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COAG Meets In Shadow Of Global Financial Crisis

The Council of Australian Governments met in Perth today. It was the first meeting since the election of the Rudd Government which included a Liberal Premier, Colin Barnett, from Western Australia.

A statement issued after the meeting said: “COAG agreed that the present unprecedented upheaval in global financial markets and renewed international scrutiny of their regulation underlines the importance of pressing forward with the COAG reform agenda to enhance the productive capacity and flexibility of the Australian economy. Building on its agreement in July 2008, COAG endorsed an implementation plan to strengthen the Australian financial services and credit regulation framework.”

  • Listen to the COAG press conference (34m) – transcript below

Official text of the COAG Communique:

This is the transcript of the COAG press conference.

RUDD: The Council of Australian Governments meets at a time of global financial crisis. And it’s times like this that a crisis affects all Governments, Commonwealth, the States, Territories. And therefore it’s time when all Governments must cooperate in Australia’s national economic interest.

I am pleased to report today that the Governments of this Australian Federation have done just that – cooperating in practical areas such as how do we advance our regulatory arrangements in Australia to make it easier for businesses to function. How do we bring about uniform areas of national credit regulation at a time when regulation of credit markets is under particular national and international scrutiny? And also working together on how we build the nation through infrastructure projects for the future?

The Council of Australian Governments today has agreed to implement a plan for the regulation of remaining areas of consumer credit. This follows COAG’s decision that the Commonwealth would assume responsibility for the regulation of mortgages, mortgage broking, margin lending and all remaining areas of consumer credit such as payday lending and financial counselling services.

The implementation plan that we have adopted is a timeline for the transfer of these responsibilities to the Commonwealth by June 2009. This is a major reform in an area which has been crying out for reform for a long, long time and necessary at times like this.

Secondly, the Council of Australian Governments has also debated today the need for infrastructure reform and to engage in a program of nation building for the future. On infrastructure reform one of the challenges that we have faced in the past is the absence of nationally consistent private public partnership guidelines for the nation.

COAG agreed today that we will have as a nation such nationally consistent guidelines and we have agreed that those guidelines will be adopted by year’s end. Furthermore on the question of our nation’s infrastructure needs for the future, we discussed the role of Infrastructure Australia, the role of the Building Australia Fund which were announced in the Commonwealth’s most recent Budget.

Earlier the Council of Australian Governments has agreed that by year’s end Infrastructure Australia would conclude its audit of Australia’s infrastructure needs and that its first COAG meeting of next year, that is March next year, that COAG would then examine in infrastructure priority list for the nation.

What the Commonwealth has decided to do is to have infrastructure Australia provide an early report on both of these matters – that is the infrastructure assessment of the nation, the audit, as well as infrastructure priorities – and for this now to be done by year’s end. This program of work has been advanced.

We believe this is important because of the outstanding infrastructure needs of the nation, both in our cities and in our rural and regional areas and we intend to get on with the job. This Government, the Australian Government has for the first time in many, many decades decided to take a leading role, an active role, a partnership role in laying out the nation’s future infrastructure and we intend to do so in close collaboration with the States. Also the decision we have taken to have nationally consistent private public partnership guidelines will help the private sector be partners with us into the future as well.

On another matter the Council of Australian Governments has also looked at the importance of bringing in a national energy efficiency strategy and we have agreed to set ourselves the object of having such a national energy efficiency in place by year’s end.

This is important, always referred to in the public debate as the low hanging fruit of the climate change agenda, the best way, the most effective way and the earliest way of bringing down greenhouse gas emissions and we intend to do so. Our objective is to have that national energy efficiency strategy agreed by year’s end.

We have also agreed as Commonwealth, States and Territories to the establishment of the National Curriculum Board as a statutory authority under Commonwealth legislation, accountable to all Australian Governments. And we have also decided through that legislation to bring together the functions of national curriculum, assessment and data management, analysis and reporting at a national level.

We believe this is an important part of the nation’s quality education agenda and I look forward to continuing partnership with the States and Territories in this important area of reform.

We also as a Council of Australian Governments today dealt at length with the requirements that have been put to us in the overall area of child protection.

The Council of Australian Governments has agreed to develop a new protocol for information sharing between Centrelink and child protection agencies and to include Centrelink in the national child protection alert system by the end of 2008.

Leaders also agreed in principle to a framework for an inter-jurisdictional exchange of criminal history information for screening of people working with children and we will continue to implement that agenda.

Finally, we had a discussion about closing the gap and the challenges of Indigenous Australia. And this grew out in part of a conversation I had in part with the newly elected Premier of Western Australia, Colin Barnett, last night.

