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(generated from captions) don't think there will be any

heads rolling in the short

term, but that doesn't mean that the national secretary

might not find something more

interesting to do in the second

half of this year. Okay. Niki?

Word is seeping out from the

business community to the

political community that Bill

Shorten is telling anybody

who'll listen that he thinks he'll be time of the next election. I'd

be a bit more careful about who

I talk to, if I was Bill

Shorten. It sounds a long way

premature to me. Okay. COAG hasn't

hasn't met for a long time.

The Government has settled on a

date, significant one with

that, February 14. We'll leave

you now with Julia Gillard

explaining that one. Thanks

for watching. We have COAG

coming up. I actually have the secretary of my department

be looking at the both of us here, Terry Mooram. You

and saying why is it that these

two people would manage to pore

over a calendar for 2011 and

without even apparently set COAG on Valentine's Day

realising that it was

Valentine's Day when we set it.

We're hoping that the spirit of Valentine's Day breaks out Valentine's Day breaks out and

we are able to work towards a

better agreement on health care

G-day there, and welcome

back to the program for another

year, and what a start to the

year it's been. Queensland and

Victoria have been underwater

and now North Queensland has

been hammered by Cyclone Yasi,

and revolution is erupting

across the Arab world adding a

already dramatic new twist to an

already uncertain world. We'll

check out the situation here

with the head of one of the

companies in the eye of the storm, Patrick Snowball of Queensland's

Queensland's biggest insurer

Suncorp. And globally,

Europe's debt crisis is far

from over and now surging oil

and food prices will soon push inflation back into an already

chaotic policy mix. We'll talk

to Morgan Stanley's Gerard

Minack about the fallout. And

after a decade of pushing

corporate Australia's heavy

barrow , Business Council of

Australia CEO Katie Lahey has

moved on. We'll interview her as she leaves. This Program is Captioned


Well, it's too early to say

exactly how much the damage

wrought in Far North Queensland

by Cyclone Yasi has cost, but

early estimates put it at

around $1 billion and the bill from Queensland's flood a

couple of weeks ago looks like

being about $5.5 billion. And then there's Victoria's flood,

the massive hail storm in

Brisbane late last year and New Zealand's earthquake, which

knocked over Christchurch. The

list of recent natural

disasters in the neighbourhood

makes for ho Rehnous and

expensive reading. It's going

to have pretty serious

implications for the way we

manage and pay for risk. The

Brisbane-based Suncorp Group is Australia's biggest player in

the general insurance market

and has had a big exposure to

spoke to its chief Patrick all the recent disasters. I

Snowball about the job ahead.

