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Inside Business -

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(generated from captions) when you have to. The green

car program, the solar program,

cut me off, I don't care, the

cut me off, I don't care, the whaling initiative against

Japan, the refugee program. To

be continued. I wonder refer

to the good weekend which you

had a glimpse of before with

Christopher Pyne on the cover.

Is this the most annoying man

in Australia is the headline.

When they told him they'd need

more than an hour for the

interview he said I can't talk

hour. We'll leave you with an idea from Victoria's

idea from Victoria's new

premier Ted Baillieu who thinks

MPs thrown out of Parliament

should be fined a day's pay and we'll have a reaction of that from we'll have a look at the

politicians. Thanks for

watching. I think that will

assist in sending messages that

the community expects high

standards. Isn't it interesting, this proposal coming from it appears the

speaker, Ken Smith, saying that

you get kicked out

you get kicked out you may lose a day's pay. He would have a

been here on a pro bono know

basis in the last few years. I

think the public would rather

ago sleep. I think it's pretty see people animated than fall

stupid idea. This is crap on top of crap on

Welcome to the program. Two

intensive years ago, Rio Tinto was in

intensive care, bleeding under

a big debt load, thanks to the

ill-timed acquisition of Alcan.

After a big infusion of capital from investors and radical

surgery, it is shovelling money

back to its shareholders thanks

to the soaring price of iron

ore. We will talk to Rio chief

Tom Albanese about where the

company is going now.

Australian households are

experiencing an equally

extraordinary turn-around in

their finances. From

their finances. From big

spenders to big savers. We have

put the purse back in the

pocket. In the most dramatic

shift of its type among shift of its type among all

check out the implications of developed economies. We will

this and the other challenges

facing retailers. Plus, of

course, the market reaction to

the dramatic events in Egypt. Live. This Program is Captioned

In first person, tuning out.

Piano sales bounce back but

will a skills shortage leave a

flat note? It definite

flat note? It definite ly

there is an influx of piano

sales, let's say from 10, 15

years ago. I'm probably too

old, I'm working harder now

than I was at 30. Over the past

two years, the giant miner Rio

Tinto has dug itself out of an

all mighty hole. This week it

repaid the investors who tipped

in $15 billion to rescue it not

so long ago. With its debt

now almost wiped out and soaring

soaring commodity prices and

demand delivering a record $14

billion profit, Rio Tinto is

now back in growth mode. I

spoke to Rio's chief Tom

Albanese in London about his

plans. Tom Albanese, you have

announced a big increase in

profit and a bigger increase in

dividend and a share buy back

$5 billion. But the stock

price went down. Do you wonder

price went down. Do you wonder

what you have to do to get the

stock price up? Not really.

There was a bit of buy-in to

the rumour of selling to the

news. We had a strong week of

performance. We have softness

in the broader market right

now. As I have been meeting

with shareholders, analysts,

many have come to me and said

'We weren't expecting capital

return, we were

return, we were surprised'. Your balance sheet is strong.

Your gearing is going to be

left about the same level, is that correct? From our

perspective, we have talked

about pretty good set of

current economic conditions. I

think GDP at 4-5% this year,

higher than we would have

expected, good long-term

picture. But there is enough

uncertainty out there, enough

risk or volatility out there. Most people I have been talking

to saying it is not a bad time to keep a strong balance

sheet. How do you feel about

the balance of your portfolio

overall? You had a go at

aluminium. Now two-thirds of

your profits come from iron

ore, do you feel overweight. ?

On aluminium, it has been a

big charge but a profit in

of overall 2010 aluminium was helpful in terms

of overall 2010 performance. We

have had very strong iron ore

pricing and record production.

