Japan, Russia to expand defence ties

JAPAN and Russia have held their first high-level defence and diplomatic talks and agreed to step up cooperation between their militaries amid regional security concerns such as North Korea and China.

Japanese Foreign Minister Fumio Kishida and Defence Minister Itsunori Onodera, and their Russian counterparts Sergei Lavrov and Sergei Shoigu also agreed on Saturday to hold joint military and anti-piracy exercises and establish a defence consultation framework. Their countries' defence ties are geared up toward peace and stability in the Asia-Pacific region and would not affect existing alliances, including one between Japan and the US, they said.

Lavrov told a news conference after Saturday's talks that upgrading defence ties between the two countries could serve their national interests in resolving terrorism and North Korea's nuclear threats, as well as other regional disputes. He welcomed the talks as a landmark development for Russia and Japan, and said that this new cooperation would not interfere with the Japan-US alliance.

Kishida also said that Japan's alliance with Washington remains "the cornerstone" of Tokyo's foreign and security policy.

Earlier Friday, Japan and Russia agreed to continue discussing a territorial dispute that has kept the nations from signing a peace treaty.

"We need to act constructively. We should not be emotional, and avoid provocative remarks," Lavrov said in Friday's news conference.

The diplomats also agreed to hold vice-ministerial talks in late January or February, ahead of Kishida's planned visit to Russia in the spring.

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Pakistani Taliban selects new leader

THE Pakistani Taliban has selected Khan Said Sajna as the insurgent group's new leader after Hakimullah Mehsud was killed in a US drone strike, members of the organisation say.

Sajna is from a group within the Pakistani Taliban that was in favour of peace talks with the government.

He was a close associate of Baitullah Mehsud, the founder and former leader of Tehrik-e-Taliban Pakistan (TTP), who was also killed by a drone in 2009.

A Taliban council picked the Mehsud tribesman as the new chief at a meeting at an undisclosed location in the tribal region on Saturday.

Hakimullah Mehsud was killed on Friday, one day before the government and the TTP were about to open peace talks after a decade of conflict.

Information Minister Pervaiz Rashid said the government would not cease its efforts to seek a peace deal with the militants despite the US attack.

"We had removed all hurdles in opening dialogue with the Taliban, and we will still try to build on that," Rashid said.

It was not immediately known whether the Taliban was also interested in initiating a process of reconciliation.

A militant commander in the northwestern town of Dera Ismail Khan said it was too early to say if the militia would still respond to government overtures.

Analysts said the future of the TTP and the proposed peace talks depend upon how well the new leader keeps the militia united.

"If the organisation splits into many groups, it will not be easy for the government to deal with each one of them," said Irfan Shehzad, lead researcher at an Islamabad-based think tank, the Institute of Policy Studies.

Pakistan's government declared a red alert overnight after Hakimullah Mehsud's killing out of fear of retaliatory attacks.

It ordered increased security around airports and other key installations.

The army was deployed on Saturday in all major cities near tribal areas after intelligence agencies warned that the TTP might launch improvised attacks to avenge the killing of their leader.

Hakimullah Mehsud was buried on Saturday, an official said.

He and four other militants were killed when an unmanned aircraft fired four missiles at a compound in the Dande Darpa Khel area of the North Waziristan tribal district near the Afghan border.

A security official said the dead rebel leader and his associates were buried in different areas of the tribal region but declined to give the exact locations.

Hakimullah Mehsud headed the banned TTP, a group of more than a dozen rebel outfits, since 2009. He succeeded Baitullah Mehsud.

Sajna hails from the Laddah area of the South Waziristan tribal district.

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Furniture factory ablaze in Sydney

Fifty firefighters are battling a large blaze at a western Sydney furniture factory. Source: AAP

FIFTY firefighters are battling a large blaze at a western Sydney furniture factory.

Fire & Rescue NSW (FRNSW) says no one is feared missing but the fire has spread into the roof of the single-storey factory on Warren Avenue, Bankstown.

The fire has been contained but crews were still working to extinguish the flames on Saturday evening.

One man has been taken to hospital suffering smoke inhalation, a FRNSW spokesman told AAP.

"Firefighters have managed to protect adjoining properties," he said.

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Man injured in Bathurst ute roll

A man has sustained serious head injuries in a ute accident in NSW, police say. Source: AAP

A MAN has sustained serious head injuries in a ute accident on a private property south of Bathurst, NSW.

Police say the ute rolled at a property at Perthville about 4.30am (AEDT) on Saturday.

A 29-year-old local man who'd been travelling in the ute tray was thrown from the vehicle and suffered serious head injuries.

He's been airlifted to Westmead Hospital and is in a serious but stable condition.

The driver, a 33-year-old man from North Richmond, was taken to Bathurst Hospital with suspected rib injuries.

His front-seat passenger, a 29-year-old man from Pokolbin, escaped with bruising.

Police will interview the men once they are deemed well enough.

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Govt embarrassed over Huawei: Labor

Labor says confusion over the coalition government's stance on Huawei's NBN ban is embarrassing. Source: AAP

CONFUSION over whether or not the coalition government would back a ban on Chinese telecoms giant Huawei tendering for work on the NBN was "amateurish and somewhat embarrassing", a senior Labor MP says.

