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Inflation hits a 17-year high

ELEANOR HALL: Australia's inflation rate has hit a 17-year high. The Australian Bureau of
Statistics says the Consumer Price Index rose 4.5 per cent in the year to the end of June.

It leaves the Reserve Bank of Australia in a difficult position.

Reporter Brendan Trembath joins us now in the studio with the details of the report. So Brendan,
just how high is this latest reading?

BRENDAN TREMBATH: Well Eleanor, it's higher than many economists were expecting. It's probably no
surprise to Australians, though, that they are paying higher prices for many things. For example,
we all know about higher prices for petrol; the Bureau of Statistics says that in this period it
was looking at, automotive fuel increased more than eight per cent.

We're also paying higher prices to have a roof over our head; rent's increasing more than two per
cent. Then there are things like healthcare, hospital and medical services up four per cent.

So increases for consumers around Australia. In the most recent period, 1.5 per cent...

ELEANOR HALL: So that's the last quarter?

BRENDAN TREMBATH: That's right, that's the last quarter, to the end of June.

And then if you look in annual terms, an increase of 4.5 per cent, that's from the June quarter to
the June quarter.

ELEANOR HALL: Can we put a lot of that down to petrol?

BRENDAN TREMBATH: You can certainly put a good amount of it, but bear in mind the Bureau of
Statistics looks at a whole range of commonly purchased goods. Now, earlier I spoke to ANZ Riki
Polygenis, and here's what she had to say.

RIKI POLYGENIS: The headline rate of inflation was very high in the June quarter, it rose by 1.5
per cent, which was above market expectation of a rise of 1.2 per cent. Although this measure was
pushed up by a measurement change by the Australian Bureau of Statistics to the deposit and loan
category, which we estimate added 0.4 per cent to the headline CPI in the quarter.

It's probably more important to look at the core rate of inflation or the underlying rate of
inflation which rose by 1.1 per cent in the June quarter, which was a slight easing from 1.25 per
cent in the March quarter.

BRENDAN TREMBATH: What does this mean for people with a mortgage?

RIKI POLYGENIS: I think the Reserve Bank will be happy to see an easing in underlying inflation, in
the June quarter. And this suggests that the Reserve Bank may now be on hold for the next few
months because it is comfortable that the domestic economy is slowing, and this is putting some
downward pressure on inflation.

But at the same time, it is probably too soon to call the peak in inflation, and the Reserve Bank
will remain alert to any upside risks on inflation.

ELEANOR HALL: So that's ANZ economist Riki Polygenis. Now, what pressure do you believe it will put
on the Reserve Bank, Brendan, and its interest rate settings?

BRENDAN TREMBATH: Well based on the most recent reports from the central bank, it looks as though
the central bank has been expecting a higher reading, so they've been playing a bit of balancing
act where they've expected that inflation would keep rising, prices would be higher.

But also they've got to bear in mind that the economy appears to be slowing. That's something that
they would like to see, they don't think, they don't want things to overheat.

So they were saying that they did expect a higher reading. Whether or not this is high enough we'll
know in the next couple of months, particularly when we get to those days when they review interest
rates.

ELEANOR HALL: What we've been hearing from economists in the last little while, at least, is that
the next rate movement will be down. Is anyone talking about a rate rise after today's figures?

BRENDAN TREMBATH: Well most of them are saying that rates are on hold at the moment, but one person
out in the wilderness as such is Michael Blyth, the chief economist at the Commonwealth Bank of
Australia. Now, he says that the central bank will increase interest rates in November.

This is a man who used to actually work for the central bank, so he's not speaking without any
experience in this realm, and he has been in his position for quite a long time.

So that's one possibility, according to Michael Blyth. But otherwise, the general view is that
rates in Australia are on hold.

ELEANOR HALL: Brendan Trembath, thank you.

Coalition delaying carbon emissions scheme

ELEANOR HALL: Now to national politics and the division over what to do about reducing Australia's
carbon emissions.

Coalition leader Brendan Nelson has indicated today that the Opposition will not support an
emissions reduction scheme that starts before 2011, and that its preferred start up date is 2012.

In doing so, Dr Nelson is effectively forcing the Government to do a deal with the Greens if it
wants to bring in its carbon pollution scheme as planned in 2010.

But with the Greens demanding ambitious emissions cuts, the Government would prefer to negotiate
with the Coalition to get its legislation through the Senate, and it's now accusing Dr Nelson of
aligning himself with the climate change sceptics.

The Prime Minister says global warming has become a pawn in the battle for the Liberal leadership.

In Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: The Opposition leader Brendan Nelson's inserted a big hurdle to Kevin Rudd's
ambition for an emissions trading scheme to be introduced in 2010.

Dr Nelson says that start date defies all logic: economic, good governance and management.

BRENDAN NELSON: This is about Australia, it's about our long-term interests, Mr Rudd's primary
responsibility is to get it right and all I can say then to Mr Rudd is to paraphrase him, "My name
is Brendan, I'm from Sydney and I'm here to help you."

ALEXANDRA KIRK: The Opposition leader says 2011 is the earliest an emissions trading scheme should
begin.

BRENDAN NELSON: Well we have consistently been of the view that you cannot responsibly start an
emissions trading scheme earlier than 2011, and preferably in 2012.

