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Inside Business -

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(generated from captions) is in order. Don't vote for

this donkey, vote for this ass.

I don't think we're meant to

be making them lovable.

Another one bites the dust.

Nice to see you and I hope you

enjoy your life as a journalist. What's journalist. What's her name?

Pixie. Isn't that what they

used to call Kevin Rudd some Don't vote for this donkey,

vote for this ass. vote for this ass. I don't

think you'll fit into it. Come on!

Like the cut of my Speedos,

Tony? We just saw a moment ago how perilous how perilous this road can be.

I can't believe I'm doing this. The comment is a very

inspiring place. The more

footage we have the more likely

it's going to turn up on the

news, Joe. We know the back

thrip is going to be this big.

Parliament is a very inspiring place. have woken up and realised... place. Suddenly Australians

This Program Is

Captioned Live. Welcome to our

final program for the year. On

Christmas eve last year the all

ords index closed at 4800. The

big story was climate change.

The all ords is still around

about 4800 but the world has

done anything but stand

still. Climate change is far done anything but stand

from the big story any more

that. Honour goes to banking.

With the insolvent banks of

Europe bringing nations undone

and the very solvent banks of Australia the focus of complaints about competition.

Today we'll reflection on both

of those things. First, with

AMP's Craig Dunn who plans to

compete with the banks

following his takeover of AXA

Asia Pacific. Then with grant Asia Pacific. Then with grant

King from Origin energy who is

still pushing for a price on

carbon. While bidding for a

slice of the New South Wales

power privatisation, building a

massive LNG factory in

Queensland, and getting hydro

power out of the wilds of Papua

New Guinea. We'll ask some of Australia's best investors what

they think 2011 will hold. 2011 looks certain to be a

year where the Australian financial landscape has a

massive reshaping. Not only

were the Cooper reforms on were the Cooper reforms

super kick in but a new giant

will be craighted with the 14

billion dollars merger of AMP

and the Australian arm of AXA. Together they'll become the

biggest provider of retail

super, managed fund and live

With the AXA board

accepting term and the ACCC

waving the deal through only

the Treasurer's approval and a

shareholder vote stand in the

way of ach's extraordinary

opportunity to take over its

largest most direct and longest

standing rival. I spoke to AMP

chief Craig dun who until now

has kept a low profile in his

year-long pursuit of AXA. Craig

Dunn, amp and AXA have been

bitter competitors since 1869

when National Mutual was formed

by John Robertson. In the 80s,

National Mutual AMP more or less destroyed

National Mutual and drove it

into the arms of the French

company, AXA. I know that they

hate amp there at National

Mutual, AXA. How are you gonna

get them to learn to love

AMP? I think it's a fair point.

There has been competitive

rivalry. It's been pretty

intense, particularly 20 or 30

years ago. We're going to have

to work hard to do that, but I

think over time people are

gonna see the benefits of the

merger. I think bringing two

very long standing Australian companies together that have

got very similar histories in

terms of their mute wral background, they've both got a

very strong commitment to

financial planners and the

value of advice to Australian families, so whilst there are

differences and history that is

you've talked about, I think

over time that is something

People will see that it's going that we can do very well.

to be a stronger and to be a stronger and more competitive business as a

consequence of the merger. Would you say the

integration issues, and the

culturalish USes are your greatest challenge in

this? Businesses always have

differences in culture. I've

the culture is always work end several businesses,

different. There different. There are more

similarities that are more

important. I think what define

as culture most is how you

interact with the end customer.

