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Subdued growth with falling inflation: the world according to RBA

Subdued growth with falling inflation: the world according to RBA PRINT FRIENDLY EMAIL STORY

The World Today - Tuesday, 16 June , 2009 12:10:00

Reporter: Stephen Long

PETER CAVE: The Reserve Bank says that falling inflation should give it ample scope to cut official
interest rates again if needed to combat the economic downturn.

In the minutes of the latest central bank board meeting there are highlights highlighting tentative
signs of improvement in the world economy.

But the board's judgement is that even if the recovery does come, growth is likely to be subdued
for a considerable time.

The RBA board has also raised concerns about the enormous build up of government debt around the
world.

Our economics correspondent Stephen Long has been perusing the board's minutes in a lock-up at the
RBA headquarters.

He's joined me now.

Stephen, what's your assessment of the tone of the minutes the RBA meeting?

STEPHEN LONG: It strikes a very interesting balance, Peter. The tone really maintains the optimism
that the Reserve Bank has been expressing for some time that the recession around the world, this
very severe recession, has really reached its peak.

They note that for the world as a whole, gross domestic product, outcomes, economic growth is not
likely to be as weak over coming quarters as it was in December 2008 quarter and March 2009 so
they're saying the recession is bottoming out around the world, noting very positive signs with
rising industrial production in China and a number of East Asian economies including Japan, which
are very significant for Australia.

But that is counter-balanced by this renewed emphasis on falling inflation and a judgement that
because growth is going to be subdued for a year or two overall around the world, that there will
be a lot of spare capacity, rising unemployment, falling consumer prices and so the board concludes
by saying that although they saw the stance of monetary policy being consistent with sustainable
growth and low inflation now, there would be adequate flexibility to respond, if need be, over the
period ahead because of that inflation outlook.

PETER CAVE: Could their words have been designed to counter some of the pressures that have seen
the big banks lift their mortgage rates?

STEPHEN LONG: Maybe so. We've seen a situation over the past few days where all the big banks have
lifted their mortgage rates citing higher funding costs. Those higher funding costs are coming from
a run up of money market interest rates all around the world but also in Australia on anticipation
of stronger economic growth and a view in some quarters that interest rates may have fallen to
their lowest level, official interest rates in Australia, and could be going up sooner than
expected.

And so this provides something of a counter. Now I am not suggesting that it isn't a genuinely held
view of the Reserve Bank, this duel view about falling inflation and recovery on the way but it's
always a question of emphasis.

These aren't verbatim minutes of the board meeting - they follow a formulaic structure and they're
highly sanitised - and I would hazard a guess that they have been designed to put that emphasis on
the counter-balance to the optimism, the fact that falling inflation gives them adequate policy
scope, and maybe it is designed to give a tweak to the money markets and stop the pressure that's
seen the banks lift rates, which after all is undermining the effect of monetary policy and the
huge cuts in official interest rates that we've seen.

PETER CAVE: We mentioned the bank's concerns about the enormous build up of government debt around
the world. What was their main problem with that?

STEPHEN LONG: What they're saying is that the huge build up in fiscal deficits and prospective
increases in government debt levels is a major challenge and they are really questioning how that
is going to be undone when you are going to have an aging population and rising health costs and
relatively slow growth in incomes for countries around the world coming out of this recession.

And they also note that government bond rates have gone up around the world, partly because of the
optimism about economic recovery but also because never before have we seen so many governments
trying to raise debt simultaneously and so that is pushing up the cost of finance.

PETER CAVE: They see subdued growth around the world. Is it fair to say that nevertheless that the
outlook for Australia, in their view, remains positive?

STEPHEN LONG: Oh definitely. They see Australia heading into a recovery later this year and their
optimism is very much based on the signs of recovery in China. They note that we've had a big surge
in exports to China and it has become a major destination for Australian exports and as Chinese
industrial production stages a very vigorous recovery and we see a recovery elsewhere in Asia,
including Japan, they're very optimistic about the outlook for Australia.

PETER CAVE: Our economics correspondent, Stephen Long who was at the board's lock-up this morning.

NAB rules out increase in standard variable home loan rates

NAB rules out increase in standard variable home loan rates PRINT FRIENDLY EMAIL STORY

The World Today - Tuesday, 16 June , 2009 12:14:00

Reporter: Sue Lannin

PETER CAVE: The National Australia Bank says it's again lifted interest rates on fixed-term
mortgages because of the higher cost of long-term finance.

Westpac has also increased fixed rate home loans just a day after the Commonwealth Bank put up its
mortgage rates.

The big four have been criticised by the Government for failing to pass on official rate cuts
in-full, despite the Government's guarantee on deposits and wholesale borrowing by the banks.

The NAB's general manager of mortgages Steven Shaw told finance reporter Sue Lannin that the
increase in fixed rates is business as usual and that it has no plans to raise rates on standard
variable mortgages.

STEVEN SHAW: Well, fixed rates are always under review and I guess the wholesale cost of funds for
fixed rates has been increasing over time so we've been actually reviewing and increasing our fixed
rates for probably the last four weeks actually and that directly reflects the actual cost of funds
for us to actually go and borrow money in the wholesale market place.

SUE LANNIN: The Commonwealth Bank has just raised its standard variable rate and its fixed term
rates on mortgages. Are you taking advantage of that move?

