Winds ease fire threat, but blow out power

STRONG winds have blown away much of South Australia's fire risk, but also torn down trees and left thousands without power.

A cool southerly change, which came after temperatures soared past 40 degrees, rolled in on Friday and brought wild wind gusts that remained until Saturday afternoon.

"The winds are over but we're still dealing with a number of tasks," State Emergency Service (SES) State Duty Officer Bob Stevenson said on Saturday.

The city's eastern and southern suburbs were worst hit, he said, with many powerlines down and crews having to respond to more than 650 calls for help.

One downed tree took seven people around four hours to cut up and remove from the street.

Around 8000 homes have lost power, many in the Adelaide area.

Police said the weather conditions were extreme with multiple intersections losing power and debris striking cars, pedestrians and cyclists.

The winds had also stirred up a serious bushfire, which threatened Tintinara homes and lives in the state's southeast.

But CFS firefighters managed to contain the blaze by late evening after it burned through about 1000 hectares.

Only the Flinders region was listed as a extreme bushfire risk on Saturday with the rest of the state rated high to severe.

Elsewhere in the country, conditions have cooled in Sydney and Melbourne after scorching temperatures baked both cities.

The fire danger is rated as low across much of Victoria and there are no fire bans in place.

In NSW, fire bans are listed in four central districts.

Hot and dry northerly winds have resulted in a severe fire danger to Queensland's Channel Country while severe conditions are also forecast along WA's northerly coast.

A bushfire that had been burning for four days in the Pilbara near the North West Coastal Highway is now under control.

The fire is deemed suspicious.

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Suspected NSW drug house goes up in flames

POLICE are investigating a blaze at what's believed to be a suburban Sydney drug lab.

Firefighters arrived at the Yagoona house, in the city's southwest, just after 6am (AEDT) on Saturday to find it well alight.

No one was inside, police say.

The flames were extinguished and a crime scene established at the Marion Street home.

Police say they located equipment inside the house that is suspected of being used to manufacture prohibited drugs.

Investigations continue, with Fire & Rescue NSW Hazmat officers helping determine what sparked the fire.

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Toll wins Coca-Cola Amatil contract

Toll has won a $380 million contract to distribute Coca-Cola Amatil's products across Australia. Source: AAP

TOLL Group has won a $380 million contract to transport Coca-Cola Amatil's beverages across Australia.

The five year contract involves bulk distribution and interstate road, rail and sea transport, and nearly doubles Toll's existing revenue gained from this work.

Toll's head of contract logistics Bruce Wilson said the contract build on the company's existing relationship with Coc-Cola Amatil.

"As a long term supplier of transport services to the beverage industry throughout the Asia Pacific region, we look forward to working with Coca-Cola Amatil to improve their supply chain," he said.

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Big paper mill fire in Sydney

AROUND 100 firefighters are battling a serious blaze at a paper mill in Sydney, with the fire spreading from stacks of paper to a three-storey building.

Three ladder appliances were deployed on Thursday afternoon to pour water on the fire near Botany Road at Matraville.

Fire & Rescue NSW Commissioner Greg Mullins said the blaze had spread from paper stacks into an adjacent three-storey building.

"We're going to be here for many hours; it's quite a serious fire," he told Macquarie Radio.

Firefighters also had to battle burning oil inside a building.

Workers were evacuated from the site but no injuries have been reported.

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Hockey highly dishonest on budget: Swan

Former treasurer Wayne Swan has lashed out at his successor for dishonesty of the highest magnitude. Source: AAP

FORMER treasurer Wayne Swan has lashed out at his successor for "dishonesty of the highest magnitude" and fiddling the budget figures, after Joe Hockey forecast four years of deficits amounting to $123 billion.

Mr Swan, now a Labor backbencher, has joined colleagues in accusing Mr Hockey of padding out the economic forecasts to paint a bleak picture of the budget.

The mid-year budget outlook forecast deficits to 2016-17 of $123 billion, $68 billion more than the pre-election outlook in August.

Underpinning the deteriorating figures are growth forecasts well below the long-run average, which Mr Swan said were being used to "make the numbers look as bad as possible".

"Out of his $68 billion in additional accumulated deficits over the next four years, $54 billion comes from his forecasting fiddle and the rest is spending decisions he's taken since being elected just over three months ago," Mr Swan wrote on his Facebook page.