Patrick Snowball, it seems like

the insurance industry has had

to have its heads knocked

together by a Government

minister in order to get to a

point where you've got standard

policies that people can

understand. Why has it taken

so long? Why did it take Bill

Shorten to achieve that this week? I think there's been a

long history in Australia about

policy wordings, and it's very

easy for it to become the

lightning conductor for what's

going on, but I think you'll

find that the industry in

twufn-2008 did put a proposal

wordings weapons inspector forward for a standard set of

actually declined on the basis

it would be anti-competitive,

so we've been down this road

before. Why isn't that the same

thing this time? I think because people have very much

gone to the focus of " am I

covered, am I not?" And the

variety of wordings and so

looking for that clarity is

something really important to

us and if it helps to have a

standard set of wordings then

we can get there, but whether

you've got a standard set of

wordings or not doesn't mean an

insurance company is going to

offer a type of insurance. I've

seen a figure of up to 60% of Queenslanders haven't been

covered in the floods - does

that sound right to you, and is

that reflective of your

company's experience? We under

the Suncorp brand are the only

company that gives automatic

flood cover in Queensland and

something like 33% of the

policiholders up there, because

we have a large market share

across the whole of Australia,

are actually covered. We have a

brand that doesn't provide

flood cover? We have one brand

that doesn't, but there has

always been the option to take

out under the Suncorp brand automatic flood cover. What's

the difference in premium? If

you're in an area that floods,

very substantial. Like

what? It's a significant

multiple, I think that's the

best way I can explain it. But

as I said, it's been something

that we've had available for

the last three years. It has

been well taken up. Indeed,

70% of our mortgagees through

the bank have actually got

Suncorp policies that give them

automatic flood cover. But I

think the other thing to

remember is that something like

90% of houses in Australia

don't need riverine flood

cover, in other words flood

from rivers because they're not

endangered and if people

started off with that automatically you'd be charging

too much for a premium for a

risk people don't need. It's

actually quite a small

percentage of the housing stock

that is exposed. What do you think should be done with the

people who aren't insured who

might live door to the person

insured - what should who is a client of yours who is

happen? This is a really tough

call and it's one that I've

experienced in the UK on several occasions, and

certainly when you start to

look at Government support and where that should go... I mean,

obviously there are hardship

funds there are ways that can

mitigate some of this disaster,

but it is a disaster for some

people and we've just got to

look next time to make certain

that either they have the flood

cover or their houses are

better protected. But

certainly in the UK, the

example was very much that it

was the public sector housing

and it was the contents of the

occupants where the first help

went. You've been knocking

around the insurance industry

for a while, are back to back

disasters like this good or bad

for the insurance industry, in

that you know, they probably

insurance people to take out

more insurance later but in the

short-term you take a hit? I think obviously insurance is

something you work out over a

long period of time and there

are times when you get these

back to backs. I mean, we've

had an earthquake, a cyclone

and two floods since September

taking New Zealand into account

as well, and you look

statistically and say all these

are 1 in 100-year events, how

do they all appear at once? The challenge we've got is we've

got to take into consideration,

is there global warming, what

do we do to mitigate risk? The

insurance industry has a huge

amount to contribute, not just whether

whether we will insure or

won't, but to advise

particularly the governments on

measures that can be taken to

mitigate the risk of changing

environmental circumstances. I

suppose one thing you can say for certain about North

Queensland is there's going to

be some cyclones, and also

floods eventually? It seems to

rain an awful lot in North Queensland. The interesting thing about it, of course, is

that since 1982 with the new

building regulations that a lot

of the houses have been built

to cyclone standard. We had a

customer from Innisfail ring us

up to say the house we rebuilt

for him after Larry had no

damage at all, so I guess after

a period of time you'd say every house in northern Queensland is going to get that level of protection. So I

think that's an example of what

I call risk mitigation and

that's as important as just

paying insurance premiums. The

'Financial Review' cited an

email from Zurich this week to

the effect that a number of

insurers are exiting the strata

market in North Queensland in

particular. Are you seeing

that? Is there a shrinkage of the number of people providing

insurance? Well, I think if you

actually look, we are the last

insurer in Queensland, but we

are a Queensland insurance

company. What do you mean " the

last insurer" ? The people providing flood cover in

northern Queensland, we're the

only people, so again, they

always say the premiums of the

many pay for the claims of the

few and we have substantial

premiums across Queensland, but

our exposure in Queensland is

not disproportionate to the

exposure we have across the whole of Australia. Some

people think we have a huge

concentration. Actually we

have almost the same percentage

of the Queensland market for

household insurance as we do

the rest of Australia. We are

just a very big insurer. This

article actually we're talking

about the exiting of insurance

companies also predicted that

premiums would rise by at least

30% in Queensland partly because of that and also

because obviously the cost of

the disasters, is that likely

do you think? I mean, I think

that people come out with all

sorts of numbers early on. You

often hear loss adjusters

saying how many billion a claim

is because that encourages more

people to get in. Substantially if you actually

look at the exposure of

reinsurers to claims in North

Queensland, actually it's not

that great. If you look at it

compared with the earthquake in

New Zealand or you look at what

happened in Katrina, a lot of

people don't have flood insurance in Queensland and

therefore that's not being hit

by reinsurers. But they're

always going to be looking at

risk, but I mean, the

reinsurance market is a global market and the thing that

actually drives the premiums in

that market is do we have hurricanes in the United States

every year? And if we don't

have hurricanes in the United

States, there is capacity

elsewhere, but to your early

point, the key thing we've got

to understand is if this

becomes a year in-year out

problem, then reinsurers are

not going to be looking to

their premium being risk

mitigation in Australia,

they're going to think that

it's going to have to carry a

premium. I suppose a key issue

for your industry and the

reinsurers as well is to what

extent are these weather

disasters related to climate change and, therefore, becoming

more frequent? We almost

touched on that earlier on.

