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RBA now sees recession this year

RBA now sees recession this year

The World Today - Friday, 8 May , 2009 12:10:00

Reporter: Stephen Long

PETER CAVE: The Reserve Bank has radically revised its forecasts for the Australian economy.

It now says that Australia will be in recession throughout 2009.

Despite this, the central bank sees what it calls "signs of a turning point" in the world economy,
with the rate of global contraction slowing.

Our economics correspondent Stephen Long has been at the RBA headquarters analysing the bank's
quarterly statement on monetary policy.

He's joined me now.

Stephen, just how serious a downturn is Australia facing according to the RBA?

STEPHEN LONG: Peter, not as bad as many countries overseas but bad enough. The Australian economy
on the Reserve Bank's forecast will be shrinking throughout 2009 with the fall in growth peaking at
-1.25 per cent in the June quarter of 2009.

Given that we had growth going backwards by half a per cent in the last three months of last year,
that implies that we are headed for the proverbial technical recession of two-quarters of negative
growth, probably three-quarters of negative growth over that period.

And that 1.25 per cent fall, most of that is going to be concentrated in the March quarter, so
we're going to see a big whack to growth if the RBA is right when the national accounts come out
for the March quarter of this year.

And to put it in context, if you go back just three months Peter, they were looking at growth of a
quarter of a per cent through to the June quarter this year. Not much growth, but the economy is
still in positive territory.

Now a 1.5 percentage point shift in the scheme of things is a pretty big turnaround.

PETER CAVE: Can we anticipate a recovery next year?

STEPHEN LONG: Yes, the Reserve Bank sees the Australian economy beginning to recover at the close
of this year, but the recovery will be tepid, certainly compared to in past recessions in the '80s
and '90s. So we're only looking at growth of half a per cent through to June 2010, recovering to
about 2 per cent by the end of 2010.

But we're not going to see the big leap of growth - the V shaped recession as some people call it -
if the Reserve Bank is right.

PETER CAVE: Everybody else has been anticipating next week's Federal Budget. What's the RBA think?

STEPHEN LONG: The RBA is also, Peter, anticipating next week's Budget and they are factoring into
their calculations another, what they describe as modest stimulus package from the Federal

And that's quite an interesting scenario because the Reserve Bank in its forecasts assumes that
interest rates stay where they are; that's always its technical assumption.

The Treasury in its economic forecasts is now diverting from its previous practice and is assuming
the market consensus on rates. So it'll be assuming that rates fall from where they are; the
official cash rate at 3 per cent into the 3 per cent range, whereas you've got the Reserve Bank
forecasting rates staying steady but the Government adding more stimulus.

So we've got something of a Catch-22 there in terms of the forecasting.

PETER CAVE: We mentioned that they saw a turning point for the world economy. What does it mean by
turning point?

STEPHEN LONG: Well what they mean by a turning point is that the pace of contraction seems to be
slowing on some of the indicators that they're looking at around the world. They refer to positive
signs of stabilisation in the global economy and sentiment in financial markets in recent weeks
with global stock markets having risen about 30 per cent from their troughs in mid March and a
number of financial institutions, the big American banks reporting better than expected profits.

And they also make the point that the credit markets have thawed a little and it's easier to raise
debt for new lendings. So the Aussie banks for instance have issued $42-billion in new bonds in the
past three months and some of those haven't had to rely on a government guarantee just in the past
few weeks.

But the big thing they see is the recovery in China and a bit of a recovery in commodity prices
which will help Australia.

PETER CAVE: There must of course be some dark clouds on the horizon. Our next story for instance is
about 10 of the 19 top US banks not looking terribly good.

STEPHEN LONG: Well there are and the risk to this forecast, the downside risk is that we'll see
more unexpected bad news from the banking system. They say that it's absolutely crucial that there
be a recovery in the financial system and if that doesn't happen all bets are off in terms of

What they say is that if we do get what they don't expect, with further bad losses and more
problems in the banking system, then we're in a bit of a spot because with the huge government
spending and the big fiscal deficits in many countries and the fact that interest rates in many
major economies are at or near zero, there isn't much room to move.

PETER CAVE: The main weapon that the RBA has is the setting of official interest rates. A lot of
the banks haven't been playing ball. Have they had anything to say about that?

STEPHEN LONG: Well they have indirectly Peter. What they've done is they've done an analysis which
attempts I think to counter some of the idea that the banks haven't been passing things on.

We know that they have squirreled away some of it for themselves to cover allegedly higher funding
costs. But they point out that there's only a small gap since January in the amount that the banks
have taken for themselves as opposed to passing on from the falls in the cash rate.

But where the big gap is, is with small business. And you see there that interest rates for small
business borrowing have only fallen to 2003 levels, whereas the cash rate and mortgage rates are at
levels equivalent to what we saw in the 1960s.

And given that one in 20 workers in Australia is self employed and small business is often referred
to as the backbone of the economy, that lack of credit and very expensive credit for small business
is a vulnerability for Australia.

PETER CAVE: Our economics correspondent Stephen Long, live in the studio today.

