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It's 4pm in Sydney, 2pm in Perth. I'm Laura Jayes. Our top stories: The ASIC chairman admits the corporate watchdog had to reduce the precautionary surveillance after funding cuts under the Abbott Government as Malcolm Turnbull insists he will give the regulator enough money to pursue misconduct in the banking sector. The corporate watchdog is set to probe Clive Palmer's role in the demise of Queensland Nickel as administrators recommend liquidation. Unions and Arrium's major lenders agree to replace the current administrators. We will have the latest shortly from SA.

Welcome to the program. I'm Laura Jayes, sitting in for David Speers who will join you from China tomorrow. In the meantime the Prime Minister is spending his second day in the west and one of the last Cabinet meetings before the budget is now under way. Publicly, the two major parties are engaged in a slanging match over whether a royal commission into the banking sector is needed. Labor says a royal commission would look into ASIC itself. It argues that systemic issues need to be examined in a public forum. The Treasurer indicated yesterday the Government would boost the resources of banking regulators. The Prime Minister was asked today if ASIC would have the funding that was cut from under the Abbott Government restored. This sp is what he said. We have given our regulators greater tools to deal with wrongdoing right across the greater business sector. If you look at what we did in terms of multinational tax asproi dance. A big issue.I asked the same question of the Attorney-General multinational George Brandis.Firstly in relation to resources, as the Government has said, we will ensure that ASIC and APRA have all the resources they need to enforce the powers under their ashth acts, the first point. In relation to the recommendations of the Murray inquiry t financial systems' inquiry, the Government announced in October we would be implementing all but one of the 44 recommendations that David Murray made. So still there's no concrete undertaking to restore almost $200 million in cuts from ASIC, or a desire to speed up the implementation of key implementation recommendations of the Murray review. The head of the Australian Securities and Investment Commission Greg Medcraft has told Sky News that with limited funding it can only do limited surveillance of at-risk companies. 70% of our funding is surveillance and enforcement. We are a law enforcement agency. So when we have less money, what it means generally is that pro-active surveillance, which is where we get out there and have a look and see where there's a problem, it means that in fact we have to look at our priorities and those that are of a lower priority, we don't do, or we scale back. Yo u have less surveillance which often results in less enforcement action. That's why law enforcement works in terms of money. Clearly you know, we've had to reduce our discretionary or pro-active discretionary surveillance over recent years. Perhaps an obvious statement, but less money means the corporate watchdog is somewhat less effective. That full interview on the latest with me at 7pm. Malcolm Turnbull went on the attack today when it comes to Labor's negative gearing policy, accusing Chris Bowen of ignoring a BIS Shrapnel report on negative gearing. Mr Bowen has some very serious questions to answer. It appears that he was given a prort by BIS Shrapnel which confirmed that a banning of negative gearing would drive down property sprals, so it would drive down the value of every Australian home, and it would drive up rents. A very unsatisfactory outcome. So yes, he has a lot of questions to answer. I thought his answers this morning were very slippery indeed. The BIS Shrapnel report did not model Labor policy. The BIS Shrapnel report was fund mentally flawed, contained factual errors and as the Prime Minister himself acknowledged a few moments ago in WA, couldn't model Labor policy because it was conducted before Labour policy was finalised and announced.Still not based on Labor's policy and Labor maintains that modelling is based on erroneous assumptions. The election campaign started. Both sides appear to have their scare campaigns ready. Turning to another issue. That is in Townsville. The demise of Queensland Nickel under Clive Palmer. There's been a development this afternoon. The Opposition Leader Bill Shorten has written to Prime Minister Malcolm Turnbull. For more details joining me is Sky News Correspondent Jim Middleton. What does the letter detail? Is this to do with what the Government can do in terms of help for the Queensland Nickel workers who are still, many of them, owed some entitlements.About 800 of them in all, those sacked and also those being made redundant as a consequence of the move to liquidation of the company. Good afternoon to you. Laura, yes, the point here is that among other things in the fairly devastating report from the administrators it noted that the company owed workers something like $73 million and their best estimation was that at best the company out of its own resources could meet about 50% of what the workers are entitled to, so leaving it up to the taxpayer and the Federal Government to meet the rest of the obligations. These are things like redundancy payments, long