus apricot, plus apple... Hi. Could I have the wheat germ, plus almonds, plus sultanas... Yeah, could I have bran, plus dates, plus almonds... I'll have the wheat flakes,

that lay bare 'Project Edwin' - the code name used by the National Australia Bank and the consultants it hired to help plot a merger with the ANZ. But, as Nine News political correspondent Tim Lester reports, where the documents are most telling is in what they say about the relationship between big business and audit companies. Edwin was born in Melbourne, a child of the chummy, dependent relationship between Australia's biggest bank... Banking is such a dominant industry in Australia. ..and the accounting giant that serviced it. As long as we've got such concentration in the auditing industry, the potential for conflicts must inevitably increase. 6.5 years on, Edwin's secrets have leaked, the numbers and planning behind what would have been Australia's first super bank, and the extraordinary risk a major accounting firm took to be part of the plan. It's the end of a long winter. The home of Aussie rules has surrendered its trophy to an outsider. COMMENTATOR: As Adelaide's joy bubbled over in a mighty 35-point thumping. The tech bubble is expanding, and business is bullish. The Howard Government has been re-elected, promising a GST. At the big end of town, some are betting a government that can win with a new tax will be bold enough to clear the way for big bank mergers. So there was a perception around big business, which obviously tends to support the Coalition, that the political climate was much more favourable. So issues that had been on the backburner came on to the frontburner. Like four pillars? Like four pillars... Ian Rogers writes a web based banking industry news sheet. In 1998, he was the 'Financial Review's banking columnist. Four pillars was starting to emerge as a talking point around the fund management scene. On an October afternoon, 11 consultants make their way to the National Australia Bank. There, bank executives brief the newly hired team on a job of such importance to NAB's departing chief executive, Don Argus, the bank will more than double spending on consultancy work with the team's employer, and spend almost $8.5 million in the coming year. Don Argus was passionate, but so, too, was his board. The consultants will work from the bank's 34th floor assessing NAB's plans to take over a competitor, making sure the bank's numbers stack up and keeping their work absolutely confidential. Now an anonymous source with knowledge of the project has given Business Sunday more than 1,000 pages, records of the assignment they christened Project Edwin. Unless we are convinced that consumers will benefit and that competition will be enhanced, we're not going to be allowing any of the big four to merge with each other. As its second term began, the Howard Government backed former Treasurer Paul Keating's so-called four pillars policy, but left a little wriggle room. Some in the financial community want the policy relaxed and it's one of those policies that remains under constant review. In public, the market thought it saw cracks in the pillars. Bank stocks surged. The Edwin documents show it was now well-founded speculation. In private, Don Argus's pet project pushed ahead in such secrecy, NAB staff were warned off the consultant's work area with a sign suggesting their project was to protect bank software from the Y2K computer bug. Such secrecy, the consultants used false names. NAB was used only as Lightning. in 1998. they note Rain was bank of the year with code names in detailed reports, And in a lesson on the problem and earmark those likely to close. list all of Rain's branches They quote Rain's annual report, Its takeover target was Rain.

Spokesman Paul Edwards says: It told us: We asked ANZ. It told us: We asked KPMG. of disloyalty. then there could be no allegation their informed consent, If the ANZ had given that position. and probably have resigned to their target bank client that they were doing so they should have fully disclosed If they had taken the assignment, role ethically and in a court of law. in which KPMG could defend its dual say there is only one circumstance John Glover and Tony Tinker The defence is informed consent. and private litigation. that they must be open to both state I would have thought conflict of interest. KPMG engaged in a breathtaking secret takeover assessment, have reacted to details of this experts Judging from how they and other the assignment. They should not have taken Tony Tinker. and author on accounting ethics and New York accountancy professor and Melbourne barrister John Glover Among them, Monash law professor of this nature. allowed them to entertain a conflict their ethical position I'm surprised that KPMG would think and governance experts. with numerous corporate law Business Sunday has discussed Edwin this work. that KPMG could have seized as grasping It strikes me, I must say, auditor of the ANZ. KPMG was also, and still is, and an astounding choice. was the bank's auditor at the time - international firm the highly respected It was both a logical choice - was from KPMG. The team of consultants and that is ANZ Bank. Well, only one bank, How many banks fit that profile?

