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Second stimulus package to be unveiled by Federal Government

Second stimulus package to be unveiled by Federal Government

The World Today - Tuesday, 3 February , 2009 12:10:00

Reporter: Hayden Cooper

BRENDAN TREMBATH: It's the first parliamentary sitting day of the year and there's a lot of money
at stake.

The Federal Government is announcing a big spending package to help soften the blows of the global
financial crisis. The Prime Minister's announcement is expected to focus on infrastructure.

The Government will also reveal Australia's current Budget position. New figures are expected to
confirm a descent into deficit.

From Canberra Hayden Cooper reports.

HAYDEN COOPER: At St Pauls Anglican Church in Canberra, politicians gathered to usher in the new
political year with a prayer.

And mingling outside after the service the Prime Minister revealed his preferred reading to match
the financial times.

KEVIN RUDD: I'm reading a biography of Keynes at the moment by Skidelsky.

HAYDEN COOPER: The John Maynard Keynes biography has clearly shaped his thinking, for today Kevin
Rudd will apply the most fundamental of Keynesian principles, spending his way through the storm.

WAYNE SWAN: (to reporters) Ready to go?

HAYDEN COOPER: Up at the House, his Treasurer was foreshadowing a day to remember.

WAYNE SWAN: Well today the Rudd Government will announce a nation-building and jobs plan to support
Australian jobs. But most importantly to invest in future economic growth.

HAYDEN COOPER: The nation-building and jobs plan, as the Government has labelled it, will cost
billions. It'll include spending on infrastructure, and help for business and households.

The Treasurer again:

WAYNE SWAN: This plan will strike the right balance between supporting jobs now and investing in
critical nation-building projects for the future.

HAYDEN COOPER: Nothing, just yet, is guaranteed to get Opposition support.

The only element confirmed is a plan for free insulation for more than two million Australian
homes. And that's already attracting criticism from the Opposition's Housing Spokesman Scott

SCOTT MORRISON: Well, this is a program which the Government in Opposition promised to introduce
when they came to government, so you know we're now more than 12 months into that government, and
what they've done is not introduced yet and now they're saying they're going to take it for $500 to
$1,000. Now, the initiative on its own is worthy of consideration and Malcolm Turnbull has been
talking about green depreciation and retro-fitting buildings and providing accelerated
depreciation. So I think it's very much on the same theme.

But I think the Government's playing catch up on its own policy. And they've dressed it up as a
stimulus package it would seem today. But with the whole stimulus package, which I understand will
be announced today, we need to look at it in its entirety. And as I say every dollar is a dollar
extra in debt.

HAYDEN COOPER: The Finance Spokesman Joe Hockey isn't expecting much either.

JOE HOCKEY: Of course there's a global financial crisis, but the message today has to be hope. Hope
that we can get out of this, hope that there is a way, that there is a solution. There has to be a
plan. But instead, today we'll see a stimulus package that rolls together all of Kevin Rudd's old
initiatives and takes a few of Malcolm Turnbull's as well. He'll roll them all together and he'll
claim that they are going to stimulate the economy; they're going to create jobs. Well, you know,
it's all spin.

HAYDEN COOPER: While there will be a splurge designed to save jobs and get Australians spending
again, the Government's also taking the unusual step of releasing updated Budget figures.

And it's here that the negative context will shine through as the size of the budget deficit is
revealed, along with new growth and unemployment figures.

These will finally confirm whether the Government believes Australia is destined for recession.

WAYNE SWAN: Well a temporary deficit has been imposed on Australia by the rest of the world. And
what you saw yesterday is the magnitude of that in terms of the revenue downgrades. Today we will
provide a full update of all of that. So all of the figures will be there for everybody to see.

HAYDEN COOPER: Today's stimulus announcement is carefully timed to coincide with the expected
interest rate cut from the Reserve Bank, allowing the Treasurer to craft his argument of policy

WAYNE SWAN: The most important thing for Australia is that we have both fiscal policy and monetary
policy working together to strengthen growth and to support jobs in the face of a global economic

HAYDEN COOPER: Joe Hockey says it'll have a far more damaging impact.

JOE HOCKEY: It may well turn out to be more of a shock to the Australian economy if the Reserve
Bank goes large and the Government goes large and it could have the effect of scaring people into
further belief that the Government is panicking. So these things need to be very carefully managed.

BRENDAN TREMBATH: The Opposition's Joe Hockey ending that report by Hayden Cooper.

Reserve Bank prepares for rate cut

Reserve Bank prepares for rate cut

The World Today - Tuesday, 3 February , 2009 12:14:00

Reporter: Stephen Long

BRENDAN TREMBATH: As we've heard the Government is unveiling its plan to try to combat the economic
crisis at the same time the Reserve Bank is preparing slash the official interest rate once again.

Most analysts are expecting a cut of at least one percentage point when the Reserve Bank announces
the outcome of its board meeting this afternoon.

Meanwhile, Australia's trade deficit has disappeared but it seems for all the wrong reasons.

Economics correspondent Stephen Long joins me now.

And Stephen, given the economic urgency, demonstrated by the additional stimulus package, how
aggressive could the Reserve Bank be today?

STEPHEN LONG: Very aggressive I think, Brendan. The most conservative estimate I've heard is they
will cut by three-quarters of a percentage point. The top end forecast is two percentage points.
And it wouldn't be surprising really if they went more than one percentage point, a full one
percentage point, given the situation that we're facing here and overseas.

