PM: This is an historic day for Australia, because for the first time ever Australia has secured a permanent place at the top table of global economic decision making. Today's also an important day for the world as we bring into a new global body - the G20 - to help deal with the global economic problems of the present and of the future.
It's important for Australia that our voice be heard in the councils of the world. It's important for Australia that our voice is heard directly - not indirectly through the agency of others - on the major economic decisions of our time, and I would thank the President of the United States and others, including the Prime Minister of India, President Hu Jintao of China, Prime Minister Hatoyama of Japan, President Lee of Korea, President Yodhoyono of Indonesia, President Zuma of South Africa and others for their strong support for the establishment of this new institution as a permanent part of the global governance system of the future.
Decisions often made in distant capitals have a direct effect on jobs and livelihoods for the working people of Australia and working people elsewhere. The first G20 leaders' summit, barely 10 months ago, was when we decided to gather together as a community of the world's major economies to respond to the worst global financial since the Great Depression 75 years before.
At that time, the global financial system, the global economy more broadly, seemed to be at the brink. The G20 stepped up to the plate as the global financial crisis morphed into a global economic recession, and we saw the actions taken in London. Those actions included stimulus strategies, stimulus strategies which we also replicated in Australia, stimulus strategies together with interventions in financial markets, together with other actions including a moratorium on protectionist measures worldwide, all of which had the combined effect of arresting the fall, arresting the collapse in the global economy.
Today's G20 summit here in Pittsburgh is focussed on building our collective response to the global recession. Our goal, as these major economies, is to deliver sustainable, long-term growth now and into the future, not to return simply to the fundamental instability of the boom and bust cycles of the global economy in the past.
That's why leaders today have agreed on a new framework for strong, sustainable, balanced growth. This framework is a comprehensive mechanism to deliver unprecedented global coordination of national economic policies. This is a new approach. In the past, often what happen was that having been through one recession, globally or regionally, what we all did was buckle up and get ready for the next one, whenever it was going to come around in greater or smaller measure.
What leaders have reflected on and resolved on this occasion is that it's time to turn the page and embark upon a new approach to global economic management, one which says that the ingredients for removing this excessive volatility in the global economy lie in an unprecedented new experiment in global macroeconomic coordination. This framework is aimed at helping to avoid the mistakes of the past when inadequate economic cooperation led to massive global financial imbalances.
The framework outlines the need for: first, continued implementation of the stimulus measures of the type which we in Australia have implemented and which have been embraced nationally and internationally; second, planning for globally coordinated withdrawal from extraordinary fiscal and monetary measures taken in response to the crisis, but only when the recovery is secure, and; thirdly, embarking on a new era of global cooperation to re-balance growth, moving away from excessive reliance on debt-driven consumption, avoiding destabilising booms and busts, and boosting productivity to secure higher, more stable growth in the future.
The implementation of this framework will involve three steps: firstly, nations will circulate to each other their national economic plans for stable growth by the end of 2009 - this is unprecedented; secondly, the collective consistency of these national plans for balanced growth and development will be analysed by the IMF and the World Bank and peer review will then occur also by G20 finance ministers and central bank governors; third, leaders will agree on actions to achieve this common objective of sustainable and balanced growth at their meetings in 2010 and beyond.
This is a significant advance in global economic cooperation and a key element in slowly paving the way for global and sustainable economic recovery. Furthermore, leaders today embarked upon decisions concerning the regulation of financial institutions. Millions of ordinary people have suffered, not through any fault of their own, but through gross excesses in terms of financial markets and various financial institutions. While Australian institutions have remained strong, the failure adequately to regulate financial institutions around the world is a genuinely global problem, because we are part of a global financial system requiring a global solution.
We have today agreed to strengthen regulation of financial institutions, including measured to address appropriately executive remuneration, ensure appropriate capital requirements for banks to help manage risk, improve derivatives markets and to begin the work on strengthening regulation of systemically important financial institutions.
