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Inside Business -

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(generated from captions) an electric limbo. There is no

such thing as an Abbott-proof

fence. You can't let this go

without ... we're very excited

to have you here tonight. Eight

days without a shower. Let's

move on now, shall we? Back to

you Barrie. I feel as if I've weathered a weathered a dozen anniversaries

already. You're making

G'day there. Welcome to the

program. Three big stories this

week - the package of re forms

called the clean energy future

plan, centred around a carbon

from the 'News of the World' tax of $23 a tonne, the fallout

phone hacking scandal which has

seen News Corporation's seen News Corporation's shares

collapse. And its shairm Rupert

Murdoch under siege. And then

David Jones shocked the market

with a huge profit downgrade

which resulted in all retailers

shares getting smashed. So this

week we're going to look into

those stories in detail, one at

a time. What does industry

think of the clean energy

future plan, how much trouble

is Rupert in and would you touch retailers with a barge

pole? This Program is Captioned

Live.

In First Gorge, BYO food - first Person -

first Person - BYO food how a

small liquor shop is muscling

up to the fient giants. When it

was a bottle shop it was lucky

to do $400 to $500,000 a year.

But we have almost doubled our turnover from the last

financial year. We can only see

that increasing over the next

year or two. Julia Gillard and

Tony Abbott spent the week in

full political campaign mode

addressing town hall debates addressing town hall debates

and confront ing irate

shoppers. But away from the politics businesses have to

figure out what the proposed

scheme means for them. Michael

Hitchens from the Australian industry greenhouse network has

been crunch ing the numbers for

them. What is your industry

group's response, Michael Hitchens, to the climate change

package that was announced a

week ago? Alan, we're quite disappointed. There's four

really key points that we have

a problem with. The first is

that this is a missed

opportunity to do some economic

reform on the 237 other

policies that the Productivity

Commission pointed out were

quite costly. Secondly, it's

going to leave our trade

exposed industries having to

catch up by about $2 billion a

year in costs compared to their competitors. Third, the electricity generation side of

things is still very uncertain.

And finally the price itself of

$23 is not at all consistent with current international

pricing, which are down at

around $15 a tonne. What is so

uncertain in the situation in

electricity? The electricity

generating sector was going to

suffer around about a 10 to 12

billion dollar asset value loss

from the scheme. What's being

offered at the moment is around

$5 billion plus an unknown

amount of money to buy out

probably a brown coal

generator. Those details remain

untern. - uncertain. What is

apparent, though, is that the

and Queensland look like black coal generators in NSW

they're going to they're going to suffer about

$5 billion asset value loss. So

what do you think the

consequences on power

this? Do you think we're generation will be with all

heading to brownouts of some

sort? , no I don't think that

is likely. The capacity will be

there, it's the price that is

the problem. Is this going to

be an even bigger burden on our

competitive situation? How do

you come up with that figure of

$2 billion in costs for trade ex#30esed

ex#30esed industries? We -

exposed industries? We tend to

boil this down to the number of

permits of those exposed to the

trade exposed and the number is

starting at 124 million permits

to cover the loss of

competitiveness. But mining and manufacturing industry in

Australia - they need about 195

million perm yilts to million perm yilts to break

even - permits to break even.

That is to not have a competitiveness tax on them. So

we're short about 70 million

permits. That over a period of

time turns into about a $2

billion a year tax on the competitiveness of

manufacturing and mining. The Government must know this. It's

pretty simple sum. What do you

think is going on? The way the

they're numbers work out is that

they're drinlting that $2 billion to oh - distributing

that $2 billion to other

people. As they say, they've

over compensated low and middle

income earners by about 20%.

That works out to be $1

billion, about half of that $2

billion I am talking

about. They seem to have given

maybe half a billion dollars a

year to renewables. Perhaps $00

million a year to the farm sect

or through the carbon farm ing

initiative. So you would say,

therefore, that the heart of

this scheme is a wealth

transporter from exporter toss

households of $2 billion? That

is certainly what it looks like

to us, yes. On the subject of

Emissions Trading Scheme and the other things apart from the

carbon tax, the Government

seems to have ignored all of

the advice, including that of

the Productivity Commission,

that all of those schemes or

renewable energy schemes is a

waste of money Yes, it's been

really quite disappointing on

that score. What they should be

doing is phasing out those renewable schemes much quicker.

