 Well Welcome everybody. I'm Ernie Bauer. I'm the Symmetro chair for Southeast Asian Studies and also relevant to today's discussion I'm a co-director with Mike Green of the Pacific Partners Initiative here at CSIS and we're honored today to have Mr. Wayne Swan with us for a version of the Banyan Tree Leadership Forum. The Banyan Tree Leadership Forum is a forum for speakers and who come from leadership roles in their countries, people who make an influence policy and that's certainly the case today. Mr. Swan is an MP, a member of parliament now. His constituency is from Lily, I think, is that right? And but he was earlier deputy prime minister of Australia and the former treasurer of Australia. As treasurer he was very well known worldwide, had worldwide acclaim and was elected the finance minister of the year, in fact in 2011 by EuroMoney Magazine. He's also recently authored and released a book called The Good Fight which is his personal account of his time in the Rudd-Gillard government which would be very interesting for any of you following Australian politics. That one shouldn't be missed and he's now going on to traveling around the United States speaking about the need to promote global economic growth and tackling the challenges of inequality and I think you've got a major report coming out either this week or next week, a collaborative effort with some of the other most preeminent scholars and leaders in the world. This event is being webcast live and so welcome to those of you watching us and live streaming. You're very wise it is a snowy day here in Washington. It's cold. As you can see from Mr. Swan, it's not as cold in Australia. He looks bronzed and I look a little bit pale up here. At least one of us is looking well and if you have questions on the internet please email them in through the Twitter at CSIS live and use and track us using the hashtag hashtag CSIS live. So without further ado I'll invite you Wayne to make some comments and then we'll open it up to a discussion. If you don't mind I'll just yeah please do some slides. Thanks very much Ernie for moderating today and thanks to the CSIS, thanks to the Australian National University for inviting me today. It is great to be back in Washington. It's a city I admire. It's a city I derive enormous inspiration from when I come here and I think this is probably the most relaxed I will have been in Washington in many years. I made a dozen or so visits to Washington through the global financial crisis and the years after it during the great recession and I can tell you on this occasion I really do feel the difference. It's great to see that the US economy is on the up and up and of course that's thanks to the very good work of a number of people that I had the privilege of working with over the years people like Hank Paulson, Tim Geithner and Ben Bernanke. I wanted to start today by just talking about one particular day in Washington which is really seared on my memory from the very beginning of the global financial crisis and of course that was an emergency meeting of G20 finance ministers here in Washington on on the day of 11th of October and the evening of the 11th of October 2008. It was a Saturday night I recall local time and of course that meeting had followed an all-day meeting of the IMF. The emergency meeting that night of G20 finance ministers was unscheduled because there was such unprecedented fear about global events at the last minute President George W. Bush attended that meeting. President Bush I believe in a very humble way opened that meeting by apologizing to everyone present for the consequences of the US subprime crisis and of course the collapse of Lehman Brothers and the subsequent impacts of that in the months that followed. He assured everybody in the room that the United States would do everything they could with both developed and developing countries to do whatever it would take to meet that challenge head on. Just before President Bush was due to address the finance ministers the Brazilian finance minister was speaking to the finance ministers in the room and he apologized for his very poor English and President Bush leaned over and whispered into his ear, that's okay my English isn't very good either. Now the problem was that President Bush didn't realize the microphone was live and of course his statement was broadcast to the 20 finance ministers and central bank governors around the room and it wasn't necessarily the best way to instill confidence at the height of the global financial crisis but we did take his words very seriously that night and he did follow through in what he promised he would do at that meeting. Two days earlier I had stood on the floor of the US stock exchange which had had its worst day since the market crash of 1987 and dropped 7% and of course the financial system here and around the world was in fact in chaos. That night after the emergency meeting of finance ministers with President Bush I returned to the embassy residence and I was due to speak via a secure phone to a special cabinet meeting that was taking place Australian time Sunday morning in Canberra. Now as is often the case in politics the most serious of decisions can be taken in sometimes the strangest of circumstances. By this time it's 10 p.m that night following the emergency meeting Washington time but for some reason some reason I've never been able to find out why the secure phone line could only be set up in the basement bedroom of the teenage son of one of the senior treasury officers so there I was I've just spent all day at the IMF where it was chaos and people were very worried we've had an emergency meeting and there I was sitting on his bed briefing the cabinet back in Canberra Sunday morning and taking them through elements of our yet to be announced stimulus package and of course the bank guarantee. I was sitting there and I'm doing this and I looked up at the wall and I thought it can't get any more bizarre than this. There I was looking at a Jimi Hendrix poster. Now I'm pretty mad about rock and roll and I couldn't get out of my head Bob Dylan's All Along the Watchtower. One of