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Monday, 26 March 2001
Page: 25558


Mr LATHAM (12:54 PM) —There is a substantial debate in this country about globalisation, mainly in the media and some other public forums. One of the inadequacies of this parliament is that there is no great debate about globalisation. It is hardly a subject that is mentioned in question time or in the other forums of the parliament. The report of the Standing Committee on Economics, Finance and Public Administration fills a significant gap in the deliberations of the parliament. It looks at the global financial system and the role that Australia can constructively play. I join with the chairman, the member for Wannon, in paying tribute to the secretariat for its work, particularly the outstanding contribution of the inquiry secretary, Tas Luttrell. This report fills a significant gap and provides some good recommendations about Australia's contribution.

It is often said that in foreign policy Australia needs to punch above its weight. The same is true in the contribution we might make to the rules governing the global financial system. While we are a prosperous nation, we are not a big player in the global market, we are not a big population and we are not a big economy on the scale of North America or Europe. Nonetheless, through expertise and a strong contribution we can play a role in aiding the stability of world finance. The report shows how this can be achieved, how Australia can be an effective participant in the Group of 22, the WTO and the Financial Stability Forum. We can also contribute, of course, through our own expertise and regulatory systems. All of us have an interest in the stability of the global financial system and all nations need to contribute.

The reference for this report arose out of the East Asian financial crisis. Australia, with its expertise and experience, is well placed to help other nations in the region to modernise their financial systems and regulations. One of the messages from the report is that there is more work to be done, that no-one can be complacent after the conclusion of that crisis some two years ago. For Australia to make a contribution is vital to our own prosperity. We all have an interest in global financial stability.

Looking at the work that needs to be undertaken and the reasons why we should not be complacent, I note that China, for instance, now has access to third- and fourth-generation economic technology, but these systems are still monitored and controlled by a first-generation method of financial regulation. So in many respects in East Asia it is a question of closing the gap between modern financial technology and rudimentary financial systems. How do we close that gap? Obviously, it requires expertise, and Australia is perfectly placed in this region to play a major role—in effect, to punch well above our economic weight.

That is the bottom line for the report, but there is also a very important message for all politicians out of this work, out of this reference and inquiry: governments need to show leadership on the question of globalisation. It is not just a matter of expertise and good recommendations and good contributions; it is also a matter of leadership. My belief is that there is nothing wrong with globalisation which cannot be fixed by political leadership and good public policy. As the data in the UN Human Development Report 2000 make clear, global economics, global finance, offers the best solution to global poverty. Just look at the world's two largest Third World nations, China and India. For centuries they tried to lock themselves away from the rest of the world, and achieved nothing more than the impoverishment of their people. Now, off the back of market based economic reform, they have achieved substantially higher economic growth rates throughout the 1990s—in the case of China, an average of 9.2 per cent per annum; and India, 3.8 per cent per annum.

The World Bank, in its report, is providing evidence that these reforms lift up the whole nation, that in fact a rising tide lifts all boats. The World Bank has reported that the income of the poor in Third World nations rises one for one with national income growth. So these are not reforms for the rich; these are reforms for all poor nations and, in particular, they are beneficial for poor people. Economic reform has emerged as a powerful force for social justice. Over the past three decades the development of trading economies in East Asia has lifted 150 million men, women and children out of abject poverty. To allow the facilitation of further trade and investment through stable financial systems is one of the great contributions we can make, not only to our own prosperity but to those nations most in need.

The countries which have been unable to break the poverty cycle, most notably in Africa, Latin America and the old Soviet Union, are those which have been most resistant to free trade and clean financial institutions. Internationally, the evidence is clear: the verdict has come in. Poverty can be beaten provided governments open their economies to free trade and market based growth, establish decent property rights and access to capital, invest heavily in education and training, respect the rule of law and eliminate corruption and—as this report points out—stabilise their financial systems with good modern institutions and regulations. Globalisation has many benefits for a nation like ours. At long last, the tyranny of distance for Australia will end. We can expand our economic markets and, of course, we can give all Australian people a world stage on which to present their ideas, innovations and insights. This report emphasises the need for political leadership.

I have reached the conclusion that governments and politics, in many respects, are the most conservative parts of our society; so too they are the most backward in their attitudes to globalisation. Nowhere do you find a hang-up about globalisation other than in the Australian political system. Look at how Australians are living their lives in practical ways. Look how they are voting with their feet. An extra 10 per cent of Australians join the Internet each year. People are joining global communications networks. Australians are consuming a record amount of information, culture and entertainment from overseas. I take this to be the true meaning of a multicultural society. We are drawing the best of information and cultures from right across the world. Australians are engaging in international travel and communications in record numbers. They are continuing to buy quality overseas products and inventions. Australian consumers discriminate purely on the basis of price and quality, not nationality. The education system is also going global. Parents are happy to have their children in classrooms which are directly linked to schools overseas, learning from each other through international methods of communication and education.

Given all those trends in Australian society, why should the political system be scared of global financial markets? Why should the political system be worried about globalisation, the ethos of people coming closer together as we break down national boundaries? Only politics is lagging behind. Ask any scientist whether ideas and inventions should be stopped at the national boundary and they will think you are mad. Ask any student whether they should learn from the knowledge of just one country and they will think you have gone quite crazy. Ask any businessperson whether markets and economic ambition should be limited by national boundaries and they will think that you have flipped your lid. In the financial system—the basis of this report— ask anyone involved in the regulatory regime whether governments should cooperate and work together and they will say of course they should. Governments working together to stabilise financial systems is the key for global economic prosperity.

Why is the political system so backward? In many respects it has grown out of touch with the lifestyles and aspirations of the Australian people. In their practical day-to-day lives, the Australian people are engaging in the benefits of globalisation. It is only in the political system that scare campaigns and misinformation are being mounted. In fact, the political system responds too easily to the demands of special interest groups trying to protect their economic privileges from competition. If there is one rule in politics it is that if someone is campaigning against globalisation they are trying to protect the privileges of the wealthy, trying to protect those who have done well out of the market economy. That is the golden rule. We need leadership to make these points known, in many ways for the political system to catch up to Australian society and the way in which it is embracing global opportunities.

This report is part of the leadership. I have been delighted to be part of the inquiry. We have all learned a lot from the material in the report. We are all satisfied with the recommendations that have gone forward. If the Howard government is serious about leadership, not only will it embrace the recommendations but it will put down the opportunistic voices and the special pleading groups who want to stand in the way of these global trends. Globalisation is a net benefit for this country. The Australian people do not want it rejected; they want it civilised. If we can do one thing to civilise global markets, it is to embrace the recommendations of this very fine report.