And one most also recall that in the last few meetings the Reserve Bank has surprised by going
further than the market's expected. Gone into the meeting in with a recommendation from its staff
to cut buy a certain amount and decided around the boardroom table to actually go further.

And what a difference a year makes. If you go back to this time a year ago, the official cash rate
was hiked to seven per cent and there was another rise still to come in the cycle and banks were
also pushing up rates at the same time to cover their increased cost of funding. And now we're
going to have whatever happens in this meeting, the lowest rates in the history of the official
cash rates set by the Reserve Bank to target inflation, which has been around for two decades. And
indeed, the lowest rates that we've seen even on the money market since the 1960s.

BRENDAN TREMBATH: It's a big world. Do you think the key concern now is the international economy
or the domestic economy?

STEPHEN LONG: It's both, and the interaction between the two. If we look at the Australian economy,
the credit figures are a particular worry. Basically they show that business borrowing has
collapsed and personal lending has also collapsed. So we had a situation where for the first time
since the last recession lending, credit growth, went backwards.

When you've got a contraction in credit growth in the economy, it says that you're headed for very,
very bad times and personal lending went back more than five per cent in the year. Just about every
indicator, whether its economic growth, those credit figures, what's happening anecdotally with
business, business sentiment, business conditions, business investment, it all looks bad on the
domestic front. And then you look at our major trading partners. Well, Japanese industrial
production is at its lowest level since 1985. China's growth rate has halved. America, the European
economies' are in recession. The real worry here is that this is the first time ever that we've
seen such simultaneous problems all around the world.

BRENDAN TREMBATH: You mentioned those trading partners. It seems Australia's long-standing trade
deficit seems to be a thing of the past?

STEPHEN LONG: Yes, it has. For the second month in a row in December our balance of trade was in
surplus. But I fear, Brendan, that that is really not good news because you look at what tipped it
into surplus, well one thing was that we weren't bringing in goods from overseas for business.
Basically, in merchandised goods and capital goods, basically they went backwards. And then you
look at our exports and what happened there was that we saw a real heading backwards of non-rural
goods in specifically minerals. Coke, coal and brickets down 11 per cent, mineral fuels down nine
per cent, metals down 11 per cent, machinery exports down 11 per cent.

So yes, we've increased the trade balance but basically it's because business isn't bringing the
things they need to make new stuff and our exports, whilst overall not too bad, the composition is
a real worry.

BRENDAN TREMBATH: And still speaking business, more bad news from the shopping mall giant

STEPHEN LONG: Indeed. Westfield, which is the world's biggest shopping mall owner, has cut its
profit target for a second time in a week. And that is largely because of the shrinking value of
its assets in the US and the UK and it's also raising $2.9-billion to repay some of the company's
debt. And that's not very good news for its shareholders.

BRENDAN TREMBATH: Economics correspondent Stephen Long, thanks very much.

Retirees lose from predicted interest rate cuts

Retirees lose from predicted interest rate cuts

The World Today - Tuesday, 3 February , 2009 12:18:00

Reporter: Simon Santow

BRENDAN TREMBATH: For people paying off a mortgage today's expected interest rate cut will bring
some much needed relief.

But not everyone is rejoicing at the cheaper cost of borrowing.

Most retirees and pensioners rely on earning interest on their money in the bank rather than paying
interest on a mortgage.

As Simon Santow reports, these people are now preparing for more pain.

SIMON SANTOW: Spare a thought for those Australians known as self-funded retirees.

They've done what successive treasurers have told them, even encouraged them to do, and ploughed
money into superannuation.

Some among them have chased the big bucks on the stockmarket, riding the rollercoaster for all it
was worth and more.

But now with shares on the slide there's been a flight to cash, especially after the Federal
Government guaranteed deposits with the major institutions, such as the banks.

Well the interest that cash was earning is now not as attractive as it was, even six months ago.

SHAUN CORNELIUS: Well on average, they are around $3,000 a year worse off pre-tax, etc. So that is

SIMON SANTOW: Shaun Cornelius is the chief executive officer of; a company which
tracks movements in interest rates among financial institutions.

SHAUN CORNELIUS: It's definitely worth Australians shopping around to make sure they are getting
the best rates. So for instance, one of the best rates in the market is six per cent for an access
online saver account and that's at the top end, that ranges right through to around four per cent.
So obviously the difference between getting six per cent for your money and four per cent, two per
cent, that can be $2,000 extra a year if you've got a better rate on a great product.

SIMON SANTOW: For older Australians the news is a bitter pill in a bad year for anyone on a fixed
income or no longer earning.

MICHAEL O'NEILL: This is the cream on the cake for just one more bit of bad news for those older
Australians who are reliant on their investment and their investment in banks for income.

SIMON SANTOW: Michael O'Neill heads up National Seniors Australia.

He's looking for some help from the Federal Government for his 300,000 members.

MICHAEL O'NEILL: One of the major areas for retirees that gives them concern is around access to
the health system, whether its pharmaceuticals or health treatments. So ensuring that there is
reasonable access via things like the Seniors Health Card will be an area that will provide comfort
for people going forward. And I guess thirdly, if we're going to be innovative around providing for
older Australians to continue to remain in the workplace, continue to try and fund their own
retirement, that it may well be that there need to be tax incentives provided in the same, for
maintaining older workers in the same way that their own centres for keeping, employing apprentices
and younger folk. So that continuing investment and support for the people who remain in the

SIMON SANTOW: In periods of prolonged economic turbulence, income-proofing older Australians is a
large challenge.

