PM: Today I have been meeting with a range of people including the President of the World Bank, also with representatives of the finance community here in New York and I also had some conversations with representatives of the Federal Reserve and others. I attended a function with President Bush and President Talabani of Iraq, talking about the future of that country.
In my meetings with the investment community here in New York, it is quite plain that there is a strong view that Australia's banks are in strong working order and their balance sheets are strong as well. That view was reinforced to me in the discussions that I just had with the representatives of the finance community here in New York. Also, the recent report by the International Monetary Fund on the Australian economy points to some core facts, namely that in the IMF's view our banks are strong, our regulators are strong and Australia is well placed to weather the current storm. The IMF's report also points to the strength of Australia's budget position which has been described as enviable.
My discussions just now with Bob Zoellick from the World Bank, who is an old friend of Australia in his many different positions over the years, it's quite plain from when you look at the global financial crisis we of course look at the implications through our own national experience and the implications for Australia, the President of the World Bank has been explaining to me the implications of course for developing economies across the world as well, already confronted with challenges in terms of food security and the roll-through effect of this financial crisis and its impact on developing economies.
That of course affects economic growth and it affects how all economies participating in global markets fair in the future. The key challenge for us all is to have a coherent strategy to respond to this crisis. In Australia that is anchored in our strong budget position, it is anchored of course in the strength of our national regulatory institutions, it is anchored in the strength in the balance sheets of our banks, it is also anchored the extent and density of our cooperation with international financial corporations and international institutions as well.
We have done that, we are doing that and we will continue to do that in the future.
I might turn to the President of the World Bank to make some remarks and then I'll take some questions.
ZOELLICK: Well, first I want to thank the Prime Minister for taking some time to meet with me today, I know he's got a very busy schedule during a brief visit. I found it to be very, very useful because, as the Prime Minister mentioned, over the course of the past seven or eight months there has been a lot of focus on financial turmoil globally.
At the World Bank we have been trying to highlight some of the issues for the developing world and, in particular the double jeopardy of the fuel and food price increases, and what we can try to do to help those that are most vulnerable. I believe that some of the turmoil over the course of the most recent week is likely to also ripple through the developing world in a way that we really haven't seen so far. The developing world has been an alternative (inaudible) of growth but I think we now have to prepare for challenges in that realm as well.
Much of the focus I think at this UN session, led by the Secretary General, is on the Millennium Development Goals and highlighting the fact that while we are now in a period where we are trying to focus on some of the financial recovery, that we also have to pay close attention to what is done on the human recovery side, particularly with some of the challenges that we are going to face in terms of aid and supporting these countries.
In that sense, I want to take this opportunity to thank not only the Prime Minister but the people of Australia. Australia was one of the countries that came in promptly and helped support a rapid food financing facility that we have to try to deal with taking that program to some of the countries that were most under stress.
We also have discussed over time some of the key issues in financing in the climate change area. Whether it's the forestation questions or some of the other issues that we face, Australia really has stepped up and worked closely with us on some of these issues which are going to be important because when you really look at the food and energy and water they are all exacerbated because of the challenges of climate change. So we had some chance to discuss the perspectives globally as obviously Australia is an important economy as part of global growth. As the Prime Minister said, and the most recent IMF report has good things to say about the strength of Australia's financial economy but Australia's part of a global system and so that's one of the reasons why it was very helpful to be able to compare notes. So thank you.
JOURNALIST: (inaudible) would you like to see the Bill before Congress passed as quickly as possible, the bail-out measures, and secondly, do you think it is time for whoever takes over the US president to implement better transparency in US financial systems similar to measures we have in Australia?
PM: Firstly, America is a robust democracy and the debate in the Congress will be fast, fierce and hard. But can I say that we are facing a global financial crisis and my appeal to our colleagues, Republican and Democrats, both sides of the aisle and the House and the Senate, is that the global economy needs these measures to be dealt with quickly.
Secondly, on the broader question of transparency could I say that through the Financial Stability Forum, where Australia has been active for a long period of time, the transparency recommendations there are very clear.
We in Australia have been in the process of implementing those and it would be good if all economies, large and small across the world, did the same because transparency is a core part of the long term stabilisation of global financial markets.
JOURNALIST: From your talks today, including with the investment bankers, do you think that Australia needs to take any further measures to reinforce itself against this crisis?
PM: The good thing about the IMF report today, apart from its general statements about the strength of the Australian economy, is also its statement that Australia is well-placed to see its way through the current global downturn. And that our banks are well regulated and our banks are strong.
The response from those in the investment community with whom I spoke today is that Australia's main banks are seen to be strong, and are robust also in the market place. And that was encouraging to hear. In terms of further measures on behalf of the Australian Government, we have worked on a daily basis, on a detailed basis, with our own council of economic regulators - the Reserve Bank and the Australian Prudential Regulatory Authority as well as ASIC. We will respond to their advice systematically and thoroughly each day. We believe we have our current policy settings right but further responses on policy front will be taken as appropriate.
JOURNALIST: (inaudible) what is the latest advice on what stage we are at in dealing with this crisis? I know that you have been told today by certain people that it is going to get worse. Is that your view?
