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Last week’s rankings in brackets plus their win-loss record. 1 BRISBANE (2) 6-1

They are hard to resist when Darren Lockyer, Karmichael Hunt and Justin Hodges start working their magic together in attack. Every other team knows those players must be stopped, but it’s a lot easier said than done. 2 BULLDOGS (3) 6-1

It’s fitting that Michael Ennis has a surname that rhymes with menace, because that is what he is to the opposition once he opens his bag of tricks. The Raiders prepared to deal with him, but still couldn’t reduce his influence. 3 ST GEORGE ILLAWARRA (4) 5-2

Keeping the Roosters to zero put them back on top when it comes to least points conceded in the NRL this season. They have given up just 77 points in seven games – an average of just 11 per game. 4 GOLD COAST (1) 5-2

They went in without forward leader Luke Bailey and dynamic five-eighth Mat Rogers against the Panthers and it contributed significantly to their loss. Player ins and outs are critical in such an even competition. 5 WARRIORS (6) 3-1-3

They should have beaten the Storm in Melbourne. The Warriors finished the stronger and it was there for them to win in extra time, but Stacey Jones hooked a field goal attempt from in front and it hit the post. 6 NEWCASTLE (5) 4-3

Their loss to the Tigers, after leading by 14 points well into the second half, could come back to haunt them. There were extenuating circumstances due to injuries on the day, but you’ve got to finish games like that off. 7 WESTS TIGERS (10) 4-3

They were in big trouble against the Knights until Benji Marshall extracted a blinding last 20 minutes from himself to turn the game around. He can’t do that all the time, but it’s nice to know that he can do it. 8 PENRITH (12) 3-4

The introduction of Luke Walsh at halfback not only served them well in that key spot – it helped some other pieces fall into place, too. Their win at home over the Titans was solid – and something they can build on. 9 SOUTH SYDNEY (11) 4-3

They didn’t have a lot to spare in their six-point win over the Sharks, but at least it was an improvement on their previous form at night – three losses from three games and a total of just 28 points scored. 10 MELBOURNE (9) 3-1-3

Began well enough against the Warriors, but were going up and down in the one spot by the time normal time ended and were lucky to escape the extra 10 minutes with a share of the points. They’ve still got problems to solve. 11 NORTH QUEENSLAND (13) 3-4

They finished off their win over the Sea Eagles with two spectacular tries that were vintage Cowboys efforts. They are heading in the right direction, but still have a way to go before they find their best form. 12 MANLY (7) 2-5

They tried hard against the Cowboys and got down the opposition’s end often enough to win the game, but came up short. It was a game that cried out for Brett Stewart’s involvement – had he played, they probably would have won. 13 CANBERRA (8) 2-5

Flew out of the boxes to lead 12-0 against the Bulldogs, but were overhauled before halftime. They have only won one out of three home games this season and need to start turning that around against Penrith this weekend. 14 SYDNEY ROOSTERS (14) 2-5

Have not scored a point in their last three halves of football. Imagine if they came up with zero against the Sharks this weekend they would fair dinkum have to call it quits and become spectators like the rest of us. 15 PARRAMATTA (15) 2-5

They were willing against the Broncos, but they wasted opportunities and you’re never going to get away with that against top opposition. They are just going to have to keep working hard and hope to get a result that way. 16 CRONULLA (16) 1-5

They came up with easily their biggest total of the season against the Rabbitohs, but at the same time they allowed the Rabbitohs to come up with their biggest total since round one. They just can’t find a way to win.

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CRONULLA coach Ricky Stuart played an extraordinary role before last night’s NRL judiciary hearing, re-enacting the suspect tackle made by Paul Gallen and claiming his repeat offender was “playing on eggshells and broken glass”. And the coach’s starring role worked.
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Gallen was found not guilty by the panel, leaving him free to play for the Sharks in Saturday’s match against the Roosters.

Earlier, the judiciary also cleared Bulldog Michael Ennis, ruling that his alleged chicken-wing tackle on Canberra fullback Josh Dugan was tender enough to escape a one-match ban.

The dual “not guilty” findings were both achieved by counsel Geoff Bellew, who created enough doubt in the minds of the judiciary panel of Mal Cochrane, Sean Garlick and Mark Coyne to hand down the surprise findings.

Gallen claimed he didn’t hit Wing with his shoulder or arm, instead saying he hit Wing with his chest. Wing was concussed and missed a large portion of the game. “It was the pec [pectoral muscle] that hit him,” Gallen said.

The Sharks lock claimed the tackle was “a good tackle” and denied that his upper arm or shoulder hit Wing on the jaw.

Stuart then acted out the tackle with Gallen in the middle of the room and passionately defended his player.