service leave, sick leave, etc, all those entitlements that people get when they are left go. There is provision in legislation for the Government to act before the entire liquidation process goes through which could take months and months. This afternoon Bill Shorten wrote to Malcolm Turnbull, not the first communication he's had with the Prime Minister on this matter, appealing to him to act immediately, saying among other things, that he noted the advice that he'd got before, if it becomes clear that the Fair Entitlements Guarantee, the scheme I was referring to, is the only option available to meet unpaid unemployment, or employment entitlements, I will ensure that assistance through that scheme is facilitated for retrenched workers as soon as possible." The words of the Prime Minister being quoted ba k to him by Bill Shorten. The Opposition Leader says these workers have lost their job through no fault of their own. I again request... "I again request you immediately direct the minister for employment to exercise ministerial discretion to ensure these payments are made as soon as possible to ease their plight". There is a pro-skrigs, he notes, before the Parliament at the -- provision, he notes, before the Parliament at the moment to reduce entitlements under the provision of the scheme, and he's asking the Prime Minister to rethink that. So the focus is on the Prime Minister to act quickly to ease the plight of these workers who lost their jobs through no fault of their own but through the mismanagement of the company according to the administrator's report a pretty devastating report and it will be interesting to see what the response is from the Prime Minister. He is in Perth. At the moment a Cabinet meeting going on over there. Only made one brief comment on this question today so far, Laura and that was that the voters of Fairfax, the seat that Clive Palmer currently holds in the Federal Government, would make far, their verdict on him and all the indications are from opinion polls and the like that there's no way Clive Palmer is going to retain that seat. So we will be looking to hear more from the Prime Minister. I think it would be difficult for him, or at least his Employment Minister, not to make some comment on this as the day wears on.Yes, cold comfort for the Queensland Nickel workers in Townsville. Thank you so much. Looking at jobs in SA as well, and right along the east coast, unions and Arrium's major lenders agreed this afternoon to have the current administrator Grant Thornton replaced by KordaMentha. Now joining me with more is Sky News reporter Patrick Murrell. reporter KordaMentha has a bit of corporate history here. What does this mean for the whole process and the ability to restructure Arrium and save those jobs?Look, Laura, unions and lenders will say that this is the best thing that could happen for Arrium and workers. The South Australian Government disagrees. They say that certainty is what is needed in a situation like this and while they would have preferred Arrium never went into administration in the first place, while they did have an administrator, they would have preferred just the one to stay there. Now it's looking likely the administrator will change with legal proceedings with unions and lenders teeming up together to have current administrator Grant Thornton overtlofr and replaced with KordaMentha. Legal proceedings will happen at around 5pm Eastern Time I should be over fairly quickly. From what I've heard it's a done deal at this stage. They should be replaced by tend of the night. SA Treasurer had stern words for lenders and unions in Question Time today. Let's take a listen. This further disruption by the awes trainian banks and the continue -- Australian banks and the continued use of Whyalla is distressing. The Australian industry needs certainty and a stable platform upon which the administrators t Commonwealth government, the SA Government, creditors and unions can work together to restructure the operations at Whyalla and give it every opportunity to succeed. So, as I said, that will all go ahead at around 5 o'clock. There was speculation earlier today that it would happen and banks and unions have been locked in discussions over the weekend. The KordaMentha is the union's preferred administrator. They got the banks to agree to using them instead of Grant Thornton. It's no secret that neither of the parties are happy with Grant Thornton, though the current administrator was happy with the way things are going. They believe that Arrium could have a future if Federal Government, State Government and going. all parties worked together but that is all up in the air now, as things move ahead with KordaMentha likely to take over. Thank you so much. We will speak to you again throughout the afternoon. Let's look at the latest essential poll now. There's been another busy week for the Government. Now I want to bring in Essential Media's Peter Lewis. Thanks for your time. Can I look at the two-party preferred vote. Neck and neck, 50/50. Hasn't changed over four weeks for the Government or for the Opposition I should point out.50/50. It's premised on a pry vary v mayor vote this week for the Coalition of 42. Primary vote for Labor of 35. 11 Greens, ten other Independents and 1% for the Palmer United Party. That 50/50 has been the same.

