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Tonight - claims that navy

ships are smuggling cocaine and

heroin into Australia. Treasury head Ken Henry calls it quits

after a decade in the job.

Holiday hardship - thousands

still stranded by Europe's big

freeze. And football folly, St Kilda's Nick Riewoldt tells the naked truth. Good evening and welcome to ABC News, I'm Virginia

Haussegger. The Australian navy

has been rocked by allegations

of an organised drug ring. It's

alleged that large amounts of

cocaine and heroin are being

brought into the country on navy ships. The Federal Government's confirmed that

investigated over the Australian nafy staff are being

agricultured use and supply of

Harbour base. An anonymous illegal drugs at its Sydney

source inside the navy has told

the ABC how sailors have been getting away with trafficking drugs. Apparently it's been

going on for years. A source

inside the navy alleges that

sailors have been bringing

kilos of heroin and cocaine

into Australia stashed on board

navy ships. 99.#% of the time customs don't bring dog on to the ship.

The sailor also told the ABC that when return from Pacific rim war

games in Hawaii recently,

packages of drugs were on board

and destined for Kings Cross. The suburb

The suburb next door to

Sydney's Garden Island navy

base. The defence force is now

confirmed its major investigations unit has been looking into looking into allegations about

navy staff. Earlier this month

it started investigating the

supply and use of illegal drugs

and in a series of raids a

range of substances were seized

and staff tested. It Alberto

Contador won't yet say what all the drugs were but sper oids

were among those found. The

anonymous navy source says it's

been going on for a long time.

The sailor also told ABC that more than 30 people from one ship alone have tested positive

to drugs. The Government prepared to talk about the

specific allegations today but

the home affairs Minister and

Justice Minister had this to say. There are of criminal sanctions for criminal say. There are of course

acts and indeed we'd expect

people to be treated

whether they're civil oon accordingly and wouldn't matter

person from the military. The

defence force says it takes a

no tolerance approach to drugs

but so far no charges have been

laid. The Federal Government is

losing one of its most powerful economic advisors. The Treasury

Secretary Ken Henry will retire

in the new year after a decade

in the job. He'll leave the Government to grapple Government to grapple with one

of his last acts of reform, the mining Super Profits Tax which

looks set tokm in for more

changes before it becomes

law. Through ten Budgets for

two Treasurers and across a decade of economic Henry was a constant in

Canberra's power elite and a

combatant when he had to be.

But his extraordinary stint as Treasury Secretary is coming to a

a close. He's been there a long

time and he wants a break. Ken Henry was committed environmentalists, the

architect of emergency stimulus packages and a champion of the

economic reform, Martin

Parkinson from the department

of climate change will replace

him when he moves out in March.

The Government certainly wishes

him all the best. The influence

of Ken Henry's ideas has been

on the wane, his grand menu for

tax reform is stalled, its

centre piece the mining Super

Profits Tax is barely

recognisable today and this

lingering tensions between report meant to settle

miners and the Government paves

the way for another 90

changes. There is a lot of

common sense in this report. A

lot of common sense in recommendations. Industry has lot of common sense in these

got its way in demanding all Territory royalties are

credited in the Federal tax? It

does take us down the track of reform, better than what we

were with the tax grab, it's

something the industry is live

with. But the tax will generate

more conflict, this time with

the States. It will be wrong

Government to further consider for any State and Territory

increasing in royalties. If the

State's ignore the message they

Stan to be financially

punished. I'm not ruling

anything in or out. To begin

agreement of our with we will secure the

colleagues. Western Australia

will never agree to the

Commonwealth imposing a cap on

our State royalties. We reserve

the right to determine the appropriate royalties as a

return to Queenslanders for the

minerals that are taken out of

our State. A fight with the

States over royalties can at

least one the Commonwealth has

a chance of winning unlike the

bruising brawl it found itself

in with the miners and this time the Treasurer lining up in his corner. There

are new questions tonight about Australia's border protection and surveillance. Another boat

carrying aslyum seekers managed

Island to get very close to Christmas

Island before it was detected.

ship It seems last week's tragic

ship wreck on the Island has

done nothing to deter those

coming by boat. The latest boat

is the third since last week's

ship wreck that left as many as

50 people dead. The ABC's drom is on Christmas Island. The latest asylum seeker boat was

found early this morning by a

navy patrol vessel. It was intercepted about ten nautical

north of flying fish kof, the

maybe harbour but it was very

close to the island's Peter Richards from the close to the island's coast. Department of Immigration spoke

about this latest arrival a

short time ago. That crew and passengers have

and are currently undergoing the necessary processing and

health checks. In total there

were 68 passengers and two crew on board that vessel. passengers coming from Iran and on board that vessel. The

