PM BROWN: Can I say I am delighted to welcome the Prime Minister of Australia, Kevin Rudd, a very good friend, and welcome to London for the meetings of the G20. But it has also been a chance for us to discuss the very close relationship between Australia and Britain and to build for the future.
We have a commitment to greater bilateral cooperation on security, that we agreed this morning. Australian troops continue to serve in Southern Afghanistan, alongside British troops and I believe that the bilateral relationships between our two countries are very strong indeed and strengthening every time that we work together.
Now Kevin and I discussed the challenges that the world economy is facing. And let me say that he has been doing an amazing job in the run up to the G20 London Summit. He has been chairing and building consensus on a number of the difficult issues that we have got to deal with.
And we will need to solve the great challenges that are presented by the global economic crisis over these next few months. All countries meeting together, and let us not forget that it took 16 years after the Wall Street crash in 1929 for the world economy to come together to agree new principles of action, and we must never make the mistakes that were made then.
A previous summit of major economies took place in London in 1983 and it collapsed in disunity with the world then descending into a downward spiral of protectionism, and we will never allow that to happen. And it was not until the Bretton Woods summit in 1945 that the world was able to unite and agree a new international architecture, and these are the subjects a new international architecture for the international institutions that are on the agenda this week.
So we want to demonstrate that we have acted quickly and that we are taking the necessary decisions to safeguard future of the global economy.
I believe that the global economy is meeting its first big test as a global economy. The speed and the scale of global change has overwhelmed the old national systems of rules and regulations. And we have to show that out of the global problems we face, we can forge global solutions. And the London Summit on Wednesday is the chance to show that we can work together.
Now we have already made some good progress in advance of the summit. Every major economy has taken action to stimulate growth. There have been coordinated cuts in interest rates. There have been cuts in taxes, there has been increases in spending and new ways of injecting resources into the economy.
The economics of doing nothing but spending cuts and retrenchments has been firmly rejected in almost every country across the globe.
Action has also been taken in Britain, America and Australia and many other countries to tighten financial regulation and we are bringing regulatory structures into line with the reality of global 21st century financial markets.
The fact of this meeting has already resulted in many of the major tax havens committing to end their worst practices. And all of this would have been unthinkable a year ago, let alone in previous global downturns.
But we are seeing an unprecedented global response to an unprecedented global crisis. But there is still more to do over the next few days if we are to forge the new consensus that is necessary to put the world economy on a path back to recovery.
First, we must, and I believe will, agree the principles of the new international framework for tighter financial regulation, and that will include hedge funds and what is known as the shadow banking system. That will mean more accountability, transparency, a new approach to pay and bonuses that replaces the old excesses and the old short-termism. The world should be for responsible, long term success.
Second, I believe we are ready to reaffirm our commitment to global markets and open trade, and that means governments and international institutions agreeing to step in and provide support for trade finance.
Third, we need to do what is necessary to support growth, continuing to push back against the global recession and supporting families and businesses. This is not the narrow issue only of fiscal policy, it is about the wider range of action to stimulate our economies and crucially the vital role that emerging markets and developing economies can play in developing the recovery that is necessary.
These countries, the developing and emerging market countries, are counted for 70 per cent of global economic growth in the past decade. And their success is also the key to our future prosperity and it is vital then that the international economic cooperation as such, that they have the resources to deal with their banking problems.
This is a decisive moment for the world economy. Growth has stalled around the world. We have a choice to make, we can either let the recession run its course and retreat into protectionism and isolationism.
That is a do-nothing approach that will push us further into recession, but we can resolve with the world community to unite, to act and to fight back against the global recession that is hurting people in every country and in every continent.
This is the test we face and the test we will meet in London this week.
PM RUDD: Thank you very much Prime Minister, and thank you for your hospitality in receiving me here again at Number 10 today. Why are we in London? We are in London because we are dealing with a global economic recession. And we are London to develop and implement a global strategy for economic recovery. Gordon has rightly pointed to the lessons of economic history.
It took between 1929 and 1944 for the world community to get together at Bretton Woods and work out what should be the form and pattern of global economic cooperation to recover from the events of the great depression. Three quarters of a century later, we are confronted with a great economic challenge again. And if you look at the earlier attempts to deal with that challenge with a failed conference in London in 1933.
The world community and its leaders have been seized of that failure and therefore what constitutes the necessary ingredients for success, and they must therefore focus on the ingredients of a global strategy for economic recovery.
If we look back at what has occurred since the Washington Summit at the end of last year through until now, we have seen substantial considered progress across key areas of macroeconomic coordination. Across stimulus, across coordinated monetary policy action and across the sorts of new forms of cooperation in resourcing we need for the international financial institutions.