STEVEN SHAW: No, definitely not and it is important to note that we have got about $35-billion in
fixed rates so those customers that are currently have a fixed rate with the National, they are not
affected by this. This is purely for new money coming in.

So it's really, if you like, a reflection of what the market thinks the variable rate could
possibly be in the future. So wholesale fixed rate cost of funds has been increasing and we simply
price off the back of that.

SUE LANNIN: But official interest rates are at the lowest in around 50 years. Why is your move
justified?

STEVEN SHAW: We've seen fixed rates probably, you know, overall increase by about 100 basis points
or 1 per cent over the last four or five weeks, so it definitely indicates that fixed rates have
been at 40 year lows and it is probably the bottom of that market and it probably gives an
indication that the RBA is possibly going to be on hold in terms of its cash rate.

We possibly expect to see increases in the cash rate over time.

SUE LANNIN: We've seen bank to bank lending rates go down. They went up after the collapse of US
investment bank Lehman Brothers. They have been creeping up only slightly in recent months. So why
are you actually raising your rates?

STEVEN SHAW: Well, we've seen short-term inter-bank lending rates fall and that is true but in
terms of longer-term wholesale, that continues to be volatile and upwards actually. From the NAB's
perspective we have no plans to actually change our variable rate. At this stage, this is a
business as usual repricing of our fixed rates. It does reflect what the wholesale cost of funds
actually are, so it is just a business as usual change to our fixed rates.

SUE LANNIN: Well, what do you think about the Commonwealth Bank's move the other day to lift its
standard variable home loan rate by 10 basis points? Did you see that as a cynical move after they
captured market share?

STEVEN SHAW: Look, I think they've justified that move on the back of wholesale funding costs and
it is true that wholesale funding costs have been very volatile and because of the way most banks
actually go and fund their books, you might see reductions in wholesale cost of funds over time.

The reality is that the average cost of funds that we're paying is going to increase over time.

SUE LANNIN: Now if the Reserve Bank does make further cuts to official interest rates later this
year, will the National Australia Bank pass on those rate cuts in full?

STEVEN SHAW: We would review what the Reserve Bank does and look at a combination of factors which
would be obviously what the cash rate is, what the wholesale markets are doing and what the
competitive environment is and determine at that point what change we would actually make to our
rates.

Our interest rates, I do believe, represent fair value and we are talking consumer can actually
get, for example, a one year fixed rate through our Choice Package at 4.99 per cent so that to me
would seem to represent fairly good value.

SUE LANNIN: In the eyes of the public, they are seeing that the banks and financial institutions
are getting government guarantees on their borrowing and also on deposits, so why aren't banks
trying to hold interest rates lower?

STEVEN SHAW: Well, I think, you know, certainly we are trying to act as responsibly... we are
acting responsibly in terms of the needs of both customers and shareholders and ensuring that, you
know, our interest rates actually reflect fair value and we are very transparent in terms of what
our underlying costs of funds are.

I do understand, you know, the public reality is that no one likes to see their interest rates go
up but we have to constantly try to balance that with the needs of both customers and shareholders.

PETER CAVE: Steven Shaw, the head of mortgage lending at the National Australia Bank, speaking
there to Sue Lannin.

Teen pregnancy highlights parents struggling with rogue children

Teen pregnancy highlights parents struggling with rogue children PRINT FRIENDLY EMAIL STORY

The World Today - Tuesday, 16 June , 2009 12:18:00

Reporter: Emily Bourke

PETER CAVE: The case of a pre-teen pregnancy in regional New South Wales has sparked a furious of
debate over whether more could have been done to intervene and by whom.

While police say their hands were tied, the Department of Community Services - or DoCS - has
admitted that it could have done more.

Child welfare experts have rushed to the defence of DoCS saying that other supports should be there
to help similarly troubled families.

And the local MP who has made the case public says that families with "out of control" children
need more support even if that means changing laws.

Emily Bourke reports.

EMILY BOURKE: The story of a 12-year-old girl falling pregnant to her 15-year-old boyfriend might
have made front page news and induced moral panic but the case has also highlighted what happens to
families who have run out of options.

The NSW MP for Dubbo is Dawn Fardell and she's taken up the cause of a desperate father.

DAWN FARDELL: Well, he was calm but very disturbed and he was, he came to see me after speaking to
local police, one of whom is a friend of his, whose hands are tied with the 12 to 16 age group and
he came to tell me his story and that we need to do something to bring into line, to care better
for this group who are running riot and leaving home and the situation that happened to his
daughter.

EMILY BOURKE: What did he think could have been done?

DAWN FARDELL: She should have been removed from that environment. Taken from her mother or
something put in place by DoCS to make sure she had stronger care and he was just asking DoCS to
intervene.

EMILY BOURKE: The New South Wales Minister for Community Services Linda Burney concedes more could
have been done by the Department of Community Services.

LINDA BURNEY: As I understand it, when the father reported this to Community Services in early
March, the young girl was interviewed by police, health and Community Services in a joint response.
At that stage the young girl did not want the father charged. In fact, as I understand it, she
wouldn't provide the name of the young man that was involved.

The other thing that I would say is that under the reforms that are coming in or have already
started to come in to child protection in New South Wales, this case actually underlines why those
reforms are really necessary.

EMILY BOURKE: Independent MP Dawn Fardell says families with "out of control" children don't have
enough support and laws might need to be changed.