On climate change, leaders agreed that we had to push for a positive outcome at Copenhagen. We also agreed the G20 finance ministers would be commissioned between now and Copenhagen to provide for leaders climate change financing options for subsequent consideration in the lead up to Copenhagen. On top of that, leaders today embarked upon a decision concerning the elimination of fossil fuel subsidies around the world, subsidies which of themselves are calculated to represent some 10 percent of the overall climate change problem.
Finally, on the reform of global institutions, important measures have been taken in relation to the IMF in particular, but also the World Bank. Australia has made the point in many, many fora over a long period of time now about the need to ensure that our international financial institutions - the IMF, the World Bank - properly reflect the underlying economic strength and contribution of national economies to the global economy. Up until now, we have had a considerable under-representation from the new, emerging economies, and Australia has been a long and consistent advocate, together with various other economies, including the United States, of increasing the representation of emerging economies on the decision-making frameworks through voice and quota allocations within the IMF in particular.
The decision today results in substantial improvements to IMF quota arrangements, with dynamic emerging markets in developing countries of at least five percent from over-represented countries. We've also tasked our finance ministers to continue to work on the implementation of this and arrangements concerning the World Bank.
To conclude, today's summit represents another important chapter in the response to the global recession, the worst in 75 years, but it would be an absolute mistake to believe that our work finishes here. In fact, our work just begins here. So much of the task still remains in the implementation of the commitments we have made in London, in the commitments made newly here today, and this will roll out over the weeks, months and years ahead.
The road to global economic recovery will be tough, it'll be bumpy, it'll be long, but today is a landmark for global economic cooperation and for Australia's roll in the global economy.
I'm happy to take your questions.
JOURNALIST: (inaudible) What happens when somebody says no (inaudible)? Have you got a mechanism for (inaudible)
PM: The ultimate mechanism will be, of course, the summit itself, and its, if you like, its implementation agency becomes the regular meetings of G20 finance ministers. That's why the core decision makers, involving central bank governors, finance ministers, informed by peer review, IMF analysis and other analyses, is the best way forward. This framework begins its implementation now.
As I said in my remarks to the gathering today, for us all this will be an unprecedented voyage of discovery, as we engage in an unprecedented exercise in global, shall we say, economic transparency, self-declaration, and parallel review, but it's necessary to begin this process because we cannot afford to return to the magnitude of the global financial imbalances we had before because of the direct consequences which that had in relation to unsustainable lending practices in various national jurisdictions which brought on this financial crisis, which in turn caused the global economic recession which we are now dealing with in its full dimensions.
Dennis, then Paul.
JOURNALIST: So you don't feel that you're giving up sovereignty in regards to economic management and there don't appear to be any sanctions apart from persuasion at the summit?
PM: This is the first time that leaders have agreed, as it were, to mutual peer review. If you're coming from the perspective of the People's Republic of China, this would be a new experience, and therefore this is a welcome, welcome development for us all, but obviously when you engage in an exercise of mutual transparency and mutual self-declaration of your forthcoming economic plans, it means that you open yourself up to the potentiality of being, I won't say admonished, but at least commented on, and that, of itself, creates an element not just of moral suasion but also of policy suasion as well. We believe that's important for the future.
This is one big step in a direction which, frankly, national governments have been quite anxious about in the past, but given where we have come from, with the extraordinary global financial imbalances which occurred before, and notwithstanding the warning bells which were rung by the Bank of International Settlements on the eve of the full onset of the last financial crisis - but where nothing was done by national governments in response to that warning - we need to do better. This is one solid step in this direction, and President Obama's recommendation for this new framework for cooperation, this new framework for global macroeconomic coordination, is, I believe, a very positive step in the right direction.
Paul.
JOURNALIST: What's your (inaudible) like, Prime Minister, essentially was (inaudible) peer review process involving the G20 and the IMF. Does it set you out a little bit on what's likely to be the result of this process? To what extent is the aim here to get into a bit of exchange rate management, in terms of sorting out the financial imbalances between China and the United States? To what extent are we looking here at coordination in terms of changes to savings and consumption policies? In terms of the substance, what sort of direction are we heading?
