Dear Sole Subscriber,

Whatever you may have thought of Harry Jenkins's performance as speaker -- from the regular malapropisms to the red-faced outburts of exasperation -- he was known across the political spectrum as a man of integrity and decency.

Peter Slipper does not come to the role with such high regard. His time in parliament, which extends over two decades, is chiefly noteworthy for his moving from the Nationals to the Liberals, a series of undignified incidents inside and outside parliament and for a series of problems around his travel expenses, which have often needed to be repaid to the taxpayer.

Labor understands this perfectly, of course, but it has not deterred the government from seizing on moves against Slipper within his own party and elevating Slipper to a role that is supposed to be both representative of Australian parliamentary democracy and a critical component of the day-to-day functioning of the House of Representatives. It may have been smart politics, but in terms of preserving the standards of public life, it is a poor outcome.

And whether Slipper can be an effective speaker must be open to question. The speaker must be respected, at least to a degree, by both sides. Judging by the cries of "shame" from the opposition benches when Slipper was dragged to the chair yesterday, his ability to command respect from those on his left is in grave doubt.

Fifteen years on, Labor finally has revenge for the defection of Mal Colston, lured by the Howard government onto the crossbenches in the Senate and into the deputy president's chair in 1996. As "revenge is a dish best served cold" cliches go, this one's been in the deep freeze for more than a decade.

It was only minutes into his new role as speaker yesterday that Peter Slipper decided to offer "a few remarks" about his intentions for the position, including that he would "be an independent speaker in the Westminster tradition". In doing so, he noted that Tony Abbott had expressed a preference for an independent speaker in the aftermath of the 2010 election. Therefore, Slipper had decided: "I will be relinquishing my party membership. I must say that I have been encouraged in this opportunity to serve the parliament in a new way by the actions of some people in the Liberal National Party in recent times."

Well played, LNP. The Queensland Party announced last night it had "accepted" his resignation. Presumably they didn't discuss refusing it for very long.

Defection wasn't comfortable for Colston. Robert Ray and John Faulkner decided to make an example of him, and began a forensic process of digging up Colston's history of travel rorts. Curiously, Faulkner and Ray, and the rest of Labor, had been entirely uninterested in Colston's travel expenses before his defection, but they more than made up for it afterwards. Colston was eventually charged with defrauding the Commonwealth, but managed to avoid being prosecuted due, according to medical opinion, to the fact that cancer would be likely to claim him before a trial was completed. Demonstrating the remarkable resilience of many a defendant who pleads ill-health, Colston didn't die until 2003, just over seven years to the day after he defected from Labor.

The Coalition, at least, has already shown considerable interest in Peter Slipper's travel expenses, and was looking to get rid of him before his defection. Whether they have the forensic skills of Faulkner and Ray to go after him remains to be seen. They've only got two years before the next election brings Slipper's parliamentary career to an end.

And while the LNP gets most of the blame for driving Slipper into the arms of Labor, Tony Abbott's relentless and hugely effective wrecking tactics over the past year would have also played a role in deterring Rob Oakeshott from throwing his hat into the ring yesterday and, potentially, delivering a humiliating defeat for the government. You can't help but think the opposition signing up to parliamentary reform (and concomitant "group hug") in September last year and then promptly welshing on the deal had its consequence in Oakeshott knocking them back yesterday.

The deal the Coalition signed up to last year -- which, indeed, still sits on the Liberal website -- explicitly provides for a non-government speaker, despite Christopher Pyne's claim yesterday that a non-government speaker was some sort of new Labor outrage. It also provided for pairing the speaker, which the opposition decided, on the basis of advice from its in-house legal hotshot George Brandis, was unconstitutional.

Oops. Pairing would have negated the impact of Slipper's defection. Too late.

Slipper wasted no time demonstrating his independent bona fides, casually firing four of his erstwhile colleagues out of the chamber, having told MPs beforehand that he would not be issuing warnings before ejecting MPs for an hour. He's unlikely to make Harry Jenkins's mistake from May of bringing on a naming before having punted sufficient Coalition MPs to ensure it leads to suspension.

Despite the extensive praise showered on him yesterday, Jenkins wasn't a particularly authoritative speaker. He was too indulgent of both Christopher Pyne, whom he punted all too rarely, and Wayne Swan, who has barely bothered answering an opposition question all year. Whether Slipper's independence extends to pulling ministers into line remains to be seen.

As, of course, does how much of Slipper's use of taxpayers' money comes to light.

Proceedings were topped off by the opposition asking one question and then launching into a censure motion in question time. It was the perfect end to a parliamentary year noteworthy for the opposition's indiscriminate use of censure motions. The government doesn't answer questions, and the opposition has stopped asking them.

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Two pieces of economic news yesterday sets the scene for next week’s Mid Year Economic Forecast and the associated spending cuts required to make up for the weak growth in tax revenues, especially company taxes.

Yesterday we had confirmation, if any were needed, of the extent of the mining boom with a shock surge in the value of construction work done in the quarter: a 12% rise in the three months to $47.5 billion, or six times the market estimate. That included a 22.6% surge in engineering work to just over $28  billion, 49% up on the third quarter of 2010.

The figures also showed a 1.1% fall in residential construction to $11.4 billion in the  quarter, down 3.5% from a year before. That led some analysts to moan about the two-speed economy, but they also know that if we had a booming home building industry and the sort of growth in engineering and construction reported yesterday, then we would have high inflation and much higher interest rates.

The Reserve Bank increased interest rates a year ago to try and get that sort of trade-off between housing and commercial property construction, and the gathering pace of construction activity in the resources  sector, especially iron ore, LNG in WA, coal seam gas and LNG in Queensland and the coal industry in NSW and Queensland. That we have been able to accommodate the explosion in construction and engineering, and see inflation fall in the September quarter, tells us that the Australian economy is better placed than all the moaners and rent seekers concede.

And yesterday David Jones reported an 11.2% plunge in first quarter sales and forecast a profit fall of up to 20%. As we’ve shown before, department stores are in the low-growth end of the retail industry. But another context for the softness in some retail sectors is that the economy must be well balanced to have coped with the explosion in activity in resources in the past year and not trigger the usual Australian inflationary surge which destroys all the gains.

On that basis, there is room for the government to cut some spending, especially if it makes smart cuts that move the budget onto a better long-term footing.

The problem remains the rest of the world, which is now slowing amid growing signs of a credit freeze that now seems to have captured Germany, the key economy for the survival of the eurozone and the euro. The most worrying development was the failure of Germany to sell all of a 6 billion euro auction of 10-year bonds earlier this week. It attracted bids for just over half of that from the market, forcing the Bundesbank (the German central bank) to take up the 39% of the offering that was unsold. That shocked markets across Europe and the US and sent shares lower, as well as commodities like gold, oil and copper.

Yields on German 10-year bonds, the bellwether security for all of Europe, jumped a nasty 0.20% yesterday after the failure, to close at 2.08%. That’s plainly still way under the 7% plus on Italian 10-year debt, but a reminder that the most credit worthy economy in Europe is now under increasing suspicion. Germany now joins the rest of the eurozone in facing higher yields at a time when the various economies are now probably in recession.

Overnight, at a France-Germany-Italy summit (Europe appears permanently in summit mode these days), Angela Merkel continued to rule out any change in role for the European Central Bank to enable the ECB to become a lender of last resort, now regarded as the only immediate hope of bringing the crisis to an end. The break-up of the Eurozone -- not just the establishment of a two-tiered, north-south zone -- is now being routinely discussed.

All this is smashing the European economy. Figures on Wednesday showed that industrial orders in the eurozone suffered the biggest single-month fall since December 2008, when it and much of the rest of the world was slumping into recession. New orders plunged by 6.4% in September from August, according  to Eurostat, the European Union’s statistical office. Leading the way was Italy where orders fell a terrible 9.2% between August and September. But France and Spain saw drops of 6.2% and 5.3% respectively, and Germany saw a 4.4% fall as well.

But there was also concerning news from China: the November survey of the country's manufacturing showed a sharp fall to 48 from 51 in October, a move that rattled confidence with the Financial Times reporting  on strikes by around 100,000 workers in factories in the south of the country over pay cuts caused by falling export orders. A 48 reading on the survey gives industrial  production at an annual rate of 11% to 12%, according to HSBC economists, and growth of 8% to 9%.

What was the problem? What worried markets was the sharpness of the fall, and then the news of the growing labour unrest in Guandong and other southern industrial areas.