US car marker GM in trouble along with top 10 banks

US car marker GM in trouble along with top 10 banks

The World Today - Friday, 8 May , 2009 12:14:00

Reporter: Brigid Glanville

PETER CAVE: Barely a day goes by that a major institution or industry in the US isn't begging for

Today the biggest car manufacturer in the US, General Motors, needs another loan from the
Government as its tries to avoid chapter 11 bankruptcy.

And as I mentioned in my conversation with Stephen, 10 major banks have also brought their begging
bowls out after they failed so-called stress tests.

Brigid Glanville has more.

BRIGID GLANVILLE: In the first three months of this year car sales for General Motors were down 40
per cent, making a loss of $6-billion.

It's this drop in demand combined with a cut in production that's created the massive debt for the
company and which now means GM is facing the prospect of filing for chapter 11 bankruptcy.

David Cole is the chairman for the Center for Automotive Research in Michigan.

DAVID COLE: I think the threat of bankruptcy may be able to keep it from bankruptcy but one of the
decisions I think the US Government has made is that absolutely there will be a General Motors in
the future. If it does go into bankruptcy there will be some restructuring of dealers and so on.
But there will a General Motors, it will be an important part of the auto industry and it will go

BRIGID GLANVILLE: If General Motors collapses it's not just a car company going under. As the
largest car manufacturer in the United States, it controls the industry; an industry that directly
and indirectly is responsible for up to three-million jobs. Already one-million jobs have been cut.

David Cole again:

DAVID COLE: The secondary impact is that with that level of impact on auto, it would take an
economy which is in a deep recession probably into a depression. And what most people are not aware
of, at least here in the States they are not, is that this is not a recession in the auto industry.
It is a depression. The level of sales currently is about four-million below what would be normally
a recession level of sales and for an industry like the auto industry which is very high capital
investment, very high fixed costs, this is an absolute disaster.

BRIGID GLANVILLE: The disastrous news for General Motors comes on the same day the Obama
administration released its stress tests of the United States banks.

A stress test is an assessment of the bank's financial viability if a recession continues.

The US government says 10 of the nation's biggest banks need to raise almost $US75-billion in new
capital to withstand losses if the recession gets worse.

Jonathan Corpina is the senior managing partner with Meridian Equity Partners.

JONATHAN CORPINA: I think everybody is looking for some glimmer of hope in the headlines and the
news stories and the situations that come out of DC to make something positive out of it.

The fact of the matter is that we still have some substantial sized banks that need billions and
billions of dollars to help them run their day-to-day operations, going to help them lend credit
bank to bank, and lend credit to individual investors, people who need money for homes. People need
cars. People need money for education and pay their bills.

So the fact of the matter is is that we are not out of the woods yet.

BRIGID GLANVILLE: While the test on America's 19 biggest financial institutions found that none of
them are at risk of insolvency, they are still short of many billions of dollars.

David Wessel, the economics editor for "The Wall Street Journal" spoke to Radio National Breakfast.

DAVID WESSEL: They trying to distinguish between the strong and weak and you picked a couple of
weak ones. Bank of America needs $34-billion. Citibank would have needed a lot but they've done
some in the last few weeks. Wells Fargo has already announced that it's going to do a common stock
offering to raise the capital.

And one of the big ones is GMAC which used to be an affiliate of General Motors, does a lot of auto
finance as well as car loans. And their situation actually got worse since the end of December and
they need to come up with $11.5-billion and that's going to be quite hard.

BRIGID GLANVILLE: US Treasury Secretary Tim Geithner says the stress tests will help get credit
flowing again.

TIM GEITHNER: Things are improving in financial markets but we have a long way to go. It's just the
beginning and we're going to keep working to try to make sure this financial system is in a
stronger position, strong enough position so it can provide the credit necessary for recovery.

PETER CAVE: And our reporter there was Brigid Glanville.

PM says he expects howls of protest after Budget

PM says he expects howls of protest after Budget

The World Today - Friday, 8 May , 2009 12:18:00

Reporter: Sabra Lane

PETER CAVE: Next Tuesday's Budget is shaping up to be a classic case of give with one hand, but
take back with the other.

Government ministers have repeatedly said that promised tax cuts will be delivered, but it appears
likely they'll introduce a barrage of new means testing for middle and high income earners to
offset those cuts and promised pension reforms.

This morning, the Prime Minister and the Treasurer didn't deny reports that they're set to start
means testing the 30 per cent private health insurance rebate.

The Opposition says that such a decision would force more people into an already strained public
health system.

And the private health insurance association says it sounds like the Government is now devising
core and non-core promises.

From Canberra, Sabra Lane reports.

SABRA LANE: The Government is getting in early with the bad news and rehearsing its response to the
Budget, with the Prime Minister acknowledging some cuts will be extremely unpopular.

KEVIN RUDD: There will be many howls of protests about things that we are doing. I accept that, I
take responsibility for it, but we've got to cushion the impact of this recession today and restore
the Budget to balance over time.

SABRA LANE: Mr Rudd was talking on Fairfax Radio this morning. He says the promised tax cuts will
be delivered because they've been legislated for.

But it sounds like he's preparing to discard another promise to keep the 30 per cent private health
insurance rebate. He didn't deny it'd be watered down for middle earners and axed for wealthy

KEVIN RUDD: If you're going to engage in long term reform and for example do the right thing over
time for our pensioners, it means that you've got to have an overall long term balance in the sorts
of measures you take in the Budget.