PM: Well in our deliberations so far we have not explicitly discussed questions of exchange rates. What we have, of course, been very mindful of are the extraordinary global financial imbalances between surplus and let's call them deficit economies, and where that has led in terms of a particular growth model, which everyone has collectively agreed is no longer globally sustainable, which is excessive imbalances creating excessive liquidity resulting in imprudent lending practices, but all driven by excessive and unsustainable debt-driven consumption. That's been an entire model for economic growth, and guess where it ended up? Taking the rest of us all across a cliff.
So, as we have sought to do in the response to the immediacy of the recession, which is not to repeat the mistakes of the 1930s but to get out there with solid fiscal stimulus and make a difference, and I believe that has had real global effect, as have the other heads of government. We've also, looking forward to the medium- to long-term future, have said to ourselves 'how else can we learn from history?' And the two strategic options are: return, bit by bit, to business-as-usual models of the past and therefore resulting in the re-emergence of an unsustainable model, or move to the future.
Now, part of that future, Paul, obviously lies in countries which have high savings rates being encouraged to spend more domestically, to consume more domestically. This will not occur overnight, it doesn't happen as a consequence of government guarantee, but it can occur if, for example, in the adjustment to growth models the automatic access to debt-driven consumption and its impact on the import of consumer goods, for example, is no longer as readily available as a growth model. It means that you therefore resort to other strategies, including increasing your own domestic consumption in countries which are less prone to that in terms of their history.
Of course, the discussion today also focussed on other growth models for the future as well - the clear link between climate change and low-carbon transformation of the economy to generate growth in the future, and of course, the final liberalisation of trade.
JOURNALIST: How confident are you that China can make this economic adjustment?
PM: Well, I'm an enormous supporter of China's economic transformation these last 30 years. I was in China as a diplomat when they undertook the first major set of transformations, around about 1984, when they moved their reforms from agriculture and the countryside to a more systemic, market-based reform across the entire Chinese economy. So, what we've seen with that great transformation, of course, is China's growth this last 30 years go through the roof, and a large part of it underpinned by, of course, the classic export model of the newly industrialised countries of East Asia.
The problem is when we've looked at a country as large China having emerged such as that, we are in a different league to that which we were in in the '70s and '80s when the so-called NICs at the time went through the same model. It follows, therefore, that the Chinese are faced with new alternatives themselves. This, therefore, presents China, but so many other economies as well, including Japan, which has had low levels of domestic consumption for different reasons, to embrace new possibilities for the future.
But that is just one. Of course, other areas of turbo charging growth in the future and reducing the growth deficit for the future, equally are there to be chosen, liberalisation of trade and the conclusion of Doha being critical, but also looking upon the climate change transformation as a new generator of jobs for the global economy, not just as some would describe it as a loss of jobs.
JOURNALIST: Can you give us an idea of the lobbying that went on behind the scenes in terms of the (inaudible)
PM: No.
JOURNALIST: (inaudible) to lock that in?
PM: This was a consensus decision.
JOURNALIST: Just on the climate change funding, there's been a recommendation to end subsidies for fossil-based fuels. Will that affect Australia in any way, perhaps in the coal industry? And secondly, are you disappointed you didn't get anything more broadly up at this meeting, given that we're running out of time on the way to Copenhagen?
PM: Firstly, I made some reference to the change to the fossil fuel subsidies in my opening remarks before, and they stand and we believe that these can be handled appropriately within Australia's existing administrative arrangements. Frankly, the problem with fossil fuel subsidies, particularly in developing economies, is of an entirely different order of magnitude. Mention was made, for example, in our session just now, the important decisions taken by the President of Indonesia in recent times. If you aggregate the impact of fossil fuel subsidies in emerging economies, the aggregate impact which that has on total carbon emissions is huge, so that's where, of course, the primary emphasis lies.
