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(generated from captions) have issued the first ever catastrophic fire warning for

parts of the state. Under the

threat, residents are warned

it's not safe to stay and

defend their homes. We have

something like 250 firefighters

out across fires at the moment,

and literally thousands more an

Stand bix We have already

broken longstanding records

over 100 years at Broken Hill

for the highest temperature ever recorded in ever recorded in November. The

Weather Bureau says rain is

expected across both South

Australia and Victoria this

weekend. Well now to tonight's

guest, Tony Abbott is Housing, Community Services and Shadow Minister for Families, guest, Tony Abbott is the

Indigenous Affairs. He joined

us a short time ago here in the

Sydney studio. Tony Abbott,

thanks for joining us. Good evening. Ian Macfarlane says evening. Ian Macfarlane

Kevin Rudd has a mandate to

introduce the Emissions Trading

Scheme. Is he right? Not a bad

scheme, that's why we have

moved these amendments,

moved these amendments, because

we are trying to make a bad

scheme better. He has a

mandate. Not for a bad

scheme. He has a mandate for scheme. He has a mandate for an

Emissions Trading Scheme. Not for any Emissions Trading

Scheme. And this is a bad one

as it stands. As it stands,

it's going to make Australian

agriculture uncompetitive, it

will close lots of coalmine,

and add 40% to electricity

bills, and if the rest of the

world doesn't go down the same

path, it will do all these

things without helping the

environment, so this is not the

scheme for which the Government

has a mandate. Ian has a mandate. Ian Macfarlane

is your chief negotiator, he's

expecting to have a deal stitched up with the Government

on Sunday or by the latest on

Monday. Will that make it a

good scheme when Ian Macfarlane

says, "We have got a

deal", Depends what the deal

is. You don't trust him Ian

Macfarlane is a terrific bloke,

he's doing a very good job, I

think it would be trying

sitting in a room with members sitting in a room with

of the Labor Government trying

to come to a sensible

arrangement, I don't think they

understand how far-reaching a

proposal they have... Ian

Macfarlane understands. Yes, he does. He's the guy you trust

He does. You say he's not

going to be captured by Penny

Wong. I'm saying he's doing a

terrific job, in the end it's

the quality of the deal which

counts, it is just how far the counts, it is just how far

Labor Party has gone towards

accepting our eminent ly

sensible amendments, frankly

the amendments we put forward

are the least that you would

want in order to improve what

is a bad scheme. Yes, you said

that, you adopted a position on

the negotiations, it's a

hardline, saying you have to

have all the amendments or

you'll walk on the deal. It's

not like your standard

industrial negotiations where

you split the difference, this

is like selling a house, if I

sell the house the buyer has to

come close to my price or

there's no deal Presumably Ian

Macfarlane wouldn't reach a

deal he didn't think was

good. I have confidence in Ian

Macfarlane, and if the

legislation through, it really Government wants to get this

does have to give us the

amendments we want. You say all

the amendments, it's non-negotiable outside of non-negotiable outside of that.

Ian Macfarlane is not thinking

the same way you are, does that

mean if he com promise s at you

will with the Government you'll

reject it. We are not giving up

on our amendments, we think all

of our amendments are important. We want the important. We want

Government to accept them

all. Ian Macfarlane said the

partyroom went a little

ballistic with him when he set

out the timetable by which he

expected to have a deal, why

was that? That's not the phrase

I'd use, our partyroom is

always constructive, usually

lively, and constructive and lively discussion is what lively discussion is what we

