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Inside Business -

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(generated from captions) million for charity, as they

have done through the

mid-winter balls. It's on

again on Wednesday, lots of

fabulous prizes on eBay,

including dinner with the Prime

Minister, tennis anyone with

Abbott and John Alexander. It's

tennis with Abbott this week

year. It was surfing last

year. No more budgie smugglers What are the Greens offering Lunch with the

Greens. David? Medical trials

for a are beginning around Australia

for a new anti-cancer drug

which is very promising. The

drug is very like thalidomide

and it is essential that women

taking this drug not become

pregnant. The martyr Calvary

hospital in Newcastle, the only

onology hospital in the hunter

Valley, has instructed doctors conducting this trial that they

must not give instruction to

the women taking part in

contraception. This is priests

vetoing treatment and all paid

for by the public in the 21st century. Okay. The Economist

magazine had a real go at Australia's politicians a

couple of weeks ago, but all

these things are relative.

Look at the latest effort on

Italy and Silvio Berlusconi,

the man who screwed an entire

country. Not a bad headline.

I'll put it another way, here's

David Cameron quoting Prince

Philip. Mr Speaker, I would

like to go on for a great deal

longer, but I'm reminded of his

royal highness's remark about

sermins which overrun, not just

sage advice for clergy in the

pulpit but probably for us in

this place too. As the Duke

put it, the mind cannot absorb

what the backside cannot endure. Closed Captions by CSI G'day there and welcome

to the program welcome to the

program. Australia's cattle

industry is in crisis because industry is in crisis

they weren't paying enough

attention to what some of the

Indonesian abattoirs were doing

to the cattle. As a result,

that trade has now been

shutdown. The ships are at

anchor, the shock yards are

filling up and 50,000 cows are

waiting for Julia Gillard to

decide what to do with them.

We'll talk to the boss of big

listed cattle producer AA Co's

David Farley. We'll also check

out the simmering tensions in

industrial relations at the

moment. Is war about to break

revolution. What's the end out? The online shopping

game. We'll talk to the boss

of the world's biggest online

payments business PayPal's

Scott Thompson about the huge

changes his company has

unleashed on retailing. This

Program is Captioned Live

Decades of hard work

building up the 500 million

live cattle trade came crashing

down overnight this week

following the Four Corners

program about animal welfare

abuses in Indonesian abattoirs

complete with the screening of

horrific scenes of brutality.

The Federal Government's

decision to halt the trade was

swift what. Happens now? What does it mean for the top end's

economy where the life cattle business is so important. business is so important. I

spoke to Australia's biggest

cattle producer AACo chief

David Farley who had to issue a

after the ban was big profit downgrade this week

announced. David Farley, what's

the state of play in the

industry right now? The state of play at the moment is

Australian Government. Julia definitely in the hands of the

Gillard, Joe Ludwig we're

looking for direction from

them, we need to know a

timetable, we need to know terms, conditions, accreditation, what is the

process required to get this

going again. There are many, many, tens of thousands of heads of cattle at the moment

literally directed to the

north, directed to wards

Indonesia. There's an industry

that works on a seasonal flow

and a genetic flow within and a genetic flow within the animals themselves that won't animals themselves

stop and the industry at the moment is sitting in bated

breath, it is idle and the only people that can give it direction are the Prime

Minister and Joe Ludwig himself. At what point does this become a real problem? this become a real problem? It

is a real problem today, Alan.

Decisions are having to be made

to feed cattle in yards, put

cattle on trucks and sends them

back to their origins,

decisions have to be made on

the stations themselves what to

do with cattle. Decisions are having to be made with staffing, decisions are having

to be made with truck

companies. It is not a matter

of when, it is a matter of now. We're dealing with living, breathing animals, we're

dealing with a season Alwyn

dough of opportunity of time and we're dealing with

we're dealing with the big commerce. More importantly,

picture, the big issue is we're dealing

dealing with animal welfare. Speaking of animal

welfare did you know before

Tuesday how the cattle were

being treated in Indonesian

abattoirs? No. The reality of

the Four Corners program was gut wrenching to every

pastoralist, including

ourselves, we stand on equal

foot with any Australian. We

were disturbed, horrified at what we've seen. I personally

have never seen anything of

such an horrific nature and I'm

sure most of my pastoralists

friends haven't as well. We

need to congratulate Lyn White,

she has done a fantastic job

bringing it to our attention. We've got an industry body looking after our interest.

