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Good Business Today for Australia Network. I'm Whitney Fitzsimmons. Coming up on the program - not accountable - GSK's boss denies he knew about the activities of Chinese executives accused of huge bribes. Confidence boost - Abe nomics is delivering much needed stimulus but can Japan's structural problems really be overcome? And renewed priority - Australia launches a fresh effort to secure a free trade agreement with China.Those stories coming up shortly but first let's take a quick look at the markets. On Wall Street there was a modestly lack lustre session.

For more on the market action I'm joined by Kris Weston from IG.There was a lack lustre session on Wall Street overnight. Why?I think we've got to turn to earnings. We saw some economic data coming out which was generally pretty up beat. But we have priced in a lot of good earnings. Last night we saw a lit of angst coming through, mostly from Caterpillar. Caterpillar has its fingers in lots of different parts of the economy and in emerging markets and China as well: They came out and downgraded their outlook as well. So I think that stock was down about 2.4% and I think that led the market down and the S&P closing down as well.There was some manufacturing and home sales data out there in the US. What did that show?It showed that housing continuing to be relative ly buoyant. There's been some disappointing number s in at the moment.We were at numbers show good expansion as the markets well. That was a flash iment numbers show good well. That was a flash region, that was above about 53

or so.Good expansion coming through. So both of through. So both of those helped by the US dollar and good selling out of US Treasuries and that rose on the 10-year basis point.Let's to Europe, the major markets there had a solid day of gains hitting about 8-week highs.Indeed. Really good gains coming through..They the index which I was looking at closely was Spain, we were seeing a really good increase in the Spanish equity market at the moment and the economy seems to be on the improvement. We're seeing job growth coming through there, we are seeing some of the excess in the housing market come off and the current account deficit turn into a surplus. But I think last night was about manufacturing: We saw manufacturing across the board in different countries and it all seemed to improve nicely there.What will be in store for local and regional markets today?A flat open: It will be an unexciting open here, we have market s trading up. We will see the MOF fund flows coming through at 10 to 10. That is very important for Abrahams nomics. We have just - Abrahams nomics.- Abe nomics. On the whole plet plety flat open across the board here today.Just briefly on commodities, oil and gold how are they trading?Both down heavy. Gold is trading down. Oil came off 1 or 2% trading just above 105 per barrel at the moment.Chris, thanks for joining us.Thank you.Now let's take a closer look at wlees what's happening with currencies and commodities.

Abrahams TAB Oil came off 1 or 2% trading just above 105 per barrel at the moment.Chris, thanks for joining us.Thank you.Now let's take a closer look at wlees what's happening with currencies and commodities.


The chief executive of drugs giant GlaxoSmithKline has insisted head office knew nothing about the alleged cash and sexual favours bribery scandal which has engulfed the company in China. Responding questions at the release of
group's half year results in London, Sir Andrew Witty refused to accept personal responsibility for crisis but he did promise a comprehensive investigation.The allegations made about people working for GSX appears we have set chamber and for me they are kiss apoinltszing. The alleged activities are not what we expect of our people and are totally contrary to their values: I can a shire you we are absolutely committed to rooting out corruption and we are committed to get to the bottom of what's happened here.GSK admitted on Monday that senior employees at its Chinese subsidiary appeared to breach Chinese law after authorities allege that employees official, pharmaceutical industry group, hospitals and doctor s to promote sales. Experts say the problem is not just confined to Glaxo.There's just systemic corruption problems in China's health care system, specifically in the pharmaceutical and medical device and diagnostic sect Organisation. This is a common problem, it's one of the more frequent issues that enoughs worry about. So I don't think it's likely that the fault only lies with these four executives.Sir Andrew conceded the bribery scandal which has claimed to have resulted in up to $500 million being channeled through travel agency also hurt the company's performance . GSK shares closed higher, though, in London trading.US President has kicked off a series of economic speeches outlining his administration's plans for growth and job creation.Making the first of his addresses to supporters in Illinois, Barack Obama challenged his political opponents in Congress to cooperate and work with him to spur America's economic recovery.It may seem hard today but if we're willing to take a few bold steps, if Washington will just