regulator to settle a claim from American KPMG paid almost $30 million Earlier this year, to make a fast buck. to find any way they can because they are market entities and on these firms both within these firms There are real pressures the company make more money. in this business of helping partners because they've become effectively has gradually morphed from their client these independent accountants The fine line that separates 99% of America's corporate revenue. now audit all of the Fortune 500 and that just four major firms There's the worry though doubts remain. into a separate company, has now shifted its consulting arm and internationally KPMG in the US The result - profound changes to improve audit independence. has started a revolution of sorts in the Enron collapse Accountant Arthur Andersen's role work, at least in the public eye. accounting firms and their clients changed the way Edwin has actually completely are on the nose. the big four accountants watchdog CorpWatch, to the California office of business across the US Tony Tinker's Manhattan home, From accounting professor left off. in the way that Arthur Andersen KPMG have taken up in some regards a more recent chequered history. their affiliates have But here in the United States, their rolled gold reputations. the accounting giants jealously guard In Australia, of this nature. which extinguishes actions a Limitation of Actions Act After six years, there was until just a few months ago. the firm stayed exposed right up And, according to John Glover, Australian clients. from one of its most crucial to a hostile damages claim KPMG was legally exposed and a lot of money at stake. fleets of barristers injunctive proceedings, Then there could have been gigantic

the world economy to its knees. that has nearly brought in the history of world economics of the perhaps the only profession of being a member I have the dubious distinction professionally qualified one. I'm an accountant and a and thousands of people as well. the economy it is an issue that can impact an individual's issue, More than just way beyond any single case. have an urgency for Australia But he and others argue standards for taking on Edwin. He too is deeply critical of KPMG voices on audit standards. is one of America's most respected Colorado based Lynn Turner, Securities and Exchange Commission, Former chief accountant to America's and perhaps Canada have done. like the UK and United States what some of the other countries l behind you're still probably somewhat at this point in time And my sense is that the necessary reforms. we're also yet to tackle KPMG controversies the Andersen and more recent that because it has escaped Here in the US there's a view with Edwin. in Australia appears to have done Which is exactly what KPMG their independence. that might have compromised for example, non-audit services - were doing things other than audit - because auditors There was also a concern that in US businesses. than the cosy auditor relationships approach to accounting from a much more independent-minded has benefited Bill Palmer insists Australia that occurred overseas. the systemic failures We did not have anything like through their institute. The accounting firms speak to management. concern the auditors were too close If you look overseas, there was a dodge $US1.4 billion in tax. telecommunications giant WorldCom to help clients wipe the failed illegal tax shelters Now the firm has admitted selling Commission. the Securities and Exchange

to Project Edwin, the four pillars and bank mergers. In terms of responsibility to shareholders, you've got to get an act on that, and understand what you might do. In a moment, Commonwealth Bank CEO David Murray, but here with a news update is Helen Kapalos. Former New Zealand prime minister David Lange has died of kidney failure at the age of 63. He had suffered a rare blood disorder for several years. The English weather has dominated the third day of the third Ashes Test. Just 14 overs were possible but, in that time, Australia managed to avoid the follow-on. And New Zealand retain the Bledisloe Cup after a come-from-behind victory over the Wallabies in Sydney. The loss also leaves Australia's Tri-Nations hopes in tatters. More news in the 'Sunday' program at 9:00am, Ali. As we saw in our report on Project Edwin, David Murray responds And next on Business Sunday, investigation. in part two of Tim Lester's KPMG and the ANZ next week We'll hear responses from the NAB, that have happened over here. or implosions to the same kind of implosion to be vulnerable the Australian economy is going and go beyond the US situation, Unless they do tighten up has now left our economy exposed. lack of any real reform Tony Tinker says Australia's

