Today's economic note comes to you from Seoul in Korea, following yesterday's G20 Finance Ministers' meeting. Last night, I had the pleasure of catching up with skipper Melissa Barbieri and her Australian women's football team - the Matildas - to congratulate them on their efforts in the Peace Queen Cup in Korea and for a brilliant 2010. Later today, I will be attending the Korean-Australian Business Luncheon with business leaders from the finance, legal services and resources sector. Then it's back to Canberra as we are right in the middle of the first full sitting fortnight of the 43rd Parliament. Last week, we held an important debate in Parliament on Australia's role in Afghanistan. As part of the debate, I spoke on our mission to build the Afghanis' capacity to lead and manage their own governance and security. Last week also included a big step forward in our plan to build the National Broadband Network. The NBN is just one of the many critical steps we are taking to boost productivity and growth in our economy.
This weekend's G20 Finance Ministers' and Central Bank Governors' Meeting in Gyeongju, Korea, made important progress on the G20 agenda in preparation for the G20 Leaders' Summit in Seoul next month. It was clear from my discussions here that the global economic recovery is patchy and uneven. The risks remain tilted to the downside, and, of course, the Australian economy will not be immune from these developments.
We made important progress toward reforms to help deliver strong, sustainable and balanced growth, agreeing to measures to reduce excessive imbalances in the global economy. In implementing these measures, the G20 recognised that country positions need to be taken into account, including Australia's position, as a commodity exporter, with a strong investment pipeline, and strong economic and fiscal position.
I'm also really pleased we were able to agree to fundamentally reform the IMF governance structures, giving more weight to emerging, developing and underrepresented economies. This is an area where Australia has been a key player over the last 18 months. Yesterday's agreement is a significant achievement that will increase the IMF's effectiveness and ensure it is better able to support countries when they are most at risk.
Ministers also agreed to move, over time, to more market determined exchange rates and refrain from devaluing their currencies. In Australia, we know the benefits that can come from a market based currency based on our own experience for nearly three decades, operating as a shock absorber against risks in the global economy. This is an important step toward addressing global imbalances, which I strongly support.
The G20 also endorsed significant progress on reforms to global financial regulation, which, importantly, recognises individual country circumstances. Overall, it was an incredibly successful meeting and I'm proud of the role Australia has played, and will continue to play, at the G20 table.
As foreshadowed in last week's note, on Monday, Minister Combet and I announced the membership of the Business Roundtable on Climate Change. I have been really pleased at the response we have had from the business community on participating in the Roundtable. It is a real ‘who's who' of Australian business leaders, and I look forward to our first meeting in November.
New research by the Climate Institute released last week also found that countries around the world are already taking steps to reduce their carbon pollution and thereby moving to cleaner energy sources and effectively having a carbon price in their economies. Importantly, it indicates that key trading partners, like China and the United States, already have implicit carbon prices within their electricity sectors.
I've always been a big believer in the capacity of Australia's mutual credit unions and building societies to provide a safe and competitive alternative to the big banks. That's why I strongly support the sentiments of Jim Murphy from the Australian Treasury, who said on Monday, in a speech to ABACUS, the mutuals' industry body, that Australians are developing a ‘greater appreciation of the important role that credit unions and building societies play in bolstering competition' and providing a ‘strong alternative to the banks — one that is widely valued in the community'.
Mutuals meet the same high standards of prudential regulation as our banks and deposits held with a mutual are backed by the Government's Financial Claims Scheme. So Australians can have absolute confidence in the safety of their money wherever their deposit is held. Some 4.5 million Australians are members of a mutual, but many others may not be aware of the critical role they play in putting competitive pressure on the big banks. Mutuals often provide home loans at a discount to the big banks, and we're bringing in tough new laws to make sure consumers can switch to any better deal without paying an unfair exit fee.
On Wednesday, we introduced an important telecommunications reform, the Competition and Consumer Safeguards Bill. For too long we have had the experience of a telecommunications sector with far too much market concentration in one company. However, this Bill will pave the way for the structural separation of Telstra's retail wing from the rest of the company. If passed, it will be a critical micro-economic reform that will lead to greater consumer choice and increased competitiveness, which will help to bring prices down.
On Thursday, we received news that the Chinese economy grew by 9.6 per cent through the year to September, moderating from 10.3 per cent through the year to June. Although conditions remain robust, this slight easing of growth reflects the Chinese Government's gradual unwinding of policy stimulus, and follows the move on Tuesday by the People's Bank of China to increase benchmark interest rates for the first time in nearly three years. These steps to return expansionary policy settings to more normal levels – a trend starting to occur across the Asia-Pacific more broadly – reflect greater confidence in the region's economic outlook.
We also saw on Friday that continued strong growth in our region has supported further increases in the prices of our export commodities. Export prices rose by 7.8 per cent in the September quarter and are up 27.7 per cent over the year. This increase reflects big rises in bulk commodities, with coal prices up 34 per cent over the year to September and metal ore prices climbing 70 per cent. This is part of what has taken Australia's terms of trade to around its highest level in 60 years and this is one reason why our dollar is so high.
Finally, today, some interesting research was released by the Assistant Treasurer Bill Shorten into community attitudes towards superannuation. The research found that many in the community are concerned about how they will fund their retirement. Only 37 per cent of consumers surveyed were confident of having sufficient superannuation to fund their retirement. This underscores the need for the Government's reforms to boost Australians' retirement savings, a cornerstone of which is increasing the superannuation guarantee from 9 per cent to 12 per cent. We will also be making changes to make super concessions fairer and introducing a simple MySuper product. These changes will build Australia's pool of superannuation savings, and make for more secure retirements.It's been a great opportunity meeting with my international counterparts over the past few weeks. However, I'm really looking forward to getting back to my electorate later this week and hopefully even up to North Queensland, with Minister Ludwig, to visit some important regional centres, like Townsville and Ingham.
Deputy Prime Minister and Treasurer of Australia
Sunday 24 October 2010