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Opposition: FuelWatch scheme 'dead'

Opposition: FuelWatch scheme 'dead'

The World Today - Wednesday, 13 August , 2008 12:10:00

Reporter: Sabra Lane

ELEANOR HALL: The Federal Government's plans for a petrol monitoring scheme appear doomed.

The Coalition had already declared its opposition to the FuelWatch scheme.

But this morning, two Senators that the Government was counting on to get the legislation through
the Upper House have come out in opposition to the scheme, saying FuelWatch will force independent
petrol retailers out of business.

In Canberra, Sabra Lane reports.

SABRA LANE: Nick Xenophon is well known in South Australia as the "No Pokies MP". He made the
switch to Federal Parliament at the last election, and is set to become famous around Australia,
for saying no, to FuelWatch.

As it stands, can you support the Government's FuelWatch Scheme?

NICK XENOPHON: No I can't. This won't give the benefits to consumers it is meant to when you
consider that four government departments have said that this could actually put prices up rather
than down.

When you've heard the evidence from the Senate committee process, it has been quite damning and I
just can't support the Government's FuelWatch scheme.

SABRA LANE: The makeup of the Senate changed last month, with the Coalition losing its majority.
The Government now needs the support of seven Senators on the crossbenches to pass its legislation.

Senator Xenophon is one of those key votes, and while he's yet to sit in the chamber, the
Independent MP's already signalling his intentions on FuelWatch, because of what he's heard at the
Senate inquiry into the Government's fuel monitoring scheme.

NICK XENOPHON: Firstly, the ACCC won't release its economic modelling for peer review. Now that, to
me, should set the alarm bells going, the fact that it hasn't been released. But at the end of the
day the big picture is to have real competition in the marketplace. If you want to put downward
pressure on prices, if you want to give motorists a fighting chance, you need to have some real
competition; some reform of the arrangements that the big four oil companies currently work under.

There is a lack of transparency. There is a lack of robust competition. We just don't have that
now.

SABRA LANE: What is wrong with giving motorists access to a website that tells them where they can
buy the cheapest fuel?

NICK XENOPHON: Well, that in itself isn't such a bad idea but the way that FuelWatch works is that
it locks in prices for 24 hours. It means that you can't have prices going lower in that 24 hour
cycle. And experience from Western Australia is that independent operators were forced out of
business.

What this would do is that the big players, the Coles and Woolworths retail outlets, they would
actually be able to consolidate their position. They could risk manage what they do; whereas
independent operators would be left out in the cold and that to me is bad for competition.

SABRA LANE: FuelWatch is supposed to start in December. It will allow motorists to find the
cheapest petrol prices in an area on any day by checking a website. Retailers must give a day's
warning of what their prices will be, but they're prohibited from changing the price - including
lowering it - for 24 hours.

Family First Senator Steve Fielding says he's against the scheme too, based on evidence given to
the Senate inquiry.

STEVE FIELDING: The FuelWatch seems to stop the volatility in petrol prices during the day which
most Australians would say that was a good thing to do. But it also appears that while it stops
that volatility, it may also mean that motorists are buying petrol at a higher average price and if
you were to ask motorists, do you want less volatility in petrol prices, they would probably say
yes.

But if you were to ask motorists that would come at a cost of purchasing petrol at a higher average
price, they would probably say I'm not so sure about that.

SABRA LANE: Both Senators want the Government's reforms extended to wholesale marketing of fuel, to
allow smaller independents to discount petrol, like the supermarket giants. Again, Senator
Fielding:

STEVE FIELDING: What Family First wants to put back in place is a restriction on the amount of
market share any one owner of a petrol retailing in Australia. This is something that would make
sure that we got real competition.

SABRA LANE: The Opposition's spokesman on Competition Policy is Peter Dutton.

PETER DUTTON: Well, certainly the refinery side of the supply chain is one that needs to be
examined properly.

SABRA LANE: Mr Dutton says the Opposition is prepared to talk with the Government about petrol
policy, but not FuelWatch.

PETER DUTTON: Well, FuelWatch in its current form is dead. FuelWatch has been a political mistake
by Mr Rudd. It was a stunt designed to give himself some cover from the political heat that was
coming from petrol prices going through the roof. And we will support any sensible and tangible
position that is put forward by the Government but that is not FuelWatch.

SABRA LANE: The Greens hold five votes in the Senate. The party says it's yet to be convinced that
the scheme is worthwhile but it will wait until the Senate inquiry into the scheme is complete.

Senator Steve Fielding says it's not a case of a hostile Senate, rather a more representative Upper
House.

STEVE FIELDING: I think that it is not a rubber stamp anymore. It means that the Australian public
cannot be taken for granted. It also means that the Government of the day just can't ram things
through and ram through bad legislation.

There is a real question mark over FuelWatch. Now you know, this is good for Australia that we are
going to actually have, you know, at least a chance to make sure that petrol retailing in
Australia, we have some real competition and we don't force through bad legislation.

ELEANOR HALL: That is Family First Senator Steve Fielding ending that report by Sabra Lane.

Govt prepared to negotiate changes on petrol scheme

Govt prepared to negotiate changes on petrol scheme

The World Today - Wednesday, 13 August , 2008 12:15:00

Reporter: Sabra Lane

ELEANOR HALL: Assistant Treasurer Chris Bowen is the Minister responsible for the Government's
FuelWatch Scheme.

