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Liberal leadership woes overshadow pensioner campaign

ELEANOR HALL: The Federal Opposition's campaign to get a better deal for struggling pensioners has
been blunted by the continuing speculation about Peter Costello and the Liberal leadership.

And today Liberal backbencher Wilson Tuckey has come out swinging. He is challenging anyone in the
party who is privately canvassing for a leadership spill to identify themselves, saying the
destabilisation is severely damaging the party.

The Government, meanwhile, is still trying to fend off the push to deal with the aged pension issue

In Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: Peter Costello, though just a humble backbencher, is still managing to dominate the
political agenda. The release of his memoirs was supposed to coincide with a clear declaration on
his future but instead, his latest responses are viewed by some as refusing to rule out the
possibility of ever being drafted to replace Brendan Nelson.

Dr Nelson says he's looking forward to the book and is confident about his own leadership position.

BRENDAN NELSON: Of course. Of course. Very. Thanks mate.

ALEXANDRA KIRK: Frontbencher Ian Macfarlane would like to see Mr Costello in the shadow ministry.
Mr Macfarlane is seeking a clear message from the former treasurer.

IAN MACFARLANE: I think we are all being as patient as we can be with Peter Costello. He has done a
fantastic job for Australia.

Brendan Nelson needs clear air to demonstrate what a really good leader he is and I think that
clear air will only come when Peter decides to stay or says I'm never, ever going to be prime
minister and decides what his career future is.

We need to know that so that we can then move on and ensure that we deliver strong opposition and a
good alternative government at the next election.

ALEXANDRA KIRK: Backbencher Wilson Tuckey's getting fed up with all the focus on Mr Costello.

WILSON TUCKEY: I mean yes, there will be the odd chatterbox and I hope to deal with them tomorrow.

ALEXANDRA KIRK: Tomorrow he's planning to lay down the gauntlet, in the Coalition's party room
meeting, challenging number-crunchers, wishful thinkers or anyone planning to bring on a spill to
come out of the shadows.

WILSON TUCKEY: I will ask those in the party room, if any, tomorrow will they identify themselves.

If they don't and assuming these people are actually honest to their own colleagues whom, if
they've done it, they are doing severe damage.

How would you like to be one of the one or two per-centers in our party knowing that people, your
colleagues, are going around destabalising our party.

ALEXANDRA KIRK: Brendan Nelson's focusing on the plight of pensioners. While he's been advised he
can't introduce a Private Member's Bill that would increase the base rate of the single aged
pension by $30 because only a government minister can appropriate money, he is planning to give
notice to parliament tomorrow of a push to help the pensioners.

The issue's been highlighted by a report from the Melbourne Institute of Applied Economic and
Social Research at the University of Melbourne. It shows that between 2001 and 2005, more than half
of the nation's elderly, most of whom rely on the single aged pension, were living on less than
half the median Australian disposable income and elderly singles remain the poorest.

While the Government's so far resisted calls for action, pointing to the tax reviews report due in
February, Coalition MPs are stepping up their campaign.

Backbencher Dennis Jensen arrived at Parliament House this morning, carrying a box, which he
emptied onto the ground.

DENNIS JENSEN: This here, these are postcards from 3000 seniors' households in my electorate
expressing their disgust at the Rudd Government and their treatment of seniors.

ALEXANDRA KIRK: The Coalition's sent out the material to its MPs.

DENNIS JENSEN: What I did was I sent these out to pensioners in the electorate and asked for them
to return them expressing their disgust with the, disgust and disappointment with Mr Rudd's
treatment of seniors.

REPORTER: And who paid for the postage on these?

DENNIS JENSEN: Most of them I did but on quite a number of them, the seniors actually put on a
stamp themselves, which is quite an ask given that they are only getting $273 a week.

ALEXANDRA KIRK: Michael O'Neill, of National Seniors Australia, says the problems faced by aged
pensioners go beyond simply lifting the base rate. He says it's just part of the answer.

MICHAEL O'NEILL: Rent assistance I think is a good example of where you can't just rely on the
blunt instrument of an overall pension increase. You need to also provide for those specific target
areas such as, rent is a very good example, where there is a group within the broad pension cohort
who are reliant, who are renters and obviously highly exposed because of the cost of the rental

ALEXANDRA KIRK: And is there an inherit inequity in a way that the pension system is constructed

MICHAEL O'NEILL: There is certainly some inequities in the way different groups are dealt with.

The prime example of that is the treatment of singles versus couples. The inequity being that at
the moment singles get 60 per cent of what the couples get. That is inconsistent with the cost
pressures they face and it is inconsistent with international comparisons around similar, similar

ALEXANDRA KIRK: And what about the issue of assets?

MICHAEL O'NEILL: There will be some, you know, self-funded retirees who are feeling the pressure at
the moment who perhaps may not have been eligible for the pension previously who might fall back
into that category.

But equally I think we have to come to grips with some of the bonus payments and similar things
that are provided without regard to any assets or income test.

ALEXANDRA KIRK: Mr O'Neill says the onus is on the Government to assist the most vulnerable group
now and continue the longer term pension review.

ELEANOR HALL: Alexandra Kirk reporting.

Rudd launches affordability fund - and attack on NSW Labor

ELEANOR HALL: The Prime Minister will return to the Federal Parliament today with Labor's
stranglehold on the state and territory governments broken.

