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(generated from captions) Julie bishop and Joe Hockey. Secondly, ministers think that Secondly, some shadow cabinet

ministers think that Malcolm

Turnbull may have been the

source for the leak against

Scott Morrison. If that's the

there's real case and that gets traction,

Denied that. In defence of

Andrew Robb, he made the

comments about the leadership,

a long time ago. I think

that's rough. Senate estimates

I think in two weeks time

they'll look at things like

costs of transporting people

from Christmas Island to

funerals in Sydney. Sight seeing?

think they'll ask a lot of

questions about sight

seeing That's the program.

After last week dominoed by the

"shit happens" controversy we any mention of the word, got through the program without

almost. I can help. The usual

suspect. We'll leave you with this. Thanks for watching. this.

I'd better take my shirt off

and get part of it resewn, what

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learn new skills and appreciate

the skills that other s have. the skills that other

Oh, shit, what happened to that

one? We mucked that one up,

technology. didn't we? Thank God for

Closed Captions by CSI

G'day, welcome to the

program. Well, this week the rise and rise of BHP Billiton.

It's heading for an annual

profit well over $20 billion.

It plans to spend $80 billion

on growth projects out of its

cash flow and while it's at it,

buy back $10 billion worth of

its shares . But then again,

money can't buy you everything.

We'll talk to BHP chief Marius

Kloppers after the course he's charting after a couple of big

deals have fallen over. We'll

also check out Telstra's

aggressive push to speed up its mobile wireless network and

what it means for the NBN, and

why business reckons the

Federal Government's got reforming the health system the

This Program is Captioned wrong way round.

Live.

BHP Billiton's record half

year profit of $10.5 billion is

a big number. At that rate, a

full year's effort would

eclipse the GDP of many

nations, ranking it well inside

the top 100, putting it

alongside the likes of Latvia

and Tanzania. But no country

large or small could match

BHP's 72% growth rate. Being

the size of a medium-sized

country isn't without its problems. Questions of national interest helped scuttle its big plans with Rio

Tinto and Canada's Potash Corporation. And then there's

the delicate issue of

international diplomacy, which

surfaced after the company was

mentioned in the US consular

cables provided by WikiLeaks to

local newspapers. I spoke to

BHP Billiton chief Marius

Kloppers at the end of a busy

week.

Well, Marius Kloppers, if I can

just deal with the WikiLeaks

cables first. Did you offer to provide secrets to the

Americans? I more likely asked

whether there was any knowledge

about what was going on in the

commercial space. You must

understand that this was during

the time that we were trying to

reform the iron ore marketing

system and we were a little bit

skittish about what was going

on. When you say you were more likely, do you remember the

conversation? I certainly don't

remember offering anything. I

have anything to offer? Not don't know what I know - Do you

that I know of. Do you think that BHP actually was

responsible for killing that

Rio Chinalco deal? We certainly

had an opinion about it at the

time. I think we're on the

record as saying that we thought that the iron ore

system had to reform in

pricing, and we thought that if

a customer owned a piece of

that system, the probability to

get market prices would be more difficult. But do you think

that your opinion was

decisive? No, absolutely not.

I mean, we're one opinion-maker

in a very large pool. On the question of the Potash

Corporation bid, you bid $130

per share, the price is now

$186 per share. They said at

the time Potash said your bid

was too low, in fact that's the

way it looks now, isn't it?

