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Another Australian soldier dies

EMMA ALBERICI: The head of the nation's defence force says the resolve of Australian soldiers to
hunt down Taliban bomb-makers will only harden after the death of another Australian soldier in

Twenty-five-year-old, signaller Sean McCarthy from Perth was killed in a roadside bomb attack in
Oruzgan Province in the south of the country, yesterday afternoon.

Two other special service soldiers were wounded in the attack and are recovering in hospital. It
brings Australia's death toll in Afghanistan to six and returns the focus to the increasingly
dangerous tasks soldiers are undertaking there.

From Canberra, Samantha Hawley reports.

SAMANTHA HAWLEY: It was signaller Sean McCarthy's second tour of Afghanistan. He was there last
year and was officially commended for his work. This time the 25-year-old SAS soldier had been
working in Oruzgan Province in the south of the country for just a month.

ANGUS HOUSTON: Signaller McCarthy was an experienced, highly skilled and professional soldier. He
was very well respected by his comrades and will be sorely missed by his many friends.

SAMANTHA HAWLEY: The Chief of the defence force, Angus Houston delivering the news of the latest
Australian death this morning. Sean McCarthy is the sixth Australian soldier to be killed in

ANGUS HOUSTON: Each loss is deeply felt by all in the Australian Defence Force. But I know that our
wonderful men and women, still serving overseas are supporting each other and are more determined
than ever to continue with their important mission in honour of their fallen comrades.

SAMANTHA HAWLEY: The Prime Minister, Kevin Rudd spoke to the Chief of the defence force from Tokyo
where he's attending the G8 summit.

KEVIN RUDD: Sean McCarthy is a terrible loss to his family, a terrible loss to the Australian
Defence Force, a terrible loss to the Australian nation. My thoughts, my prayers go to his family
at this terrible time.

SAMANTHA HAWLEY: Air Chief Marshal Houston acknowledges an increasingly dangerous situation in
Oruzgan Province where the thousand Australian troops are based. He says the growing sophistication
of improvised explosive devises being made and used by the Taliban is of greatest concern for the
coalition forces.

ANGUS HOUSTON: This incident, this loss that we've suffered will be a trigger for more and more
active operations against the people who produce these dreadful weapons.

REPORTER: When you say this will be a trigger, you mean, a what (inaudible).

ANGUS HOUSTON: What I mean is that this will, this will harden our resolve to keep these Taliban
leaders, these Taliban bomb-makers under pressure. We'll continue to go after them and we'll
continue to disrupt their activities.

If we can do that, we'll obviously lessen the number of bombs that are in place on roadsides and
make the environment safer for us and safer for the Afghani nationals.

SAMANTHA HAWLEY: Raspal Khosa is from the Australian Strategic Policy Institute.

RASPAL KHOSA: We're certainly seeing heightened activity of the sort we haven't seen yet in

SAMANTHA HAWLEY: The Chief of the defence force seems to be particularly worried about the use of
these improvised explosive devices. I mean, are they getting more sophisticated now?

RASPAL KHOSA: Yes, the levels of sophistication are, you know, similar to what we've seen in Iraq.

SAMANTHA HAWLEY: It seems the Australian Defence Force vehicles are not equipped to actually
withstand the force of these bombs now, so I guess it does show they are getting stronger.

RASPAL KHOSA: Well it's variable in terms of the impact of these devices. I mean, obviously they're
a device that is attached to some form of ordinance and these range from quite small devices to
obviously very large devices with munitions extracted from bombs or artillery shells and the like
which can disable large armoured vehicles.

SAMANTHA HAWLEY: The federal Opposition's Defence spokesman, Nick Minchin says despite the rising
Australian death toll the deployment will continue to receive bipartisan support.

NICK MINCHIN: Australian public opinion will always be mixed on these issues and the Australian
public would share our deep sadness at the loss today. But I hope all Australians will remember
that some of the terrorists involved in the massacre of Australian's in Bali were trained by, under
the Taliban in Afghanistan. That this was a hot bed for training terrorists to wreak havoc on
innocent civilians around the world.

SAMANTHA HAWLEY: The Chief of the defence force last month warned that foreign troops could be
needed in Afghanistan for another decade. Today he said he's happy with the progress the Australian
troops are making in the fight against the Taliban.

EMMA ALBERICI: Samantha Hawley reporting.

Rudd looks beyond G8

EMMA ALBERICI: The leaders at the G8 meeting in Japan say they share a vision for halving
greenhouse gas emissions by 2050, but Australia's Prime Minister isn't confident that much more
progress beyond that can be achieved at the summit.

Kevin Rudd is in the northern Japanese island of Hokkaido as part of the major economies meeting
involving 16 countries. The meeting has been discussing climate change and Mr Rudd is urging
leaders to do more to ensure there is an agreement at next year's Copenhagen conference.

