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Costello comments please some, not others

Costello comments please some, not others

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Lyndal Curtis

ELEANOR HALL: But we begin with politics in Canberra. And he says he doesn't want the Liberal
leadership but Peter Costello is still refusing to leave the federal parliament.

This morning some of his colleagues said his failure to clarify his intentions earlier, as
leadership speculation swirled around him, was "unhelpful".

But senior Liberals now say their current leader, Brendan Nelson, has been given room to do his job
and Dr Nelson is certainly trying his hardest to bat away any further leadership speculation.

In Canberra, chief political correspondent Lyndal Curtis reports.

LYNDAL CURTIS: There was so much talk of clear air this morning, you could be forgiven for thinking
it was another stage of the climate change debate.

But the clear air this time came from Peter Costello's decision to say thanks but no thanks to
those calling on him to stay in politics and take up the party's leadership.

Senior Liberals Nick Minchin on AM and Andrew Robb on Radio National kicked off the clean air

NICK MINCHIN: The speculation about the possibility of Peter remaining in parliament and putting
his hand up to be leader has not been helpful for Brendan so I think Peter clarifying his position
as clearly now clears the air for Brendan.

ANDREW ROBB: I think the intent of everybody is to give Brendan every possible opportunity. Well,
you know, he's had his hands tied to some extent in recent months because of all of this sort of
speculation. I think now that the air is cleared, I think it gives him a real opportunity to get on
and lead the party.

LYNDAL CURTIS: While Mr Costello does not want to be leader, he's not put a timetable on when he'll
leave parliament for his post-political career.

But the frontbenchers were having none of any further speculation that while Mr Costello is in
parliament, there's still hope for those wanting him to lead.

NICK MINCHIN: He's removed from public debate speculation about him putting his hand up to be
leader. He has made it absolutely clear that is not his plan or intention. It is his plan to leave.

ANDREW ROBB: I do think though that, you know, he's made it clear that at some stage he will be
moving on to the next chapter in his life and that's the important thing. It cleared the air on

LYNDAL CURTIS: Brendan Nelson who has for some weeks now acted as a man who knew what Peter
Costello would do has told ABC local radio in Melbourne the former treasurer has drawn a line under
all the speculation.

BRENDAN NELSON: He said that he would not be seeking the leadership, that he supported me and me
leading us through to the next election and that he will continue to serve the people of Higgins.

I am very resilient and I'm very determined and I will be leading us through to the next election.

LYNDAL CURTIS: There's no question that Mr Costello's actions which saw the party effectively held
hostage to his book deal have done him some internal damage. Liberal backbencher Don Randall says
it has been a distraction.

DON RANDALL: Well whether it's teasing or just playing a bit of a game, that in itself hasn't
necessarily helped the current leadership.

LYNDAL CURTIS: But while the Coalition's and Dr Nelson's opinion poll ratings are still in the
doldrums, there's still an undercurrent of possibility about a change.

Liberal frontbenchers and backbenchers are saying they are supporting the current leadership and
are dismissive of any talk of an imminent challenge by the shadow treasurer Malcolm Turnbull.

Don Randall says Dr Nelson should be left alone to get on with his job.

DON RANDALL: I think if the media start leaving him alone a bit and letting him get on with his
job, you'll find the real Brendan out there and showing what a good sort of person he would make as
prime minister.

LYNDAL CURTIS: Some but not all of the damage done to the party has been ended by Mr Costello
having finally, publicly ruled himself out as a leadership chance.

But with the party wanting to get back to the topic of the future, Mr Costello's memoirs will
continue to see it haunted by the past for a while.

Brendan Nelson and Andrew Robb are trying to turn the focus forward.

BRENDAN NELSON: Personally I think it would be much more productive if we were focused on petrol,
cost of living pressures, pensioners trying to live on $273 a week, a faltering economy, people
losing their jobs and Australians being worse off under Mr Rudd.

ANDREW ROBB: We need to move on. I mean that will be interesting history but we are now, I say to
you, very much focused on the future.

LYNDAL CURTIS: Part of Mr Costello's memoirs do look at what he believes the party needs to do for
the future. Part of that, he says, is changing party structures to end the cult of the leader that
surfaced during the Howard years. But Nick Minchin says that's just the way the party has always

NICK MINCHIN: We do imbue in our leader enormous authority. That is just a statement of fact. That
can be an advantage that we have over the Labor Party in many respects but I acknowledge Peter's
observation and I think it has been true of the Liberal Party since its formation.

ELEANOR HALL: And that's the Liberals' Nick Minchin ending that report from Lyndal Curtis.

Howard failed to honour pledge, says donor

Howard failed to honour pledge, says donor

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Sabra Lane

ELEANOR HALL: A former Liberal party figure and major donor to the party has told The World Today
that John Howard assured him that he would hand over the leadership to Peter Costello in his second

South Australian millionaire businessman Bob Day says he is extremely disappointed that the former
Prime Minister did not honour his pledge. He says the Liberal Party missed an opportunity for

Mr Day, who quit the party recently to stand as the Family First candidate in the Mayo by-election,
spoke to Sabra Lane about his conversation with John Howard back in 1994.

BOB DAY: John Howard took me by the arm and he said to me, this is how it will go Bob. I will take
over the leadership and if we win the next election then midway through our second term, I will
step aside and hand over to Peter Costello.

I commented I thought that was a great plan and he responded by saying, don't worry, it will all be

SABRA LANE: When did you learn that he had made this agreement in front of Ian McLachlan?