my favorites and of course Jimi Hendrix did it better than anyone. Now I don't know if anyone in the room knows that song but feel free to join in and I don't intend to sing it but there's a message here. There must be some way out of here said the Joker to the thief. There's too much confusion I can't get no relief and that was going through my mind and I'm sure the thoughts of those thoughts were going through the minds of many policymakers I'd been with that day because the cabinet meeting I had phoned into took two of the most important decisions taken by an Australian cabinet post war. The bank guarantee and the term funding guarantee was absolutely essential to secure our financial system and of course our initial $10 billion stimulus package which got us through the Christmas period without a complete collapsing confidence and collapsing sales across the retail sector because essentially by that stage I the prime minister and the cabinet knew we were facing the biggest threat to the global economy including to our own country since the Great Depression. That emergency finance minister's meeting effectively kicked off the G20 as the primary vehicle for economic coordination and symbolically given my topic today is inclusive prosperity for the first time at the major coordinating body which wasn't the G7 that developing world had a seat at the table. What the G20 symbolizes really is the radical shift of economic power in the global economy from west to east and that was the first time I really think that had been openly acknowledged because it was a recognition that the key to dealing with the events that had started in the United States and spread light lightning everywhere else was that everybody was in the same car both developed and developing a recognition that if we didn't grow together if we didn't do something together we would grow apart and of course that's the reason that I'm in Washington this week I'm here to release a report from the Center for American Progress on inclusive prosperity it's been authored by a diverse group of policy makers from academia business the trade union movement it's chaired by Larry Summers and Ed Balls and it aims to address one of the central political and economic challenges of our time the need for inclusive prosperity in the developed world as one of its authors and as one of and as a social democrat as well I've always had a fundamental belief that we create prosperity to spread opportunity we recognize that economic growth is not an end in itself but an absolute precondition to the prosperity we must create to lift people out of poverty and of course to support a broad middle class that's our goal and our means come not just from active government but from a strong innovative business community a healthy and vibrant civil society including a strong not-for-profit sector and active trade unions what I want to talk a little bit about today is some of my thoughts and experiences and lessons that were learnt during this period which was effectively six years because there's a good Australian story to tell about our performance during the crisis but also the performance of the Australian economy over the past 30 years become one of the most open in the developed world it's now in its 24th year of recession-free economic growth and I can say I'm proudly from a country over that 30 years and probably for a lot longer that's done a better job at matching strong growth with social equity than just about any other developed economy over the past century but I'm particularly proud of what we managed to do during the six years of the Rudd and Gillard governments and not only did we grow but we also substantially reduced poverty in our country in that period as well. Ours is a country where the overwhelming majority can gain a good education, valuable skills, experience a dignity of employment, feel that they have a stake in the character and direction of a national community and have the resources to provide an even better life for their children. Now that's a goal we aspire to for everybody in the global community and of course as was mentioned before by Ernie Kindley my book The Good Fight details what we actually did during that six year period. All of the actions that we took were guided by determination not to repeat the mistakes of the Great Depression when the economic orthodoxy was for harsh austerity and of course as this first graph shows and this is something I'm incredibly proud of and I believe all Australians should be incredibly proud of is that despite the headwinds of the global financial crisis when economies were literally shrinking before our very eyes month by month year after year after year the Australian economy during that six year period grew by 15% a spectacular result and of course while there has been an increasing concentration of wealth at the top in Australia income growth during this very period among low and middle income earners was higher than just about any other developed economy but to me it's not just those numbers that count to me the real number that says so much about an economy its performance and its economic and social outcomes is how you measure social mobility that is I believe people have a legitimate expectation that irrespective of your background your place of birth you have the same capacity to succeed as anybody else and we measure social mobility by looking at what happens as to a father's income as a predictor of what their son will earn so this graph here shows once again that Australia not perfect not the best but as one of Australia still is one of the more socially mobile countries in the developed world and of course social mobility diversity and population high degrees of education quality public services are one of the most significant advantages Australia has as we go forward to maximize the opportunities that should flow to our country from the asian century and why am I saying this today because I believe that it is the policy frameworks tried and tested in our country over a period of time that have a lot to contribute to the global debate about the role of government and securing