That's at the heart of this

issue. Is the story changing,

or is this a cycle? So if you

look at La Nina years, there is

a lot more water. El Nino is

much drier, but in the middle

there's about 45% of the time

that's neutral. Unfortunately,

we don't happen to have we on't happen to have had we don't happen to have had a

neutral year over the last

three or four years. What about

the strains on your business,

are you on track for an increase? The underlining

margin at least 3%, we're

getting that out of the benefit

of reengineering the business.

Talking about my business, I've

been in Australia 14 months and

I couldn't be more proud of the way the Suncorp team, whether

it's the bank, the insurers

have really come together. I

had 100 people on the ground

within 48 hours of the Brisbane

floods and we've been through

about 90% of those risks

already and got them on the scheme and started to fix

people up. It's just fantastic

the way people have rallied

together and this morning I've

got people out in North

Queensland as well. You reckon

it's a pretty good insurance

company? It's a fantastic

insurance company. What about

selling the bank? I think we

obviously never comment on

market rumour. There are two

things I'd point out. Firstly,

we have a very clear strategy

which is we're a diverse financial service group. We

meet the aspirations of Middle

Australia, we can give motor

insurance, life insurance, a

deposit, a mortgage and part of

that is the bank and the bank

is travelling really well and

the key issue there is that I

would point out to people that

our bank has just had an

upgrade in its rating to A

plus. It gets that A plus

because it's part of a group,

other regional groups only have

Triple B ratings. That bank is

travelling well and well bedded

into the group. The obvious

thing to do is for you to merge

your bank with Bank of

Queensland? Everybody has their

opinions. Thanks for joining us

Patrick Snowball. Thank you

very much. Now with the latest

business and market news, over to Jayne Edwards.

Thanks. Fairly tepid employment numbers on Friday

kept a lid on the US sharemarket, but Wall Street

still managed to chalk up its

biggest weekly gain in two

months. The January payroll

figures came in 100,000 below

expectations, with just 36,000

jobs created during the month.

But the US unemployment rate

also dipped to 9% because of

people dropping out of the

search for work. It confirms

the current belief among

investors that the US economy

is improving, but still needs a

leg up from the Central Bank. On commodities markets,

political unrest in Egypt is

driving the oil price which

settled on Friday at $89 a

barrel, while the prices of

sugar, wheat, corn and pork

jumped after the devastation of

Cyclone Yasi in Australia and

snow storms across America's

mid west. Global food prices

are now at record highs

according to the UN Food and

Agricultural Organisation. All

of that uncertainty didn't

affect investors' appetite for

stocks. With global

sharemarkets all posts robust

weekly gains of 2-3%. With our

local news, here's Tom Elliott.

As you just heard, the

Australian sharemarket rose

strongly during the week, not a

bad effort when you consider

all the terrible weather we've

been having. Let's look at the

insurance sector. IAG shares

down 2%. Suncorp Metway down

1%, but the real surprise was

QBE. Its stock up 4% during

the week. It's partly because

Cyclone Yasi will prove to be

less destructive than

originally feared, but also

because QBE appears to be back

on the path to growth unveiling

an acquisition of an insurance company over there called

Balboa. The market liked it.

Sticking to the Queensland

theme and shares in Queensland

Rail were up 2% also during the

week. Commodity prices

continue to rise. Iron ore is

up, coal up and this was much

to the delight of BHP and Rio

shareholders who saw their

stocks rise. Interestingly, a

new rich list published during

the week said West Australian

iron ore haress Gina Rinehart

is the richest person in

Australia worth almost $9

billion. Second place Twiggy

Forrest, also in iron ore,

worth almost $6 billion. In

the world of takeover s Austereo scored the world

looking for a buyer found one

in Southern Cross Media. The

takeover worth between $2.05

and $2.15 depending on the

level of acceptance. The Reserve Bank left interest rates on hold, that was seen as

good news for the banks. The

banks' funding costs these days

are largely set by

international, not local

markets. Finally, Tabcorp

shares up 5%, the company did

report a better than expected first-half profit, but it also

confirmed that its demerger

process was well on track to be

complete by 30 June, 2011. Winner of the week is Atlas

Iron up a whopping 21% after

upgrading its iron ore resource

in Western Australia. Loser of

the week is Gunns, down 11%

after failing to find a buyer

for its West Australian


The uprising in Egypt and its

potential to spread through the

Arab world was not exactly the

start to the year the jittery

global markets had hoped for.

