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Mexico City closes its doors to swine flu

PETER CAVE: Australia's Health Minister Nicola Roxon says that fewer than 20 Australians are under
observation as possible swine flu cases but that the World Health Organization's decision to lift
its pandemic alert level from three to four is an admission that the outbreak of swine flu can't be
contained.

Swine flu has hit Europe and with the first confirmed cases in Britain and Spain, and fresh
infections of the new strain of the H1N1 virus have been reported in the US and Mexico.

The Federal Government here has boosted border surveillance, requiring all planes before they land
in Australia to report any sick passengers on board.

It's also examining the possibility of funding a vaccination program.

However, the world focus remains on Mexico where the virus is believed to have killed 149 people.

In Mexico City, residents say the capital is beginning to resemble a scene from a post-apocalyptic
movie.

Schools and public venues have been closed by government decree, and many residents have resorted
to either shutting themselves in their homes or leaving.

As hospital waiting rooms fill up with people fearing they have the virus, authorities are still
not releasing information identifying who the victims of the swine flu are.

But they are guaranteeing that anyone who is infected will be treated.

Michael Vincent reports.

MICHAEL VINCENT: There is concern and even a growing sense of alarm across Mexico.

Residents of the capital, Mexico City - one of the world's largest cities - are describing it as
empty.

People who can are leaving; those who can't are bunkering down.

Resident Adriana Beltran.

ADRIANA BELTRAN: Everything is closed. All the entertainment for children are closed, the cinemas
and everything is closed and they ask you not to go around.

MICHAEL VINCENT: There are reports that medical supplies to combat the flu have been sold out and
only government stocks remain.

Even those whose job it is to treat the dead and dying appear to be panicking.

Jorge Martinez Cruz says his son-in-law who is being treated for suspected swine flu, but he was
stopped from getting emergency transport to hospital.

JORGE MARTINEZ CRUZ (translated): The girl in the ambulance told him to step down, that he was
going to contaminate everybody in the ambulance. I think that was terrible.

MICHAEL VINCENT: And then he says when they got to hospital it took seven hours before his
son-in-law was treated.

JORGE MARTINEZ CRUZ (translated): Today, at around 4:00pm the doctors finally saw us. We were here
since 9:00am this morning. It's not fair. They keep saying that the doors are open for us but I
went to the other clinic this morning and only to get some injection and they charged me cash -
that I had to find out.

MICHAEL VINCENT: Even outside the capital, hospitals are being overrun by people coming in with
general coughs and colds.

Dr Suyen Urrutia is the medical coordinator at the emergency room of the Red Cross Hospital at
Lazaro Cardenas, just outside Mexico City.

She says they've had dozens of people coming through doors.

SUYEN URRUTIA (translated): No, no, there's not even been one case of this flu. Really we're just
treating people for their panic. Before they wouldn't have worried about a respiratory illness; now
whenever they feel symptoms like sore throats or generally unwell they turn up here. But until now
there's not even been one person that has this flu.

MICHAEL VINCENT: But people are worried?

SUYEN URRUTIA (translated): Yes there is alarm. People are alarmed. More than anything because the
Government hasn't handled the public information very well.

MICHAEL VINCENT: Dr Urrutia says despite being overrun, they'll continue to treat whomever turns up
because the virus can kill within three to seven days.

In the capital, there's reports that bars and nightclubs were amongst the first public venues to be
shut because many of the initial victims were young and healthy.

Dr Urrutia says that may be because the national flu vaccine program only covers babies, children
and the elderly.

SUYEN URRUTIA (translated): Vaccinations are only used during certain periods of people's lives.
The first few months and years and the very old - that's why the adolescents and those between 20
and 40 years old are the ones getting sick.

They weren't part of any vaccination program. And even though that flu vaccine isn't specific to
this virus it does have certain effectiveness to protect against it.

MICHAEL VINCENT: Epidemiologists are still working to pinpoint the source of the outbreak.

At least two weeks after the first swine flu case, the Mexican Government has yet to say where and
how the epidemic began or give details on the victims.

Under an emergency decree issued at the weekend by the President Felipe Calderon, health workers
have been authorised to isolate patients and enter and search their homes to combat the flu.

But today Mexico's health secretary said his department lacked the staff to carry out that decree.

Most of the victims so far are from Mexico City.

(Marcelo Ebrard speaking)

MICHAEL VINCENT: The Mayor Marcelo Ebrard went public today to guarantee that they'll distribute
medicine to every person suspected of having the virus.

But that guarantee hasn't been enough to stop people leaving Mexico City.

Adriana Beltran and her boys aged four and two planned to fly out overnight to another state after
being locked in their home for the past four days.

ADRIANA BELTRAN: I cannot imagine someone who'd want to stay here totally in this kind of
quarantine, in their houses, with difficulties for everything.

MICHAEL VINCENT: Her mother is receiving chemotherapy for cancer.

She says, even though she lives in Puebla, a neighbouring city of the capital, she can't leave her
home.

ADRIANA BELTRAN: Yeah, we are really concerned about her because we know she's really in danger all
the time. Even with a small flu. She is really taking care. She is not going out. Even the doctor
called all their patients and asked them to stay at home and to take some special vitamins for
people with cancer chemotherapy so they can increase their defences but yeah, we know that exactly
that kind of people, they are really in danger.

