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Kevin Rudd Commits To Emissions Trading Regime

The Leader of the Opposition, Kevin Rudd, has delivered a keynote speech on foreign policy to The Global Foundation, in Melbourne.

This is the text of Kevin Rudd’s speech to The Global Foundation in Melbourne.

Thank you, David Hawes. My good friend, Steve Howard, Councillor John So, the Lord Mayor of the City of Melbourne – our host, distinguished guests and Roundtable participants.

Socrates once said, ‘I am not Athenian or Greek, but a citizen of the world.’

This is also true for Australia. By virtue of our size, our economic clout and our geography, our destiny is – and has always been – to be a citizen of the world. Like all of us who share this planet, we are stakeholders in a global community. We have rights and responsibilities to each other and to the world we all populate.

Today, I want to talk about my vision for Australia as a citizen of the world and how together we can best discharge the responsibilities of global citizenship. But before we can achieve this goal, we face a number of challenges at home and abroad.

These challenges and how best we respond to them is well understood by The Global Foundation. The Foundation has always positioned itself with one foot in Australia, and another foot in world. I appreciate and commend your work here and look forward to your continued engagement with the big challenges of our times.

The Global Economy

The contribution of China to the world economy is not to be underestimated.

Last week’s nine per cent fall on the Shanghai stockmarket revealed just how influential the Chinese economy now is to the world economy – and, importantly, how vulnerable we now all are. The events in Shanghai triggered the largest falls on many stockmarkets, including our own, since September 11, 2001. It signalled the coming of age of China as a global financial power. It also revealed Australia’s vulnerability.

Will Hutton writes that China’s economy this year will be nine times larger than it was in 1978 when Deng Xiaoping began the market-based economic reform process. China is now the fourth largest economy in the world. It has more than one trillion US dollars in foreign exchange reserves. It is the second largest importer of oil. It will be the largest exporter of goods in the world within a few years. And it is the second largest military power.

Some of these measures are open to challenge. But what is not open to challenge is that something very big is happening on our doorstep.

Over the past twenty years, 150 million people have moved into China’s cities and 400 million people have been removed from poverty. It is, he says, ‘a head-spinning achievement’.

And as Hutton says, how all of this plays out in the long run and the impact China will have in this century is uncertain. But we know it will be a major player and that for the first time in our settled history, our region will no longer be dominated by Western powers.

Nevertheless, the immediate impact on Australia has been clear. China’s insatiable demand for our resource exports has driven record commodity prices, our best terms of trade in a generation and continued economic growth.

As a result, we have grown increasingly dependent on the Chinese boom for our prosperity. The surge in our terms of trade is adding an estimated 55 billion dollars to our economy this year alone. But if China’s growth slows, and if global commodities markets fall, we could be in for a bumpy ride.

That’s why I believe we must have a total focus on long-term policies that will prepare us for life beyond the mining boom. This is integral to maintaining our prosperity. And to do this, we need to reverse the decline in our productivity growth.

When Labor handed over stewardship of the economy to John Howard 11 years ago, our productivity was growing at an annual rate of 3.2 per cent. It has now fallen to 2.2 per cent in the most recent productivity cycle, and even lower since then.

When compared with the United States, our productivity growth has fallen from 85 per cent of US levels in 1998, to 79 per cent by 2005.It is not surprising that Australia’s productivity performance today ranks only 16th in the OECD.

To boost productivity growth further, we need a new wave of reform. This is what we did in the 1980s and 1990s, when a Labor Government ushered in a reform program that opened up our economy and implemented national competition policy, which made us more competitive in the world and more prosperous at home.

These reforms were not easy but they did provide the foundation for our current prosperity, and they lifted our productivity.But the productivity gains resulting from these reforms have been eroded. So we need to begin by boosting our falling productivity growth. And the way to improve our productivity is to invest in human capital, to implement an education revolution.

The Australia Unlimited background paper prepared for this Roundtable acknowledges the importance of education to our economic prosperity. It recognises the consensus on this point and says, ‘… education provides one of the best buffers for flexibility for individuals and economies alike.’

Our competitor nations are investing heavily in education, and they are leaving us behind. That is why we need new investment at all levels of education, training and skills – from early learning and pre-school, to schools, TAFEs, universities and research. We need to turbocharge the capacity of the next generation of Australians. We have announced a range of policies – in early childhood learning, incentives to attract more maths and science teachers, and the progressive development of a National Curriculum Board.

OECD research shows that if the average education level of the working-age population was increased by one year, the growth rate of the economy would be up to 1 per cent higher.