He's been telling Sabra Lane that the Government is willing to talk to the Senators about their
concerns.

SABRA LANE: Chris Bowen, Senator Xenophon and Fielding say they can't support the Government's
FuelWatch scheme as it stands. Is the scheme dead?

CHRIS BOWEN: Look, what Senator Xenophon has said today is that he wants to see more transparency
into the petrol market. He wants to see more competition and we agree with him.

Now our bottom line is that FuelWatch is designed and will deal with the fundamentally
uncompetitive elements in the retail petrol sector in Australia and get consumers a lot more
information about how to find the cheapest petrol in their area.

Now if Senator Xenophon or any other Senator has suggestions that they can make to make the
legislation more acceptable to them, which don't undermine the Government's fundamental policy
objectives, to give consumers and motorists a better go, then we would be happy to consider it.

All legislation in the current environment is requiring a discussion and negotiation to get through
the Senate.

I'm particularly unsurprised that FuelWatch would be any different.

SABRA LANE: Both men say they believe it will have a detrimental impact on independent operators.
Nick Xenophon says it has had a terrible impact in Western Australia where the scheme is in place
now. Is that the case and how many independent operators have closed their businesses since
FuelWatch started there in 2001?

CHRIS BOWEN: Well, all the evidence from Western Australia is that there is no negative impact on
independent fuel operators. The number of independents in Western Australia has gone down by no
more than in any other state or territory in Australia and indeed, independents have reduced in
numbers around the world. So there is no evidence there is any link between FuelWatch and a
reduction in independents at all.

But as I say if Mr Xenophon has concerns, as always, we are happy to talk them through with him and
are happy to see this through the Senate in a way that meets as many people's concern as possible.

SABRA LANE: Under the plans as they stand, retailers will have to notify their prices a day ahead
and can't change them for 24 hours. The Senators say that can harm the smaller independents. Are
you open to having a scheme that allows retailers to drop their prices without being fined?

CHRIS BOWEN: Look, the fundamental elements of FuelWatch are that there need to be price certainty;
that people need to know when they go to the service station, if they have looked up the price in
advance, they know what it is when they get there. Now if there are ways that can meet those
concerns which the Government can talk through with those independent crossbench Senators, we'd be
happy to do so.

But the crossbench Senators and the Government are coming from the same direction - we want to see
more transparency and competition in the fuel market. The only people opposed to that transparency
are the Opposition. They'll oppose FuelWatch which means we'll have discussions with the other
Senators as we are always, as we have begun to do and will always going to need to do.

SABRA LANE: The Senators today have said that Treasury hasn't released all of its modelling; that
alarm bells are ringing. Why won't the Government release all that modelling? The Government says
it is big on transparency here, why won't it release all the modelling?

CHRIS BOWEN: I'm sorry. I'm not sure what you are referring to there, I haven't seen those comments
in relation to modelling. The ACCC has done very extensive modelling on the FuelWatch scheme and
that has all been released.

SABRA LANE: Well both Senators this morning have said that they have an issue with that because
they claim the Government is withholding all that modelling.

CHRIS BOWEN: All the modelling that has been done; all the econometric modelling that has been done
has been released. It is in the ACCC's report.

SABRA LANE: You believe the Senators are misguided on this point?

CHRIS BOWEN: I would be happy to talk to them about that because the modelling, and this has
received extensive publicity, the modelling that the ACCC has done in report and subsequently in
consultation with the Australian Treasury has been released.

They may be referring to the raw data. Now the raw data was supplied by informed sources and their
agreement would be needed for it to be released. The ACCC sought that agreement and it hasn't been
forthcoming.

SABRA LANE: So the company doesn't want that information released?

CHRIS BOWEN: That is correct. They only want to release it to people who they choose to release it
to - if that is what the Senators are referring to.

SABRA LANE: I believe that is and they are calling for full transparency.

CHRIS BOWEN: Well, the ACCC would be happy to release it if they receive permission from the firm
which supplied it. They would be equally happy for the firm to release it generally.

SABRA LANE: This looks to be a sticking point. Are you going to try and force this?

CHRIS BOWEN: Well again, I am more than happy to talk through any issues that they have and any
modelling that we have has been released. The raw figures that it was based on, we would release if
we were contractually able to and we have asked to be contractually released to make that
information publicly available.

ELEANOR HALL: That is Assistant Treasurer Chris Bowen speaking to Sabra Lane.

Commonwealth issues warning despite profit boost

Commonwealth issues warning despite profit boost

The World Today - Wednesday, 13 August , 2008 12:20:00

Reporter: Peter Ryan

ELEANOR HALL: Australia's biggest bank has warned of more volatile economic times ahead even as it
posted another big profit today.

The Commonwealth Bank's after tax profit is up seven per cent to $4.8-billion.

But, like the St George Bank yesterday, it too is giving no guarantees that its customers will see
any mortgage relief if the Reserve Bank cuts interest rates.

That's despite comments from a Reserve Bank assistant governor that there's no obvious reason why
banks can't pass on the official interest rate cuts.

This report from business editor Peter Ryan.

PETER RYAN: Today's comparatively rosy $4.79-billion profit from the Commonwealth Bank coincides
with a gloomy global milestone as the credit crisis continues to unfold.

The world's top 100 banks have now posted write-downs of $US500-billion stemming from America's
subprime mortgage meltdown.

