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Rudd asks Yudhoyono to intercept boat.

ELEANOR HALL: To reports that the Australian Government employed the highest level of intervention
to stop a large group of asylum seekers from arriving in Australia.

The West Australian newspaper has reported that Australia's Prime Minster Kevin Rudd rang
Indonesian President Susilo Bambang Yudhoyono at the weekend and asked the Indonesian President to
prevent a boatload of 260 Sri Lankan asylum seekers from entering Australian waters.

Mr Rudd today confirmed that he did speak to the Indonesian President about the recent earthquake
and about people smuggling, but he refused to divulge whether he made a personal plea for action.

Not long after that phone call though, the Indonesian navy sent four warships to intercept the Sri
Lankan asylum seekers.

From Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: The boatload of 260 Sri Lankans was detained off Krakatoa Island in the Sunda
Strait between Java and Sumatra on Sunday while trying to make its way to Australia.

But until now the events leading up to the interception by Australian police and the Indonesian
navy weren't known.

According to The West Australian newspaper, Kevin Rudd called Indonesian President Yudhoyono on
Saturday night, telling him that Australian Federal Police and intelligence agents learnt a vessel
was to head for Australian waters. Soon after Australia's Defence Force started working with the
Indonesian navy to pinpoint the boat.

The Prime Minister's confirmed the call, that the two discussed the recent earthquake tragedy and
people smuggling, but nothing else.

KEVIN RUDD: We have a range of communications with the Indonesians at all sorts of levels. The
business of diplomacy is not to go to the detail of communications with the Indonesians or with any
other foreign government. That is the right way to conduct diplomacy. I repeat what I said however,
I make no apology whatsoever for working as closely as I need with our Indonesian friends and
partners to get the results we all need in terms of illegal immigration.

ALEXANDRA KIRK: The World Today has been told the reason Mr Rudd's saying so little is that he's
treading carefully, not wanting to be seen as quote "lording it over" the Indonesian President
who's assisted Australia.

The source says over the past few weeks the two countries have cooperated and exchanged information
at a very high level after Australia recently increased the number of Federal Police working in
Indonesia. There's a view the boat originated in Malaysia and then steamed to Indonesia.

The World Today sought interviews with the Home Affairs Minister Brendan O'Connor and Immigration
Minister Chris Evans, but neither was available.

Former immigration minister, now Opposition backbencher, Philip Ruddock, says his government
repeatedly tried to get Indonesia to detain and process asylum seekers. He doubts Kevin Rudd's
success will be long lasting.

PHILIP RUDDOCK: While we might desire Indonesia to ensure that people en route to Australia don't
travel, and I would think that if that occurred it would be a desirable outcome, I suspect that
while Indonesia will offer cooperation it won't be possible for them to detain all of the people
that are seeking to come.

ALEXANDRA KIRK: Why don't you think Indonesia would be willing to continue this sort of approach if
it just has heeded Prime Minister Kevin Rudd's plea this time?

PHILIP RUDDOCK: You have to have in place comprehensive arrangements. You've got to have facilities
to be able to detain people, you've got to be able to ensure that people are available for
processing and I don't think that Indonesia is willing to embark upon the comprehensive
arrangements that we saw in the 1970s when they did that at Galang. And while I think the offers of
cooperation will be there and will appear to be genuine, I think the follow up will be flawed.

I mean, what the Howard government found was that if you were going to have control of your borders
and you had to manage it through the program initiative that you put in place domestically, and
while they're difficult public policy issues, the fact is - and that's the reason that the Rudd
Government has been unwinding them - the reason we've lost control of our boarders now is because
those measures; returning of boats, mandatory detention, Pacific solution, offshore processing,
temporary protection visas - all of these measures have been unwound and the people smugglers are
back in business.

ALEXANDRA KIRK: Why wouldn't Kevin Rudd be able to strike a new deal on immigration cooperation
with President Yudhoyono?

PHILIP RUDDOCK: I would like to think it was possible. It would be the equivalent of Rudd's Pacific
solution (laughs). He mightn't like the term but that's what it would be. You're asking Indonesia
to detain and enable people to be processed offshore, where Australia and the international
community would play a part in resettling those found to be refugees, where you'd have to put in
place comprehensive arrangements to return those who are found not be refugees. I mean that's what
it involves. Experience suggests that that degree of follow up would be unlikely to occur.

ALEXANDRA KIRK: The Prime Minister says he doesn't take anything Mr Ruddock says seriously.

KEVIN RUDD: It seems to be that Mr Ruddock was also that minister who said that asylum seekers had
thrown their kids overboard. I therefore place zero credibility on anything Philip Ruddock says
about anything since that time. In one fell swoop he destroyed his credibility to make comments on
this issue.

ELEANOR HALL: And that's the Prime Minister Kevin Rudd, ending that report from Alexandra Kirk in
Canberra.

And the Federal Government has just revealed that an Australian navy boat operating under the
Border Protection Command intercepted other boat yesterday north-west of Ashmore Island.

It says early indications are that there are 56 people on board including two young children, and
they'll be sent to Christmas Island for security, identity and health checks.

Asylum-seekers still a concern: survey

ELEANOR HALL: In its annual survey of Australians' fears and perceptions of the world, the Lowy
Institute found that asylum seekers do remain a concern for the majority of Australians.