shake off its complacency and set aside the kind of clash and burn partisanship that we have just seen for way too long, if we just make some commonsense decision, our economy will be stronger a year from now.It will be stronger five year s from now.It will be stronger 10 years in now.Barack Obama speaking there. Weekend elections in Japan have delivered the Conservative forces of PM Shinzo Abe control of both houses of Parliament and with it a rare opportunity to enact his plan for lifting the country out of the economic doldrums. The first stages of so-called Abenomics have already been implemented, with aggressive monetary re forms and fiscal stimulus. The next step is tax reform and labour market deregulation. But are we seeing a real turning point in Japan's economic fortunes?This restaurant in the heart of Tokyo made big news earlier this year. The a single tuna. Shelling out a record price for a single TRANSLATION: We made a successful bid to buy a 220 kilogram tunate a sta the start of the year. We paid $1.8 million for it. It was a happy occasion.You would think paying nearly $2 million for a single fish would mean that business was booming.Especially with the almost religious fervour being whipped up by the PM's audacious economic reform program, known as Abenomics. TRANSLATION: Do wow mean we pay that ror price because our economy has become better?? No, it had nothing to do with it. We just want our customers to eat delicious tuna.But one economist does believe that this sleek fish is the perfect barometer of Jap yoon's economic health. So he's developed what he called the mackerel tuna index. TRANSLATION: When we look at price, tuna is more expensive than mackerel so, I thought if people are eating more tuna, it's a sign of economic confidence.Since Mr Abe became PM there's been an up ward swing in the mackerel tuna index.Growth has surged to an annualised 4% in the first quarter of this year. Withagists attributing this rise to Abenomics and its program of aggressive monetary stimulus, fiscal spending and structural reform. But not everyone is a disciple of PM Abe's agenda.Everyone says he's pumped up the stock market and things seem to be positive.But the thing is he's done the easy things:Monetary easing, who is going to oppose that? Nobody.Spending money you don't have on fiscal stimulus, who is going to oppose that? Nobody. I Abenomics is suffering from the oppose that? Nobody. I think perception Abenomics is perception there's welfare for the wealthy.And it's in the wealthy.And it's Tokyo's posh department stores that Abe nomics is probably having its that having its biggest impact.Here in this department store some of the watches have price tag s of up of the watches have of up to $50,000. TRANSLATION: The number of watches we're sell ing isn't increasing but more customers are buying more expensive watching. Our best sellers used to be in the $5,000 to $8,000 range. But now watches priced at $10,000 and more are selling very well.Many of the people buying these watches have cashed in on Japan's surging share market. But for the vast majority their wages haven't risen in years. TRANSLATION: Because stocks are rising in the share market, we often hear about an economic recovery in the news. But we can't be optimistic about consumer confidence unless ordinary salaries rise. It comes down to an increase in wages:Back at sushi, tuna is But even though the mackerel tuna index may hints at a recovery, patrons here are not yet feeling it. TRANSLATION: People always talk about the improving economy. But my life hasn't improved at all. Nothing has changed. TRANSLATION: I can't see any change at all. I still need money for shopping and I'm not growing any richer at all.Buoyed by his weekend victory in tupper house elections, the PM can now forge ahead with the next stage of Abe nom yiblings by reforming the tax system and - Abenomics by reforming the tax system. Measures that are likely to bring him into conflict with members of his own Conservative Party.Now that he has control of both houses of the Daiet, there is no ex-deuces. He has
to deliver. Last time 2007 he wilted under the heat. Does he have a lot more backbone now? I guess we will find out.What effect will Japan's upper house elections have the on the nation's economy and to look at other global economic issues I spoke earlier to John Noonan, senior currency strategist with Thomson Reuters.John Noonan welcome back to the programGood morning.Abenomics, is this the turning point that we're - that we need 20 see in Japan's economic fortunes or his critics say he is doing the really easy thingsI would agree with the critic that he's done the really easy part of toff equation. He's done a good job doing the easy part. It's been tried before and he's been successful. So there is enthusiasm in Japan that wasn't there previously. However, the hard work is there to be done, restructuring the labour reformks making the workplace more flexible, he has agricultural reform rather than protecting the farmers they and
