Coalition stumbles on high moral ground

Australian politics: full coverageThe Pulse Live with Judith IrelandG4S guards linked to Manus violence
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Stephen Conroy over-reached when he accused Lieutenant-General Angus Campbell of a ”political cover-up” during his ill-judged intervention at a Senate hearing on Tuesday that should have been focused on what led to the chaos and carnage on Manus Island last week.

But the Abbott government’s over-reaction on Wednesday exposed the hypocrisy of Immigration Minister Scott Morrison, and may have provided a turning point for Opposition Leader Bill Shorten.

When Tasmanian independent Andrew Wilkie moved a motion admonishing Conroy, the government saw its chance to claim the moral high ground in the asylum seeker debate. It seized it, having already devoted three Dorothy Dixers to attacking Conroy.

Foreign Minister Julie Bishop seconded the motion, accusing Shorten of ”unleashing the bovver boy”, and thus being complicit in his ”outrageous, appalling, despicable conduct”. Labor, she said, was so disorganised ”they cannot even find a line to run in question time”.

But Shorten, who has been struggling to cut through, delivered one in a speech that might prove the making of him. Conroy had withdrawn his remark, Shorten said, but his concern was valid: the government was using General Campbell ”to pursue your grubby culture of secrecy”.

”We in this Parliament, and the Australians that put us here, deserve a bit better than the kindergarten, flag waving, faux patriotism which you guys want to wrap yourselves around!” he said.

It was left to Morrison to respond, and pose the rhetorical question: ”Why didn’t the previous government ask for someone like General Campbell to go and fix their mess?” What he forgot was that the previous government did ask someone like General Campbell to do precisely that.

The former head of defence, Angus Houston, was a member of the panel appointed by Julia Gillard to propose how to stop the boats – and attempts to implement the panel’s recommendations were frustrated from the start by Morrison and the Coalition.

It was left to the Greens’ Adam Bandt to lament what the debate lacked. So much was said in defence of a man more than capable of defending himself, he observed, yet so little was known about the dead asylum seeker, Reza Barati.

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Murder accused Paul Mulvihill says stabbing of Rachelle Yeo an accident

Re-enactment: Murder accused Paul Mulvihill. Photo: Edwina PicklesPaul Darren Mulvihill stood before the jury in a smart grey suit and a bright pink tie and used a wooden ruler to demonstrate on his solicitor how his ex-lover came to be accidentally stabbed in the side with a stainless-steel kitchen knife. The former rugby player told the Supreme Court he grabbed hold of Rachelle Yeo’s right hand, which held the knife, and that during a brief struggle she fell backwards and pulled him down on top of her.
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He said that as they hit the floor the knife went into her right side.

”I could feel it hit something hard,” he said.

”When I looked at the knife again it had blood on it.”

It was an important moment in the trial of Mr Mulvihill, who is charged with Ms Yeo’s murder.

The 46-year-old told the NSW Supreme Court that he and Ms Yeo, 31, began struggling when she came at him with the knife after an argument at her northern beaches home on July 16, 2012.

Mr Mulvihill said that during this argument, Ms Yeo, his former work colleague and lover, had slapped him hard in the face. He had responded by pushing her hard into the unit’s kitchen.

”As I pushed her she turned,” he said. ”I couldn’t see what her hand was doing … but when she turned around she confronted me with a very large stainless-steel knife. She said, ‘Get the f— out of here’.

”She lashed out at me, towards my right chest area [with the

knife]. I brought my right hand up to defend myself and the knife cut me at the bottom of my palm.

”When she slashed me I thought, ‘I’m in massive trouble here’.”

He said that after the initial stabbing there was another struggle during which he punched Ms Yeo in the face and managed to wrest the knife from her grasp.

Mr Mulvihill said he put the weapon down nearby, got up and started to move away when he saw that Ms Yeo was reaching for it once more.

He said that during the ensuing struggle he managed to get on top of the bleeding woman, telling her repeatedly, ”let it go, let it go”.

