Rio Tinto looking beyond China

MINING giant Rio Tinto is looking beyond China for its future growth, saying it's well placed to benefit from the industrialisation of South America, Africa and the Middle East.

"Beyond China none of us should forget there's India, there's the Asian nations, there's the Middle East, the former Soviet Union, South America and Africa," Chief executive Sam Walsh told a British Chamber of Commerce lunch in Perth on Friday.

"All of these in their time, at different rates, are going to go through the same urbanisation and industrialisation process and they're going to need the types of commodities that we in the mining industry supply for that growth."

But the company still expects China to remain a key driver of demand for iron ore, with Mr Walsh saying economic growth in the world's second largest economy could be a touch stronger than the company's previously forecast 7.5 per per cent.

"If you look at China, the growth is going to continue to be there - I'm very optimistic about that," he said.

Steel mills in China would continue to increase production as the urbanisation process in China continued, Mr Walsh said.

He is confident that 80 million tonnes of excess capacity will be reduced, as smaller, inefficient and higher polluting mills are closed.

"They also happen to be the mills that we don't supply to - we supply to the larger mills," Mr Walsh said.

Mr Walsh also expects the Chinese to focus on a higher grade ore product to improve the environmental performance of mills.

Earlier this month Rio Tinto announced it will cut its capital spending almost in half and shelve projects as it tries to bring down costs and win back the confidence of its shareholders.

The company plans to cut its capital spending to $US8 billion by 2015, below the $14 million it spent this year and well below last year's $17.6 billion peak.

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Hockey calls for disaster inquiry

The federal coalition wants the Productivity Commission to investigate spending on disasters. Source: AAP

THE federal coalition wants the Productivity Commission to look at how much the nation spends on disasters and how to help communities recover in a sustainable way.

Treasurer Joe Hockey says most existing disaster funding models are weighted towards response and recovery, with a focus on immediate humanitarian and economic relief and restoration of infrastructure to its previous standard - instead of longer-term resilience.

He has asked the commission to examine the full scope of national expenditure on disasters and the effectiveness of current mitigation support arrangements, which help prevent similar events from affecting communities the same way in the future.

"Further, the commission will be asked the best ways to reduce the impact of natural disasters on communities and how they recover in a sustainable way," Mr Hockey said in a statement on Friday.

Opposition leader Bill Shorten said cutting support for bushfire victims is wrong.

"But that's exactly what the Abbott government has done in the Blue Mountains," he told AAP.

"My concern is this review will become another excuse for the government to make savage cuts."

The Insurance Council of Australia said it was a positive step towards improving community resilience and it looks forward to helping the inquiry.

"Though disaster response and recovery are an essential component of government relief efforts, the insurance industry believes mitigation infrastructure has long-term benefits for exposed communities and the taxpayer," the council said in a statement.

Deloitte Access Economics estimates the total economic cost of natural disasters in 2012 was more than $6 billion.

In the last five years, natural disasters around the country have claimed more than 200 lives and devastated hundreds of thousands of Australians.

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Sea ice trip reopens Mawson's Huts route

TWO Australian explorers have made it over dangerous sea ice to Mawson's Huts in Antarctica, which have been inaccessible for several years.

Conservator Ian Godfrey and heritage carpenter Jon Tucker navigated 70km of sea ice on an amphibious vehicle to reach the huts.

Their visit was part of a privately funded expedition of nearly 30 scientists and others to commemorate the centenary of Douglas Mawson's exploration of the Cape Denison area.

The Mawson's Huts Foundation says this is the first time it has attempted such an ambitious and potentially hazardous crossing of the ice.

It was a joint operation between the foundation and the Australian Antarctic Division.

The huts on Cape Denison have been inaccessible for many years because an iceberg about the size of the ACT blocked the entrance to the bay.

Dr Godfrey said the trip across the sea ice was the journey of a lifetime.

"Mawson's Huts seem to be in good condition but we may only have a day here so we're doing all the essentials such as changing data loggers and assessing the condition of the building structure," he said.

He was hopeful the success of this mission meant the Mawson's Huts Foundation could resume annual visits.

Expedition manager Rob Easther said several of the scientists had planned to also make the full journey to the huts to conduct many of the experiments carried out there by Mawson's 1911-14 Australasian Antarctic expedition.

However, weather conditions mean it's likely the modern expedition team will have to leave the area sooner than hoped.

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Boy critical after 'horror' Sydney crash

A young boy is in a critical condition after a crash involving a cement truck in Sydney's southwest. Source: AAP

A SIX-YEAR-OLD boy is in a critical condition after being thrown from a van in a "horror crash" involving a cement truck in Sydney's southwest.

Police said the Toyota Tarago was stopped in a breakdown lane on the Hume Highway just before noon (AEDT) on Thursday when the cement truck crashed into its rear.

The boy, who was sitting in a rear booster seat, was thrown some 10 metres from the van by the force of the crash and suffered head, chest and pelvic injuries and leg fractures, CareFlight said.

The green van was left a mangled and crushed wreck.

Describing it as a horror crash, CareFlight said one of its trauma doctors performed emergency roadside surgery on the boy.