Prime Minister Tony Abbott ruled out overturning the ban this week, despite his Communications Minister Malcolm Turnbull and Trade Minister Andrew Robb earlier indicating it could be reviewed.

The former Labor government instituted the ban based on security advice from spy agencies ASIO and the Defence Intelligence Organisation.

Matt Thistlewaite, Labor's shadow parliamentary secretary for foreign affairs, said Mr Turnbull and Mr Robb were guilty of dangling a carrot in front of the Chinese telco.

"Having Tony Abbott and the Attorney General George Brandis come out and put paid to those arguments I think was a little bit amateurish and somewhat embarrassing for this government," Mr Thistlewaite told Sky News on Saturday.

"I have no argument with the approach that they've taken in terms of the outcome of the policy. The issue I have with is the comments of Andrew Robb and Malcolm Turnbull in the lead up to the decision being made."

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Bahrain opposition leader faces prosecutor

BAHRAIN'S main opposition group says its leader has been called to the state prosecutor's office over an exhibition that showed alleged abuses against anti-government protesters.

It's unclear whether Ali Salman, the head of the Shi'ite bloc al-Wefaq, could face arrest on Sunday.

Such a move could boost tensions sharply and open wider clashes between Shi'ite-led protesters and Bahrain's Sunni rulers.

Riot police last week raided the museum-style hall opened by al-Wefaq that included depictions of alleged torture and heavy-handed tactics against protesters during 32 months of unrest.

Authorities said the displays incited "hatred".

Al-Wefaq said on Saturday that Salman was ordered to the prosecutor's office, but gave no other details.

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Myanmar rebel groups agree on peace plan

EIGHTEEN ethnic rebel groups have reached an agreement to sign a ceasefire with the Myanmar (Burma) government if it agrees to their conditions.

The rebels agreed to negotiate with the government over the armistice, something the country has not had in 64 years.

The groups were drafting a nine-point ceasefire plan, conference spokesman Khun Oakka said at the end of the three-day conference in Laiza, 890 kilometres north of Rangoon.

It was called to discuss the government's proposal on a country-wide ceasefire.

The insurgents' demands are to be presented to government representatives at a conference November 4-5 in Myaitkyina, the capital of Kachin state.

The government of reform-minded President Thein Sein, which came to power in March 2011 after Myanmar's first elections in 20 years, has signed separate ceasefires with 14 of the country's ethnic rebel groups.

Some of the groups have been fighting since 1949, many for semi-autonomy for ethnic minorities in their traditional territories.

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Qld reef assessment paints grim picture

The federal and Queensland governments have released a new plan to protect the Great Barrier Reef. Source: AAP

FEDERAL Environment Minister Greg Hunt says a new long-term plan will improve the health of the Great Barrier Reef and increase protection, but green groups say it doesn't go far enough.

The long-awaited strategic assessment draws on scientific evidence to give an overview of the state of the reef and outlines a plan to better protect the World Heritage site.

Mr Hunt acknowledged there were some serious concerns, but is hopeful the strategy will ensure the reef's survival.

"What has happened in the past is what we have to live with, but we can control and improve the future of the reef through our actions," he told reporters on Friday.

The assessment concluded the best way to halt and reverse damage to the reef was to put in place a new management framework and examine the "cumulative effect of human activities and natural forces", rather than threats in isolation.

Mr Hunt said the framework would set tougher environmental standards for future developments.

"We make no apology for applying tougher standards going forward," he said.

The report also called for a "net benefit policy", so that any activities along the coast and in the marine park produced an overall benefit to the reef.

It also said a new reef recovery program was needed, involving local communities, industry and indigenous groups, as well as a reef-wide monitoring and reporting program.

Australian Marine Conservation Society spokeswoman Felicity Wishart welcomed the assessment but said developments along the state's coast must be stopped if Australia was serious about protecting the reef.

"If the target is to improve the health of the reef then stop doing anything that's going to damage it," she told AAP.

Ms Wishart called for Mr Hunt to reject a proposal to expand the Abbot Point coal port near Bowen if he was serious about improving water quality.

That project involves dredging three million tonnes of soil and dumping it on the reef.

WWF Australia spokesman Nick Heath said the report confirmed large sections of the reef were in "dire straits".

He said given the assessment showed inshore areas were in either poor or very poor condition, those in power couldn't justify approving inshore dredging projects.

The report found that while corals were in good condition at the northern end of the reef, both inshore and offshore corals in southern areas were in decline.

The biggest threats came from the crown-of-thorns starfish, severe weather, nutrient and pesticide run-off from farms, illegal fishing, bycatch and dredging.

Great Barrier Reef Marine Park Authority chairman Russell Reichelt said while many of the impacts of those threats were already widely known, the assessment had looked at their "accumulative impact".

"There needs to be a multi-pronged approach," he said.

"(With this in mind) we can make a difference and restore the damage to the reef."

Queensland Deputy Premier Jeff Seeney said it was important for decisions about the reef to be based on scientific facts, not "alarmist claims" by environmental groups that can't be verified.

The strategic assessment will be open for public comment until January 31.

