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Inflation at lowest rate in a decade

Inflation at lowest rate in a decade

Peter Ryan reported this story on Wednesday, July 22, 2009 12:10:00

PETER CAVE: There's more encouraging economic news this lunchtime, with confirmation that the
inflation index is becoming much less of a threat. The CPI (consumer price index) for the June
quarter has eased significantly, with the headline rate now running at an annual pace of 1.5 per
cent.

That's a big fall from the previous quarter and below the Reserve Bank's target band of 2 to 3 per
cent. The good inflation news has rekindled speculation that official rates will stay on hold for
the foreseeable future.

I've been joined in the studio now by our business editor Peter Ryan. Peter, this is a major
turnaround from a year ago when inflation was seen as a major threat.

PETER RYAN: Well that's right Peter, and today's headline result of 1.5 per cent puts inflation at
a decade low, in line with market expectations and also the RBA's own inflation outlook. And as you
said, that it's at the other extreme of last year, when September quarter headline inflation hit an
annual pace of 5 per cent.

But since then, there's been a steady moderation down to 2.5 per cent in March which was right in
the middle of the Reserve Bank's target zone. Quarter on quarter, inflation is up just modestly by
0.5 per cent.

But we really need to take into account that July 2009 really is another world from a year ago.
Official interest rates have fallen by 4.25 per cent to just 3 per cent, the global financial
system has gone to the brink of collapse and oil prices have halved.

Those fundamentals have taken a toll and the lower risk of inflation should be of mild comfort to
the Reserve Bank which had aggressively hiked interest rates to keep the inflation dragon at bay.

PETER CAVE: If you say that quarter on quarter inflation is up slightly, it's perhaps a little bit
too early to pat ourselves on the back do you think?

PETER RYAN: Well that's right. Inflation still is a problem, prices are rising, we've seen
significant rises in the quarter; fuel for example up 3 per cent, hospital and medical services up
3.6 per cent, rent is up 1.4 per cent, furniture costs are up 3.6 per cent.

However these rises have been more than offset by price falls for example in financial services,
down 4.3 per cent, vegetables down 6.9 per cent, fruit 7.6 per cent and overseas travel and
accommodation is also cheaper.

This correlates with a weakening labour market, more people staying at home to cook, lower banking
costs and Government stimulus payments. But we need to make one point - the measure of core
inflation, which is preferred by the Reserve Bank, and that's where volatile factors are stripped
out, it's still high, running at 3.6 per cent.

So domestic prices are still stubborn and the Reserve Bank will be concerned about that, so don't
expect any, at least public sighs of relief from the Reserve Bank Governor Glenn Stevens.

PETER CAVE: There's one question we can't avoid, what are the implications for interest rates? Is
another cut still a possibility?

PETER RYAN: Well as I said, the stubbornness of core inflation probably means rates will stay on
hold at 3 per cent for some time. The Reserve Bank will be looking for something quite dramatic to
cut rates - not necessarily inflation related either, perhaps another shock on the global economy.

And keep in mind that rates here are still high compared to other industrialised countries, which
are close to zero in the United States for example, so the RBA's strategy has been to keep its
powder dry. Even so economists are divided on the outlook for rates, with some thinking the cutting
cycle is over and the next move might even be up, starting in June next year.

PETER CAVE: Our business editor Peter Ryan.

Swine flu scares at Palm Island

Swine flu scares at Palm Island

Di Bain reported this story on Wednesday, July 22, 2009 12:14:00

PETER CAVE: The Mayor of Palm Island is worried that swine flu will ravage the community and has
likened its living conditions - that's Palm Island's living conditions - to the poorer areas of
Mexico. Alf Lacey says the Government's approach to tackling swine flu isn't working for the
Indigenous population at Palm Island and that a large number of community members are getting sick.

In drafting its guidelines for swine flu, the Federal Government issued information specifically
targeted toward Aboriginal people. But one doctor says that Aboriginal populations need one to one
education.

Di Bain reports.

DI BAIN: Queensland health authorities say they don't know how many people at Palm Island have
swine flu but reports that 400 out of a population of 3,500 don't come as a surprise to the local
mayor Alf Lacey.

ALF LACEY: That's the most worrying thing for me, it's that in terms of, and certainly my council,
is that because of the close knit community of Palm Island and how we live and things like that,
then certainly I wouldn't be surprised that we'd reach those, we'd reach those numbers you know.

DI BAIN: Yesterday 19-year-old Palm Island local Alma Palmer contracted the virus and had to be
airlifted to hospital in nearby Townsville. She was pregnant and has lost her baby.

The head of Queensland Health Jeanette Young wasn't available to be interviewed for The World Today
on the topic. Mr Lacy says he's worried more people will get sick and health authorities aren't
being forthcoming with information.

ALF LACEY: When we look at our living conditions and we have in excess of about 15 people living in
a three bedroom home, which you wouldn't find that in mainstream communities you know.

DI BAIN: The Federal Government issued its swine flu guidelines in June. It followed advice from
the World Health Organization which put Indigenous populations at high risk.

The Australian Medical Association's Andrew Pesce says that means Aboriginal groups should have
immediate access to Tamiflu.

ANDREW PESCE: They did present with flu like symptoms, then the medical people caring for those
patients should consider early administration of antivirals such as Tamiflu to minimise the chance
that they come down with a very severe variant of the disease.