Our chief political correspondent, Lyndal Curtis, is travelling with the Prime Minister and spoke
to me a short time ago.

Lyndal Curtis, this vision for climate change to cut greenhouse gas emissions in half, where's the
starting point - now or 1990 levels?

LYNDAL CURTIS: That's a very good question. That's one of the unanswered questions in fact from the
G8 meeting. There's also the fact that the leaders shared vision doesn't mean a actual binding
commitment on a target to reducing greenhouse gas emissions.

While the shared vision is a step forward because it does include the United States President
George Bush sharing the vision, it doesn't seem to be a big step forward because of the lack of
specificity in the commitment. The US President is still pushing for India and China to sign up to
a commitment on reducing greenhouse gas emissions.

And India and China are in the major economies meeting at the G8 today. That's the meeting that
Kevin Rudd as Australian Prime Minister is also part of. And they have been discussing climate
change this morning.

EMMA ALBERICI: But you don't know what's come out of that as yet?

LYNDAL CURTIS: No, we don't know what's come out of it. But the Prime Minister this morning wasn't
confident that much more progress would be achieved. He's obviously looking beyond that meeting,
looking ahead, particularly to the international climate change conference in Copenhagen next year.

KEVIN RUDD: It is important, not just, that we achieve progress in our individual talks here but we
do not know how much progress can be achieved. It is much more important that our negotiators
involved in the detailed negotiations between now and the Copenhagen conference at the end of next
year, are given sufficient political momentum, sufficient political support to bring about an
effective agreement.

This will be a tough road. It will be a hard road and we must do everything we can as world leaders
to ensure that our negotiators have as effective negotiating mandate as possible.

EMMA ALBERICI: Lyndal, green groups seem to be saying that this commitment from the G8 is in fact a
missed opportunity that doesn't recognise in a sense, the urgency of the challenges. Is that what
you see Kevin Rudd's position to be?

LYNDAL CURTIS: Probably not as strong as that. But he certainly is, as you heard from that, urging
the leaders to put some more momentum in, to put some more political support in to make sure
there's an agreement at the Copenhagen Conference next year.

Mr Rudd, in the brief moment we had to talk to him this morning wasn't expressing either happiness
with or disappointment with the commitment that's been made by the G8 leaders. But certainly he
does want to urge them to push harder for something next year.

EMMA ALBERICI: What other discussions is Kevin Rudd hoping to have while he's at the summit?

LYNDAL CURTIS: Well there will be further discussions between all of the 16 leaders at the summit
today. They will look at issues of food security and the G8's already expressed concern at the
rising food prices and the impact that's having on developing nations. That will also include
discussions about oil prices.

The Prime Minister's having a few one-on-one meetings with leaders at the conference. He's already
talked to the leader of Germany and will also have meetings with the leaders of India, the United
Kingdom, Brazil, Japan and the head of the World Bank.

That will focus on specific issues he wants to target with each leader. One of those issues is
likely to be pushing for progress at the world trade talks. There's a meeting that trying to be
organised for later this month and Mr Rudd wants to make sure that that meeting goes ahead.

EMMA ALBERICI: And what other commitments, if any, came out of the G8 leaders meetings?

LYNDAL CURTIS: Well there's the, they did send a very firm signal to Zimbabwe, talking about
sanctions with Zimbabwe and as I've said, they've also expressed their concern at the impact of
rising fuel prices on the developing nations.

But I think in terms of commitments that as he said, people may have been looking for more from the
G8 on the question of climate change and I don't think there'll be much more progress on that

EMMA ALBERICI: Lyndal Curtis in Japan, thankyou very much.

Garnaut calls for tougher US climate change stance

EMMA ALBERICI: The Federal Government's chief climate change adviser describes the vision statement
from the G8 leaders as a 'step along the path' in the global fight against climate change.

Professor Ross Garnaut says it's a sign that the United States is getting its act together on
climate change, but a change of government in the US is expected to make the global effort a lot

Meanwhile a major oil company argues it could be forced to shut down one of its main refineries if
and when an emissions trading scheme is launched.

Simon Lauder reports.

SIMON LAUDER: The latest stop for Professor Ross Garnaut on his capital city tour, explaining his
climate change report to the public, is Melbourne. On the way into Melbourne Town Hall he answered
to a front page article in a metropolitan newspaper which says: "emissions trading threatens to
close down a major oil refinery".

ExxonMobil Australia says it may find it impossible to recoup costs under a carbon trading scheme.
Professor Garnaut says his proposal would include support for exposed industries.

ROSS GARNAUT: Oh I am not going to judge upon particular cases. That will be the role for the
regulator of the system. We've set down principles through which trade-exposed emissions intensive
industries can be looked after and applied properly then those principles will do the job.

SIMON LAUDER: Professor Garnaut says the shared vision of the leaders of the eight richest nations
for emissions to halve in the next 42 years is not as good as a commitment, but it's good enough,
in the lead up to next year's world climate change talks in Copenhagen.