have been having on this and

many other subjects. Were

people surprised he was so

close to a deal. I think people

think that this is a bad ETS,

it needs to be improved, if

it's to be passed, in any

responsible way, and that is

what Ian Macfarlane is trying

to do. Let me confirm this -

you won't vote for it yourself

unless the Government accepts

amendments without change, is amendments without every single one of your

that right, is that the hart

line position you adopted. No,

no, no, the thing is there's a

negotiation going on. And I am

not giving away our negotiating

position. We put these amendments forward in good

faith because all of them are

important, all of them need to

be made if this scheme is to be

less bad. It is a bad scheme,

as it stands. So this is your

position now, not when you look

at the deal that Ian Macfarlane

has struck. Well, the thing is

that Ian Macfarlane is in there

pitching for our amendments, pitching for our

they are all important, they

are all necessary to improve

what is a bad scheme. How often

have you seen passions running

so high within the Liberal

Party on an issue of any

kind. Look, I think that

there's always passion in politics, I mean the boat

people issue, obviously arises

a lot of passion, there's a lot

of anger in the community about

the Prime Minister's failure in

passionate about this than the that area. The public are more

ETS. It's hard to test that,

you wouldn't know the answer to

that. You may instinctively

think that. Let me ask you

this: do you agree with Nick

Minchin, when he says the Minchin, when he says

climate change issue is a left

wing conspiracy to

deindustrialise the western

world. Well, you have to

understand just how far-reaching an Emissions far-reaching

Trading Scheme will ultimately

be. It was Ken Henry himself

who said that this was the

biggest piece of financial

restructuring that we have ever

seen. I mean, what the

advocates - what the Government

wants to do over time is

basically change the whole way

we generate power, the whole

way we transport ourselves, I

mean, this is a massive

sweeping change that will

affect the very way people

live. It's not just like the

GST. It's much bigger than

that. Is it a left wing

conspiracy, the climate change

debate, the linking of climate

change and global warm, is it a

left wing conspiracy as Nick

Minchin said to deindustrialise

the western world. I think

certainly there are some people whose agenda is not just

environmental, who have leapt

on this particular bandwagon,

and I don't like the

theological tone that so often

creeps into this debate. I

particularly dislike the particularly dislike the way

Kevin Rudd in parliament was

running around like Torquemada,

looking for heresy, trying to

create his own version of create his own version of the

Salom Witch-Hunts against

people that don't share his

view on this. Senator Nick

Minchin says since the collapse

of communism the left embraced

environmentalism as their new

religion, you hint something

similar, you have talked about

the evangelical fervour of scientists, warping this thing

may be a fad. You have also

poked fun at the idea of sea

level rises, you suggested the

world is cooling, not warming.

You don't sound that far You don't sound that far away

from the Nick Minchin brand of

scepticism. I'm on the record

on all of these things. I

refuse to be terrified of the

future. I think humankind has

been pretty good at coping with

the challenges we've been

given. If you look at Roman

times, grapes grew up times, grapes grew up against

Hadrian's Wall wall, medieval

they grew crops in Egypt. The

world has been hotter, and

significantly colder than it is

now, we've coped, I don't say

there aren't problems, haven't

been problems, might not be

problems, I refuse to be

terrified of the court. Do you

think it's a conspiracy. I am

not saying that I refuse to be

terrified of the future. What's

going on in your few, thousands

of good men and women,

scientists, engineers, experts, policitians all around the

world appear to be intent on

saving the planet from what

they believe is actually

happening, and you are sceptical about whether it's

happening or not. Are they

labouring under a terrible

delusion from your point of

view or are they right to be as

concerned as they are to want

to act in the way that they

are. Well, I think we have to

take the planet seriously. We

only have one. But it's also

important. To keep a sense of

proportion about these things.

I am always reluctant to join

Band wagons. I think there are

fashions in science and in the

academe, just as there are

fashions in so happy other

things, but look, we should

take reasonable precautions

against credible threats. I

think it is perfectly

reasonable to take action

against climate change, the

problem with the Rudd

Government's position is that

Australia could end up

impoverishing itself through

this dramatic ETS, and not do

anything for the environment if

the rest of the world does not

adopt an ETS or something like

it, that's why we have always

said. If Ian or comes back with

a deal. ... we have always said

better ta wait until after

Copenhagen. If Ian Macfarlane

comes back with a deal by the

end of this weekend as he

expects to do, you may be in a

position where you are going to

go ahead with a scheme of this

nature, not radically different

than the one the Government

proposes We have put forward

substantial amendments that

will significantly improve a

bad scheme. OK. If the Government wants us to accept

their scheme, I think they

should sent our amendments. I

hear you saying that the earth

having been hotter in different

periods in its global history.

Let me and you this: have you

read the science we've talked

about, have you read the IPCC's

report, transaction. I don't

claim to have immersed myself

in all these documents, I'm a

politician, I have to rely on

briefings, what I pick up

through secondary sources.

