RBA governor called to testify before parliamentary committee

THE Reserve Bank governor, Glenn Stevens, his former deputy and the whistleblower who exposed alleged corruption inside the Reserve’s subsidiaries will all be called to testify about the scandal before Federal Parliament.

In a development that will intensify pressure on Mr Stevens, a joint parliamentary committee intends to grill the governor, his former deputy Ric Battellino and Brian Hood, the former RBA banknote executive turned police witness.

The revelation that the trio have been called to the October 4 joint committee comes after explosive evidence was aired yesterday in a Melbourne court about how the RBA had allegedly persecuted Mr Hood after he became a whistleblower.

The three men will appear before the joint committee on the Australian Commission for Law Enforcement Integrity, which is examining Commonwealth agencies’ exposure to overseas corruption.

The decision to call the men to testify comes after a series of reports in the Herald revealing:

Growing evidence that contradicts Mr Stevens’ previous parliamentary testimony that the first the Reserve knew of corruption inside its banknote firm Securency was after the Herald’s 2009 expose´ in 2009, two years after Mr Hood told Mr Battellino about his allegations in June 2007.

Mr Hood said yesterday that Mr Battellino had “listened intently” throughout a detailed briefing, which included allegations that a Malaysian agent working for NPA and Securency had admitted paying bribes.

“We discussed all the matters … that’s why it took 90 minutes,” Mr Hood said.

When asked by defence barrister Jason Gullaci whether he stood by his claim that he had been forced out of his job by RBA assistant governor Bob Rankin in the face of contradictory evidence, Mr Hood told the court that his job had been ”scrapped”.

In an email to police in 2010, aired in court, Mr Hood revealed he was considering suing the RBA over his claimed mistreatment, saying: “My career has been damaged in the process … I am of the view that the RBA/NPA treatment of me was harsh.”

The Reserve Bank declined to comment yesterday.

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Muslims work to stop repeat of riot as police hunt leaders

POLICE say they are closing in on those responsible for the anti-American violence on the weekend, as the Muslim community and national authorities try to stave off a second wave of demonstrations planned for this weekend.

The Lebanese Muslim Association and the Islamic Council of NSW were due to meet last night in Lakemba to call for calm in their community as the actions of a few were resoundingly condemned by politicians.

Police were working to identify those who used text messages and social networking sites such as Facebook to organise the protests, which quickly turned into a riot.

One senior officer said the violence was unlikely to have been the work of just one group.

”It appears to have taken on a life of its own,” he said.

The influential leader of the Lebanon-based Shiite Muslim militant group Hezbollah has called for more protests over the anti-Islam film.

In a TV broadcast, Sheikh Hassan Nasrallah said the world needed to know Muslims ”would not be silent in the face of this insult”.

Much discussion among Muslims in Sydney centred on two specific groups – followers of the controversial Sheikh Feiz Mohammad, who once said a rape victim had ”no one to blame but herself”, and another fringe group of Muslims who believe in the so-called ”sixth pillar” of Islam which refers to armed conflict in defence of Islam.

Others pointed the finger at the political group Hizb ut-Tahrir, which on Sunday refused to condemn the violence, but continued to deny involvement.

Attempts to contact the sheikh failed.

Messages encouraging people to attend the protest circulated on Facebook on Friday.

One, from Hana Zaarour, said: ”It might get messy sis coz it hasn’t been council approved”.

Online commentary continued yesterday. Several protesters expressed outrage at the actions of the police and vowed to protest again this weekend.

”It wouldve turned out different if it was organised properly as i intended on doing next week,” said Salafa Em Uthman.

Jamal Daoud, from the Social Justice Network, said the actions of some protesters on Saturday were wrong and something had to be done.

”It has to stop. This is enough. They are hurting the Muslim image, they’re hurting the Muslim community, and they’re hurting the harmony in the community,” he said.

Politicians condemned the violence. The federal Deputy Opposition Leader, Julie Bishop, said her ”fear is that extremist elements in Australia and other countries are using this YouTube video to incite hatred and incite violence in pursuit of long-held goals”.

In Parliament yesterday, the opposition sought to implicate the government in the riots by attacking the Immigration Minister, Chris Bowen, for not cancelling the visa of a visiting Hizb ut-Tahrir preacher, Taji Mustafa.

The opposition said Mr Mustafa should have been banned because his organisation had called for Israel’s military destruction, and condoned the killing of Australian troops in Afghanistan.