MIKE CARLTON: I'll take that as a yes then.

KEVIN RUDD: No you've got to make sure that you balance things out over time.

SABRA LANE: On NewsRadio the Treasurer Wayne Swan also didn't deny the rebate was on the chopping
block for high income earners.

WAYNE SWAN: I can't comment constantly on the speculation in the newspapers. What I can say to you
is that I won't shirk, neither will the Government shirk the hard choices, especially if that means
making room for a commitment to pensioners and vital national building investments to support jobs.

SABRA LANE: The Opposition health spokesman Peter Dutton:

PETER DUTTON: They're going to drive up the private health insurance premiums, not just of people
with young families, but many pensioners and people on part pensions take out private health
insurance as well and those people will be huge losers, huge losers in this Rudd Government
decision. It stands in direct contrast to at least on half a dozen occasions, where the Prime
Minister himself said that he would not remove or alter the 30 per cent private health insurance

SABRA LANE: Comprehensive details about the planned cuts were leaked to this morning's newspapers.

Those reports says means testing will be introduced for singles earning more than $74,000 and
couples on a joint income of more than $150,000.

The rebate will be tapered down over those amounts, cutting out altogether for singles earning more
than $120,000 and couples on $240,000.

But there's a further sting. The penalty for those who refuse to take out private health insurance
will be jacked up by 50 per cent.

The cuts will save the Government $2-billion over three years.

MICHAEL ARMITAGE: That is a dumb policy decision if it's correct.

SABRA LANE: The chief executive of the private health insurance association, Michael Armitage.

MICHAEL ARMITAGE: It's firstly a major broken promise and I guess all we can say is that this from
the Labor Government's perspective might be seen as a non-core promise which I think is really

SABRA LANE: Reportedly the rebate will now be tapered off for singles who earn more than $74,000
and couples earning $120,000. Many people would argue they can afford it, they can pay.

MICHAEL ARMITAGE: The issue is that there are more than a million people in Australia with private
health insurance who earn less than $26,000. For every person who drops out of private health
insurance, whether they are on a higher income or not, the simple fact is those people on an income
of less than $26,000 will have to pay more next year.

So what the Labor Government is doing if today's article is correct is they are asking those people
who maintain private health insurance as one of their last discretionary expenditures out of their
income of less than $26,000, they're going to insist that they pay more.

I mean this is a bizarre decision.

SABRA LANE: Were you given any heads up that this was coming?

MICHAEL ARMITAGE: None whatsoever, because we were perhaps naive in that we relied on a written
promise from the Prime Minister delivered before the last election in October 2007. He says quite
specifically, "we will maintain the existing private health insurance rebates for the various age

Now that may have been naive for us, but perhaps he's regarding this as a non-core promise and he's
just blatantly not concerned about the fact that the decision will affect every single Australian.

If every Australian who is privately insured, if the decision is correct they will now pay more and
for every person who is no privately insured from now on be competing with more Australians to get
their health care in the public sector.

PETER CAVE: The Australian Health Insurance Association's Dr Michael Armitage speaking to Sabra

Major moves at the top of Telstra

Major moves at the top of Telstra

The World Today - Friday, 8 May , 2009 12:19:00

Reporter: Peter Ryan

PETER CAVE: There's been a major shakeup at the top of the telecommunications giant, Telstra.

The telco's controversial chairman Donald McGauchie has announced his resignation in a move which
is designed to repair some of the shattered relations with the Federal Government.

At the same time a Telstra insider David Thodey has been appointed Telstra's new chief executive,
replacing Sol Trujillo who resigned earlier in the year.

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

Peter we'll look at David Thodey's appointment shortly, but did Donald McGauchie's resignation come
as a shock to everyone?

PETER RYAN: Well Peter the writing was on the wall not just in Canberra but also the Telstra
boardroom it seems. Remember Donald McGauchie and Sol Trujillo were part of what's now regarded as
a very destructive team, firstly in relations with the Howard government, but things only got worse
under the new Labor Government. And things got so bad that Telstra was ultimately frozen out of the
Government's tender for the National Broadband Network.

And recently Mr McGauchie has been in a very public battle with one of Telstra's key shareholders,
the Future Fund, and the fund's chairman David Murray had made it very clear in a number of
newspaper interviews that relations with the Government needed mending.

So today Donald McGauchie has resigned and he's been immediately replaced by Telstra director
Catherine Livingstone who paid this tribute at this morning's media briefing in Melbourne.

CATHERINE LIVINGSTONE: Through his hard work and commitment, Donald led the board through Telstra's
transition to a fully privatised company and at the same time encouraged management's initiative
whereby it started the complex transformation across the company's operations. It was an extremely
difficult job handled with great care and professionalism by Donald.

PETER CAVE: Telstra's new chairman Catherine Livingstone.

Peter this morning's other big news as we've said is the appointment of David Thodey to succeed Sol
Trujillo as chief executive. What we do know about him?

PETER RYAN: Well Peter what we're seeing is a steady as she goes appointment, after the roller
coaster ride under Sol Trujillo and Don McGauchie. It should be noted also that neither Mr Trujillo
nor Mr McGauchie attended this morning's briefing.