The survey was conducted in July this year and was released this morning in Sydney. It also
indicates that many Australians still have little understanding of countries in our region.

The survey was conducted by the Lowy Institute's Fergus Hanson. He joined me in the World Today
studio and I began by asking him what his survey revealed about Australian attitudes to asylum
seekers.

FERGUS HANSON: Well it did show quite a high level of concern when people were asked are they
concerned or not concerned about asylum seekers coming to Australia by boat? Seventy-six per cent
of people said they were concerned either somewhat or a great deal. So quite a significant level
there, quite a surprising level of concern about this.

When they're asked to rank it in terms of a threat or a concern with other priorities it falls down
quite significantly, but when, just by itself, there is certainly quite a high level of concern
there.

ELEANOR HALL: Is that higher than at the time of your last poll?

FERGUS HANSON: It tends to stay very stable that question. It's, so a slight increase there but
it's not sort of a staggering increase.

ELEANOR HALL: Now your poll indicates a number of areas where there seems to be a sort of
disjuncture between government policy and public opinion - there's asylum seekers, there's climate
change dropping down the list of priorities for the public despite the major policy focus on it,
then there's the economy. Did these results surprise you?

FERGUS HANSON: It's quite remarkable when you consider that we've just come out of the worst global
economic crisis since the Great Depression that 86 per cent of Australians feel optimistic or very
optimistic about Australia's economic performance over the next five years or so, and that's
actually the highest level of optimism we've ever recorded in the five years we've asked this
question, so really quite surprising.

ELEANOR HALL: And what's your sense of this disjuncture between government policy and public
opinion; do you think that government has a responsibility to reflect public opinion?

FERGUS HANSON: I think the importance of public opinion polling like this is that it sets bounds
and holds up a mirror both to society to see where Australian public opinion is but also to policy
makers really shows boundaries where it's quite difficult to move outside of. And in some sense I
think that's quite good and in other areas I think it can constrain us, so for example, we're
seeing a bit of a division now amongst the Australian public on attitudes towards China and I think
if those attitudes start to harden it could be quite difficult for the Government to act in China
and some areas for example in foreign investment.

ELEANOR HALL: What did you discover about Australians' attitudes to China?

FERGUS HANSON: Well it's really interesting about China is there's an overwhelming sense that China
is important to us economically. Sixty-three per cent of Australians said it was the most important
economy to Australia out of China, the United States and Japan. Now that doesn't really reflect the
facts on the ground because Japan is our largest trading partner, our third largest source of
investment so by rights it should probably be at the top there, but in fact only six per cent of
Australians thought it was the most important economy. So China...

ELEANOR HALL: Only six per cent?

FERGUS HANSON: Yeah. So China looms very large in terms of the economic perception of its weight
and influence in Australia. But besides the economic factors and a sense that China is rising,
there's an emerging division I think.

We asked people whether they thought China was or would become the leading power in Asia and 95 per
cent thought it would but those people were almost evenly split between people who were comfortable
about that and people who were uncomfortable. You had 40 per cent of people this year saying
China's rise was a critical threat to Australia's vital interests.

In terms of a military perception as well there was a large minority that thought China would be a
military threat or could be a military threat in the next 20 years but there was a majority, just a
majority, that thought it was unlikely. So an emerging sense that there's a bit of a split there
and an uncertainty about what the implications are of China's rise.

ELEANOR HALL: So is fear or apprehension about China increasing?

FERGUS HANSON: In our threats question, when we first asked the question about development of China
as a world power, do they see that as a critical threat or not, initially it was only 25 per cent
of people who said it was a critical threat in 2006. This year it was up to 40 per cent.

ELEANOR HALL: What are the biggest fears now for Australians?

FERGUS HANSON: The biggest fears in terms of threats is actually proliferation. It comes in as
number one.

ELEANOR HALL: Nuclear proliferation?

FERGUS HANSON: Exactly. And that's right at the top of the list and statistically in a dead heat is
international terrorism. Now the international terrorism I think isn't quite so surprising because
the field dates for the poll coincided with the attacks in Jakarta.

ELEANOR HALL: And you surveyed the levels of trust in regional powers. Indonesia still comes way
down the list. Is that because you conducted the survey at the time of the Jakarta bombing?

FERGUS HANSON: Well I think it's a bit more than that because if you look at our feelings
thermometer as well, Indonesia consistently gets a very lukewarm rating, this year at 49. So
there's a real blind spot there I think in the Australian public in terms of the, what's happened
in Indonesia in recent years - the democratic transition, the booming economy, the very close and
growing government-to-government links - but the majority of Australians don't trust Indonesia to
act responsibly in the world which is quite surprising.

ELEANOR HALL: And yet we're increasingly warming towards the United States?

FERGUS HANSON: Well that's been an interesting phenomena all of itself. The US has really rebounded
in Australia. People at the end of the Bush era were talking about decades or even a century before
the US would be able to recover the ground that had been lost in terms of its international
reputation but here in Australia, we're really talking about new record highs for feelings towards
the US - 83 per cent of people trusting the US to act responsibly in the world somewhat or a great
deal.

It's the most trusted country out of the seven on our list. Attitudes towards the ANZUS alliance
again at record highs and it's quite interesting to contrast that with the slight cooling that
we've seen in feelings towards China.