We both do that through

financial planners, I think

there are more similarities, I

think over time people will

understand that and they'll see

the benefit of bringing the two businesses together and the

success that can bring all

stakeholders. I think you set

Ied side $285 million Ied side $285 million for integrations costs. What are

you going to spend that money

go on? A range of initiatives that

go together in terms of merging

the two businesses. One of the

benefits of bringing the benefits of bringing the two

businesses together is the

critical mass that we'll have

in terms of our compassionity

capacity to invest more to invest more significantly -

significantly in platforms. Are

you expecting to lose many

planners? There's always a risk

of revenue attrition. We have

allowed for some of that in our

modelling. Our intent is not to

do that. One of the key

attractions of merge ing with

diversity of their financial the AXA business is the

diversity of their financial

planner groups. We want to work

with those planners to grow

their businesses and let them

be more pros Parliament House

and improve their offering to

their clients. You mentioned

scale or at least that that's

going to be a result of it. Is

that the main reason for -

that the main reason for - main

benefit for merging these two

companies that you get larger

and get the synergies? That's

an important benefit. By

bringing the two businesses

together you get greater scale,

which will improve our capacity

to compete in the market. There are a whole range of other

benefits that come from the

merger. The diversity of the

multibranded financial planning

groups that AXA has is very

very strong presence, a much attractive to us. They've got a

greater presence than we have

significant opportunities in the IFA market. It gives us

significant opportunities prove

the platform offering, the

joint platform offering of both

businesses. How do you see

services wealth management and financial

services generally changing

over the next few years and how

does the merger fit in with

that view thaw have? It's been

a pretty difficult time for

most wealth management

businesses following the GFC.

Hopefully we're gonna see a

recovery in net cash flows as

markets start to recover and we

see confidence come back into

the market. Sl there have been

a lot of regulatory changes,

couple of inquiries, the banning of commissions by

banning of commissions by the

Financial Planning Association

and the Government. There are

some significant changes going

forward in the industry.

There's the change in commissions, which both

businesses have already moved

on quickly. Both AMP and AXA.

There's the Cooper report that

is going to be landed is going to be landed at some point in terms of the legislative change which is

also very significant change. I think both businesses are well

prepared. I think the scale

benefits that would come about from

from the merger will mean

they're more able to adjust and

deal with that regulatory

change. Also there's talk of -

I think you've even spoken of

it, about AMP with AXA becoming

a fifth pillar in a fifth pillar in financial

services in Australia. Can you

tell us what that means and how

can do you that anyway without

banking? We have a small

banking business today. We'd like to grow that more

strongly. The merger will help

that in terms of a greater distribution foot print in terms of

terms of deposits and mortgages

and improved funding. The

challenge with our banking

operation right now is

securitisation markets as you

know, have pretty well come to

a halt after the GFC. When we

talk about the fifth pillar,

we're talking about bringing

together of both businesses such that in wealth management

we've got a capacity if take on

the wealth management

businesses of the four

banks. We'd like to over time, grow the banking grow the banking business, once

securitisation markets recover,

but it's fundamentally about

taking the major banks on in

their wealth management

businesses. AMP bank has been

launched a few times, when it

was first launched it was full

of big plans, lots of hopes,

it's never really got any

where. That's not just because

of securitisation, is it? It

didn't get any where before surtisation market -

securitisation market? There's

some criticism there, it's fair

enough, it's taken us a while

to get it right. Before the GFC

we started to see improvement

on its growth. It's now

returning on capital above 15%.

I think it can abcompetitive

player nrt market should securitisation markets recover.

The government has tried to

stimulate that through its AOFM stimulate that through its AOFM

program and try. There's also program and try. There's also -

the Treasurer is also talking

about boosting building

societies and credit unions as

being another kind of fifth

pillar. What do you think of

that and does that fit in with

what you're trying what you're trying to dosmt We're fortunate in

Australia to have such a strong

and secure banking system. Clearly, following Clearly, following the GFC

we've seen a reduction in

banking competition and understandably that's creating

a lot of sensitivity in the

broader community. I think the

Government initiative in terms

of the AOFM and securitisation program has been a very good

one. I don't think there's a

magic wand that any government

can wave and suddenly cause

there to be more banking competition. How important in

the takeover of the AXA is the North platform? North platform? That was the

reason the ACC knocked NAB back

from taking it over. Is that a

central part of the reason you

want axe AXA? There is al

opportunity in the platforms.

