Due to the live nature of Midday we apologise for the lack of captions for some items. Armed police make a dramatic morning raid in Auckland. A former high-profile businessman's arrested. The Government's plans to get its books back into the black sit on shaky ground. And the investigation into Whitney Houston's death focuses on her medical advisers. Two people are appearing in the Auckland District Court today following a dramatic raid by armed police on an apartment block in Auckland city this morning. ONE News reporter Amy Kelley has been following developments and joins us now live from Eden Terrace in the city. Amy. SIX HOURS AFTER THIS RAID BEGAN,P POLICE ARE STILL DOING THEIR WORK HERE. MANY OF THE DOORS ARE STILL BADLY DAMAGED. NEIGHBOURS ALERTED ONE NEWS TO WHAT HAPPENED. THOSE OFFICERS ARE MEMBER OF THE CHILD EXPLOITATION TEAM. THEY'VE TAKEN AWAY ITEMS INCLUDING LAPTOPS. THREE PEOPLE HAVE BEEN ARRESTED. EARLIER I SPOKE TO BLAKE LYON AND FRANK SQUIRE, WHO WERE ALSO IN THE BUILDING. The whole building was surrounded by police and they were breaking down 28 doors, so you could hear them simultaneously from room to room breaking down the doors trying to find these young females, or whatever they were looking for, some sort of sex trade going on. But there doesn't seem to be anything like that going on at all. I didn't really see him leave. They'd taken me into another room up the hall and got me to stay in there, out of the way. Um, I don't know what it's all in aid of yet, but obviously there's some concern somewhere about something. MARK LYON AND THE OTHER MAN WILL APPEAR IN COURT LATER TODAY. The Government's spending programme could be undermined by the troubled world economy and the Christchurch rebuild. Finance minister Bill English outlined his plans this morning. We're joined now live by ONE News political reporter Renee Graham with the details. Renee. THE GOVERNMENT'S PLAN TO GET ITS BOOKS BACK INTO THE BLACK BY 2014-2015 SIT QUITE LITERALLY ON SHAKY GROUND. FIGURES OUT FROM TREASURY TODAY PREDICT THE GOVERNMENT WILL RETURN TO SURPLUS BY THE 2014 FISCAL YEAR, WITH JUST $370 MILLION. FOR A BIT OF CONTEXT, FIGURES OUT TODAY SHOW THE DECEMBER 23 EARTHQUAKES HIT THE GOVERNMENT BY $300M. A TREASURY STATEMENT SAYS THE GOVERNMENT'S ON TRACK TO MEET ITS TARGET, SAYING THE 'FORECAST SURPLUS IS NOT LARGE FOR 2014 AND IS THEREFORE VULNERABLE FOR FURTHER REVISIONS'. THIS IS WHAT BILL ENGLISH HAD TO SAY. Given the events in Europe and the weakened outlook for global growth, this surplus is understandably smaller than was forecast in the pre-election update, but the Government remains on its fiscal track back to surplus. Achieving this will require disciplined control of spending. TREASURY AND THE MINISTER SAYS CONTINUED EARTHQUAKES IN CHRISTCHURCH AND HIGHER UNEMPLOYMENT RATES THAN PREDICTED ARE IMPACTING ON ITS FINANCES. THE EUROPEAN MARKETS ARE ALSO A BIG CONCERN THAT COULD AFFECT THEIR TARGET TO HIT SURPLUS. PUBLIC-SERVICE JOB LOSSES WILL HAPPEN, WITH STATIC $800M BUDGET FOR GOVERNMENT SPENDING IN NEXT TWO FINANCIAL YEARS. Thanks, political reporter Renee Graham. Labour leader David Shearer has welcomed the decision to effectively halt the Chinese bid for the Crafar Farms. Mr Shearer has criticised the actions of the cabinet ministers who approved the deal and says the handling of the sale has been shambolic. However, Prime Minister John Key says the ruling may make it harder for foreigners to buy land here in the future. Justice Miller ruled the Overseas Investment Office had overstated the economic benefits of the bid to the ministers, who then approved the deal to sell the 16 North Island dairy farms. Labour leader David Shearer has welcomed the decision against the sale, saying the priority must be what most benefits the country. Look, I think that the key issue here is what is in NZ's best interests, and that is what the judge was really putting forward as the main criteria. What the ministers didn't do was properly consider what was in NZ's best interests, and, quite frankly, NZ's best interests are served by NZ farmers farming our land and us getting the value of it rather than giving it to a large conglomeration where the value actually goes out of NZ and the farms are farmed, effectively by us, but as tenants on` on, in this case, Shanghai Pengxin's farms. Labour Party leader David Shearer. The former