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ANZ lifts interest rates

STEVE CANNANE, PRESENTER: A second major bank has defied the Treasurer's warnings and lifted
interest rates above last week's official rise.

The ANZ has increased rates on a standard variable home loan by 39 basis points, adding more than
$70 dollars a month to the average mortgage.

The bank has moved to ward off a backlash by announcing it's scrapping mortgage exit fees, but the
Government has accused the bank of putting profits ahead of customers. And it says the ANZ hasn't
learnt anything from the fury directed at the Commonwealth Bank last week.

From Canberra, Susan McDonald reports.

SUSAN MCDONALD, REPORTER: It was late in the afternoon and after the markets had closed that the
ANZ announced the unpopular move.

The banks raised its variable mortgage interest rate by 39 basis points to 7.8 per cent. It adds
around $76 a month to an average $300,000 home loan, a rise substantially more than the Reserve
Bank's increase of a quarter of 1 per cent.

STEVE MUNCHENBERG, AUST. BANKERS' ASSOCIATION: These are real funding costs pressures and at some
point the banks do need to pass on some of those funding costs pressures.

SUSAN MCDONALD: It's been more than a week since the Melbourne Cup Day rate rise when the
Commonwealth Bank bolted out of the gates with an increase of 45 basis points, and since then
there's been an outpouring of political and community anger.

PENNY WONG, FINANCE MINISTER: The ANZ has not learnt the lessons of this last week.

SUSAN MCDONALD: With the Treasurer out of the country, it was left to the Finance Minister to

PENNY WONG: It is another case of the big banks showing disregard for their customers and putting
profits before their customers and before the community's standards.

JOE HOCKEY, SHADOW TREASURER: Today the ANZ kicked sand in the face of the Gillard Government by
increasing their interest rates by nearly double the amount of the Reserve Bank.

SUSAN MCDONALD: Amid the backlash, the ANZ sensed the need to offer some sweeteners. It's unveiled
new measure it says will boost competition and choice for customers. Mortgage exit fees have been
scrapped and the bank will offer up to $1,600 in fee discounts and subsidies until the end of the
year to reduce switching costs.

PAUL EDWARDS, ANZ SPOKESMAN: In the broader context, this is the right thing to do, but, you know,
it'll certainly cost us tens of millions of dollars.

JOE HOCKEY: Any benefit in the abolition of an exit fee is going be soaked up immediately by the
increase in the interest rate.

SUSAN MCDONALD: The ANZ pre-empted the corporate regulator announcing details of a crackdown on
mortgage exit fees. ASIC has promised to sue banks that charge unfair exit fees and it says banks
that charge customers to set up a mortgage won't be able to slug them with an exit fee as well.

IAN RAMSAY, CORPORATE LAW ACADEMIC: It is an important development. What remains to be seen,
however, is of course in what circumstances there will be enforcement action.

PENNY WONG: This is the Government's legislation working. This is the Government's legislation
being put into action.

SUSAN MCDONALD: The ANZ is thumbing its nose at all in the political debate. Its decision to raise
rates by more than the official move ups the stakes for those in Parliament campaigning on banking
reform, with the Opposition preparing a private member's bill and the Government finalising a
package of changes that it will announce next month.

It's all fodder for an Opposition Leader who's in continuous campaign mode. At a community forum in
Brisbane's mortgage belt, Tony Abbott picked up on the day's theme.

TONY ABBOTT, OPPOSITION LEADER: I think all of us dislike the banks. We love the banks when they're
giving us money; we hate the banks when they want it back again.

SUSAN MCDONALD: Earlier in Canberra, the Liberal Party federal director dissected the Coalition's
election campaign and Labor's second term so far.

BRIAN LOUGHNANE, LIBERAL PARTY FEDERAL DIRECTOR: Julia Gillard is not cutting the mustard and this
is something that is causing great concern out in the Australian community. It's almost as though
the election is unresolved and people are looking for a strong alternative.

SUSAN MCDONALD: The campaign rolls on.

Susan McDonald, Lateline.

Abbott determined to overturn Wild Rivers legislation

STEVE CANNANE, PRESENTER: Earlier in the day, the Federal Opposition Leader was in the Gulf of
Carpentaria, where he met with Aboriginal people over his private members' bill to overturn
Queensland's Wild Rivers legislation.

Tony Abbott spent much of the day visiting areas affected by the law, which has divided opinion in
Aboriginal communities.

He met Indigenous leaders, including Murrandoo Yanner, who presented him with a pair of Speedos in
the colours of the Aboriginal flag.

Tony Abbott says Mr Yanner had agreed to keep discussing possible modifications to the Opposition's

TONY ABBOTT, OPPOSITION LEADER: They like the fact that my bill enshrines the principle of consent,
although they've got some anxieties about how it might work in practice.

