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Gillard confronted, defended by shoppers


TONY JONES, PRESENTER: Julia Gillard's been taking her carbon tax message to the people and today a
couple of shoppers gave her their own message, calling the PM a liar.

Others defended her and confrontation dominated the day's campaigning on both sides of politics.

Meanwhile, there's been a warning that Australian businesses that use the Government's carbon price
as an excuse for increases will be targeted by the competition watchdog the ACCC.

Political correspondent Tom Iggulden.

TOM IGGULDEN, REPORTER: The Prime Minister says she's explaining the carbon tax, but some have
heard enough already.

JULIA GILLARD, PRIME MINISTER: And you live locally?

WOMAN: Yes, yeah.

PROTESTOR (carrying placard saying "Most incompetent government since Whitlam"): You have no
mandate! You have no mandate!

TOM IGGULDEN: The protest soon boiled over as the Prime Minister avoided the melee.

WOMAN II: What's that got to do with the carbon tax?

MAN: Because it's running our small businesses down the drain, mate. Do you have a business, ma'am?
Do you have a business? Yeah.

WOMAN II: My husband has a business and he supports the carbon tax!

JULIA GILLARD: I'm not at all surprised that there are Australians in favour and Australians
against, but this is the right thing to do for a clean energy future for our country.

TOM IGGULDEN: But Julia Gillard says she's not ducking the hard questions about the tax.

WOMAN III: I'd just like to ask one.


WOMAN III: Why did you lie to us?

JULIA GILLARD: Right, well I can talk to you about ...

WOMAN III: And why are you continuing to lie?

TOM IGGULDEN: Tony Abbott says Julia Gillard has only herself to blame for confrontations like

TONY ABBOTT, OPPOSITION LEADER: The Australian people are tough judges, but they ought to be tough
judges because they expect people to perform and they don't expect to be fibbed to, and that was
the problem that that lady was raising with the Prime Minister.

WOMAN III: A few months later, you've changed your mind.

JULIA GILLARD: No, I haven't changed my mind.

TOM IGGULDEN: But the Opposition Leader's being again accused of changing his mind on the carbon
issue by one of his own.

MALCOLM TURNBULL, OPPOSITION FRONTBENCHER: He had been - he supported a carbon tax at one point, he
supported an emissions trading scheme. And then, no doubt, you know, I'm not suggesting he did so
other than for what were good reasons, he changed his position.

TOM IGGULDEN: Malcolm Turnbull's reminder came as the Opposition Leader's trying to blunt the
Government's newly-sharpened points on the carbon tax. Today's visit was to a fish market, as he
took his carbon tax opposition to small business.

But in a community forum, he too was confronted by an opponent from the public.

VICKI, AUDIENCE MEMBER: And it's really hard to say that in a room full of people who disagree.

TONY ABBOTT: Thanks for giving Vicki a decent hearing, because it's important in a democracy that
all voices are heard.

TOM IGGULDEN: Vicki admitted she was involved in politics.

VICKI: The Greens.

MAN II: Go on, go away, we don't need you. Take your party political opinions somewhere else. We do
not need you at all.

TOM IGGULDEN: They chased her out of the forum and down the road until she called police.

VICKI (on phone to police): Come and pick me up 'cause I'm really scared. I just want to go home.

TOM IGGULDEN: And there were more tense scenes as Barnaby Joyce confronted unionists at a rally in

BARNABY JOYCE, NATIONALS (to protesting unionists): I'm going to stop the tax! I'm going to stop
the tax! My vote is to stop the tax!

TOM IGGULDEN: And in case you thought it was all about the volume today, well, there was one
significant announcement: the Government's appointed the ACCC to stop businesses from using the
carbon tax as an excuse to gouge unnecessarily high prices out of their customers. If they do so,
it's got the power to impose big fines.

JULIA GILLARD: Businesses have a million reasons not to do the wrong thing.