ALEXANDRA KIRK: Now you say not before 2011, preferably 2012, but not definitely?

BRENDAN NELSON: Well, certainly, the most important thing we've got to do here is to get this
right. We've got to make sure this is right for Australia, that it is environmentally credible,
that it's economically responsible and we're able to see our economy continue to grow.

And importantly, that in the implementation of an emissions trading scheme, that we understand that
industries, jobs and the protection, particularly of vulnerable, low-income and low-middle income
Australians, that they are protected in the process.

ALEXANDRA KIRK: So are you proposing any specific start-up date?

BRENDAN NELSON: Well look, we need again, I think, Mr Rudd needs to make available to me and to my
senior shadow ministers his top officials who are working on this. We need to be fully briefed in
this to get a clear understanding, as does the Australian public, about what the Government is
considering.

ALEXANDRA KIRK: Climate Change Minister Penny Wong has called on Dr Nelson to put the national
interest before his leadership interest.

PENNY WONG: Look, what is clear is that Dr Nelson has again chosen to line himself up with the
Kyoto sceptics in the Liberal Party. We call on Dr Nelson to stop playing short-term politics with
this issue, to consider the future of our children and our grandchildren and put the national
interest before his leadership interests.

ALEXANDRA KIRK: The Prime Minister has taken a similar line of attack.

KEVIN RUDD: And I would strongly urge all people who are interested in the country's long-term
interest to get on board; rather than playing short-term electoral politics, which now seems to be
caught up in the leadership politics of the Liberal Party, on this critical question of climate
change.

ALEXANDRA KIRK: Greens leader Bob Brown supports a 2010 start date.

He says, "Dr Nelson's statements this morning indicating that even 2012 might be too early is
perplexing" and a "spoiling tactic". But he doesn't think that puts the Greens in the box seat for
negotiating the emissions trading scheme through the Senate.

BOB BROWN: No, I don't, I think Brendan Nelson and the Coalition are becoming a moving feast, and
it's hard to tell from day-to-day what their next back off from responsible action on climate
change will be.

But the Green are consistent; we have of all the parties stated what the targets should be.

ALEXANDRA KIRK: And you support a 2010 start-up date for an emissions trading scheme?

BOB BROWN: Yes, it should be as early as possible, and the Government's talking of 2010. The
Opposition's now talking about 2011 at earliest, 2012 and maybe later than that if they really are
going to wait for overseas action, and the scientists tell us that that is irresponsible.

And our job is to make the Government's position, when it comes down the line, to improve it. And
we'll be attempting to do that, but we're not setting pre-conditions because that's not the spirit
of a negotiation process that's going to get a better outcome for all Australians.

ALEXANDAR KIRK: Having said early in the week that the Coalition backed a carbon trading scheme
starting no later than 2012, Brendan Nelson's comments today appear to have left the door open on a
start date.

BRENDAN NELSON: When you look at it all responsibly, in terms of jobs, in terms of industries, in
terms of the protection of very complex systems to protect vulnerable Australians in this
transition period, you would have to say the earliest is 2011, and ideally, in 2012.

ALEXANDRA KIRK: The bottom line is, though, for you, that there is no, in your mind, definite
start-up date that even 2012 is a possible start-up date, is that correct?

BRENDAN NELSON: Well, again, we've got to start this when we are confident that we are able to do
it efficiently, that we are able to do it in full knowledge of the economic consequences of it, and
do it in a way and at a time when we fully understand the impact on industry, on jobs, and how, in
particular, are we going to protect the most vulnerable people in this, because in the end, we're
all going to pay for it.

ALEXANDRA KIRK: The Opposition leader's office says the Coalition's position is for a 2012 start
date.

But if there's no action by major emitters such as China and India, then the emissions trading
scheme should start in such a way that Australian jobs and industries aren't hurt; in other words
kick-off with a low carbon price.

ELEANOR HALL: Alexandra Kirk in Canberra.

Govt heads to Arnhem Land for community cabinet

ELEANOR HALL: Indigenous Australians on the Gove Peninsula will today present Federal Cabinet
ministers with a statement calling for an end to key elements of the Northern Territory
intervention and for the Federal Government to set up a future fund for Indigenous Australians.

The ministers are in the Northern Territory for a community cabinet meeting in Yirrkala on the east
coast of Arnhem Land.

Speaking before the meeting, the Prime Minster said his Government is determined to improve
Indigenous health and welfare.

Sabra Lane is at Yirrkala and joins us now.

Sabra, was the Northern Territory intervention raised at the community cabinet meeting this
morning?

SABRA LANE: Aspects of it were raised, Eleanor, it is fair to say. Certainly, one of the questions
that was put to the Prime Minister was that it was particularly unfair to take away some of the
payments that these people received through the quarantining of welfare. If for example they missed
an interview because they were away at a funeral, or because they were ill. In that instance, some
of their payments are stopped for eight-week periods.

It was explained that federal public servants, if they are sick for at least one day or even three
days, that they are given a period of grace whereby they don't have to present the formal
certificate from a doctor to prove that they were sick, and they were just asking for equality in
terms of that particular aspect of the intervention.

Also, other key parts of this document ask the Federal Government to set aside some of the
$40-billion in the future fund to set up a separate Indigenous fund, if you like, to help fix some
of the housing and health issues throughout the remote communities here in the Northern Territory.