have to become more competitive and then of course we have the fiscal situation in Japan. Which has to be dealt with at some point. At some point they have to raise tax, at some point they're going to have to curb spending, do some long-term reform on Med kaed and things like that.So yes they have an ageing population, it's all ahead of them. Does he have the mandate?As we saw in Mark Willacy's story there, we have seen swings and things like the national tuna index.Yeah.Are those true indicators though, really, of where Japan is head?It's all part of the feel good factor. But these can be very temporary. There is some wealth effect in Japan right now. The stock market has come close to bubbling in - doubling in price in tix months - six months there is the wealth effect there.But it's not share market that's done that
too?.Yes, there.But it's not the only
share market too?.Yes, but probably the Nikkei has been the too?.Yes, but probably performer. The Nikkei has been underperformed other market s for many, many years during the moribund recession that Japan went through since the '80s. Yes, that is all passtive.But the structural reform is going to be a lot more important for the long-term.That unsustainability of Japan is very scary. Unless they get long-term sustainable growth by taking the really hard measures and taking the re forms needed to do so, this could end in tears, particularly as they are spending mr money right now building up their debt to far worse levels than seen in places like Greece or Portugal or Spain.So this is the hard part coming through. And there's a lot of sceptics as far as the mandate is concerned: Yes, it's true the Opposition is in tatters. But the very low turnout on the vote on the weekend means that only one in four eligible voters in Japan voted for the LDP and the Coalition. So will the push back within his own party, within the Coalition not allow him to take these tough measures. We will find out soon.As a political figure, Shinzo Abe, what is your reading of him? Do you think he will have the political will to really push forward with the difficulties now? Some people would do the difficult stuff first and then do the safer stuff later. He really needs to push forward now. Do you think he has that political willHe certainly seems to have come in the second time he's been PM. He's certainly come in this time a lot more robust, a lot more energetic, a lot more single minded as to what he wants to accomplish. He called it the three arrows. The third arrow will be the tough part. There's a lot of sceptics in Japan who say he also has very deep nationalistic urges as well. Will he, you know, divert some of his energies towards that, change the constitution building up Japan's military presence, et cetera.So it's really we're at an inflection point in Japan like in so many other point in Japan other places that will he carry forward, we should find out soon, the sceptics are forward, we should find soon, the sceptics are there
but there is also some hope that he but there that he might.We're also at an inflection point with China. We have had that PMI data that is out. It has fears of lagging growth there. Is that a concern of yours as well?Yes, it's a concern of everyones. We were getting some hope and some relief earlier this week and late last week when Japanese authorities - sorry, Chinese authorities started taking measures recognising that theyed had to do something about the slow ing growth in China. For a long time they seem to be quite sanguine about it, saying that we just have to accept lower growth, we have other things that to prioritise such as limiting credit growth, et cetera.So Chinese authorities are now aware that maybe this is slipping too far and the worry out there in the investor world is have the Chinese authorities left it too late. Sn is the snow ball rolling down the hill at a faster face than everybody thought so to begin with.Do you think they have left it too late?Job is ahead of them it Ice's very Cox plex. Not only are they facing slower growth. China has all the mean s to deal with that. Unfortunately the easier means which is easing monetary policy, fiscal spending, they also have a problem on the other side which is they have asset bubbles particularly in property, credit bubbles. Shadow banking system that is bigger than Ben Hur right now and all the moves that they can make to fire up the economy risk building those bubbles even more and the next PBOC adviser came out last night and said China is not in crisis at the moment but we're close to one.So that is what they're deal withing with right now. There's a lot of faith out there by the China bulls saying they will handle this, sew far so good.But if you look back in hitionry very few governments have been able to handle the situation that China's facing rite now.In fact the central Government have said they will intervene if it falls below 7.5% growth. What sort of intervention will they do?I don't think it will be monetary. The PBOC has been very pointed in saying that they do not want to feed the credit growth which has been out of control at the moment. They want to address the Shadow banking issue, et cetera. It will be very targeted stimulus. For instance they announced there's reporting they're going to increase infrastructure spend tong rail roads that sort of thing. But it would have to be very targeted. One of the reasons China has its