“Greetings to fellow heads of government, distinguished guests, ladies and gentlemen. And thank you to Dr. Kaul and the Commonwealth Business Council for the opportunity to address this outstanding gathering of global business and government leaders.
“It’s a pleasure to be back in Australia - for a second time as Canada’s Prime Minister. In 2007, I attended the APEC summit in Sydney and addressed a joint session of the Australian Parliament in Canberra.
“But this is my first visit to Western Australia. As a Canadian from our country’s West, there is much here that seems familiar: vast open spaces, a wealth of energy and natural resources, strong economic performance, and excellent prospects within our respective federations.
“So frankly, before I ever left Canada, I expected to feel at home here … and I do. And of course, it’s good to be here with other Commonwealth leaders.
“The Government of Canada attaches great significance to the Commonwealth. In 1931, Canada, like Australia, was a founding member. We had, of course, been included because of a common heritage – our emergence as sovereign dominions from the British Empire.
“But the Commonwealth has become about more than just a common history. Rather, it has embodied and has articulated the common values that flow from that history: principles, such as freedom, democracy, human rights and the rule of law.
“The common inheritance of countries – from every part of the world – that trace their constitutional development back to the Magna Carta and the Westminster system of responsible government.
“Principles, we believe of universal application.
“Yet sadly, in today’s troubled world, still not of universal acceptance. The Commonwealth then, is a noble aspiration. To be sure, in the 80 years since it was established, the issues have changed.
“Nevertheless, the ultimate measure of this institution’s value going forward will remain the commitment asked of all member governments to the elevation of human dignity and liberty for all their citizens.
“In the next few days, it is my strong hope, that the Commonwealth shall reaffirm, and reinvigorate, this great purpose.
“Now, ladies and gentlemen, I don’t have to tell you that much has changed during the four years since my last visit to Australia. Biggest of them all, the global economy has endured its first truly global crisis.
“Indeed, it has endured the worst financial crisis and recession since the 1930s; it ruined venerable banks; it battered established currencies; it shook governments to their core; and it triggered aftershocks and repercussions with which we must still contend.
“Canada, and Australia it must be said, have weathered it all better than most. Our financial institutions, our household sector and our government balance sheets entered the crisis in positions of strength. These lessened the recession’s impact and gave us more and better options to deal with it.
“In Canada, we took prompt, effective action to stimulate our economy. We also turned our attention early on to medium-term plans to protect our public finances and to return to balanced budgets.
“Canada will meet G-20 fiscal targets next year, well ahead of schedule. We have already largely wrapped up the measures of 2008-2009 and are moving to the Next Phase of Canada’s Economic Action Plan – a long-term, pro-growth and jobs agenda.
“And job creation is healthy. We have created more than 650,000 jobs since July 2009. As a result, Canada is one of only two G-8 countries that have more people working now than before the 2008 recession.
“Canada is also a country that, due to a range of policies, was just declared by Forbes magazine to be the best country in the world for business. I recall, by the way, that Euromoney magazine this year named Australian Treasurer Wayne Swann the World’s Best Treasurer. Give him a hand.
“I do have to point out, however, that Canada’s own Finance Minister, Jim Flaherty, won the title two years before Wayne. So we still think Jim is the best! And, in a few words, what Jim has been trying to do, and has in fact been doing very well, is to find the right balance between supporting Canadians through stimulating jobs and growth, while still reducing our deficit in a responsible manner.
“So it has gone, I think, as well as it could for us. But even with all that, the 2008 recession and since has been a tough ride down the rapids. And that leads me to my main subject: The challenges that face us as we approach the G-20 Summit in Cannes, France in about one week. And the very real risk, if appropriate and timely decisions are not made, of a second round of global recession.
“I speak, of course, of the European debt crisis. Of course, the European situation is not the global economy’s only problem. Nor has it been the central cause of the challenges the world has faced over the past three years. But it is the most immediate and imminent threat to the global recovery.
“In effect, because of the integration of their financial systems and a common currency, what started as a sovereign debt crisis in some peripheral European countries has come to pose grave risks to the larger European financial sector. And, with the uncertainty and fear it is now generating, the European crisis has become a problem with the capacity to quickly erode three years of a fragile recovery.
“I will not go into the details of what a solution should look like. The outlines of such have been evident for some time – for quite some time in fact. Indeed, EU Commission President Barroso, And others, have articulated them.
“What we are awaiting is something big enough in terms of scale and decisive enough in terms of sacrifice, that markets will be convinced the problem is being tackled and the pain is being accepted. Only then, will fear subside and confidence be restored.
“More must be done, as you say here, than merely kicking the ball into touch. There is still time for all that, but not much.That being so, there are grounds for cautious optimism in the latest news from Europe. Obviously, the situation is still evolving. However, I see as positive steps, the actions taken by our European friends just a few hours ago.
