“There is no doubt that events in the United States will put upward pressure on interest rates,” the Treasurer, Wayne Swan, said today.

“But we will just have to wait and see,” he added.

Mr Swan took care to note that he was not talking about the decision the Reserve bank is expected to take on rates, on next Tuesday.

He was speaking on ABC radio, about events associated with the collapse of share prices on Wall Street last night.

“I am certainly disappointed,” Mr Swan said, when asked for his reaction to the Republican revolt, which saw the US Congress reject President George W Bush’s call for support of a $US700 billion bail out, proposed by the US Treasury secretary, Henry Paulson.

That rejection, on a 228-205 vote, came overnight, Australian time.

“What we have to deal with now is the practical reality of that decision,” Mr Swan said.

He also spoke, once again, of the “strength” of the Australian economy.

“The Australian system is in good shape, very good shape,” Mr Swan said.

“If there is one country you would want to be in in these circumstances, it is Australia,” the Treasurer added.

But he admitted that events overseas would put “upward pressure on costs.”

Share prices plunged 777.68 points on Wall Street overnight, it’s biggest points fall ever.

That occurred after Republicans revolted and rejected their president’s plea for a $US700 bail out for the US financial sector.

The vote, in the US House of Representatives was 228-205.

The S&P 500 fell 106.85 points to 1,106.42.And the tech-heavy NASDAQ Composite index plunged 199.61 points to 1.983.73.

Oil futures also sank sharply, dropping $US11.43 to $US95.46.

The Republicans, who rejected the plan President Bush had urged them to accept, declared that they did not believe it would work.

But President Bush admitted his disappointment.

“We put forth a big plan, because we had a big problem,” he said.The meltdown forced the  US Federal Reserve to pour hundreds of billions of dollars into money markets, to bolster liquidity.

Australia, too, became more deeply involved overnight, when the Reserve Bank agreed with the Federal Reserve on a $US20 billion expansion of the previously existing swap line, to boost US dollar liquidity in Australia.

This is in addition to the $US10 billion swap line announced, ,for the same purpose, on September 24.

This was part of a world-wide protective move, involving eight other central banks, including those of  Japan, England, Europe and Norway.

Meanwhile America moved closer to the Australian banking system overnight, with the imminent sale of the Wachovia bank.

Citigroup beat off its rival,  Wells Fargo, overnight to make the purchase.

The concentration of US banks, caused by collapses in the current crisis, looks like leaving America with just three dominant players in that nation’s banking market.

They would be the Bank of America, JP MOrgan Chase and Citigroup.

“We’ve had 12 years of neglect on this.

“It’s about time Australia bit the bullet on maternity leave.”

That’s how the Prime Minister, Kevin Rudd, welcomed the Productivity Comission’s recommendation of a broad, new taxpayer funded maternity leave scheme, for Australian women.

Then he went on to say:”We intend to get on with the job and we will get the policy setting right once we work our way through the detail of this report.”

With a welcome like that, it’s a fair bet that the government will implement something very like the commission’s plan.

But broadly, that is:-

-18 weeks’ post natal leave, paid at the ruling minimum wage, which is presently $543.78 a week.  The government would pick up the bill for this.

-all employees with “a reasonable attachment” to the workforce would be eligibile.

-the employer concerned would continue to pick up the bill for the absent employee’s 9 per cent superannuation contributions for this time.

Present arrangements would largely contunue, under a new name, for stay at home mothers, who are not attached to the workforce.

The commission said that as most employees have, at least, a few weeks’ annual leave up their sleeves, this scheme should allow most mothers to stay at home with their babies for six months.

It is recommending two weeks’ leave, as well, for new fathers.

The commission estimates that the cost to the government, when all items are considered, would be about $450 million a year.

It expects that business would contribute an extra $75 million a year.

Like to know more?

Go to www.pc.gov.au and follow the prompts.

Or check out the examples in our next story.

So how would the new maternity leave scheme work out in practice?

A glance at the circumstances of two women, that the commission gave as examples, should help us to answer that question.

The first, “Laura” is a working mother with a part time job. She earns $400 a week.

Laura is entitled to – and taks – 18 weeks leave. And she gets $543.78 a week, in that time, under the proposed scheme.

That is about $9,788, altogether.

But, by taking this leave, Laura misses out on the new maternity allowance, that would replace the present baby bonus and some other small benefits.

