PM RUDD: Well first of all, if I could thank the New Zealand people and the New Zealand Government for their extraordinary expression of friendship, support and solidarity with Australia and the people of Victoria during these recent tragic bushfires. This has meant a lot to Australians. Australians have dug deep in support of all those communities so terribly affected by these fires and as a nation we have acted as one.
But you know John, the great thing is that Australia hasn't felt alone during this either. As the expressions of friendship, support and solidarity have come from across the world, from our friends across the Tasman, from the Governments of the United States, United Kingdom, the Presidents and Prime Ministers on the phone asking about people, and practical expressions of support.
And this money helps in terms of the bushfire appeal because in rebuilding these communities, the businesses and supporting the families, it's going to take a long time and therefore this practical support for the Red Cross is much appreciated.
And also, your Kiwi firefighters have been fantastic. Thank you very much for that. And we look forward to that continued close practical cooperation between the emergency services of both countries and firefighters as we struggle with the elements.
On that point, I just again draw everyone's attention to the statements made today by the Victorian Premier about weather conditions in Victoria in the immediate period ahead. It's very important for people to be vigilant and to listen very carefully to what the Victorian authorities and the CFA are saying to people in the period ahead.
Today and last night, Prime Minister John Key and I had a really good and long conversation about the trans-Tasman relationship, where we are up to now and where we want to take that relationship into the future.
It's important on occasions like this to reaffirm one core principle. And that is for Australia the ANZAC relationship, the trans-Tasman relationship, is for us an absolutely key relationship. And I didn't work on that line.
PM KEY: It's a good line though.
PM RUDD: In the sense that if you go right across what we're trying to do on the economy, what we're trying to do on security policy and foreign policy cooperation, and work together in the south west Pacific, the natural compatibility of our interests and our actions together is second to none. And so on an occasion like this when the Prime Minister is undertaking a working visit to Australia, it's important to reaffirm that as a core principle of the foreign policy of this country Australia.
Secondly, last night in particular and again this morning, the Prime Minister and I have spent a long time discussing, analysing and working through appropriate global policy responses to the global economic recession. This is a global economic recession which neither Australia nor New Zealand caused. But let me tell you, it's a global economic recession whose impact washes over both our shores. So therefore as we approach our national responses and our global responses to this global recession, we as governments will remain in absolute close contact on appropriate actions.
At home, I notice that one of the actions embraced by the New Zealand Government only last Friday was how to work together with their banks in establishing joint vehicles to deal with the problems of challenges in private credit markets at the moment. Practical sort of initiatives, practical sorts of initiatives we've had to wrestle with here in Australia as well as you see, private credit markets contracting across the world because of the problems in the global banking system.
Secondly, as we approach the G20 summit in London, we'll also be working closely with our friends in Wellington on the best set of responses there on globally coordinated stimulus, on the question of returning private credit flows to normal as soon as possible through action on toxic assets, on bank balance sheets, as well as other actions necessary to improve the regulatory regime for the future for globally significant financial institutions. These have been front and centre to our deliberations today as Australia prepares to participate in the G20 summit in a few weeks time in London.
Beyond the global economic crisis, we've also spent a lot of time discussing how we accelerate the Closer Economic Relationship between our two countries. Worldwide, this is the model Free Trade Agreement. It's been around for a quarter of a century. It's pretty good and we're determined to make it better. Any obstacles remaining in the investment field and other fields, we're determined to punch our way through and we've talked about a couple of practical measures where we can take that work forward because these two economies have such a huge interest in the future in being like that, being like that. And so, that's a practical job that we've now got in our in-trays, and there are a couple of practical areas that we would be working on, on that in the area of investment and also in the area of how to improve and make easier travel between our two countries so that the travelling public don't have as many hassles as they currently have in moving from one side of the Tasman to the other.
The other thing I'd touch on before turning to John for comment is this - our common interests in the region and the world are also of great importance to us. Australia and New Zealand working closely in the South Pacific, closely on the question of development assistance cooperation to our friends and partners and neighbours in the Pacific Islands. Working closely together also in the lead up to the Copenhagen conference on climate change. And our officials will continue to collaborate closely with the objective of ensuring there is the greatest possible degree of harmonisation between New Zealand's approach and Australia's approach to carbon pollution reduction within our respective jurisdictions.
Overall, this has been a very good conversation. Not just between the Prime Minister and myself but for a large part of the morning between the Prime Minister and key members who are here in Sydney today from the Australian Cabinet including the Treasurer, the Finance Minister, the Trade Minister, the Defence Minister as well as the Attorney General and the Minister for Agriculture, Fisheries and Forestry. We've had a good session and we have a program of work between now and when I would hope the Prime Minister is able to return here on an official safe visit sometime later in the year - which he threatens to have coincide with the Bledisloe Cup game. These events make Australian Prime Ministers nervous. I hope to make the New Zealand Prime Minister nervous on that occasion but we look forward to having you back John on an official state visit later in the year. Over to you.