They weren't able to bring it

to us as graphic phic what Four

Corners has been deliver to

Corners has been deliver to us.

They'll delivered a message

that will create action, will

fix the problem. They've fix the problem. They've put

an immediacy to it. There's

been a failing, a structural

failing within our industry

delivering the message and the failing within our industry in

reality of what was happening

over there. Yet, the issue now

is immediate. I'm convinced

that the industry has the

capability and the desire and more importantly has the ability to fix it ability to fix it extremely

quickly. We need to fix it with government, we need to fix

it with the Indonesian

Government, but we need to know an immediacy now frames, protocols, policies, et an immediacy now of time

cetera, to get the trade moving

again. To what extent should

the industry blame itself or in

fact blame the Meat and

Livestock Corporation for not

keeping an eye what was going

on over there? The industry

had an investment program going

in Indonesia and the investment

program running hand in hand with the Australian Government.

The industry expanded. I don't

think the industry moved fast enough, hard enough, invested

quickly enough, and their

reporting back to its members was without doubt not as

detailed or as deep as what

Four Corners and Lyn White have

been able to deliver back. The

industry has been court wanting

on its own internal

reporting. Do you think there

was an element in the industry

of turning a blind eye to what

was going on in Indonesia, of

not really wanteding to know?

No. If you take it from the

people that count here are the pastoralists. It is their

dollars that go into the MLA budgets and it is their

representatives that sit on the

boards. I don't think it was a

matter of turning a blind eye,

not at all. I think it was inadequate investment decisions, inadequate internal

auditing decisions, and an

industry that was going that

fast that our industry wasn't

keeping up with its rapid expansion. The minister said

he's going to appoint an

independent reviewer and the

live cattle trade has been

suspended until that review is completed. But only until

them. Basically you are on the

same page. What air saying

though while the review is

taking place the live cattle

trade should continue. Is that

correct? There's a seasonal

flow that's happening now. We're living with living

animals positioned ready to go.

Decision need to be made around

those today. Do we feed them

in the yards d disband these

animals, put them back on

trucks, send them south? What

decisions need to be made

today. There are facilities in Indonesia that are Indonesia that are well accredited to meet The

Standards that are being called

on and it seems inequitable

those facilities are suspended

and put in limbo. There are

ships sitting idled in harbour,

a great big demurrage charges.

As I said there are cattle in yards, there are trucks

waiting, there's a flow system on now that needs to be

addressed. Is it a matter of

money. Are you saying the Federal Government should pay for whatever happens to the

cattle now where they are,

whether they're slaughtered in

Australia or sent back to where

they're from? No. First and

for most it is not a matter of

money this. Is a matter of

getting animal welfare right.

This is not I an issue of a

suspended or banned trade.

This is about managing, banning

and eliminating animal cruelty

out of food chain supply

systems. Who should pay for

what happens to the cattle now?

The real issue is we need decisions

decisions being made now. At

the moment, the biggest

operators in animal welfare at

the moment in Australia is the

Australian Government itself.

Those animals in yards are in

the flow at the moment are

waiting for a direction from

the Prime Minister or the

minister of agriculture, Joe

Ludwig. They are the biggest cattle handler in Australia at

the moment. They have the

biggest position of animal

welfare in Australia at the

moment. Are you saying you're

not asking for compensation?

I'm sure the issues of compensation, the legalities

around the Government decisions and all that will be down in

the pipeline. We've got

immediate decisions to be made

today. We've got to know which

way to feed animals which way

to direct animals, what are we

going to do? Issues of

compensation are secondary as opposed to the immediate. What's the impact of

this on your company, AACo?

30% of our revenues are

derived from the live cattle

export. We're about 50%

through our program for the

2011 year. If we have to turn

these cattle around, it delays their commercial realisation

for a good full-year. AACo was

a substantial company and will

be able to weather this storm.