Do you think voters are waiting for the budget, giving the Government Lee way until they announce something?The big move happened over the summer when parliament resumed what had been a steady leap for the Coalition, 52-47, 53-47, for and I think there is a sense of now waiting to budget.

Now if there will be a movement it will be in the May to July period. What about in the preferred Prime Minister stakes? Malcolm Turnbull still leads Bill Shorten at 44-22.

Malcolm Turnbull ahead there. But the gap is narrowing. And this is something we've seen happen in other polls.Yes, that is right. Two months ago Turnbull was ahead 52-15, which was a 37-point lead. So he's still double, 44.22, but it is a significant cut in that lead. It does speak to still the Coalition really wanting to put their leader front and centre and Labor's strategy being more about core Labor brands where they are obviously doing better. Next question was interesting. Respondents were asked how fair is the overall tax system. Now, 36% said fair, 55% not fair, ten said don't know. This is probably a good sign for Labor and should also spur on the Government to maybe look at, you know, higher income earners. Indeed. It anchors a lot of the debates going on at the moment. Everything from Labor's policies on negative gearing and superannuation, to the Coalition's mooted proposal for a cut in company tax and to external events like the Panama Paper that are being played out in the global media. So this tax issue and the sense that the system is not operating fairly, could be a - potentially Ansett chor point for the election campaign.This leads me to an interesting result here with the questions about what voters think is most important to rein in, restricting tax havens the top one, minimum multinational tax rates, removing higher income, concessions, so there super was a question - what tax reform do you

I should say that the Government is very much looking at multinational tax evasion and minimisation as well.Yes, indeed. And there's two issues. One is, which issues resonate and then the ability of the parties to convince the public they can deal with the issues.

You're right. The top-end loopholes are getting across-the-board support. Anything 80-plus is everyone. What is interesting here is those where it is split. Negative gearing, open, 39-35 and some of the issues around GST, kind of dead now, which were also very much split. Those big end corporate tax evasion issues, though, it is a sweet spot for both parties if they can come up with credible policies. Certainly is. The ABCC question - how important is it to re-establish?

