Let crippled banks fail: Kevin Rudd

Sad that it takes a centre-Leftist to get it at least half right

Kevin Rudd has called for unviable overseas banks to be allowed to collapse and an international effort to shift toxic assets off the balance sheets of surviving banks as an essential first step to global economic recovery. The Prime Minister has vowed to pursue his proposals at a meeting of the G20 nations in London on April 2, arguing that "ring-fencing" toxic assets is the only way to end the global recession.

Mr Rudd outlined his plans in a speech to business leaders in Sydney yesterday in which he said the freezing of global credit flows was at the centre of the worldwide crisis. Unless banking systems in the US and Europe could be cleansed of non-performing assets, credit would remain frozen, preventing Australian banks from resuming lending to stimulate economic activity. "Whatever actions Australia takes domestically to cushion us from the impact of the global economic recession are fundamentally shaped by the actions of other governments (individually and collectively), both to stabilise their financial institutions and to stimulate global growth until private credit markets recover," Mr Rudd told the Australian Chamber of Commerce and Industry. "There can be no long-term economic recovery until we get global private credit flowing again."

Mr Rudd said Australia's banks remained strong. However, ineffective financial regulation in the US and Europe had caused an explosion of easy credit, with the resulting bad debts stuck on balance sheets of globally important banks, clogging the flow of credit around the world. It was estimated banks were holding toxic assets worth as much as $US3.6trillion.

Mr Rudd said Australian officials were working with their counterparts from other G20 nations on a response that would involve "stress-testing" troubled banks to discover which were sound. "All non-viable banks must be closed," he said. "Keeping insolvent banks alive is itself systematically damaging. All toxic assets on bank balance sheets must be neutralised." This could be done by creating a publicly owned asset-management company to isolate toxic assets or through other methods of "deploying public and private capital to ring-fence and then remove toxic assets," he said. "This needs to be done quickly and comprehensively and may require compulsion. "These toxic assets sitting on bank balance sheets in the US and Europe have become a poison in the bloodstream of the global financial system. Sick and unhealthy assets have the capacity to affect healthy assets and banks. It's like a virus which, if left untreated, can easily spread."

Mr Rudd's comments give the clearest indication yet of the behind-the-scenes action leading up to the crucial G20 meeting. The Prime Minister has also given the Australian Prudential Regulation Authority the task of examining ways to discourage institutions paying financial bonuses to reward risky investment practices by executives and traders. APRA is expected to propose a mechanism by which banks that continue to reward risky investment will be required to keep more capital in reserve, thereby limiting their lending potential. Mr Rudd is convinced inadequate regulation in the US was responsible for the global recession and uniform global regulation will prevent a recurrence. "This was capitalism out of control," he said.

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Australian decision not to tour Pakistan now shown as justified

Australian cricket's security adviser yesterday described the deadly attack on the Sri Lankan team as a "tragic vindication" of the decision to cancel Australia's last two tours to Pakistan. Dave Woodman, a former member of the Australian Defence Force, said it was always difficult to advise against a tour when so much money and public interest was at stake. "I have always said that the process may be a bit of a juggling act trying to keep different parties happy, but once the decision is made, we don't budge," Woodman said. "We copped plenty when we handed our recommendations down last time, but we knew we had made the right decision for the wellbeing of the players.

As a co-founder of Brisbane-based company BLP Training and Services, Woodman and fellow director Reg Dickason have overseen every aspect of security relating to the Australian cricket team for almost a decade. A former police officer, Dickason is the man on the ground, travelling with the team both domestically and internationally, while Woodman assists with the pre-tour planning and security assessments for Cricket Australia and the ICC.

It was on the advice of Dickason, who is in the West Indies overseeing the security of the England cricket team, and Woodman that CA scrapped scheduled tours of Pakistan in 2002 and last year, with the latter, in particular, drawing heavy condemnation from officials on the subcontinent.

However, Woodman said news yesterday of the deadly attack by gunmen on the Sri Lanka team's tour bus in Lahore was proof of the very real security threats that exist in Pakistan. "The role we play is a funny one because it tends to be a job that no one really appreciates until something goes wrong," he said. "People can take shots at you and your decisions because you can't validate it until something like this happens. "It's a tragedy what has happened, but from my perspective it vindicates the tough calls we have made in recent years."

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Outrage as man who raped girl, 4, walks free

The NSW legal establishment loves its criminals. Maybe they have things in common

THE Opposition has demanded that the Director of Public Prosecutions urgently appeal against the sentence of a 24-year-old man who escaped jail despite pleading guilty to raping a four-year-girl as she slept at her grandmother's house. The man, who cannot be named, was given a two-year suspended jail term in the District Court in Sydney on February 5 after he pleaded guilty to breaking into a house at Gulmarrad near Yamba in November 2007 and sexually assaulting the girl.