problems right now, in terms of the property about demonstrating to the Australian people that the Coalition has thought this through and we will have the appropriate organisational and structural arrangements in place to ensure that we can meet this national emergency on our borders. We are announcing today that under a Coalition Government, we will swiftly implement operation Sovereign Borders. We will have the appropriate command and control structures. The operational structures. control of Operation Sovereign Borders will be in the hand of a 3-star military commander who will be reporting directly to the Minister for immigration under the overall supervision of the National Security Commitee of the Cabinet. We have to tackle this with the appropriate level of will and the appropriate level of organisation. It is a national emergency. This is one of the most serious external situations that we have taced in many a long year. - faced. That's why it must be tackled with decisiveness, with urgency, with the appropriate level of seriousness. That's why we need to have a senior military officer in operational control of this very important national emergency. I'm going to ask Scott now to detail the policy and then I'm going to ask General Moland to speak to the policy because he is one of the people who we have been consulting with in its preparation. Thank you, Tony and, thank you also General Molen for joining us here today. For the past almost four years since Tony asked me to take on the job as Shadow Immigration Minister, him and I have been working over this time to work through the details of what needs to be done to stop the boats and that has involved me going to many places overseas, to our off shore processing facilities and visiting our detention centres all around the count country, talking to people on the ground, talking to people who've had direct operational experience involvement in this area and this has been a process of years. In learning the lessons of Labor's failures, understanding the reasons for the success of the Howard Government's policies and how they can be made to work again but in all of that period of time, the one thing that stands out to me more than anything was the experience over captain Emad. What happened with Captain Emad is this people smuggler was able to sail into the country and fly out of the country with agencies looking each of them trying to agencies looking at each other, each of best but each of them trying to do their best but frankly under an operational command system that operational didn't enable them to get the best outcome. That's not something we can allow the people who are putting themselves in many ways in harm's way on a daily basis to be operating in this very difficult environment with this, as Tony says, this national emergency situation. We need to give them the clearest and the best way for decisions to be taken, for a chain of command to operate to enable them to do their best and to get the best outcome which is what they want to see as well. As I've moved around the country and particularly talked to people on the ground here, their frustration is one that they're doing their best but there is a real frustration in the way that all of these agencies frankly just are unable to coordinate and work together in the way that should happen so the Captain Emad story where this fellow pushed a shopping trolley around Canberra for years and then was able just to scoot out of the country because Customs and the AFP and DIAC simply weren't connected to each other, illustrated to me more than any one incident thought was fundamentally wrong with the operational implementational arrangements for how this Government has been running the show on these issues for some time. We saw a very similar situation with the Egyptian jihadist was that was behind the pool fence, again the lack of integration and connection and communication between agencies that contributed to that situation was significant. We saw it in the implementation issues around the failed Malaysian people swap, where they set their own 72-hour timeframe to get people transferred to Malaysia which they missed and resulted in an injunction being imposed after that 72 -hour timeframe was imposed. The stories go on and on and on and that's why we've decided to do Operation Sovereign Borders if we're elected to Government. To take you through it, I'm going to ask the guys at the back of the room to move them forward if they could for me. If we go to the first slide, the was fwoolingsed by Kevin Rudd when he was - what was abolished by Kevin Rudd when he was Prime Minister. This is what used to work. Turning boats back where they came from, specific solution abolished 2008, temporary protection visas abolished August 2008. The very simple and administrative single case officer review process for asylum climesclaims that did seepted these things drag on in the corts u abolished in 2008, a deterrence focus to regional cooperation was abolished by their regional processing framework in the Bali process of March 2011, detention wasfective ly detention wasfective abolished in November 2011 by this Government when they went to the widespread this Government when they to the widespread community