STEVE CANNANE: But the Queensland Premier says the Opposition Leader should stick to federal

ANNA BLIGH, QUEENSLAND PREMIER: He's decided to come into Queensland and trample all over
environmental legislation that we have taken to three separate elections and the Queensland people
have voted for.

STEVE CANNANE: Anna Bligh says the Wild Rivers legislation is providing good quality jobs for
Indigenous people and protecting pristine wilderness.

Singapore Airlines recalls A380s

STEVE CANNANE, PRESENTER: The superjumbo crisis has spread to another carrier, with Singapore
Airlines forced to recall three A380's to replace their engines.

The airline says unusual oil staining in the engines had been found and the new engine work is
called "precautionary".

Hundreds of passengers due to fly on the affected aircraft have been delayed in Sydney, Melbourne
and London and Singapore Airlines found itself in more trouble today.

It, Qantas, and another nine carriers have been collectively fined a billion dollars for taking
part in a price-fixing cartel.

Karen Barlow reports.

KAREN BARLOW, REPORTER: Beating a storm front in Sydney, this virtually empty A380 is heading home
to the hangers in Singapore.

It's one of three Singapore Airlines superjumbos forced to leave behind hundreds of air travellers.

There's frustration, exasperation.

PASSENGER: Until now, I can get on a plane!

KAREN BARLOW: And in London, reports of an A380 crew mutiny over engine safety concerns.

However, Singapore Airlines says that's not true.

Singapore Airlines spokeswoman (female voiceover): "I can confirm that reports of our crew refusing
to fly are incorrect."

KAREN BARLOW: Problems with the Rolls Royce Trent 900 engine have been growing since the mid-air
catastrophic engine failure on a Qantas A380 over Indonesia last Thursday.

The Trent 900's on Singapore Airlines' fleet of 11 airbus superjumbos had been given the all clear
two days ago. But Rolls Royce engineers were giving them another look when three cases of suspect
oil stains were found.

The same staining had been found on the grounded Qantas A380s and Singapore Airlines is taking no

Singapore Airlines statement (female voiceover): "Singapore Airlines will be carrying out
precautionary engine changes on three A380s."

KAREN BARLOW: Replacing those engines will be an expensive safety precaution for Singapore Airlines
on a day when it's received a $100 million fine. The European Competition Commission has fined 11
airlines, including British Airways, Air France and Japan Airlines, a billion dollars for fixing
the price of air cargo between 1999 and 2006.

JOAQUIN ALMUNIA, EU COMPETITION COMMISSIONER: Had it not been for the commission's intervention,
the cartel would not have ended in 2006, and more than likely it would have continued through the
economic downturn and created even more harm to companies and consumers.

KAREN BARLOW: For its part, Qantas received a relatively small fine, $12 million, and it's
considering its legal options.

QANTAS STATEMENT (male voiceover): "The full decision will not be received until next week when we
will consider it in detail."

KAREN BARLOW: Qantas had already been fined by the US Justice Department and the ACCC for its
involvement in the cartel.

QANTAS STATEMENT (male voiceover): "We have acknowledged the improper conduct by the Qantas freight
division over this period."

KAREN BARLOW: Airbus isn't the only type of jumbo jet-maker having difficulties at the moment.
Smoke in the main cabin has forced one of Boeing's test Dreamliner aircraft to make an emergency
landing in Texas. All on-board are safe, and Boeing says it isn't concerned about the 787's Rolls
Royce engines.

Karen Barlow, Lateline.

Gillard arrives in S Korea for G20 summit

STEVE CANNANE, PRESENTER: The Prime Minister Julia Gillard has arrived in the South Korean capital
Seoul for the G20 leaders' summit.

During the two-day talks, leaders from the world's major economies are expected to discuss ways to
prevent a repeat of the Global Financial Crisis.

Ms Gillard will also meet the Canadian and British prime ministers during her time in Seoul.

Political correspondent Mark Simkin is travelling with the Prime Minister.

MARK SIMKIN, REPORTER: Summits like this are a little bit like diplomatic speed dating; the leaders
see each other briefly for very meaningful talks, and so no sooner had Julia Gillard touched down
in Seoul than she was whisked off to the Blue House for a meeting with the summit chair and South
Korean president.

The two leaders also discussed the possibility of an Australian-Korean free trade agreement.

Now this has been talked about for some time now, but both leaders resolved to actually try and
have it signed, sealed and delivered as soon as possible.

JULIA GILLARD, PRIME MINISTER: Trade means jobs. Free trade agreement will be good for Australia,
it will be good for Korea, and we have discussed this afternoon working to bring that free trade
agreement to conclusion.

MARK SIMKIN: Of course, the G20 will also be discussing other issues of high finance - reforms to
the IMF, giving developing countries a greater say, the so-called currency wars and China's
currency in particular, and also, reform of the international banking system.