"He's trying to put these large write downs all at the feet of the previous Labor government.

"This is dishonesty of the highest magnitude."

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Bega pulls out of cheese takeover battle

BEGA Cheese has pulled out of the three-way battle for control of Warrnambool Cheese and Butter.

The other Australian player in the fight, meanwhile, says it still has the best takeover offer, despite Canadian dairy giant Saputo sweetening its bid.

Bega Cheese, which started the bidding war in September, will let its bid lapse when its offer period closes on December 20.

Bega owns almost 18 per cent of Warrnambool shares, and said it would consider its options regarding that stake once its offer closes.

Murray Goulburn said on Wednesday its offer of $9.50 for each Warrnambool share "remains the highest current value offer" for Warrnambool's shareholders, before accounting for any increases in price that depend on certain ownership thresholds.

Saputo on Tuesday maintained its offer of $9.00 but has increased the amount it will pay if certain share thresholds are met. The bid is final.

Saputo's offer will rise to $9.20 if it gets more than 50 per cent of Warrnambool's shares, $9.40 if it gets more than 75 per cent, and $9.60 if it obtains more than 90 per cent.

Murray Goulburn said there was a significant risk Saputo would not achieve the 50 per cent, 75 per cent or 90 per cent ownership level required to trigger its offer increases.

"This risk is heightened due to the presence of a number of industry participants on WCB's share register, who currently own approximately 46 per cent of WCB in total," Murray Goulburn said.

As well as Bega Cheese's holding, Murray Goulburn has over 17 per cent, and Kirin-owned Lion about 10 per cent.

Saputo currently has nearly 17 per cent but WCB shareholders who accepted the Saputo offer before December 17 have withdrawal rights.

Murray Goulburn's bid of $9.50 is conditional upon it obtaining more than 50 per cent of Warrnambool shares.

It has also filed an application with the Australian Competition Tribunal for authorisation to merge with Warrnambool on the grounds that a merger would be of public benefit.

The tribunal is expected to make a decision by the end of February.

Murray Goulburn managing director Gary Helou has urged Warrnambool shareholders to wait until the outcome of the merger application authorisation so that Murray Goulburn's offer can be considered on its merits.

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$A and house prices crucial in 2014

THE path the Australian economy takes in 2014 will be lit by two prices.

One is the Australian dollar, the other is house values.

If neither heads in the right direction, 2014 could turn out to be more disappointing than 2013.

It was a year of below-normal employment growth and rising unemployment.

But that's what typically follows below-normal growth in economic output, which in turn typically follows a peak in export commodity prices.

And commodity prices peaked in mid-2011.

In fact, the economy has been lucky to escape the recession that, so far, has been inevitable in the year or two following the end of major commodity price surges in the post-World War 2 era.

But it's not too late for things to go utterly pear-shaped.

The Aussie dollar and the housing market could combine to make sure the historical pattern is repeated.

Here's how.

The economy that's already growing at about two thirds its normal pace, and staring down the barrel of slower growth as the mining investment boom winds down, needs two things to help it kick the mining investment habit.

One is a lower exchange rate.

That would give exporters relief from intense competitive pressures.

And it would give domestically-focused industry a bigger slice of the spending done by Australians.

The other is for the housing market to stay strong.

It is a key economic signal, encouraging investment by reducing fears that profits will be undermined by capital losses.

The high-employment building industry is enmeshed with many other sectors and has major spillover effects throughout the economy.

And housing assets are central both to household finances and the strength - and therefore the capacity to lend - of the banks.

The Reserve Bank of Australia has made it clear it wants prices to remain strong.

But what if the Aussie dollar and the housing market don't follow the script?

It's easy to imagine another bout of strength in the exchange rate, perhaps if expected interest rate rises in the US are delayed.

Or if Europe's economic recovery falters and stokes more of the demand for Australian bonds that has buoyed the Aussie in the past year or two.

And it's easy to imagine a dip in housing prices, prompted by investor fatigue, sluggish jobs and wages growth and ongoing pressure from a strong Aussie dollar.

Speculation about an eventual rate rise from the RBA will not help.

The notorious fickleness of investors currently dominating the market could turn a price retreat into a rout if they turn tail en masse.

A price slump would undercut consumer spending and curtail bank lending, not just to households but to businesses as well.

Add a too-high exchange rate and a slumping housing market to the withering mining investment boom and you have a recipe for recession.