Pike River Mine manager has stressed he doesn't regret calling his boss a dodgy git. Doug White today stood by the email comment criticising his chief executive office Peter Whittall. But under cross examination, he said his email didn't refer to Peter Whittall's approach to mine safety, more to his management of staff. I don't regret it. It was an email between myself and a personal friend. There's no way I would've expected that to be aired in public, but I don't regret having written that email, no. Defence lawyer Stacey Shortall says Peter Whittall has been absolutely devastated by Doug White's comments, and that Mr White never expressed such opinions to his face. A reminder today for the Royal Commission investigating Canterbury's earthquakes that the emotional toll is still both dramatic and very personal for many people. The commission heard that staff in Tasty Tucker bakery in Colombo St became concerned about the stability of a neighbouring building after the September quake. When the February quake struck, they were there to witness their worst fears realised. In the February earthquake, I had just served Mrs Fletcher ` the woman who was... Sorry. ...who was killed in the earthquake and was walking back behind the counter when the earthquake struck. Mrs Fletcher was struck by a beam that came down from the roof. I think she would have been killed instantly. The commission is in the final day of a series of hearings into fatal individual building failures. A police dive squad is joining the search for missing yachtsman Richard Rusbatch in the Bay of Plenty today. The 56-year-old's yacht was found drifting near Mayor Island on Tuesday morning. It's believed he fell overboard while attempting to anchor. THERE'S BEEN NO SIGN OF THE MAN A massive fire has swept through a jail in Honduras, killing at least 300 inmates. Many victims were burned or suffocated to death in their cells at the jail in central Honduras. Police fired shots into the air and tear gas as frantic relatives tried to force their way into the prison, desperate for news. An inquiry is underway to find out whether the blaze was caused by rioting or an electrical fault. Iran has announced major advances in its nuclear programme, further stoking tensions with the West. It comes amid further proof that Iran and Israel are engaging in a secret war. The ABC's TJ Winnick has the latest. Iran began loading domestically made nuclear fuel rods into its Tehran research reactor today, a defiant move in response to toughening Western sanctions over its controversial programme. President Mahmoud Ahmadinejad insisted the move was geared for peaceful nuclear energy use. 'This reactor is a research reactor,' he said, 'and it produces radio medicine.' The US State Department downplayed the announcement. Frankly, don't see a lot new here. This is not big news. In fact, it seems to have been hyped. There has long been tension between the two countries, but now a type of shadow war is emerging. An explosion that blew the roof off this rented home in Bangkok led police to three Iranians who apparently had set up a bomb factory and detonated the explosives by accident. An Israeli diplomat claims those bombs are very similar to the magnetic bombs used in attacks on Israeli targets in India and Georgia. They would like to take control of the all oilfields within the Middle East and to have a nuclear bomb. Iran could be striking back after having one of their nuclear scientists killed, allegedly by the Israelis, as well as talk of a possible Israeli strike against Iran's nuclear facility this spring. The US government is not publicly saying the Thailand explosion is linked to the Georgia and India attacks, but they are also saying they wouldn't be surprised if they area. An American accused of murdering his wife while honeymooning on Australia's Great Barrier Reef has gone on trial in the USA. Channel Nine's Denham Hitchcock reports from Alabama. For the first time, the fate of Gabe Watson has been put into the hands of a jury ` the prosecution getting right to the point. His wife ` lifeless on the bottom of the Great Barrier Reef. The prosecution claims he drowned her during a scuba dive to collect the life insurance. The defence countered it was a tragic accident ` that Tina was inexperienced. And then there was this ` a direct attack on Queensland police. If Queensland