And that is, how we take this practical area of reform into the future.

And what we’ve agreed, as Premiers and Chief Ministers, and as the Prime Minister of the country, is to hold a dedicated Council of Australian Governments meeting on the practical challenge of closing the gap. The objective, an integrated national strategy to do this, harnessing the different experiences of the states and territories in practical areas of reform that have worked. Candidly acknowledging those things which haven’t worked. And incorporating in this new national strategy the input of the private and community sector as well.

Private schools and boarding schools, sporting clubs, sporting organisations such as we’ve seen here in Western Australian through the Clontarf Academy. As well as private sector generated employment initiatives such as that which is currently being advanced by Mr Andrew Forrest.

This will be an important meeting, and we intend to be well prepared for it.

Finally, we’ve agreed to bring forward the next Council of Australian Governments meeting. Originally scheduled for December, we intend to get cracking. It’ll be held on the 17th of November, and that meeting will bring together the practical work which the Commonwealth and the States have been working on all year on the future reform agenda for health, hospitals, education and the critical areas of future funding reform in the service areas so important to Australia’s working families.

I might turn now to our host, the Premier of Western Australia, and then to the Premier of Victoria.

PREMIER BARNETT: Thank you Prime Minister, and might I first thank you and my fellow Premiers and Chief Ministers for visiting Western Australia for this COAG meeting.

I, as you can understand, was absolutely delighted to be here. I didn’t think I would, but here I am.

It was a good meeting. A number of those issues that have been before COAG for some time have obviously progressed further. It provided, for myself, an opportunity to not only meet the Prime Minister, but also the others at the table and to get to know them a little.

It also provided an opportunity for me to speak to the Prime Minister at length about some of the issues for Western Australia, and some of the aspirtations the new State Government has and some of the major projects for the future in this state.

I was particularly pleased that the decision has been made to have a special COAG meeting with respect to closing the gap, and issues to deal with Indigenous people in Australia.

Australia is a very prosperous, successful economy and nation, however not for all people. And addressing that area of social injustice I hope will prove to be the crowning achievement of this particular COAG meeting. A lot of work to be done, a complex and difficult issue, but it’s one that rises above the interests of party politics, and it’s one that rises above the interests of different governments. And I was excited, Prime Minister, I think there was a genuine desire across all the meeting today that we have to take on that responsibility.

RUDD: Thanks very much, Colin.

If I could now turn to John as the Chairman of the Council of the Australian Federation to add his remarks, then invite any other Premiers or Chief Ministers who so wish before taking your questions. Over to you, John.

PREMIER BRUMBY: Thank you, Kevin.

I think we had an excellent meeting today from the perspective of the States and Territories. I think it was another great example of Governments working together as the Prime Minister has said before, ending the blame game and getting on with the job of working together to do what is right in the national interest.

We had a long discussion today about the global financial crisis, the world economy, and Australia’s response to that.

It is, of course, important to reiterate that the fundamentals in Australia, as they are in each of the states, are particularly good. We are in a much better position than most other governments around the world.

But I was particularly pleased out of today’s discussion that the Infrastructure Australia will now be providing their interim report on priority projects in December. This will enable us to have a good look at all of the capital projects that were under consideration, and I guess, if you wanted to summarise this approach, it’s really how we fast track what is a very big infrastructure commitment by the Federal Government.

And that commitment will enable the Commonwealth and the States to work together to get cracking to bring major infrastructure projects online earlier than would otherwise would have been the case.

As the Prime Minister has said, we also agreed further significant regulation reforms today, cutting red tape. That was a feature of the last COAG. And again in the context of the global economic conditions, helping businesses reduce red tape, seamless national business regulation, helping them get on with the job, is one of the most important things we can do.

The Prime Minister referred to a national approach to public private partnerships, that’s something which certainly we’ve been seeking in Victoria for some time. We made good progress today and we’ll have the final guidelines complete by the November 17 meeting.

In terms of Governments working together, child protection, the exchange of information through Centrelink. Centrelink, in a sense has been the missing link in the information chain in the past and having Centrelink now providing that information will assist in the way in which the states manage child protection.

We also agreed today to a national approach on emergency warning systems. This is something which again the states and particularly Victoria have been pursuing in this era of climate change, one thing we can be sure about is that we’re going to see more climatic conditions and circumstances more climatic events which create emergency situations.

So whether it’s thunderstorms, whether it’s bushfires, whether it’s wind events, in so having the best possible emergency warning information system in place across Australia, will be a good thing in terms of protecting citizens across the country. And so we’ve agreed on a full report back by the end of 2008 on that issue so that we can progress it going further.