the National Australia Bank was looking at taking over the ANZ. Now retiring Commonwealth Bank CEO David Murray defends the four pillars policy, but also admits he was looking at merging with Westpac. David Murray is speaking to Ross Greenwood. Can you explain why you think there should be real precautions about allowing the big banks to merge? Banking is absolutely critical to the functioning of the economy. Customers in their skin know that. So it's not possible for four big banks to walk around town saying, "We think there shouldn't be a four pillars policy." You've first got to come up with some arguments that would carry your customers and carry the community, and that's not been done. It may well be beneficial. I don't know, because nobody has put down the set of arguments that demonstrates why it would be. That is in an environment where the dynamic competition between the banks over the last decade has caused radically reduced margins and radically increased value to the whole community. 'Project Edwin' for example, a merger of the National and ANZ, was clearly on the agenda. You must have been making your own plans at that stage? Well, yeah, we all have project names and we have another trick in the Commonwealth Bank that part-way through the project you change the project name. But, seriously, the issue was if you think that a change in policy might occur, and it doesn't have to be a big probability, but if you think it's possibly on, and there's four and two down the street might get together, in terms of responsibilities to the shareholders, you have you to get an act on that and understand what you might do. you have to get an act on that and understand what you might do. So it's more the tension of something possibly happening that drives those behaviours at those times. That does not mean that any of these proposals came close to fruition. I believe that none of them would ever have got up. But you're saying it would not have got up because of the policy, not necessarily because of the willingness of the banks, perhaps, to try to strike a deal? No. There's a fear factor. You did not want to be left out if all the others are in. So, that's the driver of the behaviour of a board and chief executive trying to make sure they protect shareholders' interests. But the other factor is that it's always possible for a foreign bank to buy an Australian bank and whilst people might think that's remote in the world today because of the value of the Australian banks, it's always a possibility. And the Government has to think through four years of that process I had taken the Commonwealth Bank partly owned by the government. That is, the organisation is still in circumstances. was that the similarity as a candidate why people sort of wrote up me Well, I think the one reason Commonwealth Bank had been through? to what you had imagined the in turning that around experience to the one had you had In hindsight, was a fairly similar for the Telstra job. You clearly were a candidate they're trying to create. goes with the value why their form of governance to demonstrate You would ask companies to do everything the same. that asks everybody a governance system So, for mine, you would not have and the governance process. and the culture of the company the leadership style of the business, with a model of the structure and add value to everybody that you want to do to innovate You have to line up the things as somebody else. You can't innovate by being the same we want companies to be different. and wealth in the economy, productivity benefit and growth The issue here is that to get around the place? with so much corporate governance to be a chief executive increasingly difficult Is it now becoming since being CEO. which has changed in your time is the other issue Corporate governance assumption to make, yes. I think that would be a decent between the Commonwealth and Westpac? that there were informal chats were considering getting together if the National and the ANZ based on all this, Can I make a presumption that, customers and the community. that genuinely look after the and people come up with arguments weighed up All of those things should be want our banks to be in the globe. and we have to think about where we of that of all the knock-on consequences

And in the 'Sunday' program today, asks: And our web poll question this week David Murray. Ross, thanks. David Murray, thanks for your time. over a very long period of time! You have double digit earnings single digit on golf handicap. on earning, 'Double digits' is the expression is one. Well, single digit golf handicap and we'll see you back in harness? So, a few months I need to be busy. I could describe it. That's the best way No. I want to be busy. to oversee something? or do you actually want Do you want to run something You must have a gut feeling? with what I want to do. that would be inconsistent at things otherwise I'll start jumping a few months, weigh all that up, until I've been out of the job to wait and I've deliberately decided different things A lot of people want me to do No. I'm not ruling anything out. of a public company yet again? of being the chief executive But you don't dismiss the prospect but I haven't decided yet. Ross, that I could take on anything, Well, I've just got so much energy, that of chairman or chief executive? do you see the next role as being and given your circumstances, Now, given your age to the government. than there was in the proceeds There's been far more value in that in the economy. and a very dynamic business was its value as a competitor of the Commonwealth Bank of the privatisation The biggest value culture change. because that brings fantastic to move on in its new era and allow the organisation from government to get the separation sensibly I think, do what you have to do Trujillo as the new chief executive? have you got any advice for Sol in the past week or so, that have engulfed Telstra So, given the politics in Telstra. and so that was the interest that well between '92 and '96 People felt that I had done and look after the customers. so they can get on ownership from the politics of part-government is to shield the organisation Part of the role in that situation on a set of sensible objectives. the organisation when you're trying to keep that comes with that and all of the ambiguity of part-government ownership,