Mr Bowen noted that the Howard government chose not to proscribe the group in 2007 and it was still legal in Britain and the United States.

Ms Bishop hinted that a Coalition government would ban the group and she described Mr Mustafa as a ”hate preacher”.

But she did not condone comments by the Liberal senator Cory Bernardi on his blog that the unrest was a consequence of multiculturalism, which was undermining Australia’s rule of law and Judeo-Christian values.

with Lisa Davies and Stephanie Gardiner

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How paparazzi get pics that make royals snap

Long shot … Ben Rushton aims for his subject using a Canon EOS 1D Mark IV camera, a 600 millimetre lens and a 2x converter to double the magnification of the lens. He shot with a 1/10000th second shutter speed. Photographer Ben Rushton takes a photo of Gabriella Duddy on North Bondi from St Peters park with a high-power lens.

Gabriella Duddy poses on North Bondi to demonstrate how the paparazzi was able to snap the topless photo of Kate Middleton.

PICTURE Prince William and his wife reclining on the beach. Then imagine a photographer, standing more than a kilometre away to capture every move with a huge lens.

That is how far away paparazzi were estimated to have been standing when snapping photographs of the topless Duchess of Cambridge on a private holiday with her husband in southern France last week.

The photographs have been published in the French magazine Closer and in an Irish newspaper, sparking widespread condemnation and questions about how far is too far when intruding on the privacy of the royals.

The photos are understood to have been taken using powerful, long lenses by photographers standing on a public road or footpath at a distance estimated at between 800 metres and 1.3 kilometres away.

Herald photographer Ben Rushton climbed to the top of Marks Park yesterday morning and zoomed in on Gabriella Duddy lying on her towel at the far end of the beach.

To take her picture he required camera equipment worth almost $20,000. He used a Canon EOS-1D Mark IV camera, a 600 millimetre lens and a 2x converter to double the magnification of the lens. He shot with a 1/1000th second shutter speed to steady the image, which shook under the extreme magnification. The lens was so heavy Rushton mounted it on a tripod to stop it snapping off the camera.

”I felt like a sniper,” he said.

The military reference is appropriate. Another Herald photographer, Brendan Esposito, said the industry jargon for a long-range shot like the one of the duchess was ”target acquired”.

”There’s some suggestion those photos have been taken by a drone aircraft,” Esposito said. ”That’s the talk in the industry.”

Ms Duddy, who agreed to be photographed, said she felt uneasy to think she could be captured in a clear image by a man she could not see, standing so far away.

”You think you’re safe,” said Ms Duddy, 21, who lives in Bellevue Hill. ”She [the duchess] probably thought she was safe and private.”

The British press has branded the editors of Closer as ”grinning perverts” while the photographer has been labelled a ”peeping Tom”.

Even the notorious tabloid The Sun, which sensationally ran photographs of Prince Harry naked in Las Vegas and features topless glamour models on page three, has described the photographs as ”grossly intrusive”.

One photographer who filmed the Duchess of Cambridge sunbathing has been revealed as a woman named Valerie Suau.

An anonymous colleague of Suau said she did not take photographs of the duchess topless, but sunbathing in her bikini.

”Valerie is concerned by the fuss and is keeping a low profile,” the colleague told the Mail on Sunday in London.

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State royalties to cost more than mining tax – report

“Royalty increases are going to be a far bigger impost” … Minerals Council of Australia chief executive, Mitch HookeINCREASES in royalties charged by conservative state governments will cost many mining companies more in the short term than the minerals resource rent tax, the industry’s peak body says.

The prediction raises serious questions, both for the federal government’s budget estimates and the opposition’s argument that Labor’s new taxes are to blame for mining’s waning international competitiveness.

The Coalition’s spokesman on resources, Ian Macfarlane, said a new analysis for the Minerals Council of Australia by Port Jackson Partners, which found that rising costs and falling productivity meant that miners were becoming relatively less competitive, showed the government was treating the industry like a ”cash cow”.

However, the council’s chief executive, Mitch Hooke, said that in today’s market conditions the $3.3 billion in royalty rises announced this year by the Queensland, NSW and West Australian governments would, over the next four years, cost miners more than the mining tax, which is supposed to raise $13.4 billion in the same period.

State governments had thought that their royalty increases would effectively be paid not by mining companies but by the federal government, which had promised to reimburse miners for the royalty rises that were announced after the mining tax came into effect. With commodity prices falling, many miners think they will not have to pay a federal profits-based tax, meaning the government will not have to reimburse anything because there is no liability to be rebated against.

