The war that was supposed to end all wars

The Boer War was the first, the war on terror the latest, Vietnam the longest and World War II the biggest.

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But 100 years ago, an innocent Australia prepared for what would prove to be its bloodiest war by far.

World War I cut a swathe through the youngest nation’s youngest and ablest men.

From the trenches of Gallipoli to the horrors of the Western Front, almost 62,000 Australians laid down their lives, compared with fewer than 40,000 in World War II.

More than 330,000 Diggers fought for king and country, and two out of every three were killed or wounded.

Now they are all gone, friend and foe; when British-born sailor Claude Choules died in Perth in 2011 he was the last survivor of the 70 million men who fought in World War I.

Of all the battles Australians waged, the doomed Gallipoli campaign is the one that has stirred patriotic hearts through succeeding generations, partly because it was the first.

But though 8700 Aussies never came home from that abortive venture in Turkey, the death toll in France and Belgium, on the Western Front, was four times heavier.

On the Somme in 1916, Australia lost as many casualties in eight weeks as would be lost at Gallipoli in eight months.

As the Battle of The Somme opened on July 1, 1916, Britain suffered its heaviest losses ever in war – 19,240 dead among an appalling casualty list of 57,420 in a single day.

In five months of grim warfare featuring the world’s first tank battles, the Allies succeeded only in pushing German forces back 65km to the heavily fortified Hindenburg Line.

The Western Front was deadlocked from a few months after the war’s start in 1914 until a few months before its end in 1918.

It stretched in a continuous line of trenches from the English Channel 700km to the Swiss frontier.

Armies millions of men strong measured advances in terms of a few kilometres gained over several months.

Casualties from each big attack, or “push”, ran into hundreds of thousands on both sides.

The first mass global war of the industrialised age cost more than nine million lives and, according to one estimate, around $260 billion – six times the sum of all the national debt accumulated in the world from the end of the 18th century to 1914.

Australia, federated only 13 years earlier, was unquestioning in its loyalty to empire, with Andrew Fisher, the Labor prime minister, vowing to back Britain to “the last man and the last shilling”.

If Gallipoli was an ultimately futile baptism of fire, then worse was to come in France.

In 1916, Australians went through hell at Fromelles, where their enemy included a young Adolf Hitler, and in poison gas attacks at Pozieres, where Gallipoli hero Albert Jacka again distinguished himself.

In 1917, Diggers attacked famously at Bullecourt, and across the Belgian border at Messines and in the muddy battles of Passchendaele.

In 1918, commanded by Lieutenant General John Monash, they helped to stop the German March offensive and then to lead the advance to final victory.

One of their finest hours came in the attack that liberated Villers-Bretonneux on the third anniversary of their April 25, 1915, landings at Gallipoli.

Most Diggers came home appalled by war, but believing strongly in the need to commemorate it.

“The younger generation didn’t know the horrors of war. They need to be reminded,” said Ted Matthews, the last survivor of the original Gallipoli landings, who died aged 101 in 1997.

“That’s what their forefathers died for – to preserve their freedom and way of life.”

If the futility of the so-called Great War is puzzling to modern generations, its cause is even more baffling.

The spark was the clumsy assassination of Archduke Franz Ferdinand, heir to the Austro-Hungarian throne, on a bridge in Sarajevo.

After decades of imperialist and nationalist tensions, backed by myriad treaties and alliances, it was all that was needed to draw in the great powers of Europe.

The assassin’s bullet was the “shot heard around the world”, but who today who could name the man who fired it, Serbian Gavrilo Princip?

The guns of war finally fell silent on the 11th hour of the 11th day of the 11th month of 1918.

World War I was widely expected on all sides to be over by Christmas 1914.

It was supposed to be the war to end all wars, but it served to set the stage for another global conflagration.

Within two decades the great powers were arming themselves for World War II.

Victorian Greens Senator-elect Janet Rice

The Victorian Greens Senator has since played a main role in the formation of the Greens in her home state.

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She was a founding member of Australian Greens Victoria in 1992 and took a seat on the City of Maribyrnong as a Greens councillor between 2003 and 2008.

Though she acknowledged the two experiences are very different, she told SBS her time in local government will help her adjust to the Senate,

“I think the experience is very relevant,” she said.

“If you’re open to be working collaboratively and find other people that are also in that case, you can make some really good progress.”