We have had a good year in the

iron ore business. We

shouldn't forget about the

important contribution we have

seen from copper and coal and

the other parts of the

business. That is the beauty

of a diversed model. Some

years, metals do well but

think too many others might not be. I don't

think too many people

accurately can predict 10 years

ahead which are strong and

which aren't. Having a dwersified portfolio of first-tier assets is a good

strategy. Some of the analysts

I have spoken to talk about you

as a pure play iron ore

company. I think this has been

a very good year for the iron

ore business but we make

profits in other parts of

profits in other parts of the

business . I would like to

continue to grow the iron ore

business, particularly the

Pilbara which is an important

part of Rio Tinto but also the

Australian economy. If we can

find the right opportunities in

other parts of the business I

want to push them too. The iron

ore price is at a historic high

which is why you are making so

much money. What's your

pricing outlook? I would say iron ore

pricing is higher than I would

have anticipated 12 months ago.

Even in the past 12 months we

have seen volatility so we

shouldn't preclude that volty

from taking place as we go

forward. We will look over the

next year - it is hard to find

big new areas of supply

globally, particularly in 2011.

But as 2013-2014,

But as 2013-2014, 2015 stand

winding in you will see new

iron ore coming in and it will

put the market closer in

balance. As we speak today, the conditions are tight with a

demand that's continuing to be

well in excess of what the

supply is. What do you think is

the long -term equilibrium

price for iron ore? That's at

least a $64 million question.

least a $64 million question.

In general we would say when

the markets come into

equilibrium will lead to some

softness in those markets

longer term. We invest on that

basis. Anyone that's investing

on the basis of today's prices

are likely to be disappointed

down the road. The question

will be over the next, say,

five years, 10 yearses, what

will be the global steel demand

and how that will translate

and how that will translate to

iron ore production.

Realistically we can expect a

reversion from current reversion from current prices.

You are confident about the

copper price according to

statements this week. Are you

the most optimistic about

copper? 10 years ago, if you

were to ask anyone in the

mineral sector what were the

metals you were most pesmatic about, they

about, they were about iron

ore, coking coal and copper.

Look at how things have

changed. Today I am optimistic

about copper, at some point in

time the higher copper prices

stay for a long period of time,

the more new supply will be

induced. That's the nature of

markets, the nature of supply

and demand. We will see a

continued period of strong

copper pricing, largely

copper pricing, largely because

many of the large mines,

including our own, are seeing

declining grades, deepening

pits, but will you see new

mines, like our own in

Mongolia, we are working on

several new projects and our

competitors are working on

their own. We will see copper

supply coming

supply coming in. Olu Tolgoi

looks like the best prospect.

Why not just buy them? In

Ivanhoe we came to an agreement

with Ivanhoe in December which

basically we provided Ivanhoe

with a pathway of financing and

Ivanhoe has given us the

management of the construction

but also the operations of business.

business. We have each settled

differences, we have obtained

objectives, we have a pathway

to 49% on the project. We are

working side by side with

Ivanhoe and will work to bring

Olu Tolgoi into production. We

want to manage that but do so

in a way which delivers value

to Rio Tinto shareholders.

What I am asking is

What I am asking is given your

optimism about copper, whether

49% is enough? We will look at

it on a value basis. Given

where we are right now, the

arrangement and agreement we

have made with Ivanhoe in

December gives us a pathway to

build the mine and operate the

mine and that meets our needs,

it probably meets Ivanhoe's

needs. Where you like to see

Rio Tinto's portfolio expand?

You have your bid for

You have your bid for

Riversdale, which is the

metallurgical coal business in

Mozambique. What else would

you like to do? I think, first

of all, of the 12 billion or so

of new approvals that we have

announced over the past 12

months, 9 billion of those have

been in Australia. Of that 9

billion, 8 billion was just in the Pilbara. Two-thirds of

the Pilbara. Two-thirds of

the investments we have

announced and decisions we have

made over the past year have been associated with the

Pilbara. I would say expanding

our Pilbara operations by over

50% over the next five years

would be my No.1 growth

priority. Probably the second

priority, as you have referred

to, would be bringing up the

copper business. I think Olu

Tolgoi is a part of

Tolgoi is a part of it but we have additional opportunities

in South America and North

America and in NSW we are

looking at opportunities which

we are working on to extend the

life of North Parks, I see as

an important part of it. But

probably not as important as

some of our other project s.

