Speech
Launch of Australia and the Global Economy
25 September 2009
Introduction
My home town of Melbourne is a great place to be on the eve of Australia’s greatest sporting event, the AFL Grand Final.
So I’m doubly pleased to be able to participate in today’s launch of Australia and the Global Economy.
This scholarly book neatly encapsulates the economic history of Australia’s trade policy, but also clearly explains the issues businesses face trading and investing in a global economy.
Today’s book launch could not have come at a more appropriate moment as policymakers grapple with the enormity of the global financial crisis.
The debate over stabilising the international trading and investment system has intensified over the last year or so and despite signs of economic recovery, debate remains unabated for several good reasons.
Chief of these is that we still need to find ways to address climate change, finalise the Doha Round of the WTO and reform the international financial system.
Indeed, as I speak the leaders of the G20 are meeting in Pittsburgh to thrash out these issues, a meeting in which Australia is playing an influential and active role.
When and if any solutions to these problems come, they will help policymakers chart a path to global prosperity over the next few decades.
As a fully-paid-up member of the international trading system, Australia has a vital interest in furthering our understanding of these complexities.
So I commend Tony [Ciro], Bruno [Mascitelli] and Siva [Muthaly] for their efforts in writing this book, which I expect will be a solid guide into the future for students, policymakers and, dare I say, even politicians.
The Role of Government in Trade and Investment Policy
I’d now like to make a few remarks about the role of government in shaping the international trade and investment agenda.
For the most part, private enterprise is the driving force behind the web of exports, imports and investments which comprise the international economy.
Yet just as there was room for government to stimulate the global economy during the GFC, so too government can help exporters and investors by creating a more effective international architecture for trade and investment.
Our nation’s economic policy history is testament to this insight, as Australia and the Global Economy makes abundantly clear.
- Our commercial treaty with Japan in 1957 showed how policy made at the highest levels can have a profound effect on our long-term prosperity.
- Gough Whitlam’s government began the series of tariff cuts in the 1970s, which set an early pattern of reform which was restarted in the 1980s.
- In the 1980s and 1990s, under the Hawke and then Keating governments, Australia embarked on a generation of tough market reforms which included floating the dollar, further tariff cuts, privatisation, sensible workplace reform and a liberal trade policy.
- Australia has also sought greater economic integration with the Asia Pacific, and was a key player behind the formation of APEC.
These reforms strengthened our economy and prepared it for shocks, such as the Asian Financial Crisis and the Global Financial Crisis.
The fruits of reform, may I say, are clearly apparent not just in our stunning run of economic growth over the last 15 or so years but also in the Australian economy’s resilience in the face of the GFC.
Even though we’re not out of the woods yet, out of all the advanced economies, Australia’s has performed the best.
This is a remarkable achievement and one which the world community has taken note.
Of course the generation of economic reforms I mentioned was only a part of the story.
Just as critical were the Government’s timely fiscal stimulus packages, record low interest rates, effective wholesale and deposit bank guarantees and a sound financial regulatory framework.
Let’s not forget, as well, the ongoing demand for our mineral resources from China and India, two economies that are still growing strongly.
The OECD’s latest Employment Outlook, for example, notes that Australia’s economy grew by 0.6 per cent in the year to June.
Treasury estimates that without the fiscal stimulus, our economy would have contracted by 1.3 per cent over the same time period.
As the Prime Minister made clear in New York this week, Australia has the second lowest rate of unemployment, the lowest debt and the lowest budget deficit of all the advanced economies.
Another way to look at Australia’s performance is to compare it with that of other major economies’.
For example, over the same time period the US economy contracted by 3.9 per cent, the Euro zone by 4.7 per cent, the UK’s by 5.5 per cent and Japan’s by 6.4 per cent.
Trade and Financial Reform
Our resilience during the GFC shows that prosperity requires good policy, which means private enterprise and government working in tandem to create wealth and jobs. This cooperation is also important in the area of trade and investment policy, including the architecture of the global trade and financial systems, as well as the challenge of climate change.
The Government has been pushing for the finalisation of the Doha Round of the WTO, combating emerging protectionist sentiment and pursuing Free Trade Agreements with several nations, including China.
The Government’s commitment to an open trading system was crystallised in February, when Australia joined New Zealand and the ASEAN nations in signing an historic Free Trade Agreement.
The AANZFTA, as it is known, will create a market of 600 million people with a combined GDP of A$3.2 trillion, no mean feat in the midst of the biggest financial crisis since the Great Depression.
Australia is a strong proponent of the G20’s efforts to reach agreement on reforming the global financial system, in part to make sure we do not repeat the events of the last year and a half.
Australian has and continues to be a crucial participant in the G20.
Conclusion
I’d like to thank Austrade for sponsoring tonight’s launch and also note that one of the authors, Dr Bruno Mascitelli, was once an employee of Austrade’s in Milan.
Bruno, it gives me confidence that your spell in the world of commerce at Austrade will have given you some good insights into the way the world works.
But Austrade still smarts from the loss of your human capital, although I should say that your book goes some way to make up for that.
Jokes aside, I congratulate the authors on a timely piece of work which I’m sure will provide intellectual sustenance for those who are curious about our nation’s international economic policy.
I’d like now to turn it over to Tim Harcourt, Austrade’s Chief Economist, to launch the book.
Thank you.