TONY ABBOTT: Well, the most misleading and deceptive conduct has been by the Prime Minister

JULIA GILLARD: A message the Prime Minister's hearing loud and clear.

Tom Iggulden, Lateline.

UK announces inquiry into hacking allegations

TONY JONES, PRESENTER: The British prime minister, David Cameron, has outlined details of a public
inquiry into allegations of phone hacking by News International.

The inquiry will be headed by Lord Justice Brian Leveson, who'll have the power to call newspaper
proprietors and question witnesses under oath.

It will deliver its findings within 12 months.

Mr Cameron also declared that anyone involved in the hacking must never be involved in the British
media again.

In a few hours the House of Commons is expected to unanimously pass a motion calling on Rupert
Murdoch to withdraw his bid for the pay TV channel BSkyB.

Europe correspondent Philip Williams reports.

PHILIP WILLIAMS, REPORTER: It takes a lot to unify the British Parliament, but this man's done it.
Rupert Murdoch's continued bid for BSkyB is now seen as totally unacceptable by all sides of

Barring a last-minute change in the next couple of hours, there'll be a non-binding but all-party
motion calling on him to withdraw the bid.

DON FOSTER, LIBERAL DEMOCRAT MP: Well it's in the public interest that Rupert Murdoch sees that
there is complete outrage in this country about the behaviour of some of his employees, about his
organisation, a real concern about that organisation controlling yet more of our media in this

In the public interest, he should back down.

PHILIP WILLIAMS: But while the initial reaction at the hacking scandal was to close the News of the
World, it's a different story at News International's other paper, The Sun.

This, their front page, in response to the former prime minister Gordon Brown's demands to explain
how the newspaper got details of his son Fraser's cystic fibrosis.

GORDON BROWN, FORMER BRITISH PRIME MINISTER: They will have to explain themselves. I can't think of
any way that the medical condition of a child could be put into the public arena legitimately
unless the doctor makes a statement or the family makes a statement.

PHILIP WILLIAMS: The Sun has responded not only in print, but with an interview with the unnamed
relative of a cystic fibrosis sufferer who they say was the legitimate source of the story and not
the medical records.

ANONYMOUS MAN: It's quite shocking for people to be making up stories basically on how it was done.
It certainly wasn't true as far as I was concerned, you know.

PHILIP WILLIAMS: The Sunday Times is also vehemently denying Gordon Brown's other allegations that
known criminals were employed to dig dirt on a property deal of his.

The publicity surrounding the whole affair is having far-reaching effects, all the way to
Australia, where News Limited CEO John Hartigan has told staff that while he has no reason to
respect wrong-doing at the company, "We will be conducting a thorough review of all editorial
expenditure over the past three years to confirm that payments to contributors and other third
parties were for legitimate services."

Back in Britain, despite the agreement on the BSkyB bid, the Opposition smells blood over David
Cameron's association with his former communications director Andy Coulson, who was arrested over
hacking allegations.

ED MILIBAND, BRITISH OPPOSITION LEADER: That while he was editing the News of the World, Andy
Coulson had hired Jonathan Reece, a man jailed for seven years for a criminal conspiracy and who
made payments to police on behalf of the News of the World.

Can the Prime Minister tell us what happened to that significant information that was given to his

DAVID CAMERON, BRITISH PRIME MINISTER: First of all, this information was not passed on to me. But
let me be clear, let me be clear: this was not some secret stash of information.

Almost all of it was published in The Guardian in February 2010 at the same time my office was
approached. It contained no allegations directly linking Andy Coulson to illegal behaviour. It
didn't shed any further light on the issue of phone hacking.

So it wasn't drawn to my attention by my office. ... If, if I was lied to, if the police were lied
to, if the select committee was lied to, it would be a matter of deep regret and a matter for a
criminal prosecution.

PHILIP WILLIAMS: At every level, the scandal that just over a week ago few cared about continues to
grip the nation, and no-one knows what will happen next.