Stuart spoke about Gallen “playing on eggshells and broken glass” because of his bad record and noted that, while the tackle looked poor, his player made no reaction to suggest he may be “stuffed”.

Afterwards, Gallen said he was satisfied with the result – but when asked about Stuart’s unprecedented demonstration, said: “I don’t know if it helped me, the character thing wasn’t the best”.

Earlier in the day, at a NSW State of Origin squad gathering, Gallen had admitted he might have to tone down his aggressive style after the Sharks threatened to fine him over his latest brush with the judiciary.

“It shocked me a little bit,” Gallen said when asked about the prospect of being fined by his club. “If I have to tone things down in order not to get fined, maybe that has to happen.”

Gallen will now have the chance to press for an Australian Test jersey, with selectors to name the team on Sunday for the Anzac Test on Friday week.

Meanwhile, Ennis will now take part in this Sunday’s clash against Wests Tigers, installing the Bulldogs as favourites – and setting up a head-to-head clash with Blues State of Origin rival Robbie Farah.

Ennis argued that he had been trying to remove the “forceful” pressure applied on his throat by the ball carrier, that he had tackled Dugan without significant force and that the arm had never been extended beyond his back.

“I am very grateful for the hearing … my representation was really good and I am very pleased with the result,” Ennis said. “This is another week, there are a few to go yet and it is important to get the preparation right and important to get back to training”.

When asked about the importance of clearing his name of being associated with the chicken-wing slur, Ennis replied: “I would rather scrub the chicken wing [talk]. I will talk about the tackle.”

Ennis said he had tackled Dugan to shift him onto his back, but also to remove Dugan’s hand, which was against his throat.

“I moved his arm to get it out of my throat,” Ennis told the judiciary. “The degree of force applied was not a great deal.”

Ennis told the judiciary he had never used wrestling techniques and nor did the Bulldogs coaching staff teach any wrestling techniques.

Bulldogs coach Kevin Moore, who was at the hearing, said after the decision was handed down that he was happy with the result. “I didn’t think there was too much in it,” he said.

Moore said the Bulldogs team had spent the past few days in recovery because the next match was on Sunday.

“Because of that, we haven’t had to move players around, so it hasn’t had any impact on our preparation for the Wests Tigers match,” Moore said.

with Glenn Jackson

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WHEN he was 10 years old, James McManus’s family decided to swap the drizzle of Scotland’s highlands for the stifling heat of Katherine in the Northern Territory. "It’s a bit out in the sticks, but I loved it," McManus says.
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He went from balancing a round ball on his boot to learning how to pass a Steeden. "I’d never heard of rugby league," he says. "I didn’t understand any of it. When I came to Australia, I played a couple of games and I spent most of it offside, telling people to kick me the ball."

Today McManus has firmly established himself in the Newcastle side and yesterday was sized up for his suits and uniform as a member of the 40-man Blues Origin squad. The 23-year-old is a strong chance to make the final cut and run out for NSW on the wing this June.

"First and foremost, I want to play well for my club," he says. "It really means a lot to me this year. We’re looking to do big things at Newcastle and we don’t want to be sitting there watching TV in September. I want to play well for my club and anything comes off the back of that is just a bonus."

Knights teammate and fellow Blues squad member Kurt Gidley thinks McManus is a fair chance for an Origin jersey.

"Since his debut, he hasn’t a missed a game playing first grade, which is a great achievement," Gidley says. "His rise to where he is today, it’s a credit to the hard work he’s put in. He’s one of the most dedicated trainers. He stays behind, as most blokes do, to do extras. But Jimmy has been like that from the start."

Today, only a slight tinge of his Scottish accent can be heard in McManus’s voice. His accent was so thick when he touched down in Katherine that, aside from his family, people really didn’t know what he was trying to say. "No one could understand a word I saying," McManus remembers. "A lot of the time, I couldn’t understand a word that they were saying as well. With time, two years, I lost the accent."

After spending three years in Katherine, surviving a flood that tore through the town, he went to Palmerston High School in Darwin, studied the game of rugby league on television and was chosen by the Northern Territory Institute of Sport on their rugby league program.

"It took me a lot of watching," McManus says. "A lot of following it on TV. A lot of schoolyard stuff and finally after that I put my hand up to play the game."

At an Australian schoolboys championship, he was spied by Knights recruiter Warren Smiles. "He’s studied the game hard," Smiles says. "He knew what he wanted and he knew he wanted to play NRL. He was very intense and mature. He’s always worked hard to do everything right."

Before he lived in the heat of the Top End, before league, he lived in Fochabers – a village in the district of Moray. "It was a pretty obscure little place but it was good." His childhood memories of Scotland? The "blankets of snow" in the wintertime, "drizzle and soccer".