So with predictions that the losses could hit a trillion dollars before there's a turnaround, it's
little wonder the head of the Commonwealth Bank is treading cautiously.

RALPH NORRIS: The issues and challenges which dominated the global financial services industry
during the 2008 financial year will continue to dictate the outlook for the Australian banking
sector for some time.

The disruption to global credit markets, higher wholesale funding costs and slowing economic growth
will continue to have a significant impact for Australian banks through calendar 2009 and
potentially beyond.

PETER RYAN: Ralph Norris admits it's a difficult environment - something of an understatement given
the widened exposure of key competitors such as the NAB and ANZ to the sinking credit environment.

While he expects the Australian economy to remain resilient, Mr Norris predicts credit growth will
moderate as the slowing economy hits customers.

But Australia's most powerful banker says other factors such as the resources boom are protecting
Australia from a more rapid economic slide.

RALPH NORRIS: While there are clearly a number of negatives at work in the Australian economy,
there are some balancing factors.

These include the huge income boost from rising commodity prices; respectable growth in the
economies of our major Asian trading partners; tax cuts; continuing strong immigration growth and
robust business and infrastructure spending.

The balance of these opposing forces favours continued modest economic and credit growth not too
far below the average of the past decade.

Given current circumstances however, we intend to maintain a cautious and conservative stance going
into the new financial year.

PETER RYAN: The flat profit and conservative talk sent Commonwealth Bank shares down two per cent
this morning, as investors battened down for similar outcomes from the rest of the big four banks.

The sentiment was underlined by the CBA's decision to pull out of talks with the Royal Bank of
Scotland to buy the Australian arm of the investment bank ABN AMRO.

But Ralph Norris was unable to avoid the issue of interest rates which have risen independently of
official Reserve Bank movements.

RALPH NORRIS: Certainly our pricing is a little sharper than our competitors'; basically around
four or five basis points.

PETER RYAN: But with the Reserve Bank poised to slash interest rates in the coming months, Mr
Norris did hold out some hope for rates relief - but not right now.

RALPH NORRIS: I think it is fair to say that where we currently sit on pricing is not where we
would like to sit in the future. I think it is fair to say that over time, we would expect that the
margin on home loans will revert to a level which is consistent with where it was say 12, 13 months
ago.

PETER RYAN: Other banking chiefs - most recently Paul Fegan from St George and Gail Kelly from
Westpac - have also refused to guarantee that official reductions will be passed on.

That seemingly steadfast view clashes with comments from Philip Lowe - an assistant governor at the
Reserve Bank. He says the global cost of sourcing money is coming down and the banks have no excuse
not to pass on the benefit to customers.

PHILIP LOWE: Over recent weeks, the 90-day bank bill rate has fallen considerably. This rate is
often used as an indicator of banks marginal cost of funds particularly at the short end. I think
over the last two or three weeks, the 90-day bank bill rate is down around half a per cent.

So that significantly reduced the bank's marginal cost of short-term funding. I think that means
that there is no obvious reason that the banks could not pass through any change in the cash rate.

ELEANOR HALL: Assistant Reserve Bank governor, Philip Lowe ending that report from business editor
Peter Ryan.

Pensioners urged to sell family home

Pensioners urged to sell family home

The World Today - Wednesday, 13 August , 2008 12:25:00

Reporter: Jennifer Macey

ELEANOR HALL: The Federal Government has this week come under increased pressure to raise the aged
pension rate which is amongst the lowest in the OECD.

Now new research shows that while many elderly Australians are income poor, they are asset rich.

A University of New South Wales study has found that Australian pensioners are more likely to be
home owners than their OECD counterparts.

And the author of the report is recommending that they tap into that wealth by selling their
children's inheritance.

Jennifer Macey reports.

JENNIFER MACEY: Sixty-seven-year-old Frances lives in a relatively large Queenslander in inner-city
Brisbane.

She retired two years ago but found it difficult to survive on the pension - so she's gone back to
teaching two days a week.

FRANCES: I love the house because it is terribly conveniently placed and it has enough room so that
when my children come home and grandchildren, there is room for them.

However, there is a lot of upkeep and overheads. It is an old Queenslander, so it does require the
replacing of the deck and painting and that kind of thing.

JENNIFER MACEY: Frances is thinking of retiring for good soon and that means selling her house to
secure more income but she says it will be hard to part with the old Queenslander.

FRANCES: You know in about 12 months' time I think it might be time that I have to sell my house to
get some money.

I think about it all the time; but every time I think about putting it on the market, I can't do
it. Emotionally I am just very attached. There are very happy memories in this house.

JENNIFER MACEY: Her situation reflects that of most Australians facing retirement -according to a
new study.

Dr Bruce Bradbury from the Social Policy Research Centre at the University New South Wales found
that more elderly Australians owned their own homes compared to that of their counterparts in other
wealthy nations.

But with pensions well below the OECD average - Dr Bradbury says many Australians are asset rich
but income poor.

BRUCE BRADBURY: In the average rich country, if you like, when people retire their income falls to
a level of about two-thirds of their previous income. In Australia on the other hand, the drop is
down to about 50 per cent.

The flip side however is that the Australian elderly have much higher rates of home ownership than
the elderly in most other countries. We have around 85 per cent of elderly owning their own home
compared to rates under 75 per cent or down in the sixties for countries like the UK.