detective Kevin Gehringer took offence, he didn't show it. Could you please identify Mr Gabe Watson? Uh, yes. He's sitting at the end of the bar table in the grey suit. Watson then close to tears as his first police interview was played. He had to relive the death of his wife today. It's very sad and tragic, and he got emotional. Gabe Watson spent the day sitting opposite the jury with his head lowered, but also listening to all that evidence ` his new wife, just a few rows back. At stake for Gabe Watson ` freedom or life in prison without parole. A new Australian study suggests smoking while pregnant can not only reduce your baby's fertility, but also your grandchildren's. Scientists have found that damage from cigarette toxins can be passed down for generations. ABC's Sophie Scott has details. The dangers of smoking while pregnant are well-documented. What hasn't been clear is whether the damage from smoking could be passed on from one generation to another. Now new research by the University of Newcastle suggests it can. It tells us that the effect of smoking is not confined to the person who smoked, but through the germline can be transferred to future generations. Using mice, they found that females who were exposed to cigarette smoke as a foetus or baby had fewer eggs, and those they did have were of inferior quality. In our experiments, when we looked at the ovaries of these mice, we discovered that about a third of the eggs had completely disappeared ` that they'd been killed off by the exposure to the toxin. The findings prompted researchers to look at what effect smoking might have on a female baby's later fertility. It's very significant because it completely changes the way that we look at cigarette-smoking. Despite public health campaigns, it's estimated that one in five pregnant Australian women still smoke. And fertility rates in this country remain low. The main reason is that women are waiting until they're older to have children. In doing that, they're actually having babies in their 30s, and that's at the time when your pool of eggs is very severely depleted. And men are not immune. Research published in 2010 found that cigarette-smoking during pregnancy could affect the fertility of male foetuses later in life. She's famous for her roles in front of the camera, but now Angelina Jolie has chosen a controversial and gritty subject for her first film as director. In the Land of Blood and Honey is set against the backdrop of the Bosnian war, as the BBC's Allan Little reports. For 40 months, these streets were besieged and bombarded. The memory is raw and ever present. CHEERING 20 years on, Sarajevo still wants its story told. It's found an unlikely new champion. The demand for tickets was enormous, so they moved the screening to a former Olympic sports stadium. But this is not an easy film. It depicts in bleak and chilling detail the brutal forced removals of non-Serbs ` the so-called ethnic cleansing. At its heart, there is a doomed love story across the ethnic divide. Many left feeling that Bosnia's story had been told at last, in unsparing honesty. Uh, the movie is very good. And I'm very glad that she made it. You know these people sitting here are going to be reminded of the most painful time in their lives. And, you know, will they feel comfortable with this? Will they embrace it? Will they be upset? I don't know, and I was terrified. I was terrified. And then when they stood up, I... I just wanted to cry. (CHUCKLES) But the divisions war imposed remain. 'This film yet again demonises the Serbs. Yet again, the Serbs are the bad guys.' She rejects the charge that the film is not balanced. 'The war was not balanced,' she says. They don't want to see these atrocities. They don't want to be reminded of these atrocities that I` I, um` Some people wanna deny it even happened. Bosnia's wounds have not healed. This film, for all its searing honesty, reveals a country still divided, unreconciled to its own painful past. The investigation into troubled singer Whitney Houston's death is expanding. The coroner now wants to talk to her doctors and medical providers. It's also emerging just how serious Miss Houston's financial difficulties were. The ABC's Diana Alvear reports from Los Angeles. What killed Whitney Houston? The Los Angeles County Coroner's Office wants her doctors and others to provide