It was as he was trying to stand that the second stab wound, this time to Ms Yeo’s neck, occurred, Mr Mulvihill said.

”I was pushing down on her to use her as leverage to get up and the knife is [horizontal] between us,” he said.

”Then suddenly the pressure was gone … she turned her head to the right and the knife went into her neck.

”The blood was pouring out … I looked at her and I knew that it was bad. I’ve grabbed her right hand and said, ‘f—, put your hand on it, put your hand on it’.

”I would never ever dream of hurting anyone … I just panicked. I knew I shouldn’t be there … I saw the balcony and I just walked over, put my hand on the rail and swung myself over.”

During cross-examination, Crown prosecutor Maria Cinque put it to Mr Mulvihill that he had lain in wait for Ms Yeo that night to ”effect the final closure”.

He denied this.

Tony Abbott’s plan to unshackle Qantas may send jobs overseas

FULL COVERAGE
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LIVE BLOG: 5000 jobs cut from Qantas

The Qantas announcement

Federal government plans to unshackle Qantas from foreign ownership restrictions could clear the way for it to shift jobs overseas and outsource maintenance.

As Prime Minister Tony Abbott signalled his determination to remove the government-imposed ”ball and chain” from Qantas, analysts from brokerage firm CLSA said the main benefit to the airline in altering the Qantas Sale Act was that it would allow it to slash costs by sending more work overseas.

Qantas will unveil on Thursday its biggest loss since it was privatised almost two decades ago. In an attempt to slash $2 billion in costs over the next three years, Qantas chief executive Alan Joyce will detail measures expected to include the axing of as many as 5000 jobs from its 33,000-strong workforce.

Coalition sources said on Wednesday night the government would not immediately unveil assistance measures in response to Qantas. They said a debt guarantee, which will allow the airline access to cheaper finance, was still the most likely short-term measure.

The Abbott government will struggle to steer change to the Sale Act through either the current senate dominated by Labor and the Greens, or the next one which will sit from July 1. Mr Abbott brushed aside suggestions of a ”secret deal” between the government and Qantas that could see a guarantee in exchange for assurances about maintenance workers’ jobs remaining in Australia.

”We want to ensure that Qantas management, as far as is humanly possible, doesn’t have any government-imposed ball and chain around their ankles and that’s the problem with the Sale Act,” he said. ”It is a significant restriction on Qantas’ freedom of manoeuvre and that’s why the government is considering legislation to establish a level playing field in this area.”

Opposition transport spokesman Anthony Albanese called on Mr Abbott and Transport Minister Warren Truss to clarify what help would be given to the airline and to protections for Australian jobs.

Mr Albanese said Labor supported maintaining the provisions of the Sale Act because it ensured maintenance and other jobs stayed in Australia and ensured regional areas were serviced by the national carrier. ”It’s about time that Tony Abbott and Warren Truss said what their plan is for Qantas instead of sitting back while threats are being made to the job security of these people who work at Qantas,” he said.

Prime Minister Tony Abbott

CLSA analysts said they were sympathetic to the airline about the foreign ownership restrictions imposed on it.

”[But] government help would be palliative not panacea and clearly needs improvements driven by Qantas itself,” they said.

Regional Express, Australia’s largest independent regional airline, launched a scathing attack on Qantas’ attempts to have the Abbott government guarantee its debt. ”There is a lot of things Qantas could do for itself to solve some of its problems, rather than just going to the government and saying please guarantee our debt,” its deputy chairman John Sharp said.

No computers, thanks, this is architecture: Glenn Murcutt’s top of the class

Dream team: Architects Ken Maher, Richard Johnson and Glenn Murcutt. Photo: Anthony Johnson If nothing else, Glenn Murcutt wants his architecture students to have passion. ”You can’t teach passion – you draw it out, [but] they have to get that fire in the belly,” Mr Murcutt said.
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And he is a tough master. Mr Murcutt, known as one of Australia’s finest architects, bans the use of computers in his studio class and insists his undergraduate students hand-draw their designs.