Now this is different to the banking debate that's raging in Australia. It's the so-called BASEL
III framework to crack down on risky lending by banks.

But it is interesting that Julia Gillard is here arguing that the Australian banks shouldn't be
restricted in these international frameworks, and at the same time of course, the banks aren't
doing her or the Government any favours by raising their rates by more than the cash rate, and I
asked Julia Gillard about that discrepancy and here's what she had to say a short time ago.

JULIA GILLARD: We don't want Australian banks to have any excuse from these new financial rules to
excuse their arrogant conduct in putting up interest rates above and beyond Reserve Bank movements.

MARK SIMKIN: Well security here is extremely tight, as you would imagine. Fifty-thousand police
officers have been mobilised, plus the military, fighter jets are escorting the world leaders'
planes as they land in Seoul.

But despite the blanket security, Seoul is putting on a welcoming face.

They've even released some figurines of the world leaders who are here, and this is, we believe,
the figurine of Julia Gillard, based on the Australian flag that she's carrying or waving, although
you wouldn't - can't be entirely sure because the national dress seems more Austrian than

This is Mark Simkin in Seoul for Lateline.

Obama praises Indonesia's 'tolerant' and 'diverse' society.

STEVE CANNANE, PRESENTER: US president Barack Obama has also arrived in Seoul this evening for the
G20 summit.

Earlier in the day, he was in Indonesia, one of his childhood homes, where he used a high-profile
speech to launch a closer partnership with his counterpart, Susilo Bambang Yudhoyono.

Indonesia correspondent Matt Brown reports from Jakarta.

MATT BROWN, REPORTER: Before the world's largest Muslim community, Barack Obama continued to reach

BARACK OBAMA, US PRESIDENT: We also know that relations between the United States and Muslim
communities have frayed over many years.

As president, I've made it a priority to begin to repair these relations.

MATT BROWN: However, this speech was not as ambitious or far-reaching as Mr Obama's dramatic Cairo
address last year.

BARACK OBAMA: In the 17 months that have passed since that speech, we have made some progress, but
we have much more work to do.

MATT BROWN: As he praised Indonesia's fight against violent extremists, he tied it to his own
escalating war in Afghanistan, which antagonises many Muslim Indonesians.

BARACK OBAMA: Innocent civilians in America, in Indonesia and across the world are still targeted
by violent extremism. I've made it clear that America is not and never will be at war with Islam.

Instead, all of us must work together to defeat Al-Qaeda and its affiliates.

MATT BROWN: His withdrawal of troops from Iraq won applause, but the reality of Israel's ongoing
occupation in the Palestinian territories weighs on many here.

BARACK OBAMA: In the Middle East, we have faced false starts and setbacks, but we have been
persistent in our pursuit of peace.

MATT BROWN: At Jakarta's Istiqlal Mosque earlier, Mr Obama found a friend in the Imam Ali Mustafa

ALI MUSTAFA YAQUB, IMAM: I hope the relation between USA and Muslim world is growing very nice.

MATT BROWN: However, the visit wasn't without its peculiar controversies.

A handshake between the religiously conservative Information Minister and Michelle Obama has caused
a storm on the internet after Tifatul Sembiring claimed he tried to avoid touching Mrs Obama, but
that she held her hands too far forward.

Television footage was quickly posted on YouTube showing his claim to be false.

In his keynote address, the President praised Indonesia's relatively moderate Islam, which is often
under attack by the nation's large community of hardliners.

BARACK OBAMA: But here, we can find the ability to bridge divides of race and region and religion,
that ability to see yourself in other people.

MATT BROWN: However, his recollections of his boyhood in Jakarta in the late 1960s drew the most

BARACK OBAMA: And I learned to love Indonesia while flying kites and running along the paddy fields
and catching dragon flies, buying sate and bakso from the street vendors.

MATT BROWN: Mount Merapi in Central Java continued spewing scolding ash clouds today and Mr Obama
cut short his trip.

Barack Obama won friends here with his recollections of the simple life in Jakarta, but now he
turns his attention back to the much bigger picture and the G20 meeting in Seoul.

Matt Brown, Lateline.

attention back to the much bigger picture and the G20

Mental healthcare will define Gillard Government: McGorry

STEVE CANNANE, PRESENTER: Tonight's guest is Professor Patrick McGorry, who'll soon end his term as
Australian of the Year, but he'll no doubt continue to speak out about what he sees as chronic
underfunding of mental health services.

In a speech he'll deliver on Monday, Professor McGorry says, mental health remains one of the
defining tests of this Government's credibility. It's a test the Australian community are willing
the Government to pass.

Patrick McGorry joins me live now from our Darwin studio.

Patrick McGorry, welcome to Lateline.