One of the benefits of bringing

the two businesses together is

the scale I'll get in

distribution and the capacity

to substantially improve the

platform offering and take that

up to the major banks that are very strong in that part of the

market today. We still need to

work through and look at the

North Platform, based on

external reports and what we've

seen to date it looks encouraging. Taking over AXA is

a big step of growth. Having

done that, and you'll then have

the largest market share in

super and rap platforms, at

least certainly the largest in

retirement incomes and

superannuation, where do you go from

from there? Where's the future

growth come from? There's a way to go

to go in merging the two businesses and getting that businesses and getting that to

be successful which we're

confident we can do. It will

mean a significant presence in

many of the markets you said.

That will lead to significant

benefits for all stakeholders including the joint

shareholders. Beyond that we're

starting to expand into Asia.

It's a focus fors in asset

management. We're not

interested in growing or building building life insurance

businesses in Asia, we've got a

small presence in four

countries, Japan, China, India

and Singapore. About 8% of our

assets under management come from Asia. That's another

longer term growth strategy

that we'll seek to build on

over time. You haven't got a

keep off the grass agreement

with axe ast - AXA SA? Because obviously AXA will buy the Asian businesses of Asian businesses of - Yes,

we're see Free to build our

businesses in Asia as we see

fit. We've got a fit. We've got a different

strategy to the bun that will

exist in AXA SA which is more

about growing life insurances

businesses am Now, with the

latest business and market news

it's over to Jane Edwards.

Thanks, Alan. Wret showed some

resilience on Friday with a

late rally capping off its best

week in three months. Despite

the release of some extremely

disapointing job numbers. The

Dow gained 20 pointsings the

Nasdaq added half a per seb.

November payrolls through by

by more than 100,000 less than

expected. The US unemployment

rate edged up to # 9.8% T was

who earlier in deflating news for investors

who earlier in the week

celebrate the bumper November retail sales and an easing of

euro debt concern by boosting

equities markets. The greenback

slipped again on the jobs news

taking the Aussie dollar above

99 c, gold came back into

fashion and jumped above $1400

an ounce. The oil price also

hit a two-year high, close to

$90 a barrel thanks to a cold

snap in the northern hemisphere

which is driving demand for heating

heating oil. It piled on 7%

over the week. All world

markets were comfortably in the

black. The US leading the way

with a 3% gain. To wrap up

local shares, here's Tom Elliott.

Elliott. As you just heard the

market was extremely volatile

this week. We had both down

days and up days. The up days

won out with the overall market

closing up around 2% for the

spotlight not for week, banking was in the

spotlight not for always the

right reasons. One of the

nation's largest banks,National

Australia Bank, had all sorts

of payment problems. The stock

was stronger during the week,

because CEO Cameron Clyne said

the payments issues had been

sorted out. Some of the queues

I saw inside NAB branches might

suggest that isn't quite the

case. Smaller banks - credit

unions. Federal Treasurer Wayne

Swan has said he wants to

create a fifth pillar in the banking world that the Federal Government might assist smaller financial institutions in their fund raising so they can

bigger banks. Perhaps compete successfully with the

unsurprisingly the share prices

of bank of Queensland, Suncorp

and Bendigo and Adelaide Bank were also stronger throughout

the week. The October retail

sales data that came out was

disappointingly weak. This

points to a rather bleak

Christmas coming up. Christmas coming up. again,

stocks like JB hi-fi, Myer,

David Jones and Kathmandu all

saw their share prices fall

during the week. Harvey Norman

broke that trend and managed to

gain a couple of cents. In

small cap land, in particular

take zofrs, the battle for

Impress Energy took a rather

interesting turn. Beach Petroleum is its major

shareholder with 20%, it's

launched an 8.25% recommended

cash bid. Another shareholder

Victoria Petroleum had 10% but

increased its holding on market

to 20%. We'll see how that one

works out soon. Perpetual is -

trading well below unemployment

the value of the bid. The

rumour is due diligence by KKR

has even started because the wo

two sides can't agree on price.

Because this is the last show

for 2010, winner of the year is

Intrepid Mines, up an

astonishing 608% after some

excellent gold and copper mineralisation deposits in in

India. Photon Group, an

extremely dilutive capital

raising several months ago.

It's not so much the Year of

Living Dangerously for

Australian investors as the

Year of Going Nowhere. The all

ords is precisely where it was

months ago things are very 12 months ago. Just like 12

delicately balanced. Neal

Woolrich caught up with some

lead ing investors to see how they're seeing things and where

they'll be placing their bets.