“I am encouraged to learn of the agreement to recapitalize European banks and the announced intention to leverage the European financial stability fund, and lighten the burden of Greece’s debt.
“These are steps in the right direction. Progress has genuinely been made. Of course, we still await the elaboration of further details and successful implementation, as we approach the G-20 summit.
“Beyond that, our G-20 Summit faces four principal tasks, in many ways the same tasks we have always had: first, appropriate macroeconomic policy coordination, especially in the area of fiscal policy; second, regulation of the financial sector; third, international trade policy; and, finally, dealing with global imbalances.
“The first is, of course, a more difficult situation than the G-20 faced in 2008. Back then, the obvious thing for all participants to do was a large and rapid effort at fiscal stimulus. Countries like Canada and Australia still retain fiscal flexibility, but underlying the European crisis today, is the reality that the path of budget deficits and national debt in many advanced countries has become, quite simply, unsustainable. The Eurozone is being forced to face this in a very hard way.
“The British, on the other hand have been getting on with the job before a crisis. For others, including the United States, credible, mid-term strategies are still necessary.
“We still believe that the clear and concrete medium-term debt and deficit reduction targets, to which all countries pledged themselves in Toronto last year, remain a good starting point for future G-20 efforts.
“Second, the G-20 must reaffirm its unequivocal pledge to the full and timely implementation of the financial-sector reform agenda that was agreed to in previous summits. This is an area where the G-20 has made a real contribution and real progress. But there remains significant work to do on Basel III and its implementations.
“Third, the G-20 must continue to work to promote global trade. Our success, thus far, of avoiding a systemic growth of protectionism around the world has been key to not repeating what happened in the 1930s. We could, however, be more ambitious. If the multilateral, global trade agenda could be pushed forward, if the G-20 could truly become the standard-bearer for free trade, that would be far superior than merely avoiding global protectionism.
“Fourth, and finally, we need over time to make real progress on the global framework for strong, sustainable and balanced growth that was first outlined in Pittsburgh.
“If I can take an example, to be frank, it will not be indefinitely sustainable for an economy as large as China to run large surpluses with inflexible exchange rates.
“The resulting deficits elsewhere lead, in fact in some cases are already leading, to suboptimal policies and, if left unresolved, will eventually and inevitably lead to bad policies, like protectionism.
“To be clear, these imbalances aren’t going to put the global economy off the rails immediately. But the longer this problem remains, the higher the risks will become.
“So those are the things that face us as we prepare to go to France. What I do want to do however, is to wrap up by making one more, very important point.
“That is, in laying out these challenges, and these challenges are very large, my intention is to be activist, not to be alarmist. In fact, I remain optimistic that all of these challenges can be addressed in an appropriate and timely way.
“I say this for two reasons. First, I have seen the world act decisively before. Let me tell you how it was in Washington in November 2008. We all remember the crisis was coming upon us with a rapidity we had never witnessed before.
“At that conference I saw Nations whose interests have been often at odds, Nations with different traditions of governance – rivals, even former enemies, addressing common problems with a common will. They recognized that in a globalized economy, a flood engulfing one would soon swamp them all.
“So, even though those twenty-some leaders all represented sovereign states, they agreed quickly to a common, synchronized set of actions to chart the same course toward calmer waters. Ideological differences were set aside. Old enmities were not raised. Indeed, if you had arrived from another planet you never could have guessed which nations had spent decades mired in hostility. You might call that situation the fellowship of the lifeboat!
“But ladies and gentlemen, in that brief parting of the veil, I saw world leadership at its best: a glimpse of a future – one where we act together because we understand what’s good for one and good for all are largely the same. That is the world we have been trying to build since 1945. The world we want for our children and grandchildren, and I saw that it can be done, if we choose an enlightened view of the exercise of our sovereignty.
“Second, and for similar reasons, I remain optimistic about Europe. Indeed, no group of the world’s nations have more consistently demonstrated an enlightened approach to sovereignty in recent decades than the countries of the European Union.
“Always remember, that the European Union, while still at times a work in progress, has really been a remarkable achievement: the better part of an entire continent, a continent with centuries of rivalry and conflict behind it, has moved forward to an amazing level of integration and coordination. They have, more often than not, when faced with choices, decided to do what is difficult and necessary, and to avoid, what would be by default, become inevitable.
“The nations of Europe are strong, their economies are diverse and their people industrious and enterprising. If the people of Europe are given a clear plan, a plan that will work, they will do what they must - what Europe needs, what the world needs.
“And whatever we say to them, we say – as Canadians, as Australians, as members of the Commonwealth – we say it as friends, as we are obliged to do when big things are at stake.
“Ladies and gentlemen, you have been extremely generous with this invitation and your time. Let me just wish those of you who are participating in the meeting of Commonwealth Heads of Government a useful, productive and enjoyable conference.
“And to all of you, a safe journey home. Thank you.”