Press Conference
Toronto, Canada
28 June 2010
(Australian Time)
SUBJECTS: G20 Summit; Resource Super Profits Tax; Australia-USA relationship; Cabinet
TREASURER:
Good evening. It's been, I believe, a successful Summit. It's another positive step towards a stronger, more sustainable and balanced global economy. I just wanted to congratulate the Canadian officials on all that they've done to make this summit so successful, but I'd also like to thank all the officials that have worked around the clock, particularly in recent days.
Now, from day one the G20 has been about achieving balance and sustainable growth by working together, by bringing together the major developed and developing economies, and of course by doing that, in a short period of time it has already achieved a great deal. But of course, as we all know, the global recovery is uneven and of course, it's fragile. So this meeting has focused very much on the need to sustain and to strengthen the global economic recovery as we go forward.
Now of course, the meeting today was presented with research from the IMF that says what we could achieve if we adopted more ambitious policies. The IMF has said that global output could be higher by $4 trillion US dollars. That over 50 million more jobs could be created. And that of course, 90 million people could be lifted out of poverty if we adopted a more ambitious policy approach, and I think the G20 has done that today.
You can see that firstly in the area of fiscal consolidation. Advanced economies have committed to at least halve deficits by 2013. Now of course, Australia will be returning to surplus by 2013. Now what this agreement shows is just how far ahead of the game Australia is when it comes to fiscal discipline. So that in the same year that G20 advanced economies have agreed to halve their deficits, Australia will be back in the black. I think that is yet another example of Australia outperforming the major advanced economies. And of course, we were the only advanced G20 economy to avoid recession. And of course, we had the second lowest unemployment of any of those economies.
I think what today's agreement demonstrates is just how our Budget position is simply miles ahead of the game. And of course, advanced economies have agreed to stabilise or reduce Government debt to GDP by 2016. And of course, by contrast, Australia's debt peaks in 2011-12 at just 6.1 per cent of GDP, and then it declines. That is just a time and fraction of net debt levels experienced by other advanced G20 economies.
Now the second area where we outlined today a more ambitious policy path was for developed and developing economies to implement fundamental structural reforms. Countries with current account surpluses should put in place reforms to boost domestic demand, but importantly, all countries should peruse structural reforms to both lift their growth potential and to enhance their capacity, their economic capacity. And one of the great strengths of Australia in recent decades is that we've done just that. We have put in place fundamental structural reforms over time to enhance the reserves of our economy. And of course, the Government here is not resting on its laurels, and we are currently putting in part and in place a further raft of fundamental reforms to enhance our growth potential. Reforms such as health reform, reforms such as retirement income reform, and of course, national broadband.
So what the G20 today said is that all countries, both developed and developing, should be looking at further structural reforms to lift growth, not just to shift growth from one region to the other. That is why the Government domestically is so stressing the need for fundamental reform.
And of course, the third area that we concentrated on today is, of course, making the global financial system more resilient. And of course, what that means is stronger capital and we put it in requirements for the banking system stronger supervision for the banking system and, of course, improved resolution arrangements which address financial institutions should they fail. These are all ambitious areas of reform which can strengthen the global economy as we go forward.
We also had a few things to say about trade, and we reiterated our support to bring forward a successful Doha Round, and to bring that to conclusion as soon as we could.
So in summary, I believe a successful Summit which addressed major areas of reform that can strengthen the global economy, and in this agreement we've seen today it has emphasised just how far ahead of the game the Australian economy is compared to many other advanced G20 economies.
Over to you.
JOURNALIST:
Mr Swan, reports from Australia suggest that one of the (inaudible). Have you been reluctant to change the design of the Mining Tax?
TREASURER:
Look, the Prime Minister made it very clear the other day that we would open the door for negotiation if the mining companies open their minds. I very much welcome their response to the offer made by the Prime Minister and we go into those negotiations in good faith.
JOURNALIST:
Are the boundaries for possible changes (inaudible)?
TREASURER:
Well, I think I have said before that I don't intend to pre-empt those discussions. We have said that there is a need for a profits based tax. Indeed, the mining industry made a submission to Independent Tax Review to that effect as well. We will sit down and talk with the industry about all of the matters associated with the tax - I've made that very clear. We will do that in good faith. But I don't intend to engage in some megaphone discussion with anybody about this matter. We will sit down and work our way through the issues, as the Prime Minister indicated.
JOURNALIST:
(Inaudible)
TREASURER:
I think it is pretty true to say there is a lot of mutual respect and affection between the United States and Australia, and I think that is certainly reflected in the approach and attitude of the President. I had a very enjoyable conversation with the President, but we didn't go into any of the detail of future visits. But of course, he is welcome any time.
JOURNALIST:
Mr Swan, you talk about trying to get to a conclusion at Doha. (Inaudible). Is there any real prospect that Doha will ever come to a conclusion? (Inaudible). Is there any concerns in Australia that, that could harm our trade (inaudible)?
TREASURER:
I think the timeframe that was put on it by an earlier G20 Summit was the end of this year. I think everyone around the table was acutely aware of that. I was impressed with the resolve of a number leaders sitting around the table, to reinvigorate these discussions as we go forward, to resolve outstanding issues. I think as number of leaders have already indicated in their remarks after the Summit today, there is a higher ambition to do better. There is certainly a fair bit of good will in the room. But as you know, this is a difficult area, and it has taken some time. But I think there was a recognition that one of the ways that we can life growth is to conclude, not only this round, but a more ambitious version of this round.
JOURNALIST:
Did Australia miss out at all because you didn't get that much longer, more involved meeting Barack Obama that was planned with Prime Minister?
TREASURER:
I don't believe so. There has been a very long conversation with the Prime Minister and the President. That occurred when I was on my way here. Members of the Government, not just myself, the Foreign Minister and others, are in constant contact and dialogue with the Administration. There is a very close working relationship with the Administration, not just in terms of formal visits, but telephone conversation and so on. I have spent an enormous amount of time with my opposite number in the United States, Mr Geithner. I was with him in Pusan, in Korea, only a couple of weeks ago for the Finance Ministers Meeting. I was in Washington, back for the IMF meetings, and G20 meetings six or seven weeks ago. So I think it is pretty fair to say that across the board there is constant dialogue and contact, and I think that is evidenced by the telephone call with the Prime Minister and the President a couple of days ago.
JOURNALIST:
I was wondering if you have a view on the effectiveness of the US financial reforms? (Inaudible).
TREASURER:
Well, it's fair to say that the raft of reforms that have been developed through the Financial Stability Board and the Basel Committee were put before the G20 today for an update as to their progress, and a report from Mario Draghi from the Financial Stability Board. And it was always anticipated that the finalisation of those matters would be considered at the November Summit. This is an enormous piece of work. It involves great detail and involves great complexity, but will fundamentally reshape the regulation of the international financial system, which is what is required given all of the events that occurred and lead to the global financial crisis.
The steps that have been taken in the United States through the proposals that have been pursued by the Administration are an important part of all of that. They are not yet, as I understand it, completely concluded, but it will certainly strengthen the global financial system when those measures pass.
The supervision and regulation of the financial system in the United States is vastly different from that in Australia, which is why when we are having discussions about financial regulatory arrangements across the globe we must always recognise that there are individual country differences. What we have to do is get a global framework in which national frameworks fit. And I believe what is being proposed in the United States, as I understand it, is consistent with that global framework that we are considering.
JOURNALIST:
Do you think there is a role for Mr Rudd in the Government if he wants to have one?
TREASURER:
That is entirely a matter for the Prime Minister to consider, and I will leave any further comment on that to the Prime Minister.