And there was retrospectrive bad news from the US, where third-quarter growth was cut back to an annual 2% (0.5% quarter on quarter) from the first estimate of 2.5%, with weak inventories and imports the biggest reason for the fall.

Quite what judgment call Treasury and its political masters make about the extent of their spending cuts will be fascinating to see next week. It's great for Australia to be experiencing economic conditions so very different from the rest of the world, but it makes for immensely difficult budget framing for local policymakers.

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Down to the Royal Courts of Justice again, those bizarre fairytale towers in the middle of the Strand, their gravitas all gone the moment you learn they were created in the 19th century, the modern state wrapping itself in ancient stone.

And all the more ridiculous when the star turn of the day is Sienna Miller.

Yes somewhere inside the building was the Leveson hearings, the judicial inquiry that has become some weird simulacrum of the thing it is investigating, with the celebs, stars, and "ordinary folks thrust into tragedy" bursting out of the red-top front pages and into the witness box.

Round the iron gates, hopeful papps were gathered, though most of the stars appear to be coming in through various underground tunnels at the back. Nevertheless, their presence is largely ceremonial in any case, a guard of honour much in keeping with the mediaeval pomp.

Then there's the punters. The folks who turn up for the public galleries are a distinct type in any case -- either concerned citizens auditing for the public good, early retirees and Rotary types with time on their hands. Or the plainly whacko.

With Leveson, there's a third group crowding out the other two: the simply star-struck, people who are, dare one say it, less than fully enagaged with the debate about limits to press freedom.

The entrance and security procedures of the courts are irritating enough to frequent visitors; to those attending for the star power, they are ultimately baffling. One experienced group makes a break for the courtroom as soon as the gates open; others wander this neo-Gothic pseudo-cathedral for hours, ghosts of the general public among the periwigged barristers, and the judges who have to be told what the internet is, and that Audrey Hepburn is dead.

Your correspondent, it must be said, legged it back to Bar Italia, where they were playing it on the big screen. By the time I got there, the fair Sienna, very much the star of the show, was appearing.

Over the past few days, as the celeb witnesses have rolled out for the inquiry, we've heard a few extraordinary things. The first was a celebrity being reasonable -- a surprisingly baggy looking Hugh Grant on Tuesday, whom the inquiry's lawyers spent a lot of time trying to tempt into an A-grade tanty.

Grant didn't play, coming straight out and saying that the press should have been all over him about the Divine Brown affair, and that he was objecting not only to illegal phone tapping but also to the manufacture of outrage based on false or miscontextualised information.

He also cracked off the first great quote of the week, referring to the notion that stardom made your entire life public property, noting that it was like saying: "You sold me your milk, you sl-t. I'm now entitled to help myself to your milk for ever."

Grant was a lot more sure-footed than Steve Coogan (Alan Partridge) who came a day later, and sounded whiny and self-righteous. And he had come after the first witnesses, the Dowlers, parents of a murdered girl whose phone had been hacked, whose evidence had reminded everyone as to why the inquiry was necessary.

News Corporation's attempt to tough out the scandal had collapsed when the Dowler case had been made public -- and it was revealed that hacking the girl's phone had led her parents to believe she might still be alive.

That news had been stomach turning and it had not diminished when Milly Dowler's mother took the stand to relate how they had tried to call her phone repeatedly while she was missing only to find the voicemail full. Then one day it wasn't, and as Mrs Dowler related, sparing us none of her initial sense of restored hope: "Oh thank God, she's alive!"

She wasn't of course -- the voicemail had been emptied by someone at News of the World. It had been presumed to be detective Glenn Mulcaire, but he issued a statement to deny that he had done it.

That recalled, re-enacted moment reminded everyone why the inquiry was there in the first place -- a sense that News Corp and perhaps other tabloids had pushed beyond sharp practice and into a destructive nihilism.

That was reinforced the next day, after the Grant interlude, with the McCanns, whose daughter Madeleine was abducted in Portugal four years ago. The Dowlers got a rough ride, but boy did they go to town on the McCanns. They were filleted and f-cked up by a relentless campaign of fabrication around every stray bit of disinformation to be found.

The McCanns eventually took a half-million pound settlement and a full-page apology from The Daily Express, but there had been limited sympathy for them from many quarters.

There had initially been limited sympathy for the couple. They had understandably used every opportunity to keep the story in the media, and the fact that Kate McCann was easy on the eye was of immense help.

But the story was turned eventually as the press required new angles -- Kate McCann's diary was published, after being leaked by the Portuguese police, stories were run suggesting that there had been orgies at the holiday where Madeleine disappeared, that the McCanns were having IVF treatment to generate a "replica" Madeline, etc.

Read the full story on our website

Residents of the Sydney riverside retreat of Coba Point have backed environmentalist Tim Flannery in his bitter climate spat with 2GB presenter Ray Hadley and a dissenting neighbour David.

And notes of a crucial August rendezvous between David and Flannery, compiled by the former Australian of the Year's anthropologist wife Alex, appear to lend weight to the Professor's version of events.

Hadley and David have accused Flannery of hypocrisy because he purchased a house close to a river while simultaneously warning about sea level rises stemming from global temperature increases. They say the professor pilots a polluting boat and regularly speeds through "no wash" zones around Berowra Waters.

This week Hadley has repeatedly called Flannery a "low bastard" on his high-rating 2GB mornings show after his attention was drawn to a Crikey item quoting from the November edition of Quarterly Essay.

A letter penned by Flannery in the storied journal accused the duo of cooking up a plot to discredit him. Flannery wrote David had told him that he had once worked for Hadley and that the "slander was based on a completely manufactured story".

Flannery said that David had admitted to him in the face-to-face meeting that the shock jock was "out to get" him because he was "on the other side of the fence" on climate change.

But this week David, 39, claimed point-blank on Hadley's program that he had never met or worked for the presenter.

Coba Point resident Bruce Foot, who owns a substantial chunk of the inlet, told Crikey this morning that his close neighbour, whose wife's name is Hope Martyn, told him directly that he once washed and detailed Ray Hadley's car.

"To hear himself say on radio the other day that he didn't work for Ray is an out and out lie and that's what's so shocking," he said.

Foot said David had previously "parroted the Andrew Bolt line on climate change" over a few beers at a neighbourhood get-together.

He told Crikey that Flannery had bought his house in 1997, well before he began agitating to curb climate emissions due to prevent sea level rises and that David was no-longer working for Hadley but was now "selling papers". Foot added that another neighbour, Stu, had also been directly told by David that he worked for Hadley.

According to Hope Martyn's Facebook page, David and his wife moved to Coba Point in September 2009. On her public wall, Martyn includes a link to a podcast of her husband speaking on Hadley's show.

"How imbarrasing!! [sic]," she wrote. "So typical of Dave though ..."

Tim Flannery's wife's notes of the mid-jetty encounter in August appear to confirm that David indeed stated that he once undertook "car detailing" for Hadley. According to the notes, David says Hadley had called him and that it was all a setup. The notes make for compelling reading:

21.viii.11 Sunday afternoon

Tim pulls up at pontoon -- v crowded with debris -- revs motor to reverse.

Man appears on verandah, shirtless, comes down pulling on sweater.

T calls out: Are you David? I'd like a word.

Man walks down, diffidently but expecting us (?) Tells barking dog to be quiet.

Man & T meet mid-jetty.

T: Are you David?

Man: Yes.

T: You're the caller David who called Ray Hadley?

D: That's me.

T explains visit. D is barely coherent [does he have a speech impediment?] T asks re call to 2GB?

D, matter of factly: They called me ... They had it all arranged. I just called in.

D: ... You're on the other side of the fence [re climate change], they [2GB] hate you, they're out to get you. I didn't call them, they called me.

Alex (surprised): Why would they call you?

D (flatly): I work for them.

A (politely): What is your work?

D (softly): Card [incoherent]

A (gently): Sorry?

D (clearly): Car detailing. I do car detailing for them at 2GB. I know them all.

T (firmly, fairly): Well, we'd like the podcast permanently removed rom the public domain. Could you ask Ray Hadley to do that.

D (hesitating, uncertain): Well, I won't see him for another fortnight, another two weeks.

A (quietly): You're a newcomer here. We don't do this sort of thing to each other. We're a small community & just respect each other's privacy.

T (gently): It's OK, leave this to me. (firmly, fairly): OK David, the decent thing to do is to get the podcast removed. It's untrue & it's dangerous. That's all.

We leave.