STEVE CANNANE: If, as you say, mental health will be one of the defining tests of the Government's
credibility, what does it have to do to meet the benchmarks to pass that test?

PATRICK MCGORRY: Well, I think what the Government has to do is commit to ending the inequity
between physical health care and mental health care in this country.

It's a fundamental principle of equity and what it means on the ground around the country is that
approximately one in three people with mental ill health get access to care, compared with the vast
majority of people who experience physical ill health.

So this is a kind of an apartheid that's characterising our health system, and every day we see the
gap widening, not narrowing.

The Government has committed in its second term to addressing this issue, but the Government has
been in power for 100 days and we still have not got a commitment from the Government.

STEVE CANNANE: So, are there any signs at all that the Government will pass that credibility test,
as you put it?

PATRICK MCGORRY: Well, I'm very hopeful. We've had some very positive interactions with the new
Minister for Mental Health Mark Butler.

He's the first Australian minister for Mental Health, so that's probably a signal that the
Government is intending to take the issue more seriously.

But, the Prime Minister, I think, needs to support this new minister very, very strongly in this
current environment because the scale of the problem is incredible. We are billions of dollars each
year short of that equity goal.

Mental health in Australia constitutes 14 per cent of the health burden, but it attracts six per
cent of the health funding and that translates into a multibillion-dollar expansion that's
required. And it needs to begin in a step-wise way from the very next budget.

STEVE CANNANE: You made the point there that the Government has appointed a Mental Health minister
for the first time, and Mark Butler says in the first weeks of him being that new minister he's
been engaging with the sector and that he's working on options for future reform.

Is that fair enough, that he's only just taken over that portfolio and he's engaging with the

PATRICK MCGORRY: Yeah, look, I think we're very pleased with our discussions with the Minister, but
the absolutely clear thing we need to say about that is the blueprint is already there.

The National Health and Hospitals Reform Commission came up with 12 very clear, evidence-based
recommendations about step-wise reform in mental health. That's at the minister's disposal and it's
fine for him to talk to the field and get to know all the relevant players and the organisations,
that's terrific, and he's actually understanding the basis for the reform and I think we're
confident about that.

But he and the Government need to make a commitment, and we want to see the Parliament really look
at this issue very seriously in the next period.

STEVE CANNANE: So are you saying the time for talk is over?

PATRICK MCGORRY: The time for talk is definitely - the time for talk was over some time ago, and
what we need to see is not more of the same.

There are several big missing elements in 21st Century mental health care in Australia; the first
being the focus on early intervention in teenagers and young adults, as evidenced by the Headspace
and EPIC models, which are top of the list of the Health and Hospitals Reform Commission's

And secondly, as well as turning off the tap in terms of future disability and premature death,
we've got to clean up the mess after the failed institution policies of the last decade or so,
where so many Australians affected by persistent mental illness are marginalised, homeless, lacking
a decent place to live, lacking a future in terms of jobs and meaningful activities, and also the
lack of community mental health services.

All that's provided on the ground in most states in Australia is acute, band-aid sort of care which
just deals with the crisis and returns people back to the really quite marginalised existence that
they face.

STEVE CANNANE: You handed your own report to the Government just before the election that was
suggesting $3 billion be injected into mental health over four years.

How did the Government respond to that?

PATRICK MCGORRY: Well, we haven't actually had a response yet. I think that this is based on the
Health and Hospitals Reform Commission recommendations.

It had the support of 61 organisations around the mental health sector in principle. There's
tremendous unity and cohesion in the sector, which I've never seen before.

There's tremendous support from the Australian community. The survey published in The Australian
last week showed that 35 per cent of Australians rate mental health as one of the top three issues,
along with climate change and the economy, compared with 10 per cent of people in the US and in

So Australians get it. The public are onto this. It's the Government that really needs to get with
the program here.

STEVE CANNANE: So why hasn't got the Government got with the program, as you put it? Is it a matter
of money? Do they not have the money in the budget?

PATRICK MCGORRY: Well, that - I think one of the problems may be that that they've locked
themselves into this straitjacket of financial responsibility on this particular issue.

It doesn't seem to apply to other issues such as, you know, wars in Afghanistan, building new
detention centres and anything that requires an immediate decision. And I think certainly when $7.4
billion were dumped into the acute and primary care sectors that money didn't seem to be a problem
in that area.

So I think it's very convenient to use that excuse, but I don't think the Australian people are
going to accept that.

STEVE CANNANE: Will waiting a bit longer, as the new minister consults with the sector and the
community, have any adverse effect?

PATRICK MCGORRY: Every day there's delay, more deaths occur from untreated or poorly treated mental
illness and more lives are thwarted or blighted as a result.

So of course delay is important and it's inexcusable when the plan is clear. Now, I believe the
minister's acting in good faith. He's approached the task constructively, but he needs the support
of his colleagues on the Labor side of politics, particularly from the leadership.