ROSS GARNAUT: The G8 summit is a step along the path I think that yesterday's understanding amongst
the G8 countries that we needed a minus 50 per cent by 2050 for the world as a whole is a step
forward. It's good that President Bush who's been most reluctant on these matters in the past was
part of that agreement.

Of course, that's just a step in the road. Allocating responsibilities amongst developed and
developing countries in circumstances in which it is not going to be easy to reduce emissions in
the early years in developing countries is another challenge, a challenge that lies ahead. But
yesterday's understanding was a good step.

REPORTER: It's a shared vision rather than a commitment though, it's a step along the road, but a
commitment would be much better from the G8 wouldn't it?

ROSS GARNAUT: Yes, but it was never realistic to expect a commitment. No-one was seeking a
commitment out of yesterday's meeting. The Japanese Prime Minister was seeking what was agreed,
that shared vision and I think that that can help shape the progress of discussions to Copenhagen
at the end of next year. We're hopefully there will be something closer to a commitment.

REPORTER: Is it good enough though? Your report makes it clear that industrialised countries need
to lead and not to wait for developing countries to jump on board.

ROSS GARNAUT: These things have to be taken step by step. It was never the intention of the host,
the Japanese Prime Minister, to go beyond what was agreed. It's good enough for current purposes.
The real tests on commitments come especially at Copenhagen late next year.

SIMON LAUDER: While the Federal Opposition has expressed concern Australia would be punishing
itself economically by moving too fast too soon, Professor Garnaut says Australia is in no danger
of taking the lead. He says there are dozens of European countries which are more advanced.

ROSS GARNAUT: Any developed country can blow up the progress by opting out. It's better that we're
not the country that blows things up by opting out.

REPORTER: How much easier do you hope the US election will make it, at least on a PR front?

ROSS GARNAUT: It will be easier in reality, not just on a PR front. The US with China is one of the
two big emitters in the world, unless the US has the biggest developed country, the biggest
emitters amongst developed countries is taking action it's not going to be possible to extend
action into the developing world.

US action is, at a national level, absolutely essential. There's lots of progress in the US at a
state level. States like California, New York are taking actions beyond what is contemplated in
Australia in many areas, especially energy efficiency.

Both Barack Obama and John McCain have committed themselves to emissions trading schemes with
ambitious emissions reduction targets. That is, the US getting their act together is an essential
step and I think we're starting to see that.

EMMA ALBERICI: Economics Professor and government advisor on climate change Ross Garnaut there,
speaking to Simon Lauder.

G8 leaders call for harder line on Zimbabwe

EMMA ALBERICI: Another vexed issue at the G8 summit has been Zimbabwe. The world's most powerful
leaders have condemned Robert Mugabe's government and called for tougher sanctions specifically
against key figures of power. The leaders also called for a special United Nations envoy to be
appointed to mediate in the crisis.

The British Prime Minister said it was the strongest possible statement on Zimbabwe and showed that
the international community was united. Though it was an altogether different story at the UN in
New York as Barbara Miller reports.

BARBARA MILLER: The G8 leaders expressed grave concern about the situation in Zimbabwe, and said
they didn't accept a government that did not reflect the will of the Zimbabwean people. They said
they would seek targeted sanctions against key figures of power in response to last month's
controversial presidential run-off poll.

That saw Robert Mugabe re-elected after his rival Morgan Tsvangirai pulled out saying he could not
continue in a climate of violence and intimidation. The British Prime Minister, Gordon Brown
outlined the agreement reached at the G8 meeting.

GORDON BROWN: What we've agreed is that we'll send a United Nations envoy to press for change in
Zimbabwe and what we've also agreed is, financial and other sanctions that will be imposed on
members of the Zimbabwe regime to bring together Russia, France, Germany, Italy, America, Canada,
all the G8 countries with Japan in putting this statement forward shows that the whole
international community is now not prepared to accept an illegitimate government and wants action

BARBARA MILLER: Gordon Brown said it was the strongest possible statement on Zimbabwe, and at the
United Nations in New York US officials said sanctions could be agreed by the end of the week.

But it wasn't long before long-standing differences on how to deal with Zimbabwe were in evidence.
Russia is one of five Security Council members with veto power. Its UN Ambassador is Vitaly

VITALY CHURKIN: We need to remind ourselves from time to time that the UN charter does not empower
the Security Council to interfere in the internal affairs of state unless the situation there poses
a threat to international peace and security.

There are serious questions in our mind if the situation in Zimbabwe can be characterised as threat
to international peace and security at least to an extent.

BARBARA MILLER: The Zimbabwean Ambassador to the UN Boniface Chidyausiku questioned Mr Brown's
interpretation of the G8 statement.

BONIFACE CHIDYAUSIKU: The G8 statement, I don't think it's as strong as you make it. The African
leaders that attended that summit explicitly said they are opposed to sanctions and they would want
to go by the AU resolution that said we should give room to negotiations in Zimbabwe.