DAWN FARDELL: Some form of legislation or something has to get into place. A lot of the things we
are not talking about hardened criminals or anything here. We are speaking about young people who
have no direction, who don't like authority and many of these are children and this father is a
good, caring father. Many of these situations do come from good homes, besides those who are really
struggling to, parents are struggling to look after themselves.

We do need something in place and I guess, speaking in Parliament of late on this issue was a plea
on my part as from the father, "What has happened to my daughter has now happened. I have to deal
with this but how can we stop it happening again?"

I'm getting foster carers coming to me, parents coming to me where if they are in a new
relationship with a partner, they're then seeking... you know if he uses authority and tells them
you have to come home now or puts his hand on their arm, they're taking out an AVO against him. I
mean it's really spiralling out of control and I would have had in the last couple of months about
10 parents come to me pleading for help to change the system and they are good parents.

EMILY BOURKE: But experts say such intervention doesn't mean taking away troubled children.

Andrew McCallum is the CEO of the Association of Children's' Welfare Agencies.

ANDREW MCCULLUM: We can actually have moral outrage about a mother at 12 or we can actually say
what do we do as a society to make sure that these families have the support that they need?

EMILY BOURKE: What are those supports look like? What are we talking about?

ANDREW MCCULLUM: Look, it's when, you know, we don't want DoCS to be there at the front door to all
family support services, so under the new regime it would be actually how do we actually put these
families in touch with non-government or government services that can actually work with them on
parenting issues, work with some of the issues around this child out of control?

But just thinking that actual removal of the child is going to be a solution to the problem only
lays the foundations for further problems. So I think we really need to look at what are the
supports that can go into the family, what other counselling can be provided for the parents so
they actually feel they can parent better, how do we support the kid when they are in the school,
how do we support the kid when they are actually at home, how do we actually make sure that they
are safe in their contact with the opposite sex.

EMILY BOURKE: And the responsibility shouldn't just fall to Community Services.

Professor Julie Quinlivan is from Notre Dame University in Western Australia and an expert in the
area of teenage pregnancy.

JULIE QUINLIVAN: All the evidence shows that you are better off to put all these interventions into
health rather than into social services because as soon as you knock on the door and you say, "I'm
from social services" many people feel threatened but if you knock on the door and you say, "Hi,
I'm a nurse from Health here to help you" it is much easier for people to engage and trust.

PETER CAVE: Professor Julie Quinlivan from Notre Dame University ending Emily Bourke's report.

Prison van death was not racism, says private firm

Prison van death was not racism, says private firm PRINT FRIENDLY EMAIL STORY

The World Today - Tuesday, 16 June , 2009 12:22:00

Reporter: Simon Santow

PETER CAVE: A private security firm has blamed two of its guards and denied inherent racism within
the company for the heat related death of an Aboriginal elder in the back of a prison van in
Western Australia.

G4S, previously known as Global Solution Limited or GSL, was blamed by the West Australian coroner
for the death of a 46-year-old man from the Goldfields who died of heat stress after a 360
kilometre journey in stifling condition in January of last year.

Last night's Four Corners program highlighted how the tragedy could and should have been avoided.

It presented evidence that GSL had previous form for neglecting the health of prisoners when
transporting detainees to the Baxter Immigration Centre four years ago.

Simon Santow spoke to G4S's director of public affairs, Tim Hall.

SIMON SANTOW: The coroner found that GSL had contributed to Mr Ward's death. Do you accept those
findings?

TIM HALL: Yes, we do. Reaction to Mr Ward's death, the same as any thinking person's reaction to
it, that it was as senseless and avoidable as it was tragic and we do accept the coroner's
findings.

SIMON SANTOW: And that GSL's procedures were totally inadequate?

TIM HALL: No. That is not correct. GSL's procedures were not totally inadequate. Why this incident
happened was because two officers disobeyed an instruction they were given to stop every two hours.

We had only had the contract for six months at that time and we were working assiduously to get all
the written procedures that we inherited from the previous operator up to date and in the time that
that was being done, supervisors gave verbal instructions to every escort that went out to
reinforce what in fact was long practice, which was that they must stop every two hours because it
was the failure to stop after two hours which is really the main factor that led to Mr Ward's
death.

SIMON SANTOW: So you are putting this down to two of your officers and not systemic failures within
the organisation?

TIM HALL: Certainly there were failures in the procedures and as much as they weren't in writing
and certainly we've made, we've taken substantial steps since this incident happened to prevent it
happening again to the extent that it is possible but essentially what caused this incident, this
tragedy, was that two of our officers disobeyed an order to stop and instead elected to drive
straight through for three and three-quarter hours. That is why Mr Ward died.

SIMON SANTOW: You would of course been aware of the warnings that had been given to the Government
about the dangers of these vans and the failures of equipment in them?

TIM HALL: It is important to distinguish between the role of a vehicle and the dangers. The
vehicles were clearly, they were hot, that were uncomfortable, they were old and they needed to be
replaced.

There had been no serious incidents in these vans to my knowledge apart from, I mean in our time
there have not been any serious incidents involving these vans at all.

SIMON SANTOW: What about the case though, Mr Hall, of the prisoner or the detainee being
transported to Baxter detention centre?

TIM HALL: That has absolutely nothing to do with us whatsoever. We are talking about, Mr Ward died
in Western Australia in a detention server, in a prisoner transportation contract. In Victoria, the
other episode that was referred to in the program last night, five immigration detainees were being
transferred from Melbourne to Mildura in Victoria 4.5 years ago.

