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Roos bank on big hearts

LAKE Macquarie have replaced the biggest man in the club with the smallest but NSW Country five-eighth Brendan Holiday has faith in the Roos forwards to get the job done against Maitland in the elimination semi-final at Marcellin Park tomorrow.
Nanjing Night Net

Towering former Waikato Chiefs second-rower Mark Burman has been ruled out of Lake Macquarie’s first assault on finals football with a knee injury.

His place has been taken by bulldog breakaway Shannon Turton, forcing a reshuffle.

Captain Cal Menzies shifts into the second row with Turton coming on at the side.

The spring-heeled Burman stands 197centimetres, weighs 113kilograms and is the Roos’ go-to man at the lineout.

He dwarfs Turton by nearly 30cm and 20kg.

‘‘It is not really like for like,’’ Holiday said.

‘‘Losing Mark is a big blow, but it is really good for Shannon to get a start.

‘‘He has worked hard for this club over a lot of years and adds a different element.

‘‘He is tough, goes hard at the breakdown and will be an asset.’’

As well as being the main jumper, Menzies is likely to assume the responsibility of calling the lineouts.

‘‘The other boys have to step up,’’ Holiday said.

‘‘We have a few things in mind to help in that area.’’

Maitland coach Geoff Golledge is not convinced that Burman will be absent but is aware of what Turton brings to the game.

‘‘I watched the tape and saw Burman go off,’’ he said.

‘‘I think he will play some part whether it is early on or at the back end.

‘‘Their lineout was more or less built around him. If he is not there it is a bit of a bonus.

‘‘In saying that, Shannon is a very tenacious player.

‘‘Once he gets on that ball he is very hard to move.

‘‘You know one thing from Shannon you will always get and that is 110per cent effort.’’

Maitland won both regular season encounters, 25-23 in week three and 27-21 in the 12th round.

Golledge studied video of the Roos’ 34-24 win over Wanderers to seal fifth place last round.

‘‘It was what I expected,’’ he said.

‘‘They are a bustling side and do a lot of their best work at the breakdown, where they are very spoiling.

‘‘That is how they played against us in the two rounds.

‘‘It was pretty physical and we don’t expect any different on Sunday.’’

Though it is the Roos’ first finals appearance since being promoted to Premier Rugby in 2002, Golledge doubts they will be overawed or satisfied with simply making the play-offs.

‘‘Knowing [Roos coach] Danny Maiava, he won’t be happy with that,’’ Golledge said.

‘‘They will have their heads on.

‘‘I remember when Maitland made the semis for the first time in yonks we got excited but it is only the start of the job.

‘‘They understand that.’’

Holiday, who won a premiership at Hamilton, is certainly not done with yet.

‘‘We are determined to go as far as we can go,’’ he said.

‘‘We have the players to put points on.

‘‘It is just getting in the right place on the field and keeping them away from our quarter.’’

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Bennett looks to future after defeat

KNIGHTS coach Wayne Bennett said his side had closed the gap on the top teams but were still off the pace after they finished his first season in charge with an 18-6 loss to South Sydney at Hunter Stadium last night.
Nanjing Night Net

Erasing painful memories of a 40-24 loss in the corresponding game last year that denied them a place in the finals, Souths (36 points) secured a top-four berth and left the Knights (24) in 11th position, and vulnerable to being leap-frogged by St George Illawarra (24) if the Dragons beat Parramatta at ANZ Stadium tomorrow night.

Backing up their 34-14 victory over the Knights at ANZ Stadium on July 8, the Rabbitohs posted just their third win from 19 trips to Newcastle stretching back to 1988 and handed Newcastle a rare loss on Old Boys’ Day in front of a crowd of 24,127.

‘‘We were competitive. As I’ve been saying for a number of weeks now, we’re just a little bit off the pace compared to the top teams,’’ Bennett said.

‘‘They didn’t try any harder than us tonight, and they weren’t any more committed than we were, they just did things a little bit better than we did and that’s the difference.

‘‘But we’re bridging the gap. We’ll get it right ...

‘‘Our last six games have been against six of the teams that’ll be in the final eight now ... and it was only seven or eight weeks ago that Souths absolutely annihilated us in Sydney and ran over the top of us and physically intimidated us.

‘‘They didn’t do that here tonight. They were as physical as they’ve ever been and were as tough as they always are, the way they’ve been playing, but we were certainly not out-gunned in that area and we certainly held our own in a lot of the one-on-one stuff out there tonight.’’

Prop Roy Asotasi and man-of-the-match Greg Inglis scored tries in the eighth and 18th minutes to give the Rabbitohs a 12-0 lead, which Newcastle trimmed to 12-6 by half-time after fullback Darius Boyd was awarded a controversial benefit-of-the-doubt try in the 27th minute.

Five-eighth John Sutton scored the only try of the second half, darting from dummy-half past Willie Mason and Jarrod Mullen to touch down in the 60th minute.

Inglis produced the tackle of the game – if not the season – in the 45th minute when he launched himself at a runaway Aku Uate, stopping the former NSW winger in his tracks, and stripping the ball to save a certain try.

Few other players in the game could have produced such a tackle on a player as strong and fast as Uate in full flight metres from the line.

Commentating on Channel Nine, former NSW coach Phil Gould said: ‘‘That might be the greatest play I’ve ever seen.’’