Mr Rudd says he's spoken to the new Liberal Premier-elect of Western Australia, Colin Barnett, to
congratulate him on his win.

The Prime Minister also issued a broadside at the dysfunctional New South Wales State Government.

But Kevin Rudd is insisting that his efforts to forge a new federalism will not be derailed.

In Canberra, Sabra Lane reports.

SABRA LANE: Housing affordability was one of the major catch-cries from Labor last year.

This morning, at a new housing estate on Canberra's outskirts the Prime Minister, along with his
Housing Minister Tanya Plibersek, launched the Government's housing affordability fund.

The Government says the fund will help slash infrastructure charges and speed up planning
approvals, saving new homeowners money.

KEVIN RUDD: The idea is this. As we said last year, to come up with a scheme which enables us to
bring down the cost of a new development by, or a new house in a development such as this, by up to

TANYA PLIBERSEK: The housing affordability fund has already been active in changing an
18th-century, paper-based development system to a 21st-century, electronic development assessment

SABRA LANE: In 1996, when the Howard government won office, the average cost of buying a new home
represented four times the annual average wage.

At the end of last year, the figure had jumped to about seven-and-a-half times the average wage.

The Prime Minister believes his policies will have an effect in bringing that figure down, but he
won't say by how much.

KEVIN RUDD: Well, I think where we would like to get to is to bring that down over time. I can't
put a number on that but what I do know is that if we just put it at arm's length and say not my
problem, it is just going to get worse.

SABRA LANE: The new fund's worth about half a billion dollars, roughly the same amount the
Government wants to raise through its luxury car tax measures.

When Parliament rose, a week and a half ago, Family First Senator Steve Fielding sided with the
Coalition at the first opportunity, to stop the Bill dead in its tracks.

The Government didn't criticise Steve Fielding for it, instead, it blamed the Opposition, claiming
it was in favour of tax breaks for Porsche drivers, rather than new money to improve public

The Prime Minister's confirmed, Senator Fielding will hold face-to-face talks with the Treasurer
today about his concerns that the new tax hike will have an adverse impact on small tourism
operators and farmers.

KEVIN RUDD: Senator Fielding has requested to see the Treasurer today. I am sure they will have a
good discussion.

But as I say, if we are going to engage in long term reform for the nation on urban congestion in
our major cities, on reform to the pension, it is going to cost a lot of money and an half a
billion dollars for Porsche drivers around the country is something we could put to that purpose.

SABRA LANE: When the Prime Minister takes his seat in the House of Representatives this afternoon,
he'll do so knowing that Labor's stranglehold on governments across the nation is over with the
Liberals taking office in Western Australia, thanks to an alliance with the National Party.

Despite that, Mr Rudd is confident his plans for a new federalism can work even with a Liberal
Premier at the table.

KEVIN RUDD: I had a good conversation last night with the Premier-elect of Western Australia, Colin
Barnett. I congratulated him as I congratulate him again today on his becoming the next Premier of
Western Australia.

And I said to Mr Barnett last night on the phone, look forward to working with him on the big
challenges that we have got to make the federation work, for the good of the country and for the
good of the people of Western Australia.

Can I say fixing the federation goes well beyond party politics and therefore I am looking forward
to working with the new WA Premier and his government.

Practical things to do and we intend to get on with the job.

SABRA LANE: While Mr Rudd had bouquets for the new Liberal Premier, Mr Rudd delivered a brick-bat
to his Labor colleagues in New South Wales.

Labor copped a walloping on the weekend in council elections across the state, and Mr Rudd says
it's no wonder.

KEVIN RUDD: The people of New South Wales are saying loud and clear to the State Government of New
South Wales that they have a very short time indeed to get their act together. That is my view as

SABRA LANE: He says the party's so self-obsessed in New South Wales that it's forgotten why it's in
power and he says his criticisms are just as valid for the federal Liberal Party.

KEVIN RUDD: The people of New South Wales are just fed up with any government which seems to be
more concerned about itself then it is about the future of the state.

Very simple question here which is are you going to get on with the business of providing
government and services to the people who need it or are you going to get lost in your own internal

That is a message equally clear to the State Labor Government in New South Wales as it is to the
federal Liberal Party of Australia.

ELEANOR HALL: That is the Prime Minister, Kevin Rudd, ending that report by Sabra Lane.

Lehman Brothers facing liquidation

ELEANOR HALL: It is one of the biggest banks on Wall Street and has survived for more than a
century and a half. But by the end of the day Lehman Brothers could be in liquidation.

The bank has been in frantic negotiations this weekend trying to find a solution to its massive
sub-prime related debt problems but it has failed to find a buyer.

And the US Federal Reserve is refusing to step into to underwrite Lehman's survival, despite
helping out another Wall Street institution, Bear Stearns, and the mortgage lenders Fannie May and
Freddie Mac.

Many market watchers are now predicting that it is heading for bankruptcy. One of those is Dr
Stephen Kirchner.

He is an economist with the Centre for Independent Studies and he spoke to me earlier today. I
began by asking him why the US central bank is refusing to intervene in the Lehman case.

STEPHEN KIRCHNER: They really want to put the onus back onto the leading financial institutions in
Wall Street to resolve this amongst themselves without involving the US taxpayer.

