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CBA confirms BankWest acquisition

CBA confirms BankWest acquisition

The World Today - Wednesday, 8 October , 2008 12:10:00

Reporter: Peter Ryan

TANYA NOLAN: In what could be a sign of things to come, the Commonwealth Bank has today swallowed
up its much smaller rival BankWest for $2-billion.

The deal will give the Commonwealth greater market share in Western Australia and access to
BankWest's growing retail network on the east coast.

The acquisition comes as Australia's big four banks fine tune their plans for consolidation, amid
the widening turmoil rocking the global banking system.

I'm joined in the studio now by our business editor Peter Ryan.

A $2-billion deal is not big bikkies in banking terms, what's so attracted the Commonwealth to

PETER RYAN: Well Tanya, this has been an open secret in the banking sector for the past few weeks,
and this morning the Commonwealth Bank confirmed it was swallowing up the much smaller bank
BankWest network for $2-billion as you said.

Now, this gives the CBA a new foothold in the fast growing West Australian market and access to a
big retail network that BankWest has built in shopping malls right along the east coast. Once this
deal is done, subject to regulatory approval, there will be 11 million customers in the combined
CBA and BankWest network; the BankWest brand will remain and we're told there will be no job cuts
at the moment.

This is also a rescue of sorts for Bank West, given that its parent company in Britain, HBOS, has
been under siege because of the credit crisis having accepted a government-backed takeover by
Lloyds TSB. But the bigger picture is that this is all part of market consolidation as Australian
banks batten down for rocky times ahead, already this year we've seen Westpac make move on the
number five bank St. George.

There's no doubt though that this is all about the Commonwealth strengthening its business given
the global financial turmoil. But according to the CBA's chief executive Ralph Norris, this wasn't
about bailing out BankWest, or becoming the rescuer of last resort.

TANYA NOLAN: And we are about to hear from Ralph Norris, the Commonwealth Bank chief executive, do
we have that grab?

PETER RYAN: No, but we can just move on then.

TANYA NOLAN: We'll move right along.

Did Ralph Norris have anything to say about yesterday's rates decision and criticism they that
should have passed on the full rates cut?

PETER RYAN: Well hopefully we'll be hearing from him, but as we know during 2008 all the banks have
raised their interest rates independently, something like half of one percentage point. So
yesterday's one percentage point cut was very important.

Ralph Norris has said though that as rates have moved up over the last year, they should be able to
come down once credit markets ease up and banks have the ability to pass on those cuts to

RALPH NORRIS: We see interest rates as declining equally in line with the way they have increased,
once markets stabilise. So once we get back to a normalised market situation I think it's fair to
say, you can expect to see reductions by the Commonwealth Bank which will be ahead, above those of
the Reserve Banks, OCR(official cash rate), and also you will see out-of-cycle decreases as we've
had out-of-cycle increases.

So you will see a situation where, what we have done on the way up in this difficult environment,
will be mirrored on the way down.

TANYA NOLAN: That's Commonwealth Bank chief executive Ralph Norris.

Today we're seeing more big slumps on financial markets around the world. What Australian stocks
are taking the biggest hits?

PETER RYAN: Well it is the banks, including the Commonwealth and all of the other big four banks.
Earlier today the futures market had been predicting a 5.7 per cent plunge after a similar lead in
from Wall Street; it hasn't turned out that bad, but still the market is down around 4.4 per cent.

The All Ordinaries Index down 197 points at 4,400.

As we were saying earlier the market had a reprieve yesterday closing one per cent stronger after
the Reserve Bank slashed interest rates by a shock one percentage point.

But that elation was quite brief, the banking sector, as I said, is weaker today with Westpac, the
NAB, the ANZ and St. George down around four per cent.

TANYA NOLAN: Well as you mention we saw a late but brief rally yesterday after the RBA rates cut.
But the fear remains; what is it that's so spooking the markets?

PETER RYAN: Well Tanya, optimism is in very short supply at the moment, we're smothered by
continuing fear and suspicion as the credit freeze heightens and of course more banks in the United
States and Europe are coming under pressure.

But put simply, the greater the interest rates cut, the deeper the fear the Reserve Bank has about
the threat to the global and local economy. Now borrowers might well be celebrating, but if
Australia is hit by a recession, that's expected to hit the United States and Europe, the good
times will definitely be over.

Now is the time to be battening down the hatches, paying off debt.

Most economists expected the Reserve Bank to keep cutting, for example, the National Australia Bank
thinks rates could fall to five per cent by March next year and the respected rates strategist at
the Macquarie Group, Rory Robertson is predicting rates will fall to 4 per cent in the cutting

So like the banks, the share market is bracing for bumpy times ahead.

TANYA NOLAN: Our business editor Peter Ryan, thank you.

Turnbull's 'ego' didn't contribute to rates cut: Swan

Turnbull's 'ego' didn't contribute to rates cut: Swan

The World Today - Wednesday, 8 October , 2008 12:15:00

Reporter: Sabra Lane

TANYA NOLAN: Listen to the Federal Government's take on yesterday's unexpected move by the Reserve
Bank to cut interest rates by one percentage point and you will hear the word "decisive" repeated

The Prime Minister Kevin Rudd says the Reserve Bank took decisive action to help strengthen
Australia's position amid the global financial crisis and Treasurer Wayne Swan has praised the
Reserve for acting decisively on monetary policy.

But the Opposition leader Malcolm Turnbull says it's thanks to him that the banks are passing on
most of the cut to borrowers.