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Bashed man stumbles home after Vic attack

A BLEEDING man who was bashed in a Melbourne park managed to stumble down a road for nearly a kilometre until he reached his parents' house.

The 38-year-old is now recovering in hospital from severe head and facial injuries after his parents heard him collapse on their front doorstep.

Police say the unprovoked and random attack, which occurred last Sunday, left a trail of blood about a kilometre long as the man staggered through the city's south.

"It's absolutely brutal and vicious," Detective Leading Senior Constable Ric Anderson said of the attack.

"If he hadn't have been able to raise the alarm, it certainly could have been life-threatening."

The man remembers hearing someone rapidly approaching from behind before he was struck in the head with a blunt object.

He saw a small, white vehicle parked at nearby tennis courts in Roy Dore Carrum Reserve prior to the attack and also seeing two women in the front of the car carrying torches.

Police say nothing was stolen and there's no known motive for the bashing.

His attacker said nothing before fleeing.

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Qld magistrate unsure of man's bikie links

QUEENSLAND police have the weekend to convince a magistrate a man charged with multiple drug offences has links to a criminal bikie gang.

Benjamin Knight, 28, faced six drug charges in Southport Magistrates Court on Friday after police allegedly discovered 16g of amphetamines, cannabis, scales and $14,450 in cash in his car on Thursday night.

In an affidavit presented to the court, police also alleged Knight was an associate of the Finks motorcycle gang.

But Knight's lawyer Tim Clements told the court his client denied the allegation and his only connection to bikies was his boss's son being a motorcycle club member.

Magistrate Michael Hogan labelled the police affidavit "vague" and claimed it was unsubstantiated.

Mr Hogan adjourned the matter until Monday after police asked for time to prepare a new affidavit.

Speaking to reporters earlier on Friday, Gold Coast anti-bikie taskforce head Superintendent Jim Keogh said he was confident Knight is linked to the Finks.

"We will be alleging that this person has links to the bikie group the Finks," Supt Keogh said.

"There's no doubt the police intelligence indicates that this person, the 28-year-old, has an association with the criminal motorcycle gang the Finks."

Knight will remain in custody until Monday when he is expected to apply for bail.

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US Office Depot, OfficeMax merger cleared

THE proposed merger of Office Depot and OfficeMax has received clearance from the US Federal Trade Commission, removing a key regulatory hurdle from the process.

The office supply companies agreed to a $US1.2 billion ($A1.27 billion) combination in February.

The agency said its 7-month investigation showed that the merger isn't likely to cause competitive harm.

The companies said on Friday that they expect the transaction to close on Tuesday.

Office Depot Inc, based in Boca Raton, Florida, runs more than 1,300 stores worldwide.

OfficeMax Inc of Naperville, Illinois, operates more than 900 stores in the US and Mexico.

They each anticipate reporting their third-quarter earnings on Monday.

Office Depot's stock gained 21 US cents, or 3.8 per cent, to $US5.80 in morning trading.

Shares of OfficeMax rose 64 US cents, or 4.3 per cent, to $US15.62.

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Russian piracy charges remain: Greenpeace

GREENPEACE says that, contrary to an earlier statement, Russian investigators have not dropped piracy charges against 28 international activists and 2 journalists detained in the Arctic city of Murmansk.

Investigators filed hooliganism charges against all 30 detainees over the past week, but failed to withdraw the piracy charges, the environmentalist organisation said.

Among those facing charges are Tasmanian Colin Russell and Australian permanent resident Alexandra Harris.

The Russian Investigative Committee said on October 23 that it had converted the piracy charges into hooligan charges.

A woman who picked up the phone at the Committee's press service on Friday refused to elaborate, saying that the agency would not make any further comments.

Greenpeace said that as a result, the 30 detainees stand accused of both piracy and hooliganism, which carry maximum sentences of 15 and 7 years, respectively.

The organisation's executive director Kumi Naidoo said the detainees should be immediately released once the piracy charge is withdrawn because international law prohibits one country from seizing another's vessels in international waters, except in extreme cases such as piracy.

"Allowing states to seize each other's vessels for lesser trumped up charges would be a major threat to international relations and commerce," he said.

Russia seized the Greenpeace ship Arctic Sunrise and detained its multinational crew in September, after activists had attempted to storm an oil rig in the remote Pechora Sea.

The organisation says that oil drilling in the Arctic is irresponsibly dangerous and risks destroying the sensitive environment.

However, Russian Prime Minister Dmitry Medvedev said on Friday that Greenpeace themselves had damaged the environment.

"Our country cannot support activities that potentially harm the environment and endanger humans," Medvedev said at a joint press conference with his French counterpart Jean-Marc Ayrault, the Interfax news agency reported.

The prime minister explained that oil platforms were so dangerous that even noble-minded protests against them are irresponsible.

"Nobody has the right to break the laws related to their operation" he argued.

Medvedev promised Ayrault that Russia would handle the case "just and strictly in accordance to law".

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Jakarta summons Aussie envoy over spying

INDONESIA has summoned the Australian ambassador in Jakarta over media reports Australian embassies have taken part in secretly intercepting calls and data across Asia.

Indonesia's Foreign Affairs Ministry is demanding an explanation from ambassador Greg Moriarty after media reports alleged the existence of a "tapping facility" in Australian embassies in Jakarta and other countries in the region.