ELEANOR HALL: It's interesting that we still see the United States as our security saviour in the
next 20 years despite the fact that we're in the midst of an economic crisis which began in the
United States and there's a lot of talk of the United States' power declining in the world.

FERGUS HANSON: Yeah it's very interesting. Part of that could be the uncertainty in the, with the
power transitions going on in Asia. Part of it could be, of course, I think is the change in
administration in the White House.

ELEANOR HALL: Do you get a sense that Australians are any more comfortable with our position as a
nation here in Asia? We seem to be seeking very close links with powers like the United States.

FERGUS HANSON: Yeah it's very interesting looking at our attitudes towards different Asian
countries because in some sense we're very aware of the emerging powers for example, China and
India, but there are also some very curious blind spots and I think Indonesia is one of them.

Korea is another one where we have, it's our third largest export destination, it's a fellow
democracy and you would expect it to rate a little bit warmer on our thermometer scale but it
scores at sort of a 50, at a lukewarm sort of level.

And another country on our list that seems to be a bit of a blind spot to Australia is our largest
trading partner Japan, where only six per cent of Australians see it as the most important economy
to Australia at the moment.

ELEANOR HALL: Fergus Hanson thanks very much for coming in.

FERGUS HANSON: Thank you very much.

ELEANOR HALL: That's the Lowy Institute's Fergus Hanson, who conducted the institute's survey,
Australia and the World: Public Opinion and Foreign Policy.

Study finds students feel safe

ELEANOR HALL: Foreign students have rated Australia as the safest place in the world to study in a
survey of 6,000 students from eight countries.

That's despite the recent international media coverage of attacks on Indian students in Australia.

The survey results on Australia's $12.5 billion education export industry were released at an
education conference in Sydney today.

Bronwyn Herbert was there.

BRONWYN HERBERT: Despite the negative reports of bashing and abuse, Australia has topped a poll on
international student safety.

TONY POLLOCK: We surveyed some 6,000 students around the world, including 1,100 students in India.
The main purpose was to found out how they thought about Australia in comparison to other English
speaking destinations.

The somewhat surprising result and indeed promising result is that they believe Australia to be the
safest destination of all the English speaking destinations and by quite a margin. I must say I'm a
little surprise that that's still holding so strongly in India, given all the publicity that we've
had over the last three or four months about safety and security in Australia.

BRONWYN HERBERT: Tony Pollock is the chief executive of IDP Education, which commissioned the
study.

The survey also revealed that students ranked the United States and Britain far above Australia in
terms of educational prestige.

Australia topped the rankings in access to student visas and permanent residency.

But Tony Pollock says with government changes made to the visa process, this is likely to impact on
future recruitment numbers.

TONY POLLOCK: It is making the visa process somewhat longer and somewhat more cumbersome for
students, so we suspect that that's going to have some negative impact over the next few months.

BRONWYN HERBERT: Tony Pollock says IDP, which works with 400 institutions across Australia and
takes in 35,000 students, is bracing for a big drop in Indian student enrolments early next year.

TONY POLLOCK: In our India offices we're expecting our 2010 February intake to be down by about 50
per cent. I would say this is not entirely due, in my view, to the discussion about safety and
security. There are other factors at work as well. We have the GFC (global financial crisis) which
has obviously impacted upon families in India and that's evident by the fact that the applications
for other countries are way down, particularly the United States.

BRONWYN HERBERT: The survey results were released today at the opening of the Australian
International Education Conference, where more than 1,300 people are attending.

Professor Michelle Barker is a Professor of Management at Griffith University. She says the survey
results are good news for a change.

MICHELLE BARKER: That's wonderful that students are recognising, and parents particularly when
they're sending their children overseas to study, that they'll say, yes they can get on with the
study when they're there, that their personal safety is not going to be compromised.

BRONWYN HERBERT: Cassandra Colvin is the manager of International Student Support at Murdoch
University.

CASSANDRA COLVIN: What's happened in the last year is you will have noticed that there's a lot more
engagement now between institutions and the broader community, such as police, and that was really
in response to recent issues and that's all improved student experience.

BRONWYN HERBERT: Dr Amanda Daly is an academic developer from the University of South Australia.

She says universities are now recognising much more needs to be done in educating local students on
integrating with their foreign counterparts.

AMANDA DALY: Particularly, my work is focused a lot on the local students and encouraging them to
develop the intercultural competence. At Uni SA we work on a graduate attribute of
internationalisation and we encourage all students to develop intercultural competence and
international perspectives. So I think it's very important that our local students develop the
skills to know how to interact with the incoming students and that in turn impacts on their career
development.

BRONWYN HERBERT: IDP Education says despite the short-term shocks in enrolments, it's still
predicting eight per cent growth in the next year.

ELEANOR HALL: Bronwyn Herbert reporting.

Telstra hits back at separation plan

ELEANOR HALL: Senior executives from Telstra have hit back at the Federal Government this morning,
saying its plan to split the company is unnecessary and damaging.

They were addressing a Senate Inquiry in Melbourne to explain their reasons for rejecting the
Government's demand that they voluntarily separate Telstra's retail and wholesale arms.

In Melbourne, Simon Lauder reports.

SIMON LAUDER: It's about a month since the Communications Minister Stephen Conroy made Telstra the
type of offer it couldn't refuse but it has refused it and now a Senate committee is scrutinising
the bill that dictates what the consequences will be.