Iraq. This latest boat is the

third to be intercepted in the

week since the tragedy here on

Christmas Island. It brings to 179 the total number of

passengers that have been taken

off each of those boats and are

now either in detention here on

Christmas Island or on their Christmas Island or on their way. Floodwaters are starting

to fall in Western Australia's

Gascoyne region after it was

hit by recent rains. Levees

built around the town of Karabelas managed to keep the

floodwaters out of most homes

but the town is now cut off.

People evacuated from flooded

stations along the Gascoyne

return River are still unable to

survey the damage. It's

believed crops and stock worth

tens of millions of dollars

have been lost. Rescue crews

stay say while the waters are

starting to ease they still

pose a serious threat. In

reality a lot of the of the water has increased and

people are probably more in

danger now of being washed

awithdraw because of that sense

of its over but it's

not Emergency crews are also

working to secure fresh food

and water for the stranded

residents. Two plane loads of

food have been flown from Perth

to Carnarvon and engineers are

repairing damage to the town's drinking water supply.

Thousands of travellers in

Europe are still stranded

facing chaotic scenes at airports, on the roads and on

the railways. In London, people

queued for five hours in the freezing cold outside St

Pancreas Station. And passengers at Heathrow Airport have to cancel their Christmas holidays. The

holidays. The flying kangaroo,

one of the lucky ones about to escape what's become an icy prison. For the third night

thousands are bedding down in

Heathrow terminals, frustrated

that a snowfall on Saturday is

still creating chaos. I think

it's the second year in a row that there's been problems that there's been problems and

they really need to assess. It

doesn't look much better for

the days ahead with hundreds of

thousands having flights

cancelled, the chance of

clearing the backlog before

Christmas look bleak. As do the

alternatives, this was the scene outside London's St

Pancreas Station, a five hour

queue just to get inside. Hope

fading for a Eurostar exit to

Europe. We hope to get on a

train today, that's what I

promise us when they went to stand in the queue. Uncertain, they staid there was only three

trains leaving do so I'm not looking very hopeful The roads

too have been jammed. Atrocious

conditions slowing traffic to a

near standstill in places. Some

roads closed all together. 20

years of policing they are some

of the worst if not the worst conditions that I've conditions that I've seen

certainly in the south Devon

area. As bad as all this looked

it's still not eclipsed the see

of 1963 were the assess froze

over and in 78 British Airways

staff took advantage of the town time. After several cold

years in a row the years in a row the British

Government is prepare for a

possible new climate

reality? We need to consider

whether we are now seeing a

step change in our weather that

might justify investment in

equipment and technologies to

reduce the impacts of severe

temperature and heavy

snowfall. And it's not just

Britain, outside Paris at Charles de Galle Airport the French Transport Minister. I'm standing in the

same clothes I've been wearing

for three days. Not everyone's

having a bad time here but

whether you're out in en joying

this having fun or you're

totally frustrated, the news is

that there's plenty more of this onnis this onnis way. Sunshine Coast has defended yesterday's artillery exercise which some

countries warned might push the

peninsula to all out war. North

Korea had promised merciless

retaliation in response to the

drill on Yeonpyeong Island but

backed away from its threat.

South Korea's Defence Minister

says it was important Seoul stand up to stand up to Pyongyang's provocations. The US negotiator

Bill Richardson held talks with

North Korea and says the

Government now recognises its

taken some bad steps. I noticed

a pragmatic attitude on their

part. More realistic, a view perhaps that perhaps that they'd moved a little too far down the

precipice and that it was time

to come back and pull back and start negotiations

again. Governor Richardson says

he secured several concessions

from North Korea, including an

agreement that UN nuclear

inspectors would be allowed back into the country. An elderly Brisbane man who

fraudulently claimed almost

$700,000 in war service

pensions is spending his first

night behind bars after being

jailed for six months. Rex

Crane's web of lies about

service in Japanese occupied

Malaya lasted more than two

decades until a war historian

exposed him last

year. 84-year-old Rex Crane

claimed he was a guerilla

fighter in Malaysia when he was

captured by the Japanese in 19426789 his fantasy lasted

almost 22 years but it took historian Lynette Silver

seconds to unravel.. To presend

that you were a that you were a POW tortured by the Japanese, given those dreadful tortures which

happened to people, and then to say you were crucified and all

this sort of thing is just beyond the pale Crane pleaded

guilty to two charges and district court Judge Marshall Irwin sentenced him to four years behind bars to be

released after six months.