Souths coach Michael Maguire and captain Michael Crocker described the tackle as inspirational and unbelievable.

‘‘In my time in rugby league, I think it’s probably one of the best tackles I’ve seen,’’ Maguire said.

‘‘Greggy is just able to do those things for his team over and over again. He puts his body on the line, and so does the team, with everything that was thrown at them.’’

Crocker said: ‘‘It’s one of the best I’ve ever seen – to stop Aku like that; not many people could have done that.’’

Knights captain Danny Buderus said he saw Uate racing down the eastern touch-line towards the Rabbitohs’ goal-line ‘‘then I saw big ‘GI’ [Inglis] coming across and you knew it was going to be a contest’’.

‘‘It was a fantastic tackle. If we’d slipped in there, it could have been anything,’’ Buderus said.

‘‘But once again, we had our chances. Always the last pass, or something would go astray from us, and we just couldn’t get over the line.’’

The Rabbitohs made the most of a southerly gale at their backs in the first half, pinning the Knights on their own line with a series of towering, swirling bombs and awkward grubber kicks to establish a 12-0 lead after 18 minutes.

Video referee Steve Clark awarded Boyd a benefit-of-the-doubt try in the 27th minute, which Tyrone Roberts converted from touch into the teeth of the gale.

Boyd appeared to drag the ball to the line after being stopped short but Clark, after several replays, gave him the green light.

Maguire described the game as a dress rehearsal for what Souths can expect in the finals.

‘‘The way the players fought for each other out there, it was actually a great game for us leading into what we’re about to face,’’ Maguire said.

Roy Asotasi of the Rabbitohs dives in for a try. Picture: Tony Feder/Getty Images

‘‘Newcastle threw a hell of a lot at us – they went from one side of the field to the other – but the boys kept getting up off the ground and fighting for each other, so it was a really good performance for us.’’

Play-the-ball errors by Newcastle forwards Adam Cuthbertson and Neville Costigan allowed Souths to re-establish momentum midway through the second half. Despite playing into the wind, the Rabbitohs forced three successive line drop-outs through a series of deft chip kicks and grubbers by Reynolds and Issac Luke, who made the most of a recall after being relegated to NSW Cup the previous week.

The Knights defended three sets but not four, as Sutton bounced out of dummy-half and beat Mason and Mullen to score in the 60th minute and Reynolds converted for an 18-6 lead.

Newcastle had a chance to hit back four minutes later when centre Timana Tahu flew high to bat back a Mullen bomb but the bouncing ball eluded Roberts, and Souths giant David Taylor tidied up for the Rabbitohs and carried it back into the field of play.

● Souths cracked the half-century in a 50-26 victory over the Knights in the NYC game.

RABBITOHS 18 (R Asotasi, G Inglis, J Sutton tries; A Reynolds 3 goals)

KNIGHTS 6 (D Boyd try; T Roberts goal)

Halftime Rabbitohs 12-6

Crowd 24,127

Referees Matt Cecchin, Chris James

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Power supply threat as workers consider strike

ELECTRICITY supplies will be under pressure if workers strike at two of the Hunter Valley’s biggest power stations.
Nanjing Night Net

Construction, Forestry, Mining and Energy Union spokesman Allen Drew said yesterday that nearly 600 Macquarie Generation employees in seven unions were considering industrial action over stalled pay talks.

They wanted similar pay rises to the 4.2per cent a year that Delta Electricity gave its workers but this had come before the O’Farrell government had introduced its 2.5per cent cap on pay increases.

Mr Drew, who is president of the union’s energy division, said an application for a secret ballot on industrial action would be heard in the Fair Work Australia tribunal on Monday.

Mr Drew said it was about 20years since the last serious power industry dispute.

A spokesman for Macquarie Generation said the corporation would be at Monday’s hearing and wanted seven days notice of industrial action, rather than the usual three days.

Mr Drew said the extra time was not needed because Macquarie could start or stop a turbine in a day if it needed to.

The Macquarie spokesman said its Liddell and Bayswater power stations near Muswellbrook produced as much as 40per cent of the state’s electricity.

‘‘Industrial action could put this supply at risk,’’ the spokesman said.

‘‘We are working hard to reach a new enterprise agreement ... within the scope of the NSW wages policy.’’

A spokeswoman for Energy Minister Peter Hartcher said productivity improvements were needed to lift wages by more than 2.5per cent.

She said the government recognised the right to take industrial action but hoped talks would succeed ‘‘so that this right does not have to be exercised’’.

Power supply.

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As miners, the big three take tumbles, but as tax lobbyists …


Nanjing Night Net

APERNICKETY and uncharitable person might say that Rio Tinto and BHP Billiton have toasted $50 billion in proceeds of the mining boom in fruitless acquisitions overseas. You get to the cool 50 by adding Rio's monumental $38 billion Alcan mishap to the roughly $12 billion BHP has written down over the past five years.

When it comes to government relations though, they have played a flawless game. Getting the mining tax watered down from the proposed $100 billion over 10 years to the presently mooted $39 billion was a stunning success. Shareholders may grumble over meagre dividends and dud acquisitions but not over prowess in lobbying.

If Fortescue's Andrew Forrest is right they won't pay one red cent. Forrest reckons they've pulled a swiftie on Canberra. They did help design the minerals resource rent tax, after all.