Where I have a real problem at

the moment there are many family producers, many indigenous

indigenous communities that are

reliant on this once a year

cash flow, once a year seasonal opportunity, they're sitting in remote isolated communities

trying to work out what to do. The social and financial

implications of this immediate decision in the north of Australia is devastating. What's your sense

of how the Indonesians feel

about this? What do you think

they'll do future. Will they

simply import live cattle from

where else or are they likely

time port beef from Australia

that's already been slaughtered

here? In Indonesia here? In Indonesia itself,

yes, there's concern yes, there's concern about

what's going to happen to their protein supply. It is not

immediate. There's cattle in the pipeline in Indonesia to

immediate their demands. As

we come into the Ramadhan

season where cattle consumption

peaks, people will be looking

where is their red meat

protein. Unless there's a

resolution immediately it will

be challenging 90 to 100 days

out. Those cattle need to be

moving in there now to meet the

supply chain cycles. Thanks

very much joining us David

Farley. There's a winter of

growing discontent out in the

nation's workplaces. Threats

of industrial action are

becoming louder and more

numerous. Some big pay rises

have been awarded as the

ongoing labour shortage starts

to bite. Is war looming or is

it just a lot of skirmishes.

Is a wages blow-out inevitable?

Neal Woolrich reports. It may

look like any ordinary

business, but JJ Richard's

waste collectors have found

themselves at the stern of an

industrial relations stink.

Employers fear the dispute

would usher in a newer era of

union strike first negotiate

later. It's absolute rubbish

of course and the reporting of

this case has been really quite

outrageous I think. Some of

the statements that have taken

place. The outcome that we saw

in the JJ Richards matter is

completely at odds with what we

were told about how the framework was to operate. Last

week, the Full Bench of Fair

Work Australia upheld an order

that forces JJ Richards to

start enterprise bargaining negotiations. The Transport

Workers Union had written to JJ Richards Richards on Christmas Eve asking for talks. The company

declined two weeks later. JJ

Richards believed in January

the parties were only

discussing whether to start

negotiations. What the

decision says it is not okay

for an employer to refuse to bargain

bargain if the employees come

and want to enter a new

enterprise bargain, they have

the right to bargain in good

faith and the judgment effectively says the employer can't just say go away. We're Paul for a framework that encourages facilitates bargained outcomes but we can't

be subject to double jeopardy

where at the same time we've

got a situation where unions

can work away from that

framework and move straight into industrial action. David

Gregory says unions have been

embolden by the new industrial

relations landscape and have

been pushing hard on pay with the mining industry most affected. We've seen some

absolutely extraordinary wage

outcomes come from some of the

negotiations there and inevitably it does mean that

whilst those sorts of things

are not being replicated elsewhere, there are parts of those outcomes that unions are looking to push in negotiations

in different industry sectors

on the attorneys seaboard.

The average in the mining and

oil and gas sector is way north

of $120,000 per annum. Some sectors like the offshore oil

and gas industry you have laundry hands, cooks,

tradespeople, barge tradespeople, barge welders,

earning around $100,000 more than our Prime Minister. What

we've got is constrained wages

growth. I think the average

for the year so far has been

about 3.8% wages growth. It is constrained, it is reasonable, and there's no sign of a wages

break out, but yes, there are

pressures in those industries

where there's a high demand for

skills. For the first time

since the commencement of the Global Financial Crisis we're

seeing the labour par get from an employer's to an employee's

market. David Wakeley says wage

pressures are emerging across

most industries. 90% of big

businesses have offered pay

rises and 12.5% of workers have

changed jobs over the past year. That might not sound like

much, but that's a 25% increase

in the number of staff who are

voluntarily putting themselves on the recruitment market and

landing roles. I think we can

see for the next couple of

years we're going to see a lot

more staff turnover. It is not

just pay the resources industry

is worried about. This week

the Mines and Metals Association launched an IR

counter-attack setting up a

fighting fund to challenge Fair Work Australia

decisions. There's a whole raft of determinations that are being

being handed down which were

not the way we expected the legislation would work.