Secondly, on the question of climate change, the fact that we have given such a clear direction to our finance ministers to, and I'll go to the relevant section of the communiqué, if I can find it in sufficient time, 30-something or other, 33, I think, or thereabouts - we welcome the work of finance ministers and direct them to report back at their next meeting with a range of possible options for climate change financing, provided as a resource to be considered in the UNFCCC negotiations in Copenhagen.
You've heard me say in recent days how all these parts relate to one another. No financing options, public or private, then less likelihood of a commitment from emerging economies to their own greenhouse gas reductions over time, which in turn means that developed economies are less likely to embrace verifiable targets. So this is very much the engine room of the work.
This is no guarantee of success. Copenhagen is going to be hard and very hard to do, but this is an important part of the stepping stone to Copenhagen and deals with the core, unresolved part of the agenda.
JOURNALIST: Just as Barack Obama was saying the stimulus should continue until we started going back to (inaudible), your policy is that we continue the stimulus until we reach trend growth, or get back to trend growth. Which is it, because they're not necessarily the same thing?
PM: That's an interesting observation that you have made. First of all, let me just give you some context on the discussion in our gathering today. The overwhelming statement from economies around the world, frankly doing a lot less well than we've been doing in Australia, is not only are we not out of the woods yet, we're still well within the woods, frankly. That's the overwhelming centre of gravity of the room, from emerging and from developed economies - presentation after presentation from heads of government. So, that's to underpin the key observation in the communiqué and the public statements associated with it, that the stimulus measures that we've agreed upon must continue to be implemented.
Two, we also indicated that through the agency of finance ministers, we'll be evolving the implementation of the framework that I've just referred to before. Part of that framework is what we describe in Australia as medium-term exit arrangements, and the characteristics which will define that, obviously, include the measurements of recovery, but all the relevant factors of all relevant governments will be taken into account. The key thing is not to exit too early; the key thing is not to exit too late. Is there an ultimate point of mathematical science to this? Probably not, but can you actually aggregate enough measures to arrive at a reasonable agreement on where exit may become appropriate? I believe so.
The alternative is simply to leave it out there as a random set of actions by individual governments over time when the data may be incomplete.
By the way, I should add that the head of the IMF said that he didn't think a double dip was necessarily probable. He described it as possible, and so we just need to be very mindful of where we are.
JOURNALIST: Prime Minister, you would appear to have had a pretty good week: praised by Bill Clinton; things have gone your way; your body language; the tone in your voice - you're obviously pretty happy?
PM: This has been a good day for Australia.
JOURNALIST: The whole week has been very good for Kevin Rudd, though.
PM: This has been a very good day for Australia because this is an historic day for Australia because it is the first time ever that our country has had a place at the top economic table of global economic decision making, and whoever is the subsequent Prime Minister of Australia at any time will hopefully be in a position to deploy this, not just for our sense of the national interest but also to be out there in the global interest.
By the way, in terms of the work which has gone underway in recent times, can I say our team of officials have worked spectacularly well, as has my sherpa, Dr Andrew Charlton. There's been a lot of work which goes on behind the scenes, and will remain behind the scenes.
One behind, then I'll come back to you Dennis.
JOURNALIST: Prime Minister, you mentioned the other day in your address to the General Assembly those workers that lost their jobs. They'll be watching this tonight, reading this tomorrow - they're still out of work. Can you speak to them for a moment about how much (inaudible) gone on here today they can expect to get new jobs, and also give a guarantee that they won't lose them again in the short term?
PM: One of the other good things about the decision to establish the G20 as a permanent institution of global economic governance is that it for the first time includes the International Labour Organisation as well. We have been working very hard on that this last year. Now, why has that been important? You will see for the first time in these communiqués long reflections of the importance of there being jobs - and quality jobs - in the recovery, and for there not to be, I'm paraphrasing here, a jobless recovery, which has sometimes occurred in the past. We had the strong voice of our friends from the ILO reflected in the deliberations here.