ELEANOR HALL: That looks unlikely to happen though, doesn't it?

STEPHEN KIRCHNER: Well, I still think there is scope for an 11th hour deal. There is speculation
that 15 banks will get together and put up $100-billion to purchase Lehman's assets.

If that doesn't go ahead then Lehman will go into Chapter 7 liquidation and in the context of that
liquidation I think there is scope for an orderly work-out of its positions.

ELEANOR HALL: Some people say though that the fall out if Lehman's fails is that the credit market
will shut down completely and inter-bank lending will cease.

STEPHEN KIRCHNER: Well, I think conditions in those markets are going to get quite severe but I
think that is more a question of the price at which the trades take place. I am not sure that the
market will shut down completely. It is just that the trades will take place at prices that a lot
of the counter-parties will probably rather not pay.

But as I said, there is scope for an orderly liquidation of those positions and that is essentially
what people have been working on this weekend.

ELEANOR HALL: If there isn't an orderly liquidation though?

STEPHEN KIRCHNER: Well, it starts to get messy.

ELEANOR HALL: And how bad could it get?

STEPHEN KIRCHNER: Oh well, conditions in credit markets are a lot better than they were at the time
of the Bear Stearns rescue. So, and that is one of the reasons why I think the US authorities are a
bit less, um, less willing to step in at this time.

I think they take the view that the onus should really be on the market and the institutions that
are counter-parties to Lehman to work this out amongst themselves.

ELEANOR HALL: If a bank like Lehman's though could end up in this position, how many other banks
could also be close to collapse?

STEPHEN KIRCHNER: Uh, well unfortunately a lot of the world's financial institutions have billions
of dollars in impaired assets on their books and a lot of those assets are being held at phoney
marks and if they are forced to mark those things to market then their capitalisation is at risk.

But I think the likely outcome here is basically a consolidation of the financial sector so you are
going to see a lot of acquisitions taking place as a result of this process.

ELEANOR HALL: But you are sounding like you're saying that Lehman's won't survive as it is?

STEPHEN KIRCHNER: Not unless there is a 11th hour rescue then Lehman will go into liquidation.

ELEANOR HALL: And do you think that is the most likely scenario?

STEPHEN KIRCHNER: At this stage, yes.

ELEANOR HALL: That is economist with the Centre for Independent studies, Dr Stephen Kirchner.

Lehman bankruptcy would have international implications

ELEANOR HALL: It now appears that some of the consolidation that Stephen Kirchner was just talking
about is already taking place with reports suggesting that the Bank of America is offering to buy
Merrill Lynch for the knock-down price of $US44-billion.

With the latest we're joined now by Richard Lindell.

Richard, before we get to the takeover bid for Merrill Lynch, what are the implications if Lehman's
is bankrupted?

RICHARD LINDELL: Well, Lehman of course, is one of the bigger players in mortgage-backed securities
- it owns more than $50-billion of these now pretty toxic assets.

But the bigger picture for Lehmans is even more troubling - it has just $US30-billion in equity
which supports $600-billion in assets - so if the total value of assets fall just slightly then the
bank is really worthless and it is probably safe to say that that is where Lehmans is at right now.

It doesn't look like any of the private banks will bail them out and why should they if there is no
money to be made out of Lehmans. Barclays Bank of the UK and Bank of America have already pulled
out - and they were considered two front runners.

It does appear that there is a stand-off between the banks and the US Treasury which held talks all
weekend. The government is obviously trying to draw a line under the amount of banks it'll rescue.

But if the US Treasury does let them go bankrupt, does let Lehman's go bankrupt then America's
biggest savings and loan, Washington Mutual and the insurer, American International Group would
probably follow in the coming days and weeks as well.

Add to that the failures of Fannie Mae, Freddie Mac, Bear Stearns - and you've got half a dozen or
so major finance institutions gone or going under and that is not even to mention the half dozen or
so other regional banks in the US which also no longer exist.

For the banks left standing - they'll wear huge losses on any related deals with Lehman. You have
got to remember these CDO's or Collatorised Debt Obligations are sliced and diced and set out into
the financial ether and so the pain will be shared around the other investment banks as well.

ELEANOR HALL: So what does all this mean for the broader economy?

RICHARD LINDELL: Well, for the broader economy, if these banks do in fact go down over the next few
days and weeks then credit conditions in the US and across the global financial system will in
fact, be tighter than they otherwise would have been and that has got to have upward pressure on
interest rates across the globe including Australia.

ELEANOR HALL: Now talking about the banks, Merrill Lynch is another in trouble but it looks like it
has found a buyer?

RICHARD LINDELL: Yeah, well the "Wall Street Journal" is reporting this morning that Bank of
America will pay $US44-billion for Merrills.

That is half of what it was worth about 18 months ago. Still shares in Merrill's have been falling
pretty quickly over recent weeks. It has written off $40-billion in bad loans and bad debts over
past year but if this deal does prove true and the "Wall Street Journal" report is true then it is
a sign of how things might play out with some of the better resourced banks picking over the
remains of a number of investment banks on Wall Street which are obviously struggling to survive.

ELEANOR HALL: So that sort of consolidations we were hearing about earlier. And Australian
companies haven't been immune from the fall-out. Today, Centro Properties has moved a step closer
to collapse.