Wayne Swan begs to differ, saying the bank's decision has everything to do with the current global
financial crisis and not as he puts it, Mr Turnbull's ego.

From Canberra, Sabra Lane reports.

SABRA LANE: The Treasurer, Prime Minister, and Opposition leader conducted something of a media
blitz this morning, selling their messages on the Reserve Bank's extraordinary decision.

WAYNE SWAN: Well certainly this will be welcome relief for families and businesses, it's a
substantial easing of monetary policy and because of that it will certainly strengthen the economy.

KEVIN RUDD: This was decisive action by Reserve Bank, decisive action to help families, but
decisive action also, which we believe which is consistent with global economic outlook we face.

MALCOLM TURNBULL: The only people I've been criticising have been Mr Swan and Mr Rudd, for their
failure to demand accountability, for their supine attitude and for their abandonment of thousands
of borrowers and millions of homebuyers around Australia.

SABRA LANE: Mr Turnbull's been pressuring Australia's big banks to pass on the entire interest rate
cut to their customers; so far, they've passed on 80 per cent of it.

The Opposition leader says the Commonwealth Bank's $2-billion takeover of Perth-based BankWest
shows the banks are strong enough to pass on the full one percentage point cut.

MALCOLM TURNBULL: I think it demonstrates the financial strength of the Commonwealth Bank; the
Commonwealth Bank is here buying, spending $2-billion to buy another bank, that's not the action of
a bank that is under dire financial pressure.

SABRA LANE: The Prime Minister attacked Mr Turnbull's stance in an opinion piece written for a News
Limited newspaper today, he says now is not the time for risk-taking, best guesses or irresponsible
populism. But he expects the banks will pass on the rest of the cut, when financial markets

Mr Turnbull shrugged off the Prime Minister's attack on Radio National.

MALCOLM TURNBULL: Like so much of what he says it's just words and he may as well have said, you
know, transformational collateralism, or something, you know, he's always coming out with words,
you know, maybe he can weave this into his campaign to eliminate greed in the world.

SABRA LANE: Mr Rudd says for now, his priorities are the economy, and the economic stability of the
retail banks.

But, Mr Turnbull says that means the Government's run up the white flag on borrowers and small

MALCOLM TURNBULL: I have stood up for borrowers and I think borrowers have got a better deal as a
result. Wayne Swan and Kevin Rudd abandoned them last week.

FRAN KELLY: So how much of this rate cut, rate cut from the banks announced yesterday do you take
credit for.

MALCOLM TURNBULL: I am not taking credit for...

FRAN KELLY: Well, yes you are.

WAYNE SWAN: Well Okay Fran. Can I just finish the sentence now; I am not taking credit for any
particular amount of it, who can say.

SABRA LANE: Treasurer, Wayne Swan pounced.

WAYNE SWAN: I know Mr Turnbull thinks that the whole world revolves around his ego, but there are
some events in the world that are much bigger than Mr Turnbull's ego.

The fact is the Reserve Bank is responding to international events, and it's responding by
providing an easing of monetary policy for Australia families. It's got absolutely nothing to do
with Mr Turnbull, basically since the Great Depression there has not been an event of this nature.

SABRA LANE: The Prime Minister told ABC Radio in Melbourne, given the Reserve Bank's action, his
Government's surplus, and the high standard of regulation here, that Australia was the best placed
economy in the world to cope with the crisis.

KEVIN RUDD: There are fundamental distinctions between the state of our major banks here in
Australia, and the state of major banks in the United States and in Europe. The balance sheets are
strong, we have the best bank regulators in the world.

And because of that and because we have strong budget policy with a $22-billion surplus as a buffer
for the future, we are best positioned of all economies in the world to see Australia through this
global economic storm.

SABRA LANE: And he told Fairfax Radio, that China will help many countries through the instability.
While China's growth rate will slow slightly, to around 9 per cent Mr Rudd says it will still need
resources, which will help Australia's bottom line.

KEVIN RUDD: China has a huge impact on the economies of the East Asia region, as well as now the
global economy. My understanding is that china will continue to drive strong economic growth for
its own national purposes, but that is also good for countries like Australia because China is such
a major trading partner of ours.

TANYA NOLAN: Prime Minister Kevin Rudd.

British Govt steps in to save UK market

British Govt steps in to save UK market

The World Today - Wednesday, 8 October , 2008 12:19:00

Reporter: Stephanie Kennedy

TANYA NOLAN: The British Government is preparing a rescue package for the UK's bludgeoned financial

The country's banking system went into freefall as its four major banks shed value, some as much as
a third.

The details of the $120-billion taxpayer-funded rescue package will be revealed in time for the
opening of the London markets.

To tell us more I spoke to our reporter Stephanie Kennedy in London earlier today.

So will the rescue package simply take the form of a cash handout to the banks?

STEPHANIE KENNEDY: Well at this stage we think it's partial nationalisation of the system,
different banks have different levels of requirements, some of the bigger banks are looking for an
investment of around $30-billion, the smaller banks possibly, obviously not that much.

What we do know is that the Government is planning to take different levels of equity in each bank.
We just don't know how much each bank will require, and that detail will be fleshed out in a few

TANYA NOLAN: What's led to the collapse of UK bank stocks?

STEPHANIE KENNEDY: Well certainly the markets were in turmoil for a second day, and the banks were
sold off heavily, this followed discussions between the heads of the banks and the chancellor
whereupon there was no firm rescue package announced after that meeting.