Now let me go to the immediate specifics of your question. Because this organisation has acted to break the fall, can I say to those around the world who have been in great fear of losing their jobs who haven't lost them already, that these actions by governments have reduced the effect for them. That is of no comfort to someone right now in Australia in the places I mentioned the other day, in Far North Queensland and Liverpool and elsewhere, who've lost their jobs, but it does mean that the track to recovery of the global economy and therefore ours, is closer than it would otherwise be - closer than it would otherwise be.
I don't believe in holding out illusions to people. This is a tough and ugly environment that we've been in, but because of the actions that we have taken, we have arrested the fall. We have therefore, as a result of that, hastened the recovery, but I don't want to go out there and create false hopes and false illusions.
But can I just say, back home, you know, the fact that we've had an economic stimulus strategy at work, in Liverpool, in Western Sydney, in Far North Queensland, with school being built and popping up in school playgrounds right around the country is part and parcel of our part of what governments around the world are doing - $5 trillion worth of stimulus being injected into the global economy. This is a $63 trillion economy. Were you to take that out, unemployment would be going through the roof, and in Australia, if we were generating the unemployment levels that we've seen in some economies which have started later with stimulus or injected less, if we were generating some of the unemployment levels that we've seen in various parts of Europe, you'd be looking at something close to nearly 400-500,000 more Australians out of work, and that's something which this Government, a Labor Government, was determined to do everything possible within its human powers to avoid.
JOURNALIST: (inaudible) China a couple of times today. (inaudible) Can you tell us how you think (inaudible) Stern Hu and Rebiya Kadeer have affected the diplomatic relationship?
PM: Let me just back up a bit and just say the great thing about forums like the G20 is you talk to a whole lot of heads of Government. In the last 24 hours or so, I've had quite good conversations with President Obama, with the Prime Minister of India, the Prime Minister of Japan, President of China, I think I'm off to see SBY in a minute, unless you guys have kept me too late and we'll be on the phone - for those who don't know who SBY is, the President of Indonesia - and others as well, and I've just come now from Prime Minister Harper, where we were discussing a range of things as well.
You may be surprised to know that in each of those discussions we simply don't tell each other what a fine bunch of fellows we all are. In fact, we actually raise things which need to be worked on. That occurred in the Canadian discussion, it occurred in the Indian discussion and it also occurred, of course, in the Chinese discussion as well.
Of course, on the question of China, you asked in terms of recent bumps in the road, has this presented us with a real problem in the relationship? Our relationship with China is in good working order, and remember in my opening remarks the Chinese President was one of many head of government that I personally acknowledged for their strong support in the establishment of this important body where Australia has now a place at the top economic table, and that's with China's strong support. And remember, these organisations work on the basis of consensus.
On the question of consular cases, no specific consular cases were discussed, but it was agreed that consular matters of mutual interest would continue to be worked on through the foreign ministry of both countries.
JOURNALIST: In you discussion with world leaders over the last week, including Mr Netanyahu, to what extent have discussions about Iran take place? What is Australia's position on the disclosures today and further sanctions?
PM: Firstly, both with the Prime Minister of Israel, as well as with other world leaders, I have discussed Iran and discussed Iran at some length, because Iran is a matter of deep concern to Australia's long-term interests in the region, as well as our wider national security interests as well. For Australia it is profoundly disturbing that Iran has been building a covert uranium enrichment facility for several years, the report just being made public. This, in our view, represents a challenge to the core of the nuclear non-proliferation regime. It's troubling that Iran continues to be unwilling to meet its obligations under the IAEA requirements and the relevant UN Security Council resolutions.
President Obama has said that he remains committed to engagement with Iran on the nuclear question through the P5+1 negotiations. There is now a pressing need for Iran to engage meaningfully at the upcoming meeting with the P5+1 on 1 October. It is important that meeting proceed, and it's important that the whole question of Iran's nuclear program is dealt with substantively by the Iranian Government.