BOB DAY: Some years later I attended what's called the General Hassett Dinner at Adelaide's Keswick
Army Barracks. Every year the Australian Army hosts a dinner in honour of one of its outstanding
generals, General Hassett. And also attending that dinner was Ian McLachlan.

And we got chatting about politics and the leadership saga unfolding between John Howard and Peter
Costello. And I said I was very disappointed that John Howard had not stepped down and given Peter
Costello the opportunity to lead the party and create some new momentum. Ian McLachlan asked why I
thought John Howard would step aside when he clearly likes the job and had not given any indication
of his intention to step aside. And I got a bit agitated and said to Ian, because he said he would.
He made a deal with Peter Costello.

Ian sort of has that wry smile and smirk on his face sometimes and he said, he asked me what made
me so sure there was a deal. And I said because John Howard told me himself. And I gave Ian
McLachlan the time, the place, the date that John Howard told me what had been agreed. I told him
I'd kept a diary and had made notes at the time.

And then Ian McLachlan revealed that he knew all about it as well and he also had kept notes.

SABRA LANE: And did he show you his note from his wallet that night?

BOB DAY: Not that night but some time later he did.

SABRA LANE: And how do you feel for Peter Costello today?

BOB DAY: I think Peter will come out of this with his reputation greatly enhanced. I think it's
very sad for the Liberal Party that this has happened, that they missed an opportunity for renewal
and for potentially a great prime minister.

Coming from the building industry, I was a national president of the Housing Industry and
Independent Contractors and it certainly irks me. We're great believers that an agreement is an
agreement; a contract is a contract. You should honour contracts.

And I'm extremely disappointed with what John Howard did and my heart goes out to Peter Costello at
this time.

ELEANOR HALL: That's former Liberal Party member Bob Day speaking to Sabra Lane.

Mixed reaction in Costello heartland

Mixed reaction in Costello heartland

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Simon Lauder

ELEANOR HALL: So what do those Australians who are represented by Peter Costello in his Melbourne
electorate think of the leadership saga?

Simon Lauder went to the Higgins electorate and found that some locals think Mr Costello could
still become Prime Minister, while others are sick of the speculation and just want him to leave

(Tram sounds)

SIMON LAUDER: This is Toorak Road, a trendy part of town and busy shopping strip in Melbourne's
inner east.

Peter Costello has been the local member since 1990. So what do locals make of the news that the
former treasurer plans to stay on the back bench? Some are clearly disappointed.

VOX POP 1: Oh, I would have liked to see him be the leader of the party and eventually be prime
minister. I thought he'd be a good prime minister.

SIMON LAUDER: And what do you make of his statement that he'll leave parliament when it suits him?

VOX POP 1: It's fair enough. I mean, no-one else can make the decision besides him.

VOX POP 2: Look I think it's his business and I'm quite happy with the way he's behaving in
Higgins. He's looking after us. I mean, what's the difference if he wants to leave or if he wants
to stay? That's his business.

SIMON LAUDER: You don't think it's the end of the Peter Costello leadership speculation?

VOX POP 2: Oh I don't think anything. It's his business. I think the Liberal Party should get on
with doing what they're doing and stop trying to crucify poor old Nelson. And just you know, just
leave it. Let things happen.

SIMON LAUDER: Does it bother you that he'll leave parliament when it suits him rather than at an

VOX POP 3: No, it doesn't. He's been there for a long time and I think he's entitled to go when he
wants to.

VOX POP 4: I'd say realistically, he'll probably have a shot. He was pushing for it throughout the
Howard tenure and I've got a strange feeling he might get there.

SIMON LAUDER: You don't think this is the end of the story?

VOX POP 4: Not yet. No one's got faith in Brendan Nelson, me included, so.

SIMON LAUDER: Higgins has always been a Liberal Party seat but not everyone here is a Peter
Costello supporter.

VOX POP 5: Well it sounds like he's bludging to me. You know, if you're not really up to much,
getting paid for kicking around and no-one knows what you're up to, if he's getting all this bad
press and he's not really up to much then what are you meant to do, you know? Maybe time to move on

SIMON LAUDER: And he says he'll leave parliament when it suits him. What do you think of that?

VOX POP 6: I think that's not very wise of him to speak that way. I think the electorate won't
really want him back because of his attitude for the last year or so.

VOX POP 7: I think he should put up or shut up. He's got issues and he's, honestly you know we're
paying for this with our good taxpayers' money and the guy should just make a run or not, or just
get the hell out, you know. Just hey, you know, what's the deal?

SIMON LAUDER: One of Peter Costello's biggest fans here is the local mayor who says Mr Costello
wasn't given the chance to shine.

CLAUDE ULLIN: Claude Ullin, the Mayor of the city of Stonnington. I've known Peter Costello for
roughly 20 years. He's an excellent local member.

SIMON LAUDER: Are you disappointed he's not committing to staying in parliament?

CLAUDE ULLIN: Yes, I'm very disappointed and I really have to say, I blame the media.

I just wish the media who always said that he lacked courage, that they had the courage to support
him and equally his colleagues in Parliament...

SIMON LAUDER: You think it's the media's fault that he's not prime minister?

CLAUDE ULLIN: I think it has a large amount to do with it.

SIMON LAUDER: Do you think his leadership chances really are over or is this not the end of the

CLAUDE ULLIN: Peter is a very definite person. I'd say that's it. But at the same time hopefully
someone will be able to persuade him to think differently.

ELEANOR HALL: The Mayor of Stonnington, Claude Ullin, speaking to Simon Lauder.