But still David Thodey had the floor with Catherine Livingstone. He's been a senior executive with
Telstra since 2001 and has been the head of sales to corporate and government customers.

His big challenge will be rebuilding relations with the Government and getting some role in the
construction of the National Broadband Network.

But it's very clear that Mr Thodey's strategy will be evolution, not revolution. He wouldn't
criticise Sol Trujillo this morning or say what he really thought about the overall broadband

DAVID THODEY: I think it's been a tremendous period that I've worked with Sol through. It's been an
enormous amount of work we've done on the transformation and Sol has been a great leader and I've
really appreciated the opportunity to work with him and I think that we'll take it forward from
here and how we work with the Government and how we can really find the best option for Australia
and Telstra.

REPORTER: You didn't really say what you thought of the strategy though when it came to the
National Broadband Network.

DAVID THODEY: Yes, well because I think it's important to look forward, because that's the most
important thing we have to do now. We have to take this company forward and we have to look at what
we can do to really get a good outcome here.

REPORTER: So you didn't think much of their strategy?

DAVID THODEY: No I said we're looking forward.

PETER CAVE: Telstra's new chief executive David Thodey, looking forward.

I understand there have been other changes announced. What are they?

PETER RYAN: Yes Peter, another board member Peter Willcox has left Telstra's board. He's been a
defendant in ASIC's pursuit of the building products company James Hardie in relation to disclosure
over the company's asbestos compensation scheme.

Also Telstra's chief financial officer John Stanhope, who was a contender for the CEO job, has been
made an executive director of the board.

This might be the start of other changes in direction for Telstra but don't expect a halt to cost
cutting or job losses anytime soon.

Meanwhile analysts such as Ivor Ries of Baillieu Stockbroking think David Thodey's biggest
challenge will be rescuing Telstra's sinking share price.

IVOR RIES: Under the Trujillo regime Telstra went from being one of the favourite stocks of all the
analysts around the market to basically almost toxic waste. I mean it's very hard to find any of
the major telco analysts to say anything nice about the company. So building bridges with the
financial community will be one of Thodey's big challenges.

PETER CAVE: Ivor Ries of Baillieu Stockbroking.

Peter has all this shakeup done anything for the share price?

PETER RYAN: Peter, Telstra shares initially rose around 2 per cent but they've now settled down to
around $3.24. That's a long way from last year's peak in May of $4.86 and even further from the T2
issue price of $7.40.

PETER CAVE: Our finance editor Peter Ryan, live in the studio.

US wrestles with future of Guantanamo detainees

US wrestles with future of Guantanamo detainees

The World Today - Friday, 8 May , 2009 12:22:00

Reporter: Kim Landers

PETER CAVE: In the United States the Obama Administration is trying to calm a political uproar over
the possibility of Guantanamo Bay detainees being released into the US.

Members of a Senate Committee have been grilling Attorney-General Eric Holder about the
Administration's plans to shutdown Guantanamo Bay by January next year.

Although President Barack Obama has ordered the closure of the prison, there are still few clues
about where the detainees will be relocated.

Washington correspondent Kim Landers reports.

KIM LANDERS: Ever since President Barack Obama decided to shut down Guantanamo Bay, there's been
speculation about where the detainees will be sent, how many of them will turn up in American
prisons or transferred overseas and how many could be set free in the United States.

At a hearing on Capitol Hill today, Attorney-General Eric Holder assured members of a Senate
committee that the safety of the American people is paramount.

ERIC HOLDER: We are not going to put at risk the safety of the people of this country in any
determination we make with regard to the disposition of any of these individuals.

KIM LANDERS: There are still 241 prisoners from 30 different countries at Guantanamo Bay. Eric
Holder has previously said about 30 detainees have been approved for release.

While the US is trying to convince European nations to take some, it's also possible that 17
Chinese Muslims, members of the Uighur ethnic group, could be freed in the US.

Democrat Senator Barbara Mikulski has pressed the Attorney-General for answers.

BARBARA MIKULSKI: When would you anticipate that this be done and that prisoners would begin to
leave Guantanamo to places yet to be determined?

ERIC HOLDER: I'm not sure. We are still in the process of making those individualised
determinations and we haven't come to a conclusion yet as to when we'll be in a position to
actually ask specific countries for, with regard to specific detainees, if they would take them.

We're doing this on a rolling basis and we have not gotten to that point yet. I would expect in the
next few months though that we would probably start that process.

KIM LANDERS: The plan to shut Guantanamo Bay still faces many hurdles.

Republican Senator Richard Shelby says detainees can't legally be brought into the US because
federal law bars entry to anyone who has received terrorist training.

RICHARD SHELBY: Do you have the authority under the law to do this, to bring terrorists into this
country and bring them into the community?

ERIC HOLDER: What I'm saying is that with regard to those who you would describe as terrorists, we
would not bring them into this country and release them. Anybody who we considered to be a
terrorist as I think you're using the word...

RICHARD SHELBY: A terrorist, or a former terrorist or whatever, or terrorist trained, all of that.

ERIC HOLDER: And again as I said with regard to the release decisions that we would make we will
look at these cases on an individualised basis and make determinations as to where they can
appropriately be placed.