John Quiggan is a federation fellow in economics and political science based at the University of

JOHN QUIGGAN: Clearly, equities, investments and the riskier types of debt investments have been
shown to be much riskier than people have anticipated. And on the other hand, the rate of interest
on the secure investments like bonds is falling and likely to stay low for some time.

SIMON SANTOW: That's not such a problem if the Government can keep inflation under control?

JOHN QUIGGAN: That's true, so the decline in the real rate if interest hasn't been as great as all
that but I accept that we will see nonetheless a fairly long period of the low nominal interest
rates, even if inflation starts to pick up a bit.

SIMON SANTOW: For a typical retiree who may have a mix of their future income in investments in
shares, in superannuation and money on deposits, the outlook for them, how would you describe that?

JOHN QUIGGAN: Well certainly much less appealing than it appeared to be a year or two ago when of
course people were racing to get their money into super. The long-standing advice which somewhat
went out the window in the 1990s is that by the time you've actually reached retirement you should
be looking at low-risk investment like bonds and that you should be more than your whole shares in
the build up in the period when you've got a long time to recover from a temporary downturn.

So the extent that people have followed that old-fashioned wisdom, they're only suffering a loss in
rates of return, which isn't so bad. But of course, the advice from a lot of advisors during the
'90s and the early years of this century was to keep on holding shares even after a time of, and in
that case, of course, people have lost quite a lot.

BRENDAN TREMBATH: Economist John Quiggan from the University of Queensland, ending Simon Santow's

Mixed reaction to insulation plans

Mixed reaction to insulation plans

The World Today - Tuesday, 3 February , 2009 12:22:00

Reporter: David Mark

BRENDAN TREMBATH: The Federal Government's plan to pay for the installation of ceiling insulation
in more than two million Australian homes has been met with a mixed reaction.

Some in the insulation industry have welcomed the move but others say it will just encourage shonky
operators to take advantage of gullible home owners.

One environmental group doubts the plan will do much to help with energy efficiency while the
Opposition says the Government is merely rehashing an old promise.

David Mark reports.

DAVID MARK: The details are sketchy but the timing is impeccable.

At the end of a scorching week around the country, the Federal Government has hinted at plans to
help insulate Australian houses.

Several of this morning's newspapers have reported details of the Government's plans to provide
either free or subsidised ceiling insulation to 2.7 million Australian homes.

The Government is yet to provide The World Today with the amount it's prepared to spend on each
home or the total budget for the package.

Even so, Steve Oliver, the New South state manager for Air-Cell insulation, which employs about 70
people around the country, says the move is a good one for his business.

STEVE OLIVER: It means that a lot of people are going to need insulation and we'll all become very
busy insulating these houses.

DAVID MARK: Two-point-seven million Australian homes, there's a lot of companies providing
insulation in Australia. Nevertheless, how long is it going to take to work through that workload?

STEVE OLIVER: It could take a couple of years, I'd say.

DAVID MARK: Does it mean you'll be putting on extra staff?

STEVE OLIVER: Yes, yes it does.

DAVID MARK: How many people do you think may have to put on?

STEVE OLIVER: It could mean putting on up to 20 people.

DAVID MARK: Do you have any sense at the moment of what it will mean in terms of a percentage
increase as to your business, to your bottom line?

STEVE OLIVER: We might see somewhere around the 10-15 per cent.

DAVID MARK: Ross Kessle is the general manager of Four Seasons Home Insulation based in Gosford on
the New South Wales Central Coast. His business turns over a couple of million dollars a year and
employs around 20 people.

He's expecting extra work from the Government's package, but argues it may not help his business in
the long term.

ROSS KESSLE: I think it's great for the economy and I think it's even better for the environment.
But for businesses with plans to stay in the industry for a long term it could actually change all
our plans.

DAVID MARK: Why is that?

ROSS KESSLE: Well, first of all, it's going to probably help the very large fibre-glass insulation
manufacturers the most, especially as they're suffering the building downturn. So that means they
could end up getting the lion's share of the work. And also it's going to probably drag in a lot of
the shonky people in the world. You know you're going to have a lot of unreputable sales people
running around, you're going to have a lot of unreputable installers suddenly appear.

DAVID MARK: So you're concerned that once this demand's taken up, once these 2.7 million homes are
insulated, there won't be as much work?

ROSS KESSLE: There won't be as much domestic work, where half of our work comes from at the moment,
and a lot of the small insulation contractors rely on the domestic work. So it will change the face
of the industry a fair bit.

DAVID MARK: The senior campaigner at the Total Environment Centre in Sydney, Jane Castle, has
similar concerns.

She argues the Government could do more to encourage energy efficiency.

JANE CASTLE: Often these handouts, they're one off and then they collapse in the heap. We do
welcome it but we think it needs to be part of a comprehensive plan and part of a package of new
incentives so that the energy supply industry is about efficiency first, and supply second. And
that's how we're going to avoid more blackouts, by increasing the reliability of our system so that
demand doesn't keep spiralling over supply.

DAVID MARK: Matthew Warren is the CEO of the Clean Energy Council which represents Australia's
renewable energy sector. And he's congratulating the Government.