On air yesterday, Hadley said his wife’s car had been detailed by Garry Smith Detailing in Haberfield and that his was occasionally "dry washed" by someone called Sharon in the 2GB car park. But enquiries over David's presence at either company drew a blank.

Today, he dedicated his weekly Daily Telegraph column to lambasting Crikey, which he described as "Media Watch on steroids" and (perhaps cynically) as a "bastion of truth and justice".

Send your tips to boss@crikey.com.au or submit them anonymously here.

Fed up with Melbourne's inclement spring weather and lured by the siren call of sunny February, the Melbourne Festival has put forth a proposal to change its dates by roughly six months, skipping 2013 in the process, and reconvening in 2014. In the process, a new festival model will be unveiled , with a new "creative director", and a new staff structure to take the festival out to 2020.

All very sensible, top-level board strategy.  The problem is, no one asked the rest of the festivals sector.

Many Melbourne festivals currently held between February and April are now terrified about the potential box office hit that could ensue once the hugely subsidised state flagship event moving into a time of year already crowded with major events.

The Melbourne International Comedy Festival's Virginia Lovett has been outspoken in her opposition. "A move into the last two weeks of February and first week of March from 2014 would put just three weeks between two major cultural festivals and would have an extremely detrimental impact on the Comedy Festival," she told Crikey.

"The Comedy Festival strongly feels the February-March period cannot sustain another major event and calls for a full economic feasibility study be undertaken before a final decision is made."

Another festival likely to take a significant hit is the Castlemaine State Festival, held in March. Its multi-arts program draws about 20% of its audience from Melbourne and also relies on significant intra- and interstate visits from arts patrons, which the Melbourne Festival could be expected to compete strongly against. Castlemaine festival director Martin Paten told Crikey that "we are very concerned", and called into question the apparent lack of policy direction from Arts Victoria on the issue of festival scheduling.

Crikey has obtained the Melbourne Festival's "briefing paper" presented to Arts Victoria on November 7. It outlines the reasons  the festival wants to move, embellished with big dollops of management-speak.

The paper was presented to an Arts Victoria round-table meeting called on November 9, after several other festivals kicked up a stink about the potential date change, and the potential for competition with existing events. It states:

"Successful major events recognise their history but are not captured by it. They build on their strengths -- one of which is their special ability to adapt and evolve as their social and cultural milieu adapts and evolves. They energise, enthuse, and re-define. They are sites of energy and of opportunity, generating a unique and lasting legacy and delivering a broad public benefit."

The guts of the proposal, however, comes at the end of the paper, in which the reasons for the date change are advanced.

"In 1985 the choice was to schedule the Festival in September, to fit the dates when all the venues at the Arts Centre would be available -- since the Government wanted the Arts Centre to be the focal point of the arts festival. Consistently inclement weather saw the Festival move to the mid-October timeslot, in 1994. Even in October, the weather issue has remained a significant impediment and risk to most outdoor activities.

"The alternative period, some time in autumn, offers better weather, better opportunities for strategic and community partnerships, better opportunities for creative co-ordination with other major performing arts programming around the country, better opportunities to reach a broader demographic and build audiences for the arts. In short -- better opportunities for more people to have fun, learn, dream, watch, hear, participate, own, think and revel."

Despite the feel-good language, Crikey understands that many of the arts executives present at the November 9 meeting were less than impressed. In particular, there appears to have been real concern that Arts Victoria did not grasp just how crowded the summer and spring events calendar is in Melbourne. Crikey has been told that after a discussion of the issue from representatives of Victorian Major Events, Arts Victoria asked attendees to provide it with a list of other events during that time. Many present renewed the call for a proper feasibility study.

There's no doubt that a change in dates will have a major impact on the Victorian, and indeed the broader Australian, arts festival ecology. With Melbourne moving to February-March, all four major arts festivals in Sydney, Perth, Adelaide and Melbourne will occur within two months. Despite the opportunities to share artists, there will also be a real competition for audiences.

Adelaide Festival general manager Kate Gould told The Advertiser's Patrick McDonald on the weekend that "it would be better if they found another slot in the year, because there are a number of festivals in that early part of the year in Australia".

Virginia Lovett points out that many of the production suppliers and staff to the various big festivals are essentially booked up year round, moving from festival to festival in a well-established circuit. She questions whether there is the capacity in the industry to support another major event in the same timeslot.

"The demand and competition for expert staff and suppliers at this time will inflate costs," Lovett argues. "The need to compete with a major festival three weeks prior will inflate marketing and media costs."

Melbourne Fringe Festival general manager Esther Anatolitis argues there may be no need to cluster so many major arts events together anyway. "Our sense of Melbourne [is] as an arts-rich city that doesn’t need to fabricate a critical mass focal point of festival activity," she wrote in an email. "From the Melbourne Fringe perspective, September-October is a great time to hold a major arts festival."

Crikey requested a comment from Arts Victoria, but was told the agency would not provide a comment on the record. We understand that no decision has yet been made, a position confirmed by the Melbourne Festival.

However, with apparently only weak policy direction emanating from Arts Victoria, the likelihood is that the Melbourne Festival will get its way. In 2006, the Brisbane Festival decided to move its dates from June to September. There was considerable dissent from affected festivals and events in Queensland at the time. The festival moved anyway.

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Schools paying top students to stay? "It is widely known within the school community of a leading Sydney North Shore private girls school that when four high-achieving year five students announced they would be leaving at the end of year six they were offered full scholarships for years seven through 12 just so the school could maintain their impressive NAPLAN results," says one Crikey writer. The cost? A conservative $750,000, they reckon. "Spending $750,000 to rig NAPLAN results? So how come these private schools are crying poor?" Good question.

Not easy being green on the road. Being green has a price for car drivers, at least in the NSW market. From the oil and petrol industry, we're told consumption of the supposedly environmentally friendly ethanol enhanced (up to 10%, or E-10) unleaded petrol is proving to be a big disappointment as motorists switch to the more powerful and expensive unleaded 95 petrol. The reason? Drivers get more kilometres per litre from the more expensive and powerful 95 unleaded than they do from the E-10 petrol.

In fact, the switch is now reaching embarrassing levels because (in Sydney at least) Caltex and Shell are finding it very difficult to keep up with demand for 95 unleaded. The result is that the cheaper E-10 (which is supported by the 4 cents per litre off shopper dockets of Coles and Woolies), is proving to be a bit of a flop and a harder sell. Stocks of unleaded 95 are increasingly short in the Sydney and NSW markets, according to an oil industry marketing source. Motorists are waking up to the fact that they can drive a lot further in unleaded 95 and that the only beneficiaries of the E-10 petrol are the ethanol producers, such as Manildra, says our tipster.

Hun hacks sweat over cost cutting. An Southbank insider tells us there were some nervous nellies at the office of the Herald & Weekly Times yesterday after new News Limited CEO Kim Williams made his first trip down south. Herald Sun editors are reportedly under serious scrutiny after overseeing disastrous weekday circulation slides below the magic half-a-million figure. The word is also circulating that "anyone over 40" at the paper is under threat as the division moves to implement its portion of a News 20% company-wide cost cutting policy. As Crikey revealed last week, the shoulder taps have already begun.

Twitter defo case over before it began. It's over, Twitter watchers. #twitdef, that is. You'll remember the saga: journalism academic Julie Posetti tweeted from a conference the thoughts of former Oz reporter Asa Wahlquist on her time at the paper and the influence of editor Chris Mitchell; Mitchell claimed he'd been misrepresented and threatened to sue Posetti in what would have been a landmark defamation case. But the 12 months Mitchell had to serve a writ passed yesterday, Posetti has announced with relief. On Twitter, of course.

Jetstar flight in a flap. This tip just landed: an A320 in Cairns a few weeks ago conducted a missed approach when the first officer (cadet) selected flaps up instead of landing flap. The result? A low-speed warning. Apparently Jetstar has swept the incident under the carpet and several captains have been demoted after incidents with low-time first officers.

Home loan documents lost in the mail. From this morning's 3AW Rumour File: "A leading bank has allegedly lost 400 customers' home loan documents for homes that were supposed to settle yesterday and today." Anyone know which bank?

Do you know more? Send your tips to boss@crikey.com.au or submit them anonymously here.

An unfortunate incident on Sunrise this morning when a competition winner was called and answered the phone with the rival's catch cry "I wake up with Today!". Cue horror faces from Mel and Kochie ...

View our Video of the Day gallery

Christmas came early for political voyeurs yesterday when the NSW Independent Commission Against Corruption opened an inquiry into whether a former Labor minister had accepted s-xual services in return for introducing millionaire property developer Ron Medich to the heads of state-owned energy companies.