RICHARD LINDELL: Well, yes. Centro failed to complete the sale of 29 shopping centres in the US for
around $800-million.

That deal was already at a discount to book value - so has to be question mark hangs over the value
of all of Centro's assets really.

Not only that - this deal was the only one that it had completed and it needs to sell a whole lot
of assets to keep the banks at bay - it owes itself about $7-billion to the banks and is currently
trying to negotiate some extensions there.

Centro, once again, got into trouble expanding too quickly into the US - was caught out by the
credit crisis and rising interest rates and now is saddled with a whole lot of debt which probably
see it going under as well.

Certainly the market isn't convinced that it'll survive. Shares in Centro Properties are down to 9
cents this morning. They were at $10 at one stage last year or so, so they are down 98 per cent
from the peak.

You can imagine that shareholders aren't impressed - in fact, they're launching a class action
against Centro's management and board that they failed to fully disclose the debt situation in a
timely manner to the market.

And just as a footnote, also today, Phil Green, the former Managing Director of Babcock & Brown has
stepped down as a director. He had already resigned as CEO and chairman, but it doesn't appear the
transition to a non-executive director was working for either party.

Babcock & Brown again it was another company caught with too much debt in a very complicated
structure. It's had to sell a lot of assets to survive and it is continuing to sell those assets.
Again, its shares are worth a fraction of what they were last year.

ELEANOR HALL: Richard Lindell, thank you.

Split in business ranks on carbon scheme

ELEANOR HALL: The Australian Government knows it'll be no easy task to design an emissions trading
scheme that'll satisfy both business and the environment lobby.

Business is largely urging caution and warning of job losses if energy guzzling industries aren't
properly compensated.

But not every Australian blue chip company is as conservative.

The Westpac Bank is today urging the Government to keep the scheme it adopts as pure as possible
and not to shelter businesses from the impact of putting a price on carbon.

Simon Santow has our report.

SIMON SANTOW: Westpac has long touted its environmental credentials.

But it's no surprise, in one sense, that Australia's second largest bank and a pillar of the
Australian business scene is prepared to take a green line on the make up of Australia's future
emissions trading scheme.

Paul Verschuer is the Managing Director of Foreign Exchange and Commodities at Westpac.

PAUL VERSCHUER: At the heart of it, Simon, we believe in the integrity and the efficiency of
market-designed outcomes to benefit the whole of our economy.

Our argument is simply that they should design a scheme to be robust and consistent with its
long-term goals. Then we acknowledge there is some transition measures necessary but they should be
put in place after you have the scheme well designed.

SIMON SANTOW: So when you say transition methods, are you at all sympathetic to some of the demands
of the Business Council of Australia?

PAUL VERSCHUER: Westpac acknowledges that some industries will be impacted and we do understand the
need for some transition arrangements. Our argument is simply to design the scheme first for
long-term success.

SIMON SANTOW: When you say transitional arrangements, in what way could the scheme be lenient and
for how long?

PAUL VERSCHUER: Ultimately, that is a question for government. They need to make sure they are
minimising the impact to the long-term success of the scheme.

SIMON SANTOW: Business is responding to the challenges of climate change in varying ways.

But most of the lobby groups representing the top end of town are urging more caution and less
haste when it comes to settling on a price for carbon.

The Australian Chamber of Commerce and Industry has just completed its submission commenting on the
Federal Government's green paper on emissions trading.

Its director of economic industry and policy is Greg Evans.

GREG EVANS: We want an efficient and workable emissions trading scheme and business is very, very
supportive of that and what we believe is important is that we put the architecture in place for an
emissions trading scheme and we do that well before maybe the rest of the world as our competitive
countries have actually done anything but we think that is important to put the architecture in

But at the same time we don't want to sacrifice the Australian economy while the rest of the world
may not have moved.

SIMON SANTOW: Westpac is going out on a bit of a limb today by announcing that in its submission it
doesn't want the compensation tap to be turned on for too long a period. It wants the scheme to be
as pure as possible and for the compensation to be relatively short and sharp. Is that realistic?

GREG EVANS: Well, we believe it is important that the so-called emission intensive trade exposed
companies in the Australian economy do in fact receive compensation because the stakes are very
high for these companies.

They make a, they make major contributions in terms of profits, investment and employment and also
the significance if they do move off-shore, the environmental impact of their moving off-shore to
less, less, a regime where there is less onus environmental regulations, there is no, it won't
achieve any net benefit.

SIMON SANTOW: But the compensation for those companies you say that are extremely exposed to
climate change, what about, for how long should the tap be turned on for them, the compensation

GREG EVANS: Well really the tap should be turned on as long as there are, until there is broad
international engagement in an emissions trading scheme.

Because while ever that doesn't happen, they are going to be at a competitive disadvantage to other

SIMON SANTOW: But you do understand don't you, Greg Evans, that in a sense will shelter these
companies from actually dealing with climate change, actually putting up a realistic price on

GREG EVANS: Oh no, there's ah... irrespective of what happens there, there will be an emissions
trading scheme introduced in Australia with the resulting price signals.

There will be a change in domestic prices and consumption will move away over time from emissions
intensive products so there will be behavioural changes within the Australian economy.

But we have got to be careful that we don't penalise these companies that make important
contributions in terms of profit investment and at the same times, there are a lot of companies
such as in the banking sector and the financial sector, they are not emission intensive so they
have a lot less at stake in this debate than those companies in the productive side of the economy.

