Press Conference

Hyatt Regency, Coolum

Friday, 3 August 2007

2 pm

SUBJECTS: APEC Finance Ministers’ Meeting; three ‘Es’ – economy, energy, environment

TREASURER:

Let me just wrap up this APEC Finance Ministers’ Meeting by highlighting a couple of the outcomes which I think will be very significant.  The first of course is the way in which we have managed to bring together the three ‘Es’ – the economy, energy and environment.  And to link them together because they are inextricably linked.  The economy of the Asia-Pacific region will not grow unless it can be assured of energy and the demands of energy are going to be enormous.  The demands on energy will put at risk environmental outcomes if they are not properly managed.  And for the first time at an APEC meeting we have put these issues on the agenda and we linked them.  And I think the delegates were very happy that it had been done in this way.  I don’t think they can be separated, I don’t think you can deal with climate change without realising the effect that it will have on an economy and you don’t deal with an economy without realising the necessity of energy.  And I think that was a major milestone, and to get a consensus here on the need to have an effective framework beyond the Kyoto Protocol under the UN Climate Process was very significant.

Secondly I think the way in which we are now managing fiscal risks, the way in which Australia has put this on the agenda including off-balance sheet liabilities and the necessity to deal properly with them through investment funds; Investment funds where Australia has in fact lead the world with our Future Fund and our Higher Education Endowment Fund, and we have a lot of relevant experience to share in relation to that.

And thirdly I’d highlight the interaction between the APEC Ministers and business,  particularly for getting better investment in this region.  And if we can develop some of these financial instruments that can mediate Asian savings and Asian investment, that will be a big step forward.

Having said all of that I think that the delegates themselves would say that this was a wonderful location to hold the forum. I want to thank the security agencies – the Queensland Police – for the work that they have done. They have done a first class job. I want to thank the APEC Secretariat, the Australian Treasury and also the Hyatt for the magnificent arrangements that were put in place and I am happy to answer any questions.

JOURNALIST:

How much (inaudible) cost?

TREASURER:

I don’t have the figures on that.

JOURNALIST:

Will you be releasing (inaudible)? 

TREASURER:

Well it is in the Budget, it has already been released.

JOURNALIST:

(inaudible) Coalition MPs have been lining up to get the same treatment in their electorates, will you support them if they ask?

TREASURER:

Well the situation in Devonport was a State Government closing a hospital and the Australian Government rescuing it.  Now, if there are other places where State Labor Governments start closing hospitals on people, I am sure that Coalition members will be lining up to seek assistance.

JOURNALIST:

What kind of involvement (inaudible)?  What was Treasury’s involvement in the decision?  Did they made a submission to Cabinet?

TREASURER:

No, this is a decision that has been made by the Government.  The Government makes these decisions.

JOURNALIST:

What do Treasury think of the decision?

TREASURER:

Well I am the Treasurer and I supported it.

JOURNALIST:

It’s effectively a $150 million boost for the local candidate there, given it’s going to cost about $45 million a year, do you see this as a money hole that you have opened up?

TREASURER:

No.

JOURNALIST:

Why not?

TREASURER:

Because I don’t.

JOURNALIST:

Treasurer, (inaudible) the APEC agreement (inaudible) carbon emission trading scheme?

TREASURER:

I think that one of the things that came out of the discussion was the trading schemes that are being set up should be set up with a view to being harmonised with other schemes so that they can have, eventually, regional and then global application.  And so to share our experience and to discuss for example with the Canadians the scheme that they are setting up, it will be a natural thing for Canada to extend their scheme eventually through the Americas, the United States and Mexico. I think that is their ambition.  I think in Australia if we could get engagement with some of the more local countries and then extend to the Americas and then possibly one day go globally. To move through the region and to the international stage would be an enormous step forward.  And so I do think it is important that as these schemes are put in place, they are put in place with a view to actually widening them and making them compatible with best international practice.

JOURNALIST:

Also, have you got comment on the AFR story today (inaudible)?

TREASURER:

No I haven’t.

JOURNALIST:

Treasurer, Lachlan Heyward from The Courier Mail.  The Russian Minister made some reference to the rather tight security, do you think that, are you concerned at all that the people of Sydney will be alienated by the really massive security that will happen when the APEC Leaders’ Meeting happens?