release program and access to the refugee review tribunal which was boolingszed under the Howard Government was restored under the Labor Government. What has it been replaced with and what hasn't worked? This is how many goes Labor have had at this. Firstly they extended the appeal rights and legal assistance in November of 2008 to those who are seeking asile anymore come to Australia illegally by boat. There was the Afghan and Sri Lankan asylum freeze which was announced by Kevin Rudd in April of 2010. That did want work. There was the famous East Timor solution before the last election, the last election fix we saw from Labor. July of 2010. The was the Afghan return solution in January 2011 which has seen less than half a dozen people actually forcibly returned to Afghanistan. There was the regional processing framework which I mentioned before which Foreign Minister Rudd and Minister Bowen hailed as being another landmark achievement which also didn't stop the boats. There was Manus island mach 1 in August 2011. When that was mooted again as a solution by this Government and we never never saw it after that election. There was the community release with work rights in November of 2011 which led to the sharpest surge in arrivals after that period of time. There was then providing full appeals to the refugee review tribunal which had previously been abolished under the Howard Government and therefore on to the Federal Court and that was done in March of 2012. Then there was the Malaysian people swap which we all remember only too well. The was the Houston panel, Houston expert panel arrangement which was put in place in August of 2012 and the boats have clearly kept coming and now we have the latest election fix from the Government which is the PNG arrangement which we already know is unravelling within days of its announcement as the core pledges and promise of that arrangement and not backed up in the text of the 2-page arrangement which doesn't even have the legal stand of the Malaysian people swap which was struck down by the High Court. What has happened is this, the boats have come and they've come from increasing number of nationalities, over 48,000 arrivals now undoubtedly will see that go to 50,000 in the not too distant future. If we look at what that record looks like, year on year, we have gone from just a handful of people turning up, around 2 per month back when this Government came to office and we're now at over an average of over 3,000 per month. Last year more than 25,000 people turned up illegally in Australia by boat, that is more than 5,000 more than the entire refugee than the entire refugee and
humanitarian settlement program even as expand ed under this Government. If we go to the cost, the cost of this, I think, shows it more than clearly. 85 million when this Government inherited the solution which has blown out to 2,900 million in this financial year and this financial year assumes only 1100 people are going to be turning up every month and we're now double that in the first month of this year. Labor's had a detention centre revolution in Australia and we've seen that with the and we've seen that with expansion of the population in our detention expansion of the our detention centres. This
chart chart also doesn't include the 15,000 that are chart also doesn't 15,000 that are out in 15,000 that community release on bridging visas. What this community release on visas. What this shows is we had a population when we're had talking about just those had a population when talking about just those who've
arrived talking about just There were just four arrived illegally by There were just just There were just four people,
just four, in November of just four, in November of 2007 when Kevin Rudd became Prime when Kevin Minister. Now when Kevin Rudd Minister. Now that he's Prime
Minister. Now Minister again, that figure is approaching almost 12,000 in detention and there's another 15,000 who are out there in the community. That is the consequence on those terms of failed policy, failed resolve and failed implementation. Tony has rightly mentioned, as all have and I'm sure all Australians, regardless of their position in the debate share the concern, about the hurenled s loss of life that has occurred and continues and

few years who would have got a visa to come to Australia, who are waiting somewhere else but their visa was given to someone who came illegally by

Labor's failures as I reflect on are these - first, they refuse to acknowledge the problem they created in the decisions they took when Kevin Rudd became PM and they've refused to understand what has caused that problem or acknowledge those causes.They are more interested in the announcement effect of things than the implementation effect.And we've seen that again with what the PM announced but doesn't have the capacity to implement with what he announced last Friday. The internal decision within Labor, as I have sat them and watched them go from failure after fail ure after failure there are reasons for that failure. One of those reasons is the internal decision that exists within the Labor ranks on this issue, forcing back down,

the 14,500 people in the last