The only single thing, factor that these two incidents had in common was that in both cases, our
staff failed to follow, wilfully disregarded, however you would like to put it, instructions that
they had to stop the vehicle.

SIMON SANTOW: And at the time, you went on ABC Radio to reassure listeners ...

TIM HALL: Yes I did.

SIMON SANTOW: ...that this could never happen again.

TIM HALL: Yes, I did. I did.

SIMON SANTOW: And it did.

TIM HALL: But it did.

SIMON SANTOW: So how does that make you feel?

TIM HALL: It makes me feel like everybody who has anything to do with this tragedy feel. That it
was senseless and avoidable and it makes one disappointed that one's employees could do this and it
makes one embarrassed that one company could do this.

I am not defending G4S against what happened. I am just trying to put into context for you why it
happened and that there is no imaginable link between those two incidents except that two officers
disobeyed orders.

SIMON SANTOW: It is hard to avoid the notion that because this person was black, Mr Ward was black,
nobody cared.

TIM HALL: That is an absolute nonsense as far as this company is concerned. It is just a nonsense.
It is an insulting observation and it has absolutely no relevance whatsoever to what happened. We
don't distinguish between the race or the colour of the people we carry, for goodness sake.

SIMON SANTOW: What is the state of the vans at the moment?

TIM HALL: I have just been advised just before I came on to talk to you this morning that every
Mazda van, and there are about 11 of these Mazda vans, as you know it was a Mazda that Mr Ward was
being transported in, that every Mazda van working north of Perth has now been withdrawn from
service.

SIMON SANTOW: As you said at the outset of this interview, it wasn't so much a problem with the
equipment or the state of the Mazda van but the actual humans employed by GSL, now G4S who, in your
words, didn't carry out the instructions.

TIM HALL: That was the main factor. Quite clearly, if the air-conditioning in this Mazda van had
been working, Mr Ward's death would not have occurred.

You have to remember that just because the fleet was old and the fleet was rundown does not in any
way whatever relive us of our duty of care. If anything it increases our obligations under our duty
of care because it means we are aware of the fleet and therefore we have to have procedures in
place to compensate for it and one of the most fundamental of those procedures is that you stop
your vehicle every two hours and you make sure that the guy in the back of your vehicle is well.

SIMON SANTOW: Will you be paying compensation to Mr Ward's family?

TIM HALL: That has never arisen as yet. Until that issue is risen, we will consider that if it
rises in the future.

SIMON SANTOW: Would it be fair though to pay compensation?

TIM HALL: I can't comment on that.

SIMON SANTOW: How do you think they might be feeling?

TIM HALL: I should think that they would feel appalled. It is not a question of thinking how they
are. I mean, I have seen them. I was at the inquest in Kalgoorlie for the length of the inquest.
One doesn't need any imagination to know how the Ward family is feeling about this. They will be
feeling let down. They will be feeling angry and they will be feeling very sad.

SIMON SANTOW: And does GSL deserve to retain the contract that it holds at the moment with the WA
Corrective Services Department?

TIM HALL: Yes, it certainly does, in my opinion. That of course, at the end of the day, is for the
Western Australian Government, for the state to decide. In my opinion, there is no reason why G4S
should feel that its contract should be taken away because of the misconduct of our staff.

PETER CAVE: G4S Australia's director of public affairs Tim Hall, speaking there to Simon Santow.

Gatto shocked by Moran murder

Gatto shocked by Moran murder

Reporter: Samantha Donovan

PETER CAVE: Police in Victoria say there's nothing so far to suggest that the murder of the
Melbourne underworld figure Desmond "Tuppence" Moran is linked to the gangland wars that claimed
the lives of his brother and two nephews.

Moran was shot dead by two masked gunman yesterday afternoon at a favourite cafe on a busy shopping
strip in inner suburban Melbourne.

There's plenty of speculation about the motives for the murder but Victoria Police say there's no
evidence linking the killing to the bloody gangland feud depicted in the books and the television
series Underbelly.

SAMANTHA DONOVAN: Union Road in suburban Ascot Vale is returning to normal after Desmond Moran was
gunned down there yesterday in a coffee shop that was one of his regular haunts.

It was the ninth anniversary of the shooting death of Moran's nephew Mark Moran but police are
unsure if that was a coincidence or some sort of message.

The Homicide Squad's Detective Inspector Steve Clark says his detectives have worked through the
night to try and pin down who may be responsible.

And they have a number of people in mind.

He says officers who investigated the gangland murders are working with his detectives.

STEVE CLARK: We are working with Purana detectives. Obviously they've got some knowledge of the
Moran family but I do want to point out that at this stage there is nothing to link Des Moran's
murder with any of those gangland murders that occurred over the past few years.

SAMANTHA DONOVAN: Detective Inspector Clark says police can apply to interview prisoners about a
crime like this but no such application has been made as yet.

STEVE CLARK: We can apply to interview those people of course but like everybody else, they have
the right to remain silent so we can apply to interview people, it is a matter for them whether
they speak to us or whether they don't.

SAMANTHA DONOVAN: Victorian Premier John Brumby is hoping that the murder of Des Moran doesn't
signal a resurgence in gang-related violence.

JOHN BRUMBY: Victoria Police are obviously taking the case very seriously indeed. The homicide
squad has its full resources on it but I am hopeful that this won't lead to any resurgence in
gangland activity and we hope that's the case and we hope that this is the end of the matter.

