This Summit representing some 20 economies around the world represents about 85 per cent of global GDP, and the Summit has been responding to a challenge facing the global financial system and the global economy and affecting, therefore, the future of us all.
The Summit, as reflected in the communiqué, has been blunt about the causes of this crisis, attributing those causes formally to a failure of the regulatory system underpinning our financial institutions.
The Summit has been equally blunt about the consequences which this crisis poses, not just for the financial sector, but more broadly for the real economy and, more broadly again, for employment. The Summit has also been clear about the necessary response for the future in three particular areas.
The first, of course, is to ensure that we undertake the necessary financial system reforms to prevent this type of crisis from occurring again. And in doing so, the Summit has agreed on five major core principles to guide regulatory reform.
Firstly, transparency of firms' disclosures of their financial product, including the future of credit default swaps and also the operation of over-the-counter transactions; secondly, the reform of executive remuneration, rather than the rewarding of excessive risk; thirdly, the strengthening of prudential oversight; fourthly, the strengthening of the oversight of credit rating agencies; and fifthly, action to prevent market manipulation. That's one series of actions for the future.
The second, of course, relates to the real economy and a commitment to economic growth through cooperative action - cooperative economic policy action to support growth and to support jobs, including, and I quote the words of the communiqué: “Immediate steps to use fiscal measures to stimulate domestic demands to rapid effect.” Various leaders reflected the fact that stimulus packages already adopted around the world account for some $1 trillion.
Listening to the International Monetary Fund, it's quite plain that in the year 2009 we'll see the withdrawal of a further $1.8 trillion in activities in the global economy. Therefore, the challenge we face is to continue to provide further stimulus, and that is clearly reflected in the decisions contained within the communiqué itself. Failure to act on this in the future will result in significant unemployment.
The third area of decision for this communiqué goes to the future of free trade. The Summit not only has rejected protectionism, but has agreed to an objective of reaching a new global free trade agreement by the end of 2008. The objective there in turn is to boost growth and to boost jobs - and, of course, to turn our back on protectionism and so to learn the lessons of the past.
Importantly, the action plan identified in this communiqué is to be completed by 31 March 2009 and, in turn, subject to a concluding summit, in by the end of April 2009, which Australia will also attend.
This summit's conclusions are sound, but the implementation of recommendations contained within the Summit will be critical, and that is why the time frame which has been outlined is of itself critical. Recovering from the global financial crisis will be a slow and difficult process for the future. There will be an impact on growth and an impact on jobs.
Australia has already set its own national course of economic action in dealing with the global financial crisis at home. And today Australia has been part of setting an international course of action with other states, in charting an international course of action ahead.
There is a long way to go. This will not be a smooth ride, it will be very bumpy indeed, but we are determined to stay the course in cooperative endeavour with our international partners through this G20 Summit and into the future. I'm happy to take your questions.
JOURNALIST: [Inaudible]
PM: Firstly, as you know, the stimulus package we've launched is one per cent of GDP and to be released within a single year. So against a single year measure it's actually in excess of one per cent of GDP.
Secondly, in terms of further measures that we will announce on infrastructure, that will add to the dimensions of our overall stimulus package. In terms of the precise financial dimensions of that, we'll have further to say on that once we return to Australia, according to the timetable I've already announced down there.
Thirdly, the other element to that is what I reflected some days ago in Australia in terms of our assistance to the motor vehicle industry but, plainly, that is spread over a number of years and does not relate to the immediate time frame.
So, firstly, one per cent of GDP already out there through the economic stimulus package we announced a month ago, with a further addition to come on that, vis-à-vis infrastructure.
That remains, at this stage, our two principal vehicles for acting, but as I've said before, the Australian Government remains determined to take whatever additional action is necessary to support growth and jobs in what will be a very difficult year for the global economy in 2009.
QUESTION: [Inaudible]
PM: [This is] a tough objective, but one which we have to rise to the occasion to meet. The Doha Development Round and the Doha agenda was the subject of extensive discussion by leaders at the recently concluded lunch as well. In fact, most of the interventions dealt with Doha and the challenges which lie ahead.
I believe there is a political resolve to act, and the reason for that is because the decision, a) not to turn inwards on protectionism is real on the part of these leaders, and b) the decision to further open the global economy to more trade and therefore greater growth and jobs growth through trade now seem to be more urgent because of the pressures bearing down on the real economy off the back of a global financial crisis.