Listen: Stephanie Anderson speaks with Janet Rice.

As a life member of the Greens, Rice said she would be sticking to party lines when to came to legislation, working against cuts to welfare and voting to retain the carbon tax .

“We are passionate about taking very serious action on addressing global warming,” she said.

“We’re very open to be working with any people who are interested in pursuing similar agendas … If there is the opportunity to be working with the crossbenchers, we’ll be pursuing them.”

In addition to environmental issues, Ms Rice said she would be joining Senator Sarah Hanson-Young in campaigning against the “warped priorities” in the Abbott Government’s immigration policy.

“For me, it’s something that I’m passionate about,” he said.

“We as Australians, we can afford to be putting out a helping hand and providing a caring approach to refugees… It’s cheaper to be treating people well and fairly rather than locking them up.”

Senator Rice has since taken to Twitter to celebrate her first day in the job.

Here I am! Day 1 being Senator Rice 南宁桑拿网,南宁夜生活,/mjH5NzVYj7

— Janet Rice (@janet_rice) July 1, 2014

Laver warns against Kyrgios hype

Australian tennis legend Rod Laver is excited by Nick Kyrgios’ potential but has warned against trying to predict how much the rising teenager can achieve.

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Laver, an 11-time grand slam champion considered one of the game’s greatest ever players, believes 19-year-old Kyrgios will be competitive against world No.1 Rafael Nadal in the last 16 at Wimbledon on Tuesday.

However he says predictions of a single-figure ranking and grand slam glory in the future could be detrimental to the Canberra teenager’s development.

“That’s a mistake, it’s just people talking cheap news,” Laver said at the All England Club launch of his autobiography Rod Laver: A Memoir on Monday.

“Otherwise he (Kyrgios) is going to think, ‘I don’t have to work as hard now’ and that’s sort of the reverse you want him to be in.

“He has to try and practice even more and even harder.”

Laver was impressed when he saw Kyrgios play at the Australian Open in January, where he reached the second-round before falling in five sets to Frenchman Benoit Paire.

The 75-year-old believes Kyrgios’ run to the fourth round at Wimbledon shows he’s developed from a talented kid into a fierce competitor with character and an ability to play under pressure.

Laver doesn’t expect Kyrgios to beat Nadal but believes he can definitely trouble him.

“If he takes a set, it might be an upset in time,” Laver said.

“He’s got all the shots, Nick, so why not win?

“Even if he loses, if it’s close, he’s going to know how much he needs to do to really get to that next level.”

Another Australian legend, Ken Rosewall, said there was no reason why the confident Kyrgios couldn’t trouble two-time Wimbledon winner Nadal.

“Some players have performed well against Nadal because they’ve kind of hit him off the court,” four-time Wimbledon runner-up Rosewall said.

“I think Nick has the power to do the same thing, so it’s just whether he can do that power and technique and consistency long enough.”

Asked what he thought of Kyrgios’ potential, Rosewall said Kyrgios was “young enough to have a fair amount of improvement in his game.”

Kyrgios is bidding to become the youngest man to reach the quarter-finals since Bernard Tomic in 2011 and his run to the fourth round means he will break into the world’s top 100 for the first time.

Rebel bikie $20m drug syndicate busted

Brazen Rebels bikies ordered another $10 million worth of speed from the United Kingdom, even though two earlier imports were intercepted.

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The Tasmanian Eastern Shore Chapter were banking on becoming millionaires for a $194,000 outlay.

Drugs imported from overseas come at a cut price to those manufactured in Australia and the bikies tried to circumvent customs by using an international parcel courier and what they thought were untraceable payments.

Little did they know they had been monitored since April by a high-level task force led by the Australian Crime Commission (ACC).

The Rebels’ alleged supplier, from Liverpool in the United Kingdom, sent two packages but were confiscated in Hobart before delivery on June 23 and 24.

The drugs were barely concealed in the packages which weighed two kilograms each and were collectively worth about $10 million.

Undeterred, and in a bid to outsmart customs, the gang then allegedly ordered another two packages to be delivered to Gold Coast members of the chapter who’d relocated to Robina and Benowa in late 2013.

“I think confidence is (the) right (word), but the detections in customs in particular were seen as business as usual,” ACC Queensland manager Carey Stent said.