Philip Williams, Lateline.

US investors sue News Corp for compensation

TONY JONES, PRESENTER: News Corporation and its chairman could also be facing trouble on the other
side of the Atlantic.

The Democratic senator Jay Rockefeller has called for an investigation into News Corp and warned of
severe consequences if allegations that the phones of September 11 victims were hacked are found to
be true.

And a group of US institutional investors has launched a lawsuit against the company, accusing the
directors of failing to investigate the hacking claims and of blatant nepotism.

From Washington, Craig McMurtrie reports.

CRAIG MCMURTRIE, REPORTER: It's the question many analysts are asking: will the fallout from the
phone hacking scandal reach News Corporation in New York?

Despite a $5 billion stock buyback scheme, its shares and board are under pressure, and as if
Rupert Murdoch didn't have enough to worry about, a group of US institutional investors has filed a
lawsuit. They claim that the UK phone hacking revelations show "a culture run amuck" within News
Corp. Lawyers for the group are also alleging that Rupert Murdoch treated the company "like a
family candy jar."

MARK LITOWITZ, LAWYER: And the board's failure to look into it was a sign that they were not
independent of Murdoch, they were not willing to investigate loyalists of Murdoch like the people
who ran the tabloids.

CRAIG MCMURTRIE: Lawyers acting for the Amalgamated Bank of New York and two union pension funds
say they're seeking hundreds of millions of dollars in damages. In their complaint they allege the
News Corporation board "provides no effective review or oversight".

They accuse board members of failing to investigate the phone hacking allegations, claiming, "...
it is inconceivable that Murdoch and his fellow board members would not have been aware of the
illicit news gathering practices ...".

The lawsuit, which is an amended version of one first lodged in March, also claims that Rupert
Murdoch, "... habitually uses News Corp to enrich himself and his family members at the company's
and its public shareholders' expense." It accuses the News Corp chairman of "blatant nepotism",
saying he paid too much for daughter Elizabeth Murdoch's Shine Television Group because he wanted
her on his board.

MARK LITOWITZ: There's a series - many years of transactions that served Murdoch's purposes and
didn't provide full value to shareholders.

CRAIG MCMURTRIE: There was no comment from News Corporation, but some industry analysts believe the
lawsuit looks like a stretch. But they also warn that others could follow.

US ethics campaigner Melanie Sloan.

MELANIE SLOAN, ETHICS CAMPAIGNER: I think given all of the circumstances now, everything about
Rupert Murdoch's media empire is up for discussion and all of it should be investigated.

CRAIG MCMURTRIE: There's speculation that US regulators could get involved, the Washington,
DC-based Citizens for Responsibility and Ethics group is calling for Congress to hold its own

MELANIE SLOAN: One British tabloid yesterday published the allegation that a New York City police
officer was offered money by News of the World to retrieve phone records of victims of the 9/11
attacks here in America.

Should it prove out that there were attempts to hack into the phone records of Americans, I think
that will be a great cause for concern here and I think you will see Congress get involved.

CRAIG MCMURTRIE: And analysts warn that the US Justice Department could also decide to have a
closer look at allegations that News Corp employees offered bribes to officials and police. The
department isn't commenting.

Craig McMurtrie, Lateline.

department isn't commenting.

Europe's debt crisis continues to worsen

TONY JONES, PRESENTER: Europe's debt crisis has worsened. Ireland has joined Portugal and Greece as
the third Eurozone nation to have its credit rating downgraded to junk status and there are growing
fears that Spain and Italy are headed the same way.

Meantime, China's economy is still growing.

Karen Barlow reports.

KAREN BARLOW, REPORTER: While temperatures rise in the European summer, some economies are boiling
over. Following Greece and Portugal, Ireland has had its credit rating downgraded to junk status,
rattling global markets.

SAUL ESLAKE, GRATTAN INSTITUTE: Well they're worried and they're worried not least because in part
as a result of the regulatory response to the global financial crisis of two years ago, banks have
been taking on more sovereign debt in their own countries.