SAMANTHA DONOVAN: Mick Gatto is one of the few figures of the gangland wars still alive and not in
jail.

In 2005 he was acquitted of murdering Andrew Veniamin after they'd argued in a Carlton restaurant.

Mr Gatto said he'd acted in self-defence.

He was a friend of Des Moran's but this morning has angrily denied newspaper reports quoting him
saying that he'd deal with the Moran murder once he returned from overseas.

He told ABC local radio that he was surprised to hear of Moran's death.

MICK GATTO: He was a nice bloke. He was a nice, quiet bloke that sort of done his own little thing
but he obviously had plenty of enemies out there or he must have otherwise it wouldn't have
happened.

I just want to make one thing crystal clear - Des Moran was a friend of mine that I seen once a
year. I had nothing to do with it in any way, shape or form.

SAMANTHA DONOVAN: Mick Gatto says he rang Des Moran after a shot was fired into his car in an
apparent murder attempt in March.

He says Moran didn't appear worried by the shooting.

MICK GATTO: I don't know what he has done to anyone. I mean I couldn't answer that question. I mean
he knows in his heart if he had a problem or not like I know in mine.

If you have done something wrong to someone well, of course you have got something to worry about
but only he knew that and all this stuff gets sensationalised all the time and that is the reason a
lot of this stuff happens. You know they connected 26 murders with this gangland stuff and I mean,
that is nonsense. There's about 10.

You know, they just blow it all up. Oh, this one got killed and he spoke to Alfons one day or he
spoke to this one one day.

SAMANTHA DONOVAN: It's been reported today that Desmond Moran and his sister-in-law Judy Moran,
Lewis Moran's widow, weren't close.

Mick Gatto says it's unlikely he'll be contacting her.

MICK GATTO: You know, I'll probably put a death notice in and if I am back in time for the funeral,
I'll go and that is it. You know, I won't be contacting anyone. You know, I mean, of course, I feel
terribly sorry for Judy. I mean no woman in the world should go through what she has been through
and people can say whatever they like about her, but put yourself in the same position and see how
you'd end up, you know, you wouldn't be here. You would probably kill yourself and my condolences
and sympathy goes out to all of them but I certainly won't be running around making enquiries or
trying to find out who done it or whatever, I mean it is none of my business. You know, I just go
along and mind my own business and do me own thing.

PETER CAVE: Mick Gatto ending that report from Samantha Donovan.

Tide turns for Turnbull, but Abbott keeps a baton in his backpack

PETER CAVE: Opposition leader Malcolm Turnbull woke this morning to the good news that not only
does he not have Peter Costello breathing down his neck but that the Coalition appears to be
closing the gap on Labor in public opinion.

As the Opposition takes stock of that, the Government is trying to convince crossbench senators to
back its emissions trading scheme.

But after convincing the Family First Senator Steve Fielding that solar activity isn't the main
factor driving climate change, he's now posed more questions he says the Government needs to answer
before he makes up his mind.

From Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: Malcolm Turnbull's keeping a low profile for now, allowing the dust to settle with
Peter Costello bowing out of federal politics.

Coalition MPs are full of glowing tributes for the man who has decided his time has passed, leaving
without ever having taken a tilt at the top job.

TONY ABBOTT: Magnanimity is a rare thing in politics. Peter Costello is entitled to be thought of
as probably, in that sense at least, the Liberal Party's greatest servant; one of the most
magnanimous people ever to serve in Federal Parliament.

DENNIS JENSEN: I think it would be fair to say that he's probably the best prime minister that
Australia's never has as well.

GEORGE BRANDIS: I think we all feel a sense of loss today that Peter Costello has confirmed his
decision to retire from politics.

ALEXANDRA KIRK: George Brandis, a long time Costello supporter, says the former treasurer was
double crossed over the leadership, because the evidence suggests there was an agreement with John
Howard that wasn't honoured.

Tony Abbott disagrees.

TONY ABBOTT: Peter Costello never had the numbers. John Howard always did. Of course, had Peter
chosen a different course, he might have been able to accumulate the numbers but to his credit,
that is not what he did.

STUART ROBERT: It is both sad and liberating.

CHRISTOPHER PYNE: I don't think any team is relieved when one of their best players decides to
retire.

JAMIE BRIGGS: John Howard, Peter Costello and Alexander Downer have moved on. We've moved to
another generation and we'll see Malcolm Turnbull shine.

ALEXANDRA KIRK: Tony Abbott doesn't disagree that Peter Costello's departure makes it easier for
Malcolm Turnbull on difficult issues, such as the emissions trading scheme.

TONY ABBOTT: All of those issues can now be discussed purely on their merits without any injection
of personalities that might otherwise have occurred.

ALEXANDRA KIRK: Malcolm Turnbull's received a second bit of good news. Today's Newspoll shows
satisfaction with his performance is up four points to 44 per cent and the Coalition's narrowed the
gap to be just one point behind Labor on the primary vote. Tony Abbott thinks voters are starting
to get the message.

TONY ABBOTT: I think that people are finally figuring out that Kevin Rudd is really making it up as
he goes along. I mean, let's face it, once he was an old fashioned Christian socialist, then he was
never a socialist, then he was an economic conservative, now he reckons he is a social democrat.
This guy has no deep convictions on economics.