“They did expect that there would be a cost of doing their business and losing those packages didn’t have an overarching impact on the syndicate.

“It was seen as the cost of doing business.”

A package destined for Queensland was seized on Friday and authorities delivered another to a Carrara caravan park on the Gold Coast on Monday afternoon.

Two alleged Rebels, aged 25 and 28, were arrested, one of whom police will allege organised the delivery.

Three other men were taken into custody in Tasmania, two are alleged bikies.

United Kingdom police in Liverpool arrested a 27-year-old man from Kidderminster.

It will be alleged all drugs delivered to Queensland would be posted to Tasmania, to be distribution through the Rebels criminal network.

“We allege they were going to import a constant of drugs, so we’ve stopped that from occurring,” acting detective superintendent Peter Bodel, from the Australian Federal Police’s national anti-gang squad said.

“We’ve broken the source, the people organising it and the people who were going to traffic down in Tasmania, so I think it was an important success.”

A total of eight kilograms of amphetamines were seized as part of the operation, taking tens of thousands hits of speed off the streets.

The joint investigation was led by the ACC’s Eligo Task Force, which targets serious organised crime, and also involved Australia’s National Anti-Gangs Squad, the financial intelligence organisation Austrac, Australian Federal Police, and Customs authorities.

Since the Eligo Task Force was set up in 2012, it has seized more than $665 million worth of drugs and assets, including $38.5 million in cash.

The five men arrested in Australia were charged under commonwealth law and are facing life in prison.

They were due to face court on Tuesday on drug trafficking, possession and importation charges.

The man arrested in the UK has been released on police bail pending further inquiries.

Carbon tax savings must be passed on: ACCC

What goes up, must come down.

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That’s the message the consumer watchdog is sending to every company that increased prices when the carbon tax was introduced two years ago.

Now the impost is gone, the Australian Competition and Consumer Commission (ACCC) will check all entities – including airlines, energy companies and local governments – to ensure their prices drop.

Excuses will not be tolerated and ditherers will be aggressively pursued.

“We’re going to be extremely tough,” ACCC chairman Rod Sims told ABC Radio on Tuesday.

“We’re going to adopt a very cynical approach when people give us reasons why they can’t be lowering their prices.”

This puts the watchdog on a collision course with big companies such as Qantas, which claims it absorbed the cost of the carbon tax and has nowhere to move on prices.

Mr Sims is sceptical of this explanation, saying the airline introduced a specific surcharge when the carbon tax took effect in 2012.

Consumers could reasonably expect fares to fall if the surcharge was no longer needed, he said.

Qantas will have to provide evidence justifying why it should not lower fares, and talks between the airline and the ACCC will continue.

The airline is not the only entity in the ACCC’s sights.

About 20 councils signalled their rates would rise with the introduction of the carbon tax.

However, with waste and electricity prices set to drop, Mr Sims said local government rates should fall in line.

“We’ll be knocking on their door to make sure that those rates come down,” he said.

Electricity companies will have 30 days to explain why they think prices will fall.

The ACCC says it will watch this sector very closely, and legislation to repeal the carbon tax gives the agency powers to ensure savings from energy companies are passed on in full.

Electricity retailers have promised to adjust prices quickly and backdate those savings to July 1.

The Abbott government claims the average Australian household can expect to save $550 a year from the repeal of the carbon tax, though some consumer groups have challenged this figure.

Consumers get their groove back

Consumers have got their groove back, having shaken off their woes about the federal government’s planned budget cuts.

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The latest weekly ANZ-Roy Morgan survey shows consumer confidence levels at a seven-month high, rebounding from a slump in April and May sparked by news of spending cuts.

Confidence levels rose 2.4 per cent in the past week, adding to recent gains and giving more weight to the theory that the recent falls were related to temporary shock from the budget.

ANZ chief economist Warren Hogan said confidence levels were now back in line with business confidence.

“Consumer confidence is now back to pre-budget levels and consistent with moderate growth in consumption and economic activity,” he said in a statement on Tuesday.

“The good news is that the headline impact of the budget appears to be temporary and the more enduring features of the economy, such as rising share and house prices, job creation and a stable world economy are now driving consumer attitudes to spending and finances.”

Economists believe that with consumers feeling more confident, retail sales should pick up.