ELEANOR HALL: That is Greg Evans from the Australian Chamber of Commerce and Industry ending that
report from Simon Santow.

Class issues surface at Beijing Paralympics

ELEANOR HALL: Paralympians at the Beijing Games are falling foul of the classifications designed to
create a level playing field for disabled athletes.

Three Paralympians have now been disqualified for being too able-bodied, the latest one lost her
silver medal in the process but perhaps more publicity was given to the poor sportsmanship of an
Australian athlete who refused to shake her hand.

The chef de mission of the Australian Paralympic team, Darren Peters, has been speaking to Karen
Barlow about the incident.

DARREN PETERS: Amanda made a mistake. She has been spoken to by the team management and in
particular, she is apologetic about it and I am sure that will never happen again.

I think the intensity of the moment got to her and also the problems that always surround anyone's
views on classification which is one of the most difficult things we ever deal with in Paralympic

KAREN BARLOW: Indeed. It has come up quite a few times. It does seem very difficult to police.

DARREN PETERS: It is. Look there are 20 incidences that I know of to do with classification issues
and the IPC on the whole does a wonderful job trying to manage it.

It is just such a complex area when you look at an athlete and what they can do and then what they
can't do and try and categorise athletes via their disability type and in this case it was cerebral
palsy and for example in cerebral palsy there's eight classes.

So it goes from CP1 down to CP8 so you know, and getting a grading in between can sometimes be
subjective so there are a heap on independent experts and world-class doctors and functional
experts that get involved in making judgements. So it is difficult.

KAREN BARLOW: Has Amanda Fraser been sanctioned in any way? Has she been reprimanded? How do you
class what happened to her?

DARREN PETERS: She has been counselled and we have spoken to her and our athletics team management
have been very keen in their advice to her as have we.

I only saw her in the food hall this morning. Look, she is a great young girl and she has admitted
she has made a mistake and moved on.

KAREN BARLOW: Fraser was proved right in her anger about the controversy in that the athlete,
Rebecca Chin, was later disqualified.

DARREN PETERS: Yeah, look, I don't think I would like to say proved right. I think what happens is
that sometimes mistakes in classification are made and a judgement today is only as good as that
judgement on that day and then when you see someone in action, you see a bit more movement shown or
a bit more ability to throw because of a movement that you didn't think they had there and that is
when the judgement gets changed.

KAREN BARLOW: But is the system wrong or is it just going to always be too difficult?

DARREN PETERS: No, no, it is not wrong. It gets to the point where you need, you really do need to
be tested thoroughly before you get to a Paralympic Games.

I think every country, like us, and every other country needs to send their athletes away more to
where the international classifiers are and we need to make sure that they see every athlete and
are very comfortable with their category so that we don't have these issues at a games.

KAREN BARLOW: There has also been the controversy of race protests at the Paralympic Games. Kurt
Fearnley has decided to move on after withdrawing his protests against the running of the 800m
event in the Birds Nest.

He was put in the wrong lane. How can that happen at a big event like the Paralympics?

DARREN PETERS: Look, I don't know. I really don't know and it is one of those things that happens
at a race where you just think the marshals would line them up the right way.

They informed the marshals that they were in the wrong lanes, the athletes. The race started and
Kurt raced. He came second. Unfortunately as a matter of process our team management always put in
a protest about issues like that. It is the way we operate.

Then the Great Britain team were upset thinking that we were having a go at them. Kurt, the
champion that he is, withdrew. He really is, acted in the spirit of fair play and he has done more
than enough there to demonstrate the Australian sportsmanship.

ELEANOR HALL: That is the chef de mission of the Australian Paralympic team, Darren Peters,
speaking to Karen Barlow.

NZ dairy farmers face milk contamination probe

ELEANOR HALL: In New Zealand, the dairy cooperative Fonterra has become embroiled in a milk
contamination scandal in China.

Fonterra is in a joint venture with the Chinese company - San Lu - which has admitted that around
700 tonnes of its milk formula was contaminated with a toxic substance to make the protein levels
of the milk appear higher.

The formula has been linked to the death of at least one baby, 400 others have fallen ill as New
Zealand correspondent Kerri Ritchie reports.

KERRIE RITCHIE: Chinese company San Lu has admitted melamine was added to its milk formula. A toxic
substance used in plastics, fertilisers and cleaning products.

Nineteen people have been arrested in China for breaking food safety laws. In New Zealand dairy
giant Fonterra is coming under scrutiny.

Fonterra owns 43 per cent of the San Lu Group. For days Fonterra has been refusing to be
interviewed but in a statement says it urged San Lu to recall the product six weeks ago.

The formula was only taken off the shelves in China last week.

Roger Spiller from New Zealand's Centre for Business Ethics says big questions remain about whether
Fonterra acted responsibly.

ROGER SPILLER: It is critical that companies have monitoring processes for ensuring that the
principles are implemented and practised. I think many stakeholders are wanting to know just how
has that been applied with Fonterra in this case.

KERRI RITCHIE: More than 400 babies fed the formula have developed kidney stones. One has died. New
Zealand food safety advocate Sue Kedgley says Fonterra hasn't been very open.

