Australia, 2008

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.