Meanwhile, a separate survey found that business confidence also appeared to be improving, with the number of new company startups rising more than a fifth in the June quarter.

The Dun and Bradstreet survey also found that nearly two thirds of respondents were more positive about the economy than a year ago.

Dun and Bradstreet chief executive Gareth Jones said low borrowing costs were helping improve business confidence.

“Confidence is critical for entrepreneurship and these numbers on business startups indicate there is a building mood of positivity about opportunities in the economy,” he said.

Business failures – those that seek legal relief from creditors or cease operations without paying creditors in full – fell 11 per cent in the June quarter but were up nine per cent for the year.

More than half of the business failures recorded in the June quarter were in the services and the manufacturing sectors.

QBE profit downgrade a ‘one off’

QBE boss John Neal insists the insurer remains on the mend, despite disappointing investors with yet another profit downgrade.

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The insurance giant has been a perpetual disappointment to shareholders in recent years, delivering a string of profit downgrades and weak results that have seen QBE’s share price fall from more than $25 to around $10.

It stayed true to form on Tuesday, flagging a $US87 million profit slide on the back of problems with its Latin American business.

The company expects its net profit to fall by about 18 per cent to $US390 million in its half year results in August.

Investors punished QBE, pushing its shares down more than 11 per cent to a seven-month low of $10.57.

But Mr Neal said the rest of QBE, including the troubled US business, was improving and urged shareholders to see the latest announcement as a one-off.

“I think when people get the chance to see the detail that sits behind the results for the half year they will take confidence that the underlying businesses are doing what we set out to achieve this year,” he told AAP.

But Mr Neal said QBE was facing tough competition, particularly in Australia, which meant insurance premiums are likely to more or less flatline in the next six months, after several years of rises.

“You’re certainly not seeing rates reducing on average but our assessment is that by the end of this year pricing will be flat,” he said

That’s great news for customers but less so for QBE, which has also lowered its guidance for group gross written premium, which is effectively the company’s revenue.

QBE expects gross written premium for the first half to fall by about four per cent to $US8.5 billion in response to competition pressures and changes to the US and European businesses.

Meanwhile, QBE expects its group profit margin to be between seven and eight per cent, which is below the 10 per cent the market had expected.

It has also forecast a combined operating ratio, a measure of the difference between the premiums the company receives and the claims it pays out, of between 96 and 97 per cent – above the 93 per cent that had been expected.

The profit downgrade is the result of a $170 million cash injection into the Latin American business.

The extra cash was needed to strengthen claims reserves and cover costs related to its Argentine workers’ compensation business, and higher-than-expected individual risk and catastrophe claims.

Analysts weren’t buying Mr Neal’s assertions about the underlying strength of the business, with 100 Doors managing partner Peter Esho rating QBE as a firm “sell”, given the lack of stability in its earnings and poor recent track record.

“At the end of the day its the track record that earns trust and the track record is not there,” he said.

“It’s not what they say its what they do and what they have been doing is downgrading consistently.”

Nat Fyfe not moping over Brownlow hurt

Nat Fyfe appears set to suffer the pain of watching a Brownlow medal slip through his fingers this year, but the star midfielder won’t care one bit as long as Fremantle take home the ultimate prize – an AFL flag.

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Gary Ablett’s season-ending shoulder injury has thrown the Brownlow medal race wide open, with Sydney’s Josh Kennedy, Collingwood’s Scott Pendlebury, Geelong’s Joel Selwood, and Port Adelaide’s Travis Boak among the contenders.

Fyfe would have been the outright favourite had he not been suspended in round two for a shoulder-to-shoulder bump that resulted in an accidental clash of heads with Gold Coast’s Michael Rischitelli.

Most AFL experts felt Fyfe was unlucky to be banned, with some calling on the AFL to review its policy of ruling suspended players out of the Brownlow race.

Only two players in VFL/AFL history have been robbed of the Brownlow medal due to suspension.

North Melbourne’s Corey McKernan was ineligible to win despite tying with Brisbane’s Michael Voss and Essendon’s James Hird in 1996,

One year later, Bulldogs star Chris Grant topped the voting but had to step aside for St Kilda’s Robert Harvey.

Fyfe has been in the hottest of form this season, averaging 27 possessions and a goal per game.

But individual glory isn’t on the mind of the 22-year-old, who would much rather guide Fremantle to a maiden premiership.

