PM: We're here in Pittsburgh for the G20 Summit, to continue working on our combined response to the worst global recession in three quarters of a century. The challenges before us are clear. The global economy remains fragile, significant economic risks remain and there still remain risks of global economic set back.
The full impact of this global economic recession will be felt for some time through rising unemployment in Australia, and around the world. Australia, of course, is doing much better than most other economies in the world in the face of this recession, but it would be absolutely foolish at this point to make the mistake of thinking that the global economic crisis is over.
What have we achieved so far through the G20? The G20 has played a critical role in breaking the fall of the global economy, which set in after the Lehmans collapse about one year ago. The G20 has delivered unprecedented coordinated action to deal with the ensuing global recession, including a $5 trillion injection in stimulus into the global economy, more than $1 trillion injected into the international financial institutions to restore confidence and guard against future financial difficulties within particular jurisdictions.
Thirdly, agreements to reform and reshape the nature of the global financial regulatory system. And fourthly, an historic agreement to resist protectionist measures to avoid a tariff war, something which has broken out in times past when great times of economic difficulty have prevailed.
The G20 has emerged as a key body for economic cooperation. I have long argued that the G20 must remain an important body for strengthening the global economy into the future. The G20 provides Australia with a voice in the decisions of the management of the global economy, which directly affects us - a seat at the top table for the first time, which we have not had before at Head of Government level, and a table where the decisions on the future of the global economy are taken.
For the week ahead, and for the next 24 hours, there are challenges which of course we need to wrestle with at this meeting in Pittsburgh. Firstly, we've got to confirm the implementation of our existing commitments made in London on fiscal stimulus, on the reform of the international financial institutions, including the IMF, on continued stabilisation of financial markets, progress on the reform of financial regulations, as well as maintaining our commitments on trade.
Secondly, we must also embrace medium-term strategies for coordinated exit across the major economies of the world from the emergency financial market interventions, fiscal interventions, and other interventions which have occurred in order to deal with the immediacy of the crisis of the last 12 months.
Thirdly, we need to craft together a more sustainable economic growth model for the future, because we can no longer simply rely upon a debt-driven consumption model for the future, given that the imbalances inherent within in it, underpinned by imbalances globally, have created so many of the conditions which caused or led to the crisis that we experienced over the last 12 months.
Finally, the spirit of cooperation among G20 head of government has been very good so far. Great work has been done between officials. We work with each other a lot on the telephone at heads of government level. We still have much, much work to be done. I believe the mood and the attitude of my colleagues from around the world is serious and seriously engaged in the fact that we are not out of the woods yet, there is a long way to go, and that we must therefore continue to work together on the critical decisions of future global economic governance.
Before I take some questions I might ask the Treasurer to add some remarks, and then we'll open it to you.
TREASURER: Thanks very much, Prime Minister. I too have been talking to fellow finance ministers and other economic decision makers in the short time that I've been here, and there's a theme that runs through those discussions as well - now is not a time for complacency, now is not a time to let our guard down. There are big challenges facing the global economy. The G20 has done a very important job over the past nine months, but there is so much more to do, which is why the agenda through tomorrow is so important, as the Prime Minister has outlined.
I'll leave it at that.
PM: Okay, over to you, folks.
JOURNALIST: Prime Minister, you've said that you want a coordinated approach from nations on exit strategies (inaudible). At what point do you think we can start to see that sort of approach being adopted?
PM: The first thing, Paul, is to get an agreement on a framework. That is, what are the elements of a framework for what is virtually unprecedented - global macroeconomic coordination. That is, a framework whereby individual governments, from time to time or on a regular basis, would bring forth their own national economic plans, development strategies for a period ahead, provide them to one another for appropriate examination, and to take any necessary actions if there was a macroeconomic problem emerging from that.
This work has been underway among officials for some time, and it hasn't reached finality yet among officials and our discussions at Head of Government level. Step number one is getting a framework for such macroeconomic coordination globally to occur. Once it does exist, then a working program or a program of action to give it effect would be the next step.
JOURNALIST: How confident are you that that framework is likely to be decided on at this G20 meeting?