strong economic growth and the importance overall of fairness in securing the necessary structural reforms that are required in developed and developing countries to significantly increase growth elsewhere in the global economy. Whenever I travel I'm always struck by just how fortunate Australia is we have challenges we have areas of disadvantage there are many things that we need to do in Australia but comparatively when you look at almost any indicator take the OECD quality of life indicator for example and many others we've done pretty well now of course our economy at the moment is slowing after many years of relatively stronger growth and strong growth in incomes as well but whatever is going on now in the cycle if you take an overall perspective our social mobility figures look pretty good. The point I want to make today is that these sort of outcomes don't happen by accident they happen because policy choices are taken or not taken at critical junctions to produce these outcomes these outcomes are the result of over 30 years of structural reforms that have made an economy more open to the world reforms like fighting exchange rate bringing down the tariff war enterprise bargaining all 20 30 years ago now but built on again and again a decent minimum wage collective bargaining based on a decent minimum wage and a decent set of basic conditions Medicare a strong transfer payment system which is highly targeted and effective and of course universal national retirement income known in Australia as super. These are the sort of reforms that have seen Australia become the envy of the world I know there's a view that somehow these outcomes suddenly have just materialized because of our relationship with China for the record it wasn't China that saved Australia during a global financial crisis they were in one too but the fact is that we are also a beneficiary of growth in the region that is a big China story and there's another reason why we can be optimistic about our future and it is a factor which propels our growth now and into the future but it is not the factor which has produced the underlying strength of our economy it's back to all of those issues that I mentioned before so Australia sat there or has sat there over the last 10 years right through the global financial crisis with an unemployment rate below six percent that's where we were for a decade even in the midst of the global financial crisis now it's just crept back up from January last year to over six percent and that's a challenge but it still gives you some idea of the magnitude of the achievement now despite all of this success we in Australia continue to have the same fractious debate that goes on in the rest of the world about the effectiveness and the need for fiscal and monetary stimulus in Australia conservative critics argue as indeed they do elsewhere in the world that the country or the world or Australia would have been better off not putting in place economic stimulus and monetary policy stimulus we would have been better having the cleansing power of a recession rather than intervening was substantial fiscal and monetary stimulus the truth is that if we didn't intervene the way we did with two very big stimulus packages Australia would have experienced three quarters three quarters in a row of negative results would have suffered much higher unemployment all the skills destruction that comes with it and of course and the capital destruction the small business destruction that goes with it all of which dragged the rest of the world down but not Australia because we held our own later on through 2010 mining boom mark two kicked in and gave us extra impetus for that for that critical period we kept our labour force intact we kept apprentices in jobs people were not relegated to too long and lengthy periods of unemployment Glenn Stevens our reserve bank governor had something to say about this debate recently and I just want to quote him very briefly because I think it sums up the nature of this global debate he says of the global financial crisis quote had it gone on we can be sure that tens of millions more people would have been unemployed but it didn't go on it was arrested as a result we talk about the great recession we don't talk about the great depression mark two he went on to say we might not like like the politics or the optics of it all but the alternative was worse now this use of extraordinary monetary policy by reserve bank governors outside of Australia because we didn't need to go to the extraordinary monetary policy measures that were forced elsewhere because legislatures were gridlocked that strategy is coming for a lot of criticism stinging criticism in recent times but of course if that hadn't been available it would have been the great depression mark two and as the Financial Times commented recently levelling income and wealth with a colossal recession is no way to address growth or inequality so for whatever the pluses and minuses were a far better place for all of those interventions so why is this debate happening the way it's happening and why have central bank governors rightly put their jobs on the line and why is there such a rearguard action to demonize their strategies and those of governments that moved well I think it's fairly clear it's a debate about the role of government all of this matters a lot because if we accept the conservative narrative a fundamentally and demonstrably false narrative that they say fair would have seen us through the crisis then the next economic crisis and there will always be a next economic crisis could well result in mass bankruptcies mass unemployment and mass human misery so this debate really matters it's just a proxy for the age-old ideological battle between those who see government as a positive force for wealth creation in a market economy and those who would wish to shrink its role virtually away to nothing and it is with us now the recovery in the global economy following the global financial crisis has been underpinned thankfully by growth in the developing world if it hadn't been for that there would have things would have been