Economy grows at robust pace

This is of course the John Howard economy we see. Labor has not had a chance to mess it up yet. All the Howard arrangements are still in place

AUSTRALIA'S economic growth rate has surprised analysts, with the economy growing by 3.6 per cent over the year to March 31, with household's adding to the expansion despite higher interest rates. The March quarter growth figures are the first for which the Rudd Government assumes full responsibility since winning the November election. [Nice of them!] The surprise jump will provide the Government will strong ammunition to the federal's opposition questions on its economic credentials at a time when petrol prices and interest rates are quickly rising.

Gross domestic product (GDP) rose by a seasonally adjusted 0.6 per cent in the March quarter, the Australian Bureau of Statistics said today. This compared with an upwardly revised rise of 0.7 per cent in the December quarter. Analysts had expected the economy to grow 0.3 per cent in the March quarter and 2.9 per cent over the year.

In seasonally adjusted terms, the main contributors to GDP growth were household consumption, despite two official interest rate rises in February and March, indicating Australia's were still happy to spend over the first three months of the year. Engineering construction and defence investment also added to the expansion.

The data come one day after the Reserve Bank decided to keep interest rates on hold at 7.25 per cent, which kept standard variable mortgage rates at around 9.5 per cent. After eight official rate rises in three years, the central bank left the official cash rate unchanged as it anticipates an economic slowdown.

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Balance of payments very lopsided

The article below talks as if that were a problem. Yet with the Federal budget in surplus that is far from the case. It just reflects justified confidence in Australia as an investment destination. Private debt is a private problem -- if it is a problem at all. If it were a problem overall, the capital inflow would not be happening

AUSTRALIA is still failing to reap the benefits of the commodity boom with our deficit to the rest of the world reaching a 56-year record in the first three months of the year. However, the Reserve Bank says it is winning the battle to slow the economy in the face of soaring commodity prices, and has decided to keep rates on hold for another month. The $19.5billion current account deficit is equivalent to 6.9per cent of GDP and is the worst since the collapse of the wool boom in 1952.

"This current account deficit underlines how the Lucky Country is pushing its luck," Morgan Stanley chief economist Gerard Minack said. The deficit eclipses the level of 6.1per cent of GDP reached in 1986, which inspired the then treasurer Paul Keating to warn of Australia becoming a "banana republic". It has risen by a full percentage point in the past year. While export revenue struggled against the effect of flooded mines in Queensland and Western Australia and drought in much of rural Australia, imports ranging from plasma televisions to jet aircraft poured in.

However, Australia is having no problem paying for imports, with global investors eager for Australian bonds. Banks raised a record $52.1billion in bond and money market issues in the first three months of the year. Reserve Bank governor Glenn Stevens said it had become more difficult for consumers and business to borrow in the past year, with higher interest rates and tighter standards imposed by lenders. "The evidence is that this is helping to produce a moderation in demand," he said. The central bank board was reassured by signs that households were reining in spending, including lower car sales, weaker retail spending and a drop in housing loan approvals.

However, the Government is concerned there may be further rate rises in store and is trying to prepare the electorate for moves it fears would be seen as its responsibility. "We must treat the RBA's decision with caution," Kevin Rudd told parliament yesterday. "When you have inflation running at 16-year highs, we are faced with increased upward pressure on inflation and, together with that, continued upward pressure on interest rates." Mr Rudd noted that many countries were facing rising inflation as a result of loose budgetary settings and global rises in food and oil prices. "This will be a 15-round fight; it is going to go on for a long time. There is no knockout blow when it comes to inflation but we are resolved with absolute determination on the part of this Government to fight the fight."

The Reserve Bank was keeping its options open, saying it would remain alert for any revival in demand growth, or any sign that expectations of continuing high inflation were influencing wage and price levels. "Considerable uncertainty remains about the outlook for demand and inflation," Mr Stevens said. While the trade deficit rose from $6.6billion to $8billion, the cost of interest on Australia's $615billion foreign debt, and dividend payments to foreign investors added a further $11.4billion to Australia's total external current account deficit.

The best export growth is being achieved, surprisingly, by the motor industry, which achieved a lift of 28.3per cent in the last year, despite the rise in the value of the dollar.

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Corruption right at the top of the Australian Federal Police

Boss Keelty is at least a bungler. He needs to go

Veteran Australian Federal Police officer Gerry Fletcher has waited a long time for vindication. The highly decorated fighter of organised crime - lauded by AFP Commissioner Mick Keelty in 2004 as a credit to the police in taking down drug syndicates over three decades - could hardly be blamed for dancing over the public humiliation of his professional nemesis.

Mark Standen, the assistant director of the NSW Crime Commission, who was arrested and charged this week over his alleged masterminding of a massive drug importation plot, had made three separate complaints of corruption or misconduct against Mr Fletcher in the past decade. All were later dismissed. The last, made at a private meeting with Mr Keelty in 2005, accused Mr Fletcher of tipping off a Sydney drug boss, the now deceased Michael Hurley, to an AFP Crime Commission investigation. This prompted Mr Fletcher's sacking.