As counsel assisting the inquiry, Geoffrey Watson SC, delivered the opening address, a packed gallery heard details about a dinner in July 2009 attended by Ian McDonald, the former minister for energy, two executives from Country Energy, and Medich. During the dinner, the developer and an associate mounted a sales pitch to the two bureaucrats on behalf of Medich’s electrical supply group, Rivercorp.

Medich is one of five men charged with the murder of Sydney businessman Michael McGurk.

After dinner McDonald selected a woman from a group of young Asian women and older Caucasian men sitting at another table. "Tiffanie" was then driven to the luxurious Four Seasons Hotel in the city to a room paid for by Medich. The businessman then drove the minister to the hotel and gave him the key.

According to Watson: "There will be direct evidence about what went on in the room and it is pretty squalid stuff. There was some kissing and fondling, but no s-xual int-rcourse."

McDonald’s evidence will be that the meeting with Tiffanie (sans breakfast) was entirely innocent, Watson said.

"He says that during the evening at the Tuscany restaurant he had noticed some neck tightness, and simply attended a remedial massage organised by Medich ... The evidence will show that (Medich associate Lucky) Gattellari paid $400 for the hotel room and more again for the services of the 'masseuse' -- and that McDonald did not repay that money," he said.

The overwhelming feeling in the public gallery yesterday was schadenfreude. McDonald, 62, has been a ticking time-bomb for the NSW ALP for years; his snouts-in-the-trough attitude emblematic of the sort of behaviour that delivered a massive thrashing to Labor at the last state election.

"Sir Lunchalot" first came to the adverse attention of the public in July 2009 when it was revealed that as minister for primary industries, he had spent nearly $150,000 on lunches, dinners and accommodation for a wine advisory group he created, and $15,000 on a charter flight.

In 2010 he was shown to have received about $30,000 in airline upgrades on Emirates for himself, his wife and two friends after he had made decisions benefiting the airline’s owner and other members of the horse-breeding industry. He subsequently resigned from parliament, but has retained generous superannuation entitlements.

Yesterday, Country Energy’s Craig Murray and Bill Frewen gave evidence about the night. Neither is accused of any wrong-doing and are both witnesses only to the behaviour of McDonald.

Frewen said that when Medich had approached the table, McDonald had said words to the effect of "there’s someone I would like you to meet, he’s a good guy". Following Medich’s sales pitch, the two executives felt that they had been placed in an "uncomfortable" situation and that the minister’s behaviour had been "inappropriate", he said.

When the bill arrived, Frewen had been shocked to see that it was $811, largely because McDonald had ordered four $130 bottles of Tasmanian pinot noir from the Freycinet Peninsula. He said that McDonald had indicated that Medich would pay it but the two executives insisted on picking up the bill because of government guidelines about probity.

In the end, it was all a waste of everyone’s time. Rivercorp never did tender for any work and has since collapsed with debts of $28 million.

Murray said that the next day he had rung the chairman of Country Energy and told him that he thought the minister’s behaviour had been "inappropriate".

After dinner, Frewen and Murray had shared a taxi home. In it, they "discussed the need to make sure that this organisation, Rivercorp, only do business with Country Energy through the usual and  proper processes", Frewen said.

"It’s silly for somebody to have promoted Rivercorp in this sort of way because it’s counter-productive, it’s because of meeting those people from Rivercorp their business would be subjected to closer than usual scrutiny," he said.

Earlier, there was evidence that Medich, indicating the table of young women, had quipped, "if you are nice to them, they will be nice to you". And isn’t that the basis of every government scandal down the ages? And exactly how nice was Tiffanie to the minister? (Who does, incidentally, have a very thick neck.) We may soon find out.

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Anthony Ball is the driving force behind Clubs Australia's campaign against Andrew Wilkie's poker machine reforms. He's got the footy codes, the tabloids and the Libs on his side, plus plenty of cash left in the bank.

And now that Wilkie's clout is weakened, thanks to the shock resignation of speaker Harry Jenkins, he's more powerful than ever.

"I'm fortunate to be in an industry which probably is powerful," the Clubs Australia and Clubs NSW boss told The Power Index last month. "Our ability to talk to people in every part of NSW every day is quite unique, and we can mobilise huge numbers of people."

Wilkie's mandatory pre-commitment scheme, Ball says, would frighten casual gamblers from having a punt, send clubs bust and result in the loss of thousands of jobs. He won't rest until it's off the political agenda.

Ball is calmer and more considered than you'd expect for someone who's spearheading such a ferocious public campaign.

"He's reasoned, thoughtful, doesn't threaten and is not self-important," says former NSW Premier Morris Iemma.

"I don't yell at people," says Ball, who was named one of our most powerful people in Sydney last month. "I learnt long ago that you attract more flies with honey than with vinegar.

Although he looks like a retired rugby league second rower, he's got an economics degree from ANU and is a graduate of the famous Washington DC school for lobbyists, the Public Affairs and Advocacy Institute.

He certainly got his money's worth, because the clubs' campaign against pokie reform has been an all-singing, all-dancing sight to behold.

Ball & co. have organised fiery protest rallies, commissioned polling showing pokie reform would cost over 30 MPs their seats at an election and run prime-time TV ads designed by Labor's favourite ad man, John Singleton. It's all been cleverly targeted at marginal Labor electorates and the seats held by the balance-of-power independents.

Their key slogan -- "It won't work and it will hurt" -- was even parroted by Channel Nine commentator Phil Gould during the rugby league semi-finals.

As a result of all this, support for pokies reform in NSW, where many key marginal seats are located, dropped from 66% in April to 52% in October, according to a Nielsen poll.

Opposition leader Tony Abbott has predicted the Coalition will scrap mandatory pre-commitment if elected because he believes the policy, which was recommended by the Productivity Commission, would hurt community clubs and do nothing for addicts. But not everything has gone the clubs' way.

In September, AFL CEO Andrew Demetriou slammed Ball as a "hillbilly" who should "just shut up" for suggesting the AFL was "uniting with the National Rugby League" to fight pokie reform.

Last month, a leaked industry estimate showed the drop in gaming revenues from the pre-commitment scheme would be 10-20%, half the figures publicly cited by Clubs Australia.

The Greens and key independent Tony Windsor has expressed support for a $1 bet limit for poker machines -- a policy Ball says would be as equally disastrous for the clubs as pre-commitment.

*Read the full profile at The Power Index

This story is just a taste of what Crikey subscribers will have access to on The Power Index.

Learn more about it from Paul Barry here.

New Zealand prime minister John Key and his National Party are cruising towards an easy victory in tomorrow's poll. Nonetheless, for those who are interested in the prospects for democracy in our part of the world it will still be a very important election.

Like other former British colonies, New Zealand inherited a system of single-member districts with first-past-the-post voting, which entrenched a two-party system. Combined with the lack of an upper house, it meant that governments wielded near-absolute power despite often having a minority of the vote.

By the 1990s, popular disaffection with this system reached such a level that, remarkably, it was able to effect reform even against the opposition of both major parties. A referendum in 1993 replaced first-past-the-post with the mixed-member proportional system (MMP) -- basically the system used in Germany (with one notable difference that I'll mention later) -- to try to ensure that seats won would actually reflect votes cast.

Opponents of MMP predicted chaos and disaster if it was adopted, with the fragmentation of the party system and the end of stable government.

Not only has that failed to happen but New Zealanders have consolidated a party system that now looks very like ours, despite the different electoral system.

In 1993, in the last election before MMP, 30.2% of New Zealanders voted for minor parties. That rose to 38% in 1996 as people experimented with the new system, and as late as 2002 it was at a similar level, suggesting that a genuine multi-party system was in the making (see the official results here). But since then it has dropped right back -- 19.8% in 2005, 21.1% in 2008, and going by the opinion polls maybe just over 20% tomorrow.

What's more, the bulk of that minor party vote seems to be ending up with just one party, the Greens, who are expected to top 10%. One poll from Roy Morgan Research puts them as high as 14.5%.

The fact that MMP has led New Zealand not into the shoals of chronic instability but to much the same place as boring old unenlightened Australia is one reason voters are likely to vote against abolishing it -- a referendum is being held together with tomorrow's election. But the other reason is that MMP tomorrow looks like demonstrating that it can do what its opponents said it never would: give one party an absolute majority.