In coal, I would like the opportunity to

opportunity to build on NSW and

Queensland operations. There

is the possibility of a

Coca-Cola coking coal

opportunity in Mozambique. We

extended the bid until early

March. I would like to look

at uranium, diamonds. On

balance, we have a pretty good

portfolio in all our businesses

where we can be ex panned the

where we can be ex panned the businesses. Are there any

profits you would like to get

in which you are not, I am

thinking about Potash. I am

thinking about about BHP. We

have been in Potash ourselves.

I was the one that got us into

the Argentinian situation. That was during their

That was during their financial

crisis. It is important to

recognise the economies can go through different phases as

they go through. We do like

Potash. We did sell the

Argentinian finance during the

crisis. I have told our

geologists if you find the

right opportunity, let's get

into it. On Potash I would

like to look at them from an exploration point of view. I

exploration point of view. I

would say on the M & A space,

in terms of landscape, I would

be more narrowly focused on the

smaller type things that would

be a bolt on to the existing

businesses of Rio Tinto. We

can certainly satisfy our

growth objectives by focusing

first and foremost on organic

opportunities within the

existing suite of Rio Tinto

businesses. No

businesses. No big takeovers?

We will focus on the smaller

ones that could complement

existing businesses. If we

have them, great, if we don't,

we will keep working on our

existing Rio Tinto businesses.

Thanks for joining us. Good

to talk to you. Markets

usually don't like revolutions,

especially in the Middle East,

but the reaction to the

but the reaction to the

resignation of the President

and the stunning success of the

Tahrir Square uprising was positive, not negative. Here

is Jayne Edwards. Events in

Egypt caused a rally on Wall

Street in Friday with the

market giving us a 2.5 year

lead high. News of the

resignation of Hosni Mubarak

gave a boost to equities, while

dampening down oil prices with

US prices falling 4% to a

US prices falling 4% to a

10-week low. The US market

overall throughout this whole

crisis held up extremely well.

If you would have asked me what

would the reaction be, I was

shocked that we did so well.

Now that it is improving, it's

got to be great for the market

. Turning to world share

markets and all posted decent

gains through the week,

although uncertainty over Egypt

on Friday helped to keep a lid

on Friday helped to keep a lid

on our local market. With

more, here's Tom Elliot. As

you have just heard, the Australian share market put in

a solid performance for the

week. We are at the start of

the results season. Rio Tinto

broke all of its own records,

recording a massive $14 billion

profit for calendar year 2010.

The company is also involved in

a friendly takeover

a friendly takeover of

Riversdale mining, a West

African mining. That takeover

got interesting when Brazilian

steel giant lifted its take in

the target to 20%. Boral

shares were up strongly, the

company beat expectations.

Many people are looking forward

to the reconstruction impact

and what that will do to companies like Boral when the

flood victims inevitably have

to rebuild their houses later

to rebuild their houses later

on in the year. The two big

commercial banks to report

during the week, Commonwealth

and NAB, beat ex mekt

pektations. Overall banks were

a lot stronger during the week.

The one exception was Macquarie

Bank which was down. It needs

to be pointed out Macquarie

Bank is an investment bank, whereas Commonwealth and the

like are trading banks and

therefore different. Shares in

the Australian stock exchange got a got a big

got a big push upwards. What's

happening overseas is all sorts

of offshore exchanges are

looking to merge. We have the

London stock exchange looking

to merge with Toronto. We have

the Deutsche Borse looking to

merge with the New York stock

exchange. As a result, this

increases the likelihood the

Australian stock exchange and

the Singapore stock exchange

will be able to complete their

merger. Hourfb however, this one is political.

one is political. Telstra

shares had a good week. The

company profit is below

expectations, however, it is

growing its mobile customer

rate. Finally, Asciano are up

stronger. Winner of the week

is Jabiru Metals, up 26% after

receiving a friendly takeover bid

bid from Independence Group.