JENNIFER MACEY: Dr Bradbury says most retirees live in houses that are much larger than they need
or can afford to maintain.

He says people should start thinking about how to best take advantage of this wealth that is locked
up in bricks and mortar and that he says means selling the children's inheritance.

BRUCE BRADBURY: They include the obvious one of trading down to a smaller house to free up some
money; the possibility of using reverse mortgages and so on. There are things that policy makers
can do to make it easier for people to do those things.

Making sure that reverse mortgages work and they are not too expensive; covering the risks
associated with them for example the risk of living too long and running out of money. And making
it easier to trade down your house; possibly reducing stamp duty for people in that, older people
for example.

JENNIFER MACEY: But Michael O'Neill the chief executive of National Seniors Australia says for many
elderly people it's not an easy decision to sell the family home. And he warns reverse mortgages
should be approached with caution, particularly if there is a downturn in the property market that
could see house prices fall.

MICHAEL O'NEILL: You've had people enter into a reverse mortgage or some kind of mortgage based on
a value now and with no repayments, reverse mortgages are about no repayments being made until the
property is sold or it is taken out of the estate at the point of death.

It may well expose people who are involved in a reverse mortgage for a fair period of time to
having no interest left in their property when they most need it.

JENNIFER MACEY: Mr O'Neill says this isn't an option for those pensioners who are renting. He is
calling on the Federal Government to increase the single pension rate by at least $30 a week as
part of the review into the aged pension announced by the Government this week.

MICHAEL O'NEILL: The situation for older Australians has deteriorated since the last budget and the
report that the Government handed down, the pensions review discussion paper, only reinforces the
fact that particularly the single aged pension is inadequate and that older Australians reliant on
the single aged pension are doing it very, very tough.

JENNIFER MACEY: For 67-year-old widow Frances, increasing the single pension rate is the best
solution.

FRANCES: I think the Government needs to increase the pension. I had some superannuation but not a
lot because I had to work part-time because my children were small when I was widowed. And there
are a lot of people like me, at my age, who are in that situation where they weren't able to
establish a good superannuation pension.

People who are on a good superannuation pension are on clover and good luck to them because they
have worked full-time for a long time, but there are a lot of people who weren't able to do that
and we're not on clover.

ELEANOR HALL: That is semi-retired Queensland teacher Frances ending that report by Jennifer Macey.

Maintenance questions plague Qantas

Maintenance questions plague Qantas

The World Today - Wednesday, 13 August , 2008 12:30:00

Reporter: Sara Everingham

ELEANOR HALL: There's more bad news for Qantas today. Six of its jets were grounded last night
because of confusion about whether or not crucial maintenance had been.

It's now emerged the maintenance, which had been ordered by the manufacturer, wasn't done properly.

Qantas argues its discovery of the problem shows its safety systems are second to none but as Sara
Everingham reports, the public might see things differently.

SARA EVERINGHAM: In all, eleven Qantas flights have been cancelled since the airlines discovery
last night of a problem with its maintenance records.

Yesterday it wasn't clear if maintenance ordered by Boeing in 2000 had been done on six jets.

Today Qantas has discovered there are problems as the spokesman for the Civil Aviation Safety
Authority Peter Gibson explains.

PETER GIBSON: Qantas maintenance missed one step in the modification of the forward pressure
bulkhead in 737-400 aircraft.

These modifications were required by anna-loo(phonetic) misdirective. Qantas is now working through
the issues of rectifying that and obviously tracking back as to how the mistake was made.

SARA EVERINGHAM: Peter Gibson says it doesn't appear as though the oversight is a serious safety
issue.

Qantas says its investigations are continuing but that it's too early to provide details on what
step was missed in the maintenance and what the consequences of that are.

Another unanswered question today is how long has this particular problem existed?

David Cox the head of Qantas engineering.

DAVID COX: It is one step and we are going back through the maintenance records over a number of
years.

SARA EVERINGHAM: So it might have existed for a few years?

DAVID COX: Yes but as I said, we are constantly in there checking so we don't assume just because
something has happened yesterday or it happened ten years ago, we don't assume anything is perfect.
We take nothing for granted and we go back and challenge it on a systematic basis. And that is the
layer of safety that allows us to say that our standards are second to none. We never rest on
safety.

SARA EVERINGHAM: If that were the case, wouldn't this problem have been picked up before?

DAVID COX: This particular issue is a very complex one and it has taken a great deal of effort to
even determine that we had an issue. It is not something that would be immediately apparent and I
can say to you I think only the process we have gone through which is a Qantas unique process,
could even have found this.

SARA EVERINGHAM: As I understand it Boeing put out this directive in 2000 for this maintenance to
be done. Could the step have been missed back then in 2000 and not picked up until now?

DAVID COX: We are reviewing the entire history and that is what when we say we are doing a record
review, we don't just look at one step, we go back through the whole lot and we are looking right
back through and that is why these things take time. But it also is why we can say we are second to
none because we do test everything.

SARA EVERINGHAM: But the public might not see it that way.

Qantas has been in the spotlight since one of its fleet was forced to make an emergency landing at
Manila after the explosion of an oxygen tank.

This latest incident will be part of an investigation of Qantas by the Civil Aviation Safety
Authority. David Cox is confident the review won't find systemic problems at the airline.

DAVID COX: No, I don't think so. I think I said at the time when that was announced, I am very
confident that our systems and processes are very, very strong.

