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Newcastle flooding cutsCoal & Allied deliveriesCOAL & Allied Industries hastold customers it might misscontracted deliveries of coal fromNewcastle because flooding hasclosed the rail system to the port.

Coal & Allied, majority ownedby Rio Tinto, was unable toestimate how long the forcemajeure would last or its effect,the Brisbane-based companysaid in a statement to the stockexchange.

Force majeure is a legal clauseallowing companies to default ontheir delivery commitments dueto circumstances beyond theircontrol.

Coal exports from Newcastle,the world’s biggest exportharbour for the fuel, were haltedlast week when a storm closedthe port and the railway from themines in the Hunter Valley andCentral Coast regions of NSW.

Exports might be cut by morethan 2 million tonnes due to the

flood disruptions, according toestimates from the Hunter ValleyCoal Chain Logistics Team, theco-ordinator of the rail transportsystem.

‘‘These weather conditionshave had an impact on theHunter Valley coal chain and willprevent Coal & Allied fromperforming its obligations todeliver coal to the port ofNewcastle,’’ the company said inthe statement.

‘‘Coal & Allied is alsopresently assessing the impact ofthese weather conditions onproduction at each of its mines.’’

BHP Billiton and Xstrata,which also export coal throughNewcastle, declared forcemajeure on deliveries earlier thisweek.

Shares in Coal & Allied fell99¢, or 1.3 per cent, to $74.01.the statement was released afterthe market closed. BLOOMBERG

No rise in first-home grantBy NASSIM KHADEMCANBERRA

LINKwww.hia.com.au

FEDERAL Treasurer PeterCostello has rejected calls fromCoalition backbenchers toincrease the first-home ownersgrant as a way to improve hous-ing affordability.

Liberal MP Steve Ciobothinks the Government shoulddouble the first-home ownersgrant, from $7000 to $14,000,saying it will help ease theaffordability crisis that is pre-venting the younger generationfrom buying their own homes.He raised the suggestion in theCoalition party room meetingthis week.

But Mr Costello told The Agethat would not be an option atthis stage, as the housing marketwas ‘‘in an extremely healthystate’’.

The latest industry data showsnew home sales nationally grewby 7.1 per cent in April, after aflat month in March, and expec-tations are that house prices for

existing homes will continue torise. In Victoria, new home saleswere up 18.5 per cent in April toa total of 2429 — the highestlevel across all states.

Mr Costello said since theHoward Government introducedthe $7000 first-home ownersgrant in 2000, a total sum of$7.3 billion had been paid outunder the scheme.

Liberal MP Bruce Baird, whochairs the lower house’s econ-omics committee, said housingaffordability and possible sol-utions may be an issue for thecommittee to consider at a roundtable meeting later next month.He said the very likely outcomeof boosting the grant would beincreasing house prices andinf lationary pressures, andinstead suggested a HECS-stylescheme where you get highergrants and start repayingamounts when your income getsabove a certain level.

Nationals Senator BarnabyJoyce agreed the committeecould consider the issue and sug-

gested schemes that encouragepeople to move to regional areaswhere housing is more afford-able. He said the dilemma for theFederal Government was how toincrease affordability withoutforcing the value of people’shomes down.

Property Council of Australiachief executive Peter Verwer saidincreasing the grant would helpoffset the artificially high cost ofhouses, ‘‘but the main game herehas got to be to stop rationingland and unfairly taxing it’’.

‘‘The spotlight is on state andterritory governments,’’ he said.

Housing Industry Associationchief economist Harley Dale saidincreasing the grant onlyaddressed the demand side, andfailed to increase supply whichwas the core of the problem.

He said without other action,such as cutting state stampduties, doubling the grant wouldincrease house prices.

Fear not farmers in Australia, Asia toldBy TIM COLEBATCHECONOMICS EDITORCANBERRA

LINKwww.dfat.gov.au

KEY POINTS■ Fear of competition from our

140,000 farmers ‘‘unrealistic’’,says trade minister.

■ Free trade negotiations withChina has gone on for twoyears with no end in sight.