31% think it's important and 41% not that important. This is what we will probably go to an election on.If that is the trigger, the Coalition is yet to convince the majority of the people that it is a trigger that is, you know, worth running a full double dissolution over. So again you've seen Malcolm Turnbull trying to prosecute this case. The risk for the Government is it boxes them into a broader debate where they are seen as being on the side of the corporate tax evaders against the interest of ordinary working Australians.Peter Lewis, as always, thank you for your time. Now let's look at the rest of the day's news, bringing in Helen Dalley at the Sky News Centre. We go to Queensland first. Queensland Court has ordered Postcard Bandit bandit Brenden Abbott to be extradited to Perth. It's pending a Supreme Court review. Joining me with more is Sky News Brisbane Bureau Chief review. Elizabeth Tilley. Elizabeth, could there be a hiccup in Abbott's move to Perth? It certainly looks that way. Good afternoon. I've just come out of the Brisbane Magistrates Court from the extradition hearing where we saw hours after Brenden Abbott was released from parole today he was granted that order to be extradited to WA, where he could face another 16 years in prison. However, just after that order was made by Magistrate Gardiner, Abbott's defence lawyers asked for it to be suspended while they lodge a review of the application with the Supreme Court. Now the magistrate agreed that that could happen, so they now have 24 hours to lodge the paperwork with the Supreme Court for that review. If they don't do that within 4 hours, the suspension is lifted. And Brenden Abbott is then sent back to WA, possibly tomorrow. But if that review is granted, with the Supreme Court, then it will be basically determined on whether or not that application is withdrawn or whether there is a determination of the application, so it might succeed. So it is a hiccup at this stage. It's not over yet. It comes after Brenden Abbott was this morning released on parole from the prison where he walked literally a few steps outside the prison when he was met by WA detectives who arrested him immediately and took him to the watchouse and whisked him to Brisbane Magistrates Court for the extradition order. They want him to serve the remainder of his sentence for escaping jail in Fremantle back in 1989. 'S served 18 years in Queensland for that. They say that's not enough. They say that he has at least 16 years owing to be served. That's what what they will be asking for. So he was going to be sent back tomorrow to WA and to face a Perth court on Friday, where he was refused bail, but at the moment it's very much up in the air. He is certainly one of our most notorious criminals. He was known as the so-called Postcard Bandit, and he did escape jail twice, not just in 1989, but also in 1998 -- 19197 here in Queensland. At the moment his fate is very much in the air. So not quite the outcome we were expecting, Helen.Thank you. The search for the killer of 15-month-old Victorian child Sanaya is continuing after an autopsy revealed the toddler was smothered. It has also been revealed the child was in close contact with two men who were facing serious criminal charges. While there's plenty of questions surrounding the alleged abduction While and my Lorder of the toddler, it's been revealed the 15-month-old was in contact with two men facing criminal charges. One of them due to face court over serious family violence offences. The men cannot be identified due to legal reasons, but we understand the mother has been relocated to a safe house during this investigation. It's unclear whether the police are linking these men to the death or why the child and her mother was in contact with them, given the criminal history. Victoria Police has advised the media they will not be commenting on the men or whether CCTV in the area caught the killer on camera. There's reports that the council was advised not to comment on whether the security cameras were operational at the time. Now, this comes after an autopsy revealed the toddler reportedly died of smothering opposed to drowning but Vic Police are yet to confirm: Sanaya's mother said they were in a park on Saturday when a strange man snatched her child from the pram. Her body was found 24 hours later partially submerged in a nearby creek where a tribute and shrine is fastly growing. Police are hunting for a man matching the description given by Sanaya's mother. Homicide detectives are expected to examine the link between those two men and the toddler's death. Anyone with information should contact Crime Stoppers. A man who allegedly stabbed another man to death in a violent confrontation outside a Hobart home has been remanded in custody. Sky News Hobart reporter with more details. 46-year-old Robert Allen has been charged with manslaughter after allegedly stabbing a 39-year-old man six times with a sharp-edged knife. The 39-year-old died en route to hospital yesterday, and he was under an apprehended violence order. He and his partner allegedly have an 18-month-old child together. Today Cindy Knowles appeared in court. It's believed two young children at home at the time witnessed the attack. He's been charged with prior offences including hitting a woman multiple times with a hammer. It's believed it may have been started over a drug dispute. He's been remanded in custody and will appear in court next month.

Let's look at tomorrow's weather.

I will be back with more shortly Laura. Back to you. Great to see you, we will speak to you shortly. A quick break here. I will be back with the a Attorney-General George Brandis.