His students are allowed near a screen only at the end of the semester. ”I say to my students that every compromise they make represents the quality of their next client,” Mr Murcutt said.

”Students in my studio cannot use the computer for the thinking process. Drawing is a critical aspect of thinking.”

For the first time this year, Mr Murcutt’s architecture students at the University of NSW also have the opportunity to be taught by two more of the country’s most respected and accomplished architects.

Richard Johnson has designed some of Australia’s standout public buildings, such as the Museum of Sydney and the Natural Portrait Gallery, while Ken Maher’s high-profile projects include the restoration of Luna Park, the Olympic Park Railway Station at Homebush and the National Institute of Dramatic Arts at Kensington.

Mr Johnson and Mr Maher will teach a component of the masters program, which all architecture students must do. Mr Murcutt chose to teach third-year students because they ”know a little about architecture but not too much”, while Mr Johnson said teaching made good architects better.

”We all have time pressures but we teach because it is important, [and] we teach because we really enjoy it,” Mr Johnson said.

Yvonne Chan, a masters student, said she chose to study at the university purely because she had the opportunity to be taught by Mr Murcutt, while another student, Jessica Gottlieb, changed degrees to be in his studio class.

”He is just amazing and it is just a huge value to be taught by people of his calibre,” Ms Gottlieb said.

”I started doing interior architecture but when I found out that Glenn was doing a studio, I changed [degrees].”

Markets pencil in a Qantas deal on line of credit from the government

While the airline industry and politicians debate whether Qantas should get a helping hand from the government, financial markets are already treating it as a done deal.
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Credit traders expect news that Qantas has secured a line of credit from the government when it announces its half-year results on Thursday.

The cost of insuring against a Qantas default within five years fell sharply on Wednesday morning on increased speculation that the airline, which lost its investment grade credit rating late last year, will secure a government guarantee.

The airline is expected to announce a range of measures to support its debt position as it releases its first-half earnings – such as job cuts, and terminal sales and lease backs. Qantas is also considering a float of its Frequent Flyer business.

Qantas’ credit default swap contracts are among the most actively traded in the Australian credit markets as they offer one of the few ways to get exposure to the airline industry.

On Wednesday, credit traders said the cost of insuring Qantas five-year debt contracts was quoted at 228 to 238 basis points, that is lower from Tuesday’s closing level of 256 basis points – a near 8 per cent fall, indicating a lower perceived risk in lending to the airline.

The change means the cost of insuring against a default of $10,000 of Qantas debt has fallen from $256 to about $235.

Last year, Qantas five-year spreads had traded at 200 basis points. But as the airline revealed it would post a first-half loss of $300 million, that spread surged to 270.

Despite reports the government would reluctantly support the airline through a debt guarantee, markets failed to respond as credit spreads traded in a range between 256 and 276 basis points.

But headlines that a debt guarantee was likely led to the sharp fall in debt spread on Wednesday morning.

Qantas Australian dollar bonds also performed strongly on Wednesday, with the spread on the airline’s $250 million 6.50 per cent bonds maturing in 2020 trading 15 basis points lower at 2.6 percentage points over the swap rate – or about 6.4 per cent.

Huawei chief James Zhao opens company up to scrutiny

The Chinese company will double its marketing budget to boost smartphones sales. Photo: Lluis GeneThe new Australian chief executive of Chinese communications company Huawei says it will become less secretive and double its marketing budget to boost sales of smartphones and tablets, despite being banned from the national broadband network over spying fears.
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In his first public appearance since taking the job in December, James Zhao said he would make himself and the company more open to public scrutiny and the media.

Mr Zhao is a career Huawei executive who joined the company in 2000 and headed its Indonesia arm from 2004 until 2011. He then ran Huawei’s Bharti Airtel Global account in India and Africa until his rotation into the Australian position.

His predecessor, Guo Fulin, has been moved back to a role in the company’s Chinese operations. “Gradually we can get to know each other better,” he said in an interview at the Mobile World Congress in Barcelona. “I’m paying attention to the end user and the subscribers. Because end users are the people and if the people like you then you can have more business.”