HBOS for example, lost 42 per cent yesterday and the Royal Bank of Scotland, 39 per cent. So there
was some serious selling off on the London stock market, and in a bid to stop the flood of
investors, the Government moved eventually and announced that they will reveal details of this plan
just before the London markets open.

Now they're calling it a stability and reconstruction plan, and they're adamant that it's not a
bailout and that it's very different to what the Americans did last week. It's not about buying up
toxic debt, so to speak, and it's based on a Swedish rescue plan from the 1990s.

Back then the Government took a stake in the banks that were in trouble, and later on when they
recovered, they sold off the shares, which the British Government is also planning to do.

TANYA NOLAN: So this crisis has obviously spread beyond the troubles of one or two banks, how deep
does it run?

STEPHANIE KENNEDY: Well it's certainly across the whole banking sector, there are a lot of
investors in the UK who invested in banks not in the UK; and a good example was this Icelandic bank
that overnight also apparently went bust.

It froze all the assets, of its savings accounts and over 300,000 investors and savers have been
left up in the air not knowing whether they will receive access to their money; if they'll receive
access to their money or if they've lost their money.

So it certainly does go very deep into the whole banking system within the UK and also through

TANYA NOLAN: The British Government has been criticised for failing to act quickly, why didn't it
move sooner to restore confidence in the markets?

STEPHANIE KENNEDY: Well the Government's actions have been quite extraordinary over the last few
days, the banks and the markets have been calling for some sort of government indication or
intervention, but the Prime Minister and the Chancellor appeared to have dithered on the whole

All they would say was that they would do whatever it takes, but they never actually spelled out
exactly what they were prepared to do and in the past 24 hours, the Government has been under
enormous pressure to make some sort of announcement to restore liquidity and confidence in the
whole banking sector.

But it seems only when the banks were literally on their knees begging for support that their share
prices went through the floor and then the Government actually stepped up. So, the Government has
been under enormous pressure and has really copped a lot of criticism here about the fact that it,
it failed to act quickly enough.

TANYA NOLAN: Is there much confidence that this rescue package is likely to work; and if so how
quickly would it work?

STEPHANIE KENNEDY: Well, the history tells us that it worked in Sweden and it certainly did so in
the short term. They're hoping that the markets will rally when the London stock exchange opens and
they're hoping that the banks share prices will hopefully bounce back.

But it won't stop a recession and that's the next major problem for the British Government, and all
the signs are there that the UK is already in a recession. We've had new figures out today from the
British Chamber of Commerce backing that up and by the end of this quarter we'll know for certain
whether Britain is in a recession.

TANYA NOLAN: Stephanie Kennedy in London.

Falling Aussie dollar a 'silver lining' for economy

Falling Aussie dollar a 'silver lining' for economy

The World Today - Wednesday, 8 October , 2008 12:23:00

Reporter: Simon Santow

TANYA NOLAN: Throughout the financial troubles the Australian dollar has been bouncing around like
a cork on a stormy sea.

Guessing where it might end up is proving a very hard game, even for those paid to predict it.

Analysts say that while a falling Aussie dollar might upset importers and overseas travellers,
there is a silver lining for the local economy.

Simon Santow reports.

SIMON SANTOW: Stephen Koukoulas has been watching the Australian currency fall from his vantage
point in London, working as a strategist for TD Securities.

He told Radio National this morning, a lot of the drop in value is down to profit taking from
overseas investors in the wake of big changes to Australian interest rates.

STEPHEN KOUKOULAS: Banks that have got liquid assets, that have made the money, they're selling
them and taking their money back home, so for an investor based in Boston or Tokyo or Frankfurt or
London, and if they've been holding Aussie dollar positions in the bond or the stock market,
they're selling them, getting their cash, taking it home and that's just forced the dollar down
quite massively in the last couple of weeks.

SIMON SANTOW: Steven Koukoulas is also convinced that lower global commodity prices are also
driving the dollar down sharply. And he's not alone.

Rory Robertson is an interest rate strategist at Macquarie Bank in Sydney.

RORY ROBERTSON: The global economy is weakening dramatically and therefore there's been a big down
trend in commodity prices and one of the reasons that the Australian dollar has been strong is that
the commodity prices have been buoyant.

Now commodity prices are falling, global growth is decelerating and so the Australian dollar has
been down shifting.

SIMON SANTOW: On top of that, says Rory Robertson, there's the human factor. No investor likes to
miss out on what they think everyone else is enjoying.

That means trying to surf a very crowded wave.

RORY ROBERTSON: Financial markets, you know, often tend to behave as a herd, 10 minutes ago almost
the herd was rushing into commodities and the herd was rushing away from the US dollar. And then
the penny dropped that in fact the global economy was sinking so suddenly people are dumping
commodities, they're dumping equities and they're dumping the Australian dollar and many other
non-US dollar currencies and rushing in the other direction.

So the US dollar had been falling for about six and a bit years, from February 2002 until earlier
this year; we had a big down shift in the US dollar to basically multi-decade lows where the US
dollar was extremely cheap, and where all the other currencies were extremely over-valued.

The herd ran in one direction for six and a bit years, the penny dropped and now the herd is
running in the other direction.

SIMON SANTOW: Stephen Walters is the chief economist at JP Morgan.

STEPHEN WALTERS: It's that combination of commodity price weakness, expectations of pretty
significant interest rate cuts that have been delivered. And I think a final factor is also what we
call a flight to quality; which is amid all this financial market turmoil and plunging business and
consumer confidence, what you typically see is a lot of global investors pull back on their risk
and that means going back into what are perceived safe haven investments.