Weren't you a bit stingy and

didn't that result in the bid failing? No, England it's

always, being a profit is

always a bit more difficult

than -- being a prophet is more

difficult than being a

historian. We offered a fair

price, a premium at the time

the bid was launched and this

was about a different set of

issues, not about price at the

time. Shareholders never got to have any say about

this. They must be feeling

happy I presume Potash shareholders? I haven't spoken

to them since. The perception

is there's been a series of

failings, the Rio bid and the

Potash bid, all of which didn't

work. Do you reflect back and

think "Actually, I wish I'd done something differently at

the time" ? There's never an

experience without a learning,

but you've got to understand

that we always come back to at

what price can we do something

where it creates value for our

shareholders and the criterion

is do you create value, not do

you complete something, and I

suspect rather that that's

approach going forward. 'Cause going to continue to be our

now you're saying actually

we're not about acquisitions

anymore, we're all about

organic growth and capital

expenditure - that's really in

a sense because the

acquisitions didn't work? I

don't think so. If you look at

our CapEx which got a lot of

press yesterday, it has been

growing at 20% per year over

the last 10 years. If you

extrapolate that trend you get

to the number that we put out

yesterday, so what we're saying

on the CapEx side is it's

business as usual, these are

the things we're going to

invest in. It's a large

number, but it's been

progressively growing. On the

M&A side I think the only

comments I made is I'm certain

of the products, prices are

very high and, therefore, price

expectations on assets are very

high too. I've spoken to some

of the analysts. There's some

disappointment you're talking

about $80 billion of capital

expenditure over 5 years, but

you actually didn't announce

anything at the time. Why is

that? Did you actually put

anything up to the board at the

most recent meeting and get

knocked back? I can't comment

about individual items at individual board meetings.

What is pretty clear is we have

been working very hard over

years now getting projects like

Dornia, Haypoint Expansion, a

project in the Bowen Basin for example and Olympic Dam down

south, progressing that and

really the 5-year plan lays out

how much capital those projects

which our investors know very

well are going to consume. Looking ahead at the

next 5 years, are you confident

that you can actually build

everything you need to build, because there are lots of

skills shortages, difficulty of

sourcing not just labour, but

the companies, the capital equipment needed - do you think you'll hit any

constraints? Look, we've worked

very hard at building an

organisation that is very

simple. We've invested a huge

amount of effort at building

these five big hubs that we've

got in Australia, three in

particular. Olympic Dam, Perth

out west on the iron ore and

then the coal in Brisbane.

These teams are in place. Yes,

they're going to expand, but

I'm very confident that gradual

build-up of capital that we've

seen and that we're going to

continue to see is one of the most sustainable in the industry.

industry. If we can't do it, I

suspect others are going to

have great trouble. Where do

you think most of the capital expenditure's going to be,

where are you focusing your

attention over the next 5 years, is it iron ore and

coal? What we've said in our

results is there's basically

five major areas for capital

spend. We've got Olympic Dam,

we've got the Bowen Basin,

we've got iron ore out in Western Australia and then in

addition to that we've got oil

and gas and then the Potash

mines in Canada. Those mines

will consume the majority of

that $80 billion CapEx program

we laid out. Is M&A completely

off the agenda now? No, cycles change and in particular my

comments yesterday should be taken in the context of

taken in the context of the prevailing prices that

prevailing prices that we see

today. In six months' time or

a years time something may come

up, something may change. Is

there a sense that in oil and

gas in order to get the

expansion that you might desire

that you need acquisitions in

that area? I think it's pretty

clear that in certain of our

products, iron ore being the typical

typical one, because everybody

has looked at that so much,

we've got organic constraints

in that business. In Potash,

copper and oil and gas there

are no such constraints and

obviously the oil and gas

market is a very large one where there may be

opportunities going forward. As you look at the capital

expenditure, what sort of

growth rates are you looking

to, are you targeting? Because

you were quite disciplined in

acquisitions obviously, you

were turning things back, what

do you require? We're sort of a

boring company. A couple of

years ago we said that our

typical returns that we get on

Greenfield projects is about

15%, brownfield may be a little

higher, 25% or so. I think

those numbers are still in the

right ballpark and how that

translates into growth again

perhaps referring to some

comments we made a couple of

years ago, on an organic basis

we think 5-6% growth over many,

many years is imminently

achievable. It's compound

annual growth? Indeed. And your

margins at 44% are roughly back

to where they were at the

beginning of 2007? That's

right. Do you think with what

you can see on the horizon you can expand margins

further? There's always a bit

of a differential outlook on

the various projects and I

can't make an exact forward-looking statement, but

what I can say is there are

certain products in our

portfolio, particularly iron

ore where India is not exporting iron ore at the

moment, where there are other

supply constraints where people

haven't invested, which looks

very good over, say, the next

3, 6 and 9 months. In fact,

just today we've probably got a

record price achieved FOB Port Headland. That project looks

good, other products look a

little different. For us, it's

a question of where the cost

structures go, but I feel very

comfortable we're going to have

healthy margins going

forward. How long can these

prices be maintained do you

think, particularly in iron

ore? Simply put over the next

12, 18 months perhaps 2 years, there's not a substantial

amount of new capacity going on

and it's more an issue of the

demand side. But you're supply side rather than the

building a lot of capacity? But

a lot of it is only coming on

later. A lot of companies cut

back capacity. During the

global financial crisis...