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THE company directors’ union has appointed a new top shop steward, James Strong – a man who knows how to keep his politburo in line.
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Following an annual meeting held at an undisclosed location, the Australian Institute of Company Directors announced the veteran company director had been appointed chairman.

It’s a position Strong knows well: in addition to his various ordinary board seats, he sits in the big chair at Woolworths and troubled retailer Kathmandu, and was formerly chairman of Rip Curl and IAG. And it was at IAG, in 2001, that Strong developed a unique technique to control troublesome directors – one that raised eyebrows at the AICD at the time.

Strong asked the rest of the board to sign undated resignation letters, which he duly collected but apparently never used.

In 2006, when news of the letters broke, then-AICD CEO Ralph Evans described the move as highly unusual. ”All the codes of corporate governance stress the independence of directors,” he said.

AICD spokesman Steve Burrell told CBD the organisation’s position had not shifted ”too much” since then. ”It was an unusual measure for an unusual and unstable situation,” he said.

At the time, IAG, formerly NRMA Insurance Group, was a somewhat turbulent beast.

”I don’t think it’s a situation where he and we dramatically differ on what’s good practice,” Burrell said. ”It’s not illegal but it’s not common practice.”

Horses for courses

RETAILER Harvey Norman had a shocking Cup day hangover, with the morning after revealing a 20 per cent slump in sales, and it looks like part of Gerry Harvey’s horse racing empire is also delivering little joy to the septuagenarian rich-lister.

Harvey owns 19 of 50 shares in a managed investment scheme called the Bel Danoro (Aus) Stallion Syndicate, the principal aim of which was standing at stud stallion Bel Danoro.

CBD says ”was” because the syndicate made a $52,684 loss in 2010-11 and in late June this year its members moved to wind it up.

Back in 2005, trainer Lee Freedman touted the horse, which was also part-owned by Harvey, as having ”a big future” after it won a race on Cup day as a three-year-old.

After going around for several years, Bel Danoro ended up at Harvey’s Vinery Stud in 2007.

However, demand for his seed clearly slowed to a trickle in the 2010-11 year, with the thoroughbred generating just $1250 in revenue.

Auditors raised going concern issues, pointing out that liabilities exceeded assets by $60,348.

”The solvency of the Bel Danoro (Aus) Stallion Syndicate is maintained by members making capital contributions to meet the ongoing operating costs,” UHY Haines Norton said.

The accounts show Harvey wore most of the year’s costs, pumping in $32,167.

As for Bel Danoro, CBD has no idea what has happened to him and couldn’t reach Harvey to ask.

The stallion is no longer featured on the Vinery website.

He may be gambolling happily somewhere. Or the solvency concerns may have turned him into solvent after a trip, via the knackery, to the glue factory.

No favourites

EVENTS yesterday confirm that Qantas information commissar Olivia Wirth’s insistence that her burgeoning relationship with Australian Workers Union boss Paul Howes won’t affect dealings between airline and union is considerably more substantial than an Airbus contrail.

Demonstrating a distinct lack of favouritism, her employer delivered a kick to the guts of his union yesterday when it axed 500 engineers, many of them AWU members. Howes didn’t front the media, leaving the job of producing jet engine-pitched howls of outrage to AWU Victorian secretary Cesar Melhem.

So Howes much is that relationship Wirth? Not a single job, it seems.

Fun with coal

WILL the real Martin Ferguson please stand up, please stand up, please stand up?

The marble-mouthed minister for energy was launching the extremely serious energy white paper in East Melbourne yesterday when his fascinating speech was interrupted by a pair of protesters, one wearing a Martin mask.

The fake Ferguson – or was it the real one? – pranced about the stage, singing a sarcastic song praising the virtues of coal as an energy source. Clearly unimpressed, the real Ferguson – or was it the fake one? – stood by the side of the stage until the pair, from activist group Quit Coal, were escorted from the room.

A forest saved

THE paper chase is alive and well at the corporate watchdog, which reduced its consumption of paper from 18 reams a person to a mere 14 reams a person in the financial year just gone.

On CBD’s shonky calculator, that means the Australian Securities and Investments Commission’s 1738 employees used about 12.1 million pieces of paper.

Assuming they take four weeks’ holidays, that’s an average of 29 pages a day.

According to its annual report, ASIC has reduced its paper use ”through the implementation and increased uptake of its Electronic Content Management record-keeping system”, which means more looking at documents on screen and less printing them out.

Got a tip?  [email protected]南京夜网.au

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AUSTRALIA’S five biggest banks would be able to survive a savage shock to the economy, including a 35 per cent plunge in house prices and unemployment soaring to 12 per cent, the banking regulator says.
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In an attempt to gauge how banks would cope with a deep economic crisis, the Australian Prudential Regulation Authority has conducted a new round of tough ”stress tests” on the major banks, the results of which were published on Thursday.