There is now going to be a

price on carbon in the economy,

albeit only 5 t 9% of the

economy. But in is going to be

a price there and there's now

no need to have no need to have these subsidies

on renewables and other areas

of the economy. Could you just

explain that 59%? Well, the

scheme's coverage looks like it

works out to be about 59% of

Australia's emissions. That is,

by leaving out transport, by

leaving out agriculture, by

what looks like leaving out the

waste sector, one of the keys

to carbon pricing being

efficient is that it is

economiwide, and clearly this

Michael Hitchens Thanks, is not. Thanks very much,

Alan. As Michael Hitchens

alluded to, the carbon tax

proposal sets aside $13 billion

to fund renewable energy

projects. Now renewable energy

give the industry the kick proponents say the money will

start it needs. But as James

concerns that Panichi reports, there are

concerns that the new scheme

also simply build on

Australia's legacy of poor

investments in clean

energy. Our climate is

changing. Our planet is

warming. Extreme heat. More

bushfires and drought s The

science is clear. We need to

put a price on carbon. It's

official - the race to

renewables has begun. In just a

few words, Prime Minister Julia

Gillard changed the landscape

of Australian renewable

energy. Today, I want to

particularly highlight the huge

investments in renewable energy

that this package brings.

Billions of dollars of new

resources to help build that

clean energy future for

Australia. The Government's

decision to plough big money decision to plough big money

into clean energy is a game changer. But opinion is divide

on whether it's the game the Australian taxpayer should be

playing at all. This finance

corporation will effectively support those emerging

enterprises that need more

support. Picking winner s is

very good at picking losers and

costing taxpayers a lot of

money. It's a signal from the

Government that it wants to do

something about climate change.

It has become un balanced as a

result of some of the political

trade-offs that appear to have happened. The Government has

set aside $10 billion over five

year force the clean energy

finance corporation, half of

that has been ear marked for

renewables. Then there's the

Australian renewable energy

agency which will administer

$3.2 billion over nine years -

arena will be mostly made up of

existing research and

development programs but

together with the finance

corporation it adds up to big

changes for the industry. We

believe this finance

corporation will play a key

role in supporting those

technologies that have proven themselves but now need to

prove themselves at scale and I

think this finance corporation

can play a key role for those

technologies - like geothermal,

large scale solar, wave and

tidal energy - they are proven, they just now need to prove themselves at scale. The

prospect of the Government's

announcement put a rock under

some renewable energy stocks

this month across geotherm 58,

solar and even wave energy

shares. The issue in Australia

is that wind power is the

lowest cost technology other

technology like solar, solar PV

or solar thermal are more expensive today than wind. Therefore, if we want Therefore, if we want to put a

broader technology mix in, we

will need to fund that in a

different way and perhaps that

is what the clean energy

finance corporation might be

do. The fund amounts to a new

start for renewable energy. But

there are those who say it's a

false start. This is a mishmash

which actually principally

involved the establishment of

slush funds which amount to

billions of dollars of tax

revenue, the revenue from the

carbon tax being recycled into

essentially non-market projects. Economists Judith

Sloan says a government funding

body is not compatible with the market-placed carbon price

framework it will have to

operate in If these kinds of

alternative energies can't

stand on their two feet, maybe

they have four feet, you know,

without being propped up by the

taxpayer that is not a market

solution. But we believe

unless Australia makes the

investment now in some of those

emerging renewable energy

technologies, then we will face

challenges in the future should

we need to go beyond the

current emissions abatement

target and also to deploy a

whole range of clean energy

technology. There's no

shortage of renewable energy options options in Australia but many

of those still require taxpayer

assistance if they're to become

viable. The challenge for the

new agencies is to decide which

forms of technology to support

and which forms to tosds out

into - toss out into a cold, un

protected market place. But

one decision has already been

made - carbon capture is a

technology which stores

emissions from fossil fuel power plant. Even power plant. Even though

Treasury modelling assumes

carbon capture in Australia's

energy future, it's not

supported by the Greens and

won't be eligible for new

funding. It leads to some

concerns on the financial side

of things. But in terms of

philosophical step, in terms of

policy step, I think it's a

very flawed step because it's

essentially saying we are not

going to worry too much about that part of the energy equation. The prospects equation. The prospects of