SUE KEDGLEY: There ought to be procedures in place in that company to make sure that there can't be
a food safety scandal so obviously there has been a major failure in some way.

We don't know exactly what's happened or the level of their involvement but I think basically, in a
situation like this, it is incumbent on Fonterra to be open, to be up front, to tell the truth, to
explain what has happened and not to try to fob people off and be evasive.

KERRI RITCHIE: But New Zealand Prime Minister Helen Clark believes Fonterra has behaved
responsibly. She told Television New Zealand that Fonterra has faced difficulties dealing with the
Chinese Government.

HELEN CLARK: I have to say, once we blew the whistle in Beijing, they moved very fast.

INTERVIEWER: But it took the Government to do that?

HELEN CLARK: It took the Prime Minister bringing people together and saying we will not have this
on our conscience.

KERRI RITCHIE: She believes Fonterra had been trying for weeks to get a recall but Chinese
officials refused.

HELEN CLARK: The first heads-up they gave that they had some concerns was around mid-August to the
embassy in Beijing but it wasn't until the end of August that the embassy felt that it had enough
information to actually report through to Wellington.

Now Fonterra, I understand was urging that the local authorities allow the joint venture to have an
official recall but they wouldn't do that.

KERRI RITCHIE: Fonterra says it is seeking a meeting with the Chinese Government and a spokeswoman
says it is likely Fonterra CEO Andrew Ferrier will answer questions about the milk contamination
scandal this afternoon.

Rural journalist Tim Fulton who regularly writes pieces on Fonterra for the "New Zealand Farmers
Weekly" says that interview is long overdue.

TIM FULTON: Well, I actually think that Fonterra's response has been a bit disingenuous in that
they have said, don't worry it is not New Zealand milk.

Well, that is an interesting response because of course, when the times are good Fonterra is all
too keen to accept credit for what it is doing for San Lu.

Remember this is a joint venture partnership. It is not just a passive stake they have got in a
Chinese dairy company and so I think Fonterra has perhaps got to put its hand up a bit on this one
and perhaps accept some responsibility for not having acted sooner.

KERRI RITCHIE: Helen Clark says Fonterra can't ignore the lessons of this tragedy.

HELEN CLARK: I think what is says to Fonterra is don't be naive when you go into a JV in a country
with a very different sort of political system and different issues around transparency.

You have to insist on your standards.

ELEANOR HALL: That is the New Zealand Prime Minister Helen Clark ending that report by Kerri

Benbrika guilty of terrorism charges

ELEANOR HALL: Now to breaking news and in Australia's largest and longest running terrorism trial,
a jury has come back after 21 days of deliberation with a mixed bag of verdicts.

Abdul Nacer Benbrika has been found guilty of all the charges, the most serious of which was
directing and being a member of a terrorist organisation.

Twelve people in all were facing charges but half of them have been acquitted.

And in two cases, the jury is yet to reach a verdict.

Alison Caldwell has been covering the trial and she joins us now from outside the court in

Alison, this trial has run for a record time. What is it all about?

ALISON CALDWELL: Hello Eleanor, yes indeed. The whole matter has run for a very long time.

These men where all arrested back in November 2005 soon after the Federal Government passed its new
anti-terrorism laws which people might remember the Howard government passed.

The men were all arrested in raids, dawn raids around Melbourne. They were all accused of being
members of a terrorist organisation.

Some of them were also accused of providing resources to a terrorist organisation and some of them
were also accused of making funds, apart from making funds available, possessing things connected
to a terrorist organisation.

ELEANOR HALL: So what has the ringleader Benbrika been found guilty of?

ALISON CALDWELL: Abdul Nacer Benbrika, 48-year-old Abdul Nacer Benbrika, he is also known as Abu
Bakr. He has been found guilty of intentionally being a member of a terrorist organisation which
was fostering a terrorist act.

He was also found guilty of intentionally directing the activities of a terrorist organisation as
well as possessing a compact disc which was connected with the preparation of a terrorist act.

It was alleged that all of these men were planning, were in the early stages of planning a
terrorist attack on Australian soil and as you said, half of them have been acquitted of that.

ELEANOR HALL: Well, half were acquitted. Why was that?

ALISON CALDWELL: Yes, that is right. Half of them were acquitted. These were more the people who
were seen as being on the edges of the group.

Not so much that core consultative group which we spoke about a few times. These were the people
who were more on the outskirts of it. They were caught up in a couple of conversations.

As we said before, most of the evidence in this case was telephone intercepts secretly recorded
telephone conversations or bugged conversations involving many of the accused.

But some of the accused were only involved in maybe one or two of those conversations. One of those
was Abdullah Merhi. He was found, he was actually found not guilty of providing resources to a
terrorist organisation but at the same time was found guilty of being a member of a terrorist

At the time of the offences he was only about 18 years old. He was the one that the prosecution was
claiming had offered himself up as a suicide bomber for the group. The others... sorry Eleanor?

ELEANOR HALL: I was going to say about the other two accused. Why has the jury found it difficult
to reach a verdict on them?

ALISON CALDWELL: Yes, well the other two. We are talking about Shane Kent. He is the man who became
a Muslim later in life. They have not yet been able to reach a verdict on whether or not he is a
member of a terrorist organisation. That is the only charge he is facing.