Once her superannuation payments are taken into account, though, Laura would get a total of about $10,436 gross, for that 18 week period.

So Laura would be $3,037 better off than she would have received, without the new scheme.

Roberta’s circumstances are quite different. She chooses to leave her $40,000 a year job, to become a full time mum.

Roberta will get a $5,000 maternity allowance and $654 in family tax benefits, a total of $5,654 for the 18 week period, after the birth of her child.

Where the father is eligible for the full two weeks paternity leave, and takes it, he would receive a gross payment of 1,088 from the government.

The commission says the maximum combined benefits, for a family taking advantage of the proposed scheme, would be $11,854,

Australia’s banks are still smarting.

They did not expect the Federal government to move against them as swiftly or as elegantly as it did late on Friday.

But they brought it on themselves.

How?

By muttering that they might not pass on an interest rate cut, if there is one next week.

As  any Economics I student will tell you, there are limits to monopoly power.

Or, in this case, to oligopolistic power.

We all have good reason to be grateful to Australia’s banks.

They have not, for the greater part, indulged in reckless lending, as some in the United States have done, with disastrous results.

But there is a price for everything.  Even good behaviour.

And the good, at times, can become a little smug.

That’s why the Federal government announced late on Friday that it would inject $4 billion into the Australia’s housing loan market.

The Treasurer, Wayne Swan, said the government would be buying top quality mortgages with that money.

He was too diplomatic, of course, to say that the move was aimed directly at the banks.

But it will help their rivals, the smaller mortgage lenders, stay in business, at a time when money is particularly tight.

In short, the government moved to keep Australia’s four big banks on their toes, by reminding them that they will still face a little competition in the market.

The Labor party has learned a lot since it tried, unsuccessfully, to nationalise Australia’s banks, back in the post war era.

The eyes of the world will be on Australia’s stock markets when they open today.

That’s because they will be among the first to open, since the US Congress reached agreement on a $700 billion bail out for Wall Street.

The world now knows that the US Congress will approve the deal.

The US President, George W Bush, tried to sell it, by insisting that the deal was “not aimed at Wall Street, it is aimed at your street.”

Officials have been busy putting the final touches since then.

Although the deal is deeply unpopular with the US public, President Bush had a point.

US economists were predicting that three to four million Americans would have lost their jobs, over the next six months, if no deal had been struck.

However, the deal still smells bad.

Democrat negotiator, Barney Frank, acknowledged that.

“No solution to a problem can be more elegant than the problem itself,” he said.

The Republican presidential contender, John McCain, cut through most clearly, in the candidates’ debate, which was televised at the weekend,  when he promised to hold those who had caused Wall Street’s crisis “accountable” for what had happened.

The latest Roy Morgan research also showed that his Democrat rival, Barack Obama, scored best when he promised to “restore America’s standing in the world” and to bring the war in Iraq “to a close.”

US legislators have set a powerful example.

Although full details have yet to emerge, the Paulson plan to patch up the US financial system, will, almost certainly,  contain salary caps, for rogue executives.

One early thought, that went into the mix, was that executives, who asked for help under the plan, would find their own salaries capped at $US400,000 a year.

That’s what the US president earns.

Although many of us  might well be satisfied with that, it would be a substantial restraint on those who, till recently, regarded themselves as masters of the universe.

They have had their counterparts here.

The Australian public, like that in the US, is very angry about those executives, who have bailed out with multi-million dollar golden parachutes, after mis-managing their corporate affairs.

Investor anger, perhaps best captured in the placard of a Wall Street protester, who invited rogue CEOs to “jump,” certainly has strong echoes in Australia as well.

That could well manifest itself in public pressure for CEO salary caps here, too.
Political moves, towards this end, have already begun.

Greens Leader, Bob Brown, has already urged the Senate to introduce salary caps for Australian CEOs.
So far, his plan has been passed over, without debate.

But it is still on parliament’s books.

It had to happen, sometime.

Wall Street picked up, overnight.

The Dow Jones industrial index closed 196.89  points higher at 11,022.06
The S&P 500 rose 23.31  points to 1,209.18
And the tech- heavy NASDAQ composite index rose 30.89 points to 2,186.57.
Oil futures rose $US1.88 to $US107.61
But there was little cheering.

So, what went right, for a change?

Approaching political agreement on Hank Paulson’s $US700 billion rescue plan helped.
The US President, George W Bush, tough warnings, in his grim speech to the nation, contributed.