"The Australian ambassador in Jakarta has been summoned to the Foreign Affairs Ministry on Friday for an official explanation from the Australian government regarding the story," a statement from the Indonesian ministry said late on Thursday night.

"As a neighbouring country and friends, such an act as has been reported does not reflect at all the spirit of friendship ... and this is something regarded by the Indonesian government as totally unacceptable."

It has been reported that surveillance collection facilities are in place at embassies in Jakarta, Bangkok, Hanoi, Beijing and Dili, and high commissions in Kuala Lumpur and Port Moresby - without the knowledge of diplomats.

Some of the details are in a secret US National Security Agency (NSA) document leaked by whistleblower Edward Snowden and published by Germany's Der Spiegel magazine.

The document reveals the existence of a signals intelligence collection program - codenamed STATEROOM - and conducted from sites at US embassies and consulates and from the diplomatic missions of other intelligence partners including Australia, Britain and Canada.

The document says the Australian Defence Signals Directorate operates STATEROOM facilities "at Australian diplomatic facilities".

A former Australian Defence Intelligence officer has told Fairfax Media the directorate conducts surveillance operations from Australian embassies across Asia and the Pacific.

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Mixed views on NSW same-sex marriage bill

Same-sex marriage has been described as unconstitutional and evil during debate in NSW parliament. Source: AAP

SAME-SEX marriage has been variously described as unconstitutional, evil and inevitable during debate in the NSW parliament.

NSW on Thursday became the fourth Australian state or Territory, after Tasmania, South Australia and the ACT, to introduce a bill that would allow gay marriage.

If passed, it would erase discrimination from state law and help young people struggling with their sexuality, Labor MLC Penny Sharpe, a member of the working group which drafted the bill, said.

"There are still young people in this state who get up every day hoping that no one notices or no one asks if they are gay, a fag, a poof, a lezzo, a dyke or words much, much worse," Ms Sharpe said.

"I want every person who has struggled simply for being who they are ... to know there are people in the community who won't accept this discrimination."

Liberal MP John Ajaka told parliament state laws would simply create different classes of marriage across the country.

But same-sex marriage was "inevitable" in Australia given growing support in the community, Labor MP Walt Secord said.

Liberal MP Peter Phelps said he'd rather marriage be out of the reach of all governments, while Christian Democratic MP Fred Nile warned the bill threatened to undermine the "sacred institution" of marriage between a man and a woman.

In an article in the Sydney gay community newspaper, The Star Observer, NSW Premier Barry O'Farrell re-stated his preference for national same-sex marriage laws to avoid a "patchwork quilt" of state legislation.

Only a change to the federal Marriage Act would deliver marriage equality, he wrote.

Outside parliament a throng of protesters gathered to rally against the bill, holding up signs reading "God Loves Sinners, But Hates Sin" and singing hymns.

Protester Ken Higgs, 61, of Taree, said same-sex marriage was "evil".

"Of course it's evil. It's a perversion of the concept of marriage," he told AAP.

The ACT passed same-sex marriage laws, to come into effect on November 7 - only to face a possible High Court challenge by December.

On Tuesday an attempt to revive Tasmania's same-sex marriage debate in the state's upper house was voted down.

The South Australian parliament threw out a gay marriage bill after it was introduced in June.

Attempts to allowing same-sex marriage have also been rejected in the federal parliament.

The NSW bill had been carefully drafted to withstand potential High Court challenges, Penny Sharpe told ABC Radio.

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Obeid 'pressured ministers over leases'

Eddie Obeid lobbied ex-treasurer Eric Roozendaal (pic) for special treatment in regard to leases. Source: AAP

EDDIE Obeid lobbied former NSW treasurer Eric Roozendaal for special treatment in regard to leases in which the Obeid family held an interest, the state's corruption watchdog has heard.

Mr Roozendaal told the Independent Commission Against Corruption (ICAC) he was unaware Mr Obeid's family owned properties at Circular Quay.

The ICAC is investigating allegations Mr Obeid lobbied several state ministers to have leases on government land at Circular Quay renewed without going to public tender after their expiration in August 2005.

The Obeids ran two restaurants and a cafe at the harbour through a company owned by a family trust, with associate and relative John Aboud acting as the face of the business.

During his time at NSW parliament from December 2004 until March 2011 Mr Roozendaal held several senior portfolios, including ports and treasury.

He also was a member of Mr Obeid's Terrigal faction.

Mr Roozendaal was ports minister from August 2005 to February 2006, and was ultimately in charge of policy governing the retail leases in which the Obeids had secret interests.

It was while he held this portfolio that Mr Obeid made representations to him on behalf of the lessees.

"He felt they were being poorly treated because they had invested a lot of goodwill into their businesses in the lead up to the Olympics," Mr Roozendaal said, recalling a conversation that likely took place in Mr Obeid's office.

"And that they felt that they should, if there was going to be a market evaluation of their leases, they should get the first right of refusal."

Counsel assisting the commission Ian Temby then asked "did you understand him to be urging that case upon you?"

"Yes," Mr Roozendaal replied.