KAREN BARLOW: EU finance ministers have again met to sort out Greece, with fears the rest of Europe
is being dragged down into economic and social turmoil.

HERMAN VAN ROMPUY, EUROPEAN COUNCIL PRESIDENT: It is very urgent that Euro group come with us - to
us with proposals on stopping the risks of contagion.

KAREN BARLOW: For the first time, some form of Greek default has been considered. The Euro finance
ministers say it may be the only way to secure Greece a second bailout.

WOLFGANG SCHAEUBLE, GERMAN FINANCE MINISTER (voiceover translation): We made it clear that above
and beyond Greece we are resolved to do everything to stabilise the Eurozone as a whole.

KAREN BARLOW: It's feared the large European economies of Spain and Italy may soon also require

SAUL ESLAKE: Spain and Italy are the third and fourth biggest economies in the Euro area and the
cost of bailing them out, if it actually came to that, would certainly wipe out any funds that the
European Central Bank and other European authorities have thus far indicated that they're willing
to put behind the bailout of the three smaller countries.

KAREN BARLOW: French and German banks also have significant exposures to Italian and Spanish debt.
With European stocks down, Italy's Finance Minister is expediting austerity measures.

GUILIO TREMONTY, ITALIAN FINANCE MINISTER (voiceover translation): I'm going to Rome to close the
Italian budget. Thank you.

KAREN BARLOW: It's a very different story in China. In the second quarter economic growth has
slowed slightly, but the world's second-largest economy is still powering along at 9.5 per cent.

SHENG LAIYUN, CHINESE NATIONAL BUREAU OF STATISTICS (voiceover translation): Although part of the
indicators registered a reduction, the overall economic performance of China is good and China is
shifting from fast development driven by policy to self-driven, healthy development.

KAREN BARLOW: And a growing China is good for major trading partner Australia.

SAUL ESLAKE: It's certainly to be hoped that China succeeds in stabilising its inflation situation
in fairly short order without needing to take drastic measures to curtail growth.

KAREN BARLOW: The Australian dollar and share market ended the day higher but consumer confidence
has fallen, taking it down to the same levels seen during the global financial crisis.

Karen Barlow, Lateline.

America's economy could have been worse: Hale

TONY JONES, PRESENTER: In the United States the stakes are also getting higher, with the deadlock
between the Republicans and the president continuing over the issue of raising the nation's debt

Failure could trigger another economic crisis there.

And Ben Bernanke is about to begin two days of testimony about the state of the US economy.

Well to discuss all that, we're joined now from Chicago by global economist David Hale, who along
with his wife Lyric has just released a new book What's Next: Unconventional Wisdom on the Future
of the World Economy.

David Hale, thanks for being there.


TONY JONES: Ben Bernanke's going to have a lot on his plate when he fronts congress later today.
For his part, will convincing the reluctant Republicans to lift the debt ceiling be at the top of
his list?

DAVID HALE: I think that'll be a major concern. And indeed, on several occasions in the last two
months he's expressed concern about this issue and encouraged congressional Republicans to reach an
agreement as soon as possible with the Democrats, with the White House, on some way to increase the
debt ceiling by August 2nd.

TONY JONES: And what'll happen if he fails to do that? What'll happen if they refuse?

DAVID HALE: Well, then we create a situation where the US Government will not be able to fund
itself in the month of August. The Government does get, every month, about $170 billion in tax
receipts, but its outlays are over $300 billion.

And this would call into question its ability to make social security payments, Medicare payments,
to pay the soldiers in Afghanistan and Iraq, and indeed to service the federal debt.

Now I believe, because they have $170 billion in revenue, they won't let the debt have a default,
but the fact is it would be very disruptive, it would lead to a suspension of many government
operations and it would have a very profound effect on the economy. So I can tell you right now,
leaders in both parties don't want this to happen.