TRADE Minister Warren Trusshas accused China and its neigh-bours of ‘‘unrealistic’’ fears that140,000 farmers in Australiacould wipe out a billion farmersin Asia if there were free trade inagriculture.

Delivering his annual tradestatement at the National PressClub, Mr Truss also warned thatthere was no end in sight toAustralia’s record run of 61 con-secutive monthly trade deficits

— despite the best terms of tradefor 56 years.

Australia’s chief negotiator fora free trade agreement (FTA) withChina, Ric Wells, told a Senatecommittee last month that nego-tiations on tariffs had stalled,

adding: ‘‘The Chinese Govern-ment doesn’t want an FTA.’’

Prime Minister John Howardand Chinese Premier Wen Jiabaolaunched the talks in April 2005.But two years later, the two sideshave yet to agree on what a dealmight cover, while talks on thekey issue of free trade in goodshave stalled because Chinarefuses to open its agriculturalmarkets.

Mr Truss accused China,India, Japan and South Korea ofhaving an ‘‘unrealistic’’ fear offarmers in Australia.

‘‘So many of the biggest and

most populous countries of theworld, with hundreds of millionsof farmers, seem to be terrifiedabout the competition that theymight face from just 140,000Australian farmers,’’ Mr Trusssaid.

‘‘There’s 800 million farmersin China, 400 million in India,tens of millions in Japan andKorea — and all these countrieshave agricultural production wayabove levels in Australia. Yet allthose countries are afraid ofcompetition from 140,000 farm-ers in Australia.’’

Mr Truss said China’s anger

over Mr Howard meeting theDalai Lama would not affect thenegotiations, adding: ‘‘I amconfident that our relationship isfirm and solid.’’

But he warned that the talksneeded ‘‘demonstrable achieve-ment’’ before President HuJintao’s visit in September forthe Asia-Pacific Economic Co-operation forum to sustainconfidence in their future.

The statement reveals thatprogress has been slow in all ofAustralia’s negotiations on freetrade, while in the Doha Round,Mr Truss said negotiators veer

‘‘from periods of optimism toperiods of pessimism’’.

He said Australia would notsupport a deal hammered out ona ‘‘lowest common denomi-nator’’ basis — as some fear theEuropean Union and developingcountries led by India areplanning.

Mr Truss said Australia wouldcontinue to run up trade deficits‘‘for quite some time’’, becauseof the high dollar and ‘‘intensecompetition’’ from developingcountries. But the Government’sinfrastructure investment andfree trade negotiations would

eventually get trade back intosurplus.

Opposition trade spokesmanSimon Crean said the Govern-ment had axed some exportprograms and halved the realvalue of market developmentgrants. ‘‘Labor can achieve betterexport performance by makingmultilateral trade agreement as atop priority, building on skillsand infrastructure, andadequately funding exportsupport programs,’’ he said.

Life’s a holiday beach.

Overseas shores lure holiday-makersBy NASSIM KHADEMCANBERRA

LINKwww.tra.australia.com

AUSTRALIA’s ailing domestictourism market is showing signsof recovery, but more Australiansthan ever are heading overseasbecause of the strong dollar,buoyant economy and cheapflights.

A Tourism Research Australiareport shows Australians took73.3 million overnight trips inthe year ending March 31, up5 per cent on the previous year.

Spending on domestic tour-ism rose 7 per cent over the year,reaching $55.9 billion, and thenumber of day trips rose 5.4 percent to 137.6 million.

The report, Travel by Austra-lians, revealed that domestic airtravel soared 15 per cent over theyear.

NSW received the most dayvisitors (34 per cent), followed byVictoria (23 per cent) andQueensland (24 per cent).

Spending was also highest inNSW ($4.5 billion), followed byVictoria ($3 billion) and Queens-land ($3 billion).

But the report also found thatAustralians took 4.4 millioninternational trips last year,2.3 per cent more than in 2005,and spent an average 22 nightsabroad.

Australian Tourism ExportCouncil managing director

Matthew Hingerty said about5 million international visitorscame to Australia last year.