Nonetheless, investors seemed

not only to be toughing it out

so far, but also hanging on to

a degree of optimism. Can it

last? I spoke to Morgan Stanley's Head of Global

Developed Market Strategy,

Gerard Minack.

The markets seem teflon coated,

Middle East crisis, sovereign

debt problems, inflation

starting to be talked about -

shall we go through those

things one at a time, or is

there an overall theme to the

market's resilience? I think

particularly in the developed

world it's all about growth and

that is giving them that teflon

coating, so long as you think

the world is normalising, all

of these other things can be

dismissed as embroidery and

it's quite different in Asia

where they are a year or two

ahead of us in the West and they're already they're already concerned about

policy tightening. Here in the

West we're in this sweet spot

outside of Australia of getting

better growth news and thinking

the Fed, the Bank of Japan will

not be tightening for at least

another 12-18 months. It's sort

of a continuation of the QE II

rally, but it's the global

liquidity rally - is that right? It's the global

equivalent. We are seeing

macroupside surprise. Chunky

data out of the US, but the

real big surprise is out of

Europe. I saw an oak leading

indicator graph today and it

was rolling over quite clearly.

Is there any sense in your mind

that the recovery will fade

this year? No. I'm actually

getting more optimistic. The

secret to a sustainable

expansion in any economy is

getting jobs growth. It's a

thing sorely lacking, even in

the US where we've got GDP back

to its prior peak with 7 million fewer workers, but I

think all the leading

indicators are coming through

now that will start to see

payroll growth accelerate, will

start to see 200,000 plus jobs

a month and that's going to be when people go yep, I believe

we've got a year of decent

growth, we'll get one last

rally up in equities and we

start to consider all these

other things that for now this bullish marketplace can

ignore. Do you think there'll

be any sovereign debt problems

this year? It's a real risk.

The trouble with trying to say

when it will blow up is it's unpredictable. There's a

political overlay and let's not

forget the whole sovereign debt

crisis was reawoke en last year

in Europe when Angela Merkel

said "Shouldn't some of these

buggers take a haircut" , which

we never thought she'd say, so

you've got to think about the

politics. If the markets say

these countries are going to go broke and increase funding

costs they will go broke, if

the market settles down it

makes it easier. We are

bearish on the end game. The

simple point about some

European countries is they are

insolvent. It depends whether

policy - It's a question of

when that comes up, right? The

lesson here is some people said

Japan is insolvent 20 years ago

and they're more insolvent, but

the trouble is here we are

waiting for Japan to blow up.

We could be waiting what would

for an investor be an eternity

waiting for some of these

periphery countries or the big

one, it's starting to

infiltrate into the core, which

we're also worried about. But

that could be a 2013, 2014 story. What about inflation,

we've got Brent crude at $100 a

barrel because of Middle East

turmoil, the food price indexes

all at record highs, doubling

in a few months. What's your

view or take on inflation this year? It's one of the reasons

why I doubt we're going to have

a long sustained macroexpansion

globally. We're going to run into constraints on commodities

and the key one for me is

actually energy. Whether you

think we're running out or not,

the supply pipeline the supply pipeline is

constricted on a 4-5 year view.

We've had oil back courtesy of

the growth in the emerging

world with lacklustre western

world growth. If we're talking

about US growth this year at 4

or 5% and they are after all still the world's biggest

energy consumer, we can easily

see oil at $150 again in the

second half. Yes, that leads

to headline inflation picking

up, but I think markets would

be much more likely to say

"Yes, it will pick up

inflation, but what it will

also do is act like a tax for

the energy-consuming countries"

and ultimately we'll look through short-term inflation

and worry about what it means

for growth in 2012. One more leg up in the market, how much? 10-15%,

much? 10-15%, that would be

about right for a market that's

saying this is back to normal.