IMF warned Costello on inflation

IMF warned Costello on inflation

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Richard Lindell

ELEANOR HALL: The Federal Opposition has spent this year blaming the Rudd Government for the
economic slowdown occurring across much of the country, but documents obtained by "The Financial
Review" under Freedom of Information reveal that the IMF warned the then treasurer Peter Costello
that his last budgets were fuelling inflation.

It was a view shared by many economists at the time, as Richard Lindell reports.

RICHARD LINDELL: The Liberals hail Peter Costello Australia's greatest treasurer and just two days
ago in Washington he told AM that the election was the turning point in Australia's economic

PETER COSTELLO: Well look, there's been a dramatic slowdown in Australia since the last election
actually, and as a consequence of that slowdown, unemployment is rising, people's wealth is going
backwards. This is matters of extreme concern to average Australians.

RICHARD LINDELL: But it appears Peter Costello himself isn't free of blame. Inflation was already
building before the election, forcing the Reserve Bank to raise interest rates 10 times. Then in
the election campaign Peter Costello delivered a stunning promise of $34-billion in tax cuts - a
promise quickly matched by Labor.

It's now clear from Freedom of Information papers that Treasury was warning Peter Costello that
earlier budgets were inflationary and would further stimulate an already hot economy.

Don Harding knew it at the time. He's a Professor of Economics at La Trobe University.

DON HARDING: We saw that after the 2007 tax cuts we saw a boost in inflation across pretty much
most categories of the CPI and we're seeing a similar kind of thing occur this time.

So the argument is not that tax cuts are bad; it's just that the timing of these was pretty much
irresponsible and particularly the 2007 ones were very irresponsible.

RICHARD LINDELL: So the Government was collecting huge surpluses then. Where should the money have

DON HARDING: Well it should have kept the surplus. I mean the idea is that you have automatic
stabilisers so that when you have a big increase in tax revenue that slows the economy down a
little bit because you're not spending it, and then when the economy is slower you can spend more
of that.

And really the crime if you like of these two tax cuts is what happened was that they suspended the
automatic stabilisers at exactly the time that you want them to work.

RICHARD LINDELL: ANZ chief economist Saul Eslake also saw the storm clouds gathering and was one of
the few market economists to state it openly. He says the last four Costello budgets were a lost
opportunity in nation building.

SAUL ESLAKE: It also would have been possible to set funds aside for future tax reform, for
rebuilding the nation's water supply, dealing with the Murray Darling basin problems, dealing with
climate change and the like, as well as for spending on infrastructure and education and hospitals.

Indeed, to be fair to the previous government, they actually did start to do that in their final
six months. The pity is that they didn't do more of it and earlier.

RICHARD LINDELL: The Reserve Bank raised rates 10 times in the last six years of the Coalition

Professor Don Harding says the previous treasurer had a hand in at least one of those rate rises.

DON HARDING: I think at least one of the last two interest rate rises can be attributable to the
higher inflation that we got because of the 2007 tax cuts. And looking forward, it's hard to know
how many cuts in interest rates we're going to have. We may have one more.

But I think we're going to have probably one fewer than otherwise would have been the case because
of the stimulus, because of the current Budget.

ELEANOR HALL: That's Professor Don Harding from La Trobe University ending that report by Richard

NSW Preimer furious at underpants MP

NSW Preimer furious at underpants MP

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Simon Santow

ELEANOR HALL: Just days after he made a great show of appointing a fresh, new Cabinet, the new
Premier of New South Wales has sacked one of his key minsters.

But it's not yet clear whether the Police Minister Matt Brown lost his job because he stripped down
to his underwear at a Parliament House party earlier this year or because he failed to disclose all
the details about it to his Premier.

Last night Premier Nathan Rees demanded the resignation of the newly installed Mr Brown. He says
he's furious about the minister's behaviour, but that Mr Brown's greatest mistake was to fail to
tell him the whole truth when he asked him to come clean over the affair.

In Sydney, Simon Santow reports.

SIMON SANTOW: Matt Brown was a minister going places. Under the leadership of Nathan Rees, he'd
just been promoted to the Police portfolio. Now his political career is in tatters, permanently
damaged by a bout of late-night dirty dancing in his underwear at a post-Budget Parliament House
office party with Labor colleagues.

MATT BROWN: I'm not wanting to duck or weave this issue. As you can imagine this is a pretty tough
day for me.

I've tendered my resignation because I behaved in a way not fitting or befitting a minister and I'm
truly sorry for any offence that I may have caused in regards to that behaviour. I regret it. If I
could turn back the clock, I would, but I'm not trying to duck and weave.

SIMON SANTOW: Premier Nathan Rees told listeners on Sydney's Fairfax Radio the latest scandal is
more than embarrassing.

NATHAN REES: Former minister Brown conceded to me last night that he had been in his underwear.
That was not what he told me earlier in the day and that's why I demanded his resignation.

We've been as a Government through a very testing period over the last 12 months, none more testing
than the last week or so, and to have a minister be less than forthright with me about an issue
like this is bitterly disappointing. We told the people of New South Wales that...

RADIO ANNOUNCER: Well you said the soap opera was over.

NATHAN REES: That's right, that's precisely right. And I also said that my priority in the first
instance is to restore people's confidence in the administration of this state and I won't be
diverted from that, but there's no question that this is a setback.

SIMON SANTOW: Labor colleague Noreen Hay represents an electorate not far from Matt Brown's Kiama
constituency. She told AM this morning that the frolics she took part in in Mr Brown's
parliamentary office were just jovial and the Minister kept his clothes on.