TREASURER:

When you have an international event you do have to ensure that leaders and ministers are protected.  And nothing is more detrimental to Australia’s reputation if you fail to do that.  Now, we are good international citizens.  We will need to offer Australia to host major international events and if we don’t do that then we wouldn’t be sharing our burden, taking our part in relation to world events.  We have shown we can do it with the Olympics, we can do it with the Commonwealth Games, we can do it with the G-20, we can do it with the APEC Leaders’ Forum.  Now, it will involve a little bit of dislocation and for that, we would ask for the patience of the people of Sydney.  But you can’t retreat from these things.  The idea that you could hold an APEC Leaders’ Summit in Seattle or in Yogyakarta or in Hanoi or in Wellington, New Zealand but you can’t do it in Australia – Australians would think that was madness.  They would think that Australia should be a good international citizen, that it should play its part. It will involve some dislocation.  But there are other countries around the world that have massive dislocation.  New York has the UN General Assembly every year.  Washington has the IMF meeting twice a year.  So it can be done and Australia will take its part.

JOURNALIST:

Treasurer just on that, are you aware of any problem that the Russian Minister had with security?

TREASURER:

No.  I don’t think he was referring to anything in particular.  I think it was a light-hearted comment.

JOURNALIST:

Secondly, on climate change and emissions trading following on what you were saying before, were you encouraged by the Chinese Minister’s endorsement of emissions trading with the path China should follow?

TREASURER:

I thought that was a real breakthrough to hear a Chinese Minister talk about a market mechanism for dealing with carbon emissions.  I have never heard that before and to me that was a real breakthrough.  When we put this on the agenda here we asked the Chinese whether they would make a presentation and Minister Jin flew through the night to come here to make that presentation yesterday morning. And it is the most advanced presentation that I have heard to date from the Chinese, who are really engaging in this issue.

JOURNALIST:

You described that as a breakthrough but the Prime Minister also wants to secure a breakthrough on climate change at APEC Leaders’ next month.  Have you stolen his thunder?  What else is there to do?

TREASURER:

There is plenty more to be done.  It was a breakthrough to get this up on the agenda, it was a breakthrough to deal with it by marrying it to the environment and the economy and energy – the three ‘E’ agenda – and we are seeing, you saw for yourself not just Australia engage in these issues but the United States, China. There we were we had the two largest emitters in the world, here they were in Australia discussing with us cooperation for carbon emission mechanisms.  And that is a pretty big step forward.

JOURNALIST:

Apparently Ross Garnaut has said that demand in China for our coal, etcetera, is going to last another 20 years but Kevin Rudd has no, that is not his opinion.  What is your opinion?

TREASURER:

Well, I think that the demand from Chinese growth will last a very long period of time.  What they will be looking for of course is clean coal technology.  And I think with the advent of clean coal technology, the use by China of coal will last decades because I think their economic growth has decades to run.

JOURNALIST:

Treasurer, can you explain a little more how you see the debate evolving over the next couple of months between the Leaders’ Summit and then the Bali UN meeting about climate change?  A lot of the other countries here seem to be placing a lot of emphasis on the Bali summit.

TREASURER:

As we agreed in our meeting, the world will need to establish an effective framework beyond the Kyoto Protocol.  And that framework will occur under UN processes.  You can’t have a global agreement out of APEC when APEC doesn’t cover the globe, obviously.  The globe is covered by the UN.  But what APEC has done here is in the framework of APEC and all of the associations of APEC it has brought the world’s two largest emitters together and made advances with them as part of the process.  And so I think we can go on from here, but the ultimate arrangements will have to bring those countries in but it will have to engage the whole world.

JOURNALIST:

(inaudible) Japanese newspaper Nikkei in Sydney.  Do you think that in Sydney in September leaders may lead to conclusions that we have clear targets to reduce emission gas or to clear conduct to create a trading system?

TREASURER:

I don’t think Sydney will set targets because as I have just said, this will be matters for individual countries and eventually in the post-Kyoto arrangements, international negotiation but I think what the Leaders will be able to do is they will be able to discuss these issues, look carefully at the mechanisms that can deal with them and talk about ways in which they could cooperate.  And I think you heard yourself the Chinese Minister talk about technology sharing – I think this is one area where Australia can really make a big impact.  We are putting a lot of money in to clean coal technology and if we are able to make breakthroughs there, if we are able to put that in place in a way that the Chinese can begin to use coal in a more clean manner, then I think this will be an energy supply which will power Chinese development for a long time to come.  Okay thanks.