much worse and of course if we didn't have extraordinary policy in the development sorry the developing in the developed world we would have had a great depression mark too but at the moment this is why this debate matters so much emerging economies are slowing growth in the developed world remains tepid at best without put per capita in some developed economies 10 to 15 percent below the pre-crisis trend think about that the British economy is only just back almost back to where it was six or seven years ago Australia didn't experience any of that now this slow recovery in the developed world is a product of complex forces no doubt that profound technological change ongoing impacts of globalization the hangover of crisis settings caused by political gridlock have all played a part but there's another factor that is increasingly important in this equation of explaining why growth in the developed world is so tepid and is so weak and that is growing economic inequality now at the core of this conundrum of a lack of sustained demand to drive growth is a complex debate there's no doubt we need structural reforms including supply side reforms they're required in developed and developing worlds but they're not sufficient to make up for the lack of overall demand now and in the immediate future and of course this is what Larry Summers has described as a secular stagnation the difficulty of sustaining demand which would permit normal levels of output now this debate about what we do to lift global growth was at the core of the recent g20 discussions in Brisbane my home city just two months ago incidentally held six years to the day of the washington summit which followed that emergency finance minister's meeting I was talking about before that Brisbane summit agreed to a two percent growth target and member countries agreed to submit and indeed did put forward something like 900 reforms that they would put in place in the next year or so to strengthen global growth fair enough as far as it went but what was quite regrettable about there was no discussion in the meeting or subsequently publicly about the extent to which those 900 reforms that were submitted promoted inclusive prosperity or whether or not some of them in fact would result in greater concentrations of wealth and income and indeed a number of the Australian proposals in that list will do precisely that but not actually the sort of structural reforms that give structural reforms a good name stopping people getting unemployment benefits for a long period of time time and unemployment benefits is not the sort of structural reform that we ought to be doing or that will necessarily garner public support now in recent years there's been an avalanche of analysis from the IMF the OECD all arguing that relative equality is good for growth this is a big turn up for a body like the IMF to actually not only argue that relative equality is good for growth but argue in favour of redistribution but they did and in fact Christine Lagarde went as far as saying that growing inequality is casting a dark shadow a dark shadow over the global economy now everybody's familiar with the data and it's so stark here in the United States about the extent to which the middle class in this country is hollowed out and there's just been income stagnation over over 30 years that in itself is what I call a handbrake on growth the consumption that used to come from people earning good middle class incomes is not there and that in itself becomes an inhibitor for investment as people ponder their decisions about where they're going to commit their capital in the years ahead they'd like to think they might have a few more customers with a bit more disposable income but all of this was missing in the G20 discussion so what is really required now is a much more informed analytical debate about what we do do to strengthen global growth and fairly share its benefits and of course that's what the report that's being released tomorrow precisely does it's been incredible to sit back and watch some of commentary we've seen from senior global policymakers which has not necessarily been taken up in the political world this is what Mark Carney had to say early last year at a conference in Paris he said this unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself in other words for markets to sustain their legitimacy they need to be not only effective but also fair these sort of statements from Janet Yellen, Mark Carney, Christine Lagarde and so on I know do anger the plutocrats around the world who have their political representatives arguing for unregulated markets the ripping out of social safety nets and the lowering of taxes across the board as if those issues themselves are somehow an elixir for growth there's no greater driver of inequality than high levels of unemployment and of course high levels of youth unemployment exacerbate the intergenerational impact of unemployment so we do require bold structural reforms and a boost to demand but if we're going to get those structural reforms they've got to be the right structural reforms that promote inclusive growth that don't result in a further increase in the concentration of wealth and income so to have a successful reform program to come out of a body like the G20 or to come out in a national economy such as the Australian economy there's got to be a clear linkage with those reforms to the jobs they promote and the fairness that flows from them because they'll never be implemented if the population generally can't be convinced that the gains will be fairly distributed and of course therein lies the problem with the Australian budget and why it is so good luck because most of the changes are not fair income structural reforms their deform their deforms which actually result in more unfairness not less so many of the prescriptions that are put forward by the laissez-faire brigade aren't about wealth creation and maximising jobs actually what they are about is wealth concentration further wealth concentration i absolutely understand there'll be those that say if you oppose these reforms you don't understand growth