NOREEN HAY: I'm told this morning that it's been described as a wild party. Can I say that there
didn't seem much wild about it to me.

But, you know, people were coming and going and there was music on, a number of people were
dancing. It was just people having fun, a bit of laughter, a bit of joking. And it was quite light
hearted. There was nothing sort of heavy duty while I was there.

SIMON SANTOW: And what was the state of Minister Matt Brown's dress at that stage?

NOREEN HAY: Whilst I was in his room he was fully dressed and this is the point I've made to a
number of people. I think whatever happened after I left that room I don't know but whilst I was in
that room, and I had a dance with Matt, he was fully clothed.

SIMON SANTOW: Did he ever say to your daughter, "Look at this, I'm titty something your mother"?

NOREEN HAY: I checked with my daughter. She doesn't recall that being said or hearing that being
said and I certainly don't recall that being said.

SIMON SANTOW: Matt Brown says in the midst of the political mess, he's been a victim too.

MATT BROWN: There's been some scurrilous accusations about inappropriate behaviour regarding a
female work colleague.

I want to state categorically they are lies, they are not true, they did not happen. You can see
here in this community I treat people with respect and I would never treat anyone, let alone a
female work colleague, as some people are suggesting. Why are they suggesting it? I don't know.
They are appalling, offensive allegations and I reject them.

SIMON SANTOW: New South Wales Opposition leader Barry O'Farrell maintains the Premier's response
has fallen short of public expectations.

BARRY O'FARRELL: There's no confidence that Nathan Rees is sacking Matt Brown for the right
reasons. Nor is there any confidence that Mr Rees didn't know about this affair before he chose
Matt Brown for the sensitive police portfolio.

It beggars belief that Nathan Rees who was a member of Cabinet at the time that this affair and
incident occurred, who was a member of Cabinet that the next day was warned by Morris Iemma against
inappropriate ministerial behaviour, wouldn't have known about this and it just again demonstrates
his lack of judgement, his poor judgement when it came to putting together his ministry.

SIMON SANTOW: Mr Rees has been in the media this morning saying that the reason he sacked his
minister was that he didn't come clean with the full truth when the Premier asked him to.

What about the mere fact that he had a party and that these acts allegedly occurred? Should that
have been enough for his resignation?

BARRY O'FARRELL: Well what the media outlet that broke this story was first told by Mr Rees' office
was that this was unacceptable behaviour but no action would be taken. Mr Rees has then after that
newspaper was published decided to appear to be tougher.

But look, that doesn't absolve Mr Rees. Mr Rees was on radio this morning saying he'd spoken to
many people about this incident, but he apparently didn't speak to Noreen Hay who is one of the
other parties to the incident who has been on radio today denying it occurred.

This is the same old Labor Party - arrogant, out of touch, drunk with power, which believes it can
say or do anything and get away with it.

ELEANOR HALL: That's the New South Wales Opposition leader Barry O'Farrell, ending Simon Santow's

Top soldier calls for changes in Afghanistan

Top soldier calls for changes in Afghanistan

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: John Shovelan

ELEANOR HALL: The United States' top military leaders have called for a new approach to the war in
Afghanistan which would involve closer cooperation with Pakistan.

Appearing before the House Armed Services Committee, the Secretary of Defence Robert Gates and the
Chairman of the Joint Chiefs of Staff Admiral Mike Mullen expressed grave concern about the
progress of the war. Admiral Mullen said he didn't believe US forces were winning.

From Washington, John Shovelan reports.

JOHN SHOVELAN: There's a new urgency in Washington about the situation in Afghanistan.

MIKE MULLEN: It is my professional opinion that no amount of troops in no amount of time can ever
achieve all the objectives we seek in Afghanistan and frankly, we're running out of time.

JOHN SHOVELAN: In a remarkably sober assessment, Admiral Mullen told the hearing he is not
convinced the coalition is winning in Afghanistan although he qualified that by saying he is
convinced it can.

The change in emphasis reflects an increasing military commitment to Afghanistan and a decreasing
one in Iraq. Just yesterday President Bush announced that he would be sending an additional 4,500
troops - a decision made possible by the withdrawal of 8,000 troops from Iraq.

US commanders in Afghanistan have been seeking more troops to combat the resurgent Taliban and
foreign fighters that are finding haven along the border with Pakistan.

Last week Major General Jeffrey Schloesser who commands US forces in the east of Afghanistan said
he didn't have enough troops to hold ground after insurgents have initially been defeated.

JEFFREY SCHLOESSER: I've got a couple of areas here as I've mentioned, throughout RC East that I
have very low numbers of troops in and therefore I'm not able to really get good effects on the
ground. I can come in and I can clobber the enemy but then I can't hold it and stay with the

JOHN SHOVELAN: The chairman of the Armed Services Committee Ike Skelton wanted to know why
Afghanistan was still fighting for a greater share of US military resources.

IKE SKELTON: How is it that the commander in Iraq was given every resource needed to achieve his
goals and we're not doing the same for the Afghan commander?

JOHN SHOVELAN: Admiral Mullen says military power alone won't achieve victory in Afghanistan. He
says there must be more cooperation from the State Department and other government agencies and the
international community.

MIKE MULLEN: Afghanistan doesn't just need more boots on the ground, it needs more trucks on the
roads, teachers in schools, trained judges and lawyers in those courts, foreign investment,
alternative crops, sound governance, the rule of law.

These are the keys to success in Afghanistan. We cannot kill our way to victory and no armed force
anywhere, no matter how good, can deliver these keys alone.