DI BAIN: Mr Lacey says he only found out that Tamiflu was available at Palm Island on Monday and
he's concerned other locals who can't read or write have no idea about the virus.

ALF LACEY: Given our living condition, and I'll keep on coming back to our living condition, and
our social standards typically on Palm and a lot of Aboriginal communities across the country, then
naturally we may end up in a situation where, like the poverty stricken communities in Mexico, you
know, where their people were more vulnerable - you know the South American Indians, you know,
certainly who are Indigenous people.

DI BAIN: Queensland Health says it's set up flu clinics at Palm Island to treat residents.
Authorities are no longer counting how many people present with the flu, instead they're keeping
numbers on admissions to hospital and deaths.

Professor Michael Gracey is a paediatrician who represents the not-for-profit group Unity of First
People of Australia.

He says pandemics like swine flu have the potential to ravage many remote communities in Australia
and often the Government takes the wrong approach to getting its warnings out.

MICHAEL GRACEY: That's a very good point that the mayor has made, and it is very important also for
mainstream health professionals, in other words Western doctors and nurses and public health
officials, to communicate better that perhaps the best way to get messages across to these high
risk people, like Indigenous communities and the high risk groups within Indigenous communities
that I've identified, are one on one.

PETER CAVE: Professor Michael Gracey, ending that report from Di Bain.

Damning report on Queensland Police

Damning report on Queensland Police

Annie Guest reported this story on Wednesday, July 22, 2009 12:18:00

PETER CAVE: Twenty years after Queensland's watershed Fitzgerald Inquiry that exposed systemic
corruption in the Queensland Police Force, a new report has uncovered misconduct with the potential
to undermine the entire criminal justice system.

An investigation by the state's independent crime watchdog has implicated 25 police in misconduct,
mostly surrounding the handling of an informant. The report reveals confidential police information
has been misused, an informant has paid police and officers themselves have offered criminals
rewards for confessions.

There are also suggestions that police dipped into money intended to help solve crimes for their
own use.

Annie Guest has just been to a press conference with the police commissioner, she's joined us now.
Annie, what did the commissioner have to say in response to this damning report?

ANNIE GUEST: Peter the characteristically quietly spoken commissioner Bob Atkinson said he took
full responsibility for the problems revealed by the watchdog, and those issues outlined in the
Crime and Misconduct Commission's report that was tabled in Parliament today include, implicate 25
officers in misconduct.

A lot of it is surrounding dealings with a criminal informant and there are also suggestions that
an officer raided funds for... that officers raided funds for their own use and those funds had
been provided by banks to fight bank-related crime.

And the police commissioner said that of the 25 people implicated, three have been charged, 11 left
the service during internal police investigation, and 11 remain actively in service.

BOB ATKINSON: Sadly in nearly all of these cases, the officers started out with the intention of
solving serious crimes, but along the way they lost their way, and then for some of them, what was
a bad situation was made worse by them not being completely forthright, honest and frank about it,
and in fact by lying.

PETER CAVE: Queensland's police commissioner Bob Atkinson. Annie, what were the problems that the
crime watchdog uncovered in relation to the criminal informant, and what do we know about him?

ANNIE GUEST: Peter the prisoners name is Lee Owen Henderson and he's jailed for serious crimes, and
it was found that police had been dealing with this man, who more than 10 years ago it had been
publicly revealed and it was widely known that he was not to be trusted, that he was not a reliable
police informant.

And it's been found that police were again, several police were again dealing with this man. And
when I asked the police commissioner how this could happen, he said he'd only received the report
this morning and was still going through it but that it's little more than police erring, going
outside standard procedures.

He said that this is, there is no comparison to be drawn to pre-Fitzgerald Inquiry days in
Queensland but that these are serious problems that have been dealt with.

PETER CAVE: Has the Government had anything to say about this?

ANNIE GUEST: Yes the Police Minister Neil Roberts attended the press conference with the police
commissioner and he said that despite the commissioner taking responsibility for the problems, he
didn't want Bob Atkinson to resign and he has faith in the service.

NEIL ROBERTS: These matters that have been reported by the CMC are very serious and of great
concern, there's no argument about that. However I think the Queensland public can be reassured
that we have a very robust accountability framework in place. I don't believe that there is
systemic corruption from the service.

PETER CAVE: And that was Queensland's Police Minister, Neil Roberts.

Nationals Leader rejects talk of ETS amendments

Nationals Leader rejects talk of ETS amendments

Emma Griffiths reported this story on Wednesday, July 22, 2009 12:22:00

PETER CAVE: The Opposition Leader Malcolm Turnbull has been lying low this morning and has so far
let-slide a blistering attack from one of his own MPs - the Liberal backbencher Wilson Tuckey.

But not so the National Party Leader, Warren Truss. He's stepping up to back Mr Tuckey's stance
that the Government's emissions trading scheme should not be passed - even with Coalition
amendments.

Earlier this week, Mr Turnbull appeared to leave open the possibility of amending and then passing
the Government's scheme. Mr Tuckey says that's not what the Coalition party room agreed to do and
he's called his leader both arrogant and inexperienced.

The Nationals say there is no way they'll support the scheme, even if knocking it back gives Labor
a trigger for a double dissolution election.