I should add one further point. One of the great challenges also we face across the world is in the area of trade financing. That is, the financing arrangements, particularly on the part of various developing countries to sustain their normal trade arrangements. This also has been the subject of extensive discussion on the part of leaders and the World Bank and other institutions are at work on this.
JOURNALIST: (Inaudible)
PM: The key thing with executive pay is this - first of all, people around the world are fed up and angry with these outrageous packages paid to financial company executives who have contributed so much to what has gone wrong in the global economy. And who pays the price? Working people and their jobs. That's the first point.
The second is, what you need for the future is a set of principles for executive remuneration which calibrate remuneration levels with the risk profile of individual firms.
This can be done in a way which is then perfectly compatible with principles to be incorporated in the Basel rules for financial institution operation into the future.
You can do that without specifying a number, you can do that without specifying a range, but you can specify in terms of the risk profile on one hand of a firm and not rewarding excessive risk taking by executives of that firm at the same time.
This has been the subject of extensive work by the Australian Prudential Regulatory Authority in Australia, and we are in the process of collaborating in detail with our international partners on taking those principles across the rest of the world.
JOURNALIST: (Inaudible) what is the timing of the announcement of that (inaudible) depend on (inaudible)
PM: No, what I've said consistently in the past, Michelle, and I'll say it again - the next stage in terms of fiscal stimulus in Australia lies in the initial set of infrastructure announcements we will make in December - I've said that before.
I've also said before that there'd be further statements on infrastructure into the new year. And we're doing it deliberately in that programmatic way because we believe that it is necessary to get going smaller projects ready to roll which have a limited lead time. But, be very mindful of the longer lead times which are necessary for those with extensive planning horizons.
You get these things right and in sequence. So what you will have in December is the statement by us in terms of those shorter term infrastructure projects which can be got going very soon. What you will have from us later on are longer term projects which require greater lead time in the planning.
On the precise timetable for that second set of statements, we are still working through that.
JOURNALIST: (Inaudible)
PM: What you've not had from us is either detailing of the projects or the quantum attached to those projects for the timeframe ahead. That's what we're working on at the moment. That's December, there'll be subsequent statements after December, and on top of those two undertakings, as I've said before, the Government remains ready and determined to take whatever additional action is necessary as well into the future to support growth and jobs.
The need to take fiscal policy action is underlined by the gravity of the employment and growth consequences of this financial crisis. What is important in this statement on the part of heads of government here at the Washington summit is their commitment to cooperative efforts to undertake immediate steps to use fiscal measures to stimulate domestic demand to rapid effect.
The language of that agreed upon by 20 heads of government from the largest economy in the world through to the rest of the other 85 per cent of GDP represented around the table is significant.
Why is it there? Everyone recognises there is a large challenge now to support growth and jobs in what will be a very difficult and challenging year in 2009.
JOURNALIST: (Inaudible) deficit (inaudible)
PM: Michelle, I'm willing to restate the government's policy - long standing - that we will support a budget surplus over the course of the economic cycle. Always been our policy in the past, and will be our policy in the future.
That's also a responsible policy, as you know, Matthew Franklin.
JOURNALIST: (Inaudible)
PM: Our discussions have been entirely focussed on the agenda at hand. I've had many discussions over the past period of time with the President, with the Secretary of State, with the Secretary of Defense, the Secretary of the Treasury and with the President's economic advisers on the core task at hand which is the global financial crisis and how we will respond through the detailed contents of this communiqué.
This is actually tough detailed substantive work.
Our officials have been hard at work, but it's also been necessary to exchange views, conclusions and our courses of action at the political level as well.
And as for the other part of your question, those other matters were not canvassed by anybody.
JOURNALIST: (inaudible)
PM: In the opening part of my formal intervention in the summit today I said broadly as follows - that this was an important decision by the United States to bring together for the first time a gathering of developed and developing economies to formally participate for the first time in the decision making of the future direction of the global financial system and the global economy.
This is the first occasion on which this has formally occurred. And therefore, it is a point of historical significance.
I also went on to say that it is not rational for the future directions of the global economy and the financial system to be taken in the absence of major emerging economies like China, like India, like Korea, like Brazil, like Mexico, like Indonesia - and others - it doesn't make sense. And furthermore, this is another factor as well, which is that if you look at the impact of the global financial crisis - it has begun in developed economies. It has now spread to the developing economies where the impact will be even worse.