If the eurozone were to collapse and send the global economy into chaos, causing Australia’s economy to shrink by 5 per cent in a year, the regulator found the nation’s banks would face ”significant” losses.

But the chairman of APRA, John Laker, said none of the banks would fail or breach the capital requirements from the global regime known as the Basel II framework.

”The result is testament, in part, to the stronger funding positions that the advanced banks had adopted since the crisis,” Mr Laker said in Brisbane.

The five banks involved in the test were Westpac, NAB, Commonwealth Bank, ANZ and Macquarie Group, which make up 80 per cent of Australia’s banking system.

The tests also found the banks were also in a position to survive a sudden freeze in global funding markets – which flared up as a key weakness during the 2008-09 global financial crisis.

Mr Laker said a global credit market freeze would be ”systemically challenging” and would squeeze margins, but maturing wholesale debt would be offset by growth in banks’ domestic deposits.

Despite lingering concerns about the risks posted by Australia’s housing market – which is responsible for about half the banks’ credit exposure to the economy – Mr Laker said losses on home loans contributed to only a fifth of their losses in the test.

A key reason for this was the tougher lending standards in recent years.

Business lending, including commercial property loans and corporate loans, played a bigger role in the modelled losses, as these tend to go into default earlier than residential mortgages.

Under the scenario used in the test, Australia was hit by a plunge in the economies of China, Europe and North America.

It assumed Australian house prices fell 35 per cent from their peaks and unemployment surged to 12 per cent – higher than the crippling levels reached during the early 1990s recession.

It also assumed global debt markets were closed to banks for six months, sparking fierce competition for deposits, which crimped lending margins.

Mr Laker emphasised that the stress test was in no way a forecast, and it was substantially tougher than the previous round of tests in 2010.

”The stress test was intended to test the boundaries of ‘severe but plausible’, especially given the current relatively strong position of the Australian economy,” Mr Laker said.

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STATE governments lost little time in pushing back against the federal government’s call for more energy market competition by asking Canberra to overhaul regulation of the sector.

After a doubling of electricity prices in parts of Australia over the past few years, much of the interest in Thursday’s release of the energy white paper was on electricity sector reform.

Following privatisation in the 1990s, Victoria is the only state to open the door fully to electricity competition.

New South Wales has retained price controls for residential and small commercial users, and a review of the market is under way to assess competition and whether price controls should be removed.

All other states have retained some form of price control, which reflects the exposure of state politicians to the backlash from power price or supply problems.

The real work in overhauling electricity sector regulation will begin at the energy ministers’ meeting later this month.

That meeting will consider a series of reports aimed at overhauling the way investment in the power sector is regulated.

Under the present regulatory regime, electricity companies are able to inflate their capital spending plans and challenge government decisions they don’t like. This, coupled with decisions by some states such as NSW to opt for higher reliability standards, has fuelled steep power price rises in recent years.

”The federal government must … strengthen its regulator to ensure decisions are made in the long-term interests of consumers,” NSW Energy Minister Chris Hartcher said.

Victorian Energy and Resources Minister Michael O’Brien said: ”What was missing [in the white paper] was any program to ensure the Australian Energy Regulator

has the resources, the powers and the independence it needs to do the job consumers need it to do.

”The AER will continue to face difficulties in regulating large, well-resourced energy network companies without fundamental structural reform.”

The federal government wants all state governments to open the door to full competition by privatising all government-owned assets and removing price controls.

”Nearly half of NSW households have already moved away from standard regulated rates by shopping around for the best deal,” Mr Hartcher said.

”But until we are confident competition in the energy market has been found to be effective … the government will continue to provide a regulated price option.”

Victoria has mandated smart meters aimed at cutting electricity use, at significant cost to all users, but other states have refused to follow suit despite pressure from Canberra.

Mr Hartcher said some customers could benefit from smart meters, but his government was opposed to a national scheme because of the cost to customers if they were forced upon them.

“Customers must first understand the potential benefits that smart meters can offer,” he said. ”Energy businesses should have flexibility to offer innovative products that customers want, not ones that a government has forced upon them.

“And when these products are made available, customers should be entitled to choose.”

NSW is working with Victoria and Queensland to present a united front at this month’s meeting of energy ministers, which could clear the way for measures to overhaul electricity sector regulation to be finalised at the Council of Australian Governments meeting in early December.

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THE main newspaper publishers say digital subscriber sales for the September quarter have increased as print editions continue to decline.
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It was the first time that both major newspaper groups – the owner of this paper, Fairfax Media, and News Ltd – reported fully audited mastheads sales, including print and digital, said the industry group the Newspaper Works.