Telstra was asked to voluntarily separate its fixed-line copper network from its other businesses,
or lose the option to acquire any new wireless spectrum, which is essential to deliver the next
generation of mobile phone services.

This morning Telstra's executive director of regulatory affairs, Dr Tony Warren, hit back at those
who argue separation has been a success in the UK and New Zealand.

TONY WARREN: Well, it's been a success if your objective is to hamstring the incumbent. I think the
pretty clear outcome is that it's harmed shareholders. It's harmed consumers.

SIMON LAUDER: Senior Telstra executive Geoff Booth delivered a long list of reasons why the
Government's plan is a bad one.

GEOFF BOOTH: It will impede the achievement of the national broadband network vision, reduce
competition, especially in the mobile and media markets, harm consumers, particularly those in
rural and remote Australia, it will not necessarily result in industry reform, it will provide the
ACCC with expanded powers, unparalleled in any other industry and it could destroy value for the
1.4 million share holders who have purchased Telstra shares from the Government over the past 12
years.

SIMON LAUDER: Mr Booth argues forcing Telstra to run its wholesale and retail businesses separately
would require products to be switched from one system to another and then possibly another when the
broadband network is up and running.

He estimates the process would cost $1 billion and could lead to chaos around Australia.

GEOFF BOOTH: Multiple migration does significantly add to the risk of customer service and billing
programs, with millions of customers involved. It does really magnify the potential for some chaos.

SIMON LAUDER: One of the main arguments for separating Telstra's wholesale and retail arms is to
ensure the company doesn't favour its own retail customers over its rivals, who rely on its
wholesale services.

Dr Tony Warren says Telstra's IT system is already being upgraded so the company can prove that all
customers are treated equally. He says that's a better plan than breaking the company up.

TONY WARREN: We have to take what Telstra's done and break it and give part of it to open reach,
part of it to wholesale and part of it to retail. At the moment we're saying, well a better way is
to keep it whole and ensure its equivalence.

SIMON LAUDER: Having rejected the Government's ultimatum to structurally separate, Telstra's future
as an integrated company is now at the mercy of the Senate. As it stands the bill would enforce
functional separation with new competition rules.

Even then Telstra would have to offload its 50 per cent share of the Foxtel pay-TV group and the
network that carries Foxtel.

Dr Warren says the Government's plan will harm all mobile phone and pay-TV users.

TONY WARREN: Taking us out of the upgrade path, the 4G market would basically reduce competition in
that market and particularly reduce competition in that market for rural and regional consumers for
whom we are the only network.

And then secondly, in the Foxtel space, clearly if we were forced to divest Foxtel, it's most
likely that a media player would be the company that would acquire that. How a greater
concentration of media can be in a consumer interest, we have not seen a good argument for that.

SIMON LAUDER: While Telstra is keen to link its arguments with the Government's plan to build a
national broadband network, its rival says that's a red herring.

Optus' general manager for economic regulation, Andrew Sheridan, also faced the Senate committee
this morning.

ANDREW SHERIDAN: Whilst the NBN (national broadband network) is an important consideration, this
reform package stands on its own. It addresses problems that exist in the market today and impact
all users of telecommunications services.

SIMON LAUDER: Mr Sheridan points to limits to the services available and the prices charged for
them as evidence the current regime is failing Australian businesses.

ANDREW SHERIDAN: The reform package will deliver the foundation for a more competitive fixed line
market, an outcome that will benefit all 22 million Australians.

SIMON LAUDER: The Senate committee is due to report in less than a fortnight.

ELEANOR HALL: That's Simon Lauder reporting.

Corbett appointed Fairfax Media chairman

ELEANOR HALL: The recent boardroom acrimony at Fairfax Media appears to have been settled today
with the appointment of Roger Corbett as the company's new chairman.

The former chief executive of Woolworths and Reserve Bank board member replaces the Melbourne
businessman Ron Walker.

Mr Walker lost out in a power struggle with the Fairfax family.

But Mr Corbett, who until today was Fairfax's deputy chairman, has received only a qualified
welcome from fund manager Peter Morgan, who still questions his lack of hands-on media experience.

Mr Morgan, whose 452 Capital owns 5 per cent of Fairfax, spoke to our business editor Peter Ryan.

PETER MORGAN: The important thing going forward for Fairfax is that the board and management team
work closely together and as one and the disunity that's been portrayed over the last 10 weeks or
so is put to bed and forgotten about.

I mean, Fairfax has been a company that for 15 years has been littered with poor management, poor
acquisition decisions and underneath all that it's still got some very important and very valuable
mastheads in the Sydney Morning Herald and The Age.

But as I said, the board has to work together with management and management has to work together
with the board as one to take this company forward.

PETER RYAN: Do you believe Roger Corbett has the credentials to bring unity to the board and to the
company and to create more confidence for investors?

PETER MORGAN: Well I would have preferred someone with some media standing. When you look at the
board of Fairfax today, there's not a lot on it with regards to media standing.

Of the ones that are available Roger's perhaps the best choice. He did a terrific job at Woolworths
taking it from a share price of $5 to well into the 20s. His acquisition strategy was very much
focused within Australia if there was any acquisitions made at all he grew the business
organically.

And I think, you know, he does bring to the Fairfax board some integrity, but as I said, the most
important thing for Fairfax going forward is the management team are one, given that the balance
sheet is still, you know, carrying a reasonable amount of debt.