Tax is complicated stuff, so making projections would be pure speculation. They may decide to pay something, even if they don't have to, just to quell the ire of Treasury and allay the prospect of yet another tweak to the legislation.

A cursory perusal of the accounts of the big three - Xstrata being the other big resources house to have thrashed out the MRRT with a freshman Gillard government a few years ago - would suggest the miners are off to a splendid start.

BHP's recent accounts show a tax credit of $US637 million relating to the petroleum resource rent tax (PRRT) and MRRT. There was no breakdown provided, or any meaningful commentary.

For its part, Rio recognised a ''deferred tax asset'' of $1.1 billion in regards to the MRRT. And the inscrutable Xstrata, which looks to be paying very little tax at all on these shores, if any, has booked a $US579 million income tax credit relating to the MRRT.

All up then, the big three have recognised gains of $2.3 billion in relation to the great big new tax. It is a deluxe start to be sure, at least in light of earlier portrayals of this grotesque and menacing slight to Australia's sovereign risk.

In any case, the politics may soon flare up, especially as some economists are now ruminating about a $10 billion hole in next year's budget.

October 21 is the date for the first MRRT instalment. The budget papers are counting on $3 billion arriving for this first instalment, and $6 billion for the financial year. And they are counting on the big three to pay most of it. Fingers crossed.

For what it's worth, BHP paid full freight this year; the top tax rate as its revenues peaked. Rio booked tax charges of $678 million on its $6.8 billion in profits for the half year, paying most of it in London. As for Xstrata, well, who knows?

Having failed to dig up much in its published accounts, we put in a call, just for the fun of it. It was not easy to establish contact with a communications operative but when we finally did, there was a kind offer to try to find out if Xstrata paid any tax in Australia at all. Alas, we never did manage to hear back.

Who knows? Perhaps its enigmatic parent company, Glencore, forks out a few Swiss francs in the Canton of Zug where its headquarters sleepily nestle. Or the odd dollar meanders perchance through a Byzantine maze of structured entities en route to a low-lying isle with a clump of palms in the Caribbean.

No matter. Back on this continent, the trick for the big three is to pay just enough MRRT to stave off a fuss in Canberra. They might well contend that, now the boom is over, things are tough, profits are down, and so forth.

Against the backdrop of aborted projects and falling revenues though, sentiment is a risk.

The worm has turned. Eighteen months ago, Marius Kloppers was riding high, declaring an $80 billion spending program on new mining projects. This was to have been the largest expansion in history.

By May this year, however, the Taj Mahal of corporate endeavours had been shelved. Then last week, the BHP chief confirmed the $30 billion expansion of Olympic Dam had also been put on ice.

It was a crushing blow for South Australia. ''Appalling,'' lamented former SA treasurer Kevin Foley. ''How can any government, here or worldwide, take this company at its word again?''

BHP is in damage control. Suitably contrite for the write-downs and retreating share price, Kloppers took a bonus cut and appeased shareholders with higher dividends. They are listening, and they know there is more to come.

As the iron ore price took another shellacking this week and traders laid waste to mining services group Boart Longyear, pulverising the stock price, it's a vastly different world now for resources than it was 18 months ago.

This story Administrator ready to work first appeared on Nanjing Night Net.

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A business reporter’s greatest value lies in asking hard questions

A QUARTER of a century. It's a long time to be stuck in the same place, unless of course it is exactly where you always wanted to be.
Nanjing Night Net

Unfashionable though it may these days, longevity in the workplace does have its rewards. It may not deliver the fabulous salary increases that those with a more mercenary mindset achieve. But it affords one the luxury of taking the longer view, a more considered appreciation of history: of a company, an industry, an economy, a nation and the individuals that live and work there.

Newspapers globally are under threat as they desperately and belatedly attempt to adapt to a digital world that has decimated their revenue base. Some will survive, many will not. Those that do will endure a great deal of pain amid drastically altered circumstances and with far fewer staff.

In itself, that shouldn't be any reason for alarm. A great many industries are undergoing radical change and large numbers of workers are facing the painful adjustments that result.

But a menacing danger quietly lurks behind the technological changes within the media, one that has the potential to debase one of the foundations necessary for a healthy democracy. Nowhere is that more apparent than in the way in which business news is presented, where the interests of a free press and commercial imperatives collide, often with devastating effects.

The more vulnerable media companies become, the less capable they are of withstanding the pressure of vested interests and the more susceptible they will be to attack. Many will adopt the easy way out, that it is best to simply not cause trouble.

Unlike politics, sport, industrial relations or crime, where journalists zealously pursue their quarry, when it comes to business, the Australian media generally has opted for a soft and fawning relationship. It has always been thus. And it comes back to bite.

In the mid-1980s, one of Kerry Packer's magazines, Australian Business, came up with the brilliant idea of handing out awards to our best and brightest in the high-octane world of commerce. The idea was that it would generate readership and whip up interest among the big swingers downtown.

One of the judges on the inaugural panel was budding bizoid Christopher Skase, who later found infamy and misfortune as a fugitive on Majorca after the collapse of his Qintex group of companies. But the man selected back then as Entrepreneur of the Year, Ian Johns of Tricontinental, became even more notorious after his financial institution hit the skids a few years later and nearly took Victoria down with it.