four-wheel drive, and Toyota's legendary double-wishbone front suspension 343 newton metres of torque, With a huge turbo diesel Toyota HiLux, electronic direct injection Introducing the 3-litre, we're now meant to work? about the way rather more serious or do they say something rather more serious or do they say something But are they mere play things racing cars. they actually have virtual Here, in the reception, changing the way we work. When we come back, has yet to see a single cent. Meanwhile Macquarie's client a staggering 166 times over. a staggering 166 timess over. its money back the bank will eventually earn accounting, Even on the most conservative lucrative in the bank's history. that will go down as one of the most did a deal In March 2002, Rourke and Morris justify success when it's achieved. A huge cheque at bonus time helps law and their credit limits. as long as they remain within the hand by head office to cut deals, Macquarie bankers are given a free again. Macquarie Bank striking it rich

If you have noticed the office that works for them. of how you can design an office equation can get brought into the overall their lifestyle anything that really impacts or sporting commitments - or religious needs or religious beliefs whether they be parenting much more people's different needs, You're able to accommodate on a single floor. has achieved the same and services group, But 5D, a real estate management such as transparency. and core values, to reflect new workplace realities business purpose-built whole blocks Last week we looked at how big Zinn's special report. in the final part of Christopher of the future And now the white collar world Welcome back. TOYOTA THEME PLAYS it's ready for anything off-road. is less, well, officious, it's a deliberate move away from the steam-aged notion of such places being merely for working. The new ethic and appearance of the office is well illustrated by Vodafone's national HQ. Here, in the reception, they actually have he have virtual racing cars. Here, in the reception, they actually have virtual racing cars. But are they mere play things or do they say something rather more serious about the way we're now meant to work? VOICE ON GAME: Wow, that was an awesome move! Oh no! What you have to do is fit in with people's lifestyles. We have to enable people that want to work from home or people that have families or people that want to work long hours or short hours, whatever fits, we don't care, as long as they get the job done. The fit-out at Vodafone's Sydney HQ is in keeping with the new office orthodoxy - no fixed lines, a range of meeting rooms, hot-desking - all reflecting the very values of the mobile character - flexibility and fun. Does it really make a difference? It makes a huge difference. I think people relax. They are not trying to be someone else. They're being themselves. And that is all we can really ask of people at Vodafone. If you're yourself, you can give your best. All these changes weren't just dreamt up by the boss or a jazzy design team. They came from the workers being asked what they wanted and the architects listening. They work in a very collaborative fashion. They are very passionate about their business and very much out there bringing the work back back to the organisation. It meant that we had to look at new workplace settings for them. So is this changing the way we work or is it just reflecting changes in the way we're working anyway? Very much reflecting the changes that are occurring in the workplace, yes. This might be okay for a hip telco but what about a more stayed, but what about a more staid, traditional workplace, like a law firm? I think it's created a wonderful work environment for us. What we've noticed, even in a very short time, is the change in the interrelationship between staff. There are lots of meeting areas for them. The interrelationship has really improved. After their old lease expired after 30 years and Deacons merged with another law firm, they decided to do something quite different and have just moved in. With the client's space, the main aim is for clients to feel comfortable, to want and come see their lawyers. We're a bit like dentists in some respects. You only ever come to us as a last resort. If people feel good about the environment, it will encourage them to come. But being lawyers and, despite the arrival of top notch cafes, the good old office with a door has survived. We had previously had open plan as a trial on one of our floors and, although some people enjoyed that form of working environment, by and large the professional staff wanted a room for privacy, for being able to concentrate