PM: I think there's a large degree of consensus that we need to have an alternative framework to the non-existing framework which existed in the past. There is still some disagreement about the actual nature of the framework for the future, but our officials have been working hard on this. Each paragraph is tightly and carefully negotiated, but there's still some way to go yet.
JOURNALIST: Is there any timeframe, though? Obviously, you're working towards consensus, but you must be thinking in terms of the exit strategy, 12 months, 18 months, two years?
PM: Well, on the question of, let's call it exit strategy from the emergency measures that all governments have had to take given the depths of economic crisis which unfolded after Lehmans, there is, first of all, a general view, as reflected in my earlier remarks and Wayne's just now, that we're not out of the woods yet. Secondly, therefore, what's necessary to do is again to begin to elaborate a framework within which coordinated exit strategies could be considered.
It is far better to have that framework in place so that when you need to begin to make it operational, you are not simply doing so on a casual basis. So it's work on such a framework which has engaged the minds of officials, and again a lot of good work has gone in, but I'd much rather be cautious about how far we will get on this occasion because there are 20 heads of government, each with firm views on the future, and we are dealing with a democracy of States here.
Perhaps the Treasurer could add?
TREASURER: I just want to add to that, when it comes to financial regulation and supervision, there's been an enormous amount of work done through the FSB and the BIS. And that work is continuing, and there'll be milestones in terms of the various subjects they are dealing with - widespread agreement, for example, on the need to increase both the quality and quantity of capital in the banking system, but a whole lot of other matter that are associated with that. They won't all be completed in one meeting, or in one year, so those discussions continue, and I certainly hope it is the case that as we go through the period ahead that those are further refined and reported back to finance ministers and to leaders.
PM: Over here and then over to you.
JOURNALIST: Prime Minister, there's been some differences between Europeans on executive salaries and (inaudible), and the approach of the US (inaudible). Where does Australia on that issue, and will there be an agreement at this meeting on how to approach it?
PM: I'll ask the Treasurer to respond.
TREASURER: Well, we stand with the position that we have put at the last finance ministers' meeting back in March, which is the framework put together by APRA, which has been through the processes of the FSB and the discussions they have had, and at our finance ministers meeting only two weeks in London the ministers asked the FSB to have a look at a number of other matters, and that report will come back to the meeting tomorrow.
I don't want to pre-empt that, but I think that there will be a rigorous framework outlined, which is very important because some of the packages have encouraged very risky behaviour, which goes to the very core of some of the issues in the financial system that we've lived with the consequences of over the past six to nine months, so it's an important part of regulation and supervision. It's not the only part, however, but an important part, and we're looking forward to a discussion on the report back from the FSB this evening and in the morning.
PM: Before I go to this one- some have said that the whole question of executive remuneration should not be dealt with by the G20 or the FSB. The Government's view is completely the reverse. We are dealing with the global economy, global financial markets, the remuneration structures and how they're calibrated in various financial markets around the world have a profound impact on Australia.
But large banks operating globally, if you're going to have a proper calibration of risk and reward, then if those decisions are being regulated outside Australia and using a set of standard vastly different to what we would accept within Australia then we have a problem. We're working our way through this. The Treasurer and his officials have been doing excellent work as well, and I know Governor Draghi, who heads the FSB, is regarding this as a top priority.
JOURNALIST:PM, I understand that Australia's bid to host the World Cup in 2018 or 2022 has received a good reception in recent weeks, including this week. Are you confident that Australia can host an event that's bigger than the Olympics, and I'd also like to ask the you on your views on the cost and benefits and so on.
PM: What good news do you have?
JOURNALIST: That you've received good reception this week, and the Treasurer has in fact spoken to some nations this week who are on the executive council of FIFA.
PM: Name them.
JOURNALIST: Trinidad and Tobago, Cyprus, Japan, US.
PM: Well, I'm not so sure about all that, actually. I think it might have been more in passing with a couple of them. Look, this is a long campaign, and it's going to be tough, really tough. I mean, when I went to FIFA headquarters recently in Switzerland and had explained to me how difficult a race this is going to be for Australia. Securing this event for Australia - fantastic for the game, fantastic for Australia.