The six-year-old was then placed in an induced coma before being flown by helicopter to Westmead Children's Hospital in a critical condition.

His 13-year-old sister, who was sitting in the front passenger seat of the van, sustained minor injuries including cuts and abrasions and was also taken to Westmead.

Their mother, standing outside the van at the time of the crash, suffered suspected pelvic injuries and was taken to Westmead Hospital for treatment, police said.

The driver of the cement truck and his passenger were trapped in their vehicle before being freed by emergency services and taken to hospital.

The truck driver, believed to be in his 30s, is undergoing mandatory blood and urine tests.

Southbound lanes of the motorway have been re-opened.

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Bushfire comes close to SA homes

A BUSHFIRE has come close to homes in the Adelaide Hills as South Australia swelters through extreme weather conditions.

The Country Fire Service (CFS) had about 200 firefighters supported by six aircraft tackling the blaze near Rockleigh.

It burnt strongly for much of Wednesday, destroying about 1000 hectares of grassland as it headed towards the town of Callington.

It came within about one kilometre of homes before a wind change but was still listed as uncontrolled.

Temperatures across SA surged above 40C with conditions forecast to get worse on Thursday.

The Bureau of Meteorology said Adelaide could expect 43C with 45C forecast for some regional centres.

A cool change was not expected across South Australia until late on Friday.

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Group of friends claim $70m lottery ticket

THE hunt for Australia's biggest single lottery winner is over after a group of female friends produced the winning ticket purchased on the Gold Coast.

The women won $70 million in Tuesday's Oz Lotto draw and have vowed to split it equally.

The syndicate leader said she checked the unregistered ticket on Wednesday morning and was shocked to discover that they had won.

"When I realised we'd won, I just sat there shaking like a leaf," she said.

The women regularly meet up for lunch and decided to use their loose change to buy a ticket.

"I told everyone on the last occasion to throw in some loose change and I'll buy a lotto ticket in a big draw before Christmas," she said.

"I saw Oz Lotto had jackpotted to $70 million so purchased a QuickPick entry."

She's not sure what she'll do with her share.

"My husband told me he wanted to buy a racehorse but I said 'It's not your prize'," she laughed.

The winning 12-game ticket was bought from a Runaway Bay news agency.

Lotto players still have an opportunity to win big this week with a $40 million Powerball jackpot on Thursday.

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Hockey paints bleak budget picture

Treasurer Joe Hockey will blame Labor over the expected dismal mid-year economic outlook. Source: AAP

THE federal budget could remain in deficit for the next decade and drive national debt to two-thirds of a trillion dollars, the government warns.

Treasurer Joe Hockey painted a bleak picture when he handed down the mid-year budget review on Tuesday, telling Australians they would need to adjust their expectations.

Mr Hockey was making the case for broad-based savings, which will come in next year's budget, against a backdrop of weaker economic growth and higher unemployment for a number of years.

"Returning the budget to sustainable surpluses will not be achieved by piecemeal savings here and there," Mr Hockey told the National Press Club in Canberra.

"All options are on the table."

The 2013/14 federal budget has blown out by $17 billion since before the election and is forecast to be the third largest deficit on record at $47 billion.

There is no immediate sign the budget will return to surplus, after the previous forecast for a $4.2 billion surplus in 2016/17 was wiped out.

Instead, there will be a $17.7 billion deficit in that financial year.

Budget deficits are also projected for every year to 2023/24 unless action is taken, the government said.

The last surplus, of $19.7 billion, was in 2007/08.

If the government's forecasts stand, by 2023/24 the federal budget will have been in deficit for 16 years.

"Australians will now have to adjust their expectations of what government can sustainably provide, otherwise our nation's prosperity and our people's quality of life will be at risk," Mr Hockey said.

Shadow treasurer Chris Bowen said Mr Hockey should have outlined a path back to surplus.

"Joe Hockey is softening up the Australian people," Mr Bowen said.

"He is preparing the ground for deep and brutal cuts come budget time."

The budget deterioration reflects two key factors: a softer economic outlook and steps taken by the coalition to address unresolved issues inherited from the former Labor government, such as the $8.8 billion recapitalisation of the Reserve Bank of Australia.

Slower growth has resulted in a $37 billion reduction in tax receipts over the forward estimates and the economy remains in transition from a mining investment boom to broader sources of growth.

The economy is likely to expand by a sub-trend 2.5 per cent in 2013/14 and into 2014/15. Trend growth is usually about 3.25 per cent.

Unemployment is forecast to be six per cent by mid-2014, but rising to 6.25 per cent in 2016/17. The jobless rate is now 5.8 per cent.

Government debt is also expected to rise, from $320 billion this year to $460 billion by 2016/17, and a staggering $667 billion by 2023/24.

Australian Chamber of Commerce and Industry chief executive Peter Anderson said the figures were alarming.

"The only true solution to this alarming cycle of debt and deficit is for the government to provide the private sector with more economic freedom and a fairer deal to create the wealth required to get us out of this budget hole," he said.

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Qld pilot died doing what he loved: wife

Authorities are searching for a newly-wed couple after their plane crashed off Queensland's coast. Source: AAP

PILOT Alexander Rae died doing what he loved, his wife says.