“The multi-platform publishing strategies being pursued by the major newspaper publishers have produced a very promising picture of newspaper circulations,” said Newspaper Works chief executive Tony Hale.

Fairfax’s metro mastheads, The Sydney Morning Herald and The Age, reported 56,559 weekday digital subscribers and 31,502, respectively, for the period covering July to September.

More importantly, the Fairfax metro mastheads continued to dominate the Roy Morgan total masthead readership survey for the quarter ending September 2012. The Herald topped the multi-platform measure of readership while The Age came in fourth-highest. News Ltd’s national masthead, The Australian, reported its audited digital subscriber numbers for the first time, with 31,241 average net paid weekday digital subscribers for the same period. The Australian put a paywall on its website in October last year, News Ltd’s Melbourne masthead, the Herald Sun, followed in March this year. It did not report its digital subscriber numbers for the September quarter, but a News spokesman said: ”We would expect to release those in the next quarter.”

Fairfax will start metered access early next year along the lines of The New York Times site, with free access to a set number of items before readers are asked to subscribe.

Fairfax, which has been stripping out unprofitable newspaper sales, recorded the biggest falls in print. According to the Audit Bureau, weekday circulation of The Herald is down 15.1 per cent year on year, while The Sun-Herald declined 21.3 per cent.

The Age weekday is down 16.9 per cent per cent year on year, while The Sunday Age is down 15.4 per cent.

News Corp reported the weekday sales of The Australian down 4.6 per cent, and its weekend edition dropped 5.6 per cent. The Herald Sun dropped 4.4 per cent in weekday circulation, and 5.7 per cent on Sunday.

The author owns Fairfax Media shares.

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Accused: Nick Greiner.FORMER New South Wales premier Nick Greiner has admitted concealing his company’s involvement in a deal that has become the target of a $25 million bid-rigging allegation by a Swiss investment firm.
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Pala Investments, a Swiss group controlled by Russian oligarch Vladimir Iorich, has accused Mr Greiner of using his positions in two companies to hoodwink Pala into selling a subsidiary for less that it was worth.

Mr Greiner chairs mining services company Bradken, which had expressed an interest in buying the subsidiary group Norcast in February 2011.

Bradken claims it was excluded from the sale process, after which US private equity group Castle Harlan made the purchase for $190 million and sold it to Bradken for $202 million.

In addition to his role at Bradken, Mr Greiner sits on the board of Castle Harlan’s Australian affiliate, CHAMP. He is also head of the federal government’s GST review.

Appearing in the Federal Court in Victoria, Mr Greiner said he had chosen not to ”promote” the fact that Bradken was ultimately behind the transaction, because the company had originally been rejected from a deal.

”Norcast had excluded us,” Mr Greiner said. ”So the notion that we would fly a Bradken flag over the transaction doesn’t make sense.

”It would have increased the risk of the transaction not happening.”

Pala claims that Castle Harlan was acting as an intermediary for Bradken, and that it would have asked for a higher price had it known Bradken was behind the deal.

Bradken chief executive Brian Hodges also gave evidence to the court over his involvement in the on-sale of Norcast.

When an email revealed he had passed on detailed financial information about a possible Norcast acquisition to people above him, he was forced to backstep statements that he had stopped ”pursuing” the purchase.

After Mr Hodges played down the importance of the email, counsel for Pala, Charles Scerri, QC, asked: ”So you just send meaningless information to people for the fun of it?”

Pala has filed similar claims against Castle Harlan in the Supreme Court of New York.

The case is continuing.

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AMID a gloomy sharemarket outlook, Contango Asset Management is seeking to launch another listed investment company, hoping to raise as much as $200 million to invest in mid-cap stocks.
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Tapping into investor demand for dividends, the Contango MidCap Income fund is boasting a 7.2 per cent annual yield, payable via a 1.8 per cent quarterly dividend, which will be generated from investment performance or from capital.

The launch comes at a difficult time for financial markets, with the resources sector off the boil and most domestic cyclical stocks forecasting tough trading conditions well into 2013, leaving only defensive sectors such as healthcare, facing firmer earnings prospects.

The proposed float comes six months after it delisted trading in Contango Capital Partners after seeking to merge it with another of its listed funds, Contango Microcap, following a poor investment performance and being wrong-footed by sharemarket gyrations in the wake of the global financial crisis.

Along with some unlisted funds, this has left Contango Asset Management with the sharemarket-listed Contango Microcap, a $150 million fund that has struggled on a five-year view, although it has performed well since its inception in 2004.

The proposed mid-cap fund is to invest in ASX 300 stocks, excluding the top 30 companies. Investors are being offered a free bonus option for each share subscribed for, with the minimum size of the offer pegged at $30 million.