JOHN SHOVELAN: Admiral Mullen says the US needs to revise its strategy to combat the safe havens
militants have along the border with Pakistan.

MIKE MULLEN: We can hunt down and kill extremists as they cross over the border from Pakistan, as I
watched personally us do during a day-long trip recently to the Korangal Valley, but until we work
more closely with the Pakistani Government to eliminate safe havens from which they operate, the
enemy will only keep coming.

JOHN SHOVELAN: The two defence chiefs wouldn't detail how many more troops could be sent to
Afghanistan next year beyond the 4,500 announced by the President. Commanders in Afghanistan have
repeatedly sought about 10,000 troops.

John Shovelan, Washington.

Lehman Brothers announces record quarterly loss

Lehman Brothers announces record quarterly loss

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Peter Ryan

ELEANOR HALL: The US investment bank Lehman Brothers has just delivered the biggest loss in its
158-year history and remains on the brink of collapse.

The Wall Street institution today reported a $4-billion quarterly dive and announced a huge
sell-off of its assets in an effort to survive.

As business editor Peter Ryan reports, Lehman Brothers had brought its results announcement forward
in an effort to limit the plunge in its share price.

PETER RYAN: Lehman Brothers is a Wall Street survivor. It's endured every modern crisis from the
American Civil War to the Great Depression, through to the Asian economic meltdown. But will it be
around when the sub-prime mortgage meltdown is a compelling case study for economics students?

Lehman's chief executive Richard Fuld exhibited some shaky optimism when he unveiled a survival
strategy along with a quarterly loss of $US4-billion.

RICHARD FULD: We have put in place a credible plan. Today's strategic actions, each of which is
significant in its own right, taken together as a whole, significantly reduces our remaining risk
and greatly improves our ability to create value for our shareholders.

PETER RYAN: The announcement was brought forward to stem yesterday's bloodbath after the withdrawal
of South Korea's rescue plan sparked a 45 per cent share market plunge.

Even though Lehman Brothers is now selling half its asset management business, writing down debt
and cutting investor dividends, analysts say the Korea Development Bank had some very good reasons
for cold feet.

PETER MORRISSEY: Its balance sheet is too messy for anyone to become involved with it. Only a fool
would acquire this company in whole right now. It's got to be cleaned up first.

Economist Peter Morrissey of the University of Maryland says Lehman Brothers was typical of other
Wall Street banks, up to their necks in bad real estate investments and mortgage-backed securities
in the United States and Britain.

With no new bail-out in sight, he says Lehman needs to liquidate the bad decisions without delay.

PETER MORRISSEY: Selling the real estate assets for what they might be worth, which is not zero,
they're worth something. You know, some of those mortgages will be paid off, some of those
properties may be worth less than before but they're worth something. So you sell them off to see
what you've got.

And then you have to see what you can get for your good assets that are not essential to it being
an investment bank. And you're back to an old-fashioned merchant bank which does mergers and
acquisitions, initial share offerings and so forth. That's what could be sold.

PETER RYAN: Lehman Brothers is the second Wall Street bank to go to the brink this year. Back in
March, Bear Stearns was rescued by the US Federal Reserve which negotiated a forced marriage with
JP Morgan Chase.

But Peter Morrissey says another government-backed bail out would send the wrong message.

PETER MORRISSEY: It's about time the folks in New York learned that they can fail so that they
conduct their business in a more responsible fashion. What's more, it is possible that new merchant
banks will emerge and they will likely emerge out of the regional banks in the United States to
take its place.

Now it's going to take some time, but having these crippled investment banks in New York is not
very favourable to the US credit market and either they clean up their balance sheets, get
themselves straightened out and fly straight again, or they go out of business and are replaced.

PETER RYAN: The growing sentiment that institutions must be allowed to fail comes after this week's
government bail-out of the mortgage giants Fannie Mae and Freddie Mac.

While most commentators agree their failure would have sparked a global financial meltdown, the
focus is now turning on payouts for the Fannie and Freddie chiefs. For example, Freddie Mac's
chairman Richard Syron is expected to receive $15-million with more than half of that in cash.

With the economy now a big issue in the presidential race, both Barak Obama and John McCain are
using the payouts as examples of corporate excess in tough times.

BARACK OBAMA: Taxpayers here in Dayton would not want to hear that part of this package includes a
multi-million dollar bonuses particularly when so many people here are out of work.

JOHN MCCAIN: We cannot allow this to turn into a bail-out of Wall Street speculators and
irresponsible executives (applause and cheering). They cannot be rewarded.

PETER RYAN: The worsening outlook for Lehman Brothers is continuing to worry Australian investors.
Local banking stocks fell as much as 3.5 per cent this morning with still no end to the credit
crisis in sight.

ELEANOR HALL: Business editor Peter Ryan.

Kiwis celebrate rate cut

Kiwis celebrate rate cut

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Kerri Ritchie

ELEANOR HALL: In New Zealand the Reserve Bank has surprised economists by announcing a larger than
expected cut to the official cash rate to help lift the country out of recession.

The Reserve Bank has delivered a cut of half of one per cent and it's promising further cuts, as
New Zealand correspondent Kerri Ritchie reports.

KERRI RITCHIE: Reserve Bank governor Alan Bollard held a press conference in Wellington to deliver
what is welcome news to the growing number of New Zealanders doing it tough.

ALAN BOLLARD: Good morning everybody. Welcome to the Reserve Bank and welcome to our monetary
policy statement for September.

The Reserve Bank has this morning determined to cut the official cash rate from eight to 7.5 per
cent, that is by a 50 basis points cut.