Never before in modern economic history have governments of the leading economies cooperated so closely on so grave an economic crisis, and it is important to point to the trillions of dollars worth of economic stimulus which has already arisen from the action by individual Governments, in response to the call at the Washington Summit to act together. And if we act together on the great challenge of stimulus, then the overall impact it has on economic activity is that much greater.
Australia and the United Kingdom are old friends, old allies, with a shared heritage. And in the G20, I find it difficult to point to a country with whom we have a closer relationship that the United Kingdom.
And what I would like to say to Prime Minister Brown is that his efforts in pulling this exercise together, in pulling together the efforts necessary to underpin global economic cooperation, have known no bounds. Prime Minister Brown's energy and determination to fashion a global economic outcome here and prior to this, in the lead up also to the Washington Summit, deserve appropriate public recognition.
His energies have been such in recent days that the Prime Minister's voice is starting to falter, he is on the phone so much, and particularly with some of our friends in recent days who he will be meeting again soon from Latin America.
In both the White House and in Number 10, Australia has strong friends and allies who together will shape the content of this global strategy for economic recovery. This is necessary to deal with the great challenge of jobs.
Because by acting together in fashioning and implementing a global economic strategy, we are dealing with jobs, in Birmingham, in Brisbane, in Manchester and in Melbourne and these are jobs which are important to underpin.
Finally our actions together through the stimulus which has already been agreed have worked out across the participating economies, has already supported some 20 million jobs across the G20 economies for the year ahead. This is important action so far, and we still have much to do in terms of the meeting which will be held in London later this week.
On our bilateral relationship, as the Prime Minister indicated, we have discussed common questions of security, our common work together in Afghanistan, and we have also today, also agreed on a new national security partnership between the United Kingdom and Australia.
This brings together the various strands of our cooperation and coordination in defence, in security, in counter intelligence, in new threats to security, right across the spectrum.
This is an excellent security policy relationship. For the first time, we bring these elements of our cooperation together into a single document and we have resolved together to work even more closely on the common challenges we face into the future.
So Prime Minister, thank you again for hosting me here to Number 10. We have a big week of work ahead of us, but again I would commend the British Prime Minister for being so much the driving force in making sure that governments around the world act together in this unprecedented exercise in global economic cooperation given the challenges we all face.
JOURNALIST: Prime Minister on the G20, has it now become impossible do you think to get a meaningful agreement on further fiscal stimulus given the hardening positions of for example on one hand the Europeans and on the other hand Britain and the Americans. And on Jacqui Smith, how can you retain full confidence in her (inaudible) she is now in serious danger of losing all respect, all the respect of the general public.
PM BROWN: Well first of all on the economy, let me say that we're making very good progress. These are very difficult issues that are complex issues, but we have over the last few months seen governments agree or about to agree, $2.5 trillion dollars of fiscal stimulus and that is something that the world has never seen in response to a downturn before.
We've never seen the same coordinated cuts in interest rates and we haven't seen the same coming together to look at what we can do for trade and what we look to can do for the emerging markets and developing countries. So the world is coming together and we are not making the mistakes of doing nothing that were made in the past.
As for the future actions are concerned, I think you will find that we are prepared to do whatever is necessary to restore the world economy (inaudible) and I believe that the discussions that we're having will show results in that way by the time we get to Thursday.
As far as Jacqui Smith is concerned, this is very much a personal matter for Jacqui, she has made her apology. Her husband has made it clear that he has apologised. I think the best thing is that Jacqui Smith gets on with her work which is what she wants to do.
JOURNALIST: (inaudible) there does seem to be in the public discourse at least, a pessimism about the potential outcomes of the G20 meeting. I'm just wondering if you could reflect on exactly what is at stake here. Wouldn't failure be a massive blow to the global economy and confidence and potentially to the stock markets and to what extent do each of you believe that you can bring the kind of leadership to drive the outcomes you're looking for?
PM RUDD: On the question of a global strategy for economic recovery, the first thing to note is what has been achieved so far. It is important to ask this question: where would the global economy now stand if the $2.5 trillion dollars worth of stimulus to which the Prime Minister just referred to had not been injected?
That is a very important consideration and secondly had central banks not been working with each other in terms of co-ordinated action on monetary policy change. These are sizeable, substantial achievements.
We go to the ingredients of what's on the table now, which is an international framework for dealing with impaired assets on bank balance sheets. The core of the economic problem never before in modern economic history have banks and governments agreed between themselves a framework for dealing with this core part of the economic impediment to recovery which is restoring our banks to health. Here, the United States and in Europe more broadly.
Also the additional resources and reforms necessary for the International Monetary Fund to deal with the challenges which now face us from the deep difficulties in the economies of the emerging markets and developing economies, most particularly and most recently those in Central and Eastern Europe.