MATTHEW WARREN: Insulation is a no-brainer technology. It's affordable, it saves energy, it creates
jobs in Australia because most of the insulation is manufactured in Australia. It saves households
money and it saves greenhouse emissions. It's a win-win, win-win.

DAVID MARK: But the Federal Opposition's spokesman for housing Scott Morrison, isn't so sure. He
says the Government is simply re-hashing old promises.

SCOTT MORRISON: They announced a program for $500 rebates in May of last year and it still hasn't
started. And with the Government has formed on killing a solar rebate program and killing our solar
industry, based on what they did in last year's budget because they weren't prepared to ensure that
rebate was allowed to all homes where people were looking to reduce carbon emissions. I mean
they've got to decide whether they're going to do things for welfare reasons or whether they're
going to do things for reducing emissions.

BRENDAN TREMBATH: The Federal Opposition's spokesman for housing Scott Morrison, ending David
Mark's report.

Green Collar jobs to boom

Green Collar jobs to boom

The World Today - Tuesday, 3 February , 2009 12:26:00

Reporter: Michael Edwards

BRENDAN TREMBATH: Many jobs have been lost in the global financial crisis but there could be light
at the end of the tunnel for job seekers.

There are predictions a new generation of jobs will be created as governments and businesses adopt
more environmentally friendly practices.

Advocates of wind and solar energy and other types of green technology say it could revive
Australia's economy.

Michael Edwards has this report.

MICHAEL EDWARDS: It doesn't seem so long ago that people used to talk about computer literacy as an
essential to get ahead in the jobs market.

But now the talk is about green literacy.

Phil Freeman is from the Australian Conservation Foundation.

PHIL FREEMAN: Just as we had to learn computer skills and become computer literate in the last 20
years, we're going to have to become literate in the new green skills of the future. And that goes
for all job occupations. It means electricians are going to have to have green skills, we're going
to need green plumbers, teachers will need to know about sustainability and all the way through to
the banking sector. There's a lot of bankers out of work at the moment. The big bright future for
them is in carbon trading and new financial instruments that drive investment into the clean
industries of the future.

MICHAEL EDWARDS: Phil Freeman says concern about climate change is driving a growth in green
technology, and that along with this will come a massive growth in "green collar" jobs.

PHIL FREEMAN: In six industries alone that we looked at last year with the ACTU, there's a
potential for half a million jobs and there are plenty more industries in the sector that the
Government should be looking closely at. They include renewable energy, energy efficiency,
sustainable water industries, bio-materials, green buildings and construction, waste and recycling,
to name a few.

MICHAEL EDWARDS: Fiona Wain is the chief executive of the advocacy group Environment Business

She says the present economic troubles do present opportunities.

FIONA WAIN: It's a hard time, it's a tragic time for a lot people. Let's not gloss over that. But I
really think it is an opportunity for us to really reassess where our value systems lie, where our
training needs to be, where our outputs need to be, and how we get there.

MICHAEL EDWARDS: Fiona Wain says she expects there will be a big shift towards jobs in the green
technologies sector.

FIONA WAIN: In terms of title you could dream up anything that you like. It's the content of what
has to happen. If I was back at university now I would be jumping up and down with excitement
because I would be wondering where to go because there are so many different options in
architecture, planning, are really going to move into their sexy era. And renewable energy to my
mind is the big no brainer in all of this and this is where Australia really can lead, and cannot
only lead in helping revolutionise the next industrial era in this country, but can help develop
that in Asia.

MICHAEL EDWARDS: The Greens leader Senator Bob Brown agrees. He says saving the environment could
be the way to save the economy.

BOB BROWN: Wherever you look at saving the planet, you increase the number of jobs.

MICHAEL EDWARDS: But Bob Brown says this green revolution can only come with full government

BOB BROWN: And that means a big investment in schools and in education. And we're way behind the
rest of the world after 12 years of the Howard government in spending there. So that's got to be a

MICHAEL EDWARDS: Phil Freeman from the Australian Conservation Foundation says Australia has been
slow to act, but he says future prosperity depends on it doing so.

PHIL FREEMAN: This is the bright light for Australia. We've got huge potential to create these
types of "green collar" jobs and grow our new clean industries. But we have to start now and we
have to follow the lead of the US. We're seeing the Obama administration with a big green jobs plan
and also China putting hundreds of billion dollars behind these new industries as well. If we don't
go for it in Australia, we're going to miss the boat.

BRENDAN TREMBATH: Phil Freeman from the Australian Conservation Foundation ending Michael Edwards's

Crunch time over whaling

Crunch time over whaling

The World Today - Tuesday, 3 February , 2009 12:30:00

Reporter: Shane McLeod

BRENDAN TREMBATH: Crunch time is coming for Australia over whaling.

The head of the International Whaling Commission wants to know by the middle of this year whether
countries like Australia are prepared to do a deal with Japan.

The compromise is set out in a discussion paper released early this morning by Dr Bill Hogarth, the
US-appointed chairman of the commission.

But as Shane McLeod explains, the trade-off might be more than Australia is prepared to accept.

SHANE MCLEOD: The chairman of the International Whaling Commission Bill Hogarth, says the
organisation is at the crossroads. Beset by seemingly fundamental disagreements; on the brink of

For the past year and a half the organisation has been working to break the deadlock. Expert
negotiators have been brought in to try and get the pro and anti whaling forces talking to each
other at special meetings at the IWC.