A royal commission, blackmail and insider trading charges and jail time forever tarnished the glittering awards night and it later took on the mantle of ''kiss of death'' when the companies of several subsequent winners ended up in receivership within a year of picking up the trophy. The magazine's competitor, Business Review Weekly, did not fare much better. It handed out awards to the likes of Bruce Judge and Garry Carter, whose business empires collapsed spectacularly.

Apart from isolated episodes such as the Poseidon boom of the 1970s, business became front-page news only after deregulation in 1983. Gyrations in the dollar, fortunes being won and lost on the stockmarket and the emergence of a new and brash kind of businessman dedicated to toppling the old guard captured the public imagination.

But the heroic tales of corporate conquest, the kind of soft, promotional stories that pop up every time a market is on the upswing, have an insidious side-effect. They attract the hard-earned savings of ordinary folk who end up losing everything in the ensuing firestorm while the hero turned villain saunters off with a bagful of cash. The media rarely questions its role in these events. Consider the great bull run between 2000 and and 2008. Acres of glossy profiles of the entrepreneurs of the day but nary a question, hardly any stories about the complexity and opaque nature of the financial engineering that no one could explain or understand. It wasn't just here, either. In the US, where freedom of the press is written into the constitution, business reporters failed to pick up the greatest scam ever perpetrated on the global financial system.

No one seemed to twig that vast numbers of people with barely any income were buying new houses on borrowed money or questioned the unholy alliance between Wall Street and Capitol Hill that funnelled trillions of dollars into the coffers of investment banks, forcing capitalism to the brink.

Why? It's all a little too difficult. Because, unlike politics or sport, those running big business have a great deal of power. Veer too far from the press release, question a little too aggressively and the mighty weight of a corporation suddenly is hovering above, threatening litigation, demanding your dismissal. The chief executive probably knows a few people on the newspaper company's board.

Little wonder then that most business reporters default to the easy option. And many begin to believe they are part of the business world, that the reason they are being squired to upmarket restaurants, to corporate boxes and offered trips to exotic places is that they are part of the team.

The stories become ever more technical to impress their contacts. Every sentence is littered with impenetrable jargon. In the end, there's so much wood, they forget a forest is even in the vicinity.

Eventually, the industry starts leaking ''scoops''. It's a mutually beneficial relationship, a wonderful symbiosis, where the bankers boost their deal-making prowess and bonuses and their pet reporters become gun news breakers.

It speaks volumes that one of the best pieces of journalism about the events of this decade came, not from The Wall Street Journal, but from Rolling Stone.

Matt Taibbi's expose on the investment bank Goldman Sachs, The Great American Bubble Machine was met with howls of protest from almost all on Wall Street even as they read and revelled in every one of those thousands of words that perfectly captured the noughties.

Taibbi was an outsider. No one even thought of buying his soul. He wasn't even on the radar.

This is the final column I'll pen for BusinessDay. It is an emotional parting but after 25 years, it is time to move on. There have been good times. There have been great times. And the ethos that was drilled into us all those years ago - that we work for the readers, for you - is something that remains true today and hopefully in the future, in whatever form The Age and The Sydney Morning Herald take.

So this is it. Time to clean up the desk. Then again, there is so much clutter and rubbish here, maybe I'll leave it for whoever comes next. You need a legacy, after all.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Untold riches, untold taxes: a royal battle

THE luxury gated community of Sanctuary Cove in Queensland is about as far as you can get from the tiny alpine and tax friendly European principality of Liechtenstein.
Nanjing Night Net

Ahead of the 19th annual boat show in 2007 in the northern Australian playground of the wealthy, the mood was buoyant: more than 400 exhibitors were preparing to take part, with plenty of international attention. Lehman Bros was still standing and the global financial crisis wasn't even a blip on the horizon. Life for the uber-wealthy was good.

Among the boat show visitors was a then 65-year-old wealthy retired anaesthetist, Dr Henry Mulherin. Born in Mackay, Mulherin had lived much of his working life in Hong Kong and Singapore before selling his practice and returning to Australia for his children to grow up.

Mulherin was at the boat show on ''business'', according to the customs card he ticked on his arrival in Australia. It was his fourth trip to Australia from his Singapore base in several months and the number of days he was spending in Australia was steadily rising.

Unknown to Mulherin, on the other side of the world events were already unfolding that would unravel a secret world of trusts, foundations and Liechtenstein bank accounts that would send shockwaves around the world amid allegations of aggressive tax minimisation schemes.

The audit would result in the retired doctor receiving a $36 million tax bill.

An employee at Liechtenstein bank LGT Treuhand, whose identity has been suppressed in this case, had taken compact discs containing the account details of many of the bank's customers, selling them to German authorities and setting off a worldwide investigation.

The records triggered tax audits into the likes of billionaire Frank Lowy and his family. (There is no suggestion any action was taken against the Lowys.) But while Mulherin was enjoying the Queensland sun, details of 20 Australians holding $110 million in LGT Treuhand accounts were provided to local authorities. The details of the action against Mulherin are the latest in a global wave of tax cases against wealthy individuals accused of using Liechtenstein as a tax haven.

Before the month was out, tax officers arrived at the Mulherin family's Brisbane house where ''using statutory powers [they] obtained access to documents at the residence''.

They scanned and removed hardcopy documents, files and copied computers.

Investigators wanted to know about a trust belonging to Mulherin in Liechtenstein.