TONY JONES: Can we also expect a tough response from the same Republicans, who'll be demanding
answers on why the federal stimulus spending has failed to deliver a revival in the US jobs market?
In fact the job situation has got worse, unemployment is increasing; I think it's now at 9.2 per
cent unemployment.

DAVID HALE: Well I think what could be said is if we hadn't had the federal stimulus program two
years ago, two and a half years ago, things might have been worse.

The Federal Government did give to the state governments over the last two and a half years $160
billion of aid. Despite that aid, they still lost over 500,000 jobs. But if we hadn't had that
money for the states with their massive fiscal deficits, the job losses might have been closer to
800,000 or 900,000.

So I would say that the stimulus package prevented things from getting worse. But given the scope
of the financial crisis, given the scope of the downturn, there was no way we could avoid a large
increase in unemployment in 2008 and 2009.

The problem is the recovery itself has been subdued because the private sector is going through,
still, a process of deleveraging. The small business sector in particular is very, very cautious,
and the small business sector by itself accounts for over a third of US employment.

TONY JONES: The stimulus package, or the key part of it, the $600 billion bond buying program, has
finished. It finished at the end of last month. So what policy options are left for Obama and for
the Fed if they want to try and increase employment?

DAVID HALE: Well the Fed's made it very clear in all its recent statements it'll leave interest
rates close to zero for many more months, indeed maybe for another year or two.

It also promises to maintain its balance sheet at the current size. As bonds mature, instruments
mature, it's not going to let the balance sheet shrink, it'll simply roll this money over.

And if in six or nine months' time, because of very significant fiscal drag in the economy, as
taxes increase and spending cuts occur, and we still have unemployment rates close to nine per
cent, I would not rule out in 2012 a return to a quantitative easing policy.

Right now the Fed's not talking about that, Ben Bernanke's reluctant to do it because of all the
criticism he took last year from Asian central bankers, not to mention Republican economists.

But if in six months' or nine months' time unemployment is still nine per cent, the economy's
growth rate's less than two per cent, we cannot rule out a return to the policy we had over the
last six months with the Federal Reserve buying a large volume of US government securities.

TONY JONES: And of course that would go against, once again, the Republicans, who now control both
houses of congress. Their main theme is to actually cut government spending, and of course we're in
a huge political impasse over that.

So, how could you actually do that when you've this political drive going in one direction, the
political drive from Obama going in the opposite direction?

DAVID HALE: Well, both parties agree there will have to be over 10 years a very large reduction in
government spending to reduce America's fiscal deficits. Both parties have talked about numbers in
the range of $2 or even $3 trillion.

The problem is the details. The president would also like to have tax increases on high-income
Americans as well as some selective tax increases on business.

Republicans rule out any tax increases. There's also disagreements about how to manage Medicare,
the Government healthcare program for the elderly. But both parties do agree there will have to be
over the next five or 10 years very, very significant reductions in government spending.

The problem is to reach a convergence on the details.

TONY JONES: David, do you see any light at the end of the tunnel here, because at the same time the
crisis in the Eurozone appears to be worsening with the debt contagion now spreading to Italy, and
how is this going to impact on the US before we go on to talk about what's actually happening in

DAVID HALE: Well, the answer is it'll have a modest effect on trade, because Greece, Portugal,
Ireland are in very severe recessions. And now with this financial crisis, there is the danger of
recession coming to Spain and Italy.

Right now we have two European economies. We got a boom in Germany and Sweden, pretty good growth
in Austria and France and Holland because of their success at exporting and the fact we've had over
the last year tremendous growth for their products in emerging market countries.

But Southern Europe is much weaker. It has a very major problem with public debt. Over the last 10
years it's become less competitive in foreign trade because it's had no growth in productivity,
steady growth in wages, and in the case of Spain and Ireland, we also had over the last 10 years
major property bubbles, which have now crippled the banking system and also increased public debt
to rescue the banks.