PETER CAVE: Mexico City resident Adriana Beltran.

Passengers arriving in Sydney are checked for virus

PETER CAVE: The frontline of defence in stopping swine flu from entering Australia is at present
the airline industry.

Overnight the Federal Government boosted border surveillance requiring all planes before they land
in Australia to report any sick passengers on board.

At least six people with flu-like symptoms were escorted off a plane in Brisbane airport, with one
person detained and tested for swine flu.

Quarantine officers are checking many flights arriving from the Americas in all capital cities.

Jennifer Macey reports.

JENNIFER MACEY: Overnight, biosecurity measures at all Australian airports were ramped up.

The captains of all flights from the Americas are required to make an announcement asking any sick
passengers on board to report to airline staff before the plane is allowed to land.

Passengers arriving at Sydney airport this morning say they had to wait while quarantine officers
boarded their planes to check on anyone with flu-like symptoms.

VOX POP: They made numerous announcements, and then when we landed the quarantine people came on
board to check to see if anyone had any coughs or sniffles.

JENNIFER MACEY: Was there anyone sick on your plane?

VOX POP: There was apparently a lady who had a sniffle and they came to check her out and I don't
know what they did with her but she wandered off so I think, I don't know.

JENNIFER MACEY: And where have you flown from?

VOX POP 2: From Chile.

JENNIFER MACEY: What sort of precautions were taken when you flew?

VOX POP 2: They just told us on the plane that if you had flu-like symptoms or anything like that,
to let them know and they would deal with you on the ground otherwise there was nothing really.

JENNIFER MACEY: Were there any quarantine officers that boarded your flight?

VOX POP 2: No there weren't. It was just the air hostesses telling us information.

VOX POP 3: Well, there were really none coming from Los Angeles but once we landed here in Sydney,
no-one could get up until someone from the Health Department or whatever came through and walked
through the plane.

Whether they were just checking to see if anybody looked ill or there were specific people they
wanted to see because I believe there were a couple of people from Mexico on the flight and they
might have just been looking to see how they looked but other than that, they didn't ask everybody
how they felt or anything like that.

JENNIFER MACEY: But some passengers flying from Los Angeles didn't notice any special precautions
taken when they arrived this morning.

VOX POP 4: No, we didn't get anything until we got here in Sydney and they had us stay on the plane
a little longer for quarantine.

We just sat there for like three extra minutes and they said, 'OK you can get off the plane now.'

Nothing exciting.

JENNIFER MACEY: Did quarantine come on the plane and check anyone out?

VOX POP 4: Nuh uh. I just saw, the only thing I saw was the dog walking around the baggage claim.

JENNIFER MACEY: Travellers flying from Hong Kong say they had to pass through thermal imaging
scanners used during the SARS epidemic to pick up any changes in temperature.

VOX POP 5: You walk past - they've obviously got a monitor pointing at you - you walk past and it
reads your body temperature on a screen.

They also did a random checks of people, taking individual temperature checks and they did ask us
if we had been into some of the affected areas if we could go and notify a doctor or ground staff
in Hong Kong airport but Sydney and London seem to be pretty relaxed about it.

JENNIFER MACEY: Similar procedures are in place in Europe after three people tested positive for
swine flu in Scotland and Spain, raising fears that the virus has already crossed the Atlantic.

A Sydney couple who had been holidaying in Cuba were quarantined for half an hour in Santiago in
Chile before being allowed to board their flight to Australia.

VOX POP 5: In Chile, when we came off the plane, there is a camera at the end, catches everybody
coming in. You have to stand on a cross on the floor and then we got put into quarantine for half
an hour, just while they went through the paperwork.

JENNIFER MACEY: And they said that that was because of the swine flu?

VOX POP 5: It was all to do with the swine flu, yes. There was no problems with it unless you want
to go to the toilet. There was no toilet facilities but that didn't bother us at the time.

JENNIFER MACEY: Airport workers are now worried that they might be exposed to swine flu from
infected travellers.

The unions are meeting with Qantas and other airlines this morning after raising concerns that
proper procedures weren't put in place to protect staff.

The Transport Workers Union federal secretary Tony Sheldon says the biosecurity protections only go
so far.

TONY SHELDON: Well the workforce is concerned that they could be exposed unwittingly by Qantas and
other airlines as there hasn't been proper training to identify potential people at risk. They
haven't been informed about potential symptoms that they could suffer from or a system by which,
where people are being tested at the moment. Staff that may have come in contact with those people,
they've been also informed of potential exposure.

JENNIFER MACEY: The Federal Government says anyone returning from the US or Mexico who develops
flu-like symptoms should consult their doctor immediately.

But as yet, there are no official warnings for people to defer travel to Mexico or the United
States - although the European Union is already advising people to avoid non-essential travel to
the Americas.

Yet some travellers are already changing their plans.

LISA GLANVILLE: My name is Lisa Glanville. I am from the Central Coast of New South Wales. Yeah, we
had planned a trip to Tijuana but we cancelled because of the swine flu and yeah, it's quite
frightening actually, so...

JENNIFER MACEY: When did you find out about swine flu and when did you cancel?

LISA GLANVILLE: It is declared a major emergency I think over in the States at the moment so yeah,
we were going to go on Friday. We booked on Tuesday and we cancelled on Wednesday as soon as we
found out, so.

You don't want to sort of bring that back into Australia either so.