ALEXANDRA KIRK: But the unity fostered by Peter Costello's departure is not forever. Tony Abbott on
Fairfax Radio reminded his leader there are others who harbour leadership ambitions, albeit not
right now.

TONY ABBOTT: There is a team in place and it is a good team and that team's not got to be given the
best possible chance to win the next election and I think what Peter did yesterday will make that
more likely.

INTERVIEWER: Final question Mr Abbott, are you now 100 per cent sure that Malcolm Turnbull will
lead the Liberals to the next election?

TONY ABBOTT: Absolutely, I am.

INTERVIEWER: And do you still have leadership aspirations down the track?

TONY ABBOTT: Oh, down the track but a long, long way down the track.

ALEXANDRA KIRK: While the Coalition ponders its position on Kevin Rudd's emissions trading scheme,
Family First Senator Steve Fielding is still mulling over where he stands. His earlier concerns
that solar rather than human activity might be driving climate change have been dispelled, after
meeting government climate scientists yesterday. He's now focussing on ocean temperatures.

STEVE FIELDING: Yesterday's meeting with the chief scientist and Professor Steffen, they outlined
that they are using a different temperature measure, which is ocean temperature. Now that is
something we are going to have to look at because that is something that the IPCC wasn't using to
prove that carbon emissions were driving up global temperatures.

ALEXANDRA KIRK: But Professor Will Steffen, the head of the Australian National University's
Climate Change Institute, says sea temperatures are a very good guide to global warming.

WILL STEFFEN: It is an important complimentary measure because as the earth's surface warms up, as
a result primarily of greenhouse gases, that heat is going into various parts of the earth's
surface. The air is an important one because we live in it but in fact more of the heat goes into
the ocean.

ALEXANDRA KIRK: And how much has it warmed?

WILL STEFFEN: It has warmed by about 14 times 10 to the 22nd joules - it's the energy unit that we
use.

ALEXANDRA KIRK: Professor Steffen, who attended yesterday's meeting with Senator Fielding, says
that equates to 0.1 of a degree centigrade rise between 1961 and 2003. He says it's quite
impressive, given that oceans cover 70 per cent of the Earth's surface and water has a very high
heat capacity.

Do you say that if you look at sea temperatures, that you come to the conclusion, without any
doubt, that human activity is causing global warming?

WILL STEFFEN: We can't find any other explanation.

PETER CAVE: Professor Will Steffen from the ANU Climate Change Institute ending that report from
Alexandra Kirk.

One killed, several wounded as shots fired at protestors

PETER CAVE: In Iran, one man has been killed and several others injured after gunmen reportedly
opened fire on a mass rally in the capital Tehran.

It's the worst violence since the disputed presidential elections last Friday.

Hundreds of thousands of people have marched through Tehran in support of the Opposition candidate
Mir-Hossein Mousavi, in what are being described as the biggest anti-government demonstrations
since the 1979 Islamic revolution.

US President Barack Obama has joined other international leaders saying he's deeply troubled by the
violence in Iran.

Jennifer Macey reports.

(Sound of protesters)

JENNIFER MACEY: Late into the night protestors filled the streets of the Iranian capital Tehran in
protest against a presidential election they claim was rigged.

Some estimates say up to a million people marched from Enghelab Square to Azadi Square or the
Square of Revolution to the Square of Freedom.

Protestors held signs saying "Where is my vote?" and "This is not election - this is selection".

The crowd chanted "Where is the 63 per cent?" questioning the percentage of the vote that President
Mahmoud Ahmadinejad says he won in Friday's poll.

(Sound of protesters)

Others chanted "Mousavi retake my vote" in support of the Mir-Hossein Mousavi, the defeated
moderate candidate, who spoke to demonstrators from on top of a car.

MIR-HOSSEIN MOUSAVI (translated): Our people are demanding their respect, their vote and their
rights.

JENNIFER MACEY: The Government had banned any protest following unrest over the weekend but
protesters ignored the orders and riot police.

During the early evening, as people were beginning to leave Azadi Square, shots were fired into the
crowd.

One man died and several others were wounded.

It's the worst violence since last Friday's disputed election and has attracted concern among
international leaders.

US President Barack Obama says he's deeply troubled by the violence.

BARACK OBAMA: I think that the democratic process, free speech, the ability of people to peacefully
dissent, all those are universal values and need to be respected.

JENNIFER MACEY: European leaders have called on Iranian authorities to investigate claims of voter
irregularity but aren't yet talking about sanctions.

The British Prime Minister Gordon Brown.

GORDON BROWN: And that is why the regime must address the serious questions which have been asked
about the conduct of the Iranian elections. The way the regime responds to legitimate process will
have implications for Iran's relationships with the rest of the world in future.

JENNIFER MACEY: Germany's Chancellor Angela Merkel has condemned the Government's clampdown on the
country's communication technologies and also on foreign journalists.

ANGELA MERKEL (translated): We are concerned about the restrictions on media reporting and we
believe there should be a transparent examination of election results because there are arguments
that there were irregularities.

JENNIFER MACEY: The Government has blocked the mobile phone network and access to many websites,
such as the social networking site Facebook.

But protesters are accessing Twitter to rally supporters and post reports of violence at
demonstrations.

Karim Sadjadpour, from the Carnegie Endowment for International Peace in the US, told CNN that
there are already splits emerging among the Iranian elite.