Another recent study found that countries able to achieve literacy scores 1 per cent higher than the international average will increase their living standards by a factor of 1.5 per cent of GDP per capita. Education is the pathway to future prosperity. We must set for ourselves a goal for Australia to become the best educated country, the most skilled economy, the best trained workforce in the world.

While the mining boom has delivered our current prosperity, we won’t always be as lucky. We need to make our own luck. It’s about maintaining our future prosperity. While it is critical that we invest in our human capital, it is equally important that we invest in our industries through innovation.

We should be proud of our manufacturing industry. Many of our manufacturers are working hard to innovate and expand. We need to do more to celebrate our success stories and use these to spur more innovation, more creativity and more investment. It is part of our nation-building history. We have always been a country of innovators.

This also requires a partnership with government. We believe that in the twenty-first century, innovation policy is industry policy. We want to help our businesses produce new goods and services for world markets. To help them be more efficient, more flexible and more competitive.

We must strengthen investment in knowledge and creativity, provide incentives for business research and development, accelerate the take up of new technology, attract foreign R&D funds, and strengthen the links between universities and businesses.

We need to do all we can to move innovation from the margins to the mainstream. To move away from the subsidy mentality and towards providing growth incentives for Australian business. To encourage behavioural change around building an innovation culture and more innovative industries.

These initiatives are necessary if we are to remain globally competitive and preserve our prosperity.


A second great challenge of our age is sustainability.

While some may doubt the existence of climate change, the core science is beyond dispute. The planet is heating up. The ice caps are melting. Sea levels are rising. The ocean’s waters are warming. The corals are bleaching. There are more extreme weather events, changing rainfall patterns, and threatened species.

Climate change looms as the great moral, economic, social and environmental challenge of our age – and our planet is calling us to action. The world can’t stand idly by and debate the science or play party politics with the future. I don’t doubt that climate change is real and nor do the vast majority of Australians.

We need to forge a new national consensus on climate change. I believe that we need to:

  • ratify the Kyoto Protocol,
  • cut Australia’s greenhouse pollution by 60 per cent by 2050,
  • set up a national emissions trading regime,
  • substantially increase our renewable energy target, and,
  • ensure that Australia’s disaster mitigation plans reflect the impact of climate change.

Climate change also presents an opportunity for Australia to be a leader in the new global markets for energy efficient technology.

That is why I have recently announced support for a National Clean Coal Initiative. This will fund, in partnership with industry, new research into technologies that reduce the greenhouse gas emissions from coal-fired power stations.

Another way we can harness new technologies to innovate and deal with climate change, is to reduce the greenhouse gas emissions produced by our road transport sector, which accounts for 13 per cent of all emissions, and is growing.

We also need new ideas, suggestions and solutions and I will soon convene a National Climate Change Summit to ensure all options are put on the table.

We also need to think globally in how we respond to climate change. We need to convince the United States to commit to making greater progress and ensure that China is also part of the global solution. I am pleased that on Monday, the Chinese Premier, Wen Jiabao, in a speech to the National Congress, reaffirmed a commitment to reduce pollution. This follows the Chinese government’s decision to introduce a carbon trading scheme and plans to consolidate a range of small mines, steel mills and power stations – all aimed at reducing greenhouse gas emissions.

We should also play a leadership role in helping our Pacific neighbours deal with climate change – who in the years ahead will be particularly affected in the areas of agriculture, fisheries and tourism.

Australia and the World

My argument has been that the challenges of maintaining our economic prosperity and in dealing with climate change are not challenges just for Australia – they are challenges for the world. And we can’t make social and economic progress at home unless we work with the community of nations abroad.

At a time when globalisation is blurring the lines between the foreign and the domestic, the overriding challenge is to navigate the future in a volatile world where change is the only constant. As it is clear that our foreign policy is inexorably linked with our security, our economy and our environmental sustainability – we need to work with others to deal with current and future challenges.

Indeed, making progress on climate change, on terrorism, on eradicating poverty and disease, on nuclear non-proliferation, on disaster management, on counter-terrorism and on peacekeeping – all depend on cooperation and partnership. And it requires active participation in the multilateral order.

These are not things we can do alone. And they are things which we cannot afford to leave to others.

Australia needs to assume, once again, its historical role as a creative middle power, born under Evatt’s leadership at the San Francisco conference to establish a charter for the United Nations in 1945. Always making a real contribution, lending a hand where it is needed, and with respect and admiration around the world. Punching above our weight. Ensuring that our voice is heard. Making a difference. Being part of the global solution. Not just being part of the global problem.