(Christmas bells ring)

Lights, cameras, but where's

the action? Just as retailers

and shoppers get ready for

Christmas, extra's statistical

boffins are taking their own

snap shots of the Australian

economy. The picture that's

emerging is far from rosy. GDP

growth slowed to fall in the

September quarter and retail

sales fell by an alarming 1% in

October. Here we are in the

beginning of December And we're

already in sale mode. That's

the indication of how tough it

is out there. Richard Robertson

has been running Ted's Cameras

for nearly 40 years. His view

of the economy is as gloomy as

it's ever been. Unfortunately

we've already lost thousands of

small mum and dad-type

finishing area. The smaller businesses in the photo

camera stores are just finding it that much it that much harder to compete.

If you're not aligned with a

major buying group you're going

to find it very hard to

compete, especially with this

online on slaught with the lower price that is is generating

generating now. Just as

consumers have been reluctant

to loosen the purse strings

this year, so too share

investors have been treading

wearly, with local and

sways over the international markets going

sways over the past - side ways

over the past 12 months.

However some of Australia's

leading stock pickers think it

will be a different story in

2011. We think the risk in the

markets is dramatically less

than it's been at many times

over the last three years, so

from a risk perspective we

think the equity markets are

pretty healthy. At the moment,

but there's a but there's a lot of

uncertainty. We would say it's

a relatively safe time to be

investing, but people have to

expect a bit of volatility with

the uncertainty. I think these

recent figures from the PMIs

around the world suggest that

growth is continuing to

accelerate or at least show nog

signs of wilting. And that is

in the developed markets. In

the developing markets, of the developing markets, of course, so-called, they're

going on perfectly fine. I

think in a valuation sense the

Australian equity markets and

others a round the world look

pretty compelling to the extent

they're under valued relative

to other asset classes, the

uncertainty we've had over the

last couple of years probably

gives us pause in terms of what

will happen next, it will drive

that to be fully valued. Perennial's Adrian

Mulcahy says bank ing stocks

and resources are the best in

the year ahead. He likes

companies exposed to the US

economy like News Corp, James

Hardie and res med. If we saw

economy and the currency an improvement in the US

reteated to more fundamental

levels, there's a bit of a

double hit for those companies

themselves back into Australia

such that they will be potentially -

Hamish Douglass Magellan Financial Group's

Hamish Douglass is also upbeat

about America's prospects and

thinks official there is have

the right policy prescriptions

in place. But he thinks the

best value is still to be found

in developing economies. We

think the emerging market

consumption story, so big consumer companies servicing

these consumers in emerging

markets we're very positive on

that story. We're very positive

also on the e-commerce story a

round the world because we

think that is going to be a real growth engine. However Platinum Asset Management's

Kerr Neilson warns the best

days for stocks in those

developing markets might be

behind them. There has been so

much money going into emerging

markets I think that area will

lose some of its following now

because yes, we'll continue to

grow but the prices have moved

up, prices of shares cr moved

up in anticipation of up in anticipation of some

pretty good prospects. And he's

also worried about Europe's

sovereign debt woes which could

remain a problem even after

investors and the media lose interest. Governments have

guaranteed bank debt, we're not

talking about deposits here,

whereas the bank debt holders

should've taken a hair cut. And

this will just cause a more protracted problem and a much

deeper problem. Ultimately the

big question we'll face through big question we'll face tht

next year is how the Populus

live with much more austere economic

economic environments. In terms

of growth the world's a prit yu

tough place looking out for the

next five years. So I think you have to be pretty choosey where you wanna be in the markets if

you're really looking for growth because there's not a

lot of bright spots in the

world that are gonna deliver a

lot of growth in the next five

years or so. Hamish Douglass

says European political

stability will be a major issue

in 2011 and a lot will depend

on Germany's willingness to

support the European Union and

provide liquid ity. In Asia he

says Japan remains the wakest

link while the efforts by

Chinese authorities to call

their - cool their economy

could mean resources stocks are

no longer a sure bet. I think

comods in the next - comoidities in the comoidities in the next 18

months is too difficult to

predict. It's evenly balanced

whether China is going to slow

down or not following the

massive credit expansion and

property investment that's been

going on, people - some people

say a speculative bubble.