Earlier on Thursday the ICAC heard Mr Obeid had also told Joe Tripodi, who took over the waterways portfolio from Mr Roozendaal, he wasn't happy expressions of interest would be sought for the leases.

Mr Tripodi's former deputy chief of staff Lynne Ashpole said her boss had told her of discussions he had with Mr Obeid.

"My memory of his exact words were that Mr Obeid wasn't very happy with him for wanting to have an expression of interest process," she said.

Mr Tripodi was initially in favour of putting the leases out to tender when they were to be renewed, Ms Ashpole said.

The decision to seek expressions of interest was later suspended until direct negotiations with tenants for ten year fixed terms were offered in July 2008.

Mr Obeid's lawyer Stuart Littlemore argued that his client "had a go" at Mr Roozendaal on behalf of retailers in general and only mentioned the Circular Quay leases as an example.

"Mr Obeid's position is 'I had a go at Eric about retail leases, generally, yes I had a go at Eric about the way the retail lease regime was working at Circular Quay'," Mr Littlemore said.

"(He) did that because (he) was speaking in general about unfairness. (He) didn't want to disclose to (Mr Roozendaal) that here was a family interest because he might have felt compromised."

The hearing continues before Assistant Commissioner Anthony Whealy.

Mr Tripodi is expected to appear on Friday.

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Clive Palmer wins seat of Fairfax

Clive Palmer has won the seat of Fairfax and says he'll have no conflict of interest as an MP. Source: AAP

NEWLY declared federal MP Clive Palmer doesn't have a clue how much money, or how many company directorships or properties he has, but reckons it'll be no problem to declare his pecuniary interests.

"Well, you've got within 28 days from when you've been sworn in, so it will be there," a jovial Mr Palmer told ABC television on Thursday after being declared the winner of the Sunshine Coast seat of Fairfax with a final margin of 53 votes.

Mr Palmer thought he might own up to 20 properties.

He said "who knows, who cares ... don't worry about money" when asked how much he had, and denied he would have any conflict of interest as an MP because of his business interests.

"Conflict of interest only comes if you are a minister of the crown," he said.

He was unable to say how many company directorships he had because he didn't think of them in terms of numbers.

"I wouldn't have a clue, but a lot, maybe 40 or 50," he told the 7.30 program.

Mr Palmer told AAP he was looking forward to the Palmer United Party making a positive contribution to the battle of ideas in Canberra.

"We have three senators and have the balance of power, so I think we can make a significant contribution as a party."

His Liberal National Party (LNP) opponent Ted O'Brien congratulated Mr Palmer, but the party may still challenge the result.

LNP state director Brad Henderson said the validity of any election could be disputed by a petition addressed to the Court of Disputed Returns within 40 days of a declaration.

"Given the sheer scale of this process, in terms of the number and nature of challenges and determinations made, the LNP will now take some time to consider its position", he said in a statement.

Mr Palmer was concerned by the three recounts in Fairfax, one of closest electoral races in Australian history.

The Australian Electoral Commission (AEC) finally declared him the winner almost eight weeks after the September 7 federal election, and following his party challenging more than 50,000 ballot papers.

Mr Palmer originally finished 36 votes ahead of Mr O'Brien, but the AEC on September 21 automatically ordered a recount because the margin was less than 100 votes.

"I'm very disappointed in the AEC because the first count I won by 36 votes, the second count I won by seven votes and the third count I won by 53 votes," he told AAP.

"That's a bit of a worry, isn't it?"

He said he'd been criticised for challenging the validity of 50,099 of the 89,176 ballots, another Australian record, but the result had vindicated his actions.

The Palmer United Party leader has over the past two months accused both the LNP and AEC of vote fraud and applied for a Federal Court injunction to stop the count in Fairfax.

Mr Palmer also claimed former military officers were controlling the electoral commission and rigging the election.

Despite his grievances, he thanked rival candidates and the local AEC officials "who had a very difficult job and had a great deal of pressure on them from the AEC apparatchik from Canberra and Brisbane".

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Drug tunnel found on US-Mexico border

A SOPHISTICATED border tunnel has been discovered connecting San Diego and Tijuana, Mexico, the latest find by investigators who have encountered a number of secret passages in recent years used for drug smuggling.

The passage was recently completed, US Immigration and Customs Enforcement said in a brief statement on Wednesday night.

A spokeswoman, Lauren Mack, declined to elaborate but said more details would be released on Thursday.

Mexican news organisations published photos that show a deep, well-built tunnel near Tijuana's main airport.

Alberto Capella, Tijuana's public safety chief, said a law enforcement operation was under way and he couldn't provide details.

More than 75 tunnels have been discovered along the US-Mexico border since 2008, designed largely to smuggle marijuana to the US.

The tunnels are concentrated along the border in California and Arizona.

San Diego is popular because its clay-like soil is easy to dig, while in Nogales, Arizona, smugglers tap into vast underground drainage canals.

San Diego's Otay Mesa area - site of the latest discovery - has the added draw of plenty of nondescript warehouses on both sides of the border to conceal trucks being loaded with drugs.

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Safe assumption phone was tapped: Carr

BOB Carr says while he was foreign minister it was a "safe assumption" to operate as though his phone calls were being monitored.