So we have two European economies. And the problem with this crisis is the Europeans have not been
able to reach a consensus yet on what to do about the Greek debt.

The Germans have proposed on many occasions in the last two months they want the private investors
to share in a restructuring process, to extend the debt, possibly even take losses. And when these
ideas are heard, they frighten all investors and that has led in recent days to the heavy selling
pressure on Spain and Italy.

The Germans are very committed to the monetary union. They believe it's essential to their
prosperity. But German public opinion is hostile to the idea of making transfer payments to
countries like Greece and Portugal. The Germans feel this is irresponsible, it's rewarding bad
behaviour. And this in turn puts pressure on Mrs Merkel, the German Government, to try and have
some kind of burden-sharing process with the private sector. And that has created the risk of
widespread financial contagion now engulfing countries like Spain and Italy.

There will have to be a solution done in the next few days. The private sector may agree to some
re-profiling of the debt, extending maturities, but it's essential that we avoid something called a
full-scale default, because that would simply magnify the contagion problem and could at some point
over the next three or four months jeopardise the survival of the monetary union itself.

TONY JONES: It's an interesting crisis in this sense: I mean, Italy's financial market has been
relatively stable, unlike Spain and Ireland, but they do have massive government debt. It's
structural debt.

It's been around almost since - well it's been growing since the end of the Second World War
evidently. With the money markets punishing Italy, how is that going to affect the equation and the
spreading of this contagion? Because it's suggested that if they continue to punish Italy, Italy's
banks could fail.

DAVID HALE: Well Italy's had a high level of public debt for many years. That's not new. And it is
a very large level of public debt. It's over $2.2 trillion, it's 120 per cent of GDP.

But at the same time, Italy is running a primary budget surplus of 1.8 per cent of GDP. That's the
surplus you have when you take away interest payments. The finance minister right now has before
the Italian parliament a major fiscal reform bill that'll probably take effect in the next few
weeks to cut public spending over the next three years by $40 billion euros and to achieve a budget
surplus in Italy by 2014.

So strong actions are underway to further address the Italian debt problem. And if we did not have
these fears about Greece, about bondholders suffering large losses, I don't think we'd have right
now a crisis in Italy.

But it's the combination of the uncertainty about Greece, coupled with the fact we have a large
public sector debt in Italy and have had that for many years, plus we've had some tensions in the
Italian ruling coalition.

Last week prime minister Berlusconi was critical of his Finance minister, Mr Tremonti, and there
were fears over the weekend that Tremonti might resign. And because he has been the major force in
Italy for fiscal reform, for fiscal austerity, the sheer possibility that that might happen would
by itself have created a crisis of confidence.

Now Berlusconi I think has learned in the last two or three days he cannot lose Tremonti; in fact
he has to carry through this fiscal austerity program. That's very clear from his comments

So, if we could resolve the Greek debt situation in the next few days, get this Italian fiscal
program through parliament, things could, in a week or two, look a lot better. But right now the
Eurozone finance ministers must reach some agreement about what to do with the Greek debt, and they
must do it in a way that does not encourage fears of default and worse financial contagion
elsewhere in Europe.

TONY JONES: Central banks are running out of money essentially for big bailouts. Some radical
solutions have been proposed in your new book, What's Next?

Perhaps the most radical is a financial transaction tax, sometimes known as the "Tobin tax" after
the man who first proposed it, the Nobel laureate James Tobin. How would it work, could it work,
would any leader in the Western world ever accept such a thing?

DAVID HALE: Well this has been proposed off and on over the last 30 years going back to Mr Tobin in
the 1970s and it would be a tax basically on all global financial transactions - currency trading,
stock trading, things like that - to generate revenue to finance various public goods.

Now two weeks ago the leader of the European Union, Mr Barosso, did propose a Tobin tax for Europe
alone to help finance the budget of the European Union. There was not yet any major response to
this proposal, but needless to say, it will invite great concern and great criticism.