On top of that, and as the Prime Minister has just referred to, a coordinated frame work for dealing with regulation for the future for the financial system more broadly, and to act as appropriate in the future on further stimulus given the challenges still. I think it is important for us all to frame very clearly these alternatives. One approach is to stand back and do nothing and let the markets rip and we've seen what's happened with that in the past, or alternatively, governments, nationally and internationally, acting to step into the breach.
And on these core elements of this emerging global strategy for economic recovery, progress has been achieved, progress will be achieved in London and further progress will be necessary as the year progresses as more data emerges about the challenges in 2010.
But this against all historical precedents, I have got to say, has reflected a strong coordinated action agenda across the participating governments.
PM BROWN: I want to thank Kevin Rudd for his leadership but particularly his proposals about how we can change the international institutions and how we can restructure our banking system and Australian proposals are very important to what we are now discussing in the communiqué for the G20.
Look, this is a testing time for the world. In previous downturns, the world has not been able to rise to the challenge. So we have long periods where recession happened and no coordinated action was taken.
What we are seeing at the moment is coordinated action in interest rates, te biggest interest rate cut we have ever seen in the history of the world, what we're seeing is coordinated action also on the stimulus and new investment in our economies and more has been put in and is being put into our economies round the world than at any time in history.
And we're also seeing a coordinated attempt to restructure our banking system, to deal with the problems of tax havens, to get international responsibility in all countries about remuneration of banking and financial officials, and we're trying to stimulate world trade.
So the world is coming together and the results this week will show that global problems, because these are global problems, require global solutions and I believe that the world will rise to the challenge and to defeat those who say that to do nothing is an option and defeat those who say protectionism is an option. I think you'll find that coordinated action is the way ahead, not just now but for the future as well.
JOURNALIST: (inaudible)
PM BROWN: The Home Secretary is doing a great job, and I don't think this issue should be allowed to detract from everything that she is doing to ensure we protect the public and keep on making things safe, and she's done the right thing by taking steps to rectify the mistake that was made as soon as she became aware of it, and I think that is generally acknowledged.
The savers of the Dunfermline Building Society will be fully protected, and the fact that we are finding new ways of administering departments so that we have offers from public companies that have been enabled to take up some of the workers of the Dunfermline Building Society shows that we're taking all steps necessary to protect both the savers and the people who rely on the Building Societies for mortgages for the future. But let's face facts - the Dunfermline Building Society is the author of its own mistakes; mistaken investments; mistaken policies. We have had to step in where the Dunfermline Building Society has failed, and we have stepped in in such a way that we can protect both the savers and give those people who depend on the building society for mortgages a way to move to the future.
JOURNALIST: (Inaudible) I have a question on China for both Prime Ministers.
Prime Minister Rudd, you have had at least 2 meetings with senior members of the Chinese Government in recent months which you didn't disclose to the Australian public, and yesterday your staff asked for you to be seated away from the Chinese Ambassador. I'm wondering why you're so sensitive about your connections with China.
And Mr Brown, how critical is China to the success of this week's G20 meeting?
PM RUDD: I actually stayed the weekend with the British Foreign Secretary, David Miliband, who's a friend of mine. We were both on set together and it was kind of a natural thing to actually wouldn't mind parking yourself next to each other as well. I think people should all that into a bit of context.
You know why China's important for us all? China's important because it's Australia's largest trading partner. It became that way in fact, I recall, in recent years, probably under the previous government.
The reason why China is important to Australia as being our largest trading partner is this: Australian jobs depend on that. The more we export to China with its vast economy which itself like other economies is going through some difficulties in recent times, the more we sell to China the more Australian jobs we create.
That's the bottom line here. I'm in the hunt for Australian jobs, as is the British Prime Minister for British jobs. And the reality is you're looking at these emerging growth economies and my interest long term, and the Australian national interest for the long term, is act effectively in the national economic interest to maximise our interests in that Chinese economy, because now it's akin to Australian long term jobs. As do our other international economic relationships.
But this is a big one and China is emerging as a big global economy and therefore it is absolutely necessary for any Australian Prime Minister that we maximise our economic interests and the interests of Australian jobs in developing that relationship further, and I intend to do that.
PM BROWN: China is a very important party to all of us. Our trade with China has been increasing substantially even in the downturn our exports having been rising. I had long conversations with Premier Wen who was with us in London only a few weeks ago, and President Hu is coming to the Summit this week. I believe the Chinese are enthusiastic about the plans for recovery that we are discussing and we look forward to working with them. I think our relationship with China is a very important part of any modern economic policy and that's why they're part of the G20.