ELEANOR HALL: So how did the Prime Minister and his Indigenous Affairs Minister respond to these
issues?

SABRA LANE: They said that at the moment, as has been previous announced, that the whole
intervention is under a review and this will be part of the review that is being undertaken at the
moment. And the Prime Minister certainly did acknowledge that it seemed particularly harsh.

ELEANOR HALL: And what more do we know about this statement calling for a curtailing of the
intervention and for a future fund for Indigenous Australians?

SABRA LANE: It is a seven-page document, Eleanor, it hasn't been given to the Prime Minister yet.
We're expecting that that will be handed to him shortly. You might be able to hear at the moment,
there's a ceremony happening right in front of the Prime Minister right now, and we've got about 20
Indigenous men with ochre and white paint daubed on their bodies, they are singing, they're
chanting, they've got message sticks. One of them lunged at the Prime Minister just a couple of
minutes ago, as part of the performance; it was quite a spectacular sight.

That document of intent will be given to him once these formalities are over.

ELEANOR HALL: And will the ministers be spending much time in the community beyond this cabinet
meeting?

SABRA LANE: Yes they will be. After they have lunch here in this park, it's slightly overcast and
it's slightly drizzling here, and to my left here at the moment they are cooking a barbecue,
they're turning the snags, they will be having a barbecue here in the park. It's another chance to
informally meet with locals here to talk about the issues that are of concern to them.

They are going to be here for another couple of hours, and then later in the afternoon, they're
going to take a short bus trip to the nearby community of Nhulunbuy, where again they are going to
have an afternoon tea, and that will be an opportunity for the 15 ministers that have travelled up
here with the Prime Minister today to meet with locals and to talk with them about housing and
education issues.

ELEANOR HALL: Sabra Lane in Yirrkala, thank you.

Hospital infections could be halved by clean hands: research

ELEANOR HALL: The body advising the nation's health ministers says hospital infection rates could
be halved if health workers simply washed their hands more regularly and more thoroughly.

The Australian Commission for Safety and Quality in Health Care has presented its report to health
ministers meeting in Canberra today.

It has found that around 200,000 people each year are contracting infections within the healthcare
system.

Chief executive Professor Chris Baggoley has been telling Tanya Nolan what proportion of these
infections are those more deadly ones that infect the bloodstream.

CHRIS BAGGOLEY: Now our experts tell us that there are around 7,000 patients a year have staph
aureus in their bloodstream; and as you would imagine, having bacteria actually within your
bloodstream is quite a serious event, and can certainly be life-threatening.

TANYA NOLAN: And what is the death rate from these bloodstream-borne infections?

CHRIS BAGGOLEY: Well, the data we have shows that if you have a bloodstream infection, 19 to 27 per
cent with such an infection will die, and there's concern in fact that if it is staph aureus that
rate is even higher.

And the reason we are focusing on staph aureus is that, that is the one where attention
particularly to hand hygiene can make the biggest difference.

TANYA NOLAN: So are you saying that a lot of these infections, including golden Staph, are because
doctors, nurses, staff aren't washing their hands?

CHRIS BAGGOLEY: Yes, if they were able to pay the full attention to hand hygiene then that would
make a big difference. Now, it is important to understand that doctors and nurses and other staff
do wash their hands, but they need to really make a difference and maybe every time they encounter
a patient, there can be three of four times they need to pay attention to hand hygiene, even with
the one patient encounter.

So we need to work with them and I say, all jurisdictions are doing this, and we are working with
them to make sure that there is no opportunity to spread infection that is let go (phonetic)
without hand hygiene.

TANYA NOLAN: And what is the overall cost per year of these hospital-based infections?

CHRIS BAGGOLEY: Well, Tanya, we know that there's two million extra bed days occupied by patients
because they have picked up healthcare associated infection. The cost, we're told, of surgical site
infections and not just hospital costs but other costs as well associated with that, is $20 million
per year.

TANYA NOLAN: Why are there so many hospital-based infections?

CHRIS BAGGOLEY: Just normally, we have say the staph aureus, or the golden staph bacterium on our
skin; and as long as our skin is intact, it doesn't invade the skin, but when you go to the
hospital and you have lots of holes put on you, and the bacteria can migrate inside. So, and when
you have patients of course that are sick, whose defences are down, then they are more prone to
pick up infections that are around.

TANYA NOLAN: So even with the standard practice of sterilising hospital equipment and doctors,
nurses, staff washing their hands, infections are still possible?

CHRIS BAGGOLEY: Yes, infections are still possible because people bring in their own bacteria and
because they are often very sick. But the big attention that we can make sure is paid to this does
relate to the habits of healthcare workers, and the cleanliness of the environment.

So there are things we can do, and are being done.

TANYA NOLAN: What proportion of infections are picked up in hospital, and what proportion are
brought in from outside?

CHRIS BAGGOLEY: It will depend on the varying bacteria and so on, and even to the population. So we
know that, I'm learning, in Western Australia community-acquired staph aureus infections are
looming as a significant problem. But this 200,000 infections per year are those that are
healthcare associated.

So they're not ones that people have come in with, because people say with pneumonia come in with
an infection. The important thing is to make sure that the infection that they've got from their
pneumonia doesn't get spread to other people.