KIM LANDERS: Republicans in the US House of Representatives have introduced a piece of legislation
called the "Keep Terrorists Out of America Act". It prohibits the transfer or release of detainees
into the US, including those cleared of terrorism charges, unless a state's governor or legislature
signs off on the plan.

Republican John Boehner is the House Minority Leader.

JOHN BOEHNER: The world suddenly did not become safer on January 20th 2009. There are still
terrorists around the world who are committed to killing Americans and destroying our way of life.
A number of those terrorists are now being held at a prison at Guantanamo Bay Cuba. In January of
next year, if the administration proceeds with our current plan, they won't be there. In fact they
may be here in the United States.

KIM LANDERS: The Republican legislation is unlikely to ever make it to a final vote, given the
Democratic control of the House of Representatives.

But Republicans believe they can use this issue to cast the Democrats and the President as weak on
national security, especially because polls show the majority of Americans oppose the transfer of
detainees within US borders.

This is Kim Landers in Washington for "The World Today".

Victorian suspension may be final hurdle for jumps racing

Victorian suspension may be final hurdle for jumps racing

The World Today - Friday, 8 May , 2009 12:30:00

Reporter: Simon Lauder

PETER CAVE: The likelihood that a spectacular and dangerous form of horse racing may have reached
its last hurdle has elicited an emotional response from people who rely on the sport.

A dozen horses were killed after injuring themselves in jumps races in Victoria last year and this
season is off to a disastrous start.

In a move which many people believe is the end of the sport, Racing Victoria has suspended jumps
racing and the South Australian Government now wants the industry to come to a stop in that state.

But proponents say that banning jumps racing will lead to even more carnage.

Simon Lauder reports.

SIMON LAUDER: David Londregan is a former champion jumps jockey and his livelihood is still in the
sport. It's a livelihood he believes is under serious threat and as authorities deliberate on the
future of jumps racing, he's planning a dramatic protest.

DAVID LONDREGAN: Well I'm threatening to send a head or two around the countryside to the powers to
be and just to remind them what damage they are doing to our horses.

SIMON LAUDER: Mr Londregan trained seven horses for jumps races and without the sport he says they
would waste away in a paddock. He believes that would be inhumane.

DAVID LONDREGAN: (laughs) Well I'll just have to put a gun to their heads and shoot them all, well
not all of them but I'd say half of them would have to be put down, yeah, for the wellbeing of the
horse, I'm just going to have to do it, you know.

SIMON LAUDER: A dozen horses died or were put down mostly after breaking necks or legs in Victorian
jumps races last year, prompting a review of the industry.

RACE COMMENTATOR: As they come to the next hurdle, Danever (phonetic) running out and Cascade
(phonetic) down! Oh and he's brought Shrogenay (phonetic) undone!

SIMON LAUDER: Changes were made to the jumps, but this week has shown those changes haven't worked.

Three horses died during this week's Warrnambool Racing Carnival in the state's south-west, and two
in the previous fortnight.

The Victorian President of the RSPCA Dr Hugh Wirth says last year's review gave too much weight to
the economic benefits of jumps racing and the latest deaths show a ban is long overdue.

HUGH WIRTH: These jumps racing courses are becoming the killing fields. Animals are slaughtered in
front of a crowd.

SIMON LAUDER: Racing Victoria's CEO Rob Hines has ordered a suspension of jumps races and the
organisation's jumps review panel is preparing another report.

ROB HINES: As we stand here at Warrnambool, what a fantastic spectacle the race was and yet we
still had a disaster. So clearly it's very difficult and the board have got a lot of serious
matters to consider. But the incidents have been so serious this season that we have to have a good
hard look at it.

SIMON LAUDER: Jumps racing was banned in New South Wales about 12 years ago and the chairman of the
Thoroughbred Racehorse Owners' Association, David Moodie sees the suspension of the sport as the
death knell for jumps racing in Victoria.

DAVID MOODIE: This happens again down the track which we all know it will and I think we're
fighting a losing battle. The risk profile's just no longer acceptable socially and to the
community as a whole.

SIMON LAUDER: Now the pressure for a ban has spread beyond Victoria to the only other state where
people can bet on hurdling horses in Australia. Two horses have died at jumps races in Adelaide in
the past fortnight.

It's too much for South Australia's Racing Minister, Michael Wright.

MICHAEL WRIGHT: We think there should be a suspension of all jumps racing. This is a matter for
thoroughbred racing SA but because of what's happened both in South Australia and Victoria, we
believe that TRSA should conduct an immediate inquiry and while that inquiry is pending, we think
that jumps racing should be suspended.

SIMON LAUDER: Jumps racing fan and Channel 7 sports commentator Bruce McAvaney says the change to
easier jumps with synthetic brush tops may have done the industry more harm than good.

BRUCE MCAVANEY: Since they've tried to make the jumps smaller and in their, I guess opinion of the
officials, safer, it's turned out that we've had more deaths than ever. And it's got a lot to do
with the speed of the race, the bigger the jumps, the slower the horses go through.

SIMON LAUDER: Jumps racing has been a part of the Australian racing scene since the 1830s. Racing
Victoria will make an announcement on its future next week.

PETER CAVE: Simon Lauder reporting.