BARBARA MILLER: The trouble for the G8 leaders is that without the cooperation of southern African
nations it seems unlikely further sanctions will achieve much. Although they have slightly
toughened their stance on Zimbabwe in recent times, the southern African nations still strongly
advocate mediation and not confrontation with Robert Mugabe.

At a Liberal Party fundraiser in Perth last night the former prime minister John Howard criticised
that stance, linking the current crisis to what he called a failure of leadership following
disputed elections in Zimbabwe in 2002.

JOHN HOWARD: If the requisite pressure had been placed six years ago, by South Africa in
particular, on Zimbabwe's then corruptly elected government we would not have seen the disaster
that has unfolded over the last six years.

BARBARA MILLER: With the chances slim that action by the international community will result in a
breakthrough, some are now asking if intervention by the Vatican could influence Robert Mugabe, who
describes himself as a devout Catholic. But the Archbishop of Sydney Cardinal George Pell says he
thinks that's unlikely.

GEORGE PELL: Their stance would have been worked out in concert with the local bishops. Mugabe's a
tyrant and more than capable wreaking havoc on those who oppose him. And the Vatican wouldn't be
worried about their own safety in the Vatican, but they would be concerned about the well being of
the Catholic battlers in Zimbabwe.

BARBARA MILLER: In Zimbabwe, the Deputy Information Minister Bright Matonga described the G8
statement as racist and an insult to African leaders. There's been no formal response yet from the
opposition Movement for Democratic Change.

But the party has responded to a report in Zimbabwe's state newspaper that talks between the
Government and Opposition are about to resume. The MDC described the report as a figment of the
dictatorship's imagination.

EMMA ALBERICI: Barbara Miller.

Russia threatens retaliation after US missile system announced

EMMA ALBERICI: Behind the smiles and comradeship at the G8 summit, tensions have been brewing
between Russian President Dmitry Medvedev and his American counterpart George W. Bush.

America has announced that it has reached an agreement with the Czech Republic to build one part of
its planned missile defence system in Eastern Europe.

The issue was raised at a meeting of the two leaders in Japan. Russia has now threatened to react
with force if the shields are built too close to its borders.

Jennifer Macey prepared this report.

JENNIFER MACEY: The son of Star Wars has inched one step closer to reality. That's the nickname
given to the missile defence shield the US Government has been eager to establish.*(see editor's

Now the Czech Republic has given America the green light to build part of the $3.5 billion system
on its soil. In Prague, US Secretary of State Condoleezza Rice and her Czech counterpart Karel
Schwarzenberg toasted the deal with champagne

CONDOLEEZZA RICE: I'm very proud to stand with you today to sign this landmark agreement, I think
that it is truly a landmark agreement. It is an agreement that is befitting for friends and allies
who face a common threat in the 21st century and wish to address it, through the application of the
best defensive technologies that we can bring to bear.

JENNIFER MACEY: The radar tracking base would be situated south of the capital and as part of its
overall plans for Eastern Europe, the US hopes to place 10 interceptor missiles in Poland.

But the deal has greatly upset the Russians. A statement from the Russian Foreign Ministry warns if
the anti-missile shield is deployed close to the Russian border, Moscow will be forced to react,
and not with diplomacy. Vitaly Churkin is the Russian Ambassador to the United Nations.

VITALY CHURKIN: Every military action causes a military response. This is what military people are
about. If there is a military action, if there is a change in strategic posture, there's a counter
change of strategic posture. You can read it in every military textbook. So there is nothing
surprising, there are not even questions to be asked about.

JENNIFER MACEY: The Russian President Dmitry Medvedev also raised his concerns about the system
during his first face-to-face meeting with US President George W. Bush at the G8 summit in Japan,
calling it absolutely unacceptable. But he stressed that the deal shouldn't hamper relations
between the two countries.

DMITRY MEDVEDEV (translated): As to my conversation with George Bush we expressed our mutual
opinion that under no conditions should we allow a pause in the relations between the Russian
Federation and the United States of America.

JENNIFER MACEY: But the Pentagon has just released statement calling Russia's military threat
"bellicose rhetoric," designed to make the Washington's European partners nervous. US Secretary of
State Condoleezza Rice also insists the shield is not aimed at Russia but at rogue states.

CONDOLEEZZA RICE: We've made the point to our Russian colleagues that we all face the threat from
states like Iran that continue to pursue missiles of ever longer range and we must be in a position
to respond.

JENNIFER MACEY: Alexander Nekrasov is a former advisor to president Boris Yeltsin. He says the
shield is being used by Washington as a bargaining tool.

ALEXANDER NEKRASOV: They're basically putting pressure on Moscow and saying to them if you solve
problem which is forcing us to deploy this system, we might look at the ways of not deploying it.
And the problem is Iran of course and I think that Russia has leverage on the Iran, or at least it
can try.