Emma Griffiths reports from Canberra.

EMMA GRIFFITHS: The Government's plan to address climate change is set to go to a vote in the
Senate next month. The Liberal Party says it won't vote for the emissions trading scheme as it is,
but the Opposition Leader Malcolm Turnbull hasn't ruled out attempting to amend the legislation and
then pass it.

That's triggered a spray from his own backbench. Wilson Tuckey has sent an email to his party room
colleagues attacking their leader and rejecting the ETS in any form. On ABC Local Radio in Brisbane
this morning, one member of the Liberal party room, the Queensland Senator George Brandis,
dismissed Mr Tuckey and any talk of division.

GEORGE BRANDIS: Just because Wilson Tuckey decides to send out an ill-tempered email and express it
in language so belligerent that it's bound to get a headline, that doesn't constitute a split in
the Liberal Party.

EMMA GRIFFITHS: And like Malcolm Turnbull, the deputy Opposition leader Julie Bishop has spoken of
the need to change the laws too.

JULIE BISHOP: The question of the Government scheme will depend upon whether the Government listens
to the valid concerns from business who are warning that the scheme is flawed, and they've turned
to the Coalition to try and fix the Government's flawed scheme.

EMMA GRIFFITHS: It's not clear whether that means bringing on amendments this year or rejecting the
Government's legislation and announcing the Opposition's own version of a trading scheme.

What is crystal clear is the National Party's rejection of the current legislation. The Nationals
Leader Warren Truss says any amendments would have to amount to wholesale changes to the scheme
because, like Wilson Tuckey, he believes it's a job destroyer.

WARREN TRUSS: Well he raises concerns about any suggestions that there are amendments that can be
made to make this Labor CPRS scheme acceptable. The Nationals have said right from the beginning
that this scheme is unacceptable, that it would be very damaging for Australian industry, and it
won't deliver any environmental benefits, and so we remain opposed to Labor's CPRS.

EMMA GRIFFITHS: So if your Coalition partners, the Liberal Party, suggested some quite substantial
amendments to this legislation, is there anything they could do that would win over the National
Party votes on this?

WARREN TRUSS: Well it would have to be very, very substantially changed before the National Party
could even contemplate supporting an emissions trading scheme of this nature. We will not support a
scheme that costs Australian jobs, we won't support a scheme that delivers nothing for the
Australian environment and we won't support a scheme that is way out of kilter with what's
happening in the rest of the world.

EMMA GRIFFITHS: The Prime Minister Kevin Rudd has been quick to point out that the Coalition's
division makes it impossible to negotiate over ETS, though the Opposition says it's never even had
an offer to sit down with the Government.

KEVIN RUDD: It's virtually impossible because you don't know where they're coming from, and it
changes all the time. We've got a responsibility and a mandate from the Australian people from the
last election to act on climate change.

EMMA GRIFFITHS: Rejecting the scheme twice in the Senate would give the Government a substantial
trigger for a double dissolution election. Wilson Tuckey states in his email that he can think of
no better issue upon which to campaign. But given Malcolm Turnbull's poor polling, that's unlikely
to be an opinion shared by many of his colleagues.

It's irrelevant to Warren Truss who says the principle is more important than avoiding an early
poll.

WARREN TRUSS: We have principles, we have issues that we stand up for, and if we want the public to
support us in an election, whether it be a normal routine election in two years time, or some kind
of contrived double dissolution, then the public will want to be sure that we're standing up for
things and that we will deliver better outcomes for the country.

EMMA GRIFFITHS: Senior Liberal sources have told the ABC that the Coalition will have a solid
position within the next few months. And they believe that their strategy of waiting to see what
the rest of the world does will eventually win over the electorate.

PETER CAVE: Emma Griffiths reporting.

NAB raises money as bad debts rise

NAB raises money as bad debts rise

Sue Lannin reported this story on Wednesday, July 22, 2009 12:26:00

PETER CAVE: The National Australia Bank has gone back to the market in the hopes of raising nearly
$3 billion. The bank says that it wants to build a buffer which includes cash on hand for small
acquisitions and to cover bad loans.

It made $900 million in the three months to June but took a $1 billion hit on bad debts. Woolworths
is also reporting good news with another rise in sales. But BHP Billiton says it's been a
challenging year.

Finance reporter, Sue Lannin.

SUE LANNIN: Australia's big banks are among the least popular businesses in town for refusing to
cut interest rates in line with official reductions. But that policy has helped their bottom line.
The National Australia Bank says it made $900 million dollars in the three months to June.

That's even though it had to write off around $1 billion for bad and doubtful debts (B&DD) - loans
and investments that have gone wrong. The chief executive Cameron Clyne expects bad loans to get
worse.

CAMERON CLYNE: At a total group level, B&DDs also continue to increase, reflecting the challenging
environment. The B&DD charge for the June quarter was 1 billion and 64.
Eight-hundred-and-fifty-nine million of this related to specific charges on which around one third
were a small number of exposures - predominantly in NAB Capital and the Australian business bank.

Most of the deterioration came from a small number of large exposures in the NAB Capital institute
and NAB corporate portfolios, but as the credit cycle progresses we expect this will move into SME
(small and medium enterprises). The retail portfolio is expected to lag the rest of the book.