JENNIFER MACEY: So what did you do instead of going to Mexico?

LISA GLANVILLE: We just went to Disneyland instead.

YOUNG CHILD: It was really fun.

LISA GLANVILLE: We were looking forward to it but then it is better to be safe than sorry, so.

JENNIFER MACEY: The flu scare is expected to further hurt the international tourism industry which
is already struggling under the global economic crisis.

And Mexico which relies heavily on foreign tourism is likely to be hit particularly hard.

PETER CAVE: Jennifer Macey with that report.

Vaccine maker waits for go ahead to tackle outbreak

PETER CAVE: In medicine, it's almost always the case that prevention is better than cure.

But when it comes to swine flu, Australian authorities believe they have both covered.

The Federal Government says it has adequate stocks of the antiviral flu treatments Relenza and
Tamiflu.

It's also examining the possibility of funding a vaccination program to prevent frontline health
workers and the wider population from getting the disease in the first place.

Our reporter Simon Santow is speaking to Dr Rachel David from vaccine manufacturer, CSL Limited.

SIMON SANTOW: How soon could a vaccine be developed for this new strain of swine influenza if it
was needed?

RACHEL DAVID: What we are doing at CSL at the moment is making sure that we have access to the
virus so that we can begin the development process and the way that we start is something that
we're commencing at the moment and that is to make a safe version of the virus called a
manufacturing feed, which we then feed into our manufacturing process to produce the vaccine.

Now we're working on that at the moment. That takes between one and three weeks and then should the
Government request of us that we produce a vaccine, we will be able to put that into the process
and start making doses available within six weeks after that.

So, all in all, about nine to ten weeks from now.

SIMON SANTOW: And in terms of mass coverage, should the Government decide to go that way, how much
time would you need to do that?

RACHEL DAVID: We can never make enough for the whole country in one go. It is on a batch by batch
basis and at this stage we can't determine the size of a batch until we know the dose and how well
the virus grows in the lab.

So what the Government has is a priority for who should be vaccinated or receive treatment first
and that usually is frontline health and community workers and people working at the border.

SIMON SANTOW: So they could have the vaccine in their bodies within nine or ten weeks?

RACHEL DAVID: That's right and for us to give everyone in the country one dose at least, we have a
rule of thumb which at this stage is only an estimate but we believe that, that takes about six
months.

SIMON SANTOW: And what would be the cost of producing the vaccine on that sort of scale?

RACHEL DAVID: Compared to the cost of actually managing an outbreak of the flu, it is not onerous.
The flu vaccine is a technology that's been with us for a long time.

I think really we could say probably about $50-million but again, that is only a ball park and that
includes the cost of actually rolling it out to people in the field.

SIMON SANTOW: Now, of course, it is a bit of a dilemma, isn't it, for governments to decide to give
it the go-ahead or not because of the cost in disrupting the production of existing flu vaccines?

RACHEL DAVID: That's correct. At the moment in Australia, seasonal flu, the regular seasonal flu,
it still represents a risk for people as we enter into the winter months so we still need to
provide people with the regular influenza vaccine and they should still continue to use it.

We do, however, recognise that this is only an emergency measure, so if the Government and the WHO
decide we should go into production we will do so but it is a serious decision for Government to
have to make because you are also asking every person in the country to make themselves available
to have the shot.

SIMON SANTOW: Can you outline what it would do in terms of disruption to the production of the
seasonal flu vaccine?

RACHEL DAVID: There are two ways we could go about it. One is if it's determined the situation is
very urgent, we can cease production of the vaccine that we normally use, which has three strains
that are just circulating in the community. We would stop that and commence just producing a
vaccine against the swine flu strain. However if it's determined that we have some time, what we
can simply do is replace one of the strains in the regular vaccine that we make and issue it as a
normal vaccine with the three strains.

It is just that one of those strains would protect against the swine flu.

PETER CAVE: Dr Rachel David from the vaccine manufacturer, CSL Limited, speaking to Simon Santow.

WHO admits swine flu can't be contained, says Roxon

PETER CAVE: The Prime Minister Kevin Rudd says Australia's chief medical officer Jim Bishop and the
Health Minister Nicola Roxon will brief Federal Cabinet this afternoon on the current status of the
swine flu crisis and Australia's plans to deal with it.

Mr Rudd says it is a serious matter.

Nicola Roxon says the World Health Organization's decision to lift its pandemic alert level from
three to four is an admission that the outbreak of swine flu can't be contained.

She spoke to Sabra Lane.

NICOLA ROXON: Well, there are no confirmed cases of swine flu. What there are, are a number of
people who have presented with flu-like symptoms who have been travelling in affected areas and
they are currently undergoing tests.

The latest report I had was that was under 20 people across Australia but the situation is changing
very fast, so those figures will change quickly as we have more people returning from their
travels.

SABRA LANE: In Brisbane this morning, Qantas pulled six passengers from a plane which arrived from
the Americas. What can you tell us about this case? I think one person is still being detained?

NICOLA ROXON: Well, there's no detention process underway at the moment. What is underway is a
process of notifying and identifying travellers who might have symptoms, making sure they are aware
of the risks, providing them with clinical and medical assessment if it is required.

From five o'clock this morning we have had a clinical presence at each international airport and we
will see numbers of people being identified. Of course, a vast number of those people may well have
ordinary flu but we are doing this as a precautionary step and I think that the public would
understand that this is in their interest.