Mr Carr's comments come after media leaks from former US intelligence contractor Edward Snowden revealed that German Chancellor Angela Merkel, and other foreign leaders, had their personal phones tapped by the US National Security Agency (NSA).

The revelation has created an uproar in Germany and across Europe amid conflicting reports as to whether US President Barack Obama knew of the eavesdropping.

When asked by ABC's Lateline on Thursday whether he operated under the assumption that his calls were being monitored while he was Australia's foreign minister, Mr Carr said it was a "safe assumption".

"In travelling in some parts of the world, one felt that advice more pressing than in other parts of the world," the recently retired NSW senator said.

Mr Carr, who was foreign minister under the former Labor government, says the lesson to be learned out of the leaks is whether allowing security agencies to pursue "adventurous objectives" is worth the potential loss of prestige.

"The Americans are going to have a vigorous debate about whether their national interest has been compromised by a too adventurous activity from intelligence agencies set up, strengthened, and strongly resourced after September 11," he said.

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Better preschools paying off, stats show

THE evidence is in: better quality preschool education is leading to smarter primary school students.

The COAG Reform Council says that halfway through the Council of Australian Governments' 10-year agreement to improve early childhood and school education, there are encouraging signs it's working.

"There has been a significant pay-off in terms of the COAG reforms in early education which is now trickling down the system," council deputy chairman Greg Craven told reporters in Canberra.

"We can see, for example, improved results in literacy among the group of children who are now entering years like Year 3, who were the first beneficiaries of those COAG reforms."

The benefits could be even bigger if more young kids spent at least 15 hours a week at preschool, the council said.

The council's report on education, released on Wednesday, used national testing (NAPLAN), enrolment, international testing and census data to assess student performances over the five years from 2008 to 2012.

It finds improvements in student achievements in primary school but not secondary school.

Similarly for attendance rates, almost all primary students went to school but the rate dropped off in high school.

Year 10 had the lowest attendance rates across all jurisdictions, with little change since 2008.

Professor Craven said it was concerning that reading and numeracy results for secondary students hadn't improved significantly.

But he said the overall picture was mixed, citing an increase in the proportion of students completing Year 12.

Although the country isn't on track to meet its target of 90 per cent of students completing Year 12 by 2015, it should get there by 2020.

"If more Australians are attaining the end of school, we can expect that the children of those Australians are going to do better," Prof Craven said.

"There is good news in this that we're improving at the bottom, we're improving at the top; if we can move to meet in the middle where the problems seem to be then there is a significant hope of general improvement."

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Disengaged youth cause for concern

MORE than a quarter of young Australians are neither learning nor earning in the years after school, a report says.

Experts are concerned if the disengaged youth of Australia aren't drawn back into the economy they could become a "lost" generation.

The new COAG Reform Council report on education, released on Wednesday, shows the proportion of 17- to 24-year-olds not fully engaged in work or study grew to 27.3 per cent in 2011.

Queensland, South Australia, Tasmania and the Northern Territory were above the national average while in the ACT just 17 per cent of youth were not fully engaged.

The report found there were more in full-time study but fewer in full-time work in 2011 than in 2006.

Council deputy chairman Greg Craven said the global financial crisis and subsequent drop in jobs available would have had an impact.

He said all those young people weren't necessarily sitting around doing nothing - they could be in part-time study or work, but not enough hours a week to count as fully engaged.

Nevertheless, the results were worrying.

"This is a very, very complicated problem," he told reporters in Canberra.

"More research would be good because we don't want people in that age group to become entrenched in non-participation."

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Disadvantage persists in schools: report

A NEW report paints a bleak picture of how disadvantaged students do at school, say the people who work with those children.

The COAG Reform Council report on education, released on Wednesday, shows there are still huge gaps between the performance of indigenous and non-indigenous students.

The Smith Family, a leading provider of education support to disadvantaged students, says the results are depressing.

"It's really clear that there's a significant group of young people ... who just aren't getting the education that they deserve," chief executive at The Smith Family, Lisa O'Brien, told AAP.

Indigenous children are twice as likely to be developmentally vulnerable and unprepared for starting primary school, then have poor literacy and numeracy results and school attendance.

After school, 60 per cent of young indigenous people weren't fully engaged in study or work - almost three times more than non-indigenous people.

There are also big differences between students from low socio-economic backgrounds compared with their wealthier, more advantaged peers.

"It remains the case in Australia that if you are disadvantaged for any reason, you will perform less well," council deputy chairman Greg Craven said.

"It's a mixed picture but it's clearly something that COAG's work is not finished on."

Dr O'Brien said students weren't getting a firm grounding early on and problems were exacerbated by a lack of good role models.

In a western Sydney school, teachers kicked off a careers program by asking their Year 7 students to interview an adult they knew about their job, career choices and training.

"All the kids were looking a little bit concerned about how to do it so (the teacher) was wondering what's the issue," Dr O'Brien said.

"Only two in that class actually knew someone who was employed.

"What does a post-school career look like when inter-generational poverty is set and unemployment is all that you've known?" he said.

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Business credit hit by FBT uncertainty

UNCERTAINTY surrounding the previous Labor government's planned changes to fringe benefit tax (FBT) on cars had a dampening impact on overall business credit in the run-up to the September election.