And I think this is, in a way, pressure being built up by Washington. I think it's quite a cunning
move actually.

JENNIFER MACEY: But Dr Michael McKinley, a Senior Lecturer in international relations and strategy
at the ANU in Canberra disagrees. He says Russia doesn't have enough leverage over Iran.

MICHAEL MCKINLEY: The United States has been bent on some form of missile defence for many, many
years. Its goal basically is to be invulnerable and to say that it's really a tactic designed to
influence Moscow's relations with Tehran, I think is taking it far too far.

So for the United States to sort of medal, if you like, with the balance between itself and Russia
on the basis of claims made against rogue states is causing many people to question the strategic
analysis going on in Washington.

EMMA ALBERICI: Dr Michael McKinley from the Australian National University ending Jennifer Macey's

*Editor's note: This transcipt has been amended to clearly define the missile defence system.

Consumer confidence lowest in 16 years

EMMA ALBERICI: The Australian sharemarket is enjoying a much needed bounce today but the same can't
be said for consumer confidence which has plunged to its lowest level in 16 years.

The Westpac-Melbourne Institute index of consumer sentiment dropped by 6.7 per cent in July.

Economists are surprised by the sharp fall given that interest rates have been on hold for four
months. But retailers say that consumer spending dried up in May and not even last week's tax cuts
have done anything to lift the mood.

Neal Woolrich reports.

NEAL WOOLRICH: Around the nation retailers have been bringing forward their mid-year sales. But it
seems nothing can coax Australian shoppers out of their current malaise. The latest evidence is the
Westpac-Melbourne Institute index of consumer sentiment which fell by nearly seven per cent in July
to its lowest level since January 1992.

BILL EVANS: That came as a big surprise given that interest rates had been stable over the month
and given that we're already at a 18-year low and given that it had fallen by a surprisingly large
5.6 per cent last month.

NEAL WOOLRICH: Bill Evans is Westpac's chief economist and says that consumer sentiment was 2.7 per
cent higher than today's level back in 1991.

BILL EVANS: And of course by then the unemployment rate was heading to 11 per cent. It's only seven
per cent above the low point in confidence that we saw in 1990. So we're really starting to look at
levels of the index that we really haven't seen since that last brutal recession.

And my feeling is that there's the economic environment is nowhere near as disastrous as is was
back then. I think we'll probably start to see some stability in confidence.

NEAL WOOLRICH: Rob Lake from Orex Recruiters says he's not surprised by the plunge in consumer

ROB LAKE: Retailers are telling us that sometime in mid-May the customer tap got turned off and
particularly at the discretionary end of the market. People just aren't spending like they were and
it's a confidence issue.

NEAL WOOLRICH: There are some pockets of goods news. Myer and David Jones are reporting higher
cosmetic sales. They argue that those sorts of items hold up better in a downturn as consumers
switch their spending away from higher-priced goods. Rob Lake says the early-, mid-year clearance
sales have had little effect and there's faint hope among retailers that the tax cuts that came in
from the first of July will stimulate spending.

ROB LAKE: We're hearing that the sales this year have been a bit disappointing and it's interesting
that David Jones have had a sale on the sale just last week. So they're doing everything they can
to get the numbers up. There's too many other drains on the household budget at the moment. That
food price inflation, interest rates and petrol.

NEAL WOOLRICH: And consumers aren't just tightening their belts at the check-out. Figures from the
bureau of statistics show that the value of home loans taken out in may dropped by six per cent.

Given the strong labour market and Australia's continuing economic growth consumers might be unduly
pessimistic at the moment. But Westpac's Bill Evans says the Reserve Bank won't be able to ignore
the drop in sentiment.

BILL EVANS: Even though that it's likely on the 23rd of July that we're going to see an elevated
inflation read for the June quarter which will probably mean the Reserve Bank's underlying
inflation rate that currently stands at 4.25 will be rising closer to 4.5.

That these other signals are suggesting that maybe the Reserve Bank's growth forecast that we saw
in early May will have to be revised down.

EMMA ALBERICI: Westpac's chief economist Bill Evans ending that report by Neal Woolrich.

Govt announces superannuation cost review

EMMA ALBERICI: The Federal Government says the country's superannuation system is too costly and
needs an overhaul. All the fees and charges imposed by superannuation funds in Australia now amount
to 1.25 per cent per annum.

The Minister for Superannuation Nick Sherry has announced a review of those costs including close
scrutiny of the conflicts of interest that arise as a result of the system that allows financial
planners to collect on-going commissions from certain superannuation funds they recommend to
clients. I spoke to Senator Nick Sherry earlier today.

Nick Sherry, on average it's been shown that fees are around 1.25 per cent per annum on about
100,000 invested that's $1,205 a year. It's not insignificant is it?