KERRI RITCHIE: Dr Bollard says he agrees with economists - New Zealand is in the grip of a shallow
recession. He says the country's economy is experiencing a "marked slowdown" which is being led by
the household sector.

ALAN BOLLARD: In addition, New Zealand business is coming under more pressure from higher costs and
from softer demand. Over all, this implies that we are now going through a period of household
readjustment in New Zealand and it's a period of below average growth.

KERRI RITCHIE: Many economists had been tipping a cut but this is twice what they had expected.

Brendan O'Donovan is Westpac's chief economist in New Zealand.

BRENDAN O'DONOVAN: Just about all commentators and the market was expecting a 25 basis point cut so
Dr Bollard has come riding into town on a big white horse and he said I'm going to help save

But he's making a fairly heroic assumption. He's assuming that the inflation problem that New
Zealand has got at present is going to take care of itself. I'm not quite so sure that that will be
the case but what he's saying is 50 basis point cut today and today's statement was also consistent
with a follow up 25 basis point cut in October and another one in December.

KERRI RITCHIE: In July the official cash rate was cut from 8.25 to eight per cent. That was the
first cut in five years. Now it's down to 7.5 per cent.

Brendan O'Donovan says while it might deliver some short-term relief, New Zealand has some serious
economic problems to worry about.

BRENDAN O'DONOVAN: The big question comes: is inflation going to disappear out of this economy like
the Reserve Bank is hoping or is it going to prove more persistent?

I think it's going to prove more persistent because we're seeing wage settlements, union
negotiations coming through and saying we want a cost of living adjustment because of the higher
food prices, higher energy costs.

So a lot of these wage settlements are coming through at rates of five per cent, some higher, and I
think that's going to create a problem for the Reserve Bank, that inflation is going to remain
quite persistent in this economy.

KERRI RITCHIE: But Reserve Bank Governor Alan Bollard says there are some positives on the horizon.

ALAN BOLLARD: We do in our forecasts see a pick-up later in the year. This is primarily driven by
tax cuts, by government spending, by stronger rural incomes and also by softer monetary policy.

The banks will reach their own decisions about what needs to happen to mortgage rates but we think
we're giving quite a lot of room for them to make decisions and without having a strong view about
what's going to happen, there are of course a very wide range of rates out there, we would expect
some of this to certainly pass through and trigger mortgage rate reduction.

KERRI RITCHIE: Now all eyes are on the banks. One of the smaller lenders has gone first. Kiwibank
has dropped all its home loan rates. It cut its variable rate by half a percentage point to 9.7 per
cent. Its two year fixed rate is now 8.49 per cent.

This is Kerri Ritchie in Auckland reporting for "The World Today".

Pokies inquiry set to curb industry

Pokies inquiry set to curb industry

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Michael Edwards

ELEANOR HALL: In Canberra today a Senate inquiry has begun examining legislation that has the
potential to drastically curb Australia's poker machine industry.

Independent senators Steve Fielding and Nick Xenophon have introduced Bills which call for tax
increases on poker machines and limits on the amount of money that punters can bet.

The Senators say the Commonwealth needs to take charge because state governments have shown they
can't be trusted to crack down on a problem which is eroding Australia's social fabric.

Michael Edwards has this report.

MICHAEL EDWARDS: Family First Senator Steve Fielding says curbing the impact of problem gambling
should be a national priority. Senator Fielding says problem gambling is tearing families apart and
it's largely being driven by poker machines in pubs and clubs.

He says it's something that state governments can't be trusted to fix as they rely so heavily on
revenues generated by the machines.

STEVE FIELDING: How could they sleep at night, the state governments, sleep at night knowing that
50 per cent of the revenue is coming from problem gambling? This is basically stealing from the
vulnerable and it should stop.

MICHAEL EDWARDS: A Senate inquiry has begun examining draft legislation proposed by Senator
Fielding and self-described "no pokies" Senator Nick Xenophon which is aimed at keeping problem
gamblers away from poker machines.

Senator Fielding says his legislation is designed to cut down on how frequently money is put in the

STEVE FIELDING: Well what the legislation does is it looks at the machines themselves and reduces
how fast they spin. It would also give a break between spins, just allowing people to stop and
think about how much they're spending, and also would look at how ATMs, how close they are to poker
machines and people withdrawing more than they possibly should because they're so close.

MICHAEL EDWARDS: And Senator Fielding is also calling for an increase in taxes on poker machines.

STEVE FIELDING: All the money raised from this extra tax would go into a trust fund that would help
local community groups de-hook themselves from reliance on pokies revenue.

MICHAEL EDWARDS: It's unclear what level of support the legislation will get from the major
parties. Senator Nick Xenophon is calling for bipartisan support.

NICK XENOPHON: We have a Prime Minister who says he hates poker machines, he knows what they do to
families; an Opposition leader who has been very critical of the damage caused by poker machines.
So it's a matter of getting those fine words and putting them into action.

MICHAEL EDWARDS: Social welfare groups agree with the senators that pokies are damaging society. Dr
Mark Zirnsak is the chair of the Victorian InterChurch Gambling Taskforce.

MARK ZIRNSAK: The kind of impacts are divorces, family break-ups, loss of housing, fights within
family, including one in eight people who are in counsel for problem gambling reporting there's
been violence in their, domestic violence as a result of their gambling problem.

MICHAEL EDWARDS: But sporting and social clubs say the proposed legislation would prove disastrous.
The clubs say pokies generate $4-billion in revenue and they couldn't survive without them.