we're now two and a half years

would on and normally that capacity

would have delivered, but the investment was just not made. What's your view about

the Chinese economy? Look, our basic views about commodities

is it's going to be a story of

supply lagging that is going to

give us good prices. On China,

a lot of people are talking to me about inflation,

overcorrection and so on, but I don't think we've got the

situation that we had in the

'90s where the Chinese Government

Government let inflation run

away completely and then had to

pour a lot of water on the

economy. We simply have a

managed slowdown here, so I

think that Australia's going to

be in a very good position

going forward. Should we read,

the way you're doing your

capital management as an indication of caution in that you have increased the

dividend, but not very much.

Most of it is through a

buyback, which obviously

doesn't have to be maintained.

You could, in fact, double your

dividend without losing any

sleep at all, but then you'd

have trouble taking it back - does that indicate

caution? There's always a

degree of prudence. This is a

company that's not cut a

dividend since the Great

Depression. So it's had 70

years of uninterrupted flat or positive dividend growth. We

want our investors to see the

dividend as an annuity. If

we've got surplus cash we would

rather return it to our

shareholders in different

ways. But you don't have any

desire for BHP to be a yield

stock? You understand that BHP

pays a larger dividend than the

next three big mining companies

put together. Finally, the discussions with the Government

over the tax, the resources

tax, where is that at and do

you feel confident you're going

to end up with a result you can

be comfortable with? The

reality Alan is that most of

our discussions took place last

year during the middle of the

year when the MRRT was

discussed. The reality is it's

the policy transition group

that has had a lot of

discussion since then and

obviously from here onwards

goes the implementation. But

in essence on policy elements,

the company hasn't had really meaningful new policy debate

for half a year now. Did you

see the backlash this week to

your large profit politically,

and pick up the phone to our

advertising agency to start

thinking about another ad

campaign? Probably something to

think about, how we communicate

what the benefits to Australia

are of our company investing

$80 billion, paying $5.5

billion of taxes last year and

creating hundreds of thousands

of jobs if you count the

trickle down. I think we

probably can do more to

communicate how all

Australians... 'cause 43 cents

out of every dollar goes into

royalties and taxes and then

there's salaries on top of

that, benefits from the

commodities boom we've got out

there. You must look at the situation in particular in

relation to the States and

their stance on royalties and

realise that there's a really

major problem here that needs

to be resolved and I would have

thought you'd be looking at

that with some trepidation? Alan, again

perhaps I'm too sanguine about

this, but we've given our input

last year. We believe that

we've agreed to something which

we have the full intention to

pay and which we've taken into

our planning. We work by the

rule that if you've agreed to

something, you normally try and

make that work rather than the

other way around. Thanks for

joining us Marius

Kloppers. Thank you very

much. Having secured some, but

not all of the key commercial

terms of its $11 billion deal

to off-load its old copper

network to the NBN, Telstra

boss David Thodey flew to Spain

this week to unveil his next generation of wireless mobile

communications. The superfast

4G network will have download

speeds similar to the fibre

that will be deployed by the

NBN and should start operating in capital cities by the end of

the year. So is it a threat to

the Federal Government's $35

billion NBN plan? Neal Woolrich

reports. We're about to turn

on the largest - let me say

that again - the largest, most

advanced, highest speed 3G

broadband network on the planet. Four years ago, and

with much fanfare, Telstra's then chief executive Sol Trujillo launched the company's