Labor believes that we should base our foreign policy on three strong pillars – our alliance with the United States, our membership of the United Nations and a policy of comprehensive engagement with the Asia-Pacific region.

Labor is a rock solid supporter of Australia’s alliance with the United States. Indeed, it was Labor who formed the alliance under John Curtin during World War Two. We believe that the United States has overwhelmingly been a force for good in the world, but we are not uncritical. We don’t believe that an alliance mandates automatic compliance with everything the United States does.

That is why, for example, we must all ensure all Australians are allowed the due process of the law.

In our wider region, Japan is one of our most important neighbours. Japan does not often figure in Australia’s foreign policy debate. Australia and Japan share many of the same strategic challenges and mutual objectives in the region.

I support greater security cooperation with Japan. In office, Labor will strengthen our counter terrorism and intelligence coordination with Japan and work towards establishing joint maritime and military exercises, in order to combat piracy and fight terrorism in our region. We note Japan’s role in Iraq and support the training of Japanese troops in Australia. Australia-Japan security cooperation is growing and strengthening, but these things take time. For example, there are good opportunities for greater cooperation in counterterrorism. Also in counter-disaster management. Also in regional cooperation on weapons of mass destruction proliferation and narcotics.

However, given our current strategic circumstances I don’t believe we should now be moving down the path of a formal defence pact between our two countries. To do so at this stage may unnecessarily tie our security interests to the vicissitudes of an unknown security policy future in North East Asia. Labor believes that for the foreseeable future it is better to enhance our cooperation and build our relationship around shared interests, and formalise these through a range of sub-treaty cooperative agreements.

Australia must re-embrace the tradition of active middle power multilateral diplomacy, particularly in our region – and I now want to discuss a few areas where we can make a difference.

Within this framework, we need to continue global action on nuclear nonproliferation. This need is urgent given India, Pakistan and North Korea have tested weapons in the past decade. Australia used to be a leader in this area. I want us to re-establish the Canberra Commission on the Elimination of Nuclear Weapons set up in 1995. But we should expand it to include all forms of weapons of mass destruction – chemical and biological – and give it a policy making, advocacy and diplomatic role. It could also help rebuild the collapsing consensus around the Nuclear Non-Proliferation Treaty (NPT). The Canberra Commission can be a vehicle for real progress on these issues and it will be our gift to the world.

As a global citizen we also have obligations to help those who are not so fortunate. The United Nations estimates that 2.8 billion people live on less than US two dollars a day – that is a shocking and shameful statistic. As a relatively wealthy and prosperous country, we have an obligation to work for the betterment of humankind wherever we can – to help alleviate poverty, to eradicate disease, to improve literacy, to reduce suffering and hardship, and to promote hope and opportunity.

We should not fulfil our citizenship of the world by sending just arms to fight, but rather sending aid to foster growth and development, and extend the hand of friendship. We should be a more proactive supporter of debt relief and coupling aid funds with social, economic and institutional reforms. We should also be looking at the underlying causes of poverty.

But sadly, our international aid commitment has fallen to its lowest level in over thirty years. Despite the government agreeing to the Millennium Development Goals in 2000, we have failed to follow it up with action plans and development programs targeted on the world’s poorest countries. We are being significantly outspent by George Bush, Tony Blair and other G8 countries. We can do much better than this – and we should.

Australia is, and can become, an even greater overwhelming force of for good in the world.

We should send not only our money, but also our people. In the spirit of John

F. Kennedy’s Peace Corps, we should send our best young minds, our most creative and innovative talent, with all the enthusiasm and promise which they can muster to contribute to the social and economic progress of the most disadvantaged nations. We should unleash the potential of the next generation of Australian youth and direct it towards where it is needed most – in the service of others.


In many ways, much of our success in Australia has been because of our global outlook. Opening our economy to the world and our borders to immigration has made us more prosperous.

Our engagement in world affairs has given us stronger security and fruitful trading partnerships.

To be successful in the future we need understand the challenges, to focus on the long-term and to work in partnership with the global and regional community of nations.

We will never be the richest country, or the largest, or the most powerful militarily, but we can play a constructive role in the world. We can extend the hand of friendship, we can advocate new ideas and new solutions to seemingly intractable problems, and we can send our best and brightest to help. We can make a difference.

Government doesn’t have all the answers, but government can make a difference. Just as international government can make a difference.

Most of these are inevitably political challenges with economic, social and environmental consequences. But as Charles de Gaulle once said that ‘Politics are too serious a matter to be left to the politicians.’ He was right – we need your help. We need The Global Foundation’s help. We must work with others and try to build a consensus on the challenges we face and how we deal with them.

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Malcolm Farnsworth
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