Look, I think I am as well

versed on these matters as your

average politician needs to

be. But you have read Ian

Plimer's book. I haven't

finished Ian Plimer's book, I

have started Ian Plimer's

book. Which you have quoted

from time to time. I quoted a

couple of passages, I'm

probably more familiar with the

book through people who there

written about it than I am

through reading it myself. What

evidence do you have for saying

the earth cooled since the late

1990s. Well, I am not setting

myself up as the great expert

here. But the Hadley Institute

in Britain which is apparently

one of the most reputable of

these measuring centres,

according to press reports, has

found that after heating up

very significantly in the

previous 25 years, there seems

to have been a slight cooling,

but at a high plateau, I but at a high plateau, I accept

that. That is Ian Plimer's

argument. This is the Hadley

Institute, this is

measurements. I'm about to tell

you what the Hadley Institute

says, when you goo and look at what it says about global

temperatures, they say that the

years 1998 to 2006, include the

hottest, the second, the third,

the fourth, the fifth and the

sixth hottest years in recorded

history. And the hottest one

was at the beginning and the

less hot ones since. According

to the Hadley Institute's many

temperatures data, 1998 was the

hottest year on record. 2005

was the second hottest year on

record. The third hottest year

on record since 1880, since

recorded temperatures were made

is 2003, the fourth 2002, the

fifth 2004. OK, fair enough,

but the fact of the matter is

what should we do about this?

Now, You are the one that quoted the Hadley Institute. Yes. Are you Institute. Yes. Are you aware,

for example, that the for example, that the latest

modelling of the Hadley Centre,

released two months ago warns

that their scientists, using

their data, projecting it with

computers are now saying doit doll The the Hadley Institute

are - I didn't say that they

were climate change deniers, were climate change deniers, I

didn't want them hauled up with

the witch-hunt or the

inquisition. Do you want to

know what they are saying, what

the latest study is saying, by

2060 global temperatures could

rise by 4 degrees, the

implications for the world and

Australia, if that is true are

catastrophic. As I said, it is

quite concern ing, but we have

to remember that these are

computer models, and we also

have to accept that there is

have to accept that there is -

there are many - there are

certainly some reputable

scientists, Tony, who don't

accept that the most important

element in climate change, to

the extent that it's occurring

is man made carbon dioxide. And

yet those same people quote the

Hadley Centre as you did,

suggesting that the earth has

cooled, yet when you look at it

in detail, what you see is it's

remained on a remarkably high

plateau, higher than any

recorded temperatures. But

since 1997, notwithstanding the

continued increase in man made

CO2 there has not been a

further increase. And you are

happy with that. Well, look, if

man-made CO2 was quite the

villain that many of these

people say it is, why hasn't

there just been a steady

increase, starting in 1750 ,

and moving in a linear way up

the graph. There are complex

answers. Exactly, it's a

complex issue, it is a very

complex issue. One needs to

talk to scientists. There's no simple simple solution.

Yet you haven't talked to

scientists about it. I have

spoken to many people who have

many different perspectives on

this, in the same way that you have. Let's go to the question

of asylum seekers, the other

huge issue in parliament. The

interesting thing about that is

here is Kevin Rudd claiming to

be able to solve problems that

might happen in 50 pore 100

years time and he can't solve

the problems that are aping now

on Australia's - happening now

on Australia's doorstep. Let's

go to the question of the

special resettlement deal

offered to the Tamils The

non-extraordinary deal. You

argue others in Indonesia have

been denied that deal. I would.

Maybe the Hadley Institute has

something different to say, I

would argue they've been denied

the same the same deal.