The chairman has now come up with a discussion paper in which he tries to propose a solution. In
essence, a compromise.

It would happen in two stages. The first running up to five years would see interim decisions made
on some of the most controversial issues that are confronting the organisation. Among them, Japan's
long-standing desire to be allowed to resume whaling in its own waters, and the controversy over
Japan's existing whaling programs, conducted under the scientific provisions of the International
Convention on Whaling.

The proposal, as outlined by the IWC would grant Japan a quota to resume coastal whaling while at
the same time offering options to deal with Japan's scientific hunt. Either phase out the Japanese
kill altogether over five years, with the original quote reducing by 20 per cent each year, or
establish reduced limits on the Japanese program.

Compromise has been at the negotiating table for years, but never before has it reached such a
formal documented stage. The chairman's paper is due to be considered at a special intercessional
meeting of the IWC to be held in Italy in March.

But for anti-whaling groups like Greenpeace, it's a deal too far.

Steve Shallhorn from Greenpeace Australia.

STEVE SHALLHORN: I don't think there's acceptable compromise that does not involve an immediate
stopping of whaling in the Southern Ocean and it's not a compromise to the whales if it means that
a thousand whales are going to be killed in the North Pacific instead of in the Southern Ocean.
That's not a compromise.

SHANE MCLEOD: Even talk of a compromise has proved difficult for the Federal Government which
campaigned strongly against Japanese whaling during the 2007 election campaign.

Details of the IWC discussions reported last week led to accusations of secret deals being done.

The Environment Minister Peter Garrett, today, emphasised again the discussions within the IWC are
just that, and are only suggestions from the chairman on how to make progress.

A spokesman said Australia's position on whaling remains clear - absolutely opposed. He says that's
the way Australia will approach any future decisions at the IWC. The results of next month's
special meeting will be considered by all delegates at the annual IWC meeting in Portugal in June.


Government unveils new stimulus package

Government unveils new stimulus package

The World Today - Tuesday, 3 February , 2009 12:38:00

Reporter: Lyndal Curtis

BRENDAN TREMBATH: The Federal Government has unveiled a $42-billion spending program against the
backdrop of sharply weakening economic growth and rapidly expanding budget deficits.

There are cash giveaways and spending on schools, roads and rail, communities and businesses. The
Government hopes the spending will keep growth positive, although the figures show it will be a
close run thing if it happens.

Chief political correspondent Lyndal Curtis has been in the lock up for the economic statement and
she joins us now in the Canberra studio.

BRENDAN TREMBATH: Well Lyndal why has the Government felt the need to come out with such a big

LYNDAL CURTIS: Well when you look at the picture of the economy painted by the Government, it's not
a pretty one. It says the outlook for the economy is that the economy will be significantly weaker
than it forecast just in November.

It says the global economic outlook has drastically deteriorated since November. It's been the most
extraordinarily synchronised slump in global activity in decades. It says almost all sectors face
significantly weaker growth and there's a much weaker outlook for growth than three months ago.

In fact it's predicting growth will be now down to just one per cent from the two per cent forecast
in November, and for this year, and virtually flat at 0.75 per cent next year. Unemployment is
forecast to be up to seven per cent by 2010 and employment growth is going backwards next financial
year. If not for the plan, growth would have been 0.5 per cent this year. The Government sources
say growth next year would be negative.

The sharp falls in revenue the Government's already announced plus spending measures today
including this one, will push the Budget well into deficit. The Budget this year, which was
forecast in November to be a $5.4-billion surplus, is now predicted to be a whopping $22.5-billion
deficit. That's not the end. There'll be $35-billion deficit racked up in the next two financial
years, and a $26-billion deficit in the year after that.

Now when you think back to the Budget where there was a sizable deficits predicted, that's a very
sharp turnaround in Government balance sheets in less than a year. The Government has outlined
something of a plan to return the Budget to Surplus, something the Opposition's been calling for.
It says when conditions improve and the economy grows above the trend, it will allow tax receipts
to recover naturally, it will keep tax as a share of GDP, lower than the average recorded in
'07/'08, and it will also hold real growth in spending to two per cent.

BRENDAN TREMBATH: So that's a huge amount of money. $42-billion worth. What sort of areas?

LYNDAL CURTIS: There are two strands to the spending. The Government's very keen that the spending
is temporary, targeted and timely. That's a formula the Treasury outlined when those mid-year
forecasts were announced. The Government's keen that the boost will be delivered where it's most

The first half of this year, that's where cash handouts that it's delivering will washout of the
system. The package doesn't deliver a permanent increase in Government spending, the Government was
very keen to stress that, as would happen with the generalised tax cut that Opposition's been
calling for. And the spending is targeted to get maximum bang for the buck. The Government's says
doing nothing is not an option so it's doing something to the tune of $42-billion, most of that
will be spent this year.

The first strand is the cash handouts. They'll happen by April. Some will take place from today,
when that washes out of the system, the second strand, nation-building, begins. The cash handouts
are worth $12.7-billion. Some households will get two bonuses, some will get even more.

There are bonuses for working Australians which will taper down and then cut out when you reach
$100,000 of income. That's $950, all the bonuses are worth $950. A single income family bonus for
families receiving Family Tax Benefit Part B, a back to school bonuses for each school-aged child
for people receiving Family Tax Benefit Part A, a farmer's hardship bonus for people are getting
income-support related to exceptional circumstances which is the sort of support farmers get in
drought. There will also be a training and learning bonus, also $950 each to students and other
people receiving income support to assist with education costs.