Authorities to date have done a

very good job. Those efforts to

engineer a slowdown in China

could also put a dampener in

sentiment in Australia which is

already patchy in the leadup to

Christmas. Perhaps the most

vulnerable sector is retail

which already faces rising

interest rates and a bigger threat than ever from online

shopping thanks to the elevated

currency. I think that part of

the market is a bit difficult.

I think probably the domestic particularly discretionary retails and

retails and even some of the

staip le parts of the market

are an area you tend to be

underweight, I think they're

the ones that will find it most

difficult. I've never known it

as tough. It's really really

tough. We have a nickname for

Elizabeth Street in Melbourne,

we call it blood alley because

everybody's after blood. They

want the sale. While

Australia's stock market, as

always, remains vulnerable to

the whims of global forces,

domestic politics may play a

greater role than usual in 2011. 2011. Banks, mining companies

and Telstra have already been

threatened with heavy hand of

regulation. And looming large

next year is a price on carbon

which is shaping as the biggest

economic reform of them all.

As Neal just mentioned

perhaps the biggest issue for

business will be the need to

sort out the policy mess

surrounding climate change.

Grant King has been at the fore

front of business demands that

something be done and is a key

adviser to the Federal

Government through its business

round table approach. He also has plenty of other big and

expensive issues on his plate

for 2011. Grant King, you're on the business round table about

climate change, trying to get a

consensus in Australia on the

subject. Is there any hope of a

consensus here if we can't get one internationally, and one internationally, and there

doesn't seem to be any sign of something coming out of Cancun

at the moment. As I understand

it Cancun process has just

begun so we need to see what

comes out of it. what really

drives us in Origin here in

Australia is our domestic

context, the domestic context

is framed a round both sides of

government having made a

commitment to a 5% reduction on 2000 levels by 2020. 2000 levels by 2020. The

actions we take and the

decisions we make in Origin are

frame end that context because

that seems to be a very solid bipartisan position reaffirmed

by both parties during the last election. No-one seems to be

any close tore getting a price

on carbon. Do you think it's

possible to achieve a 5%

reduction in the timeframe

agreed without that? 5%

reduction is a very big target.

I know there is some debate in

the chunt - the chunt - community around

it's not ambitious enough. But

when you're involved in the

industry and look at what you

have to do to achieve it, it is

a big target. We're talking

about a price that might come

into effect in 20012, 13, 14,

then it is a challenge to see

how price alone will help us

achieve that 5% reduction

target. Our view is there probably win

probably win Will need to be complementary measures. Is

there a built of a mood and a

move towards a carbon tax? I've

been involve end this debate

for years. I've noticed that

all of the economists in the

world have their favoured model

as to what best answer is.. As

a practitioner, a company

involve end this every day, we

believe a traded scheme, like

an ETS in the broad sense is the

the best way to go for the

long-term. I think an imporntd

point we'd make is if you haveh a choice between the price and

the scheme we'd argue to get

the scheme right for the long

run, a nice simple effective

scheme that endures in the long

run will do more for certainty

than will a price for today and

tomorrow. Given the carbon emissions target that everyone

you say has agreed on and you say has agreed on and other

factors in pleags what, sort of

increase in the price of

electricity do you think we're facing?

I think you've referred

earlier to a debate in the

community that's achievable.

One end of the debate is

theoretically might what

mightic required to achieve a

price cut. Our view in our

contribution to that debate is

not to say the right answer

ought to be X, it's to say if ought to be X, it's to say if

you do this that will be the

consequence. If we try to

achieve that reduction through

price alone the price will be higher than might be the case

if we chose to implement other

- It's double or triple the

price? Not for electricity.

It's not going to double or

triple the price of

electricity, there are other factors causing increase in electricity prices. That's why

I think you asking the question what

what effect would a carbon

price have on consumers an

answer might be pulling back on

some of the other schemes.

