PM: The important thing that APEC has done this weekend is sign up to the G20 communiqué and the action plan which the G20 has agreed to on the global financial crisis.
My discussions with leaders from the Asia Pacific Region this weekend have been sobering, confronting, on the global financial crisis. But there's also been a clear determination to embrace a practical course of action to deal with the impact of the crisis on the real economy. And that of course is contained within the G20 communiqué from Washington.
Action on the stabilisation of financial markets in the short term. Action on long term financial market stabilisation. And a commitment to coordinated economic action - fiscal and monetary - to support real growth and jobs.
Because what my discussions with world leaders have indicated in the last few days is that all are concerned about the impact of this crisis on the real economy in their countries, and on jobs in their countries into the future as well.
There's also, I believe, a clear realisation on the part of participating governments that this crisis presents us with a unique challenge as governments. Looking the year ahead, a large slice of growth is being pulled out of the global economy, which cannot in the year ahead easily be filled by business and the private economy. Therefore, governments in the period ahead have a critical and key role to play through public investment.
And there has been a lot of discussion about the forms of investment, and in fact a lot of inquiries of the Australian Government about the actions that we undertook in our economic stimulus package earlier this year.
Another important outcome has been the commitment in the statement on the global financial crisis produced by world leaders on the Doha round. This statement does not just confirm the communiqué which was released a week ago in Washington. For the first time it requires trade ministers to meet in December in order to do everything possible to bring the free trade round to a successful conclusion.
Again, what world leaders have recognised is the importance that trade plays in the real economy now, on growth and jobs, and not just avoiding protectionism in 2009, but looking into the future beyond that, the important shot in the arm which a positive outcome on Doha would give to the global economy.
Therefore, directing trade ministers answerable to these heads of government to meet in Geneva in December is one further step forward to bringing about that difficult objective that is a successful conclusion to the Doha free trade round.
Another aspects of today's deliberations was the positive response from a large number of leaders in the discussions about Australia's Global Carbon Capture and Storage Institute - the CCS Institute. This came out of the discussions on climate change. As you know, Australia some months ago launched our CCS initiative, and that's in fact how you bring about clean coal for the purposes of energy generation for the future.
The Australian Government is committed to investing up to $100 million each year to turn this institute into a reality. And what's it about? Helping to bring on-stream at-scale commercial projects for power generation using coal over the next decade that demonstrates not only the usability of CCS technology - clean coal technology - but also to demonstrate price and cost.
There was more than, shall I say, general and polite interest on this question in the conversation. A number of governments, including the Koreans, the Russians, the Canadians, Mexicans and others, indicated their interest in having more information on this institute, what it's doing, and potentially becoming participants in it as well in terms of investment.
In terms of climate change - looking ahead, one third of greenhouse gas emissions into the future will come from coal fired power stations. Therefore acting in this area is of critical importance for the future.
Finally, on the question of counter-disaster management, again the Australia-Indonesia initiative which was launched yesterday was noted by participating governments, but then triggering a substantial discussion about the adequacy of the region's ability to respond to future natural disasters. There's grave concern about the impact of climate change on the frequency and intensity of natural disasters. And therefore, the outcome of the implementation of this new joint Australia-Indonesia facility on natural disaster risk management will be important for the future.
We intend to provide a report further on its implementation when next we meet at APEC.
The problem with natural disasters, by definition, is that no one knows when they are going to hit next or who they are going to hit next or how hard it's going to be. And we, as Australia-Indonesia, following the tsunami, accepted co-chairpersonship of the APEC taskforce on natural disaster management. This brings that response to a legitimate and I believe practical close. We now need to implement and build on that facility for the future.
Preparing for natural disasters, making sure we've got proper exercising for them between various agencies military and non-military, as well as various hardening exercises or measures when it comes to various regions of the world, or in our part of the world, vis a vis guidelines for building construction and the rest. This is an important facility. We've done a lot of work to make sure that it doesn't duplicate anything else. And judging by the response from leaders, we believe that this will be the subject of further positive discussion in the future.