That has not been the case up until now. We are following these developments closely. They affect the interests of us all.
JOURNALIST: Back on climate change, have you arrived (inaudible) ahead of the Copenhagen summit. What's your feeling now after the UN and G20 talks? What exactly do you think we're going to see at Copenhagen? (inaudible)
PM: Well, we all want to see a substantive agreement between countries, developed and developing, at Copenhagen. That remains the Australian Government's objective.
Why? Because it's in Australia's national interest and it's in the global interest. I state again the obvious: we are the hottest continent and the driest continent on the planet, and as a consequence the continent which feels the impact of climate change first and worst.
So, in terms of progress, as I said in my remarks on climate change earlier today, this is really, really hard, because you are dealing with a whole lot of different interests by different governments at different points of the, let's call it, the development cycle, but at the UN Secretary General's summit in New York which I just attended, there was a strong level of political momentum coming from that.
As I said in my answer to the question before, a lot of the, shall I say, technical heart of this problem deals with the question of climate change finance, and that is now being referred to G20 finance ministers, but it is difficult to predict what sort of outcome we're going to get at Copenhagen. The attitude of the Australian Government will be to through every ounce of our diplomatic effort, every element of our personal energy at trying to bring about an outcome.
JOURNALIST: If I could ask a follow-up question about the (inaudible), was that process setting particular benchmarks or targets or standards (inaudible)?
PM: Look, I think it's a question of one step after another. I think these things will take time. Where we've got to 10 months after the first meeting of the G20 and 12 months after the full unfolding of the global financial crisis is a framework on global economic coordination. Now, you will see, I'm sure, other elements of practical policy consideration evolve out of this framework over time. Key thing is to agree on the overall principles of the framework and the fact that we now have reporting arrangements within it.
There was one other element to your question early on - you asked a question which dealt with exchange rates and then you asked?
JOURNALIST: Benchmarks?
PM: Oh, benchmarks and standards. Look, you'll see, I think, alive in the communiqué, references to strong growth. Strong growth in a range of economies has a range of different definitions and the precise numerics around that will come when you'll see finance ministers gather, but this is not intended to be some broad, unspecific exercise.
What are the two key concerns alive here? To prevent the re-emergence of large-scale, unsustainable global financial imbalances. That's in order to avoid the re-emergence of a crisis of the type that we've just had.
Challenge number two is, OK, crisis avoidance is one thing. How do you then go about growing the new global economy if you are saying on the way through that the old growth model is no longer sustainable? That's the hard bit as well.
It is in filling out both these boxes that we actually have the work ahead of us, but it's far better that we have agreed we need to do this work and the framework for doing it in and understand that's where the mandate lies.
This is the last question.
JOURNALIST: (inaudible)
PM: Well, can I, well, first of all, I mean, your question, obviously, is hypothetical. My job as a government decision-maker is 'what do we do now in response to the data that we have?' and we have done what can do, based on the data we have both nationally and through the global, coordinated fiscal and monetary effort and financial market intervention efforts which we've been describing here today.
As for the future, you talk about where does extra growth come from? I would draw your attention to the three quarters of a trillion dollars which, according to the Peterson Institute in Washington DC would be delivered to global growth if we concluded Doha. That is critical to be done. It must be done. We committed again to resolving it in 2010. 2010 is next year, it starts in about three months' time. That is one part of the equation.
The second growth driver for the future also should be looking at the opportunities which come from Copenhagen with the injection which will occur into the global economy as we undertake from private and public finance the carbon transformation globally - energy efficiency measures, as well as renewable energy sector, as well as carbon sequestration and storage, and other categories which come off the back of this transformation to a lower-carbon economy are all generators of employment and growth.
If you look at trade, you look at carbon transformation and other drivers, there is, I think, a reasonable menu to work from, and as I said, elaborating the future growth model if we are departing from the previous ones for the global economy now remains our critical piece of work - one step at a time.
Thank you very much.