Do you think they should begin

the same opportunity as the

78. I don't believe the

Government should give any boat

people any special deal which

will effectively outsource our

migration program to the boat people, to the people smugglers. I'm talking about

feel in Indonesia classified as

refugees, there are many

thousands of then. Many arrived

by boat. What happened by boat. What happened with

Kevin Rudd is that people

smugglers now determine smugglers now determine who

comes to our country, and the circumstances under which they

come. Into that is what this

guy has done. John Howard

stopped the flow, Kevin Rudd

started it up again. These

people are in Indonesia, there

are several thousand of them. It appears the Federal

Government is talking about

increasing the numbers of

resettlements from among that

group. Wouldn't that be a good

idea in terms of getting

long-term refugees out of

Indonesia where they can't

settle and bring them to other

countries where they can

settle It would be good for Indonesia, I don't know that it

would necessarily be good for

Australia. If the people smugglers and the boat people

get the idea that if you get to

Indonesia, you'll get to Australia, because Australia

has a deal with Indonesia to

take-all of their displaced

people, Indonesia becomes the

open backdoor for immigration

to Australia, and that is no

improvement. That is going

backwards, surely. Assuming

that the Government moves to

resettle or attempt to resettle

a fair percentage of the

refugees who are currently

stranded in Indonesia, you

wouldn't support that. Well, I

would want to see what's

proposed, but anything which

says to desperate people, says to desperate people, and

there are millions of them in

our region that if you can get

to Indonesia, you've got to

Australia is problematic, very

problematic, that means that

our border protection

effectively depends upon Indonesia's border protection,

and that is not a very good

position for a sovereign

country to have. Tony country to have. Tony Abbott,

we are out of time unfortunately, we have to leave

you there, we thank you very

much for taking the time to

come and join us again on Lateline. Thanks. Lateline. Thanks. Afghan

President Karzai has been sworn

in for a second term after his

controversial re-election. On

taking office President Karzaii

promised to tackle corruption

and said Afghan forces will and said Afghan forces will be

able to take the lead in

security within five years,

that commitment will be

welcomed by the US welcomed by the US President

Barack Obama who warned the US

won't stay in Afghanistan indefinitely. South Asia

Correspondent Sally Sara

reports. President Karzaii has

been given a second chance,

this time he's under more

pressure than before to

eradicate corruption and

improve security in

Afghanistan. US Secretary of

State Hillary Clinton and

hundreds of other dignitaries

gathered for the ceremony at

the presidential palace in Kabul.

TRANSLATION: I swear to

observe the constitutional laws

and rights and protect

it. President Karzai told the

crowd he hopes Afghan forces

will be ready to take the lead

in providing security across

the country within five years,

and says Africans want the

fighting to stop, but

acknowledged that drug

trafficking and corruption are

slowing development and stability.

TRANSLATION: Corruption and

bribery is a dangerous problem,

we want to the follow this

issue seriously, therefore we

want to hold a special

conference in Kabul to find effective and new way toss

fight the problem. United

States and other foreign donors

are calling on Hamid Karzai to

lift his performance in the

second term, the international

community is demanding greater accountability and accountability and governance.

President Barack Obama President Barack Obama is

making it clear US troops won't

be there indefinitely. My

preference is not to hand off

anything to the next President.

I would like the next I would like the next President

to come in and say, "I have a

clean slate", He said he'll

make an announcement within

weeks on whether he'll send

more US troops, the President

will outline an overarching

strategy addressing every

aspect of the war in

Afghanistan. Across the border

in Pakistan there's been more

violence, at least 16 people

were killed when a suicide

bomber blew himself up outside

a court building in the city of

Peshawar. Several police were

among the casualties, most of

the victims were civilians, the

latest in a series of attacks

in Pakistan's volatile

north-west. While Western

powers discussion another round

of sanctions against Iran, a

NATO country is signing trade

deals undermining their

effect. Turkey has been ramping

up its trade talks to the

amusement of the west. Horror

of Israel. Where is a country

banging on the door of the EU

for more than two decades shift

focus to the east, should

Western allies be worried. Ben Knight filed this report from

Istanbul. In the centre of

Istanbul Turks gather to mark

the moment of the death the moment of the death of Mustafa Kemal Ataturk. SIREN SIREN WAILS

Mustafa Kemal Ataturk is the

country's towering figure, a

man that founded the secular

stake from the ruins of stake from the ruins of the

Ottoman Empire in 1923. He

turned the country away from

Asia, towards Europe. Almost

overnight he banned the Fes and

demanded western dress, he

introduced the Latin alphabet

instead of Ottoman script, gave

women the boat and put boys and

girls into the same schools,

religious leaders were exiled

or worst, Turkey's history as

the capital of the Muslim world

was over. Many worry it's

coming back. It's in the

clothing of the young women,

that's very apparent. You mean

the headscarves. The

headscarves, yes. It's not the

burqa, but it's the headscarves

that are being more

prevalent. Headscarves are a

pivotal issue in Turkey, a

symbol of the head-on clash

between the secular old guard

and rising religious movement.

For six years Turkey has been

governed by a religious party,

the AKP, it overturned the ban

of headscarves at state

universities, the secular

charged the AKP with trying to

create an Islamic state in

Turkey by stealth. AKP

Government survived, but only

just. In the past Turkey's

military stepped in when

governments get too religious,

not this time. This year dozens

of senior officers and

academics have been jailed,

charged with plotting against

the AKP Government. It's the

foreign policy changeses that

are the most stark ling. Last

month Turkish's Prime month Turkish's Prime Minister

Tayyip Erodogan when to train

Tehran, talking up trade. For a

country a member of NATO, it

was eyebrow raising

behaviour. If Turkey will not

comply by the international

communities wish to impose

sanctions on Iran, for example,

then it will be a serious

mistake that is regarded - will

be regarded as crossing the

Rubicon. Some Turks were

appalled at the warm of embrace

in troin, but says the decision

to go there was correct. Much

as we want a nuclearised

command we find it less to find

a war next to our

border. Turkey has been trying

for more than 20 years to

fulfil mooust reverse's dream

of making his country a part of

Europe. Old Europe has been

refusing to let Colin

Turkington in. Turkey -- to let

turkey in, the old foreign

policies, says Turkey is having

good relations with neighbours.