Finally, the bilateral discussion with the President of Russia was positive and constructive in terms of the future of the bilateral relationship and the economic relationship between our two countries. And we intend to continue those discussions at a bilateral level at the next G20 meeting.
JOURNALIST: Prime Minister, you spoke of the importance of governments of continuing, and if necessary increasing, public investment in the short term of the next year, I think. But are you prepared to do that if required to the extent that it pushes the Budget into deficit, or is deficit still a dirty word?
PM: Well, our attitude is this - the global financial crisis has already reduced the government's revenues by some $40 billion. Secondly, it's getting tougher and tougher out there as far as the global economy is concerned. But as you know, from the government's Mid Year Economic and Financial Outlook, we are projecting a modest surplus into 2009. Under current circumstances, therefore, we don't see the need to borrow for the purposes of investing for growth in the economy for the future.
It's a difficult situation and a tough situation and certainly one which has been the subject of general discussion by all governments here.
JOURNALIST: It was noted that your Asia Pacific Community was discussed. Was is merely noted? Was there any enthusiasm for it?
PM: Well look, it was certainly referred to by the President of the session. I gave a presentation on it and it's certainly been the subject of some considerable discussion in the various bilaterals I've had as well.
As I've said all along, this is going to be a slow and steady process, and we'll also be discussing it again at the East Asia Summit when it meets in Chiang Mai before too much longer.
I see this as a process unfolding over some years. The purpose of today was for me simply to provide an upfront direct briefing to heads of government on the content of the Australian proposal, and the process going forward.
We still have Dick Woolcott, my emissary on the Asia Pacific Community, who is travelling still across the region. That process hasn't concluded yet. There are still a number of governments to visit. And then we have got next steps from there. But, so far, so good.
JOURNALIST: Prime Minister, outside of the disaster relief and the global financial crisis, reading through the communiqué, nothing happened. Doesn't that vindicate your claim that (inaudible)
PM: You know, what's important about this gathering is building on the Washington summit, is I believe a common resolve for governments to act through government spending and investment to stimulate the global economy. This will not happen all at once. But coming directly to your question - what is important about this gathering along with the one that preceded it in Washington is that the fabric of the discussion which has occurred between heads of government now makes further action of a coordinated nature more possible than before. For that to occur, you need to have governments on the same page.
They need to understand collectively and have an emerging common view about the gap being left by the suck-out of economic activity off the back of the crisis.
The IMF reminds us, between and three per cent of global GDP, $1.8 trillion, a clear view that monetary policy in most economies doesn't have much further to run.
Because in most economies, interest rates are down to negligible levels. And then, where does that leave you? Government spending and investment, and it was a way to inject growth into the economy.
Therefore what I have found even in the evolution of the discussion from Washington last weekend and to the discussion this weekend, is an increasing, what I would describe as emerging political consensus of the need for further action, further action next year and the beginnings of the understanding of the need of the added benefit which comes from coordinated action, based on some advice we have already received from the IMF, which is if you act together to stimulate, it has a double stimulatory effect.
So you say there is not a beacon of loud, clear calls for a particular course of action in the pages of this. What I see over the last two meetings is the emergence of a clear consensus for action in what will be the critical year for us all on the economy, real growth and jobs in 2009.
And what Governments I believe are discovering is that the imperative for coordinated and cooperative action now is unprecedented. Governments haven't had to gather like this before. I mean APEC is a regular institution, the G20 was not, but Governments have rarely had to come together and say, ‘here is a major assault on jobs in our economies, next year and in our real economic growth. What can we do about it, what must we do about it and how can we do it together?'.
That would not have been possible in the absence of these two I believe important summits on subsequent weekends.
One final point, before coming back quickly to the APC is the decision reflected in the communiqué to direct trade ministers to meet in December was not there before.
That was a direct resolve from the meeting to get things cracking now. Because experiences of trade bureaucracy internationally are such that many things can unravel.
