The Australian
leads with BHP Billiton’s decision to increase its sales to China by 500%, replacing Japan’s 20-year reign as the company’s biggest single market. Meanwhile opposition leader Kim Beazley is standing by his Treasury spokesman Wayne Swan despite some Labor MPs agitating for change following Swan’s post-budget performance. And The Oz says house prices are at least 25% overvalued and may not start to rise again for another decade, prompting the Reserve Bank to confirm it would keep interest rates steady for another month.

The Sydney Morning Herald
leads with the new rail tunnel to be built under Sydney Harbour and the city according to a government report. The Herald was denied official access to this report “despite repeated attempts under freedom of information laws,” but a copy was eventually leaked to the paper. The SMH also writes that the second Chinese asylum seeker, Hao Fengjun, has revealed that the Chinese spy network Secret Force has three levels of agents in Australia and other Western countries.

The Age leads with evidence that Chinese defector Chen Yonglin pleaded in writing for asylum last month, which contradicts Foreign Minister Alexander Downer’s version of events. An analysis of the federal budget grants by The Age has revealed 16 of 27 special sports grants pledged in last year’s federal election campaign went to the marginal Liberal seat of McEwen, held by Victorian MP Fran Bailey.

The Daily Telegraph
reports that 91% of NSW is in drought, with much of the state recording its lowest rainfall on record, and only 4% is in a satisfactory condition, according to monthly drought figures. And federal environment minister Ian Campbell says Australia may be one or two votes short of stopping Japan from winning an expected motion to resume commercial whaling when the International Whaling Commission meets late next week.

The Herald Sun splashes with the admission of Joe Korp’s ex-lover that she tried to kill Maria Korp – the woman in the boot – because it was what he wanted and she was driven by love. And the Hun also reports that rising police and anti-terrorism costs have blown the state government’s Commonwealth Games budget, most likely by tens of millions of dollars.

The Courier-Mail reports that following Queensland’s staggering Budget surplus of about $3 billion, premier Peter Beattie has rejected demands to hand back their GST revenue, saying that state’s strong economic performance has been carrying the national economy and compensating for the under-performance of NSW. The Advertiser is still following the Kapunda Road Royal Commission which has heard that lawyer Eugene McGee rang his wife 28 minutes after hitting cyclist Ian Humphrey and told her: “I think I’ve killed somebody.” The Mercury reveals that at least 8% of positions in the Tasmanian public health system are unfilled, including 278 nursing positions, 78 medical staff, 20 ambulance officers and 11 specialists. And the NT News reports that a man’s efforts to grow a little cannabis for himself and save on his electricity bill with a heavy-duty magnet were foiled when police searched his house while he was at work.