Typically, for example, in low yielding assets in Japan, and also in the US bond market which is
the most liquid and largest investment market in the world. So we've seen a lot of flows out of
what we call peripheral currencies like Aussie dollar, Kiwi, out of South African currency and back
into the US dollar.

SIMON SANTOW: So is this the end for the climbing Aussie dollar.

Steven Koukoulas isn't so sure the market's settled on its value just yet.

STEPHEN KOUKOULAS: The Australian economy is still, despite the problems that we've got, superior
to that of the US, the Euro, to the UK, to Japan, to Canada, the list goes on, and yet we weakened
even ten per cent against those currencies.

Look I think we're probably going to move back into the high 70s, or even we could see 80 cents
again and that's probably fair value level for the Aussie dollar.

SIMON SANTOW: Macquarie Bank's Rory Robertson agrees the Australian economy is fundamentally sound
and better off than many others.

Still, he's not necessarily predicting the same rebound for the currency.

RORY ROBERTSON: The Australian dollar is at its lifetime average, since the Australian dollar was
floated in the early 1980s, the average against the US dollar has been pretty well 70 US cents.

Now that the Australian dollar is around its long-term average, I think everyone should be a bit
more modest about, you know, anyone's ability to forecast that the next big move. It could be
either way. I, you know, because it's come so far, so fast, there's probably a reasonable chance
that it will bounce. Lots of people still see value in owning the Australian dollar at these

However, if the global credit crunch keeps intensifying, the global panic continues, then there'll
be some investors who had themselves set with the Australian dollars for the past several years who
will be forced to dump their position, and that would put downward pressure on the currency.

TANYA NOLAN: Rory Robertson is an interest rate strategist with Macquarie Bank.

Passengers reveal details of horror Qantas flight

Passengers reveal details of horror Qantas flight

The World Today - Wednesday, 8 October , 2008 12:27:00

Reporter: David Weber

TANYA NOLAN: More terrifying details are being revealed of what occurred on board a Qantas plane
forced into an emergency landing in Western Australia yesterday.

Many of the passengers have been heaping praise on the pilot and the crew of the airbus that made a
forced landing in Exmouth, 1,200 kilometres north of Perth.

It's widely believed the aircraft suddenly lost altitude, forcing the plane to drop several
thousand feet in a matter of seconds.

But an inquiry is underway into the cause of the incident.

More than a dozen of the 300 passengers were injured; David Weber spoke with some of those

MALE PASSENGER: Basically it seemed to hit a bit of hole and it went down, we all hit the ceiling
and all of our stuff was everywhere, all over the place, you know, it was just one of those things
that happened, you know there's not a lot you can do about it.

DAVID WEBER: We're you strapped in at the time?

MALE PASSENGER: I personally was, yes, but there were quite a few other people were as well, but
there were obviously people moving around the cabin and those people that were moving around the
cabin hit the ceiling and hit the floor and that was that.

Qantas have done very well by us; they've been very nice and very good about everything.

DAVID WEBER: Given the circumstances you're very happy with the treatment?

MALE PASSENGER: Without a doubt.

FEMALE PASSENGER: It was just horrendous, just horrendous, that's it, nothing else.

DAVID WEBER: Can you explain what happened?

FEMALE PASSENGER: Well I don't know, it just sort of, the plane just dropped and the inside of the
plane just looks like a complete wreck, like it's been in a plane crash.

DAVID WEBER: And you were strapped in?

FEMALE PASSENGER: Yeah, we were lucky we were strapped in, if you weren't strapped in people just
hit the roof and went, they were just being thrown all over the place.

DAVID WEBER: One of those who hit the ceiling was Malcolm Yeo.

When he arrived in Perth last night, he had an arm in a sling and a cut on his head.

MALCOLM YEO: Well I was in the tail when it hit so I then had to get up front where Shelley was and
it was a case of crawling over panels, most of the roof, much of the roof caved in there. Air frame
must've flexed enough to let a lot of it drop in.

DAVID WEBER: Mr Yeo said he was in the tail of the plane with Qantas staff members, and they were
all seriously injured.

MALCOLM YEO: And I'm the lucky one because there were four of us there and they've got broken limbs
and spinal injuries, and they spilt their wine. At least I didn't spill my wine! (Laughs).

DAVID WEBER: Mr Yeo said he hurt his arm when it was jammed in the ceiling, as the plane went down
the first time. He said he found himself weightless.

MALCOLM YEO: It was a real slam the first time we hit and then there was a second one and I found
myself actually in mid-air unable to drop to the floor and unable to go up to the ceiling.

DAVID WEBER: So you were almost, sort of weightless.

MALCOLM YEO: Weightless, no not almost! Absolutely.

When I recognized what had happened, that we'd hit clear air turbulence, then it was a case of
trying to find a safe spot to land on. What I didn't realize was the amount of demolition that had
gone on in the rest of the aircraft.

Although we had descended just slightly before that so I think the crew must've had a warning that
they were running into wind shear anyway. But I've never had a wind shear like that; to get slammed
by the roof of an aircraft is an experience I can do without again.

TANYA NOLAN: Qantas passenger Malcolm Yeo.

Qantas responds to emergency landing

Qantas responds to emergency landing

The World Today - Wednesday, 8 October , 2008 12:31:00

Reporter: Michael Edwards

TANYA NOLAN: Qantas says it won't speculate on the causes of the incident before the investigation
is completed.

The Pilots Association says the most likely explanation for the plane losing altitude is that it
hit a patch of what's called clear air turbulence.