as a finance minister for six years i understand what drives growth productivity but what will drive productivity is the correct decision about the correct reforms to lift productivity fostering gains it gains in broad-based productivity is the foundations of long of long-term prosperity which we need to spread opportunity so if we are to build more productive and inclusive economies we have to acknowledge that inequality isn't a fringe issue and combating its rise is absolutely fundamental to kick-starting growth across the developed world and of course more importantly putting in place the effective structural reforms that will drive it and here i think the Australian experience is particularly relevant what we do need and the foundations of fairness are there in good public investment and affordable quality health and education or underpinned by fairness in the workplace a decent minimum wage collective bargaining arrangements which reflect the productivity issues that i spoke about before a strong public private partnership in the pension system similar to our superduation system a series of reforms that promote competition all of those are a structural reform agenda that underpin the importance of lifting productivity but in the meantime before that can be done there does need to be a substantial boost to global demand and there's one or two very easy ways to go about that and quickly and the IMF has pointed to this and that is a substantial increase in public and private investment in infrastructure over above that you know a rapid increase in lifting the quality of education those two things can be implemented relatively quickly in many economies around the world central to this debate about the role of government is also a discussion really about your view of who generates wealth in my world in my social democrat world nurses builders teachers construction site laborers hairdressers shop assistants waitresses are all generators of wealth just are just as small business people are as bankers are as multinational companies are everybody is a generator of wealth until we come to grips with this concept that everybody is in it together and we're all generators of wealth we will struggle to deal effectively with the issues of inclusive prosperity we will continue to see too many recipes of what I call trickle down economics which hasn't really worked hasn't the gains of that have not necessarily been as fairly shared and what we've seen is industrial organizations representing working people smashed their job security and conditions with it and of course they were told that at the end of this process there would be the jobs and the incomes that flow from it there aren't too many countries in the world where we can actually say that has happened because the truth is a rising tide doesn't necessarily lift all boats because all boats are slightly different and we need a set of structural reforms that make sure that some people who are unlikely to be lifted can be lifted as well and the policies that reflect it so we're all in this together so on that Saturday night back in October 2008 the G20 commenced a remarkable thing which was to avoid a great depression mark two I wish we now had the same commitment from world leaders that we found during the global financial crisis to ensure that we now find new policies to grow together because we don't will grow apart thank you thank you very much it's very well done I want to start with a question and then I'll open it up to the to the audience and I guess the question is are you focusing on developed countries because you know if we look at developing countries I think there there's a question there right how do how can governments play the role that you'd like them to play if they don't have the institutions and the trust established with people in their private sectors to accomplish these goals and I wondered if you would talk about that because if we look at the region that that you live in and that we're on the beach or we're on the the borders of the Indo-Pacific you know the OECD looks at a middle class that is now somewhere near 500 million but will be 3.2 billion people in 20 by 2025 so I wondered if you might share some thoughts about that sure and you will there's a variety of ways I could come at that but I'd also make the point to start with that this concentration is also happening in the developing world so whilst millions of people in the developing world are being lifted out of poverty you are starting to see some really huge concentrations at the top in a number of those countries so that in itself is very much an issue across the developing world it's just that you had to take a manageable bite of this and the hollowing out in the in the developed world is also a drag on the emerging world now I hope as they go through the development process and move up the evaluated chain and lift more people out of poverty and are creating even bigger and more successful and prosperous middle classes that they don't make some of the mistakes that have been made particularly say in this country the policy decisions which have seen the middle class here hollowed out so I think there's a message there and it is as relevant for the developing world as it is for the developed world and I know many policy makers in the developing world are looking and thinking at these issues as a finance minister in Australia you know it's it's amazing to actually mix with a number of these emerging countries who are very focused on reform I mean they are really focused on on creating wealth and and lifting their living standards across the board and they're probably more knowledgeable about many of the structural reforms that I spoke about then you'll find politicians or policy makers in the developed world yeah I mean I've found through my experience in bodies like APEC particularly the G20 the Australian example for example Australian example is highly relevant and highly studied by by many policy makers in the developing world I won't name the person but three or four years ago I was in a meeting in one of the larger Asian economies that's done very well