“That incident happened all of the way back in round two – it is what it is,” Fyfe said of his controversial suspension.

“There are only a couple (of players) who have topped the poll and been ineligible, but there are other prizes I have on my mind.

“The biggest challenge I usually have is keeping my body together and getting through the year. So touch wood, I am going pretty well in that area and been able to stack some consistent footy (together).

“But the crunch time starts now.”

Fremantle slipped to fourth spot on the table following their shock 58-point loss against St Kilda a fortnight ago.

Dockers players had the bye week to “stew” over that inept performance, and Fyfe is confident they’ll rebound strongly in Thursday night’s clash with Carlton at Patersons Stadium.

Fremantle will welcome back ruckman Aaron Sandilands (back), midfielder Stephen Hill (leg) and goalsneak Hayden Ballantyne (suspension), while Garrick Ibbotson, Hayden Crozier and Tom Sheridan are also in line for recalls.

“I’m sure the guys who feel they’re on the edge are certainly aware of the pressure that’s coming from underneath, which is really healthy,” Fyfe said.

AAP buys Margaret Gee’s, Who’s Who

Australian Associated Press has bought Crown Content’s directories business in a move which brings the Margaret Gee’s Media Guide and Who’s Who in Australia publications into the AAP stable.

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AAP chief executive officer Bruce Davidson said Crown Content’s seven online and print directories brands will be incorporated into the AAP Medianet communications solutions business.

The acquisition will strengthen Medianet’s product suite and is expected to deliver increased efficiency and savings through integration of management, sales and production.

“The acquisition of the directories business will create an enhanced value proposition for our clients – including the 1500 current clients of the Margaret Gee’s Media Guide,” Mr Davidson said in a statement on Tuesday.

“By combining the two offerings we intend to market the full spectrum of the media and stakeholder intelligence market – from one-off communications needs to the ongoing requirements of our government, corporate and community clients in Australia and New Zealand.”

The Crown Content stable also includes Who’s Who in Business in Australia, Who’s Who of Australian Women, the National Guide to Government, the Directory of Australian Associations and the Australian Local Government Guide.

Medianet managing director Michael O’Connell said the depth of information available in the Crown Content directories and databases would enhance Medianet’s reach and influence.

“AAP also understands the need for accuracy and is well-placed to continue the high levels of research required for these quality publications,” Mr O’Connell said.

Report sparks WA shopping debate again

Independent grocers say a report recommending further deregulation of retail trading hours in Western Australia will be a “catastrophe” for small business.

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The Economic Regulation Authority (ERA) conducted an inquiry into microeconomic reform in WA to improve productivity, and the report was tabled in parliament on Monday.

It recommended retail trading hours be deregulated, with the exception of Christmas Day, Anzac Day morning and Good Friday – similar to the models in Victoria and Tasmania.

“Consumer choice, rather than government regulation, should determine which shops open and when,” the report said.

“Small retailers have already adapted to substantial liberalisation of trading hours in Western Australia, and the structural adjustments that would arise from full deregulation are not anticipated to be as significant.”

But WA Independent Grocers Association president John Cummings said if the recommendation was adopted it would see national retail chains “sweep away” small retailers under a “one-size-fits-all” model.

Mr Cummings said it was wrong to suggest all retail marketplaces and consumers in WA were identical regardless of whether they were in the city, suburbs or country towns.

He said the winners would be national shopping centre chains, while the small and medium sized retailers would struggle, especially in regional areas where there were fewer resources to compete against the chains.

Independent research into the effects of existing trading hours proved current weeknight and Sunday trading was already harming small retailers, Mr Cummings said.

The study, conducted for IGA grocers, showed most small retailers suffered reduced profits and sales since the introduction of weeknight and Sunday trading in 2010 and 2012.

The survey revealed almost 60 per cent of small retailers suffered falls in profits, while almost one third reported nothing had changed, Mr Cummings said.

Air Algerie pilots asked to turn back

France says the pilots of the Air Algerie passenger plane that crashed in Mali, killing all 118 people on board, had asked to turn back.

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“What we know for sure is that the weather was bad that night, that the plane crew had asked to change route then to turn back before all contact was lost,” Foreign Minister Laurent Fabius told reporters in his latest briefing about Thursday’s disaster.