David Costello is the chief executive of Clubs Australia.

DAVID COSTELLO: When you look at the whole range of community and sporting facilities at clubs, and
I'm talking only about clubs here provide right around the nation, it is clear that you wouldn't
have clubs any more if they weren't operating gaming machines and could provide the sort of
services they do.

MICHAEL EDWARDS: The inquiry is expected to report in November.

ELEANOR HALL: Michael Edwards with that report.

Tourism industry relies on film for resurrection

Tourism industry relies on film for resurrection

The World Today - Thursday, 11 September , 2008 12:52:47

Reporter: Karen Barlow

ELEANOR HALL: One of the great Australian growth industry of the 1980s and 90s, tourism, has

Quarterly tourism figures point to a steady drop in visitor numbers and tourist operators say the
industry needs urgent resuscitation.

As Karen Barlow reports, Tourism Australia is now pinning its hopes on a soon to be released
Australian film.

(Excerpt from movie)


FEMALE: The story takes place in a faraway land called Oz.

(End of excerpt)

KAREN BARLOW: There is a lot riding on the soon to be released Baz Luhrmann epic "Australia" - and
not just the local film industry. The World War II love story with Luhrmann's trademark emphasis on
excellent cinematography has tourism figures rubbing their hands in expectation.

Olivia Wirth from the Tourism and Transport Taskforce says next month's marketing tie-in with the
film is a great opportunity.

OLIVIA WIRTH: The "Australia" movie is a fantastic opportunity for Australian tourism. There is no
doubt about that. And Tourism Australia are investing a lot of funding and creative thought into
making this work for Australia as a tourism destination.

KAREN BARLOW: Australia's tourism industry needs all the help it can get. Figures from Tourism
Research Australia shows the numbers of overseas visitors has flat-lined since the Sydney 2000
Olympics, although the figures do reveal international tourists are on average spending more time
and money in Australia.

The Tourism and Transport Taskforce represents 200 of Australia's most prestigious tourism and
aviation operators and executive director Olivia Wirth says the situation is dire.

OLIVIA WIRTH: This is an ongoing trend. This is not a blip. This is a great concern to the

We're seeing the same number of holiday visitors that we did in 2000. That means we've got eight or
nine years of flat-lining growth of holiday visitors. That's those travellers that are coming from
overseas for leisure travel within Australia.

So business travel is doing well, business events is doing well, education travel is performing
well, but holiday and leisure travel is not performing so well.

KAREN BARLOW: Conditions have tough for tourism this year with rising fuel costs and a relatively
strong Australian dollar.

Daniel Gschwind from the Queensland Tourism Industry Council is particularly concerned about the
drop in Japanese tourists.

DANIEL GSCHWIND: Well the Japanese market which is and always has been very important to Australia
and to Queensland has continued to decline. It certainly hasn't been the workhorse that it has been
in the past.

KAREN BARLOW: Australia appears to have lost its flavour with the UK as well as Japan. The tie-in
tourism ads with the Baz Luhrmann film will cost $50-million and are due to air next month in
Europe, North America and Asia.

However Olivia Wirth warns that like the unsuccessful "Where the bloody hell are you?" ads of two
years ago, marketing is not the only answer.

OLIVIA WIRTH: It doesn't matter if you have a fantastic marketing campaign. If you don't have the
right product at home you're simply not going to be able to attract and sustain tourists to

So we absolutely support the "Australia" movie. It is a fantastic opportunity. If you have a look
at what New Zealand did with "Lord of the Rings", they made that work for the tourism industry. But
you do need to have the right products at home, otherwise you simply can't be, you know, selling
hot air.

KAREN BARLOW: Can you imagine it would work with Japanese tourists?

OLIVIA WIRTH: All indications show that this movie is going to be a huge success, including in

KAREN BARLOW: Even though the Japanese are the antagonists in the film?

OLIVIA WIRTH: It's an interesting point Karen, and look I'm not a specialist on this movie but what
I do understand is that that's only an underlying, background, but the overlying theme in the movie
is all about romance and about the experience that Australia, and that Australia changes you.

So obviously that works for us as a tourism destination, that when you come here you have
experiences that change you. So we're hoping that it's going to work for all markets including

KAREN BARLOW: With the Australian dollar falling below the 80 US cent mark today things may be
looking up for the call to Australia.

(Excerpt from movie):


FEMALE VOICE: We can't let them win.

MALE VOICE: We won't.

(End of excerpt)

ELEANOR HALL: Karen Barlow reporting.

Adult support services prevent child abuse

Adult support services prevent child abuse

The World Today - Thursday, 11 September , 2008 12:56:47

Reporter: Emily Bourke

ELEANOR HALL: One of Australia's leading child protection experts is calling for a revamp of the
way child protection authorities respond to cases of abuse and neglect.

Professor Dorothy Scott is the director or the Australian Centre for Child Protection and she says
social services and police are working in isolation and that they are failing to protect children
because they are not treating whole families.

She has accused both sides of politics of lacking the political courage to do more to prevent child
abuse and its causes.

Emily Bourke has our story.

EMILY BOURKE: Professor Dorothy Scott doesn't mince her words when it comes to child abuse in

DOROTHY SCOTT: We have doubled the number of children in state care in this country in the last
decade. We now have 30,000 children on any night under the care of the state.

As that increases and then number of foster carers decrease, we are already in the midst of a
serious crisis and until we start to really tackle it with prevention, we will be left trying to
pick up the pieces of damaged children at the bottom of the cliff.