SUE LANNIN: Speaking to analysts at a briefing this morning, the bank's executives denied the plans
to raise $2.7 billion from a share sale were to cover possible losses from bad investments made by
NAB Capital.

It's the second time the bank has gone to the market in the past year. Cameron Clyne says the money
raised will fund small acquisitions and cover the rise in bad debts.

CAMERON CLYNE: The raising also provides a meaningful buffer to accommodate increased volatility
within certain capital items while allowing us to maintain business momentum. While market
conditions have shown some improvement, we remain cautious on the outlook.

We also want to provide a buffer for potential adverse impacts of recent tax case developments
should provisions be taken.

SUE LANNIN: He says the bank is on the hunt for new opportunities, like its recent purchase of the
Australian arm of investment company Aviva.

CAMERON CLYNE: The current environment provides a unique opportunity for us to take market share.
We're seeing significant opportunities in the SME and institutional segments to grow our business
at attractive returns. We are hiring between 150 to 200 additional bankers, with over 125 to date,
to enable us to take advantage of the customer dislocation that's arising from peer mergers, and
exit of other players in the market.

SUE LANNIN: One company that seems to be recession proof is retailer Woolworths. Sales rose nearly
8 per cent in the fourth quarter and increased 7.5 per cent over the year to nearly $50 billion,
helped by food and liquor sales.

Chief executive Michael Luscombe says he's pleased with the result.

MICHAEL LUSCOMBE: We obviously faced a unique and remarkable year both in the global economy and
also in the Australian economy, and I'm delighted today to announce another solid result in a year
of what could be described as somewhat one of turmoil and the one where we had the Australian
Government step in and help the retail industry.

SUE LANNIN: Michael Luscombe says the results were also aided by the company's customer loyalty
programs.

MICHAEL LUSCOMBE: There's no doubt that every day rewards assisted there, and I guess we're seeing
a little bit more since the advent of the Qantas frequent flyer program.

SUE LANNIN: Big miner BHP Billiton has been hit by the global slowdown. But it says annual
production remains solid in the fourth quarter despite a big drop in demand. Iron ore production
fell 10 per cent, largely because of delays caused by accidents and expansion work in Western
Australia.

Resources analyst Gavin Wendt says the results were expected.

GAVIN WENDT: I think it was a very solid result and I think it was warmly received by the market. I
think however it was pretty much in line with what the market was expecting; the market was
anticipating better production performances pretty much right across the board from the company.

PETER CAVE: Fat Prophets resource analyst Gavin Wendt ending that report by Sue Lannin.

Downer says radicalism in Indonesia has no quick fix

Downer says radicalism in Indonesia has no quick fix

Peter Cave reported this story on Wednesday, July 22, 2009 12:30:00

PETER CAVE: Indonesian police have revealed that they believe one of the suicide bombers who
carried out last week's attacks on the Marriott and Ritz Carlton hotels was Nur Said also known Nur
Hasbi.

He is a former student at the Madrasah, or religious school run by the notorious cleric Abu Bakar
Bashir at Solo in Central Java. Bashir has been described as the spiritual advisor of the Bali
Bombers and the alumni of the school where Bashir still lives include three of the Bali Bombers,
the man who drove the truck which exploded at the Australian embassy in 2004, and several others
linked to terrorist incidents in Indonesia, Singapore and the Philippines.

The former Australian foreign minister Alexander Downer has long urged Indonesia to act against
Bashir. I spoke to him this morning.

Mr Downer, I was in Jakarta a few years ago when you announced at a conference what then was
regarded as a fairly radical proposal to pour money into the Madrasahs in order to modernise them
and de-radicalise them; has that program been bearing fruit do you think?

ALEXANDER DOWNER: I think it's too early for it to bear fruit; I think eventually it will, there's
no question of that. This is really to build new religious schools, not to put money into the
existing Madrasahs, and so AusAID, I don't know how many they've built now, but AusAID have built
several of these schools coming under the auspices of the ministry of religious affairs and also
education, so that it has a core mainstream curriculum but also some religious teaching as well.

So it's a way of maintaining, if you like, an element of religious education but mainstreaming it
and keeping radicalism out of that sort of education.

PETER CAVE: When do you think it will start working?

ALEXANDER DOWNER: Well I don't think it's going to, if you like, bear fruit for several years until
children have really gone through these schools and you get a new generation of people who've had
some religious education but have had proper education as well and that they're able to go out and
get proper jobs.

The problem with the Madrasahs is that they teach them nothing except religion, which OK that's
fine, although it's a very extremist form of religion they teach them, but they have no capacity to
get jobs on the back of that. I mean they're not taught arithmetic and literature and all the
normal things people are taught in schools, they're just taught about the Qur'an and other sort of,
religious derivations of the Qur'an and nothing much else.

PETER CAVE: Do you think that Indonesia under Susilo Bambang Yudhoyono is serious about ending the
role of these religious schools as breeding grounds for suicide bombers?

ALEXANDER DOWNER: Well I think they have been but this just takes a lot of time. I mean one of the
questions is whether they've done enough about the likes of Abu Bakar Bashir, and one or two other
religious leaders of that kind.