bold new venture into the

mobile world, the next G

network. But times have changed in the telecommunications business and

especially for Telstra. This

week, Sol Trujillo's successor

David Thodey presided over a

decidedly low-key affair in far-away Barcelona where he

announced plans for Telstra to

launch a 4G network by the end

of the year. It will enable

video calling with good

response times. It will allow

you to go into areas of high

data use age and transition

into regional areas and provide

a great experience. Telstra

has had a substantial advantage

with this next G network for

quite some time. I see this

announcement as making sure they maintain that advantage in

terms of coverage and quality

that has allowed them to charge

something of a premium in the market over the last few

years. Half of Australia's

mobiles are now smart phones

which have sparked a surge in

data use as people brows the

Internet or download videos

while on the move. Telstra's

4G roll-out will aim to tap

into that growing demand and

attract a higher value and

ultimately more profitable type

of customer. They made it

onto this network will be the fairly clear that the users

laptop users, people using

either data cards or dongles

plugged into the side of their

laptops for mobile broadband.

What that will do is it will

take pressure off their

existing next G network which

has more and more smart has more and more smart phones

on it. The margins do go up

from time to time as you add to mobile capacity. You've seen

mobiles take a hit with change

in pricing strategy, but we

expect those margins to head

back up again and it's as a

result of the utilisation as

better penetration wireless broadband reaches

levels. Telstra's plans to beef

up its wireless capacity led

some to claim the company was

launching an assault on the National Broadband Network, but that was quickly dismissed by

both the company and the

Communications Minister. Look,

we've always viewed them as

completely complementary. We

welcome Telstra's announcement.

What we want to see is

Australians get the best

possible experience, the best

possible prices, best possible

broadband. capacity from their mobile

broadband. 4G is a natural

evolution for this. Broadly we see fixed and mobile broadband

as complementary. We think in

most cases people will choose

to use both and, in fact, the

industry will be pushing people

as much as it can to use both. It's clear that Telstra's

4G plan is no NBN killer, but

the fact Telstra is prepared to

invest heavily in the new

technology does confirm the

growing demand for wireless and

if more households choose to

become mobile only, that could undermine one of the key assumptions of the NBN business

plan. At the moment, there's

only around 12 or 13% of mobile only households. The NBN

business case assumes that gets

to about 16.4%, but more than

likely as this wireless

broadband capacity grows, we'll

see wireless only households

reach 20%. It's already

reached that in some parts of

Europe and the US and that then

starts to eat into the NBN

business plan. When we look at international experience, say, in the United States we see

quite high proportions of people dropping fixed voice,

but a lot of those households -

in many cases more than half -

still have fixed broadband. So

what the NBN company is talking

about in terms of its targets

is truly mobile only homes that have dumped fixed voice and

fixed broadband and that's a

smaller number than the 12%

number we're seeing bandied

around at the moment. Stephen

Conroy says a number of

independent reports have all

supported the NBN's business

case. And what they're case. And what they're saying

is there's a very reasonable

assumption in the business case

around the 15% figure that the

NBN are using. So those who

want to claim like Malcolm

Turnbull, that 25% of homes are

going to be mobile only, are

flying in the face of all the international data. Royal Bank

of Scotland's telecommunications analyst Ian

Martin also argues that if too

many higher value customers

choose the convenience of

wireless, then that will cut

into the NBN's earning potential. It's not just a

matter for the take-up rates

for NBN, but also the usage NBN

expects to get around 30-40% of

the revenue ultimately from

high-value, high-quality

services. But if more and more

of the value use is moving into

wireless broadband that eats

into the revenue potential of

NBN across their customer

base. Those risks to revenue were brought into focus this

week in a report by the

consulting firm Greenhill

Caliburn. Ovum analyst David Kennedy says Greenhill

Caliburn's review of the

corporate plan doesn't tell us

much that isn't already known, but it's still a useful exercise. Look, I think it's

always important to get third

parties and a fresh set of eyes

looking at assumptions,

particularly on a project as

big and as valuable as this.