Turkey's relations with Israel

is crumbling, they were friends

and long shared technology, it

changed during the Gaza changed during the Gaza War.

TRANSLATION: President TRANSLATION: President Perez,

you are older than me. Israel

was stunned at the Vietry ole

of this attack on Shimon of this attack on Shimon Perez.

TRANSLATION: You kill people,

I remember the children that

died on the beaches. But it was

outraged when Turkish State TV

broadcast a drama series

portraying Israeli soldiers as

baby murderers, Israel worry at

the change in tone and doesn't

like the new friends Turkey is

making in the region It is

Iran, it is Sri Lanka, it is

Libya. Turkey is shaking Libya. Turkey is shaking hand

with the enemy, with the

threat, the radical ist lal One can only wonder can only wonder whoo Mustafa

Kemal Ataturk would make of all

this, his image is still to be

seen all over Turkey, it's

slowly disappearing, and the

country created in his image is

change, in Turkey support for

joining the European Union is

below 50%, in Istanbul

divisions are clear. I'm

standing here on the edge of Europe. Just over the water

there is where Asia begins.

Geography has been crucial

here. During the Cold War

Turkey was the only NATO

country to share a border with

the Soviet Union, that's over,

the fact is Turkey isn't as

important to the west any

more. Soli Ozel says the more. Soli Ozel says the Turks

won't give up on the west. Deep

down we know why we wanted to

be members of the European

Union to begin with, no matter

how angry we are, and I sigh

sure you the most Unified

people in Turkey are seething

with anger at the union, the

way they are treating Turkey,

the commonsense will remain.

We don't ever look backward.

It's the minority that shouts

out loud. They are making too

much noise. It seems that

noise will only get louder.

Well, time for a quick look at

the weather:

That's all from us, Lateline

Business coming up in a moment.

If you'd like to look back a

the interview with Tony Abbott

or review stories or

transcripts just the web site.

Abc.net.au/lateline. Now here

is Lateline Business with Ali

Moore. Tonight, a regulation

too far, Standard & Poor's

doesn't rate new rules imposed

on them in the wake of on them in the wake of the

global financial crisis . No,

they should seek to continue to

give the rating. A bitter

harvest, creditors vote to

liquidate Great Southern. I put

in over 600,000 over a period

of time, to lose it like

of time, to lose it like that

is just totally wrong. And

China chases the high risk,

high reward mining asset on

offer in the developing world.

Lending money to many merging

markets, not all of them is an

old film with a sat ending.

To the markets and Australian

shares managed small gains

despite is negative lead despite is negative lead from

Wall Street, ASX 200 rose 10 points, Nikkei down points, Nikkei down 1.5%, Hong

Kong's Hang Seng fell for a

third session in a row, and in

London the FTSE is weaker in

morning trade. A short time ago

the OECD released its latest

growth forecast and predicts a

robust recovery for Australia,

the organisation says China,

Asia and the United States are

pulling the world out of an

economic vortex with

surprising, though modest

speed. To discuss the report

I'm joined from London by James

Shugg senior economist at

Westpac. At first glance it

appears there's been a

remarkable turnaround in the

growth forecast of the OECD in

the last six month, yes, with

the EECD they come a little

late to the party. They public

forecasts twice a year,

certainly it's no real surprise

that they are more upbeat on

the global economic outlook,

given the improving situation

that's already starting to

emerge in many economies around

the world. You have to remember

when they prepared their

forecasts last time we had seen

the worst back to back declines

in economic output in countries

like the US, United Kingdom,

Japan, Europe, for a

generation. The banking system

was still in very sick mode and

we didn't know how the

Government policy reactions in

terms of support for the banks,

sharper lower interest rates

and fiscal stimulus, we didn't

know if the stimu lie would

work, we now do, that's why the

OECD revised numbers up. Can

you give examples, they are

big, particularly if you look

at the United States. That's

right. For the OECD as a

right. For the OECD as a whole,

for example, they are talking

about growth in the trial

industrialised economies next

year 2% compared to 1%, the

previous forecast. They are

still expecting a substantial

shrinkage of 3.5%, it's less

than they had six months ago,

five months ago, so the turn

around is significant. For

Australia, the turn around is

very dramatics, I mean the OECD

does a lot of forecasts in

conjunction with the Government, the various

economies that they are looking

at. Six months ago the

widespread view was that

Australia was in a recession,

the Government put in place its

Budget in May of this year, in

Australia on the basis that it needed to help fight Australia's way out of

recession, we now, of course,

know that that is not the case.