SABRA LANE: The World Health Organization has upgraded its pandemic alert level from three to four.
Practically, what does that mean for Australia?

NICOLA ROXON: Moving from three to four means that the World Health Organization now accepts that
this virus can be transmitted from human to human.

It also means that they don't believe it can be contained any longer. Obviously this has spread
beyond Mexico and that efforts should be focussed on mitigation.

Now in Australia we're obviously doing both of those things because we don't yet have any confirmed
cases in Australia and we're doing all we can to prevent having cases here but being realistic that
it will probably be difficult given the way this disease is spreading, to protect ourselves
entirely from having anyone with symptoms in Australia, that we have to be ready to treat and cope
quickly with the circumstances as they change.

SABRA LANE: The next step is a level five ruling, which is a pandemic. Might that decision come as
early as today?

NICOLA ROXON: I think it is unlikely that it will come today during our daytime. Of course, this
decision was made overnight in the European day. I think what they've made clear in this
announcement is that it doesn't mean that a pandemic will be declared but it increases the
likelihood of it.

All of the world's health officials are closely working on this matter. It's a major international
concern and they will make that decision as soon as any information is available which merits it
but they've made clear that we are not yet at that point although we may be in the near future.

SABRA LANE: Queensland has activated its pandemic plan. Does the Commonwealth look like it will
activate its plan too?

NICOLA ROXON: Look I am advised that it is not usual for us to declare a pandemic in advance of the
World Health Organization identifying it as such.

SABRA LANE: What will happen in Australia once a pandemic is declared? Will borders close? Will
schools close? The Greens say that you must detail Australia's plan should that happen.

NICOLA ROXON: We need to remember that we don't currently have any cases in Australia. There are
stages to handling diseases as they develop and some of the suggestions that are being made are
very much at the far end of circumstances. We've seen for example in Mexico, where this disease is
at its worst, that we have schools and other institutions being closed to try to reduce the spread
of the disease.

We are not in the situation at this point that we would be contemplating those sorts of steps in
Australia. Of course, if the situation changed quickly, we are ready and able to do that if need
be.

SABRA LANE: You talked about yesterday that Australia has a stockpile of 9.5-million doses of
Tamiflu and Relenza. How will those be distributed if you make that decision to get rid of the
stockpile?

NICOLA ROXON: We have 8.7-million courses of Tamiflu and Relenza. They are available if a pandemic
is declared. There is priority given to health workers. Again, we've seen in Mexico that they are,
a large number of the people who have been affected severely by the flu, many of those who have
died, were health workers.

But we clearly would need to respond to the circumstances. If there were an outbreak in a
particular state, we would prioritise providing the stockpile in that state, where people were at
risk, if there were a particular school, if there were an outbreak in a particular area, obviously
we would prioritise those.

There is quite a complex system in place for how that allocation occurs.

SABRA LANE: Have you had further discussions with the manufacturers of Tamiflu and Relenza about
whether they can increase their output?

NICOLA ROXON: I haven't had any of those direct discussions today but I believe that my department
has.

SABRA LANE: And are they looking to boost their productions?

NICOLA ROXON: Obviously, if you were a manufacturer in this field at the moment, you would be
looking to boost your production.

There will be a big market for the product across the world. Obviously many countries that are far
more exposed in the current situation than Australia.

PETER CAVE: The Health Minister Nicola Roxon speaking there with Sabra Lane.

Govt lets slip on end of recession

PETER CAVE: The Federal Government has released its official projections for the end of the
recession.

The exact figures will be in the Budget in two weeks but in a letter sent to his state and
territory counterparts, the Federal Treasurer has revealed that the economic comeback will begin
late next year or early in 2011.

There'll be a weak start to the recovery but in the following two years, the Budget will project a
strong bounce in growth and falling unemployment.

It's a faster revival than suggested by the International Monetary Fund. Last week its economic
outlook stated that the world-wide recovery is expected to be sluggish.

From Canberra, Emma Griffiths reports.

EMMA GRIFFITHS: With two weeks until Budget day, the Federal Treasurer Wayne Swan has revealed
there'll be a change to the way the Government delivers its economic forecasts.

WAYNE SWAN: The most important thing we are doing is providing more accurate, more contemporary
information. We are in extraordinary times. We are in the middle of a global recession. The
forecasts do need to reflect that.

EMMA GRIFFITHS: So this time, the Budget will provide the official predictions for an extra year -
the 2010/2011 financial year.

Forecasts for that year would not normally be included. Normally for the second year out of a
Budget the forecasts would be for a standard expectation of trend growth.

But this time there will be detailed treasury forecast and it will show growth below the trend -
set at 3 per cent. It will show some growth though, and that's the important point for the
Government.

It'll reveal that the way out of recession will begin at the end of next year or early in 2011.

The growth will be faint but it will be there.

And it'll allow the Government to show an economic comeback as it nears the next federal election.

But Wayne Swan says that's not the motivation.

WAYNE SWAN: We are trying to be accurate. We are trying to provide the public with as much
information as possible to keep them informed. Many other countries adopt this approach. To do the
opposite, to stay with the traditional methods in the middle of a global recession, that would be
the inaccurate thing to do.

EMMA GRIFFITHS: The projections for the following two years will show a rapid return to growth with
above trend figures lifting Australia out of recession and putting Australians back into work.