He said the strong dollar,booming economy, cheap flightsand a lack of interest by manyyoung Australians in seeing theircountry meant more needed tobe done to encourage Australiansto travel domestically.

Tourism and TransportForum Australia managingdirector Christopher Brown saidthat although the overall picturewas improving, the industry wasstill a long way from getting backto the 2003 peak when domesticovernight visitor numbersreached 75 million.

‘‘That figure must be the

benchmark for industry andgovernment as we look to sustainthe growth of the last year,’’ hesaid.

Federal Tourism MinisterFran Bailey said domestic tour-ism had been struggling over thepast few years in the face of stiffcompetition from plasma TVsand overseas holidays.

‘‘Now Aussie families arerediscovering great experiencesin their own backyard, not onlyhaving a great family break butalso injecting millions ofvaluable dollars into regionalcommunities,’’ she said. With AAP

Sydney beats Melbourneas commercial capitalSYDNEY has outrankedMelbourne as Australia’s topfinancial hub, in an index of theworld’s most inf luentialcommercial centres.

Sydney was ranked 14th outof 50 cities in the firstMastercard Worldwide Centresof Commerce Index. Melbournewas 34th. Sydney was fifth inthe Asia-Pacific region andMelbourne seventh.

London edged out New Yorkas the financial capital of theworld. Tokyo was the top-placed Asian city, and thirdoverall. Moscow came last.

The cities were rated on sixcategories: legal and politicalframework, economic stability,ease of doing business, finan-cial f low, business centre andknowledge creation/infor-mation flow.

The Australian cities weregraded the same for legal and

political framework and econ-omic stability. But as home tothe stock exchange, ReserveBank and the FuturesExchange, Sydney pulled aheadof Melbourne in the other fourcategories.

‘‘Sydney and Melbourne aretwo of the world’s most vibrantcities and this Mastercard indexproves they are more than justgreat places to live — they arealso key centres of commerce,’’Mastercard Australia executivevice-president Leigh Chapmansaid.

He said the index providedan opportunity to understandhow Australia and other inter-national cities connected withthe global marketplace.

‘‘(That) is crucial for successin today’s economy, plus ithelps fuel the friendly compe-tition between a variety of cit-ies,’’ he said. AAP

Coonan’spanel ‘agood idea’— TrujilloBy GARRY BARKERTECHNOLOGY EDITOR

LINKwww.accc.gov.au

SOL Trujillo, Telstra’s chiefexecutive, has welcomed as ‘‘agood sign’’ CommunicationsMinister Helen Coonan’s pro-posed expert panel to considerrival bids to build Australia’snext-generation fibre-to-the-node network.

He spoke of Telstra, the G9’sscheme, and perhaps some otherFTTN proposals’’ being put tothe panel.

In a letter to Telstra staffmembers he said he believed theGovernment now saw the needto ‘‘break the regulatory logjamthat is now stopping the deploy-ment of FTTN’’.

Doing that was simple, hesaid. ‘‘Backward-looking regu-lations need to be changed if weare to enjoy continued progressin telecommunications.’’

Telstra had an FTTN plan that‘‘reflects negotiations and dis-cussions with the Governmentthat are now complete’’, he said.‘‘We have spelled out our finan-cial, engineering, and othercapabilities; stated clearly thefinancial, legislative and regulat-ory reform requirements that areneeded to safeguard the invest-ment of $4.1 billion of our share-holders’ capital.

‘‘So that is why this initiativeby the Government is an essen-tial and constructive step . . . if itis done right.’’

Changing regulations was apolicy issue to be managed bygovernment, not by appointedregulators, he said. But having aprocess to decide this major nat-ional policy issue was just thebeginning.■ The Australian Competitionand Consumer Commissionissued two reports showing con-sumers continued to benefitfrom competition in the telecom-munications industry.

‘‘Overall average prices paidby consumers fell by 6.5 per centin real terms,’’ said ACCC chair-man Graeme Samuel. ‘‘Growinginvestment in infrastructure isalso providing consumers withbetter-quality services.