So it's those sort of dynamics

that have driven the

substantial upward revisions to

their forecast. Where does

China fit into the picture,

it's not an OECD country, but

where does it fit. It's an important part of the global

economy. Even though it's not

part of the OECD. The OECD has a funny definition of the

world, which is it, China,

Brazil and India, and China.

And so what we see on China is

probably growth between probably growth between 8-9%

over the N couple of years,

maybe accelerating to 10% by

2011. That compares to 13%

which was what they which was what they saw

typically around about the

middle of this decade, before

the global crisis hit. So it is

still weaker growth and China

experienced previously, and

also it's growth driven by

different sources. Previously

the Chinese growth story was

driven by global trade,

American and other consumers

buying cheap Chinese exports,

now the Chinese growth story is

driven more by internal stimulus, infrastructure

spending and the like. Because

we haven't yet got the real

pick up in global trade coming

through, that's why the Chinese

story, whilst robust and

supportive of the global

economy won't be as strong as

previously. Away from the OECD

expectations, there are numbers

out in the US in the out in the US in the next

couple of of days, they could

potentially ruin the party. I

would say that we have started

to see some disappointment to see some disappointment out

of the US this week. We had

shockingly weak housing figures reported yesterday, house

starts fell 10% in October. If

you look at Condos, blocks of

flats and apartments, they are

down 75% on where they were a

year ago, it looked like the

housing market was turning a

corner in the US, that's now in

question. We had industrial

activity figures released this

week for October, they were

softer than expected, and later

today, tonight, your time, we

get another update on the

industrial sector, regional

update adding to the update adding to the knowledge

of the US economy. You are

right there's a sense starting

to come through that maybe the

strong growth we saw in the

third quarter of the US economy

may not be that much more

sustainable once we head into

2010. James Shugg, many thanks

for joining us. Back to our

markets and the major move markets and the major move e, Insurance Australia Group

surged 5% on speculation of a

takeover offer from takeover offer from QBE.

Commonwealth Bank put on 78

cents. Newcrest up 1.6%, spot

gold hitting a record high.

Retail stocks were a during,

Woolworths down 12 cent.

Rules imposed last week on

the ratings agencies by the

corporate regulator proved too

much for Standard & Poor's,

they say the laws plying to all

other financial services

players are too onerous for the

agency and it will no longer

rate retail products in this country, Andrew Robertson reports. Ratings agencies are

under the pump worldwide for their role in their role in the global

financial crisis . In an

attempt to make those operating

in Australia more accountable the Australian Securities and

Investment Commission last week

confirmed it will force them to

acquire a financial services

licence, on Lateline Business

last Thursday last Thursday the University of New South New South Wales Professor

Fariborz Moshirian made this

prescient prediction. We are

going to create what is called

regulatory arbitrage, credit

rating agencies in the US,

Europe, are going to act

differently to our credit

rating agencies here. That is

what has happened, what has happened, with

Standard & Poor's saying it

will no longer rate products

sold to retail investors in

Australia. The sticking point

the licensing requirement to

take part in an external

dispute resolution process. It

told Lateline Business it's concerned:

But analysts like Brett Le

Mesurier struggle to understand why Standard & Poor's why Standard & Poor's objects