The nation-building and, I must stress, all of this spending apart from one part of the
nation-building is all new money and none of the nation-building funding comes from the big
nation-building funds that the Government announced in the Budget last year. So that's still
available to spend if it needs it. But it's spending $28.8-billion on infrastructure, $14.7-billion
on building or upgrading buildings in every one of Australia's 9,500 schools. Going to things like
assembly halls, libraries, indoor sports centres. So you can imagine the Education Minister's going
to be kept very busy opening things. They'll also be some money for secondary schools, and some
money for the maintenance for both, money which is brought forward for trades trading centres which
the Government announced in last year's Budget.

There'll be new money for social and defence housing, for public housing, the Government wants to
build around 20,000 new public houses by 2010 and also 800 new defence homes. The Government says
that will help create 15,000 jobs. There's also money for the repair of public housing, money as
we've heard for insulating homes and also an increase in solar hot water rebate, a tax break for
small business and for business to help them with their capital expenditure. And money for black
spots, regional roads, and also boom gates at railway crossings and some more money for community

Now the Government says this package will support and sustain 90,000 jobs in the next two years.
It's no longer saying it will create jobs, that's a definite change in the rhetoric and I think
reflects the reality that the Government knows it has to keep the jobs that it already has as well
as create jobs.

BRENDAN TREMBATH: Chief political correspondent Lyndal Curtis. A lot of ribbon-cutting ceremonies

Sri Lankan hospital attacked

Sri Lankan hospital attacked

The World Today - Tuesday, 3 February , 2009 12:50:00

Reporter: Sally Sara

BRENDAN TREMBATH: At least nine people have been killed during the shelling of a crowded hospital
in northern Sri Lanka.

The International Red Cross has condemned the attack and says it is shocked by the loss of life.

The hospital in the Vanni district was full of casualties from intense fighting between Sri Lankan
forces and Tamil Tiger rebels.

South Asia correspondent Sally Sara reports.

SALLY SARA: The staff and patients of the hospital found themselves in the crosshairs of the

The hospital in the north east of the country was shelled three times on Sunday afternoon and
evening and was hit again last night local time.

It's unclear whether the Tamil Tigers or government troops were responsible for the attack.

UN spokesman Gordon Weiss says the effects of the shelling was devastating.

GORDON WEISS: The last one struck a women's and children's ward and that was a ward that was a
30-bed ward, filled to overflowing, so there were people lying in the corridors as well and in the
spaces between the beds. So it did considerable damage when it hit.

SALLY SARA: Local health workers say several people lost their arms and legs in the shelling. Many
were already injured when they arrived at the hospital, and were then hit again when the shells

Sophie Romanens, spokeswoman for the International Committee of the Red Cross in Sri Lanka, says
the attacks are a shocking breach of international law.

SOPHIE ROMANENS: We are indeed, we are very shocked about the fact that medical structures are hit
by shelling. This is unacceptable. You know, there are patients there to get medical treatment and
it is very important these facilities are respected.

SALLY SARA: The Sri Lankan Government is ordering civilians to leave the area and go to designated
safe zones. But aid groups say the safe zones have also been shelled.

Asia Pacific director for Amnesty International Sam Zarifi says 250,000 civilians remain at risk.

SAM ZARIFI: The Government just frankly doesn't have the sufficient ability to take care of a
quarter of a million people. So the Government is realy gambling with the lives of these people
assuming that it can finish the military phase of thing conflict without letting more and more of
these people die.

SALLY SARA: The Sri Lankan military says it will keep going until it eliminates the Tamil Tigers.

But Christian Le Miere, analyst with Jane's Defence Weekly says that could take years and even then
the Tamil Tigers could reform as they have in the past.

CHRISTIAN LE MIERE: Given the difficult fighting conditions in the jungles in northern Sri Lanka,
it will be years before any military campaign significantly. So I think given the number of people
still under arms and we keep finding them in fresh terrains it maybe impossible to (inaudible)
altogether and some kind of peace agreement may be necessary.

SALLY SARA: Until then, the fighting is set to continue and a quarter of a million civilians remain
stranded on the battlefield in northern Sri Lanka.

This is Sally Sara for The World Today.

Gaddafi takes over AU

Gaddafi takes over AU

The World Today - Tuesday, 3 February , 2009 12:42:00

Reporter: Barbara Miller

BRENDAN TREMBATH: Libya's eccentric and flamboyant leader Colonel Moamar Gaddafi has landed a dream

Dressed in splendid gold robes and surrounded by traditional leaders, he's been elected head of the
African Union. It's a position he's wanted for a long time, and he's promised his leadership would
be a time of action not words.

Some African leaders though have reservations about Colonel Gaddafi's elevation to the post, and
his proclaimed goal of creating a United States of Africa.

Barbara Miller compiled this report.

(Sound of audience clapping)

BARBARA MILLER: At a summit in Ethiopia Moamar Gaddafi was handed the ceremonial gavel marking his
chairmanship of the African Union.

The eccentric Libyan leader was dressed in golden robes and flanked by seven traditional leaders
whom he called kings.

Moamar Gaddafi has long coveted the position of African Union chairman. He's now got it by default
because it was the turn of a north African nation to take it on.