Whatever the reason it's not good for the airline which has been plagued by mid-air safety
incidents in recent months.

The airline was this morning defending its safety record but does admit it's been a difficult

Michael Edwards has this report.

MICHAEL EDWARDS: It's been a bad year for Qantas.

In July, one of its 747s flying from Hong Kong to Melbourne was forced to make an emergency landing
in Manila after an oxygen bottle exploded through a floor and into the passenger cabin.

Just days later, a domestic flight had to return to Adelaide when a wheel-bay door failed to close.

In August, one of its planes was forced into an emergency landing at Sydney airport after a
hydraulic fluid leak.

This latest incident has Qantas once again answering questions about its safety record, but it
wasn't outgoing chief executive Geoff Dixon or any of his management team who faced the media.

The job of defending the airline and its crews was left to Qantas' chief pilot, captain Peter

PETER WILSON: Our captains and Qantas' safety record is one of the highest in the world, our
captains undergo enormous amounts of training and these sorts of things, when these incidences
occur, that training comes to the fore. The captain made a decision, he was aware that there were
injuries on board and as such he made the decision to land at Learmonth which is the closest

MICHAEL EDWARDS: Qantas is holding an internal inquiry to determine why its aircraft had to make an
emergency landing at Learmonth airport.

It will coincide with another investigation by the Australian Transport Safety Bureau.

Pilots say the most likely reason that the Qantas flight was forced to land at Learmonth airport
was because it hit a patch of clear air turbulence.

That's a weather phenomenon which happens when air currents travelling at varying speeds and at
different temperatures collide.

But captain Peter Wilson says it's too early to speculate.

PETER WILSON: At this stage it's too early to say, there are multiple factors that could occur,
could lead to this, we are currently holding our own internal investigation and the ATSB is also
conducting the investigation.

The purpose of that is to obviously get the facts and at this point, it is pointless speculating.

MICHAEL EDWARDS: Captain Wilson says he's spoken to the pilot of the plane, but at this stage the
airline's main priority is passenger welfare.

Captain Wilson was also sceptical of reports the plane dropped more than 2,000 metres, saying the
most likely scenario was several hundred metres.

But there was one issue he was more specific about.

MICHAEL EDWARDS: It's fair to say it's been a fairly tough few months for Qantas?

PETER WILSON: I think that's probably fair to say but again I wish to emphasise, you know, our
safety record and the standard of our pilots and our crews is amongst the highest in the world.

MICHAEL EDWARDS: The Pilots Association has also praised the performance of the Qantas crew.

The Association's president, captain Ian Woods, says the most likely explanation for the incident
is that the plane did hit turbulence.

IAN WOODS: Well look, a jet upset which is what has occurred is typically caused by turbulence, but
when the turbulence is strong enough, what happens is the flight control forces overpower the
autopilot and it's likely to disconnect, and when it disconnects the aeroplane snatches.

Now that kind of occurrence is quite rare, but in the beginning it's because the upset arose.

MICHAEL EDWARDS: Investigators are using the plane's black box and voice recorder to try to work
out what happened.

The ATSB says the investigation could take up to six months.

TANYA NOLAN: Michael Edwards reporting.

Economic crisis dominates US presidential debate, round two

Economic crisis dominates US presidential debate, round two

The World Today - Wednesday, 8 October , 2008 12:34:00

Reporter: Kim Landers

TANYA NOLAN: The US presidential candidates have met for round two of their scheduled debates, in a
town hall style showdown.

With four weeks until the election, the stakes are high and Republican John McCain needs a strong
performance to halt Democrat Barack Obama's momentum, in a campaign now dominated by the economic

Even his running mate Sarah Palin has told Senator McCain it's time to take the gloves off.

The debate is being held in Nashville, Tennessee and it's in John McCain's preferred town hall
style setting; meaning the audience gets to ask questions too.

Our Washington correspondent Kim Landers joins us live now.

Kim, how crucial is this debate to the race to the White House?

KIM LANDERS: Well this debate is John McCain's chance to land a blow that could help him transform
a presidential contest which has started to tip towards Barack Obama in recent weeks, that's
because the Democratic nominee has been profiting politically from the economic meltdown.

Let's not forget that earlier today the Dow Jones crashed another 500 points.

Barack Obama has now got a solid lead in most of the national opinion polls, up to about seven per
cent, he's also piling up leads in key battleground states that each candidate must win to take the
White House.

So he's been trying to cement that lead, but it's no surprise that the turmoil in the economy has
been front and centre of this debate.

TANYA NOLAN: Well, I was going to say, the voters in this town hall style debate, have they been
asking questions about the economy mostly?

KIM LANDERS: Absolutely, because these candidates last debated 12 days ago and so much has changed
since then, both John McCain and Barack Obama have been asked if the American economy is going to
get worse before it gets better.

Senator Obama said no, Senator McCain said well, it depends on what action's taken now.

Barack Obama said there's a lot of blame to go around, and he's been blaming the Bush
administration; pointing out that there's been big increases in deficit spending; that they've let
the markets run wild. He's also been having a dig at John McCain over his tax cuts saying that the
Republican just wants to cut taxes for the rich.

Let's have a little bit of a listen to what Barack Obama has been saying.

BARACK OBAMA: I think everybody knows now we are in the worst financial crisis since the Great
Depression, and a lot of you I think, are worried, about your jobs, your pensions, your retirement
accounts, your ability to send your child, your grandchild to college. And I believe this is a
final verdict on the failed economic policies of the last eight years.