It's vital that that's accessed and tapped into. The Prime Minister's on the record as saying that
she will provide that support. I just want to know on behalf of the sector and on part of 3.2
million Australians this year who have suffered mental ill health: when is that going to happen? We
need a deadline. These people have waited for far too long.

STEVE CANNANE: The motion that's due to appear before the House of Reps next week is calling on the
Government to take action and among other things to roll out early intervention centres for young
people across the country. But hasn't Labor already announced a first wave of these centres?

PATRICK MCGORRY: Well, the positive sign is that Headspace, the primary care version of that, is in
place in some communities in Australia. It needs to be strengthened and rolled out much more
rapidly than the current plans propose.

But probably the most vital part of that reform is the backup system, which is called EPIC, or the
early psychosis model. Now these Headspace centres can't function without specialised youth mental
health services dealing with early intervention for the more complex and severe problems.

And the current government allocation for this will only produce a cardboard cut-out version of
that which actually will do very little good and probably discredit the whole approach in the

So it has to be properly funded. The Coalition's motion has got accurate costings in it. Now this
can be phased in, so I think there's a way of doing this and allowing other investments in mental
health to occur in parallel because I think there are two areas we need to focus on, the front end
and the longer term. But ...

STEVE CANNANE: The Coalition's motion has already passed the Senate, but the Greens and Labor both
voted against it. What does that tell you?

PATRICK MCGORRY: Um, well, I think that the Government obviously hasn't - isn't ready to embrace
it, and obviously it would be preferable if the Government took the initiative and actually took
the high moral ground on this issue and got us to a tri-partisan position. The Greens are very
supportive of mental health reform, and it's just a matter of detail, I think, about where the
emphasis is.

STEVE CANNANE: Are you surprised the Greens didn't support the Coalition's motion, because these
centres, these early intervention centres are aimed at young people, who are basically the target
voters for the Greens?

PATRICK MCGORRY: I think the Greens are very supportive of early intervention for youth and
particularly for a proper implementation of the EPIC model alongside Headspace, but I think they do
want to see other things happen as well and so do I and so does the whole Australian community.

So, I think we've got to do more than one thing and I think that we will get to that position. In
fact, the early intervention and youth mental health focus has got tri-partisan support in the
policy sense.

Where we're lacking is in the investment and in the reality on the ground.

STEVE CANNANE: You've been touring the country in recent months as Australian of the Year. In the
various states and territories you've been in, have you seen anything that's given you cause for

PATRICK MCGORRY: Well the big thing that gives me cause for optimism is the tremendous
community-wide support for investment and reform and a 21st Century standard of care in mental
health, and that's coming from the Australian people, from the grassroots, from everyone that I've
met in the community across the whole country in the last few months.

It's also coming from every level of society, whether it's bureaucrats, policymakers, people
working in all parts of the health and social sector, and indeed from all sides of politics across
the Parliament.

Where it hasn't quite penetrated yet is at the top level of leadership and that's what we need to
see slot into place and make this a reality. And it's not going to be something one-off, it's not
going to be something that's a single budget flurry.

We have to see a progressive scaling up of mental health services over the next five to 10 years so
that we reach this target of equity in health care and that people will not experience this
apartheid-type problem when they come with one type of problem, being a mental health problem,
versus another type, such as a cancer or a heart attack or something like that and where they
receive Rolls-Royce treatment compared with absolutely second-class care in the other area.

STEVE CANNANE: What about in remote Indigenous communities? I mean, it must be hard to know where
to start in those communities when you've got alcohol and drug abuse, you've got lack of
employment, you've got suicide rates higher than the rest of the community and then you've got a
lack of facilities, remoteness as well?

PATRICK MCGORRY: Yeah. I think that's quite true and that's the reason that the suicide rate is
substantially higher in Indigenous communities, reflecting a much worse mental health situation in
those communities.

But, it can be approached in a multi-component way, by tackling the social determinants which are
obviously going to impact on a whole range of health outcomes, but also making services available
in a culturally appropriate way that will be trusted.

It's the same issue as with young people: make the services acceptable and engageable so that they
actually get to first base, and then having some real expertise to offer people so they can
actually make a good recovery from these very treatable episodes and forms of mental ill health.

STEVE CANNANE: The Prime Minister has a personal connection with this issue: her father worked for
a number of years as a psychiatric nurse.

Do you think that she has the will to drive the kind of reforms that you want to see to the mental
health sector?

PATRICK MCGORRY: Yeah, well, I'm very encouraged by that fact and also by the fact that she's
visited our service in Melbourne when she was Shadow Health Minister.