Dr Peter Fourie from the Department of Politics and International Relations at Macquarie University
says opinion in Africa of Colonel Gaddafi is mixed.

PETER FOURIE: On the hand he is on it for really standing up to the waist in an ideological,
Africa-centric solidarity of the global self kind of way. He's really a bit of dinosaur in terms of
modern politics and African politics and Africa's place in the world.

But I think people think he's quite an interesting and eccentric and in that sense there's real
affection across the African continent. However in terms of his political ambitions for the African
continent as a whole, I think there's a certain measure of scepticism. He does downright strange
things like his recent meeting of traditional leaders across the African continent who crowned him
king of kings, which really is an anachronistic in today's political world.

BARBARA MILLER: Human Rights campaigners have voiced their concern about the appointment.

Reed Brody from Human Rights Watch attended the AU summit.

REED BRODY: Even though Libya's reintegration has accelerated, we shouldn't forget that this is
still a country where there are no political freedoms. There are still many, many dissidents in
jail, this is a country which has never had an election. So it's a little disappointing that
somebody like that is chosen to represent and be the face of Africa. But it wasn't surprising.

BARBARA MILLER: Colonel Gaddafi told the summit his chairmanship would be a time of action not
words. And indicated he would be pursuing his ambition of creating a United States of Africa.

MOAMAR GADDAFI (translated): I dream about a united Africa.

BARBARA MILLER: There's no widespread support though for the idea of a United States of Africa.

And Colonel Gaddafi may also have to turn his attention to more pressing matters, such as Sudan or

PETER FOURIE: Given his agenda to become more of a statesman and certainly he's been cuddling up to
the West a little bit more in recent years, I think he needs to sell his oil, he's given up on his
biological warfare program and so on. His main driver in Zimbabwe will be to infringe his position
as a statesman and Gaddafi has done a lot of what is called "chequebook diplomacy", buying his way
in, buying the favour of people, paying off certain opposing leaders and so on, when things really
get going. So there might be a little bit of that, but again I think we will hear the rhetoric of
African solutions to African problems and even some resistance of a western model in Zimbabwe.

BARBARA MILLER: Do you think now that he's in this position Moamar Gaddafi will seek to exploit it
as much as he can?

PETER FOURIE: Oh definitely. Oh definitely That's in the nature of the animal. So definitely. He
will want to project himself as a kind of African king.

BARBARA MILLER: Colonel Gaddafi will hold the position of African Union chairman for one year.

A US State Department spokesman said Washington would continue to work with the AU, adding that
we'll just have to see how it goes.


Hobart doctor works in Sudan

Hobart doctor works in Sudan

The World Today - Tuesday, 3 February , 2009 12:46:00

Reporter: Felicity Ogilvie

BRENDAN TREMBATH: When a young doctor left for the war-torn nation of Sudan he was looking for a
challenge. Twenty-nine-year-old Stratos Roussos from Tasmania got what he wanted.

Through the organisation Doctors without Borders, he was placed in charge of paediatrics at a
hospital in the southern Sudanese town of Aweil.

He's just returned home from a seven-month stint in Sudan.

Felicity Ogilvie caught up with him in Hobart.

STRATOS ROUSSOS: I guess from a professional point of view, the diseases that we saw were
completely different to things we'd see in Tasmania. And really a lot of diseases were preventable.
So, for example I had never seen a case of cholera before I had arrived in Africa and by the time I
left I had treated several hundred patients with cholera, diseases like tetanus, we saw a lot of
babies with neo-natal tetanus. Maybe two or three admissions of babies with neo-natal tetanus,
which obviously, no matter how much experience you have here, you'd never seen it. And obviously as
you treat children more and more you become a bit more confident and you learn how to deal with
these diseases. Same with malaria, the complications of malaria.

So it was a real different sub-type of pathology that we were seeing from a medical point of view.
I learnt how to deal with a minimum of resources, not having the luxury of I guess of ordering lots
of investigations and tests and really relying on my skills a lot more. Where I guess here you do
have several levels in terms of hierarchy with consultants and referral systems and those kind of
things. Where really we had to sort of rely on our skills a lot.

FELICITY OGILVIE: When you're a doctor seeing such distressing situations with the babies born with
tetanus and you're seeing children that are just like little skeletons, how do you mentally cope
with that?

STRATOS ROUSSOS: I think it's more of a retrospective thing to deal with. At the time it was
obviously so busy, we were working quite long hours. So there was no real time to reflect on that
aspect. Obviously we saw a lot of death and I think that was more on the downtime when we had a
chance to just sort of I guess cool our heals for a bit and that was the time where it was
difficult, where we had a bit of time to step back and think about this.

But I guess one way I was able to deal with it was to also see the upside of what we're doing and
how many lives we were saving. Obviously, you know, death is difficult and certainly in those
circumstances but sometimes it's a reality and children sometimes presented too late or there was
nothing we could do and yeah, even though it was quite sad, you had to sort of put into perspective
of what we were doing.

FELICITY OGILVIE: What do you see as the future for medical care in countries such as Sudan?

STRATOS ROUSSOS: It's really dependant on the lack of conflict. If there's no more sort of
outbreaks of wars, it's really dependant on that because as long as there's war, there's still
going to be a movement of people. People aren't going to be willing to plant crops and stay in one
area and obviously it's just going to be a huge disruption and health, money going into health is
going to be the least of their priorities.

So I think, if conflict remains at a minimum, then we should see an improvement.