NICK SHERRY: You're right. It's not insignificant. It's significant because if it's $1200 a year
over 30 years, it's a lot of money and there's also compound interest as well. So we do need to
look at ways we can make the system more cost effective. Deal with structural issues and I've
termed it, renovating the house.

Some people argue for more contributions and more tax concessions and incentives et cetera. Well
that's fine, there's a legitimate debate, but there also has to be a legitimate debate and
conclusion about the costs of the operation of the system. And our system, and it's a compulsory
system, I think generally is too expensive. We need to get the costs and the fees down over time.

EMMA ALBERICI: Are financial planners' fees too expensive?

NICK SHERRY: It depends on the circumstances.

EMMA ALBERICI: Those who take trailing commissions?

NICK SHERRY: As a general model, trail commissions are a conflict of interest because it does warp
the advice and distribution. I'm more concerned about the commission associated with distribution
as distinct with providing advice. But the conflicts are well known. The issues that have been
identified have been argued uphill and down dale for the last ten to 15 years.

So I've actually said, look we can't continue with the current system. There needs to be an
alternative that ensures effective competition that does put downward pressure on the retail price
and distribution. There needs to be an improvement, the industry and consumer organisations you
give me your thoughts and ideas on how we can make an effective change that will lower fees over

EMMA ALBERICI: Because a financial planner is supposed to plan a person's affairs, but there is no
planning in a sense when the money is allocated. It's like telling someone which bank account they
should be putting their money into and then taking an annual fee out of their account for the work
they did in weeding out the best account. It just doesn't seem to make sense.

NICK SHERRY: There are a number of disadvantages with a commission. One of them is lack of
contestability. You don't necessarily get the service year on year on year for the payment of the
commission. In some cases you get no service. In other cases, it's arguable it can lead to

But you need contestability on payment to ensure that you've got effective competition to drive
down price. So that's one of the downsides. There's a conflict of interest. There's no doubt
there's a correlation if someone is payed a commission, there is a temptation to ensure that the
money flows to the provider paying the commission. It does warp advice.

So there are a number of disadvantages. They are well known and I do think we need to find some
solutions to this.

EMMA ALBERICI: Well in 2003 you told the ABC's Four Corners program that commissions for selling
superannuation products should be banned. Is that still your view?

NICK SHERRY: Look I think the issue is quite complex, so the solution, if you ban the commission
for example, you could end up with its replacement by a fee, but a fee that applies every year. So,
effectively the same outcome.

EMMA ALBERICI: But then at least it's much more transparent and the consumer can decide.

NICK SHERRY: That's certainly true, but not necessarily will the consumer decide. Because, let me
give you an example of the complexity of this issue: we have disclosure documents and fees are
disclosed, but unfortunately the disclosure documents we've ended up with are 50 to 60 pages long
and they're Latin-like and generally most people can't read and understand them.

So there are a range of reforms that you have to carry out to maximise competition. The theory of
competition is fine. But you have to have simple disclosure documents for example, that work has

EMMA ALBERICI: But you long argued that these sorts of commissions should be banned. Now you're in
government, will you ban them?

NICK SHERRY: Well, now we're in government we're going to affect changes that will make a
meaningful difference to fee structures and reduce costs. That's what we're going to do.

EMMA ALBERICI: But you'll stop short of banning them?

NICK SHERRY: Well what we will do is we'll look at the total package of solutions to reduce costs
down. As I've said, there are some complex issues around the disclosure regime which is new. We've
had the complex disclosure regime introduced in the last four to five years. We've got to take that
into account.

EMMA ALBERICI: But there doesn't seem to be a lot of complexity. You either charge a fee for
service or a trailing commission?

NICK SHERRY: Well, it is a bit more complex than simply prohibition. You need to consider other
factors. You need to consider, for example, how you would provide advice that is cost-effective and
it is not easy to do, I have to say in the current disclosure regime which has been introduced in
the last four years.

So you need to tackle the issue on a number of fronts. There's not easy, simple solution given the
complexity and the evolution of the industry.

EMMA ALBERICI: Maybe it cost-effective is one thing, but in its current guise, it's not
cost-effective, it's simply disguised as being cost-effective because it's in the fine print and
it's one per cent or so every year which seems a lot easier to manage than if you put that figure
up front.

NICK SHERRY: Well that's my very point. We need to make sure that you affect the number of changes
in a number of areas to get a lower cost outcome. Banning a commission, per se, is a simple
solution but there are other issues that have to be tackled.

EMMA ALBERICI: So are you saying you won't take the simple solution at all?

NICK SHERRY: No what I will do is affect a set of changes after I've consulted with industry and
with consumer organisations that will make a real difference. I will give you another example,
we've got preferred product lists, that's an issue that will need to be considered. There are a
range of complex current regulatory structures that need to be considered in association with the
fee structures themselves.

EMMA ALBERICI: Nick Sherry thankyou very much for your time.

NICK SHERRY: Thanks very much.