That resolve was clearly stated for the first time for that meeting in Geneva to occur in December.
Asia Pacific Community is a long term proposition, understandably, because it seeks to bring together the threads of economic cooperation necessary now for political and security cooperation. That political cooperation is beginning to emerge off the back of, frankly the crisis which now confronts all of us, which is the global financial crisis.
Unprecedented political cooperation is emerging and the conversations around the table have been intense, acute and focussed on that.
JOURNALIST: There seems to be some umming and erring ... about whether it will be 18 months before the crisis is over, and did you discuss the sale of uranium with the Russian leader?
PM: And the connection between the two is? (Laughter.) On the first, the introductory statements I think in the first paragraph of the communiqué were those from the Peruvian President. The Canadian Prime Minister has made that clear as has various other Governments. We all know for a fact that the recovery from the global financial crisis and the global economic crisis is going to take a period of time.
We cannot be absolutely specific about that and certainly the Peruvian President Garcia was expressing his views on that.
On the second matter, yes those matters were discussed with the Russian President and I indicated to the Russian President the reservations which have already been raised by the joint committee on treaties of the Australian Parliament and that still has some ways to work its way through, and that we would be responding in due course as a Government to the recommendations of the treaty committee.
JOURNALIST: Mr Rudd I understand that the Government is still projecting a budget surplus but as you know that's a moveable feast. As well many of our finest economists are now saying that -
PM: Name them, name them.
JOURNALIST: Well Chris Richardson for a start, I won't go on from there, but Chris Richardson is saying that a budget deficit might be an economic necessity, that it might be something the Government actually ought to do for our economic good. Isn't it time that you levelled with the Australian people and said whether you are philosophically opposed to ever taking your budget into the red, or whether you agree with those economists and if it is necessary, that you would take our budget into the red. Isn't that a fair question?
PM: I think the clear philosophical position this Government has had since opposition and since becoming government is this, that we believe in maintaining a Government and budget surplus over the economic cycle.
Secondly what I have said very clearly is this: under the circumstances which present themselves now, we do not believe there is a need to borrow for the Government to invest and spend.
I have also levelled with the Australian people that the circumstances we face in the world are rapidly changing and as you can see from the mid-year financial and economic outlook where we reduced down, radically, future Government revenues by $40 billion, we recognise, based on Treasury's analysis, the softening in Government revenues and the general economy coming off the back of the global economic recession.
That is levelling. There was a lot of commentary and there has been for some time about deficits, about automatic stabilisers, about public sector borrowing requirements. What I am saying is, under current circumstances, we do not see the need to borrow for the purposes of Government spending and investment.
Circumstances rapidly change. They have been changing. We level, we will level with the Australian people, as we are now, based on every piece of information that we have got.
JOURNALIST: Prime Minister, when you say you don't see the need to borrow, are you making a distinction there that if the budget were to be in deficit, that could be funded through the accumulated surplus in the Future Fund and other funds such as the infrastructure fund?
PM: Well the purpose of the funds is clear cut and that is to support infrastructure investment, and on each year that you draw down on the funds, it of course goes to the budget bottom line, that is clear.
We have known that and we have said that all the way through. What I am talking about is borrowing for the purposes of Government investment or spending and what I am saying to you loud and clear is that based on current circumstances, we do not see the need to borrow.
We have already trimmed, and it has been a big capital T trim, $40 billion of projected revenues from the budget bottom line based on the softening of the global economy off the back of the global economic recession.
We will be upfront with the Australian people, there is a tough year ahead, uncertain times lie ahead. We have based our current forecast based on the data we have, and that has been absolutely clear cut and upfront about the information which is at hand.
JOURNALIST: Prime Minister, back home it's the 24th. You talk about a tough year ahead, can you tell us what sort of a year it's been on your first anniversary?
PM: I'm about to lose my voice, I think, that's what sort of year it's been.
For us as a Government, what has been important has been to implement our election commitments to the Australian people and to tackle with both hands and act decisively on the global financial crisis.