The tax office alleges Mulherin established a ''complex net of trusts and companies, some incorporated overseas, through which his financial affairs have been managed''.

Mulherin's solicitors at Irish Bentley Lawyers were informed that Mulherin ''appears to have used the services of international promoters, including LGT Bank in Liechtenstein … to establish, amongst other things, a foundation in Liechtenstein and entities in the British Virgin Isles''.

Mulherin returned to Australia once more before leaving for Singapore on August 14, 2007, never to return.

The wealthy Queenslander who was a keen currency trader and investment financier was fearful and unwell, suffering from a number of medical complaints including epilepsy.

From Singapore, he spoke to his lawyer Zeke Bentley, who asked why he was so fearful about returning to Australia.

''Because I am aware of the [tax] commissioner's power to detain someone in Australia,'' he said, according to a submission to the Administrative Appeals Tribunal.

''Didn't you see what they did to Paul Hogan? He was there for his mother's funeral. I don't trust them not to try and detain me if I come back to Australia for these proceedings.''

Details of Mulherin's battle with the taxman have emerged in an appeal he made against the assessment to the AAT. Last week, the AAT reaffirmed the tax office assessment but not before Mulherin put on record lengthy details about his attempts to beat the taxman.

LEAVING Australia in 2006, Mulherin ticked the box on the immigration card saying he was an Australian resident departing permanently.

But that trip to Sanctuary Cove in 2007 and trips in the same year had taken Mulherin's stay in his country of birth to around 155 days. Mulherin was still in the process of seeking permanent residency in Singapore.

The tax office had used the Liechtenstein information to amend assessments of Mulherin's income from 1999-2007, saying he was still a resident of Australia. The increase in taxable income was enormous - $25.9 million, accompanied by $11.3 million in penalties.

Mulherin argues that he is a resident of Singapore and not an Australian resident for tax.

At the heart of the dispute, the tax office says that in 1995 Mulherin instructed a forerunner to LGT Treuhand to set up a trust called the San Simeon Foundation.

In questions from the tax office before he left the country, Mulherin denied all knowledge of the San Simeon trust, arguing variously:

■''I have no recollection of the establishment of an entity called the San Simeon Foundation.''

■''I have no recollection of receiving any money from the San Simeon Foundation.''

■''I have no recollection of making any deposits to the San Simeon Foundation.''

In a 2010 letter, Mulherin said: ''I deny the deputy commissioner of taxation's allegations that I was entitled to or exercise control over any funds held in the alleged San Simeon Foundation.''

Then last year he acknowledged an involvement with LGT Bank, saying he was a client.

''Between 1997 to 1998, I marketed East Coast Traders Pty Ltd to the LGT Fund of Funds to their Hong Kong office and at hedge fund conferences.''

Records lodged with the corporate regulator show one of two shareholders of East Coast Traders is Dr Mulherin's family trust.

In bringing the action to try to defeat the tax office, the burden of proof was on Mulherin.

But he declined to appear in person at the hearings and failed to provide evidence to satisfy the deputy president, Phil Hack, hearing the case who expressed frequent frustration.

''It is not merely the absence of the applicant that is remarkable; there is a remarkable absence of critical documents produced by him,'' Mr Hack said. ''What was not produced by the applicant were documents that evidence the nature of the relationship between him and LGT Treuhand including relevantly the documents by which the foundation was set up.''

In one court skirmish before the hearings began, Mulherin asked to be able to appear via video link from Singapore.

Health concerns were cited, including a long history of epilepsy ''taking the form of partial complex seizures with secondary generalised tonic clonic seizures''.

Visual problems, mild cognitive decline and severe anxiety and stress were also cited. It was argued Mulherin was too unwell to travel. His lawyer Zeke Bentley says he offered to fly the court to Singapore business class plus accommodation to hear the matter.

''He has a genuine fear that the circumstances of travelling on his own under extreme stress will trigger another tonic clonic seizure which may be lethal,'' one submission said.

The AAT was unimpressed: ''There is no reason why another appropriately qualified carer could not accompany him and if necessary administer the requisite treatment for a tonic clonic seizure, which I understand to be the administration of rectal Valium.''

Mulherin argued his case wasn't dissimilar to Hollywood director Roman Polanski, who sought the right to appear in his sex case via teleconference.

It came to nothing. Last week, the AAT reaffirmed the tax office's revised assessment, noting that while the tax office may have got some of its numbers wrong, Mulherin had done little to put on record evidence to show what was correct.

''It is certain that the respondent's assessments are not correct. But the cases demonstrate that it is not enough for a taxpayer to show error in the respondent's assessment; the taxpayer must also show what the actual taxable income was. That was a burden that the applicant here did not discharge.

''On the view I take of the matter, he was presently entitled to the income of the foundation. He has made no attempt to show what the actual income of the foundation was during any of the relevant years.''

The AAT found that the tax office was entitled to use the information to its best efforts to determine an assessment.

''It is undoubtedly the case that the respondent's assessments are not correct, but the applicant has not shown the taxable income on which tax ought to have been levied. It follows that he has not shown that the assessments are excessive.

Zeke Bentley believes there are good grounds to lodge an appeal in the Federal Court.