There are schemes in New South

Wales and Victoria which have

ultimately been seen to have

cost consumers money. Our view

is they should all be

rationalised. If we had a nice simple effective well designed

scheme. Origin, with all this gk

gk on, going on, Origin has a

huge challenge to deal with

that. You've got a lot of

renewable energy projects on

the plate. You're also raising

the bar for yourself by

starting up an LNG project in

Queensland. And air looking to

bid for New South Wales privatised electricity

companies. You get the sense

that there's so much going on with

with Origin, how is the company

cope ing both in a cope ing both in a management

sense and capital sense with

all this? We're more than wise

enough to know that not all

things occur as may be

intended. We're not a bet on

any particular outcomement we

have a lot of options to

develop renewable energy, for

example. At the core of our

business is a strong gas-based

generation business. We think

in any event society will want to see us to see us decarbonise energy,

that's the path that we're on.

But we're on it on the basis

that we'll make sensible

decisions when the signals are

clear to us as to who what choices governments and the

community wants us to make. You

talked about APLNG and the New

South Wales privatisation, I

can't comment a lot on the

privatisation process, it's

well known that we have made

public we've submitted proposals to the government or bids to the government but the outcome

outcome is unknown. Is it fair

to say if you succeed you're going to have to have a big

rights issue? What we've said

publicly is if we succeed we

would contemplate an equity

issue, but we have no immediate

need to do it. That is because

in part the longer term capital commitments that the company

has also depends on the timing

of expenditure on our LNG

project. We want to firstly

know to the extent that we know to the extent that we were

successful in New South Wales

process, what is that costing

us, and then in the context of

that, how does that sit with

the capital requirement that is

we'll have for ap L ing in. It

is quite likely we will - ap

LNG. We have no immediate need to make one. The bid in New

South Wales is fully funded in terms of facilitieses available

to the company. When do you

expect to have a final

development decision on APLNG

in Queensland? When we came

together with Conoco, we were

targeting December 2010. It is

that now. The two key elements

of that timing was all the

regulatory approvals we need an

contracting the customer. We

have all the Queensland

consensus weigh need, we're

into the federal process and

we're currently discussing we're currently discussing with

the relevant departments in the

Federal Government the timing

of that Federal decision. I

think more rel rant is where

we're up to with customers.

With respect to customers we've

said we believe we are still

engaged in meaningful

negotiations with customers

whose requirements can trigger

the project. We've also said

quite studiously we're quite studiously we're not

going to give running

commentary saying we're nearly there, there, expressing degrees of

nearness isn't all that helpful

at the end of the day. You've

got the Papua New Guinea hydro

project, another few billion

dollars worth of - also the

transmission to get the

electricity to Townsville. Is

it true to say this could all

happen and none of them could

happen sfvents it's true to say

that from a management

perspective we're working on a number

number of material option that

is will continue Origin as

loaning record of growth now,

over 11 years we've grown 17% a

year level. Strategically

that's what we continue to

pursue on behalf of our shareholders. You'd expect us

to have a lot of opportunities

in front of us and we do. They

will take a lot of effort to

crystallise, they're all in

various degrees of progress.

The good and the bad The good and the bad thing

about our industry is it takes

a long time to do anything,

typically 5-ten years is the

investment cycle. That's plenty

of time to schedule the funding

and think about the sort of

capital we need to do that. We

don't have this sudden

convergence of a massive

capital requirement to develop

those projects. Our interests

in developing the project in

New Guinea, are interests that

would take us through to 2018.

That's plenty of time to think about

about funding that. If our LNG

project proceeds on the current

schedule. Thanks for joining

us. Thanks for the time. That's

it for the program. And from us

for 2010. Thank you for your

interest and support, we really enjoyed bringing you the

program and look forward to doing

doing it again next

doing it again next year. Until

then we wish you and your

family and friends a very merry Christmas and This Program Is Captioned

Captioned Live. Hello again.

Welcome to off ciders. Cricket,

as they say, is a game of statistics. If you bundle their past two innings together,

England are now 3/834 and

Alistair Cook has been

dismissed just once for 438.

The English opener has been