Strongly promoted by President Bush, and supported by Senator McCain, that essentially said that we
should strip away regulations, consumer protections, let the market run wild and prosperity would
rain down on all of us.

It hasn't worked out that way.

TANYA NOLAN: That's the Democratic presidential candidate Barack Obama.

Kim, how has the Republican nominee John McCain responded to those sentiments?

KIM LANDERS: Well John McCain is saying look, yes Americans are angry, they're upset, they're a
little bit fearful and he's also trying to make them a little bit worried about what sort of
president therefore Barack Obama would be.

He says, Barack Obama is the most liberal, he's the biggest spender, he has the most liberal,
biggest spending record in the Senate. He's voted for nearly a billion dollars in pork-barrel
projects and he says look, look at my record, after all John McCain prides himself on not voting
for these pork-barrel projects, which are called earmarks here in the United States.

And John McCain has also been trying to lay out that he does have some specific ideas, he's been
ridiculed in the past for saying that the fundamentals of the American economy are strong, he's
been laying out some specific plans tonight. Let's listen to John McCain doing just that.

JOHN MCCAIN: As president of the United States Allan, I would order the secretary of the Treasury
to immediately buy up the bad home loan mortgages in America, and renegotiate, at the new value of
those homes, at the diminished values of those homes and let people make those, be able to make
those payments and stay in their homes.

Is it expensive? Yes, but we all know my friends, until we stabilise home values in America, we're
never going to start turning around and creating jobs and fixing our economy.

TANYA NOLAN: Republican candidate John McCain.

Well just briefly Kim, there's been some personal attacks in recent days, any those on show in this

KIM LANDERS: Well despite the fighting words in the lead up to this debate, there's been no
knockout blows, there have been a few sharp elbows though. These candidates have been walking right
up to the people who've been asking the questions, addressing them directly; but then they've used
the questions to pivot and have a bit of a dig at their opponents. So we've seen plenty of that
during the debate, but no nasty attacks.

TANYA NOLAN: Kim Landers in Washington thank you.

Lapthorne family await news on missing daughter

Lapthorne family await news on missing daughter

The World Today - Wednesday, 8 October , 2008 12:38:00

Reporter: Emma Alberici

TANYA NOLAN: The Lapthorne family may have to wait another 10 days before they can be sure remains
found in Dubrovnik are not those of their missing daughter Britt.

Croation police say they're fairly certain the body parts found off the coast could not be those of
the missing 21-year-old.

But a post mortem is yet to be completed.

And coincidentally, the Police Minister and Justice Minister have both been sacked from the
Croatian Government over the rising incidence of crime in the country.

Europe correspondent Emma Alberici reports from Dubrovnik.

REPORTER (translated): No-one expected this in that place and at that hour, Ivana Hodak was gunned
down, shot two times in the head in front of her apartment in the city centre at about 11 a.m. The
job was done fast and the killer made sure she was dead.

EMMA ALBERICI: The Croatian capital of Zagreb was shocked by the news that the daughter of a
defence lawyer and the former vice president had been murdered. On the same day a 17-year-old man
shot his girlfriend then turned the gun on himself.

Crimes of this kind just don't happen here, not since the war ended in the mid 90s.

The reaction from the Prime Minister was swift. He sacked both his Police Minister and the Justice
Minister. Professor Zdravko Bazdan lectures in international relations and democracy and human
rights at the Dubrovnik University.

ZDRAVKO BAZDAN: Two murders in the middle of the day, this is for the first time, in such a

EMMA ALBERICI: Is that why the head of police and the justice minister were both sacked, because
there were these two murders?

ZDRAVKO BAZDAN: Yes of course.

EMMA ALBERICI: It's not their fault that there were murders though.

ZDRAVKO BAZDAN: That is a good decision of the Prime Minister to sack them out because they're on
the top of the pyramid. The situation has been changed, specially these days in Croatia, we are all
scared about Britt's disappearance.

This is first time in Dubrovnik.

EMMA ALBERICI: First time you've had a missing person?

ZDRAVKO BAZDAN: Missing person in Dubrovnik, definitely.

EMMA ALBERICI: The senior detective from the capital known only as Antonio spent his second day in
Dubrovnik; probably quite relieved to be away from Zagreb at this time.

Neither he nor the Australian Federal Police officer working on the case of missing Melbourne woman
Britt Lapthorne would speak to the media.

They told the family there were still no positive leads, and now the wait is on for the results of
a post mortem examination on the remains found in the Adriatic Sea off the coast of Dubrovnik.

DALE LAPTHORNE: A hospital, simple blood test, just a pin prick and four samples, we passed the
dental records on only ten minutes ago, (inaudibly) forwarded them to Darren, Darren's passed them
on directly to the police force.

EMMA ALBERICI: The body parts were sent to Zagreb where more sophisticated DNA testing is possible.
Police have told Dale Lapthorne not to expect a result for at least another week and probably ten

This is Emma Alberici in Dubrovnik for The World Today.

Britt's mother appeals for compassion from authorities

Britt's mother appeals for compassion from authorities

The World Today - Wednesday, 8 October , 2008 12:42:00

Reporter: Tanya Nolan

TANYA NOLAN: Britt Lapthorne's mother has made a plea for more compassion from the Australian and
Croatian authorities.

Here is some of what Elke Lapthorne had to say.

ELKE LAPTHORNE: Parents, you know, you leave the porch light on for your child and when they come
home you turn it off, and that's what I'm doing.

There were a couple of times I woke up during the night and I was gasping for breath, I just don't
want to wake up anymore, at the same time I didn't want to hear that news of course but it was too
coincidental, the timing was too coincidental, who else could it have been, you know.