Last week the International Monetary Fund laid down a slower chart to recovery, arguing the
severity of the downturn means the revival will be much slower than it had been out of previous
recessions.

The Opposition says the Government has changed its methodology to suit its political needs.

EMMA GRIFFITHS: Shadow Treasurer Joe Hockey.

JOE HOCKEY: Treasury couldn't get the figures right for a 12 month forecast let alone to get
forecasts and projections right over four years and the economy is changing so dramatically that
any attempt by the Government to lay down an economic recovery strategy by changing the
methodology, sends a very bad message to Australians that you can't trust what the Government says.

EMMA GRIFFITHS: But Chris Richardson from Access Economics supports the change.

CHRIS RICHARDSON: Treasury has a standard way of doing it but it wants to switch from the standard
because this won't be a standard Budget or a standard outlook. Right now it's recession. At some
stage a couple of years out its recovery. It makes sense for Treasury to map that pattern more
closely.

EMMA GRIFFITHS: Access Economics has just released its own forecast and it's not pretty.

It predicts a deficit of $50-billion and as many as one-million people out of a job by the end of
next year.

Wayne Swan's not disputing it.

WAYNE SWAN: The Access report certainly demonstrates the brutal impact on government revenues and
the consequence of that is a higher temporary deficit.

We've already written down revenues between the May Budget and February by $115-billion and Access
Economics is now talking about a further loss to national income of something like $40-billion
arising from lower company profits and lower commodity prices.

There's no doubt that the outlook for revenue is bleak.

EMMA GRIFFITHS: Chris Richardson says Australia should brace for some nasty decisions that have to
be made in the Budget.

He supports the tax cuts due to kick in this July but says there will have to be spending cuts too.

CHRIS RICHARDSON: The trouble for the Government is it needs to explain to people why it has to
spend more in the short-term and less in the long-term. More in the short-term because the economy
is in trouble and it needs support, but less in longer-term to repair the Budget and substantially
less at that. I mean both sides of politics promising boom time promises, you know tax cuts,
supporting the big spending increases of recent years.

That combination is unaffordable and there aren't enough rich people in Australian, aren't enough
people earning $150,000 and more to close that gap.

Middle Australia will feel the pain of Budget repair.

EMMA GRIFFITHS: The Treasurer has repeated the oft-repeated line of not ruling anything in or out.

WAYNE SWAN: It certainly means taking some very, very tough decisions in this Budget to protect the
national economic interest in the short-term, the medium-term and the long-term.

PETER CAVE: Treasurer Wayne Swan ending that report from Emma Griffiths.

NAB profit hit, but still worth $2-billion

PETER CAVE: These are dire times for banks around the world, with some in the United States and
Europe only surviving because of taxpayer-funded bailouts.

But as the global financial crisis continues to bite, one of Australia's biggest banks is still
managing to post a respectable profit.

The National Australia Bank's (NAB) half year profit out today is down more than 9 per cent to just
over $2-biillion as bad and doubtful debts hit the bottom line.

Here's our business editor, Peter Ryan.

PETER RYAN: The NAB is blaming tough market conditions for the 9.4 per cent fall in half year cash
profit.

The $2-billion bottom line might be respectable and in line with expectations, but it's been
savaged by a big rise in bad and doubtful debts.

Six months ago the charge was $700-million; now it's more than doubled to $1.8-billion.

Chief executive Cameron Clyne is battening down for more bad news as the recession deepens.

CAMERON CLYNE: We are not providing guidance but I think you would have to say though that the next
six to 12 months will be difficult.

I think we're now entering a period of economic downturn and with unemployment predicted to peak in
2010 I think it is a likely outcome that bad debts will continue to be an issue through 2010.

PETER RYAN: Cameron Clyne is predicting that while big business will continue to hurt, the outlook
is now becoming dire for many small and medium businesses as credit dries up and unemployment
spirals.

CAMERON CLYNE: Obviously there are the large corporate impairments in the half and we flag that at
our first quarter trading update, a number of significant corporate impairments but as we have
flown in to the second quarter of this half, you are starting to see more smaller and medium sized
businesses become stressed, particularly those that rely on any form of discretionary income. That
is a sector that has become more stressed.

PETER RYAN: Even so, Cameron Clyne can see signs of life in the Australian banking sector.

For example, the NAB's revenue actually increased by 11.5 per cent to $8.5-billion, thanks to the
demise of many non-bank lenders who were once active in the mortgage market.

Balancing that out is a 7.5 per cent fall in earnings for nabCapital and a 28 per cent fall in the
wealth management arm MLC.

But more importantly, Mr Clyne thinks news is becoming 'less worse than expected' both locally and
in the United States and that Australia could be cushioned from a deeper recession.

CAMERON CLYNE: One thing that is pleasing is that we seem to have moved beyond what were a fairly
regular rounds of systemic shocks that we were having albeit a large scale crisis of confidence
from things like the Lehman Brothers or other things and obviously when you have those systemic
shocks, you get a significant freeze in the debt and the credit markets.

We seem to have moved beyond the systemic shocks. I think we are now into managing an economic
downturn. As to whether it has bottomed, it is difficult to say. I think the encouraging thing from
Australia's point of view is that we are only now going into this cycle whereas as I said, many of
the economies around the world have been in it for a year or more so if there is a prospect of a
return to global growth in 2010, that would suggest that Australia probably can't fall as far as
some other economies have.