SARA EVERINGHAM: The public might need some reassurance. To add to their uneasiness on Sunday night
a Virgin Blue plane had to make a high-speed landing at Melbourne airport because of a problem with
the slats on its wings.

Peter Gibson from the Civil Aviation Safety Authority says all safety concerns taken seriously.

PETER GIBSON: Well, I suppose some people might get nervous but I think they have got to be
realistic that none of these events have had a bad outcome. All of them have been handled very well
by the flight crews. All of them have been reported. All of them are being investigated.

So it is not as if these things are being swept under the carpet. They are being looked at very
carefully and that is what keeps the Australian aviation system, one of the best in the world.

ELEANOR HALL: Peter Gibson from the Civil Aviation Authority ending Sara Everingham's report.

France brokers Russia, Georgia peace

France brokers Russia, Georgia peace

The World Today - Wednesday, 13 August , 2008 12:35:00

Reporter: David Mark

ELEANOR HALL: The French President Nicolas Sarkozy has brokered a peace plan between Russia and
Georgia who have agreed to end their fighting over the breakaway region of South Ossetia.

But while the fighting has stopped, the war of words hasn't.

The Georgian President, Mikhail Saakashvili, is accusing Russia of ethnic cleansing and Russia's
Dmitry Medvedev has called Georgian troops lunatics and accused Mr Saakashvili of lying.

David Mark has our report.

DAVID MARK: A peace of sorts has been brokered in the southern caucuses after France's President,
Nicolas Sarkozy travelled from Moscow to Tbilisi for talks.

The result is the first draft of a six point peace plan that will go to a meeting of European Union
foreign ministers later today.

President Sarkozy spoke to reporters in the Georgian capital.

NICOLAS SARKOZY (translated): We have held lengthy discussions with President Saakashvili and his
team on the principles of the agreement that we had discussed with President Medvedev and the Prime
Minister Vladamir Putin.

It is therefore the beginning of the process which allows France to hope with all its power for
peace in the region that we are in.

DAVID MARK: Russian President, Dmitry Medvedev:

DMITRY MEDVEDEV (translated): I have decided to conclude the operation to force the Georgian
authorities into peace. The aim of the operation has been achieved. The safety of our peace-keeping
forces and the civilian population has been restored. The aggressor has been punished.

DAVID MARK: The language of the two waring leaders is anything but peaceful and the truce,
tentative at best.

Georgia's President Mikhail Saakashvili, has accused Russia of continuing the fighting.

MIKHAIL SAAKASHVILI: I mean now we heard that they basically halted the fighting but as I told you,
after this announcement there were a number of killings reported and bombing strikes continued.

And again I stress this time on purely civilian targets because there are no, for this moment there
are no militaries left there.

DAVID MARK: President Medvedev hit back claiming Georgia's assertions that it had stopped fighting
days ago were lies.

DMITRY MEDVEDEV (translated): As far as the Georgian President's assertions are concerned about the
ceasefire already having been observed for two days - that is a lie.

The Georgian forces were shooting at peace-keepers and unfortunately there were fatalities
yesterday too.

You know, that is what differentiates thugs from normal people. When they smell blood, it is hard
to stop them.

DAVID MARK: The conflict began six days ago when Georgia sent troops into the pro-Russian province
of South Ossetia. Russia's retaliation was swift and brutal.

Its troops and tanks poured into South Ossetia while its fighter jets attacked towns inside
Georgia. Georgia has accused Russia of ethnic cleansing and filed a complaint with the
International Court of Justice.

President Saakashvili says he has unverified reports that Russia had been executing civilians.

MIKHAIL SAAKASHVILI: What we've been getting reports lately that groups in Nishkin Valley
(phonetic) were entering villages previously under control of the Georgian Government and were
having competing killings, rampages and ethnic cleansing of the areas adjacent to Toleskinole
(phonetic).

DAVID MARK: Russia claims 2,000 civilians have been killed in the conflict, while the UN says
100,000 people have been forced from their homes.

Perhaps now some will be able to return as one condition of the ceasefire is an agreement for
troops to return to their pre-conflict positions.

The US Secretary of State, Condoleezza Rice, has mapped out the next moves in the quest for peace.

CONDOLEEZZA RICE: Calm needs to be restored. There then will be international efforts to facilitate
the withdrawal of forces from the zone of conflict. We can then look to the issue of how to resolve
the long-standing frozen conflicts of South Ossetia and Abkhazia.

DAVID MARK: But whether those conflicts can be resolved after the past week is another question.

Georgia's President, Mikhail Saaksahvili:

MIKHEIL SAAKASVILI: Our message to them is, no matter what they do, no matter how much they bomb
us, no matter how they want to cripple us and undermine us, we are not going to give up our freedom
and Georgia will never surrender.

ELEANOR HALL: That's Georgia's President Mikhail Saakashvili, ending David Mark's report.

Australia to send humanitarian aid to Georgia

Australia to send humanitarian aid to Georgia

The World Today - Wednesday, 13 August , 2008 12:40:00

Reporter: Samantha Hawley

ELEANOR HALL: Australia's Foreign Affairs Minister, Stephen Smith the Federal Government is
preparing to announce a package of humanitarian assistance for those who've been displaced by the
fighting in South Ossetia in Georgia.

Mr Smith revealed that Georgia had asked Australia for military assistance during the fighting but
that the Government refused that request.