and I'd taken their representatives of the foreign investment review board to have a talk about our approach what we were doing they brought in a number of their experts and in the middle of the conversation this minister said now your policy of horizontal fiscal equalization what there's only five people in Australia that understand what horizontal fiscal equalization is and for everybody here that is the method we use to basically take money out of the more prosperous states and give it to the less prosperous states with the objective of everyone around the country getting the same level of service in health or education or whatever no one has horizontal fiscal equalization he was quite familiar with it as indeed they are with any number of the reforms that I read through before our whole retirement income superannuation system subject of extensive study a hector here from the Treasury spent some time in the region no requests for this sort of information come through all the time but you know whether it's our transfer payment system take China I mean moving from an investment led export model to a consumption model they're all looking at methods of health care delivery retirement age delivery chronic I mean you name it yeah all of these things are very much on the agenda and the sort of models that actually get a Guernsey in these discussions you always find that there's a couple of Australian models that are there good ones and the bad ones so it's very much on the agenda there as well but you cited the example of infrastructure it's a classic example of where governance really matters so if you're going to marshal public and private finance for infrastructure in the developing world the real challenge there isn't the availability of money it's whether the investors have the faith that it's going to be invested within a set of guidelines and in an accountable way that's why this whole discussion about you know whether there's going to be a new China investment bank who kicks into it its relationship to the Asian Development Bank how they all fit in with the World Bank are really important but even if all the money is available unless you've got the governance in place you know the cost benefit analysis the rigorous scrutiny of how these things are done then the easy way to kickstart growth across many of the Asian countries and every one of them names their number one priority at the moment is infrastructure or a country like Indonesia for example but more than more than them these issues are the ones that need to be nutted through quite different from that debate in developed countries I mean it's amazing this country is not taking the opportunity of record low rates to have a massive infrastructure program to fix up you know what is pretty old and flagging infrastructure here which doesn't necessarily suffer from you know the sort of governance type issues I was talking about before public or private or some combination of both is doable right across the developed world but a bit harder in the developing world which is why we need our multilateral institutions really focused on it so that's just one example of that difference let me open the floor to questions observations that you might have right here in front Connor Cisla with the Asahi Shimbun you mentioned the Asian infrastructure investment bank very briefly and I just wanted to ask you a bit more specifically about that there's been a fair amount of writing recently I think about whether or not Australia will join and I wanted to know your personal thoughts on that as well as if you had any commentary about the current administrations I think Australia should join but it doesn't necessarily deal with the issues I just spoke about before for it to have standing all those issues of governance have to be settled and as I understand it I'm not I'm not privy to these discussions but the Australian government had some reluctance based on on government governance issues but I can't speak for them but they are relevant here but let's say that they were all fine and essentially the same procedures or similar procedures to what a world bank would do or what an Asian development bank would do are all there well what could be wrong with it I mean a part of the problem here and let's be frank is is that the IMF should have had its representational arrangements changed there's no issue I spent more time on when I was doing multi-lateral stuff than changing the voice and representational arrangements I chaired the committee that made the report and it's all done and dusted except it can't happen because the US won't agree and they haven't got it through the congress so little wonder when the developed world can't actually fix up a problem as simple when as logical as making the IMF representative of the entire global economy and giving fairness to the developing world that the developing world would say well we might go and do our own thanks very much so that's um that's pretty understood that extend to the um the structure of the world bank and well I'm not I'm not so sure that there's a could be I'm not sure that anyone's really worried about the structure of the world bank there's been changed there too but the one and I'd have to double check where that's up to but the IMF is a symbolic organization and you know it's very symbolic almost at every level and the fact that it can't actually make itself representative of its members because one country has got politics which is gridlocked its approval methods is not a very good outcome now you know I think we did a lot more capital marshaled for infrastructure across both the developed end of developing world I'm I was gobsmacked for example that the G20 leaders meeting could not even see its way through to supporting the IMF recommendation that said that at this stage it's actually cheaper and more efficient and economically better for governments to borrow and use debt financing in this current environment to build infrastructure than it is to you know to do anything else and that's just sheer ideology it's the ideology that stopped the G20 talking about climate change the same