EMMA ALBERICI: And that was Senator Nick Sherry there, the Minister for Superannuation.

Internet security flawed, says expert

EMMA ALBERICI: An internet security expert in the US says he's found a gaping hole in the World
Wide Web. The Domain Name System translates internet addresses that people can easily understand
and remember into long sequences of numbers that computers can comprehend.

Now it's been found that this very basic tool has a security flaw that could affect almost everyone
online. Timothy McDonald reports.

TIMOTHY MCDONALD: The Domain Name System translates basic internet addresses, such as
into a long string of numbers that computers can easily understand. Security analyst Dan Kaminsky
has told a Network Security Podcast that it functions as the internet's road map.

DAN KAMINSKY: Send an email, where's it going to go? DNS is the one that tells you where is goes.
DNS goes bad, email goes bad.

TIMOTHY MCDONALD: Unfortunately, Dan Kaminsky now thinks this most basic of internet tools has a
gaping security flaw.

DAN KAMINSKY: It's not good, this class of attack is known as cash poisoning and basically an
attacker can go ahead and impersonate large chunks of the web or large chunks of the internet to a
random user.

TIMOTHY MCDONALD: In other words you might think you're visiting your bank, but really you're being
redirected without your knowledge to an imitation site that looks virtually identical. Of course,
the site's only there to fool you into giving up your account number and password.

The DNS flaw has spurred the internet industry into action. Dan Kaminsky approached major computer
companies earlier this year about meeting in secret to come up with a solution. He says the result
was a rare occurrence of widespread industry co-operation to fix the problem, before the word got
out to hackers about the security flaw.

DAN KAMINSKY: That's not something you normally get the opportunity to do. So, a dirty little
secret, all patches are reverse engineered to find out the exploit that they're fixing. Usually you
can look right at it and say, oh they weren't checking this value.

Well in this case we can just straight up say, we're taking this thing that was fixed and we're
making it more random. Yeah, well that's not enough to know how to actually do the attack. That's
not to say that this obscurity is going to last forever. But we intentionally chose a solution that
we felt would be the hardest to reverse engineer so that people could have as much time as possible
to patch.

TIMOTHY MCDONALD: The chief executive of the Internet Industry Association Peter Coroneos says
there aren't any known incidents in Australia of hackers exploiting the flaw, but he says industry
players are working to protect themselves against it. He says internet security is always a work in
progress, and hackers may eventually find their way around the fix.

PETER CORONEOS: We've set off on an inter-planetary travel on a spaceship that was never designed
to go as far as what we want to go. And now we're deciding that we're rebuilding the spaceship in
the processes the space flight itself to add further functionality and capacity to it.

So it's sort of getting built as we go and getting improved as we go. So there's a tendency,
certainly in the long-term, because the internet is so economically valuable now, because it has
become an indispensable part of our lives then there is no question that the necessary efforts to
shape the internet into a more secure medium are almost guaranteed.

TIMOTHY MCDONALD: Peter Coroneos says this particular flaw is something that home-users won't be
able to do much about, and will be mostly worked on by IT experts at the server level. But he says
users still have a big role to play in keeping their information secure.

PETER CORONEOS: Internet culture, there's a culture of security is a shared enterprise and everyone
has to play their part. End users certainly would be exposing themselves to risk if they're
engaging in risky behaviour online. Perhaps downloading files they're not sure of the security of
those or the legitimacy of them.

Not having anti-virus and anti-spyware and firewall software in place. So everyone has to play
their part.

EMMA ALBERICI: Peter Coroneos from the Internet Industry Association there, ending Timothy
McDonald's report.

Addicted to the baby high

EMMA ALBERICI: A new study has found a mother looking at her own smiling baby gets a similar high
to that of taking cocaine. Research from the Baylor College of Medicine in the United States, shows
that the same part of the brain lights up from the two activities.

It could help prove the special mother-infant bond and also help to understand when things go
wrong. Bronwyn Herbert spoke to the lead author, paediatrician Doctor Lane Strathearn from the
Texas Children's Hospital.

LANE STRATHEARN: When a mother sees her own baby smiling compared to another baby smiling, it
activates similar sort of brain circuits as a cocaine addict getting a shot of cocaine. So it's a
powerful stimulus and I think any mother can tell you that; that when she sees her baby smile it
really does have a powerful effect.

BRONWYN HERBERT: Could you explain this powerful stimulus as to what is actually happening in the

LANE STRATHEARN: OK, well there are certain circuits in the brain that process reward stimuli. So
they help us to predict reward and help to motivate behaviour in response to particular cues. And
for baby faces that we believe that those cues that a mother receives from her baby actually help
to motivate behaviour in response to those baby faces. So care-giving behaviour, cuddling, picking
up, responding to a baby's emotions.

BRONWYN HERBERT: A smiling child of someone else's wouldn't have the same effect?