The witness who provided the details to the tax office was available for interview in the proceedings but did not present oral evidence.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Reality of China steel hits mining stocks


Nanjing Night Net

MINING stocks took a hit this week as the reality of a massive oversupply of Chinese steel became apparent.

Benchmark iron ore prices fell to $90 a tonne on Thursday, and by yesterday had fallen to $US88.70, levels not seen since the financial crisis.

They peaked about $US190 a tonne last year, and were at $US134 a tonne as recently as two months ago.

That saw mining stocks take a hit on Thursday, but by yesterday shareholders were snapping them up, buying such names as Rio Tinto after it dipped below $50 for the first time since mid 2009. Over the week, Fortescue Metals lost 44¢ to $3.54, with group chairman Andrew Forrest spending nearly $39 million in two days to increase his shareholding, helping the share price stabilise.

For the week, the benchmark S&P/ASX 200 Index lost 32.8 points, 0.75 per cent, to 4316.1.

Over the month-long profit-reporting period, BHP Billiton's scrapping of the $30 billion Olympic Dam mine expansion, Qantas' first loss since privatisation and Fairfax's write-down-driven $2.7 billion loss delivered the biggest horror headlines.

But Commonwealth Bank delivered its biggest profit of $7.1 billion, and BHP it's second-biggest with $US15.4 billion.

And before a slump in iron ore prices hit some mining stocks, miners and mining services companies generally performed well, including a record profit for Fortescue Metals.

By yesterday market watchers became increasingly excited about a meeting of central bankers in the US.

Federal Reserve chairman Ben Bernanke was due to speak last night, Melbourne time. This time last year he used the event to foreshadow a second round of quantitative easing.

For the week, BHP Billiton lost $1.30 to $31.79, as the company sold its West Australian Yeelirrie uranium deposit to Canada's Cameco Corporation for $US430 million.

Newcrest Mining lost $2.55 to $24.65. Australia's largest goldminer suspended production at its flagship Lihir mine in Papua New Guinea amid a dispute with land owners. Transfield Services fell 19.5¢ to $1.835, as the head of the construction and maintenance company stepped down after turning a full-year loss into a healthy net profit of $84.8 million.

Perpetual lost 73¢ to $26.48 as the fund manager planned to cut more jobs next year as it continues with a big restructure that contributed to a 57 per cent drop in its full-year profit.

Flight Centre rose 41¢ to $23.90. The company said it expected to boost the number of outlets around the world by up to 8 per cent and add 1000 sales staff.

Toll Holdings rose 8¢ to $4.63 as it said that resolving problems in its business in Japan and its marine shipping operations in Asia were its priority. WorleyParsons rose 4¢ to $2.52.

With AGENCIES

This story Administrator ready to work first appeared on Nanjing Night Net.

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Qantas cosies up to Emirates

Code-sharing deal is nearing takeoff.QANTAS is on the verge of signing an alliance deal with Middle Eastern airline Emirates as early as next week, in an effort to stem large losses on the kangaroo route to Europe.
Nanjing Night Net

The code-share agreement is believed to include route swaps whereby Emirates would operate the majority of flights on some routes such as those out of Perth to Europe. Qantas has been flying from Perth to Europe via Singapore.

However, the deal will raise serious questions about the future of Qantas' long-standing revenue-sharing agreement with British Airways on the kangaroo route between Australia and Britain.

Critics describe a code-share agreement as a short-term measure by Qantas management, which is under pressure to get a deal done. Early this year Qantas shelved much-trumpeted plans to set up a premium airline, RedQ, in south-east Asia.

''I don't understand this - it just means less and less Qantas,'' a source said of a code-share deal with Emirates. ''Unless they are going to be paid for the passengers [who transfer to Emirates flights], and that is unlikely, it is not a huge benefit. It is just a huge downgrading of the Qantas presence and handing it over to Emirates.''

Last week Qantas cancelled orders for 35 Boeing Dreamliner aircraft. Although the cancellation will boost Qantas' bottom-line earnings in 2012-13, it has raised questions about a further shrinking of the airline's international network.

After the release last week of its full-year results, Qantas chief executive Alan Joyce has begun an investor roadshow overseas, and will be eager to show institutional investors he is making progress in turning around the international operations, which lost $450 million last financial year.

The selling point of the code-share deal to investors and consumers is that the two airlines would have a combined eight A380 superjumbos flying each day from Australia to Dubai, and offer a large number of destinations beyond the Emirates base.

However, it is likely to result in Qantas ditching flights to Frankfurt in Germany - its last remaining destination in continental Europe.

Emirates has repeatedly ruled out taking an equity stake in Qantas.

A more substantive revenue or profit-sharing alliance would have taken at least a year to complete. Qantas is believed to have wanted to pursue a deeper alliance, but Emirates would not entertain the proposal.

It is not the first time Qantas has courted a relationship with the Middle Eastern airline, which is renowned for its desire to go it alone. Qantas did form a code-share agreement with Emirates in the 1990s but abandoned it a short time later.

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Predictions take a bleak turn in negative season

JB Hi-Fi is amongst those with a much-reduced earnings forecast.IT'S not only miners talking down the future. This year's reporting season, which ended yesterday, has been the most pessimistic in seven years, according to Goldman Sachs, with almost half of companies lowering their expectations for the year ahead.
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Against that, fewer than one in five companies lifted earnings forecasts with a week to go, and even those were far from bullish.