ideology that stopped the G20 talking about inclusive prosperity stopped what should have been a better infrastructure outcome at the G20 now as far as it when it was fine so they agreed that they set up in Australia a body which would assist the rest of the world with government arrangements that I was talking about before fine good hope it happens great for Sydney but if we've given this challenge we've got a weak growth which some people accept as secular stagnation other people contest it doesn't really matter common sense tells you that at the moment aging population in the developed world rapid technological change ripping into occupations higher up the income scale there's one simple way to to really give a boost to global demand and that is to get a few decent infrastructure projects going across the developed and developing world it shouldn't be beyond us to get at least a couple of the multilateral institutions to look after what can be done immediately in the in the developing world and developed world countries get on with that have got the capacity on their balance sheet to do it with public finance or public finance and private finance this country certainly has our country has Germany has any number of countries do some don't but that was you know a pretty incredible piece of work from the high America given its history but largely ignored in the G20 leaders and finance ministers deliberations why for the reason I just spoke about in my presentation it's an ideological thing government shouldn't be doing these things a vibrant economy in a market system a vibrant market economy always needs an active vibrant referee which is the government as you've done this work have you found private sector leaders who embrace too right we've got a couple on there's about 15 people that have contributed to this report it's coming out tomorrow and yes they're private sector leaders and indeed there's been a pretty healthy debate in this country um I tell the story I was reading Politico the billionaire from California who coined the term that they'll be coming for us with pitchforks soon and just as I was reading that that Politico article I happened to be in New York and I walked the highlight and I got towards the end of the highlight down towards the financial district and I had my head in all of this um because I was writing something about it and I looked up and there's this sort of six-story building which has got this huge sign plastered across it and it says very simply the French aristocracy never saw it coming either and you know I don't think that's where we are but as Christine Legard has said sort of concentrations we're getting are not sustainable economically forget if you if you want for a minute the whole ideal of fairness for me a socially mobile and fair society is a more optimistic one anyway which is a dynamic a dynamic in the in the economy that you can't measure you can't put it in a spreadsheet you can't measure the quality of life that comes from all of those things but we know it's now bad just in pure economic terms Hi my name is Doug Paul from the Carnegie Endowment I wanted to ask you about your policy prescriptions as laid out in the speech or elsewhere and how they interface with globalization I have in mind the recent very sharp protests in Hong Kong and Taiwan where a lot of younger people there feel they're not getting the housing the benefits the jobs and the incomes that they their parents experienced led them to believe would come their way and some of this is ascribed to various causes one to be that globalization has now brought so many competitors into the workforces of the world that labor markets need to be adjusted and education needs to be adjusted to put people in the right places to be able to have those expectations met you seem to know what I'm talking about how about your response it's a really good question there's no question that the part of the outcome of the middle class hollowing out has been globalization that is that you know the movement of industries to lower cost areas of production and so that's not a reason to reject it to reason to embrace a whole suite of policies that flow from that the fact is that there has been a whole lot of industry which has now moved that moved out of developed countries and moved to developing countries is now moving out of those countries and going to others I mean the Chinese are moving over to a consumption based economy based on the fact that they're going up the value added chain and doing things more successfully higher up that's what we want for the whole world so if you're talking about economic growth you cannot and must not ever be divorced from productivity and we must always striving to be more productive as we strive to be more productive we increase our overall living standards and technology is part of that but you know the big debate that's coming again is one that we've had in the whole of my political life and it's been a fest itself in various changes but you know there's very material around say called the book called the second machine age that there's a wave of technological change coming now which looks like it's going to smash as a potential to really carve into a lot of people who previously thought they were impervious to people on relatively higher incomes with professional standards you know it could end up being just like what happened to a number of unskilled process workers years ago used to work work in a number of the factories that aren't there anymore so all these things are happening and and we've got to we've got to cut our cloth as we try and think about the policy responses to these things you know you don't react to the advances in technology by smashing the you know the machinery in the wool mill or you know going down and doing something to Apple this is going to happen the question is how do we harness it what are the policy frameworks we put around it how do we make most people benefit from it now we've got a big debate coming up in the UN the Millennium Development Goals are coming up again there's going to be a and there is I know because I've been