LANE STRATHEARN: No it does. We saw that there was still a response to other babies smiling. But it
was certainly nowhere near as powerful as when the mother's saw their own baby smiling. That is
where we really saw the strongest signal.

BRONWYN HERBERT: And what if you aren't actually a mother? Do you still get a response like this in
terms of seeing a smiling baby?

LANE STRATHEARN: Yeah I think. We didn't actually look at that in the study, but I would imagine
that those same responses are there, but it's just a matter of degree. That's why we specifically
contrasted the response to when mothers saw their own baby compared to someone else's baby - a baby
that they'd never seen before. And that's where there was specific activation of these particular
reward pathways in the brain.

BRONWYN HERBERT: I understand your research looked at brain scans of 28 new mothers. It seems like
a small sample. Are you looking at expanding this?

LANE STRATHEARN: Well 28 in the functional MRI(magnetic resonance imaging) world is really quite a
good sample. It's an involved and expensive process and that's a number that really gave us
sufficient information for our purposes.

One thing that we are also looking at now, is how different sub-groups of these mothers respond
differently. For example, is it the case that some mother's don't receive this reward stimulus or
reward response in the brain when they interact with their baby? Could this help us to better
understand what happens in child neglect?

Perhaps in some mothers, this process isn't working properly and so there's not that same reward
and motivation to adequately respond to a baby's needs and provide the nurturing care that a baby

EMMA ALBERICI: Paediatrician Doctor Lane Strathearn from the Texas Children's Hospital, speaking to
Bronwyn Herbert.

British lawyer targets Australian Olympian

EMMA ALBERICI: Selection on an Olympic team should be about sporting prowess. But for some athletes
there are also the courts as Australia's elite modern pentathletes are finding out.

Last week the British Modern Pentathlon Association was successful in appealing against Australia's
male pentathlete, Alex Parygin, from the Olympic team.

Now a British lawyer who worked on the case has got the female pentathlete Angie Darby in his
sights. Mike Townley has questioned her qualification and is demanding a Greek athlete who he is
now working for take her place at Beijing. Modern pentathlon in Australia is shocked and disgusted
and will fight the appeal.

Olympics reporter Karen Barlow has more.

KAREN BARLOW: Twenty-one-year-old Angie Darby is in heavy training for her first Olympics. Modern
pentathlon is a five-pronged sport with the disciplines of running, shooting, fencing, riding and
swimming. But a sixth element has entered Angie Darby's pre-Olympic bubble - a legal challenge to
her selection on the team for Beijing.

ANGIE DARBY: I don't really understand where this is coming from, it is very hard like especially
only a month out that this should be happening now it is just I have to vent all this frustration,
I guess, into training but it just seems like I a bit of a witch-hunt. I don't understand.

KAREN BARLOW: Just last week Australia's male pentathlete, Alex Parygin lost his spot on the
Olympic team after Britain appealed against his qualification. The case went to Court of
Arbitration for Sport, so there was no further avenue for appeal. Now, Mike Townley, the lawyer
involved in the case against Parygin wants Angie Darby out of the team.

There are claims of cheating by inventing or changing scores and questioning of the standard of
local qualification competitions. Angie Darby is stunned.

ANGIE DARBY: He's trying to throw a lot of stuff at us about, I don't even know like he's just kind
of scratching kind of into whatever he can, because I think he is saying because we didn't sort, in
some events because we didn't have international competitors like over one country there it doesn't

But at the same time we put out the invitations we put it on the international calendar inviting
other federations to come. We don't have the money to pay for them to come or; we have to pay some
much money to go to Europe.

KAREN BARLOW: The Australian head coach of modern pentathlon, Gerry Adams, also says the claims are
without merit.

GERRY ADAMS: There is no doubt Angie qualified last year. If we had any doubt into Angie's
qualification we would have sent her to every international competition possible.

KAREN BARLOW: The International Union of Modern Pentathlon stands by its rules and Gerry Adams says
it has been fighting to keep the Australia athletes on the road to Beijing. As for Mike Townley's
allegations of cheating, Adams says they are false and part of a campaign to undermine the

GERRY ADAMS: He can say what we likes, it's just...we are all gobsmacked in Australia all our
federation, the slanderous emails that we have had from the British federation as well as him about
how we run our competitions here in Australia have been unbelievable.

KAREN BARLOW: This lawyer he was working with the British Association of Modern Pentathlon?

GERRY ADAMS: That is right.

KAREN BARLOW: Did he suddenly move in on the Greek athlete who may be able to be in this position?

GERRY ADAMS: Well we believe so because this information for an appeal had not came from the Greek
Olympic Committee, it has come from this lawyer.

KAREN BARLOW: Time may be on Australia's side. Olympic rules say an appeal against selection must
be lodged within 21 days of the announcement. Angie Darby was announced on the Australian team on
the 1st of June.

EMMA ALBERICI: Karen Barlow.