Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I thank the honourable member for his question. Twelve months ago the global economy embarked upon one of the most significant challenges in our lifetimes when we confronted the prospect of not just global financial markets collapsing, global credit markets freezing and a tumbling in stock prices around the world but also one economy after another collapsing into recession and unemployment rising right across the world. This has been a most difficult year for the global economy and, despite the progress which has been achieved in recent times, we still face great challenges ahead, particularly when it comes to supporting the needs of jobs both at home and around the world.

The global response to this global crisis has, of course, been coordinated through the G20. This has been an important mechanism of global cooperation. We met in Washington, we met in London and, most recently, we met in Pittsburgh. Most critical to the outcomes of the G20 has been the decision by governments across the world to get behind the $5½ trillion worth of stimulus into the global economy—in other words, to provide that necessary injection of activity into the global economy through public investment when the private sector worldwide has been in retreat. Of course, the result of this virtually unprecedented level of global economic cooperation and coordination has been that credit markets have begun to thaw, and we have seen stock markets begin to recover, we have seen job losses in some areas avoided and we have seen the beginnings of the return of confidence. In fact, many have remarked that the G20 summit in London represented the break in the fall of the global confidence cycle both for consumers and for business and the beginning of the turn in some of the global growth indicators.

This, however, is not a recipe for complacency. We must get on with the business of implementing the Pittsburgh agenda. Firstly, we must get on with the business of implementing a sustainable framework for long-term economic growth, the reason being that we cannot afford a simple return back to the global macroeconomic imbalances which underpinned so many of the challenges that we faced at the time the subprime crisis took off. Secondly, we must also implement the Pittsburgh agenda when it comes to reducing risk-taking in financial markets in a responsible manner. Hence the recommendations in Pittsburgh to increase the capital adequacy requirements of financial institutions. Hence also the recommendation to adjust remuneration arrangements for financial executives to make them more calibrated to long-term performance rather than short-term risk. Thirdly, we must implement the necessary reforms for the global financial institutions as a necessary backstop to future crises and reducing the risk of future crises unfolding.

The good news for Australia is that the G20 has now been entrenched as the premier forum for global economic cooperation. This is an important development for Australia. Secondly, as a result of that, Australia now has a seat at the top economic table when it comes to global economic decision-making. Thirdly, as a consequence of that, Australia’s voice at head-of-government level is now heard directly rather than through the medium of other countries. This is a good development in terms of Australia’s voice in the big challenges which still lie ahead for the global economy.

Our global action has been proceeding along these lines. Our domestic action the House will be familiar with—the actions that we took to stabilise financial markets with bank guarantees and also our intervention in terms of the three sets of stimulus packages in order to step in and play our part with global stimulus investments in order to keep the economy going when the private sector was in such retreat. We have done so entirely consistent with the principles of conservative economic management. We have done so in a manner whereby we have properly expanded the role of government when the private sector is in retreat and we have properly begun to retract the role of government as the private sector shows evidence of recovering. We have done so while maintaining our AAA credit rating, we have done so with the lowest debt across the major advanced economies and we have also done so with a clear plan, announced in the budget, for returning the budget to surplus. The result of these measures is that Australia has the fastest-growing economy across the 33 members of the OECD. It is the only one among the major advanced economies not to have gone into recession. It has the second-lowest unemployment and also the lowest net debt and the lowest deficit.

These are good achievements for Australia, but, looking ahead, the uncertainties still in the global economy are real. We must be vigilant about that, as the Treasurer has said repeatedly. We must also be very mindful in monitoring developments in the global economy—the international economy—and the domestic economy in terms of our own future fiscal policy settings, and we will continue to do so. The absolute cornerstone of this government’s strategy for the year past and the future is our absolute commitment to do whatever is necessary to support the jobs of Australian working families in dealing with this global economic crisis for which they were not the cause.

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