EMILY BOURKE: As director of the Australian Centre for Child Protection, Professor Scott has been a
long time observer and commentator on the way Australian agencies respond to actual and potential
child abuse and neglect. She says it's time adult support services be brought in to help manage
crises and extend their help to children.

DOROTHY SCOTT: A whole range of services that are designed to deal with adults can actually prevent
child abuse and neglect.

They are adult drug treatment services, mental health services, homelessness services, correctional
services, disability services, refugee resettlement services, domestic violence services.

And if we can help those services see and hear children and work with the parenting needs of the
adults they are there to serve, we'll be able to prevent child abuse and neglect much more

For example, if a mother is arrested, say for a drug-related offence, and she is the sole carer of
a child, then it's very important that police respond in ways that children don't come home from
school and find an empty house.

EMILY BOURKE: This model demands greater funding, more training and initially bigger workloads for
social workers, but Professor Scott says there's already evidence it works.

DOROTHY SCOTT: Certainly in places like the United Kingdom there is now a very big push to think
child, think family in all of these types of services.

The good thing is that somewhere in Australia, these services are already doing exactly what I
would like all of them to be doing but the obstacles are significant and it needs leadership by
state and territory governments, but it also needs leadership from Minister Macklin and the
National Child Protection Plan.

EMILY BOURKE: According to Professor Scott, alcohol is the biggest single factor that puts children
at risk.

DOROTHY SCOTT: One in eight children is in a household where an adult is regularly drunk. It is
responsible for over half of the children in state care being in state care. And while we've given
a fair bit of attention to parental drug problems, it's as if alcohol abuse is the elephant in the

EMILY BOURKE: And that's why she wants both sides of politics to agree to a new tax scheme for
alcohol, well beyond the troubled alco-pops tax legislation which may still be blocked in the
Senate by both the Opposition and Family First Senator Steve Fielding.

DOROTHY SCOTT: I think it would have been better had a more wholistic policy been put forward of
taxing all alcohol products in line with their alcohol content.

But to see the Opposition and Senator Fielding politically respond to what I think is a major
public health strategy of the Rudd Government to begin to address this problem is deeply
disappointing. If we really care about vulnerable children, we will be working together right
across the political spectrum on this issue.

ELEANOR HALL: Professor Dorothy Scott from the Australian Centre for Child Protection speaking to
Emily Bourke.

Local research finds possible cause of SIDS

Local research finds possible cause of SIDS

The World Today - Thursday, 11 September , 2008 12:59:47

Reporter: Nance Haxton

ELEANOR HALL: It kills an average of 65 babies a year in Australia and its cause is still unknown.

Now research from Adelaide's Women and Children's Hospital has found that a possible cause of
Sudden Infant Death Syndrome has been overlooked.

The study found that a strain of golden staph bacteria could be a trigger for the syndrome.

Associate Professor Paul Goldwater told Nance Haxton that he analysed the post mortem reports of
more than 190 babies over a 25-year period to come to his conclusion.

PAUL GOLDWATER: We believe that these pathogens are actually causing infection and they may be the
cause of SIDS. We found them in about a quarter of the cases of sudden infant death. Staph always
is one of the leading ones and we found it in about 10 per cent.

NANCE HAXTON: Is that the same as the golden staph infection that people are familiar with?

PAUL GOLDWATER: Yes, that's right, yeah. What's of particular note is that staph aureus, this
golden staph, very commonly carries lethal toxins and as part of our research we found two-thirds
of SIDS infants actually carry these lethal toxins in their intestines, as it happens.

NANCE HAXTON: So would that be a trigger possibly for SIDS...


NANCE HAXTON: Or are you arguing that it's actually, it could be actually a cause of SIDS?

PAUL GOLDWATER: We think it could be a cause.

NANCE HAXTON: And it has been overlooked until this time?

PAUL GOLDWATER: We believe so, yes.

NANCE HAXTON: So what happens from here? You've made the recommendation that really from now on
post mortems should look at whether there is this bacteria present more carefully?

PAUL GOLDWATER: That's what we would recommend, definitely.

And also in terms of the care of the baby, the sleeping surface is very important and babies should
not be put down to sleep on sofas or in the parents' bed because these are heavily contaminated
sites, heavily contaminated with pathogenic bacteria.

And of course the recommendation is to put the baby down on their backs. We think the association
with prone sleeping is that the baby is more likely to ingest or get colonised with these bacteria
if their face is in contact with the sleeping surface.

NANCE HAXTON: One criticism of the study was that the cases were drawn over a long time span. How
would you respond to that?

PAUL GOLDWATER: Well unfortunately, or fortunately depending how you look at it, the comparison
deaths are quite rare and so we have to look over a long period of time.

NANCE HAXTON: So how confident are you that this particular golden staph bacterial infection could
be a cause of SIDS?

PAUL GOLDWATER: Extremely confident. But we believe other bacteria could be involved as well.

And also, there's strong evidence that viruses probably play a role as a co-factor. My PhD student,
Amanda Highet, is doing genetic studies as well as the bacterial toxin studies and has had some
very interesting findings with some genes that we believe make SIDS babies more susceptible to
these bacterial toxins. And her preliminary data shows a very strong correlation with two
particular gene mutations.

NANCE HAXTON: So there could be a genetic factor as well as a bacterial factor?

PAUL GOLDWATER: Oh, almost certainly, almost certainly. And when you put all of these factors
together that's when the baby is at risk.

ELEANOR HALL: Associate Professor Paul Goldwater is from the Adelaide Women and Children's Hospital
and he was speaking to Nance Haxton.