They're not the way in gi the

Government told us they would

work. Some of those will be

tested through the

courts. This year, action has been threatened by Patrick

Stevedoring's dock workers Qantas pilots and most recently

BHP Billiton coal miners in Queensland. Despite those high-profile flare-ups, the number of days lost to industrial disputes has

remained around current levels

for the past two years. In

fact, if you look at those

disputes actually not much has

happened in terms of industrial

action that's taken place.

Days lost, yes, there's been

some high-profile statements

about them, but actually, the

numbers are quite clear.

Industrial disputes are down.

We do have a large number of

major enterprise bargaining

rounds come up over rounds come up over the next few months. Clearly there are

high-profile ones in transportation, both on the

wharfs and in airline industry, and

and they are going to get a lot

of attention. While pay,

conditions and workplace unrest

are getting plenty of media

attention, productivity is not. Last week's national accounts

revealed that GDP per hour

worked fell 1.8% in the worked fell 1.8% in the March quarter, although neither side

of the IR debate is blaming the

fair work Act for that.

Employers though are worried

that unions are celebrating workplace agreements which

deliver pay rises but nothing

in the way of meaningful productivity targets. We've now

had a situation where we are

not seeing productivity growth

coming through changes to our

labour market arrangements.

We're not seeing delivery in

terms of the productivity

growth that we were told was

going to come through a

framework that was going to

enhance workplace negotiations.

I would say in response,

we're wear of the changes that

have happened on the employers's side. A lot of

employees in this country are prepared to critseize government about lack of

investment in training and development and so on and not

prepared to make a contribution

themselves. Given the already

heated industrial relations environment, productivity might

have to take a back seat for a

while longer as unions and

bosses continue to slug it out.

It's been another fraught

week on the markets. Let's see

how things finished up. Over

to Jayne Edwards It wasn't a

good end to the week on Wall

Street. We should brace for a

difficult day on our local

market tomorrow after the US

indices lost 1.5% on Friday and

the Nasdaq slumped to its

lowest level this year. A week

of mixed economic news finished with disappointing Chinese

trade data and continuing

worries about Greece's debt. China still posted a massive

trade surplus in May but was

well short of expectations

leaving investors fretting the

outlook of global growth. The

oil price slipped after reports Saudi Arabia planned to boost

supply, while metals prices

slumped on the Chinese trade

data. With a clutch of US

economic reports out next week,

analysts are tipping further

falls in the sharemarket.

Looking at world markets, US

shares posted their 6th week in

the red. The UK and Europe

lost another 2%. Japan was

steady and Australia stayed in

the doldrums. With more on

that, here's Marcus Padley.

We're still stuck in our 20%

trading range. The range we've

been in for about 18 months now

although it does look we're

heading from top top to bottom

at the moment. We saw the RBA

leave interest rates you can changed this week the comments

with the meeting pushed out expectations for the next

interest rate rise at least

beyond the next CPI numbers due

on July 28. Good stories and

bad stories this week. Good

stories were outnumbered by the

bad stories. They included Metcash which was up half their

results. They weren't dazzling but they have a dividend coming

up. Iluka was up after

announcing a 75% increase in

titanium dioxide prices and a

35 to 40% increase in zircon price. Sigma Pharmaceuticals

up. Mesoblasted after phase

two trials. Territory re

sources was up after a counter

bid for the company. Stocks

going down included Tabcorp

which submit off their casinos business Echo Entertainment.

Ter dough down about 3% on what

they were before the split.

The Australian agricultural

company had to have a small

profit downgrade to take

account of the new livestock

brand. Newcrest was down after

cutting production numbers.

Macquarie was down after a

fairly high-profile fairly high-profile sell

recommendation was put on the

stock by Citibank. They also

cut their target price from 38

down to $30.50. We saw Paladin

which is down 50% since January

fall again this week as they

had to deny stories of a

capital raising and that Newmont Mining was looking to

sell their stake. We saw

Fairfax after a strategic

review which included selling

non-core asset. Indophil was

down after 189 million

capitalising. Gloucester Coal

is down 38% since January.

They fell again after this week

announcing a 85% shortfall on

the retail component of their

recent entitlement issue.