The Government is at odds with Labor over whether to have a royal commission into the banking sector. Labor hasn't yet identified what terms of reference there would be, but it argues that the royal commission would be given greater powers than some of the regulatory bodies like ASIC, APRA, the ACCC and the financial ombudsman. Today the Government argued it will give ASIC all the powers it requires, but when pushed further on that, both Malcolm Turnbull and the Attorney-General George Brandis weren't exactly forthcoming when it comes to reinstating that $200 million' worth of funding that was cut under the Abbott Government, nor was it forthcoming in pushing forward and bringing forward the time line of implementing the recommendations out of the Murray Review. I spoke to the Attorney-General George Brandis Attorney-General about this and also Parliament sitting next week. Attorney-General George Brandis, thanks for your time from Perth this afternoon. Can I first ask you, there's been 13 serious incidents of financial misconduct in just the last two years. Is the Government misreading the public mood when it comes to a royal commission into the banking sector? Well I think it's the Labor Party that is misreading the legislation, as a matter of fact, because as the Prime Minister and the Treasurer have pointed out, we have a well-regulated system, nobody is saying it's incapable of improvement, but we have a well regulated system with powerful regulators, namely ASIC, the Australian Securities and Investment Commission and APRA, the Australian Prudential Regulatory Authority. Each of those regulatory authorities, contrary to what's been erroneously assorted do have more extensive powers of investigation than a royal commission. What a royal commission can do is it can investigate, it can summon witnesses, it can compel the production of documents, and it can request search warrants. But its powers are basically powers of investigation and report. What ASIC can do under its act is all of those things but what it can also do is cause the initiation of both criminal and civil proceedings. It can, so it is a regulator with enforcement powers as well as merely powers of inquiry and report. Mr Bowen embarrassed himself this morning when he said on AM that the reason for his claim that ASIC's powers were not as extensive as a royal commission, I'm quoting him now, "ASIC can only investigate matters referred to it by whistleblowers". That is investigate absolutely wrong. ASIC can investigate matters referred to by whistleblowers, but it has motion powers to commence investigations on its own initiative and it can also inves date matters referred to it -- investigate matters referred to it by ministers. It is very surprising frankly that Mr Bowen, as the Shadow Treasurer, who was one briefly the Treasurer, is unaware of the powers in ASIC's own act, yet evidently, he is.But to look at what's happened in the last two years alone - we could go back further - as I said, 13 incidents of serious misconduct in the banking sector, so looking at the financial services' inquiry, giving ASIC perhaps more powers, will you give, fast-track the recommendations, it gives new product intervention powers and increased penalties. That would be a start, woultdn't it?For a start, Laura, and this seems another point seemingly lost on Mr Bowen and Mr Dreyfuss, the penalty provisions in the ASIC act for non-compliance orders in accordance with the investigations are more severe than the penalty provisions under the royal commission. And these are recommendations Dunn der the inquiry, the Murray inquire -- under the Murray inquiry, that have not been adopted. Will you fast-track those?What the Government has said when it announced the response to the Murray report last October is that in all but one case we would adopt the recommendations of the Murray inquiry. Now, so Laura, we have already made our intentions clear in relation to that. I said in, at the start of this interview that nobody says that ASIC's role is incapable of improvement. It is a wild and reckless thing for the Labor Party to say that our entire corporate regulatory framework is so inadequate that we need a royal commission to address it and in particular it goes to show how half-baked and underdone and how much of a thought bubble in fact this new, this Labor Party policy is, that the spokesman who is meant to understand this area of policy - the Shadow Treasurer and the Shadow Attorney-General - are making claims about the inadequacy of ASIC's powers when ASIC has the very powers they say it lacks. Aren't you leaving it to ASIC to essentially investigate itself?No. Going back to my previous question - will you fast-track these investigations out of the Murray inquiry?We have announced we will implement the Murray recommendations.When?That is a matter that the Government takes very seriously. We won't go about this in a half-heart ed or reckless way, the way the Labor Party is approaching such an important issue. Put this p in context Laura: What the Labor Party, which is the alternative government of Australia What is doing as a political stunt is calling into question the integrity of the entire Australian financial system and it's doing it effectively as a thought bubble in response to some observations that the Prime Minister made in his address to Westpac.But we've seen the Treasurer say there could be provision to give these bodies, particularly ASIC, more powers and I do note that the Abbott Government has cut funding to ASIC by about $200 million, so it would be reinstating that, because even Greg Medcraft has said those cuts have hurt ASIC.I understand the Prime Minister has made some observations earlier in the day, that ASIC will be given the resources it needs, but this isn't a question about the Labor Party - the Labor Party are