”In the current market circumstances, the royalty increases are going to be a far bigger impost,” Mr Hooke said. ”You don’t have to be a rocket scientist to figure out that as prices come off, the [mining tax] is going to be very slim pickings, which means there will be no opportunity to rebate the royalty increases.”

Mining companies were incensed when the Queensland government announced coal royalty rises of about $1.6 billion in the next four years, on top of NSW government royalty increases worth $1.5 billion and a West Australian increase of $800 million.

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Reform is essential, say business groups

Proposals aimed solely at increasing revenue “should be treated with extreme caution” … Australian Industry Group chief executive, Innes Willox.PEAK business groups support increasing the GST or widening its base, but say it must be part of a broader tax reform package rather than a money-making exercise for the states.

A decade ago, the Senate amended the tax to exempt fresh food, health and education.

The federal government and the opposition have flatly ruled out any change but business groups said the tax would be worth increasing if the proceeds were used to cut inefficient state taxes and give corporate Australia a tax break.

The chief executive of the Australian Industry Group, Innes Willox, said any proposals that aimed at just increasing revenue ”should be treated with extreme caution”.

”These recent proposals are not proposals for tax reform; they are proposals to give more money to the states and territories,” he said.

“AI Group agrees that Australia’s tax system could be improved by lifting the share raised by more efficient taxes, including consumption taxes, and reducing the share raised by less efficient taxes, such as company tax, transaction taxes and other inefficient taxes levied by the states and territories. This is a debate we have to have to drive tax reform.”

The chief executive of the Business Council of Australia, Jennifer Westacott, concurred.

”Sooner or later, Australia will need to have a conversation about comprehensive tax reform to meet the needs of future generations. The GST will have to be part of that,” she said.

”Comprehensive tax reform bears no resemblance to short term ad hoc tinkering; it requires a long term plan.”

The Assistant Treasurer, David Bradbury, said the Liberal premiers were not happy with just slashing spending on health and education. ”Now they want to hit them with the GST,” he said.

To change the GST, the approval of all the states and the Commonwealth is required.

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Top diplomat takes over in Defence shake-up

Foreign Affairs chief Dennis Richardson.ONE of Australia’s most respected diplomats has been parachuted into the Defence Department to bridge a deepening rift between Defence Minister Stephen Smith and the military.

In the dramatic shake-up in the $24 billion department, former special forces commander Duncan Lewis has been replaced as secretary of Defence after barely a year in the job.

The department has been in near revolt in recent months over budget cuts and Mr Smith’s criticism of a culture of abuse in the military that has led to a series of sex scandals.

Foreign Affairs chief Dennis Richardson, who had been planning to retire at the end of his term, has now agreed to take on the notoriously challenging Defence portfolio.

Mr Lewis’ sudden resignation caught many close observers by surprise and follows persistent reports of a break-down of trust with Mr Smith.

Mr Lewis warned last month of a gap between the government’s strategic ambition and what it was willing to spend.

Labor has delayed several major projects, notably a decision to build a fleet of 12 attack submarines and finalise plans for air warfare destroyers, helping to bring the budget back into surplus. But the move has sparked fierce debate in defence circles over whether Australia might be left exposed.

The debate has come to a head after the government brought forward the date to publish a new Defence white paper, with insiders now dismissing it as a ”white pamphlet” that will be light on detail.

Mr Lewis will be shoe-horned into the role as Australian ambassador to NATO, taking over from Brendan Nelson, defence minister in the Howard government.

In a memo to Defence staff yesterday, Mr Lewis said ”several weeks ago” Prime Minister Julia Gillard had asked him to consider accepting the post.

”I would like to make it very clear that, notwithstanding media reporting, I have not been forced out of my current position and I am not departing Defence for any reason other than to take up this ambassadorial post at the request of the Prime Minister,” Mr Lewis wrote.

But the move has sidelined senior diplomat Bruce Gosper who had been expected to take up the job.

Mr Richardson has a reputation as a tough operator who reformed the deeply troubled Australian Security Intelligence Organisation in the years before the terrorist attacks of 2001.

He will achieve a rare double: the first person to hold the top jobs in Defence and Foreign Affairs since the formidable Sir Arthur Tange in the 1970s.

Another former spy chief, Peter Varghese, Australia’s high commissioner to India, will take over as Foreign Affairs head.

Mr Varghese has also been persuaded not to quit the public service, having earlier made plain a desire to switch to the private sector after a long diplomatic career and a stint in charge of the Office of National Assessments.