PM KEY: Well let me just start by saying I think the relationship between New Zealand and Australia has probably never been in better heart with tremendous goodwill on both sides to ensure that we have the strongest possible relationship to deal with the challenges that we have in front of us. Both New Zealand and Australia face significant issues from the global economic challenges but the strength of our banking system which is so closely inter-related between two countries gives us a head start over and above a lot of other countries in the world.
We are committed as governments to ensuring that we come up with practical solutions for those challenges. And I think we're learning off one another and supporting one another in the actions that we might take. I think in the months and years ahead, progress can be made on some of the issues that have been lurking on the agenda for quite some time but which progress hasn't been successful. I'd like to think we can progress this issue of people being able to travel between New Zealand and Australia more easily because I think that's of tremendous benefit to both citizens, citizens of both countries.
I think it does make sense for New Zealand to look closely at climate change policy here and the development of that in Australia. There is I think from New Zealand's point of view, we look at CER as arguably the most successful trade document that have ever been formed and the movement to a single economic market and from our point of view developing climate change policies which were at odds with those in Australia would seek to sort of separate a single economic market rather than bring it together. So we will be in the course of the work that New Zealand is undertaking in redefining its emissions trading scheme, be spending some time across the Tasman here to look at where progress can and can't be made.
Just on a couple of other minor issues but that will be significant over time, New Zealand has indicated our strong support for the Square Kilometre Array project. That's a potentially $2 billion investment, that's again a great example of the collaboration that can take place between New Zealand and Australia and where the sum of the parts is greater than the individual pieces. We'll be making a financial contribution to that project. I think that can have real scientific benefits for both countries, I think that's very important and we're certainly very supportive of the work that's happening on climate capture and storage because again tackling those climate change issues with practical, technical responses is very important.
PM RUDD: Thanks very much Prime Minister and I think we're taking one a side today. Why don't you pick a journalist from New Zealand?
JOURNALIST: Prime Minister, you talked about wanting to make international travel between Australia and New Zealand [inaudible] How soon do you believe that might be possible and what are the barriers?
PM KEY: Well the barriers are in a number of areas, they would obviously be bioecurity, they are around political security, quarantine issues, but I believe that they are surmountable and we have agreed to have elevated the issue to our various departments of Prime Minister and Cabinet so that we can get some focus around the issue and see whether it is possible to advance it.
Now last year the leadership group when it met set an objective of reaching more common borders by 2015. In my view that's far too long. I mean if we're serious about wanting to progress this issue we should be much more ambitious in a time scale.
PM RUDD: So we're going to do some practical work on this. John tells me our both our Governments have laboured energetically in the field on this since 1992, so our progress has been meteoric and we can both blame our predecessors.
PM KEY: It's always a nice thing to do.
PM RUDD: Going back into deepest antiquity. But the bottom line is this is a practical thing. Can we do it? Well that involves security questions, immigration questions, customs question, quarantine questions. How do we make it work at a practical level so that someone jumping on a plane here in Australia going to New Zealand goes through one set of arrangements and then can jump off in New Zealand at a domestic terminal and the reverse from New Zealand travellers coming to Australia?
So, it's one of those things that we've decided to crunch it, see if we can get agreement within the year and if we can't we'll explain to you why. But I think we've decided rather than just have it languish out there in never-never land, to bring it into decision making territory.
PM KEY: Particularly when Canada and the United States are proving it to be possible [inaudible].
PM RUDD: If those guys can get it together then I presume we can as well.
JOURNALIST: Prime Minister we got more data showing that manufacturing -
PM RUDD: One here and then there.
JOURNALIST: I just wanted to ask you, you talked about the importance of keeping credit flowing. Nathan Rees this morning has foreshadowed that there's the possibility of a bigger than expected budget deficit in NSW. Queensland's just downgraded its credit rating. What is the Commonwealth going to do keep these States' ability to raise debt and to help them?
PM RUDD: Well I haven't seen those comments from the NSW Premier. Our responsibility at the national government level is of course to ensure that through our national economic policy settings, the stabilising of financial markets, double bank guarantee important to that. Secondly while global credit markets don't recover, then to act as appropriate within national credit markets to support them. We've done that with the commercial property market, car dealership finance and the residential mortgage backed securities because we're both wrestling with gaps which are emerging in credit markets through factors beyond our control in the global financial system and I mentioned before the New Zealand Prime Minister's approach announced last Friday of how do they establish a joint vehicle with their banks to deal with potentially troubled assets in the real economy.
Then we go to the realm of what we can do to provide interim support for economic activity through stimulus packages. New Zealand has a significant package of around about four to five per cent. We agreed before, put our two stimulus packages together and they're in a similar order of magnitude and over a couple of years period and we have two per cent flowing through in calendar 09.