Winner of the week this week

was Coffey International up 39%

after a strategic review under their new managing director.

That stock is coming off a nine

year low. Loser of the week

was Hastie Group down 27% after

announcing a deal with their

lenders to restructure debt ahead of a recapitalisation. A

government announced the final month and half after the

details of its big package of

reforms to financial planning

parts the industry are fighting

a rear guard action against two

bits of it. The package is

called FOFA, the future of the

financial advice. Broadly the

idea is to turn the financial

financial advice industry advice industry into a

rather than a financial sales one. All commissions upfront

and trailing are to be banned

along with volume based

payments to advisers plus soft

dollar arrangements. Advise

are gave up on those things

years ago no no problem there.

The two things they're kicking

up about is what's all opt-in

client arrangements and

commissions for life insurance

inside superannuation. Life

commission selling of financial insurance remains a bastion of

products and the only reason it

hasn't been banned is

Australians under insured.

Government wants more people to

have life insurance. If you're

Products in banning commissions on vi.

Products in super you can't

really leave them month life

insurance inside super. That's got to stay. The opt-in

provision means financial

advisers client's actually have

to decide to retain their

services every two years

instead of just having their

investment accounts skimmed

forever and ever. The industry

says this will cost a fortune

and re he reduce will value of

financial planning practices. Not

Not for those who do something

for their money. The good

adviser will have no problem

keeping their clients. The one

who'll lose out from FOFA are the

In a world where cash is

dying and retailing continues

its start getting online migration one of the biggest

winners is the US based outfit

PayPal. It was bought by eBay

nine years process payments but

threatens to outgrow its parent

with 100 million customers doing $ is00 billion of

transactions a year. PayPal

clips the ticket on everyone of

them. I spoke to PayPal's them. I spoke to PayPal's glow

boss Scott Thompson in Sydney

this week. While you were in

Australia it emerged the

Reserve Bank is looking to cap

surcharges on credit cards.

Does that provide an

not sure it provides an not sure opportunity for PayPal? I'm

opportunity for

us. Fundamentally the decision that will be made will be what

it is. We don't particularly

agree with sur charging on

transactions online transactions online or transactions in general because

there's pots of that that seem

to be counter competitive. But

I our value proposition stands

on its own for consumer and

is treated in that manner. Is merchants regardless of how it

it fair to say PayPal competes

with credit cards with online

transactions in most online

transactions are done by credit

cards but you're trying to

break into that field and get

more market share. Is that a reasonable assumption? There

are people who believe we

compete with credit cards, but

the majority of transactions

that are done inside the PayPal

wallet are actually funded with

a credit card. We view

ourselves as a great partner

with the banks and credit card

companies. The vast majority

of all of the first transaction

a PayPal customer does around the world actually started with

a credit card transaction. As

a consumer ages in tour

franchise and uses us more and

more and more, they put

different funding sources in

their wallet that they're comfortable with and choose the

one they want for any transaction. Are you becoming a

kind of international bank?

No. We have a wonderful international franchise. We

operate in 1 90 countries

today. We have nearly 100

million active customers and

almost 9 million merchants.

There's a lot of transaction activities that happen around

the world. But it is payment

activity not banking activities

by and large. It isn't our

intention to become an international bank. PayPal

started off doing eBay's

transactions which is why eBay

bought PayPal in 2002. You're

moving away from just eBay,

right, which I guess is why

John done ho the CEO of eBay said you'll become larger than

them eventually. Is that

correct? That how you see the

future of PayPal? We did in

2002 were predominantly an eBay

base when that transaction

happened. We began building

what we call our merchant

services business in 2005. In

2006, we launched it on a

pretty global basis. It now

accounts for two-thirds of our

total payment volume and nor

than half of our revenue and it

is growing very fast and the

public earnings documents which

show how fast it is growing,

and I think it is going to

continue to grow very fast.

PayPal will be bigger than ooig

at some point and this

services business, which is at some point and this merchant

two-thirds of our total payment

volume, will become 90 or 9 5% three or four

three or four years from today.

The opportunity is vast and in

that section our business and

grow it very rapidly. What's we are looking to continue to

the average clip you take on

the transactions? It depends

on the market that you're in.