If the float succeeds in raising the $200 million it is targeting, this will rank it as one of the biggest floats of 2012. Difficult market conditions are keeping new issues to a minimum, while companies raising fresh equity have typically been forced to offer sizeable discounts.

Listed investment funds associated with former stockbroker Geoff Wilson have blocked the move to merge Contango Capital Partners, arguing that the offer price of 90¢ a share was too cheap. It is believed there have been sporadic negotiations between the two parties, although Mr Wilson would not comment on the status this week.

Contango MidCap plans to have an ongoing buy-back program if the shares fall below 90 per cent of the net asset value and hasn’t ruled out further issues of shares after the first two years of trading.

Management fees will average 1 per cent of the gross portfolio annually, with no fees for the first two years, but 1.66 per cent annually for subsequent years.

A 20 per cent performance fee is also payable if the fund has paid a minimum 1.8 per cent quarterly return, exceeded a performance benchmark of the Reserve Bank’s cash rate plus 4 per cent and for the portfolio value to exceed a ”high water mark” valuation.

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AUSTRALIAN shares followed a global sell-off on Thursday, reflecting the uncertainty coursing through world markets as China kicked off a once-in-a-decade leadership transition and Barack Obama’s post-election victory high rapidly gave way to concerns that a ”fiscal cliff” of looming tax hikes and spending cuts could cripple the US economic recovery.
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Despite Greece’s fractured parliament passing austerity measures on Thursday that will gain it access to bailout funds and stave off a default, and latest unemployment figures showing the Australian economy added more than 10,000 new jobs last month, the benchmark All Ordinaries index closed 32.6 points, or 0.7 per cent, lower at 4483.8.

Voters returned Mr Obama to office despite a stuttering economy and a stubbornly high unemployment rate, but the defeated Mitt Romney’s Republican Party retained its majority in the lower house, and the prospect of the President and Congress struggling to agree on a resolution – needed by year’s end – sent Wall Street stocks down 2.4 per cent on Wednesday.

The Congressional Budget Office in the US has estimated that the fiscal cliff could result in a drag of up to $US600 billion next year, or 4 per cent of gross domestic product.

In Beijing, China’s outgoing President Hu Jintao – who is expected to be succeeded by vice-president Xi Jinping – warned corruption remained the biggest threat to the legitimacy of the ruling Communist Party, as he formally opened the party’s national congress.

The week-long congress will usher in a new set of leaders, who will likely oversee China overtaking the US as the world’s largest economy.

But the transition is being held in a backdrop of mounting social issues, including a growing wealth gap, rising costs of living and perceptions of rampant corruption.

China also faces an urgent need to reform an economy that heavily favours its state-owned enterprises and to shift the economy’s reliance on investment-led growth more to domestic consumption.

”Reform of the political structure is an important part of China’s overall reform,” Mr Hu said. ”We must continue to make both active and prudent efforts to carry out the reform of the political structure and make people’s democracy more extensive, fuller in scope and sounder in practice.”

Qu Hongbin, HSBC’s chief economist for China, said the new leadership could liberalise interest rates, and push to make the yuan freely convertible within five years. “There are clear signs that China’s new leaders … will make speeding up reform top of their policy agenda in the coming years,” he said in a report.

But others point out that internal factional struggles – laid bare by the sensational Bo Xilai scandal – would mean the new leadership under Mr Xi would take time to consolidate its power before being able to make meaningful policy decisions.

“If the markets hope that structural changes could take place soon after March next year, when the new administration comes in, my advice is ‘don’t hold your breath’,” Credit Suisse economist Tao Dong said.

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WORLD peace is something everyone aspires to and yet the world abounds with conflict. The same can be said about electricity prices, yet there has been a noticeable absence of reform.
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Over the past decade, endless reports and investigations into the electricity sector have all concluded that the only way to reduce prices is dramatic change. However, without the political will of the states, nothing can change.

And so it was with the federal government’s 2012 energy white paper, which was released on Thursday with great fanfare.

It called for price deregulation, price signalling, the introduction of smart meters and called on the states to ”take on hard reforms”. It stopped short of recommending privatisation, something which it explicitly mentioned in its draft report.

The final report says: ”Government ownership of energy assets

may create the potential for conflict in both policy and operational decisions. However, government ownership of energy businesses is a decision for the respective governments.”

This makes it another so-what report. There is nothing revolutionary in it and it doesn’t change the fact that reform was required three months ago, last year, a decade ago – but nothing has happened and nothing can happen unless Queensland, New South Wales and Tasmania come on board.

Indeed, the white paper is similar to a plethora of other reports that have called for radical reform. Back in 1991, the Industry Commission (now the Productivity Commission) released a report recommending privatisation to lower prices. The proposal was then backed by the Hilmer review and became a central plank of the national competition policy.