I sort of felt a calmness there as well because I said to Dale and Darren, I'm sure it's Britty,
and we have to be prepared for this, and they agreed with me.

I just want the Australian Government in all of this, I want them to have a heart in all of this, I
want the Australian Federal Police officer to have a heart and I don't want any other family to go
through what we're going without the compassion and humanity that goes with something like this.

REPORTER: Can I ask you, do you feel like the AFP has given you sub-standard treatment here, do you
feel poorly treated by the AFP through this?

ELKE LAPTHORNE: We understand he's over there as an observer, alright, but we also feel my jumping
up and down and attacking the Government is that they seem to lack compassion, it's just totally
bizarre and surreal and it's horrific and everyday it's just getting worse and worse and worse and
I'm wondering how much, what else are we going to hear, you know.

Why hasn't Britt been found, for heaven's sake?

TANYA NOLAN: That's Britt's mother Elke Lapthorne.

Foreign Minister promises more communication over missing Britt

Foreign Minister promises more communication over missing Britt

The World Today - Wednesday, 8 October , 2008 12:46:00

Reporter: Tanya Nolan

TANYA NOLAN: Foreign Minister Stephen Smith says he understands the family's anger and says
Australian and Croatian officials will now hold daily meetings with Mr Lapthorne.

STEPHEN SMITH: At any given time there are a million Australians overseas, and currently we have
nearly 50 Australians who are missing, registered as missing overseas, and so the terrible anguish
that the Lapthorne family is going through is also a terrible reminder to the other 50 families who
have loved ones missing overseas.

I've seen the remarks that the Lapthorne family have made, and can I make this point; given the
terrible anguish that the family find themselves in, I think the family are entitled to make
whatever points they want to make, to make whatever comments they want to make.

It's my responsibility, the Government's responsibility to ensure that the Government is doing
everything it can to assist the family, and we've been doing that by consular assistance, in
Dubrovnik, in Croatia, we have two officers in Dubrovnik rendering consular assistance to Mr
Lapthorne and his son.

In addition, we obtained the agreement of the Croatian authorities to send an AFP officer to
observe and assist, and the advice of the AFP officer is that the Croatian authorities are
conducting an exhaustive investigation and are leaving no stone unturned to try and resolve the

TANYA NOLAN: That's Foreign Minister Stephen Smith.

Inquiry into Newman assassination begins

Inquiry into Newman assassination begins

The World Today - Wednesday, 8 October , 2008 12:49:00

Reporter: Brendan Trembath

TANYA NOLAN: The man jailed for plotting Australia's first political assassination is the first
witness to be called to front a judicial inquiry into his conviction.

Phuong Ngo says he did not give evidence at the final trial, where he was convicted of killing NSW
MP John Newman in 1994, because his mother had died.

The judicial review was called after an academic raised concerns about some of the evidence
presented to the three trials.

Our reporter Brendan Trembath joins me from the hearing at the Supreme Court in Sydney.

Brendan how did Phuong Ngo appear when he gave evidence?

BRENDAN TREMBATH: Well, he calmly answered questions at this inquiry into his conviction. He was
brought from a maximum security jail where he's serving a life sentence. He's been in jail for the
past ten years.

Phuong Ngo wore a dark blue suit, he was a willing witness, he has been convicted of killing the
Labor Party MP John Newman in 1994. This is really his last chance to have a review of his
conviction, he's already faced the New South Wales Court of Criminal Appeal, but had no luck there.

This is a special inquiry.

The inquiry's heard that the men were members of the Labor Party's right faction but they were not

TANYA NOLAN: And why do you think he mentioned his mother's death?

BRENDAN TREMBATH: Well this is important because, it's to do with why he didn't give evidence in
his third trial. He faced several trials: one of them was aborted; one resulted in a so-called hung
jury, essentially when a jury can't agree on a verdict; the third trial resulted in his conviction.
But he only gave evidence at his second trial, and not the third and he was asked why this was,
because this might have a bearing on his case.

He has told the inquiry that his mother died in March 2001, she died on the 20th of March in
Vietnam, Mr Ngo is originally from Vietnam, but he didn't find out about her death until a few days

He has told the inquiry that he did not give evidence because he just gave up, and he took the
advice of his lawyers not to give evidence.

TANYA NOLAN: What weight will this judicial review carry?

BRENDAN TREMBATH: Well it can carry fairly significant weight, these are relatively rare in New
South Wales, there have only been a couple. This particular one was ordered by the Chief Justice.
But previously there have been judicial reviews into the convictions of people like Tim Anderson,
he had his conviction quashed, he was accused of involvement in the bombing of the Hilton Hotel
during a Commonwealth heads of government meeting in the 1970s.

But his conviction was quashed, so there can be quite a dramatic effect at the end of these
inquiries. At the end of this one it's likely that the former district judge conducting it will
make recommendations to the state's Chief Justice about what should happen next.

TANYA NOLAN: Our reporter at the Supreme Court in Sydney, Brendan Trembath.

Tourism Australia launches new 'walkabout' ad

Tourism Australia launches new 'walkabout' ad

The World Today - Wednesday, 8 October , 2008 12:53:00

Reporter: Jennifer Macey

TANYA NOLAN: The falling Aussie dollar may be an incentive for overseas tourists, but the Federal
Government has unveiled another lure to get them here.

A new ad campaign is urging tourists to go walkabout and lose themselves in Australia.