Bloggers emboldened by league legal threats

Bloggers emboldened by league legal threats

The World Today - Friday, 8 May , 2009 12:34:00

Reporter: Oscar McLaren

PETER CAVE: The operators of an AFL fan blog have sent a defiant letter to the League, rejecting
demands they make sweeping changes to the blog.

A week ago the AFL sent a letter to the group of predominantly IT students in their early 20s who
run the site called "contested footy".

The AFL asserted that the blog infringed its intellectual property by using the names and nicknames
of its clubs.

It also said that images of matches and training sessions taken by the students must be taken down
and demanded to know the names of the photographers.

The bloggers now have taken legal advice and say they won't be changing anything. They say that the
league has to start thinking about its fans rather than dollars.

Oscar McLaren has this report.

OSCAR MCLAREN: The blog "contested footy" began as a University project but after receiving a
letter from the AFL, the operators feared that it might end in a bruising court case.

James Rose is one of the contributors to the site. He says he and his friends have been in turmoil
since getting a cease and desist email from the AFL last week.

JAMES ROSE: Eventually we started talking to lawyers and they gave us the advice that they could
help us with our response and that would be effectively, we're not going to change the site from
how it is now because we don't think we're obliged to.

OSCAR MCLAREN: The AFL's letter accused the site's authors of violating the league's intellectual

EXCERPT FROM AFL LETTER: Please be advised that the AFL owns amongst other things registered
trademarks including the term AFL and all AFL club names and nicknames.

OSCAR MCLAREN: It continued:

EXCERPT FROM AFL LETTER: The use of the trademarks and designs by you represents or connotes that
the AFL approves of or associates itself with your website.

OSCAR MCLAREN: James Rose says he simply doesn't understand why the AFL wouldn't approve of the

JAMES ROSE: Even if we were getting significant volumes of traffic which we're not, although it has
increased since the AFL sent us that letter, all they're doing is helping to promote the brand. You
know everything's positive; everything's we love football, you should love football too and this is
why. I don't see how that can be negative for their brand.

OSCAR MCLAREN: The AFL refused to be interviewed for this story. However a spokesman said that it
is, quote, "normal practice for any company to protect its intellectual property."

James Rose says the AFL shouldn't see itself like any other company with a product to sell.

JAMES ROSE: The AFL although it's now a corporation, primarily they're to govern what was a league
for the fans, you know like it was a league that started up because people wanted to play footy and
people liked going to watch it. It wasn't meant to be a commercial entity in its incarnation.

I think that you know, every now and then they've got to remember not to look at what's best dollar
wise and actually start looking at what's best for promoting the game and what's best for their
fans and those sorts of things.

OSCAR MCLAREN: The "contested footy" site is by no means that only blog of its kind online. There
are millions of fan blogs covering everything from football to opera.

Brian Fitzgerald from the Queensland University of Technology's law school says they're merely an
extension of normal discussion.

BRIAN FITZGERALD: I think what you see in things like the "contested footy" blog is what we might
have seen 10 or 20 years ago in a local newsletter or even a chat in a work space or in a coffee
shop about the game. We're now seeing a lot of the happening publicly and in the online world.

So there seems to be a need here to reconcile the game with the fans, at least a generation of the
fans are certainly going to interact and talk about the game in this new online socially networked

OSCAR MCLAREN: A Senate inquiry is currently under way over how to deal with media coverage of
sport in an age when digital media are becoming more and more common.

The AFL is amongst a number of companies to have made submissions to it.

Brian Fitzgerald says he simply hopes that all parties involved are realistic about the effects of
user generated content.

BRIAN FITZGERALD: Let's face it; people take their cameras everywhere they go now because they're
basically imbedded in their mobile phones. So the idea that you can actually stop the internet or
stop people using the new technologies is really I think something that the music industry has
learned in a pretty hard way.

The more exciting thing is for the established industries whether they be sporting, entertainment
or the combination of both is to understand that there's new communities online, there are new
technologies that intersect with the sort of networked online world. How can we actually work with
that to actually gain a better and stronger fan base and also new revenue streams for the game?

PETER CAVE: Brian Fitzgerald, a professor of law at the Queensland University of Technology. That
report from Oscar McLaren.

Lenders defend lending practices

Lenders defend lending practices

The World Today - Friday, 8 May , 2009 12:38:00

Reporter: Di Bain

PETER CAVE: Australia's big banks have been forced to defend their lending practices after the
corporate watchdog was highly critical of how some lenders were dealing with people suffering
financial hardship.

The survey also included non-bank lenders and mortgage brokers.

It found overall that their practices in dealing with those struggling to make their home loan
payments were poor.

It's made a raft of recommendations but the Australian Bankers' Association says the survey is old
and that banks have changed since it was conducted.

Di Bain reports.

DI BAIN: Over the past three years the number of people making late repayments on their home loans
has doubled and the corporate watchdog has been surveying how mortgage brokers, banks and credit
unions are dealing with customers who are struggling to pay their bills.

ASIC's Greg Kirk says the overall assessment wasn't good.

GREG KIRK: Whilst there's some doing very well and that's not consistent across the board, even
though there's room for improvement and that's very much on the nuts and bolts of the arrangement.