Loser of the week, however, is

Myer. Down 14% after

unrailing veiling yet another unexpected profit downgrade.

As Tom mentioned, the big

retailer Myer had a horror week

after announcing an ugly and

unforeseen profit down grade.

It could be the start of a

significant trend as Australian

significant trend as Australian

households lurch from spending

to saving. While it has taken

the heat off interest rates, it

is putting it back on

retailers, a fact noted by

Reserve Bank gof nof Glenn

Stevens on Friday to the House of Representatives Standing

Committee. Neal Woolrich

reports. There is one little thing that everybody knows.

Back in the old days, saving money was child's

money was child's play. Money

in the savings tree is safe.

And grows. Over the years,

though, Australia went from a

nation of penny pinchers in the

50s and 60s, to big spenders as

credit surged from the 1990s.

But now in the wake of the

global financial crisis, a new

wave of austerity is emerging

and the tight-firsted consumer

and the tight-firsted consumer

is making a comeback. It is

extraordinary. We are four

times out of the US despite the

fact they are in technical

recession. We are better than

almost all the European

countries. We are curiously a

nation of good savers. That's

a double edged sword as the

Reserve Bank Governor

acknowledged on Friday. This

is no doubt a difficult

environment for retailers.

From a macroeconomic point of

From a macroeconomic point of

view, perhaps on balance it is

not entirely unwelcome in the

current circumstances. In the

1980s, Australia's net saving

rate was above 15% but fell

until a decade ago when

households were on average

spending more than they were

earning. Since then the saving

rate has picked up spiking dramatically

dramatically during the global

financial crisis. I think a key

factor has been household

wealth has been growing at a

lesser pace. What we saw is

that house prices rose very

rapidly between 1997 and 2003.

In fact they, rose faster than

income growth. A lot of the savings was being done by capital gains in the housing stock.

stock. If it was sustained,

you would expect to see

expenditure redirected towards

investment and away from

discretionary spending. It is

not necessarily a positive or a

negative. It is more about

who benefits more. The new

conservativism among consumers

along with other threats like

online shopping means some retailers have been doing it

tough. The latest figures show retail spending

retail spending grew just 0.2%

in December and 2% for the

year. When we talk about the

last 12 months, the first six

months of the year were sensational. The second part of

the year tended to drop down a

little bit. But we finished

up strongly at Christmas time. Rod Smith says his boating

accessories business has

weathered the choppy seas

that's because better than most. In part

that's because his largely

blue-collar clientele wasn't

badly hurt by the GFC. As

Ratty said to Mole, nothing

like messing about in boats.

You will find people will spend

if you have product they need

or you can help them determine

they need. But still his

customers are always driving a

hard bargain. Nobody wants to

hard bargain. Nobody wants to

pay retail price. Everybody asks

asks 'Can you do better?' Or

'Is that the best price?'.

or Sometimes it can be the hardest

or the easiest. If you are

confident in your prices, you

have set the price correctly in

the first place and the answer

will be question. Retail

analyst Andrew Inwood reckon s

there is a two-speed labour market developing.

market developing. While unemployment headlines look strong, there is a large number

of white-collar worker who is

have had to take big pay cuts.

If your job has moved from

full-time to part-time, full-time to contract, your spending behaviour will change.

You will disappear from the

unemployment figures but won't

necessarily start to spend

confidently because of what the

income economists call the permanent

income hypothesis. That says if

people worrying about earning

less in the future, they will

be less likely to spend. ICAP

Australia senior economist Adam

Carr says while major

Department stores have suffered

a down turn, many retailers are

holding up better than recent

reports would suggest. When

you have come retailers

recording record

recording record profits,

Bureau of Statistics showing a

clear pick up. There are some

misleading signals and analysts

are confused or choosing to

focus on that. When it is

impossible to say when

consumption will pick up again,

it is clear that higher than

normal saving is making the

Reserve Bank's job industry.