PM: Well I am not quite sure who you are referring to in particular but let me explain our own position. And that is, a global financial crisis is going to obviously affect global economic growth and that will wash through to the national growth performances of all economies.
And you see in our own figures in Australia, that we are projecting a softer growth performance in the period ahead. This therefore has a time to wash through to the real economy and that is what all policy makers are concerned about.
I can say one thing though about that. The fact that we have in Australia, what the IMF describes as an enviable budget position of a $22 billion budget surplus, as a buffer for the future to act, is very important and puts us in a very good position, relative to other economies.
BOB ZOELLICK: Well I basically agree with the way the Prime Minister stated it. And I will just add from the perspective of the World Bank since we focus on developing countries, that one of the elements that has characterised this financial turmoil very differently, if you think about it, from the ‘90's or the ‘80's, is the strength of some of the developing countries.
That is a good thing, the multiple pool of growth and Australia has benefited from that in East Asia. I think what we now have to watch is to see what the ripple effects are in terms of exports and the trading system and whether then this leads to some questions in terms of domestic investment in some of the developing countries, and some of them may not have strong banking systems.
Now, each country has to be looked at on its own terms and we actually, at the World Bank, are trying to go through each of the developing countries and try to understand what we can do to support.
Fortunately the Bank is a very well capitalised institution, we're considered a quality credits or we are sort of a (inaudible) so we have got a good capital (inaudible) 30 position, we are currently in a good position to help and that is one reason again, it is helpful to talk with the Prime Minister given his experience particularly in the Asia Pacific region, as we try to think about how we can support that.
JOURNALIST: (inaudible) $700 billion bail-out going to some non US based institutions, are you aware of whether there are any Australian institutions would benefit as currently designed by the Treasury Department and also for Mr Zoellick, do you have a view on this, the idea of banning all types of short selling, as something of a financial expert, what do you think of that as a policy?
PM: Firstly in terms of the content of the $700 billion proposal from the Secretary of the United States Treasury, our own Treasury and our own central bank are currently in discussions with their American counterparts on the full and final detail of this package and how it will be implemented.
I will reserve further comment to that. I have already said that we welcome this package. I think it is a good and strong measure from the US administration at a time when the global financial crisis, global financial markets are under considerable stress.
I have also noted by the way, a debate between moral hazard on the one hand and a financial crisis on the other. Can I say that at a time like this, when you have the global financial system in severe crisis, the important and enduring consideration here is to act decisively to restabilise the system.
That is the first responsibility of Government and I would commend the administration for what they have done.
ZOELLICK: I would just say generally since my focus is on the developing world, that I think what, you know, particularly (US Treasury) Secretary (Henry) Paulson and (Federal Reserve) Chairman (Ben) Bernanke have done are important and good steps.
And I think that this is a problem, certainly beyond the scope that anybody expected, and I think the combination of steps that they've taken and the SEC has taken have been the right steps.
Now as the Prime Minister, you have a debate in the Congress, an equal branch of government in terms of trying to move it forward and I hope and expect they probably will move it forward.
JOURNALIST: (inaudible) leaving aside the strength of the Australian banks, how would you characterise Mr (Rupert) Murdoch or the investment bankers at the roundtable's view of where this is heading?
PM: Well I will let individual investment bankers speak for themselves. Can I say in relation to the state of the Australian banks and their balance sheets, the International Monetary Fund is not given to casual views, they have conducted an analysis of the state of the Australian economy and the elements of it and their conclusions are there in black and white. And the IMF has delivered a very strong positive report card for Australia, and on the robustness of our regulators, the strength of our banks, and our ability to see our way through this global economic downturn.
JOURNALIST: On climate change Mr Rudd, you and Mr Zoellick discussed it, is there any question that it may affect the timetable for implementation of an ETS in Australia?
PM: No our ambition is as it has always been, Dennis, and we haven't changed that. What I have been discussing with the President of the World Bank today and with many others here in New York, is the implementation of the initiative I announced in Australia last Friday, for a Global Carbon Capture and Storage Institute.
That is important in terms of bringing on coal fired power stations in the future using CCS technology. That is a practical means, not only to bring down greenhouse gas emissions in a timely fashion, but a practical means also to assist strongly affected industries, the electricity generation industry, in a period of transition which would occur once a carbon pollution reduction scheme is introduced.
JOURNALIST: Do you welcome the breakthrough you had on the Luxury Car Tax? And where are you up to with the other measures that are working their way through the Senate?
PM: Well it is quite remarkable that we have to depend on the independents in the Senate to get our measure on Luxury Car Tax in Australia through. I find that remarkable.
Secondly, can I say this, at a time of global financial crisis, it is imperative that Australia remain in a strong Budgetary position. The Government has brought down a strong Budget surplus and I would say it is irresponsible for any political party to block measures which underpin that surplus in the Senate and that remains my position.
JOURNALIST: (inaudible) Medicare Levy Surcharge (inaudible)
PM: Because we want to deliver a $1200 a year or up to a $1200 a year benefit for working families. And I am surprised that the Liberal Party would stand in the road of that in the Senate as well.
And the reason why we have put forward a compromised position is that we are absolutely determined to deliver that as an outcome for 330,000 Australians. Our original proposal was for 400,000 Australians and the answer to that question is best obtained from the Liberal Party back home.