I think like Mark Butler, she's intelligent, she understands the issues, she's engaged with them.
And it just comes down to a matter of politics, leadership and vision. And her comment yesterday
about the kind of Australia that she wants to see is one of where there's equal opportunity for

Well I'd like to see equal opportunity in health care for people who experience mental ill health
and that's 3.2 million Australians every year.

STEVE CANNANE: Patrick McGorry, thanks for talking to us on Lateline tonight.

PATRICK MCGORRY: Thank you very much, Steve.

thanks for talking to us Lateline tonight.

Thank you very very much, Steve.

'Honeymoon killer' will be released into detention centre

STEVE CANNANE, PRESENTER: The Australian Government wants to deport American Gabe Watson, but has
asked the United States government to confirm he won't face the death penalty.

The man known as the "Honeymoon Killer" will be released from a Queensland prison tomorrow before
being sent interstate to an immigration detention centre.

From Brisbane, Natalie Poyhonen reports.

NATALIE POYHONEN, REPORTER: Gabe Watson will be a free man early tomorrow, but that freedom also
means deportation.

SANDI LOGAN, IMMIGRATION DEPARTMENT: Arrangements are currently being made for Mr Watson to be
taken into immigration detention tomorrow morning when he's released from jail.

NATALIE POYHONEN: Watson is serving an 18-month sentence for the manslaughter of his wife on their
honeymoon in 2003. Tina Watson died during a scuba diving trip in North Queensland. The couple had
been married for 11 days.

Alabaman authorities plan to charge Gabe Watson over his wife's death when he returns to the US.
But the Australian Government wants an iron-clad guarantee he won't be executed.

SANDI LOGAN: Once we have that formal assurance in writing that Mr Watson will not face the
prospect of a death penalty, should he be charged and should he be convicted of that charge in the
United States, we'll be in a position to remove Mr Watson forthwith.

ROBERT MCLELLAND, ATTORNEY GENERAL: I understand certain undertakings have been given by the
Alabama authorities. I think those will be clarified, bedded down and then the Minister for
Immigration will make the decision.

NATALIE POYHONEN: Alabama's assistant attorney-general says there shouldn't be any confusion.

DON VALESKA, ALABAMA ASSISTANT ATTORNEY-GENERAL: There is no death penalty offence awaiting him. No
judge can reinstate it. It's gone.

NATALIE POYHONEN: That agreement was given to Queensland authorities earlier this year.

ANNA BLIGH, QLD PREMIER: The Queensland Government has cooperated with the Alabama authorities,
providing them with all the evidence and documents that they need if they want to make another
prosecution. This is now a question for the Federal Government.

NATALIE POYHONEN: Tina Watson's family says a decision can't come soon enough.

TOMMY THOMAS, FATHER: You know, there's an old saying: "Justice delayed is justice denied", and we
continue to see justice delayed in this case.

NATALIE POYHONEN: Gabe Watson will be guarded by immigration officials until he reaches the US.

Natalie Poyhonen, Lateline.

Chinese dad jailed for campaigning against milk company

STEVE CANNANE, PRESENTER: A Chinese man who mounted a campaign to protest against contaminated baby
milk has been jailed for two and a half years for inciting social disorder.

Zhao Linhai whose own five-year-old son was among the 300,000 made ill by the milk became the
leading face of a movement by parents to claim compensation for medical bills.

The 38-year-old founded a website to provide information after it was discovered watered down milk
formula had been bulked up with the industrial plastic melamine.

At least six babies died after drinking the formula which causes kidney stones and kidney failure.

Mr Zhao's wife said the sentence was harsh and vowed to launch an appeal.

Israeli housing developments labelled 'provocation'

STEVE CANNANE, PRESENTER: Israeli plans to build more than 1,000 new homes in occupied East
Jerusalem have been described as deliberate provocation by Palestinians and peace groups.

Last week the announcement might have been lost in the fog of the US mid-term elections, but with
Barack Obama in Indonesia, it's had a much bigger impact.

Middle East correspondent Ben Knight reports from Jerusalem.

BEN KNIGHT, REPORTER: Israel captured this land between Jerusalem and Bethlehem in 1967. Three
decades later, it built this: Har Homa. Clearly there's been no freeze on building here.

Now, this neighbourhood is set to grow by a thousand more apartments.

NABIL SHAATH, PALESTINIAN AUTHORITY SPOKESMAN: This is a show of defiance of the international
community, of the United States government and of the peace process.

BEN KNIGHT: In the West Bank settlement of Ariel, another 800 homes have been given the go-ahead.
Israel says it could be years before homes are built, but the timing of the announcement could
hardly be worse.

BARACK OBAMA, US PRESIDENT: This kind of activity is never helpful when it comes to peace
negotiations. And, I'm concerned that we're not seeing each side make the extra effort involved to
get a breakthrough.