His address to the nation was certainly serious.

And his assurance that he is prepared to accept tougher controls, over how the proposed $US700 billion, in Hank Paulson’s rescue plan, is spent, may have provided a little comfort, too.

So, too, would rumours of a likely interest rate cut, in the US.

However it was, President Bush’s grim warning:”That our entire economy is in danger,” would, undoubtedly, have concentrated most minds.

“This is the absolute height of arrogance,” Senator Michaelia Cash thundered.

“Clearly this tax grab was more important to this high taxing government than consulting and researching the actual impact of the decision on the oil and gas industry and the people of my State,” the still new Senator declared.

It was an impressive speech, by any standards.

She predicted that the gas bills, that West Australians pay, would “soar” and that their electricity prices would rise.

Senator Cash was, of course, condemning the   “$2.5 billion tax grab”  that the Rudd government made in its May budget, when it ruled that the standard petroleum excise would apply to “condensate” produced on the North West shelf.

The producer, Woodside, obtained an exemption from this charge, back in 1977.

It was then an infant industry, working under exceptionally difficult conditions.

But, as history will recall, the project has been exceptionally successful since then.

And its chief, Don Voelte,  has since confirmed, the Rudd government’s decision will, indeed, see West Australians paying more for their gas.

And Senator Cash is, undoubtedly right, in saying that it will cause the State’s electricity prices to rise, too.

“This tax grab is all about the politics of envy and it will increase the price of domestic gas in Western Australia,” she said.

“Not only that, it will hurt in particular the pensioners,” Senator Cash declared.

All very admirable.

A local politician, looking after her own people.

But there was just one, small thing that Senator Cash did not declare.

At least, not in her speech.

That was the fact that she, herself, had a private interest in the matter, as she holds Woodside shares.

Senator Cash is not making a secret of that fact.

Indeed, she declared it, in the register of Senators’ interests, that was published the next day.

But a declaration, in the speech itself, would have been graceful.

So the US is a democratic country after all.

Politicians, including Presidential hopeful John McCain, are insisting  on participating in Hank Paulson’s projected rescue of the global economy.

Mr McCain says he has suspended campaigning in the US election, to rescue the nation.

And he has invited his rival, Barack Obama to do the same.

Great politics. Especially for a man who insists that he is not politicking.

But there are risks.

As HBOS economist Alan Langford points out, key debt markets are still dangerously high.

And Hank Paulson’s $US700 billion rescue plan is now trapped in Washington traffic.

The situation is still very urgent.

And markets are still very unsettled, despite Warren Buffett’s comforting move to invest up to $10 billion in Goldman Sachs.

But there was at least a small sign of some sanity returning to the markets overnight, Australian time.

Wall Street was down again, at the time of writing, just before the market was due to close.

But the fall – of some 10 points at that time – was modest and restrained.

But US market woes aren’t over yet.

Not by a long chalk.

Greed, greed for want of a better name.  Greed is still good.

OK. We must be honest here.  Greed is, clearly, on the nose in the United States right now.

It doesn’t have many friends, there.

Oddly, though, it still does, in the Australian parliament.

The Greens leader, Bob Brown, moved in the Senate yesterday for curbs to be placed on the salary packages of the CEOs at the top end of town.

That is those whose remuneration is measured in millions, even if their high flying companies fail.

Sure, this was just a bit of cheap political populism.

But Brown still argued that it is obscene to permit this kind of “inequity” to continue, when pensioners and other Australians on low incomes are doing it so tough at present.

And he pointed out that the greedy, in the United States, at least, hadn’t been doing the world a whole lot of good, anyway.

But what support did he get, for his motion, condemning local CEO “greed?”

Almost none.

The South Australian independent Senator, Nick Xenophon, voted with the five Greens, for Brown’s motion.

But Family First’s Steve Fielding voted with the Tories who, naturally enough, found Brown’s idea utterly repulsive.

Well, millionaires have families, too, don’t they Senator Fielding?

Often several.

But Labor senators, too, voted against the motion.

They know that the super-rich often take out a little insurance, by donating to their party, as well, before elections.

One vote, one value was once a mantra of the Australian  Labor party.

Last night, though, it saw one vote, that of Family First Senator, Steve Fielding, blast a hole in its budget strrategy.

“This is big,” one Liberal Senator muttered, as MPs walked out of the Senate, after the vote.

Indeed it is.