You ask how I feel, what I feel is that next year is going to be tougher and harder. It is going to involve a lot of hard work and a very tough year ahead.
Not just for the Government, for the economy, the Australian people, families. This will be a very difficult year and every head of Government I have spoken to in the last 36 hours has not varied from that point of view.
JOURNALIST: Has the job been what you thought it would be and have you achieved what you expected you might achieve in the first year?
PM: What I think is really important is honouring what we told the Australian people we would do. We have been as meticulous as possible in putting together what we said we would do and implementing them. Some people may be bored to tears by that but we actually take it very seriously. So you know, that is a good thing to do because it is part of maintaining trust with the Australian people and trust is really important in what is going to be a very hard year ahead.
There will be tough decisions, and tough decisions are made possible if a relationship of trust exists between Government and people.
JOURNALIST: Mr Rudd, how likely is it in your opinion that (inaudible)
PM: Oh how long is a piece of string? Look, we have had 20 heads of Government or so around the table in Washington, we've had 20 heads of Government or so, or economies, around the table here in Lima. All have said it is critical to conclude Doha. It is reflected in the language of the Washington communiqué. It is reflected in the language of the Lima communiqué. We've directed trade Ministers to meet in December.
Where we got to in July was actually quite a narrow band of disagreement involving a limited number of countries. What's now required is a huge political heave to get it across the line. Will we get there? Dunno. Went to church this morning, I hope that helps but will we get there? It's tough.
JOURNALIST: Mr Rudd, there've been various predictions emerge on what form your new regional structure might actually take - it might be be built on ASEAN or it might be built on APEC (inaudible) or that it might be a new body. Have you developed any ideas or was there any sort of weight of opinion in the summit on this?
PM: You know, in discussions with various leaders and others it's quite plain that there are a range of views on this in terms of how such a body could emerge, in terms of existing structures.
To me, that is not important at this stage. What is important is to have the leaders of our region focus on the end point of where we want to be as a region in a decade or so's time. Focus on that and do you want to have a region which begins to drift, and drift in the direction of old and bad patterns of behaviour based on conflicts? Or do you want a region which actually, in its structure and its culture encourages cooperation?
Now, that's what I call an Asia-Pacific Community, bringing together main players across the broad agenda to look at security and economic matters. We don't have that at present.
How we get there is now a matter for discussion and the end point is simply a matter for discussion, but the important thing is to get the ball of discussion rolling, and I believe that's what we've done.
JOURNALIST: Mr Rudd, would you support or oppose our ally in Afghanistan Hamid Karzai, entering peace negotiations with the Taliban's Mullah Omar as he has said he would like to do?
PM: In response to that, I haven't seen what Hamid Karzai has said. I'd like to study it carefully. His domestic political circumstances in Afghanistan are complex. When it comes to Al-Qaeda, there can be no negotiation with terrorists under any circumstances. We are absolutely committed to that principle.
On the broader prospects for political reconciliation in Afghanistan, I'd like to study carefully what Hamid Karzai has said before commenting further.
JOURNALIST: But you do make a distinction between Al-Qaeda and Mullah Omar?
PM: What I'd like to do is look carefully at what Hamid Karzai has said. Let's also be clear about the Taliban. Now the Taliban didn't actually run a Sunday school picnic when they were running Afghanistan.
This is a brutal, bloody regime which killed women by stoning them to death.
I have no particular time for them. But I'd like to study carefully what has been said by Hamid Karzai before commenting further. Tony, do you want to ask a question or are you just waving? Okay, that's fine. I've got a spotlight in my eye, I couldn't quite see to be quite honest.
JOURNALIST: As for the Doha round, since the talks last failed, the world economy has taken a bad turn for the worse, the US Administration is now in transition, a lot of governments have taken (inaudible). What gives you any sense that there is hopefully a breakthrough (inaudible)?
PM: You know, in this business you can either play a strategy which risks nothing, and get nowhere or you can have a go. And I think the resolve of heads of government is to have a go.