Opponents of greater democracy still have trouble understanding this point, but if voters fail to deliver one party a majority, you should be blaming them, not the system. The flip side of that is that if one party really does win a majority of the vote, a democratic system will follow suit and give it a majority of the seats.

That's where John Key is heading tomorrow. The most recent polls (summarised by Antony Green) put National on between 49.5% and 50.9% of the vote, and if that holds up it will almost certainly deliver a majority.

It's not quite as simple as that. A party with 50% should be well placed, since some parties will fall below the 5% threshold and their votes will be wasted (so 50% of the total vote might be 53% of the effective vote that determines representation). But some of the intricacies of MMP work the other way, and if you make a set of heroic assumptions -- that several minor parties win their electorate seats, that the two Maori parties win most of the Maori seats (creating an "overhang"), and that mad Winston Peters gets his party back above 5% -- then it's possible that even a 50%+ vote for National would just fall short of a majority.

That's what both Morgan and The New Zealand Herald are relying on in playing up the chance of another hung parliament. But it's academic rather than real; it will only happen if ACT and United Future win their electorate seats, and they are both committed to supporting Key's government in any case.

If tomorrow's referendum votes to keep MMP, the government has promised a review of the system to tidy up some of its anomalies. That would be a good thing. An obvious matter for attention (although it seems unlikely to play a role this time) is the rule by which even one electorate seat qualifies a party for list seats, even if it's well below the threshold -- unlike the German model, where three electorate seats are required.

But despite such quirks, MMP has demonstrated that the system can be democratised without the sky falling in. Unfortunately there seems little chance that Australia will take the hint.

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Labor's contempt for parliament shows through. Even a cursory glance at this morning's front pages will tell you that Peter Slipper's reign as speaker of the House of Representatives is going to be an eventful one. References to past indiscretions and current investigations into claims for expenses are not the ingredients for a peaceful time.

There was not much respect, nor dignity, shown for the highest parliamentary office in the land shown by the Sydney Daily Telegraph for example. Enlarged ears, a rats tail and barely visible photo-shopped whiskers are not designed to add gravitas.

Yet the Labor government knew this would be the kind of reception awaiting its choice as the new speaker after the resignation of Harry Jenkins. If parliament becomes a complete laughing stock -- as it most probably will when it resumes next year -- the government just doesn't care.

The whole atttitude towards what happens in the House of Representatives these days is that it is nothing more than a necessary inconvenience in the way of getting on with running the country.

Tackling the new income tax orthodoxy. Perhaps Australia had it right back in the 1960s and 1970s when the maximum personal income tax rate was over 60 percent without the rich having the benefit of dividend imputation. Certainly a recent paper by Nobel prize winning economist Peter Diamond would suggest that is the case.

In a paper written with Emmanuel Saez, Professor of Economics, University of California, Berkeley, Professor Diamond analyses the optimal tax rate on top earners and argues that this should be the rate that maximizes the revenue collected from them. The mathematics is a bit complicated to summarise here but seems to suggest that for the United States a top rate of 70% would fit the bill.

We did not hear much of that kind of talk at Australia's recent federal tax forum presided over by Treasurer Wayne Swan. The Labor Party seems happy to go along with the prevailing wisdom that letting the rich pay less is better. The downward trend in maximum rates in this country is shown in this graph from the Henry Tax Review.

Anyone else and we'd call it blackmail. News of the World sent a video of former F1 chief Max Mosley participating in an alleged sado-masochistic orgy to the governing body of world motorsport after he dared to launch a legal challenge against the paper.

In evidence yesterday to Lord Justice Leveson's inquiry into press standards Mr Mosely said that News of the World publisher News International sent the "entire video" inviting the FIA to "show it to all members". It was "several hours long" and sent on behalf of the company by its lawyers, Farrers.

The News of the World video was sent to the FIA in the week after it had splashed on a story headlined "F1 boss has sick Nazi orgy with five hookers", which was originally published in March 2008. The tabloid released an edited version of the film on its website, without copy protection software "so the video was then copied all over the world".

Mosley subsequently launched a legal action against what he described as a "straightforward invasion of privacy" and eventually won 60,000 in damages in the high court, the largest sum ever awarded by a UK court in a privacy case.

It is fear of just such tactics that has given the Murdoch empire such power over politicians and others throughout the world. To me it is simply a legalised form of blackmail.

Getting a bit precious. The do-gooder protectors have surely gone too far this time.

This ad, beautifully filmed by film maker Bruce Weber and starring Hailee Steinfeld in a wistful vision of 40s Americana, has been banned by Britain's Advertising Standards Authority due to the positioning of Steinfeld "in a potentially hazardous situation sitting on a railway track, we concluded the ad was irresponsible and in breach of the Code in showing a child in a hazardous or dangerous situation."

 Sporting events are dangerous political venues. Further evidence that addressing the crowd at a sporting event can be a dangerous tactic for politicians. Here is Russian Prime Minister Vladimir Putin at the end of a martial arts bout between Russia's Fedor Emelianenko and America's Jeff "The Snowman" Monson:

An attempt by the prime ministerial spinners to claim the crowd was actively booing the defeated American has led to outrage on Russian social media sites.

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Following last month's Iranian plot to assassinate the Saudi ambassador to the US, revealed by a Mexican DEA informer posing as a drug cartel insider, many were quick to comment on how much the whole thing felt like the narrative of a Hollywood thriller.

Implicit in this common aside was a suggestion that the alliance of Quds Force and cartel was somehow unrealistic or unlikely. As with the more ridiculous outings of Steven Seagal or Jean-Claude Van Damme -- this was, so to speak, a direct-to-video international incident -- it was presumed that we were being asked to suspend rather too much disbelief. Islamic terrorists making overtures to Latin American crime syndicates? One was reminded of the James Bond films in which all the world's criminals not only know each other, but belong to the same union.

In fact, however, we should not be so surprised by this curious, and concerning, meeting of minds. For one thing, Iran has a history of spearheading such superficially insane-sounding plots. As Christopher Hitchens has pointed out, Iranian exile Roya Hakakian has given us ample reason to dismiss the other common line about the story, which holds that Ayatollah Khamenei and his cronies are too cunning to go in for this type of cockamamie adventure. They have gone in for such cockamamie adventures before, as in the case of the cold-blooded, broad-daylight murder of the Iranian Kurd exile Sadegh Sharafkandi at Berlin's Mykonos restaurant in 1992. "Never assume that the totalitarian or terrorist enemy is smart enough to conceal his traces," Hitchens writes. "Indeed, don’t always assume that he is even interested in doing so."

For another thing, such enemies don't at all seem that interested in concealing their traces in Latin America. The continent is no stranger to Islamic extremism. The terrorist bombings in Buenos Aires in 1992 and 1994 -- of the Israeli Embassy and a Jewish community centre, respectively -- merely marked the arrival of Iran on the scene. The West's two endless wars -- the one against terrorism and the other against drugs -- have been dovetailing in the region ever since.

Hezbollah, Iran's proxy in Lebanon, has for years now been its proxy in South America, as well as on the Central American isthmus. Hugo Chavez's Venezuela, which has happily provided material and moral support to Colombia's FARC rebels, and that has ties with Tehran that Western supporters like to play down or ignore, has long been suspected of harbouring this proxy. While such suspicions are at least five years old, an increasingly sizeable body of evidence is emerging to support them.

In August last year, Chavez hosted leaders of Hezbollah, Hamas and Palestinian Islamic Jihad in Caracas, at Iran's instigation. In a television interview recorded at La Picota prison in the Colombian capital of Bogota in March this year, Venezuelan drug trafficker Walid Makled confirmed that Hezbollah "work in Venezuela. They make money and all of that money they send to the Middle East".

More concerning still was Roger F. Noriega's testimony to the Subcommittee on Counterterrorism and Intelligence Committee on Homeland Security in July. The assistant Secretary of State for Western Hemisphere Affairs under President George W. Bush, Noriega told the committee that Hezbollah's presence was growing at an alarming rate in Latin America, and that it was being supported a parallel network of operatives linked to the Quds Force of the Iranian Revolutionary Guard Corps. "These networks co-operate to carry out fund-raising, money-laundering schemes, narcotics smuggling, proselytisation, recruitment, and training," Noriega said. "We can identify more than 80 operatives in at least 12 countries throughout the region."

Noriega named Mohsen Rabbani as a key figure in the Qods Force network and Ghazi Atef Salameh Nassereddine Abu Ali as playing a central role in Hezbollah's operations. An Iranian national, Rabbani is wanted by Argentinean prosecutors for his role in the aforementioned attacks in Buenos Aires and is the subject of an Interpol red notice. Despite this, Rabbani often returns to the region, and indeed was in Venezuela in March this year.