carbon storage haven't been

helped by the collapse of the

large Zerogen project in

Queensland late last year. But

carbon storage supporters say

it has to be part of the mix if

Australia wants to meet its

emissions targets If we're

going to tackle this climate

change in the best and most

appropriate and most cost

effective man er, we have to

have everything in our arsenal there. There is proecially going to work. Let's going to work. Let's not have

the Government pick ing win ers

oh the Greens picking

winners. It's widely agreed

that the Government set carbon

price of $23 a tonne is not

high enough for the market to

sort out which carbon abating

method is the most cost

effective, which is why the

Government established its renewable energy fighting

fund. But at that level it's

what I call a homeopathic

price, it's actually doing very

little to change little to change behaviour. It's probably not

even a price that will

encourage the transfer of

electricity generation from

coal to gas. I think when you

start putting a serious price

on carbon emissions from

Canberra traditional fossil

fuels, then by that very nature people start switching their

investment into renewables. As

we start to price the

environmental burden there environmental burden there is

no doubt that energy becomes

for fatele. But few politician

s would be willing to count the

cost of a higher carbon price .

With the Coalition also

advocates direct action to

reduce carbon emi, government

involvement in renewable energy

may be here to stay. And now

with the latest business and

market news over to Jane

Edwards. Thank, Alan. Despite

all the gloom about dent in the

US and Eurozone, Wall Street

investors took solace in some

good earnings results on Friday and bought up stocks. The Nasdaq posted the best gain,

jumps by 1%. Tech giant Google

cheered up share investors by

roundly beating profit

expectations. It added 13% and

lifted other intern net stocks

with it. It over shadowed a

fall in US consumer sentiment

and the ongoing political stalemate stalemate over the US debt

ceiling, which caused both

major ratings althssys to

threaten a US credit downgrade.

Across in Europe, there was

relief as only eight Eurozone

Banks failed their latest

stress test, when up to 15 had

been expected to fall short.

But Friday's share price

reprieve is likely to be

temporary. And the gold price

soared to a new record as sores

searched for a safer searched for a safer

asset. World share markets were

all in the red over the week,

with the US, UK and Japan each

losing 2% and Europe and

Australia live dieching by 4%.

With more on that, here is Tom

Elliott. As you just heard,

the Australian share market

like many other stock markets

tafrndz world had a pretty

torrid week and it wasn't

difficult to see why. We had

the carbon tax locally and the on

on going debt criesies in both

the US and yump. Interestingly

with the carbon tax some of the

stocks that were were perceived

to be loser s as a result - and

I'm talking about Bluescope

Steel, 1 Steele, Qantas and

Virgin Blue, they were all sold

off hef Li during the week.

News Corp it's been in the news

as well as making the news. I

decided to formally drop itsed

by for BSkyB. The ongoing

problems that News Corp is

facing means the shares have

continued to be sold. Gold was

one of the few winners during

the week. As a result the

nation's big est gold producer

Newcrest mining was bought up by investors. Another sector

that actually did pretty well

due to corporate activity was

coal. Now coal is per seefds to

be a loser as a result of the

combox combax but not if you

export it. Macarthur Coal is export it. Macarthur Coal is

one of the - biggest exporter

of coal for steel making. It

received a takeover bid at

$15.50 a share from consortium

of Peabody and Arcelor. ArcelorMittal. Turning to the

retail sector and what a

terrible time it had. Firstly

David Jones announced a shock

profit downgrade and its shares

have been sold off to a have been sold off to a post global financial crisis low.

