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 37 08-51851 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 08-51851 38 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.