''Adding to the negativity, the size of the positive upgrades is also the lowest in the past seven seasons,'' said Hamish Tadgell, a Goldman Sachs analyst.

The gloomy portents continue a trend of companies being more conservative in their disclosures.

Formerly bullish chief executives got their warnings out early this year. During March and April more than a dozen companies issued earnings downgrades. Most came from businesses exposed to the domestic economy, including building materials group Boral, electronics retailer JB Hi-Fi and property developer Stockland.

Resources companies, with the exception of Andrew Forrest's Fortescue, had already primed the market for lower profits due to falling commodity prices, increased costs and reduced demand from China.

As more companies issue warnings early and throughout the year, ''earnings season'' is becoming less a month of revelations than the continuation of a year-long drip-feed.

Of the season's few surprises, most were positive. Goldman Sachs reported that 42 per cent of companies beat expectations and only 17 per cent fell below - the fewest negative shocks since the global financial crisis.

One company that failed to brace the market was the driller Boart Longyear, which slashed its earnings forecast for 2012, prompting investors to dump the stock in heavy trading.

Boart Longyear shares fell 37 per cent on Thursday after the company chopped about $300 million off its earlier revenue forecast - from $2.3 billion to $2 billion.

BHP Billiton's public relations department spent a year warning of falling profits due to softer commodity prices, higher costs and lower demand. BHP's share price dipped only 1 per cent despite announcing a 21 per cent drop in full-year earnings.

In a year where consumers saved, home prices fell, the dollar rose, China stumbled and Europe collapsed, Australia's top companies still made money. Nearly 90 per cent of companies turned a profit last year, although total profits were down 23 per cent compared with 2011, say CommSec economists.

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Forrest puts more skin in game

Andrew Forrest: Piggy-backers are behind the play.DIRECTORS doing some buying trumped the sellers, thanks to Andrew Forrest, the Fortescue Metals Group supremo, opening his wallet big-time.
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Forrest earlier this week paid $4.02 a share and $3.71 a share for two parcels of 5 million shares. With punters worried about iron ore prices, the scrip closed the week at $3.54. Those piggy-backing Forrest, at least in the short term, are well behind the game; earlier this year he picked up about $135 million of stock at around $4.85 a share.

The scorecard closed the week at $27 million to $43 million in favour of buyers but extract Forrest's display of support and it was a different story.

With the earnings season out of the way, a clutch of managing directors took some money off the table. Heading the list was Michael Malone, the chief of iiNet, a telecommunications business. He sold a decent chunk of stock and at a discount to the market.

On Tuesday, iiNet closed at $3.67 and the next day Malone sold 22 per cent of his stake at $3.30 a share; the shares closed yesterday at $3.50.

Elsewhere, Terry Davis, the managing director of Coca-Cola Amatil, sold some shares as he periodically does, raising $1.6 million. The shares hit a new $14.10 high recently; Davis sold at $13.74 and the scrip closed yesterday at $13.69.

Amcor chief Kenneth MacKenzie appeared on the sellers' list after a busy time exercising a swag of options at anything up to a 37 per cent discount on the market price, and collecting some free shares.

The result was that he ended up with 2 million more shares than previously, a stake worth $23 million.

Cardno, an environmental and infrastructure concern, was another to hit a new high recently, and managing director Andrew Buckley sold at $8.02. The shares closed at $7.46.

Webjet, another stock that was recently in virgin territory, saw continued selling from Steven Scheuer, one of its non-executive directors.

Two executive directors of little-known GR Engineering bought shares at less than half what they were fetching earlier this year, while ASX chief Elmer Funke Kupper opened his shareholding account with the purchase of 10,000 shares.

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Construction groups bullish on spending in resources states

CONSTRUCTION groups are bullish about infrastructure work in the resource states, but tighter budgets and shrinking coffers will cramp spending on government projects, with the outlook relatively dim in Victoria.
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More than 60 per cent of players in the private sector expect a rise of at least 10 per cent in infrastructure spending over the next three years, the inaugural Infrastructure Investment survey by technical service consultant AECOM has found. AECOM's local arm is Davis Langdon.

In contrast, only 20 per cent of public authorities expect similar funding rises for federal, state and local government projects. AECOM's global business intelligence manager Michael Skelton said most public authorities expected investment in communal infrastructure to contract in this time.

Survey respondents represented a cross-section of civil infrastructure sub-sectors, 56 per cent from the public sector and 44 per cent private. Key findings were:

■55 per cent of contractors and consultants expect a rise in infrastructure work over the next three years.

■48 per cent said their experiences of public-private partnerships were poor.

■83 per cent said risk allocation was the biggest challenge for successful public-private partnerships.

The survey found respondents' main infrastructure priorities were rail (27 per cent), road (15 per cent), ports, energy and general transit, (10 per cent each), sustainable infrastructure (8 per cent), freight (7 per cent), aviation and water (3 per cent each), and telecommunications (2 per cent).

Mr Skelton said Victoria was at the lower end of expectations for infrastructure investment. Only 38 per cent expected more spending on infrastructure - mainly in transit rail and ports - compared with 77 per cent in Western Australia.

''Given the funding required in the resource states, as well as ongoing flood-related work, other states are expecting reduced levels of federal funding,'' he said.

''This, combined with less money in the states' coffers, means certain sectors and parts of the country have a subdued investment outlook.''