Mr Smith is visiting Indonesia and spoke from there to reporter, Samantha Hawley.

STEPHEN SMITH: We welcome the fact that Russian President Medvedev has indicated that he is
prepared to stop hostilities. That sets the scene for an effective ceasefire.

SAMANTHA HAWLEY: Well, there is just news to hand now that Georgia has agreed to the terms of the
ceasefire. That has got to be a positive step.

STEPHEN SMITH: Absolutely, but in the end what we now need is to try and find a long-term solution
to this. Yes, we have seen very regrettable violence and force of arms, use of the force of arms in
the last few days but this problem has been going on for some time. We now do need to work through
by dialogue, a solution to this problem.

SAMANTHA HAWLEY: I understand that Georgia had actually asked Australia for military assistance. Is
that right?

STEPHEN SMITH: At officer level in New York through the UN, Georgia approached officer level, a
number of countries for military assistance. Our response was of course, the obvious which is - we
are not interested in a military solution here, we're interested in ceasefire and a dialogue. So
that was made very clear.

SAMANTHA HAWLEY: OK so absolutely no consideration by Australia to that request?

STEPHEN SMITH: Absolutely not. We are not interested in a military solution here. We are interested
in a dialogue. I have made it clear and I again make it clear, Australia of course, stands ready to
contemplate humanitarian assistance. There have been a large number of civilians who have been
killed or injured or displaced.

SAMANTHA HAWLEY: Do we know how many?

STEPHEN SMITH: I am not aware of the precise numbers, possibly 100,000 of displaced people in South
Ossetia and Georgia.

SAMANTHA HAWLEY: Could we provide refuge for some of these people?

STEPHEN SMITH: Well I think it is too early to contemplate that. What we want in the first instance
is a cessation of violence, restoration of peace and stability and then talks which we hope can
bring about a long-term solution to this.

SAMANTHA HAWLEY: And you will be providing some form of humanitarian aid, money I expect, when will
you make an announcement about that?

STEPHEN SMITH: I hope to be in a position to announce what we are doing in the first instance in
the next 24 hours.

SAMANTHA HAWLEY: You mentioned the number of civilian casualties is very high. Should Russia or
Georgia for that matter, face war crimes investigations?

STEPHEN SMITH: Well again, I think it is very early to contemplate things of that nature.

SAMANTHA HAWLEY: There are still reports of sporadic fighting. Should the Australians who remain in
Georgia still proceed with plans to leave or given now that Georgia seems to have agreed to the
ceasefire, can they safely remain in the country?

STEPHEN SMITH: We, yesterday, increased our travel advice to not to travel to Georgia. There are a
small number of Australians who are in Georgia and our advice to them has been that if they are
able to leave safely, they should leave and for a number of Australians, we have been able to
facilitate their leaving Georgia.

For those who want to remain we have been indicating to them that they should effectively keep
their heads down. They should stay indoors and keep their heads down.

ELEANOR HALL: The Foreign Affairs Minister, Stephen Smith speaking to Samantha Hawley.

Olympics related violence in western China

Olympics related violence in western China

The World Today - Wednesday, 13 August , 2008 12:45:00

Reporter: Stephen McDonell

ELEANOR HALL: To China now where the Olympic Games appears to have led to an explosion of violence
in the western Chinese province of Xinjiang.

According to local media reports, ethnic Uighur separatists have been attacking police and other
government officials in an attempt to upstage the Games.

It is being reported that 31 people have been killed there in eight days of clashes.

China correspondent Stephen McDonell is in the city of Kashgar where eight security personnel were
stabbed to death yesterday.

He joins us now. Stephen what is the mood now in Kashgar?

STEPHEN MCDONELL: Well if you walk around the city and speak to people, they are quite nervous
speaking about their situation, the security presence and why in fact, they may want independence.

Now this is a place where recently there has been some killing, a round of killing here and we
tried to get to that area but if you try to speak and people how to get there, what is going on,
they are very suspicious of outsiders. They are even suspicious of local people because they think
there might be spies amongst their own rank.

ELEANOR HALL: What is the relationship between the Uighur people there and the Chinese authorities?

STEPHEN MCDONELL: Well, it is not such a great relationship you would have to say. I mean when
people dealing with the police, they are doing it, I suppose with suspicion because they know that
the police think that they are possibly members of these extremist groups who are capable of
killing police or others to try and achieve independence. So on both sides there is real suspicion
and you would have to say the relationship is not great.

ELEANOR HALL: And what are authorities there saying about the likelihood of the violence
continuing?

STEPHEN MCDONELL: Well, I mean, they are making clear that it looks like the Olympics has been the
catalyst for this violence.

Now, um, as long as the Olympic Games is continuing, then it looks like there will be other
possibilities of this happening.

Now as you mentioned, in just eight days, we have had more than 31 people killed and a series of
suicide bombings and subsequent shoot-outs with the police and also, just this most recent event
when someone pulled up at a roadblock and stabbed and killed three security personnel. So look, as
long as the Olympic Games is going on, if the pattern continues, it seems there will be more
killing.

ELEANOR HALL: And you have tried to reach the scene of that most recent attack?

STEPHEN MCDONELL: Yes, we left the city and tried to move through the road blocks to get to where
this recent attack happened but I mean in the first place, our drivers were petrified in terms of
going there because they are worried, these local drivers, that they will be somehow seen as
involved by the police and they could be thrown in jail.

