What Australian papers say on Thursday, December 13, 2006

AAP General News (Australia)
12-14-2006
What Australian papers say on Thursday, December 13, 2006

SYDNEY, December 14 AAP - The takeover offer for Qantas has prompted a Sydney Morning
Herald editorial headlined "Private Equity and Public Pain.

"Here's the deal," says the Herald.

"Loans are cheap, so you borrow money to buy out a company's public shareholders.

"You cut costs, boost revenue, then sell the revamped business back to the public.

"As well as the profit, there are huge fees all along the way. In just a few short
years you've made a motza.

"What could go wrong?"

Well, lots, actually, cautions the Herald.

"Interest rates could go up and the economy turn down; your 'private equity' deal could
become a very public disaster."

No wonder, says the paper, the governor of the Reserve Bank, Glenn Stevens, is sounding
the alarm.

"Australia's top banker has joined the chorus of concern about the boom in private
equity takeovers," says the Herald.

"It has seen a string of multi-billion-dollar transactions, of which the spurned $11
billion takeover bid for Qantas would have been the biggest.

The Herald says the term "private equity" is misleading as it suggests shareholders
putting capital into business.

"But these deals are all about replacing share capital with borrowings."

That may work well when times are good, says the paper, but as Mr Stevens has cautioned,
Australia will inevitably face "less forgiving circumstances than ... over the past decade."



The Australian headlines its main editorial "Qantas and the fear of a crash landing".

The paper says it is an uncomfortable irony that the Qantas board has rejected an $11
billion debt-funded takeover offer just as the world's central bankers united to warn
of a possible crash landing.

"Qantas directors are duty bound to make sure they extract every cent they can for
shareholders from any corporate raider who comes knocking," says The Australian.

And their rejection has forced the suitor to lift their offer and drop a condition
that a $100 million break-fee be paid to merchant bankers should the deal fall over.

"That's the free market, says the paper.

"Qantas is a private company, and the deal is small beer in the context of the debt
bubble that has prompted warnings from the financial market regulators.

And it says Reserve Bank governor Stevens is the latest to add his voice to the chorus
of concern that heavy corporate borrowings to fund deals such as the Qantas bid may result
in a painful landing should the world economy experience a shock.

The Australian adds that the Qantas deal is just the latest in a line of multi-billion-dollar
bids that are transferring ownership of publicly listed companies into private equity
syndicates.

"These syndicates are soaking up the world's retirement savings, and need the target
companies to generate big profits to pay the interest bill."



Meanwhile, under the headline "Changed climate helps trade talks", the Australian Financial
Review says the mere suggestion that a comprehensive
free-trade deal with Japan - covering agriculture as well as services, resources and manufactures
- could be achievable would have been dismissed with hearty guffaws only a few years ago.

But now that FTA talks with our largest trading partner and the world's second largest
economy are finally being launched, the prospect doesn't seem quite so far-fetched.

The Fin Review says profound changes in Japanese society and politics, as well as in
the regional balance of economic and strategic power, are forcing the hand of that country's
political class

"Things once unthinkable are now not only being thought but being done," the paper says.

"Japanese agriculture - among the one or two most lavishly protected farm sectors in
the world - may not be the obstacle to trade reform it once was."



An editorial in Brisbane's Courier Mail says the Anglican Church is to be commended
for its efforts to introduce tough new psychological profiling to weed out potential paedophiles
among trainee and existing clergy and eventually, among all church workers.

The paper says that while such offenders are only a small minority, their evil, criminal
acts have caused their victims devastating, long-term suffering and cast a serious slur
over mainstream churches in recent years.

"As they draw on the expertise of psychologists, the churches must also pay close attention
to the faith lives of those they prepare for ministry, because child sex abuse represents
the ultimate breakdown or betrayal of Christian faith," the Courier Mail concludes.



A Melbourne Herald Sun editorial says the Bracks government's determination to reform
the legislative council has come back to bite it.

The newspaper says Victoria is faced with the same frustrating uncertainty "born of
minority agendas" that once afflicted the senate.

It comes after two Democratic Labor Party candidates appear to have won two legislative
council seats in the recent state election.

The newspaper says they will be the unlikely partners sharing the balance of power
with the Greens and the Nationals.

"It seems too much to hope the minority MLCs will acknowledge the mandate Victorians
gave the Bracks Government," the editorial says.

"But if they overplay their grip on power and parliament becomes gridlocked, Victoria
will suffer."



The Melbourne Age says the Bracks Government only has itself to blame for the resurrection
of the Democratic Labor Party.

The DLP has not held a seat in a Victorian parliament since 1958 but in the recent
state election won two seats in the reformed upper house.

The newspaper says although the government has won a recount, "nothing will compensate
for the shock factor that has seen the DLP back on its feet", potentially sharing the
balance of power with the Greens and Nationals.

But the newspaper blames the government for its own misfortune by trying "but ultimately
failing" to manipulate the complexities of the reforms to its own political advantage.

"Labor, by favouring the DLP against the Greens, which it expected would grab the balance
of power, unwittingly ... brought the DLP back from the dead and left the government short
of control of the legislative council," the editorial says.

"Any electoral system that allows for any party with a minimal number of votes to come
first, needs careful scrutiny: elections must be determined by the people who vote, not
those who meet in darkened party rooms."



Finally, the Sydney Daily Telegraph says the New South Wales Police officers and "spin
doctors" who have tried this week to argue that a locked police station bearing a sign
overnight saying it was closed for business was actually open and operating normally,
should be given an award - for unparalleled effrontery.

AAP it

KEYWORD: EDITORIALS

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