The survey found Queensland had registered consistent increases in private sector engineering work, while WA and the Northern Territory had sporadic increases.

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UK soft on NAB bond issue

Overseas investors are taking a 'more cautious' approach to Australian bank bonds.AN APPARENT stumble by National Australia Bank as it attempted to borrow funds from British investors has raised questions among some analysts as to whether the global debt market may have had its fill of Australian bank bonds.
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Turmoil in Europe from the end of last year and into this year has meant banks have been slower than usual to secure wholesale money to fund their lending books. But banks are again thinking about interest in covered bonds to help keep average funding costs low.

NAB sold a barely subscribed £250 million ($A383 million) 14-year covered bond issue. This issue came on the heels of Commonwealth Bank tapping British investors for £750 million. Covered bonds have traditionally been snapped up by investors, given they are backed by a portfolio of mortgages making them lower risk.

Still, the soft demand for NAB has raised questions as to whether offshore investors are tiring of Australian bank bonds, given nearly $100 billion worth are sold a year. At the same time the big Australian banks have been rushing to the market on their new covered bond issues.

One London-based investor said they were taking a ''more cautious'' approach to Australian bank bonds.

''Although the Aussies offer a diversification play away from Europe and the US in times of heightened volatility, China is coming under increasing pressures and it seems like Australia is coming off the heat a bit,'' F&C Asset Management portfolio manager Paul Fenner-Leitao said in London.

ADCM Services principal Philip Bayley said NAB entered a market that had already filled up on Australian bank debt. Namely, the NAB issue was almost an exact replica of the well-subscribed Commonwealth Bank issue a week earlier, given they were both 14-year bonds.

''The [UK] covered bond market is a very small market and it's not one that's known for having a great deal of liquidity. And to bring two basically identical deals in the space of a week probably wasn't a very clever idea,'' Mr Bayley said. Instead, NAB may have been better served by issuing a shorter-dated deal or tapping local investors, he said.

The NAB raising coincided with the release of a report by US-based investment house Variant Perception that warned Australia's heavy reliance on foreign funding was a risk to the banking sector. It argued Australian banks may find it difficult to fund themselves, as the housing market continues to correct.

NAB chief financial officer Mark Joiner recently told investors the bank had met this year's funding target from global money markets, raising $27 billion. The bank was now working on raising funds to meet next year's funding needs.

Australian banks generate about 40 per cent of their funding from global money markets, making up the shortfall in deposits.

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Ore slump hits home

Dumped: Benchmark iron ore prices fell another 1.8 per cent to levels not seen since the financial crisis.AUSTRALIA'S largest miners will suffer a collapse in earnings and come under severe funding pressure if the current weakness in commodity prices persists, according to analysts.
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Benchmark iron ore prices - which peaked at around $US190 a tonne last year and were at $US134 a tonne as recently as two months ago - continued on their sharp downward trajectory yesterday, falling another 1.8 per cent to $US88.70 a tonne, levels not seen since the financial crisis.

In a research note to clients, Macquarie said iron ore majors BHP Billiton and Rio Tinto stood to suffer ''massive'' earnings cuts of between 50 to 80 per cent, if commodity prices remained at current levels over the next

year. Laying bare the extent of the bets staked on the sustainability of China's economic miracle, under the same scenario, Fortescue Metals would potentially see its entire earnings for the year wiped out.

UBS said the falling iron ore prices ''exposed the margins of all Australian iron ore producers''.

UBS's analysis, based on a $US93 a tonne spot price, showed BHP and Rio Tinto only receive about $US77 a tonne for their iron ore - still enough to generate a healthy profit margin of $US34 and $US40 a tonne respectively for their low-cost operations.

But Fortescue's margin has already been crunched to $US9 a tonne, according to the UBS research team led by Glyn Lawcock, and would dip in the red if iron ore prices fell further.

Mr Law said that if iron ore prices remained at current levels, BHP Billiton's earnings would fall by 33 per cent, from $15.5 billion to $10.4 billion, next year. For Rio Tinto, earnings for the same period would halve, down from $13.2 billion to $6.6 billion.

The Chinese steel industry is under significant stress, with unprofitable steel mills shutting and most others running down their inventory stockpiles at unprecedented rates.

It is the velocity of the ''destocking'' that has left steel and iron ore analysts convinced that Chinese factories will have to resume purchasing - and thus stabilising iron ore prices - within months.

The analysts at Macquarie, led by Adrian Wood, emphasised that it expected, along with most in the market, iron ore prices to rebound from current levels, but admitted ''clear downside risk exists to the short and medium-term''. And UBS forecasts a return to prices of more than $US125 a tonne by the end of the year.

But the investment bank's analysis highlights the pressures the current depressed iron ore prices could place on the big miners' funding models.

Should these iron ore prices persist, Macquarie said Fortescue would require an extra $US1.5 billion to $US2 billion of funding next year to finance its commitment to an aggressive production expansion.

Credit ratings agency Moody's has placed Fortescue's debt on review for a possible downgrade.

Similarly, BHP would face a funding shortfall of almost half of its intended $US22 billion capital expansion program this year. The world's biggest miner already caused ructions in the market after announcing last week it would shelve its $30 billion expansion of Olympic Dam.

Macquarie said Rio Tinto would face a $US12.8 billion funding gap.

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