Now when we finally reached these roadblocks, the police have just said, no, no foreign reporter is
going anywhere near this. And so we have been able to travel around the area but not specifically
to that location. There is a massive security and police presence on the roads all around Kashgar.

ELEANOR HALL: And Stephen, is there any excitement at all about the Olympic Games being held in
China?

STEPHEN MCDONELL: Well, people are still watching the Games. I mean, we walked through, past a few
cafes and saw people having their lunch and watching television and seeing that it is on. But
unfortunately because it has been a catalyst for such misery around here, I think for many people
they are probably waiting for it all to finish and sort of hoping that the violence might stop and
that the security crackdown might be lessened.

I mean they have got to pass an ID check just to buy petrol.

So it has been quite a sad and miserable time for many locals here but given that, you would have
to say that there are still some people watching it, but not a hell of a lot of interest, I would
have to say.

ELEANOR HALL: Stephen McDonell, thank you. That is our China correspondent, Stephen McDonell in the
city Kashgar in the western Chinese province of Xinjiang.

Expert on innovation says Aust needs radical change

Expert on innovation says Aust needs radical change

The World Today - Wednesday, 13 August , 2008 12:50:00

Reporter: Eleanor Hall

ELEANOR HALL: A key international advisor on the Federal Government's national review of innovation
is warning that Australia has only a small window of opportunity to make the most of its innovation
potential.

The global head of innovation for IBM, Nicholas Donofrio, is calling on the Australian Government
to make urgent and radical changes to Australian infrastructure including its education system
which he says needs to be dragged from the 19th into the 21st century.

The Government is planning to release its innovation review next month and Nicholas Donofrio is in
Australia this week to meet members of the review panel, business leaders and the Minister for
Innovation, Industry, Science and Research, Kim Carr.

He joined me earlier in The World Today studio.

Nicholas Donofrio, what exactly is innovation and why is it important?

NICHOLAS DONOFRIO: So here in the 21st century, innovation is all about finding value, unlocking
hidden value that exists in the marketplace. It is either in a business problem, a societal
problem, a governmental problem, an educational problem; and then you apply your technology, your
goods, your services in a unique and intricately different way.

So you are looking for things that exist at these deep interstices. That value, when you find it,
Eleanor, that is real innovation.

ELEANOR HALL: Now, you are in charge of innovation at IBM, you deal with innovation inside a
company but what makes a country a world class innovator?

NICHOLAS DONOFRIO: Pretty much the same thing that makes a company a world class innovator. It is
all about culture. It is all about having the right people positioned to be able to do the right
things at the right times and enabling them.

ELEANOR HALL: Now the Australian Government is about to release the results of its national
innovation review, how do you rate Australia compared to the rest of the world?

NICHOLAS DONOFRIO: As you know I have been invited here by Minister Carr to be part of the
international advisory panel. I have great expectations for Australia.

ELEANOR HALL: Why?

NICHOLAS DONOFRIO: Well, I mean perhaps you are so much like us and I have great expectations for
the United States.

It has something to do, Eleanor, with the intangibles, the freedoms that we have; the freedom of
thought that we have. We are a problem based people. We like problems. Australians, Americans - we
are very similar in the way we approach our thinking about what needs to be done.

That core is, I find, incredibly important and valuable. Yes, you have to be smart. Yes, you have
to have infrastructure. Yes, you have to have investments. But the major issue is the people.

ELEANOR HALL: One of the big differences between the US and Australia though is that Australia has
a history of people having good ideas but those ideas not being taken to the commercial stage, so
that a lot of our innovators end up going overseas. How can a problem like that be overcome?

NICHOLAS DONOFRIO: So I am hoping that through this work that we are doing with the Australian
Government, that the whole issue of infrastructure and investment becomes addressed. The investment
of long-term ideas not just short-term ideas, and people getting credit for investing in long-term
ideas.

Education for instance, is a long-term thing in my mind. Education needs to be invested in this
country. You have to start to change the way you are education people. You are educating them,
actually not even in the 20th century sense, you are education them in a 19th century model.

Most people come out shaped like the letter "I". You know what that letter looks like. You are very
deep in a particular subject but you are very narrow in scope.

What I have been advocating along with many other people, is we need people who are shaped like the
letter "T". So these people are as wide as they are deep. They are capable of understanding that
value migrates. They are capable of understanding and grasping multi-disciplinary concepts and
ideas and they are global.

So the longest term investment of all is education. In the end, your success or your failure is
governed by your willingness to change, to lead change, to embrace change and to create change.

ELEANOR HALL: You met the Minister yesterday. What was your assessment of his willingness to do
that?

NICHOLAS DONOFRIO: He is clearly there. I mean when he was so generous to invite me to participate
in this international advisory panel, he made it very clear to me that this is all about change.
And he also made it very clear to me that this is all about an urgency, you know, for Australia to
move now.

This isn't something you can put on the back burner. I mean, if you do, you do it at your own
peril. Remember everyone is looking to raise their standard of living - everywhere around the
world. Vietnam, the Philippines, India, China, Africa, the Middle East. I mean there are so many
people Eleanor who live at quote unquote "the base of the pyramid". They have so little to lose
when they change.

It is countries like ours, it is the major markets as we call them now. We have everything to lose
but yet if we don't change and if we don't move, we will lose everything.