to the minimum and basic

standards imposed on all other financial services

providers. No, it's not a good

look. They should seek to

continue to give the rate, that

is what their objective is to

provide advice to investors

about the relative strength of

the investments that they are

undertaking. For banks and

other institutions that issued

debt security to small

investors such as ANZ's recent

hybrid offering, Brett Le

Mesurier believes a lack of a

rating from Standard & Poor's

will force them to pay a higher

interest rate It's difficult

for the product issuers to demonstrate how strong they are

from a credit rating perspective, for them to

demonstrate the likelihood of

the investors getting the

payments on time, and to the

full extent they are expecting. Thousands of

Australians by debt products on

the recommendation of financial

planners, and they use credit

ratings as part of their basis

for offering them to their

clients, Canberra based

financial planner Daniel

Brammall says the absence of a

credit rating will cause big

problems for his industry. What

is likely to happen, at is likely to happen, at least

in the short term is that

Australian financial services licensees and financial

planners in general are likely

to try to do their own

research, which is a recipe for

disaster. Daniel Brammall says

the research won't be as good

and he believes clients will

end up paying more for financial planning

services. Without the research

reports costs will go up. The

professional indemnity

insurance is likely to insurance is likely to rise, it

will have a throw back to the

consume ever. Standard & Poor's

will apply for a licence to

rate wholesale debt products,

those sold to big investors, as

will Moody's and Fitch. Moody's

warned the banks the credit

ratings on tier 1 and tier 2

capital could be downgraded

because risks increased in the

wash up of the global financial

crisis . The instruments count

as part of regulatory capital,

we have seen a wide variety of

approaches of regulators, in

Europe, for example,

supervisors want banks to stop

paying coupon on tier 1 iminstruments. Although no

Australian bank needed a bail

out they operate in a global

environment, meaning they won't

avoid tougher conditions

imposed on pierce around the

world. Creditors voted to

wind-up most of the companies

in failed in failed agribusiness Great

Southern Limited, in the end

unsecured creditors had little

choice but to accept

liquidation, they face a

uncertain future with no

guarantees of getting their

money back. In the end the 4

hour creditors meeting was

little more than a little more than a formality It

was a waste of time. Creditors

voted to put most of the

group's 35 companies including

the head entity into

liquidation, many felt they had

little choice. A lot of

information the floor couldn't give because he said it was in

the hands of receivers, we

would have thought that the

receivers would be here to give

out that information. Creditors

are frustrated that the group's receivers and managers

appointed by Great Southern's

banks have control over the

group's destiny, and many

learned ownership of the frees

they've groan could pass to the

landlords of their plantations

because rents haven't been paid

since September. I am not very

happy at all. I put in, gee, a

little over $600,000 over a

period of time. To lose it period of time. To lose it like

that is just totally that is just totally wrong. I

don't think they've looked at

it, you know in a proper

way. Great Southern went into

administration in May owing

banks around $600 million. The

administrator Martin Jones says

liquidation is the only chose

bows the scheme is insolvent

and no other firm has come

forward with a viable option.

The market value of Great

Southern's assets are not

clear, nor the entitlementments

of growers, it makes it

impossible to determine Great Southern's financial

position. There's uncertain to

determine the return to

unsecured creditors, until such

point that the receivers

complete their work, we are

unlikely to be able to give

clear and concise clear and concise understanding

of the likely return. Martin

Jones says the law prevent

Great Southern's receivers from

selling off assets at fire sale

prices. Unsecured creditors

are not confident they'll see

any of their money back. I hope

to get something out of it.

It's not looking too good at

this stage, I don't think. If

the banks step in and take it,

you'll lose the trees. All is

not lost for creditors yet.. A

Perth based agribusiness called

a meeting for next month to

vote on getting the schemes up

and running, the proposed deal

is far from assured. Creditors

need to be convinced enough

money is injected back into

Great Southern to ensure the

banks claims will be satisfied. Property group Mirvac told shareholders it's

ripe for expansion at the same

time the company has been

forced to defend an increase in

fees nor non-executive

directors, with retail

investors at the Annual General

Meeting unhappy with a 30%

increase in fees after a year

of big profit losses, Mirvac

appointed former Suncorp

appointed former Suncorp boss

John Mulcahy as one of two

directors to its bored. I spoke

with CEO Nick Collishaw earlier. Welcome to Lateline

Business. Thank you. Your

Chairman spent a large part of

today's AGM defending a big

increase in the salary pool for

directors, it got through on

the proxies, clearly there was

a bit of discontent from retail

investors, given you are more

than 1 billion loss last year,

why do you need to pay your

directors more. The investor

pool voted at the AGM was 71%,

of those over-97% of those

voted in favour. The pool that

we have put to investors today

allows us to bring on two new

directors, which will be

strengthening the board and

providing greater support for

myself and my management

team. So two new directors,

500,000 more, does that 500,000 more, does that mean

you are paying each director

$250,000 a year. No, it is not.

The remuneration of the

directors will be decided by

the remuneration committee, but

what it provides us is the

ability for growth over the

year's to come, but also for

other duties that the directors

may be asked to do from time to

time. Well, it's no secret it's

been a rough ride for

investors, given where the

share price is, and the FAT distributions have been distributions have been cut.