A Lebanese-born Venezuelan citizen, Nassereddine was black-listed by the US Treasury Department in 2008 for providing fund-raising and logistical support to Hezbollah, and is currently Venezuela's second highest-ranking diplomat in Syria. "Using his diplomatic status," Noriega said, "Nassereddine has built and consolidated relationships with Hezbollah officials in the Middle East, first in Lebanon and now in Syria," while his two brothers, Abdallah and Oday, "[maintain] relationships in the broader Islamic community" and "[set] up training operations on [Venezuela's] Margarita Island," respectively. Writers Douglas Schoen and Michael Rowan have written at length about Isla de Margarita's thriving black market for false documents and its legion of "quasi-legal front businesses that funnel money overseas to terrorists, as well as to outright illegal enterprises whose profits similarly get steered to Middle Eastern terror".

While some members of the US State Department have maintained that Hezbollah's activities in Venezuela are limited to fund-raising -- "as if that were comforting," cracked Noriega to the committee -- their presence there should nevertheless give pause to those who maintain that Chavez is less a terrorist-supporting thug than the victim of US smear campaigns. It won't, however, for the same reason that this same group of people tend to think of Hezbollah as a resistance movement rather than as a terrorist organisation.

The blood-soaked deserts of Chihuahua and Tamaulipas may be a strange place to resist Israeli Zionism, of course, but that hasn't stopped Hezbollah from trying. The organisation's presence in Mexico is more recent than its presence in South America and, far from mere fund-raising, is somewhat more malevolent in nature.

Read the full story on our website

GetUp! boss says pokie campaign a flop. GetUp! director Simon Sheikh says the clubs movement has run a shoddy campaign against Andrew Wilkie's proposed poker machine reforms. "They've run a pretty poor campaign so far and we're lucky they have," Sheikh told The Power Index.

"There was all this build up about a scary campaign. I was in Canberra the day after it [the first round of ads] was released and there was this feeling of relief in Jenny Macklin's office. They were thinking, thank goodness Clubs Australia is running this ridiculous campaign." Sheikh said the clubs had gone too hard too soon in their fight to kill off mandatory pre-commitment. -- Matthew Knott (read the full story here)

Eurozone needs to hurry up, say Money Movers. Australia's most powerful bankers have had their say and it's not pretty. We're headed for GFC mark II, say the Money Movers, and the fallout from the European debt crisis could be felt globally.

Outgoing Commonwealth Bank CEO Ralph Norris, recently named our third most powerful Money Mover, told Fairfax press that global credit markets "effectively froze" this week when Germany managed to sell only two-thirds of the E6bn worth of bonds it put up for sale. ''This has potential to be significantly worse than the Lehman Brothers collapse and the subprime crisis because now we are talking about nation states,'' the buck-toothed Kiwi said. -- The Power Index (read the full story here)

George Miller wants Crean to give game industry a break. Happy Feet director George Miller is showing even the most powerful of lobbyists how to get your own way: by convincing arts minister Simon Crean that a tax rebate is needed to support the local production of video games.

The rebate would be an extension of the current 40% producer tax rebate that has helped films like Baz Luhrmann's The Great Gatsby get made locally, according to The Australian Financial Review. Crean has already declared there's a "strong case" for the rebate which he'll explore in the lead up to the next budget, following a visit to Miller's Dr D studio where Miller outlined how local production houses could tap into the worldwide $60 billion games industry. -- The Power Index (read the full story here)

This story is just a taste of what Crikey subscribers will have access to on The Power Index.

Learn more about it from Paul Barry here.

Front page of the day. Brilliant tabloid work by The Daily Telegraph:

Murdoch departures 'may herald his exit from papers'

"James Murdoch has dramatically quit as director of the companies that publish the Sun, The Times and the Sunday Times and analysts said he could soon sever all ties with the troubled newspaper group." -- London Evening Standard

Staffer turns against Sandilands as banned brands go to air

"Signs of internal views at Southern Cross Austereo about Today Network presenter Kyle Sandilands have emerged, with national account manager Julie Anne Dacumos taking to Twitter to describe Sandilands as 'a douche'." -- mUmBRELLA

Journalist Mona Eltahawy tells of s-x assault in Cairo ministry

"The prominent US-Egyptian journalist Mona Eltahawy has described a brutal s-xual and physical assault that she says she suffered after being arrested by Egyptian riot police during a 12-hour ordeal inside Cairo's interior ministry." -- The Guardian

ABC accused of publishing erroneous material on coal-seam gas website

"The gas and petroleum industry's peak body has lashed the ABC for publishing an information website on coal-seam gas mining 'riddled with factual errors'." -- The Australian

Why journalists must earn the right to teach old media new tricks

"New York Times media reporter and blogger Brian Stelter spoke about his experience as a young reporter at the Times, a company that is symbolic of old media. He argued that one must earn the right to teach and learn the way a company operates before you start making changes. After spending his time learning." -- Mashable

The Winners: Seven's night, as expected. The finale of Beauty and The Geek Australia did the job.

The Slap finale on ABC at 8.30pm, 831,000. Harrowing final episode to the best drama this year on TV.

1. Beauty and The Geek Australia (winner announced) (Seven) (8.30pm) -- 1.253 million
2. Seven News (6pm) -- 1.121 million
3. Beauty and The Geek Australia (Seven) (7.30pm) == 1.075 million

The Losers: No one really. A quiet night. There were turkeys, but let's save them for Christmas.

News & CA: Nine News won Sydney, lost the rest to Seven News. A Current Affair won Sydney and Melbourne, TT won the rest.

Chris Uhlmann's Tony Abbott interview on 7.30 last night was as solid as anything Kerry O'Brien did at the program when it was 7.30.

In the morning Seven's Sunrise is having its best week for a couple of months.

1. Seven News (6pm) -- 1.121 million
2. Today Tonight (Seven) (6.30pm) -- 992,000
3. Nine News (6pm) -- 943,000
4. A Current Affair (Nine) (6.30pm) -- 896,000
5. ABC News (7pm) -- 812,000
6. 7.30 (7.30pm) -- 715,000
7. Ten News (5pm) -- 546,000
8. The Project (6.30pm) -- 535,000
9. Lateline (ABC) (10.30pm) -- 232,000
10. SBS News (6.30pm) -- 171,000
11. Lateline Business (ABC) (11.05pm) -- 137,000 + on news 24 at 8.30 pm
12. SBS New (9.30pm) -- 123,000

In the morning:

1. Sunrise (Seven) (7am) -- 404,000
2. Today (Nine) (7am) -- 351,000

The Stats:

• FTA: Seven (3 channels) won with 31.3% from Nine (3) on 25.9%, from the ABC (4) on 19.9% from Ten (3) on 18.4% and SBS (2), 4.5%. Seven leads the week with 31.4% from Nine on 26.2% and Ten on 18.4%.
• Main Channel: Seven won with 22.5% from Nine on 18.8%, ABC 1 on 14.4%, Ten was on 12.6% and SBS ONE was on 3.7%. Seven leads the week with 23.4% from Nine on 20.0% and Ten on 14.3%.
• Digital: 7TWO won with 5.1% GO was second with 3.7%, 7mate was second with 3.6%, with Eleven on 3.5%, as was ABC 2, Gem was on 3.4%, ABC 3 was on 1.1%, News 24 was on 0.9% and SBS TWO was on 0.7%. The 10 digital channels had an FTA share of 28.8%. 7TWO leads the week with 4.6%, with Eleven and 7mate on 3.5%.

Pay TV: Seven (3 channels) won with 25.7%% from Nine (3) on 2.3%, from the ABC (4) on 16.4% from Pay TV (200 plus channels) on 15.2%, Ten (3) on 15.1% and SBS (2), 3.7%. The 15 FTA channels had a share of 84.8%, with the 10 digital channels on 21.9% and the five main channels were on 62.9%.