There are different interchange

schemes in all the markets, but

across the entire business, it is about 3.6%. What's the clip

in Australia? Our published

rate in Australia is 2.4% plus

30 cents but we have other fee

merchant relationships that go schedules that are specific to

somewhat lower than that. Who

pays most of that , her

pays most of that , her dhants

or customers The merchant pays

that ints change rate. The merchant pays that fee.

Similar to what happens with

credit cards, that's how the

transaction is funded.

Consumers pay nothing in most

cases for... Except on the

price of the goods that they

buy. Yes. We of course don't set the price of goods. Of

course not. It's just the payment transaction. You

operate in a lot of countries.

Yes. What are the complexities

of using lots of currencies and

does it cost more when you're

trying to do a cross currency transaction? We do operate in

a lot of countries and it is

very complex. If would be a wonderfully easy business wonderfully easy business to

manage and grow if every country around the world was the same, but there are two

that are alike in policies and systems and everything is

different in all of these

countries. What we need to do

as we enter a new market is

customise our services for that

individual market and make sure

that it all knits together and so the way we look at it,

actually s that we sit above

the payment infrastructure in

most markets and we make it

better through software which

is PayPal. The second part of

your question is the cross-border

cross-border nature of our

business. Very healthy portion

of our business on average it's

25% of our payment volume and

that's growing very

rapidly. Cross-border?

Correct. That's quite a lot.

What we're find ing

in-Australia, as I'm sure a lot

of countries are, there's a

tremendous amount of online shopping happening in

particular from overseas with

the strong currency in

Australia. What do you think

the global proportion of

shopping is being done online

at the moment and where do you

think it is going to end up? I

think two things. When we...

Again it is market by market by

market. On average online as a

percentage of retail is less

than 10%. It is early days for online e-commerce activity.

But there's a bigger trend

that's afoot and that that's afoot and that is the

lines are all blurring between

online and off-line and mobile

and all these things that are

happening. As we look forward

in the future, we're beginning

to articulate metrics which are

just a percentage of commerce

because they're designate tore of e-commerce M commerce or

off-line commerce is just going

way. That's how we look at

managing our business. As a

percentage of total spend,

mobile plus online as we look

forward into the future will

certainly be well more than 10%

and I think most people would

argue it could be a third of total spend of the average consumer. I don't understand

how the line between online and

off-line is blurring. What do

you mean by that?

Historically, PayPal hasn't

worked that point of sale in a

retail location. You couldn't

go into one of the large

retailers here and see us as a

payment option You handover or

credit card or debit card or

whatever. Yes, exactly. The

reason why that has

historically been the case in

those stores those devices have

been offline, meaning they're

not connected to a network.

One of the big trends that's happening in Australia and

around the world all those devices in retail stores are

being connected to networks and

we view that as a massive

opportunity for PayPal. Now we

can be a tender type, an option

for payment at point of sale

because that device is

essentially a computer when it

is connected to a network. It

is a fascinating, dramatic increase in the total addressable market for us. Are

you going to issue PayPal cards

or done by a mobile phone? There are three options we're

working on for the consumer to

engage as at point of sale.

Ern certainly a mobile phone is

one of those options and there will be two will be two other options we offer consumers that will be

unique. They're not going to

ride the existing rails that

the credit cards do. There will be a whole new experience,

a whole new infrastructure,

whole new message format. We think it is one that's dramatically better than what's there today

there today for the merchant and Musa Konneh super. Great

talking to you Tom to. .

Thanks very much. Good seeing you. That's it for the program.

If you'd like to check out any

of our stories and interviews

again, we'll have transcripts

and a video and vodcast posted

on our website a This Program is Captioned

Live. Hello again. Welcome to

'Offsiders'. In cricket, the

Australian selectors have

puzzled fans for a long time

now, but the axing of Simon

Katich has taken that to

another level. We'll look at

that this morning. In AFL, the

Hawthorn Geelong rivalry again

lived up to expectations, but a

double blow for the Hawks, they

lost a match and almost

certainly a star player for the

season. Six first-half goals