Bruce Baird (Cook, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Would the Treasurer advise the House of outcomes from the recent G8 summit in St Petersburg? What progress is being made to reform global financial institutions?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Cook for his question. The G8 finance ministers met in St Petersburg over the weekend.

Opposition Member:

An opposition member interjecting—

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

There were not many socialists. The Russians are much more pro-enterprise than the Australian Labor Party, I can tell you. One of the things the Russians want to do is to promote private enterprise and flexible wage bargaining. If I were the member for Lilley, I would not head for Russia; Cuba is more your bag, my friend. To go back to St Petersburg, the G7 finance ministers represent the developed economies of the world. Together with Russia they represent the G8. The G8 finance ministers met in St Petersburg over the weekend and had two topics of conversation, principally. The first was good governance in public finance, on which Australia was asked to lead the discussion. None of the G8 countries has a history of budget surpluses that matches Australia’s and none of them has retired all of their net debt. Australia’s experience was considered of sufficient interest for Australia to be asked to lead the discussion in St Petersburg.

Finance ministers from the developed economies of the world were particularly interested in intergenerational reporting, something else which Australia pioneered with our first Intergenerational report in 2002, and our Charter of Budget Honesty, which provides for accounting against external standards and also statements of sensitivities and risks. The G8 ministers noted in their communique the importance of good governance in public finance and pledged to work at an international level to improve standards both for developed and developing economies.

The second topic of discussion amongst the G8 ministers in St Petersburg this weekend concerned the topic of energy security, which is of interest to all countries around the globe. Russia, of course, is a massive oil exporter, but, to various degrees, the G7 countries are net oil importers. All the G7 countries are struggling with high gasoline or petrol prices. A discussion took place in relation to the measures which could be taken on a global scale to improve prices for consumers and to take the risk out of the global economy which high gasoline or petrol prices represent.

It was agreed between the ministers that facilitating further private investment, both from consuming and producing countries in the oil business, was very important. For many of the large oil producers of the world this will mean liberalising foreign investment regimes, giving certainty of title and allowing technical expertise to be brought in to increase the take from fields which hitherto may have been thought unproductive or uneconomic but which can be returned to, as well as investment in new fields. Ministers agreed that, whilst not without its risks, the outlook for the global economy remains a positive one, particularly whilst the industrialisation which is occurring in China continues to lead global growth. They noted the importance of keeping a watch on inflation and of being vigilant to any inflationary price movements that might get into the general economy as a second-round effect from oil prices or finance.

Australia is not a member of the G8. It is the first time we have ever been invited to a G8 summit. This was an invitation which was extended to Australia principally so that it could share its experience in relation to good governance in public finance. But Australia is also chairing the group of developed and developing nations known as the G20. The annual conference of that group will be held in Melbourne, Australia, in November. It has become an important forum for the reform of the IMF and the World Bank. The managing director of the IMF is visiting Australia today and tomorrow. Our discussions will continue on making those global financial institutions more representative, particularly of the growing Asian economies, and more accountable to national governments for the work they do. I expect that these will be positive discussions with positive progress to be reported in the course of this year.