PETER RYAN: The NAB has also been busy raising capital to strengthen its balance sheet, courtesy of
the Government guarantee.

Cameron Clyne says $16.5-billion was raised in the half year which represents 86 per cent of the
full year requirement.

CAMERON CLYNE: We want to maintain, at this stage, a prudent capital position given the uncertainty
in the cycle. That is obviously well above what rating agencies and regulators would see as
necessarily being required but the reality is, in an uncertain economic time we want to be prudent
and that is why we are topping capital up further.

PETER RYAN: But Mr Clyne had a diplomatic response on relations with the Federal Government, given
recent tensions over the NAB's decision to pass on nothing of the most recent cut to official
interest rates.

CAMERON CLYNE: We have got a very strong working relationship with the Government. I mean this is a
time when in fact, you would want and hope that the banks were working collaboratively with the
Government.

We have got a challenging time ahead for Australia and it's in everyone's interest that we work
collaboratively and we are very comfortable with that relationship.

PETER RYAN: The NAB is also testing its relationship with investors, confirming the dividend per
share will be cut by 24 per cent - the first time since the last recession in 1991.

PETER CAVE: Our business editor, Peter Ryan.

GM scraps Pontiac, but local industry hopes to avoid job cuts

PETER CAVE: The car industry is hopeful the decision by Holden's parent company to end production
of the G8 Pontiac won't mean job losses in Australia.

Holden's Elizabeth plant in South Australia makes more than 30,000 of the cars for the US market.

But Holden doesn't believe it will have to shed jobs because of the decision.

The car industry body, the Chamber of Automotive Industries, says the decision is a reflection of
the restructuring in the US industry.

But the Chamber's chief executive Andrew Mackellar has told our chief political correspondent
Lyndal Curtis the move is not necessarily a negative for Holden.

ANDREW MACKELLAR: Well, it will mean that their export plans to the US will be affected in some
measure but what we know is that Australian car-makers are certainly world competitive. They have
demonstrated that time and time again and no doubt Holden and the other local car-makers will
continue to look for new export markets to replace anything that comes out of this decision.

LYNDAL CURTIS: Do you know how many of the cars Holden is exporting to the US?

ANDREW MACKELLAR: Well, I think it has been useful numbers. I think, so far, it has resulted in
exports of around 30,000 to 40,000 additional vehicles since the program commenced last year so
that has been a valuable contribution.

It won't be ending overnight and it will give the company time to look for other new markets.

They have also announced that they will be introducing a second car line in Adelaide, a small car
to be produced in Adelaide from late next year as well, so that is a positive that the industry can
take considerable heart from.

LYNDAL CURTIS: So it may mean that even if Holden can't replace the exports to the US with exports
to other countries, it can still maintain its workforce by introducing the second car?

ANDREW MACKELLAR: Well, certainly that is what they have indicated, that there won't be any job
implications out of the announcements coming out of the US overnight. They have already positioned
themselves for these sorts of eventualities. Going to one shift, that was announced earlier this
month but they've done that without the loss of any jobs which is a significant achievement and
they have been able to do that through operating and understanding with their workforce and with
the unions in Adelaide.

LYNDAL CURTIS: Although it would be a difficult time to try to look for replacement export markets
given much of the world is in an economic slowdown, as some major markets are in recession. Hard to
look for new markets then at this time or in a year's time to start selling the cars to?

ANDREW MACKELLAR: Well, look that's true. There are many other markets around the world that are
just as affected. In fact the Australian market, of any around the world, has been less affected
than most so that is a positive but they will be looking for new export opportunities.

They have shown that they are at competitive even at much higher exchange rate levels so I think
there will be new opportunities there in the future.

LYNDAL CURTIS: Given the troubles that the US car manufacturers are in, can Australia expect to see
some flow on effects from that over the next say two or three years?

ANDREW MACKELLAR: Well, they are obviously very much linked with their global parents and they are
working through some very challenging issues at the moment but I think all the indications are that
the Australian car-makers are well regarded, they are well positioned within their global
operations and we would expect that they will maintain that ranking as a result of the processes
that are currently underway.

LYNDAL CURTIS: In the context of the Budget preparations, Access Economics has called on the
Government to target middle-class welfare and to look at not only programs affecting people but
also things like industry support. Do you think there is any case for the Government to wind back
industry support in order to help bring the Budget back into surplus quicker?

ANDREW MACKELLAR: Certainly not. Look, the policy arrangements that were announced by the
Government late last year, the new car plant, that has already yielded immediate dividends for the
industry.

What it has done, it has secured new investment in the Australian industry. Three significant
decisions: the small car to be produced by Holden in Adelaide, the Toyota Hybrid Camry and Ford's
decision to reverse its closure of the Geelong engine plant. All of those things have occurred as a
result, as a direct result of the policy arrangements that the Government has put in place.

So it is supporting new investment, it is supporting jobs and the industry and without those policy
arrangements those things would be lost to Australia.

LYNDAL CURTIS: But if the Government is having to trim in other places, shouldn't industry also be
prepared to take a hit if necessary?

ANDREW MACKELLAR: Well, the point is that it is bringing benefits to the Australian economy so you
wouldn't want to close off those benefits to the Australian economy.