DI BAIN: Key findings in the report include a willingness for banks to offer short term relief
rather than long term solutions such as tailoring specific repayment arrangements to individuals.

It found lenders often advised customers with hardship options after they defaulted on their loans
and some were advising people to tap into their superannuation to meet home loan repayments.

Mr Kirk says this is a worry.

GREG KIRK: If you access super in some circumstances, put it into the loan, you're still unable to
meet the payments, you lose the house and you've already lost your super so you end up in a worse
position. So we're asking that banks and other lenders be judicious in terms of suggesting that to
consumers. For some consumers, it's the right solution, for many it's not going to be the right

DI BAIN: Seven banks were included in the survey and the Australian Bankers' Association's chief
executive David Bell says the study's old.

DAVID BELL: That report of course relies on a survey done almost a year ago and since then the
world has moved on. Banks have been at pains since then to put measures in place to assist their
customers who are experiencing financial stress.

DI BAIN: He says the recent deal banks made with the Government to go easy on borrowers who lose
their jobs proves the banks are adjusting their practices.

DAVID BELL: Of course every report that's made, we have a look at these things, but I would make
these two points.

Firstly this report is based on survey data almost a year old and since then the world has moved on
and banks are doing a lot of things which probably this report itself didn't contemplate.

And secondly, it doesn't just apply to banks of course, it's a very general report and applies to a
range of lenders. So some of the things in this report may literally not apply to banks now.

DI BAIN: Is there any one single recommendation that you can indentify that will definitely be
looked at?

DAVID BELL: Look we will look at all the recommendations. The thing we have a clear focus on is
wanting to help our customers and if any organisation including ASIC or any government body wishes
to make suggestions about how we can improve that, we're willing to listen and take those things on

DI BAIN: Mortgage brokers were also criticised in the report for believing it was not their role to
offer financial hardship assistance or advice.

The Mortgage and Finance Association's Phil Naylor:

PHIL NAYLOR: At the moment and probably in the times coming ahead, we all need to be cognoscente
that with the likelihood of higher unemployment, there will be an element of people getting into
difficulty and all people in the mortgage chain need to be cognoscente of that and take appropriate

DI BAIN: ASIC's report didn't take into account lending practices to businesses, but the Small
Business Council's Jaye Radisich says lenders are taking a similar attitude to business loans.

JAYE RADISICH: Many banks do have financial hardship programs but they're in fact rarely offered to
small businesses. They're mostly reserved for personal and consumer mortgages. That information is
also difficult to track down, it's not something that's usually widely advertised or promoted by
the banks, it's something that you have to scratch and sniff around to find.

Under changes announced earlier this month ASIC will take charge of national consumer credit laws.
It says this will give it more opportunities to work closer with the industry and ensure the
standards are lifted.

PETER CAVE: Di Bain with that report.

Australian astronomers test dark energy

Australian astronomers test dark energy

The World Today - Friday, 8 May , 2009 12:42:00

Reporter: Jennifer Macey

PETER CAVE: It's one of the greatest mysteries of the Universe - why is the expansion of the
universe speeding up rather than slowing down?

Since the late 90s scientists have blamed a mysterious force called dark energy but they know
little about this invisible force except that it's believed to make up three-quarters of the place.

Now a team of Australian scientists calling themselves the WiggleZ are using new technologies to
test dark energy theories by measuring distant galaxies.

Jennifer Macey reports.


JENNIFER MACEY: The sound waves of the Wiggles may send kids into hyper space but now a team of
scientists at the Anglo-Australian observatory in Coonabarabran are measuring acoustic oscillations
or wiggles from 200,000 distant galaxies. They hope it will tell them something about dark energy.

The director of the Anglo-Australian Observatory professor Matthew Colless is part of the project
that they've dubbed the WiggleZ Dark Energy Survey.

MATTHEW COLLESS: The name comes from the fact that we're actually looking for tiny wiggles in the
distribution of galaxies. The Z is because we're using a redshift survey for which astronomers use
Z as the typical symbol and of course because several of us have small children, all of whom are
fans of a certain well known children's entertainment group.

JENNIFER MACEY: Professor Colless says the four-year survey will provide clues about the true
nature of dark energy and how it came to dominate over gravity.

MATTHEW COLLESS: We expect we'll be able to measure both the total amount of matter to about 2 per
cent precision and we hope that this will give us a clue as to exactly what the dark energy is
really telling us about the universe.

JENNIFER MACEY: In the late 1990s scientists accidently stumbled on this mysterious, invisible
force called dark energy.

The astronomers discovered that the expansion of the universe is not slowing down but rather
speeding up.

Professor Brian Schmidt from the Mt Stromlo Research School of Astronomy and Astrophysics at the
ANU is one of the first people to discover dark energy.

BRIAN SCHMIDT: In 1998 a team that I led found from distant exploding stars, which we call
supernovae which we use to measure distances across the vastness of space, that the universe was
speeding up over time; that is its expansion was getting faster and faster over time.

JENNIFER MACEY: And you're attributing this to dark energy?

BRIAN SCHMIDT: Yes and the idea is that dark energy which was invented by Einstein makes gravity
push on itself, it's actually repulsive. We always think of gravity being attractive. Well this
version of matter which is very different than the atoms that we're made out of actually repulses

JENNIFER MACEY: But professor Mike Turner from the Department of Astronomy and Astrophysics, and
Physics at the University of Chicago says scientists still don't know what makes up dark energy.