The trouble is that the laws are a bit lax in terms of dealing with extremism, and the reason for
that is that the Government has been nervous about inflaming the situation by being too radical.
For example we had discussions with them, it must be four or five years ago now, about banning
Jemaah Islamiah.

They've always been nervous about that because they say if you do that sort of thing, you take that
sort of action, it will make the situation worse not better. In general I think there's, their
judgement has been pretty much right, and you know, I would have said until last week they've done
a really exceptional job in fighting terrorism and in particular reducing political support for
terrorist organisations.

And for, if you like, radical Islam, they've done very, very well in that respect. But of course
we've seen what we've seen last week, and that's perhaps much more to do with somebody like Noordin
Top is still on the loose, than a failure of overall Indonesian policy.

PETER CAVE: Well let's look, as you've mentioned Abu Bakir Bashir, his school in Solo is still
operating, why is a place like that allowed to operate?

ALEXANDER DOWNER: Well I mean, I think that is a fair question and the answer to that is that
they're worried that if they just close down those sorts of places that it will lead to an
incitement of radical feeling and in particular would build up support for those sorts of groups
out of sympathy.

It's a hard judgement to make, I mean I would have thought after what we've seen last week there'd
be a strong case for closing a school like that, and there'd be a strong case for taking more
radical action against Abu Bakir Bashir. But that's been the explanation they've given.

PETER CAVE: What is Australia doing in Indonesia to combat terrorism? We know that the Federal
Police are there, we know that we're offering money for these Madrasahs, what else is it doing?

ALEXANDER DOWNER: Well I think the greatest contribution Australia has made is one we don't boast
about very much, it's the contribution we've made to tracking down and finding the people who've
been involved in terrorist organisations and breaking up their linkages into the Middle East and to
other parts of the region.

Obviously that hasn't been 100 per cent successful, but it has been pretty successful and a large
number of the detentions, arrests of extremists have been with the assistance of Australian
authorities over some years now.

So we've been able to provide a lot of help behind the scenes in that sort of a way, and yes it's
true, we've tried to put money into, if you like, moderate education institutions -or moderate
religious educational institutions - to try to divert people from the more extremist Madrasahs into
those institutions.

And as I've said that sort of work is a long term-project, that's not a short-term project.

PETER CAVE: Mr Downer, without landing us both in jail, who's carrying out these sort of
operations?

ALEXANDER DOWNER: Well, the Australian Federal Police have been doing an excellent job as is well
known.

PETER CAVE: And some other agencies as well, is that what you're saying?

ALEXANDER DOWNER: Well I mean, you know, particularly here focus on the Australian Federal Police,
obviously it's important that all of the resources of the Australian Government are brought to
bear, and they are.

PETER CAVE: Could we do more without getting the Indonesians offside do you think?

ALEXANDER DOWNER: Well I'm not sure that we so much can do more, I mean I think unfortunately this
is just a long and grinding campaign, there is no, if you don't mind the metaphor in this context,
silver bullet. There's no one single thing you can do just to wipe out this problem, I mean there
are people who hold these beliefs.

And more than that, and I think this is something people understand, don't understand - they're
prepared to die for their beliefs, and they're prepared to die as martyrs, they know that they're
martyrs. And so consequently it's very hard to put a stop to it, and it's only through patience and
time that you will eventually do that.

PETER CAVE: The former foreign affairs minister Alexander Downer.

Japan's Prime Minister Tara Aso prepares for a tough election

Japan's Prime Minister Tara Aso prepares for a tough election

Mark Willacy reported this story on Wednesday, July 22, 2009 12:34:00

PETER CAVE: Japan will go to the polls next month in an election the pollsters confidently predict
will end the country's system of virtual one-party rule.

Deeply unpopular, with his approval rating hovering in the teens, the Prime Minister Taro Aso has
taken the extraordinary step of apologising for his many gaffes and policy flip-flops.

But few think it will be enough to save Mr Aso and his Liberal Democratic Party, which has enjoyed
50 years of almost unbroken rule.

For voters, Japan's recession-hit economy looks like being the number one election issue, as North
Asia correspondent Mark Willacy reports from Tokyo.

(Sound of cheering)

MARK WILLACY: With cheers of "Banzai!" or long life, members of Japan's Lower House heralded the
start of an historic election campaign; historic because if the polls are right, this election will
put an end to one of democracy's most successful political parties.

And the man likely to lead the Liberal Democratic Party into the wilderness has acknowledged that
he's on the nose with the Japanese public.

(Sound of Taro Aso speaking)

"Our party must accept the public criticism," says the Prime Minister Taro Aso. He then went on to
apologise for what he called his own "lack of competency" and for the trouble it had caused the
Liberal Democratic Party.

(Sound of Aso shouting angrily)

But at a meeting of the ruling party, a few of the Prime Minister's own MPs took a swing at their
leader, criticising him for failing to consult them about the timing of the poll.

Even before Taro Aso called this election there was a concerted effort to oust the gaffe-prone
Prime Minister; it failed after some uncharacteristically deft manoeuvring by Mr Aso.

(Sound from LDP launch)

After an unofficial campaign launch, the Prime Minister called a press conference to begin his
pitch for election.

(Sound of Taro Aso speaking)

"I dissolved the Lower House to ask the voters what they want," says Taro Aso. "For my part, I
promise the voters that I will put the economy back on track, I will take responsibility," he says.