PETER RYAN: Do you think that Roger Corbett will have problems to deal with given that he was
associated with Ron Walker who was ousted as chairman?

PETER MORGAN: Well as outside shareholder looking in, you've just got to hope that those problems,
if that's the right word, are gone. Ron Walker and Roger were as one, as you would expect any
chairman and director to be.

There is obviously issues that will still be there with regards to the Fairfax family but, you
know, one can only hope as a shareholder looking in that those management problems are brought to
rest, because I do believe the Rural Press management team is a very strong management team. It is
what Fairfax needs but having said that, you know, the worry that we've had is that, you know, the
board starts digging in, it feels a little bit with regards to that management team.

PETER RYAN: Would you have preferred to see John B. Fairfax as chairman?

PETER MORGAN: Possibly. I mean, possibly but you would have, you would have had maximum disunity at
the board level. You know, I think both J.B. Fairfax and Brian McCarthy, and even Brian Cassell
who's the finance director there, proved themselves as Rural Press.

I mean they took a company from nothing to something. It was taken over by Fairfax at a very good
price, it had an outstanding record, and you know, J.B. had some credentials to take over as
chairman.

PETER RYAN: And Roger Corbett was doing investor presentations or meetings, I gather, over the past
few weeks. Did he impress you?

PETER MORGAN: I think, you know, Roger's track record at Woolworths stands itself in good stead.
The problem that we have always had is that Roger and the previous chairman were closely aligned.
We want this company to fully recognise its position. It needs unity at a board level and at
management level, and the two are intertwined obviously.

So, you know, our biggest concern is coming from the fact that we were not always convinced that
Roger could work with the Rural Press management team that's now funning Fairfax.

PETER RYAN: So now he's seen as the peacemaker for Fairfax?

PETER MORGAN: Well hopefully we do have peace, and I mean, you know, the company can deliver what
it's always potentially had to deliver over the last 20 years.

ELEANOR HALL: That's Peter Morgan of 452 Capital, speaking there with business editor Peter Ryan.

British PM told to repay expenses

ELEANOR HALL: The British Prime Minister has been asked to repay $22,000 in parliamentary expenses.

An independent audit of MPs' expenses revealed that Gordon Brown had claimed for the cost of
cleaning his second home and for gardening expenses.

The expenses rorts scandal which was exposed earlier this year continues to disgust voters, as
Europe correspondent Emma Alberici reports.

EMMA ALBERICI: Every member of the British Parliament came back from the summer recess to find a
letter in their pigeon hole from Sir Thomas Legg. The former civil servant had just completed a
seven month review of the discredited expenses system. They were either given the all clear, asked
to explain a claim, or to pay back money.

Downing Street confirmed that the Prime Minister had been asked to reimburse the Parliament to the
tune of $22,000. The sum represents excessive claims on bills he'd submitted for cleaning,
gardening and general maintenance on his second home.

At his party's annual conference, Gordon Brown had committed to cleaning up the system.

GORDON BROWN: But there are some who let our country down, and never again should a Member of
Parliament be more interested in the value of their allowances than the values of their
constituents.

(applause)

And never again should it be said of any Member of Parliament that they are in it for what they can
get. All of us should be in Parliament for what we can give.

EMMA ALBERICI: All three of the party leaders in Britain will now be giving something. Nick Clegg
of the Liberal Democrats - $1,500 in over claimed gardening expenses. The Conservatives' David
Cameron - an explanation for his claim for mortgage interest.

The Tory leader was trying to take the moral high ground, even though his own party has paid close
to half a million dollars back into the public purse, including $1,500 for repairs to David
Cameron's second home - things like clearing wisteria and vines from a chimney.

DAVID CAMERON: Right from the start I said that Members of Parliament needed to pay back money,
that's why in the Conservative Party we set up the scrutiny panel, and I've said to my MPs,
everyone must take part in this new process, must respond to the letters and must of course comply
with the eventual determination of how much money is paid back.

EMMA ALBERICI: After months insisting she'd done nothing wrong in claiming for her second home, the
former home secretary Jacqui Smith was told that she had clearly breached the rules. A
parliamentary watchdog forced her to apologise for designating the apartment she occasionally
shared with her sister in London as her first home for the purposes of expenses.

This allowed her to claim $110,000 worth of expenses on her family home in Redditch in the UK's
midlands region.

There was also the matter of the pornographic film her husband claimed on his wife's parliamentary
expenses account.

JACQUELINE SMITH: I want to apologise unreservedly to the House, as I have to my constituents, for
wrongly claiming for the cost of films, alongside my broadband and cable connection.

EMMA ALBERICI: It was a harrowing day for the Prime Minister just months out from a general
election. He wanted to show that he was reining in the budget deficit, which at $310 billion is the
biggest in the advanced world.

But while he was talking about asset sales, jokes were flying about whether more money might be
raised if MPs simply paid back their false expense claims.

ELEANOR HALL: That's Europe correspondent Emma Alberici.

Teen bomber kills dozens in market.

ELEANOR HALL: As the world awaits the official outcome of Afghanistan's election this week, a spike
in violence in neighbouring Pakistan has added to the regional tensions.

In the latest incident a teenage suicide bomber killed more than 40 people overnight when he flung
himself at a military convoy passing through a busy market in the country's north-west.