PETER CAVE: And that was Andrew Mackellar from the Chamber of Automotive Industries speaking to
Lyndal Curtis.

Queensland mines hit by more job cuts

PETER CAVE: Dire predictions made in January have been realised with the axe again falling on
workers in the mining sector.

Engineering contractor Macmahon Holdings Limited has slashed 360 jobs at two Central Queensland
mines due to the economic crisis.

The Perth-based company has also announced a wage freeze for the lucky ones who still have a job.

More than 5,000 positions have now been lost in Queensland mines and the unions fear that more will
go before the end of the financial year.

From Brisbane, Nicole Butler reports.

NICOLE BUTLER: Sadly it's becoming a familiar story in these tough economic times - hundreds of
people turn up to work only to be told they've lost their jobs.

That's what's happened to 360 staff at the Saraji and Goonyella mines in Central Queensland.

The axe fell after engineering contractor Macmahon Holdings Limited lost a contract for work at a
BMA mine.

BMA announced in January it was slashing production by up to 15 per cent because of the economic
downturn.

Nonetheless, CFMEU (Construction, Forestry, Mining and Energy Union) boss Steve Pierce says the
latest job cuts were unexpected.

STEVE PEIRCE: We were hoping, I suppose, that with the amount of cut backs that BMA have put
through their system already, that that would be the end of it. But obviously it hasn't, there was
contract losses at Goonyella last month and now they have advised that these contract losses at
Saraji so it's really a matter now of waiting to see how many more, if any, are going to come out
of the BMA group and any other coal company.

NICOLE BUTLER: The number of jobs lost in Queensland's mining industry since last October has now
climbed to around 5,000.

Mr Pierce says he's afraid more will go before the end of the financial year.

STEVE PEIRCE: We haven't been approached directly by any of the coal companies to advise us that
but given the profits are a moving feast and a lot of these cutbacks, in our view, seem to be more
profit-driven than as a result of a loss of contracts, there's always a concern that there is going
to be further impacts on the workforce.

NICOLE BUTLER: Besides job cuts, MacMahon has also announced an across-the-board wage freeze.

No one from the Perth-based company has been available to speak with The World Today but a written
statement has been issued. It says:

(Extract from Macmahon Holdings Limited statement)

The changing economic environment and dramatic reduction in demand for resources have impacted
Macmahon's mining businesses. In particular with monthly revenues now averaging 30 to 40 per cent
lower than six months ago.

Adding to these issues, severe rain and cyclones in the March quarter have impacted our operations
in Queensland's Bowen Basin and the Pilbara region of Western Australia.

(End of extract)

NICOLE BUTLER: Macmahon's downgraded its annual net profit forecast from up to $40-million to as
low as $15-million. Its share price has plummeted.

Meanwhile the Queensland Premier Anna Bligh has described the company's job cuts as a tragedy.

ANNA BLIGH: What's happening in central Queensland is a tragedy for many of these mining towns and
communities and the families that call these towns home. It is more bad news today. We will be
working with these displaced workers and hope to find them relocated jobs.

We have already activated our rapid response team who will be meeting with those people who have
lost their jobs.

It is not easy and I think people understand that there aren't going to be jobs there for everybody
who loses a job but if we can make sure that just one person gets a job rather than sustain
unemployment, then that's worth doing.

NICOLE BUTLER: But the mining union is cynical.

It says it's not aware of the Government's job squad having any success in finding sacked workers
new positions.

The CFMEU's Steve Pierce again.

STEVE PEIRCE: Given the amount of redundancies we've had in the industry since Christmas, these
people's short to medium term employment prospects look very bleak indeed.

PETER CAVE: Unionist Steve Pierce ending Nicole Butler's report.

Taliban calls off Swat valley deal

PETER CAVE: Taliban fighters in Pakistan have declared as worthless a peace pact forged earlier
this year with the Government in Swat valley in the country's north-west.

The Taliban says the deal is off because the Government has renewed military action in the region.

The development is certain to further raise concerns in the West about the Pakistan Government
losing the battle against the extremists operating within its borders.

Barbara Miller reports.

BARBARA MILLER: The Pakistan Government's peace deal with Taliban militants has been controversial
from the outset.

In February, Islamabad agreed to Sharia law being imposed in the area, which includes Swat valley,
if the Taliban ended a rebellion there.

The US Secretary of State Hillary Clinton recently accused Islamabad of basically abdicating to the
Taliban.

Speaking on a visit to Afghanistan on Monday, Pakistan's Foreign Minister Shah Mehmood Qureshi said
there was no need to worry.

SHAH MEHMOOD QURESHI: Please do not panic. We have a common vision. We have now a common enemy and
we've devised a common strategy to deal with that enemy.

We are a political government. We believe in dialogue. We believe in reconciliation. That does not
mean abdication. We will not surrender. We will not capitulate and we will not abdicate.

BARBARA MILLER: But the Taliban's announcement that the Swat valley deal is off because of renewed
fighting will only fuel concerns that Islamabad doesn't have the situation under control.

Afrasiab Khattak, the leader of the Awami National Party (ANP) which governs Swat, said the
military action was small-scale and targeted

AFRASIAB KHATTAK: Actually it is not a full-fledged military operation. The security forces had
entered the area because there were reports about miscreants violating laws, attacking people,
kidnapping people, killing people so the security forces were entering the area when they were
fired upon.

