The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

4 June 2008

NO.066

Treasurer to Attend OECD Ministerial Council Meeting

Today I will attend the Ministerial Council Meeting (MCM) of the Organisation for Economic Cooperation and Development (OECD).

I will jointly lead a discussion on the economics of climate change, attend a working dinner and participate in discussions on sovereign wealth funds (SWFs).

The meeting will also include the latest OECD assessment of global economic conditions and major economic trends and issues.

The Rudd Government views climate change as a profound economic challenge. Ratification of the Kyoto Protocol was the first official act of the Rudd Government.

Australia is also actively and constructively engaged in UN negotiations to forge a new post-2012 outcome on climate change that is both equitable as well as economically effective.

Australia has a comprehensive national framework for tackling climate change. The central component of this framework is the introduction of an emissions trading scheme by 2010.

The scheme will help us meet our greenhouse gas emissions reduction goal – to reduce emission by 60 per cent on 2000 levels by 2050 – at least cost.

Like the OECD, the Rudd Government understands that the costs of inaction far outweigh the costs of early and comprehensive action on climate change. As OECD countries, we have a responsibility to take the lead in responding to the challenge of climate change.

I also appreciate that the OECD - one of the world's most respected economic organisations - is engaged in extensive research and analysis of possible responses to the challenge of climate change. I commend the OECD for this work.

We also welcome the role that the OECD is playing in managing concerns related to SWFs and note that the conclusions of the OECD Investment Committee report are consistent with our response to the issue.

SWFs can be a stabilising influence in global financial markets and can assist in macroeconomic management.

Surging food and energy prices will be an important agenda item tomorrow. Sharp rises recently in energy and food price are causing direct cost-of-living concerns across the OECD, as well as broader inflationary pressures and anxiety about energy and food security.

The Australian Government is concerned about the impact of high food prices both domestically and on the world's most vulnerable, and has recently contributed A$30 million to the emergency appeal of the UN World Food Programme.

In its latest Economic Outlook, released Wednesday, the OECD expects Australian economic growth to ease from 4.1 per cent in 2007 to 2.9 per cent in 2008 and 2.7 per cent in 2009, reflecting tighter financial conditions and slower global growth.

On the inflation front, the OECD expects inflation to ease from 4.1 per cent in 2008 to 3.1 per cent in 2009. The OECD highlights the stabilising role that fiscal policy is now playing in support of monetary policy. Moreover, the OECD suggests that the Government's fiscal strategy, addressing education and infrastructure, should help alleviate the supply constraints in the Australian economy.

Reflecting the fallout from global financial market turmoil, cooling housing markets in several economies and high commodity prices, the OECD is forecasting that growth amongst member countries will slow to 1.8 per cent in 2008, before returning to potential by the second half of next year.

Recently improved sentiment in global credit markets is welcome, but the possibility of further episodes of financial market turbulence still represents a significant downside risk to the global growth outlook.

Today I will also meet in Paris with Dr Agustín Carstens, Mexican Finance Minister, and Ms Kristin Halvorsen, Norwegian Finance Minister. We will discuss the global economic outlook, market-based approaches to climate change and SWFs.

4 June 2008