The five top Pay TV channels were:

1. Fox 8 (2.71%)
2. Lifestyle (2.69%)
3. Sky News (2.43%)
4. TV1 (2.11%)
5. Crime & Investigation (1.99%)

The five top Pay TV programs were:

1. Grand Designs (Lifestyle) -- 114,000
2. AFL: National Draft (Fox Sports 1) -- 114,000
3. Tough Nuts: Australia's Hardened Criminals (Crime & Investigation) -- 69,000
4. The Simpsons (Fox 8) -- 66,000
5. Coronation Street (UKTV) -- 65,000

Regional: Prime/7Qld (3) won with a share of 32.6% with WIN/NBN (3) on 27.5%, with SC Ten (3) was on 19.6%, the ABC (4) was on 16.7% and SBS (2) was on 3.6%. Prime/7Qld won the main channels with 22.4%, from WIN/NBN on 20.2%. The 10 digital channels were won by 7TWO on 6.9%, with GO on 4.0% and Eleven on 3.7%. The 10 digital channels had a total FTA share of 29.8%. Prime/7Qld won with 35.5% from WIN/NBN on 26.6%.

The five most watched programs in regional areas were:

1. Seven News -- 541,000
2. Home and Away -- 522,000
3. A Current Affair -- 492,000
4. Beauty and The Geek Australia (winner announced) -- 477,000
5. Beauty and The Geek Australia -- 477,000

Major Markets: A clean sweep by Nine overall and the main channels. Nine was second in both in every market. The ABC (and ABC 1) was third everywhere bar Melbourne and Brisbane where Ten was third overall. Seven and Nine shared the overall win in Melbourne. GO won Sydney in the digitals, 7TWO won the rest. Seven leads Nine and ten in all five metro markets.

(All shares on the basis of combined overnight 6pm to midnight All People)

Glenn Dyer's comments: That the AFL Draft on Fox Sports 1 could attract a solid audience (for Pay TV) of 114,000, tells us all we want to know about last night. There are some people who will watch anything, no matter the time of day or year, or what's on the box.

So Beauty and The Geek Australia, which is a highly contrived program, even by reality show standards, did well.

The Slap on the ABC did well last night in metro markets, but not in regional areas and as a result the ABC finished 4th on the night in the regions behind SC Ten, reversing the way the rankings were in the metro markets. Was The Slap too confronting for regional viewers? The Slap finished in 8th spot in the metro rankings, but didn't make the top 10 in the regions. Because of that it dropped to 12th in the combined rankings.

The five top national programs last night were:

1. Beauty and The Geek Australia (winner announced) -- 1.730 million
2. Seven News -- 1.661 million
3. Beauty and The Geek Australia -- 1.551 million
4. Home and Away -- 1.461 million
5. Nine News -- 1.393 million

Tonight: Better Homes and Gardens on Seven. Then a movie. Movies on Nine. House on Ten, a repeat of Midsomer Murders on the ABC 1.

Saturday: Doc Martin on the ABC 1 at 7.30pm. RocKwiz on SBS at 9.30pm, movies on Seven, Nine and Ten sum up the last night of official ratings for the commercial networks. Cost. The repeats are cheap. Golf on Ten.

Sunday: First day of summer ratings. The chats in the morning. Golf on Ten. A movie version of Brideshead Revisited on ABC 1 at 8.30pm. Ten starts that remake of the very silly show It's A Knockout at 7.30pm then another episode of the equally silly, Terra Nova at 8.30pm. Seven is in summer dress with Kiwi programs Dog Patrol and Coastwatch, plus a tired repeat of Bones. Nine has 60 Minutes ticking away.

Source: OzTAM, TV Networks reports

Read more from the world of TV on Dan Barrett's blog White Noise

When former AGL chief executive Greg Martin accepted the role of Murchison Metals chief executive mid-year, he made no bones about what his role was. It was to create a transaction that enabled it to sell-off Murchison’s core assets without taking the group under in the process. It would appear he has succeeded.

Murchison had created a highly strategic position for itself in Western Australia’s mid-west iron ore province, with a half interest in the Crosslands joint venture with Japan’s Mitsubishi that owns the Jack Hills iron ore project and a 25% stake in the proposed Oakajee port and rail project. Murchison also has a further direct 25% interest in Oakajee, a project regarded as essential to the opening up of the mid-west region.

The problem for Murchison was that, with a market capitalisation that was less than $300 million at the time of Martin’s appointment (it was down to just over $120 million yesterday), the funding requirement for its share of the Jack Hills and Oakajee developments -- the capital costs for the projects are estimated at more than $10 billion -- would prove impossible to meet.

That’s why Martin made it clear from the outset that he was pursuing a "corporate" transaction. When he started the process it appeared the best outcome was a takeover of Murchison itself, but the eventual outcome has produced something surprisingly positive.

Given the direct and indirect nature of Murchison’s interest in Oakajee and the joint venturing of Jack Hills, Mitsubishi was always the most obvious buyer. The problem in making sense of any deal, however, was that Oakajee needs a lot more customers than just Jack Hills to be a viable project.

China’s Sinosteel, which has a $2 billion Weld Range project in the region, had been negotiating to become a foundation customer but walked away earlier this year in protest at the proposed tariffs for shipping its ore and their structure, which was said to impose disproportionately high charges on the foundation customers with short mine lives. Weld Range has a mine life of only about 15 years.

Weld Range is among several iron ore projects in the mid-west in which Chinese interests have invested more than $3 billion. Those projects wouldn’t necessarily be completely stranded if Oakajee didn’t proceed, but getting that ore to market would be more complicated and expensive and probably significantly delayed.

With the cost of Oakajee continually blowing out, the timing of first shipments repeatedly pushing out, iron ore prices already well down on their peaks and China starting to feel the effects of the economic woes of the US and Europe, the economics of the mid-west mines have already changed significantly. The port and rail infrastructure remains, however, a priority for the WA government and the key to opening up the resources in the region.

The deal Martin announced today is quite straightforward. Murchison has agreed to sell its interests in Crosslands and Jack Hills to Mitsubishi for $325 million of cash -- an implied value of 51 cents per share and more than 80% above the group’s recent share price trading levels. No wonder its share price soared today.

If the deal is consummated -- it is conditional and Murchison is free to keep trying to find a better deal now that it has a benchmark transaction out in the open -- Murchison would emerge with $200 million to $220 million of net cash, its Rocklea iron ore project just west of Tom Price in the Pilbara and some exploration tenements. Rocklea, potentially a 10 million tonnes per annum mine, has a development cost of about $370 million.

Martin has beaten the bushes for alternative proposals and says the Mitsubishi deal is the best he could flush out.

Given China’s interest in the region -- the Oakajee partners out-bid a rival consortium, largely Chinese and including Sinosteel, to win preferred tenderer status to build the rail lines and port from the WA government -- it wouldn’t be a surprise if there was eventual Chinese involvement in the project.

Indeed, Mitsubishi is reportedly already negotiating with the Chinese and could presumably replace the undersized Murchison with Chinese state-owned investors highly motivated by China’s stated ambition of securing its own sources of raw material supply.

*This article first appeared on Business Spectator

Every Friday, The Power Index profiles a place where powerful people wine, dine and travel. Today we start the series with a restaurant frequented by Melbourne’s business elite, The Italian ...

The Italian enjoys its power by proximity. The elegant CBD long-lunch spot sits smack bang in the rear of one of Melbourne's centres of corporate influence, 101 Collins Street.

Walk through the marble-filled foyer of the "Tower of Power" (so nicknamed because of the building's creme de la creme list of tenants) and you'll become quickly aware of The Italian's clientele.

Watching its belt of elevators ferry swathes of besuited movers and shakers up and down the building's 44 floors will give you even more of an idea. Think pin-striped investment bankers, high-flying corporate lawyers and cashed-up stockbrokers.

And tucked behind a giant stock exchange board displaying the day's trading action you'll find The Italian.

Recently installed in a former gallery, Roberto Scheriani's creation sees its fair share of deals getting done and money getting made. It's here that much of Collins Street's Paris End business types pass through to enjoy a macchiato or plate of top-notch seasonal classic Italian nosh.

Some patrons who have been known to grace The Italian's linen tablecloths include corporate adviser John Wylie, trucking kingpin Lindsay Fox and retail magnate Solomon Lew.

On the menu, diners preferring pasta might pick from the blue swimmer crab, tomato and chilli spaghetti ($27) or the lamb shoulder and rosemary ragu rigatoni ($25). Those trying to stay off the carbs could choose the twice roasted half duck, rainbow chard and black olives ($39) or the chargrilled spitchcock with Italian coleslaw ($38).

The 400-bin wine list, as you can imagine, very much caters to the regulars.

For dessert, punters can cleanse the palete with the vanilla panna cotta with strawberries, blueberries and mint ($16).

Sitting outside, the time-poor can get their caffeine fix as they check their Blackberries while those who venture inside sit down for a more substantial feed.