However, credit data provider Veda says low interest rates and a new government appears to be giving businesses greater confidence with credit demand in October looking strong.

Veda said its business credit demand index for the September quarter, released on Wednesday, fell 0.7 per cent over the year, a sharp fall from 5.5 per cent annual growth in the June quarter.

"The September quarter was the first contraction in business credit demand since the end of the GFC, so it is clear that weak economic conditions and political uncertainty were affecting business confidence," Veda's general manager of commercial credit risk Moses Samaha said in a statement.

While inquiries for business loans rose 3.1 per cent in the September quarter, trade credit fell 0.6 per cent and asset finance tumbled 5.9 per cent, reversing two quarters of growth.

"We saw a large drop in the number of businesses seeking to hire or lease equipment in the September quarter, which may have been a result of changes to fringe benefit tax implemented by the Labor government at the beginning of the quarter," Mr Samaha said.

The coalition government has scrapped the FBT changes.

He said the Veda index was highly correlated with growth in gross domestic product (GDP), investment in machinery and building construction.

The September quarter reading would be consistent with annual GDP growth of 2.5 per cent compared with 2.6 per cent as of the June quarter.

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BP sees profit drop in Q3, raises dividend

UK oil company BP has reported a 34 per cent drop in third-quarter net profit, but says it will increase its quarterly dividend and divest another $US10 billion ($A10.4 billion) in assets.

BP blamed a drop in refining margins for the decrease in net profit to $US3.5 billion in the quarter ended September 30 from $US5.28 billion in the same period a year earlier.

But investors were encouraged by the company's plans to increase its quarterly dividend by 5.6 per cent, to 9.5 cents a share, payable in December.

Chief Executive Bob Dudley also said the company plans to sell off $US10 billion in assets before the end of 2015, with the proceeds set to go to shareholders, such as in the form of share buybacks.

Shares in BP were up 4.5 per cent in midday trading in London.

Total production for the third quarter was 3.17 million barrels of oil equivalents a day, driven mainly by growth in production from new projects.

The company said new major upstream projects - particularly in Norway and Angola - are showing strong production.

BP, which has already set aside more than $US42 billion for the 2010 oil spill in the Gulf of Mexico, did not elaborate on its current estimates for the costs of the Gulf spill, but said it might revisit its provisions at a later date.

Ishaq Siddiqi, a market strategist at ETX capital, said the numbers "look clean" on the whole. The fact BP's costs related to the Deep Water Horizon incident have held steady, for now, is "another welcome relief".

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Autos drag down US sales stats

A SHARP drop in auto sales caused largely by a calendar quirk lowered US retail spending in September.

But Americans spent more on most other goods, showing some confidence in the economy before much of the government shut down.

Overall retail sales dipped 0.1 per cent, the Labor Department said on Tuesday - the weakest showing since March.

Auto sales fell 2.2 per cent, the largest decline since October 2012, but the drop occurred largely because the sales calendar pulled Labor Day weekend activity into August, automakers have said.

Excluding autos, gas and building supplies, sales rose 0.5 per cent in September, up from 0.2 per cent in August.

Economists exclude those categories because they tend to be volatile.

Outside of autos, nearly all retailers reported higher sales, including furniture stores, electronics and appliance retailers, and grocery stores.

Sales at clothing stores and department stores were the only others aside from autos to decline.

Consumer confidence fell in September to a four-month low, according to the Conference Board.

In addition to a weaker job market, higher interest rates and a drop in stock prices may have also weighed on Americans' outlook.

Sluggish spending is likely to weigh on growth.

Most economists predict growth slowed in the July-September quarter to an annual rate of about 1.5 per cent to 2 per cent, down from a 2.5 per cent rate in the April-June quarter.

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Jackson's doctor released from jail

THE former doctor convicted of causing Michael Jackson's death has been released from jail.

Jail records confirmed Conrad Murray's release on Monday and the sheriff's office said he left a downtown Los Angeles jail at 12.01am (1800 AEDT).

The former cardiologist served less than two years in jail after being convicted in 2011 of involuntary manslaughter for Jackson's June 2009 death.

The pop superstar died after receiving a lethal dose of the anaesthetic propofol, which Murray was giving Jackson as a sleep aid.

Murray's medical licences remain suspended or revoked in three states where he previously practised medicine.

Murray had been sentenced to serve four years behind bars, but a change in California law allowed his incarceration time to be significantly cut down.

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Investment outlook rests with govt

HOPES are fading that non-mining sections of the economy will be taking up the slack of a waning resources investment boom any time soon.

So an independent forecaster believes government infrastructure spending must be encouraged.

In its latest Investment Monitor, Deloitte Access Economics says for the first time in a decade the total value of investment projects at all stages of construction has now declined for three consecutive quarters.

"It is clear that the investment in the resources sector which has underpinned growth for the best part of a decade is fading," Deloitte Access Economics partner Stephen Smith said releasing the report on Tuesday.

"However, the composition of growth in the medium term - and in particular what the key driver of growth will be - remains less clear."

He said despite record low interest rates, retail spending continues to be soft with few signs of a revival, while non-residential building activity "remains on shaky ground".