Of course, it's not normal for just about every important thing to go wrong at once.

But it does happen.

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Weaker growth not helping budget

THE budget bottom line is looking bleak, and a weaker economy isn't going to help the situation.

The 2013/14 federal budget deficit has risen to $47 billion, from a $30 billion deficit forecast just before the September election, according to the mid-year economic and fiscal outlook (MYEFO).

The year-average gross domestic product (GDP) for 2014/15 is expected to grow by 2.5 per cent, compared to three per cent in the pre-election fiscal outlook.

Unemployment is expected to rise to six per cent in fiscal 2013/14 and then move to 6.25 per cent in the following three years.

RBC Capital Markets senior economist Su-Lin Ong said the revised economic forecasts make for sobering reading.

"Growth is expected to remain well below trend for the next two years, with cuts to nominal GDP capturing the further likely decline in the terms of trade," she said.

"The increasing drag on activity as the mining capital expenditure cycle matures and turns down is evident in the further downward revision to domestic demand.

"It shows an economy really struggling with the challenges of growth rotation towards the non-mining sectors.".

The Treasury's forecasts are based on there being no change to government policy but that could change in the May budget.

HSBC chief economist Paul Bloxham said the deterioration in the deficit over the next few years with no surplus on the forecast horizon is because of weaker economic growth and increased government spending.

"Overall, Australia's fiscal position is not that bad, although it should be much better and plans need to be made to put it onto a more sustainable medium-term footing," he said.

"Care will need to be taken to put Australia on a path to medium-term fiscal balance, without unduly tightening policy at a time when growth is still below trend.

"The significant delay in firming up the government's medium-term plans could also be somewhat costly, as it leaves households and businesses uncertain about what the government will do."

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Pressure grows for NSW pub lockouts

EMERGENCY service workers and doctors are demanding NSW government action to stop the carnage caused by alcohol-fuelled violence.

NSW confirmed it was the capital of drunken violence at the weekend, with 540 arrests during a trans-Tasman operation meant to curb the problem.

The NSW opposition is renewing its calls for a trial of reduced trading hours and lockouts in the state's licensed venues after the success of those measures in Newcastle.

The Last Drinks coalition, a group representing concerned emergency department staff, police and paramedics, has joined the chorus.

Its spokesperson, Australian Salaried Medical Officers' Federation president Dr Tony Sara, says the pressure is firmly on the government.

Dr Sara says a trial in select trouble spots would show positive results in a short time.

He said measures in Newcastle cut alcohol violence by 37 per cent and emergency department admissions by 26 per cent, so were worth a try in Sydney.

He challenged NSW Premier Barry O'Farrell to explain what harm a trial could do, believing the government was under the thumb of the powerful liquor lobby.

"How could it hurt?" Dr Sara told AAP.

"It might reduce profits a bit, but either they lose some money or we continue to have people hurt and maimed.

"I think the community comes before profits."

But Mr O'Farrell rejected calls for tougher laws, arguing authorities had done their part.

"Police and government agencies are doing their bit and the hotel industry, by and large, is responsibly getting on with their task," he told reporters on Monday.

"What we now need is for the community to come to the party."

NSW Opposition Leader John Robertson says police tell him privately they support tougher measures such as pub lockouts.

Police Commissioner Andrew Scipione agreed that cultural shift was crucial.

"Police will never arrest our way out of this problem," he said.

"If we don't start today we will lose a generation of young people to this love affair with alcohol."

Mr Scipione said a 23-year-old man who was punched and stomped on in front of dozens of revellers at Bondi Beach at the weekend was no longer in a critical condition.

The Australian Hotels Association NSW would not comment.

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Aurizon to cut rail fleet, cancel project

FREIGHT and coal haulage operator Aurizon will take a hit of almost $200 million as it cuts the size of its rail fleet and cancels a major Queensland project.

The company, previously known as QR National, is reducing its locomotive fleet by 28 per cent and cutting the number of wagons by 12 per cent in a bid to bring down fuel and maintenance costs.

Aurizon's downsizing will appear as an asset impairment expense of $130 million to $150 million in its accounts for the first half of the 2013/14 financial year.

The company will also incur a $47 million impairment on recent changes to several projects, including Glencore Xstrata's decision to stop the Wandoan project because of weakening thermal coal prices.

