PRESS DIGEST-Australian General News - May 13

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com) -- Extra funding for health and disability reforms will be excluded from tonight's federal budget under a deal struck with the states in March. Consequently, the new payment model, which includes performance incentives, will not come into force until at least January 2009. Addressing the caucus yesterday, Treasurer Wayne Swan promised to deliver 'a good Labor budget' that would combat the inflationary pressures inherited from the former Coalition government. Page 1. -- Westpac Banking Corp (WBC.AX: Quote, Profile, Research, Stock Buzz) is set to unveil a A$19 billion friendly takeover bid for St George Bank (SGB.AX: Quote, Profile, Research, Stock Buzz) that would create Australia's biggest financial services group. Having joined Westpac as chief executive officer four months ago, Gail Kelly intends to buy her former employer through an all-scrip deal. Sources have flagged a 1.3-for-one offer. In comment, Federal Treasurer Wayne Swan warned there were 'a number of regulatory steps that would need to be followed before any merger could go ahead.' Page 1. -- Home loan approvals slumped more than 6 percent in March as the tighter economy dampened sentiment in the property sector. Australian Bureau of Statistic figures showed a corresponding 5.3 percent drop in the value of housing loans, with new-home buyers staying away in droves: finance for the purchase of new dwellings plunged 11.5 percent to be 35.5 percent lower than March 2007. 'Rapid [interest] rate rises in the past five months are now having a significant impact,' said Master Builders Australia economist Peter Jones. Page 3. -- The nine telecommunications companies preparing to tender for the A$4.7 billion national broadband network are in talks with potential financiers, the bid manager for the G9 group, Michael Simmons, said yesterday. Rival Telstra (TLS.AX: Quote, Profile, Research, Stock Buzz) confirmed on Friday it had paid the A$5 million bond required of parties bidding for the Federal Government project. Mr Simmons said the Optus-led G9 would seek an extension to the bid deadline of July 25, citing a lack of technical information about the high-speed network. Page 1. THE AUSTRALIAN (www.theaustralian.news.com.au) --A Victorian Liberal Party campaign manager yesterday became embroiled in the scandal over an anti-Liberal blog that saw two staffers sacked last month for operating the website. Susan Sandler, a close ally of Liberal leader Ted Baillieu, resigned after one of the staffers accused her of writing an anti-Semitic email about a party candidate. State party president David Kemp indicated a 'few' more Liberals would be expelled over their involvement in the blog. Page 1. -- Federal Education Minister Julia Gillard has not committed to publishing the results of schools in literacy and numeracy tests, which start today. Despite a Labor election pledge to publish 'league tables' comparing schools across the nation, Ms Gillard said yesterday she had yet to decide on 'the best use of this information.' While the states and territories have agreed to provide the results of their schools to the Commonwealth, Queensland, South Australia and New South Wales are opposed to the so-called league tables. Page 1. -- Several senior Liberal Party members yesterday rejected a claim by Queensland party president Gary Spence that they were behind a state merger with the Nationals. On Saturday, Mr Spence announced that the two conservative parties had agreed to merge with the near-unanimous support of the Liberals' state council. However, former federal minister Mal Brough said the council had merely endorsed negotiations on the proposal. Liberal moderates hope to replace Mr Spence with Mr Brough in a ballot later this month. Page 2. -- A six-month-old baby encountered by Australian troops during a battle with the Taliban died in an ensuing skirmish, a report has found. The baby was in a room from where a couple opened fire on Australian troops in Southern Afghanistan last November. Although the soldiers placed the infant in a safer spot, they later returned to find the child dead. It is believed a concussion blast from a grenade caused the child's death. The Defence Force report did not recommend that Australian troops change their rules of engagement. Page 3.

THE SYDNEY MORNING HERALD (www.smh.com.au) -- In the lead-up to tonight's federal budget, a leading economist has urged Treasury to preserve the tax windfall from the mining boom rather than spend it. The Australian National University's Warwick McKibbin said the former Coalition government had failed to properly manage the 'terms of trade shock,' and it was vital to shield the economy to avoid inflationary pressures. A surge in exports has generated an extra A$80 billion over the past four years, according to Macroeconomics consultancy. Page 1. -- Former leader of the New South Wales opposition Peter Debnam yesterday resigned from the frontbench over the Government's plan to privatise the electricity market. It followed the Opposition's decision last week to give in-principle support to the energy sell-off. Mr Debnam last night promised to vote against the plan if it came before parliament. Mr Debnam led the Coalition opposition to a resounding defeat at the state election in March 2007, amid a backlash against the federal Coalition's workplace laws. Page 2. -- New South Wales Transport Minister Eric Roozendaal yesterday rejected an Ombudsman's call to release documents on the Lane Cove Tunnel in Sydney's north. Mr Roozendaal said a contract between the Roads and Traffic Authority and tunnel operator Connector Motorways was 'commercially sensitive.' At issue is a A$25 million compensation package paid to the company to keep the tunnel toll-free until after last year's state election. Page 2. -- A former RailCorp supervisor yesterday admitted taking regular bribes from contractors during his tenure at the New South Wales rail operator. After several days of denials, George Laidlaw told the Independent Commission Against Corruption that he received money on a weekly basis for handing jobs to long-time contractors. Several RailCorp employees and managers have been called to the inquiry to explain hundreds of thousands of dollars in alleged fraudulent payments. Page 3.

THE AGE (www.theage.com.au) -- Australia will increase its intake of refugees by 500 a year, with a particular focus on Iraqis and the Karen people - a Burmese ethnic minority forced to live in camps on the Thai border. At tonight's federal budget, the Government is also expected to outline its plan to abolish temporary protection visas, which require refugees to have their asylum claims reassessed after several years. Psychologists claim this uncertainty exacerbates the trauma of refugees, who are unable to sponsor family members under the existing system. Page 2. -- Health experts warn that hundreds of thousands of Victorians may drop their private health insurance and overload the public system, following changes to the Medicare surcharge. The Federal Government came under criticism yesterday for lifting by A$50,000 the income threshold at which the surcharge applies, after an election promise to maintain the surcharge. The Australian Medical Association said this would encourage Australians to quit their private cover and drive up insurance premiums for those that remained. Page 2. -- Popular Dutch violinist Andre Rieu received a rousing welcome from thousands of fans attending a three-hour promotion at Melbourne's Telstra Dome yesterday. Rieu, whose new album Waltzing Matilda is number-one on the local pop charts, performed two songs for the crowd ahead of a scheduled tour later this year. The shows will feature his 50-member Johann Strauss Orchestra, two ice rinks, horse-drawn carriages and a reproduction of Vienna's Schnbrunn Palace. Page 3. -- Mercedes Corby yesterday told the Supreme Court that she did not smoke marijuana and had never taken cocaine or other hard drugs, despite opposing counsel presenting photographs purporting to show her in the act of preparing and smoking cannabis. Ms Corby also declared her sister, Schapelle, innocent of a drug-smuggling charge that saw her sentenced to 20 years' jail by a Bali court in 2005. Ms Corby is suing Channel Seven over drug-trafficking allegations made by her former friend, Jodie Power, in a recent interview. Page 3.