(Sounds from DPJ launch)

Across town, the man the polls say is a shoo-in for the Prime Minister's job was also launching his
bid for power.

Like his opponent Taro Aso, Yukio Hatoyama is the grandson of a former prime minister.

With his strange shock of upright hair, the 62-year old Hatoyama is thought to be the richest man
in Japanese politics, with his financial assets estimated at $22 million.

And his Democratic Party of Japan is appealing to the hip pocket of recession-hit voters, promising
to waive tolls for expressways and to introduce a monthly child care allowance of $340.

(Sound of Hatoyama speaking)

"Only a change of power can help Japan," says Yukio Hatoyama. "Our party will fight this election
with a sense of mission that will be remembered in history. We will break the grip of the Liberal
Democratic Party and the bureaucracy," he says.

Reform of the political system and the bureaucracy is certainly something many Japanese voters have
been yearning for for years.

But with Japan's economy contracting more dramatically than any of its major competitors, people
here also want some hope for their financial futures.

(Sound of man speaking)

"The politicians need to wake up and think how people like me are coping in this recession," says
this unemployed man. "They need to fix the economy and help us out of this mess," he says.

(Sound of cheering)

And while many in Japan already cheer a long life, more and more people want the politicians to
deliver them a better life.

This is Mark Willacy in Tokyo for TWT.

China's Pacific aid secretive and erratic

China's Pacific aid secretive and erratic

Meredith Griffiths reported this story on Wednesday, July 22, 2009 12:38:00

PETER CAVE: For the past few years China has been rapidly increasing the amount of aid that it
gives to Pacific Island nations. Last year it was $253 million across the top of the table, making
it the second largest donor in the region after Australia.

But a new report from the foreign policy think tank, the Lowy Institute, says that China's aid
program is secretive and so erratic that it makes long-term planning for the region difficult. And
the report's author, Fergus Hansen, says China may have miscalculated by helping to prop up the
military regime in Fiji.

He told Meredith Griffiths that China treats the details of its aid program as a state secret.

FERGUS HANSEN: The problem with the secrecy is that it inhibits donor coordination so that other
donors don't know what China's doing, which has the potential to lead to duplication for example,
and from recipients it has also, there's evidence it leads to a suspicion among them that China
might be over-quoting the cost of the project it's building, forcing them to take out larger loans
than is in fact necessary.

MEREDITH GRIFFITHS: So what it China's aid strategy in the Pacific?

FERGUS HANSEN: For several decades China has been trying to win back the countries that recognise
Taiwan, and that's led it into an approach to aid giving its focus to very much on the short-term.

MEREDITH GRIFFITHS: You described China's aid pledges in this region as erratic; how is that
different from the aid programs from Australia or from the USA?

FERGUS HANSEN: We tend to take on long-term programs such as trying to improve health care delivery
or improve education services over a long period of time, and those sort of commitments mean that
we're in there giving comparable amounts of aid each year.

If you look at China's aid by contrast, it's very sporadic and it tends to focus on one-off
projects. For example if you look at aid to Micronesia, in 2008 its pledge (inaudible) was worth
just 28 per cent of the amount it had promised the previous years, and it really means that for
these governments it's very hard to rely on Chinese aid or to look at long-term development
strategies.

MEREDITH GRIFFITHS: Isn't Australia, isn't the US, aren't those countries also motivated by their
domestic agendas when they're deciding some of their aid priorities?

FERGUS HANSEN: Definitely, every country has national interests that are at least to some extent
underlying their aid programs, but I just think, even if you look at China's long term interest in
the Pacific, it's not really using its aid program to address them.

MEREDITH GRIFFITHS: Can we talk a bit about the relationship between China and Fiji; what's going
on there?

FERGUS HANSEN: China and Fiji were in discussions over a large soft loan worth $US150 million, but
it was only after the coupe that China concluded the deal. It then followed with another large soft
loan that was worth about $US83 million. I think it's really gone beyond what normal relationship
management would require and has really, sort of, quite unusually over engaged Fiji.

MEREDITH GRIFFITHS: You've referred to that as a miscalculation by China, where do you think it has
gone wrong?

FERGUS HANSEN: Well I think if you look at Bainimarama's support in Fiji, it's quite small, his
credibility has really been undermined by the fact he hasn't shown any attempts to try and
implement his reform agenda, and on top of that if we look at past coupe leaders in Fiji, his
ongoing leadership is not by any means a guaranteed proposition.

MEREDITH GRIFFITHS: How is China's aid program changing the way international relations work in the
Pacific region?

FERGUS HANSEN: China's aid is really quite commercially minded. The OECD (Organisation for Economic
Cooperation and Development) has set up guidelines for aid giving. China has decided to give aid
outside of that framework, sensibly because it sees them as Western standards.

The problem with that of course is that there's a reason why those standards have been developed in
the first place. We saw for example, aid givers loading up many very poor countries with enormous
loans to the point at which they finally broke under the rate of the repayments of those loans.

China is still continuing as we see in the Pacific to give very large loans to countries, some
cases up to 22 per cent of their entire GDP in one loan. It's in a sense jeopardising some of the
development benefits we've seen in recent years.

PETER CAVE: Fergus Hansen from the Lowy Institute speaking to Meredith Griffiths.