Police were called to the house on November 22 after the girl's grandmother discovered her car had been broken into. When they arrived, the girl told them that a man had been inside the house overnight and had sexually assaulted her. The man was arrested five days after the attack when police matched him to DNA on clothing found at the scene.

He was charged with sexual assault of a person under the age of 10 as well as several other charges including break and enter. The man spent 14 months in prison awaiting his sentence but walked free after his appearance last month. The shadow attorney-general, Greg Smith, said the Director of Public Prosecutions should urgently consider an appeal and described the sentence as "unbelievable". "It seems totally inappropriate for the court to impose such a light sentence where the maximum penalty for such an offence is 25 years. An explanation is required," he said.

Mr Smith said the leniency of the sentence sent a poor message to the community. "The community have a right to expect the punishment to fit the crime. Here the crime was against a four-year-old child," he said. The girl's MP, Steve Cansdell, said he was "angry and disgusted" the man had been released. "I have had a crisis meeting with shadow attorney-general Greg Smith and he has agreed the NSW Opposition will do everything possible to convince the Director of Public Prosecutions to appeal this ridiculously lenient sentence. "Crimes against children, particularly those of a sexual nature, deserve the harshest possible punishment, but instead this animal is out on the streets, walking and possibly stalking his next victim."

A spokesman for the DPP refused to comment, saying his office was awaiting a transcript of the judgment.

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DPP appeals against rape sentence

THE Director of Public Prosecutions lodged an appeal yesterday against the sentence of a man, 24, who pleaded guilty to raping a girl, 4, as she slept in her grandmother's house. The Attorney-General, John Hatzistergos, raised concerns about the sentence with the DPP after the Herald revealed that the man, who cannot be named, was given a two-year suspended jail term after pleading guilty. Mr Hatzistergos would not comment on the case but said it was worth remembering that the maximum sentence for sexually assaulting a child under 10 years was 25 years, and the standard minimum sentence was 15 years. "I referred the matter to the director because there were understandable concerns about this particular sentence, and I believed it required further analysis," Mr Hatzistergos said. "It's an abhorrent crime."

Police were called to a house at Gulmarrad on the North Coast on November 22 after the girl's grandmother discovered her car had been broken into. When they arrived it emerged that the young girl had been sexually assaulted. The man was arrested five days after the attack when police matched him to DNA.

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Australian miners' message against Warmist laws comes with teeth

The hiccups the Rudd government is having over its emissions trading scheme will not be soothed by the messages it is getting from the black coal industry. The miners are Australia's biggest commodity exporters, earning around $45 billion last year, and they supply 57 per cent of domestic electricity. They employ 30,000 people and another 100,000 indirectly. They feed $15 billion a year in to the nation's pockets through remuneration, hiring contractors and buying goods and services.

And they hand over $4 billion in royalties to state governments while paying another $2.5 billion in direct and indirect taxes. In the context of the current Queensland election, they are the largest single contributor to the Bligh government's budget.

Against this background, they are out and about via the Australian Coal Association at present making it very clear that, as the global commodity boom slides in to history, they are less than happy at the way they are being treated in the emissions trading process.

The message comes with teeth - the black coal miners have so far retrenched 2,000 workers as they wrestle a big downturn and there will be more job losses, they warn. For every job lost at the mines, ACA adds pointedly, three more are lost elsewhere in the service chain. Substantial investment in coal mining is now under review or deferred, says the ACA, and equipment orders associated with mine expansions are being cancelled.

The black coal miners' gripe with ETS is based on their belief that they are one of the most trade-exposed industries in the country, as well as being emissions intensive. Their key rivals overseas - Indonesia, South Africa and Colombia among them - don't face carbon charges and, in fact, Australia is the only developed country to include "fugitive emissions" from coal mining and petroleum production in an emissions trading scheme. The major source of the miners' greenhouse gases - 22 million tonnes a year or about four per cent of the national total - are "fugitive emissions."

The miners' point to a set of numbers as the basis for their unhappiness. At $25 per permit, the Rudd ETS is going to cost them $4 billion over five years. The government is offering them assistance amounting to $500 million over five years for "gassy" mines and $250 million over five years, providing they spend the same amount as well, for abatement activity. The grants are subject to 30 per cent company tax.

If black coal had been included in the EITE - for emissions-intensive, trade-exposed - list of industries, miners would receive $500 million, or more, per year for 10 years in permit allocations. This would not be taxable. By comparison, the export LNG industry, included in the government's EITE list, will receive assistance amounting to 60 per cent of its emissions trading costs.

The coal miners reject the government assertions that they should be excluded from the EITE list because they can achieve abatement through taking up relatively low-cost technologies. "Fundamentally incorrect," says the ACA. And the association says the government concern that some mines make windfall gains could be addressed simply by an allocation rule that directed permits to mines with high "fugitive emissions."

It will be interesting to see how all this plays in the Queensland election.

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