These are the core of what we are doing. In terms of the State Governments' requirements in Australia in terms of capital investment, the circumstances of each State is different, it depends where they are in the capital investment cycle and I'm sure all those technical level discussions are occurring as they have been for quite some time between heads of Treasuries around the country in terms of long term needs.
JOURNALIST: Prime Minister.
PM RUDD: I think we, back to a New Zealand question.
JOURNALIST: You talked about harmonisation of emissions trading schemes. Why not have one single carbon trading market [inaudible].
PM KEY: Well that may be a conclusion as a result of all the work we do. But ultimately at this stage we need to look to see where the differences are, how possible it is for New Zealand to align itself with Australia. There are obviously fundamental differences between our economies.
If you think about New Zealand, half of all our emissions are coming from agriculture. It's about a quarter I think of the Australian economy's emissions. So there are differences that may preclude that. But we can start the process of seeing from the New Zealand side whether there is gains to be made by being more closely aligned with Australia.
PM RUDD: Kieran.
JOURNALIST: On the manufacturing data that's out today, it shows a slide. I wanted to get your response to that. The other question is related to the defence bungle, with Defence Minister [inaudible] we've seen tensions between the Minister for defence, between the Army and the defence offices, will there be any ramifications from the SAS bungle or [inaudible]?
PM RUDD: On the question of, I think I'll take your first question first then I'll come to the other. On the question of the state of the global economy and the state of global manufacturing, I saw as I came in here revised data out of the United States for the fourth quarter which is a revision downwards in terms of negative growth for that quarter from, if I've got these data correctly, from one to one point six.
The avalanche of negative from around the world is painting a common picture around the world, which is all economies are under stress. That is being felt in all sectors in the economy including manufacturing and manufacturing is so employment intensive and the implications for people and their jobs is immediate and acute. Of course the effect exists within other sectors of the economy as well.
The key question is what do you do about it? I go back to the armoury of the policies available to governments, such as the ones we lead. One is, in terms of providing interim support for demand in the economy, including for manufactured products, it is absolutely critical that governments around the world are engaged in coordinated fiscal stimulus. The International Monetary Fund has called for that action. The reason they called for that action is that it spreads out the demand for products and services across the general economy.
New Zealand is doing its bit, Australia is doing its bit and it's important that's coordinated across the global economy. Because if people beg out from that in any way, it actually sucks demand further out of the global economy including for manufacturing products.
Secondly, what you can also do is to assist through Government policy efforts to maintain the stability and effectiveness of our own national financial markets to the greatest extent possible. We've been doing that through the actions that I outlined before.
And then with individual firms and individual industries to work with them as creatively and as constructively as possible as I'm sure the New Zealand Prime Minister is doing with the manufacturing sector in his country as possible.
These are difficult and challenging times and we face a very hard year ahead. But we intend to leave no stone unturned when it comes to necessary action to support demand in the economy through stimulus, necessary action to stabilise financial markets at home and to the extent that we can influence abroad and to work with firms and their workers, who lose their jobs through no fault of their own, to assist them as well.
On the question of defence. Look I think the whole question was best summarised by the Shadow Minister for Defence several days ago in Canberra when I seem to recall him saying that he was satisfied that the SAS soldiers concerned were being appropriately handled. There is a whole lot of political controversy which surrounds these sorts of things, but the bottom line is just getting on with the job, fixing the system in place and ensuring that that is done.
What the Prime Minister and I discussed this morning was is in fact the core piece of defence policy work under way in Australia and effectively in New Zealand. We are reaching conclusion soon on a Defence White Paper which governs the architecture for Australian defence policy out for the decade ahead. New Zealand is about to embark upon this exercise.
This is a core element of how we defend our countries and how we cooperate together in the security policy sphere in the period ahead. That's where the core work is going to be. We'll always have problems in individual systems here and there and they have to be attended to on the way through but the core work of the defence policy, that's where it's going to lie in the period ahead and you'll see our Defence White Paper in the not too far distant future.
PM KEY: I'll just make one comment there and that would be - there will always be casualties that come out of an economic recession, and in fact that will rebalance your economy and it's appropriate sometimes that will take place.
The challenge that governments are facing around the world at the moment is not that there won't be casualties, it's that who companies that would otherwise survive but because of the totally dysfunctional nature of international credit markets they now have their livelihood threatened.
And what I think New Zealand and Australia have to be careful of is that in this
sort of economic storm, that the barn doors aren't blown off the economy which leaves us with a manufacturing sector and a productive sector which is totally dysfunctional, not because it doesn't deserve to survive but because the credit markets can't support it.
They are ultimately the lubricant of economic growth and that is requiring government I think to consider much more laterally what tools are available to them. These are extraordinary times and we need to look deep in the toolbox.
PM RUDD: And on that the Prime Minister has a luncheon to address with the business community, he's due there I think within 15 minutes and we should allow him to depart. Thank you very much ladies and gentlemen.