And furthermore, in terms of the long term health of the recovery and the speed of the recovery, it will be very much driven by the recovery in developing economies as well.
So it is an historic day, and the decision by the United States to bring together these economies, the traditional and continuing members of the G7 together with this wider range of emerging economies and others, is a significant milestone in the beginning of a new century where the impact of globalisation is such that, frankly, all major contributors to the global economy must be on the decision making bus.
What was fascinating today was that countries and economies and societies as diverse as the Kingdom of Saudi Arabia, the People's Republic of China, the Republic of Indonesia, Japan, the French Republic, ourselves, all acting to a common set of problems, all acting on the basis of the common solutions which we must now embrace. And there was, I believe, a common sense across that great diversity of the depth of the challenge we face, and the fact that the path to recovery is going to be difficult, bumpy and hard, but there is no alternative course of action other than for us to act internationally and cooperatively.
The days of unilateral national action to in one fell swoop solve a global economic problem have been dispensed with. This summit reflects that fact. And what has been good about this summit is such a diversity of states have seen able to agree on the principles for a common course of action for the future.
JOURNALIST: (Inaudible) everyday mums and dads of Australia feel today (inaudible)
PM: You know something, in Australia what we have done is chart a national course of economic action in response to the global financial crisis. You see that through our guarantees on bank deposits, and our guarantee on bank funding, the support we have given to families through the $10.4 billion economic security strategy. That's our economic course of action nationally.
But because we are one part of a global economy, what has been missing is a concerted international course of action. So, what we've had as a consequence of our participation in this is Australia, being already on the road to implementing our national course of action on the economy, but now together with 85 per cent of the rest of the world economy, bring upon an international course of action.
For every person in Australia, the pace for recovery will be slow, it will take time. But what I know for a fact is that if we were acting completely separately from the rest of the world it would be even slower and even more difficult. This is one significant step in the right direction, but many more need to be taken.
JOURNALIST: (Inaudible)
PM: Around this conference hall, at dinner last night, prior to dinner last night, we've had multiple conversations, I've had with multiple heads of government about various subjects. That is normal, that is what happens at these sort of encounters. As I have had with a number of the President's advisers in the course of yesterday with the Secretary of Defence, formally out at the Pentagon, and with the Secretary of the Treasury out at the Treasury. That's the normal thing that you do out in Washington.
And I've got to say, given the enormous constraints which this summit has been convened under, we have an administration in transition, a global financial crisis becoming a global economic crisis becoming a global employment crisis, that the outcomes we have achieved here, the course of action which has been embarked upon, the three areas of agreement that we have reached, and furthermore the fact that there is a timetable set for the implementation of these agreements by 31 March at the end of next year with a further summit to conclude that process, indicates the seriousness and the resolve of those who participated.
JOURNALIST: (Inaudible)
PM: Well what I'd say to that, Tony, is that as I've said consistently in Australia, is that the remarks that were reported in the article that day was not made by the President. That's not my view, it's not the view of the US Ambassador in Australia, and not the view of the White House. It's been my view from the beginning and it's my view today. And that view hasn't changed.
Anything else? Good. Thank you.
JOURNALIST: (Inaudible)
PM: On the question of my conversation with the US President, these questions have been presented to me in the House of Representatives on multiple occasions on multiple days.
The US Ambassador has said on behalf of the US Government that he regards the matter as concluded - I do as well. And, that remains the position today.
Can I say that on the general inference which is being conveyed by Mr Turnbull in Australia that this somehow represents a difficult in the conduct of relations with states generally - Australia has been engaged in general discussions with governments from across the world in the course of the conduct of this summit, including the government of the United States, because of the core course of action which is necessary for the global economy. That's not been impeded in the slightest.
And can I just say that in the normal course of action and in the normal dealings between one government and another, this is one of those challenges that as far as the summit is concerned, getting to grips with a common course of action on the global economy, on jobs, on next steps, on financial market reform, on the future of Doha - this is what it's all about, You know, there are always going to be bumps in the road with one thing or another, it's just life, but the core course of action here and the core agenda is as described. And I am pleased that the government has been able to work cooperatively and constructively with all governments represented here.
And if I can conclude with this, paying also a particular tribute to my officials who have acted themselves not only professionally, but diligently with all our counterparts. Not only today and in the last couple days, but with officials in 20 capitals around the world over the last several weeks in injecting an Australian view. They've done it effectively, they've done it professionally, and I believe that Australia's national interests have been well served by it.
Thank you.