not raising an issue about resources but about powers...But Greg Medcraft has... Let me...It would be a start to reinstate those cuts that were made under the Abbott Government.Well, I want to address what Mr Bowen has said. Mr Bowen has got this wrong. Mr Bowen and the Labor Party have said that ASIC and APRA as well lack the powers of a royal commission and they are dead wrong. They are completely wrong. ASIC and APRA have all the powers of investigation and inquiry and report and compulsion that a royal commission has under the Royal Commissions Act. But they have additional powers and stronger penalty for non-compliance and as well investigations by ASIC can be initiated, and APRA, can be initiated by themselves, on the reference of a minister, yet Mr Bowen said this morning they could only be initiated by a whistleblower. He got that wrong, too.You admit the banking sector is not perfect, there could be extra provisions given to these bodies that I've named. There's been cuts of resourcing under the Abbott Government, so will the Government restore some of these and what will you do to improve some of the funding, some of the resources and perhaps some of the recommendations out of the financial services inquiry? You can't tell me when the recommendation also be implemented. Well, Laura, there are two topics here you've raised. Firstly in relation to resources: As the Government has said, we will ensure that ASIC and APRA have all the resources that they need to enforce the ample powers under their acts. That's the first point. In relation to the recommendations of the Murray inquiry, the financial systems inquiry, the Government announced in October that we would be implementing all but one of the 44 recommendations that David be Murray made.
Okay. Well, we will continue to talk about this of course. Let me ask about Parliament sitting next week after the time - the House of Representatives is only sitting for two days. Why is that?The focus, frankly, is on the Senate. It is in the Senate the ABCC legislation has been delayed. It was presented to the Senate last year and knocked back. It was reintroduced to the Senate on 4 February this year and rather thanked debating it again the Labor Party and the crossbench decided to send it to yet another Senate committee inquiry, a committee that had already inquired into the self-same bill, an inquiry conducted before the same committee by the very same Senators in the same bill. So it seems there's been a long litany of delaying tactics because Labor and the Greens and some of the crossbenchers just don't want the Senate to do its job, to debate this bill. What the Government has said is that we've said, we will bring the Senate back for three weeks to give you ample time to debate this bill so there will be no excuse for the Senate not performing its principal role, which is a deliberative role to consider and debate legislation. Now if at the end of the day the Senate decides to reject the legislation for a second time, so beat and in the event that would occur, as you know, the constitution gives the Government certain options.But why not use this time to consider and put to the House the abolition of the Roads Safety Remuneration Tribunal. this I know this is a commitment to abolish after the election, but truckies have told Sky News in the last 24 hours they don't have time to wait, they don't have time, these couple of months until after the election. So why not use this time?Well, firstly, Laura, I will leave xhen veri on the Road Safety Remuneration Tribunal to my colleague who's had remarks to make about this within in last 24 hours. This is a very, very serious matter. It is a matter that imperils the livelihood of tens of thousands of owner-drivers across Australia and in particularly across regional Australia. Let me leave to my colleague Michaelia Cash to explain the specific measures the Government is taking to address that particular concern. But the principle, the principal reason that Parliament is being brought back is to make the, to put the Senate's feet to the fire, to make sure the Senate does its job, stops delaying Act ticks, stops the foot dragging, that it actually deliberates on the ABCC bill a bill that is designed specifically to eliminate or deal with widespread sis stemmic corruption in the construction industry and either as the Government wishes, enacts that legislation or if the majority so chooses, rejects the legislation, so that the Government can pursue the matter through a double dissolution and a joint sitting. Attorney-General George Brandis, thank you so much for your time. Thank you very much Laura. Let's look now at the new $5 note. Carrington Clarke joins me to discuss it. There's been plenty of talk about this on social media, Twitter, other newsagencies today. But firstly, why are we getting a new $5 note?We should firstly point out, and skorl the Treasurer has pointed out, this has been an area of innovation for a while now TRBA set the trend on using the new technology in banks notes to make them harder to counterfeit and more durable as well. This is the new design. Now, yo u can see the colours have been mostly retained, though a lot of people described this as maybe busy. though a lot of people described
this as maybe busy. The middle panel, that's transparent, so whatever colour you put behind it will show up. The Queen is still on there and the outline of the new Parliament House is the same. The basic colour scheme is the same but there are features including for vision-impaired people to allow features them to be better able to identify the note. These will be coming in to circulation on 1 September. It's mainly about improving the security, obviously, the scandals with counterfeiting which have the happened previously and dublt and updating them, maybe a fresher look from the