ELEANOR HALL: Professor Chris Baggoley is the chief executive of the Australian Commission for
Safety and Quality in Health Care, which advises the nation's health ministers. He was speaking to
Tanya Nolan.

Serbian nationalists protest over Karadzic arrest

ELEANOR HALL: Serbia's new Europe-leaning government and many of the country's citizens are
optimistic that the capture of war crimes suspect, Radovan Karadzic, will open the door for Serbia
to join the European Union and come to terms with the horrors of its recent past.

But nationalist supporters of the former war-time leader are furious about the Government's plans
to extradite Karadzic to the UN war crimes court at The Hague and have clashed with police in
Belgrade.

In the decade that he's been on the run, Radovan Karadzic has managed to live under the nose of his
pursuers in Belgrade by growing a long white beard and assuming a new identity as an alternative
medicine practitioner.

From Belgrade, Europe correspondent Rafael Epstein reports.

RAFAEL EPSTEIN: In the Serbian capital tonight, there were more clashes with police.

(Sound of rioting)

RAFAEL EPSTEIN: But the majority seem resigned to Serbia's realignment and some even welcome it.

VOX POP (translation): He'll be tried like all Serbs are, only Serbs are tried. He won't be
acquitted like other criminals who were set free.

VOX POP 2 (translation): As far as I'm concerned, it would be better if all the suspects were
extradited, for they are the one putting the brakes on the prosperity of our country.

VOX POP 3 (translation): The European Union, as well as America, should appreciate this gesture.

VOX POP 4 (translation): I think it's good. It's another step towards Serbia and all their citizens
facing the mistakes of the past.

RAFAEL EPSTEIN: European leaders and generals used to shake hands with Radovan Karadzic and accept
his assurances as they sent aid convoys away from where they were needed.

Now he's been found in Belgrade. With a long beard and long white hair he's barely recognisable;
but why has he been arrested now?

His victims have long suspected the west allowed him to remain on the run in exchange for stepping
away from power at the time the conflict was brought to an end by the Dayton Accords.

At one of the many smoky cafes in the capital, I met Zoran Vuletic. He's is a member of the
powerful steering committee of the Liberal Democrats, one of the parties in the ruling coalition
here.

He says Europe will not be so quick to reward his country.

ZORAN VULETIC (translation): Everybody is telling us, "Just give Karadzic to Hague Tribunal and you
will step in the European Union", and I think that this was not the purpose of The Hague Tribunal.

RAFAEL EPSTEIN: Do you think there's going to be any violence because of the arrest, and maybe if
Ratko Mladic is arrested, do you think that might to trouble, maybe even just violent
demonstration?

ZORAN VULETIC (translation): I don't think there would be violence because the state was organising
all the arresting action very well, and when the state don't want to have any violence, we will
have action without violence.

But I don't think so, that even in the case of Ratko Mladic will there be any violence, so I don't
expect any kind of riots.

RAFAEL EPSTEIN: I just wonder if you think that it strengthens the Government.

ZORAN VULETIC (translation): This arresting will get some new blood for the Government, but
unfortunately just on a technical level, the real understanding of the war crimes, the state and
the people will not be capable. It is very hard for people to realise that war crimes was done.

RAFAEL EPSTEIN: It's long been thought that former spies and soldiers as well as ultra nationalists
and criminals helped him hide.

What's clear is that Radovan Karadzic was being watched by someone, and that someone had access to
footage showing him giving a healthcare lecture.

But the new look was effective. The editor of one magazine he wrote columns for, told the BBC he
never suspected who his contributor really was.

MAGAZINE EDITOR (translation): The person that I got to know was a person that everybody would like
to be their friend. He was a highly cultural man, he was very tolerant, he had a sense of humour,
he was very positive, he was very intellectual. So he was a great person.

RAFAEL EPSTEIN: Away from the din of that smoky cafe, at least one politician hopes that this is a
proper step forward for his nation.

ZORAN VULETIC (translation): I would like that this as a chance for opening of stories about war,
war criminals, and why they commit crimes and what was the real point, what was going on. But
unfortunately, I think that this is going to lead in the way of closing those stories. I think that
very soon, all these stories will be closed and nobody will take care anymore about it.

ELEANOR HALL: And that's Serbian politician Zoran Vuletic, ending Rafael Epstein's report.

Zimbabwean Senator sceptical about talks

ELEANOR HALL: The two weeks of talks on a power-sharing deal between Zimbabwe's ruling party and
the Opposition have begun in South Africa.

Yesterday's signing ceremony was the first time in a decade that Opposition leader, Morgan
Tsvangirai had faced President Robert Mugabe; whom he accuses of orchestrating the political
violence that has rocked the country and destroyed the economy.

But while Mr Tsvangirai has said he will negotiate in good faith and many Zimbabweans are
optimistic about the talks, a human rights lawyer and Senator with a faction of the Movement for
Democratic Change, David Coltart, is sceptical.

He told the ABC's Africa correspondent, Andrew Geoghegan, that he believes Robert Mugabe will do
anything to retain power.

DAVID COLTART: Whilst this is a significant step forward, I think many of us are still sceptical
about whether the process will ultimately yield a meaningful transition to democracy and freedom.

We are dealing with a very cunning old fox in Robert Mugabe, and there's no doubt in my mind that
he has been forced into this process, will be looking for any avenue out of it and will do
everything in his power to retain as much power as possible.