KARIM SADJADPOUR: I spent a couple of years in Iran and I remember talking to individuals within
the Revolutionary Guards, within the Basij, and they are not a group of Hezbollahi, as we call them
- hard line radicals. You do have plenty of people who recognise that this "death to America"
culture of 1979 will always prevent Iran from fulfilling its enormous potential.

JENNIFER MACEY: But another expert says it's not in the best interests of the Opposition candidates
for the protests to get out of control.

Associate Professor Shahram Akbarzadeh is the deputy director of centre of the National Centre of
Excellence for Islamic Studies at the University of Melbourne.

SHAHRAM AKBARZADEH: The Islamic regime has never shied away from using brutal force to suppress
dissidents and they will use force and there have been reports of shooting and on the other side,
the reformists, the Mousavi leadership, they are not going to allow the situation to get out of
control. They are trying to contest the results but if things get too hot, it could seriously
undermine the whole regime as a whole and Mousavi has no interest in undermining the regime.

JENNIFER MACEY: More protests are being planned for this week in continuing defiance of government
orders and it may pose a direct challenge to the Iranian authorities.

PETER CAVE: Jennifer Macey with that report.

Fears held for kidnapped men, women, children in Yemen

PETER CAVE: Grave fears are being held for a group of nine foreigners, including two children,
kidnapped in Yemen last week after authorities said they'd recovered some bodies.

There are conflicting reports coming out of Yemen about just how many bodies have been found.

Analysts are alarmed by the development because even though kidnappings are common in Yemen, no
hostage has been killed for nearly 10 years.

Meredith Griffiths reports.

MEREDITH GRIFFITHS: There's been no official announcement from Yemen but German media is flooded
with reports that all nine people taken hostage on Thursday have been killed.

(Sound of German news report)

As well as two German nurses, a German doctor and his family, a British engineer and a South Korean
teacher are also missing.

Earlier, a Yemeni official said that a tribesman had found seven bodies, including the children.

Later, the Yemeni Interior Minister said they only found the body of three women.

Though the details are still unclear, observers say this a shocking development even though
kidnapping is rife in Yemen.

Dr Sarah Phillips from the University of Sydney is an expert on the country.

She says the kidnappers are usually tribal groups, using the hostage to get the Government to
improve local infrastructure like wells, roads or schools.

SARAH PHILLIPS: Typically they are held for less than a week and they are treated quite well.
Before 1988 it was almost seen as a bit of a joke - go to Yemen and get kidnapped for a bit of fun.
People were given gifts and there's some quite amusing stories on the internet about people who
have gone there and really recommend this as a great thing to do as a tourist.

MEREDITH GRIFFITHS: That all changed in 1998 when an Islamic militant group kidnapped 16 tourists,
including two Australians.

Thirty-five-year-old Sydneysider Andrew Thirsk and three other hostages were killed in a shootout
when Yemeni security forces stormed the kidnapper's hideout.

A Norwegian diplomat was also killed in the crossfire after being kidnapped in 2000, but most of
the hundreds of westerners who've been taken hostage are usually released unharmed.

The Government has blamed the most the recent kidnapping on a Shi'ite tribal group that's been
leading an insurgency since 2004.

They vehemently deny it and say the kidnappers were a tribe affiliated with the Government.

But Dr Sarah Phillips from Sydney University says both sides are just exploiting a tragic event for
their own purposes.

She says the latest kidnapping doesn't seem to be a standard tribal kidnapping.

SARAH PHILLIPS: The willingness to kill the hostages, that is a radical departure. That is not
usually the case in a tribal kidnapping at all and to my knowledge there was no request for a
ransom. There may have been but that has certainly not been reported and none of my sources on the
ground have indicated that that was the case and that, the willingness to kill, the willingness to
kill women and it appears a child as well, is a very, very big departure from the way that this
usually occurs.

MEREDITH GRIFFITHS: She says the kidnappers were most likely militant jihadists

SARAH PHILLIPS: Militants have been regrouping in Yemen, particularly over the last five or six
months. There was a group called Al Qaeda in the Arabian Peninsula and they are reasonably well
organised.

They have conducted two suicide attacks against foreign targets since the beginning of the year and
they have been threatening that they are going to continue to harm western interests and tourists
specifically in the country.

MEREDITH GRIFFITHS: One theory is that the foreigners were killed as an act of vengeance after Al
Qaeda's top financier in the region was reportedly arrested on the weekend.

While it's still unclear precisely what's happening in Yemen, Dr Sarah Phillips says there's no
doubt the Government is losing control as it struggles to cope with falling oil revenues

SARAH PHILLIPS: Definitely on the street it has the feeling that it could only be a matter of time
before there is some sort of a rupture. There is a very clear sense of desperation and also, it is
a subtle thing, but a sense of aggression that I noticed that was not there a few years ago.

MEREDITH GRIFFITHS: Many international observers are keenly worried about Yemen becoming a failed
state. They say its remote mountainous terrain, poverty and lack of infrastructure already make it
the ideal new home for jihadists who are coming under increased pressure in Pakistan.

PETER CAVE: That report from Meredith Griffiths.

Obama presidency sees rise in right-wing hate groups

PETER CAVE: In the United States there's growing concern about a potential rise in domestic
extremism.

The number of active hate groups in the United States has risen by more than 50 per cent since the
year 2000.

Researchers say that right-wing hate groups, including white supremacists, have been energised by
the recession and the election of America's first black president.

Washington correspondent Kim Landers reports.