answers. They've issued subpoenas for medical and pharmacy records. While the coroner says it's a routine request, they found several bottles of prescription medication in her hotel room. # I will always love you. # New details are also emerging regarding her funeral arrangements. Houston's godmother, Aretha Franklin, is set to sing on Saturday at the New Jersey church where Houston first found her voice. # And I... # That voice is once again topping charts. I Will Always Love You is the number-one bestseller on iTunes, where 22 of the top 100 downloads are sung by Houston. Whitney Houston is one of these celebrities who is potentially worth more dead than alive, which is a sad thing to say, but is probably true in this case. # How will I know... # At her peak, Houston was one of the most bankable stars in the world. But her lifestyle was lavish. Houses cost money, your clothes, your chauffeur. All of that stuff. And, of course, drugs. ABC News has learned banks had recently tried to foreclose on two of her homes. Still to come on Midday, business news, with a good result from Michael Hill. And then in sport, the South African cricketers taste their first action on the NZ tour. Then AC Milan give Arsenal veteran Thierry Henry a send-off he'd rather forget. 9 More industrial action is on the cards for the Ports of Auckland. The Maritime Union has just announced plans for another week-long stoppage. It will follow straight on from another seven-day strike due to begin on the 24th of February. With me now is Gretchen Williamson from Craigs Investment Partners. Good afternoon, Gretchen. A good result for Michael Hill? This item will be captioned live. For more, go to tvnz.co.nz and click on 'business'. IT WAS A GOOD RESULT, PERHAPS A BIT SURPRISING NUMBERS WERE UP 11% ON THE PREVIOUS HALF. GOOD NUMBERS OUT OF AMERICA. MARGINS WEAKER IN AUSTRALIA. AND A SLIGHT INCREASE IN THE DIVIDENDS. HASN'T DONE MUCH FOR THE STOCK PRICE. MICHAEL HILL WILL BE HAPPY WITH THE NUDGE UP. THE DOLLAR HAS COME OFF A FIVE-MONTH HIGH. WHY? WE SAW IN THE LAST 24 HOURS THE DOLLAR GO UP TO AN ALL TIME HIGH SINCE THE EURO WAS CREATED. THE EUROZONE IS JUST STAYING OUT OF A RECESSION. DISAPPOINTING NUMBERS OUT OF GERMANY. THE DOLLAR SEEMS TO BE STICKING AT A STRONG LEVEL. Sport. Football, and AC Milan have staked a strong claim for a place in the last eight of the Champions League this morning, tearing London club Arsenal apart with four unanswered goals. The first, a scorcher in the 14th minute from Kevin-Prince Boateng. This is Boateng. Oh, what a strike! Kevin-Prince Boateng is the king here tonight. That was just outrageous! Brazilian star Robinho scored Milan's second to give the Italian club a 2-0 half-time lead. Thierry Henry was brought on for the second half, his final appearance for Arsenal, but to no avail, Robinho adding a third just minutes later. A late penalty was slotted away by Zlatan Ibrahimovic. AC Milan with a 4-0 win, and Arsenal with a mountain to climb in the return clash in London to stay alive in the Champions League. The South African cricket team have opened their tour of NZ with a 20-run win against the Canterbury Wizards in Christchurch. Chasing 151 to win, Canterbury lost several early wickets before Matt Henry smashed 42 off just 17 balls to give the home side a brief chance of winning. Oh, that's clubbed well and truly over mid-off. That's beautifully straight. Matt Henry. CHEERING But the home side eventually fell short of South Africa's 150/6. The Proteas now head to Wellington for a Twenty20 against the Blackcaps tomorrow night. Still to come on Midday ` I'll be back with the afternoon weather. Now to the weather. For weather, see tvnz.co.nz And finally, to the top stories on our website. A man who made a fortune in property development has been arrested during an operation by the child exploitation team in Auckland. There has been a call for the Government to review the controversial National Standards after a primary school principal resigned over their roll-out. And the Duchess of Cornwall has chosen Kiwi children's classic Hairy Maclary as one she pledges to share with others this year. Thanks for joining us. Our next news is at 4.30, and the ONE News hour will be here at 6. Good afternoon. Captions by June Yeow and Tracey Dawson. Captions were made possible with funding from NZ On Air. Copyright TVNZ Access Services 2012