We also agreed a national approach of course to hazardous chemicals.

The Prime Minister has mentioned climate change. We agreed on the national approach to energy efficiency. We had a very positive discussion about carbon, capture, storage and the critical role that Australian Governments can play in leading the world in carbon capture storage.

And if you think of countries internationally like China, in 20 years time China’s economy will be four times bigger than it is today and they will still be generating something like 60 per cent of all of their electricity from coal.

And so tackling the global carbon issue, carbon capture storage, is a fundamental role for Australia to play. We are a leader and the initiative recently announced by the Prime Minister will help us go a long way towards doing that.

Finally, can I say again, another great example in the climate change area, I think in Governments working together. We’ve agreed today on more regular reporting in relation to the Murray-Darling Basin. More regular reporting of progress in terms of projects. And this is important. In the last year we’ve seen very strong levels of water trading, and that’s a positive thing which is occurring in the Basin. We’ve also seen significant works occurring in terms of water saving infrastructure, delivering water for the environment. And what we agreed today was regular reporting back through COAG of the success of those investments in terms of releasing water for the environment and particularly the Murray system.

Finally, in relation to the next meeting, November 17, for the states this is a significant meeting. Getting an agreement on the major SPPs, and on national partnership agreements at that meeting, particularly the healthcare agreement.

I know we said at the first COAG meeting in Melbourne last year in December that we will take a year to get the Australian Healthcare Agreement right, if we can do that by November 17, I think that will be just a stunning example of the Federal Government and the States working together in the interests of those who use our health system across Australia. And so that will be a significant focus of that November 17 meeting.

And of course, as Colin has said too, we discussed today closing the gap. And the focus next year with a specific COAG meeting on closing the gap will also be, I think, a very concrete example of governments working together.

JOURNALIST: How are you and Government leaders planning to cushion the effects on all Australians of the global financial crisis. Why doesn’t the public have a right to expect the banks do what Malcolm Turnbull said to do and pass on all the next interest rate cuts?

RUDD: The first that we have as responsibility in Government is to ensure strength of the Australian economy and the strength and stability of the Australian financial system.

This is fundamental. It is fundamental to everything and what has been pleasing and good about the discussion with colleagues today is their collective commitment for everyone to do their part.

Part of the future lies in the confidence which comes also to the nation through an integrated program of nation building, investment in infrastructure, investment in economic infrastructure and I don’t know a single Premier or a Chief Minister around this table who couldn’t identify for me immediately two of three major infrastructure needs in their respective States or Territories which need investment.

We are a nation committed to infrastructure, we are a Government committed to nation building and I think that is going to be very important part of our economic message to the nation in these globally unsettling times.

And the second part of your questions Geoff, it goes to the stability of the financial system. You have got two alternatives here.

One is you can respond to the advice of the financial regulators and the Reserve Bank has as early as last week was saying that the cost of capital for our lending institutions has been directly affected by the global financial crisis and you can respond to that. That’s why we have said that we want to see a maximum pass through of any reduction in official interest rates to consumers. But we also want to make sure that we maintain the stability of the Australian financial system consistent with the advice of the regulators.

So either you can act responsibly in response to the advice of the regulators or you can choose to play short term populist politics.

The Government that I lead will take the hard decisions in the interests of the long term stability of our country’s financial system. Now if that’s politically unpopular on the way through so be it. It is the right thing to do.

JOURNALIST: (inaudible)

RUDD: The challenge is also to look 3, 6, 9, 12 months ahead. We still do not know for example what will happen with the passage of the proposal which is currently before the United States congress. This morning Australian time and very early Perth time, I was speaking to the House Majority Leader in the United States, Steny Hoyer, who is a bloke I have gotten to know in recent times, about how the legislation will progress through the House of Representatives.

We are still up for a debate in the United States. It is tough, it is tough politically. I certainly put to him the view of a friend and ally of United States of the importance of both Houses of Congress to pass an important measure to stabilise an important financial system, there and therefore globally.

What I am saying to you is, we do not know, the final detail of the passage of that proposal of the United States Congress. We do not know its long term impact. And therefore the prudent course of action is to be looking ahead 3, 6, 9, 12 months later and to ensure that we are responding intelligently and appropriately to the advice of the regulators and as I said as late as last week who were advising us about the cost of capital for Australian institutions now and into the future and to make appropriate and sensible preparations for that. My responsibility is to do everything sensible to maintain the stability of the Australian financial system and I intend to do so.