Jimmy, as he was known, was flying a 21-year-old French woman on a scenic joy ride in a Tiger Moth when the biplane crashed into the water off South Stradbroke Island, killing them both

Campers and resort guests saw the red and white plane spear into the water in an almost vertical position about 400 metres off the island, near the Gold Coast, on Monday afternoon.

In his last radio communication, Jimmy said: "Conducting aerobatics over 3500 feet", The Courier-Mail reported.

Debris from the crash began to wash up on the beach as a frantic search for survivors in choppy waters wore on into the evening until it was suspended in the darkness.

At dawn on Tuesday underwater visibility had improved and a few hours later police divers using sonar found the plane's fuselage lying on the seabed.

The pilot and his passenger's bodies were inside.

Jimmy's wife Alice thanked search crews and well wishers.

"On behalf of all of Jimmy's family and friends, we would like thank everyone for their support and well wishes," she said in a statement.

"We all know Jimmy died doing what he loved."

The family of the French tourist is yet to make a statement.

The Australian Transport Safety Bureau is investigating the crash and has appealed to anyone who saw it, or picked up debris that washed ashore, to come forward.

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Kiwi extends gains over Aussie dollar

THE New Zealand dollar has extended its rally against its trans-Tasman counterpart as the divergence between the neighbouring economies makes New Zealand interest rates more attractive.

The kiwi rose as high as 92.49 Australian cents on Monday, the highest since October 2008, trading at 92.40 cents at 5pm in Wellington from 92.26 cents on Friday in New York.

The NZ dollar traded at 82.78 cents from 82.56 cents at 8am and 82.63 cents on Friday in New York.

The kiwi has been making fresh five-year highs against its Australian counterpart as the slowing economy in Australia and burgeoning local recovery underline the different stages of the interest rate cycle each nation's central bank is in.

New Zealand's Reserve Bank is keen on hiking rates next year, while Australia's is sitting on record-low rates to keep the stimulus coming.

Investors will be looking to see any hint of an easing bias when the minutes to this month's Reserve Bank of Australia policy meeting are released on Tuesday.

"Their central bank is quite determined to get the Aussie dollar lower to get a more sustainable mix in their economy," said Dan Bell, head of corporate sales at HiFX in Auckland.

"It looks like the kiwi/Aussie could get up to the 95 cent level" over the next month before it "runs out of puff," he said.

The kiwi fell to 85.04 yen at 5pm in Wellington from 85.31 yen on Friday in New York, and was little changed at 60.16 euro cents from 60.19 cents.

The trade-weighted index was steady at 77.92 from 77.90.

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Wesfarmers sells underwriting operations

DIVERSIFIED conglomerate Wesfarmers is selling its Australasian insurance underwriting operations to Insurance Australia Group (IAG) for about $1.85 billion - its biggest ever divestment.

Wesfarmers managing director Richard Goyder said the sale followed approaches by a number of parties that were interested in the underwriting business.

Wesfarmers had spent a lot of money in recent years getting the Australian and New Zealand insurance underwriting business into much better shape.

"But it hasn't delivered satisfactory returns on average over the last five years to Wesfarmers," Mr Goyder told reporters.

"And over a period of time, if any of our businesses don't generate satisfactory returns, we'll look and see what we do with it."

Mr Goyder said the sale of the insurance underwriting business also reduced some of the risk in Wesfarmers' portfolio of industrial, mining, retail and financial businesses.

There was inherent volatility in the insurance business because of catastrophic events like earthquakes in New Zealand, and Cyclone Yasi.

The sale does not include the insurance division's broking operations in Australia, New Zealand and the UK, and its Australian and New Zealand premium funding businesses which will remain part of Wesfarmers.

Wesfarmers expects a pre-tax profit of about $700 million to $750 million from the transaction, which will be included in the financial results for the second half of the 2014 financial year.

Mr Goyder said Wesfarmers had not yet decided what to do with the proceeds from the sale.

The sale is subject to regulatory approval, which is expected to take several months.

The acquisition comprises Wesfarmers' underwriting companies trading under the WFI and Lumley Insurance brands, and a 10-year distribution agreement with Coles.

IAG chief executive Mike Wilkins said the acquisition was a compelling strategic fit for IAG.

"Acquiring these businesses supports the group's strategic priorities of accelerating profitable growth in Australia and sustaining our market-leading position in New Zealand, and we expect attractive EPS (earnings per share) accretion," Mr Wilkins said.

IAG expects the acquisition will lift earnings per share by a modest amount in the first full year of ownership and by at least five per cent in the second year.

The acquisition will be partly funded from a $1.2 billion placement of shares to institutional investors, at $5.47 per share.

The integration of Wesfarmers' underwriting businesses is expected to generate pre-tax net benefits of about $140 million a year, with a significant proportion derived from reinsurance.

The integration process is expected to be substantially complete within two years, with pre-tax integration costs of $120 million.

Shares in Wesfarmers were 20.5 cents higher at $41.51 at 1515 AEDT. IAG shares are in a trading halt until the start of trading on Wednesday, December 18. They last traded at $5.70.

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