Judge Irwin said it was an act

of calculated and premeditated fwraud,. However, judge Irwin

said -

It was terrible because I

realise a lot of that my father

had experienced and he never received a cent. A statement

through Crane's lawyers said he

apologises to those who were

prisoner of war and to the

Australian community. Crane has an outstanding debt of more

than $400,000 which unlikely to

be recovered. Former Victorian

Premier John Brumby has quit politics. His announcement

stole the show on day one of

Victoria's new parliament. John

Brumby was Premier for three

years until last month's

election loss. He election loss. He says he no longer has enough passion for politics. After talking to

Rosemary and the kids and my

family I came to the view on

Sunday night that the right

thing for me and for the people

of Broadmeadows and for the

parliament was to move on and

to make way for new blood. John

Brumby says he's most proud of

leading Victoria through tough

time, the global financial

crisis, the drought and the

Black Saturday bushfires. New

Premier Ted Baillieu was intorn

in today along with other

member of Victoria's 57th parliament. The Reserve Bank

has warned home owners to

continue to be restrained in

their spending if they want to

avoid future interest rate rises. And a found this year's rate hikes

have already led to an increase in mortgage defaults. Consumers

could have been forgiven for thinking the Reserve Bank

Governor was out and about

offering hope. The bank's

latest board minutes pointed out

out that cautious households

who were safing who were safing more and

spending less were helping keep the pressure off inflation. They're probably

indicating that they've got a

bit more time up their sleeves in terms of the next interest

rate rise. But the household

caution will have to continue

and while the RBA says Europe's debt problems have increased

the global risks, the reality

for Australia hasn't yet

changed. There's a resources

investment boom that's just

starting and that's going to

play out over the next couple

of years. So most analysts are

sticking to the interest rate forecasts. We're still of the

view that the next rate rise

will likely be in the second

quarter next year. And that

doesn't augur well for households. A report by Fitch

shows that around 1.5% of all

mortgages are in arrears, some of the

of the worst regions are around the Gold Coast in Queensland,

the south-west of Sydney, and

the south-west region of Western Australia including some parts of some parts of Perth. I think

people are quite leveraged and

as interest rates have started

to increase people have started

to hurt. But when it comes to

serious 90 day delinquencies

leading to foreclosures,

Australia is still well below

the problem countries like the UK and

UK and US. Fitch says it's hard

to see a serious problem without rising unemployment. To

finance now and both the

Australian dollar and the local

share market bounced back today, strong buying lifted

markets across Asia after the heat went out of the Korean confrontation. Well it was

really just a one day worry on

Asian markets and as I said last

last night, by no means qualified as a opinionic. Today

with North Korea turning the

other cheek, the buyers were

back in force oso to speak. The

US and UK roads a bit last night but

night but the marks in Asia

mostly surged. Which is not the

way it's been most most of

year. The graph shows the performances of major markets

this year so far and the winner is Wall Street. 9.6%

unemployment, housing still in

the mud, consumer spending weak

and the Government so far in

debt it's given up. So why is

the US share market up 10% when the

the Chinese market representing the world's most successful

economy at the moment is down

10%. Well there's two answers.

There's lots of money thanks to

the Fed and US companies got

ready for a depression but only

got a recession. So now their

profit margins are booming .

Australian shares rose two

thirds of 1%, the

also rose and Telstra when up a

couple of cents on the back of the National Broadband Network business plan coming out yesterday. Australian dollar is

having another run at parity

rising to 99.66 cents and the Trade Weighted Index went to a 25-year high of 75.3 thanks gains against all the other

major currencies as well. The Bureau of Statistics put out

population data today and the

news is that net migration is

in steep decline. From a record

320,000 in the year to March 2009 down to

2009 down to 215,000 in the

latest 12 months. In a country

with booming investment in

mining and energy projects,

this is the big problem with

our borders and that's finance.