This was echoed in subsequent reports by groups including the OECD, COAG, the Owen report in NSW, and more lately the Productivity Commission, which released its draft report into electricity regulation last month, with a deadline of November 23 for submissions.

It is now in the federal government’s interests to push hard for reform ahead of an election next year, when it will need to counter perceptions that the introduction of the carbon tax is the prime cause of rising electricity prices.

As Energy Minister Martin Ferguson pointed out on Thursday, average retail electricity prices have risen about 40 per cent nationally over the past four years and well above 50 per cent in some states.

These are alarming increases. But unless NSW, Tasmania and Queensland jump on board, prices will continue to rise and hopes of reform will remain a pipe dream.

In NSW and Queensland, both governments came to office promising no asset sales. Barry O’Farrell has put the wheels in motion to get a sale ready to go, Queensland’s Campbell Newman is immovable.

The reality is electricity reform is a hot political potato and it shouldn’t be. It gets the unions offside and that explains why the federal government has backed away from explicitly recommending privatisation.

Sadly, reform should be bipartisan as it is in the country’s national interest to improve productivity and make infrastructure assets more efficient.

Despite this, we get the Greens in NSW trying to score points by issuing a news release warning against deregulation on the basis that now was not the time for ”blind faith” in markets and competition.

We don’t need blind faith in markets and competition, we need to look at the facts. In Victoria, which became a wholly private electricity market in the 1990s, price rises have been consistently lower than in all other states.

Reform kicked off in 1995 with the establishment of a contestable National Electricity Market. But it has halted in the past few years. The NEM facilitates about $10 billion of electricity trade each year, adding about $1.5 billion to gross domestic product a year, according to the Australian Bureau of Agricultural and Resource Economics.

A report released by Ernst & Young in 2011 found that the price paid per megawatt-hour in Victoria increased by just 7 per cent in real terms from 1996 to 2010, compared with real increases of 45 per cent and 46 per cent respectively in NSW and Queensland.

The other fact is Victorian consumers can churn their way to cheapness due to the number of retail outfits vying for business.

It seems the big price rises in the unreformed states can mainly be attributed to network costs. Ernst & Young found that network costs in Victoria decreased by 9 per cent in real terms on a per customer basis between 1996 and 2010. Over the same period, per customer network costs in NSW increased by 65 per cent and in Queensland they increased by a whopping 105 per cent.

Infrastructure Partnerships Australia argues in a paper that market reform, including the privatisation of network businesses, provides a great opportunity to break the back of Australia’s broader infrastructure shortfalls. ”In states where networks remain publicly-owned, electricity investment consumes up to a quarter of total public infrastructure investment – money that would be much better spent on ailing transport, hospitals and other social infrastructure,” IPA says.

In NSW, the sale of network assets would raise up to $50 billion. This would give it oodles of money to fund the North-West Rail Link, the M5 and M4 motorway completions, and the Pacific Highway duplication. In Queensland, the sale of electricity network businesses would raise something similar.

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THOUSANDS of Chinese Communist Party delegates, including billionaire industrialists and a teenage Olympic gold medallist, assembled in Beijing on Thursday to witness the coronation of a new generation of red emperors.
Nanjing Night Net

For better or worse, they will govern the world’s second-largest economy and the most populous nation for the next decade. It is probable that China will surpass the United States as the largest economy during their reign.

The 18th Party Congress will be convened without the theatrical fanfare of the US presidential election. But its impact will be arguably even greater for Australia and the region.

It is commonly acknowledged that China has once again reached another inflection point in its long march to be a modern and prosperous nation. The unwritten social contract between the ruling party and the 1.3 billion ruled needs to be redrawn.

For the past three decades, the party has provided uninterrupted economic growth for a once poverty-stricken country and much-needed social and political stability after years of Maoist political extremism.

However, the Chinese model of heavy infrastructure investment and export-led growth is showing signs of fatigue. The doyen of Chinese economists, Wu Jianliang, has repeatedly said the country has reached a threshold of economic and social tensions.

Leading reformist newspapers have urged Beijing to implement a comprehensive economic and social reform agenda to steer China away from the so-called middle income trap, when developing countries fall short of their full growth potential.

The outgoing party chief, Hu Jintao, said the key to resolving all of China’s mounting problems was sustained economic growth, and central to that was tackling the vexed issue of the relationship between the government and market.

Though China has long ditched a Maoist command economy, it is only halfway to a fully mature market economy. The ”visible hands” of the government are still disproportionately influential in the running of the economy.

State-owned enterprises, which are affectionately known to the Chinese party leaders as the ”elder sons of the republic”, are dominating key sectors of the economy and sucking oxygen out of the dynamic private sector.

The big four state-owned banks have managed to squeeze large monopoly rents out of the long-suffering Chinese depositors, which easily dwarf the combined profits of some of the best private companies in China.