talking to a number of people more informed discussion happening through that process particularly about the developing world all of these things are complex but I don't our capacity to actually deal with them I think is increasingly being hindered by the unfairness of what people are sitting around them hi Joshua Melzer from Brookings you mentioned briefly in your speech that Australia has been growing consecutively for a number of years but it's facing a couple of headwinds could you just go into some more detail what you think the challenges are for Australia in the near and future and what policy prescriptions you would suggest to harness some of the advantages Australia has going forward I'm really optimistic about the future of Australia but we are facing a few headwinds and I could run through a few of them essentially we are now moving in transition from being predominantly driven well not predominantly but substantially driven by mining sources of growth or the mining investment boom looking for other sources of non mining growth but the mining boom isn't over because the export boom is just happening because a lot of that kit that's been built is now starting to export in fact I think the first LNG tank is going or nearly going out of Gladstone you know as we speak so the mining boom has had various phases the investment boom that is now largely over or tailing always going to some people called it a clip that was the labour intensive part of mining and and we need to see more investment outside the mining sector and that is starting to happen but it's been slower we had tremendous headwinds when I was there we had a high dollar and high interest rates which were both two big countervailing forces to what was a huge investment surge the big advantage we've got at the moment is we've got very low interest rates and we've got finally a dollar which is more like real value and reflecting the change in terms of trade although someone argue you probably should be lower if it was lower than it currently is but at least it's you know it's 20% off what it was so we are still seeing a lot of money being invested in Australia I think we've got a short-term problem with confidence which is self-induced by the government by their budget and it's falling to pass and and it's falling to really look like it's in charge of whatever is going on but that's I think you know that will work its way through the system but we are growing slower now than we have in a while the consequence of that is higher unemployment but the medium to long-term the future for Australia is always being in our people yes what we get out of mining is great it's still not the dominant industry in the economy either employment or necessarily investment where you know however you want to manage it 12th largest 13th largest 14th largest economy big dynamic economy is future and its current base is in services notwithstanding mining I mean the Australian economy is powered not just by mining it's powered by by being a modern services economy and fantastic opportunities are there for us as these middle class classes emerge further across the region that's just not China it's right across the region I think the great success of Australia in recent times put all this aside has been just how comfortably we now fit into our region when we put the Asian Century white paper out there in 2012 a lot of people said oh well we already know all this well in a sense we probably did but it came together in the document an extensive consultation went on around the region it was taken very seriously it went out again and as I moved around the region you know I suddenly thought you know for the first time in my political life we are now really not just saying that we're keen on Asia but there's almost you know that we there's no them and us as much anymore there's just oh we're down here and we're all here together and it's it's it's much more like that now and I think if you want to use the economic jargon our greatest comparative advantage is what they see us as being or what we want them to see us as being which is an economy which is not necessarily the cheapest because it could never be where a rich developed economy but it's a place you'd like to go it's a place that you respect it's a place where you know you can buy decent services it's a place that'll play an honorable role in the region and the world it'll do the right thing it's a place that's multicultural it's accepting of the region where as for most of its life it was in denial about it they can see that embodied in the nature of our population they can see it in the interchange of people these are these are the things that don't matter you know we've had we went through sadly the passing of golf and there was you know a strong discussion about what were all all the the achievements of the Whitlam government to my mind the biggest economic achievement of golf Whitlam was beating Nixon to China because you can't measure how much that was worth for Australia in China and when I went there on the 40th anniversary of that visit there are still people you know who say they were here they understood well I have to say on behalf of CSIS it's a great honor to have you here it's it's not often when you have a great relationship with with a country and a group of leaders like you and your colleagues where you you can come to the United States and and tell us that we're you know we've got some bruises and and the clothes are unwrapped a little bit and it's really helpful actually it's one of the things that we've we really would like to continue if a friend can't tell you about where your bumps are then you're in trouble so thank you very much for taking time and talking to us and just before we close he is actually an avid tweeter so would you tell us your twitter handle and so folks can follow you swanee Queensland yeah follow him it's it's more of this and if you have a question swanee qld swanee qld at swanee qld but follow him it's really interesting and if you have some questions maybe he'll you can pose them there and he might answer them thank you again thank you again thanks