I would like to
congratulate Mr. d’Escoto Brockmann on his election
as President of the General Assembly at its sixty-third
session. The Australian delegation looks forward to
working closely with him throughout the session.
We gather together at a time of great challenge to
the international system — a challenge that reminds us
afresh that we live in a world where our
interdependence is now greater than at any time before,
an interdependence that therefore demands our
international cooperation now more than at any time
before.
There are many who criticize the United Nations.
And those of us who know this institution well know
that it is not immune to criticism. But those who argue
against this Organization advance no credible argument
as to what should replace it. Whatever its
imperfections, the United Nations represents a
necessary democracy of States — States who resolved,
out of the carnage of the last world war, that
cooperation should always be preferred to conflict, that
our national interests are invariably best served by the
simultaneous prosecution of the international interest,
and that the purposes of our common humanity should
prevail over the narrow interests of the few.
When the nations of the world met in San
Francisco in 1945, the United Nations was conceived
as a bold experiment — one that ran contrary to the
grain of the international order that had preceded it,
where conflict was the norm and cooperation the
exception; one in which the international community,
for the first time, began to imagine how through an
international institution we could not just protect the
sovereignty of States, but equally advance the
protection of peoples and the dignity of individuals.
Beyond that, we began to advance the idea that
through the other great international institutions — the
World Bank, the International Monetary Fund (IMF),
the General Agreement on Tariffs and Trade (GATT)
and the International Labour Organization (ILO) — we
could fashion an international economic order that
recognized the unfolding reality of economic
interdependence.
These were the ideals we set for ourselves more
than half a century ago. And while the history of our
achievements since then has been mixed, the ideas and
the ideals on which these institutions were constructed
nonetheless remain as valid now as they were back
then.
The failures that we have seen in recent times do
not lie in the institutions alone. The failure lies more in
the poverty of our political will to animate those
institutions to discharge the purposes for which they
were created. And that is our collective responsibility.
The global financial crisis of today presents us
afresh with a critical opportunity to act
comprehensively and collectively for the long term,
rather than selectively and separately for the short. In
the post-war period, the quantum of financial
institutional failure seen these last weeks has been
great. The quantum of government intervention in
financial markets has been significant. The quantum of
the impact by one market on another has been
unprecedented. What we have seen in financial markets
should bring home to us all that the central organizing
principle of this twenty-first century is interdependence.
For the century just past, interdependence may
have been one option among many. For the century that
is to come, there is no longer an alternative.
Interdependence is not the expression of sentimental
idealism. Instead, it is a recognition of the new realism
of our current times, which represents the cumulative
impact of the globalization of our engagement with
each other over many decades. Through unprecedented
trade flows, unprecedented investment flows and
unprecedented financial flows, we now see the
globalization of our economy; the globalization of
security, arising from the searing impact of
11 September when the obscenity visited on this great
city caused us all to conclude that terrorism was the
enemy of all civilized humanity, not just of some
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nations; and the globalization of the environment, as
we have come to recognize that carbon emissions from
one part of the planet affect all parts of the planet and
therefore radically affect the future of the planet itself.
What all these things tell us is this:
interdependence is the new realism of this twenty-first
century. And unless as a community of nations we rise
to this new challenge, our future is bleak indeed.
The global financial crisis is a call to the global
community to act. Financial markets are a public good.
The stability of global financial markets is a public
good. If Governments fail to protect this public good,
then those who suffer are the working people of the
world, whose jobs, whose homes and whose standard
of living depend on it.
It is Governments rather than speculators that
have the central responsibility for determining the rules
that govern the way markets work. A decade ago, the
global economy and global financial markets were
buffeted by the Asian financial crisis, and as a global
community we resolved that we would act to reduce
the risk of such systemic crises in the future. The
problem is, a decade on, that systemic lessons were not
learned.
Now we face a financial crisis of truly global
proportions. We must therefore ask ourselves three
questions: What went wrong? What needs to be done
now to fix the problem of financial market instability
for the long term? And most critically, how do we
marshal the political will to do so?
First, what went wrong? There has been a failure
of internal governance within financial institutions.
There has also been a failure of external oversight.
Regulators have not always recognized the systemic
risk posed by significant financial institutions.
So what must now be done?