The Federal Tourism Minister Martin Ferguson launched the $40-million campaign, replete with images
of prawns on the barbie, the Sydney Opera House and Uluru.

It also includes two mini-movies directed by Baz Luhrmann to coincide with his new feature film

Jennifer Macey reports.

(Extract from tourism campaign)

JENNIFER MACEY: Tourism Australia is looking for a bright side to the world's current economic

Its new advertising campaign features an overworked New York power couple, who find themselves by
going walkabout in Australia.

The Executive General Manager of Marketing for Tourism Australia Nick Baker says it's a highly
emotive campaign.

NICK BAKER: Look, this campaign is different, it's actually about our visitors, it's about what's
in it for them that end benefit if you like of an Australian holiday. We've really shifted the
focus from what Australia gives to what the visitor gets from an Australian holiday.

We think it's viable in these current times when our potential visitors, as the Minister said, are
facing tough times that we really appeal to heart not just the head.

We think it will remind people why holidays are important, and that an Australian holiday will give
them an experience that will change them and change their lives.

JENNIFER MACEY: Stress relief aside there's also the money, in particular Australia's falling

A weaker dollar makes it cheaper for overseas tourists to spend their money here.

On the other hand, financial worries can have everyone tightening the belt.

Federal Tourism Minister Martin Ferguson acknowledges that it's a tough time for the tourism

MARTIN FERGUSON: It's very important that we actually get back into the market with a new approach
because in recent times it's been a very tough global tourism market, and Australia's done it
pretty hard, we've got the tyranny of distance, the price of oil, the strength of the Australian
dollar, and now we've got a softening of the global economic market so we've got to be in it to win

And this is a unique opportunity to use the film "Australia" to actually promote the unique,
wonderful, beautiful country Australia, and we're going to give it our best shot.

JENNIFER MACEY: The transformative walkabout is a central theme in the $40-million campaign with
television and cinema ads and a host of print variations featuring iconic images from all states
and territories.

Director Baz Luhrmann, soon to release his epic "Australia" is behind the filmed versions, and he's
used one of his cast, young aboriginal actor, Brandon Walters, in the commercial.

Tourism Australia's Nick Baker says the ads will benefit from the publicity wave surrounding the
release of the film later this year

NICK BAKER: We know people are going to get exposed to Australia and the Australian story through
that process, irrespective of whether they go and see the film. So there's sort of two components
to that whole PR message.

And for us there was a logic about trying to identify a more specific message which was not about
seeing the film but what Australia offers, that was the two prong strategy if you like, and that
helps in a risk sense as well, if the film is not hugely, hugely successful, although we kind of
think it will be, then this stands alone.

And the whole idea was to create a mini-film if you like that stood alone, told a story about why
Australia is special as a holiday destination.

JENNIFER MACEY: it's not just foreign tourists the campaign is hoping to encourage to travel in

The Managing Director of the Tourism and Transport Forum says locals should also holiday at home.

CHRIS BROWN: Globally it's very difficult to get international people in the current climate to go
anywhere for a holiday and it's tough to keep Australian's at home, because we're going off-shore
in record numbers. So here's a movie and a campaign that should play to both a local and an
international audience, remind them about the transformative benefit of Australia, not just a
holiday - but an experience.

(Sound from tourism campaign commercial)

TANYA NOLAN: Jennifer Macey compiled that report.

Tokyo shocked by bizarre nude swimmer

Tokyo shocked by bizarre nude swimmer

The World Today - Wednesday, 8 October , 2008 12:57:00

Reporter: Shane McLeod

TANYA NOLAN: Forget your stock market meltdowns, your political turmoil, even your food safety

There's one topic that has Japan talking today, and that's a bizarre nude swim by a British tourist
in one of the country's highest security waterways, the moat around the Imperial Palace in the
centre of Tokyo.

Our Tokyo correspondent Shane McLeod reports on a two-hour togs-off standoff.

SHANE MCLEOD: As a nation Japan isn't entirely adverse to nudity, one of the countries well-known
festivals involves hundreds of near naked men parading through the streets with large objects
shaped like male appendages, promoting masculinity and fertility, but there's a time and a place
for nudity, and swimming in the moat of the Imperial Palace in the heart of Tokyo is not it.

The man was of a portly build, completely bald and completely nude.

His pink complexion hinted he wasn't Japanese, but television networks used pixilation to stop the
revealing performance being too revealing.

While onlookers at the palace used their mobile phone cameras to keep snap shots for posterity,
police at first tried to rescue the man, from a small row boat they tried to throw him a float, but
when he started hurling rocks back at them, they quickly backed off and prepared for a more
aggressive approach.

The lumbering nude swimmer climbed out of the moat, but refused to go quietly, he started charging
police with a pedestrian safety barrier, then he was pushed back into the water.

Eventually after his two hour swim and stand-off, he climbed up the high wall on the other side of
the moat, and was promptly arrested.

Exactly what triggered his need for a dip is still being determined, he was reportedly touring the
palace forecourt with a group of Spanish tourists when he inexplicably emptied his pockets,
stripped naked and and plunged into the grey green waters of the moat.

Some reports suggest the man had dropped a bag, he went to the police box outside the palace to
report it, then stripped off and jumped into the water to retrieve it.

Others suggest he was simply excited to be at the Imperial Palace.

The British Embassy in Tokyo this morning, says it's investigating whether the man is a British
citizen or a dual national, but could not comment further on the case.

In a nation where appearances are everything, this is one performance unlikely to be welcomed back
for a repeat appearance.

This is Shane McLeod in Tokyo for The World Today.