JOURNALIST: The Premiers all came here today to say that they would like to see fast tracking of your infrastructure funding. You went to the election with some very clear policies about process involved (inaudible). Can you guarantee that even though you bought forward this schedules that those standards will stay in place?

RUDD: Absolutely. And the reason is that Infrastructure Australia has been established under national legislation with an advisory broad and for the purposes of exercising complete probity of analysis, cost benefit analysis of every infrastructure proposal put to it.

Why? It is taxpayers’ money and it is expensive. It is a lot of money and we only intend to use this money wisely investing and dealing with the infrastructure bottlenecks of the future.

Bringing forward an interim report is an important measure. But you know something it will not lead in any way to any compromise to the processes associated with Infrastructure Australia.

Projects will be considered on their merits and will be subject to the due diligence of Infrastructure Australia.

JOURNALIST: (inaudible)

RUDD: No, laudable as it is, not maybe Matthew.

JOURNALIST: (inaudible)

RUDD: You know something the job of politics is to get it right at both levels. The Premiers and Chief Ministers have been making good and strong points about the nation building challenges which we face and particularly at this time of stresses in the global economy.

The same time you can deal intelligently and flexibly in response while not compromising in the integrity of your assessment process.

This is a lot of taxpayers’ money we are talking about $20 billion. It is not going to be thrown up against the wall, let me tell you. It is going to be used wisely, and therefore that is the process we have invested in.

JOURNALIST: (inaudible)

BLIGH: You would get at least 8 arguments on that.

BRUMBY: There are a lot of engine rooms around the place.

RUDD: Well some 4 cylinders, some 6, anyway (inaudible). Can I say I have said every time I’ve come to the West, and I say this as a loyal son of the great state of Queensland, is the figures speak for themselves in the West. In mean in West about a third of the nation’s exports come from here. Am I right Colin?

BARNETT: A little more.

RUDD: Thank you for that.

And therefore the commands respect. I have said when I was Leader of the Opposition, I have said so as Prime Minister, and I have been many, many times in the last 18 months that the national Government needs to invest more in this State’s infrastructure needs into the future. Why? It is in the national interest to do so.

So much of the country’s wealth comes out of this State. But for the other parts of the country which we will respond to in national interest terms, infrastructure needs are far, wide and broad. The challenge is to get it right. We discussed today the scope of the Building Australia Fund. Our initial investment is $20 billion and subject to future budgets we will be investing in more. We intend to be long term partners with the States and Territories in nation building.

You know it was a term which sort of became unfashionable for a while. We are about to bring it right back into fashion, it is the right thing to do.

JOURNALIST: (inaudible) there could be a $10 billion impact on the upcoming budget because of the financial crisis. Those figures, is that true?

RUDD: That was in the Oz, it was on the front page. I have said before at press conferences in Canberra, is that if you have got a global financial crisis and it has been unfolding for some time it is going to global economic growth to be ratcheted back. That’s true, it’s both attested to by the IMF and by the World Bank and by others and that has therefore led to revised growth projections for Australia. That means revenues (inaudible) be down as well. That is clear. On the quantum we are working our way through that.

And when the numbers are good and ready, I am sure you will be maybe not the first to know, but I am sure you will know soon after that.

JOURNALIST: Mr Barnett your first COAG, the only Liberal Premier. (Inaudible) infrastructure (inaudible) are things moving fast enough as far as you’re concerned?

BARNETT: Well I was happy with yesterday and today’s discussions as I said, particularly with the Prime Minister. Western Australian will be putting in a revised submission on what we believe are in this state’s and the nations best interest. And we’ll endeavour to get that to Canberra within the next two to three weeks.

JOURNALIST: (inaudible) Mr Brumby are you concerned that the impact of the financial crisis (inaudible) will be that impact on PPPs and the ability to secure finance from the private sector, and if that happens, will the Commonwealth money be enough to bridge that gap?

BRUMBY: Well, what I’ve said about that is the global financial conditions will make it a more difficult environment for PPPs than would otherwise have been the case. Nevertheless, I expect that there will be a significant number of PPPs in Victoria and across Australia that will be fully funded over the next few years.

But what I’ve said more generally, and what has been echoed today in the discussions we’ve had and in the communiqué, is that in the current environment, where there will be less available credit around the world for capital projects there is a bigger and more important role for Government.

And that’s what we discussed today, and I couldn’t have been happier with the discussions we had today. The fact that subject, of course, and fully consistent with proper processes as the PM has said, we’re going to see the interim report from Infrastructure Australia. That will mean more money for more capital works can hit the ground sooner than would otherwise have been the case. And that’s exactly what we need in terms of stimulating activity and maintaining strong economic conditions going forward.