Other retailing stocks like

Myer, JB Hi-Fi, Harvey Norman

also felt the ill winds of selling. Bank stocks also sold

off during the week again

because of that debt crisis and

because local housing prices

appear to be on the slide. And

finally BHP was sold off during

the week, that's because it's

decided to spend $12 billion buying US energy company

pet Pet row hawk. As a result

both it and Woodside fell

because many people think that

Woodside is no longary Takeover

Target for BHP. Win over the

week is Cellestis. Loser of the

week is Carbon Energy after

being charged with breaching

environmental guidelines at its

Queensland gas project. Retail

stocks took a ham therg week

after David Jones issued an

earnings downgrade that caught

the market completely

off-guard. So was it a sign of

the wider malaise in retail or

more to do with problems inside

DJ's? I spoke to Citi's retail Aboriginalis Craig Woolford. -

analyst. Craig Woolford.

Obviously the focus has been on

David Jones. Are they in worse

shape than the other retailer,

in particular than Myers? David in particular than Myers? David

Jones had a pretty big

downgrade. A lot of the down

grade related so some very weak

sales results and worse still

they had given guide ance that

was strong er than some of its

compet o, like Myer. So the

down grade relates to that

issue around the expectations

that they previously set

compared with things have

panned out. Is David

panned out. Is David Jones in

fundamentally - got

fundamentally more of a problem

than other retailers? We

haven't had results from the

other retailers yet. But we

certainly expect that David

Jones will show a very steep

decline relative to Myer. Does

that mean that David Jones has

a real stock problem because

they would have stocked up

their store force a certain

level of sales which have been

nowhere near met? The inventory

problem for David Jones is one

where they've set where they've set their

expectations too high for both

the winter clearance period as

well as the summer season for

next year. And that contributes

to the downgrade that they

provided for both 2011 and

2012. Right. So to what extent

is the problem for all

retailers at the moment? The

lower consumer spending and to

what ex tent is it on line shopping? It's very difficult

to isolate the issues in retail

to one fethdor. On line

shopping is very topical but

it's not just online, it's

obviously weak consumer

sentiment. One issue that is

very prominent right now is an

increase in household savings. Paul Zahra at David

Jones said something like

shopping has almost stopped

dead. They're terribly gloomy at the moment, aren't at the moment, aren't they? The

deterioration in sales for

David Jones during the leer

Clearance period was a double

digit decline. The company

themselveses is saying it's one

of the worst sales results they

have ever seen in their business. That is a pretty

ominous sign for the current retail climate. A lot of the

issues there, though, relate to

the discounting activity,

perhaps the promotions aren't

as appealing or the discounts

are wearing thin on consumers

because we've just had because we've just had so many

dis counts for so long. Is

there an element in David Jones

of a hangover from the problems

with Mark McInnes, the previous

CEO? There is no real evidence

that the issues around David Jones management have

transpired. Certainly the sales

results around the time of Mark

McInnes's departure showed no

real impact from the scandal

that unfold. The other issue then is

then is - has there been a deterioration in management

since Mark McInnes left and

Paul Zahra took over? There's

been a few management change s

at David Jones but the

replacements have all been

internal and most of the

executive remains very stable. The issues with David

Jones have been one where the

sale s environment has

deteriorated a lot more than

they anticipated. I think any

retail executive would have had difficulty dealing with difficulty dealing with an 11%