Prime Minister Tony Abbott confirmed the Labor government’s ban on Huawei products on the national broadband network over concerns the equipment could be used by the Chinese government to spy.

Huawei’s reclusive founder and co-chief executive Ren Zhengfei was an officer in the People’s Liberation Army and rarely conducts interviews with Western journalists.

The new chief executive said the NBN issue was not on his radar.

“When I come here I don’t talk about this [issue] and also I do not have interest in this [issue],” he said.

Huawei chairman John Lord said most Australian governments and businesses had moved on from the NBN ban and the issue was now “dead and buried”.

“There’s always going to be a group that will continue on about the security aspect but … I think people trust Huawei now.”

Mr Lord said he was set to approve the company’s local budget in March and there would be a doubling of the company’s consumer marketing spending. The company declined to state how much the marketing budget was worth in 2013.

Mr Lord said the next annual report, in March, would show Huawei’s 2013 revenue grew 10 per cent from the $368 million reported in 2012 and the board forecasts a 10 to 12 per cent increase in 2014.

David Ramli travelled to Barcelona as a guest of Huawei.

Financial planners free to flout advice rules due for repeal

Financial planners are free to flout parts of the new Future of Financial Advice Act while the Coalition prepares to dismantle them.
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The admission from the Australian Securities and Investments Commission at a Senate hearing on Wednesday gives planners a green light not to present to clients the annual statements regarding ongoing fee arrangements entered into before July 1, 2013, required under section 962S of the Corporations Act.

ASIC deputy chair Peter Kell said the commission had taken the decision to ”avoid uncertainty” while the government prepared to remove the provision.

However, the repeal of the rules is uncertain because Labor and the Greens, who hold the balance of power in the Senate until July, have vowed to block the move.

”There is no value at this point in time, no value for the industry, in going out and initiating enforcement action in relation to matters that are currently being considered before the Parliament,” Mr Kell told Labor senator Sam Dastyari.

Assistant treasurer Arthur Sinodinos announced plans to wind back parts of the reforms on December 20. The changes will not be enacted until regulations are introduced backed up by legislation after the Senate changes hands in July.

Senator Dastyari asked ASIC chairman Greg Medcraft why he was proposing not to apply a law which had been in place since July.

Mr Medcraft said ASIC had already announced a decision to adopt ”a facilitative approach to compliance with the law in the first 12 months”.

”Basically again you could argue the same way, that we did not strictly enforce the law in that first period to allow industry to adapt to the law,” he said. ”So it is not dissimilar.”

Mr Medcraft said if he saw a ”major breach” he would enforce it.

Senator Sinodinos said the situation was little different to that faced by businesses wondering how to react to the tax measures announced by Labor but not enacted by the time it lost office.

”When with a law like this which has only been in effect for 12 months and a new government comes along which has clearly signalled an intent to amend the law … what ASIC has done is try to provide some certainty to people, and I think in that sense it is a reasonable thing to do,” he said.

The regulation would ”come into place when the government signs them,” which could be ”earlier than May”.

Crunch time for Qantas chief Alan Joyce on airline job cuts

Qantas chief executive Alan Joyce. Photo: Nic WalkerAir New Zealand profit leaves Qantas in the shade
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Qantas chief Alan Joyce faces one of the biggest tests of his career on Thursday when he is expected to reveal more than 3000 job cuts, the early retirement of planes and airport terminal sales.

With the airline set to notch up its biggest first-half loss since it was floated in 1995, Qantas management will reveal how it intends to rip $2 billion in costs out of the business over the next three years.

The carrier has warned it will post a pre-tax loss of between $250 million and $300 million in the first half, a period during which Australian airlines typically make the lion’s share of their earnings.

At the same time the federal government is set to provide Qantas with a debt guarantee, meaning the taxpayer would foot the bill should the airline default.

The government has made clear it will attempt to relax regulations which prevent the airline from majority foreign ownership.