It had previously been known that the crew asked to change route due to bad weather conditions, but the revelation they then demanded to turn back is a new development.

Speaking hours after the black box flight recorders of the McDonnell Douglas 83 jet arrived in Paris from Mali to help investigators on Monday, Fabius added that air crash experts currently on the remote desert site of the accident were toiling away in “extremely difficult conditions”.

France’s transport minister, meanwhile, warned that analysing the crucial black boxes that record flight data and cockpit conversations could take “weeks”.

Fabius said more than 20 air accident experts were currently in Mali’s remote, barren Gossi area where the plane came down, working in tough conditions to determine why the plane plunged to the ground and to try and recover remains of the victims.

“The (human) remains are pulverised, the heat is overwhelming with rain to boot and with extreme difficulties in communicating and in transport,” he said at the foreign ministry, where the flag flew at half-mast in mourning for the tragedy that saw entire families wiped out.

Video footage of the Gossi area showed a scene of devastation littered with twisted and burnt fragments of the plane.

France bore the brunt of the tragedy, with 54 of its nationals killed in the crash of flight AH5017, which had taken off from Ouagadougou in Burkina Faso bound for Algiers.

Victims also hailed from Burkina Faso, Lebanon, Algeria, Spain, Canada, Germany and Luxembourg.

Several towns across France that lost entire families or couples to the tragedy also announced they would pay hommage to people they held dear.

The central village of Menet, where a family-of-four perished in the crash, said a silent march would take place on Friday in front of the places where the victims used to go, such as the school or certain shops.

“People in the village can’t quite realise what happened. For us, the footage we see on television is extremely violent,” said the mayor Alexis Monier.

The accident is the worst air tragedy to hit France since the crash of the Air France A330 from Rio de Janeiro to Paris in June 2009.

Cheika happy to claim underdog tag

NSW Waratahs coach Michael Cheika is happy rather than insulted some pundits rate the Crusaders as favourites over his red-hot side heading into Saturday’s Super Rugby final.

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Cheika on Tuesday named an unchanged starting side for the game at Sydney’s ANZ Stadium, which has already drawn ticket sales of more than 38,000.

While bookmakers on both sides of the Tasman have the Waratahs as marginal favourites, plenty of chatter from New Zealand suggests the seven-time title winning Crusaders should enjoy that status.

“I would have expected that’s how they would have thought,” Cheika said on Tuesday.

“I suppose probably part of our history has tended them to lead to that conclusion, that we won’t deliver on the day.

“But I suppose we’ve been told now for a while.

“Everyone thought we’d fall over at some stage.

“We’ll just go out there and play as we have all season, the best we possibly can.

“We’ll try and play really attacking footy and see if we can give them some trouble.”

Asked if he was insulted a team riding a eight-match unbeaten run and home advantage could be considered an underdog, an ebullient Cheika said “usually we’re trying to play for that status, they are just giving it to us perfectly.

“We don’t even have to worry about it, we don’t even have to fight for it.

“I’m not insulted. They are the ones who have been in the finals the last 11 years or whatever.”

Cheika doubted the Crusaders would be haunted by any demons by not having added to their record tally of titles since 2008, having lost in a semi-final or final every subsequent year.

“I doubt it very highly, you get a certain air of confidence when you are continually in the finals,” Cheika said.

NSW lost both their previous finals away to the Crusaders, but Cheika didn’t intend broaching that subject with his players.

“I don’t think so, what’s the relevance?” Cheika said.

“It’s not even worth addressing last week at this stage because that’s over.

“You’ve got to stop taking the pats on the back and reading all the good things, even though they are nice.

“Just focus on the challenge that’s going to come up on Saturday night.”

Cheika had some simple advice for any of his players tasked with tackling giant Crusaders winger Nemani Nadolo on Saturday.

“You’ve just got to put your hiking boots on and try and get in there and hang on,” Cheika said.

Waratahs: Israel Folau, Alofa Alofa, Adam Ashley-Cooper, Kurtley Beale, Rob Horne, Bernard Foley, Nick Phipps, Wycliff Palu, Michael Hooper (capt), Stephen Hoiles, Jacques Potgieter, Kane Douglas, Sekope Kepu, Tatafu Polota-Nau, Benn Robinson. Res: Tola Latu, Paddy Ryan, Jeremy Tilse, Will Skelton, Mitch Chapman, Pat McCutcheon, Brendan McKibbon, Matt Carraro, Taqele Naiyaravoro, Peter Betham (two to be omitted).