At least 116 people have been killed in a series of blasts and attacks over the last week and as
the military gears up for a major assault on the Taliban heartland.

Barney Porter reports.

BARNEY PORTER: The latest attack occurred in the north-west district of Shangla, when a 13-year-old
suicide bomber, on foot, struck a paramilitary convoy passing through a crowded bazaar.

The blast then detonated ammunition in some of the trucks.

Six soldiers were among the 41 people killed; the rest were civilians. Around 45 others were
injured.

One of Yosuf Khan's relatives was wounded in the attack.

YOSUF KHAN (translated): After the blast people were running everywhere and there was also firing.
We were looking for our relatives. We saw some people who had lost their hands and some had lost
their legs.

BARNEY PORTER: It was the fourth violent incident in a week.

The spate of attacks began when a suicide bomber blew himself up inside a heavily guarded United
Nations aid agency in the heart of the capital Islamabad, killing five staff members.

On Friday, a militant detonated a car-bomb in the middle of a busy market in the north-western city
of Peshawar, killing 53*.

Then came last weekend's raid on Pakistan's heavily fortified army headquarters in the city of
Rawalpindi, in which nine militants and 14 other people were killed.

Pakistan's military spokesman, Major General Athar Abbas, says the militants' aim in that raid was
to seize senior army officials and trade them for jailed comrades.

ATHAR ABBAS: Their target was to take hostage senior officers of the GHQ (General Headquarters) and
then place their demands of rescuing. The main demand was to take, they gave a long list of all
those who had been apprehended, the terrorists who are in our custody, the custody of the
Government, they wanted their release.

BARNEY PORTER: The attacks have come as the army prepares for an offensive against the major base
of the Taliban in South Waziristan - a rugged mountainous region bordering Afghanistan, and which
has always been outside direct government control.

It follows last April's campaign to clear the Taliban out of the Swat Valley.

The army has already claimed success there but many Taliban are believed to have simply melted into
rural areas or gone to neighbouring districts.

Dr Christopher Sneddon is a senior lecturer at Melbourne's Deakin University.

CHRISTOPHER SNEDDON: I think to some extent the Taliban is on the run but the great difficulty of
course is you can go in and get these people out of the area but they relocate to somewhere else
and the counter-insurgency operation is, yes, getting, clearing the area of the enemy but then
you've got to rebuild the area and you've got to keep the enemy out and that remains the problem
for the Pakistan army.

BARNEY PORTER: Now it has been reported that the Pakistan military intelligence had a hand in
creating the Taliban in the first place. Is not the hardline militia a fact of life for any
Pakistan government?

CHRISTOPHER SNEDDON: Yes it is, for the Government, and this is where we have to discriminate
between the Government and the military. The Government says the right things and I think they are
actually reasonably keen in terms of controlling the Taliban.

I think the army has a different agenda, or at least an agenda that doesn't always mesh with the
Government's and they would be using some of those assets, as they would consider them, for
operations in Afghanistan and some of those - Taliban they're now calling them - in southern Punjab
for operations against India either in Kashmir at the moment or in the future somewhere in India.

BARNEY PORTER: On that basis, Dr Sneddon is not hopeful of an end to the violence soon.

CHRISTOPHER SNEDDON: The future holds more instability. The Pakistan army which, through its
inter-services intelligence agency, was very supportive of the Taliban, has now lost control of
that organisation and they are trying to rein them in but that remains the issue. Do they want to
rein them in or do they want to obliterate them?

So it's a bit of a power struggle and all it is going to lead to in the future is more uncertainty
and more such instances. Maybe not at the level we're seeing at the moment but there will continue
to be incidences of militants taking on government officials or government organisations or even
the military, such as in Rawalpindi.

ELEANOR HALL: That's Christopher Sneddon, ending that report by Barney Porter.

*EDITOR'S NOTE: The audio version of this report incorrectly states the Peshawar death toll is 58.
The correct figure is 53.

Political brawl over Aboriginal gang

ELEANOR HALL: In South Australia, the Government and the Opposition are trading insults over what
should be done to control an Aboriginal gang.

Yesterday, as some gang members appeared in court, the state's Attorney-General called them "pure
evil" and beyond rehabilitation.

Today the shadow Attorney-General took her own rhetorical swipe.

But a senior Adelaide criminologist says all the politicians are doing is encouraging the gang
members by giving them greater celebrity.

Michael Vincent has our report.

MICHAEL VINCENT: South Australia's current marketing pitch to the world is that it's a "brilliant
blend" - a place of culture and ideas.

But the state goes to the polls in five months and a law and order debate has broken out in
Adelaide.

MICHAEL ATKINSON: We are dealing with an evil phenomenon. We are dealing with a criminal gang,
gunmen, who go round in gangs hitting soft targets. This is about pure evil.

MICHAEL VINCENT: Attorney-General Michael Atkinson.

Not to be outdone, his Opposition counterpart Vickie Chapman.

VICKIE CHAPMAN: These are the children who are really little turds, let's be honest, they really
are difficult children and they have got all sorts of hideous backgrounds and they're nasty little
pieces of work.

MICHAEL VINCENT: And finally a talkback caller this morning on ABC local radio.

TALKBACK CALLER: The citizens of Adelaide, and I know in my own area, have been absolutely
terrorised, really, really terrorised. Now surely this gang is a mob of terrorists.