BEN KNIGHT: It's the second time this year Israel's prime minister Benjamin Netanyahu has
embarrassed the White House by holding back-slapping meetings with the American vice-president
while the Israeli government is approving hundreds of new homes to be built on occupied land.

HAGIT OFRAN, PEACE NOW: Today is trying to stop negotiations and to put all the blame on the

BEN KNIGHT: But Israeli government officials say that in any peace agreement, neighbourhoods like
Har Homa will be part of Israel and that building here doesn't contradict the desire for peace.

But Palestinians are increasingly frustrated and increasingly talking about declaring their own
state with or without Israel with the support of the United Nations Security Council. Benjamin
Netanyahu says that won't work.

BENJAMIN NETANYAHU, ISREALI PRIME MINISTER: The only way you're going to conclude a successful
peace negotiation is if you actually engage in it.

And I'm disappointed with the fact that the Palestinian authorities found ways to - not to
negotiate, to seek a detour, to somehow go to the UN or go to the Security Council or go elsewhere
and avoiding the critical negotiations that we have to engage in.

BEN KNIGHT: History's repeating itself in another way here today. The foundations of this
neighbourhood were laid 12 years ago during Benjamin Netanyahu's first term as prime minister.

It severely damaged relations between Israel and the Clinton White House, and that's something
Hillary Clinton will remember well.

The two will meet this week during Benjamin Netanyahu's tour of the United States. In New Orleans,
the prime minister tried to talk about Iran, but was heckled by Jewish students.

But this crowd was with the prime minister.

BENJAMIN NETANYAHU: God bless you and see you this year in a united Jerusalem. Thankyou very much.

BEN KNIGHT: His support at home appears to be just as strong.

Ben Knight, Lateline.

to be just as strong. And now to the weather: And that's all from us F you would like to look back
at tonight's interview with Professor Patrick McGorry or review any of Lateline's stories or
transcripts, you can visit visit our website. You can also followous on Twitter and on FaceBook. I
will see you again tomorrow night. Goodnight.

This Program is Captioned Live.

Good evening and welcome to Lateline Business, I'm Ticky Fullerton. Tonight - as consumer
confidence takes a dive, ANZ breaks cover to raise its its mortgage rates beyond the RBA's.

I think we'll find a second round of falls in December once we see the decisions of the other
banks. So to me it's sort of half an probably going to be closer to double digits.

Australian workers are doing unpaid overtime worth $72 billion a year.

Australians work the longest hours in the Western world and we're only beaten by Japan and Korea
and, of course, the Japanese have a word for death by overwork. I don't think we want to get to
that point.

And heavy rains in NSW threaten a bumper harvest.

A lot of that crop has been damaged to the point where it's probably not useable for anything.

A late selloff on the Chinese economy left the All Ords in the red for a third day running. It's
been a week of deafening silence from the banks, but late this afternoon ANZ joined the
Commonwealth in raising its variable rate mortgage above the RBA. Deposit rates are also up and
mortgage exit fees will go, but with households already feeling the squeeze highlighted by a drop
in consumer confidence this month it puts the banking sector squarely back in focus. Here's Emily
Stewart. It's beginning to feel a lot like Christmas, but Bank has already put a dampner on
festivities. Economists warn the rise in interest rates could mean a repeat of the lacklustre
spending seen last year.

Christmas is one of the peaks and it's a time we look forward to maybe reaping some rewards, but
this year it's just a case of survival.

Whether it's Myer or small or Whether big retailers we're going to find it tough because of this
interest rate rise.

A Westpac report has found consumers are likely to Spen cautiously leading up to Christmas with
consumer sentiment falling by 5% since October and a third of respondents say they plan to spend
less on presents than last year.

Less money to go around, but we'll make wise choices.

Economists say the high Australian dollar has partially offset the negative impact of the rate hike
in terms of consumer spending and given retailers who buy imported products a

import from all over the world. I'm a retailer so I get it from wholesalers who do the importing,
but certainly with the American dollar the way it is at the moment that has helped us as retailers
because that has brought down some of our purchasing prices.

, but has negatively impacted on some businesses.

Because a lot of purchases are now done overseas people are finding those products are cheaper and
they're by-passing the GST by doing so as doing so as well.

Westpac's chief economist Bill Evans doesn't think the Commonwealth Bank's rise above the Reserve
has affected consumer confidence.

I think we'll find a second round of falls in December once we see the decisions of decisions of
the other banks so to me it's sort of half an instalment on a fall that's probably going to be
closer to double digits.