So far it hasn't been a very

merry Christmas for Canberra

retailers. This is a make or

break week for shops, many rely

on it to earn half their year's profits

profits but shopping centres

and showrooms are unseasonly

to go, the patron saint of

children is readying his

reindeer. The elves are hard at

work and so are parents. I

think they're going to store

up, about 4,000 kids tomorrow I'm expecting. Elsewhere

there's idolness. It's been

boring because there's been

really very few in the way of

customers. You don't see as

many people sort of wanding

past with huge parcels and

things like usual. I'm finding

it ease yes to move around on

my trolley and because normally

it's quite crowded. In the

lead-up to Christmas retail has

been doing it very tough. The

economy didn't recover for

retail since the Federal

election. The Retail Traders

Association says the number of transactions mirror last year, but the average spend is 15%

down. That's been catastrophic for some of the ACT's 25,000 businesses. It's gotten worse

if anything and yesterday been

our worst day so far in four years. The

years. The chamber blames a

combination of unseasonal wet weather, political uncertainty and interest rate increases.

Tradition is also increasingly under threat. There is some

concern about online shopping and

and people using the Internet to purchase without paying

GST. But there is an upside to

the gloomy retail

outlook. Maybe they just see

reason and spending is not just

for the sake of it is it? So

it's Christmas, it's more than

just presents. The chamber says

there have been some signs of a

spending upswing in the last

week but a retail revival is

not expected until the loadup

to the Federal Budget early

next year. The Federal Court

has ordered the suppression of compromising leading AFL footballers. The feetos show St Kilda captain

Nick Riewoldt and some of his

team-mates in various stages of

undress. They were posted on

FaceBook but by a teenager girl

with a grievance against AFL

players. Riewoldt says the nude

photo of him was photo of him was stolen but the teenager denies that and teenager denies that and says she intends to release more. He

says... At no point in time

have I had any association with

the person that is responsible

for obtaining my photograph and posting it on FaceBook. The

photos that are circulating the

Internet I took myself at like

one of the player's houses and

at a hotel room. That's

completely false. The

photograph was taken over 12

months ago in Miami by a

team-mate, Sam Gilbert. I asked

Sam to delete the photo, it was

my understanding that it my understanding that it was deleted. To infer that stand there and pose for a photograph naked knowing that

it was going to be kept is just

absolute garbage and offensive. The photographs

upload on the 17-year-old's now

delead FaceBook account show Saints players Riewoldt, Nick dal Santo and Zac various states of undress.

Riewoldt says they were taken

from team-mate Sam Gilbert's

computer. Late today Gilbert

emphatically confirmed that was

the case. And apologised to his

team-mates. The girl claimed to

have fallen pregnant to another

AFL player in May. She's

unhappy at how unhappy at how Riewoldt, St Kilda and the AFL have treated

her since. The original photo

that I brought out of him was

in spite of how he treated me in Adelaide. Yesterday's Federal Court order preventing

publication only refers to

photographs from the

applicant's computer so if

there are any photos which

respect as Nick from Sam Gilbert's computer

there's nothing to legally

prevent the girl from

publishing them. She promised

to post more on Twitter this afternoon but it appears police

have put a stop though those

plans. The case will be back in Federal Court on

Thursday. Australia's improved

ashes fortunes are set to

deliver a big boost to cricket

Australia's coffers. Ticket sales for the crucial Boxing

Day Test at the MCG are on

track for a world record

attendance on day one. NSW batsmen Usman Khawaja has been called into the Australian

squad on standby for injured skipper Ricky Ponting. The Australian players weren't the only

only ones rejoicing at their

extraordinary turn around in

Perth. We're on target to make

history with the Boxing Day

Test match. We certainly want

to break a record on Boxing Day

which is 91,000 which is 91,000 plus.

Australia's stunning form reversal has led surge in support the MCG's

total Test attendance record

could also go. The record at

the MCG for a Test match is 3

50,000 people, albeit over six

days but we this think we can

get in excess of

300,000. Tensions between the

two teams are also on the rise, the visitor have youed not to

back down. If it wasn't happening people would be

questions why is it not happening, is the happening, is the passion not there and it's a very exciting

place to be. Not even the

recording breaking feats of Sachin Tendulkar could save

India from defeat against South

Africa. The number two ranked

Proteas humbled the world's top

Test nation in the first Test

at Centurion. South Africa can

draw level with India on top of the rankings with a 3-nil

series win. It's not all about

line honours in the lead-up to

the Sydney-to-Hobart ch these

soilors have their sights set

on the overall victory. The

trophy is the trophy that yachtsmen around the world wake

up in the morning and hope that

they're going to win one

day. The likes of 'Limit' and

local Sydney yachts 'Jazz' and

'Loki' are amongst the

favourite for handicap honours. Got a lot of

experienced people on the boat,

some of them have done more

Hobarts than me, some Hobarts than me, some are up in

their 20s so yeah I think that

will help. The race starts on

Boxing Day. A starling

performance from Tim Cahill

denied Manchester City the

chance to climb to the top of the English Premier League.