Who in the G20 is (not) afraid of the big bad Russian wolf?

By Fabrizio Carmignani, Griffith University

The downing of Malaysian Airlines flight MH17 has considerably increased the strain on the relationship between Russia and the European Union and United States on the other side.

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Following the escalation of the Ukrainian crisis earlier this year, the EU and US had already adopted some “phase two” sanctions, including travel bans and some asset freezes affecting Russian individuals and companies. Russia was also suspended from the G8, whose summit should have taken place in Sochi in June.

The scope of “phase two” sanctions is now being expanded, although the European Union has rejected the push for so-called “phase three” sanctions directed at entire sectors of the Russian economy, for now at least.

Australia has also taken a firm stance against Russia, with foreign minister Julie Bishop succeeding in obtaining a unanimous resolution at the UN Security Council (including permanent member Russia) condemning the downing of the flight and demanding an international, independent investigation.

Even before the plane disaster, there were suggestions that as host of the G20, Australia could possibly remove Russia from the G20 Summit in November. These suggestions are now stronger than ever.

Asked whether this might effectively happen, Prime Minister Tony Abbott replied that he would “… wait and see what will happen” and that:

we want to ensure that visitors to this country have a good will to this country, visitors to this country are people who have done the right thing by this country.

In a meeting with Russian’s trade minister, Abbott went further, saying:

Australia takes a very dim view of countries which facilitate the killing of Australians, as you would expect us to.

Abbott spoke directly with Russian President Vladimir Putin before the approval of the Security Council resolution, but clearly the tension between the two countries remains high.

A unanimous decision made by 19 members of the G20 to remove Russia from the summit would certainly have a significant impact. It would mean that there is a strong, compact anti-Russian coalition capable of enforcing tough sanctions, which extend well above and beyond asset freezes and travel bans (which are standard “phase two” sanctions).

The economic threat for Russia would be credible and would come at a time when its economy is particularly fragile. In 2014 only, some US$75 billion worth of capital has fled Russia. The rate of economic growth decreased to less than 1.5% in 2013 and it is now close to zero.

With the country on the edge of a recession, the prospect of very harsh sanctions sustained by all the largest countries in the world might be enough to convince Russia to change its approach to the Ukrainian situation.

But this is simply not going to happen. At this stage, it seems very unlikely, if not impossible, that all 19 other members of the G20 could agree on excluding Russia from the summit.

When the hypothesis of exclusion first circulated earlier this year, China, India and Brazil issued a statement warning of their concern about Australia’s intention. Only a few days ago, Mexico stressed that blocking anyone from the G20 would be bad for the group.

The European front is also not necessarily unanimous. Countries like Germany, the Netherlands and Italy, which heavily depend on Russian energy exports, might be less willing to ramp up sanctions against the Russian energy sector. France currently has a $1.6 billion contract to sell military helicopters to Russia and might be therefore less prepared to support sanctions that involve an arms embargo.

Given this situation, it might not be a good idea for Australia to insist on excluding Russia. Certainly, as a sovereign state, Australia has the right to deny access to any undesired person, including eventually President Putin and the Russian delegation.

But such a unilateral action would almost certainly split the G20 and lead to its collapse. This would be a real loss for the global community.

Over the past few years, the G20 has proved to be a useful mechanism for coordinating economic policy in response to global shocks. Its demise would make macroeconomic cooperation more difficult, with adverse effects for all countries.

Moreover, the G20 is an open channel of communication between Russia and the rest of the world. Shutting it down would only make the dialogue more difficult, with the risk of returning to a Cold War situation.

Conversely, by bringing leaders together, the summit could create an opportunity to engage in diplomatic negotiations. Something like that already happened last year, when the St Petersburg summit provided the context for addressing the Syrian situation.

All in all, while the strong rhetoric of Abbott and the Australian government is understandable, using the G20 to take an adversarial stance against Russia is likely to do more harm than good. It is instead within the UN Security Council that strong action should be taken to ensure a peaceful solution to the Ukrainian crisis.

Fabrizio Carmignani receives funding from the Australian Research Council for a project on the estimation of the piecewise linear continuous model and its macroeconomic applications.