Medium term we're not back to

normal, but this is a

short-term marketplace and as

we saw last year, in global

equities we had five moves of

at least 10% last year, each

one happened fast at an

analysed pace of 80%. You

could have looked through last

year and said you had OK equity returns, but within that you

were a rooster one month, a featherduster the next and I

think this year we could have a

great first third, first half

of the year. That will be when everybody lifts their forecasts

for the end of the year and as

soon as they start lifting

those forecasts I think the

smart investor should start to

sell. The medium term is the

new long-term, isn't

it? Exactly. The institutional

clients I talk to have

telescoped their trading

activity, conviction levels are

very low and ultimately, you're

only as good as your last trade

and they just play it month by

month, quarter by quarter and

2012 for now may as well be

next century. Thanks

Gerard. Thanks.

Rupert Murdoch launched News

Corporation's new iPad

application the Daily this week

proclaiming it represents the

chance to make news gathering

viable once more. The

'Australian' even gushed that

it makes media magical again

and the hyperbole surrounding

the launch of this iPad only

publication did overshadow the

quiet strangling of MySpace,

the site bought in 2005 for

$580 US beaten pointless by

Facebook. If the Daily and the

iPad is the exciting future and

MySpace is the dark past it

won't be any easier, that's for

sure. The price of a

subscription will be 99 cents a

week or $39.99 a year. It cost

about US $30 million to build

and employs 100 journalists and

costs $500,000 a week to run or

$26 million a year. Apple

takes 30% of the revenue so it

looks like News Corp will need

about 900,000 subscriptions to

break even. Murdoch said

800,000, so let's split the

difference, 850, that's tough.

Churn rates on iPad

subscriptions are very high and

there's plenty of news

available for free. Also,

early reviews of the Daily are

mixed at best. One reviewer

writing for a competitor

admittedly said it was a news

magazine torn up and stuffed

page by page onto an iPad

screen. It's only available in

the US at the moment so I can't

tell you what I think, but I

can tell you what I think of

Rupert. He's an 80-year-old

media magnate who still thinks

his wish will make it so, but

the world has changed.

It's been a fairly tumultous

decade for corporate Australia,

but one constant has been the

stewardship of its peak lobby

group, the Business Council of

Australia by Katie Lahey. She

finished her tenure as chief

executive at the BCA on Friday

and took time out from packing

up to reflect on what's been

achieved and what hasn't.

Katie Lahey, just as an

observation, the Business Council of Australia seems to

be like part lobby group and

part think tank, but because

it's got a small number of quite large members it doesn't

need a high-profile, it doesn't

have to take a lot of media

profile. I just wonder does it

throw its weight around behind

the scenes? You'd call us a

quiet achiever. We don't throw

our weight around, but have

conversations with key

decisionmakers, usually in

Canberra, but sometimes in the

States but often we do that

having done a serious piece of

research. We're not going

banging on people's doors until

we know what we've got to say,

then we'll do things quietly

and if we feel we're not

getting traction we may go out

into the media, but that's not

our general modus operandi. Obviously with the

mining tax, that was a very

high-profile campaign it wasn't

the BCA just a few of your members,

members, but they threw their

weight around and actually some would say brought the Prime

Minister down? They certainly

got change in that tax and that

whole thinking around the

mining tax and I think for us,

our position on that was this

is a worrying tax. It's a

worry for the mining sector,

but for the rest of our

membership it's a worry because

there were sovereign risk

issues, there were investors

overseas very concerned if it

means this for the miners, will

it mean this for the banks this

week, and this for the

retailers the week after. Was

there awkwardness with that, because that tax came out of

the Henry Tax Review and I know

last year Ken Henry praised the

Business Council's contribution

to that tax review process. So

were you in some way

responsible for the mining

responsible for the mining tax which you subsequently opposed? No. I think what he