The immediate task is to rebuild confidence in
the financial system by ensuring that central banks
provide adequate liquidity, by enabling the
recapitalization of critical financial institutions and by
ensuring their continued solvency. Over the longer
term, the challenge is to reform financial markets and
regulatory systems so as to reduce the chances of these
events repeating themselves in the future. To this end,
together with other States, we would argue that the
following reform programme be implemented.
First, systemically important financial institutions
should be licensed to operate in major economies only
under the condition that they make full disclosure and
analysis of balance sheet and off-balance sheet
exposures. Systemically important financial institutions
are not just commercial banks but can include
investment banks, insurance companies, hedge funds
and financial clearing houses.
Which institutions are systemically important will
vary in a given country over time. The central bank in
each country should have responsibility for the
stability of the financial system. That should be
embedded in globally agreed best-practice standards
for financial regulation and should be assessed by the
IMF.
Secondly, we need to ensure that banks and other
financial institutions build up capital in good times as a
buffer for bad times, using predictable rules.
Supervisory frameworks need to be countercyclical,
not pro-cyclical. The Basel rules need to address this.
Thirdly, financial institutions need to have a clear
incentive to promote responsible behaviour rather than
unrestrained greed. Regulators should set higher capital
requirements for financial firms that have executive
remuneration packages rewarding short-term returns or
excessive risk taking. Again, the Basel rules need to
address this.
Fourthly, supervisory systems must be compatible
with accounting principles that reflect reasonable
assessments of the value of assets over time. We need
to make sure that accounting rules foster a more
medium-term perspective and that they do not
encourage institutions to believe that risk is low merely
because current asset prices are high or recent asset-
price volatility has been low. The Basel rules also need
to address this.
Fifthly, the IMF should be given a strengthened
mandate for prudential analysis. Conservative and
consistent prudential standards should be applied to all
financial institutions of systemic significance.
Furthermore, the IMF and the Financial Stability
Forum should develop early warning systems that
signal impending institutional vulnerabilities and
provide advice on remedial policies. Collectively, those
institutions have led the development of the initiatives
that represent the core of the financial-market reform
agenda that I have just described. However, those
institutions are, by their very nature, bureaucratic, and
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the reform processes they initiate are constrained by a
lack of political authority.
That brings me to the third question arising from
the current crisis: how are we to go about
implementing this reform agenda for the long term?
What is required is political will, exercised
through ministerial forums working in cooperation
with the IMF, the Financial Stability Forum and the
Group of Twenty (G20). The G20 is well placed to
provide the political authority to have such actions
implemented urgently and comprehensively. In that
context, Australia will work intensively with the
forthcoming Chairs of the G20 — in particular the
United Kingdom in 2009 — to ensure that financial
stability is at the centre of the work programme and to
initiate arrangements to strengthen G20 input into
shaping the work of the IMF and the Financial Stability
Forum and the implementation of agreed outcomes.
At their meeting in November, the G20 finance
ministers should review the progress made in adopting
the current Financial Stability Forum
recommendations, reinforce the agreed deadlines for
finalizing their implementation and agree with the
Forum on a clear timetable for the action plan.
As countries with systemically important
economies, G20 members should demonstrate their
commitment to best-practice financial regulation and
disclosure by providing better information regarding
the stability of their domestic financial systems and
cross-border exposures to the IMF and the Financial
Stability Forum. The IMF and the Financial Stability
Forum should provide regular scenario analysis to the
G20 to facilitate clear engagement on the risks facing
the global financial system. Such analysis should be
included in an enhanced version of the IMF’s Global
Financial Stability Report.
The purpose of this reform agenda is to provide a
real political mandate for our international regulatory
institutions to do their job in defending the integrity of
the international financial system.
One of the greatest challenges we face is climate
change and the threat it poses to the environment. In
December last year, after many years of delay,
Australia ratified the Kyoto Protocol. We are
determined to be part of the solution to climate change,
not just a part of the problem. We have acted to begin
the process of developing a comprehensive emissions
trading or carbon pollution reduction scheme to bring
down carbon dioxide emissions over time. We will also
implement a national energy efficiency strategy as well
as a renewable energy strategy. Developing and
deploying new technologies will also be part of our
response to climate change.