KIM LANDERS: At Washington's Holocaust Museum last week, a self proclaimed white supremacist
started shooting, leaving one security guard dead.

A few weeks earlier, a late term abortion provider had been shot dead at his Kansas church.

With these examples of right-wing extremism making headlines, debate has flared in the US about
whether this violence is going to increase.

Mark Potok is the director of the Intelligence Project at the Southern Poverty Law Centre. He
monitors and investigates hate groups and says they've become more active.

MARK POTOK: We really have seen quite a rash of violence, of extremist rhetoric both from the hate
groups and also within the political mainstream and of real cases of anti-Obama hatred.

KIM LANDERS: The US Department of Homeland Security has warned that domestic right-wing extremism
is the most pressing domestic terrorist threat that America faces.

Its April report said right-wing extremists could use the troubled economy and the election of
President Barack Obama to recruit members.

But the Obama administration distanced itself from the controversial document because it also
claimed that disgruntled veterans were possible converts to extremism.

Mark Potok says the threat from right-wing extremists remains.

MARK POTOK: For instance, last December a man was found in the state of Maine to have been building
a dirty bomb, a bomb with radioactive components. His wife told police that he, in fact, was
enraged by Obama's election and planned to do something with it. You know, we have seen a Marine
Lance Corporal, an active duty marine here, charged in connection with a plot to assassinate Obama.

KIM LANDERS: So do you believe that domestic right-wing extremism is one of the most pressing
threats that the United States faces?

MARK POTOK: I think it is a pressing threat. I think it is much more widespread than most Americans
have any inkling of. You know, every year the FBI reports hate crimes, hate crime numbers and their
reports generally account for about 6,000 to 10,000 hate crimes a year but the reality is as shown
in the recent, very carefully done Justice Department study is that the real level of hate crime in
America is something like 200,000 incidents a year - in other words 20 to 30 times higher than the
FBI has been reporting.

KIM LANDERS: The Southern Poverty Law Centre says the number of hate groups in the US has increased
54 per cent from 602 in the year 2000 to 926 last year.

But not everyone thinks the increase in animosity will manifest itself in an increase in violence.

Louis Andrews is president of the National Policy Institute, which describes itself as a "white
advocacy group".

LOUIS ANDREWS: I don't think so at this time. The kinds of things that you have seen, the Holocaust
murder and of course the black Muslim who murdered the white recruiter which didn't make the news
for three days unlike the other murders which were white on black. So there is a big double
standard there in the American media but those are all incidental things that happened due to
individual nut cases. I don't see any, at the present, any great increase in violence or anything.

KIM LANDERS: Nor does he think that Barack Obama's election as President ushers in a new era in
race relations in the United States.

It's interesting to note that Louis Andrews voted for Barack Obama but he says he did it because he
wants to see the Republican Party destroyed so that it can be reborn as a party which represents
the interests of white people and not corporate elites.

This is Kim Landers in Washington for The World Today.

Seven sports compete for inclusion in 2016 Olympics

PETER CAVE: The 2016 Olympic Games are still a long way off but one competition has already begun.

Seven sports, including karate and rugby, are competing for inclusion.

In Switzerland, sporting officials have been making their pitches for the two slots available and
there's a lot of money riding on the decision.

Brendan Trembath prepared this report.

BRENDAN TREMBATH: The International Olympic Committee says all seven sports have something to offer
but only two will be included in the 2016 Games

Jacques Rogge is the IOC president.

JACQUES ROGGE: The sport has to add an added value to the already existing sports in the Olympic
program. So we are only going to take a sport if the sport can bring something new.

BRENDAN TREMBATH: The seven sports vying for inclusion are traditional ball sports such as
baseball, golf, softball, squash and rugby.

Karate and roller sports like skateboarding are also contenders.

Jacques Rogge says there are several conditions.

JACQUES ROGGE: I will look at popularity, universality. We look at the fact whether this sport is
very costly in terms of infrastructure, whether they have a good ethical behaviour in terms of
fighting doping.

BRENDAN TREMBATH: The two sports selected will enjoy a higher profile, with that huge international
audience.

But also there's money in it - many nations subsidise Olympic sports.

Michael Kassis is the president of the Australian Karate Federation.

He says the sport has many participants around the world and deserves to be in the Olympics.

MICHAEL KASSIS: Right throughout the world there is in excess of 50-million people from all ages,
the age of four up to 70 participate in karate.

BRENDAN TREMBATH: You often see children around Australia in their karate uniforms but how widely
practiced is it here?

MICHAEL KASSIS: Here in Australia we have got an excess of 60,000 participants, that is registered
participants through the Australian Karate Federation.

BRENDAN TREMBATH: Something else the IOC looks at is the cost. Is it an expensive sport to compete
in?

MICHAEL KASSIS: Absolutely not. Compared to any other sport, the only thing you would need is a
karate uniform, which you are looking around about anything between $50 to $100. For a parent in an
economic crisis like today, they might not be able to afford to send their children to other sports
because of relevant cost of karate is quite considerably cheaper than any other sport.

BRENDAN TREMBATH: Now the other issue is that dirty word in sport - doping. Has doping been a
problem in karate at all?

MICHAEL KASSIS: Not at all. We keep a close monitor of all athletes. There is random testing with
any international representatives and so far we have not had any problems with doping or the
illicit drugs.

PETER CAVE: Michael Kassis, the president of the Australian Karate Federation, ending that report
from Brendan Trembath.