was surprising was our submission that was

comprehensive and quite

radical, which you don't often

get from business

organisations, but we'd taken a big picture approach looking

beyond just the bottom line of

our members, what did we need

to do to increase

participation, what did we do

about the welfare to work

issues. So we'd gone beyond

just the media bottom line

issues and I think that's what

he's done in his review and I

think he was praise worthy of

our work because we'd taken a

similar tact. The big event of

the past ten years was the

election in 2007 which saw a

change of government. A big

part of that election campaign

was WorkChoices and industrial

relations. I think the

Coalition now reflects that

WorkChoices went a bit too far

at the time. What was your

position leading up to that

election on WorkChoices? We

didn't have a particular position on WorkChoices, but

what we did say is we had a

position on industrial

relations. We wanted a system that provided flexibility in

the workplace, that increased

participation and enhanced

productivity. So we were

looking for that and we

assessed the various options

against that sort of set of

principles and before that

election - I've actually been

here for four elections - but before that election which saw

the change of government, we

ran an advertising campaign,

flexibility in the workplace, which highlighted the need for

that highlighted the fact that

productivity in Australia has

been falling. But did you think

at the time that WorkChoices

probably was going too far, did

you think it would rebound in

the way it did? I don't know,

but when the Rudd Government

came in and they had such a

strong mandate for the Fair

Work Act you had to listen to

that and say the general public

has said there's something

here, so we obviously with a

new government, were there on

the sidelines wanting to make

the new system work and to

support that as best we could,

but our principles remain very

much the same. Is this going

to enhance productivity? Is it

going to allow more people into

the workplace? Is it going to be flexible enough for

Australia to compete on a global stage? What's the

answer, what's your position

now? We've got a watching brief

on it. Our members have asked

us to look at it, to watch it

and I think the danger point

will come in probably about

2012. A lot of the existing

EBAs are up there, an election

year. I think that will be the

point where we'll have

collected our evidence which

we're doing regularly now with

our members and be ready to

present that to government.

Government has said that the

current system will enhance

productivity. Well, the jury's

well and truly still out on

enhancement of that. We haven't seen any

productivity. You don't think

you have? We haven't, no, and

that's a concern for Australia.

It's been the same for the last decade. We've seen

productivity trailing down and

we'd like to see it starting to

go up again. Is that the

biggest challenge Australia

faces? I put it at the top of

the list. The other big

challenge for us is making

challenge for us is making our

federation work. In 2011 we've

got a system that can't deliver

us a national education system, a national nrmg system, national infrastructure. We've

got too much red tape and it's

different in every State and

Territory. We've still got a

whole range of different

occupational health and safety

systems and yet we want to

compete on a global stage and

our States are saying well,

it's Sydney versus Melbourne,

Melbourne versus WA. We

shouldn't be thinking like

that, we should be thinking as

a federation, as Australia

competing with the rest of the

world. Our competitors now

aren't individual States, our

competitors are Hong Kong,

Singapore, China, Korea. We've

got plenty of competition out

there. We don't need to be squabbling internally. I think

you're moving into your fifth

CEO role, it's a long way from

Yorkshire. Yes, it is. How do

you reflect on your career? I

pinch myself. I came here as a

migrant when I was 21 thinking

I'd stay for the 3-year working

holiday and here I am many,

many years. I'm not going to

tell you how many, later and

being the CEO of the Business

Council of Australia. I've had

a terrific career and all my

adult education and all my CEO roles have been here in

Australia and I just feel very fortunate migrant. I guess

you're starting a whole new

career now in recruitment.

What qualifies you for that? I

think the fact as you said I've

had four other CEO roles and

they were looking for a CEO. I

am used to recruiting and

selecting people in my own

team. If they want to build a

business and the recruitment of

CEOs is one of the top criteria

for that, I have got a very

good little black book in my

back pocket. A good note on

which to leave it. Thank you

the program. very much. And that's it for

Live. Welcome to another year This Program is Captioned

of 'Offsiders'. As the various

football codes prepare for

another season, gambling is

emerging as the first serious

challenge. In the NRL Ryan

Tandy has been charged with

giving false evidence as part

of an investigation into suspicious betting. At the

same time, betting agencies are

redoubling their involvement in

the game. If a sobering

dangers of all of that is needed, then it happened

overnight when the ICC threw

the book at three pack Stanni cricketers for conspiring with

book makers. On Mr Butt a

sanction of 10 years on inI