With the other gentlemen, Amer Haddara, Amer Haddara has been found, they can't decide yet on
whether or not he was a member or whether or not he was providing resources to a terrorist

So what the jury has been told is go back, continue your deliberations with those men but in the
meantime at least we have verdicts in most of the cases.

With the men who were found not guilty, they were released immediately. They were very relieved.
They smiled. They hugged each other. Everyone stood up. All of the accused stood up and hugged each
of those men who were now allowed to leave and resume their lives.

ELEANOR HALL: And what of Abdul Nacer Benbrika? What does he now face in terms of a jail sentence.

ALISON CALDWELL: Yes, Abdul Nacer Benbrika could face anywhere up to, gosh, 25 years.

Being a member of a terrorist organisation which is fostering a terrorist act itself could bring 10
years prison. Possessing a thing, a compact disc could bring 15 years in prison. Directing the
activities of the organisation could bring 25 years in prison but no doubt, Eleanor there will be
appeals in this case.

It was a long trial. The jury was having to consider 27 different verdicts. It was essentially 27
different trials and there were a number of issues that came up throughout the trial which could
become points of appeal.

ELEANOR HALL: Alison Caldwell at the court in Melbourne, thank you.

Australians warned to be wary of new diseases

ELEANOR HALL: It has already killed more than 400 people. Now the exotic disease, Chikungunya could
be heading for Australia.

The disease is spread by a mosquito, which is found in Australia's north.

And leading disease experts are warning it is just one of a suite of emerging diseases likely to
spread here.

Dr Julie Hall is an expert on communicable diseases with the World Health Organisation's Western
Pacific Office. She's been speaking to Ashley Hall.

JULIE HALL: Certain conditions, increase in the population size, increased urbanisation. The rapid
way in which we can travel now - all of these have compounded to increase the potential risk of
emerging infectious diseases.

ASHLEY HALL: Now one of those diseases that is of particular concern is Chikungunya, have I said
that correctly?

JULIE HALL: Yeah, Chikungunya. I mean this is a disease that is a good example of the types of
threat that we are talking about.

It is a disease that really hasn't been seen in Asia since the 1960s. A disease that was in Africa
causing high numbers of cases, half a million in a year but really not affecting Asia and then in
2004, only four years ago, it left Africa, went into many of the countries around the Indian Ocean
and since then we have seen millions of cases occurring across the Asia-Pacific region and a large
outbreak in Italy just last year so onto mainland Europe as well.

Large numbers of cases. Quite a significant impact when those outbreaks have occurred.

ASHLEY HALL: What are the symptoms?

JULIE HALL: For the majority of people, this is a short-lived disease. For young people it is one
to two weeks of feeling unwell, a fever, joint pain but for those in their middle-ages and older,
it can take three to four months to recover.

So a debilitating disease - not necessarily a large killer. There are deaths associated with this
disease but a debilitating disease that can happen fairly explosively.

ASHLEY HALL: And it is carried by mosquitoes which are found in Australia?

JULIE HALL: Because it has just re-emerged, we are still learning a lot about this disease but some
of the mosquitoes that are capable of transmitting it are here in northern Australia, yes.

ASHLEY HALL: So how likely is it that we will have an outbreak here in Australia?

JULIE HALL: It is very difficult to predict but we look at what has happened in other Asian
countries. Once you start to get people who are infected in a country, they get bitten by
mosquitoes, then you start to get fairly rapid transmission of the disease.

Australia unlike many of its Asian neighbours though, has a good early detection system. It is
difficult to predict whether it would ever come here to Australia but it is certainly close by and
it is certainly a disease that the environment is rife if it were to become a problem.

ASHLEY HALL: You say that we have a good early detection system in Australia. Do we have adequate
measures to preclude this disease from travelling here in the first place?

JULIE HALL: Well, I can't really comment that much on the situation in Australia but I work for the
World Health Organisation and we are trying under the new international health regulations to
strengthen just that. The ability for countries throughout the region to detect cases quickly and
the ability for countries to work together to prevent the spread of disease.

SARS showed us that infectious diseases do not respect international borders. It spread very
quickly around the world so one of the best defences for Australia is to strengthen capacity in the
near neighbours to detect and respond to infectious diseases that could potentially threaten

ELEANOR HALL: That is Dr Julie Hall, a specialist in communicable diseases with the World Health
Organisation's Western Pacific Office. She was speaking to Ashley Hall.

Euthanasia debate heats up

ELEANOR HALL: The push for voluntary euthanasia laws is underway on two fronts in Australia.

In a video made before she died, a 31-year-old woman pleads for Prime Minister Kevin Rudd to
legalise euthanasia.

And there are also calls for the issue to be examined by the Law Reform Commission as Simon Lauder

SIMON LAUDER: Angelique Flowers was diagnosed with aggressive colon cancer just a few months ago.
Before she died last month, the 31-year-old recorded a video of herself, which is now on the
website of "The Age" newspaper.

She described how she felt about the prospect of a slow painful death from a total bowel

ANGELIQUE FLOWERS: All I want after 16 years of painful Crohn's disease and now cancer, is to die a
pain-free, peaceful death.

SIMON LAUDER: Angelique Flowers made a plea to the Prime Minister to take the issue on.

ANGELIQUE FLOWERS: I beg the Labor Government to continue beating with the heart it has shown and
to ensure euthanasia is made legal once again.