Aurizon had proposed a 210 kilometre Surat Basin rail corridor from the Wandoan mine in a joint venture with the Swiss multinational.

"There's not any job losses that are related to that," chief executive Lance Hockridge told reporters on Monday.

In July, Aurizon launched a second voluntary redundancy program in a bid to save $230 million by 2015.

Some 248 voluntary redundancies have since been accepted.

"I think the bulk of it is done," Mr Hockridge said.

More than 2,000 employees have left the company since it was privatised by the former Queensland Labor government in 2010.

Mr Hockridge said he was "cautious but confident" about the thermal coal sector, as well as the future of projects in Queensland's Galilee Basin, where Aurizon has agreed to develop a rail project for the GVK-Hancock joint venture involving billionaire Gina Rinehart.

Aurizon shares were down one cent at $4.69 at 1504 AEDT.

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Bushfire threatens lives, homes in WA town

High temperatures in Western Australia have prompted bushfire warnings for much of the state. Source: AAP

FIREFIGHTERS are battling an out-of-control bushfire that is threatening lives and homes northeast of Perth.

An emergency warning has been issued for people four kilometres east of Toodyay.

The Department of Fire and Emergency Services (DFES) says the fire is burning on both sides of Goomalling Toodyay Road, and homes in the Wicklow and Dumbarton Estates are under direct threat.

"You are in danger and need to act immediately to survive," the DFES said.

"The bushfire is out of control and unpredictable."

About 150 career and volunteer firefighters from the Fire and Rescue Service and Bush Fire Service are fighting the fire, which was reported at 9.18am on Sunday and has so far burned about 100 hectares.

Two helitacs and two fixed-wing water bombers have been sent to assist ground crews.

The DFES says the bushfire is moving fast in a south-southeastern direction.

Residents in Toodyay, about 86km northeast of Perth, told AAP there was smoke in the township but they were pleased with the quick response from firefighters.

Shire president David Dow said the blaze was burning in a semi-rural and rural area but there were still hundreds of people living there.

"The fire is obviously very serious," he told AAP.

"Everyone is just getting out at the moment."

The DFES has warned that if the way is clear, residents should leave now.

"Do not wait and see. Leaving at the last minute is deadly," it said.

Residents who plan to stay and actively defend their properties are warned not to rely on mains water pressure because it may be affected.

People have been told to leave in a western direction towards the Toodyay township.

Goomalling-Toodyay Road has been closed and motorists have been warned to avoid the area.

The cause of the fire is unknown.

In December 2009, a bushfire caused by a fallen power pole destroyed 38 homes and damaged about 137 properties in Toodyay.

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Nervous trading ahead of Federal Reserve

THE Australian sharemarket is expected to see some nervous trading ahead of this week's US Federal Reserve meeting.

The meeting is expected to indicate when the Federal Reserve might wind back its stimulus program, after a bipartisan US budget deal in congress that would avert another US government shutdown.

The Fed's decision is expected to reach Australia on Thursday morning.

AMP chief economist Shane Oliver is tipping a soft start to local trading on Monday.

"We will see a week of nervous trading ahead of the Federal Reserve meeting, then shares will look a bit stronger into the Christmas period," Dr Oliver said.

The Fed's announcement may cause the Australian dollar to fall, he said.

CommSec chief economist Craig James agreed most investors will be treading water early in the week.

"Our markets will have a flat start on Monday and most investors won't be buying and selling - they will wait until the (Fed's) decision comes through," Mr James said.

The Australian market fell 6-7 per cent over the last six weeks while US and European markets finished flat last week.

The Dow Jones on Friday was up 15.9 points (0.10 per cent) at 15,755.36, but down 1.7 per cent for the week.

The Australian dollar rose from 89.3 to 89.6 cents and was likely to drift until the Fed's decision, Mr James said.

The futures market dropped 15 points or 0.3 per cent, and oil prices fell modestly last week.

"The base metal markets saw a modest gain, which is positive for Australian miners," Mr James said.

Locally, the Mid-year Economic and Fiscal Outlook (MYEFO) and the Reserve Bank meeting minutes will be released on Tuesday.

At Friday's close, the benchmark S&P/ASX200 index was up 35.9 points, or 0.71 per cent, at 5,098.4. The broader All Ordinaries index was up 32.3 points, or 0.64 per cent, at 5,101.5.

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