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Treasurer to address G8 Finance Minister in Osaka.

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13 June 2008


Today, I will attend the G8 Finance Ministers’ Meeting welcome ceremony and the Ministerial G8 Outreach dinner to discuss the macroeconomic outlook including food and commodity prices.

I will be advocating appropriate policy responses to financial market turbulence and highlighting the importance of global markets in responding to rising food and commodity prices.

This is only the second time an Australian Treasurer has participated in the G8 Outreach - partners this year include Indonesia, the Republic of Korea, Brazil, South Africa and Thailand.

Australia’s economy has been remarkably resilient in the face of the ongoing global financial turmoil and is well placed to remain so. While slower global growth, tighter credit conditions and higher domestic interest rates are affecting the Australian economy, this is being countered by robust growth in emerging economies, boosting Australia’s terms of trade.

In the face of the countervailing forces of economic turbulence abroad and rising inflation at home, the Australian Government has been highly disciplined on fiscal policy, delivering a strong Budget surplus and offsetting new spending with savings elsewhere to put downward pressure on inflation.

It is important not to abandon inflation targeting regimes, which have been so successful at anchoring inflationary expectations, just when they are most needed.

High food and energy prices present challenges to the global economy not seen in a generation. High prices for minerals and energy could be sustained, driven by strong demand growth in China and other industrialising nations, and the inability of the world’s minerals and energy suppliers to meet the scale of demand. Strong demand is

also expected to support high world food prices.

It is important the response to high food prices covers short-term responses and key policy drivers, and does not distort domestic and world agricultural markets, otherwise adverse incentives that reduce agricultural production, or contribute to volatility in world food prices, will be created.

Australia has responded to rising food prices by committing A$30 million to the UN’s World Food Programme Emergency Appeal. We will also be working to strengthen food security in developing countries through increased development assistance,

international agricultural research, constructive participation in multilateral processes and continued advocacy for international trade policy reform.

I will also meet with a number of my counterparts - Mr Fukushiro Nukaga, Japanese Minister of Finance; Mr Aleksey Kudrin, Russian Minister of Finance; and Mr Mario Draghi, Chairman of the Financial Stability Forum.

Contact: Matt Coghlan 0415 098 050


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