decline in sales. So what is

your outlook now? Are you

telling clients to buy any

retailers at all? The weakness

in the state of retail spending

has been so weak for so long it that it's become difficult to

identify when retail spending

will start improving. It is

probably not until this that retail spending improving that

you will see some of the retail share price

share price start to rise. How

are you rating the sector? The strongest recommendations we

have at the moment are

Woolworths and Metcash which is

a grocery whole saler. These

are businesses that are very

defensive by nature. They tend

to benefit from rising grocery

prices because they're

defensive categories. So those

share prices have held up well

and should continue do do so over in next 12 over in next 12 months >>p and

the rest are a sell? The rest

have a much bigger problem,

both cyclical and structural

factors. Thank you for joining

us. Thank you. It's been

fascinating this week to watch

as Rupert Murdoch has been

Murdoched. That, is he's become

the focus of a media feeding

frenzy. Dramatically closing

the 'News of the World' wasn't

enough. Now he's been forced to dron News dron News Corp's bid for the

rest of BSkyB. In the United

States, the FBI is

investigating. In Australia,

there's rumblings of a media inquiry. For a share market

view of all these events I

spoke to Maddock #345d from 2

MG Asset Management on Friday. News Corp shares have been

dumped. Is this a psychological

reaction from the market to the

phone hacking scandal or is

there an element there of the price being adjusted price being adjusted for the

fact that the BSkyB takeover is

not going to go ahead? I think

primarily it's a psychological

reaction. The cash flow issue

is by and large not too big a

deal at the moment. Clearly,

'News of the World' was going

to be in short term a loss

-making operation. Because the advertisers just advertisers just weren't going

to be there and the public were

going to stop whying it. So

they closed it, smart move, get

it over and done. With Longer

term, you can see that effect potentially flowing on to the

other UK newspapers. So that

will make them less profitable

in the near term. That is only

a small proportion of the News

Corp revenue, isn't it

it? Revenue, yes, but they're

only 10% of the ebit. And that

includes the 'Wall Street

Journal', all the Australian

newspapers and all of the UK

newspapers. So we're talking

about a half a per cent to 1%

impact on the ebit line at

most. But strategically there

are bigger issues. In the UK,

you've got now the Government clearly against News

Corporation whereas before they

degree were either on side or to some

degree held captive by the

power of News Limited. Do you

think this will shake the

Murdoch family's control of

News Corp? No. Again I don't

see how that could happen. What

is the strategic challenge

then? The strategic issue is

licencing and regulation of

media ownership. Again, in the

UK I don't think they have too many options - the many options - the government

that is - to change the status

quo. But they can clearly prevent News Corp from doing

the next thing, which is to to

attempt to buy BSkyB. BSkyB is

a hugely profitable, very

successful business, developed

largely by Rupert and News

Corporation and by rights they

should own all of it. But

Rupert really has - he's very

good at achieving what he wants

to achieve. He will say what he

has to say and do what he has

to do in order to achieve his

goals. That doesn't mean he

will break the law. But he

will, if he has to, do

virtually everything else. So

they will not put BSkyB off the

agenda It is just going to be

Adelaide. What about in

a Australia? Do you think there's

a chance of regulatory clamp

down here? There is talk of a parliamentary inquiry. There is talk. I think it would be the

wrong thing to do because I

don't think it will go

anywhere. There is as yet no

evidence there is any Yong

doing oany wrong doing here and

I don't think the Government

has any legal recourse to force

divest ment of existing

ownership structures. More important, though, is the important, though, is the

US. And where there are

requirements for the owner or

the operate other of a licence

to have - or of a licence to

have a good moral standing then

those places are going to be

open to litigation, to inquiry

and so on. And in the US the TV

licences are owned - sorry, are licenced to an individual. licenced to an individual. That

is, Rupert Murdoch. Do you

think at the heart of this is

the idea that Rupert has hung

around too long? Not really,

no. I think there's plenty of

capable executives who are able

to deal with these issues. And

who are perfectly capable of

running the company in a

Mr strategic sense just as well as

Mr Murdoch. I don't think that

you would have necessarily had

a different result. It's

Rupert's company, it's always been Rupert's company and it

will continue to be Rupert's

company. But that might be

turning into a negative now.

That is the problem. From time

to time in the past it's been a

negative too. I don't think - I

think you can point to many

instances where he hasn't got

everything right. And clearly

this is one of

this is one of them. But I

think succession planning and

capable executives are there in

order to keep things on an even track. Obviously somebody at

News International hasn't done

that. Whether that is James or

other people, there is an issue

to be focussed on and the

culture has to be changed. Thanks very much,

Scott. Thank you, Alan.