London in particular, for example, would be concerned that if we had a tax on financial
transactions in London, but not in New York, Hong Kong and Tokyo, this would simply undermine
London's role as a global financial centre.

So I think, given those fears, which you'll have possibly, is the Europeans advocating at the next
G20 meeting a global Tobin tax, not just a European Tobin tax.

But the fact the issue was raised in Europe two weeks ago tells you the issue is still in play. The
odds of it going very far are still quite limited because I doubt we can achieve a global consensus
on this. But, because of the need to fund various government programs, because of the need to raise
money for various public goods, the issue will, I think, still have a following for some time to

TONY JONES: A final question, David, because there is at least one positive side in the past 24
hours to the global economic picture, that is China released today unexpectedly high growth
figures, over nine per cent, and surging retail figures.

Are we now seeing real evidence of the decoupling of the emerging markets, particularly China and
India, from what's happening in the US and Europe?

DAVID HALE: Well China still depends heavily on foreign trade, therefore it's not invulnerable to
bad news in Europe and the United States. But there have been a couple of major changes in China
over the last 18 months which will strengthen domestic demand.

First, last year, we had a very major labour shortage development in eastern China, and this lead
to very significant increases in wages - 20 per cent plus for many of China's migrant workers.

These large increases in wages obviously are helping to drive more growth and consumer spending.

Secondly, China's raised interest rates now five times in the last eight months. The Chinese
household sector is sitting literally on trillions of dollars of bank deposits which were, indeed
still are, earning a negative real return, because the inflation rate in China's over six per cent
and the yield on bank deposits is only 3.5 per cent.

But that yield eight months ago was only two per cent, so there has been in the last eight months a
50 per cent increase in Chinese interest income.

In addition, the Chinese government or parliament last week approved an income tax reduction
program. They will now exempt from income taxation all those who earn less than 3,500 RMB a month.
And this will reduce the number of people in China paying an income tax from 84 million to only 24
million. So this also will in the year ahead give a further boost to domestic consumption, domestic

So what China's now doing is going through a multi-year reorientation from relying on export-led
growth to relying far more on domestic demand. And that will, in the years ahead, help to maintain
a relatively high growth rate in China.

TONY JONES: David Hale, once again, fascinating to talk to you. We'll have to leave you there. We
thank you very much for joining us at this time of the morning in Chicago.

DAVID HALE: Good evening.

Christmas Island rescue boats unseaworthy

TONY JONES, PRESENTER: The inquiry into the Christmas Island disaster has turned its attention to
the rescue boats on the island.

The coroner specifically wanted to know why federal authorities had supplied boats that couldn't
operate in bad weather and weren't seaworthy at the time of the tragedy.

But a marine rescue expert told the hearing the lack of proper rescue boats did not compromise
efforts to save the asylum seekers.

From Christmas Island, Andrew O'Connor reports.

ANDREW O'CONNOR, REPORTER: It was left to Navy and Customs fast rescue boat crews to save shipwreck
survivors in seas peaking up to eight metres.

The island's own dedicated rescue boats had been mothballed after being declared unseaworthy. The
inquest has previously examined why the boats weren't available, with the Commonwealth arguing that
even if they were still in commission, the conditions were too dangerous to launch them.

It was a view shared by Sergeant Adam Mack of the WA Water Police.

The key question has been whether those boats could've helped save even more lives at Rocky Point
that morning. Sergeant Mack told the inquest the conditions were so severe that day, the boat
simply couldn't have been launched safely, and he said that the lack of those boats didn't
adversely affect the rescue effort.

The recovery operation was a different matter. As he marshalled a limited number of boats and
aircraft to search the coastal waters, Sergeant Mack said the lack of suitable rescue boats on the
island itself was a constraint.

As Navy boats searched the water, he also had problems getting air support, with the one aircraft
assigned to his operation being forced to leave after just one day because of a lack of fuel on the
island. By that stage, it had covered only half its assigned search area.