‘‘These reports show thatconsumers are the winners interms of lower prices and better-quality services when there iscompetitive pressure betweenproviders.’’

Mr Samuel said the reportsindicated teleco providers hadinvested heavily in 3G mobilenetworks and broadband infra-structure.

‘‘The benefit of competitiveinvestment was demonstratedwith a number of carrierslaunching high-speed ADSL2-plus services,’’ he said. With AAP

Wheat export watchdog gets teethBy MICHELLE GRATTAN

Seeds of new law sown.

LINKwww.awb.com.au

THE previously virtually tooth-less wheat industry regulator willbe beefed up and so will theminister’s power over it underlegislation to be introduced toParliament today.

The body will also get a newname from October 1 — theExport Wheat Commission.

It will be able to request infor-mation and documents fromthose it believes can assist it.This is in addition to its power toget information from the holderof the single desk, presently AWBInternational.

The Agriculture Minister willbe able to direct it to investigate abroad range of issues.

The commission will reportthe information to the minister.If it believes it warrants furtherinvestigation, it can also pass iton to the police and otherregulatory agencies, includingthe Australian Securities and

Investments Commission.This is to overcome one of the

problems — restrictions on itsharing confidential information— that the WEA has had in pur-suing possible law breaches.

The minister will also beallowed to release a report of acommission investigation. Atpresent, he only gets a confiden-tial annual report. But there willbe some limits preventing the

disclosure of information thatmight cause financial loss to anindividual or company, or reducethe return to the national pool.

The commission will havefour to six members, allappointed by the minister. Atleast one, but not more than two,must have expertise in grainproduction.

The legislation gives the min-ister a 12-month extension of the

power of veto over bulk wheatexports.

From March, the minister willbe able to change the companydesignated as holder of the singledesk for bulk exports.

The growers are trying to gettogether a company to take overthe single desk. One model couldbe a demerged AWBI. AWB ismanaging the coming harvest,but the new operator would takeover from the 2008-09 harvest.There will not be a veto powerunder the permanent marketingsystem, because there will onlybe opportunity for non-single-desk bulk wheat exporters in rarecircumstances such as marketfailure.

The legislation guarantees thederegulation of wheat exportedin bags and containers. This onlycovers up to 5 per cent ofexports.

Hannans mines Mal’s Papuan linksBy MARIO XUEREB

LINKwww.hannansreward.com

Mal Michael

MINING company HannansReward is banking on AFLfootballer Mal Michael’s Papuanroots and contacts to identifyresource projects in Papua NewGuinea.

The triple premiership playerand Essendon defender will usehis high profile in PNG to linklocal landowners sitting onpotential mineral, oil andagricultural projects to the WestAustralian company.

Hannans, which is exploringfor nickel and gold across fivesites in WA, hopes Papuan-bornMichael’s contacts in theresource-rich region will enableit to expand beyond Australia.

Under the deal, Hannans willhave first rights to projectssourced by Michael’s company,JLM, as joint ventures betweenthe two parties.

JLM will receive 250,000

shares in Hannans as part of thedeal, subject to shareholderapproval.

‘‘Over time, landowners haveapproached us to help themsource foreign investment todevelop their projects,’’ Michaelsaid in a statement to the stockexchange.

‘‘One of our aims is to ensurepositive outcomes for the trad-itional owners . . . this can beachieved because we have a

good understanding of therelationship between the peopleand their land.’’

The former Brisbane Lionsfull-back left the club last year tofocus on his PNG business. Hejoined Essendon when it agreedto give him time off to pursue hisnon-football work.

Hannans managing directorDamian Hicks said Michael hadidentified one project that bothcompanies were interested indeveloping. Because of the cul-tural barrier, PNG is not a placewhere Hannans would go byitself, Mr Hicks said.

‘‘Going into an area with vastresources was very difficult froma cultural and geographic per-spective, so going in with Mal wethink we have a chance,’’ he said.

Hannans shares closed 9¢down to 71¢.