MICHAEL VINCENT: Members of this single gang have been accused of a five-week rampage that included
a dozen hold-ups and several home invasions.

Some of them are alleged to have taken part not long after being released from jail.

But South Australia has had some gruesome mass murderers in its time. If this gang of alleged
stick-up artists is "pure evil", how would those other criminals compare?

The Attorney-General was not backing away from his comments on ABC local radio this morning.

MICHAEL ATKINSON: They're using guns, they're bashing people with the butt of the gun, they're
putting their exploits up on Facebook and boasting about it, they have no conception that what
they're doing is wrong - yes they're evil.

MICHAEL VINCENT: But the Opposition has seized on his rhetoric, pointing out that the gang will
just add that to their webpage promoting their exploits.

VICKIE CHAPMAN: Worried about what's on Facebook now? This will be a badge of honour. This won't
resolve the problem. These are kids who are seriously disconnected, they're out there causing havoc
in the community and inciting fear in the general community and they do need to be treated. There's
no question about that and included in that is a penalty.

But having a piece of legislation which keeps them in there for two weeks longer or two months
longer of a sentence is not going to make a scrap of difference.

MICHAEL VINCENT: Dr Allan Perry has been a criminal law specialist at Adelaide University for 33
years.

He says publicity will just encourage the gang members.

ALLAN PERRY: Yeah look, I think it's understandable that people can both be frustrated and fearful
about this kind of behaviour but to talk in those sort of emotive ways doesn't improve the
situation at all. I'm afraid all it does is reinforce the extremely inefficient punishment paradigm
that has characterised the correctional system in South Australia for a very long time.

MICHAEL VINCENT: Does it also play into the hands of this gang and make them feel like they're more
notorious?

ALLAN PERRY: I certainly think that publicity given to it encourages them and for senior government
officials and Opposition officials to come out in this sort of way, yeah I think increases the
sense of celebrity that they feel and in that way, you know, encourages them and it certainly can't
be seen to be done for any sort of effective reason. It's been done purely for political reasons,
which is what so much of criminal justice policy is underpinned by and why overall it's so
ineffective.

MICHAEL VINCENT: South Australia goes to the polls on the 20th March next year.

ELEANOR HALL: Michael Vincent with our report.

Poker machine makers call for national standards

ELEANOR HALL: They've been blamed for all manner of social ills but the manufacturers of poker
machines say they're being unfairly stigmatised and that the industry is in fact working to
minimise problem gambling.

And they say they could do this more effectively and responsibly if state and federal governments
were to streamline the rules surrounding the machines.

Anti-gambling counsellors, though, remain unconvinced, as Timothy McDonald reports.

(Sound of poker machine)

TIMOTHY MCDONALD: The last time the Productivity Commission did a count, it found Australia has as
many as a fifth of the world's poker machines, depending on which ones you count.

The head of the Gaming Technologies Association Ross Ferrar says a more complete reading of those
numbers paints a very different picture.

ROSS FERRAR: That's nonsense. It has always been nonsense and as far as we're concerned it always
will be. Currently Australia has something in the order of two per cent of the world's gaming
machines. Now that's been independently researched every two years since 1999 and it's come up with
roughly the same amount.

That kind of statistic can generate an emotional response, when you say 20 per cent. When you say
there's 10 times as many machines in Australia as there actually are it leads people to think
things that they shouldn't be thinking.

TIMOTHY MCDONALD: It's 10 years since the Productivity Commission came out with their findings and
in that time manufacturers say they've been unfairly demonised.

The commission is currently taking a second look at gambling and manufacturers hope the community
and government response will be a bit different this time around.

But community groups and advocates are making their own submissions and say their sympathies lie
with problem gamblers rather than the industries that profit from them.

The Reverend Keith Garner is the CEO of Wesley Mission.

KEITH GARNER: We're packed to the gunnels with the number of people that we could see. We could see
as many as we have the money to deal with and we can't deal with any more.

Everybody that's involved in this industry knows that we're pressed to the very limit and the truth
is that studies in the past, and present studies, suggest that the people who gamble most are the
people who have the least.

I know we sometimes read in the newspapers about high profile people who lose a lot of money at the
tables but it's ordinary people with very little money that are losing the most.

TIMOTHY MCDONALD: But Ross Ferrar says emotional responses aren't helpful.

He says state governments are now burdening manufacturers with all kinds of rules, which are often
untested and may do very little to help problem gamblers.

He says recently, Victoria announced plans to mandate a new "pre-commitment" feature on machines,
which would force gamblers to budget more carefully.

ROSS FERRAR: But it hasn't been specified what pre-commitment is, so not only don't we know what
pre-commitment is but we have no way of ascertaining how to design, develop, test and submit for
approval, machines which incorporate pre-commitment.

Now we guess that it's a form of budgeting. Our members are very, very happy to design, develop,
test, submit, games and gaming machines that include budgeting for players, in fact it sounds like
a good idea doesn't it? But has it been researched? Not to our knowledge. Is it likely to help? We
don't know. If it doesn't help is it going to be removed? I doubt it.

TIMOTHY MCDONALD: The Gaming Technologies Association says there are too many jurisdictions with
different approaches to problem gambling.

Ross Ferrar says there's no national approach and that makes it more difficult for manufacturers to
create machines that reduce problem gambling.