Unfortunately when The Power Index visited we only had the time (and petty cash advance) for a coffee, but we can assure you we're looking forward to enjoying a more substantial visit.

As with many corporate CBD lunch spots, The Italian's influence dies down at night. But we're sure it's seeing enough action during the day to more than make up for it. Like a lot of things power, it's all about location, location, location.

*Who have you spied eating at The Italian? Email us your tips and power restaurant suggestions.

This story is just a taste of what Crikey subscribers will have access to on The Power Index.

Learn more about it from Paul Barry here.

The market is down 49. The SFE Futures were up 5 this morning.

US Markets were closed overnight for the Thanksgiving holiday. European markets down – FTSE (UK) down 0.24%, DAX (Germany) down 0.54%, CAC40 (France) down 0.01%. Italian bonds yields rose again overnight to 7.12%. Belgian yields rose to their highest level in 11 yrs at 5.74%. Portugal’s bonds also slid, with yields on the 10 year bond rising to 12.21%. German Chancellor Merkel upset the markets with a rejection of a joint Eurobond scheme and continued resistance to the ECB becoming the lender of last resort. Fitch downgraded Portugal’s credit rating to BB+, or junk status. Metals were mixed overnight, the Gold price fell 40c to $1694.50 and the Aussie dollar fell 97.29c from 96.89c.

Main points:

Treasurer Wayne Swan has approved the acquisition of Foster’s Group (FGL) by SABMiller. SAB Miller have agreed to keep management in Australia and not move any existing brewing facilities offshore. Swan said “SABMiller has agreed to a number of undertakings which recognise the significance of Foster’s to our economy and to our community, and support Australian jobs”. FGL up 3c to 537c.

In a sign of how tough the market is Bluescope Steel (BSL) traded under 40c this morning sending the institutions that subscribed to their  40c rights issue underwater and killing retail demand. The rights trading under the code BSLR are not option value only with a negative intrinsic value. BSL 39.5c. It hit 37.5c this morning.

• Woodside Petroleum (WPL) has set a production target for CY2012 that is 27% higher than 2011 as their Pluto LNG project comes on stream. The market didn’t like it – WPL down 5% to 3341c.
• Primary Health Care (PRY) expects EPS to rise 15% to 20% this financial year at it grows their existing general practices. PRY down 9c to 319c.
• Billabong International (BBG) said they have no explanation for the 13% fall in their share price yesterday. BBG down another 3c today to 361c. There is a suggestion that as the 138^th biggest company they will be removed from the ASX 100 in the next S&P ASX index rebalance.
• Brambles (BXB) has acquired Canadian rival Paramount Pallet for $12.76m. This will allow the company to expand in Canada according to the CEO. BXB down 5c to 679c.
• Sundance Resources (SDL) has requested its shares be placed in a trading halt pending an update on the proposed takeover by Hanlong Mining Group.  SDL unchanged at 42.5c.
• RHG Group (RHG) has gone 6c ex dividend today. RHG last traded at 42.5c.

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Peter Slipper:

Roger Davenport writes: re. "Huge win for Labor as Slipper takes the chair" (yesterday, item 1). Well what a surprise, the Speaker of the House of Representatives resigns before the Parliament closes for the summer recess.

The Collation cries foul play, unprecedented etc, etc, they had not seen it coming, not cricket.

Obviously we could not expect them to remember the Mal Coulson deal done under John Howard, which allowed the Coalition to get controversial legislation through the Senate, including the sale of Telstra.

Both sides will use any trick in the book to get the upper hand, morals take a back seat when it comes to taking a  political advantage

What will our Prime Minister do with this advantage she has won, yes the pokies legislation becomes less of a problem.

However, the most pressing issue she needs to resolve is the offshore processing debacle and the stand-off by Tony Abbott put to rest.

It will be interesting to see what the Coalition will do when the issue is sent up to the Senate.

Flannery v Hadley:

Phillip Gray writes: Re. "Ray Hadley v Tim Flannery ... and 'David' the neighbour" (yesterday, item 5). I read with some curiosity Ray Hadley's (who?) view that Crikey is lightweight, and Flannery may be having some sort of "episode".

Perhaps he should just realise that he is an unknown in Western Australia -- we have our own on air jockey underraters, who have to keep stirring some poor old possum so that their radio overlords don't give them the big bum's rush.

How many people would part with their hard earned to hear what contrived drivel Ray may want to sprout (as against free-to-air redneck ranting)? I am happy to subscribe to hear what Crikey has to say. I am also greatly heartened to hear what Professor Flannery has to say -- he is a most measured and reflective speaker and has the ability to communicate.

Western Sydney is not Australia -- it is only a part of a wonderful land that is screaming out for genuine defenders of its environment, people, and true sense of place in a world that is now on a complete knife edge.

Libya:

Niall Clugston writes: Re. "Flames of revolution in Yemen flicker ever closer" (yesterday, item 15). Not sure why Charles Richardson believes "the early signs from Libya's transition look pretty good".

Apparently because of a nominal nomination of an interim cabinet.  Or is it because Saif al-Islam Gaddafi hasn't yet been murdered like his father? (The war band that captured him being better disciplined.) But no, because Richardson, citing Voltaire, believes a cowardly murder and an incompetent cover-up is a "real advantage".

If this is "liberation", then I'd prefer a stable dictatorship, particularly if I was part of a religious/ethnic minority, or secular, or female.

Margarine:

Stilgherrian writes: Re. Michaela Banerji (yesterday, comments) wrote that "to look at the way that margarine is manufactured would make a mother weep, and never buy it again ... happily providing butter to her family instead." I strongly suggest she spend a couple of days on a dairy farm and make a fair comparison. Oddly enough, farming isn't quite as delightful as portrayed in the TV adverts.

Baillieu one year on:

Henrie Ellis writes: Re. "Baillieu govt one year on: a 'let 'er rip' approach to environment" (yesterday, item 12). Will the real Ted Baillieu please stand up? Far from being the amiable, decent, "compassionate conservative" that his spin doctors portrayed him as in the lead-up to the state election last year; a tactic that no doubt influenced many swinging voters, he has at last been revealed as a captive of the far right of his own party and the hayseed mafia in the National party.

He has neither the force of personality to stand up to the likes of Peter Ryan, the Deputy Premier, regarded by many as the "real Premier", nor resist the importuning of environmental vandals allied to his own party. He has handled industrial relations in an amateurish way and wedged himself after giving the Police Association what Ryan wanted.

He has trashed any educational credentials he might have had by slashing funding to arguably highly successful programs in literacy/numeracy and vocational training in schools while reneging on teachers' salary promises.

All opposition leader Daniel Andrews has to do is portray him as a weak, duplicitous premier beholden to the "top end of town"  and putty in the hands of the doctrinaire special interests that infest the coalition parties.

Forget the polls, currently he is looking like a one-term Premier with feet of clay, for sadly despite many new faces in the coalition ranks, his ministry is bereft of talent and potential future ministers on the backbench are scarce on the ground. Ted, the honeymoon is over!

China:

Iain McCoy writes: Re. "Rundle: Europe's stuck, nothing changes in Italy, and the Pope must die" (yesterday, item 4). Guy Rundle's claim yesterday that: "China's provinces are really 20 separate Greeces, leveraged to f-ck off the books and in imminent danger of collapse." I'm intrigued by this suggestion. Any sources/references?

Climategate II:

Tamas Calderwood writes: Re. "New Climategate emails reveal life is tough for scientists" (yesterday, item 3). Graham Readfearn claims that Professor Michael Mann's "hockey stick" graph has "withstood extreme scrutiny since it was first published in 1999". Interesting, because it was never explained why they used a "trick" to "hide the decline" of the tree ring data when it didn't agree with the instrument data. The three investigations that "cleared" all the scientists never bothered with details like that. They just assumed all the science was correct. How could it possibly be wrong?

I understand that this new round of emails will be dismissed by global warmers, just like all the other un-alarming climate facts such as the lack of warming since 1998 and the lame 0.7º warming in the past 150 years. But as the world does nothing while Australia forges ahead with its brave tax, the government's stock will continue to sink because most people are wise to the fact that our carbon tax is a meaningless but expensive con that cannot possibly affect the climate.

So as it is so succinctly put in Climategate II email <1682> Wils: "What if climate change appears to be mainly just a multidecadal natural fluctuation?  They'll kill us probably …"

Well, I wouldn't go that far …  but there will be hell to pay -- and it won't be because the press were such meanies in reporting these climate shenanigans.

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