Dubai fraud suspects pursued by Gold Coast developer

Dubai fraud suspects pursued by Gold Coast developer

Rachael Brown reported this story on Wednesday, July 22, 2009 12:42:00

PETER CAVE: Two Australian businessmen charged with fraud in Dubai are now also being pursued by a
developer back home.

Victorian Matt Joyce and Marcus Lee from Sydney, have helped manage the Dubai Government-owned
Nakheel, a property development company.

They were charged with fraud on the weekend; the details of the charges are yet to be revealed.

Now, a Gold Coast developer is considering civil action against them.

But the men's lawyer says they're merely scapegoats for the ripples of the global financial crisis.

Rachael Brown reports.

RACHAEL BROWN: Matthew Joyce and Marcus Lee have been working for Nakheel, which has developed
Dubai projects like Palm Island and The World, which can be seen from space.

All these men have seen for the last six months however, is the inside of their tiny jail cells.

The two were detained in January amid bribery allegations, spent seven weeks in solitary
confinement and they've only recently been charged with fraud.

The exact details of the charge are not yet clear; the prosecution summary is in Arabic and won't
be translated until later this week.

Despite the sketchy details, Gold Coast developer Sunland Group, which purchased land on the Dubai
Waterfront development, has complained to Australian authorities about the men, and is expected to
take civil action to try to recover losses from their alleged crime.

In a statement Sunland says:

EXCERPT FROM STATEMENT (voiceover): Sunland understands that the charges relate, at least in part,
to the purchase by one of its subsidiaries of a site from the Dubai Government owned master
developer Nakheel at Dubai Waterfront in October 2007.

The company has been assisting the authorities in Dubai with their investigations since December
2008.

RACHAEL BROWN: Sunland would not respond to questions put to it by The World Today but the Fairfax
press reports it's made formal complaints about Mr Joyce and Mr Lee to the Queensland Police and
the Australian Competition and Consumer Commission.

EXCERPT FROM STATEMENT (voiceover): Sunland has taken steps to report the action of certain
individuals to the Australian authorities and we are investigating civil remedies in respect of the
alleged fraud

RACHAEL BROWN: Matthew Joyce's Melbourne lawyer, Martin Amad, says Sunland's gripe might have more
to do with sour grapes over its failed business venture, and finding answers for its shareholders,
than any illegality.

MARTIN AMAD: First I've heard of it. And I can't begin to image what it is that they are going to
complain about.

What I am able to say about the allegations that are being investigated in Dubai is that this is a
legitimate business transaction, whereby Sunland purchased a parcel of land from Dubai Waterfront,
so we have experienced and sophisticated property developers engaging in a legitimate business
transaction.

I cannot for the life of me begin to imagine what complaint Sunland would have, but having said
that, I do understand that Sunland have lost a lot of money after the purchase of this parcel of
land, after the global economic crisis and they've written down the value of that property
significantly in recent announcements to the ASX. So there may be indeed an ulterior motive behind
this, I just don't know.

RACHAEL BROWN: And can you foresee any jurisdictional issues? These men work in Dubai but Sunland
says they do have scope for potential legal action because negotiations were held in Australia.

MARTIN AMAD: I can say unequivocally that there were no negotiations between Matt Joyce and Marcus
Lee and Sunland that took part in Australia.

PETER CAVE: Melbourne lawyer Martin Amad, ending that report by Rachael Brown.

New Zealand sets up a taskforce to bridge the wage gap between Australia and NZ

New Zealand sets up a taskforce to bridge the wage gap between Australia and NZ

Kerri Ritchie reported this story on Wednesday, July 22, 2009 12:46:00

PETER CAVE: Australians are on average about a third richer than New Zealanders, which seems a bit
unfair seeing our Kiwi cousins work more hours than we do.

The New Zealand Government has established a special taskforce to come up with ways of closing that
income gap.

It's aiming to have New Zealanders enjoying the same high living standards as Australians by 2025.

New Zealand correspondent Kerri Ritchie reports.

KERRI RITCHIE: In the past four decades, a big gap has emerged between the pay packets of New
Zealanders and Australians.

It's the main reason why tens of thousands of kiwis keep crossing the Tasman each year.

Don Brash is the chairing the new taskforce, which he hopes will bridge the wage divide.

DON BRASH: I said that if we didn't reduce that income gap we ran the risk of being a distant
Tasmania to the Australian mainland.

KERRI RITCHIE: The New Zealand Prime Minister John Key has described the wage gap as a "serious,
long-term systemic problem".

Don Brash led the National Party before John Key and believes pay parity is the key to keeping more
Kiwis at home.

DON BRASH: For more than 100 years New Zealand and Australia had broadly similar levels of income
standards and in the 70s and 80s we dropped off the pace. Through the 90s we were growing at about
the same pace as Australia, but of course that didn't reduce the gap at all which had emerged
previously.

KERRI RITCHIE: Mr Brash says incomes in Australia are now about a third higher and the taskforce
will find out why.

DON BRASH: It appears that Australia has more capital per worker than New Zealand does, and their
next question was, why is that the case? Is it something about the regulation system here or the
tax system, which explains that the Australian worker can produce more in an hour than the average
New Zealand worker can?

KERRI RITCHIE: You might have a few cheeky Australians saying they are just smarter?

