Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Prime Minister. Will the Prime Minister outline to the House the need for coordinated international action to help respond to the global financial crisis?

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

Is this the blueprint for the world?

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

The acting Manager of Opposition Business, the member for Sturt, says: ‘Is this the blueprint for the world?’ I would remind the honourable member of this: that in terms of restoring confidence to global financial markets, what we do in Australia is important and what is done around the rest of the world is doubly important, because we are in a global economy with a global financial system where everything is related to everything else. That is why the government has been acting domestically and internationally since the onslaught of this crisis.

Australia believes strongly that coordinated global action is required to address this crisis. We welcome recent initiatives by the G7 and the G20 to bring countries together to find common solutions. At their recent meeting in Washington, finance ministers from the G7 announced a plan to address the global financial crisis. In that plan there were five core elements: (1) preventing the failure of systemically important financial institutions, (2) improving access to liquidity and funding, (3) re-establishing confidence in financial institutions, (4) guarantees for depositors, and (5) restarting the secondary markets for mortgages and other securitised assets.

At a subsequent meeting of the G20, finance ministers committed to use all economic and financial tools available to them to ensure the stability and continued proper functioning of financial markets. Their agenda endorsed the G7 plan and also extended it to the use of macroeconomic policy and other measures necessary to restore stability. G20 leaders went on to say that they were committed to using all the economic and financial tools available to them to ensure stable and well-functioning financial markets.

The Treasurer attended these meetings on Australia’s behalf. In his remarks he highlighted the importance of the G20 at a time when the global financial crisis is spilling over from developed to developing economies. That is of deep concern and relevance to this economy, Australia, given the critical importance of major developing economies in our own region for our own future growth, most particularly China. The Treasurer also called for the reform of global financial architecture so that we do not repeat the failure to reform post the Asian financial crisis.

The G20 meeting was also attended by President Bush, who outlined the need for collective action to deal with the crisis. More recently, the President, together with the President of the French Republic, President Sarkozy, and the President of the European Commission, Mr Barroso, have been providing important leadership in this area by calling for appropriate, coordinated international action. Australia has consistently called for international action to be coordinated in response to the global financial crisis through the agency of the G20. In my own address to the UN General Assembly in September I spoke of the importance of the G20 in addressing this crisis. At that time I also outlined a framework from Australia’s part about how the G20 could work together with the International Monetary Fund and the Financial Stability Forum to reform global financial markets. In recent days I have written to all G20 heads of government requesting further coordinated action on their part, given that we are all in this together. Coordination is required in two important areas: one is the reform of global financial regulation, but the second part looms as being equally important and progressively more important—and that is a coordinated global economic stimulus in the face of slowing economic growth.

The G20 is a critical forum for the future to deal with the current global financial crisis. First of all, the G20, of course, has a record of achieving real results borne of hard experience. It was born out of the Asian financial crisis. The G20 was the key force in improving IMF governance in 2006-07 by increasing the quota and voice of emerging market economies in the deliberations of the IMF. Second, the G20 of itself represents across its combined membership the following core facts: 85 per cent of the world’s financial system, 95 per cent of global stock market capitalisation; 80 per cent of global trade, and two-thirds of the world’s population. This is an important institution because of its representative characteristics. On top of that, by bringing together a limited group of countries in a structured way, it has demonstrated an ability to forge consensus across developed and developing economies, and extending the remit for coordinated action on regulatory reform to financial markets and for global economic stimulus into a representative body which brings together critical developed and developing economies.

Australia is working hard with Brazil and other G20 members to ensure that the G20 continues to provide leadership and coordinated action to address this crisis. At their meeting in early November the G20 should engage with the Financial Stability Forum to agree a clear timetable for implementing the Financial Stability Forum’s recommendations. The Treasurer will again be representing Australia at that important meeting.

International cooperation is essential in a time of global crisis. We have argued consistently, as Australia, that an appropriate mechanism, an appropriate institution, for advancing coordinated global action on both the fiscal policy front and on the regulatory reform front is the G20, an institution in which Australia is represented. Further action is necessary domestically; further action is necessary internationally. Unless this is coordinated through a mechanism such as the G20 our concern in Australia is that, once we see our way through this particular storm, if fundamental institutional reform questions are not dealt with, then in turn we face a repeat of this storm in the future. This government will leave no stone unturned through the mechanism of the G20 to ensure that we have a properly coordinated agenda of action for the future. It is a proper mechanism for doing so. It has a major role to play in the future and Australia stands ready to act and act decisively within its framework.