ROSS FERRAR: One problem gambler is too many but, as in all gambling industries in Australia, they
are legislated and regulated by state and territory government and that's fine, we're completely
comfortable with that. We comply with everything that must be complied with and more but there are
different approaches and different interpretations of standards between states and territories and
that impedes using innovation to address the issues that need to be addressed.

TIMOTHY MCDONALD: The Reverend Garner says his organisation doesn't have an opinion on whether or
not a national approach would be better.

But he says the focus needs to be on what he says is an increase in problem gambling.

KEITH GARNER: They face the same issue everybody else does across a country with states and
Commonwealth issues, but what is true is that whatever state you're in and whatever place you're
in, the issue of gambling is on the rise, and so there needs to be a greater scrutiny about what is
allowed and what isn't allowed and for people like ourselves to speak quite clearly for those who
are suffering.

ELEANOR HALL: That's the Reverend Keith Garner from the Wesley Mission ending that report from
Timothy McDonald.

Dwarf race sparks controversy

ELEANOR HALL: To Melbourne now and Racing Victoria says it won't be a feature of next year's Spring
Racing Carnival, but its dwarf racing competition has infuriated Victoria's Racing Minister Rob
Hulls who says it's an embarrassment that will do nothing to promote the industry.

In Melbourne, Alison Caldwell reports.

ALISON CALDWELL: The dwarf's race at the Cranbourne Cup on Sunday in Melbourne's south-east was the
brainchild of Racing Victoria's marketing team and their online spruiker Tommy Little.

The race involved three dwarves dressed in jockey silks riding on the backs of three punters down a
50 metre course.

The aim was to promote Victoria's Spring Carnival.

LITTLE CUP JOCKEY: I'm very confident 'cause I'm the only girl, you know, I can't wait. It'll be
good.

RADIO PRESENTER: You've got a bit of a size advantage on these guys as well. Are you the lightest
of these three.

LITTLE CUP JOCKEY: I'm 47 kilos. So...

RADIO PRESENTER: How are you going Jeremy?

JEREMY HALLAM: Forty.

RADIO PRESENTER: Forty! Jeremy.

LITTLE CUP JOCKEY: But I've had two children.

RADIO PRESENTER: Now Arty, you look like you're ready, you look like you're chomping at the bit
ready to get into this race. Are you confident?

ARTY: I'm ready to ride. You know what I mean?

ALISON CALDWELL: But the race has sparked controversy on Melbourne radio and in newspapers today,
with some declaring the stunt offensive and unacceptable.

James Whitaker is with the group Short Statured People of Australia.

JAMES WHITAKER: It's just unacceptable and inappropriate because in a sense it's like we're back on
the stage there or back on the circus again trying to entertain. You know, not everyone has a
mature mindset. They may not think, well this is just a bit of fun. Sometimes that can carry over
into real life and yeah, I just think, as an association, we want to be treated, you know, I guess
the word is dignity. We want to be treated with respect and dignity.

ALISON CALDWELL: The SSPA was formed in 1968.

James Whitaker says the Little Cup has wound the clock back 40 years and stereotypes dwarves as
circus acts.

JAMES WHITAKER: Yeah, I was quite shocked. As far as I'm concerned, in this country anyway, for 40
years we've been trying to fight towards, we've been fighting for our motto "equality" for 40 years
now.

ROB HULLS: Well look there's often a fine line between a bit of fun and a silly stunt and I think
this falls into the latter category.

ALISON CALDWELL: Victoria's Racing Minister Rob Hulls says the race was an embarrassment.

ROB HULLS: I simply say, come on, this sort of entertainment is certainly not going to promote our
great Spring Carnival around the world. I mean the Midget's Cup for goodness sake. It's certainly
no way of promoting this great Spring Carnival right around the world, right around Australia and
right throughout Victoria

ALISON CALDWELL: After the race the three jockeys were asked if they enjoyed the meet.

ARTY: Guys, did we have fun today?

ALL: Yeah!

ALISON CALDWELL: James Whitaker says the race reminded him of last week's controversial red faces
skit in which contestants blacked out their faces to impersonate the Jackson Five.

JAMES WHITAKER: I see that as a direct parallel as to what's happening to the short statured
community with this particular stunt. So yeah, I think it's very relevant.

ALISON CALDWELL: Racing Victoria's marketing manager is Stuart Laing. He can't see the comparison
with the Hey, Hey it's Saturday skit.

STUART LAING: I can understand that people are trying to make the connection but I don't think
there's any connection whatsoever given that was about someone who's deceased and, you know, we
certainly weren't painting people's faces.

ALISON CALDWELL: Of course you would have noticed the view of the Short Statured People of
Australia which represents dwarves. They've said it's downgrading and that they want to be taken
seriously.

STUART LAING: Well look the people involved were consenting adults and took part of their own free
will and they certainly enjoyed what was involved in it. We understand that you can't please
everyone and if anyone's offended by the events of Sunday then we apologise to them.

Overwhelmingly, though, the feedback that we're getting is, hey, you know, this is a bit of
harmless fun, no harm done.

ALISON CALDWELL: Do you think you'll do it again next year.

STUART LAING: It's been done so there's no need to do it again.

ELEANOR HALL: The man who came up with the stunt, Racing Victoria's marketing manager Stuart Laing,
speaking to Alison Caldwell.