FELICITY OGILVIE: You want to get into rural and remote medicine back in Australia. How did going
to Africa help you with that decision?

STRATOS ROUSSOS: It really just showed me a way that medicine can be both adventurous but also you
can a big difference in populations where I guess a lot of doctors choose not to go for a variety
of reasons whether it's too remote or they have family commitments and those kind of things where I
feel I'm able to practice the art of medicine a lot more and for me it's more satisfying and it
also allows me to do a variety, to practice a variety of different aspects of medicine. So that's
the real drawcard out for me to gather, from a personal point of view, being to travel to different
areas, see a lot of Australia and help populations in need.

FELICITY OGILVIE: You're about to go to a small Tasmanian town now, Georgetown which is in the
north of the state. What do you expect to find there as you start your GP training?

STRATOS ROUSSOS: It's a good question, I'm not really sure what to expect. I think it will be a
different type of medicine than I'll be used to. It is a rural town but I'm lucky enough to be
working with two quite experienced doctors there as mentors. So, hoping to learn a lot and for me
it's a completely different experience to what I've been used to. So I'm looking forward to it as
being a positive experience.

BRENDAN TREMBATH: Dr Stratos Roussos speaking to Felicity Ogilvie.

Extreme weather or climate change?

Extreme weather or climate change?

The World Today - Tuesday, 3 February , 2009 12:50:00

Reporter: James Kelly

BRENDAN TREMBATH: Is the recent extreme weather just that or the result of climate change?

Britons are seeing the biggest snowfalls in almost 20 years and Sydneysiders are preparing for the
heat wave which gripped Melbourne and Adelaide last week.

Queenslanders are being evacuated from their homes as floodwaters from an ex-tropical cyclone
inundate properties.

James Kelly reports.

JAMES KELLY: It's enough to make a weather forecaster cry. The unpredictability of what could
happen next.

In Britain heavy snow falls have almost paralysed the country, closing roads and airports, as well
as schools and businesses.

COMMUTER: I had to walk in, my car couldn't get up the hill. The taxi that I ordered crashed into a
bus and so no taxi. Went to the bus stop told no buses running because I was told they were stuck
going up the hill, so I've walked all the way in.

JAMES KELLY: More than six million commuters didn't make it to work.

COMMUTER 2: Absolutely diabolical there's no going on the road there's nothing. We're like a third
world country

JAMES KELLY: Back home, North Queensland residents are facing their own hardship as ex-tropical
cyclone Ellie continues to dump hundreds of millimetres of rain on already saturated towns and
rural areas.

More than 400 homes at Ingham, north of Townsville, are surrounded by floodwaters. About 20 have
been inundated with up to two metres of water.

Hinchinbrook Mayor Pino Giandominico says it's the third highest flood on record and there have
been some evacuations of elderly residents.

PINO GIANDOMINICO: We have asked people to move out before the event but as always you always get
people who want to stay.

JAMES KELLY: The small town of Giru south of Townsville, is also cut off by floodwaters with the
Haughton and Burdekin rivers still rising. And further north in the Gulf, Karumba is cut off.

The Federal Member for Kennedy Bob Katter, says the army should be on stand-by.

BOB KATTER: The barge is ten-days round trip. The fruit and vegetables are bad by the time they get
from Cairns down to Karumba. But, one case there was a two month old child had to be bought back in
a tinnie through crocodile-infested major floodwaters some 70 kilometres from Normanton to Karumba.

JAMES KELLY: The local acting Mayor Joyce Zahner says rising floodwaters have forced the evacuation
of more properties there as well.

JOYCE ZAHNER: We've had some evacuations from Normanton, we've relocated both persons and property
to higher accommodation in Normaton. We've had five isolated stations evacuated, there are numerous
other stations around the area that have water inundation through their houses and we are keeping a
very close eye on all of this.

JAMES KELLY: Kylie Camp from Floraville Station, south-east of Burketown, says river levels at the
station have risen above the previous record set after cyclone Larry in 2006.

KYLIE CAMP: We did get some resupplies last week but there now would be nowhere for anything to
land. Here it's not just the Leichhardt, the Alexandria joins the Leichhardt just down from our
house and that's also been quite a good flood and it's the combination of those two rivers which
are creating this record flooding event here.

JAMES KELLY: Further south in New South Wales, new fires have broken out at Tumut and Toomora as
residents in Sydney's western suburbs brace themselves for 42 degree temperatures.

Hot north-westerly winds are to blame, just like those which brought the heatwave to Melbourne and
Adelaide last week.

Jake Phillips from the Weather Bureau.

JAKE PHILLIPS: As we head towards the weekend the western parts of Sydney will be getting up around
the 40 degree mark, possibly even a couple of degrees above so maybe about 41 or 42 degrees might
be the maximum we see there.

JAMES KELLY: Hot around the rest of the state?

JAKE PHILLIPS: Yes that's right, along much of the coast things will be a little bit cooler as the
sea breeze has some effect but as soon as you head west those temperatures are looking as though
they'll be really quite warm indeed.

JAMES KELLY: Crazy weather at the moment, isn't it?

JAKE PHILLIPS: It does seem to vary quite a lot from one part of the country to the other doesn't
it. Those floods up in Queensland and dry weather and fires down in New South Walers, is quite a

BRENDAN TREMBATH: The Weather Bureau's Jake Phillips ending that report from James Kelly.