Mr Lewis, a former commander of the elite special forces troops, was National Security Adviser under then prime minster Kevin Rudd.

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Lifting GST rate to 15pc could net extra $25bn

LIFTING the goods and services tax to 15 per cent would boost Australian state budgets by an extraordinary $25 billion per year – almost $6 billion of which would be kept by the Baillieu government in Victoria, but experts warn it would soon evaporate.

Razor-gang budgets have reignited the debate on the rate of the GST, which was originally set at 15 per cent when first mooted in opposition by then Liberal leader John Hewson before the 1993 election. That is also the rate to which New Zealand has now lifted its GST after two decades at 12.5 per cent. It is dwarfed by GST rates of 20 per cent or more in most of Europe.

At 10 per cent, Australia’s GST earns the states $50 billion per year, double the $24 billion it earned when introduced in July 2000.

But as a proportion of gross domestic product it has been slipping for years, something Treasury budget papers blame on increased household saving, and also a ”steady decline in expenditure on items attracting GST as a share of total consumption”.

”We knew this was going to happen,” says Greg Smith, a former head of Treasury’s revenue group and a member of the Henry Tax Review.

”It was clear people were moving their spending from goods to services … but it was also clear they were moving spending to services outside the scope of the GST such as health and education.”

Treasury calculations show the prices of health, education and rent – all excluded from the GST – have been increasing far faster than the prices of items covered by the GST, meaning a growing proportion of spending is GST-exempt.

It is why NSW Premier Barry O’Farrell has called for a debate about lifting the GST, receiving backing from South Australia’s Treasurer Jack Snelling.

But experts warn that lifting the rate to 12.5 or 15 per cent would only buy time, perhaps even accelerating the shift in spending away from items covered by the GST.

”The greater the GST rate the greater the incentive for fraud and for moving spending elsewhere,” says Neil Warren, professor of taxation at the University of UNSW. ”To stop it you would need to tighten up on GST-free imports and consider extending the GST to food, education and health.”

The Age calculations show extending the GST to presently exempt fresh food would raise an extra $6 billion per year (some of which would need to be spent compensating low-income earners), extending it to education would raise a further $3 billion, and health another $3 billion.

But Professor Smith says the health and education savings are illusory.

”The states themselves are the biggest providers of health and education. Taxing their services in order to help fund their services would mean money in one door and out the other. It isn’t a net revenue gain.”

And much of the extra income would be earmarked as soon as it came in.

”The Commonwealth would want the states to cut insurance taxes and stamp duties,” said Professor Warren.

”Those two alone would eat up the extra income.”

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Labor’s ‘Pacific Solution’ gets going in Nauru

Green and khaki canvas tents at the asylum-seeker accommodation centre in Nauru await the arrival of more refugees.A PLANELOAD of Sri Lankan boat people is expected to land on Nauru today as the Labor Party’s reinvigoration of the so-called ‘‘Pacific Solution’’ gathers pace.

The new arrivals, the second group to go to Nauru since Labor reopened the John Howard-era detention centre on the tiny Pacific island, were expected to touch down shortly after 7am (5am Australian time).

Like the 30 Tamils who arrived on Friday, they will be  taken by bus to the 500-person capacity tent city in the sweltering middle of the island, where they will be hemmed in by thick jungle, the island’s rubbish tip and a rock quarry.

With the Australian Army almost finished building the tent city and with the Christmas Island detention centre already exceeding its capacity due to an influx of boats  this year, today’s arrivals will soon be followed by more. Indeed a boat carrying 10 people was detected off West Australia’s coast last night.

Another planeload of several dozen Tamils are expected later this week, and the first group of Afghan Hazaras early next week. By then the camp will house more than 150 asylum seekers.Some of those 150 may also turn out to be women, children or whole families, as Immigration Minister Chris Bowenlast week told a press conference that ‘‘you can expect to see a broad cross-section of people transferred to Nauru next week and in coming weeks’’.

Despite promises by Mr Bowen that Labor’s system on Nauru would involve a processing centre, not a detention camp, the site’s inhabitants are forbidden from leaving.

A Nauruan government spokesman, Rod Henshaw, said on ABC radio that the situation was a ‘‘period of settling in’’.

‘‘I know the Nauru government is anxious to have them settled and, over a period of time, to give them the privileges of wandering around.’’

He said he hoped the asylum seekers would be free to leave the camp in weeks or a month. ‘‘I couldn’t put a time on it … but that is the objective, [to give the asylum seekers] the freedom of the island to some degree.’’