Chinese banks have long favoured their state-owned counterparts in the credit market. Cash-strapped private companies have been forced to borrow at usurious rates from loan sharks to sustain their operations.

The real litmus test for Beijing’s avowed goal to deepen economic reform is its willingness to take on the powerful vested interests of its red capitalists.

It is no easy challenge. Some of the biggest and most powerful Chinese state-owned enterprises were former government ministries. Their chief executives still enjoy status as cabinet ministers and have strong influence over government policies.

Some commentators argue that China’s state-owned oil companies are outmanoeuvring the foreign ministry in some parts of the world. Indeed, the ministry building in Beijing is literally being overshadowed by the imposing headquarters of these oil giants.

Early this year, a joint World Bank and Chinese government report argued that the long-term prosperity of the Chinese economy depends on Beijing reforming the state-owned sector. China’s red capitalists have ferociously resisted the change so far.

Hu’s opening speech at the 18th Party Congress has sent out mixed messages about the future policy direction in this vital area.

He said market-based rules must be respected and the government would unreservedly support the expansion of the private sector, ensuring a level playing field for state and private sector players.

Despite the lofty rhetoric of encouraging the private sector, the retiring party chief said the government would also support the continuation of the state-owned enterprises. It is unclear how his successors will walk this tightrope.

Reform of the state-owned enterprises has added significance for another announced goal of the Chinese government, namely the further integration of the Chinese economy with the world. Hu said the country needed to accelerate the pace of its ” going out” strategy.

Chinese overseas investment led by state-owned enterprises has fast become one of the most sensitive issues between China and many of its trading partners, including Australia and the US.

In fact, it is one of the key issues holding back the tortured negotiations between Canberra and Beijing over a free trade agreement.

Chinese leaders have a strong record of implementing a difficult and challenging economic reform agenda since the late 1970s, though there were signs of reform fatigue in the twilight years of the Hu-Wen administration.

We can be cautiously optimistic that new leaders can pull this one off again. But China’s red capitalists will not make their job easy.

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THE Labor Party often points to the super guarantee system to establish its credentials when it comes to maximising Australians’ retirement benefits. In fact, the lack of action by all Labor governments since the introduction of the system to fix a big problem with its design proves the opposite.
Nanjing Night Net

The superannuation guarantee has its origins in a deal done by the ACTU with the Hawke government to forgo a 3 per cent wage increase for a 3 per cent compulsory employer superannuation contribution.

In 1992, after a Senate select committee inquiry into superannuation, the guarantee system was introduced by the Keating government. There have been minor changes over the years.

Due to a lack of clarity in the definition of salary used by the system, less than scrupulous employers are able to reduce their required contribution. This occurs when employees try to improve their retirement investments by making voluntary salary-sacrifice super contributions.

The Tax Office, in information provided to employers to help them meet their super guarantee commitments, states that the salary to use for an employee is evidenced by:

■ Ordinary weekly earnings; or

■ The salary specified in an industrial agreement or employment contract; or

■ The amount calculated by the payroll system.

It is this multiple choice of the salary figure to be used by employers that creates problems for employees wanting to sacrifice salary into extra superannuation contributions. This is because some employers follow the letter of the law and base their super guarantee contribution on ordinary weekly earnings after the employee sacrifices some of their wage or salary.

Take for example an employee on a salary of $50,000 a year. If they did nothing, the employer super guarantee contribution should be $4500. But if the employee chooses to salary sacrifice $5000, they are now being paid a weekly salary based on $45,000.

This means their employer is able to base that 9 per cent contribution rate on the lesser salary and only contribute $4050.

In some cases less scrupulous employers are able to avoid making any contribution at all. This is because, some legal experts believe, there is the possibility for an employer to count the $5000 salary sacrificed as meeting their requirement to make the $4050 contribution, and therefore not make any contribution.

Both main political parties are aware of this flaw in the design of the system. The best response that the Gillard government has provided is: “We are considering the issues raised in relation to salary sacrifice.” Given that this problem has existed since the system was introduced, offering to consider the issues raised is far from comforting.

If employees were hoping for a more concerned attitude from the opposition, they will be sorely disappointed. Mathias Cormann, shadow minister for financial services and superannuation, said: “We have no current plans to revisit the way compulsory super and salary sacrificing interact. Obviously employees choosing to salary sacrifice will make judgments on whether or not salary sacrificing makes sense for them given their individual circumstances.”

The problem can be solved by tightening the definition of salary for SG purposes to that of salary plus amounts sacrificed as superannuation contributions.

Hoping that politicians will do the right thing has not worked for more than 20 years. Perhaps the only way to achieve fairness is for employees to write to their federal member.

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