So I think the steps we’ve taken, plus the agreement today on national PPP guidelines, is exactly the right thing for governments to be doing, and will create that better investment environment, albeit a more difficult environment than it was three months or three years ago.

JOURNALIST: (inaudible) do you now think our economy needs the shot in the arm that big government infrastructure spending will give it (inaudible)

RUDD: The nation has for a long time needed infrastructure bottlenecks to be dealt with. The Reserve Bank has been saying that for a long time. As I’ve said repeatedly in parliament in Canberra, there has been up to 20 warnings about infrastructure bottlenecks across the nation. That is a continuing need.

What I’ve also said in recent times, and again in the parliament in Canberra, is that what’s our response to the global financial crisis? One, maintaining a policy of a strong financial management through a strong Budget surplus to provide us with a buffer for the future. But two, through that also to implement our long term strategy of nation building – a $76 billion plan for nation building. I’ve said that before and I’ll say it again.

These two needs are entirely compatible. And, I’m determined to get on with the job. And it’s been a good discussion with the Premiers and Chief Ministers today on that.

RANN: Can I just take that question from the other states, to say that infrastructure. I mean let’s just remember, and I’ve been at COAG meetings now for more than six and a half years, the previous Federal Government wasn’t in the game of infrastructure. In fact, we’ve already seen a role out of significant infrastructure in relation to the River Murray’s needs and the re-engineering of the river. And I think what we’re talking about now is a real commitment. I mean, my state has doubled the infrastructure spend and with PPPs which we’ve committed to, effectively tripling the infrastructure spend. In the past, we’ve had state governments that were spending more on infrastructure than the entire Federal Government, so we welcome what is happening with infrastructure now. We welcome the fact that we’re going to get a report by the end of this year so we can get cracking.

But it’s in stark contrast to what we’ve had over the last six and a half years, or twelve years, where infrastructure couldn’t be discussed at COAG meetings.

JOURNALIST: (inaudible)

RUDD: No, what you’ll see in the communiqué today and I’m sorry it is not ready for you, and I went through a summary of what we did today which was not comprehensive it’s partial. One of the things that we’ve done today, and people have actively contributed to this, is the new intergovernmental agreement on early childhood education for indigenous Australians.

That’s consistent with a commitment that I gave as Prime Minister at the time of the national apology about closing the gap.

That’s led to detailed work with the states and territories over the last several months which has brought together that intergovernmental agreement which I’ve signed today, or I’m about to sign today, but the communiqué will go through that.

Colin Barnett though in a discussion with me last night and again in comments this morning, triggered some thinking on my part about how do we take that part of closing the gap into, frankly a much broader national agenda. And that is, states, territories and the private and community sector marching to the beat of the same drum on a complete response to the challenge of indigenous Australia. And that will be informed, also, by the report that we’ll receive soon on the experience of the NT intervention.

JOURNALIST: Another major problem facing us all is the price of petrol (inaudible).

RUDD: We’ll sort that through really quickly – I wouldn’t worry too much about that. The key thing is having someone in the saddle. We’ve got one. In contrast to previous administrations when no such entity existed. This is right, it helps, it helps in terms of maximising consumer power together with other measures. And while we’re here in Western Australia, I draw attention to the fact that FuelWatch has operated successfully in this state since the year 2000 I think, Colin, 2001, introduced by the then Liberal Government. We sought to do that nationally, as you know.

These are all measures designed to increase consumer power in what is a very difficult cost burden for families across the country, and that is the price of petrol.

JOURNALIST: (Inaudible)

RUDD: I’m a big fan of the LNG industry, always have been, always will be. I’ve seen a lot of their projects, and it’s exciting to see what’s happened on the North-West Shelf and where it can all go to into the future.

Second point, though, is on the specific impact of the Carbon Pollution Reduction Scheme on LNG, as I’ve said already, we’ll sort through in our consultations with industry, precisely how LNG and other industries will be dealt with – strongly affected industries, emissions intensive trade exposed sectors of the economy. This is a very comprehensive exercise that the Commonwealth is engaged in at the moment. It’s not easy, it’s hard, it’s complicated. But you know something, it’s necessary to do in the national interest and we are being thorough about it. And I draw your attention to the most recent report by Ross Garnaut, which again continues to inform the debate.

I think we’d better zip, folks, because I know a few of the colleagues have got to start zipping themselves to other parts of the country.

Thank you, thanks very much.

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Malcolm Farnsworth
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