Questions also continue to be asked about the decision to process the refugee claims under Nauruan law. Last week the regional head of the United Nations High Commission on Refugees, Rick Towle, said that Australia was handing over legal responsibility for people seeking asylum in that country.

Some  have  expressed concern that Australia may disagree with a refugee approval made under Nauruan law and refuse to take the person, meaning they can’t be returned to their country or resettled in Australia.

The media remains barred  from the site, but yesterday The Age was able to glimpse the tents that house the arrivals.

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Pakistan will cull ‘healthy’ sheep

MORE than 20,000 Australian sheep are facing premature slaughter in Pakistan after local authorities said the animals were diseased and must be killed.

Livestock exporter Wellard yesterday said the veterinary department in Pakistan had issued orders that prevented Australian sheep exported to Pakistan two weeks ago from entering the consumer supply chain and must be euthanised.

This month, the Ocean Drover, owned by Wellard, unloaded sheep in Pakistan, after being at sea for two weeks following rejection from Bahraini authorities because they were infected with the contagious viral disease, scabby mouth.

Wellard said the new orders conflict with previous advice from Pakistani authorities that tests taken from the sheep were still being tested or confirmed the sheep were disease free.

The Age understands slaughter had begun with ”several hundred” already killed, but has now stopped as the company, industry and the Australian government work to stop the cull while Pakistan’s government conducts disease tests.

”We are not sure what is going on as the sheep are healthy,” Wellard managing director Mauro Balzarini said.

”The sheep were farmed for human consumption, so it is disappointing that some healthy sheep are being euthanised when they are absolutely safe to be processed.”

The new revelations have been seized on by Greens senator Lee Rhiannon as further evidence the industry should be shut down.

”Either [Agriculture] minister Ludwig has no idea about the fate of these 21,000 sheep or he is deliberately staying tight-lipped,” Senator Rhiannon said.

Senator Joe Ludwig said the Greens were scaremongering and were putting out media statements before contacting his office or industry.

”The Greens want the trade ended and will sabotage it at whatever opportunity they get.”

The sheep had been approved for arrival in Pakistan by local and Australian authorities – Australia has the strictest export conditions in the world.

An agriculture department spokesman said it was confident the sheep delivered to Pakistan were healthy on leaving Australia.

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The farmer wants a life: minister urges lockout over coal seam gas

THE Minister for Western NSW, Kevin Humphries, has encouraged a group of farmers to continue to ”lock the gate” to prevent coal seam gas companies entering their land just days after a cabinet decision on new rules to balance the interests of miners and farmers.

Mr Humphries, who is the member for Barwon, flew to Moree last Thursday to meet a local farmer and anti-coal seam gas activist, Penny Blatchford.

Ms Blatchford owns 7000 hectares at Gurley and Bellata, between Moree and Narrabri, covered by an exploration licence for Leichhardt Resources, which wants to look for coal seam gas.

The exploration licence is one of 22 such licences renewed on Tuesday, the same day the government announced its strategic land use policy for how coal seam gas drilling and coal mining may be carried out in NSW.

Ms Blatchford and 83 other landholders have been refusing to sign access agreements with Leichhardt Resources and other companies for about 18 months as part of a ”lock the gate” protest.

”He said it was important for me to hold the line and not take our [protest] signs down just yet,” Ms Blatchford said. ”He said he had no problem with people locking their gates.”

She said Mr Humphries told her: ”My view is no means no. If you don’t want them in, I think you still have a very good case. I think it would be impossible for them to break through that.”

Mr Humphries expressed concern over the policy when a draft version was released in March.

His latest comments risk undermining cabinet solidarity and reinforce tensions between the Nationals and Liberals.

The policy makes mining companies wanting to access areas classified as ”strategic agricultural land” have their proposals examined by an independent scientific panel. But farmers and environmental groups are furious no area has been quarantined from potential mining activity.

Ms Blatchford said Mr Humphries was genuinely concerned about farmers. But the NSW Greens MP Jeremy Buckingham said his comments acknowledged the policy meant farmers’ only choice was to break the law.

”The Nationals have such a low level of confidence in their own government’s policy that they’re telling farmers to keep locking the gate,” he said.

But Mr Humphries said he was aware of Ms Blatchford’s concerns and wanted to explain the policy.

”I fully support the NSW government’s strategic regional land use policy and am proud of the balance it has struck between the interests of agriculture, the environment and mining,” he said.

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