The value of non-residential work commenced over the past year is at the lowest since the immediate aftermath of the 2008-2009 global financial crisis, when the then Labor government rolled out the school building program in an effort to lift activity.

Mr Smith said public infrastructure spending can play an important part during an uncertain period of economic transition.

Tony Abbott has labelled himself as the 'infrastructure prime minister' and Treasurer Joe Hockey is pushing the funding of projects to the top of the government's agenda.

"In a phase in which business investment spending is looking increasingly shaky and support to economic activity is required, a more active public sector role in financing and supporting infrastructure projects should be welcomed," he said.

The forecaster's investment database showed the total value of projects decreased by $3.4 billion or 0.4 per cent in the September quarter to $873.7 billion, taking it 5.7 per cent lower than a year ago.

The value of definite projects - under construction or committed - slipped in value by 0.7 per cent to $464.7 billion, although this was a modest 0.6 per cent higher than a year earlier.

But while the value of planned projects - under consideration or possible - at $409 billion was little changed from the June quarter, this was 12 per cent down from September 2012.

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Man fractures face in boat backflip

A MAN has sustained head injuries after trying to backflip off the top of a ferry on NSW's Central Coast.

Police responded to reports of drunk passengers on board a ferry at Ettalong Wharf on Saturday night.

Paramedics treated a man with head injuries.

Police say the man, 25, tried to back flip from the top of a ferry but hit his head on the boat railing on the way down.

The man was taken to Gosford Hospital with fractures to his head and face.

NSW Police transport commander Assistant Commissioner Max Mitchell labelled the incident as dangerous and stupid.

"It's quite clear alcohol was a factor in this incident, which by anyone's definition was dangerous, foolish and stupid," he said in a statement.

"We remind commuters it is an offence to consume alcohol on public transport or to behave in an anti-social manner as a result of drug or alcohol intoxication."

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Royal couple return home after Sydney tour

Crown Prince Frederik and Princess Mary will fly out of Sydney on Tuesday after a jam-packed tour. Source: AAP

DANISH royals Crown Prince Frederik and Princess Mary will fly home on Tuesday after wrapping up a jam-packed Sydney tour.

What began as a trip for the Sydney Opera House's 40th anniversary turned into a visit to a state reeling from a bushfire crisis.

The fire-ravaged Blue Mountains became the impromptu public highlight of the royal couple's busy schedule, which started when they landed in NSW last Tuesday.

Enthusiastic fans greeted Mary and Frederik at each public appearance, including the opening of a Danish jewellery store in Sydney's city centre and a visit to the Australian Twins Registry.

But none were more appreciative than the hundreds of people who gathered in the bushfire-hit town of Winmalee to greet the couple on Sunday.

Swapping their leather boots and cargo pants for elegant attire, the couple attended the Opera House's 40th-anniversary celebrations on Sunday night as the event's official patrons.

Those who did not come face-to-face with the Tasmanian-born princess were still warmed by her visit.

Mary sent 12 bouquets she received from fans on her Sydney tour to cancer patients at the Westmead Hospital Crown Princess Mary Cancer Centre.

The couple will attend the Crown Prince Couple Awards at Sydney Opera House on Monday night as the last official function of their trip.

It will be the first time the awards, gifted to the royal couple as a wedding present, have been held outside Denmark.

Mary and Frederik will fly out of Sydney International Airport on Tuesday.

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NSW trucks deregistered for tunnel delays

THREE trucks have had their registration suspended after becoming stuck in Sydney tunnels and causing lengthy traffic delays.

Their drivers are the first to be hit by state laws introduced in July.

Roads Minister Duncan Gay said one over-height truck drove into the Eastern Distributor last Friday.

It caused damage to the sprinkler system and more than two hours of delays on the busy road.

Mr Gay said the truck was deregistered for three months and the driver was being penalised for failing to stop.

Another two trucks have had their registrations suspended for 28 days after they closed the Sydney Harbour Tunnel for 20 minutes in separate incidents this month.

Mr Gay said there were $2200 fines and demerit points for truck drivers with over-height loads, but the message was not getting through.

"New laws were introduced in July this year which allow us to hit operators where it hurts and suspend a vehicle's registration for up to three months if it's driven into a tunnel when over-height," he said in a statement.

Mr Gay said the drivers who affected the harbour tunnel "ignored countless signs and warning devices" and had to be reversed out of the tunnel.

In yet another instance, a West Australian operator had his visiting rights in NSW revoked for three months for closing the Sydney Harbour Tunnel for 20 minutes last week.

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Cyprus president expects positive review

CYPRUS' president says he expects international creditors' latest review to approve the country's handling of its bailout program.

Cyprus in March got a 10 billion euro ($A14.5 billion) loan to save it from bankruptcy, but in return it had to commit to a series of reforms and measures.

Among those, uninsured depositors in the country's two biggest banks were forced to take major losses on their savings.

The second-largest bank, Laiki, was shut down and authorities imposed capital controls to prevent a run.

Nicos Anastasiades said on Monday that a second assessment by the country's eurozone partners and the International Monetary Fund will be "equally significant and positive" as their initial one over the summer.

EU and IMF officials are due to begin their review on Tuesday.

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