ANDREW GEOGHEGAN: What do you think it took for those two men, for Robert Mugabe and Morgan
Tsvangirai, to shake hands?

DAVID COLTART: I think primarily it was the collapsing economy. Morgan Tsvangirai I think has been
prepared to meet Robert Mugabe for some time. It's Robert Mugabe who has described Morgan
Tsvangirai as the puppet of the west, as a traitor.

And I think that this was forced upon Robert Mugabe by the collapsing economy; and also by the
withdrawal of support for his regime by African countries, and SADC (Southern African Development
Community) in particular.

ANDREW GEOGHEGAN: Now of course negotiators only have two weeks to get something together, to get a
solution to this crisis, which doesn't appear to be a long time at all, does it?

DAVID COLTART: It is not a long, and I fear that we may just result in a position similar to the
Lancaster House conference, which brought the then-Rhodesian civil war end in 1979. Politicians
then acted in an expedient fashion to bring the war to an end, they cobbled together a constitution
that was seriously flawed, and my personal fear is that we get the same now.

I think that this time period has been thrust upon everyone because of the collapsing economy; I
think that the South African Government, SADC and Mugabe know that if they hold on any longer, we
may well see civil disobedience here and a complete collapse of the country.

So the pace of this process has been thrust on all of us, but I don't see how we can agree (on)
these very serious issues, these long-outstanding issues within such a short time frame.

ANDREW GEOGHEGAN: Well the aim of these talks is to form a government of national unity, are you at
all optimistic that that can be achieved?

DAVID COLTART: Well, I'm not optimistic in the short-term, and no-one can be optimistic in a
country where there's inflation running at well over two million per cent, where five million
people are desperately in need of food assistance, where some 4,000 people a week are dying. It's a
desperate situation that our countries faces.

But I am optimistic that this is a significant step; that we are going to make some significant
progress towards bringing democracy to our country. But there's a long road ahead.

ELEANOR HALL: That's human rights lawyer David Coltart speaking to Andrew Geoghegan.

McCain rebukes media over 'saturation' Obama coverage

ELEANOR HALL: In the United States, John McCain's frustration with the US media is reaching boiling
point.

The Republican presidential hopeful is clearly becoming irritated by the saturation coverage being
given to his Democrat rival, Barack Obama, who is on an international trip.

But that's not the only dilemma for the Republican campaign. Senator McCain is also being
outmanoeuvred by the Republican he's looking to succeed, as the Bush administration shifts its
policy on Iraq.

This report from Washington correspondent Kim Landers.

KIM LANDERS: John McCain's campaign is lashing out at what it calls the American media's "bizarre
fascination" for Barack Obama.

EXCERPT FROM REPUBLICAN WEBSITE VIDEO: The media's love affair with Barack Obama is all-consuming.

KIM LANDERS: The Republican's website has a new video which says the media is in love with Senator
Obama.

EXCERPT FROM REPUBLICAN WEBSITE VIDEO: I felt this thrill going up my leg, and I mean, I don't have
that too often.

KIM LANDERS: You can enter a contest to pick the love ballad that best symbolises this devotion,
while watching video clips of TV personalities gushing over the Democratic candidate.

John McCain's campaign has been grumbling for a while about the media's treatment of Barack Obama,
but this is its most obvious effort yet to try to make the media feel a little guilty.

Thomas Mann is a senior fellow at the Brookings Institution, a Washington think tank.

THOMAS MANN: I think it's an indicator of frustration in the McCain camp and the difficulties they
face. Certainly, strong conservatives who hate the mainstream media will agree with Senator McCain,
but that's not where the votes are for him. He's got those votes, he needs others in the political
centre; and I think an attack on the press isn't going to carry him very far.

KIM LANDERS: The swipe from the McCain campaign comes as Senator Obama continues his foreign tour,
designed to show him as a potential commander-in-chief.

And his political timing certainly has been good. The Iraqi Government has left little doubt that
it favours a US troop withdrawal plan similar to Barack Obama's. Even the Bush administration has
announced it's agreed on what it calls a "general time horizon" for a US combat troop exit.

Several weeks ago, John McCain was talking of victory in Iraq around 2013. Now, the Republican
White House hopeful even appears out of step with the policies of President George W. Bush.

Thomas Mann says the Iraqi Government's stance in particular puts John McCain in a difficult
position.

THOMAS MANN: This makes a huge difference because it effectively endorses the way forward outlined
by Senator Obama and puts Senator McCain in a position of saying, "But wait! I was for the surge
early and the surge worked! and that's why we can talk about all this stuff". It's sort of very
backward looking, and as a consequence, Obama, who's oftentimes been criticised for simply
repeating his initial opposition for war, but having no practical plan for going forward, is now in
the driver's seat when it comes to the future in Iraq.

KIM LANDERS: How devastating is this for John McCain's campaign?

THOMAS MANN: The only way John McCain can win this campaign, if he persuades enough Americans that
Barack Obama cannot be trusted as commander-in-chief; that he's too inexperienced, that he's not
sufficiently knowledgeable, that his judgement is bad, and he, McCain by contrast, is perfectly set
for the job.

I think the last couple of days suggest that might be a very hard sell for Senator McCain.