DON BRASH: (Laughs) Yes you might have that indeed. I'm not sure that'd be terribly much much
scientific evidence for that.

KERRI RITCHIE: The leader of New Zealand's ACT Party Rodney Hide believes pay parity with Australia
can be achieved in 16 years.

RODNEY HIDE: The reason that we've set this as a goal with Australia, it's something that New
Zealanders can relate to because we love beating Australia.

KERRI RITCHIE: But some aren't too happy about Don Brash's appointment.

New Zealand's Opposition Leader Phil Goff described it as a "Trojan horse" set up by the National
Government to push through privatisation.

PHIL GOFF: Don Brash's views are well known on that. He has been very frank about his support for
privatisation and a right wing ideology to govern the direction this country moves in.

KERRI RITCHIE: There're also some grumblings about the cost.

The task force will be given almost half a million dollars over the next three years.

Don Brash says it's good value for money.

DON BRASH: It'll be very good value indeed if we succeed in pointing out some ways in which we can
achieve this faster growth. Everyone will benefit from that enormously.

KERRI RITCHIE: He says New Zealand might be small but that's no reason why incomes can't be bigger.

DON BRASH: Wealth is not well correlated with the size of the economy. You've got lots of very
small affluent economies, think of Singapore, think of Switzerland, think of Denmark and so on,
Ireland; those countries are prosperous, more prosperous than New Zealand, they're also quite
small.

People have said, but look we can't ever catch Australia because of course Australia has a huge
wealth of minerals, and of course Australia does, but there's not much correlation between mineral
wealth and overall national wealth either. You think of again countries like Japan which have got
virtually no mineral resources but has income well above New Zealand. Singapore again is another
good example; no minerals, no natural resources to speak of at all and yet income levels well above
New Zealand.

PETER CAVE: The former National Party leader Don Brash, and it was one of his predecessors Robert
"Piggy" Muldoon who said that immigration of New Zealanders to Australia improved the IQ of both
communities.

China and India in awe of solar eclipse

China and India in awe of solar eclipse

Sally Sara reported this story on Wednesday, July 22, 2009 12:50:00

PETER CAVE: Hundreds of millions of people were plunged into darkness today as the 21st Century's
longest and most spectacular solar eclipse passed over the world's two most populous countries. The
solar eclipse saw a 250 kilometre wide corridor of darkness pass first across India and then onto
China.

The ABC's South Asia correspondent Sally Sara watched the eclipse from the banks of India's sacred
River Ganges at Varanasi, where superstition and science did battle amongst the millions who came
out to see the spectacle.

Sally Sara, you are standing there on the banks of the Ganges; what was it like this eclipse?

SALLY SARA: It was remarkable. We came down just after 4am this morning and already there were
already thousands of people, many of them barefoot, converging on the banks of the River Ganges,
coming down in the darkness through the streets.

A lot of the pilgrims dressed in orange, coming down to get their share of the river. The crowds
just grew and grew and grew, and then obviously the light started to change and people chanting,
and prayers intensified in the build up to the eclipse itself.

But just enormous crowds. I don't think I have even been amongst so many people in such a confined
area in my life.

PETER CAVE: Just describe to us what happened as the sun disappeared behind the moon shadow.

SALLY SARA: The change in the light was remarkable, there was just a tiny bit of golden light and
lots of people were in rowing boats out on the Ganges, so they were gradually put into silhouette
and then so quickly it just went completely black and there were cheers from the crowd, people had
their arms up in the air, facing towards the sun chanting.

It was just so much faster than I think a lot of people had imagined. There were some French
tourists standing next to us and I was watching the lady there, she burst into tears as it went
into darkness and just hearing this hum of humanity as people are chanting and praying and then
once the totality of the eclipse ended and the sun re-emerged there were cheers from the crowd.

A lot of people here were very frightened by the eclipse, people are quite superstitious, so there
was a lot of emotion from the pilgrims who come here to this holy place on such a holy day, and a
day that really does still bring quite a bit of fear to people. So I think many people were
actually quite relieved when the sun came out again.

PETER CAVE: What sort of superstitions are involved there?

SALLY SARA: It was interesting Peter, last night on Indian television channels, some of the
channels had panels of guests which included traditional people, astrologers, and then scientists,
and people were phoning in with questions about whether pregnant women could be outside today when
the eclipse was on, what would happen, and it was a real battle between superstition and science as
these various panel members gave their advice as to what happens.

Even some middle class people today, it was reported in the paper, would be, if they could avoid
it, avoid giving birth today, mothers giving birth, so if they're able to induce the birth early or
hold on today and wait for caesarean or other tomorrow they were doing that, so some people were
quite afraid.

PETER CAVE: What's so particular about this eclipse?

SALLY SARA: This eclipse is going to be the longest eclipse of this century, and more than that
it's expected to be one of the most viewed eclipse events in history simply because the path of
totality, the stripe if you like which is plunged into total darkness, goes across some of the most
heavily populated places in the world, not only here in India - starting off on the west coast,
going through places in Gujurat, then Bhopal and here in Varanasi - but of course it then goes onto
China, for hundreds of millions of people will see this event before it fades out over the Pacific
Ocean.

PETER CAVE: Our South Asia correspondent Sally Sara.