I think it's going to be really tough and I've been speaking to our trade negotiators, to be really tough. But the alternative is for heads of government to say ‘oh, too hard, too complicated, let's forget about it for another half decade'. I actually don't think that's the right way to go.
The way you maximise the pressure of a negotiating process is to do what heads of government have done both here and in Washington, and the requirement for the Trade Ministers to be in Geneva for a meeting in December is an important advance on that.
JOURNALIST: You've always said that you and all of your colleagues are only there for as long as you perform. Do you rule out, given that you've been in office now for a year, do you rule out say in the next year a Cabinet reshuffle based on your judgments about whether your colleagues have performed?
PM: First of all, as I said the other day in a number of interviews, I am proud of the Cabinet and the Ministry, the Executive, because they've performed very well in the first year in office.
They have been diligent, they have been hard working, and for those of you who have dealt with them, I'm not wishing to put words in your mouth, I think they have performed as a very good team and that's my view and I haven't changed from that.
My other view is that we've all got to remain on our mettle. That includes me. All of us have got to remain on our mettle.
JOURNALIST: Sorry, does that mean yes or no. (inaudible)
PM: What I said was everyone is performing well, and we must all remain on our mettle and that's my answer to your question. Thank you. Gerard.
JOURNALIST: Mr Rudd, just from your earlier remarks, it sounds like (inaudible) financial crisis take much longer than 18 months (inaudible).
PM: No Gerard. What I'd say is the time for recovery is not able to be clearly predicted. Therefore I'd much rather be upfront with the Australian people and just say we're in this for the long haul. We are doing everything possible through government economic policy to reduce the impact on families and businesses to the greatest extent possible.
We are facing many off-shore uncertainties in terms of what happens with global financial institutions and the roll-on effect and contractions in global growth and export. Therefore, this is a box of challenges we face. I'm not going to stare down the barrel and say to the Australian people it's going to be over by X date or Y date. I don't think that's being fair dinkum.
What I know is it's going tough and hard in ‘09 and what I need to be upfront about is the measures we're taking in order to deal with it. Fashionista.
JOURNALIST: The first anniversary (inaudible) ... great big brown blanket?
PM: I guess it's kind of part of the APEC colour and movement show isn't it? That's kind of what you do, isn't it?
JOURNALIST: Do you think you're going to wear it again?
PM: What are you, sort of asking me out or what?
JOURNALIST: No, I'm asking if you're going to wear it again. Do you think you're going to wear it again?
PM: We haven't left Peru yet. I think it's a very nice poncho and it's a good poncho -
JOURNALIST: Is it your colour?
PM: I hope that's a reflection on what we would describe in Queensland as the old guard, but I just take that as a personal insult from you.
JOURNALIST: Prime Minister, while you were wearing the poncho I noticed you were in very intense conversation with President Hu Jintao. I wonder what's your -
PM: We were checking poncho sizes.
JOURNALIST: What is your assessment of the role China is going to play in the period ahead -
PM: I've forgotten what was the end of the question, but okay.
JOURNALIST: - (inaudible) engage in the efforts to resolve the crisis (inaudible).
PM: Look, I believe, as I've said before publicly, that China has acted responsibly in terms of the stimulus to its own economy. I draw attention to what the Chinese leaders have said - that one of the best things they can do for global economy is to maintain growth within the domestic economy.
Now if you have 1.3 trillion people - 400 million of them still lie south of the poverty line, I stand to be corrected on the exact number, but something like that - then it is a huge challenge.
I also believe that the Chinese government will continue to act responsibly into the future. I have nothing to cause me to conclude that China is anything but aware - nothing to cause me to conclude that China would do anything other than act responsibly in the future.
If there's a common feeling, a common resolve, a common sentiment in the room today, it is this - on the global financial crisis, everybody recognises that we are in this boat together and the extent to which we reduce the impact on our economies and jobs and families will depend entirely on the extent to which we work together effectively in the future.
I'd better run. Thank you.
[ends]