Flight Centre managing director Graham Turner also weighed in on the debate about the government extending help to the airline, saying Qantas needed to be freed from the restrictions of the Qantas Sale Act and its heavily unionised workforce.

But Mr Turner said the removal of the foreign ownership restrictions was preferable to the government extending assistance in the form of standby debt facility.

”You can’t keep things in Australia just to protect local industry when you have international competition which will inevitably go to the places where things are more efficient,” he said.

”With international airlines, you are working in a competitive international market, and you have to be competitive in the long-term or there is not going to be a viable future for the business.”

Still, Australia’s largest regional airline has launched a scathing attack on Qantas’ attempts to have the Abbott government stand behind its debt.

Regional Express deputy chairman John Sharp – a former Howard government transport minister – said the move would distort the industry.

“If the Australian government backs Qantas, Qantas will then be a government-backed airline, and so Rex will be confronted with two government-backed airline operations that we will be competing with, and that I think is unfair, that I think is a significant distortion of the marketplace,” Mr Sharp said.

Virgin Australia’s key shareholders include United Arab Emirates-backed Etihad. It also counts Singapore Airlines and Air New Zealand as investors – airlines that also count on state support.

Mr Sharp said if the government decided to guarantee Qantas’ debt, it should guarantee the debt of the whole airline industry in Australia.

”We all agree with a level playing field, but if you don’t guarantee the other airlines, and only guarantee Qantas, you will be creating an unlevel playing field, and we’ll be on the unlevel part of it,” Mr Sharp said.

The attack on Qantas comes after Rex reported a 60 per cent fall in first-half profit, down to $3.6 million. Passenger numbers fell 5.1 per cent compared to 2012 to just under 550,000. Rex will not pay an interim dividend.

During the global financial crisis, the Australia government provided a debt backing for the country’s banks. Mr Sharp said the same principals should be applied to not create an uncompetitive environment.

Meanwhile, brokerage CLSA questioned Qantas’ strategy of maintaining a 65 per cent share of the domestic market. ”What we don’t understand is why Qantas appears to have focused on growing capacity to protect market share, particularly with slowing market growth.”

Qantas has left observers to speculate it will axe thousands of jobs from its 33,000-strong workforce.

Peter Lowy happy to sing but puts off swan song

Who says the Lowy family aren’t a colourful bunch. Peter Lowy, who plans to step back from executive duties sometime after the latest Westfield restructure, was asked by Maxim Asset Management’s Winston Sammut if Wednesday’s annual result was possibly his ”Australian result presentation swansong”.
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Lowy admitted that he hadn’t given it much thought.

”Do I get to sing, Winston?” he asked. ”I think all of the guys around the table might be a bit happy.”

He could always call in elder brother David Lowy and his hard rock outfit, The Dead Daisies, as back-up.

But Lowy insisted he won’t be hanging up his boots just yet.

He listed the mountain of work the company had to get through before he relinquished any executive duties and, ”after that, I just want to remind everyone I will be a non-executive director, so I’m not exactly going away”.

He should at least get another crack at topping the pay tables at Westfield. Peter has been pipped by brother Steven Lowy two years in a row, despite them sharing CEO duties.

In a typically straightforward manner, Westfield reported that, Peter’s ”total remuneration based on the amortised fair value of all awards at grant date” was $8.15 million, down from $8.92 million the previous year.

Steven topped the pay list with $8.66 million, down from $9.4 million the year before.Rex misses targets

A 60 per cent fall in first half earnings at Regional Express played second fiddle to the regional airline’s attempt to jump on the entitlement bandwagon with undeserving rival, Qantas.

Rex’s deputy chairman – and former Howard government transport minister – John Sharp said he planned to visit Canberra after the results announcement with the clear message that any deal on offer to Qantas has to be extended to its rivals. Otherwise it risks creating a competitor that will ”try and knock us off”, he said.

”Qantas can be a very strong competitor, whether that’s bullying or not, I don’t know, but we certainly feel the very substantial size difference,” Sharp told reporters.