The security forces had to retaliate and they are facing miscreants in a small pocket. It is not an
operation the whole district.

BARBARA MILLER: The ANP leader stressed that the authorities would never compromise with militant
elements and would use all their legal and constitutional powers to act against anyone trying to
create a parallel state.

And President Asif Ali Zardari said hitches in any peace deal were to be expected.

ASIF ALI ZARDARI: There is always a reassessment. You see there are known policy which doesn't need
adjustment, tinkering with or upgrading.

BARBARA MILLER: In a briefing to international media, President Zardari also addressed concerns
that the Taliban could get its hands on the country's nuclear weapons.

ASIF ALI ZARDARI: It is not a clash in the Gulf. Nuclear technology is a huge subject so it is not
that one little Taliban can come down and press a button. There is no button. So I want to assure
the world that the nuclear capability of Pakistan is under safe hands.

BARBARA MILLER: President Zardari kept his appointment with foreign media but pulled out of a news
conference with the visiting British Prime Minister Gordon Brown, reportedly in protest over Mr
Brown's repeated statements that terror plots in the UK were originating in Pakistan, and over the
recent arrest of 11 Pakistani students in Britain, who were later released without charge.

In a news conference with Pakistan's Prime Minister Yousuf Raza Gilani, Gordon Brown focussed on
the two countries' common interests.

GORDON BROWN: The challenge is complex. The insurgents may be resilient but the narrative is
destructive, their motives are false and their resort to violence is unacceptable. We will stand up
to the extremists, together Prime Minister Gilani, we will reverse this trend and we will take them
on.

The Prime Minister has just stated his resolve and that of his government to fight terrorism and
extremism.

BARBARA MILLER: Mr Brown said cooperation between Islamabad and London in the fight against
terrorism would be strengthened:

GORDON BROWN: We will support each other more strongly on counter-terrorism activities and we will
support this close cooperation immediately by the UK delivering a ten-million pound package of
counter terrorism capacity, giving assistance to Pakistan's agencies.

BARBARA MILLER: On the issue of Osama bin Laden, President Zardari said his intelligence suggested
that the Al Qaeda leader might be dead.

But he added that hadn't yet been confirmed.

It's still, Pakistan's President said, somewhere between fiction and fact.

PETER CAVE: Barbara Miller reporting.

Abstinence makes the brain grow stronger, says expert

PETER CAVE: A visiting US expert has warned that teenagers are risking long-term damage by drinking
during adolescence.

Dr Aaron White believes the Government regulation is not the solution. He says that parents need to
do more to delay the age that their children start using alcohol.

A new campaign to change the attitudes of teenagers and their parents towards drinking will be
launched today.

Here's our youth affairs reporter, Michael Turtle.

MICHAEL TURTLE: The shock tactics of advertising campaigns aimed at reducing teenage drinking have
tended to focus on how a night out can be ruined.

(Excerpt from television advertisement)

TEENAGER: But it was an accident! We just had a few drinks!

ANNOUNCER: Don't turn a night out into a nightmare.

(End of excerpt)

MICHAEL TURTLE: Maybe the feeling is that young people don't think about the long-term effects of
alcohol.

But a visiting US expert believes that's where the real danger lies.

Dr Aaron White from the National Institute on Alcohol Abuse and Alcoholism says it's during
adolescence that the most harm can be done to a person's brain.

AARON WHITE: And so whenever the brain is changing it can be stifled by alcohol, and there's an
incredible amount of brain development during the adolescence years, so what seems to happen is
that alcohol disrupts normal brain development, the size of certain structures including the
frontal lobes behind your forehead which let you make good decisions and plan for the future and
control your urges, the frontal lobes shrink in heavy drinking, adolescence.

MICHAEL TURTLE: And he says it's not just the physical effects which should of concern, because
it's during this developmental stage that alcoholic traits can first be formed.

AARON WHITE: Because the brain learns so quickly during adolescence, it's easier for us to learn
bad habits; to learn to become dependent on the drug and the younger one starts drinking, the
greater the odds they'll become an alcoholic.

MICHAEL TURTLE: Dr White is in Australia to help launch a new campaign by the group DrinkWise.

Last year, the group developed this advertisement, aimed at parents.

(Extract from television advertisement)

FATHER: Michael, go and get your old man a beer, would you.

(End of extract)

MICHAEL TURTLE: Today it will move onto the next stage, which is trying to delay the age at which a
child first drinks alcohol.

Dr White says it's not something that can be done through regulation or tighter laws.

AARON WHITE: In terms of getting kids to delay the onset, that's really done at the individual
family, school, community level and that involves modelling healthy behaviour, promoting activities
that keep kids busy and engaged and satisfy their needs.

MICHAEL TURTLE: This week, the Council of Australian Governments will consider proposed new
regulations which would severely restrict advertising by alcohol companies.

Dr White believes that's not the solution, although it could be a step in the right direction.

AARON WHITE: There is no evidence that advertising directly triggers an increase in consumption but
if we don't restrict it then the beverage industry is left free to pump young people full of
positive expectations regarding alcohol without presenting them with the potential negatives.

MICHAEL TURTLE: He says studies have shown that increasing tax on alcohol can reduce the harms it
can cause - more support for the Federal Government as it prepares to try for a second time to pass
its alcopops legislation.

PETER CAVE: Michael Turtle with that report.