Reserve Bank's job industry.

The bank needs to engineer a

slow down in investor spending.

If consumption were to boom,

at the same time we expand the

resources sector, and increase

our construction to house a

growing population, it will be

hard to avoid the are economy

overheating. I think the RBA

want to avoid rising rates but they

they are seeing confusing

signal s out of the CPI and if

consumer spending data. What

the savings rate helps them to

sit back alongside a low CPI

and assess what's going on. I

think the Reserve Bank is

banking on the household saving

ratio staying highe. They are

talking about households being

talking about households being

cautious. That could all change

and force the RBA to raise

interest rates more

aggressively if consumers once

again raid their piggy banks

and head out on a spending

spree.

The swing is one of a host of

challenges facing retailers. I

spoke to James Stewart, a

retail specialist and partner

in the firm Ferrier Hodgson.

Is there much data about what's

going on in online retailing?

There is a lot of data and a

lot of data is variable.

Depending on who you speak to,

you will get different answers.

There is no doubt the online

retail sales momentum is

growing. There is no debate

about is that. What happens in Australia if

Australia if we kaump up to the

you rest of the world? In the UK

you have seen percentage of

total retail sales move from

less 3% five years ago to

around 8% in 2010. You have

seen similar sort of trends in

the US market, where online

retail is growing rapidly from

reasonably lower percentage

numbers to around 7%. Online

retail in the US influencing, in retail in the US is

influencing, in this year it is

estimated about a trillion

dollars worth of in-store

sales. What percentage of

retail sales in Australia do

you think are online? It is still relatively low for

Australian retailers. It is

probably only anywhere between

2 and 3%. So do you think that

Australia are going to catch up

to the 7 or 8% we are seeing in

the UK and US? Ultimately yes. We have a

We have a slightly different

issue in terms of density of

population. Our freight costs

are proportionately higher for

a lot of retailers. Whereas in

the UK and the US mart they can

spread the freight costs across

a more dense population base.

We will get there. We are

early adopters of technology,

early adopters of Internet

activities and things like

activities and things like

that. Retailers are saying they

are doing it tough, consumer

spending is down in the stores.

Do you think that is caused by

the shift? To some extent,

yes. There are greater factors

at play. Economically people

are feeling different. You

have still Australian

consumering high ly leveraged. When you see the interest rates

go up, cost of living

go up, cost of living going up,

that affects the bread and milk

money and affects people psychologicalcally. People are starting to research more

about what they are going to

buy, particularly when it comes

to discorrections kregsry

items. What about Christmas?

Most had a tough Christmas.

Most went on sale earlier and

that left them nowhere

that left them nowhere to go in

January. It makes it

difficult to follow up in

January with a new sale and say

'We have a different offer out

there or a bigger discount'.

You are seeing a lot of

negative sales out there. Not

all retailers are in that

situation. You are seeing some

good retailers get fantastic

results but many are seeing tough outcomes

tough outcomes and many

well-known retailers. Price

rises in China, what's going on

there? This is the next wave

that will impact Australian

retail. You have price

deflation on the one hand. You

have price inflation that is

likely to happen going forward

because costs are rising out of China. Particularly in

apparel, impacted by the price

of cotton, costs of labour and

of cotton, costs of labour and

a growing middle class in China

which is sucking up its own

demand out of the factories.

When the GFC hit in 2008, you

saw a lot of factories close in

China and not all of that

capacity has returned. When

the retailers go to China and

the buyers go over there to

order their stuff and pick it

up, what's occurring? You are

seeing some interesting discussions happening, particularly for

particularly for some of the

relatively speaking smaller

retailers by world standards.