The Singapore-backed Rex knows how to open doors in Canberra. Last year the airline’s board held its nose and handed $250,000 to Labor and only $70,000 to the out-of-power Libs. We are sure Sharp will ensure the balance is corrected this year.Gift for taxman

Has Sydney Airport lost the Macquarie magic?

The airport operator’s full-year results on Wednesday revealed that the company paid tax for the first time since the 2005 financial year.

The Max ”The Axe” Moore-Wilton-chaired company coughed up $51.9 million for the taxman after banking a $67.2 million tax benefit the year before.

Investors need not fret that Macquarie’s exit from the share register last year – via a distribution to its investors – has seen Sydney Airport turn over a new leaf.

A $69 million ”settlement payment” with the Tax Office was to blame for this aberrant behaviour and normal service is expected to resume next year.

The key ingredient is a private equity level of debt, which means its interest payments of $432 million last year, came close to matching the rest of its operating expenses combined at $497 million.Costly Dubai

Property developer Sunland Group is still counting the cost of the Dubai debacle, which led to Australian executives, Matthew Joyce and Marcus Lee, spending years in detention. The company’s interim results updated the legal cost of claims the group was duped into paying a $14 million ”introductory fee” to secure land on the Dubai waterfront in 2007.

Sunland reported that its operational costs included $8 million of legal expenses ”primarily relating to Sunland’s costs of the Victorian Supreme Court trial and appeal, and payment of $6.5 million cost order awarded against Sunland in relation to the trial”.

Those are hefty sums for a group that has forecast a net profit of $12 million this year.

Joyce and Lee have only just returned home from Dubai after being exonerated following years of detention over the allegations.

Sunland’s costs relate to a civil case against Joyce and Lee, which collapsed last year.

The company is still up for costs over the appeal, which were also awarded against it.

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Flight Centre posts record $111 million profit

Flight Centre has broken another record by posting a 22 per cent rise in first-half net profit to $111 million as a weaker dollar failed to dampen Australians’ love affair with overseas travel.
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Australia’s largest travel agency will pay a 55¢ interim dividend on April 17, up from 46¢ in the prior half.

The latest payout delivers $8.4 million into the hip-pocket of Graham Turner, Flight Centre’s managing director and the company’s largest shareholder.

Despite it breaking records, Flight Centre has stuck to its guidance for this financial year of pre-tax profit of between $370 million and $385 million.

Mr Turner said demand for leisure and corporate travel remained ”reasonably good”, although the company had noticed slowdown in travel by the mining industry due to a greater focus on reducing costs.

Flight Centre reported a 20 per cent rise in profit before tax to $155 million for the six months to December, which included a $9 million one-off gain from its wholesale business. Revenue rose 15 per cent to $1.1 billion for the half.

Mr Turner said fluctuations in the value of the dollar had not stopped Australians from travelling overseas en masse. ”There are no indications that people are going to stop travelling or slow it down,” he said.

Flight Centre, which has been keen to press the point with investors, highlighted government data showing that growth in outbound travel had accelerated during the first half despite a fall in the Australian dollar.

Mr Turner said baby boomers were still spending on overseas travel, and fares were at record lows due to intense competition between Middle Eastern and Asian airlines.

”The airlines have to be on the ball if they want to fill up the big planes. The consumer has never had it so good, which helps us,” he said. ”We go for volume.”

The key driver of its latest earnings was again its Australian business, which posted a 20 per cent rise in pre-tax earnings to $124 million for the half. Its three largest businesses – in Australia, the UK and the US – generated almost 80 per cent of its total transaction value, or the price at which goods and services are sold, in the first half.

But its businesses in the US, which posted a loss, and Canada, failed to meet expectations.

Moelis analyst Todd Guyot said Flight Centre was positioned for ”sustainable low double-digit growth”, emphasising the ”quality of the business model and management”.

Shares in Flight Centre closed up 3 per cent at $1.59 on Wednesday.