These will come in on 1 September, will potentially be the last with Glenn Stevens' signature on the back. He will be leaving. So what happens with the old note, do that they get filtered out?They get filtered out naturally when they're destroyed and damaged. They get circulated out once they are damaged. There's no necessity for them to be forced out sooner. I asked the RBA, gave them a call and asked them if they will potentially get rid of the five cent piece. They don't do the job, they corrected me, that's managed by the Mint, they handle the note side. When will we get rid of five cent coins?That's a decision for the bureaucratics. They are buck-passing. And the cost of the elements in there are more than the, the five cent piece. And Queensland Nickel has been one of the hot topics, there have been a mock up of different parts of the, of what other design we could have look at if we were trying to.

Let's go through a few of them as they have become available today. Some of the social media campaigns. Looking at who could potentially be on that $5 note. Here is how the process works. So as you can see them all in action as they're produced. Some of the sutions that we have had -- suggestions that we have had. Clive Palmer in the news. Laura, suggestion that maybe he would have made a genuinely good replacement for the note. Where is Clive Palmer on the $5 note? I want to see him on the $5 note. A few people have responded in the Australian public. This is a big part of people's lives. The $5 is probably the note that most of us have most commonplace dealings with.

We got different comments. Here we go, one coming up. The Chief Political Correspondent from Fairfax. Harsh criticism. Everyone is a critic when it comes to art.

Tony Abbott eating an onion. You would think that the staunch monarchist Tony Abbott wouldn't be happy. Replacing the Queen. And Jaquie Lambie. We don't have the new security feature. An outdated version.Poor artwork.

It comes into place in September. There's a few new elements on this note. Is it Wattle?Yes, so apparently each of the new notes is going to be a, have a different type of Australian model. I didn't know we had that type of -- that many types of Wattle. The this is an education push and a type of Australian bird we mut on there. They've got the Wattle design on the sides. But also it comes at an interesting time. A lot of evidence is that Australians are carrying less cash in their wallets, using technology like Apple Pay, Android Pay, square technology, so a lot of people are moving away from notes. However, some people enjoy the anonimity that comes with cash handing and some people don't necessarily want to know where all their cash is going.Very true. Well, if you like the old note, you should probably save them.I remember my mother when we got rid of $2 bills, kept them in old school enkriek lo peed yas which are also -- encyclopedias, also obsolete now. A quick break here. When we come back, we will focus on China. But also there's warning that if Australia doesn't, well f the Government doesn't look more seriously at budget repair n five or so years we could risk losing our Triple A credit rating. Paul Bloxham will join us.