The Australian Government has decided to
establish a global centre to drive the demonstration and
commercialization of carbon capture and storage
technologies. Building on existing national and
regional initiatives, that project will bring together the
best researchers in the world to develop the best
technology to apply. As the world at present is
planning to generate 45 per cent of its electricity from
coal by 2030, we can no longer afford to delay acting
on such technology. Australia invites all Governments
and corporations of goodwill to participate in the
Global Carbon Capture and Storage Institute.
The United Nations and we, its Member nations,
have a responsibility to protect the nations and peoples
of the world. We must protect people from terrorism,
and that must include a commitment to support those
nations on the front lines of the struggle. Australia is
working closely with the Government of Afghanistan
and with our global partners to bring security and
stability to that country. We can never again allow it to
become a haven for terrorists.
Australia is also an active contributor to global
efforts to prevent the spread of weapons of mass
destruction. We continue to urge nations to sign and
ratify the Comprehensive Nuclear-Test-Ban Treaty so
that it can enter into force.
We remain concerned that States such as Iran and
North Korea continue to defy the international
community and to fail to comply with demands for a
full declaration and accounting of their nuclear
programmes. Their actions are undermining the global
consensus on containment of the spread of nuclear
weapons.
This year, the Treaty on the Non-Proliferation of
Nuclear Weapons (NPT) celebrates its fortieth
anniversary. As a middle Power and a long-standing
member of the NPT, Australia is committed to working
with other nations towards the goal of the eventual
abolition of nuclear weapons. Australia, together with
our close friend and partner Japan, has established an
International Commission on Nuclear Non-Proliferation
and Disarmament to create the political and policy
39 08-51851
consensus necessary to elicit a real result on
non-proliferation and disarmament in advance of the
2010 NPT Review Conference.
The United Nations own security machinery must
also be effective. The Security Council needs reform.
Australia supports expansion of its permanent
membership to reflect changes in the world since 1945,
and our nation will be a candidate for a non-permanent
seat for the 2013-2014 term. Australia once again
wishes to play its part in advancing the international
security order.
Prosperity comes from economic growth. It
comes from nations trading with one another. That is
why it is so important that we conclude the Doha
Round of world trade talks this year. It is why we must
also implement the Millennium Development Goals,
consistent with our solemn commitment in this place at
the dawn of this millennium.
Progress in achieving the Goals has been mixed.
We need to redouble our efforts to reduce poverty, to
provide education for children and to ensure that
people in the developing world have access to health
care. Australia is committed to increasing its official
development assistance to 0.5 per cent of its gross
national income by 2015. Australia now resolves to do
much more — much, much more — to make poverty
history. It is unforgivable that poverty and conflict,
such as those in Darfur, continue to claim the lives of
innocents in the face of inaction by Governments.
Development is also about protecting human
rights. Sixty years ago, this body adopted the Universal
Declaration of Human Rights. We must commit afresh
to protecting the rights that that charter identifies.
As nations, we should also commit afresh to
righting past wrongs. In Australia, we began that
recently with the first Australians, who have the oldest
continuing culture in human history. This year, on
behalf of the Australian Parliament, I offered an
apology to Indigenous Australians for the wrongs that
they had suffered in the past. That was the right thing
for Australia to do.
Our membership in the United Nations is a key
pillar of our foreign policy. Our priorities are regional,
but our interests are global. We work with partners
around the world to meet shared challenges. Through
our membership in the United Nations, we are
committed to using creative middle-Power diplomacy
to help overcome the great challenges of our age —
challenges that are beyond the power of individual
nation-States to resolve, that can be overcome only
through unprecedented cooperation between States.
That is because the problems that we seek to solve in
this Hall and through the organs of the United Nations
touch every one of our peoples. To advance prosperity
and stability at home, we must advance prosperity and
stability around the globe.
Australia was one of the founding Members of
the United Nations. Our Foreign Minister at the time,
Herbert Evatt, made a significant contribution at the
San Francisco Conference, particularly on the part of
small and medium-sized countries. He ensured that the
role of the General Assembly was protected in the
structure of the Organization as a whole.
Sixty years ago this week, he was elected
President of the General Assembly at its third session.
Evatt was a patriotic Australian. Evatt was equally a
passionate internationalist. Sixty years later, this
institution, together with other international institutions
of our current order, have yet to realize the vision of
those who founded it. Yet the need today, in this age of
unprecedented global interdependence, is greater than
ever before.
And so it falls to this generation to now summon
the political faith and to exercise the political will
necessary to act for the common purposes of the planet
we all share.