The government had managed to rescue most of its luxury car tax, the night before, by doing deals with the two cross bench senators, Fielding and the South Australian independent, Nick Xenophon.

It did that by doing deals with them.
But not last night.

Fielding wanted more than the government was offering on it’s plan to offer relief from the Medicare levy.

The government had, already, compromised on this one, too.

It had agreed to cut the threshold, for single people, from its planned level of $100,000 to $75,000.

But Fielding wanted more.

Specifically, more relief for low income families.

So he voted with the Conservatives, to block the government’s entire Medicare Levy surcharge bill.

Fielding says he wants more negotiations.

He will probably get that.

But there are risks, too, in his “my way or the highway” tactics.

Governments do have to budget, to run the country well.

And this is not a great time to inject any extra uncertainty into national affairs.

The Rudd Labor government has – substantially – rescued its controversial luxury car tax.

By doing so, it will preserve all but as estimated $40 million, of the $22 billion surplus, that it bid for in its May budget.

However it was forced to do deals with  two cross bench Senators, the South Australian independent Nick Xenophon and the Family First’s Steve Fielding.

Senator Xenophon had insisted that people who placed orders for cars, before Budget night in May, and took delivery of them by July 1, be exempted from the tax.

The government agreed.

Senator Fielding insisted that farmers and tourist operators should also be exempted.

Once again, the government agreed.

Both groups will have to pay the tax initially, but they will be able to get it back, by way of a rebate.

However, primary producers will only be able to purchase one so-called luxury vehicle a year, in this way.

Tourist operators will not be limited in the number of vehicles they can purchase.

The Coalition tried, unsuccessfully, to have the luxury car tax threshold increased from the government’s proposed figure of $57,180 to $90,000.

But Senator Xenophon, Senator Fielding and the five Green Senators all voted with the government, to strike down that idea.

The result, which followed almost a full day’s debate, is a major victory for the government.

The government said, in its May budget, that this tax would raise $550 million over four years.

Although that has now been trimmed, the government should still get most of the money it sought.

The Prime Minister, Kevin Rudd, and several senior ministers have warned that the $22 billion surplus is badly needed, as a buffer against the impact of current global market fluctuations, on the Australian economy.

The government has accused the Coalition of economic vandalism, for opposing the measure.

Australia’s pensions should be set and reviewed by an independent authority, according to  Catholic Social Services Australia.

It’s suggestion has come during a bitter debate between Australia’s major political parties, over the current level of the single age pension.

Politicians from all sides have agreed that people on that pension in Australia are doing it tough, at present.

But that’s where the agreement has ended.

The Senate, earlier this week, urged the government to increase that pension immediately by $30 a week.

It even passed a bill, urging the government to take that step.

However, the government declared that bill unconstitutional, saying  Section 53 of the Constitution prevents the Senate from originating a money bill.

The government says it wants to wait for a report on Australia’s tax and social security systems, before it adjusts pension rates.

And that report is not due until next year.

The Catholic body says an independent Entitlements Commission should be given the job of setting and reviewing Australia’s pensions.

However, the idea is not likely to appeal to either of the major parties.

Politicians are always reluctant to cede any of their powers to unelected bodies.

The one conspicuous exemption to that is the Reserve Bank’s power to set Australia’s interest rates.

That power was given to the bank after one government was accused of refusing to raise interest rates, when that was necessary.

Naturally, that refusal occurred in the months immediately before a Federal election.

The Federal government has moved to assure investors that the present ban on short selling shares won’t be permanent.

Superannuation and Corporate Law Minister Nick Sherry did that when he released an exposure draft of legislation that will require the disclosure of such sales.

He said the four weeks exposure was meant to prepare for “the possible future removal of the current halt on most types of covered short selling put in place by regulators from yesterday.”

“As we have always said, the government has no intention of putting in place a permanent legislative ban on covered short selling.

“In normal circumstances (this) can add to the efficient operation of the market,” Senator Sherry said.

But no-one is pretending, at present, that global financial markets are in anything like normal circumstances.

The bans were imposed because the Australian Securities and Investments Commission feared a raid, perhaps by a large hedge fund, if it were not.

Senator Sherry defended the bans on both naked and covered short selling yesterday, saying Australian authorities had acted appropriately in the circumstances.

He said Ireland, Canada, the United States and many other countries had taken similar action.

It would have been unwise for Australia not to have followed suit in those circumstances, Senator Sherry said.