How long before distributions

go up again. In our business,

last year's distribution at 8

cent per security, and next

year's distribution guidance at

9 cent per security, it's already trending up. That's

still a long way from the 33

cent that you were paying. It

certainly is different to certainly is different to where

it was, a number of years ago,

and the business will increase

distributions in line with

profit increasing. We are

presently at the bottom as we

see it of the development

cycle, and our development

business will contribute to

earnings in the years coming

forward. And importantly for

the Mirvac Group, the security

of income coming from the

Mirvac property trust underpins

the current distribution. If we

look at your capital racings,

you've had two in the last

year, one $500 million, one

$1.1 billion, you are on the

hunt for opportunities. Both of those capital raisings were

done, one, to strengthen our

capital position, which

certainly they have done, and

the share price has grown in

response to that strengthening,

and to provide a capital base

for participation in the

opportunities in the year

ahead. So, yes, we are looking

for opportunities both in the

investment space, investment grade assets here in Australia

and the development space. Is

there anything on the books, on

the cards? Well, as you

probably are aware, we have

made a proposal to emrate

investors,, a separately listed

vehicle on the Australian stock

exchange. That internalisation

will not chew up all the extra

money, is there anything else

on the cards. No, it won't

take-all of our resources,

indeed, if successful will

leave us with a healthy capital

position. We continue to look

at other opportunities, there's

nothing that I can report on

today. Did you raise too

much? No, I don't think so. I

think we raised adequate

capital to give the market

confidence that the business

was going to be pa survivor,

and we sit now with a - the

support of our bankers, the

support of our investors, and

in an exceptionally

well-balanced position, and one

that should be able to take up

the opportunities coming into

2010. You talked earlier about

the offer you have made for the

stock you don't already own and

the Mirvac real estate

investment trust. You upped the

offer yesterday, will that get

that deal over the line. I

think the first offer that we

made to the market was a fair

offer. And we have been offer. And we have been talking

to the major investors, and the

major retailer advisory groups.

Taking their feedback, we had

decided that while we thought

the deal would get across the

line, it's best to put an

insurance policy in place, and

enhance the offer, because the

thought of this traction being

blocked or not succeeding -

transaction being block said or

not succeeding was not worth

bearing, I'm expecting

institutional investors and

retail investors will think

positively of the increased

offer. You also said earlier

that you believe we are at the

bottom of the development

cycle. What is your reading of where residential property is

at the moment. Well, the

residential market is an

interesting one, I guess, right

around the country, in generic

terms, we still face

significant undersupply. We

face a market where demand is

growing, yet supply is

constrained. That in balance

between supply and demand is

going to push prices. What

about the fact that about the fact that interest

rates are going up, and the

first home owners grant is

winding down. What impact are

those factors having, you still

see a bright future. Well, I

certainly see a positive

future. I think the first home

buyers boost coming to an end

at 31 December will certainly

have an impact in the first

home buyers area, of course,

importantly, what we see is a

level of consumer confidence

pick up for second and third

home buyers, and that market

moving along. Nick Collishaw,

many thanks for talking many thanks for talking to

Lateline Business. Thank you

for having me. There's much

debate in Australia about the

massive appetite of the Chinese

for Australian assets,

especially in resources. China

has spent more than $30 billion

on various commodity investments since the investments since the election

of the Rudd Government two

years ago. But is Australia the

only country in the sights of

the Chinese, with a war chest

of $2.5 trillion US dollars,

the answer is clearly no. China

looks far and wide to find

places to spend its money, it

doesn't just look at good

financial investments,

strategic interests and

resource are all part of the

strategy. The march of the

Chinese, headlines after

headlines on China's billions buying Australia's resources 2009 marks a

watershed, they are taking

advantage of market conditions. Not surprisingly

China is looking behind

Australian shores, China's

investment overseas doubled to

$50 billion in 2008,

projections suggest it could

double to $100 billion. The

problem that the Chinese problem that the Chinese face

is they are late entrants to

the resource games, a lot of

the attractive assets are

locked up by international big

mining or oil companies, so to

some extent they have to take

scraps off the table, meaning

frequently going into

developing country markets that

haven't been developed because

others thought the risk was too

high. In the past year Chinese

oil companies spent $13 billion

on projects in Russia,

Kazakhstan, and Venezuela. And

reports suggest it's about to

pour $30 billion into oil

assets in Nigeria. They have

always tried a 60/40 rishio,

60% in developed and 40 in

undeveloped. Because of the political knockbacks in

countries like Australia and