It is not uncommon to see some

factories saying to some

wholesalers and retailers in

this country, saying 'We need

to have a discussion about the

price you were going to pay and

the price you are now going to

pay?'. What's the difference,

you're hearing about? We are

hearing stories between 20 and

hearing stories between 20 and

30% is not uncommon. What's

being put to the retailer is

unless you have prepared to pay

that 20 to 30%, we will look to source your product with

another customer. Thanks for

joining us. It is a pleasure.

Thanks.

The lack of suitably

qualified or experienced

employees is a common lament

among Australian businesses these days. For

these days. For those trained

in the fine art of piano tuning

and restoring, it has become a

theme song as they look to try

and pass their businesses on to

the next generation.

I can see myself tuning until

I basically can't hear anymore.

I don't ever not want to tune.

I love tuning. Just to smell

the felts and the leathers and

the French polish. I long for

the French polish. I long for

that. Happily for John Borsje

there is a robust demand for

his skills. We find the work

is just falling into our lap

now. I'm probably too old - I

am working harder now than I

was at 30. We probably could

have 100 tuners or 130, 140

tuners in Melbourne. But there

is hundreds of thousands of

pianos. You can see it is an

out of kilter ratio.

out of kilter ratio. It was a

different tune 30 years ago

when the growing popularity of electronic organs and keyboards

was hammering the traditional

piano. The piano industry took

a very very bad dive. Then to

cope with that crises, the

bigger companies put off their

tradies so that cut all the apprenticeship

apprenticeship system out.

That's why we don't have a lot

of piano tuners and the older

tuners now are very very busy.

It was during this tumultuous

time that John Borsje joined

the trade in Perth. My best

friend, he had a piano shop.

He desperately needed someone

to come into the shop with him.

For 2,300 tuned in and

delivered in the home.

delivered in the home. In

Sydney? We can arrange it in

Sydney. There will be a slight

corrections. I don't know

what else could be prompting it

but deflt definitely -

definitely there is an influx

of piano sales, let's say from

10, 15 years ago. We are what

we call a one-stop shop. We

move piano s,

move piano s, tune pianos. I

would say our forte would be

our workshop where we do

extensive repairs. It is very

labour intensive because you have all these little parts to

a piano. Although business is

booming, John Borsje has just

the one emplea. I would

consider David as like a senior

apprentice to me. I

apprentice to me. I have

trained three in my time. The

industry hasn't had a formal

training program for decades.

That is probably the biggest

concern of the Piano Tuners

Guild throughout Australia. We

don't even have our own category registered with the

Government as a piano tuner. We

We come under the cabinet-maker or woodworkers awards. Some

or woodworkers awards. Some in

the industry are considering tackling the problem

themselves. There could be a

school being started up by one

of our guild members. Just

making sure that when we are gone, there will be people to

look after these beautiful

instruments. He is confident

about the future for the

business he founded. The

piano won't die. It will

never die. There is too many people that have

people that have a passion for

music to start with. There

are piano players that will

always keep it

alive. Meanwhile, John Borsje's

devotion shows no sign of

fading quietly. You have a piano which is almost like

firewood, it's just rusted and

bent. Three months later you

have this beautiful,

have this beautiful, re-strung,

polished piano that just gives

you goose bumps when you hear

it played. You think you have

just bought this beautiful

instrument back to life.

Rebecca Nash reporting.

That's it for the program.

Transcripts and video and a vod

cast of all today's stories and

interviews will be Premiers and did in style in Welcome to offside irs. The

Welcome to offside irs. The cricketers have left the

country and unofficial at least

the rugby league and August

cease rules have started with practice matches and

turf war is getting plenty of

attention especially in western

Sydney. In soccer the Sydney. In soccer the finals

are now set to go and Brisbane

Roar are in great shape having

gone 25 games without a loss.

Last night along wait they

picked up the Premier's plate

pass minor Premiers and they did in

did in style in front of 20,000

fans. Early ball, beautifully

done. Oh, it's one of the

goals of the season. They are

the Premiers. The run away

Premiers. They the very much