It's simply a case of due

diligence. It's important to

get third parties to check your

thinking and reasoning and if they arrive at the same place

that you arrived at well,

that's a gd thing. It's not a

waste of money, it's a simple

basic business prudence. Another consulting

firm Lazard is working on its

own report into the NBN

examining the proposed deal

with Telstra to migrate

infrastructure however that

report is likely to remain

under wraps. Senator Conroy

says it will be advice to

Cabinet which is not

traditionally released to the public. Now with the latest

business and market news, it's

over to Jayne Edwards.

Thanks, Alan. There were more

signs of strengths in the US

sharemarket on Friday with the indicies continuing to gain

ahead of a 3-day weekend in the

States. The Dow jumped by 0.5%

thanks to strong sales by the

major blue chip Caterpillar.

The S&P 500 has doubled its

value in less than two years,

but many Wall Street analysts

are now expecting a correction.

China unsettled commodity

markets on Friday by lifting

its bank reserve requirements

in a further attempt to keep a

check on growth and inflation.

Over the week, world stock

markets were generally higher

ask and Australian shares added

1%. Late on Friday, Fortescue

Metals had a loss in the

Federal Court over allegedly

misleading statements by the

company and founder Andrew

Forrest about a 2004 Chinese

iron ore deal. The court

upheld ASIC's appeal in the

case, meaning that Fortescue

faces a hefty legal bill and

Andrew Forrest could be banned

from acting as a from acting as a company director. However, Fortescue

is flagging a further appeal,

telling the Stock Exchange it's considering all available legal

options. Now with all the news

on major share price movements

over the week, here's Tom

Elliott. As you just heard,

the Australian sharemarket had

another solid week. Now

because we're in the middle of

results season, it is company

profits driving sharemarket

share prices far more than

developments overseas. First

up, Telstra. Stock up 5 cents

during the week. The stock

will go ex-dividend of 14 cents

a share on Monday and it has a

history of going up in the few

days before this. That's been

established well in the past. Still, investors like the

company's new-found focus on

wireless broadband. Turning to

mining and BHP announced a record first-half profit of $10.5 billion, $10.5 billion, however, the

stock didn't do much as the

company said it was going to

retain cash on balance sheet to

fund organic expansion. Its competitor Fortescue had a very

good result and announced a

maiden dividend. Before you

get too excited, the dividend

is just 3 cents a share

unfranked , which equates to a

yield of just under half of 1%

per annum. Qantas's profit up quite dramatically for the last

6 months. That company will not reintroduce a not reintroduce a dividend possibly because it's worried

about the impost of higher fuel

prices in the near future. The

ASX profit up just slightly for

the year. Not a particularly

good result, but, of course, its share price has been buoyed

by all this talk of mergers and

takeovers between various

overseas exchanges. Early in

the week, National Australia

Bank shocked the market, both

the sharemarket and consumers

by issuing its now famous dear

John letter in all the major

newspapers. Its share price

was up for the week as was

Westpac's, while the other two major banks, ANZ and

Commonwealth were down. It

seems competition is suddenly

firing up in the banking marketplace. That can't be bad

for consumers. Fosters

first-half profit pretty

disappointing in the wine and

beer decisions, but of course

takeover demerger talk is

keeping the company share price

buoyant. Winner of the week is

Ardent Leisure Group, up 22%

after reporting a massive 130%

increase in first half profits.

Loser of the week the Biota

Holdings, down 22% after

reporting an unexpected first

half loss of $16 million. This

time last week, the Federal

Government had just about inked

an agreement with the Premiers

for its health reform plan mark

two. Now the Business Council

of Australia has weighed into

the debate with its own report

on what should happen to the

health sector. It's mark for

the Government plan says " good

start". I spoke to the Business Council of Australia's

spokesman on health Rohan Mead,

who runs the insurer Australian

Unity. I've read the Business Council's report on the health

sector. It's full of

unarguable-sounding phrases

like the need for microeconomic

reform, focus on outcomes - but

it seems to be short on actual

specific suggestions about what

needs to be done. Do you have

any? I certainly do, Alan and I

think the issue though in the past has

past has been too much of a

grasping for the total solution

in some sort of package. This

is a very, very large sector.