Scott. Thank you, Alan. Over

the past few year, the local

independent bottle shop has

come under enormous pressure

with Australia's two big

supermarket chains now

dominating the sector. Like

many others, this suburban

bottle shop was finding the

competition crushing but,

surprise ingly found the key to

its survival was side stepping

the big guys altogether and in the process creating the process creating a new

market. It's just a simple

concept. All people want is

value for money, they want the

old fashioned service. We haven't over complicated things

here. We've streamline ed it.

It's a casual, easy enjoyable

place. When the Pendrich

Brothers took over this shop in

2006 it was a run-down clean 2006 it was a run-down clean skins bottleo. Initially things

were very tough, completing

with a lot of the big guys in the area. In the immediate

vicinity we had two of the major

major liquor chains, their

major stores and also two of

their off shoot stores as

well. Survivors in the shadow

of such buying pour and below

cost selling was near impossible. We don't know what

goes on behind closed doors but

there's a lot of re there's a lot of re rebates

involved with the bigger

guys It works on volume. When

the bigger guys buy on volume

they get a good price. And then

there was the advertising

spend. Every time I open a

newspaper they have one double

sided page ads, full colour

page ads. We had to re assess

and look at where we are were

heading. We always wanted to

have a wine bar and this was

the perfect opportunity to have a wine bar and this was

start the ball rolling with

that now. The wine bar

didn't mean the end of their

bottle shop. Instead the

brothers combined the two

functions - investing

significant time, money and

effort into obtaining a general licence. We find that very good

for us. To have a general

licence for the customers to be

able to come down, sit down, try a

try a glass of wine, grab a

bottle on the way u out. We

started to concentrate on the

mid-range bottles of wine. And

that is what we found we could start competing and from there

we just grew. There was also

another unusual selling

point. We don't have food. The

concept is BYO food, a couple

of reasons - we are only a

small venue, we don't have room

hand for a kitchen. On the other

hand that's where a lot of the

money is tide up in in

restaurant force a restaurant

to survive they need to add the

big margins on to their

wine. So we can offer our wine

at a lot of a reduced cost.

We still get a lot of

laughs on. Most places are BYO

alcohol, we're the complete

small nibblies opposite. What we offer is some

small nibblies but if people want something more substantial

they can bring in their own

food. It's pov prove add boon

for business. When it was a

bottle shop, there was lucky to

be doing 400 to 500,000 a year.

We have almost doubled our

turnover from the last

financial year and we can only

see that increasing over the

next year or two. Wine make

verse warmed to the idea of the

bottle shop come wine bottle shop come wine bar. A

lot of these wine Iries that we

had built up a relationship

refused or didn't want to deal

with the big guys. They saw a

perfect opportunity for us. The

wine knowledge and wine thirst

that people want to have is

growing every day. It's

surprising how many young adults are coming into our

store and sitting down and

drinking wine. It's not only a

new generation Wei walking

through the door. We've had

quite a few visits from other

stand alone bottle shops who

are doing it tough out there

and have heard how we have

turned it around to be a successful business. And

Pendrich Brothers's advice? I

suppose think left of centre a

bit. I think there is a niche

market out there. And that

Sith for the program. If you

would like to check out any of would like to check out any of our stories an interviews all

over again, we will have

transcripts and video and a

Welcome to Offsiders. The betting scandal in the AFL is

the big story this morning. It

didn't deter the crowds. 86,000

turned up to see Collingwood

clash with Carlton T didn't

hold Collingwood back but it

was in the words of one

football writer this morning a

subdued victory. In the NRL subdued victory. In the NRL

something you'd never bet on.

Two matches last night, both

went into extra time and both

ended with game-breaking field

goals in the 87th minute.

What a tremendous kick! This Program Is Captioned

Live.

Straight to the

Straight to the mug punter.

Heath Shaw out for eight weeks for betting on the first goal

and then the captain fined for inadvertently giving inside information? In the Shaw case

it's too stupid to be sinister

but it's worse than just

stupidity. This is a player

involved in the game wantonly breaking a vital principle of

the sport and that is to

protect its integrity and protect its integrity and

protect its believability and

not just for its audience but