On the other part of your question, which is can we host an event bigger than the Olympics? Of course we can. We're Australia. We do things well when we put our mind to it. We did it for the Olympics, and did it with a degree of professionalism which is now widely regarded right around the world nearly a decade after the Sydney Olympics. If we succeed with the World Cup bid, then we would apply the same disciplines and the same national effort to produce a fantastic World Cup in Australia as well.
JOURNALIST: Prime Minister, you've talked about the need (inaudible) the Doha trade talks. How confident are you that you're going to get some sort of breakthrough (inaudible)
PM: Watching the trade talks as I have for a large part of my political career is still watching grass grow and paint dry. In fact, I was talking to Hillary Clinton about this earlier today and I won't paraphrase what Secretary Clinton had to say about the negotiations because this is a very detailed process. Therefore, there are still areas of technical disagreement. Our challenge is to fix them and to achieve, across our numbers, the political will to put the ball over the try line. Australia strongly supports the earliest possible conclusion of the Doha round.
If you go to the whole question of future growth in the global economy, we need to find large new sources of economic growth. In the speech I've just made here at Carnegie Mellon I made a point of saying that one of those areas for growth is to conclude the round. The Peterson Institute in Washington's done their study: there's nearly $1 trillion worth of additional activity in the global economy if we free up markets - great for developing countries, great for developed countries, great for the global economy at a time when it actually needs a shot in the arm. But I don't want to create the impression that this will mysteriously pop out tomorrow afternoon at five past five.
Here, then there.
JOURNALIST: Prime Minister, on climate change, you've spoken about your need (inaudible). Is this meeting the sort of place where we should start to hear more detail on numbers coming from these leaders? Where do we get firm progress if we've only got (inaudible) and then APEC before Copenhagen?
PM: This is an excellent question, because time's running out - 76 days, I think, now to Copenhagen, and one of the questions we've been discussing among each other as leaders is what are the staging points between now and then, because the rubber's got to hit the road on targets, commitments, and on financing, public and private, as well as the other elements of an integrated agreement, what I called a grand bargain between developed and developing countries.
I think, having sat through a dinner the other night with the UN Secretary General where we had present the Chinese President, the President of the United States, and of course the President of the European Union, the President of France and others, there is obviously a grasping of the fact that all these three things are linked and we need to achieve progress in the financing part of the equation if we're to unlock commitments from emerging economies, if we're then to unlock binding targets from developed economies.
The other thing is that for the first time so far, largely through the agency of the Europeans, numbers have been kicked around the table, for the first time. You would have seen some of those reflected in the public comments by the European Union and by the British and others. For the first time that I have been participating in these discussions, people are now bandying numbers around.
What will need to happen, I would hope through the agency of finance ministers between now and Copenhagen, those to be shaped into concrete options for decision. The problem we have is, that frankly, the technical mechanisms to reduce that to bite-sized chunks for decision between now and then. You don't get that one right, the other two bits of the jigsaw don't fit together, and that's why it's such a complex piece of work.
JOURNALIST: MPs have been given a pay rise (inaudible)
PM: Barnaby said all of that?
JOURNALIST: Yes he did (inaudible)
PM: On the first one, it's of course a recommendation of an independent tribunal, and as you know that system has been around for a long time. On the question of Barnaby's observation, can I just say, look, as Prime Minister of the country, you know what all the conditions of employment are when you stick your hand up for this job: a) the working hours, b) the extended privilege of spending so much time with you guys, and c) remuneration, etcetera. I think that's all just fine, and that's as it should be for the future.
If you'll all excuse us, we've actually got to get on to-
JOURNALIST: Footy tips?
PM: Oh, footy tips. Well, I was asked this yesterday by one of your number, and I have an appallingly bad record recently, so I'm very reluctant to put the mockers on people. Having said that, let me put mockers on someone. No, I have a deep affection for the good people of Geelong, so that's where I'll be lending my support.
Thanks folks, got to run.