But even with these issues, Sergeant Mack said he was confident that all survivors who could have
been saved had been saved on the day of the accident. He also believed it was always unlikely they
would find more bodies beyond those recovered in the initial rescue.

Of the estimated 50 victims, 20 people remain missing, presumed dead.

Andrew O'Connor, Lateline.

Assange continues fight against extradition

TONY JONES, PRESENTER: WikiLeaks founder Julian Assange has continued his fight against extradition
in London's High Court.

Mr Assange's lawyers challenged the legality of a lower court decision in February which cleared
the way for his extradition to Sweden.

Mr Assange claims he won't receive a fair trial in Sweden on rape charges and he fears once in
Sweden he'll be sent to the United States, which is conducting an investigation into his WikiLeaks

Entrepreneurs buy Triabunna woodchip mill

TONY JONES, PRESENTER: Two of Australia's wealthiest entrepreneurs have bought a Tasmanian woodchip
mill, throwing the future of the state's forest industry into doubt.

Wotif creator and Australian Greens donor Graeme Wood and Kathmandu clothing founder Jan Cameron
signed the contracts to buy Gunns' Triabunna mill today.

They're paying $10 million for the operation. They say they'll continue to run it as a woodchipping
facility, but for the term of the current contract.

Their long-term aim is to make Triabunna a mecca for tourism on Tasmania's east coast.

Brad Markham reports.

BRAD MARKHAM, REPORTER: Entrepreneurs Jan Cameron and Graeme Wood are now significant players in
Tasmania's forest industry. The pair has bought Gunns' Triabunna woodchip mill for $10 million.

JAN CAMERON, ENTREPRENEUR: That's a very unexpected development for both of us, I think.

BRAD MARKHAM: The east coast site is among a list of assets the timber company Gunns is selling to
raise cash.

JAN CAMERON: We've been fairly committed about pursuing this opportunity and we've kept the
negotiations open and we've been quite persistent.

BRAD MARKHAM: The deal scuttles a plan by family-run company Aprin to buy the woodchip mill.

RON O'CONNOR, APRIN: It just ripped me up bad because I've been - you know, we been working on this
pretty hard.

BRAD MARKHAM: It had conditional approval for a taxpayer loan and a secret profit-sharing
arrangement with Forestry Tasmania.

It's also been revealed Aprin was prepared to pay $16 million for the mill.

BRENDAN O'CONNOR, APRIN: What we are wondering is why we weren't offered the mill under the same
circumstances. If the offer was 10 to start with, we would have had the money to Greg six weeks

BRAD MARKHAM: There's been a mixed reaction to the sale.

BOB BROWN, GREENS LEADER: It's a wonderful outcome. It's come from the market without government
interference or backroom deals.

PETER GUTWEIN, TASMANIAN SHADOW TREASURER: This will have drastic consequences for the entire
forestry sector in Tasmania. Triabunna was an integral part of the supply chain.

BRAD MARKHAM: But the owners have agreed to keep the mill operating for an unspecified transition
period, which the industry says needs to be until 2027.

LARA GIDDINGS, TASMANIAN PREMIER: We will hopefully be able to work with the new owners to ensure
that there is a future for the native forest industry in southern Tasmania.

JAN CAMERON: Most likely we'll tender the mill out to an operator for this period.

BRAD MARKHAM: Aprin's owners won't be applying.

RON O'CONNOR: Cut off my arm first.

BRAD MARKHAM: The site will eventually be converted into a tourism hub.

JAN CAMERON: This is definitely a long-term project for Graeme and myself. We don't have any firm
ideas exactly what is going to happen.

NICK MCKIM, TASMANIAN GREENS LEADER: Triabunna now has the opportunity to grasp a future with a
broader economic base.

BRAD MARKHAM: Ownership of the mill will officially change hands on Friday.

Brad Markham, Lateline.