for long periods of time, so we've gone back to the traditional office. James Calder, who was involved in Deacons's journey, personally doesn't go for beanbags but admits they do have their place. But as the MD of an international design for change business, he admits there are aspects of workplaces he really hates. You mean apart from beanbags? I guess the money that is wasted, you know, that people just don't think about it. You know, it is a big chunk of an organisation's costs after IT and people, yet it's given no management time at all and no thought. It's just handed to the facilities person. I think it actually needs more management time. Large or small, the new offices are a return to good old-fashioned fresh air and natural light and a chance to use space wisely so communities, instead of walls, grow up around workers. We started off in the beginning of this century with sky scrapers as the real model and now I think ground scrapers are becoming the desired floor shape to help get that interaction between people. By now you may be thinking it's all OK for cashed-up businesses with forward-thinking CEOs, but what about the public sector? Do they get a look-in? Really, it was about integrating two cultures that were quite different from each other and bringing them together and using the space to drive through a new culture. VicUrban, in Melbourne's Docklands, is a statutory authority involved in sustainable development. Their 170 staff wanted to use as much recycled material and as few synthetics as possible, with the end result being compact with not cramped. with the end result being compact but not cramped. We are of a view that sustainability shouldn't cost the earth, so this fit-out has been delivered at around 30% of what you you might at around 30% of what you might expect to pay. So, at under $1,000 per square metre, we've delivered a work space that looks good, that people like and hasn't cost the earth. All these projects cost less than conventional fit-outs. First is, think of your office as a factory and don't allow any of the kind of talk that goes on about offices to go on unless it would make sense in a factory as well. Don't put control of your office in the HR department because they wouldn't do that in a factory. Don't give it to your financial controllers to run on a cost basis because they wouldn't do that in a factory. As well as being an expert on using culture to design offices, David has set up its own experiment in Sydney called the Ark. Here, small enterprises which are non-competing and often complementary, share the space. They can grow or shrink and even mix. The cynics may shrug it off as a fad. But the re-engineering of the office to allow people the sort of space they need and want contributes to productivity and even costs less. Part of this is involving the people, so involve your employees in what sort of workplace they want. Ask them what makes them happy and what makes them deliver and be able to perform day in and out. It doesn't have to be something grand. Give control of that factory to the people, the operational people. If it is a sales area, give control to the sales people. If you can't trust a particular work group with their office space, you shouldn't be trusting them with anything else as well. It's very difficult for an adviser to help a client that doesn't really have much idea of where they're going. The best you can provide is really generic space. I think maybe that is why a lot of offices are generic and boring because they haven't actually thought about where they're going. After the break, the country baker hitting the big time. Why do people keep paying $6,000 to hear you speak? Six thousand plus.

Next week on Business Sunday we're going to introduce you to the amazing Tom O'Toole, the baker from Beachworth with his colourful, if a little course, language. What is sane, what is normal? Really, I bull s**t, bull s**t. Normal what? What is normal? What is sane? Sane or not, O'Toole earns $6,000 a talk on the public speaking circuit. He has written two books and produced two motivational motivational DVDs. I do in excess of 100 paid talks a year. I'm on fire!. It's my passion, it's my enthusiasm. It is an enthusiasm which last reached into the very top of Australia's corporate world. Immediately impressed. You can't help but be impressed by the minute you meet him, by his enthusiasm and just his energy. Tom O'Toole and his motivational madness next week. But that's Business Sunday for today. 'Sunday' is next with Macquarie Bank striking gold. I'm Ali Moore. See you next week. Supertext Captions by the Australian Caption Centre. www.auscap.com.au