KIM LANDERS: There's now speculation that John McCain might name his vice presidential candidate
within the next few days, perhaps an attempt to steal Barack Obama's thunder right in the middle of
his overseas tour.

This is Kim Landers in Washington for The World Today.

Journalist's boat sinks

ELEANOR HALL: It was supposed to be a confidence boosting farewell for New Zealand's Olympic rowers
before they headed off to Beijing.

Journalists, photographers and TV cameramen boarded a small boat to follow the rowers out onto Lake
Karapiro in the country's North Island.

But then the media boat started taking water and capsized, sending the press pack into the freezing
water, along with their expensive camera gear.

New Zealand correspondent Kerri Ritchie spoke to one of the unexpectedly wet photographers.

KERRI RITCHIE: Sarah Ivey says most days, she thinks she has a dream job.

For two years, she's been a photographer for New Zealand's largest newspaper, The Herald.

But yesterday, as she sat in a small boat taking photos of New Zealand's Olympic rowers, she wasn't
so sure she'd made the right career choice.

SARAH IVEY: We were motoring along behind the rowers, and we were taking on a fair bit of water,
you know, like there was spray and a bit of chop, and it was raining on and off. At the start, we
were all sitting up the front of the boat, and it's very low-sided, only about 12 inch high sides.

And I can just remember my camera lens all of a sudden was pointing at the water, rather than at
the horizon, and I was wondering what was going on, and I looked up, and took my eye off my lens,
looked down, and I was knee-deep in water, because I was already cold and wet but didn't sort of
notice that I was knee deep in water and I looked up, and there was just water gushing in over the
front.

I was sort of in the front line of people, and everyone was sort of scrambling to get to the back,
and shouting and screaming.

KERRI RITCHIE: The boat flipped, and Sarah and seven of her media colleagues were in the freezing
lake.

SARAH IVEY: There must have been an air pocket inside and so we were all trying to scramble to get
onto the boat.

KERRI RITCHIE: The 24-year-old had a life jacket on, so she wasn't too scared.

She was more worried about her precious photographs - and what her bosses would say.

SARAH IVEY: I was frightened for my gear, to be honest, we were just basically all yelling, "We've
got to get our gear out of the water!", because, you know, it's worth a lot of money. There would
have been hundreds of thousands of dollars worth of gear that went in the water.

I had a long lens, people would have seen them, lenses that we shoot the rugby, et cetera with,
attached to my camera body, and one hand on a monopod and I was trying to hold that out of the
water like a lollipop.

KERRI RITCHIE: She says the photograph of the group treading water and trying to keep their camera
gear in the air would have won the World Press Photo of the Year -

if only someone had been able to take it.

SARAH IVEY: It's funny, we've always joked about the media boats sinking and how hilarious it would
be, and at the time, when we were all in the water, it wasn't very funny but all we could do was
laugh, once we were on the shore, because it was just so ridiculous and none of us could believe
what had just happened.

KERRI RITCHIE: Sarah Ivey was able to keep hold of all her gear but it got soaked, and will have to
be replaced. She was able to dry out her camera card and save her photos. One shot appears in
today's sports section.

But there was a mix-up at The Herald newspaper, and Sarah Ivey's photograph was printed with a
credit to Getty Images.

Sarah Ivey says this is one by-line she truly deserved.

SARAH IVEY: This morning, I was like, "How could that possibly be a Getty Images picture?" Getty
Images photos are on the bottom of Lake Karapiro!

ELEANOR HALL: A somewhat bemused photographer Sara Ivey ending Kerri Ritchie's report.

Mac Bank profit growth coming to an end

ELEANOR HALL: The message from Australia's biggest investment bank to its shareholders today was
decidedly subdued.

At its annual general meeting in Melbourne, the Macquarie Group warned that its 16-year streak of
rising annual profits may be coming to an end.

But the group's new CEO, Nicholas Moore, said that the company had still made a solid start to the
new financial year.

In Melbourne, Alison Caldwell reports.

ALISON CALDWELL: By the close of trading yesterday, Macquarie's shares had fallen by over 50 per
cent in the past year, in the aftermath of the subprime mortgage meltdown and the widening credit
crisis.

By mid-morning though, the share price had risen by five per cent, possibly reflecting ongoing
shareholder confidence and optimism in the country's largest investment bank.

After just three months in the job, Macquarie's new CEO Nicholas Moore briefed the media in
Melbourne ahead of the group's AGM. Compared to previous years, the message today was decidedly
subdued.

Nicholas Moore says Macquarie Group has made a solid start to the new financial year in difficult
conditions.

NICHOLAS MOORE: We have been careful in the use of our language, as you would expect. Time has
passed and the markets haven't got any easier from the last time we've spoken to the press about
this matter, and so I think everyone will observe that it is increasingly challenging given market
conditions.

We would still obviously, we would love to achieve that 1.8 result again or even better, but
practically, just looking at where the markets are at the moment, it is increasingly challenging
for us to actually hit that number.

ALISON CALDWELL: He says market conditions continue to make short-term forecasting more difficult
than usual.

Admitting a repeat of last year's record profit would be unlikely, Nicholas Moore says he still
sees plenty of opportunities ahead.

NICHOLAS MOORE: There will be a whole, and there are a whole range of opportunities for us to grow
market share and actually be entering into new markets over this period. So we do see in many our
businesses, actually see it as a period of opportunity.