Cahill scored his 8th goal of

the season in the fourth minute.

COMMENTATOR: Cahill. He's done

it again. The Australian world

Cup star then laid on a

secondter for team-mate

Leighton Baines as Everton won 2-1. It's been a touch few weeks for water sports in

Canberra. Severe storms and a

sewage spill have repderred their playing field, Lake

Burley Griffin, off limits. The lake's open again but for many

sports which have had problems

with algal blooms in the past

it's just one disrupted season

too many. They're now looking

for alternative sites. For a

land locked city, Canberra's water sporting community has

always needed a drop or two of

resilience and optimism. But late le they've needed more

than their normal dose, a sores

of algal blooms have closed the

lake in recent years and now a

sewage spill is disrupting

another season. The reputation

of Canberra has a place to triathalon is triathalon is getting damaged. This year triathalon

ACT shortened its season in

anticipation of algal blooms,

the national capital authority

sees no clear solution to the

problem. There are a range of potential solutions particularly for blue-green

algae but the science algae but the science behind

them is a bit patchy and there are

are a range of other flow-on

effects. Now the Territory's water considering trasic measures. We were looking at contingencies

for two major regatas of over

200 poets over the two, moving

them to somewhere like

Jindabyne or down the coast.

This year's sewage spills have

been a cruel blow for the lake users.. From From a business model for a small non-profit sporting

organisation, it's quite

significant. Earlier this month rowing Australia said its Olympic preparations were

jeopardy, the lake has cleared

in time for the rowers but

forror sporting bodies it's

just one disrupting too

many It's just putting the

organisation at risk F we can't

to have lake closeer and the

participation levels falling,

then we'd have to look outside

of the square Our outside the Territory. Taking their revenue

and their reputation with

them. If you look

in about an hour you should see a

a spectacular sight. A partial

lunar elips, the first flee years will be individualsible

to Skywatchers across NSW and

the ACT. You'll see a

bright moon directly lit by the

sun getting bigger and bigger

until the eclipse finishes

about 50 minutes after most of

us see it rise. It happens

around twice every three years

when the moon moves into the

earth's shadow. And I'm sure

Mark Carmody will be watching

keenly and here he is wul the

weather news. Thank you and

good evening. Yes as soon as

I've finished I'll slip out and

see it but I'm full of joy,

it's Christmas week, my

shopping is done, that cold

snap is behind us with the

temperatures on the way up and

kids we've just heard Santa's

sack is loaded and ready to

rock'n'roll and the reindeer are ready to are ready to fly so why wouldn't you be full What about today? Fine and

sunny and a maximum of 20. Even

the winds's calmed down a bit

after yesterday's howlers. Monsoonal cloud extends across

across the Top End and is

generating showers and storms. Pa.y cloud is

Pa.y cloud is being blown

across the lower regions of the south-east but is only producing isolated showers. A

high pressure system in the

Bight is extending a ridge

across most of the south-east

and this will keep our region

fine and dry until Sunday, Christmas day around Canberra

will be fine, dry and hot. With

an can't expected maximum of

28. That should bring a whole

lot of joy to most of us.

Around Australia tomorrow -

Tomorrow is the longest day of the year.

Virginia, the old Parliament

House rose garden which is a

plaet great place to take your

Christmas have iters is full of

joy too, take the name of this

beauty, Joyfulness. You really

are full of joy, very excited about Christmas obviously.

Thanks very much Mark. That's

ABC News. The '7:30 Report' is

next. And you can keep up with

the latest nuance ABC News 24.

And I'll be back with a short

update at 8:30. Until

Captions by CSI.? This Program Is Captioned

Live. Does it worry you that they

still have your information?

Right. Yes. What worries you? Oh like that they can

probably give it to marketers

or just people that I don't

really want to have anything to do with. Tonight on do with. Tonight on the 7.30 Report - getting off the web.

Why it's so hard to remove personal details from

cyberspace. The more they know

about you as an individual, the more effectively they can target you.

And - the mass exodus of

Christians from the lands

they've called home they've called home for centuries. I kind of imagined --

I can't imagine the holy land without Christians.

Welcome to the program. Eye' Heather Ewart. 'Time'