The former narcotics strike team boss has since been reappointed to the AFP but is still waiting for a public apology from Mr Keelty. The Australian understands Mr Keelty and Mr Standen were members of a small group - the so-called 1979 club - of officers who had been with the AFP since its inception. Colleagues have said the two men worked closely together in the Redfern office of the AFP in Sydney in the early 1990s and went jogging together in the mornings. Mr Keelty refused to discuss his relationship with Mr Standen yesterday, although a spokesman for the commissioner denied that the two had been close. The spokesman also refused to respond to The Australian's question as to whether Mr Keelty would be offering Mr Fletcher a public apology.

Despite being cleared, and reinstated to the AFP this year on the orders of the Australian Industrial Relations Commission, Mr Fletcher's reputation has continued to suffer under the stain of MrStanden's allegations. But no more. Mr Fletcher, in an interview conducted through his Sydney lawyer, Terry Boyle, told The Australian yesterday he had been shocked by the reaction among the rank and file of the AFP to Mr Standen's arrest. "The change of attitude towards me of some people in the AFP, and outside, has been really surprising," he said. "My reputation was totally damaged from what he (Mr Standen) did, what the AFP did."

Mr Fletcher is constrained from revealing his full emotions because of the charges against Mr Standen, but says he could never understand why the allegations were not properly investigated. "If one person makes a complaint that doesn't stick, who cries wolf, wouldn't the next step be to look at testing the crying of that person?"

When the AFP was questioned by The Australian about whether the force intended to review Mr Fletcher's case and the Hurley tip-off, a spokesman for Mr Keelty said it would be inappropriate to comment on specific investigations. "The AFP is currently reviewing a range of matters involving potential connections to this investigation," the spokesman said. "It is not appropriate to outline the extent of these inquiries."

Mr Fletcher cannot hide his disgust at the way he was treated, and says he is still paying the price. Despite his reinstatement to the force, nine months after it was ordered by the AIRC, he is yet to be returned to operational duties, and now answers telephone calls from the public.

Mr Fletcher's latest trouble began when Mr Standen, at a private meeting with Mr Keelty in 2005, alleged that Mr Fletcher had tipped off Hurley about an investigation, allowing him to escape police. Hurley was later captured, and died last year before standing trial. The matter arose in April 2005, when Mr Fletcher answered his work telephone and agreed to meet a mystery caller the next day at a cafe across the road. His coffee companion was Hurley, then under investigation by the AFP and NSW Crime Commission for importing cocaine from South America through a gang with links to airport baggage handlers.

An old-style investigator, Mr Fletcher was widely known among criminal circles because of his arrest record and preference for building contacts and finding informants. After the 40-minute meeting, Mr Fletcher made a report to his superiors detailing the conversation, in which Hurley had said he would "soon be departing Australia for good". Before his death from cancer, Hurley was asked about Mr Fletcher's reputation on the street. "One hundred per cent honest," he said. "I think he's locked everyone up you can talk about."

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NSW crime body polluted too

Would you believe it? The crooked Federal cop was also big in the NSW crime watchdog!

The Iemma Government was under pressure to replace all senior officials of the NSW Crime Commission last night in order to have an independent investigation into the ramifications of drug charges against the body's assistant director Mark Standen. Because Mr Standen was facing serious charges, every criminal investigation involving the commission should be reviewed by a new leadership team, said former National Crime Authority chairman Peter Faris QC. "The fallout from this will be massive," he said.

Other states needed to launch their own reviews of criminal prosecutions because the NSW Crime Commission was frequently involved in national investigations, Mr Faris said. The cross-border nature of much of its work meant the state-based system of regulating its activities was inadequate, he said. Mr Faris said the AFP, which had been aware Mr Standen was under investigation, would also need to explain what information about drug investigations it had made available to the NSW Crime Commission.

The commission, which was established in 1986, is responsible for assembling evidence for the Director of Public Prosecutions and has a particular focus on drug trafficking and organised crime.

Crime Commissioner Phillip Bradley rejected calls for a royal commission into the affair yesterday but said Mr Standen's arrest had been "very damaging".

Mr Faris said the matter proved the need for a new national anti-corruption watchdog that could match the cross-border activities of law enforcement agencies. "Crime knows no borders," he said.

However, NSW Police Minister David Campbell defended the current arrangements and said the episode involved just one officer. "To my knowledge, the allegations of corruption relate to one individual and there is no evidence before me to suggest that this matter spreads any further," Mr Campbell said.

But Mr Faris said Mr Standen's seniority meant any review could not be confined to those areas for which he was directly responsible. It needed to cover every matter involving the commission. "Decisions on all sorts of things would have gone to the most senior ranks of the commission," Mr Faris said. "All sorts of extremely sensitive information would have been shared by and with other agencies."

Some of the commission's well-known cases include the jailing last year of former Balmain rugby league star Les Mara for importing cocaine and the arrest of 14 men in Sydney and Melbourne over an international drug ring dealing in cocaine, ice and ecstasy.

Calls for a better system of regulating the commission were also made yesterday by Sydney University criminologist Mark Findlay, criminal lawyer Phillip Boulten SC and legal academic John Anderson. Mr Boulten said the crime commission should answer to parliament and needed a permanent inspector with the powers of a royal commissioner. Professor Findlay said the commission was characterised by a tight-knit police culture that was resistant to oversight. "It has been said in the past that it was more open to corruption due to its internal and rather protective organisational structure," he said.

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