MIKE TURNER: First of all dark energy is a substance, rather than particles. So it's very different
than anything else we know.

Secondly, it seems to be smoothly distributed throughout the universe and accounts for almost
three-quarters of the universe.

Thirdly the feature that gives it repulsive gravity is that it's extraordinarily elastic. It wants
to scrunch up. And that elasticity gives it its repulsive gravity.

And last but not least is we don't have a clue as to what it is.

JENNIFER MACEY: Professor Turner says dark energy is one of the most profound problems in science

MIKE TURNER: According to quantum mechanics a vacuum is not empty but it's filled with particles
that are living on borrowed time and borrowed energy. And so our simplest idea about dark energy is
that it is just the quantum energy of nothing.

Unfortunately our calculations, when we try to calculate how much nothing weighs, which sounds
rather fanciful but we can try to do that, we get an absurdly large answer. It would over explain
this phenomenon and so we get yet another problem; why does nothing weigh so much?

JENNIFER MACEY: Dark matter will ultimately determine the fate of our universe which is expected to
either tear apart or collapse upon itself.

Professor Brian Schmidt says to understand the future it's important to learn more about dark

BRIAN SCHMIDT: Well I think we have safely a hundred-billion years up our sleeves, so it's not
going to happen in a human lifetime, but we really need to understand dark energy to guess what, to
really extrapolate what future holds for the universe.

PETER CAVE: Professor Brian Schmidt from the ANU, our reporter Jennifer Macey.

Giant glacier set to sail

Giant glacier set to sail

The World Today - Friday, 8 May , 2009 12:46:00

Reporter: Felicity Ogilvie

PETER CAVE: A massive iceberg with enough freshwater in it to fill Sydney Harbour 135 times over is
about to break off the Mertz glacier in Antarctica.

The iceberg will be 75 kilometres long and it will contain 750,000 gigalitres of ice which is
apparently quite a lot.

Scientists aren't sure if it's a natural event or if global warming is to blame but a joint
Australian and French team hope to find out.

Felicity Ogilvie reports from Hobart.

FELICITY OGILVIE: The Mertz glacier is near Commonwealth Bay in East Antarctica. It flows into the
southern ocean for 140 kilometres before it drops icebergs into the sea.

A large crack has formed about half way along the Mertz Glacier which means it's going to drop a
very large iceberg.

French glaciologist Benoit Legresy is measuring the break up.

BENOIT LEGRESY: Just at the moment, it's undergoing a massive calving event which promises to
release an iceberg which will be between 20 to 25 kilometres wide and 75 kilometres long by about
400 to 500 metres thick.

FELICITY OGILVIE: The iceberg contains enough fresh water to fill Sydney Harbour 135 times. That's
30 per cent of the world's annual water consumption or 675,000 gigalitres of water.

When it breaks off the iceberg won't melt straight away because it could take up to 30 years for
the currents to move it to water that's warm enough to melt the ice.

The scientists realised the large iceberg was forming when they looked at satellite pictures of the
Mertz Glacier and saw two large cracks. When the cracks kept getting bigger Benoit Legresy decided
to measure the break up.

BENOIT LEGRESY: There's very few that have been picked up before the calving event, so the pretty
good situation where we are now, is we had the time to go on the glacier and put our instruments on
it before the calving happens.

FELICITY OGILVIE: He's put eight GPS beacons on the glacier to measure how the ice is moving.

BENOIT LEGRESY: They are precise GPS beacons which are autonomous; they can operate as long as year
around and they measure the position where they are every 30 seconds. And this position is measured
to almost a centimetre level.

FELICITY OGILVIE: Two of the GPS beacons are on either side of a major crack on the Mertz glacier.

PhD student Lydie Lescarmontier has been analysing the data from the beacons.

LYDIE LESCARMONTIER: We know that the speed of the opening is 12 centimetres per day for example
and we can correlate this with current for example and we know that when currents are pushing the
ice stone, we have an acceleration of the opening of the crack.

FELICITY OGILVIE: The French scientists are spending this year working at the University of
Tasmania with their Australian colleague professor Richard Coleman.

RICHARD COLEMAN: We're trying to build up a picture of different cases, if you like, different
simulation studies to gain a better overall understanding of what's happening in the Antarctic

FELICITY OGILVIE: You're spending a year following, looking at how it's breaking up; will you be
able to work out why? Whether this is a natural phenomenon or if it has anything to do with climate

RICHARD COLEMAN: Realistically you need probably 50 or 60 years of data to see whether that's
happening. What we're doing is building up a baseline study in effect so that we can see into the
future and gain enough information from understanding the basic dynamics to then be able to model
it. So one way that you can do it into the future is to build up numerical models and simulate
whether if climate warms you know, one degree or two degrees, how the ice shelf is going to react.

FELICITY OGILVIE: The scientists may be measuring the widening crack centimetre by centimetre but
they can't say when the massive iceberg will finally break off the Mertz glacier.

They're expecting it may break off before they get back down to Antarctica this summer.

PETER CAVE: Felicity Ogilvie reporting.