ELEANOR HALL: Now, is there one change that you have made in your company over recent years that
surprised you for better or worse, with its effect on innovation?

NICHOLAS DONOFRIO: Yes. It has to do with this whole phenomena around connecting people. This whole
idea around collaboration and if I might extend that to the world of social networking.

This is a powerful force of change that is coming at us. Whether it is me and you and whatever
social networking we do. But more importantly our children and our grandchildren, they are going to
actually grow up this way; they are going to grow up with this tool set and this capability.

The power of just connecting everybody together, gives you the opportunity to get the better idea
if not the best idea and you know what Eleanor, you never know who has the better idea.

So you have got to have this network of socially active people connected together in a very diverse
way. That is another advantage by the way that Australia has. The diversity of its culture and the
diversity of its thought are inseparable; just as the United States.

You know these heterogenous environments usually come up with some very, very powerful ideas and
forces for change.

ELEANOR HALL: Now you mentioned the urgency of this, what sort of a time frame do you think the
Australian Government should be putting on bringing in the sort of infrastructure changes that you
are talking - the things that will take a long time?

NICHOLAS DONOFRIO: I think they have to start right now and I am hopeful that that's what they are
going to do. That is clearly what I am going to tell them they should be doing at the luncheon I
will be speaking at.

You have to have six-month checkpoints. You have to have 12-month checkpoints. You can't tell me it
is going to take five years. Showing visible change as fast as you can to the widest number of
people that you can so you get the cohort.

This is a cultural transformation. You have to get the people behind it. Look, it is not just about
technology anymore - innovation is a different thing. It is a harder topic, you know, the value has
moved away from simply here is my invention, don't you want it. So I say to the Government of
Australia, start now, move as fast as you can and don't give up.

ELEANOR HALL: That is Nicholas Donofrio, the global head of innovation at IBM and he has been
advising the Australian Government on its innovation review. If you want to hear more from Nicholas
Donofrio, an extended version of that interview will be available shortly on our website.

Humpback off threatened species list

Humpback off threatened species list

The World Today - Wednesday, 13 August , 2008 12:55:00

Reporter: Simon Lauder

ELEANOR HALL: The humpback whale appears to have recovered from last century's widespread hunting
and is now officially off the threatened species list.

But conservationists are warning that whaling nations including Japan will now use the whale's new
status as an excuse to resume hunting it.

And there's also a new addition to the threatened species list, the Australian snubfin dolphin.

Simon Lauder has our report.

SIMON LAUDER: The West Australian Marine Science Institution recently announced the discovery of
one of the world's biggest humpback whale nursery grounds, after sighting more than 600 humpback
whales, 300 kilometres north-east of Broome.

Now the International Union for Conservation of Nature says humpback whales have bounced back.

It has revised the status of the humpback, putting it just outside the danger zone. On the
'red-list' of threatened species, humpbacks are now in the 'least concerned' category.

The International Whaling Commission protected humpbacks in 1966, after more than a century of
whaling put the whole species at risk.

Japanese whalers were set to defy the moratorium, but withdrew plans to hunt humpbacks last whaling
season.

Conservationists are now concerned that plan will be revived by evidence the species is recovering.

Nicola Beynon from the Humane Society International says the new status will be used as
justification for whalers to put humpbacks back in their sights.

NICOLA BEYNON: That threat was simply political posturing, parts of it was a negotiating tactic for
the International Whaling Commission to try and threaten the commission into lifting the ban on
commercial whaling.

SIMON LAUDER: Would you expect that threat to be dusted off again this year?

NICOLA BEYNON: I would think because of the IUCN reclassification, they might think that that adds
more strength to their arguments; but I think the international community will hold firm and
maintain the ban on commercial whaling. It is clearly working.

SIMON LAUDER: A spokesman for Japan's Institute of Cetacean Research has told The World Today Japan
will not hunt humpbacks for another two years, as long as the International Whaling Commission
restores commercial whaling, and allows 'abundant species' to targeted.

Dr Randall Reeves from the International Union for Conservation of Nature says the 'red-list' is
not about whether or not a species can be exploited, and there are some types of humpback which are
still in danger. Although he says there is limited scope for some whales to be captured.

RANDALL REEVES: Although the species as a whole, globally, has been down-listed, at the very same
time in the red list that has been announced today, two sub-populations of humpback whales have
been listed as endangered and one of those sub-populations is called Oceania sub-population, which
includes the whales in many of the South Pacific islands and eastern Australia.

So that population, the fact that it still hasn't recovered sufficiently to come off the list is a
significant point to bear in mind.

SIMON LAUDER: Can you say how safe the humpback is in that 'least concerned' category? Would it be
correct to say that a species in that category can be caught sustainably?

RANDALL REEVES: Well, I think if you understand the biology of the species, of the population, well
enough, I think so, yes.

SIMON LAUDER: Dr Reeves says many dolphin species have declined as a result of human actions. A
recently discovered Australian species is now at risk.

RANDALL REEVES: One example that comes from Australia, we just listed, the snubfin dolphin - a
newly recognised species along the northern coast of Australia.

I think we listed it as 'near threatened'. Those few people who have been out looking for them have
noted that they have to sail a long way before they encounter just a few and then it is a long gap
again. All the science that we have so far are quite worrisome.

ELEANOR HALL: That is Dr Randall Reeves from the International Union for Conservation of Nature. He
was speaking to Simon Lauder.