SIMON LAUDER: The appeal from Angelique Flowers comes as the Australian Greens prepare to introduce
a bill in the Senate to lift the 1997 Commonwealth ban on the territories legalising euthanasia.

The President of the pro-euthanasia group Dying with Dignity Victoria, Neil Francis, says the
emotional appeal to Kevin Rudd is useful, but there's not much the Commonwealth can do about the
issue in the states.

NEIL FRANCIS: It will be of use to the territories and that it a terrific start. It will reinstate
the right of territories to make such legislation but the Federal Parliament can not overrule the
state parliaments on this particular matter.

SIMON LAUDER: Until last week advocates of voluntary euthanasia were pinning their hopes on a bill
in Victoria's Parliament which would have allowed doctors to help terminally ill patients to end
their lives.

But the Physician Assisted Dying Bill was voted down 25 to 13 in a conscience vote in the Upper

The Liberal member for Bass, Ken Smith, says the bill was defeated despite community support for
voluntary euthanasia.

KEN SMITH: The truth of the matter is that there are doctors around now that are prepared to
administer a lethal dose of morphine on the basis that they are assisting people by cutting back on
the amount of pain but they reach a stage where they can give a dose of morphine that will kill

Those doctors are in a position now where they are able to be prosecuted and I don't think that
that is fair.

SIMON LAUDER: Why is the issue got to be addressed now more than in the past?

KEN SMITH: There has been a number of news polls that have been run over a number of years now and
the last polling showed that there 82 per cent of Victorians wanted this type of legislation to
allow them to be able to in fact, die with some dignity.

SIMON LAUDER: Both Ken Smith and the Victorian Greens are pushing for the issue to be referred to
the Law Reform Commission. Neil Francis from Dying with Dignity Victoria says given the way the
recent abortion debate was handled in Victoria it would be inconsistent of the Government not to
refer euthanasia to the commission.

NEIL FRANCIS: It has referred one matter to the Law Reform Commission and received a report,
constructed a Bill and put it through the Parliament and it has behaved in a rather obstructionist
manner on the other matter which has also very high support in the community.

ELEANOR HALL: That is the president of Dying with Dignity in Victoria, Neil Francis. He was
speaking to Simon Lauder.

Learning more about success

ELEANOR HALL: A study by Melbourne University has found that a good education is not necessarily
the key to financial success.

The pay packets of 20,000 people who were interviewed as part of the study were more closely
related to their personality than to their education.

And the report found that about a quarter of those Australians who earn more than $60,000 a year
didn't finish year 12.

Reporter Felicity Ogilvie has been speaking to the author of the study - Professor Bruce Headey.

BRUCE HEADEY: There are lots of people in Australia who left school before Year 12 and are doing
very well financially. About a quarter of men and women are in that situation.

FELICITY OGILVIE: Is this a generational thing? Did you look at the age of these high earners? Is
it entrepreneurs who dropped out of school and made their money in the '80s or can someone drop out
of school or not finish Year 12 today and still make that rich list?

BRUCE HEADEY: Well, of course the people that are making good money are nearly all 30 and over but
having said that it seems that there hasn't really been a change. It is still true that lots of
folk with not much formal education do very well financially in this country.

FELICITY OGILVIE: And what kind of jobs are these high earners with little to no formal education

BRUCE HEADEY: Oh, the best paid industry in this country is the mining industry as people in WA and
Queensland would know, so people in that industry earn a lot more than others but a whole lot of
people have set up their own business and are entrepreneurial and willing to take risks, have also
done very well.

Basically, the people who are doing well are people who have gone into business for themselves.
Maybe then become publicly listed, set up a good internet business or whatever and a lot of it is
personality and a bit of luck.

FELICITY OGILVIE: You've just spoken about personality. The survey does look at that. There is a
well-known phrase self-made man or woman and you have found a lot of these self-made Australians.
What is it in their personality that makes them successful?

BRUCE HEADEY: Willingness to take risks so if you are a cautious sort of person you are unlikely to
make a lot of money unless you have got a good education, but also hard work and conscientiousness.
Persistence, you know, makes a hell of a difference.

FELICITY OGILVIE: Have you looked at whether those same personality traits are found in people with
a formal education who are also on that high income?

BRUCE HEADEY: Yes, so having those personality traits plus a good education. That is a double plus.

FELICITY OGILVIE: One of the things I found surprising in the survey was other personality traits
such as being an extrovert or being an antisocial neurotic didn't make any difference. Why do you
think that is?

BRUCE HEADEY: Well, actually, I think if we had more detailed information we'd find some
differences so I think it helps to be extroverted in what you might call "front of office" jobs,
but if you have a behind the scenes type of job or "back room" job you could call it then
extroversion isn't going to help so probably we need a bit more detail on the personality stuff to
pin it down, you know.

FELICITY OGILVIE: I would just like to ask finally then, if there are so many Australians making a
lot of money without finishing high school, what financial incentive is there then for people to
get a formal education?

BRUCE HEADEY: Well on average, people with a formal education do better especially if they have
relatively quiet and retiring personalities and don't want to take risks. Also jobs which involve
formal qualifications are usually more secure.

ELEANOR HALL: That is Prof Bruce Headey from Melbourne University. He was speaking there to
Felicity Ogilvie.