Farmers hope for lower interest rates after milk payout slashed; Fonterra refuses to release phone minutes; Maori want piece of infrastructure pie; fossils suggest New Zealand may not have been submerged 22m years ago; and more

Dairy farmers dominate the dailies this morning, with Fonterra's decision to cut its milk payout forecast by 90 cents to $5.10. The Press leads with farmers' hopes the Reserve Bank will cut interest rates today to balance their fall in income. The South Island's richest person, Allan Hubbard, said the reduced payout could make some new dairy farms marginal.

The New Zealand Herald splashes a photo of Fonterra CEO Andrew Ferrier across the front page, saying the company went into damage control over its payout cut and its role in the Chinese contaminated milk scandal. Ferrier says he has phone records showing he had made it "crystal clear" to Sanlu CEO Tian Wenhua that "the only acceptable level of melamine was zero", but he refused to release the documents. It adds that the payout cut slashes average farm incomes by more than $100,000 per annum, so rural towns will suffer.

The DominionPost asks how low mortgage rates can go if, as expected, Reserve Bank governor Allan Bollard announces a cut to interest rates this morning. Some economists suspect that the cut may be 1.5 or even two percent, rather than the one percent previously favoured. Either way, banks will lower their mortgage rates below the current 5.95 - 7.1 percent range.

Maori Affairs minister Pita Sharples is establishing a ministerial taskforce to guide Maori through the recession. Sharples held an economic hui in Wellington yesterday, attended by around 80 Maori leaders, and the ideas generated would be developed by the new taskforce, the DomPost reports. The Herald says iwi are keen to invest in the new infrastructure programme being developed by the government, signalling a specific interest in toll roads and Auckland airport.

The Otago Daily Times says Dunedin mayor Peter Chin has sent "a secret letter" to the government seeking money for the proposed Otago stadium. Cr Teresa Stevenson wrote to the paper asking if the mayor has the authority to write to central government without agreement from the council. Chin refused to comment, but Otago Regional Council chair Stephen Cairns confirmed he co-signed a letter.

Back in the Herald, city reporter Bernard Orsman has surveyed the debt levels of the region's councils and reports that an Auckland super city would inherit more than $3 billion in debt. All councils are increasing their debt to keep rates as low as possible, but Local Government New Zealand says they're still within prudent levels.

And finally, new research suggests New Zealand may not have submerged beneath the waves 22-25 million years ago, as previously believed. Some scientists have argued that the proto-New Zealand landmass went under water when it broke away from Gondwana land, but tuatara fossils found in Otago suggest there was enough dry land to support early relatives of the tuatara, native frogs and even moa.

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