A rise in interest rates is expected to impact the housing market which has been subdued in recent
months. Official figures show the number of owner occupied houses financed in September was up 1%
on August figures and the total investment of investment housing fell $95 previous month. Now the
ANZ has become the next bank to raise rates increasing its variable mortgage interest rate by 0.39%
to 7.8%. They've by 0.39% to 7.8%. They've also abolished exit fees. Meanwhile the Australian
Securities and Investment Commission has established guidelines for early termination fees. The
chairman Tony D'Aloisio says the law limits these fees to the recovery of a lender's loss caused by
the early termination. meets in early December and retailers and consumers alike are hoping they
won't have anymore unwanted interest rate surprises in store. sullen day on the markets. Earlier I
spoke to Martin Lakos from Macquarie Private Wealth. A bit of a local market selloff - how much was
that due to a renewed China focus?

Almost a Groundhog Day where we had the market steady through the morning's trade and this
afternoon saw a heavy selloff. Very much so the focus was coming out of news out of China with the
inflation number heading more importantly the Chinese authority looking to try to stem hot money
going into their property market once again. We would view this in the medium term as prudent by
Chinese authorities in authorities in terms of wanting to maintain sustainable growth between 8-10%
and certainly trying to clamp down on money going going into the property market that might put
imbalances on that Chinese economy. So the market didn't like that news straight up. Down 50 points
at one stage pretty much one stage pretty much across the board with materials, financials and the
energy stocks in particular the big underperformers.

To a couple of specific stocks. Qantas actually rallied despite this $12 million fine from the
European Commission. Does European Commission. Does that mean its cartel behaviour is old news?

That cartel issue is old news. It first arose in 2006 so I think it's well within the marketplace,
but two bits of news came out that overrun that. Singapore Airlines came out with a strong result
in terms of numbers and capacity taking place and even more importantly out of the US, Priceline
the second largest online travel bookings agency has come out with fourth earnings estimates
beating analysts. It may be the travel industry is in for a reasonable run.

Railroads company Linas has jumped ahead, something a deal with a European customer?

It has been running very hard over the last couple of month. There's a view that China is not only
importing iron ore and coking coal and energy, but also looking at rare erts for a range of
industries industries and Linas is in that space. They space. They didn't disclose their new of the
contract, but the market liked that and the stock was up nearly 7%.

Share registry company Computer Share had its AGM today, what was the message to shareholders?

They did say that the guidance they'd previously given was well and truly in line. They are seeing
good activity in Asia and that's the growth for Computer Share in terms of what they're operating
in Hong Kong. They really want to see more M&A activity they commented on although they think
there's things in the pipeline not yet coming through and certainly with takeover activity that
will help to boost earnings for Computer Share over the next one that is leveraged to improving
stock market conditions.

Thanks for talking to Lateline Business.

Always a pleasure.

On the other movers on the local sharemarket: Yesterday on the program we looked at the growing
tensions in fiscal and monetary policy between east between east and west. Despite these been a
better time to these tensions, there's been a better time to invest in emerging markets. That's the
message one international expert is delivering at this week's ASFA conference in Adelaide. Dr
Michael Power is a strategist with the specialist bank and asset manager Investec based in Cape
Town and joined me from Adelaide a short time ago. Dr Michael Power, welcome to Lateline Business.

Nice to be here.

When it comes to emerging markets you say Australia has a front row seat to the greatest show on
earth. What should we be doing about it?

I think there are two things. First of in there are two things. First of in their own right in
terms of what's happening in emerging markets and especially in Asia and secondly, there are
certain conditions emerging in Australia with regards to your demographics which you to start
looking beyond Australia as the primary repository of your savings.

How much of the growth in these markets is reflected in most of the world's capital indicies now?

Not at all. I call it the 85-15 rule. 85% of the world's growth in the next decade will come from
emerging markets which currently have about a 15% weighting in most indicies. So the paradox at the
moment is that investors when looking at the way the world is are underinvesting in the way the
world will be in 10 years' time.

If I take an example maybe a global fund might have themselves rated against, say, the M Miskie
index, but that's not weighted against the emerging markets, in a way you could find many of these
funds are

absolutely right. There is a second bite at the cherry a lot of Australian investors still can get
and that is in buying many of the stocks available on your indicies they are themselves directly
emerging market growth so you're not missing out on the story altogether.

When our fund managers look to investing in, say, European funds they're not necessarily getting
access to the right weighting of growth markets are they?

Not at all. And I think the Europeans are facing the same problem as are the Americans. I would
actually probably argue on a completely weighted basis because you have a high exposure to
resources you probably directly and indirectly do have a higher weighting than United States
generally would have towards emerging markets. However I still don't However I still don't think
given that 85% of the world's growth in the next decade is coming from emerging markets even
Australians have sufficient weighting towards that story.

Let me ask about India. I was surprised at how quickly India appears to be on track to accede China
in terms of growth. some extent about China. How much do you think we know about India and
investment in India?

Not nearly enough and I think you raise a particularly important point for Australia. I do think
over the next 10-15 years you will find your economy's becoming much economy's becoming much more
aligned maybe not in terms of character, but in terms of their synchronicity and I do think that
India and the Indian