10% of the economy, more than

10% of the workforce. It's

growing at $10 billion plus

accelerating per annum and in

that sort of context, the idea

of being able to sort of

specify the remedy for the

sector's ills all at once is

part of the problem. I'd settle

for a few little ones along the

way, rather than the entire

- Having said that, I think we

need to make sure we need to start moving away institutionally from a system

focussed on activity. What

should the Federal Government

do, apart from recent reforms

which are focussed on outcomes

as you point out? It seems to

be based on the Victorian

system of case mix funding

where funding is applied

according to the procedures, an efficient cost of the

procedures. Is that wrong,

should they do something

else? It's absolutely right.

It's something to be welcomed. Activity-based costing is part

of the solution, but it's

necessary not sufficient.

Being in a position where we

can understand when we add $1

billion or more to the public

hospital system, understanding

a little more what we actually

get out of the public hospital

system as a result, how many hip and heart operations,

that's all vital underlying

data and we don't have that

today and that's part of the

problem. When I find out a

little bit more about heart and

knee operations and what's

going on in the acute hospital

sector more broadly, but with

more granule ar detail, I can start saying things sensibly about what should our

complication rates be, what

should we be achieving in terms

of trying to bring patterns of

disease more in line in one

community rather than another.

Are there things we can learn

from this information? It's an

important first step, but it's

by no means the end of the

reform road. Are there specific

things you'd like to see

done? We need to do institution

building in this area. We need things equivalent to the

Productivity Commission and

APRA and the World Bank in the

health world. It's 10% of our

economy and don't get the

sufficient attention it needs.

We need Stuart protections so

they can stand up to powerful interest groups like

governments who are very

conflicted as funders and

providers in the health care

arena. There's a diagnose in the report talking about

turning the health care

industry on its head with

patients being on the top

instead of the bottom and specialists on the bottom

rather than the top. What does

that mean, how would that look

like in practical

terms? Imagine a situation

where someone has a complex

need, a complex fracture or a

broken ankle that needs a

specialist. That also needs to

happen, but we need to start

looking at the person as a

whole. Is the cause of that

frookture some osteoporosis,

other types of diseases which

also need to be treated? And,

in fact, to make sure there is

no reoccurence of breakages do

we need to do better? That's

the sort of orientation we need

from the system. Wouldn't that

cost more? I'm struck by a statement in the report which

said " health is a superior

good and, therefore, the

proportion of expenditure is

irrelevant". It seems to me if

you're overlaying the cost of

wholistic care on top of what

we already have that would be

more expensive, and the purpose

of the exercise is to restrain

health costs as the population

ages? There's a couple of

things in that. The current

system we submit doesn't manage

inefficients well. There is

likely to be inflation in costs

in some areas, but if the value

of the activity increases as

well that shouldn't worry us.

This is not about just a cost control mentality, this is about trying to drive better community outcomes, better patient outcomes and,

therefore, better value for the

system overall. Sadly, where

we are at the moment is that

governments and other major

funders are in the business of

cost control rather than

patient value. If we actually

address a changed orientation

we should be able to see a

better value equation.

Similarly, we should be able to

make the system look at its

efficiencies and actually seek

to squeeze out its poor

practices and replace them with

better practices. That also

comprehend not just one

instance of disease, but someone's whole lifetime

experience of health and ill

health. Thanks for joining us,

Rohan Mead. Thank you. That's it for the program.

Transcripts, video and Podcast

of all today's stories and

interviews will be available on our

Hello again. Welcome to

'Offsiders'. Perhaps Peter

Costello should dust off that

much-maligned newspaper column,

the one where he suggested that

maybe footballers are not the

best people to teach life

skills to our kids. Yet again a football personality is on

the front pages of the

newspapers for all the wrong reasons. This AFL's best-known player agent,

Ricky Nixon, who has admitted

having inappropriate dealings

with a 17-year-old girl, the

same girl at the centre of the

St Kilda nude photo

the scandal that involved his

own clients. That's our top discussion this morning. For

the top sporting performance,

surely Black Caviar, her win in

the Lightning Stakes described

in one newspaper this morning

as the best sprinting performance in performance in Australian

racing. Black Caviar at 200

metres. She's