ALISON CALDWELL: There's been speculation Macquarie might look to privatise some of its listed
funds, including Macquarie Airports and Macquarie Infrastructure Group.

Nicholas Moore said the groups businesses are performing relatively well in a volatile market. He
said each fund has its own board which will assess its own circumstances.

Unlike its competitor Babcock and Brown, he says Macquarie hasn't initiated a worldwide review of
its listed funds structure.

NICHOLAS MOORE: We don't have an overall global Macquarie central review of what's happening. It is
very much a case-by-case, fund-by-fund review that is going on and as has been pointed out earlier,
one of the funds is actually being taken private, that was as a result of that fund looking at its
circumstance, having regard to the interest in the broader market in the assets, and actually
taking appropriate steps.

ALISON CALDWELL: So what will Macquarie's shareholders and the market make of all of this? JP
Morgan's banking analyst Brian Johnson.

BRIAN JOHNSON: I don't think it should be any great surprise to the market, but if you have a look
it, certainly the commentary is ever so slightly different to what they have said before. What
they're saying is the first quarter is down on the first quarter of last year, that's not surprise.
When you think that there was some quite big asset realisations that came through then which have
not recurred.

And on the outlook, they are saying now it would be more challenging to actually equal last year's
profit. That should be no surprise either, because I think most of the consensus expectations are
around that level.

The other thing they've said is that the franking position will be down, going forward, but I think
what is more interesting is a very subtle change in messaging, and that is that historically what
happens is Macquarie are always quite cautious on the outlook at the full year result, and then
when the first quarter rolls around, they are always saying, "Oh, we've had a blinder of a first
quarter".

That's not what they are saying this time around, but I would say I don't think that is any
different to what people were actually expecting.

ELEANOR HALL: That's JP Morgan banking analyst Brian Johnson, ending Alison Caldwell's report.

Iemma on the backfoot over Iguana affair

ELEANOR HALL: The Iguana Joes nightclub scandal that has New South Wales Education Minister John
Della Bosca and his wife, Federal MP Belinda Neal, possibly facing charges, is now creating new
problems for the New South Wales Premier.

Premier Morris Iemma is now being accused of misleading State Parliament over a public servant who
was caught out engaging in digging dirt for the Labor Party. The bureaucrat has been disciplined
and his activities have been referred to the corruption watchdog.

But Mr Iemma has told reporters this morning that he did nothing wrong when he dismissed the
allegations as nonsense in Parliament last month.

In Sydney, Simon Santow reports.

SIMON SANTOW: Rarely has a nightclub in a sleepy part of the New South Wales Central Coast caused
such a political commotion.

But critics of the Iemma Government says what's become known as the "Iguana Joe's affair" is
symptomatic of a government on the nose in the electorate and unable to put a foot right.

The Premier this morning denied he'd misled Parliament a month ago when he dismissed as "nonsense"
a question about the behaviour of an employee of the Department of Premier and Cabinet.

Paul Lister worked out of John Della Bosca's offices on the Central Coast, and in Parliament, he'd
been outed as digging dirt on behalf of the Labor Party.

Mr Lister's aim was to find any links between Mr Della Bosca's accusers, the employees at Iguana
Joes, and the Minister's political opponents, namely the Liberal Party.

What's not clear is whether Mr Lister took it upon himself to do the digging in office time or
whether he was asked to by his political or departmental masters.

The Premier was doing his best to bat the problem away.

(To Morris Iemma) Premier, what did you mean last month when you dismissed a question from Barry
O'Farrell as "nonsense" about the conduct of Paul Lister?

MORRIS IEMMA: Exactly that; the politically-loaded question and it got an appropriate response.

SIMON SANTOW: Well it turns out that Paul Lister has been disciplined?

MORRIS IEMMA: He has. It has been pointed out, the appropriate role and duties, and the director
general has pointed that out to him.

SIMON SANTOW: When were you advised about his role and what he did?

MORRIS IEMMA: Well this is a matter for the director general, he is not an employee of my office,
he's an employee of Premiers and Cabinet, put into the office of the Minister of the Central Coast,
and there was an issue, and the director general has dealt with that, and as a matter of course,
has informed the ICAC.

SIMONW SANTOW: But aren't you splitting hairs by saying, look, he's not one of your staff members....

MORRIS IEMMA: He's not a staff member of mine, no he's not a staff member of mine. And that's
correct, that's correct, and there was, as I'm advised, there was some confusion about his actual
role, and that matter has been dealt with, as you say, disciplinary matter has been taken against
him, and as a matter of course, the director general has informed the ICAC.

SIMON SANTOW: What do you think of his conduct?

MORRIS IEMMA: Well, as a public servant, and his role clarified, the director general has taken the
appropriate action.

SIMON SANTOW: The question was, why has Paul Lister, one of your department's public servants...

MORRIS IEMMA: I have the question here. That's correct.

SIMON SANTOW: Isn't that exactly what he did?

MORRIS IEMMA: Dig dirt? Well, that's the premise of Mr O' Farrell's question, my response was
appropriate to his question.

SIMON SANTOW: So if he wasn't digging dirt, what was he doing?

MORRIS IEMMA: Well that's, what has happened is that the director general has interviewed the
person.