The budget is a couple of weeks away. For every government all budgets are pretty crucial. This is the Turnbull Government. Scott Paul Morrison's first budget. There's a lot of expectations on this. There's a better story for the Government when it comes to commodity prices and the expectation of the iron ore price for one. There is a warning today that Australia could be at risk of losing its Triple A credit rating if there is not a clear pathway to budget repair in the next five years. I want to bring in Chief Economist at HSBC for Australia and New Zealand, Paul Bloxham. He joins me from Sydney. We hear quite consistently warnings about Australia losing its Triple A rating. How much of a risk is it?I think at this stage it's a fairly small risk because at this stage Australia has low levels of government debt when you compare it to other countries. Net government debt is about 18% of GDP, whereas the average across the OECD is closer to 75% of GDP. It's the trajectory that is worry some. If you go back to 2008, we had a net government asset position of 4% of GDP. We've seen debts rise quickly. If that were to continue at some point, sure, the Triple A rating would be at risk. Because we have lower debts than everyone else, at the moment that is unlikely. The Government needs to make moves to put us back to a sustainable budget path, but they have time to work that out.There's no indication there will be any significant moves in this upcoming budget. So how bullish do they need to be?I think it is a little disappointing that what we're getting is quite a bit of commentary that is suggesting there isn't going to be much reform in this budget. We certainly have seen most of the things that were on the tax reform agenda gradually scratched off the list, which I think is disappointing as well. The Government needs to be making plans to get us back to a sustainable budget balance position over time. Part of that in my view at least has to be that we find better ways to get tax, make the tax system more efficient and potentially get a bit more tax revenue because otherwise the budget will stay in that deficit position for longer and that of course will eventually put pressure on the Triple A rating.I think you might be sorely disappointed Paul Bloxham from all the indications we've seen. But looking at the commodity prices, there are, they are slightly up across the board. This is a better story for the budget overall. In my looking at the iron ore price, it had a four in front of it and the spot price is a lot higher than that now.Certainly the higher commodity prices will be supportive. The other thing supportive of government revenues that is the fact the labour market is looking better. That's been driving, that's likely to be driving more income tax recreates. So the budget will general will get a bit of a reprieve from those two factors in terribles of supporting revenues. And that will make the budget look potentially better than it did. But the challenge remains we have a budget deficit. With ehave to get back to surplus. The system, without changes, structural changes to the tax system, or to the spending commitments, that sustainable budget surplus is not likely.If I can ask you a quick question about the banking inquiry, the Government warned that if a Labour Government put in a royal commission it would kill confidence. Is that right?Well, certainly I mean, I'm not going to comment on the Royal commission issue with the banks. I think what we have right now is a system that's working fairly well and we have regulators that are making moves to make it work as it should. China - Malcolm Turnbull is on his way there a two-day visit. He's obviously there to talk up investment. This is on the become of the free trade agreement signed with China. Wa does he need to do? How important is a trip like this? It's being called the biggest trade delegation ever - 1,000 businesses, I think.They're our largest trading partner, the fastest I growing large economy in the world. We expect to have growing relations with China that will be supportive. They have their challenges, shifting their growth model from an investment-led story to a consumer and services-driven economy and Australia is shifting our economy from having been driven by mining investment to be more driven by services, exports, more by exports of agricultural products. It is important we maintain these relationships and continue to build on them. They're driving a lot of our economic success.China does seem to change tack in terms of the signals it sends out. On the front page of The Financial Review, a story that China cracked down on Aussie food and dairy imports. Vitamins in particular. This will affect big companies like Vitamins Blackmore's. Is that a huge issue or is this merely a bump in the road?I don't think this is a macro story as yet, but it is worth pointing out we are much more dependent now on the Chinese consumer in terms of our economic story. Mining investment is now falling and the mining story is not the major driver of our growth going forward. The major driver we think of growth will be demand from services from China and Asia and that relies, and agricultural products and that relilies on the Chinese consumer continuing to be able to access Australian products and continuing to demand our products. That is the major risk to Australia's outlook, if we were to see a pullback in terms of Asian and Chinese demand for our consumer products.There's been a bit of a focus on China and its steel production in the last week. With Arrium in sharp focus in SA, look, the amount of steel being dumped by China, of course, there is a focus on China. Should Malcolm Turnbull raise this, in a public forum in China when he goes there, not there, but is there a capacity to raise it privately and is it just China we should be worried about or is it Brazil and other steel-making companies? Are we too focussed on China and steel dumping?I think there is a global glut of the was thety for producing steel. Steel prices have -- capacity for producing steel. Steel prices have fallen. It creates challenges for pricing of steel products and I think this glut of capacity to produce steel will take a long time to, will take a long time to work through.We shouldn't forget that China is using our iron ore to produce it, right?Sure. We're a large producer of, a large exporter of iron ore. It is an important story in terms of providing that input into their steel industry and we are still seeing month on month increases in terms of iron ore, exports to China, so although China are consuming less of their iron ore and seeing their iron ore production falling because they are pulling back to some degree on steel production, they're consuming more of our iron ore. It's a fine balancing act. We want them to continue to demand our iron ore, they are, but there's excess capacity in the steel industry. Paul Bloxham thank you. A quick break here on PM Agenda.

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