SIMON SANTOW: The Opposition Leader, Barry O'Farrell, not surprisingly finds Mr Iemma's response
inadequate.

BARRY O'FARRELL: The question couldn't have been simpler, the Premier's answer was very clear, he
dismissed it, he described it as "nonsense", and now his most senior public servant advising him
has confirmed that it happened.

This is an outrageous use of the public service; it demonstrates that after 13 years in office, the
Iemma Government believes that it can get away with anything.

What's important today is not just for the Premier to try and run a million miles from this issue,
but for the Premier to put in place an inquiry, preferably through ICAC, to determine who gave this
public servant the instruction to dig the dirt, and whether those instructions came from the
Premier's own office.

SIMON SANTOW: The letter from the director general of the Department of Premier and Cabinet says
that staff members need to be instructed on removing confusion over their roles, whether they are
departmental employees or ministerial staffers.

BARRY O'FARRELL: Well this person was appointed to the Premier's Department, the most senior
Premier's Department official on the Central Coast, he might have been operating out of offices
also occupied by the then minister for education, but it was clear that he was employed by
taxpayers and his role was as a public servant. The public servant's code of conduct says that
whilst you are in those roles, you shouldn't engage in party political activities.

ELEANOR HALL: Barry O'Farrell is the New South Wales Opposition leader, and he was speaking there
to Simon Santow.

Drummers as fit as athletes: study

ELEANOR HALL: It may not be everyone's idea of a work-out, but researchers in the UK have found
that when they're on stage or even a practice session, drummers can use up as much energy as elite
athletes.

British sports scientists monitored the heart rate and oxygen intake of the drummer Clem Burke who
played with the pop group Blondie.

As Jennifer Macey reports, they found that he was as fit as a long distance runner or premier
league football player.

(Sound of drums being played)

JENNIFER MACEY: Led Zeppelin's John Bonham was a renowned drummer who put his whole body into his
work, and his famous 20 minute solos.

Now a new study suggests that he might have been as fit as a highly-tuned Olympic athlete.

Sports scientists from two universities in the UK hooked up rock drummers to a series of wires and
breathing apparatuses to monitor their heart rate and oxygen intake during a gig.

Their most famous test case was Blondie drummer Clem Burke.

(Sound of Blondie song 'Call Me')

JENNIFER MACEY: Sport scientist Dr Steve Draper from the University of Gloucestershire says
drummers have as much stamina as elite athletes.

STEVE DRAPER: I think the most startling thing for us was when we first got heart rate traces from
Clem's concert is, we looked at them, and they could have been a premiership footballer. I think
that's where we would like to make the comparison because it's 90 minutes, it's intimate in
exercise, the heart rate is very high.

JENNIFER MACEY: The researchers found that during a performance, Blondie's drummer Clem Burke lost
about two litres of fluid - which is similar to what an athlete running 10,000 metres loses.

His heart rate could get as high as 190 beats per minute, which is equal to the world's best
footballers during a game.

(Sound of rock music band True Love Chaos)

JENNIFER MACEY: The findings don't come as a surprise to Eric Neira, who plays the drums for the
indie rock band, True Love Chaos, from Sydney.

ERIC NEIRA: Yeah, it is very, very physical. I mean, you get off that stage and your underwear is
wet! What people don't get is, like, a drummer is sitting on a stool a lot of the time, but you
know, your legs, your arms, you're just going at 100 miles an hours sometimes.

And not only that, but then there's the mental strain as well, because as you know, the drummer is
the backbone to a band, and you want to keep that time. So very physical, but at the same time,
it's a lot to do with the old head, you know, you have to endure, really.

JENNIFER MACEY: And he says with all his drumming he doesn't need to schedule in an extra exercise
regime during the week.

ERIC NEIRA: I rehearse say once, twice a week with the band, and then we'll do a show as well, and
what you find is that that's basically it, you don't really need to exercise at all, that's it.
You've done your exercise for the week, and more.

JENNIFER MACEY: Some rock bands even train before tours to make sure they're match fit. Dave
Rowntree, the drummer from the British band Blur, reported losing a stone every time he went on
tour.

But it's a different story for Jazz drummers who have a less flamboyant style of playing. Jim
Piesse is a renowned Sydney jazz drummer and teacher.

JIM PIESSE: Well sometimes, as well as wanting to produce a great sound and a great groove, part of
the show is to make it look good, too, so you might exaggerate your movements in order to make it
look more visually exciting.

JENNIFER MACEY: Is that because drummers are often at the back of the stage?

JIM PIESSE: Maybe, I haven't thought of that but that might be part of it!

JENNIFER MACEY: The researchers hope their findings will encourage some overweight children who
aren't interested in sport to take up drumming instead.

However there are some drummers who warn that people shouldn't throw out their gym clothes just
yet.

Fifty-four-year-old Andy Evans has been playing the drums for most of his life - and now teaches at
the Australian Institute of Music in Sydney.

ANDY EVANS: Well if you saw me, you'd probably dispute that. It certainly sort of keeps you fairly
supple, but I don't think you are going to lose weight playing the drums. You certainly have a lot
of fun doing it.

(Sound of Blondie song 'Call Me')

JENNIFER MACEY: But he's not Blondie's Clem Burke.

ELEANOR HALL: Jennifer Macey with that report.